An Act to enable professional Individuals and firms in the District of Columbia to obtain the benefits of corporate organization, and to make corresponding changes in the District of Columbia Income and Franchise Tax Act
PL 92-180 (H.R.10383), enacted 12/10/1971

576 
PUBLIC LAW 92-180-DEC. 10, 1971 
[85 STAT. 
80 Stat. 396. 
83 Stat. 6. 
SEC. 4. (a) Section 905(a) of title 5 of the United States Code is 
amended by striking out "or" at the end of paragraph (5), by striking 
out the period at the end of paragraph (6) and inserting in lieu thereof 
a semicolon and the word "or", and by adding after paragraph (6) the 
following new paragraph: 
"(7) dealing with more than one logically consistent subject 
matter." 
(b) Section 905 (b) of title 5, United States Code, is amended by 
strikmg out "April 1, 1971" and inserting in lieu thereof "April 1, 
1973". 
SEC. 5. Section 911(a) of title 5, United States Code, is amended by 
striking out "10 calendar days" and inserting in lieu thereof "20 cal-
endar days". 
Approved December 10, 1971. 
December 10, 1971 
[H. R. 10383] 
Public Law 92-180 
AN ACT 
To enable professional individuals and firms in the District of Columbia to 
obtain the benefits of corporate organization, and to make corresponding 
changes in the District of Columbia Income and Franchise Tax Act. 
District of 
Columbia Profes-
sional Corpora-
tion Act. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That this Act shall 
be known and may be cited as the "District of Columbia Professional 
Corporation Act". 
DEFINITIONS 
SEC. 2. As used in this Act, unless the context otherwise requires: 
(a) The term "professional corporation" means a corporation orga-
nized under this Act solely for the specific purposes provided under 
this Act, and which has as its shareholders only individuals who them-
selves are duly licensed to render the same professional service as the 
corporation. 
(b) The term "professional service" means any type of personal 
service to the public which may be lawfully rendered only pursuant 
to a license and which by law, custom, standards of professional con-
duct or practice in the District of Columbia, before the effective date 
of this Act, could not be rendered by a corporation, including without 
limitation the services performed by certified public accountants, 
attorneys, architects, practitioners of the healing arts, dentists, 
optometrists, podiatrists, and professional engineers. 
(c) The term "license" or "licensed" refers to a license, certifica-
tion, certificate, or registration, or other legal authorization required 
by law as a condition precedent to the rendering of professional serv-
ice within the District of Columbia. 
(d) The term "Council" means the District of Columbia Council 
or the agent or agents designated by it to perform any function vested 
in the Council by this Act. 
(e) The term "Commissioner" means the Commissioner of the 
District of Columbia or his designated agent. 
85 STAT. ] 
PUBLIC LAW 92-180-DEC. 10, 1971 
577 
EXEMPTION 
SEC. 3. This Act shall not apply to any corporation now in existence 
or hereafter organized which may lawfully render professional serv-
ices other than pursuant to this Act, nor shall anything herein 
contained alter or affect any existing or future right or privilege 
permitting or not prohibiting performance of professional services 
through the use of any form of business organization. Any corpora-
tion organized under the District of Columbia Business Corporation 
Act (D.C. Code, sec. 29-901 et seq.) may be brought within the pro- 
^s stat. 179, 
visions of this Act by complying with the provisions of this Act and 
filing amended or restated articles of incorporation meeting the 
requirements of section 6 of this Act. 
CONSTKUCTION OF ACT 
SEC. 4. The provisions of this Act shall not be construed as repealing, 
modifying, or restricting the applicable provisions of law relating to 
corporations, or regulating the several professions covered by this Act, 
except insofar as such laws conflict with the provisions of this Act. 
Except as otherwise provided by this Act, the prov isions of the District 
of Columbia Business Corporation Act shall be applical)le to any pro- ^\c^^c'odI%)-
fessional corporation organized under this Act. 
