Professional Incorporation Frequently Asked Questions


These questions and the answers to them are intended as general guidance to the most commonly discussed issues relating to professional corporations.  The responses are not legal advice and are not intended as such.  For more detailed information on professional corporations, readers should review the relevant statutes and regulations provided in this document and consult with independent legal or financial advisors.

Index of Questions


General

Should I set up my practice as a professional corporation?
I am already practising through a corporation that does not comply with the rules for a professional corporation.  Do I need to change or convert that business corporation to a professional corporation?
What is the difference between a professional corporation and a practice management corporation?
My colleagues and I, some of whom are members of other health professions, have set up a corporation to manage our clinic.  Do we have to register our corporation with the College and obtain a certificate of authorization?
How long is the process for setting up and registering a professional corporation?

Setting up the Corporation

What is an acceptable name for my professional corporation?
Do I have to change the name of my practice so that it is the same as the name of my professional corporation?
What kinds of activities can a professional corporation undertake?
Who is permitted to be a shareholder, officer or director of a professional corporation?
Can my spouse be a shareholder, officer or director of my professional corporation (she/he is not a Naturopathic Doctor)?
Can a holding company be a shareholder of a naturopathic professional corporation?

Professional Responsibility

As a registered naturopathic doctor and part owner of a professional corporation, what is my personal responsibility for the inappropriate activities of the professional corporation?
Can the College revoke my professional corporation’s certificate of authorization?
If the College revokes my professional corporation’s certificate of authorization, how do I get it back?
How often am I supposed to provide the College with updates on changing information about my professional corporation?

The Model

Why do I have to obtain Articles of Incorporation from the Ministry of Government Services and then register the corporation with the College as well?
Why is the College charging professional corporations to register and obtain certificates of authorization?  Since the owners and shareholders of professional corporations have to be College members anyways, doesn’t it mean we are paying twice?




General


Should I set up my practice as a professional corporation?

That depends on a number of factors including the nature of your practice, with whom you practice, your personal financial circumstances and the financial circumstances of your practice. 

Generally, the College understands that much of the benefit of the professional corporation relates to the way corporations are taxed.  However, the restricted ownership structure of the professional corporation may negate some of these benefits. 

To understand the advantages and disadvantages of the professional corporation model, the College recommends that you discuss your plans with your accountant and lawyer.

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I am already practising through a corporation that does not comply with the rules for a professional corporation.  Do I need to change or convert that business corporation to a professional corporation?

If the corporation is going to practise naturopathy it must convert into a naturopathic professional corporation operating under a certificate of authorization.

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What is the difference between a professional corporation and a practice management corporation?

From the College’s perspective, the main difference is that a practice management corporation cannot practise naturopathy so does not require a certificate of authorization.  Your legal and business advisors can provide specific advice to your circumstances.

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My colleagues and I, some of whom are members of other health professions, have set up a corporation to manage our clinic.  Do we have to register our corporation with the College and obtain a certificate of authorization?
There are differences between professional corporations and those that manage practices.  A corporation that manages practice is not permitted to practice a regulated health profession.  Therefore, it is not required to register with our College or the college of other shareholders.  

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How long does it take to set up and register a professional corporation?

For the process and timing to obtain Articles of Incorporation from the Ministry of Government Services contact the Ministry directly at www.ontario.ca/ministry-government-and-consumer-services.
 
Once a member submits an application to the College for a certificate of authorization for a professional corporation, processing will begin upon receipt of all required supporting documents and fees.  In the event that any information is missing or further information is required, the College will contact the applying member as soon as possible.

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Setting up the Corporation


What is an acceptable name for my professional corporation?

The name:
  • must include the words “Professional Corporation” or “Société professionnelle”;
  • must include the surname of one or more shareholders of the corporation as the surname is set out in the College register (that can include one or more of the shareholder's initials or a combination of his or her given name and initials);
  • must indicate the health profession practiced by the shareholders as authorized in the relevant statute, that is, the Naturopathy Act, 2007 for NDs  (TIP: "naturopathy" is the term in the Act, "naturopathic" would likely be an acceptable derivation; however, "naturopathic medicine would not reflect the terminology in the Act and would therefore not be acceptable);
  • must not include any information other than that permitted under the Business Corporation Act or the regulations;
  • must not include any professional titles or designations (e.g. "Dr.", "Doctor", "Naturopathic Doctor", or "ND") (TIP:  Although other Colleges may have permitted the inclusion of Dr. in the title, the College of Naturopaths is unable to do so as "Dr" cannot be used in front of a name without "Naturopathic Doctor" appearing following the name.  As such, the lengthy name would not be permitted).
  • must not violate the provision of any other Act;
  • cannot have a number.
For detailed information, please refer to section 3.2 of the Business Corporation Act and Ontario Regulation 39/02 under the Regulated Health Professions Act, both of which are included in the College handbook on professional corporations.  It is also wise to consult with the College before setting up your corporation to ensure that the name is appropriate.

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Do I have to change the name of my practice to the same name of my professional corporation?

