(a)  If any shareholder becomes ineligible, he or she shall transfer his or her shares to an eligible person or offer them to the corporation for redemption at their fair-market value. If the articles of incorporation or the bylaws of the corporation restrict transfer of its shares, and transfer of the shares to an eligible person is prevented, the corporation shall redeem the shares of the ineligible shareholder, and compensate the ineligible shareholder in full for the fair-market value of his or her shares determined as of the date that the ineligibility occurred. Nothing contained in these provisions is to be interpreted to prevent a shareholder and the corporation from making a binding agreement as to a method for determining the fair-market value or for determining what constitutes the fair-market value of his or her shares. In the event the corporation and an ineligible shareholder cannot agree as to the fair-market value, the regulatory agency excluding the division of professional regulation shall, upon application by either party, appoint a board of not less than three (3) qualified persons engaged in performing similar professional services to determine the fair-market value of the shares, and the decision of the board is final and binding upon the parties. The division of professional regulation shall, upon application by either party, appoint a neutral arbitrator with experience in business valuation whose fees will be paid by the corporation petitioner to determine the fair-market value of the shares, and the decision of the arbitrator is final and binding upon the parties. The redemption of its shares by a professional service corporation shall not be effected at a time or in a manner so as to impair or prejudice the rights or remedies of any creditor of the corporation. As used in this chapter, “ineligible shareholder” includes a shareholder electing to retire or withdraw from active employment in the corporation. Nothing contained in these provisions is to be interpreted to prohibit the temporary exercise of incidence of ownership of stock in any corporation by persons or corporate fiduciaries not authorized to practice, solely for purposes of administering estates of shareholders deceased or under legal disability to transfer their shares. For purposes of this section, “temporary incidence of ownership” means any period of time not exceeding two (2) years; and “administering estates of shareholders” shall include, but not be limited to, contracting with licensed professionals to operate the practice upon the death of the person licensed to practice.

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Terms Used In Rhode Island General Laws 7-5.1-5

  • administering estates of shareholders: shall include , but not be limited to, contracting with licensed professionals to operate the practice upon the death of the person licensed to practice. See Rhode Island General Laws 7-5.1-5
  • Authorized to practice: means duly licensed, certified, or registered by the proper regulatory agency. See Rhode Island General Laws 7-5.1-2
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • in writing: include printing, engraving, lithographing, and photo-lithographing, and all other representations of words in letters of the usual form. See Rhode Island General Laws 43-3-16
  • ineligible shareholder: includes a shareholder electing to retire or withdraw from active employment in the corporation. See Rhode Island General Laws 7-5.1-5
  • person: may be construed to extend to and include co-partnerships and bodies corporate and politic. See Rhode Island General Laws 43-3-6
  • Professional services: means the rendering of personal services by a person authorized to practice as one of the following professions as defined:

    (i)  Physicians;

    (ii)  Dentists;

    (iii)  Attorneys at law;

    (iv)  [Deleted by P. See Rhode Island General Laws 7-5.1-2

  • Regulatory agency: means :

    (i)  The professional licensing board contained within the department of health, as set forth in title 5 when referring to physicians, dentists, chiropractors, podiatrists, registered nurses, optometrists, physical therapists, opticians, physician assistants, or midwives or nurse-midwives;

    (ii)  The Supreme Court when referring to attorneys at law;

    (iii)  The boards of registration of professional engineers and land surveyors when referring to professional engineers or land surveyors;

    (iv)  The board of examination and registration of architects when referring to architects;

    (v)  The board of accountancy when referring to certified public accountants and licensed public accountants;

    (vi)  The board of veterinarians when referring to veterinarians;

    (vii)  The board of examiners of landscape architects when referring to landscape architects;

    (viii)  The board of psychology when referring to psychologists. See Rhode Island General Laws 7-5.1-2

(b)  Every shareholder of a corporation organized under this chapter who is entitled to vote at a meeting of the shareholders or to express consent without a meeting may authorize any other shareholder of the corporation to act for him or her by proxy executed, in writing, by the shareholder or by his or her duly authorized attorney in fact.

History of Section.
P.L. 1964, ch. 185, § 1; P.L. 1972, ch. 100, § 4; P.L. 1999, ch. 406, § 1; P.L. 2000, ch. 328, § 1; P.L. 2000, ch. 513, § 1.