Bill > S2386

Introduced Session

This bill amends, supplements and repeals various sections of "The Professional Service Corporation Act" (PSCA), P.L.1969, c.232 (C.14A:17-1 et seq.), in order to expand the ability of foreign professionals and professional corporations to do business in New Jersey, and to make the PSCA consistent with the "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq. Current law requires each shareholder of a professional corporation to be licensed within this State to provide the type of professional services for which the corporation was incorporated. This bill eliminates that requirement, enabling professionals who are licensed or otherwise legally authorized to provide services in other states to be shareholders of a New Jersey professional corporation, provided that at least one shareholder is licensed by the State of New Jersey. In addition, the bill allows foreign professional corporations to do business in this State through shareholders or employees who are licensed in New Jersey. Current law only extends this privilege to foreign professional legal corporations. This bill also expands the ability of a domestic professional corporation to merge with a foreign professional corporation, or a domestic or foreign limited liability company, authorized to provide the same professional services. This bill repeals and replaces sections 6 and 10 of the PSCA in order to make the PSCA consistent with the "New Jersey Business Corporation Act." When the PSCA was enacted, a business corporation was required by the "New Jersey Business Corporation Act" to have three directors, but the law was later amended to require only a single director. This bill will similarly reduce the number of required directors to one, and requires that all of the directors and the president be licensed or otherwise legally authorized professionals. Other officers need not be professionals so long as they do not direct or engage in the professional practice. The bill also broadens the categories of authorized shareholders of a professional corporation to include individuals licensed or otherwise legally authorized by states other than New Jersey and entities, such as professional corporations or limited liability companies, owned solely by individuals authorized to practice the profession, so long as at least one individual shareholder or one individual owner of a permitted entity shareholder is licensed or otherwise authorized by the State of New Jersey. The term "another state of the United States" rather than a "foreign state" is used to limit ownership to professionals licensed in other states of the United States, as distinguished from foreign countries. Finally, as hospitals have increasingly looked to acquire physician practices, the bill provides that a licensed physician acting as a hospital's nominee may direct the professional medical practice, however the financial benefits and burdens shall be enjoyed or suffered by the hospital.

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Nia Gill (D)*, 

Senate Commerce Hearing (13:00 9/26/2016 Committee Room 6, First Floor) (on 09/26/2016)