NRS 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.

NRS 89.100 Authority of regulating boards not affected.

NRS 89.110 Scope of authority.

PROFESSIONAL ASSOCIATIONS

NRS 89.200 Inapplicability of chapter 87 of NRS. [Effective through June 30, 2006.]

NRS 89.200 Inapplicability of chapter 87 of NRS. [Effective July 1, 2006.]

NRS 89.210 Filing requirements; name of association.

NRS 89.220 Professional relationship preserved.

NRS 89.230 Restrictions on membership and rendering of professional services.

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

NRS 89.250 Annual list: Filing requirements; fees.

NRS 89.252 Defaulting associations: Identification; penalty.

NRS 89.254 Defaulting associations: Duties of Secretary of State; forfeiture of right to transact business; assets held in trust; distribution of assets.

NRS 89.256 Defaulting associations: Conditions and procedure for reinstatement.

NRS 89.260 Authority of regulating boards not affected.

NRS 89.270 Scope of authority.

_________

GENERAL PROVISIONS

NRS 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)

NRS 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.

(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. “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

7. “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.

8. “Sign” means to affix a signature to a record.

9. “Signature” means a name, word, symbol or mark executed or otherwise adopted, or a record encrypted or similarly processed in whole or in part, by a person with the present intent to identify himself and adopt or accept a record. The term includes, without limitation, an electronic signature as defined in NRS 719.100.

(Added to NRS by 1963, 865; A 1969, 519; 1995, 2117; 2003, 3159)

NRS 89.023 Form required for filing of records.

1. Each record filed with the Secretary of State pursuant to this chapter must be on or accompanied by a form prescribed by the Secretary of State.

2. The Secretary of State may refuse to file a record which does not comply with subsection 1 or which does not contain all of the information required by statute for filing the record.

3. If the provisions of the form prescribed by the Secretary of State conflict with the provisions of any record that is submitted for filing with the form:

(a) The provisions of the form control for all purposes with respect to the information that is required by statute to appear in the record in order for the record to be filed; and

(b) Unless otherwise provided in the record, the provisions of the record control in every other situation.

4. The Secretary of State may by regulation provide for the electronic filing of records with the Office of the Secretary of State.

(Added to NRS by 2003, 20th Special Session, 111)

NRS 89.025 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)

NRS 89.027 Filing of records written in language other than English. No record 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 record into the English language.

(Added to NRS by 1995, 1137; A 2003, 3160)

PROFESSIONAL CORPORATIONS

NRS 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)

NRS 89.040 Filing requirements; required provisions 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 addresses, either residence or business, of the original stockholders and directors of the professional corporation.

(c) Except as otherwise provided in paragraph (d) of this subsection, 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.

(d) For a professional corporation organized pursuant to this chapter and practicing pursuant to the provisions of NRS 623.349, a certificate from the regulating board or boards of the profession or professions to be practiced showing that control and two-thirds ownership of the corporation is held by persons registered or licensed pursuant to the applicable provisions of chapter 623, 623A or 625 of NRS. As used in this paragraph, “control” has the meaning ascribed to it in NRS 623.349.

2. The corporate name of a professional corporation must contain the words “Professional Corporation” or the abbreviation “Prof. Corp.,” “P.C.” or “PC,” or the word “Chartered” or the abbreviation “Chtd.,” or “Limited” or the abbreviation “Ltd.” The corporate name must contain the last name of one or more of its current or former 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; 2001, 1780; 2003, 3160; 2003, 20th Special Session, 111)

NRS 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 money 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, residential design, engineering and landscape architecture, or any combination thereof, and may be composed of persons:

(1) Engaged in the practice of architecture as provided in chapter 623 of NRS;

(2) Practicing as a registered interior designer as provided in chapter 623 of NRS;

(3) Engaged in the practice of residential design as provided in chapter 623 of NRS;

(4) Engaged in the practice of landscape architecture as provided in chapter 623A of NRS; and

(5) 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.

(1) Any psychologist who is licensed to practice in this State;

(2) Any social worker who holds a master’s degree in social work and who is licensed by this State as a clinical social worker;

(3) Any registered nurse who is licensed to practice professional nursing in this State and who holds a master’s degree in the field of psychiatric nursing; and

(4) Any marriage and family therapist who is licensed by this State pursuant to chapter 641A of NRS.

Ê Such a professional corporation may market and manage additional professional corporations which are organized to render a professional service relating to mental health services pursuant to this paragraph.

3. A professional corporation may render a professional service only through its officers and employees who are licensed or otherwise authorized by law to render the professional service.

(Added to NRS by 1963, 866; A 1969, 705; 1985, 585; 1991, 323, 1306; 1995, 353, 1704; 1997, 206; 2001, 1781; 2003, 435)

NRS 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 renders:

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 signs on behalf of a professional corporation within the limits of his actual authority.

(Added to NRS by 1963, 866; A 1969, 521; 2003, 3160)

NRS 89.070 Restrictions on ownership and transfer of shares.

1. Except as otherwise provided in this section and NRS 623.349:

(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.

Ê 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. Except as otherwise provided in NRS 623.349, 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.

Ê 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. Except as otherwise provided in subsection 4, 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, only 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. A professional corporation practicing pursuant to NRS 623.349 in which all the stockholders are natural persons, regardless of whether or not the 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 control and two-thirds ownership of the business organization or association that is acquired is held by persons registered or licensed pursuant to the applicable provisions of chapter 623, 623A or 625 of NRS. As used in this subsection, “control” has the meaning ascribed to it in NRS 623.349.

