Ontario Professional Incorporation Rules for Doctors and Dentists have changed

I sat down with David Arntfield of McKenzie Lake Lawyers to discuss recent changes made to the definition of “family member” in the Ontario Business Corporations Act (OBCA)…

There have been some recent changes to the definition of “family members” in relation to dentists and physicians in Ontario.  Tell us about those changes.

“That’s correct Jonathan.  As you know, the Business Corporations Act (Ontario) (“OBCA”) permits “family members” of physicians or dentists to hold non-voting shares issued by medicine or dentistry professional corporations.

The OBCA defines “family member”, in relation to a dentist or physician, as being the “spouse, child or parent” of the dentist or physician.

On December 12, 2014, the OBCA was amended to clarify and potentially broaden the definition of “family members” who may be eligible to hold shares of medicine and dentistry professional corporations. These changes may impact Ontario  physicians and dentists.”

Could you explain these changes and the potential impacts to medical doctors and dentists?

“Certainly! Prior to these changes taking effect, the definition of eligible family members was limited to the ‘spouse, child or parent’ of the regulated professional shareholder, without specific guidance as to whether the term ‘child’ included adopted children, step-children, or children resulting from a common-law relationship. Similarly, ambiguity persisted in circumstances where the regulated professional may have been adopted, or had step-parents or adoptive parents in addition to lineal parents.

Recognizing the need for clarification, the Ontario Legislature has modified the definition of “family members” under the OBCA, by adding the following supporting definitions:

“child”, in relation to a shareholder of a health profession corporation, includes a person whom the shareholder has demonstrated a settled intention to treat as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody;

“parent”, in relation to a shareholder of a health profession corporation, includes a person who has demonstrated a settled intention to treat the shareholder as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody.

Are these changes positive?

“In our view, the foregoing changes are overwhelmingly positive, and serve to alleviate any lingering doubt as to whether adopted children, step-children, children from a common-law relationship, step-parents or adoptive parents may hold shares of a medicine or dentistry professional corporation. Note, however, that in-laws (i.e., the parents of a professional’s spouse) remain ineligible and are not permitted to hold shares of a professional corporation as ‘family members’.”

Are there any additional clarifications that could have been included?

“It would have been beneficial if the Ontario Legislature had also taken steps to clarify that the term ‘spouse’ includes same-sex and unmarried couples.  You can visit our website www.mckenzielake.com to read more on that subject.”

I’m wondering if the RCDSO and CPSO have updated any related forms or procedures that might be impacted by this change. Have you heard anything?

“From a forms perspective, the most significant change affects physicians only – they no longer need to go meet with a lawyer or notary public as part of their annual renewal process – this is a great relief to many of our time-challenged clients.

The RCDSO has not yet adopted this approach, and still requires a statutory declaration as part of the process.”

Can readers contact you for more information?

“Of course! If you have any questions or would like to discuss any of these changes in more detail, please contact me: David Arntfield at arntfield@mckenzielake.com