Dental practice ownership rules in Newfoundland and Labrador

The Newfoundland and Labrador Dental Board publishes a short Dental Incorporations Advisory that sets out the basic principles of professional incorporation under the Dental Act and the Dental Regulations. It is the plainest statement of who may own a dental practice company in the province, and it is written for the people who will sign the application, not for the people who will buy the business. This guide works through the advisory and then through the questions it leaves for a buyer or seller. It is not legal advice, and the advisory itself tells applicants to refer to the Dental Act and the Professional Dental Corporations Regulations for further details. Other provinces run their own rules.

Licence first, then practice

The advisory says a dental practitioner cannot provide services by or through a corporation unless it is a professional dental corporation registered and licensed with the Board. It says the corporation must be incorporated under the Corporations Act of Newfoundland, and that its name must indicate that it is engaged in the practice of dentistry and may not carry information beyond what the regulations permit or require. The Board’s website lists the Professional Dental Corporation Regulations beside the Dental Act and the Dental Regulations among the legislation it publishes. The Corporations Act itself lets the Lieutenant-Governor in Council appoint a Registrar of Companies, so the corporate filing and the Board’s licence are two separate steps with two separate offices.

Who may hold voting shares and sit as a director

The advisory sets a stricter test than a simple majority. All directors of the corporation must be dental practitioners individually registered and licensed under the Dental Act. All holders and beneficial owners of voting shares must also be individually registered and licensed under the Act. Practitioners who work through the corporation must still be individually registered and licensed. The advisory adds that there cannot be any restriction on the right of each practitioner who is a shareholder to vote as they wish, nor on the powers of the directors to manage the business and affairs of the corporation in relation to the practice of dentistry. For a buyer, that points to a shareholder agreement as the document to read closely.

Non-voting shares and the Board’s inquiry

Non-voting shares are treated differently. The advisory says they may only be owned by a natural person. It also says that where the beneficial owner of non-voting shares is not a dental practitioner providing services through the corporation, or is not in an apparent familial or personal, meaning non-commercial, relationship with such a practitioner, the Board may inquire as to whether there is a commercial reason for the shareholding. The advisory does not say the Board will refuse such an arrangement. It says the Board may ask. A seller thinking of keeping a family member on the share register, or a buyer thinking of bringing in a passive investor, should ask the Board how it applies that inquiry before the structure is fixed.

Applications, renewals and changes

An application form for licensure as a professional dental corporation must be completed and submitted to the Board. Applications, renewal applications and notices of change must be sworn to by each dental practitioner who is a director or shareholder. Renewal is annual. Any change from the last filed application, renewal application or notice of change must be disclosed to the Board by filing a notice of change within fifteen days of the change. The advisory does not describe an approval step before a change takes effect, so ask the Board whether a sale of shares needs anything before closing or only a notice after it. The advisory also says a professional dental corporation must limit its activities to providing dental services, and that fees are set by the Board and may change.

Personal responsibility stays personal

The advisory says practitioners remain personally liable for dental negligence, whether they practise in their personal capacity or through a professional dental corporation. They remain accountable to the Board for their conduct, and they have the same legal and ethical responsibilities to their patients either way. A buyer who is a dentist is therefore not buying distance from the clinical risk. Ask what professional liability protection the corporation and each practitioner carry, and what happens to coverage for past work when ownership changes. Insurance terms are a matter for the insurer and the Board, not for this guide.

Patient records

The Board lists the Personal Health Information Act among the legislation it publishes. That Act defines a health care professional, including a corporation, by reference to licensing or registration under several named Acts, and the Dental Act is among them. Section 15(1) requires a custodian to take steps that are reasonable in the circumstances to ensure that records containing personal health information in its custody or control are retained, transferred and disposed of in a secure manner. A practice sale moves records from one party to another, so the buyer and the seller should each ask who the custodian is before closing, who is the custodian afterward, and how the transfer will be documented. A dental lawyer can say how the Act applies to a particular transaction. See also the dental practice due diligence guide for what else to request.

• Ask the Board for the current application and notice-of-change forms before drafting the purchase agreement.
• Ask who holds every voting share beneficially, and whether any agreement limits a practitioner’s right to vote.
• Ask whether any non-voting shareholder falls outside the advisory’s family or personal relationship wording.
• Ask whether the Board expects anything before closing, or only a notice of change afterward.
• Ask who will be the custodian of patient records after closing, and how that is recorded.