5. 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; 2001, 1781)

NRS 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. Except as otherwise provided in NRS 623.349, a natural person may not be an officer or director of a corporation organized under this chapter unless he 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, except as otherwise provided in NRS 623.349, 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; 2001, 1783)

NRS 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)

NRS 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

NRS 89.200 Inapplicability of chapter 87 of NRS. [Effective through June 30, 2006.] The provisions of chapter 87 of NRS (Uniform Partnership Act) do not apply to professional associations.

(Added to NRS by 1969, 523; A 2005, 443)

NRS 89.200 Inapplicability of chapter 87 of NRS. [Effective July 1, 2006.] The provisions of chapter 87 of NRS do not apply to professional associations.

(Added to NRS by 1969, 523; A 2005, 443, effective July 1, 2006)

NRS 89.210 Filing requirements; name of association.

1. Within 30 days after 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 signed, and shall pay at that time a filing fee of $75. A copy of any amendments to the articles of association 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 $175.

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; 2001, 3190; 2003, 3160; 2003, 20th Special Session, 112)

NRS 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 signs on behalf of a professional association within the limits of his actual authority.

(Added to NRS by 1969, 523; A 2003, 3161)

NRS 89.230 Restrictions on membership and rendering of professional services. Except as otherwise provided in NRS 623.349, 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. Except as otherwise provided by law, a professional association may render professional service only through its members and employees who are licensed or otherwise authorized by law to render the professional service.

(Added to NRS by 1969, 523; A 1995, 2120; 2001, 1783)

NRS 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, except as otherwise provided in NRS 623.349, 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. Except as otherwise authorized by NRS 623.349, a membership interest in a professional association may not 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; 2001, 1783)

NRS 89.250 Annual list: Filing requirements; fees.

1. Except as otherwise provided in subsection 2, a professional association shall, on or before the last day of the first month after the filing of its articles of association with the Secretary of State, and annually thereafter on or before the last day of the month in which the anniversary date of its organization occurs in each year, file with the Secretary of State a list showing the names and addresses, either residence or business, of all members and employees in the professional association and certifying that all members and employees are licensed to render professional service in this State.

2. A professional association organized and practicing pursuant to the provisions of this chapter and NRS 623.349 shall, on or before the last day of the first month after the filing of its articles of association with the Secretary of State, and annually thereafter on or before the last day of the month in which the anniversary date of its organization occurs in each year, file with the Secretary of State a list:

(a) Showing the names and addresses, either residence or business, of all members and employees of the professional association who are licensed or otherwise authorized by law to render professional service in this State;

(b) Certifying that all members and employees who render professional service are licensed or otherwise authorized by law to render professional service in this State; and

(c) Certifying that all members who are not licensed to render professional service in this State do not render professional service on behalf of the professional association except as authorized by law.

3. Each list filed pursuant to this section must be:

(a) Made on a form furnished by the Secretary of State and must not contain any fiscal or other information except that expressly called for by this section.

(b) Signed by the chief executive officer of the professional association.

(1) Has complied with the provisions of NRS 360.780; and

(2) Acknowledges that pursuant to NRS 239.330, it is a category C felony to knowingly offer any false or forged instrument for filing in the Office of the Secretary of State.

4. Upon filing:

(a) The initial list required by this section, the professional association shall pay to the Secretary of State a fee of $125.

(b) Each annual list required by this section, the professional association shall pay to the Secretary of State a fee of $125.

(Added to NRS by 1969, 524; A 1995, 1139; 1999, 1625; 2001, 101, 1784, 2725, 3190; 2003, 194, 3161; 2003, 20th Special Session, 112, 187; 2005, 2270)

NRS 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 $75. The fee and penalty must be collected as provided in this chapter.

(Added to NRS by 1995, 1138; A 2001, 3191; 2003, 20th Special Session, 113)

NRS 89.254 Defaulting associations: Duties of Secretary of State; forfeiture of right to transact business; assets held in trust; distribution of assets.

1. The Secretary of State shall provide written notice to each professional association which is in default pursuant to the provisions of NRS 89.252. The written notice:

(a) Must include a statement indicating the amount of the filing fee, penalties incurred and costs remaining unpaid.

(b) At the request of the professional association, may be provided electronically.

2. On the first day of the first anniversary of the month following the month in which the filing was required, the articles of association of the professional association are 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 transact business has been forfeited.

4. The Secretary of State shall forthwith notify each professional association specified in subsection 3 by providing written notice of the forfeiture of its right to transact business. The written notice:

(a) Must include a statement indicating the amount of the filing fee, penalties incurred and costs remaining unpaid.

(b) At the request of the professional association, may be provided electronically.

5. 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 professional 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.

6. If the assets of the professional 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 professional association.

Ê 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 professional association.

(Added to NRS by 1995, 1138; A 2003, 20th Special Session, 113)

NRS 89.256 Defaulting associations: Conditions and procedure 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:

(1) The list and certification required by NRS 89.250; and

(2) A certificate of acceptance of appointment signed by its resident agent; and

(b) Pays to the Secretary of State:

(1) The 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 $300 for reinstatement.

2. When the Secretary of State reinstates the professional association, he shall issue to the professional association a certificate of reinstatement if the professional association:

(a) Requests a certificate of reinstatement; and

(b) Pays the required fees pursuant to subsection 8 of NRS 78.785.

3. The Secretary of State shall not order a reinstatement unless all delinquent fees and penalties have been paid, and the revocation of the articles of association occurred only by reason of the 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; A 2001, 3191; 2003, 20th Special Session, 114; 2005, 2271)

NRS 89.260 Authority of regulating boards 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)

NRS 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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Chapter 89 — Professional Corporations and Associations

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