Can a non-dentist, or a holding company, own shares in an Ontario dental corporation?

An Ontario dentist who practises through a corporation uses a health profession corporation. Under section 85.8 of the Health Professions Procedural Code, one or more members of the same health profession may establish one, and the Business Corporations Act provisions that apply to professional corporations apply to it. So the question of who may own shares is answered by those provisions and by the Royal College of Dental Surgeons of Ontario (RCDSO). This page covers the corporate route in Ontario only. It says nothing about ownership outside a corporation.

The ownership conditions in the Business Corporations Act

Section 3.2(2) of the Business Corporations Act, subject to regulations under section 3.2(6), requires that all issued and outstanding shares be legally and beneficially owned, directly or indirectly, by one or more members of the same profession. It also requires every officer and director to be a shareholder. The RCDSO adds that each director and officer must be a dentist and a College member and sign an undertaking in Form C, and each dentist shareholder must be a College member and sign Form D.

Voting agreements, holding companies and federal incorporation

Under section 3.2(4), an agreement or proxy that gives someone who is not a shareholder the right to vote a share is void. Under section 3.2(5), subject to section 3.2(6), a unanimous shareholder agreement is void unless each shareholder is a member. The RCDSO states that holding companies may not own shares in a dentistry professional corporation, and that a certificate of authorization cannot be obtained for a federally incorporated corporation. Section 3.2(6) lets the government exempt classes of health profession corporations from some of these provisions, so ask a lawyer to check the current regulations.

Non-voting shares

The RCDSO says non-voting shares can be owned by a College member, by a spouse, child or parent of a voting dentist shareholder, and in trust for one or more minor children of a voting dentist shareholder as beneficiaries. That is the College’s description, so read it alongside the Act and confirm it covers your structure before anyone signs.

Holding out, death and divorce

The Regulated Health Professions Act, 1991 provides that no person shall hold himself or herself out as a shareholder, officer, director, agent or employee of a health profession corporation unless the corporation holds a valid certificate of authorization. Section 3.3(1) of the Business Corporations Act provides that the certificate remains valid, and the corporation stays a professional corporation, despite the death or divorce of a shareholder, subject to the rest of that section and its regulations. For the wider purchase, see buying a dental practice in Canada.