901! * 
PURrx)SE; rowEKs 
SEC. 5. (a) A professional corporation may be organized solely to 
render professional services thi-ough its shareholders, directors, officers, 
employees, or agents who are themselves duly licensed to I'ender the 
particular service, and to render service ancillary thereto. A profes-
sional corporation may charge for such services, may collect such 
chai'ges, and may compensate those who render such service. A pro-
fessional corporation may employ pei-sons who are not licensed, but 
such persons shall not perform professional ser\ices; and no license 
shall be required of any person who is employed by a professional 
corporation to perform services for whicli no license is otherwise 
required. 
(b) Xo professional corporation may do any act wliich is prohibited 
to an individual licensed to render the professional service for which 
the cor})oration is organized. 
(c) Notwithstandmg any provision of this Act, a professional cor-
poration may— 
(i) invest its funds in real estate, mortgages, stocks, bonds, or 
other type of investment; 
(ii) own real estate or personal property; and 
(iii) enter into partnership and other agreements with individu-
als (who may be shareholders, directors, employees, or agents of 
the professional corporation), partnerships, or professional cor-
porations rendering the same type of professional services within 
or without the District of Columbia, to the same extent that an 
individual licensed to render the same professional service may 
enter into such partnership or other agreements pursuant to law, 
rules, regulations, or standards of professional conduct of the 
profession practiced through the professional corporation. 
578 
PUBLIC LAW 92-180-DEC. 10, 1971 
[85 STAT. 
INCORPORATIOX 
SEC. 6. One or more natural persons may incorporate a professional 
corporation by delivering articles of incorporation in duplicate orig-
inals to the Commissioner. The articles of incorporation shall meet the 
l^^^*^>i^5* 
requirements of the District of Columbia Business Corporation Act 
D.C. Code 29- 
i 
' 
i TJ.- 
^ 
^^ 
j. P 
j.i 
^ 
901. 
nnd. m addition, shall set forth— 
(a) the designation of the professional services to be rendered 
through the corporation; 
(b) the names and addresses, including street and number, if 
any, of the original shareholders of the corporation; and 
(c) a statement that each of the original shareholders and direc-
tors named in the articles of incorporation is licensed to render a 
professional service for which the corporation is to be organized. 
NUMBER OF DIRECTORS 
SEC. 7. A professional corporation shall have one or more directors, 
without regard to the number of shareholders. 
QUALIFICATIONS OF SHAREHOLDER, DIRECTOR, AND OFFICER 
SEC. 8. No person shall be a shareholder, director, or officer of a 
professional corporation or render professional services on its behalf 
unless he is an individual licensed to render a professional service for 
which the corporation is organized, except that if a j)rofessional cor-
poration has only one shareholder, the secretary of the corporation 
need not be licensed to perform (and may not perform if not so 
licensed) such professional services. As used in this section, the term 
"officer" shall mean chairman of the board, president, vice president, 
treasurer, and secretary. Nothing in this Act shall require a share-
holder or incorporator of a professional corporation to have a present 
or future employment relationship with the corporation or actively to 
participate in any capacity in the prodviction of income of, or perform-
ance of professional service by, such corporation. 
CORPORATE NAME 
SEG. 9. The corporate name shall contain the words "professional 
corporation", or the abbreviation "P.C.", or the word "chartered", 
and shall not contain the word "company", "incorporated", "corpora-
tion", or "limited", or an abbreviation of one of such words. A pro-
fessional corporation shall render professional services and exercise 
its authorized powers under its corporate name. 
PROXY 
SEC. 10. No shareholder of a professional corporation shall enter 
into a voting trust, proxy, or any other arrangement vesting another 
person (other than another shareholder of the same corporation) with 
the authority to exercise the voting power of any or all of his shares, 
and any such noting trust, proxy, or other arrangement shall be void. 
PROFESSIONAL EELATIONSHIP ; LIABILITIES 
SEC. 11. (a) The provisions of this Act shall not be construed to 
alter or affect the professional relationship between an individual 
furnishing professional services and an individual receiving such serv-
"Officer.* 
85 STAT. ] 
PUBLIC LAW 92-180-DEC. 10, 1971 
579 
ice, either with respect to liability arising out of such professional 
service or the confidential relationship, if any, between the individual 
rendering, and the individual receiving such professional service. 
