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1994 SESSION


CHAPTER 349
An Act to amend and reenact §§ 13.1-543, 13.1-544, 13.1-545.1, 13.1-546, 13.1-1102, 13.1-1103, 13.1-1106 and 13.1-1107 of the Code of Virginia and to repeal §§ 13.1-549.3 and 13.1-1114 of the Code of Virginia, relating to professional corporations and professional limited liability companies.
[H 997]
Approved April 5, 1994

Be it enacted by the General Assembly of Virginia:

1. That §§ 13.1-543, 13.1-544, 13.1-545.1, 13.1-546, 13.1-1102, 13.1-1103, 13.1-1106 and 13.1-1107 of the Code of Virginia are amended and reenacted as follows:

§ 13.1-543. Definitions.

As used in this chapter:

A. The term "professional service" means any type of personal service to the public which requires as a condition precedent to the rendering of such service or use of such title the obtaining of a license, certification or other legal authorization and shall be limited to the personal services rendered by pharmacists, optometrists, practitioners of the healing arts, practitioners of the behavioral science professions, veterinarians, surgeons, dentists, architects, professional engineers, land surveyors, certified landscape architects, public accountants, certified public accountants, attorneys-at-law, insurance consultants, audiologists or speech pathologists, and clinical nurse specialists. For the purposes of this chapter, the following shall be deemed to be rendering the same professional service:

1. Architects, professional engineers and land surveyors; and

2. Practitioners of the healing arts, licensed under the provisions of Chapter 29 of Title 54.1, optometrists, licensed under the provisions of Chapter 32 of Title 54.1, practitioners of the behavioral science professions, licensed under the provisions of Chapters 35, 36 and 37 of Title 54.1, and one or more clinical nurse specialists who render mental health services licensed under Chapter 30 (§ 54.1-3000 et seq.) of Title 54.1 and registered with the Board of Nursing.

B. The term "professional corporation" means (i) a corporation which is organized under this chapter for the sole and specific purpose of rendering professional service other than that of architects, professional engineers, land surveyors or certified landscape architects and , except as expressly otherwise permitted by this chapter, which has as its shareholders only individuals who themselves are duly licensed or otherwise legally authorized within this Commonwealth to render the same professional service as the corporation and of which shareholders at least one is duly licensed or otherwise legally authorized to render such professional service within this Commonwealth; or (ii) a corporation which is organized under this chapter for the sole and specific purpose of rendering the professional services of architects, professional engineers, land surveyors and or certified landscape architects, or any combination thereof, and at least two-thirds of whose shares are held by persons duly licensed or otherwise legally authorized within this Commonwealth to perform the services of an architect, professional engineer, land surveyor or certified landscape architect; or (iii) a corporation which is organized under this chapter or under Chapter 10 (§ 13.1-801 et seq.) of this title for the sole and specific purpose of rendering the professional services of one or more practitioners of the healing arts, licensed under the provisions of Chapter 29 of Title 54.1, or one or more optometrists licensed under the provisions of Chapter 32 of Title 54.1, or one or more practitioners of the behavioral science professions, licensed under the provisions of Chapter 35, 36 or 37 of Title 54.1, or one or more practitioners of audiology or speech pathology, licensed under the provisions of Chapter 26 of Title 54.1, or one or more clinical nurse specialists who render mental health services licensed under Chapter 30 (§ 54.1-3000 et seq.) of Title 54.1 and registered with the Board of Nursing, or any combination of practitioners of the healing arts, optometry, the behavioral science professions, and audiology or speech pathology, and all of whose shares are held by or all of whose members are persons duly licensed or otherwise legally authorized to perform the services of a practitioner of the healing arts, optometry, the behavioral science professions, or audiology or speech pathology or of a clinical nurse specialist who renders mental health services; however, nothing herein shall be construed so as to allow any member of the healing arts, optometry, the behavioral science professions, or audiology or speech pathology or a clinical nurse specialist to conduct his practice in a manner contrary to the standards of ethics of his branch of the healing arts, optometry, the behavioral science professions, or audiology or speech pathology, or nursing, as the case may be.

