What happens to a professional corporation (a “PC”) when the doctor is no longer in the house?
Your client is a doctor who has been practising through a PC for a few years. The doctor now wants to retire. What do you need to do with the PC? The Business Corporations Act (Ontario) (the “OBCA”) does not impose any special requirements on a PC that does not wish to remain a PC. In this respect, it is useful to recall that a PC is really no different than any other corporation except that it meets certain conditions in the OBCA and it has a certificate from the relevant College, both of which permit it to practice a profession. Take away the certificate, and the only significance is that the corporation can’t carry on the practice anymore.
The former PC is now just an ordinary corporation under the OBCA, but it is likely that more remains to be done. The articles of a PC should contain restrictions on the business it can carry on or the powers it may exercise (section 5 of the articles) because the restrictions were required by the OBCA for the corporation to qualify as a PC. The OBCA does not require that the restrictions be removed now that the corporation will not continue as a PC, but they could be problematic for an “ordinary” corporation (anything done in violation of the restrictions could be “ultra vires“). In addition, the articles should contain restrictions on who can be a shareholder of the corporation (section 8). Again, this is probably not desirable. Accordingly, it would be prudent to amend the articles of a former PC to remove the restrictions on its powers and shareholders.
It would also be a good idea to contact the relevant College to let it know that the PC won’t be renewing its certificate of authorization. The College might have requirements that aren’t in the OBCA. In any case, it will be a good idea to remove oneself from the College’s mailing list.
