What the statutes mean

Prior to 1995 chiropractors were not permitted to co-own their businesses with any other health care providers. With the amendment of the service corporation bill in 1995, chiropractors have the option of sharing ownership with any of the following health care providers:

• Chiropractors
• Nurses
• Medical doctors
• Physical therapists
• Podiatrists ã Dieticians
• Athletic trainers
• Optometrists
• Pharmacists
• Psychologists
• Social workers ã Marriage and family
• Audiologists therapists ã Speech pathologists

There is no restriction on the number of professionals that may own a service corporation. In a large clinic setting there could theoretically be hundreds of owners representing each of the professions listed above.

Owning a service corporation does not relieve a chiropractor of his or her obligation to carry malpractice insurance.

• An individual that is not licensed in one of the professions listed above may not have any part in the ownership or control of the service corporation. If any of the owners or the service corporation lose their license, for any reason, they must immediately severe their employment and their financial interest in the service corporation. A service corporation that fails to comply with this provision faces suspension or forfeiture of its franchise.

• The choice of a name is virtually unrestricted except that it must end with the word “chartered” or “limited”, or the words “service corporation”, or the abbreviation “ltd.” or “S.C.”.

• Chiropractors must file articles of incorporation before they provide any services to patients.

• A service corporation that has only one shareholder needs only one director who serves as president and treasurer. A service corporation that has only 2 shareholders needs only 2 directors, who fill all of the general offices of the service corporation between them.

Liability

The service corporation is liable for the omissions, negligence, wrongful acts, misconduct or malpractice of a shareholder, director, officer or employee while the person provides professional services on behalf of the service corporation.

A shareholder, director, officer or employee of a service corporation is not personally liable for the debts or other contractual obligations of the service corporation. They are also not

liable for the omissions, negligence, wrongful acts, misconduct or malpractice of any person who is not under his or her actual supervision and control.

Individuals are liable for their own personal omissions, negligence, wrongful acts, misconduct or malpractice and for the omissions, negligence, wrongful acts, misconduct or malpractice of any person acting under his or her actual supervision and control.

Continuity of the service corporation

A service corporation has perpetual existence until it is properly dissolved.

• If all shareholders of a service corporation cease at any time to be licensed, the service corporation is converted into a business corporation.

• Within 90 days of a shareholder’s death or disqualification to own shares, all of the shares of the shareholder must be transferred to, and acquired by, the service corporation or another person qualified to own the shares. If the shareholders do not have a “buy/sell” agreement, the service corporation must purchase the shares at the book value as of the end of the month immediately before the death or disqualification.

Annual report.

Each service corporation must file an annual report during the calendar year quarter of the anniversary of the incorporation. The report:

• Must list the address of this service corporation’s principal office and the name and post-office address of each shareholder, director and officer of the service corporation.

• Must certify that each shareholder, director and officer is licensed in Wisconsin.

• The report must be prepared on forms approved by the department and cannot contain financial or other information that is not specifically requested by the state. The department is responsible for mailing blank forms at least 60 days before the report is due.

Statute excerpts

180.1903 Foundation of service corporation
180.1905 Business corporation law applicable
180.1907 Corporate name
180.1909 Filling articles of incorporation
180.1911 Participants; conflict of interest
180.1913 Alternative incorporation by one or 2 persons
180.1917 Corporate agents
180.1919 Continunity; dissolution; stock transfer or redemption
180.1921 Annual report

180.1901(1) “Employee” means an individual who is hired by a service corporation and who is usually and ordinarily considered by custom, practice or law to be rendering professional or other personal services for which a license, certificate, registration or other legal authorization is required. “Employee” does not include any of the following:

180.1901(1)(a) An individual who is hired by a service corporation and who provides services as an administrator,

technician, clerk or bookkeeper.

180.1901(1)(b) An individual who performs all of his or her employment for a service corporation under the direct supervision and control of a licensed, registered or certified officer or employee of the service corporation.

180.1901(1m)”Health care professional” means an individual who is licensed, registered or certified by any of the following:

180.1901(1m)(ag) The department of regulation and licensing under subch. X [XI] of ch. 440.

180.1901(1m)(am) Chiropractic examining board under ch. 446

180.1901(1m)(ar) Board of nursing under ch. 441.

180.1901(1m)(b) Medical examining board under subch. II of ch. 448.