C. Persons who practice the healing art of performing professional clinical laboratory services within a hospital pathology laboratory shall be legally authorized to do so for purposes of this chapter if such persons (i) hold a doctorate degree in the biological sciences or a board certification in the clinical laboratory sciences and (ii) are tenured faculty members of an accredited medical college or university that is an "educational institution" within the meaning of § 23-14.

§ 13.1-544. Who may organize and become shareholder.

An individual or group of individuals (i) duly licensed or otherwise legally authorized to render the same professional services other than those of architects, professional engineers, land surveyors or certified landscape architects, of which at least one is duly licensed or otherwise legally authorized to render such professional services within this Commonwealth, or (ii) complying with the provisions of § 13.1-549 and duly licensed or otherwise legally authorized to render within this Commonwealth the professional services of architects, professional engineers, land surveyors or certified landscape architects, or any combination thereof, may organize and become a shareholder or shareholders of a professional corporation for pecuniary profit under the provisions of Chapter 9 (§ 13.1-601 et seq.) of this title or become a member or members of a nonstock corporation under the provisions of Chapter 10 (§ 13.1-801 et seq.) of this title, for the sole and specific purpose of rendering the same and specific professional service, subject to any laws, not inconsistent with the provisions of this chapter, which are applicable to the practice of that profession in the corporate form. Any nonstock corporation so organized for the sole purpose of rendering such professional services shall be subject to all limitations and restrictions imposed by this chapter.

§ 13.1-545.1. Merger or consolidation with foreign professional corporation.

Any corporation organized under this chapter may merge or consolidate with a foreign professional corporation which has qualified to do business in this Commonwealth pursuant to § 13.1-544.2 only if both corporations are organized to render the same professional service; provided that (i) such merger or consolidation is permitted by the laws of the state under which such foreign professional corporation is organized, and (ii) if the surviving or new professional corporation is organized and operating under the laws of Virginia, all stockholders of such remaining professional corporation , except stockholders subject to the provisions of § 13.1-549.3, shall be licensed or otherwise legally authorized within this Commonwealth to render the same professional service as the corporation, provided that if such service is that of architects, professional engineers, land surveyors or certified landscape architects, or any combination thereof, at least two-thirds of such stockholders shall be licensed or otherwise legally authorized within this Commonwealth to render the applicable service.

§ 13.1-546. How corporation may render professional services; nonprofessional employees and officers; organizers and shareholders need not be employees, etc.

No corporation organized and incorporated under this chapter may render professional services except through its officers, employees and agents who are duly licensed or otherwise legally authorized to render such professional services within this Commonwealth; and only shareholders, officers, employees, and agents licensed or otherwise legally qualified by this Commonwealth may perform the professional service in Virginia; provided, however, this provision shall not be interpreted to preclude clerks, secretaries, bookkeepers, technicians and other assistants who are not usually and ordinarily considered by custom and practice to be rendering professional service to the public for which a license or other legal authorization is required from acting as employees of a professional corporation and performing their usual duties or from acting as officers of a professional corporation; and provided further that nothing contained in this chapter shall be interpreted to require that the right of an individual to be a shareholder of a corporation organized under this chapter, or to organize such a corporation, is dependent upon the present or future existence of an employment relationship between him and such corporation, or his present or future active participation in any capacity in the production of the income of such corporation or in the performance of the services rendered by such corporations.

§ 13.1-1102. Definitions.

A. As used in this chapter:

"Professional business entity" means (i) a professional limited liability company, (ii) a professional corporation within the meaning of § 13.1-543 B of Chapter 7 of Title 13.1, or (iii) a partnership each of the partners of which is duly licensed or otherwise legally authorized to render the same professional services as those for which the partnership was organized.

