How to Incorporate a Pharmacy in Ontario: Professional Corporation and OCP Requirements
Updated: Aug 14
Many pharmacists begin thinking about incorporation when they move from employment into pharmacy ownership, acquire an existing pharmacy, open a new location or begin providing professional pharmacy services through their own business.
But incorporating a pharmacy in Ontario is not the same as incorporating an ordinary business.
Pharmacists operate in a regulated environment, and the corporate structure must comply with Ontario corporate law as well as requirements administered by the Ontario College of Pharmacists (“OCP”). Depending on the business model, there may also be an important distinction between a pharmacist professional corporation and the corporation that owns or operates the pharmacy itself.
Understanding that distinction before incorporating can prevent costly restructuring, regulatory delays and problems with future ownership changes.
Can a Pharmacist Incorporate in Ontario?
Yes.
Ontario pharmacists may use a health profession corporation to practise pharmacy, provided the corporation satisfies the applicable requirements and obtains a Certificate of Authorization from the Ontario College of Pharmacists.
A pharmacist may also be involved in a corporation that owns or operates an accredited pharmacy. However, the rules governing that operating corporation are not identical to the rules governing a pharmacist professional corporation.
This distinction is important when determining how a pharmacy business should be structured.
What Is a Pharmacist Professional Corporation?
A pharmacist professional corporation is an Ontario professional corporation established to carry on the practice of pharmacy and activities related or ancillary to that practice.
Unlike a general business corporation, it is subject to specific restrictions relating to:
ownership;
directors and officers;
its corporate name;
the activities it may carry on; and
authorization from the Ontario College of Pharmacists.
The OCP requires a health profession corporation to obtain a Certificate of Authorization before practising pharmacy through the corporation. The certificate must also be renewed annually with the College.
Pharmacists considering this structure should therefore treat incorporation as both a corporate law process and a professional regulatory process.
Pharmacist Professional Corporation vs. Pharmacy Operating Corporation
This is one of the most important distinctions for pharmacists considering incorporation.
A professional corporation and a corporation that owns or operates an accredited pharmacy are not necessarily the same thing.
Pharmacist Professional Corporation
For an OCP-authorized health profession corporation:
all issued and outstanding shares must be legally and beneficially owned, directly or indirectly, by one or more members of the Ontario College of Pharmacists;
all directors and officers must be shareholders;
the corporation's name must satisfy professional-corporation naming requirements; and
the corporation cannot carry on an unrelated business that is outside the practice of pharmacy or activities related or ancillary to pharmacy practice.
Corporation Owning or Operating a Pharmacy
Ontario law contains a separate set of requirements for corporations that own or operate pharmacies.
Among other things, a corporation cannot own or operate a pharmacy unless:
a majority of its directors are pharmacists; and
a majority of each class of shares is owned and registered in the name of pharmacists or qualifying health profession corporations holding valid OCP Certificates of Authorization.
This is why pharmacists should not assume that incorporating a professional corporation automatically creates the appropriate structure for owning and operating a retail pharmacy.
The correct structure depends on what the corporation will actually do, who will own it, whether there are other investors or business partners, and how the pharmacy operation will be organized.
1. Determine What the Corporation Will Actually Do
Before filing Articles of Incorporation, determine the corporation's intended role. For example:
Will it provide professional pharmacy services?
Will it own an accredited pharmacy?
Will it operate the retail pharmacy business?
Will it hold shares in another pharmacy corporation?
Will there be multiple pharmacists involved?
Will there be non-pharmacist investors or family members involved in any part of the business?
Will the business eventually operate multiple locations?
Is the pharmacist acquiring an existing pharmacy rather than starting a new one?
These questions affect the appropriate corporate structure.
Simply incorporating a generic Ontario corporation first and attempting to make it compliant later may result in unnecessary amendments or restructuring.
Pharmacists who are still determining the appropriate structure can review Delta Law's business incorporation services for Ontario businesses before establishing the corporation.
2. Structure the Shares Correctly
Share ownership is particularly important for pharmacist professional corporations.
