Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1997, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 22-S.F.No. 624
An act relating to professional firms; modernizing and
standardizing the law regulating professional business
organizations; amending Minnesota Statutes 1996,
sections 13.99, subdivision 92e; 144A.43, subdivision
4; 322B.12, subdivision 1; 322B.92; 323.44, by adding
a subdivision; and 323.49, by adding a subdivision;
proposing coding for new law in Minnesota Statutes,
chapter 303; proposing coding for new law as Minnesota
Statutes, chapter 319B; repealing Minnesota Statutes
1996, sections 319A.01; 319A.02; 319A.03; 319A.04;
319A.05; 319A.06; 319A.07; 319A.08; 319A.09; 319A.10;
319A.11; 319A.12; 319A.13; 319A.14; 319A.15; 319A.16;
319A.17; 319A.18; 319A.19; 319A.20; 319A.21; and
319A.22.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
PROFESSIONAL FIRMS
Section 1. [319B.01] [PROFESSIONAL FIRMS ACT; CITATION.]
Sections 319B.01 to 319B.12 may be cited as the "Minnesota
Professional Firms Act."
Sec. 2. [319B.02] [DEFINITIONS.]
Subdivision 1. [SCOPE.] For the purposes of sections
319B.01 to 319B.12, the terms defined in this section have the
meanings given them.
Subd. 2. [BOARD.] "Board" means an agency of the state of
Minnesota which has jurisdiction to grant a license to furnish
professional services of a category within subdivision 19,
except that in the case of a professional firm that provides
legal services, "board" means the board of professional
responsibility.
Subd. 3. [CERTIFICATE OF AUTHORITY.] "Certificate of
authority" means:
(1) with respect to a foreign firm that is a corporation,
the certificate of authority required under sections 303.01 to
303.24 and any notice filed under section 303.115 in connection
with that certificate; and
(2) with respect to a foreign firm that is a limited
liability company, the certificate of authority required under
sections 322B.905 to 322B.955 and any notice filed under section
322B.92, clause (3), in connection with that certificate.
Subd. 4. [DISQUALIFIED.] "Disqualified" means to have a
license to provide pertinent professional services:
(1) suspended, unless by its terms the suspension will
automatically end less than 90 days after it takes effect; or
(2) revoked.
The disqualification occurs when the suspension or
revocation first takes effect.
Subd. 5. [FIRM.] "Firm" includes a corporation, limited
liability company, and limited liability partnership, wherever
incorporated, organized, or registered.
Subd. 6. [FOREIGN FIRM.] "Foreign firm" means a
corporation incorporated, limited liability company organized,
or limited liability partnership registered under the laws of a
state other than Minnesota.
Subd. 7. [FOREIGN PROFESSIONAL FIRM.] "Foreign
professional firm" means a foreign firm that has in effect an
election under section 319B.04, subdivision 2.
Subd. 8. [GENERALLY APPLICABLE GOVERNING LAW.] "Generally
applicable governing law" of a firm means:
(1) with respect to a firm that is a corporation, the state
statute under which the corporation is incorporated;
(2) with respect to a firm that is a limited liability
company, the state statute under which the limited liability
company is organized; and
(3) with respect to a firm that is a limited liability
partnership, the state statute under which the limited liability
partnership obtains its status as a limited liability
partnership;
plus any other law that is generally relevant to the structure,
governance, operations, or other internal affairs of the firm.
Subd. 9. [GOVERNANCE AUTHORITY.] "Governance authority"
means the authority and responsibility to:
(1) determine important policies for a professional firm;
(2) superintend the professional firm's overall operations;
and
(3) maintain general, active management of and ultimate
control over all matters involving professional judgment.
Subd. 10. [MINNESOTA FIRM.] "Minnesota firm" includes a
corporation organized under chapter 302A or 317A, limited
liability company organized under chapter 322B, and limited
liability partnership registered under section 323.44.
Subd. 11. [MINNESOTA PROFESSIONAL FIRM.] "Minnesota
professional firm" means a Minnesota firm that has in effect an
election under section 319B.03, subdivision 2.
Subd. 12. [ORGANIZATIONAL DOCUMENT.] "Organizational
document" means:
(1) with respect to a corporation organized under chapter
302A or 317A, that corporation's articles of incorporation;
(2) with respect to a limited liability company organized
under chapter 322B, that limited liability company's articles of
organization; and
(3) with respect to a limited liability partnership
registered under section 323.44, that limited liability
partnership's registration and any notice filed under section
323.44, subdivision 9, in connection with that registration.
Subd. 13. [OWNER.] "Owner" means:
(1) with respect to a professional firm that is a
corporation, except a nonprofit corporation, an owner of shares
in the corporation;
(2) with respect to a professional firm that is a limited
liability company, a membership interest in the limited
liability company; and
(3) with respect to a professional firm that is a limited
liability partnership, a partnership interest.
Subd. 14. [OWNERSHIP INTEREST.] "Ownership interest" means:
(1) with respect to a professional firm that is a
corporation, except a nonprofit corporation, shares in the
corporation;
(2) with respect to a professional firm that is a limited
liability company, a membership interest in the limited
liability company; and
(3) with respect to a professional firm that is a limited
liability partnership, a partnership interest.
Subd. 15. [PARTIAL RIGHT.] "Partial right" means a right
in or with respect to an ownership interest where the right is
by itself insufficient to make the right's holder an owner.
Subd. 16. [PERTINENT PROFESSIONAL SERVICES.] "Pertinent
professional services" means, with respect to a professional
firm, the category or categories of professional services
specified by the firm in its election under section 319B.03,
subdivision 2, or 319B.04, subdivision 2.
Subd. 17. [PROFESSIONAL.] "Professional" means a natural
person who is licensed by the laws of the state of Minnesota or
similar laws of another state to furnish one or more of the
categories of professional services listed in subdivision 19.
Subd. 18. [PROFESSIONAL FIRM.] "Professional firm" means
both Minnesota professional firms and foreign professional firms.