"Professional limited liability company" means (i) a limited liability company that is organized under this chapter for the sole and specific purpose of rendering professional service other than that of architects, professional engineers, land surveyors or certified landscape architects and, except as expressly otherwise permitted by this chapter, that has as its members only persons or professional business entities that themselves are duly licensed or otherwise legally authorized within this Commonwealth to render the same professional service as the professional limited liability company and of which members at least one is duly licensed or otherwise legally authorized to render such professional service within this Commonwealth; (ii) a limited liability company that is organized under this chapter for the sole and specific purpose of rendering professional services service of architects, professional engineers, land surveyors and or certified landscape architects, or any combination thereof, and at least two-thirds of whose membership interests are held by persons duly licensed or legally authorized within this Commonwealth to perform the services of an architect, professional engineer, land surveyor or certified landscape architect; or (iii) a limited liability company that is organized under this chapter for the sole and specific purpose of rendering the professional services of one or more practitioners of the healing arts, licensed under the provisions of Chapter 29 (§ 54.1-2900 et seq.) of Title 54.1, or one or more optometrists licensed under the provisions of Chapter 32 (§ 54.1-3200 et seq.) of Title 54.1, or one or more practitioners of the behavioral science professions, licensed under the provisions of Chapters 35 (§ 54.1-3500 et seq.), 36 (§ 54.1-3600 et seq.) or 37 (§ 54.1-3700 et seq.) of Title 54.1, or one or more practitioners of audiology or speech pathology, licensed under the provisions of Chapter 26 (§ 54.1-2600 et seq.) of Title 54.1, or one or more clinical nurse specialists who render mental health services licensed under Chapter 30 (§ 54.1-3000 et seq.) of Title 54.1 and registered with the Board of Nursing, or any combination of practitioners of the healing arts, of optometry, the behavioral science professions, and audiology or speech pathology and all of whose members are persons or professional business entities duly licensed or otherwise legally authorized to perform the services of a practitioner of the healing arts, optometry, the behavioral science professions or audiology or speech pathology or of a clinical nurse specialist who renders mental health services; however, nothing herein shall be construed so as to allow any member of the healing arts, optometry, the behavioral science professions, or audiology or speech pathology or a clinical nurse specialist to conduct that person's practice in a manner contrary to the standards of ethics of that person's branch of the healing arts, optometry, the behavioral science professions, or audiology or speech pathology, or nursing as the case may be.

"Professional services" means any type of personal service to the public that requires as a condition precedent to the rendering of that service or the use of that title the obtaining of a license, certification, or other legal authorization and shall be limited to the personal services rendered by pharmacists, optometrists, practitioners of the healing arts, practitioners of the behavioral science professions, veterinarians, surgeons, dentists, architects, professional engineers, land surveyors, certified landscape architects, public accountants, certified public accountants, attorneys at law, insurance consultants, audiologists or speech pathologists and clinical nurse specialists. For the purposes of this chapter, the following shall be deemed to be rendering the same professional services:

1. Architects, professional engineers, and land surveyors; and

2. Practitioners of the healing arts, licensed under the provisions of Chapter 29 (§ 54.1-2900 et seq.) of Title 54.1, optometrists, licensed under the provisions of Chapter 32 (§ 54.1-3200 et seq.) of Title 54.1, and practitioners of the behavioral science professions, licensed under the provisions of Chapters 35 (§ 54.1-3500 et seq.), 36 (§ 54.1-3600 et seq.), and 37 (§ 54.1-3700 et seq.) of Title 54.1, and one or more clinical nurse specialists who render mental health services licensed under Chapter 30 (§ 54.1-3000 et seq.) of Title 54.1 and registered with the Board of Nursing.

B. Persons who practice the healing art of performing professional clinical laboratory services within a hospital pathology laboratory shall be legally authorized to do so for purposes of this chapter if such persons (i) hold a doctorate degree in the biological sciences or a board certification in the clinical laboratory sciences and (ii) are tenured faculty members of an accredited medical college or university that is an "educational institution" within the meaning of § 23-14.