180.1901(1m)(bg) Physical therapists affiliated credentialing board under subch. III of ch. 448.

180.1901(1m)(bk) Podiatrists affiliated credentialing board under subch. IV of ch. 448.

180.1901(1m)(br) Dietitians affiliated credentialing board under subch. V of ch. 448.

180.1901(1m)(bs) Athletic trainers affiliated credentialing board under subch. VI of ch. 448.

180.1901(1m)(c) Optometry examining board under ch. 449.

180.1901(1m)(d) Pharmacy examining board under ch. 450.

180.1901(1m)(e) Psychology examining board under ch. 455.

180.1901(1m)(f) Examining board of social workers, marriage and family therapists and professional counselors under ch. 457.

180.1901(1m)(g) Hearing and speech examining board under subch. II of ch. 459.

180.1901(2)”Service corporation” means a corporation organized under ss. 180.1903 to 180.1921.

Formation of service corporation.

180.1903(1) One or more natural persons licensed, certified or registered pursuant to any provisions of the statutes, if all have the same license, certificate or registration or if all are health care professionals, may organize and own shares in a service corporation. A service corporation may own, operate and maintain an establishment and otherwise serve the convenience of its shareholders in carrying on the particular profession, calling or trade for which the licensure, certification or registration of its organizers is required.

180.1903(2) Professional or other personal services, consultation or advice in any form may be rendered only by directors, officers, agents or employees of the service corporation who are licensed, certified or registered pursuant to statute in the field of endeavor designated in the articles of incorporation of the service corporation.

180.1903(3) Liability may not accrue to a service corporation or its shareholders solely as a result of a decision to organize under sub. (1) or solely as a result of a decision to include or exclude a category of health care professionals as eligible to become shareholders of the service corporation.

180.1903(4) Each health care professional, other than a physician or nurse anesthetist, who is a shareholder of a service corporation and who has the authority to provide health care services that are not under the direction and supervision of a physician or nurse anesthetist shall carry malpractice insurance that provides coverage of not less than the amounts established under s. 655.23 (4).

Business corporation law applicable.
180.1905(1) Other provisions of this chapter shall be applicable to service corporations, including their organization, and service corporations shall enjoy the powers and privileges and be subject to the duties, restrictions and liabilities of other stock corporations, except as provided in ss. 180.1901 to 180.1921. A service corporation may not engage in any business other than that for which it was specifically organized and for which its charter was granted.

180.1905(2) Sections 180.1901 to 180.1921 control in the event of conflicts with any other provision of this chapter.

180.1907 Corporate name. The service corporation may bear the last name of one or more persons formerly or currently associated with it. A service corporation may adopt a name which does not include the surname of any present or former shareholder. The corporate name shall end with the word “chartered” or “limited”, or the words “service corporation”, or the abbreviation “ltd.” or “S.C.”. A service corporation in existence on January 1, 1991, need not change its name to comply with this section.

180.1909 Filing articles of incorporation. Before commencing operations, a service corporation shall deliver its articles of incorporation to the department for filing.

Participants; conflict of interest.

180.1911(1) Except as provided in s. 180.1913, each shareholder, director and officer of a service corporation must at all times be licensed, certified or registered by a state agency in the same field of endeavor or be a health care professional. An individual who is not so licensed, certified or registered may not have any part in the ownership or control of the service corporation, except that the nonparticipant spouse of a married individual has the rights of ownership provided under ch. 766. A proxy to vote any shares of the service corporation may not be given to a person who is not so licensed, certified or registered.

180.1911(2) If any shareholder, director, officer or employee of a service corporation becomes legally disqualified to render professional or other personal services, consultation or advice within this state for which he or she was licensed, certified or registered, or accepts employment or is elected to a public office which by law places restrictions or limitations upon his or her rendering of the services for which he or she was licensed, certified or registered, he or she shall immediately sever all employment with, and financial interest in, the service corporation. A service corporation’s failure to require prompt compliance with this subsection is a ground for the suspension or forfeiture of its franchise.

Alternative incorporation by one or 2 persons.
180.1913(1) A service corporation which has only one shareholder need have only one director, who shall be the shareholder. The shareholder shall also serve as the president and treasurer of the service corporation. The other officers of a service corporation described in this subsection need not be licensed, certified or registered in the same field of endeavor as the president.