The OCP's current Certificate of Authorization application requires all issued and outstanding shares of the professional corporation to be legally and beneficially owned, directly or indirectly, by one or more members of the College.
This is more restrictive than simply requiring pharmacists to hold the voting shares.
The share structure should therefore be considered before incorporation, particularly where the pharmacist is contemplating:
multiple shareholders;
future ownership changes;
tax planning;
an eventual sale;
another pharmacist joining the practice; or
a broader pharmacy ownership structure.
Corporate tax planning should also be coordinated with the pharmacist's accountant or tax adviser. The fact that a corporation can be created does not mean that every possible share or tax structure is permitted under the professional regulatory rules.
3. Choose a Compliant Professional Corporation Name
A pharmacist professional corporation cannot simply use any corporate name.
According to the OCP's current requirements, the name must:
include the surname of one or more shareholder pharmacists as that surname appears on the College register;
indicate the health profession;
include the words “Professional Corporation” or the permitted French equivalent; and
not contain information beyond what is permitted by the applicable legislation.
For example, branding considerations that might be appropriate for an ordinary operating company may not necessarily be appropriate for the legal name of a pharmacist professional corporation.
The corporate name should therefore be reviewed before the Articles of Incorporation are filed.
4. Appoint the Proper Directors and Officers
For a pharmacist professional corporation, all directors and officers must also be shareholders of the corporation.
The OCP also requires every health profession corporation to appoint a pharmacist Director Liaison who acts as the primary point of contact with the College regarding the corporation and any pharmacy owned or operated by it.
The corporate records should accurately reflect these appointments.
This includes maintaining appropriate:
director resolutions;
shareholder resolutions;
officer appointments;
share issuances;
share certificates; and
corporate registers.
Incorporation is therefore more than simply receiving Articles of Incorporation from the Province of Ontario.
5. Apply for an OCP Certificate of Authorization
Creating the Ontario corporation is only part of the process if the corporation will operate as a pharmacist health profession corporation.
An application for a Certificate of Authorization for a Health Profession Corporation must be submitted to the Ontario College of Pharmacists together with the required corporate information, supporting documentation, undertakings and applicable fee.
The application requires information concerning matters such as:
the corporation's name;
shareholders;
directors and officers;
the Director Liaison;
the corporation's intended professional activities; and
the locations from which the corporation carries on activities.
Each director is also required to provide an undertaking to the College concerning the professional and regulatory responsibilities of the corporation.
The Certificate of Authorization is not a one-time requirement. The OCP currently requires it to be renewed annually on or before March 10.
6. Do Not Confuse Incorporation With Pharmacy Accreditation
Incorporating the business does not, by itself, authorize a new community pharmacy to open.
Before a new pharmacy can open to the public, it must be accredited by the Ontario College of Pharmacists.
The OCP currently requires a complete application for a Certificate of Accreditation to be submitted before construction and at least 45 days before the proposed opening date. The application process includes corporate documentation and an assessment of the proposed pharmacy.
The OCP's process may include:
the pharmacy accreditation application;
information concerning the operating corporation;
declarations concerning pharmacist directors;
Articles of Incorporation;
share documentation;
an approved pharmacy floor plan; and
a pre-opening assessment.
Pharmacists opening a new location should therefore build regulatory lead time into their transaction and opening schedule.
7. Coordinate the Corporation With the Pharmacy's Other Agreements
The corporation should not be considered in isolation.
A pharmacy business may also have:
a commercial lease;
a pharmacy purchase agreement;
a franchise or banner agreement;
wholesaler or supplier agreements;
financing documents;
pharmacist associate agreements;
independent contractor agreements;
employment agreements; and
agreements with other healthcare providers.
The correct legal entity should be identified in each agreement.
For example, if a lease, supplier agreement or employment contract is entered into before the final corporate structure has been determined, the pharmacist may later need assignments, amendments or landlord and third-party consents.
Corporate structuring should therefore be addressed early in the process rather than after major agreements have already been signed.
Delta Law works with regulated practitioners and clinics through its Healthcare & Wellness legal services, including corporate and contractual matters affecting healthcare businesses.
