What share restrictions apply when buying a professional practice?

The share rules that matter in a practice purchase are set profession by profession, and each regulator states them in its own way. Before pricing the deal, a buyer needs to know who may hold shares in the corporation, who may serve as an officer or director, and whether a holding company is allowed. The three regulators below show how far the answers can differ, and the guide to buying a professional practice covers the wider deal.

Some regulators limit shareholders to their own members

The College of Physiotherapists of Ontario says only members of the same profession can be shareholders, officers or directors of a professional corporation. The College of Opticians of Ontario says all officers, directors and shareholders of an optician’s professional corporation must be opticians who are registrants of the College, and that the corporation cannot carry on business other than the practice of opticianry. For a buyer, that makes registration a condition of holding the shares, and of serving as an officer or director.

Others allow holding companies, with conditions

CPA British Columbia says members may use holding companies to hold their shares in an incorporated public practice firm, subject to certain applicable requirements under section 39 of the Chartered Professional Accountants Act. An applicant for a professional accounting corporation permit must be a member in good standing with a direct or indirect proprietary interest in the corporation’s shares, and the permit is not a licence to practise public accounting, which is applied for separately.

Practice management corporations follow looser rules

The College of Physiotherapists says ownership rules for a practice management corporation are more relaxed: members of different health professions, non-health professionals and even family members can be shareholders, officers or directors. Such a corporation is not permitted to practise a regulated health profession, and the College describes it leasing clinic space, buying equipment or paying administrative employees.

What to ask the regulator

• Who may hold shares, and who may be an officer or director, in the corporation being bought?
• Is a holding company allowed, and on what conditions?
• Does the corporation need its own certificate or permit, and is your own registration in place by closing?