How do I transfer a professional corporation when I retire?

A professional corporation is not an ordinary business to sell. Who can own it, who can run it and whether it may keep practising are governed by rules that differ by profession and province, and the profession’s regulator explains them. A retiring owner can begin by reading the regulator’s rules before looking for a buyer.

Who can hold the shares

The College of Physiotherapists of Ontario says only members of the same profession can be shareholders, officers or directors of a physiotherapy professional corporation that practises, and that corporations not permitted to practise the profession can have other shareholders. The Ontario College of Social Workers and Social Service Workers says all officers and directors of the corporation must be shareholders, and that every shareholder must be registered with the College. Chartered Professional Accountants of British Columbia issues incorporation permits and says members may use multi-tiered corporations to hold their shares in a public practice firm. The pool of eligible buyers can be narrow, and who counts depends on the profession.

What happens to the certificate or permit

The College of Physiotherapists of Ontario says every professional corporation must hold a certificate of authorization from the College to practise. The social workers’ College says a corporation’s certificate may be revoked if it ceases to be eligible, for example when a shareholder resigns their College registration. A retirement that leaves a corporation without an eligible shareholder can therefore put its authority to practise at risk, so the order of the share transfer and the resignation matters.

Where client records go

For Ontario health professionals who are custodians of personal health information, the Information and Privacy Commissioner says their obligations do not end until a legally authorized successor has custody and control of the records. It lists retirement among the events that may leave records abandoned and recommends a succession plan that clearly identifies a successor. Other professions and provinces have their own record rules, so ask the regulator where client files must go.

Tax and structure

The capital gains deduction applies to qualified small business corporation shares as the Income Tax Act defines them, so the shares should be tested against that definition. Selling a practice’s assets rather than its shares is a different structure. For a physiotherapy practice in Ontario, the College of Physiotherapists says the corporation needs its certificate of authorization to practise; for other professions, ask the regulator what the corporation that will carry on the practice must hold.