Washington Professional Corporation for Attorneys Law

Corporations – Professional Corporation – Washington

REVISED CODE OF WASHINGTON, Title 23b (Washington Business Corporation Act)
REVISED CODE OF WASHINGTON, Title 18, Chapter 18.100 (Professional Service Corporation Act)
REVISED CODE OF WASHINGTON, Title 18, Chapter 18.09 and Title 2, Chapter 2.44 (Attorneys at Law)

A Washington professional corporation organized to engage in the practice of law is subject to the provisions of the Washington Business Corporation Act and the Washington Professional Service Corporation Act. When there is a conflict between these two acts, the provisions of the Professional Service Corporation Act prevail.

Additionally, a Washington professional corporation organized to engage in the practice of law is subject to any and all rules and regulations of the Washington State Bar Association and the Washington Supreme Court.

A “professional service” is defined as any type of personal service to the public which requires as a condition precedent to the rendering of such service the obtaining of a license or other legal authorization.

A “professional corporation” is a corporation which is organized for the purpose of rendering a professional service.

An “eligible person” means an individual, corporation, partnership, fiduciary, qualified trust, association, government agency, or other entity, that is eligible to own shares issued by a professional corporation. An “ineligible person” is any individual, corporation, partnership, fiduciary, trust, association, government agency, or other entity which for any reason is or becomes to own shares issued by a professional corporation and includes a charitable remainder unitrust or charitable remainder annuity trust that is or becomes an ineligible person.

An individual or group of individuals duly licensed or otherwise legally authorized to render the same professional services within Washington may organize and become a shareholder or shareholders of a professional corporation for pecuniary for the purpose of rendering a professional service. One or more of the legally authorized individuals must be the incorporators of the professional corporation.

Professional corporations must render professional service and exercise its authorized powers under a name permitted by law and the professional ethics of the profession in which the corporation is so engaged. The corporate name of a professional service corporation must contain either the words “professional service” or “professional corporation” or the abbreviation “P.S.” or “P.C.” The corporate name may also contain either the words “corporation,” “incorporated,” “company,” or “limited,” or the abbreviation “corp.,” “inc.,” “co.,” or “ltd.”

No corporation organized may render professional services except through individuals who are duly licensed or otherwise legally authorized to render such professional services within Washington. Clerks, secretaries, bookkeepers, technicians, and other assistants employed by a professional corporation who are not usually and ordinarily considered by custom and practice to be rendering professional services to the public for which a license or other legal authorization is required are not required to be licensed.

Each shareholder of a professional corporation must be personally engaged in the practice of the profession in Washington and be duly licensed or otherwise legally authorized to practice the profession in Washington. At least one officer and one director of the corporation must be duly licensed or otherwise legally authorized to practice the profession in Washington or each officer in charge of an office of the corporation in Washington must be duly licensed or otherwise legally authorized to practice the profession in Washington.

Subject to the provisions of ยง 18.100.118, all directors and all officers other than the secretary and the treasurer of a professional corporation must be duly licensed or otherwise legally authorized to render the same specific professional services within this or any other state as those for which the corporation was incorporated. If all of the outstanding shares of a professional corporation are held by an administrator, executor, guardian, conservator, or receiver of the estate of a former shareholder, or by a transferee who received such shares by operation of law or court decree, such administrator, executor, guardian, conservator, receiver, or transferee for a period of twelve months following receipt or transfer of such shares may be a director, officer, or shareholder of the professional corporation.

Nothing contained in the Professional Service Corporation Act is to be interpreted to abolish, repeal, modify, restrict or limit the law now in effect in Washington applicable to the professional relationship and liabilities between the person furnishing the professional services and the person receiving such professional service and the standards for professional conduct. Any director, officer, shareholder, agent or employee of a professional remains personally and fully liable and accountable for any negligent or wrongful acts or misconduct committed by him or by any person under his direct supervision and control, while rendering professional services on behalf of the corporation to the person for whom such professional services were being rendered. The corporation is liable for any negligent or wrongful acts of misconduct committed by any of its directors, officers, shareholders, agents or employees while they are engaged on behalf of the corporation in the rendering of professional services.

No professional service corporation is allowed to engage in any business other than the rendering of the professional services for which it was incorporated. However, a professional corporation may invest its funds in real estate, personal property, mortgages, stocks, bonds, insurance, or any other type of investments.

No professional corporation may issue any of its capital stock to anyone other than the trustee of a qualified trust or an individual who is duly licensed or otherwise legally authorized to render the same specific professional services within Washington or any other state as those for which the corporation was incorporated.

With the exception of qualified trusts, a proxy, voting trust, or other voting agreement with respect to shares of a professional corporation is not valid unless all holders thereof, all trustees and beneficiaries thereof, or all parties thereto are eligible to be shareholders of the corporation.

Unless a director, officer, shareholder, agent or employee of a professional corporation who has been rendering professional service to the public is legally qualified at all times to render such professional services within at least one state in which the corporation conducts business, he or she must immediately sever all employment with and financial interests in the corporation forthwith. A corporation’s failure to require compliance with this statutory provision constitutes a ground for the forfeiture of its articles of incorporation and its dissolution.

No shareholder of a professional may sell or transfer his or her shares in the corporation except to the trustee of a qualified trust or another individual who is eligible to be a shareholder of the corporation. Any transfer of shares in violation of this statutory restriction is void, except for transfers made by operation of law or court decree.

If a shareholder of a professional corporation dies, or a shareholder, charitable remainder unitrust, or charitable remainder annuity trust becomes ineligible to be a shareholder of a professional corporation, or the shares of the corporation are transferred by operation of law or court decree to an ineligible person, those shares are less than all of the outstanding shares of the corporation, then those shares may be transferred to remaining shareholders of the corporation or may be redeemed by the corporation pursuant to terms stated in the articles of incorporation or by laws of the corporation, or in a private agreement. In the absence of any such terms, such shares may be transferred to any individual eligible to be a shareholder of the corporation. If these shares are not redeemed within twelve months after the death or disability of a deceased or ineligible shareholder, such shares must be deemed to be shares with respect to which the holder has elected to exercise the right of dissent described in Chapter 23B.13 of the REVISED CODE OF WASHINGTON and has made written demand on the corporation for payment of the fair value of such shares. The corporation must forthwith cancel the shares on its books and the deceased shareholder or ineligible person must have no further interest in the corporation other than the right to payment for the shares as is in Chapter 23B.13 of the REVISED CODE OF WASHINGTON.

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