C. Except as expressly otherwise provided, all terms defined in § 13.1-1002 shall have the same meanings for purposes of this chapter.

§ 13.1-1103. Who may become a member.

Two or more individuals or professional business entities (i) duly licensed or otherwise legally authorized to render the same professional services other than those of architects, professional engineers, land surveyors or certified landscape architects, of which at least one is duly licensed or otherwise legally authorized to render such professional services within this Commonwealth or (ii) complying with the provisions of § 13.1-1111 and duly licensed or otherwise legally authorized to render within this Commonwealth the professional services of architects, professional engineers, land surveyors or certified landscape architects, or any combination thereof, may become members of a limited liability company for pecuniary profit under the provisions of Chapter 12 (§ 13.1-1000 et seq.) of this title, for the sole and specific purpose of rendering the same and specific professional service, subject to any laws, not inconsistent with the provisions of this chapter, which are applicable to the practice of that profession in the limited liability company form.

§ 13.1-1106. Merger or consolidation with foreign professional limited liability company or foreign professional corporation.

Any limited liability company organized under this chapter may merge or consolidate with a foreign professional limited liability company that has qualified to do business in this Commonwealth pursuant to § 13.1-1105, or a foreign professional corporation that has qualified to do business in this Commonwealth pursuant to § 13.1-544.2, only if both limited liability companies or the limited liability company and the professional corporation are organized to render the same professional services, provided that (i) the merger or consolidation is permitted by the laws of the state under which the foreign professional limited liability company or foreign professional corporation is organized, (ii) if the surviving professional business entity or new professional business entity is a professional limited liability company, organized and operating under the laws of Virginia, all members and managers of the remaining professional limited liability company, except members and managers subject to the provisions of § 13.1-1114, shall be licensed or otherwise legally authorized within this Commonwealth to render the same professional service as the professional limited liability company, provided that if such service is that of architects, professional engineers, land surveyors or certified landscape architects, or any combination thereof, at least two-thirds of those holding membership interests shall be licensed or otherwise legally authorized within this Commonwealth to render the applicable service, and (iii) if the surviving professional business entity or new professional business entity is a professional corporation organized and operating under the laws of Virginia, all stockholders of the remaining professional corporation, except stockholders subject to the provisions of § 13.1-1114, shall be licensed or otherwise legally authorized within this Commonwealth to render the same professional service as the professional corporation, provided that if such service is that of architects, professional engineers, land surveyors or certified landscape architects, or any combination thereof, at least two-thirds of such stockholders shall be licensed or otherwise legally authorized within this Commonwealth to render the applicable service.

§ 13.1-1107. How limited liability company may render professional services; nonprofessional employees and agents; members and managers need not be employees, etc.

No limited liability company organized under this chapter may render professional services except through its members, managers, employees and agents who are duly licensed or otherwise legally authorized to render those professional services within this Commonwealth , and only members, managers, employees, and agents licensed or otherwise legally qualified by this Commonwealth may perform the professional service in Virginia. However, this provision shall not be interpreted to preclude clerks, secretaries, bookkeepers, technicians and other assistants who are not usually and ordinarily considered by custom and practice to be rendering professional service to the public for which a license or other legal authorization is required from acting as employees, managers and agents of a professional limited liability company and performing their usual duties or from acting as employees, managers or agents of a professional limited liability company. Nothing contained in this chapter shall be interpreted to require that the right of an individual to be a member or manager of a limited liability company organized under this chapter, or to organize that limited liability company, is dependent upon the present or future existence of an employment relationship between that individual and that limited liability company, or that individual's present or future active participation in any capacity in the production of the income of that limited liability company or in the performance of the services rendered by that limited liability company.

2. That §§ 13.1-549.3 and 13.1-1114 of the Code of Virginia are repealed.