(REPRINTED WITH ADOPTED AMENDMENTS)

 

Senate Bill No. 301–Committee on Judiciary

 

(On Behalf of State Board of Architecture, Interior
Design and Residential Design

 

March 8, 2001

____________

 

Referred to Committee on Judiciary

 

SUMMARY—Revises provisions governing formation and operation of professional corporation or association by certain multiple disciplines. (BDR 7‑634)

 

FISCAL NOTE:  Effect on Local Government: No.

                             Effect on the State: No.

 

~

 

EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to business associations; revising the provisions governing the formation and operation of a professional corporation or association by certain multiple disciplines; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1. NRS 89.040 is hereby amended to read as follows:

1-2    89.040  1.  One or more persons may organize a professional

1-3  corporation in the manner provided for organizing a private corporation

1-4  pursuant to chapter 78 of NRS. Each person organizing the corporation

1-5  must, except as otherwise provided in subsection 2 of NRS 89.050, be

1-6  authorized to perform the professional service for which the corporation is

1-7  organized. The articles of incorporation must contain the following

1-8  additional information:

1-9    (a) The profession to be practiced by means of the professional

1-10  corporation.

1-11    (b) The names and post office [box] boxes or street addresses, either

1-12  residence or business, of the original stockholders and directors of the

1-13  professional corporation.

1-14    (c) [A] Except as otherwise provided in paragraph (d) of this

1-15  subsection, a certificate from the regulating board of the profession to be

1-16  practiced showing that each of the directors, and each of the stockholders

1-17  who is a natural person, is licensed to practice the profession.

1-18    (d) For a professional corporation organized pursuant to this chapter

1-19  and practicing pursuant to the provisions of NRS 623.349, a certificate

2-1  from the regulating board or boards of the profession or professions to

2-2  be practiced showing that control and two-thirds ownership of the

2-3  corporation is held by persons registered or licensed pursuant to the

2-4  applicable provisions of chapter 623, 623A or 625 of NRS. As used in this

2-5  paragraph, “control” has the meaning ascribed to it in NRS 623.349.

2-6    2.  The corporate name of a professional corporation must contain the

2-7  words “Professional Corporation” or the abbreviation “Prof. Corp.,” or the

2-8  word “Chartered” or “Limited” or the abbreviation “Ltd.” The corporate

2-9  name must contain the last name of one or more of its stockholders. The

2-10  corporation may render professional services and exercise its authorized

2-11  powers under a fictitious name if the corporation has first registered the

2-12  name in the manner required by chapter 602 of NRS.

2-13    Sec. 2.  NRS 89.050 is hereby amended to read as follows:

2-14    89.050  1.  Except as otherwise provided in subsection 2, a

2-15  professional corporation may be organized only for the purpose of

2-16  rendering one specific type of professional service and may not engage in

2-17  any business other than rendering the professional service for which it was

2-18  organized and services reasonably related thereto, except that a

2-19  professional corporation may own real and personal property appropriate to

2-20  its business and may invest its [funds] money in any form of real property,

2-21  securities or any other type of investment.

2-22    2.  A professional corporation may be organized to render a

2-23  professional service relating to:

2-24    (a) Architecture, interior design, residential design, engineering and

2-25  landscape architecture, or any combination thereof, and may be composed

2-26  of persons:

2-27      (1) Engaged in the practice of architecture as provided in chapter 623

2-28  of NRS;

2-29      (2) Practicing as a registered interior designer as provided in chapter

2-30  623 of NRS;

2-31      (3) Engaged in the practice of residential design as provided in

2-32  chapter 623 of NRS;

2-33      (4) Engaged in the practice of landscape architecture as provided in

2-34  chapter 623A of NRS; and

2-35      [(4)] (5) Engaged in the practice of professional engineering as

2-36  provided in chapter 625 of NRS.

2-37    (b) Medicine, homeopathy and osteopathy, and may be composed of

2-38  persons engaged in the practice of medicine as provided in chapter 630 of

2-39  NRS, persons engaged in the practice of homeopathic medicine as

2-40  provided in chapter 630A of NRS and persons engaged in the practice of

2-41  osteopathic medicine as provided in chapter 633 of NRS. Such a

2-42  professional corporation may market and manage additional professional

2-43  corporations which are organized to render a professional service relating

2-44  to medicine, homeopathy and osteopathy.