An individual shall be personally liable and accountable only for any 
negligent or wrongful acts or misconduct committed by him, or by 
any individual under his supervision and control in the rendering of 
professional service on behalf of a corporation organized under this 
Act. No individual shall be so personally liable and accountable 
merely because he is a director, officer, or manager of the professional 
corporation. 
(b) The corporation shall be liable up to the full value of its assets 
for any negligent or wrongful acts or misconduct committed by any of 
its officers, shareholders, directors, agents, or employees in their ren-
dering of professional services on behalf of the corporation. Except as 
otherwise provided in this section, the liabilities of a professional 
corporation and its shareholders shall be governed by the District of 
Columbia Business Corporation Act. 
^„^t^t* j ^ ^ * 
•
•
• 
D.C. Code 29-
901. 
TUANSFEK OF SITAKKS 
SEC. 12. (a) Shares in a professional corporation may be transferred 
only to an individual who is eligible under this Act to be. a shareholder 
of such corporation, or to such professional corporation, or may devolve 
by operation of law upon the personal representative or estate of a 
deceased or legally incompetent shareholder. The articles of incor-
poration, bylaws, or an agreement among its shareholders may provide 
that any such transfer shall l)e subject to the express approval of all, 
or of any lesser proportion of the remaining shareholders of the cor-
poration, and may provide for the manner in which such consent shall 
be given. Any transfer made in violation of this section shall be void. 
(b) A professional corporation may reacquire its own shares through 
purchase or redemption, and may cancel such shares if at least one 
share remains issued and outstanding, except when it is insolvent or 
the purchase or redemption would render it insolvent. 
(c) The provisions of the District of Columbia Securities Act (D.C. . NonappUcabii-
Code, sec. 2-2401, et seq.), and of the Securities Act of 1933, shall not ^'^'g stat. eao. 
apply to the issuance or transfer of securities of a professional cor- 
48 stat. 74. 
poration. Every certificate for shares of a professional corporation 
^^ ^^^ ^^°' 
shall contain on its face the following legend: "The ownership and 
transfer of these shares and the rights and obligations of shareholders 
are subject to the limitations of the District of Columbia Professional 
Corporation Act.-' 
(d) In the event that shares of a professional corporation are ^^^^^J^^ ^"de^n'^. 
attached for the individual debts of a shareholder, or are executed tion,^ *^' "
^
^ *""^' 
upon under any pledge or hypothecation thereof, the sole right of the 
creditor with respect to such shares shall be to obtain their redemption 
by such professional corporation within sixty days after serving writ-
ten demand for redemption upon such corporation. The redemption 
price for such shares shall be (1) the amount to w^hich the shareholder 
is entitled upon voluntary redemption of his shares by the provisions 
of the articles of incorporations, bylaws, or an agreement among its 
shareholders, or if there are no such provisions, (2) the book value 
of such shares at the end of the month immediately preceding the date 
of such demand, determined under generally accepted accounting 
methods consistent with the method of accounting used by the cor-
poration for Federal income tax purposes, by an independent certified 
public accountant selected by the corporation, but paid by such credi-
tor, for the purpose. 
75-432 O - 72 - 39 
580 
PUBLIC LAW 92-180-DEC. 10, 1971 
[85 STAT. 
Certificate of 
authority. 
Licensed regis-
tered agent. 
Annual report. 
MERGER OR CONSOLIDATION 
SEC. 13. A professional corporation may merge or consolidate only 
with another domestic professional corporation, and only if both 
corporations are organized to render the same professional services 
or professional services which, although not the same, could otherwise 
be rendered by a single professional corporation. 
