1997 Minnesota Statutes

CHAPTER 319A. Professional corporations

     319A.01 Professional corporations act; citation.  

    Sections 319A.01 to 319A.22 may be cited as "The Minnesota 
 professional corporations act."  

    HIST: 1973 c 40 s 1 

     319A.02 Definitions. 

    Subdivision 1.  For the purposes of sections 319A.01 to 
 319A.22 the terms defined in this section have the meanings 
 given them. 

    Subd. 2.  "Professional service" means personal service 
 rendered by a professional pursuant to a license or certificate 
 issued by the state of Minnesota to practice medicine and 
 surgery pursuant to sections 147.01 to 147.22, chiropractic 
 pursuant to sections 148.01 to 148.105, registered nursing 
 pursuant to sections 148.171 to 148.285, optometry pursuant to 
 sections 148.52 to 148.62, psychology pursuant to sections 
 148.88 to 148.98, dentistry pursuant to sections 150A.01 to 
 150A.12, pharmacy pursuant to sections 151.01 to 151.40, 
 podiatric medicine pursuant to Laws 1987, chapter 108, sections 
 1 to 16, veterinary medicine pursuant to sections 156.001 to 
 156.14, architecture, engineering, surveying, landscape 
 architecture, geoscience, and certified interior design pursuant 
 to sections 326.02 to 326.15, accountancy pursuant to sections 
 326.17 to 326.229, or law pursuant to sections 481.01 to 481.17, 
 or pursuant to a license or certificate issued by another state 
 pursuant to similar laws. 

    Subd. 2a.    Professional health service.  (a) 
 Individuals who furnish professional services pursuant to a 
 license or certificate issued by the state of Minnesota to 
 practice medicine pursuant to sections 147.01 to 147.22, 
 chiropractic pursuant to sections 148.01 to 148.106, registered 
 nursing pursuant to sections 148.171 to 148.285, optometry 
 pursuant to sections 148.52 to 148.62, psychology pursuant to 
 sections 148.88 to 148.98, dentistry pursuant to sections 
 150A.01 to 150A.12, pharmacy pursuant to sections 151.01 to 
 151.40, or podiatric medicine pursuant to sections 153.01 to 
 153.26 are specifically authorized to practice any of these 
 categories of services in combination if the individuals are 
 organized under this chapter. 

    (b) This authorization does not authorize an individual to 
 practice any profession, or furnish a professional service, for 
 which the individual is not licensed, but otherwise applies 
 regardless of any contrary provision of a licensing statute or 
 rules adopted pursuant to that statute, related to practicing 
 and organizing in combination with other health services 
 professionals. 

    (c) A professional corporation may not adopt, implement, or 
 follow a policy, procedure, or practice that would give a board 
 grounds for disciplinary action against a professional who 
 follows, agrees to, or acquiesces in the policy, procedure, or 
 practice. 

    (d) This subdivision expires on December 31, 1998. 

    Subd. 3.  "Professional" means a natural person who is 
 licensed by the laws of the state of Minnesota or similar laws 
 of another state to render professional service. 

    Subd. 4.  "Professional corporation" means a corporation 
 organized under sections 319A.01 to 319A.22 for the purpose of 
 rendering professional service. 

    Subd. 5.  "Foreign professional corporation" means a 
 corporation, limited liability company, or limited liability 
 partnership organized under laws other than the laws of this 
 state for a purpose for which a professional corporation may be 
 organized hereunder. 

    Subd. 6.  "Board" means an agency of the state of Minnesota 
 which has jurisdiction to grant a license to render professional 
 service of a type which a professional corporation is authorized 
 to render.  In the case of a professional corporation formed to 
 practice law, "board" means the board of professional 
 responsibility. 