2-45    3.  A professional corporation may render a professional service only

2-46  through its officers and employees[, all of whom must be authorized to

2-47  render that] who are licensed or otherwise authorized by law to render the

2-48  professional service.

 

3-1    Sec. 3.  NRS 89.070 is hereby amended to read as follows:

3-2    89.070  1.  Except as otherwise provided in [subsections 2 and 3:] this

3-3  section and NRS 623.349:

3-4    (a) No corporation organized under the provisions of this chapter may

3-5  issue any of its stock to anyone other than a natural person who is licensed

3-6  to render the same specific professional services as those for which the

3-7  corporation was incorporated.

3-8    (b) No stockholder of a corporation organized under this chapter may

3-9  enter into a voting trust agreement or any other type of agreement vesting

3-10  another person with the authority to exercise the voting power of any or all

3-11  of his stock, unless the other person is licensed to render the same specific

3-12  professional services as those for which the corporation was incorporated.

3-13    (c) No shares of a corporation organized under this chapter may be sold

3-14  or transferred except to a natural person who is eligible to be a stockholder

3-15  of the corporation or to the personal representative or estate of a deceased

3-16  or legally incompetent stockholder. The personal representative or estate of

3-17  the stockholder may continue to own shares for a reasonable period, but

3-18  may not participate in any decisions concerning the rendering of

3-19  professional services.

3-20  The articles of incorporation or bylaws may provide specifically for

3-21  additional restrictions on the transfer of shares and may provide for the

3-22  redemption or purchase of the shares by the corporation, its stockholders or

3-23  an eligible individual account plan complying with the requirements of

3-24  subsection 2 at prices and in a manner specifically set forth. A stockholder

3-25  may transfer his shares in the corporation or any other interest in the assets

3-26  of the corporation to a revocable trust if he acts as trustee of the revocable

3-27  trust and any person who acts as cotrustee and is not licensed to perform

3-28  the services for which the corporation was incorporated does not

3-29  participate in any decisions concerning the rendering of those services.

3-30    2.  [A] Except as otherwise provided in NRS 623.349, a person not

3-31  licensed to render the professional services for which the corporation was

3-32  incorporated may own a beneficial interest in any of the assets, including

3-33  corporate shares, held for his account by an eligible individual account plan

3-34  sponsored by the professional corporation for the benefit of its employees,

3-35  which is intended to qualify under section 401 of the Internal Revenue

3-36  Code , [(]26 U.S.C. § 401 , [)] if the terms of the trust are such that the

3-37  total number of shares which may be distributed for the benefit of persons

3-38  not licensed to render the professional services for which the corporation

3-39  was incorporated is less than a controlling interest and:

3-40    (a) The trustee of the trust is licensed to render the same specific

3-41  professional services as those for which the corporation was incorporated;

3-42  or

3-43    (b) The trustee is not permitted to participate in any corporate decisions

3-44  concerning the rendering of professional services in his capacity as

3-45  trustee.

3-46  A trustee who is individually a stockholder of the corporation may

3-47  participate in his individual capacity as a stockholder, director or officer in

3-48  any corporate decision.

4-1    3.  [A] Except as otherwise provided in subsection 4, a professional

4-2  corporation in which all the stockholders who are natural persons are

4-3  licensed to render the same specific professional service[,] may acquire

4-4  and hold stock in another professional corporation, or in a similar

4-5  corporation organized pursuant to the corresponding law of another state,

4-6  only if all the stockholders who are natural persons of the corporation

4-7  whose stock is acquired are licensed in that corporation’s state of

4-8  incorporation to render the same specific professional service as the

4-9  stockholders who are natural persons of the professional corporation that

4-10  acquires the stock.

4-11    4.  A professional corporation practicing pursuant to NRS 623.349 in

4-12  which all the stockholders are natural persons, regardless of whether or

4-13  not the natural persons are licensed to render the same specific

4-14  professional service, may acquire and hold stock in another professional

4-15  corporation or in a similar corporation organized pursuant to the

4-16  corresponding law of another state if control and two-thirds ownership of

4-17  the business organization or association that is acquired is held by

4-18  persons registered or licensed pursuant to the applicable provisions of

4-19  chapter 623, 623A or 625 of NRS. As used in this subsection, “control”

4-20  has the meaning ascribed to it in NRS 623.349.