FOREIGN P R O F E S S I O N A L 
CORPORATIONS 
SEC. 14. Notwithstanding any other provision of this Act, a foreign 
professional corporation licensed in a jurisdiction other than the 
District of Columbia to perform a professional service of the type 
defined in section 2(b) of this Act, may apply for and obtain a certifi-
cate of authority to render such professional service in the District 
of Columbia under the following terms and conditions: 
(a) The articles of incorporation shall meet the requirements of 
section 6 of this Act, and shall state the address of its registered office 
in the District of Columbia and the name of its registered agent in 
the District of Columbia. 
(b) I'he name of the foreign professional corporation shall meet the 
requirements of section 9 of this Act and shall conform to any ethical 
standards applicable to the rendering of professional service in the 
District of Columbia. 
(c) The powers of any foreign professional corporation admitted 
luider this section shall not exceed the powers permitted to domestic 
professional corporations under section 5 of this Act. 
(d) Any foreign professional corporation seeking admission to the 
District under the provisions of this section shall have at least one 
director or officer as resident agent for its registered office in the Dis-
trict. Additionally, such resident agent and any other shareholder, 
director, officer, employee, or agent who renders professional services 
wdthin the District on behalf of the foreign professional corporation 
shall be licensed to render professional service in the District of 
Columbia. 
(e) An annual report shall be filed in accordance with the require-
ments of section 19 of this Act. 
(f) No certificate of authority shall be granted to a professional 
corporation incorporated in a jurisdiction which does not permit recip-
rocal admission of professional corporations incorporated under the 
laws of the District of Columbia. 
"Disqualified 
shareholder." 
DISQUALIFIED PROFESSIONAL 
SEC. 15. If any individual rendering professional services on behalf 
of a professional corporation assumes a public office which prohibits 
his rendering of the professional services, or for any other reason is 
disqualified by law to render the professional services, he immediately 
shall sever all employment relationship in which he shares in the 
corporation's profits attributable to professional services rendered 
after such assumption of office or other disqualification. For the pur-
poses of section 16 of this Act, he shall be referred to as a "disqualified 
shareholder". 
STOCK o r DISQUALIFIED, DECEASED, LEGALLY INCOMPETENT SHAREHOLDER 
SEC. 16. (a) Subject to the limitations of this section, a disqualified 
shareholder and personal representatives, legatees, or heirs of a 
85 STAT. ] 
PUBLIC LAW 92-180-DEC. 10, 1971 
deceased or legally incompetent shareholder may continue to own 
shares of a professional corporation but shall not be permitted to par-
ticipate in any decisions concerning the rendering of professional 
services by the corporation. The articles of incorporation, bylaws, or 
an agreement among the shareholders of a professional corporation 
may provide, consistent with the provisions of this section, for the 
disposition of shares of a disqualified, deceased, or legally incompetent 
shareholder. 
(b) The articles of incorporation, bylaws, or an agreement among 
shareholders may provide that, within ninety days (or any earlier 
date) after the date a shareholder becomes a disqualified shareholder, 
the disqualified shareholder shall sell and surrender, and the corpora-
tion or any individuals qualified to be shareholders shall purchase and 
receive, his shares of stock of the corporation. In the absence of any 
such provision, the disqualified shareholder shall sell and surrender, 
and the corporation shall purchase and receive, his shares of stock of 
the corporation within thirty days after the date he becomes a disquali-
fied shareholder. Unless otherwise provided by the articles of incor-
poration, bylaws, or an agreement among the shareholders, payment 
for the shares of stock purchased pursuant to tlie provisiojis of this 
subsection shall be made in full no later than six months after the 
expiration of the period by which the purchase must be made. 
(c) The articles of incorporation, bylaws, or an agreement among 
shareholders may provide that, within one year (or any earlier date) 
after the date of death of a shareholder, his personal representative, 
legatees, or heirs shall sell and surrender, and the corj^oration or any 
individuals qualified to be shareholders shall purchase and receive, the 
shares of stock of the corporation owned by the deceased shareholder. 
In the absence of any such provision, the personal representatives, 
legatees, or heirs shall sell and surrender, and the corporation shall 
purchase and receive, the shares of stock of the corporation within one 
hundred and eighty days after the date of death of the shareholder. 