    Subd. 7.  "Corporation" as used in this chapter includes a 
 limited liability company organized under chapter 322B and a 
 limited liability partnership.  With respect to a limited 
 liability company, references in this chapter to articles of 
 incorporation, bylaws, directors, officers, shareholders and 
 shares of stock shall refer to articles of organization, 
 operating agreement, governors, managers, members and membership 
 interests, respectively.  With respect to a limited liability 
 partnership and except as otherwise provided in section 319A.08, 
 references in this chapter to articles of incorporation and 
 bylaws refer to partnership agreement; references to directors, 
 officers, and shareholders refer to partners; and references to 
 shares of stock refer to partnership interests. 

    HIST: 1973 c 40 s 2; 1974 c 504 s 1; 1977 c 256 s 3; 1978 c 
 549 s 1; 1978 c 674 s 34; 1979 c 21 s 1; 1986 c 444; 1987 c 108 
 s 16; 1987 c 345 s 12; 1989 c 194 s 21; 1991 c 199 art 2 s 1; 
 1992 c 507 s 2; 1992 c 517 art 1 s 21,22; 1992 c 542 s 4; 1993 c 
 137 s 17; 1994 c 539 s 1,2; 1995 c 58 s 1; 1995 c 206 s 3; 1997 
 c 76 s 1 

*   NOTE:  This section is repealed by Laws 1997, chapter 22, 
*article 2, section 9, effective January 1, 1999.  Laws 1997, 
*chapter 22, article 2, section 10.

     319A.03 Formation. 

    One or more natural professional persons may form a 
 corporation pursuant to chapter 302A or 317A, organize a limited 
 liability company pursuant to chapter 322B, or register a 
 limited liability partnership according to chapter 323 for the 
 purposes hereinafter set forth.  In addition to providing the 
 information required by the chapter under which the entity is 
 formed, organized, or registered, the following information is 
 also required in the forming, organizing, or registration 
 document: 

    (1) the name of the corporation, limited liability company, 
 or limited liability partnership, which must comply with section 
 319A.07; 

    (2) the purpose of the corporation, limited liability 
 company, or limited liability partnership, which must comply 
 with section 319A.04; 

    (3) that the shareholders of the corporation, members of 
 the limited liability company, or partners in a limited 
 liability partnership may only be professional persons licensed 
 to render the kind of professional services that fit the purpose 
 of the corporation, limited liability company, or limited 
 liability partnership; and 

    (4) that the officers and directors of a corporation, the 
 governors and managers of a limited liability company, and the 
 partners of a limited liability partnership, other than the 
 secretary and treasurer and their assistants, must be 
 professional persons licensed to render the kind of professional 
 services that fit the purpose of the corporation, limited 
 liability company, or limited liability partnership. 

    HIST: 1973 c 40 s 3; 1981 c 270 s 132; 1987 c 384 art 2 s 78; 
 1989 c 304 s 137; 1992 c 517 art 1 s 23; 1995 c 128 art 3 s 6 

     319A.04 Purpose for which incorporated.  

    A professional corporation may be organized pursuant to 
 sections 319A.01 to 319A.22 for the purpose of rendering one 
 specific kind of professional service and services ancillary 
 thereto, or two or more kinds of professional services which are 
 specifically authorized to be practiced in combination under the 
 licensing laws of each of the professional services to be 
 practiced by a licensed individual or a partnership of licensed 
 individuals and services ancillary thereto; provided, however, 
 that a professional corporation may own real and personal 
 property necessary or appropriate for rendering professional 
 service and may invest its funds in real estate, mortgages, 
 stocks, bonds, or any other type of investment.  

    HIST: 1973 c 40 s 4 

     319A.05 Applicability of acts. 

    A corporation incorporating, a limited liability company 
 organizing, or a limited liability partnership registering, 
 under sections 319A.01 to 319A.22 and chapter 302A, 317A, 322B, 
 or 323 shall proceed in the manner specified in chapter 302A, 
 317A, 322B, or 323.  After incorporation, organization, or 
 registration, a professional corporation, limited liability 
 company, or limited liability partnership shall enjoy the powers 
 and privileges and shall be subject to the duties and 
 liabilities of other corporations, limited liability companies, 
 or limited liability partnerships, respectively organized under 
 chapter 302A, 317A, 322B, or 323, except insofar as the same may 
 be limited or enlarged by sections 319A.01 to 319A.22.  If any 
 provision of sections 319A.01 to 319A.22 conflicts with the 
 provisions of chapter 302A, 317A, 322B, or 323, sections 319A.01 
 to 319A.22 take precedence. 

