Professional Service Corporations

R.I. Gen. Laws tit. 7, ch. 7-5.1

in effect

R.I. Gen. Laws § 7-5.1-1 Application of general corporation law.

7-5.1-1. Application of general corporation law. Except as otherwise provided in this chapter, all provisions of the general corporation law, including the Rhode Island Business Corporation Act, chapter 1.2 of this title, applicable to domestic business corporations are applicable to corporations organized under this chapter. P.L. 1964, ch. 185, § 1; P.L. 1972, ch. 100, § 1; P.L. 2005, ch. 36, § 3; P.L. 2005, ch. 72, § 3.

R.I. Gen. Laws § 7-5.1-2 Definitions.

7-5.1-2. Definitions. As used in this chapter: (1) “Authorized to practice” means duly licensed, certified, or registered by the proper regulatory agency. (2) “Professional services” means the rendering of personal services by a person authorized to practice as one of the following professions as defined: (i) Physicians; (ii) Dentists; (iii) Attorneys at law; (iv) [Deleted by P.L. 2000, ch. 328, § 1, and by P.L. 2000, ch. 513, § 1.] (v) Professional engineers; (vi) Architects; (vii) Certified public accountants and licensed public accountants; (viii) Veterinarians; (ix) Chiropractors; (x) Podiatrists; (xi) Registered nurses; (xii) Optometrists; (xiii) Physical therapists; (xiv) Landscape architects; (xv) Land surveyors; (xvi) Opticians; (xvii) Physician assistants; (xviii) Psychologists; or (xix) Midwives or nurse-midwives. (3) “Regulatory agency” means: (i) The professional licensing board contained within the department of health, as set forth in title 5 when referring to physicians, dentists, chiropractors, podiatrists, registered nurses, optometrists, physical therapists, opticians, physician assistants, or midwives or nurse-midwives; (ii) The Supreme Court when referring to attorneys at law; (iii) The boards of registration of professional engineers and land surveyors when referring to professional engineers or land surveyors; (iv) The board of examination and registration of architects when referring to architects; (v) The board of accountancy when referring to certified public accountants and licensed public accountants; (vi) The board of veterinarians when referring to veterinarians; (vii) The board of examiners of landscape architects when referring to landscape architects; (viii) The board of psychology when referring to psychologists. P.L. 1964, ch. 185, § 1; P.L. 1969, ch. 163, § 1; P.L. 1971, ch. 171, § 24; P.L. 1972, ch. 100, § 2; P.L. 1980, ch. 268, § 1; P.L. 1981, ch. 245, § 1; P.L. 1989, ch. 537, § 1; P.L. 1992, ch. 281, § 1; P.L. 1995, ch. 259, § 1; P.L. 1995, ch. 304, § 1; P.L. 2000, ch. 328, § 1; P.L. 2000, ch. 513, § 1; P.L. 2012, ch. 101, § 1; P.L. 2012, ch. 106, § 1; P.L. 2018, ch. 346, § 3.

R.I. Gen. Laws § 7-5.1-3 Authority to practice.

7-5.1-3. Authority to practice. (a) Except as specifically provided in subsection (b) of this section, any corporation organized under this chapter may engage in rendering professional services of not more than one of the professions enumerated in § 7-5.1-2, provided that every officer, director, and shareholder of the corporation is an individual authorized to practice the profession and is employed by the corporation in that practice. No individual may be an officer, shareholder, director, or employee of any other corporation engaged in the practice of the same profession without the prior written approval of the applicable regulatory agency or agencies. (b) Nothing in these provisions is to be construed to prohibit a corporation organized under this chapter from engaging in the practice of the following combination of professions: (1) Physicians, dentists, registered nurses, podiatrists, optometrists, physician assistants, chiropractic physicians, physical therapists, psychologists, midwives, or nurse-midwives; (2) Landscape architects, professional engineers, architects, and land surveyors; and (3) Certified public accountants and licensed public accountants. P.L. 1964, ch. 185, § 1; P.L. 1972, ch. 100, § 3; P.L. 1981, ch. 245, § 1; P.L. 1989, ch. 537, § 1; P.L. 1992, ch. 281, § 1; P.L. 1998, ch. 232, § 1; P.L. 1998, ch. 345, § 1; P.L. 2000, ch. 328, § 1; P.L. 2000, ch. 513, § 1; P.L. 2002, ch. 242, § 1; P.L. 2012, ch. 101, § 1; P.L. 2012, ch. 106, § 1.