180.1913(2) A service corporation which has only 2 shareholders need have only 2 directors, who shall be the shareholders. The 2 shareholders shall fill all of the general offices of the service corporation between them.

180.1915 Professional relationships and liability. Except as provided in this section, ss. 180.1901 to 180.1921 do not alter any contract, tort or other legal relationship between a person receiving professional services and one or more persons who are licensed, certified or registered to render those professional services and who are shareholders, directors, officers or employees in the same service corporation. A shareholder, director, officer or employee of a service corporation is not personally liable for the debts or other contractual obligations of the service corporation nor for the omissions, negligence, wrongful acts, misconduct and malpractice of any person who is not under his or her actual supervision and control in the specific activity in which the omissions, negligence, wrongful acts, misconduct and malpractice occurred. A service corporation may charge for the services of its shareholders, directors, officers, employees or agents, may collect such charges and may compensate those who render such personal services. Nothing in this section shall affect any of the following:

180.1915(1) The liability of a service corporation for the omissions, negligence, wrongful acts, misconduct and malpractice of a shareholder, director, officer or employee while the person, on behalf of the service corporation, provides professional services.

180.1915(2) The personal liability of a shareholder, director, officer or employee of a service corporation for his or her own omissions, negligence, wrongful acts, misconduct and malpractice and for the omissions, negligence, wrongful acts, misconduct and malpractice of any person acting under his or her actual supervision and control in the specific activity in which the omissions, negligence, wrongful acts, misconduct and malpractice occurred.

180.1917 Corporate agents. The relationship of an individual to a service corporation with which the individual is associated, whether as shareholder, director, officer or employee, does not modify or diminish the jurisdiction over him or her of any state agency that licensed, certified or registered him or her for a particular field of endeavor.

Continuity; dissolution; stock transfer or redemption.

180.1919(1)(a) A service corporation has perpetual existence until dissolved in accordance with other provisions of this chapter.

180.1919(1)(b) If all shareholders of a service corporation cease at any one time and for any reason to be licensed, certified or registered in the particular field of endeavor for which the service corporation was organized, the service corporation is converted into and shall operate solely as a business corporation under applicable provisions of this chapter, exclusive of ss. 180.1901 to 180.1921.

180.1919(2)(a) Within 90 days after a shareholder’s date of death or disqualification under s. 180.1911 (2) to own shares in the service corporation, all of the shares of the shareholder shall be transferred to, and acquired by, the service corporation or persons qualified to own the shares. If no other provision to accomplish the transfer and acquisition is in effect and carried out within the 90-day period, the service corporation shall purchase and redeem all of the deceased or disqualified shareholder’s shares of the service corporation at the book value of the shares, determined as of the end of the month immediately before death or disqualification.

180.1919(2)(b) For purposes of par. (a), the book value is determined from the books and records of the service corporation in accordance with the regular methods of accounting used by the service corporation to determine its net taxable income for federal income tax purposes. A subsequent adjustment of the service corporation’s net taxable income, whether by the service corporation, by federal income tax audit made and agreed to, or by a court decision which has become final, does not alter the redemption price.

180.1919(2)(c) This section does not prevent the parties involved from making any other arrangement, or providing in the service corporation’s articles of incorporation or bylaws or by contract, to transfer the shares of a deceased or disqualified shareholder to the service corporation or to persons qualified to own the shares, whether made before or after the death or disqualification of the shareholder, if all of the shares involved are transferred within the 90-day period under par. (a).

Annual report.

180.1921(1) A service corporation shall deliver to the department for filing a report in each year following the year in which the service corporation’s articles of incorporation were filed by the department, during the calendar year quarter in which the anniversary of the filing occurs.

180.1921(2) The report shall show the address of this service corporation’s principal office and the name and post-office address of each shareholder, director and officer of the service corporation and shall certify that, with the exceptions permitted in s. 180.1913, each shareholder, director and officer is licensed, certified, registered or otherwise legally authorized to render the same professional or other personal service in this state or is a health care professional. The service corporation shall prepare the report on forms prescribed and furnished by the department, and the report shall contain no fiscal or other information except that expressly called for by this section. The department shall forward report blanks by 1st class mail to every service corporation in good standing, at least 60 days before the date on which the service corporation is required by this section to file an annual report.

180.1921(3) A report under this section is in lieu of an annual report required by s. 180.1622.

180.1921(4) An annual report is effective on the date that it is filed by the department.