Subd. 19. [PROFESSIONAL SERVICES.] "Professional services"
means services of the type required to be furnished by a
professional under a license or certificate issued by the state
of Minnesota to practice medicine and surgery under sections
147.01 to 147.22, chiropractic under sections 148.01 to 148.105,
registered nursing under sections 148.171 to 148.285, optometry
under sections 148.52 to 148.62, psychology under sections
148.88 to 148.98, dentistry and dental hygiene under sections
150A.01 to 150A.12, pharmacy under sections 151.01 to 151.40,
podiatric medicine under sections 153.01 to 153.25, veterinary
medicine under sections 156.001 to 156.14, architecture,
engineering, surveying, landscape architecture, geoscience, and
certified interior design under sections 326.02 to 326.15,
accountancy under sections 326.17 to 326.229, or law under
sections 481.01 to 481.17, or under a license or certificate
issued by another state under similar laws.
Subd. 20. [STATE.] "State" means a state of the United
States and the District of Columbia.
Subd. 21. [STATEMENT OF QUALIFICATION.] "Statement of
qualification" means, with respect to a foreign firm that is a
limited liability partnership, the statement of qualification
required under section 323.49 and any notice filed under section
323.49, subdivision 9, in connection with that registration.
Subd. 22. [UPDATE.] "Update" means:
(1) with respect to a Minnesota professional firm that is
either a Minnesota corporation or a Minnesota limited liability
company, amend the organizational document;
(2) with respect to a Minnesota professional firm that is a
Minnesota limited liability partnership, file a notice under
section 323.44, subdivision 9, in connection with the Minnesota
limited liability partnership's registration;
(3) with respect to a foreign professional firm that is a
foreign corporation, file a notice under section 303.115 in
connection with the foreign corporation's certificate of
authority;
(4) with respect to a foreign firm that is a limited
liability company, file a notice under section 322B.92, clause
(3), in connection with the foreign limited liability company's
certificate of authority; and
(5) with respect to a foreign professional firm that is a
foreign limited liability partnership, file a notice under
section 323.49, subdivision 9, in connection with the foreign
limited liability partnership's statement of qualification.
Sec. 3. [319B.03] [AUTHORITY OF MINNESOTA FIRMS TO FURNISH
PROFESSIONAL SERVICES; ELECTION BY MINNESOTA FIRMS TO INVOKE THE
ACT.]
Subdivision 1. [AUTHORITY UNDER THIS ACT AND UNDER OTHER
LAW.] (a) A Minnesota firm that has in effect an election under
subdivision 2 may furnish professional services within Minnesota
as provided in sections 319B.01 to 319B.12. A Minnesota firm
may furnish professional services within Minnesota without
making an election under subdivision 2 only if:
(1) no Minnesota statute, Minnesota rule, or tenet of
Minnesota common law requires the Minnesota firm to make that
election in order to furnish professional services within
Minnesota; and
(2) no Minnesota statute, Minnesota rule, or tenet of
Minnesota common law precludes the Minnesota firm from
furnishing professional services within Minnesota in the absence
of that election.
(b) A Minnesota professional firm may provide professional
services and exercise the ancillary powers permitted under
section 319B.06, subdivision 1, paragraph (c), in another state
if:
(1) the Minnesota professional firm is authorized to
provide the services and exercise the powers within Minnesota;
(2) the Minnesota firm's organizational document does not
prohibit the Minnesota professional firm from providing the
services or exercising the powers in the other state;
(3) in the case of a Minnesota professional firm that is a
limited liability partnership, the partnership agreement does
not prohibit the Minnesota professional firm from providing the
services or exercising the powers in the other state; and
(4) the Minnesota professional firm complies with all
applicable laws of that other state regulating the furnishing of
professional services and exercising of ancillary powers in that
state.
Subd. 2. [ELECTION TO INVOKE THIS ACT.] To elect to become
a Minnesota professional firm and be authorized to furnish
professional services according to sections 319B.01 to 319B.12,
a Minnesota firm must in its organizational document:
(1) state that the Minnesota firm elects to operate under
those sections;
(2) acknowledge that the Minnesota firm is subject to those
sections; and
(3) specify from the list stated in section 319B.02,
subdivision 19, the category or categories of professional
services the Minnesota firm is authorized to provide.
The statement, acknowledgment, and specification may be
made when a Minnesota firm initially files the organizational
document or may be added at a later time by updating that
document.
Subd. 3. [RESCISSION AND AMENDMENT OF ELECTION.] (a) A
Minnesota professional firm may rescind its election by updating
its organizational document to delete the statement,
acknowledgment, and specification required by subdivision 2.
(b) A Minnesota professional firm may update its
organizational document to change the specification required by
subdivision 2, clause (3).
Subd. 4. [RELATIONSHIP OF THIS ACT AND GENERALLY
APPLICABLE GOVERNING LAW.] If a Minnesota firm has an election
under subdivision 2 in effect and the Minnesota firm's generally
applicable governing law conflicts with sections 319B.01 to
319B.12, sections 319B.01 to 319B.12 govern.
Sec. 4. [319B.04] [AUTHORITY OF FOREIGN FIRMS TO FURNISH
PROFESSIONAL SERVICES; ELECTION BY FOREIGN FIRMS TO INVOKE THE
ACT.]
Subdivision 1. [AUTHORITY UNDER THIS ACT AND UNDER OTHER
LAW.] A foreign firm that has in effect an election under
subdivision 2 may furnish professional services within Minnesota
as provided in sections 319B.01 to 319B.12. A foreign firm may
furnish professional services within Minnesota without making an
election under subdivision 2 only if:
(1) no Minnesota statute, Minnesota rule, or tenet of
Minnesota common law requires the foreign firm to make that
election in order to furnish professional services within
Minnesota; and
(2) no Minnesota statute, Minnesota rule, or tenet of
Minnesota common law precludes the foreign firm from furnishing
professional services within Minnesota in the absence of that
election.
Subd. 2. [ELECTION TO INVOKE AUTHORITY UNDER THIS ACT.] To
elect to become a foreign professional firm and be authorized to
furnish professional services according to sections 319B.01 to
319B.12, a foreign firm must in its certificate of authority or
statement of qualification:
(1) state that the firm elects to operate under sections
319B.01 to 319B.12;
(2) acknowledge that the firm is subject to those sections;
(3) state that, to the extent its generally applicable
governing law conflicts or differs with those sections, the
foreign firm has made the necessary changes to the agreements
and other documents controlling its structure, governance,
operations, and internal affairs so as to comply with those
sections; and
(4) specify from the list stated in section 319B.02,
subdivision 19, the category or categories of professional
services the foreign firm is authorized to provide within
Minnesota.
