Corporations – Professional Corporation – Colorado
COLORADO REVISED STATUTES, §§ 7-101-101 through 7-117-105 (Colorado Business Corporation Act)
COLORADO REVISED STATUTES, §§ 12-36-101 through 12-36-202 (Medical Practice)
Professional corporations are formed under the Colorado Business Corporation Act and under the various professional service corporation statutes and are organized solely for the purpose of providing a professional service.
The statutory requirements for the formation and organization of a business corporation are set out in the COLORADO REVISED STATUTES, §§ 7-101-101 through 7-117-105, the Colorado Business Corporation Act. In addition to the requirements applicable to business corporations, a professional corporation organized to engage in the practice of medicine is controlled by COLORADO REVISED STATUTES, §§ 12-36-101 through 12-36-202 (Medical Practice). The professional corporation is also subject to any additional rules, regulations, or disciplinary procedures established by the Colorado State Board of Medical Examiners.
The duration of a professional corporation may be perpetual, for a term of years, or to a date certain. If no duration is stated in the Articles of Incorporation, the duration of the corporation is considered to be perpetual.
A professional corporation is required to continuously maintain a registered agent and office for the purpose of service of process. The articles of incorporation must include the street address, not a post office address, of the registered office and the name of the registered agent at that address. The registered agent may be a natural person, a Colorado corporation, or a foreign corporation qualified to do business in Colorado. A Corporation may not serve as its own registered agent. The business address of the registered agent must be the same as the address of the registered office.
The articles of incorporation of a corporation organized to engage in the practice of medicine must contain provisions complying with the following requirements:
1. The name of the corporation must contain the words “professional company” or professional corporation” or abbreviations thereof.
2. The corporation must be organized solely for the purposes of conducting the practice of medicine only through persons licensed by the board to practice medicine in the state of Colorado.
3. The corporation may exercise the powers and privileges conferred upon corporations by the laws of Colorado only in furtherance of and subject to its corporate purpose.
4. All shareholders of the corporation must be persons licensed by the board to practice medicine in the state of Colorado. They must be individuals who, except for illness, accident, time spent in the armed services, on vacations, and on leaves of absence not to exceed one year, are actively engaged in the practice of medicine in the offices of the corporation.
5. Provisions must be made requiring any shareholder who ceases to be or for any reason is ineligible to be a shareholder to dispose of all his shares forthwith, either to the corporation or to a qualified person.
6. The president must be a shareholder and a director and, to the extent possible, all other directors and officers must be persons licensed to practice medicine in the state of Colorado. Lay directors and officers must not exercise any authority whatsoever over professional matters.
7. The articles of incorporation must provide and all shareholders of the must be jointly and severally liable for all acts, errors, and omissions of the employees of the corporation or that all shareholders of the corporation must be jointly and severally liable for all acts, errors, and omissions of the employees of the corporation. In the alternative, the above restriction is not applicable during periods of time when each person licensed to practice medicine in Colorado who is a shareholder or any employee of the corporation has a professional liability policy insuring himself and all employees who are not licensed to practice medicine who act at his direction in the amount of fifty thousand dollars for each claim and an aggregate top limit of liability per year for all claims of one hundred fifty thousand dollars or the corporation maintains in good standing professional liability insurance which must meet the following minimum standards:
a. The insurance must insure the corporation against liability imposed upon the corporation by law for damages resulting from any claim made against the corporation arising out of the performance of professional services for others by those officers and employees of the corporation who are licensed to practice medicine.
b. Such policies must insure the corporation against liability imposed upon it by law for damages arising out of the acts, errors, and omissions of all nonprofessional employees.
c. The insurance must be in an amount for each claim of at least fifty thousand dollars multiplied by the number of persons licensed to practice medicine employed by the corporation. The policy may provide for an aggregate top limit of liability per year for all claims of one hundred fifty thousand dollars also multiplied by the number of persons licensed to practice medicine employed by the corporation, but no firm must be required to carry insurance in excess of three hundred thousand dollars for each claim with an aggregate top limit of liability for all claims during the year of nine hundred thousand dollars.
d. The policy may provide that it does not apply to: Any dishonest, fraudulent, criminal, or malicious act or omission of the insured corporation or any stockholder or employee thereof; the conduct of any business enterprise, as distinguished from the practice of medicine, in which the insured corporation under this section is not permitted to engage but which nevertheless may be owned by the insured corporation or in which the insured corporation may be a partner or which may be controlled, operated, or managed by the insured corporation in its own or in a fiduciary capacity, including the ownership, maintenance, or use of any property in connection therewith; when not resulting from breach of professional duty, bodily injury to, or sickness, disease, or death of any person, or to injury to or destruction of any tangible property, including the loss of use thereof; and such policy may contain reasonable provisions with respect to policy periods, territory, claims, conditions, and other usual matters.
The corporation must do nothing which, if done by a person licensed to practice medicine in the state of Colorado employed by it, would violate the standards of professional conduct as provided for in § 12-36-117. Any violation by the corporation of this provision is grounds for the board to terminate or suspend its right to practice medicine.
The obligation of each person licensed to practice medicine employed by the corporation to conduct his practice in accordance with the standards of professional conduct provided for in § 12-36-117 is not diminished by this requirement.
Any person licensed to practice medicine who by act or omission causes the corporation to act or fail to act in a way which violates such standards of professional conduct is personally responsible for such act or omission and is subject to discipline for that act or omission.
The physician-patient privilege specified in § 13-90-107 (1) (d), C.R.S. is not changed because services were rendered by a corporation.
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