R.I. Gen. Laws § 7-5.1-4 Investments.

7-5.1-4. Investments. Nothing contained in these provisions is to be interpreted to prohibit any corporation organized under this chapter from investing its funds in real estate, mortgages, stocks, bonds, or any investment not otherwise prohibited by the general corporation law, or from owning real or personal property appropriate to the rendering of professional services. P.L. 1964, ch. 185, § 1.

R.I. Gen. Laws § 7-5.1-5 Eligibility of personnel — Transfer of stock.

7-5.1-5. Eligibility of personnel — Transfer of stock. (a) If any shareholder becomes ineligible, he or she shall transfer his or her shares to an eligible person or offer them to the corporation for redemption at their fair-market value. If the articles of incorporation or the bylaws of the corporation restrict transfer of its shares, and transfer of the shares to an eligible person is prevented, the corporation shall redeem the shares of the ineligible shareholder, and compensate the ineligible shareholder in full for the fair-market value of his or her shares determined as of the date that the ineligibility occurred. Nothing contained in these provisions is to be interpreted to prevent a shareholder and the corporation from making a binding agreement as to a method for determining the fair-market value or for determining what constitutes the fair-market value of his or her shares. In the event the corporation and an ineligible shareholder cannot agree as to the fair-market value, the regulatory agency excluding the division of professional regulation shall, upon application by either party, appoint a board of not less than three (3) qualified persons engaged in performing similar professional services to determine the fair-market value of the shares, and the decision of the board is final and binding upon the parties. The division of professional regulation shall, upon application by either party, appoint a neutral arbitrator with experience in business valuation whose fees will be paid by the corporation petitioner to determine the fair-market value of the shares, and the decision of the arbitrator is final and binding upon the parties. The redemption of its shares by a professional service corporation shall not be effected at a time or in a manner so as to impair or prejudice the rights or remedies of any creditor of the corporation. As used in this chapter, “ineligible shareholder” includes a shareholder electing to retire or withdraw from active employment in the corporation. Nothing contained in these provisions is to be interpreted to prohibit the temporary exercise of incidence of ownership of stock in any corporation by persons or corporate fiduciaries not authorized to practice, solely for purposes of administering estates of shareholders deceased or under legal disability to transfer their shares. For purposes of this section, “temporary incidence of ownership” means any period of time not exceeding two (2) years; and “administering estates of shareholders” shall include, but not be limited to, contracting with licensed professionals to operate the practice upon the death of the person licensed to practice. (b) Every shareholder of a corporation organized under this chapter who is entitled to vote at a meeting of the shareholders or to express consent without a meeting may authorize any other shareholder of the corporation to act for him or her by proxy executed, in writing, by the shareholder or by his or her duly authorized attorney in fact. P.L. 1964, ch. 185, § 1; P.L. 1972, ch. 100, § 4; P.L. 1999, ch. 406, § 1; P.L. 2000, ch. 328, § 1; P.L. 2000, ch. 513, § 1.

R.I. Gen. Laws § 7-5.1-6 Qualifications of employees.

7-5.1-6. Qualifications of employees. Every corporation organized under this chapter may render its professional services only through employees who are authorized to practice. However, nothing contained in these provisions is to be interpreted to prohibit any corporation from employing unlicensed persons to perform functions not constituting professional services. P.L. 1964, ch. 185, § 1.

R.I. Gen. Laws § 7-5.1-7 Names.

