Washington State House of Representatives Office of Program Research | BILL ANALYSIS |
Judiciary Committee |
SSB 6411
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
Title: An act relating to professional service corporations.
Brief Description: Expanding the eligibility of certain representatives and transferees to serve as directors, officers, and shareholders of professional service corporations.
Sponsors: Senate Committee on Law & Justice (originally sponsored by Senators Angel, Bailey, Rivers, Becker, Warnick and Padden).
Brief Summary of Substitute Bill |
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Hearing Date: 2/24/16
Staff: Omeara Harrington (786-7136).
Background:
Under the Professional Service Corporation Act an individual or group of individuals who practice the same profession may incorporate for the purpose of rendering that professional service to the public. A professional service is any type of personal service in which the person rendering the service must have a license or other legal authorization in order to perform the service. The types of professionals that may create a professional corporation include, but are not limited to: certified public accountants; chiropractors; dentists; osteopaths; physicians; podiatric physicians and surgeons; chiropodists; architects; veterinarians; and attorneys at law.
Professional corporations may only provide services through persons who are licensed or authorized to perform the professional services. Persons licensed in another state may become a member of a professional corporation in Washington that performs the same professional services, and a professional corporation may render services in another state through persons not licensed in Washington. Clerks, secretaries, book-keepers, technicians, and other assistants of the corporation need not be licensed or authorized to practice the profession.
Generally, all directors of a professional corporation, and all officers other than the secretary and the treasurer, must be duly licensed or authorized to render the professional services of the corporation. Upon the death or ineligibility of a shareholder of a professional corporation who holds fewer than all outstanding shares, the shares of the deceased on ineligible person may be transferred to the remaining shareholders, redeemed by the corporation, or transferred to an individual eligible to be a shareholder. If all outstanding shares of a professional corporation are passed to an administrator, executor, guardian, conservator, or receiver of the estate, or other person receiving the shares by operation of law or court decree, the receiving party may be a director, officer, or shareholder of the professional corporation for a period of 12 months.
Summary of Bill:
A person receiving all outstanding shares of a professional corporation from a person who has died or become ineligible to own shares may be a director, officer, or shareholder of the corporation for a period of 36 months, rather than 12 months. No later than 12 months after the transfer, at least one officer and one director of the corporation must be duly licensed or otherwise authorized to practice the profession in Washington.
The list of circumstances under which a person may receive all outstanding shares of a professional corporation from a deceased or ineligible person is expanded to include receipt of shares under a community property agreement or as distribution from the former shareholder's estate or trust.
Appropriation: None.
Fiscal Note: Not requested.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.