Limited Liability Company – General – New Jersey
Related New Jersey Legal Forms
A New Jersey limited liability company formed to engage in the practice of law is subject to the provisions of the New Jersey Limited Liability Company Act. The practice of law in New Jersey by a limited liability company is also subject to rules and regulations of the New Jersey Supreme Court.
The New Jersey Limited Liability Company Act does not specifically address the practice of a profession by a limited liability company. The Act does provide that a limited liability company may carry on any lawful business, purpose or activity. Additionally, the Act provides that “In any case not provided for in this act, the rules of law and equity, including the law merchant, shall govern.”
In contrast, the New Jersey Professional Service Corporation Act provides extensive restrictions which must be adhered to by a professional corporation. Therefore, it seems logical, reasonable, and prudent to look to the Professional Corporation Act for guidance as to how a limited liability company should be organized.
New Jersey Professional Service Corporation Act
The Professional Service Corporation Act defines a “professional service” as any type of personal service to the public which requires as a condition precedent to the rendering of that service the obtaining of a license or other legal authorization.
No professional corporation or foreign professional legal corporation may render professional services in this State except through its officers, employees and agents who are duly licensed or otherwise legally authorized to render such professional services in New Jersey. Provided, however, that this restriction does not include in the term “employee” clerks, secretaries, administrators, bookkeepers, technicians and other assistants who are not usually and ordinarily considered by law, custom and practice to be rendering professional service to the public. The term “employee” does not include any other person who performs all his employment under the direct supervision and control of an officer, agent or employee who is himself rendering professional service to the public on behalf of the professional corporation.
Nothing in the Professional Corporation Act abolishes, repeals, modifies, restricts or limits the law applicable to the professional relationship and the contract, tort, the legal liabilities between the person furnishing the professional services and the person receiving professional service, or to the standards for professional conduct. This includes the confidential relationship between the person rendering the professional services and the person receiving such professional service and all confidential relationships remain inviolate.
Any officer, shareholder, agent or employee of a professional corporation is personally and fully liable and accountable for any negligent or wrongful acts or misconduct committed by him, or by any person under his direct supervision and control, while rendering professional service on behalf of the corporation in New Jersey. The personal liability of shareholders of a professional corporation, in their capacity as shareholders of such corporation, is no greater in any aspect than that of a shareholder-employee of a corporation organized under the provisions of the Business Corporation Act of New Jersey.
A professional corporation is liable up to the full value of its property for any negligent or wrongful acts or misconduct committed by any of its officers, shareholders, agents or employees while they are engaged on behalf of the corporation in the rendering of professional service.
No professional corporation may engage in any business other than the rendering of the professional services for which it was specifically incorporated. The may invest its funds in real estate, mortgages, stocks, bonds or any other type of investments, and may own real or personal property necessary for, or appropriate or desirable in, the fulfillment or rendering of its professional services.
No professional corporation may issue any of its shares to anyone other than an individual who is duly licensed or otherwise legally authorized to render the same professional service as that for which the corporation was incorporated. No shareholder of a professional corporation may enter into a voting trust agreement or proxy or any other type of agreement vesting another person not a shareholder of the corporation with the authority to exercise the voting power of any or all of his shares.
The estate of a deceased shareholder may continue to hold the shares of a deceased shareholder for a reasonable period of administration of the estate, but may not participate in any decisions concerning the rendering of professional services.
If any officer, shareholder, agent or employee of a professional corporation becomes legally disqualified to render the same professional service as that for which the corporation was organized, he shall forthwith sever all employment with the corporation and shall not, directly or indirectly, participate or share, as a shareholder, in any earnings or profits realized by the corporation on account of professional services rendered on or after the effective date of his disqualification.
No shareholder of a professional corporation may transfer his shares in the corporation except to the corporation or to another individual who is eligible to be a shareholder of the corporation.
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