The whole history of the world is summed up in the fact that, when nations are strong, they are not always just, and when they wish to be just, they are no longer strong. -- Winston Churchill


PREMIUM LEGAL RESOURCES LEGAL FORMS ASK A LAWYER

[These will remain effective at least until fall 1999. - staff]
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GENERAL PROVISIONS

89.010 Short title.
89.020 Definitions.
89.025 Secretary of state: Fees.
89.027 Secretary of state: Filing of documents written in language other than English.

PROFESSIONAL CORPORATIONS

89.030 Applicability of chapter 78 of NRS.
89.040 Organization: Procedure; limitation; contents of articles of incorporation; corporate name.
89.050 Scope of business; property and investments; professional services by officers and employees.
89.060 Professional relationship preserved.
89.070 Restrictions on ownership and transfer of shares.
89.080 Duties upon legal disqualification of officer, stockholder, director or employee; qualifications of officer or director; death of stockholder whose interest is in revocable trust.
89.090 Filing annual statement with secretary of state; contents; fee; penalty. [Repealed.]
89.100 Authority of regulating boards not affected.
89.110 Scope of authority.

PROFESSIONAL ASSOCIATIONS

89.200 Inapplicability of chapter 87 of NRS.
89.210 Articles of association to be filed with secretary of state; filing of amendments; name.
89.220 Professional relationship preserved.
89.230 Restrictions on membership.
89.240 Duties upon legal disqualification of member or employee; redemption of and restrictions on transfer and ownership of member's interest.
89.250 Annual statement regarding members and employees: Filing; contents; execution; fee.
89.252 Defaulting associations: Identification; penalty.
89.254 Defaulting associations: Duties of secretary of state; forfeiture; distribution of assets.
89.256 Defaulting associations: Procedure and conditions for reinstatement.
89.260 Authority of regulating board not affected.
89.270 Scope of authority.
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ATTORNEY GENERAL'S OPINIONS.
No corporation may practice medicine except licensed physicians incorporated under chapter; strict compliance required. No corporation organized under state's general corporation law (see NRS ch. 78) may lawfully engage in practice of medicine as defined in NRS 630.020, but one or more licensed physicians may practice medicine in corporate form if they are incorporated under NRS ch. 89 (Professional Corporations and Associations Act) and strictly comply with its provisions. AGO 219 (10- 3-1977)

Corporation may not practice medicine unless organized under chapter; health maintenance organization may provide health care. Corporation may not lawfully engage in practice of medicine unless organized under NRS ch. 89, but corporation which is health maintenance organization authorized under NRS ch. 695C to provide health care services may provide such services without violating NRS ch. 630 because NRS 695C.050 exempts health maintenance organizations from provisions of NRS ch. 630 and provides that they are not deemed to be practicing medicine. AGO 219 (10-3-1977)

GENERAL PROVISIONS

89.010 Short title. This chapter is known and may be cited as the Professional Corporations and Associations Act. (Added to NRS by 1963, 865; A 1969, 519)

89.020 Definitions. As used in this chapter, unless the context requires otherwise:

1. "Employee" means a person licensed or otherwise legally authorized to render professional service within this state who renders such service through a professional corporation or a professional association, but does not include clerks, bookkeepers, technicians or other persons who are not usually considered by custom and practice of the profession to be rendering professional services to the public.

2. "Licensed" means legally authorized by the appropriate regulating board of this state to engage in a regulated profession in this state.

3. "Professional association" means a common law association of two or more persons licensed or otherwise legally authorized to render professional service within this state when created by written articles of association which contain in substance the following provisions characteristic of corporate entities:
(a) The death, insanity, bankruptcy, retirement, resignation, expulsion or withdrawal of any member of the association does not cause its dissolution.
(b) The authority to manage the affairs of the association is vested in a board of directors or an executive board or committee, elected by the members of the association.
(c) The members of the association are employees of the association.
(d) Members' ownership is evidenced by certificates.

4. "Professional corporation" means a corporation organized under this chapter to render a professional service.

5. "Professional service" means any type of personal service which may legally be performed only pursuant to a license, certificate of registration or other legal authorization.

