Physicians and dentists in Ontario are permitted to incorporate a professional corporation through which they may practice their profession. There are significant benefits associated with incorporating, and most professionals choose to take advantage of these benefits by establishing a medicine professional corporation (MPC) or a dentistry professional corporation (DPC).
MPCs and DPCs are governed by the Regulated Health Professions Act (RHPA) as well as the College of Physicians and Surgeons (CPSO), in the case of MPCs, and the Royal College of Dental Surgeons of Ontario (RCDSO), in the case of DPCs. Incorporating an MPC or a DPC is a complex process that requires compliance with legislation as well as the regulations set by the CPSO or the RCDSO. We routinely assist physicians and dentists to establish a professional corporation and we encourage that they engage a lawyer and accountant to assist with the determination and establishment of the proper corporate structure in order to achieve long term goals.
Incorporation
Medicine professional corporations and dentistry professional
corporations must be incorporated as a provincial corporation under
the Business Corporations Act (Ontario) (OBCA). As such, it is
necessary to first file articles of incorporation prior to applying
for a Certificate of Authorization from the CPSO or the RCDSO.
There are certain provisions that must be included in the articles,
including a provision indicating that the corporation may not carry
on a business other than the practice of the profession, and
activities related to or ancillary to the practice of that
profession. The corporation is permitted to temporarily invest
surplus funds of the corporation, but there are restrictions on the
types of investments the corporation is permitted to pursue, to
ensure the corporation does not carry on a business that is not the
profession.
The type and number of shares being issued is
determined by the physician's or dentist's accountant and
lawyer. It is important to determine the most appropriate
corporate structure, considering the unique circumstances of the
physician or dentist, in order to achieve long term goals. There
are certain requirements and restrictions attached to the share
capital of the professional corporation. The rules surrounding the
shares of an MPC and a DPC require the voting shares of the
professional corporation to be held by a physician or dentist who
is a member of the college governing their profession. Non-voting
shares are permitted to be held by certain family members of the
physician or dentist (the spouse, children and parents of the
member physician or dentist). The definition of "spouse"
also extends to include a common-law spouse of the physician or
dentist. If the physician or dentist has minor children, the shares
allotted to the minor children must be held in trust for each minor
child, usually by the physician or dentist, until such child is
eighteen years old. Once the child turns eighteen, the shares are
transferred to the child directly.ertificate of Authorization
Once the professional corporation has been incorporated as an
Ontario corporation, it is necessary to obtain a Certificate of
Authorization from the CPSO or the RCDSO in order to be permitted
to practice the profession through the professional corporation. In
order to obtain a Certificate of Authorization from either college,
the physician or dentist must complete the application from their
respective college's website, as well as pay the corresponding
application fee. In addition to the completed application form, the
college governing the profession requires specific documentation to
be submitted along with the application including a copy of the
articles of incorporation and a Corporation Profile Report. If the
college determines that the applicant is eligible for a Certificate
of Authorization, it will issue the certificate. Once the
certificate is issued, the certificate must be renewed annually.
For dentists, the certificate expires on August 31 of each year,
regardless of the date the certificate was issued, and must be
renewed prior to that date. For physicians, the certificate expires
one year from the date of issue and the renewal process must be
completed prior to the anniversary date that the certificate was
issued.
It is possible for the college to revoke a Certificate of Authorization under various circumstances. For instance, if the professional corporation ceases to practice medicine or dentistry, as the case may be, or if it carries on business that is not the practice of the profession or activities related to or ancillary to the practice of the profession, the college may revoke the certificate and the physician or dentist would no longer be permitted to practice through the professional corporation.
Directors and Officers
The OBCA is very clear in imposing specific requirements on the professional corporation, including restrictions with respect to persons permitted to act as the directors and officers of the professional corporation. The directors and officers must be shareholders of the corporation who are members of the college governing the profession practiced through the professional corporation.
Naming the Professional Corporation
Under the RHPA there are certain requirements and restrictions with which MPCs and DPCs must comply. One of these restrictions pertains to the permitted name of the professional corporation. Pursuant to the RHPA, the name of the MPC or DPC must include the physician's or dentist's surname. The name may also contain the physician's or dentist's given names or initials, as well as "Dr.". If the MPC or DPC is to have more than one physician or dentist member it is only necessary to include one of the physician's or dentist's names in the name of the professional corporation. The name of the professional corporation must also contain the words "Medicine Professional Corporation" in the case of an MPC and "Dentistry Professional Corporation" in the case of a DPC.
Liability
It is a common misconception that all liability of the professional corporation (including professional liability of the physician or dentist) is limited by virtue of practicing through the professional corporation. However, practicing through a professional corporation does not protect the shareholders from professional liability. The actions of the professional corporation are deemed to be the actions of the shareholders . The dentist or physician who chooses to practice through a professional corporation continues to remain liable for any professional liability claims made against the corporation.
Originally published Siskinds, May 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