    HIST: 1973 c 40 s 5; 1981 c 270 s 133; 1987 c 384 art 2 s 79; 
 1989 c 304 s 137; 1992 c 517 art 1 s 24; 1994 c 539 s 3 

     319A.06 Rendering of professional services. 

    Subdivision 1.  A professional corporation may provide 
 professional service in another state if it complies with all 
 applicable laws of that state regulating the rendering of 
 professional service therein.  

    Subd. 2.  A foreign professional corporation may provide 
 professional service in this state only upon compliance with 
 sections 303.01 to 303.24, 322B.90 to 322B.955, or 323.44 to 
 323.49, regulating foreign corporations, foreign limited 
 liability companies, and foreign limited liability partnerships, 
 respectively.  The secretary of state shall promulgate forms for 
 such purpose.  The provisions of sections 319A.01 to 319A.22 
 relating to the rendering of professional service by a 
 professional corporation apply to a foreign professional 
 corporation.  Sections 319A.01 to 319A.22 shall not be construed 
 to prohibit the rendering of professional service in this state 
 by a person who is a shareholder, director, officer, employee, 
 or agent of a foreign professional corporation, if the person 
 could lawfully render professional service in this state in the 
 absence of any relationship to the foreign professional 
 corporation, irrespective of whether the foreign professional 
 corporation is authorized to provide professional service in 
 this state. 

    HIST: 1973 c 40 s 6; 1992 c 517 art 1 s 25; 1994 c 539 s 4; 
 1995 c 128 art 3 s 7 

     319A.07 Corporate name. 

    The corporate name of any corporation organized under 
 sections 319A.01 to 319A.22 shall not be used to imply 
 superiority and, in the case of a corporation, other than a 
 limited liability company, shall end with the word "Chartered," 
 or the word "Limited," or the abbreviation "Ltd.," or the words 
 "Professional Association," or the abbreviation "P.A."  The name 
 of any limited liability company organized under sections 
 319A.01 to 319A.22 and chapter 322B shall end with the words 
 "Professional Limited Liability Company," or the abbreviation 
 "P.L.C.," or the words "Limited Liability Company," or the 
 abbreviation "LLC."  The name of any limited liability 
 partnership organized under sections 319A.01 to 319A.22 and 
 chapter 323 shall end with the words "Professional Limited 
 Liability Partnership," or the abbreviation "P.L.L.P.," or the 
 words "Limited Liability Partnership," or the abbreviation "LLP."

    HIST: 1973 c 40 s 7; 1992 c 517 art 1 s 26; 1994 c 539 s 5; 
 1995 c 58 s 2 

     319A.08 Professional regulation. 

    No professional corporation or foreign professional 
 corporation shall begin to render professional service in the 
 state of Minnesota until it has filed with each board having 
 jurisdiction of professional service of a type which the 
 corporation is authorized to render a copy of its articles of 
 incorporation, except that a limited liability company shall 
 instead file a copy of its articles of organization and a 
 limited liability partnership shall instead file a copy of its 
 registration with the secretary of state pursuant to section 
 323.44.  Except as provided in this section, nothing in sections 
 319A.01 to 319A.22 shall restrict or limit in any manner the 
 authority or duty of a board with respect to persons rendering 
 professional service within the jurisdiction of the board, even 
 if the person is a shareholder, director, officer, employee or 
 agent of a professional corporation or foreign professional 
 corporation and renders professional service through such 
 corporation.  

    HIST: 1973 c 40 s 8; 1995 c 58 s 3 

     319A.09 How services rendered.  

