Illinois Professional Corporation for Medical Doctors Law

Corporations – Professional Corporation – Illinois

Related Illinois Legal Forms

805 ILLINOIS COMPILED STATUTES 5/ (Business Corporation Act of 1983)
805 ILLINOIS COMPILED STATUTES 10/ (Professional Service Corporation Act)
225 ILLINOIS COMPILED STATUTES 10/ (Medical Practice Act of 1987)

The practice of medicine in the State of Illinois is controlled by the Illinois Medical Practice Act of 1987. A professional corporation organized to engage in the practice of medicine, like and individual licensed to practice medicine in Illinois, is subject to the rules and regulations of the Department of Professional Regulation, the Illinois State Medical Discipline Board, and the Illinois Medical Licensing Board.

Additionally, the practice of medicine as a professional corporation is controlled statutorily by 805 ILCS 5/ (Business Corporation Act of 1983) and 805 ILCS 10/ (Professional Service Corporation Act). If there is a conflict between the provisions of the Business Corporation Act and the Professional Service Corporation Act, the Professional Service Corporation Act controls.

The primary distinctions between a “regular” corporation and a professional service corporation are:

Definitions

“Ancillary personnel” are persons acting in their customary capacities, employed by those rendering a professional service who:

1. Are not licensed to engage in the category of professional service for which a professional corporation was formed; and

2. Work at the direction or under the supervision of those who are so licensed; and

3. Do not hold themselves out to the public generally as being authorized to engage in the practice of the profession for which the corporation is licensed; and

4. Are not prohibited by the licensing authority, regulating the category of professional service rendered by the corporation from being so employed and includes clerks, secretaries, technicians and other assistants who are not usually and ordinarily considered by custom and practice to be rendering the professional services for which the corporation was formed.

The “regulating authority” is the State board, department, agency or the Supreme Court of Illinois (in the case of attorneys at law) having jurisdiction to grant a license to render the category of professional service for which a professional corporation has been organized or the United States Patent Office or the Internal Revenue Service of the United States Treasury Department.

A “license” includes a license, certificate of registration or any other evidence of the satisfaction of the requirements of Illinois, or of the United States Patent Office or the Internal Revenue Service of the United States Treasury Department, for the practice of a professional service.

A “professional corporation” is a corporation organized under the Professional Service Corporation Act solely for the purpose of rendering one category of professional service or related professional services and which has as its shareholders, directors, officers, agents and employees (other than ancillary personnel) only individuals who are duly licensed by Illinois or by the United States Patent Office or the Internal Revenue Service of the United States Treasury Department to render that particular category of professional service or related professional Services. The secretary of the corporation need not be licensed and the registered agent of the corporation need not be licensed when the registered agent is not a shareholder, director, officer or employee (other than ancillary personnel).

A “professional service” is any personal service which requires as a condition precedent to the rendering thereof the obtaining of a license from a State agency or from the United States Patent Office or the Internal Revenue Service of the United States Treasury Department.

Initial Organization

One or more persons, each of whom is licensed to perform the same professional service or related professional services in Illinois, may organize a professional corporation by filing articles of incorporation with the Secretary of State on forms furnished by the Secretary. The articles of incorporation must meet the requirements of the “Business Corporation Act of 1983” and state the specific profession to be practiced by the professional corporation.

A professional corporation may be organized only for the purpose of rendering one specific type of professional service and services ancillary thereto. Additionally a professional corporation may be organized for the purpose of rendering related professional services and services ancillary thereto.

Rendition of Professional Services

No corporation may render professional services except through its officers, employees and agents who are duly licensed or otherwise legally authorized to render those professional services in Illinois.

Professional Relationships and Liability

The Professional Service Corporation Act does not abolish, repeal, modify, restrict or limit the law now in effect in Illinois applicable to the professional relationship and liabilities between the person furnishing the professional services and the person receiving such professional service and to the standards for professional conduct.

Any officer, shareholder, agent or employee of a professional service corporation organized remains personally and fully liable and accountable for any negligent or wrongful acts or misconduct committed by him or by any ancillary personnel or person under his direct supervision and control while rendering professional services on behalf of the professional service corporation to the person for whom such professional services were being rendered.

A professional service corporation has no greater liability for the conduct of its agents than a general business corporation. A professional service corporation is liable up to the full value of its property for any negligence or wrongful acts or misconduct committed by any of its officers, shareholders, agents or employees while they are engaged on behalf of the professional service corporation in the rendering of professional services.

The relationship of an individual to a professional service corporation (whether the corporation representative is acting as a shareholder, director, officer or employee) in no way modifies or diminishes the jurisdiction over him of the governmental authority or State agency which licensed, certified or registered him for a particular profession.

All rights and obligations pertaining to communications made to, or information received by, any qualified person, or his advice thereon, is extended to the professional service corporation of which he is a shareholder or employee, and to the professional service corporation’s officers, employees and ancillary personnel.

Name

A professional service corporation must adopt a name consisting of the full or last name of one or more of its shareholders. If it is not otherwise prohibited by law, rules of a regulating authority or the canons of ethics of the profession concerned, a professional service corporation may adopt a fictitious name.

