Professional Corporations in Ontario: Common Issues with Authorization

Incorporating a professional corporation in Ontario is not the same as incorporating a standard business.

From a filing perspective, the process may appear similar.

In practice, the corporation must meet specific requirements set by the applicable regulatory body before it can be authorized to operate.

We regularly see situations where a corporation has been successfully incorporated through ServiceOntario, but is later rejected by the governing college when applying for a Certificate of Authorization.

This creates confusion.

From the client’s perspective, the corporation exists. From the regulator’s perspective, it does not meet the requirements to operate as a professional corporation.

Incorporation and Authorization Are Two Separate Steps

One of the most common misunderstandings is assuming that incorporation alone is sufficient.

In reality, there are two distinct steps:

• incorporating the corporation

• obtaining authorization from the governing body

The first step creates the entity.

The second step determines whether that entity can operate as a professional corporation.

If the structure does not meet the regulator’s requirements, authorization will not be granted.

The Most Common Issue Is the Corporate Name

Naming is one of the most frequent reasons for rejection.

Professional corporations are subject to specific naming rules, which typically require:

• inclusion of the professional’s surname

• inclusion of the regulated profession

• inclusion of “Professional Corporation” or an accepted abbreviation

We often see corporations incorporated under:

• a general business name

• a brand name without the required elements

• a name that does not meet the college’s guidelines

Even if the name was accepted at the time of incorporation, it may still be rejected by the regulator.

Share Structure and Ownership Restrictions

Professional corporations are not structured in the same way as standard corporations.

Most regulatory bodies require that:

• all voting shares are owned by licensed members of the profession

• non-licensed individuals are restricted or excluded from ownership

• control remains with the licensed professional

We regularly see corporations where:

• shares are issued broadly without considering licensing requirements

• non-licensed individuals are included as shareholders

• the structure does not meet regulatory standards

In these cases, the corporation may need to be amended before authorization can be obtained.

Mismatch Between ServiceOntario and Regulatory Requirements

ServiceOntario focuses on whether the corporation can be incorporated.

The regulatory body focuses on whether it can operate as a professional corporation.

These are different standards.

A corporation can be:

• properly incorporated

• but not properly structured for regulatory approval

This is where many issues arise.

Incorporating as a Standard Corporation

Another common issue is incorporating as a standard corporation rather than as a professional corporation.

This can result in:

• a name that does not meet professional requirements

• a structure that is not aligned with regulatory rules

• additional steps required to convert or amend the corporation

While this can be corrected, it often requires additional filings and restructuring.

What Happens When a Corporation Is Rejected

When a professional corporation application is rejected, the next step depends on the issue.

In most cases, this involves:

• amending the corporate name

• adjusting the share structure

• correcting ownership

• aligning the corporation with the regulator’s requirements

This is not a matter of refiling the same documents.

It requires identifying what is non-compliant and correcting it properly.

Why These Issues Are Common

These situations are not unusual.

They typically arise where:

• incorporation is done without reference to the governing body’s requirements

• a general incorporation service is used

• the focus is on completing the filing rather than structuring the corporation

From a filing perspective, the corporation is created.

From a regulatory perspective, it is not usable.

Fixing the Corporation

In most cases, an incorrectly incorporated professional corporation can be corrected.

This may involve:

• filing Articles of Amendment

• restructuring share ownership

• updating the corporate name

• ensuring compliance with the specific college’s requirements

Once the structure is aligned, the application for authorization can proceed.

Book a Consultation

If your professional corporation has been rejected or you are unsure whether your current structure meets your college’s requirements, it is worth reviewing the corporation before taking further steps.

These issues are usually fixable, but they need to be addressed correctly. A focused review can identify what needs to be amended and how to move forward, and you can Book a Consultation to walk through your corporation and get it properly aligned for approval.