Limited Liability Company – General – New Mexico
Related New Mexico Legal Forms
The New Mexico limited Liability Company Act provides that a limited liability company can be organized to conduct or promote any lawful business or purpose. If the purpose for which the limited liability company is organized makes it subject to provisions of other laws, the limited liability company must also be subject to those statutory provisions. Therefore, a New Mexico limited liability company organized to engage in the practice of engineering and surveying is subject to the New Mexico Limited Liability Company Act AND the New Mexico Engineering and Surveying Act. (EDITOR’S NOTE – The New Mexico Engineering and Surveying Act stands repealed as of July 1, 2006.)
The name of a limited liability company must be stated in its articles of organization and must contain the words “limited liability company” or “limited company” or the abbreviation “L.L.C.”, “LLC”, “L.C.” or “LC”. The word “limited” may be abbreviated as “ltd.” and the word “company” may be abbreviated as “co.”
The New Mexico Limited Liability Company Act contains no specific provisions applicable to limited liability companies organized to engage in the practice of a profession. However, the Professional Corporation Act contains extensive provisions applicable to a corporation organized to engage in the practice of a profession. It would seem prudent, then, to look to the Professional Corporation Act for guidance on how a limited liability company should be organized and what restrictions it should apply to itself.
The following are provisions from the Professional Corporation Act that appear appropriate to modify and apply to a limited liability company organized to engage in the practice of a profession.
A professional corporation renders professional services only through its officers, employees and agents who are duly licensed or otherwise legally authorized to render professional services. The term “employee,” does not include clerks, secretaries, bookkeepers, technicians and other assistants who are not usually and ordinarily considered by custom and practice to be rendering professional services to the public for which a license is required.
The Professional Corporation Act does not modify the legal relationships, including confidential relationships, between a person performing professional services and the client or patient who receives such services.
A “professional service” is 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.
A “professional corporation” is a corporation which is organized under the Professional Corporation Act for the sole and specific purpose of rendering professional service and which has as its shareholders only individuals who themselves are licensed or otherwise legally authorized within this state to render the same professional service as the corporation.
A professional corporation may be organized only for the purpose of rendering one specific type of professional service. The corporation cannot engage in any business other than rendering the professional service for which it was organized, though it may render services ancillary to the professional services. A professional corporation may own real and personal property necessary or appropriate for rendering the type of professional service it was organized to render and may invest its funds in real estate, mortgages, stocks, bonds and any other type of investments.
Shares of stock of a professional corporation may be issued and transferred only to persons who are duly licensed or legally authorized to render the professional service for which the corporation is organized.
Shares of stock of a professional corporation may be transferred:
1. by operation of law to persons or legal entities not so licensed or authorized, subject to the requirements of the Professional Corporation Act;
2. to a revocable trust the grantor of which is such a duly licensed or authorized person, provided that the trust contains provisions that require the trustee, upon the grantor’s death or disqualification to render the professional service for which the grantor was licensed or authorized, to dispose of the shares as otherwise provided in the Professional Corporation Act; and
3. to a tax-qualified employee benefit plan established for the exclusive benefit of the professional corporation’s employees, provided that the plan’s trustee is required to dispose of the trust’s shares as provided in the Professional Corporation Act before transfer or distribution of the shares to beneficiaries of or participants in the plan who are not duly licensed or authorized to render the professional service for which the corporation is organized.
The articles of incorporation of any professional corporation must provide for the purchase by the corporation, its shareholders, or any person duly licensed or authorized to render the service for which the corporation is organized, of all shares of its stock:
held by any person who becomes disqualified to render the professional service for which he was licensed or authorized within a period of thirty days after establishment of the disqualification; or
which devolve by operation of law upon any person or legal entity not licensed or authorized to render the professional service for which he was licensed or authorized within eight months from the date of devolution.
Any shares held in violation of the above restrictions may be cancelled by action of the board of directors.
If any officer, shareholder, agent or employee of a professional corporation becomes legally disqualified to render that professional service, or is elected to a public office that is a restriction or limitation upon rendering of the professional service, or accepts employment that places restrictions or limitations upon his continued rendering of the professional service, that person must sever all employment with, and financial interest in the professional corporation immediately.
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