    A professional corporation or foreign professional 
 corporation may render professional service only through natural 
 persons who are licensed or otherwise authorized by the state of 
 Minnesota to render professional service of a kind which the 
 corporation is authorized to render and may so render 
 professional service notwithstanding any provision of law to the 
 contrary.  Such persons need not be shareholders of the 
 corporation but may be employed by the corporation to render 
 professional service.  

    HIST: 1973 c 40 s 9 

     319A.10 Relationship to person served.  

    Sections 319A.01 to 319A.22 do not alter any law applicable 
 to the relationship between a person furnishing professional 
 service and a person receiving the professional service, 
 including liability arising out of the professional service and 
 the confidential relationship and privilege of communications 
 between the person rendering professional service and the person 
 receiving the professional service; provided, however, that no 
 person is personally liable in tort for any act not personally 
 participated in.  No director, officer, or employee of a 
 professional corporation or foreign professional corporation is 
 personally liable in contract for any contract executed on 
 behalf of the corporation within the limits of the executor's 
 actual authority.  

    HIST: 1973 c 40 s 10; 1986 c 444 

     319A.11 To whom shares may be issued. 

    Subdivision 1.    Generally.  (a) A professional 
 corporation may issue its stock only to and admit as a member 
 only natural persons licensed to render a kind of professional 
 service which the corporation is authorized to render or 
 partnerships or professional corporations rendering the same 
 kind of professional service.  A person, partnership or 
 professional corporation who becomes a shareholder or member of 
 any such corporation may transfer its shares of stock or its 
 membership only to a natural person, partnership or professional 
 corporation to whom the corporation could have issued the shares 
 of stock or membership.  No proxy to vote any share in a 
 professional corporation or membership may be given to a person 
 who is not so licensed, nor may any voting trust be established 
 with respect to the shares of the professional corporation 
 unless all the voting trustees are natural persons so licensed. 

    (b) Notwithstanding paragraph (a), a professional 
 corporation may issue its stock under this section to an 
 employee stock ownership plan, as defined in section 4975(e)(7) 
 of the Internal Revenue Code of 1986, as amended, if 

    (1) the voting trustees of the plan are natural persons 
 licensed to render a kind of professional service which the 
 corporation is authorized to render, and 

    (2) the shares are not directly issued to a person or 
 entity not licensed to render a kind of advice which the 
 corporation is authorized to render. 

    Subd. 2.    Nonapplication of securities regulation 
 provisions.  Chapter 80A shall not be applicable to nor govern 
 any transaction relating to any shares of a professional 
 corporation. 

    HIST: 1973 c 40 s 11; 1976 c 239 s 91; 1981 c 296 s 1; 1993 c 
 375 art 17 s 12 

     319A.12 Changes in corporate status. 

    Subdivision 1.  A professional corporation or foreign 
 professional corporation shall report to the board having 
 jurisdiction of the professional service which the corporation 
 is authorized to render the death of any of its shareholders or 
 members within 30 days of such death.  Within 90 days following 
 the date of death of a shareholder of a professional corporation 
 or the loss of a license to render professional service, all of 
 the shares of stock owned by such shareholder or the member's 
 membership shall be transferred to and acquired by the 
 professional corporation or persons qualified to own such shares 
 of stock or membership.  If the articles of incorporation, 
 bylaws, or a written agreement of the shareholders of a 
 professional corporation fail to state a price or a method of 
 determining a price at which the corporation or its shareholders 
 may purchase the shares of stock or membership of a deceased 
 shareholder or a shareholder no longer qualified to own shares 
 of stock in the corporation or membership, then the price for 
 the shares of stock or membership shall be the fair market value 
 as determined by the board of directors, or in the case of a 
 limited liability partnership, the partners, unless the 
 partnership agreement delegates the determination to one or more 
 managing partners, but not less than the book value as of the 
 end of the month immediately preceding the death or 
 disqualification of the shareholder or member.  Book value shall 
 be determined from the books and records of the corporation in 
 accordance with its regular method of accounting.  This 
 subdivision does not change the effect of sections 323.28 and 
 323.30, under which the dissociation of any partner from a 
 limited liability partnership causes the dissolution of that 
 partnership. 

