Can a Non-Professional Organize a Professional Corporation in New Jersey?

Full Question:

Is there any way a non-physician professional can become the sole shareholder/owner of a physician professional corporation and then employ a physician to render patient services?
01/18/2010   |   Category: Corporations ยป Professional...   |   State: New Jersey   |   #20503

Answer:

NJ statutes only allow a person who is licensed or otherwise legally authorized to render the same or closely allied professional service within NJ, to organize and become a shareholder or shareholders of a professional corporation. No professional corporation may render professional services in NJ except through its officers, employees and agents who are duly licensed or otherwise legally authorized to render such professional services within NJ.

Please see the following NJ statutes:

14A:17-5. Professional corporation and foreign professional legal
corporation

(a) One or more persons, each of whom is duly licensed or
otherwise legally authorized to render the same or closely allied
professional service within this State, may organize and become a
shareholder or shareholders of a professional corporation for
pecuniary profit under the provisions of the Business Corporation
Act of New Jersey (Title 14A, Corporations, General, of the New
Jersey Statutes), for the sole and specific purpose of rendering
such professional service.

(b) A foreign professional legal corporation may render legal
services of the type provided by attorneys-at-law in this State
provided by that it secures a certificate of authority from the
Secretary of State in accordance with Chapter 13 of the Business
Corporation Act of New Jersey (Title 14A, Corporations, General,
of the New Jersey Statutes) and provided further that every
shareholder or employee of the foreign professional legal
corporation providing legal services in this State is an
attorney-at-law licensed and eligible to practice in this State
under the Rules of the Supreme Court.

14A:17-6. Directors and officers

A professional corporation which has only one shareholder need
have only one director who shall be such shareholder. Such one
shareholder shall also serve as the president of the corporation.
The other officers of the corporation in such a case need not be
licensed or otherwise legally authorized to render the same
professional service within this State, as such one shareholder. A
professional corporation which has only 2 shareholders need have
only 2 directors who shall be such shareholders. The 2
shareholders shall, between them, fill all the officerships of the
professional corporation.

14A:17-10. Who may own shares; voting trust; estate ownership

(a) No professional corporation may issue any of its shares to
anyone other than an individual who is duly licensed or otherwise
legally authorized to render the same professional service as that
for which the corporation was incorporated. No shareholder of a
professional corporation shall enter into a voting trust agreement
or proxy or any other type of agreement vesting another person not
a shareholder of the corporation with the authority to exercise
the voting power of any or all of his shares. Subject to the
provisions of the corporation's certificate of incorporation, the
estate of a deceased shareholder may continue to hold the shares
of such shareholder for a reasonable period of administration of
the estate, but shall not be authorized to participate in any
decisions concerning the rendering of professional service.

(b) A foreign professional legal corporation rendering legal
services in this State shall have at least one shareholder who is
an attorney-at-law licensed and eligible to practice in this State
under the Rules of the Supreme Court.

14A:17-7. Rendering of professional service limited to licensed
personnel; charges authorized

No professional corporation or foreign professional legal
corporation may render professional services in this State except
through its officers, employees and agents who are duly licensed
or otherwise legally authorized to render such professional
services within this State; provided, however, that this provision
shall not be interpreted to include in the term "employee" as used
herein clerks, secretaries, administrators, bookkeepers,
technicians and other assistants who are not usually and
ordinarily considered by law, custom and practice to be rendering
professional service to the public for which a license or other
legal authorization is required in connection with the profession
to be practiced, nor does the term "employee" include any other
person who performs all his employment under the direct
supervision and control of an officer, agent or employee who is
himself rendering professional service to the public on behalf of
the professional corporation; provided, that no person shall,
under the guise of employment, practice a profession unless duly
licensed to practice that profession under the laws of this State.
Notwithstanding any other or contrary provisions of the laws of
the State, a professional corporation or foreign professional
legal corporation may charge for its services, may collect such
charges, and may compensate its officers, employees and agents,
including those persons excluded from the term "employee" as used
herein.