Dental practice ownership rules in Quebec

Quebec handles dental corporations through the Professional Code and a regulation made under the Dental Act, and the Ordre des dentistes du Québec administers the declarations that go with it. Unlike a permit-based regime, the Quebec text is written as conditions a dentist must satisfy to practise within a société at all, and the conditions have to be met at all times. This guide reads the regulation on practising within a limited liability partnership or a joint-stock company, and the Order’s page on practising in société. It is not legal advice. Other provinces run their own regimes, and a Quebec practice should have a Quebec lawyer review the structure, in French where documents require it.

The framework

Section 1 of the regulation lets a member of the Ordre des dentistes du Québec practise within a limited liability partnership or a joint-stock company within the meaning of Chapter VI.3 of the Professional Code, on the regulation’s terms. A member who no longer satisfies a condition of the regulation or of that chapter must immediately cease to be authorized to practise within the partnership or company. The Order says the regulation has been in force since 19 June 2008. Section 187.17 of the Professional Code adds that a member practising in a joint-stock company is not personally liable for obligations of the company or of any other professional arising from fault on the part of the other professional, or that professional’s servant or mandatary, in the course of their professional activities within the company. The protection is worded around fault on the part of someone else.

The conditions that must hold at all times

Section 3 sets five conditions. The voting rights attached to the shares must be held by at least one member of the Order, or by a legal person, trust or other enterprise whose voting rights are held wholly by at least one member. In a joint-stock company, the non-voting shares may be held by a member, by a relative in direct or indirect line of descent or the spouse of a member who holds the voting shares, or by an entity wholly held by those persons. Only members may be appointed to management duties, including director, representative and officer. Share capital may not be transferred without the consent of the board of directors. The conditions must also be written into the company’s articles or the partnership contract, which must state that it is constituted to carry on professional activities.

Shareholders who lose their standing

Section 2 of the regulation on practising within a limited liability partnership or a joint-stock company deals with a member struck from the roll for more than three months, or whose professional permit is revoked. During that period the person may not hold, directly or indirectly, any share in the partnership or company, and may not be a director, officer or representative. The regulation text read for this guide sets no grace period for that situation. A buyer should therefore ask the Order, and read the seller’s shareholder register, to learn whether any holder of voting or non-voting shares has a record that could trigger section 2 before closing, and what the share register will look like on closing day.

Declarations to the Order

Before practising within a société, a member must give the Order the declaration described in section 5 on the Order’s form, a written confirmation from a competent authority that the company exists, confirmation that it is registered and has an establishment in Québec, proof of the liability coverage the regulation requires, and an irrevocable authorization allowing a person, committee, disciplinary body or tribunal referred to in section 192 of the Professional Code to obtain certain documents from any partner or shareholder. Under section 4, a member is exempt from these conditions if a representative of the société has already fulfilled them with the Order. The declaration lists shareholders, their percentage of voting and non-voting shares and their duties. Section 6 requires the declaration to be updated and provided before 31 March each year and requires prompt notice of changes that might breach the section 3 conditions. The Order confirms the annual deadline applies whether or not anything has changed, and asks for a current statement from the Registraire des entreprises.

Representatives, documents and insurance

Where more than one member practises in the société, section 7 requires a representative and a substitute, who must be members and practise in Québec within it. Section 13 lists the documents that authorization covers, including the register of securities, any shareholder agreement and voting agreement with amendments, and the register of directors. Section 9 requires liability security through the Order’s professional liability insurance fund. Section 14 of the regulation on practising within a limited liability partnership or a joint-stock company requires a notice in a newspaper having general circulation in each place where the professional has an establishment, within fifteen days of the constitution of a joint-stock company. A buyer should ask for these filings, because they show whether the structure was ever documented as the regulation expects. The Registraire des entreprises also says every registered enterprise must file an annual updating declaration, even if nothing has changed. For the wider checklist, see dental practice due diligence.

• Ask for the latest declaration filed with the Order and the confirmation the Order sends once it has processed it.
• Ask who holds every voting and non-voting share, and whether each holder fits section 3.
• Ask for the shareholder agreement and any voting agreement, which the regulation’s authorization lets disciplinary bodies obtain.
• Ask who the representative and substitute are, and whether a change of ownership requires replacing them.
• Ask the Order how the company’s next annual declaration should reflect the sale.