4-21    5.  Any act in violation of this section is void and does not pass any

4-22  rights or privileges or vest any powers, except to an innocent person who is

4-23  not a stockholder and who has relied on the effectiveness of the action.

4-24    Sec. 4.  NRS 89.080 is hereby amended to read as follows:

4-25    89.080  1.  If any officer, stockholder, director or employee of a

4-26  corporation organized under this chapter who has been rendering

4-27  professional service to the public becomes legally disqualified to render

4-28  such professional services within this state, he shall sever within a

4-29  reasonable period all professional service with and financial interest in the

4-30  corporation , [;] but this chapter does not prevent a corporation formed

4-31  under this chapter from entering into a contract with an employee which

4-32  provides for severance pay or for compensation for past services upon

4-33  termination of professional service, whether by death or otherwise.

4-34    2.  [No] Except as otherwise provided in NRS 623.349, a natural

4-35  person may not be an officer or director of a corporation organized under

4-36  this chapter [other than a natural person who] unless he is licensed to

4-37  render the same specific professional services as those for which the

4-38  corporation was incorporated.

4-39    3.  Upon the death of a stockholder of a corporation who has

4-40  transferred his interest in the corporation to a revocable trust as permitted

4-41  by NRS 89.070, the trustee of the revocable trust may continue to retain

4-42  any interest so transferred, including corporate shares, for a reasonable

4-43  period, but may not exercise any authority concerning the rendering of

4-44  professional services and may not , except as otherwise provided in NRS

4-45  623.349, distribute the corporate interest to any person not licensed to

4-46  render the services for which the corporation was incorporated.

4-47    4.  A corporation’s failure to require compliance with the provisions of

4-48  this section is a ground for the forfeiture of its charter.

 

5-1    Sec. 5.  NRS 89.230 is hereby amended to read as follows:

5-2    89.230  [Members] Except as otherwise provided in NRS 623.349,

5-3  members who organize a professional association must all be natural

5-4  persons licensed to render the same specific professional services as those

5-5  for which the professional association is organized. [A] Except as

5-6  otherwise provided by law, a professional association may render

5-7  professional service only through its members and employees[, all of

5-8  whom must be licensed] who are licensed or otherwise authorized by law

5-9  to render the professional service.

5-10    Sec. 6.  NRS 89.240 is hereby amended to read as follows:

5-11    89.240  1.  If any member or employee of a professional association

5-12  who has been rendering professional service to the public becomes legally

5-13  disqualified to render the professional service within this state, he shall

5-14  sever within a reasonable period all professional service with and financial

5-15  interest in the association; but this chapter does not prevent a professional

5-16  association from entering into a contract with a member or employee

5-17  which provides for severance pay or for compensation for past services

5-18  upon termination of professional service, whether by death or otherwise.

5-19  Upon the death of a member of the association who has transferred his

5-20  interest in the association to a revocable trust as permitted by subsection 2,

5-21  the trustee of the revocable trust may continue to retain any interest so

5-22  transferred for a reasonable period, but may not exercise any authority

5-23  concerning the rendering of professional services and may not , except as

5-24  otherwise provided in NRS 623.349, distribute the interest in the

5-25  association or its assets to any person not licensed to render the services for

5-26  which the association was organized.

5-27    2.  [No] Except as otherwise authorized by NRS 623.349, a

5-28  membership interest in a professional association may not be sold or

5-29  transferred except to a natural person who is eligible to be a member of the

5-30  association or to the personal representative or estate of a deceased or

5-31  legally incompetent member, except as provided in this subsection. The

5-32  personal representative of such a member may continue to own such

5-33  interest for a reasonable period, but may not participate in any decisions

5-34  concerning the rendering of professional service. A member may transfer

5-35  his interest in the association or any other interest in the assets of the

5-36  association to a revocable trust if he acts as trustee of the revocable trust

5-37  and any person who acts as cotrustee and is not licensed to perform the

5-38  services for which the association is organized does not participate in any

5-39  decisions concerning the rendering of those professional services.

5-40    3.  The articles of association may provide specifically for additional

5-41  restrictions on the transfer of members’ interests and may provide for the

5-42  redemption or purchase of such an interest by the association or its other

5-43  members at prices and in a manner specifically set forth in the articles.