    Subd. 1a.  A professional corporation may at any time by 
 amendment to its articles of incorporation relinquish the powers 
 and privileges conferred upon it by this chapter and elect to be 
 governed thereafter solely by the provisions of chapter 302A, 
 317A, 322B, or 323, as the case may be.  Notwithstanding any 
 provision of this chapter, the representative of a deceased or 
 incompetent shareholder of a professional corporation shall have 
 authority to vote the deceased or incompetent shareholder's 
 shares on the question of adopting such an amendment. 

    Subd. 2.  If within 90 days following the date of death of 
 a shareholder or member of a professional corporation or the 
 loss of a license to render professional service all of the 
 shares or membership owned by the deceased or disqualified 
 shareholder or member have not been transferred to and acquired 
 by the corporation or persons qualified to own the shares or 
 membership, the corporation shall thereafter be governed solely 
 by the provisions of chapter 302A, 317A, 322B, or 323, as the 
 case may be and shall not enjoy any of the powers and privileges 
 conferred by sections 319A.01 to 319A.22.  When the corporation 
 ceases to be authorized to render professional service, its 
 corporate name must be changed to comply with the corporate name 
 provision of chapter 302A, 317A, 322B, or 323, as the case may 
 be, and any words, phrases or abbreviations contained therein to 
 comply with the provisions of sections 319A.01 to 319A.22 shall 
 be eliminated. 

    Subd. 3.  A professional corporation may purchase its 
 shares of stock without regard to any restrictions provided by 
 law upon the repurchase of its stock if after each repurchase at 
 least one share of stock remains outstanding.  

    HIST: 1973 c 40 s 12; 1979 c 21 s 2; 1981 c 270 s 134,135; 
 1986 c 444; 1987 c 384 art 2 s 80,81; 1989 c 304 s 137; 1992 c 
 517 art 1 s 27,28; 1994 c 539 s 6-8 

     319A.13 Transfer of shares.  

    No share of stock of a professional corporation, nor any 
 beneficial interest therein, nor any membership, may be 
 transferred to any person to whom the share or membership could 
 not have been issued by the professional corporation.  The 
 articles of incorporation or bylaws or a written agreement of 
 the shareholders may contain provisions restricting the transfer 
 of shares or memberships.  

    HIST: 1973 c 40 s 13 

     319A.14 Convertible securities; stock rights and options.

    No professional corporation shall create or issue any 
 securities convertible into shares of the professional 
 corporation.  The provisions of sections 319A.01 to 319A.22 with 
 respect to the issuance and transfer of shares apply to the 
 creation, issuance, and transfer of any rights or options 
 entitling the holder to purchase from a professional corporation 
 any shares of the corporation.  Rights or options shall not be 
 transferable, whether voluntarily, involuntarily, by operation 
 of law, or in any other manner.  Upon the death of the holder, 
 or whenever the holder ceases to be licensed to render 
 professional service which the corporation is authorized to 
 render, the rights or options shall expire.  

    HIST: 1973 c 40 s 14 

     319A.15 Merger; consolidation. 

    No professional corporation shall merge or consolidate with 
 any other corporation unless the surviving or new corporation is 
 a professional corporation or a foreign professional corporation 
 which complies with all requirements of sections 319A.01 to 
 319A.22. 

    HIST: 1973 c 40 s 15; 1979 c 21 s 3 

     319A.16 Officers; directors. 

    Except as otherwise provided by this section, every 
 director and every officer of a professional corporation shall 
 be a professional licensed to render professional service of a 
 type the corporation is authorized to render.  If the articles 
 of incorporation or the bylaws so provide, the secretary, the 
 treasurer, and any assistants to either of them, need not be 
 professionals.  If the professional corporation organizes 
 pursuant to chapter 317A, a majority of its board of directors 
 need not be professionals. 

    HIST: 1973 c 40 s 16; 1979 c 21 s 4; 1989 c 304 s 137 

     319A.17 Examination by board.  