6. "Regulating board" means the body which regulates and authorizes the admission to the profession which a professional corporation or a professional association is authorized to perform. (Added to NRS by 1963, 865; A 1969, 519; 1995, 2117)

89.025 Secretary of state: Fees. Except as otherwise provided in NRS 89.200 to 89.270, inclusive, the fees set forth in NRS 78.785 apply to this chapter. (Added to NRS by 1995, 1139)

89.027 Secretary of state: Filing of documents written in language other than English. No document which is written in a language other than English may be filed or submitted for filing in the office of the secretary of state pursuant to the provisions of this chapter unless it is accompanied by a verified translation of that document into the English language. (Added to NRS by 1995, 1137)

PROFESSIONAL CORPORATIONS

89.030 Applicability of chapter 78 of NRS. The laws applicable to other Nevada private corporations organized under chapter 78 of NRS and all rights, privileges and duties thereunder shall apply to professional corporations, except where such laws are in conflict with or inconsistent with the provisions of this chapter. In case of conflict, the provisions of this chapter shall apply. (Added to NRS by 1963, 865)

89.040 Organization: Procedure; limitation; contents of articles of incorporation; corporate name.

1. One or more persons may organize a professional corporation in the manner provided for organizing a private corporation pursuant to chapter 78 of NRS. Each person organizing the corporation must, except as otherwise provided in subsection 2 of NRS 89.050, be authorized to perform the professional service for which the corporation is organized. The articles of incorporation must contain the following additional information:
(a) The profession to be practiced by means of the professional corporation.
(b) The names and post office box or street addresses, either residence or business, of the original stockholders and directors of the professional corporation.
(c) A certificate from the regulating board of the profession to be practiced showing that each of the directors, and each of the stockholders who is a natural person, is licensed to practice the profession.

2. The corporate name of a professional corporation must contain the words "Professional Corporation" or the abbreviation "Prof. Corp.," or the word "Chartered" or "Limited" or the abbreviation "Ltd." The corporate name must contain the last name of one or more of its stockholders. The corporation may render professional services and exercise its authorized powers under a fictitious name if the corporation has first registered the name in the manner required by chapter 602 of NRS. (Added to NRS by 1963, 865; A 1969, 520; 1979, 122; 1987, 585; 1991, 323, 1305; 1995, 2118)

89.050 Scope of business; property and investments; professional services by officers and employees.

1. Except as otherwise provided in subsection 2, a professional corporation may be organized only for the purpose of rendering one specific type of professional service and may not engage in any business other than rendering the professional service for which it was organized and services reasonably related thereto, except that a professional corporation may own real and personal property appropriate to its business and may invest its funds in any form of real property, securities or any other type of investment.

2. A professional corporation may be organized to render a professional service relating to:
(a) Architecture, interior design, engineering and landscape architecture, or any combination thereof, and may be composed of persons engaged in the practice of architecture or interior design as provided in chapter 623 of NRS, persons engaged in the practice of landscape architecture as provided in chapter 623A of NRS and persons engaged in the practice of professional engineering as provided in chapter 625 of NRS.
(b) Medicine, homeopathy and osteopathy, and may be composed of persons engaged in the practice of medicine as provided in chapter 630 of NRS, persons engaged in the practice of homeopathic medicine as provided in chapter 630A of NRS and persons engaged in the practice of osteopathic medicine as provided in chapter 633 of NRS. Such a professional corporation may market and manage additional professional corporations which are organized to render a professional service relating to medicine, homeopathy and osteopathy.

3. A professional corporation may render a professional service only through its officers and employees, all of whom must be authorized to render that professional service. (Added to NRS by 1963, 866; A 1969, 705; 1985, 585; 1991, 323, 1306; 1995, 353, 1704)

89.060 Professional relationship preserved. The provisions of this chapter relating to professional corporations do not modify any law applicable to the relationship between a person furnishing professional service and a person receiving such service, including liability arising out of such professional service; but nothing contained in this section shall render:

1. A person personally liable in tort for any act in which he has not personally participated.

2. A director, officer or employee of a professional corporation liable in contract for any contract which he executes on behalf of a professional corporation within the limits of his actual authority. (Added to NRS by 1963, 866; A 1969, 521) NEVADA CASES. Defendant members of professional corporation entitled to summary judgment where no allegation defendants personally participated in tortious acts. In action for wrongful termination of employment, where plaintiff sought to hold each member of professional legal corporation personally liable for tortious acts of one member of that corporation, but failed to allege in his affidavits any facts showing that defendants personally participated in alleged tortious acts as required by NRS 89.060, defendants were entitled to judgment as matter of law pursuant to N.R.C.P. 56(c), because plaintiff failed to show that there was genuine issue for trial. Grayson v. Jones, 101 Nev. 749, 710 P.2d 76 (1985), cited, Moody v. Manny's Auto Repair, 110 Nev. 320, at 323, 871 P.2d 935 (1994)

