Can my Holdco own shares in my adult child’s professional corporation?
Generally no. Ontario professional corporations (PCs) are subject to regulator rules restricting share ownership. All voting shares of an MPC or DPC must be owned by the licensed practitioner. Non-voting shares can be owned by a spouse, a child, or a trust for their benefit (Business Corporations Act (Ontario) s. 3.2 for medical and dental PCs). Legal, engineering, and accounting PCs have stricter rules; direct Holdco ownership is generally not permitted.
Medical Professional Corporations (MPCs) under CPSO regulations and OBCA s. 3.2(4): voting shares must be held by the physician; non-voting shares can be held by (a) the physician’s spouse, (b) the physician’s child, or (c) a trust for a minor child of which the physician is trustee. A Holdco (whether owned by the physician or by family) cannot hold PC shares directly under this narrow rule.
Dental Professional Corporations (DPCs) under RCDSO: same structure – voting shares to the dentist, non-voting shares limited to spouse/child.
Legal PCs under Law Society Act s. 61.0.1: voting AND non-voting shares must be held only by licensees of the LSO. A non-lawyer spouse cannot hold shares. A Holdco owned by non-lawyers is prohibited.
Chartered Professional Accountant firms under CPA Ontario By-law: voting control and majority ownership must rest with CPAs; a Holdco is allowed only if it is itself owned by CPAs.
Note: Workaround: an adult child who is a licensed practitioner can own an MPC/DPC directly, and can wrap their MPC/DPC under their own personal Holdco. The Holdco can then receive tax-free intercorporate dividends from the child’s PC.
Source: cpso.on.ca â Medical Professional Corporations
— Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA
Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.