How to buy a dental practice in Ontario: licences, ownership rules and what transfers

Buying a dental practice in Ontario is partly a corporate transaction and partly a dealing with the profession’s regulator. The Royal College of Dental Surgeons of Ontario (RCDSO) issues the certificates of authorization that dental health profession corporations need, and it states that the rules governing those corporations are set out in the Regulated Health Professions Act, 1991 (RHPA) and the Business Corporations Act. Whether the deal is a purchase of shares in an existing corporation, a purchase of assets into your own corporation or an amalgamation, ask the College early which of its steps apply to that structure. This guide covers who may own the practice, what does not carry across on a closing and what to ask the seller for. For the national picture, read buying a dental practice in Canada. This guide covers Ontario only.

What the RCDSO and the RHPA make a dental corporation

The RCDSO describes a Health Profession Corporation as a corporation incorporated under the Business Corporations Act that holds a valid certificate of authorization issued under the RHPA or the Health Professions Procedural Code. The RCDSO also states that the rules governing health profession corporations are provincial and are set out under the Regulated Health Professions Act, 1991 and the Business Corporations Act. So the certificate, not incorporation alone, is what makes the corporation a health profession corporation. The RCDSO also says a certificate of authorization cannot be obtained for a federally incorporated corporation. If the practice or the buying corporation is outside Ontario, ask that province’s dental regulator what applies.

Who may be a director, officer or shareholder

The RCDSO requires each director and officer of the corporation to be a dentist and a College member, and to sign an undertaking in Form C. Each dentist shareholder must be a College member and sign an undertaking in Form D. The RCDSO says the undertakings must be signed, dated and witnessed. It also says who can hold non-voting shares: a member of the College, a family member of a voting dentist shareholder (spouse, child or parent), or a person holding in trust for one or more minor children of a voting dentist shareholder as beneficiaries. If you are not yet a College member, or someone else expects to hold shares alongside you, ask the College whether the structure is permitted before you sign.

What a closing does not carry across

The RCDSO says that on an amalgamation the predecessor corporations cease to exist and a new certificate of authorization is required. It adds that the application can only be submitted by the purchaser or new director after the amalgamation takes place, and that a cancellation notice of the predecessor certificates may be submitted with it. If your deal involves amalgamating the seller’s corporation with yours, plan the closing timeline around that sequence rather than assuming the seller’s certificate carries across. In any structure, ask whether the seller’s certificate is being kept, replaced or surrendered, and get the College’s answer in writing.

Notice to the College and the August renewal

The RCDSO states that you must notify the College when your corporation’s shareholders change, and it publishes a Notice of Change of Shareholders form and declaration for that purpose. It also states that all certificates of authorization expire on August 31 of each year, regardless of the initial date of issuance, and must be renewed annually; a certificate not renewed before August 31 will be revoked effective September 1. A closing shortly before that date should not leave renewal as an afterthought. Ask who files the renewal, who pays for it, and whether it will reflect the shareholders and directors as they stand after closing. Separately, the Canada Revenue Agency says it is important to contact your tax services office whenever a member of a corporation’s board of directors changes.

Holding out before the certificate is in place

Section 34.1(1) of the RHPA says no corporation shall hold itself out as a health profession corporation unless it holds a valid certificate of authorization. Section 34.1(2) adds that no person shall hold himself or herself out as a shareholder, officer, director, agent or employee of a health profession corporation unless the corporation holds a valid certificate. The practical question for a buyer is timing. If a new sign, website or letterhead would present a corporation as a health profession corporation, confirm that its certificate is in place first.

Patient records when the practice changes hands

The Information and Privacy Commissioner of Ontario says a change in a health information custodian’s practice, if not properly managed, may adversely affect patients’ privacy and access rights under the Personal Health Information Protection Act, 2004 (PHIPA). It says a custodian’s obligations to protect records and to let individuals exercise their access and correction rights do not end until a legally authorized successor has custody and control of the records. The succession plan it recommends identifies a person responsible during the transfer for, among other things, responding to patients’ access requests and notifying patients of the transfer. Ask the seller who the custodian of the records is today, who will be after closing, and how patients will be told. You can also browse healthcare businesses for sale on Deavo.

• The corporation’s current certificate of authorization and its most recent annual renewal
• Copies of the Form C and Form D undertakings and the list of current directors, officers and shareholders
• Any Notice of Change of Shareholders filed with the RCDSO in recent years
• The seller’s written plan for transferring patient records and for who acts as custodian after closing
• The deal structure in writing, so you can confirm with the College whether a new certificate is needed