8. Consider the Structure Before Buying an Existing Pharmacy
A pharmacist acquiring an existing pharmacy should determine the intended corporate structure before the purchase transaction closes.
The structure may affect:
whether the transaction is an asset purchase or share purchase;
which corporation becomes the pharmacy owner;
regulatory applications;
financing;
the commercial lease;
employees;
supplier arrangements; and
post-closing ownership.
Changes in corporate ownership, directors, shareholders or share structure may also trigger notification or documentation requirements with the OCP. The College currently requires notification of corporate amendments within 30 days of the change taking effect.
This is one reason pharmacy acquisition planning should involve the corporate, regulatory and transactional pieces together.
9. Coordinate Legal and Accounting Advice
Incorporation can provide potential tax and business-planning advantages, but the benefits depend on the pharmacist's individual circumstances and the structure of the business.
A lawyer and accountant serve different roles in this process.
Your accountant can advise on matters such as:
tax consequences;
compensation through salary or dividends;
tax planning;
accounting treatment; and
financial structuring.
Your lawyer can address:
the appropriate corporation;
Articles of Incorporation;
share structure;
directors and officers;
corporate records;
OCP corporate requirements;
agreements between owners; and
alignment between the corporation and the pharmacy's commercial contracts.
Ideally, legal and accounting advice should be coordinated before the structure is finalized.
Common Pharmacy Incorporation Mistakes
Incorporating a Generic Corporation Without Considering OCP Requirements
A standard incorporation may not contain the appropriate structure for a pharmacist professional corporation or pharmacy operating company.
Correcting the structure later can require amendments and additional corporate work.
Assuming Only Voting Shares Are Restricted
For an OCP-authorized pharmacist health profession corporation, the rules apply to all issued and outstanding shares, not simply the voting shares.
This is an important distinction when planning ownership or tax structures.
Treating the Professional Corporation and Pharmacy Corporation as the Same Concept
They are governed by different requirements.
A pharmacist professional corporation must comply with the professional-corporation regime, while a corporation owning or operating an accredited pharmacy must satisfy the applicable pharmacy ownership and control requirements.
Depending on the business model, careful planning may be required to determine which entity or entities should be used.
Incorporating After Signing Major Agreements
Waiting until after signing a lease, purchase agreement, franchise agreement or financing documents can create unnecessary assignment and consent issues.
The intended corporate structure should ideally be determined before major commitments are made.
Forgetting Ongoing Corporate and OCP Compliance
The work does not end after incorporation.
Professional corporations must maintain their corporate records and renew their Certificate of Authorization annually. Changes to a pharmacy operating corporation may also have to be reported to the OCP.
Do You Need a Lawyer to Incorporate a Pharmacy in Ontario?
Ontario's online incorporation system makes the mechanical act of creating a corporation relatively straightforward.
The more difficult issue is determining what corporation should be created and how it should be structured.
For pharmacists, this can involve the interaction between:
Ontario corporate law;
professional corporation rules;
OCP requirements;
pharmacy accreditation;
ownership restrictions;
tax planning;
commercial agreements; and
future business plans.
Legal advice can be particularly valuable where a pharmacist is:
opening a new pharmacy;
acquiring an existing pharmacy;
incorporating professional services;
bringing in another owner;
planning multiple locations;
restructuring an existing pharmacy business; or
preparing for future growth or sale.
Pharmacy Incorporation Lawyer in Ontario
Delta Law Professional Corporation assists pharmacists and other regulated healthcare professionals with professional corporation and business incorporation in Ontario.
Our work can include:
Ontario incorporation;
professional corporation structuring;
Articles of Incorporation;
share structure;
corporate resolutions and minute-book documentation;
OCP Certificate of Authorization documentation;
corporate reorganizations;
shareholder and ownership arrangements; and
related commercial contracts.
We also advise healthcare businesses on the agreements that accompany ownership and growth, including leases, purchase agreements, employment and contractor agreements, and other commercial arrangements.
If you are incorporating a pharmacist professional corporation, opening or acquiring a pharmacy, or reviewing an existing pharmacy structure, Book a Consultation to discuss the appropriate next steps.
