Professional corporation (PC)

A professional corporation, or PC, lets a regulated professional carry on a practice through a company. You meet it when a regulated practice is sold, because the buyer may be buying the shares of a PC rather than assets. The rules come from each province’s or territory’s own law, and in the Northwest Territories the profession’s governing body issues the permit.

How the rules read

Ontario’s Business Corporations Act defines a professional corporation as one that holds a valid certificate of authorization or other authorizing document issued under an Act governing a profession. Section 3.2(2) sets conditions, subject to subsection (6), which allows regulations with special rules for health profession corporations. One is that all issued and outstanding shares are legally and beneficially owned, directly or indirectly, by one or more members of the same profession. In the Northwest Territories, the Professional Corporations Act requires a valid permit and, subject to stated exceptions, limits voting shares to members of the designated profession. Other jurisdictions run their own regimes.

What to check or ask

• Whether the buyer belongs to the profession that the province’s rules require.
• Whether the governing body must issue, renew or reissue the certificate or permit after the sale. The College of Dental Surgeons of Alberta, for one, administers dental professional corporations there.
• What the articles and shareholder agreement say about transferring shares.

For a retirement sale, see how to transfer a professional corporation when you retire. The body to ask about approval may be a regulatory college.