Eligibility of personnel — Transfer of stock.
R.I. Gen. Laws § 7-5.1-5
in effect7-5.1-5. 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.
Source: State of Rhode Island General Assembly (rilegislature.gov)URL: https://webserver.rilegislature.gov/Statutes/TITLE7/7-5.1/7-5.1-5.htmFetched: 10/20/2026