AN
ACT Relating to professional service corporations; and amending RCW 18.100.030,
18.100.090, 18.100.095, 18.100.110, and 18.100.116.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
18.100.030 and 1983 c 51 s 2 are each amended to read as follows:
As
used in this chapter the following words shall have the meaning indicated:
(1)
The term "professional service" means 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 and which prior
to the passage of this chapter and by reason of law could not be performed by a
corporation, including, but not by way of limitation, certified public
accountants, chiropractors, dentists, osteopaths, physicians, ((podiatrists))
podiatric physicians and surgeons, chiropodists, architects,
veterinarians and attorneys at law.
(2)
The term "professional corporation" means a corporation which is
organized under this chapter for the purpose of rendering professional service.
(3)
The term "ineligible person" means any individual, corporation,
partnership, fiduciary, trust, association, government agency, or other entity
which for any reason is or becomes ineligible under this chapter to own shares
issued by a professional corporation. The term includes a charitable
remainder unitrust or charitable remainder annuity trust that is or becomes an
ineligible person for failure to comply with subsection (5)(b) of this section.
(4)
The term "eligible person" means an individual, corporation,
partnership, fiduciary, qualified trust, association, government agency, or
other entity, that is eligible under this chapter to own shares issued by a
professional corporation.
(5)
The term "qualified trust" means one of the following:
(a)
A voting trust established under RCW 23B.07.300, if the beneficial owner of any
shares on deposit and the trustee of the voting trust are qualified persons;
(b)
A charitable remainder unitrust as defined in section 664(d)(1) of the internal
revenue code or a charitable remainder annuity trust as defined in section
664(d)(2) or 664(d)(3) of the internal revenue code if the trust complies with
each of the following conditions:
(i)
Has one or more beneficiaries currently entitled to income, unitrust, or
annuity payments, all of whom are eligible persons or spouses of eligible
persons;
(ii)
Has a trustee who is an eligible person and has exclusive authority over the
share of the professional corporation while the shares are held in the trust,
except that a cotrustee who is not an eligible person may be given authority
over decisions relating to the sale of shares by the trust;
(iii)
Has one or more designated charitable remaindermen, all of which must at all times
be domiciled or maintain a local chapter in Washington state; and
(iv)
When distributing any assets during the term of the trust to charitable
organizations, the distributions are made only to charitable organizations
described in section 170(c) of the internal revenue code that are domiciled or
maintain a local chapter in Washington state.
Sec.
2. RCW
18.100.090 and 1983 c 51 s 4 are each amended to read as follows:
Except
as otherwise provided in RCW 18.100.118, no professional corporation organized
under the provisions of this chapter 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 this state as those for which the corporation was incorporated.
Sec.
3. RCW
18.100.095 and 1983 c 51 s 12 are each amended to read as follows:
Except
for qualified trusts, a proxy, voting trust, or other voting agreement with
respect to shares of a professional corporation shall not be valid unless all
holders thereof, all trustees and beneficiaries thereof, or all parties
thereto, as the case may be, are eligible to be shareholders of the corporation.
Sec.
4. RCW
18.100.110 and 1983 c 51 s 5 are each amended to read as follows:
No
shareholder of a corporation organized as a professional corporation may sell
or transfer his or her shares in such corporation except to the
trustee of a qualified trust or another individual who is eligible to be a
shareholder of such corporation. Any transfer of shares in violation of this
section shall be void. However, nothing in this section prohibits the transfer
of shares of a professional corporation by operation of law or court decree.
Sec.
5. RCW
18.100.116 and 1991 c 72 s 4 are each amended to read as follows:
(1)
If:
(a)(i)
A shareholder of a professional corporation dies((, or if));
(ii)
A shareholder of a professional corporation becomes an ineligible person;
(iii)
Shares of a professional corporation are transferred by operation of law or
court decree to an ineligible person((, and if)); or
(iv)
A charitable remainder unitrust or charitable remainder annuity trust that
holds shares of a professional corporation becomes an ineligible person; and
(b)
The shares held by the deceased shareholder or by such ineligible person
are less than all of the outstanding shares of the corporation((:)),
then
(((1)))
the shares held by the deceased shareholder or by the ineligible person
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.
(2) If such a redemption or transfer of the shares held by a
deceased shareholder or an ineligible person is not completed within twelve
months after the death of the deceased shareholder or the transfer, as the case
may be, such shares shall be deemed to be shares with respect to which the
holder has elected to exercise the right of dissent described in chapter 23B.13
RCW and has made written demand on the corporation for payment of the fair
value of such shares. The corporation shall forthwith cancel the shares on its
books and the deceased shareholder or ineligible person shall have no further
interest in the corporation other than the right to payment for the shares as
is provided in RCW 23B.13.250. For purposes of the application of RCW
23B.13.250, the date of the corporate action and the date of the shareholder's
written demand shall be deemed to be one day after the date on which the
twelve-month period from the death of the deceased shareholder, or from the
transfer, expires.