The statements, acknowledgment, and specification may be
made when the foreign firm initially files for a certificate of
authority or statement of qualification or may be added at a
later time by updating that document.
Subd. 3. [RESCISSION AND AMENDMENT OF ELECTION.] (a) A
foreign firm may rescind its election by updating its
certificate of authority or statement of qualification to delete
the statements, acknowledgment, and specification required by
subdivision 2.
(b) A foreign firm may update its certificate of authority
or statement of qualification to change the specification
required by subdivision 2, clause (4).
Sec. 5. [319B.05] [FIRM NAME.]
Subdivision 1. [NO IMPLICATION OF SUPERIORITY.] The name
of a professional firm must not imply or be used to imply
superiority.
Subd. 2. [REQUIRED NAME ENDINGS.] The name of a
professional firm must end:
(1) in the case of a corporation, with any one of the
following phrases, words, or abbreviations: "Professional
Corporation"; "Professional Service Corporation"; "Service
Corporation"; "Professional Association"; "Chartered";
"Limited"; "P.C."; "P.S.C."; "S.C."; "P.A."; or "Ltd.";
(2) in the case of a limited liability company, with any
one of the following phrases or abbreviations: "Professional
Limited Liability Company"; "Limited Liability Company";
"P.L.L.C."; "P.L.C."; or "L.L.C."; or
(3) in the case of a limited liability partnership, with
any one of the following phrases or abbreviations:
"Professional Limited Liability Partnership"; "Limited Liability
Partnership"; "P.L.L.P."; or "L.L.P."
A permitted abbreviation may include or omit periods.
Sec. 6. [319B.06] [FURNISHING SERVICES.]
Subdivision 1. [CATEGORIES OF SERVICE.] (a) A professional
firm may provide professional services within Minnesota in one
of the categories listed in section 319B.02, subdivision 19, if:
(1) the professional firm's election under section 319B.03,
subdivision 2, or 319B.04, subdivision 2, specifies that
category; and
(2) each of the professional firm's owners meet the
requirements of section 319B.07 with regard to that category.
(b) A professional firm may provide professional services
within Minnesota in more than one of the categories listed in
section 319B.02, subdivision 19, if:
(1) the professional firm's election under section 319B.03,
subdivision 2, or 319B.04, subdivision 2, specifies those
categories;
(2) each of the professional firm's owners meet the
requirements of section 319B.07 with regard to at least one of
those categories; and
(3) the relevant licensing statutes, as listed in section
319B.02, subdivision 19, or rules in effect under those
statutes, specifically authorize those categories of services to
be practiced in combination.
(c) A professional firm may exercise any powers accorded it
by its generally applicable governing law, so long as the
professional firm exercises those powers solely to provide the
pertinent professional services or to accomplish tasks ancillary
to providing those services.
(d) A professional firm may not conduct any other business
or provide any other services beyond those authorized in this
subdivision, either within or outside of Minnesota.
(e) A professional firm may not adopt, implement, or follow
a policy, procedure, or practice that would give a board grounds
for disciplinary action against a professional who follows,
agrees to, or acquiesces in the policy, procedure, or practice.
Subd. 2. [MANNER OF FURNISHING SERVICES.] (a) A
professional firm may furnish professional services within
Minnesota only through professionals licensed or otherwise
authorized by the state of Minnesota to furnish the pertinent
professional services. Firm owners who are properly licensed
professionals may provide professional services on a
professional firm's behalf, and a professional firm may also
hire or retain properly licensed professionals as employees,
nonemployee agents, or independent contractors to furnish
professional services on the professional firm's behalf.
(b) If a professional firm is authorized under subdivision
1, paragraph (b), to furnish more than one category of
professional services, a professional furnishing professional
services on behalf of the professional firm is required to be
licensed or authorized only with respect to the category or
categories of services which the professional actually furnishes.
Subd. 3. [RELATIONSHIP TO PERSON SERVED.] (a) Sections
319B.01 to 319B.12 do not alter any law applicable to the
relationship between a person furnishing professional services
and a person receiving the professional services, including
liability arising out of the professional services and the
confidential relationship and privilege of communications
between the person furnishing professional services and the
person receiving the professional services.
(b) Sections 319B.01 to 319B.12 do not alter any law
applicable to the relationship between a professional firm
furnishing professional services and a person receiving the
professional services, including liability arising out of the
professional services and the confidential relationship and
privilege of communications between the professional firm
furnishing professional services and the person receiving the
professional services.
(c) Whether a Minnesota professional firm's owners and
persons who control, manage, or act for the firm are personally
liable for the firm's debts and obligations is determined
according to the firm's generally applicable governing law.
Sec. 7. [319B.07] [OWNERSHIP INTERESTS.]
Subdivision 1. [OWNERSHIP OF INTERESTS
RESTRICTED.] Ownership interests in a professional firm may not
be owned or held, either directly or indirectly, except by any
of the following:
(1) professionals who, with respect to at least one
category of the pertinent professional services, are licensed
and not disqualified;
(2) general partnerships, other than limited liability
partnerships, authorized to furnish at least one category of the
professional firm's pertinent professional services;
(3) other professional firms authorized to furnish at least
one category of the professional firm's pertinent professional
services;
(4) a voting trust established with respect to some or all
of the ownership interests in the professional firm, if (i) the
professional firm's generally applicable governing law permits
the establishment of voting trusts, and (ii) all the voting
trustees and all the holders of beneficial interests in the
trust are professionals licensed to furnish at least one
category of the pertinent professional services; and
(5) an employee stock ownership plan as defined in section
4975(e)(7) of the Internal Revenue Code of 1986, as amended, if
(i) all the voting trustees of the plan are professionals
licensed to furnish at least one category of the pertinent
professional services, and (ii) the ownership interests are not
directly issued to anyone other than professionals licensed to
furnish at least one category of the pertinent professional
services.
Subd. 2. [ISSUANCE AND TRANSFER OF OWNERSHIP INTERESTS
RESTRICTED.] A professional firm may not sell, grant, give,
allocate, issue, or otherwise transfer an ownership interest
except to persons who meet the requirements of subdivision 1.
No owner may transfer an ownership interest except to persons
who meet the requirements of subdivision 1. These restrictions
apply regardless of whether a purported sale, grant, gift,
allocation, issuance, or other transfer:
(1) is voluntary or involuntary;
(2) constitutes a present transfer or an undertaking to
make future transfer or to allow the transferee to cause a
future transfer to occur; or
(3) is permanent or subject to defeasement.