Ililess otherAvise provided by the articles of incorporation, bylaws, or 
an agreement among the shareholders, payment for the shares of stock 
[)urchased pursuant to the provision of this subsection shall be made in 
full no later than one year after the date of death of the shareholder. 
K?:DEMPIIOX PRICK 
SKC, 17. In the event the articles of incorporation, bylaws or an 
agreement among the shareholders, do not fix the price at which the 
corporation or its shareholders may purchase the shares of a disquali-
fied, deceased, legally incompetent, retired, or expelled shareholder, or 
does not provide a method of determining such price, then the price 
for such shares shall be the book value of such shares on the last day 
of the month innnediately preceding the disqualification, death, ad-
judication of incompetence, retirement or expulsion of the shareholder, 
determined under generally accepted accounting methods, consistent 
witli the method of accounting used by the corporation for Federal in-
come tax pur]ix)ses, by an independent cei-tified public accountant em-
ployed l)y the corporation for the purpose. 
581 
68 Stat. 179. 
D.C. Code 29-
582 
PUBLIC LAW 92-180-DEC. 10, 1971 
[85 STAT. 
PERPETUAL EXISTENCE: DlSSOLmOX 
SEC. 18. A professional corporation shall have perpetual existence, 
except that whenever all shareholders of a professional corporation 
cease at any time for any reason to be licensed to perform the profes-
sional services for which the corporation was organized, the profes-
sional corporation shall be treated as converted into a corporation orga-
nized under the District of Colinnbia Business Corporation Act. Un-
90 u"' 
" 
less the holders of all of the outstanding shares of the corporation 
unanimously amend the articles of incorporation to adopt purposes 
consistent with the District of Columbia Business Corporation Act 
witliin sixty days after the date on which the last shareholder of the 
corporation ceased to be licensed to perform those professional serv-
ices, the dissolution of the corporation shall be deemed to have been 
authorized by the act of the corporation and any shareholder may at 
any time thereafter file with the Commissioner, on behalf of the cor-
poration, a statement of intent to dissolve. 
ANNUAL REPORT 
SEC. 19. The annual reports of a professional corporation shall meet 
the requirements of the District of Columbia Business Corporation 
Act and, in addition, shall set forth— 
(a) the names and addresses, including street and number, if 
any, of all shareholders of the corporation; and 
(b) a statement that each shareholder, director, and officer of 
the corporation is currently licensed to render a professional 
service for which the corporation is organized. 
NONCOMPLIANCE; PENALTIES 
SEC. 20. The failure of a professional corporation to comply, or to 
require compliance with any provision of this Act, shall be a ground 
for the involuntary dissolution of such corporation. Any person, 
including a corporation, w^ho violates any provision of this Act or who 
fails to comply with any provision thereof, for which violation or 
failure no penalty is provided therein or elsewhere in the laws of the 
District of Columbia, shall be deemed guilty of a misdemeanor and 
upon conviction thereof by a court of competent jurisdiction shall be 
fined not more than $500 for each violation or failure. 
AMENDMENT TQ THE DISTRICT OF COLUMBIA INCOME AND 
FRANCHISE TAX ACT OF 1947 
SEC. 21. The second sentence of section 1 of title V I I I of the Dis-
trict of Columbia Income and Franchise Tax Act of 1947 (D.C. Code, 
61 Stat. 345. 
gg(._ 47-1547) is amended to read as follows: "The words 'unincorpo-
157*4?' ^"^^ ^ " 
rated business' do not include any trade or business which by law, 
"Unincorporated customs, O
T ethics cauuot be incorporated, any trade, business, or pro-
business." 
fessiou whicli can be incorporated only under the District of Columbia 
Ante, p. 576. 
Professioual Corporation Act, or any trade or business in which more 
than 80 per centum of the gross income is derived from the personal 
services actually rendered by the individual or members of the part-
nership) or other entity in the conducting or carrying on of any trade 
or business and in which capital is not a material income-producing 
factor.". 
Approved December 10, 1971.