89.070 Restrictions on ownership and transfer of shares.

1. Except as otherwise provided in subsections 2 and 3:
(a) No corporation organized under the provisions of this chapter may issue any of its stock to anyone other than a natural person who is licensed to render the same specific professional services as those for which the corporation was incorporated.
(b) No stockholder of a corporation organized under this chapter may enter into a voting trust agreement or any other type of agreement vesting another person with the authority to exercise the voting power of any or all of his stock, unless the other person is licensed to render the same specific professional services as those for which the corporation was incorporated.
(c) No shares of a corporation organized under this chapter may be sold or transferred except to a natural person who is eligible to be a stockholder of the corporation or to the personal representative or estate of a deceased or legally incompetent stockholder. The personal representative or estate of the stockholder may continue to own shares for a reasonable period, but may not participate in any decisions concerning the rendering of professional services. The articles of incorporation or bylaws may provide specifically for additional restrictions on the transfer of shares and may provide for the redemption or purchase of the shares by the corporation, its stockholders or an eligible individual account plan complying with the requirements of subsection 2 at prices and in a manner specifically set forth. A stockholder may transfer his shares in the corporation or any other interest in the assets of the corporation to a revocable trust if he acts as trustee of the revocable trust and any person who acts as cotrustee and is not licensed to perform the services for which the corporation was incorporated does not participate in any decisions concerning the rendering of those services.

2. A person not licensed to render the professional services for which the corporation was incorporated may own a beneficial interest in any of the assets, including corporate shares, held for his account by an eligible individual account plan sponsored by the professional corporation for the benefit of its employees, which is intended to qualify under section 401 of the Internal Revenue Code (26 U.S.C. 401) if the terms of the trust are such that the total number of shares which may be distributed for the benefit of persons not licensed to render the professional services for which the corporation was incorporated is less than a controlling interest and:
(a) The trustee of the trust is licensed to render the same specific professional services as those for which the corporation was incorporated; or
(b) The trustee is not permitted to participate in any corporate decisions concerning the rendering of professional services in his capacity as trustee. A trustee who is individually a stockholder of the corporation may participate in his individual capacity as a stockholder, director or officer in any corporate decision.

3. A professional corporation in which all the stockholders who are natural persons are licensed to render the same specific professional service, may acquire and hold stock in another professional corporation, or in a similar corporation organized pursuant to the corresponding law of another state, if all the stockholders who are natural persons of the corporation whose stock is acquired are licensed in that corporation's state of incorporation to render the same specific professional service as the stockholders who are natural persons of the professional corporation that acquires the stock.

4. Any act in violation of this section is void and does not pass any rights or privileges or vest any powers, except to an innocent person who is not a stockholder and who has relied on the effectiveness of the action. (Added to NRS by 1963, 866; A 1969, 521; 1977, 643; 1991, 1306; 1995, 2118)

89.080 Duties upon legal disqualification of officer, stockholder, director or employee; qualifications of officer or director; death of stockholder whose interest is in revocable trust.

1. If any officer, stockholder, director or employee of a corporation organized under this chapter who has been rendering professional service to the public becomes legally disqualified to render such professional services within this state, he shall sever within a reasonable period all professional service with and financial interest in the corporation; but this chapter does not prevent a corporation formed under this chapter from entering into a contract with an employee which provides for severance pay or for compensation for past services upon termination of professional service, whether by death or otherwise.

2. No person may be an officer or director of a corporation organized under this chapter other than a natural person who is licensed to render the same specific professional services as those for which the corporation was incorporated.

3. Upon the death of a stockholder of a corporation who has transferred his interest in the corporation to a revocable trust as permitted by NRS 89.070, the trustee of the revocable trust may continue to retain any interest so transferred, including corporate shares, for a reasonable period, but may not exercise any authority concerning the rendering of professional services and may not distribute the corporate interest to any person not licensed to render the services for which the corporation was incorporated.

