Selected Commentary

Physicians usually choose to practice in professional corporations for tax and management reasons. The decision to do so is an individual one and usually follows discussions with an accountant or tax lawyer. If the conclusion is favorable, then the first step is to set up a corporate structure and register the Corporation under the Business Corporation Act. Again, such is usually done with the assistance of a lawyer or accountant.

Such a registered corporation is considered a legal "person". It can purchase property, sign contracts or leases, sue or be sued. However, for a corporation to practice medicine there are certain additional elements.

For example, there are restrictions on the acceptable names available for professional corporations. They generally must include the term "Professional Corporation" or "P. C." or otherwise reflect that they are practising medicine. Corporations should include the physician's name, or initials, or the geographical area in which they practice.

Day to day affairs of a corporation are run by "directors". Two thirds of the directors of the professional corporation must be physicians. As most professional corporations are only set up by a single physician, this usually means that he or she is the only director.

It is common in a corporate structure for there to be different classes of shares. Some shareholders have the right to vote and, hence, oversee the corporation's affairs. For Professional Corporations, such voting shares must be held by licensed physicians or by corporations controlled by licensed physicians. In addition, the corporate structure may establish shares which do not have the right to vote, but only share in any financial benefits. There is no restriction on the ownership of these shares; they can be owned by anyone.

Once a corporation has been established that meets the above criteria, it can be registered with the College. This involves a brief application process and registration fee of $100. The annual fee for professional corporation is $100 dollars. Upon registration, the College advises Medicare that the Corporation is licensed to practice medicine and which physician or physicians are practicing through that corporation.

It is sometimes asked whether such a corporation can participate in activities outside the practice of medicine. This may be restricted by "articles" under which the corporation is established. From the College's point of view, the corporation is no different from an individual physician who may persue other ventures beside medicine.

The question also arises as to the impact on liability issues of practising in a corporation. Generally, under corporate law, if an activity occurs through the corporation only the corporation can be sued. Such still would apply to professional corporations in regards to such business matters as contracts or occupier's liability. On the other hand, if the matter is related to the practice of medicine, whether as a malpractice suit or as disciplinary matter, the fact that the physician is practising through a corporation is ignored.

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Dr. Ed Schollenberg, Registrar
College of Physicians and Surgeons of New Brunswick
One Hampton Road, Suite 300
Rothesay, NB E2E 5K8 

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