Information Bulletin: Professional Corporations

November 2001

Background

In the 2000 Ontario Budget, the government announced its intention to allow regulated professionals to incorporate their practices.

Professional incorporation would confer many of the same tax and non-tax advantages enjoyed by other incorporated self-employed individuals. However, professional liability will not be limited through incorporation and shareholders of professional corporations are restricted to members of the same profession.

Provisions allowing regulated professionals to incorporate were included in Bill 152, Balanced Budgets for Brighter Futures Act, which received Royal Assent on December 21, 2000. Technical amendments to these provisions were made through Bill 45, Responsible Choices for Growth and Accountability Act, which received Royal Assent on June 29, 2001.

Proclamation of the relevant provisions of both Bills on November 1, 2001, combined with the necessary regulations or by-laws under the governing Acts of affected professions once finalized, will enable regulated professionals to incorporate their practices.

Key Features of Professional Corporations

Ensuring professional liability is not limited by incorporation:

In general, the corporate form insulates shareholders in their personal capacity from corporate liability. The professional corporation provisions ensure that personal professional liability of those professionals who choose to operate their practices through a professional corporation will not be limited.

Role of professional governing bodies:

The governing bodies of regulated professions will be responsible for the certification or licensing of professional corporations that fall under their jurisdiction. In addition, the governing bodies will be able to "look through" professional corporations and hold the professional shareholders accountable for their actions.

Naming a professional corporation:

The name of the professional corporation must include the words "Professional Corporation" or "Société Professionnelle" and cannot be a number name.

Ownership restrictions for professional corporations:

The professional incorporation legislation allows one or more members of the same profession to be shareholders in a professional corporation. All officers and directors of the professional corporation are required to be shareholders of the corporation.

Business activities which can be undertaken:

The professional corporation may not carry on a business other than the practice of the profession; however, this shall not be construed to prevent the corporation from carrying on activities that are related to, or ancillary to, the practice of the profession, including the temporary investment of surplus funds earned by the corporation.

Professions Affected by Professional Corporation Provisions

Members of the following professions would be eligible to operate a professional corporation:

  • Chartered accountants under the Chartered Accountants Act; certified general accountants under the Certified General Accountants Association of Ontario Act; and lawyers under the Law Society Act (responsibility of the Ministry of the Attorney General).
  • Audiologists, chiropodists including podiatrists, chiropractors, dental hygienists, dental surgeons, dental technologists, denturists, dieticians, massage therapists, medical laboratory technologists, medical radiation technologists, midwives, nurses, occupational therapists, opticians, optometrists, pharmacists, physicians and surgeons, physiotherapists, psychologists, speech language pathologists, and respiratory therapists under the Regulated Health Professions Act (responsibility of the Ministry of Health and Long-Term Care).
  • Social workers and social service workers under the Social Work and Social Service Work Act (responsibility of the Ministry of Community and Social Services).
  • Veterinarians under the Veterinarians Act (responsibility of the Ministry of Agriculture, Food and Rural Affairs).

Prior to the enactment of this legislation, professionals were prohibited from incorporating their practices except as specifically permitted by the statute regulating the particular profession.

The status of corporations that were in compliance with the law before the coming in force of the professional corporation amendments would, therefore, be unchanged.

Establishing a Professional Corporation

Regulated professionals who wish to incorporate their practices should consult the Companies Branch of the Ministry of Consumer and Business Services for Ontario incorporation requirements, and their governing body for conditions of incorporation specific to their profession.

Government of Ontario Ministry Contacts

The implementation of the provisions allowing regulated professionals to incorporate their practices has involved many Government of Ontario ministries. The contacts listed below will assist interested parties in obtaining information on topics that fall under the jurisdiction of specific ministries.

Ministry and Contact Information
The Ministry of Consumer and Business Services is responsible for the Business Corporations Act, Ontario, and can respond to enquiries about changes made to this Act and the process for incorporating a professional practice. Mailing address:
Ministry of Consumer and Business Services Companies Branch
393 University Ave., 2nd Fl. Toronto ON M5G 2M2

Telephone:
1-800-361-3223
(416) 314-8880

Internet address: http://www.cbs.gov.on.ca

The Ministry of Health and Long-Term Care is responsible for the Regulated Health Professions Act and can respond to enquiries that relate to the professions governed by this Act. Mailing address:
Ministry of Health and Long-Term Care Program Policy Branch
Hepburn Block, 8th Floor
80 Grosvenor St.
Toronto, ON M7A 1S2

Telephone:
1-800-268-1153
(416) 327-8894

Internet address: http://www.gov.on.ca/health/

The Ministry of the Attorney General is responsible for the Chartered Accountants Act, the Certified General Accountants Association of Ontario Act, and the Law Society Act and can respond to enquiries that relate to the professions governed by these Acts. Mailing address:
Ministry of the Attorney General
Policy Branch
720 Bay St., 7nd Fl.
Toronto ON M5G 2K1

Telephone:
(416) 326-2500

E-mail: susan.dizon@jus.gov.on.ca

The Ministry of Community and Social Services is responsible for the Social Work and Social Service Work Act and can respond to enquiries that relate to the professions governed by this Act. Mailing address:
Ministry of Community and Social Services
Community Services Branch 56 Wellesley St. W., 12th Fl.
Toronto ON M7A 1E9

Telephone:
(416) 327-4971

Internet address: http://www.gov.on.ca/CSS/

The Ministry of Agriculture, Food and Rural Affairs is responsible for the Veterinarians Act and can respond to enquiries that relate to the professions governed by this Act. Mailing address:
Ministry of Agriculture, Food and Rural Affairs
Dr. David Alves, Manager
Veterinary Science and Provincial Veterinarian for Ontario
1 Stone Road West, 3rd Fl.
Guelph ON N1G 4Y2

Telephone:
(519) 826-3127

E-mail: david.alves@omafra.gov.on.ca

The Ministry of Finance was responsible for the coordination and implementation of the professional corporations initiative. Mailing address:
Ministry of Finance
Personal Income Taxation & Fiscal Arrangements Branch
Frost South Bldg., 5th Fl.
7 Queen's Park Crescent
Toronto ON M7A 1Y7
Telephone:
(416) 327-0230

Internet address: http://www.gov.on.ca/

 

Contact:

Agnes Geller
Communications Branch
416 325-0463

 

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For more information visit www.fin.gov.on.ca

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