Subd. 3. [ISSUANCE AND TRANSFER OF PARTIAL RIGHTS
RESTRICTED.] (a) Except as permitted by this paragraph, no
professional firm may sell, grant, give, allocate, issue, or
otherwise transfer a partial right. Unless prohibited by its
generally applicable governing law or some provision of a
document or agreement permitted by its generally applicable
governing law, a professional firm may:
(1) subject to section 319B.08, subdivision 3, sell, grant,
give, allocate, issue, or otherwise transfer an option to
acquire an entire ownership interest to a person who meets the
requirements of subdivision 1; and
(2) subject to its licensing law, undertake to make
payments, in the nature of separation, retirement, or death
benefits, on account of a former owner who has died, become
disqualified, or for any other reason has ceased to be an owner.
(b) Except as permitted by this paragraph, no owner may
transfer any partial right. Unless prohibited by the
professional firm's generally applicable governing law or some
provision of a document or agreement authorized by the
professional firm's generally applicable governing law, an owner
may, subject to section 319B.09:
(1) enter into an agreement with other owners of the
professional firm regarding voting rights and other aspects of
management; and
(2) grant a proxy to a person who meets the requirements of
subdivision 1.
(c) Except as permitted by paragraphs (a) and (b), no
person may hold or transfer a partial right. These restrictions
apply regardless of whether a purported transfer:
(1) is voluntary or involuntary;
(2) constitutes a present transfer or an undertaking to
make a future transfer or to allow the transferee to cause a
future transfer to occur; or
(3) is permanent or subject to defeasement.
Subd. 4. [IMPROPER ISSUANCE AND TRANSFERS VOID.] A sale,
grant, gift, allocation, issuance, undertaking, creation,
pledge, or other transfer in violation of this section is void.
Subd. 5. [FURTHER TRANSFER RESTRICTIONS PERMITTED.] If
permitted by its generally applicable governing law, a
professional firm may further restrict the transfer of ownership
interests and partial rights.
Subd. 6. [NONAPPLICATION OF SECURITIES REGULATION
PROVISIONS.] Chapter 80A does not apply to or govern a
transaction relating to an ownership interest of a professional
firm.
Sec. 8. [319B.08] [EFFECT OF DEATH OR DISQUALIFICATION OF
OWNER.]
Subdivision 1. [ACQUISITION OF INTERESTS OR AUTOMATIC LOSS
OF PROFESSIONAL FIRM STATUS.] (a) If an owner dies or becomes
disqualified to practice all the pertinent professional
services, then either:
(1) within 90 days after the death or the beginning of the
disqualification, all of that owner's ownership interest must be
acquired by the professional firm, by persons permitted by
section 319B.07 to own the ownership interest, or by some
combination; or
(2) at the end of the 90-day period, the firm's election
under section 319B.03, subdivision 2, or 319B.04, subdivision 2,
is automatically rescinded, the firm loses its status as a
professional firm, and the authority created by that election
and status terminates.
An acquisition satisfies clause (1) if all right and title
to the deceased or disqualified owner's interest are acquired
before the end of the 90-day period, even if some or all of the
consideration is paid after the end of the 90-day period.
However, payment cannot be secured in any way that violates
sections 319B.01 to 319B.12.
(b) If automatic rescission does occur under paragraph (a),
the firm must immediately and accordingly update its
organizational document, certificate of authority, or statement
of qualification. Even without that updating, however, the
rescission, loss of status, and termination of authority
provided by paragraph (a) occur automatically at the end of the
90-day period.
Subd. 2. [TERMS OF ACQUISITION.] (a) If:
(1) an owner dies or becomes disqualified to practice all
the pertinent professional services;
(2) the professional firm has in effect a mechanism, valid
according to the professional firm's generally applicable
governing law, to effect a purchase of the deceased or
disqualified owner's ownership interest so as to satisfy
subdivision 1, paragraph (a), clause (1); and
(3) the professional firm does not agree with the
disqualified owner or the representative of the deceased owner
to set aside the mechanism,
then that mechanism applies.
(b) If:
(1) an owner dies or becomes disqualified to practice all
the pertinent professional services;
(2) the professional firm has in effect no mechanism as
described in paragraph (a), or has agreed as mentioned in
paragraph (a), clause (3), to set aside that mechanism; and
(3) consistent with its generally applicable governing law,
the professional firm agrees with the disqualified owner or the
representative of the deceased owner, before the end of the
90-day period, to an arrangement to effect a purchase of the
deceased or disqualified owner's ownership interest so as to
satisfy subdivision 1, paragraph (a), clause (1),
then that arrangement applies.
(c) If:
(1) an owner of a Minnesota professional firm dies or
becomes disqualified to practice all the pertinent professional
services;
(2) the Minnesota professional firm does not have in effect
a mechanism as described in paragraph (a);
(3) the Minnesota professional firm does not make an
arrangement as described in paragraph (b); and
(4) no provision or tenet of the Minnesota professional
firm's generally applicable governing law and no provision of
any document or agreement authorized by the Minnesota
professional firm's generally applicable governing law expressly
precludes an acquisition under this paragraph,
then the firm may acquire the deceased or disqualified owner's
ownership interest as stated in this paragraph. To act under
this paragraph, the Minnesota professional firm must within 90
days after the death or beginning of the disqualification tender
to the representative of the deceased owner's estate or to the
disqualified owner the fair value of the owner's ownership
interest, as determined by the Minnesota professional firm's
governance authority. That price must be at least the book
value, as determined in accordance with the Minnesota
professional firm's regular method of accounting, as of the end
of the month immediately preceding the death or loss of
license. The tender must be unconditional and may not attempt
to have the recipient waive any rights provided in this
section. If the Minnesota professional firm tenders a price
under this paragraph within the 90-day period, the deceased or
disqualified owner's ownership interest immediately transfers to
the Minnesota professional firm regardless of any dispute as to
the fairness of the price. A disqualified owner or
representative of the deceased owner's estate who disputes the
fairness of the tendered price may take the tendered price and
bring suit in district court seeking additional payment. The
suit must be commenced within one year after the payment is
tendered. A Minnesota professional firm may agree with a
disqualified owner or the representative of a deceased owner's
estate to delay all or part of the payment due under this
paragraph, but all right and title to the owner's ownership
interests must be acquired before the end of the 90-day period
and payment may not be secured in any way that violates sections
319B.01 to 319B.12.