7-5.1-7. Names. The names of every professional service corporation shall end with the words “professional corporation” or “corporation” or “incorporated” or “limited” or the abbreviations “p.c.” or “pc” or “corp.” or “inc.” or “ltd.”; and that designation in the corporate name constitutes notice to every person or corporation availing himself or herself or itself of the services of any corporation, that it is organized under the provisions of this chapter. However, a corporation organized under this chapter may engage in rendering professional services under a fictitious business name subject to provisions of § 7-1.2-402. Each regulatory agency may impose additional requirements as to the names of corporations organized to render professional services subject to its jurisdiction. P.L. 1964, ch. 185, § 1; P.L. 1971, ch. 171, § 25; P.L. 1972, ch. 100, § 5; P.L. 2005, ch. 36, § 3; P.L. 2005, ch. 72, § 3.

R.I. Gen. Laws § 7-5.1-8 Insurance required.

7-5.1-8. Insurance required. (a) Every professional service corporation shall maintain insurance against any liability imposed by law upon the corporation or its employees arising out of the performance of professional services, excluding liability for claims brought about or contributed to by the dishonest, fraudulent, criminal, or malicious acts or omissions of any employee. The insurance shall be maintained in a company lawfully authorized to write insurance in this state and shall be, with respect to each claim, in the aggregate amount of fifty thousand dollars ($50,000) multiplied by the number of professional employees of the corporation as of the policy anniversary date. However, in no case is the coverage to be less than one hundred thousand dollars ($100,000). Not more than five hundred thousand dollars ($500,000) coverage is to be required of any corporation. Any policy for insurance coverage may include a deductible provision in an amount not to exceed twenty-five thousand dollars ($25,000) for each claim multiplied by the number of professional employees of the corporation as of the date of the issuance of the policy. (b) Every insurance company shall furnish to the incorporators of each corporation to be insured by it a certificate reciting that application for the insurance has been duly made and that a policy of insurance as required will be issued, the amount of coverage to be provided, and the expiration date of the policy. The incorporators shall file the certificate in the office of the secretary of state at the time of filing the articles of association, and the secretary of state shall not certify the articles of association unless the certificate of insurance has been filed. Subsequently, every insurer shall notify the secretary of state and the insured of the termination of the insurance not more than thirty (30) days nor less than ten (10) days before the effective date of the termination. Upon receipt of the notice, the secretary of state shall inform the appropriate regulatory agency of the notice. P.L. 1964, ch. 185, § 1; P.L. 1968, ch. 236, § 1; P.L. 1972, ch. 100, § 6; P.L. 1977, ch. 250, § 1; P.L. 1986, ch. 90, § 1; P.L. 2005, ch. 36, § 3; P.L. 2005, ch. 72, § 3.

R.I. Gen. Laws § 7-5.1-9 Privileged communications.

7-5.1-9. Privileged communications. Nothing contained in this chapter requires disclosure, by any employee of a corporation organized under this chapter, of any communication previously privileged from disclosure. P.L. 1964, ch. 185, § 1.

R.I. Gen. Laws § 7-5.1-10 Powers of regulatory agency.

7-5.1-10. Powers of regulatory agency. Nothing contained in this chapter abolishes, repeals, modifies, restricts, or limits the powers of any state regulatory agency, to regulate the conduct of professional services pursuant to law. P.L. 1964, ch. 185, § 1.

R.I. Gen. Laws § 7-5.1-11 Severability.

7-5.1-11. Severability. If any provision of this chapter or the application of any provisions to any person or under any circumstances is held invalid by any court of competent jurisdiction, the invalidity does not affect any other provision or the application of the provision, and it is declared to be the legislative intent that this chapter and the provisions of this chapter would have been enacted if the invalid parts had not been included in the chapter. P.L. 1964, ch. 185, § 1.

R.I. Gen. Laws § 7-5.1-12 Short title.

7-5.1-12. Short title. This chapter may be cited as the “Professional Service Corporation Law”. P.L. 1964, ch. 185, § 1.

Source: State of Rhode Island General Assembly (rilegislature.gov)URL: https://webserver.rilegislature.gov/Statutes/TITLE7/7-5.1/INDEX.htmFetched: 10/20/2026