The Advisory: Volume 8, Issue 2, April 2010
Family Members Can Now Own Shares in Professional Corporations
By Scott Watson, QC, Bencher, Law Society of Alberta
Statutory amendments will permit family members to own non-voting shares in Alberta professional corporations (PC’s).
Non-voting shares can now be owned by non-professional family members (spouse, common-law partner, and children). The changes affect lawyers, doctors and accountants.
While non-voting shares can also be held by a trust, only minor children of the professional can be beneficiaries of the trust.
The legislation will bring Alberta in line with other provinces. It will allow professionals to include family members as shareholders of their PC consistent with other small businesses, while retaining the need for professionals to be responsible and accountable.
How will amendments allow lawyers to plan?
For many Albertans who own businesses, the ability to issue shares to family members, trusts or others is an important part of their tax and estate planning. These amendments will allow lawyers to plan for their family’s future in a way similar to many other Alberta business owners and business owners across Canada.
Is the public interest still protected?
Lawyers will remain accountable and liable for negligence in the provision of legal services. Directors and voting shareholders of the PC must still be lawyers. Control and key corporate decisions will remain in the hands of the lawyer. Liability for professional negligence will continue to flow through to the lawyer, and will not be limited solely to the PC. Protection of the public interest is not affected by these changes.
The new legislation came into force March 1, 2010.
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