It is permissible for a professional service corporation to continue to use the name of a deceased shareholder for a period of one year after his death without recording the name of the professional service corporation with the county clerk.

A professional service corporation may continue to use the name of a shareholder who voluntarily withdraws from the professional service corporation if the withdrawing shareholder files with the regulating authority his written permission for the continued use of his name by the professional service corporation. This permission remains in effect until written revocation has been received by the regulating authority from the former shareholder.

The corporate name of a professional service corporation must end with the word “chartered” or “Limited” or the abbreviation “Ltd.”, or with the words “Professional service corporation” or the abbreviation “Prof. Corp.” or the initials “P. C.”

Directors

A professional service corporation organized is governed by a board of directors elected by the shareholders and represented by officers elected by the board of directors, and, if desired, by an executive committee elected by the board of directors.

If a professional service corporation has only one shareholder, it need have only one director and that director must be the shareholder. That shareholder may also serve as president, secretary, and treasurer of the professional service corporation. A one-shareholder professional service corporation is not required to have a vice-president.

If a professional service corporation has only 2 shareholders, it need have only 2 directors, both of whom must be shareholders. The two shareholders must fill the offices of president, vice-president, secretary and treasurer of the professional service corporation between them.

Restrictions of Stock Ownership

No professional service corporation may issue any of its capital stock to anyone other than an individual who is duly licensed or otherwise legally authorized to render the same specific professional services or related professional services as those for which the professional service corporation was organized.

No shareholder shall enter into a voting trust agreement or any other type of agreement vesting another person with the authority to exercise the voting power of any of his stock.

Share Redemption – Death or Disqualification of Shareholder

The articles of a professional service corporation must provide for the purchase or redemption of the shares of any shareholder upon death or disqualification. This provision may also be in the by-laws of the professional service corporation or in a separate agreement of the interested parties.

If the articles of a professional service corporation, the by-laws or a separate agreement fail to state a price or method of determining a fixed price at which the professional service corporation or its shareholders may purchase the shares of a deceased shareholder, or a shareholder no longer qualified to own shares in the professional service corporation, then the price for such shares must be the book value as of the end of the month immediately preceding the death or disqualification of the shareholder. Book value is determined from the books and records of the professional service corporation in accordance with the accounting methods used by the professional service corporation.

Certificate of Registration

No professional service corporation may open, operate or maintain an establishment for any of the purposes for which a professional service corporation may be without a certificate of registration from the regulating authority authorized by law to license individuals to engage in the profession or related professions concerned. Application for such registration must be made in writing, and must contain the name and address of the professional service corporation and such other information as may be required by the regulating authority. Upon receipt of such application, the regulating authority, or some administrative agency of government designated by it, shall make an investigation of the professional service corporation. If the regulating authority is the Supreme Court it may designate the bar or legal association which investigates and prefers charges against lawyers to it for disciplining.

If such authority finds that the incorporators, officers, directors and shareholders are each licensed pursuant to the laws of Illinois to engage in the particular profession or related professions involved (except that the secretary of the professional service corporation need not be so licensed), and if no disciplinary action is pending before it against any of them, and if it appears that the professional service corporation will be conducted in compliance with the law and the regulations and rules of the regulating authority, such authority, shall issue, upon payment of a registration fee of $50, a certificate of registration. Upon written application of the holder, the regulating authority which originally issued the certificate of registration shall renew the certificate if it finds that the professional service corporation has complied with its regulations and the provisions of the Professional Service Corporation Act.

No certificate of registration is assignable.

The regulating authority which issues a certificate of registration may suspend or revoke it for any of the following reasons:

1. The revocation or suspension of the license to practice the profession of any officer, director, shareholder or employee not promptly removed or discharged by the professional service corporation;

2 .Unethical professional conduct on the part of any officer, director, shareholder or employee not promptly removed or discharged by the professional service corporation;

3. The death of the last remaining shareholder;

4. Upon finding that the holder of a certificate has failed to comply with the provisions of the Professional Service Corporation Act or the regulations prescribed by the regulating authority that issued it; or

5. The failure to file a return, or to pay the tax, penalty or interest shown in a filed return, or to pay any final assessment of tax, penalty or interest, as required by any tax Act administered by the Illinois Department of Revenue, until such time as the requirements of any such tax Act are satisfied.

Before any certificate of registration is suspended or revoked, the holder must be given written notice of the proposed action and the reasons therefor, and shall provide a public hearing by the regulating authority, with the right to produce testimony and other evidence concerning the charges made.

Professional Services

A professional service corporation may only engage in the rendering of one category of professional service or related professional services and may render such professional service or related professional services only through shareholders, directors, officers, agents and employees who are themselves duly licensed in that category of professional service. No person who is not licensed in that category of professional service or related professional services shall have any part in the ownership, management or control of the professional service corporation, nor may any proxy to vote any shares of such professional service corporation be given to a person who is not so licensed.

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Inside Illinois Professional Corporation for Medical Doctors Law