    Any board, or any employee designated by such board, shall 
 have the right at all reasonable times of free access to all 
 books and records of any professional corporation and any 
 foreign professional corporation holding a certificate of 
 authority to do business in this state and may summon and 
 examine under oath the officers, directors, and employees of any 
 such corporation in all matters concerning the operations of any 
 such corporation which are governed by sections 319A.01 to 
 319A.22 or the corporation laws of Minnesota or the rules of 
 such board provided, however, that nothing contained in this 
 section shall authorize anyone to have access to, or to compel 
 anyone to testify with respect to, books, records, or 
 information of any type subject to a privilege recognized by 
 law.  Any information obtained by the board as a result of any 
 proceeding authorized by this section shall be confidential 
 except that on request a copy thereof shall be made available to 
 a duly authorized representative of the professional corporation 
 or foreign professional corporation involved, and shall be 
 immune from subpoena and inadmissible as evidence at a trial, 
 hearing or proceeding before any court, board or commissioner 
 except a proceeding to cancel the corporate charter or to revoke 
 the certificate of authority to render professional service in 
 this state.  

    HIST: 1973 c 40 s 17; 1985 c 248 s 70 

     319A.18 Rules.  

    Each board may make such rules as are necessary to carry 
 out the provisions of sections 319A.01 to 319A.22.  

    HIST: 1973 c 40 s 18; 1985 c 248 s 70 

     319A.19 Savings clause.  

    Nothing contained herein is intended to alter the right of 
 natural persons licensed to provide professional service, to 
 organize as a partnership, an unincorporated association, a 
 business trust, or any other form recognized under laws of this 
 state.  

    HIST: 1973 c 40 s 19 

     319A.20 Suspension or revocation. 

    The corporate charter of a professional corporation or the 
 certificate of authority of a foreign professional corporation 
 may be suspended or revoked pursuant to section 302A.757, 
 322B.843, or 317A.751 for the reasons enumerated therein or for 
 failure to comply with the provisions of sections 319A.01 to 
 319A.22 or the rules of any board.  A board through the attorney 
 general may institute such suspension or revocation proceedings. 

    HIST: 1973 c 40 s 20; 1981 c 270 s 136; 1985 c 248 s 70; 1989 
 c 304 s 134; 1990 c 426 art 2 s 10; 1992 c 517 art 1 s 29 

     319A.21 Annual report.  

    Every professional corporation and foreign professional 
 corporation holding a certificate of authority to do business in 
 this state shall file annually on or before January 1, with the 
 board or boards having jurisdiction over the kind of 
 professional service the corporation is authorized to render a 
 report containing the following: (a) the name and address of 
 each shareholder and each officer and director; (b) a statement 
 under oath whether or not all shareholders, directors, officers, 
 employees, and agents rendering professional service in this 
 state on behalf of the corporation are licensed by this state or 
 otherwise authorized to render such professional service; and 
 (c) such additional information as the board may by rule 
 prescribe as appropriate to assist in determining whether a 
 professional corporation or a foreign professional corporation 
 is complying with the provisions of sections 319A.01 to 
 319A.22.  For filing the first of such reports the professional 
 corporation or foreign professional corporation shall pay to 
 each board with which such report is filed a fee of $100 which 
 shall be for the use of such board, and for filing each 
 successive report the fee shall be $25 which shall be for the 
 use of the board.  

    HIST: 1973 c 40 s 21; 1985 c 248 s 70 

     319A.22 Retroactive effect.  

    A professional corporation heretofore organized pursuant to 
 authority granted by any provision of law applicable to an 
 individual profession is hereby recognized, validated and 
 continued and the provisions of sections 319A.01 to 319A.22 
 apply retroactively to any such professional corporation so that 
 any such professional corporation is deemed to have been 
 organized pursuant to the authority granted by sections 319A.01 
 to 319A.22.  Any such corporation that fails to comply with the 
 provisions of sections 319A.01 to 319A.22 within one year of 
 March 23, 1973 shall forfeit its corporate charter in the manner 
 prescribed by law.  

    HIST: 1973 c 40 s 22