A N A C T
RELATING TO PROFESSIONAL SERVICE CORPORATIONS
It is enacted by the General Assembly as follows:
SECTION 1. Section 7-5.1-2, 7-5.1-3 and 7-5.1-5 of the General Laws in Chapter 7-5.1 entitled "Professional Service Corporations" are hereby amended to read as follows:
7-5.1-2. Definitions -- As used in this chapter:
(1) "Professional services" means the rendering of personal services by a person authorized to practice as one of the following professions as defined:
(iii) Attorneys at law;
(v) Professional engineers;
(vii) Certified public accountants and licensed public accountants;
(xi) Registered nurses;
(xiii) Physical therapists;
(xiv) Landscape architects;
(xv) Land surveyors;
. ; or
(xvii) Physician assistants.
(2) "Regulatory agency" means:
(i) The division of professional regulation when referring to physicians
and surgeons, dentists, osteopaths, chiropractors, podiatrists, registered nurses, optometrists, physical therapists, or opticians ; or physician assistants;
(ii) The Supreme Court when referring to attorneys at law;
(iii) The board of registration of professional engineers and land surveyors when referring to professional engineers and/or land surveyors;
(iv) The board of examination and registration of architects when referring to architects;
(v) The board of accountancy when referring to certified public accountants, and licensed public accountants;
(vi) The board of veterinarians when referring to veterinarians;
(vii) The board of examiners of landscape architects when referring to landscape architects;
(3) "Authorized to practice" means duly licensed, certified, or registered by the proper regulatory agency.
7-5.1-3. Authority to practice -- (a) Except as subsequently specifically provided in subsection (b), any corporation organized under this chapter may engage in rendering professional services of not more than one of the professions enumerated in section 7-5.1-2, provided that every officer, director, and shareholder of the corporation is an individual authorized to practice the profession and is employed by the corporation in that practice. No individual may be an officer, shareholder, director, or employee of any other corporation engaged in the practice of the same profession without the prior written approval of the applicable regulatory agency or agencies.
(b) Nothing in these provisions is to be construed to prohibit a corporation organized under this chapter from engaging in the practice of the following combination of professions:
and surgeons, dentists, registered nurses, podiatrists, and optometrists, physician assistants; and
(2) Landscape architects, professional engineers, architects, and land surveyors; and
(3) Certified public accountants and licensed public accountants.
7-5.1-5. Eligibility of personnel -- Transfer of stock -- (a) If any shareholder becomes ineligible, he or she shall transfer his or her shares to an eligible person, or offer them to the corporation for redemption at their fair market value. If the articles of incorporation or the by-laws of the corporation restrict transfer of its shares, and transfer of the shares to an eligible person is prevented, the corporation shall redeem the shares of the ineligible shareholder, and 0 compensate the ineligible shareholder in full for the fair market value of his or her shares determined as of the date that the ineligibility occurred. Nothing contained in these provisions is to be interpreted to prevent a shareholder and the corporation from making a binding agreement as to a method for determining the fair market value or for determining what constitutes the fair market value of his or her shares. In the event the corporation and an ineligible shareholder cannot agree as to the fair market value, the regulatory agency excluding the division of professional regulation shall, upon application by either party, appoint a board of not less than three (3) qualified persons engaged in performing similar professional services to determine the fair market value of the shares, and the decision of the board is final and binding upon the parties. The division of professional regulation shall, upon application by either party, appoint a neutral arbitrator with experience in business valuation whose fees will be paid by the corporation petitioner to determine the fair market value of the shares, and the decision of the arbitrator is final and binding upon the parties. The redemption of its shares by a professional service corporation shall not be effected at a time or in a manner so as to impair or prejudice the rights or remedies of any creditor of the corporation. As used in this chapter, "ineligible shareholder" includes a shareholder electing to retire or withdraw from active employment in the corporation. Nothing contained in these provisions is to be interpreted to prohibit the temporary exercise of incidence of ownership of stock in any corporation by persons or corporate fiduciaries not authorized to practice, solely for purposes of administering estates of shareholders deceased or under legal disability to transfer their shares. For purposes of this section, "temporary incidence of ownership" means any period of time not exceeding two (2) years; and "administering estates of shareholders" shall include, but not be limited to, contracting with licensed professionals to operate the practice upon the death of the person licensed to practice .
(b) Every shareholder of a corporation organized under this chapter who is entitled to vote at a meeting of the shareholders or to express consent without a meeting may authorize any other shareholder of the corporation to act for him or her by proxy executed, in writing, by the shareholder or by his or her duly authorized attorney in fact.
SECTION 2. This act shall take effect upon passage.