Subd. 3. [EXPIRATION OF FIRM-ISSUED OPTION ON DEATH OR
DISQUALIFICATION OF HOLDER.] If the holder of an option issued
under section 319B.07, subdivision 3, paragraph (a), clause (1),
dies or becomes disqualified, the option automatically expires.
Subd. 4. [NO EFFECT ON PARTNERSHIP DISSOLUTION.] This
section does not change the effect of sections 323.28 and
323.30, under which the dissociation of a partner from a limited
liability partnership causes the dissolution of that partnership.
Sec. 9. [319B.09] [GOVERNANCE.]
Subdivision 1. [GOVERNANCE AUTHORITY.] (a) Except as
stated in paragraph (b), a professional firm's governance
authority must rest with one or more professionals, each of whom
is licensed to furnish at least one category of the pertinent
professional services.
(b) In a Minnesota professional firm organized under
chapter 317A and in a foreign professional firm organized under
the nonprofit corporation statute of another state, at least one
individual possessing governance authority must be a
professional licensed to furnish at least one category of the
pertinent professional services.
(c) Individuals who possess governance authority within a
professional firm may delegate administrative and operational
matters to others. No decision entailing the exercise of
professional judgment may be delegated or assigned to anyone who
is not a professional licensed to practice the professional
services involved in the decision.
(d) An individual whose license to practice any pertinent
professional services is revoked or suspended may not, during
the time the revocation or suspension is in effect, possess or
exercise governance authority, hold a position with governance
authority, or take part in any decision or other action
constituting an exercise of governance authority. Nothing in
this chapter prevents a board from further terminating,
restricting, limiting, qualifying, or imposing conditions on an
individual's governance role as board disciplinary action.
Subd. 2. [VOTING AND MANAGEMENT RIGHTS RESTRICTED.] (a)
The restrictions stated in section 319B.07 apply to the holding
and exercise of:
(1) any proxy relating to the voting right of any ownership
interest in a professional firm; and
(2) any other right to vote or participate in the
management of a professional firm where the right derives from
or is on account of an ownership interest in the professional
firm.
Except as stated in paragraphs (b) and (c), this paragraph
applies to rights a representative of a deceased or incompetent
owner might otherwise have.
(b) If a Minnesota professional firm is deciding whether to
rescind its election under section 319B.03, subdivision 3, the
representative of a deceased or incompetent owner has authority
to vote the deceased or incompetent owner's ownership interest
on that issue to the same extent the owner would have had the
right to vote but for the death or incompetency.
(c) If a foreign professional firm is deciding whether to
rescind its election under section 319B.04, subdivision 3, and
the foreign professional firm's generally applicable governing
law provides the representative of a deceased or incompetent
owner authority to vote the deceased or incompetent owner's
ownership interest on that issue, nothing in sections 319B.01 to
319B.12 limits the representative's authority.
Sec. 10. [319B.10] [MERGERS AND OTHER REORGANIZATIONS.]
Subdivision 1. [REORGANIZATION PERMITTED.] A professional
firm may enter into a merger, consolidation, exchange of
ownership interests, conversion, or any other reorganization
permitted by its generally applicable governing law.
Subd. 2. [EFFECT ON PARTICIPATING PROFESSIONAL FIRM.] (a)
If a professional firm participates in and survives a
reorganization but the reorganization causes the surviving firm
to be out of compliance with section 319B.07 or 319B.09, or both:
(1) the surviving firm's election under section 319B.03,
subdivision 2, or 319B.04, subdivision 2, is automatically
rescinded;
(2) the surviving firm immediately loses its status as a
professional firm and the authority created by that election and
status terminates; and
(3) the surviving firm must immediately and accordingly
update its organizational document, certificate of authority, or
statement of qualification. Even without that amendment,
however, the rescission, loss of status, and termination of
authority occur automatically when the reorganization takes
effect.
(b) If, before a reorganization takes effect, the 90-day
deadline established in section 319B.07, subdivision 1, has been
triggered but has not yet elapsed with regard to an ownership
interest in a professional firm participating in the
reorganization, the surviving firm is not out of compliance with
sections 319B.07 and 319B.09 merely because the reorganization
accords a comparable ownership interest in the surviving firm to
the disqualified owner or the representative of the deceased
owner's estate. The original 90-day deadline applies to the
comparable ownership interest and the surviving firm.
Subd. 3. [FILINGS WITH SECRETARY OF STATE.] (a) For a
Minnesota professional firm involved in a merger, the document
filed with the secretary of state to effectuate the merger must
state whether that Minnesota professional firm will survive the
merger, and if so, whether that Minnesota professional firm will
remain a Minnesota professional firm once the merger takes
effect.
(b) For a foreign professional firm involved in a merger,
the certificate filed with the secretary of state under section
303.11 or 322B.92 must be accompanied by a statement as to
whether that foreign firm will survive the merger, and if so,
whether that foreign professional firm will remain a foreign
professional firm once the merger takes effect.
Subd. 4. [STATUS OF NEWLY CREATED FIRM.] If a
reorganization involves the creation of a new firm, that firm
may make an election under section 319B.03, subdivision 2, or
319B.04, subdivision 2, and become a professional firm if the
firm meets the requirements of sections 319B.01 to 319B.12.
Sec. 11. [319B.11] [PROFESSIONAL REGULATION.]
Subdivision 1. [BOARDS' POWERS.] Each board may make
whatever rules are necessary to carry out sections 319B.01 to
319B.12. Except as stated in this section, nothing in sections
319B.01 to 319B.12 restricts or limits in any manner the
authority or duty of a board with respect to persons furnishing
professional services within the jurisdiction of the board, even
if the person is an owner, director, governor, officer, manager,
employee, agent, or independent contractor of a professional
firm and furnishes professional services through that firm.
Subd. 2. [LIABILITY SHIELD.] (a) Except as stated in
paragraph (b), no board may directly or indirectly require a
person providing professional services through a professional
firm to assume greater liability for the firm's debts and
obligations than is contemplated by section 319B.06, subdivision
3.
(b) Paragraph (a) does not prevent the board from requiring
a professional to assume personal liability for specified
obligations or categories of obligations as a term or
requirement of board disciplinary or corrective action
concerning the professional.
