Professional Corporation - Liability for Malpractice + Negligence

Contact our law firm for your incorporation legal work at 403-400-4092 or Chris@NeufeldLegal.com

Unlike a standard business corporation, which aims to shield owners from almost all forms of liability, a Professional Corporation is intentionally designed to maintain the direct link of accountability between the regulated professional and their client. To achieve this, the articles of incorporation must include specific restrictive clauses that prevent the corporate entity from acting as a shield against professional malpractice and negligence. By following these statutory requirements, the professional ensures that the corporate structure is recognized for tax and administrative purposes while explicitly acknowledging that personal liability for malpractice and negligence remains undisturbed.

The primary mechanism for maintaining this liability is found in the applicable professional statutes or regulated health professions statutes of each province, which stipulate this distinction as further recognized in general business corporations statutes. These statutes contain specific carve-out provisions stating that the liability of a person carrying on the practice of a profession is not affected by the fact that they are practicing through a corporation, which must be reflected in the articles of incorporation. Consequently, any attempt to draft articles that limit liability for professional errors or omissions would be legally void and would likely result in the professional body refusing to issue the necessary Certificate of Authorization.

While professional malpractice remains a personal burden, the professional corporation does offer a divided liability shield for non-professional obligations. This means the corporation can enter into commercial contracts, such as office leases, equipment financing, and employment agreements for administrative staff, without the professional being automatically liable for these debts. If the corporation fails to pay its rent or defaults on a bank loan that was not personally guaranteed, the professional’s personal assets (like their home or personal savings) are generally protected from those specific creditors. This creates a distinct legal vestige of protection that separates the business risks of running a practice from the clinical or legal risks of serving a client.

At Neufeld Legal, we have the experience and insight to assist you in structuring your professional practice as a Professional Corporation, whether you are a doctor / physician, dentist, chiropractor, optometrist, accountant or lawyer. As such, when you are looking to incorporating a new Alberta professional corporation* or dealing with its ongoing corporate development, we welcome you to contact our law firm at 403-400-4092 or via email at Chris@NeufeldLegal.com.

(1) Certain professions (i.e., engineers, geoscientists, architects, licensed interior designers) that are not required to restrict their professional activities to a professional corporation, and are permitted to utilize a regular corporation, nevertheless, such corporations must be specifically incorporated to include distinctive legal clauses (which can have a similar effect in exempting the professionals from limited liability for professional malpractice and negligence) and attain approval from the profession's regulatory body [more on corporation permit to practice], which in turn requires additional legal work and cost.

Who can incorporate a Professional Corporation

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