5-44    Sec. 7.  NRS 89.250 is hereby amended to read as follows:

5-45    89.250  1.  [A] Except as otherwise provided in subsection 2, a

5-46  professional association shall, on or before the last day of the month in

5-47  which the anniversary date of its organization occurs in each year, furnish a

5-48  statement to the secretary of state showing the names and residence

5-49  addresses of all members and employees in such association and shall

6-1  certify that all members and employees are licensed to render professional

6-2  service in this state.

6-3    2.  A professional association organized and practicing pursuant to

6-4  the provisions of this chapter and NRS 623.349 shall, on or before the

6-5  last day of the month in which the anniversary date of its organization

6-6  occurs in each year, furnish a statement to the secretary of state:

6-7    (a) Showing the names and residence addresses of all members and

6-8  employees of the association;

6-9    (b) Certifying that all members and employees who render

6-10  professional service are licensed or otherwise authorized by law to render

6-11  professional service in this state; and

6-12    (c) Certifying that all members who are not licensed to render

6-13  professional service in this state do not render professional service on

6-14  behalf of the association except as authorized by law.

6-15    3.  The statement must:

6-16    (a) Be made on a form prescribed by the secretary of state and must not

6-17  contain any fiscal or other information except that expressly called for by

6-18  this section.

6-19    (b) Be signed by the chief executive officer of the association.

6-20    [3.] 4.  Upon filing the annual statement required by this section, the

6-21  association shall pay to the secretary of state a fee of $15.

6-22    [4.] 5.  As used in this section, “signed” means to have executed or

6-23  adopted a name, word or mark, including, without limitation, a digital

6-24  signature as defined in NRS 720.060, with the present intention to

6-25  authenticate a document.

6-26  Sec. 8.  NRS 625.407 is hereby amended to read as follows:

6-27  625.407  1.  Except as otherwise provided in this section:

6-28  (a) A firm, partnership, corporation or other person engaged in or

6-29  offering to engage in the practice of engineering or land surveying in this

6-30  state shall employ full time at least one professional engineer or

6-31  professional land surveyor, respectively, at each place of business where

6-32  the work is or will be performed; and

6-33  (b) All engineering or land-surveying work done at a place of business

6-34  must be performed under a professional engineer or professional land

6-35  surveyor, respectively, who has been placed in responsible charge of the

6-36  work and who is employed full time at that particular place of business.

6-37  2.  If the only professional engineer or professional land surveyor

6-38  employed full time at a place of business where engineering or land-

6-39  surveying work is performed ceases to be employed at that place of

6-40  business, during the 30 days next following his departure:

6-41  (a) The place of business is not required to employ full time a

6-42  professional engineer or professional land surveyor; and

6-43  (b) The professional engineer or professional land surveyor placed in

6-44  responsible charge of engineering or land-surveying work performed at the

6-45  place of business is not required to be employed full time at that place of

6-46  business.

6-47  3.  Except as otherwise provided in subsection 5:

6-48  (a) A firm, partnership, corporation or other person who performs or

6-49  offers to perform engineering services in a certain discipline at a particular

7-1  place of business in this state shall employ full time at that place of

7-2  business a professional engineer licensed in that discipline.

7-3    (b) Each person who holds himself out as practicing a certain discipline

7-4  of engineering must be licensed in that discipline or employ full time a

7-5  professional engineer licensed in that discipline.

7-6    4.  [Architects, registered interior designers, residential designers,

7-7  professional] Professional engineers and [landscape architects may, in

7-8  accordance with the provisions of NRS 623.349,] professional land

7-9  surveyors may join or form a partnership, corporation, limited-liability

7-10  company or other business organization or association with registrants and

7-11  licensees outside of their field of practice, or with persons who are not

7-12  registered or licensed.

7-13  5.  The provisions of this section do not apply to a firm, partnership,

7-14  corporation or other person who:

7-15  (a) Practices professional engineering for his benefit and does not

7-16  engage in the practice of professional engineering or offer professional

7-17  engineering services to other persons; or

7-18  (b) Is engaged in the practice of professional engineering or land

7-19  surveying in offices established for limited or temporary purposes,

7-20  including offices established for the convenience of field survey crews or

7-21  offices established for inspecting construction.

7-22    Sec. 9.  This act becomes effective on July 1, 2001.

 

7-23  H