You can, but do not have to.  The rules for the names of professional corporations mean that your current practice name will probably not qualify as an appropriate name for your professional corporation.  It may be confusing for your patients if you change your practice name to match the name of your professional corporation.  So the rules permit professional corporations to practice under different names.  However, any material that includes your practice name (e.g., letterhead, invoices, receipts) should also include the corporation name (if the two are different).  Owners of professional corporations are required to inform the College of every practice name under which the professional corporation practices.

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What kinds of activities can a professional corporation undertake?

The Business Corporations Act provides that the only business that professional corporations are permitted to undertake is: 1) the practice of the profession; and 2) activities that are related to or ancillary to the practice of the profession.  This includes the temporary investment of surplus funds earned by the corporation. The practice of another profession (e.g. massage therapy, physiotherapy, chiropractic) is not “related to or ancillary” to the practice of naturopathy. Such practitioners need to obtain their own professional corporation with a certificate of authorization from another college.

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Who is permitted to be a shareholder, officer or director of a professional corporation?

Section 3.2 of the Business Corporations Act requires that all shares of a professional corporation be owned by one or more members of the same profession.  The same section also requires that all officers or directors of a professional corporation be shareholders of the professional corporation.  Therefore, only members of the same profession can be officers or directors.

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Can my spouse be a shareholder, officer or director of my professional corporation if she/he is not a Naturopathic Doctor?

No – shareholders in a professional corporation must be members of the same profession, and all officers and directors must be shareholders.

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Can a holding company be a shareholder of a naturopathic professional corporation?

Yes, as long as all of the shareholders of the holding company’s shares are registered naturopathic doctor’s with the College of Naturopaths of Ontario.

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Professional Responsibility


As a registered naturopathic doctor and part owner of a professional corporation, what is my personal responsibility for the activities of the professional corporation?

Section 3.4 of the Business Corporations Act makes it clear that the shareholders of professional corporations remain responsible for its activities.  This means that the activities of the corporation reflect directly upon the shareholders’ responsibility to uphold professional standards.  In addition, shareholders of professional corporations retain their liability for professional liability claims made against the corporation in respect of errors and omissions that were made or occurred while the person was a shareholder.

Section 3.4 also contains a clause that deems the act of a professional corporation to be the acts of the shareholders, employees or agents of the corporation.  That makes it clear that the professional corporation cannot be used as a means of avoiding professional responsibilities

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Can the College revoke my professional corporation’s certificate of authorization?

It can in a number of circumstances, including:
  • The corporation ceases to be eligible to hold a certificate of authorization;
  • The corporation ceases to practise the profession in respect of which the certificate of authorization was issued;
  • The corporation fails to comply with one or more of the requirements for a renewal of the certificate;
  • The corporation carries on any business that is not the practice of the profession governed by the College or activities related to or ancillary to the practice of that profession;
  • The corporation fails to notify the Registrar of a change in shareholders.
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If the College revokes my professional corporation’s certificate of authorization, how do I get it back?

The professional corporation must apply for a new certificate and meet the eligibility requirements in effect at the time, which includes submitting the required information and paying the fees.

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How often am I supposed to provide the College with updates on changing information about my professional corporation?

The College by-laws state that every member of the College shall - for every professional corporation of which the member is a shareholder - provide in writing certain information on the application and annual renewal forms for a certificate of authorization and, within 30 days of any change in the information.  This information includes:
i.    the name of the professional corporation as registered with the Ministry of Government Services;
ii.    any business names used by the professional corporation;
iii.    the name, as set out in the register, and registration number of each shareholder of the professional corporation;
iv.    the name, as set out in the register, of each officer and director of the professional corporation, and the title or office held by each officer and director;
v.    the principal practice address, telephone number, facsimile number and email address of the professional corporation;
vi.    the address and telephone number of all other locations, other than residences of clients, at which the professional services offered by the professional corporation are provided; and
vii.    a brief description of the professional activities carried out by the professional corporation.
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The Model


Why do I have to obtain Articles of Incorporation from the Ministry of Government Services and then register the corporation with the College as well?

That's the requirement under the Business Corporations Act The government chose to delegate the regulation of professional corporations to regulatory bodies as an additional duty, beyond their duties to regulate individual members.

The College understands that this process is intended to ensure that the shareholders, officers and directors of professional corporations understand their professional responsibility respecting the activities of their corporations.  In addition, regulatory agencies must retain authority over their members, and the ability to grant and revoke certificates of authorization is a means of maintaining this kind of authority.

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Why is the College charging professional corporations to register and obtain certificates of authorization?  Since the owners and shareholders of professional corporations have to be College members anyways, doesn’t it mean we are paying twice?

Although corporations, may be owned by members of the College, the professional corporation is distinct from its owners and must be treated as such.

Furthermore, the College is required to record and monitor substantial amounts of information about professional corporations.  That is different from the kind of information kept on individual members.  As a result, the College has to establish separate processes for record keeping, administration, and management of professional corporations.  This warrants a separate fee for professional corporations.


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