Subd. 3. [FILING OF ORGANIZATIONAL DOCUMENT AND REPORT
INFORMATION.] (a) No professional firm may furnish professional
services within Minnesota until the firm files with each board
having jurisdiction over the pertinent professional services:
(1) a copy of the firm's organizational document,
certificate of authority, or statement of qualification;
(2) a report containing the same information as required by
subdivision 4; and
(3) except as stated in paragraph (b), a fee of $100.
(b) If a firm has previously been organized under sections
319A.01 to 319A.22, that firm is not required to pay the filing
fee under paragraph (a).
Subd. 4. [ANNUAL REPORT.] (a) Every professional firm must
file annually on or before January 1 with the board or boards
having jurisdiction over the pertinent professional services a
report containing the following:
(1) the name and address of the professional firm;
(2) the contents of any amendment made to the firm's
organizational document, certificate of authority, or statement
of qualification since the filing of the most recent report
under subdivision 3 or this subdivision;
(3) a designation of the position or positions within the
firm that have governance authority;
(4) the name and address of each owner of an ownership
interest and each person occupying a position with governance
authority;
(5) a statement as to whether all employees, agents, and
independent contractors furnishing professional services within
Minnesota on behalf of the professional firm are professionals
authorized to furnish at least one category of the pertinent
professional services;
(6) except in the case of a professional firm that is
organized under chapter 317A or the nonprofit corporation
statute of another state, a statement as to whether all owners
and persons occupying a position with governance authority are
professionals authorized to furnish at least one category of the
pertinent professional services;
(7) in the case of a professional firm that is organized
under chapter 317A or the nonprofit corporation statute of
another state, a statement as to whether at least one person
occupying a position with governance authority is a professional
authorized to furnish at least one category of the pertinent
professional services; and
(8) any additional information as the board may by rule
prescribe as appropriate to assist in determining whether a
professional firm is complying with sections 319B.01 to 319B.12.
The statement required by clauses (5), (6), and (7) must be
made and signed under oath by a professional who is an owner or
employee of the professional firm, licensed in at least one
category of the pertinent professional services and duly
authorized to make the statement on behalf of the professional
firm.
(b) For filing each annual report under paragraph (a), each
firm must pay a fee of $25 to each board with which the report
is filed.
Subd. 5. [REPORT OF OWNER'S DEATH OR DISQUALIFICATION.] (a)
Except as stated in paragraph (b), within 30 days after the
death or disqualification of an owner, the professional firm
must report the death or disqualification to each board having
jurisdiction over any of the pertinent professional services.
(b) A professional firm need not report a disqualification
to a board which took the action that caused the
disqualification.
Subd. 6. [EXAMINATION BY BOARD.] (a) A board, or an
employee or agent designated by a board, may inspect at all
reasonable times all books and records of a professional firm
and may summon and examine under oath the owners, directors,
governors, officers, managers, persons occupying a position with
governance authority, and employees of the firm in all matters
concerning the operations of the professional firm that are
governed by sections 319B.01 to 319B.12, the rules of the board,
or the professional firm's generally applicable governing law.
This subdivision does not authorize anyone to have access to or
to compel anyone to testify with respect to books, records, or
information of any type subject to a privilege recognized by law.
(b) Any information obtained by a board as a result of an
examination authorized by paragraph (a) is confidential, immune
from subpoena, and inadmissible as evidence at a trial, hearing,
or proceeding before a court, board, or commissioner except a
proceeding under subdivision 8.
(c) A professional firm subject to an examination under
paragraph (a) may request in writing that the board under whose
authority the examination is being or has been conducted provide
the professional firm with a copy of all or any specified parts
of the sworn testimony taken or received during the examination
as well as all or any specified exhibits provided as part of
that testimony. The board must comply promptly with the request
and may charge the requesting firm the reasonable cost of making
and providing the copies.
Subd. 7. [STATUS OF INFORMATION.] Except as stated in
subdivision 6, information filed by a professional firm under
this section is public data under chapter 13.
Subd. 8. [INVOLUNTARY DISSOLUTION AND RESCISSION OF
PROFESSIONAL FIRM STATUS.] A board, through the attorney
general, may institute proceedings in a district court of this
state or a contested case proceeding under chapter 14 to
involuntarily rescind a professional firm's election under
section 319B.03, subdivision 2, or 319B.04, subdivision 2, to
impose restrictions or conditions on that election or to
reprimand the professional firm due to a violation of sections
319B.01 to 319B.12, the relevant licensing statute as listed in
section 319B.02, subdivision 19, or the rules of the board. A
board, through the attorney general, may institute proceedings
in a district court of this state to have a Minnesota
professional firm involuntarily dissolved, or a foreign
professional firm's certificate of authority or statement of
qualification revoked on those grounds, as well as on any other
grounds provided by Minnesota law. A board may seek reprimands,
restrictions, conditions, involuntary rescission, and, as
appropriate, dissolution or revocation within a single
proceeding in a district court of this state. After a court
enters a decree imposing rescission, dissolution, or revocation
upon a professional firm, a board shall cause a certified copy
of the decree to be filed with the secretary of state. The
secretary of state shall not charge a fee for filing the
decree. A board's claim against a professional firm for
involuntary dissolution or revocation does not abate simply
because the professional firm has rescinded its election under
section 319B.03, subdivision 2, or 319B.04, subdivision 2. A
voluntary rescission does abate a board's claim to obtain
reprimands, restrictions, conditions, or involuntary rescission.
Subd. 9. [FEES.] All fees paid under this section are for
the board to which they are due.
Sec. 12. [319B.12] [TRANSITION PROVISIONS.]
Subdivision 1. [SPECIAL DEFINITIONS.] As used in this
section:
(1) "professional corporation" has the meaning given in
section 319A.02, subdivision 4;
(2) "foreign professional corporation" has the meaning
given in 319A.02, subdivision 5; and
(3) "corporation" has the meaning given in section 319A.02,
subdivision 7.
Subd. 2. [NEW USE OF CHAPTER 319A PRECLUDED.] Beginning
July 1, 1997, no Minnesota firm may organize under chapter 319A
and no foreign firm may begin to operate under chapter 319A.
