New Mexico Professional Corporation for Accountants Law

Corporations – Professional Corporation – New Mexico

Related New Mexico Legal Forms

STATUTORY REFERENCES
NEW MEXICO STATUTES ANNOTATED, §§ 53-11-1 through 53-18-12 (New Mexico Business Corporation Act)
NEW MEXICO STATUTES ANNOTATED, §§ 53-6-1 through 53-6-14 (New Mexico Professional Corporation Act)
NEW MEXICO STATUTES ANNOTATED, §§ 61-28B-1 through 61-28B-2940 (1999 Public Accountancy Act)

New Mexico corporations are subject to the provisions of the New Mexico Business Corporation Act (NMSA §§ 53-11-1 through 53-18-12). In addition to being subject to those statutory provisions, professional corporations are specifically subject to the provisions of the New Mexico Professional Corporation Act (NMSA §§ 53-6-1 through 53-6-14). If the provisions of the Business Corporation Act conflict with the provisions of the Professional Corporation Act, the provisions of the Professional Corporation Act prevail.

A professional corporation organized to engage in the practice of accountancy is subject to the rules and regulations of the New Mexico Public Accountancy Board.

GENERAL

A professional corporation renders professional services only through its officers, employees and agents who are duly licensed or otherwise legally authorized to render professional services. The term “employee,” does not include clerks, secretaries, bookkeepers, technicians and other assistants who are not usually and ordinarily considered by custom and practice to be rendering professional services to the public for which a license is required.

The Professional Corporation Act does not modify the legal relationships, including confidential relationships, between a person performing professional services and the client or patient who receives such services.

DEFINITIONS

A “professional service” is any type of personal service to the public which requires, as a condition precedent to the rendering of that service, the obtaining of a license or other legal authorization. The term includes, but is not necessarily limited to, the personal services rendered by certified public accountants, registered public accountants, chiropractors, optometrists, dentists, osteopaths, podiatrists, architects, veterinarians, doctors of medicine, doctors of dentistry, physicians and surgeons, attorneys-at-law and life insurance agents; and

A “professional corporation” is a corporation which is organized under the Professional Corporation Act for the sole and specific purpose of rendering professional service and which has as its shareholders only individuals who themselves are licensed or otherwise legally authorized within this state to render the same professional service as the corporation.

CORPORATE PURPOSE

A professional corporation may be organized only for the purpose of rendering one specific type of professional service. The corporation cannot engage in any business other than rendering the professional service for which it was organized, though it may render services ancillary to the professional services. A professional corporation may own real and personal property necessary or appropriate for rendering the type of professional service it was organized to render and may invest its funds in real estate, mortgages, stocks, bonds and any other type of investments.

CORPORATE NAME

The name of a professional corporation MUST contain the words “limited,” “chartered,” “professional association” or “professional corporation” or contain an abbreviation of those words.

STOCK

Shares of stock of a professional corporation may be issued and transferred only to persons who are duly licensed or legally authorized to render the professional service for which the corporation is organized.

Shares of stock of a professional corporation may be transferred:
a)by operation of law to persons or legal entities not so licensed or authorized, subject to the requirements of the Professional Corporation Act;
b)to a revocable trust the grantor of which is such a duly licensed or authorized person, provided that the trust contains provisions that require the trustee, upon the grantor’s death or disqualification to render the professional service for which the grantor was licensed or authorized, to dispose of the shares as otherwise provided in the Professional Corporation Act; and
c)to a tax qualified employee benefit plan established for the exclusive benefit of the professional corporation’s employees, provided that the plan’s trustee is required to dispose of the trust’s shares as provided in the Professional Corporation Act before transfer or distribution of the shares to beneficiaries of or participants in the plan who are not duly licensed or authorized to render the professional service for which the corporation is organized.

The articles of incorporation of any professional corporation must provide for the purchase by the corporation, its shareholders, or any person duly licensed or authorized to render the service for which the corporation is organized, of all shares of its stock:
a)held by any person who becomes disqualified to render the professional service for which he was licensed or authorized within a period of thirty days after establishment of the disqualification; or
b)which devolve by operation of law upon any person or legal entity not licensed or authorized to render the professional service for which he was licensed or authorized within eight months from the date of devolution.

Any shares held in violation of the above restrictions may be cancelled by action of the board of directors.

If the articles of incorporation or the bylaws of a professional corporation fail to fix a price at which the corporation or its shareholders may purchase the shares of a deceased or disqualified shareholder, then the price for the shares shall be the book value of the shares as of the end of the month immediately preceding the death or disqualification of the shareholder.

DISQUALIFICATION

If any officer, shareholder, agent or employee of a professional corporation becomes legally disqualified to render that professional service, or is elected to a public office that is a restriction or limitation upon rendering of the professional service, or accepts employment that places restrictions or limitations upon his continued rendering of the professional service, that person must sever all employment with, and financial interest in the professional corporation immediately.

A professional corporation’s failure to require compliance with this restriction constitutes a ground for the forfeiture of its articles of incorporation and its dissolution.

MERGER AND CONSOLIDATION

A professional corporation may consolidate or merge only with another domestic professional corporation organized to render the same specific professional service for which the professional corporation is organized.

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Inside New Mexico Professional Corporation for Accountants Law