NM Stat § 53-6-1 (2021)
2021 New Mexico Statutes|Chapter 53 - Corporations|Article 6 - Professional Corporations|Section 53-6-1 - Purpose of act.

The purpose of this act [53-6-1 to 53-6-13 NMSA 1978] is to provide for the incorporation of an individual, or group of individuals, to render the same professional service to the public for which such individuals are required by law to be licensed or to obtain other legal authorization. History: 1953 Comp., § 51-22-1, enacted by Laws 1963, ch. 16, § 1. ANNOTATIONSLiability of shareholder. — Nothing in Article 15 of the Business Corporation Act (53-15-1 through 53-15-4 NMSA 1978) or this article permits rendering an individual judgment against a shareholder of a professional corporation based solely upon a failure of the corporation to properly value the stock of the corporation. For that reason, such liability must be predicated on a theory outside the language of the statute. Morrow v. Cooper, 1991-NMCA-108, 113 N.M. 246, 824 P.2d 1048. Fraud in the inducement in shareholder agreement of professional corporation. — Where there is fraud in the inducement to enter into a shareholder agreement, the contract is voidable, capable of being affirmed or rejected at the option of one of the parties, and remains in effect until the fraud by which the defrauded party had been induced to sign is discovered. Jones v. Aug , 2015-NMCA-016, cert. denied, 2015-NMCERT-001. Where shareholder, without the knowledge of other shareholders, modified his shareholder employment agreement, putting in place a more generous deferred compensation package than the other shareholders, there is fraud in the inducement to enter into the contract and the contract is voidable, remaining in effect until the fraud is discovered. Jones v. Aug , 2015-NMCA-016, cert. denied, 2015-NMCERT-001. Punitive damages for breach of fiduciary duties. — Punitive damages are appropriate when an actor willfully breaches fiduciary duties. Jones v. Aug , 2015-NMCA-016, cert. denied, 2015-NMCERT-001. Where appellant shareholder, without the knowledge of other shareholders, modified his shareholder employment agreement, putting in place a more generous deferred compensation package than the other shareholders, overpaid himself by hundreds of thousands of dollars, failed to inform other shareholders of bonuses paid to himself without appropriate basis, controlled the shareholder allocation sheets that the shareholders used to track their compensation, failed to inform other shareholders of material facts and information relating to business and financial affairs, knowingly submitted incorrect information about his bonuses at shareholder meetings, and knowingly and intentionally paid himself bonuses to the substantial economic detriment of the other shareholders and the corporation itself, the award of punitive damages was appropriate. Jones v. Aug , 2015-NMCA-016, cert. denied, 2015-NMCERT-001. Contract reformation is a remedy for fraud and may form the basis for an award of punitive damages. — Contract reformation is an equitable remedy by which a court will modify a written agreement to reflect the actual intent of the parties, usually to correct fraud or mutual mistake in the writing; where a plaintiff has established a cause of action in equity and the wrongdoer's misconduct is willful, wanton, malicious, reckless, fraudulent and in bad faith, punitive damages are allowable to do complete justice. Jones v. Aug , 2015-NMCA-016, cert. denied, 2015-NMCERT-001. Where appellant shareholder, without the knowledge of other shareholders, modified his shareholder employment agreement, putting in place a more generous deferred compensation package than the other shareholders, overpaid himself by hundreds of thousands of dollars, failed to inform other shareholders of bonuses paid to himself without appropriate basis, controlled the shareholder allocation sheets that the shareholders used to track their compensation, failed to inform other shareholders of material facts and information relating to business and financial affairs, knowingly submitted incorrect information about his bonuses at shareholder meetings, and knowingly and intentionally paid himself bonuses to the substantial economic detriment of the other shareholders and the corporation itself, appellees request to make all the shareholder agreements equal fell squarely within the definition of the equitable remedy of contract reformation, and the award of punitive damages was appropriate. Jones v. Aug , 2015-NMCA-016, cert. denied, 2015-NMCERT-001. Provision of medical services by corporation controlled by non-physicians. — A corporation, organized and controlled by nonphysicians, may provide medical services to the general public through employed physicians, unless prohibited by statute or unless it exercises lay control of medical judgment or engages in lay exploitation of the medical profession in a manner prohibited by public policy. 1987 Op. Att'y Gen. No. 87-39. Law reviews. — For article, "The New Mexico Professional Corporation," see 9 Nat. Res. J. 591 (1969). For article, "1983 Amendments to the New Mexico Business Corporation Act and Related Statutes," see 14 N.M.L. Rev. 371 (1984). For note, "Legal Malpractice Membership in a Professional Corporation Does Not Confer upon an Attorney-Shareholder a Limitation on Personal Liability for Attorney's Breach of Duty: Sanders, Bruin, Coll & Worley, P.A. v. McKay Oil Corp.," see 31 N.M.L. Rev. 637 (2001). Am. Jur. 2d, A.L.R. and C.J.S. references. — 18A Am. Jur. 2d Corporations §§ 192 to 195; 18B Am. Jur. 2d Corporations §§ 2043, 2120. Practice by attorneys and physicians as corporate entities or associations under professional service corporation statutes, 4 A.L.R.3d 383.