Subd. 3. [EARLY ELECTION INTO THIS CHAPTER BY CHAPTER 319A
ORGANIZATIONS.] (a) At any time before January 1, 1999, a
professional corporation organized under chapter 319A and a
foreign professional corporation governed by chapter 319A may
elect to be governed by sections 319B.01 to 319B.12. To make
that election, the professional corporation or foreign
professional corporation must:
(1) comply with section 319B.03, subdivision 2, or 319B.04,
subdivision 2, whichever is applicable; and
(2) amend, to the extent necessary to comply with sections
319B.01 to 319B.12, its organizational document, certificate of
authority, or statement of qualification, as well as any
agreements and other documents controlling the corporation's
structure, governance, operations, and internal affairs.
(b) Regardless of the date an electing professional
corporation or foreign professional corporation actually makes
its election under this subdivision, the electing professional
corporation or foreign professional corporation may make the
election effective as of January 1, 1997. Except as allowed by
this paragraph, an election under this subdivision is effective
on the date the electing professional corporation or foreign
professional corporation complies with paragraph (a).
(c) The law and documents that govern the structure,
governance, operations, and other internal affairs of a
professional corporation or foreign professional corporation
when the corporation is deciding whether, when, and as of when
to make an election under this subdivision control the manner of
making those decisions.
Subd. 4. [ALL USE OF CHAPTER 319A ENDED; DEEMED ELECTION
FOR MINNESOTA PROFESSIONAL FIRMS.] (a) Beginning January 1, 1999:
(1) no professional corporation may operate under chapter
319A and no foreign professional corporation may operate under
chapter 319A; and
(2) chapter 319A ceases to apply to professional
corporations and foreign professional corporations.
(b) On January 1, 1999, a Minnesota professional
corporation that has not elected to be governed by sections
319B.01 to 319B.12 will be considered to have made that
election, and the professional corporation's purposes, as stated
under section 319A.03, clause (2), will be considered to be the
specification required by section 319B.03, subdivision 2, clause
(3).
Subd. 5. [ACTS DURING TRANSITION.] The continuation or
completion of an act by a professional firm that had been a
professional corporation or foreign professional corporation but
elected to become a professional firm governed by this chapter
and the continuation or performance of any executed or wholly or
partially executory contract, conveyance, or transfer to or by
the professional firm shall, if otherwise lawful before the
professional firm became governed by this chapter, remain valid,
and may be continued, completed, consummated, enforced, or
terminated as required or as permitted by a statute applicable
to the contract, conveyance, or transfer before the effective
date of this chapter.
Sec. 13. [EFFECTIVE DATE.]
Article 1 is effective January 1, 1997.
ARTICLE 2
CONFORMING AMENDMENTS
Section 1. Minnesota Statutes 1996, section 13.99,
subdivision 92e, is amended to read:
Subd. 92e. [PROFESSIONAL CORPORATIONS OR FIRMS.] Access to
records of a professional corporation held by a licensing board
under section 319A.17 or records of a professional firm held by
a licensing board under section 319B.11 is governed by that
section.
Sec. 2. Minnesota Statutes 1996, section 144A.43,
subdivision 4, is amended to read:
Subd. 4. [HOME CARE PROVIDER.] "Home care provider" means
an individual, organization, association, corporation, unit of
government, or other entity that is regularly engaged in the
delivery, directly or by contractual arrangement, of home care
services for a fee. At least one home care service must be
provided directly, although additional home care services may be
provided by contractual arrangements. "Home care provider"
includes a hospice program defined in section 144A.48. "Home
care provider" does not include:
(1) any home care or nursing services conducted by and for
the adherents of any recognized church or religious denomination
for the purpose of providing care and services for those who
depend upon spiritual means, through prayer alone, for healing;
(2) an individual who only provides services to a relative;
(3) an individual not connected with a home care provider
who provides assistance with home management services or
personal care needs if the assistance is provided primarily as a
contribution and not as a business;
(4) an individual not connected with a home care provider
who shares housing with and provides primarily housekeeping or
homemaking services to an elderly or disabled person in return
for free or reduced-cost housing;
(5) an individual or agency providing home-delivered meal
services;
(6) an agency providing senior companion services and other
older American volunteer programs established under the Domestic
Volunteer Service Act of 1973, Public Law Number 98-288;
(7) an employee of a nursing home licensed under this
chapter who provides emergency services to individuals residing
in an apartment unit attached to the nursing home;
(8) a member of a professional corporation organized under
sections 319A.01 to 319A.22 or chapter 319B that does not
regularly offer or provide home care services as defined in
subdivision 3;
(9) the following organizations established to provide
medical or surgical services that do not regularly offer or
provide home care services as defined in subdivision 3: a
business trust organized under sections 318.01 to 318.04, a
nonprofit corporation organized under chapter 317A, a
partnership organized under chapter 323, or any other entity
determined by the commissioner;
(10) an individual or agency that provides medical supplies
or durable medical equipment, except when the provision of
supplies or equipment is accompanied by a home care service;
(11) an individual licensed under chapter 147; or
(12) an individual who provides home care services to a
person with a developmental disability who lives in a place of
residence with a family, foster family, or primary caregiver.
Sec. 3. [303.115] [FOREIGN PROFESSIONAL FIRM FILINGS.]
When a foreign corporation uses chapter 319B to elect
professional firm status, rescind that status, or change the
specification of professional services required under section
319B.04, the foreign corporation must file with the secretary of
state a notice which:
(1) states the election, rescission, or change in
specification;
(2) had been approved in accordance with the foreign
corporation's generally applicable governing law, as that term
is defined in section 319B.02, subdivision 8; and
(3) has been signed on behalf of the foreign corporation.