4. A corporation's failure to require compliance with the provisions of this section is a ground for the forfeiture of its charter. (Added to NRS by 1963, 866; A 1969, 522; 1991, 1307; 1995, 2119)

89.090 Filing annual statement with secretary of state; contents; fee; penalty. Repealed. (See chapter 586, Statutes of Nevada 1995, at page 2121.)

89.100 Authority of regulating boards not affected. The provisions of this chapter relating to professional corporations do not bar the regulating board of any profession from taking any action otherwise within its power, nor do they affect the rules of ethics or practice of any profession. (Added to NRS by 1963, 867; A 1969, 522)

ATTORNEY GENERAL'S OPINIONS.
Regulating board may prohibit incorporation. Under NRS 89.100 (Professional Corporations Act), regulating board of particular profession may prohibit members of its profession from incorporating by promulgation of rule of practice which forbids such action. AGO 74 (9- 26-1963)

89.110 Scope of authority. No professional corporation may do any act which is prohibited to be done by natural persons licensed to practice the profession which the professional corporation is organized to practice. (Added to NRS by 1963, 867; A 1995, 2120)

PROFESSIONAL ASSOCIATIONS

89.200 Inapplicability of chapter 87 of NRS. The provisions of chapter 87 of NRS (Uniform Partnership Act) do not apply to professional associations. (Added to NRS by 1969, 523)

89.210 Articles of association to be filed with secretary of state; filing of amendments; name.

1. Within 30 days following the organization of a professional association under this chapter the association shall file with the secretary of state a copy of the articles of association, duly executed, and shall pay at that time a filing fee of $25. Any such association formed as a common law association before July 1, 1969, shall file, within 30 days of July 1, 1969, a certified copy of its articles of association, with any amendments thereto, with the secretary of state, and shall pay at that time a filing fee of $25. A copy of any amendments to the articles of association adopted after July 1, 1969, must also be filed with the secretary of state within 30 days after the adoption of such amendments. Each copy of amendments so filed must be certified as true and correct and be accompanied by a filing fee of $10.

2. The name of such a professional association must contain the words "Professional Association," "Professional Organization" or the abbreviations "Prof. Ass'n" or "Prof. Org." The association may render professional services and exercise its authorized powers under a fictitious name if the association has first registered the name in the manner required under chapter 602 of NRS. (Added to NRS by 1969, 523; A 1979, 123)

89.220 Professional relationship preserved. The provisions of this chapter relating to professional associations do not modify any law applicable to the relationship between a person furnishing professional service and a person receiving such service, including liability arising out of such professional service, but:

1. A member or employee of a professional association shall not be personally liable in tort for any act in which he has not personally participated.

2. A member or employee of a professional association shall not be personally liable in contract for any contract which he executes on behalf of a professional association within the limits of his actual authority. (Added to NRS by 1969, 523)

89.230 Restrictions on membership. Members who organize a professional association must all be natural persons licensed to render the same specific professional services as those for which the professional association is organized. A professional association may render professional service only through its members and employees, all of whom must be licensed to render the professional service. (Added to NRS by 1969, 523; A 1995, 2120)

89.240 Duties upon legal disqualification of member or employee; redemption of and restrictions on transfer and ownership of member's interest.

1. If any member or employee of a professional association who has been rendering professional service to the public becomes legally disqualified to render the professional service within this state, he shall sever within a reasonable period all professional service with and financial interest in the association; but this chapter does not prevent a professional association from entering into a contract with a member or employee which provides for severance pay or for compensation for past services upon termination of professional service, whether by death or otherwise. Upon the death of a member of the association who has transferred his interest in the association to a revocable trust as permitted by subsection 2, the trustee of the revocable trust may continue to retain any interest so transferred for a reasonable period, but may not exercise any authority concerning the rendering of professional services and may not distribute the interest in the association or its assets to any person not licensed to render the services for which the association was organized.

2. No membership interest in a professional association may be sold or transferred except to a natural person who is eligible to be a member of the association or to the personal representative or estate of a deceased or legally incompetent member, except as provided in this subsection. The personal representative of such a member may continue to own such interest for a reasonable period, but may not participate in any decisions concerning the rendering of professional service. A member may transfer his interest in the association or any other interest in the assets of the association to a revocable trust if he acts as trustee of the revocable trust and any person who acts as cotrustee and is not licensed to perform the services for which the association is organized does not participate in any decisions concerning the rendering of those professional services.

3. The articles of association may provide specifically for additional restrictions on the transfer of members' interests and may provide for the redemption or purchase of such an interest by the association or its other members at prices and in a manner specifically set forth in the articles. (Added to NRS by 1969, 523; A 1991, 1308; 1995, 2120)

89.250 Annual statement regarding members and employees: Filing; contents; execution; fee.

1. A professional association shall, on or before the last day of the month in which the anniversary date of its organization occurs in each year, furnish a statement to the secretary of state showing the names and residence addresses of all members and employees in such association and shall certify that all members and employees are licensed to render professional service in this state.

2. The statement must:
(a) Be made on a form prescribed by the secretary of state but must not contain any fiscal or other information except that expressly called for by this section.
(b) Be signed by the chief executive officer of the association.

3. Upon filing the annual statement required by this section, the association shall pay to the secretary of state a fee of $15. (Added to NRS by 1969, 524; A 1995, 1139)

89.252 Defaulting associations: Identification; penalty.
1. Each professional association that is required to make a filing and pay the fee prescribed in NRS 89.250 but refuses to do so within the time provided is in default.
2. For default, there must be added to the amount of the fee a penalty of $5. The fee and penalty must be collected as provided in this chapter. (Added to NRS by 1995, 1138)

89.254 Defaulting associations: Duties of secretary of state; forfeiture; distribution of assets.

1. The secretary of state shall notify by letter each professional association which is in default pursuant to the provisions of NRS 89.252. The notice must be accompanied by a statement indicating the amount of the filing fee, penalties and costs remaining unpaid.

2. On the first day of the ninth month following the month in which the filing was required, the articles of association of the professional association is revoked and its right to transact business is forfeited.

3. The secretary of state shall compile a complete list containing the names of all professional associations whose right to do business has been forfeited. The secretary of state shall forthwith notify each such association by letter of the forfeiture of its right to transact business. The notice must be accompanied by a statement indicating the amount of the filing fee, penalties and costs remaining unpaid.

4. If the articles of association of a professional association are revoked and the right to transact business is forfeited, all the property and assets of the defaulting association must be held in trust by its members, as for insolvent corporations, and the same proceedings may be had with respect to its property and assets as apply to insolvent corporations. Any interested person may institute proceedings at any time after a forfeiture has been declared, but if the secretary of state reinstates the articles of association the proceedings must be dismissed and all property restored to the members of the professional association.

5. If the assets of the association are distributed, they must be applied to:
(a) The payment of the filing fee, penalties and costs due to the state; and
(b) The payment of the creditors of the association. Any balance remaining must be distributed as set forth in the articles of association or, if no such provisions exist, among the members of the association. (Added to NRS by 1995, 1138)

89.256 Defaulting associations: Procedure and conditions for reinstatement.

1. Except as otherwise provided in subsections 3 and 4, the secretary of state shall reinstate any professional association which has forfeited its right to transact business under the provisions of this chapter and restore the right to carry on business in this state and exercise its privileges and immunities if it:
(a) Files with the secretary of state the statement and certification required by NRS 89.250; and
(b) Pays to the secretary of state:
(1) The annual filing fee and penalty set forth in NRS 89.250 and 89.252 for each year or portion thereof during which the articles of association have been revoked; and
(2) A fee of $25 for reinstatement.

2. When the secretary of state reinstates the association to its former rights, he shall:
(a) Immediately issue and deliver to the association a certificate of reinstatement authorizing it to transact business, as if the fees had been paid when due; and
(b) Upon demand, issue to the association a certified copy of the certificate of reinstatement.

3. The secretary of state shall not order a reinstatement unless all delinquent fees and penalties have been paid, and the revocation of the association's articles of association occurred only by reason of its failure to pay the fees and penalties.

4. If the articles of association of a professional association have been revoked pursuant to the provisions of this chapter and have remained revoked for 10 consecutive years, the articles must not be reinstated. (Added to NRS by 1995, 1138)

89.260 Authority of regulating board not affected. The provisions of this chapter relating to professional associations do not bar the regulating board of any profession from taking any action otherwise within its power, nor do they affect the rules of ethics or practice of any profession. (Added to NRS by 1969, 524)

89.270 Scope of authority. No professional association may do any act which is prohibited to be done by natural persons licensed to practice the profession which the professional association is organized to practice. (Added to NRS by 1969, 524; A 1995, 2121)
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This document was produced by the Library from material supplied by the State of Nevada, Carson City NV.

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