Sec. 4. Minnesota Statutes 1996, section 322B.12,
subdivision 1, is amended to read:
Subdivision 1. [REQUIREMENTS AND PROHIBITIONS.] The
limited liability company name must:
(1) be in the English language or in any other language
expressed in English letters or characters;
(2) contain the words "limited liability company," or must
contain the abbreviation "LLC" or, in the case of an
organization formed pursuant to section 319A.03 or chapter 319B,
must meet the requirements of section 319A.07 or 319B.05
applicable to a limited liability company;
(3) not contain the word corporation or incorporated and
must not contain the abbreviation of either or both of these
words;
(4) not contain a word or phrase that indicates or implies
that it is organized for a purpose other than a legal business
purpose; and
(5) be distinguishable upon the records in the office of
the secretary of state from the name of each domestic limited
liability company, limited liability partnership, corporation,
and limited partnership, whether profit or nonprofit, and each
foreign limited liability company, limited liability
partnership, corporation, and limited partnership authorized or
registered to do business in this state, whether profit or
nonprofit, and each name the right to which is, at the time of
organization, reserved as provided for in sections 302A.117,
317A.117, 322A.03, 322B.125, or 333.001 to 333.54, unless there
is filed with the articles of organization one of the following:
(i) the written consent of the domestic limited liability
company, limited liability partnership, corporation, or limited
partnership or the foreign limited liability company, limited
liability partnership, corporation, or limited partnership
authorized or registered to do business in this state or the
holder of a reserved name or a name filed by or registered with
the secretary of state under sections 333.001 to 333.54 having a
name that is not distinguishable;
(ii) a certified copy of a final decree of a court in this
state establishing the prior right of the applicant to the use
of the name in this state; or
(iii) the applicant's affidavit that the limited liability
company, corporation, or limited partnership with the name that
is not distinguishable has been organized, incorporated, or on
file in this state for at least three years prior to the
affidavit, if it is a domestic limited liability company,
corporation, or limited partnership, or has been authorized or
registered to do business in this state for at least three years
prior to the affidavit, if it is a foreign limited liability
company, corporation, or limited partnership, or that the holder
of a name filed or registered with the secretary of state under
sections 333.001 to 333.54 filed or registered that name at
least three years prior to the affidavit, that the limited
liability company, corporation, or limited partnership or holder
has not during the three-year period filed any document with the
secretary of state; that the applicant has mailed written notice
to the limited liability company, corporation, or limited
partnership or the holder of a name filed or registered with the
secretary of state under sections 333.001 to 333.54 by certified
mail, return receipt requested, properly addressed to the
registered office of the limited liability company or
corporation or in care of the agent of the limited partnership,
or the address of the holder of a name filed or registered with
the secretary of state under sections 333.001 to 333.54, shown
in the records of the secretary of state, stating that the
applicant intends to use a name that is not distinguishable and
the notice has been returned to the applicant as undeliverable
to the addressee limited liability company, corporation, or
limited partnership or holder of a name filed or registered with
the secretary of state under sections 333.001 to 333.54; that
the applicant, after diligent inquiry, has been unable to find
any telephone listing for the limited liability company,
corporation, or limited partnership with the name that is not
distinguishable in the county in which is located the registered
office of the limited liability company, corporation, or limited
partnership shown in the records of the secretary of state or
has been unable to find any telephone listing for the holder of
a name filed or registered with the secretary of state under
sections 333.001 to 333.54 in the county in which is located the
address of the holder shown in the records of the secretary of
state; and that the applicant has no knowledge that the limited
liability company, corporation, or limited partnership or holder
of a name filed or registered with the secretary of state under
sections 333.001 to 333.54 is currently engaged in business in
this state.
Sec. 5. Minnesota Statutes 1996, section 322B.92, is
amended to read:
322B.92 [AMENDMENTS TO THE CERTIFICATE OF AUTHORITY.]
If any statement in the application for a certificate of
authority by a foreign limited liability company was false when
made or any arrangements or other facts described have changed,
making the application inaccurate in any respect, the foreign
limited liability company shall promptly file with the secretary
of state:
(1) in the case of a change in its name, a termination or a
merger, a certificate to that effect authenticated by the proper
officer of the state or country under the laws of which the
foreign limited liability company is organized; or
(2) in the case of a change in the name or address of the
registered agent required to be maintained by section 322B.925,
an amendment to the certificate of authority signed by an
authorized person.; or
(3) in the case of an election, rescission, or change in
the specification of professional services under section
319B.04, a notice which:
(1) states the election, rescission, or change in
specification;
(2) has been approved in accordance with the foreign
limited liability company's generally applicable governing law,
as that term is defined in section 319B.02, subdivision 8; and
(3) has been signed on behalf of the foreign limited
liability company.
The fee for filing the document is the same as for filing
an amendment.
Sec. 6. Minnesota Statutes 1996, section 323.44, is
amended by adding a subdivision to read:
Subd. 9. [CHAPTER 319B ELECTION.] When a limited liability
partnership uses chapter 319B to elect professional firm status,
rescind that status, or change the specification of professional
services required under section 319B.04, the limited liability
partnership must file with the secretary of state a notice which:
(1) states the election, rescission, or change in
specification;
(2) has been approved by the limited liability partnership
according to its generally applicable governing law, as that
term is defined in section 319B.02, subdivision 8; and
(3) has been signed on behalf of the limited liability
partnership.
The fee for filing the document is $35.
Sec. 7. Minnesota Statutes 1996, section 323.49, is
amended by adding a subdivision to read:
Subd. 9. [CHAPTER 319B ELECTION.] When a foreign limited
liability partnership uses chapter 319B to elect professional
firm status, rescind that status, or change the specification of
professional services required under section 319B.04, the
foreign limited liability partnership must file with the
secretary of state a notice which:
(1) states the election, rescission, or change in
specification;
(2) has been approved by the foreign limited liability
partnership according to its generally applicable governing law,
as that term is defined in section 319B.02, subdivision 8; and
(3) has been signed on behalf of the foreign limited
liability partnership.
The fee for filing the document is $35.
Sec. 8. [REVISOR INSTRUCTION.]
In Minnesota Statutes 2000, the revisor of statutes shall
remove the following words and references:
(1) in section 13.99, subdivision 92e, remove "records of a
professional corporation held by a licensing board under section
319A.17 or";
(2) in section 144A.43, subdivision 4, remove "sections
319A.01 to 319A.22 or"; and
(3) in section 322B.12, subdivision 1, remove "section
319A.03 or" and "section 319A.07 or".
Sec. 9. [REPEALER.]
Minnesota Statutes 1996, sections 319A.01; 319A.02;
319A.03; 319A.04; 319A.05; 319A.06; 319A.07; 319A.08; 319A.09;
319A.10; 319A.11; 319A.12; 319A.13; 319A.14; 319A.15; 319A.16;
319A.17; 319A.18; 319A.19; 319A.20; 319A.21; and 319A.22, are
repealed.
Sec. 10. [EFFECTIVE DATE.]
Sections 1 to 7 are effective the day following final
enactment.
Section 9 is effective January 1, 1999.
Presented to the governor April 4, 1997
Signed by the governor April 8, 1997, 10:25 a.m.
Official Publication of the State of Minnesota
Revisor of Statutes