Can this agreement be signed electronically?

Yes. Electronic signatures are legally valid under the federal ESIGN Act (15 U.S.C. ch. 96) and state UETA statutes where adopted; confirm any state-specific exceptions before e-signing.

Is notarization required for the agreement?

Not always. Notarization depends on state law and the specific corporate action; some filings or third‑party acceptance may require notarized signatures or a notary acknowledgment.

Who must be a shareholder in a PC?

Shareholders generally must be licensed professionals in the practice area per state professional corporation statutes; include eligibility rules in the agreement to enforce that requirement.

How should disputes be handled?

Include a clear dispute resolution clause specifying mediation or arbitration, governing law, and venue to reduce litigation risk and preserve confidentiality.

What records should be retained after signing?

Keep executed agreements, signed amendments, and the audit trail for the active term plus recommended retention periods (see retention timeline), and follow HIPAA or IRS rules where applicable.

When should I involve counsel?

Involve corporate and licensing counsel prior to execution to confirm compliance with state professional statutes, tax implications, and to draft enforceable buy‑sell provisions.

Electronic Signature
Templates
Legal
Professional Corporation Agreement

Professional Corporation Agreement

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PROFESSIONAL CORPORATION AGREEMENT

This Professional Corporation Agreement (the "Agreement") is made and entered into as of by and among Shareholder A Name: , a licensed professional practicing as: , with principal address: (hereinafter "Shareholder A"), and Shareholder B Name: , a licensed professional practicing as: , with principal address: (hereinafter "Shareholder B"). Shareholder A and Shareholder B are each referred to herein as a "Shareholder" and collectively as the "Shareholders."

RECITALS

WHEREAS, the Shareholders desire to organize and operate a professional corporation under the laws of the State of Incorporation: for the purpose of rendering professional services within the scope of their respective licenses; and

WHEREAS, the Shareholders intend for the corporation to be governed by the terms set forth in this Agreement, the Corporation's Articles of Incorporation, and the Corporation's Bylaws; and

WHEREAS, the Shareholders desire to set forth their respective rights and obligations with respect to the ownership, management, transfer, and disposition of shares in the Corporation and related matters.

NOW, THEREFORE

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Shareholders agree as follows:

1. NAME AND FORMATION

1.1 Name. The name of the professional corporation shall be (the "Corporation"). The Corporation shall be organized as a professional corporation under the laws of the State of Incorporation.

1.2 Articles and Bylaws. The Corporation shall file Articles of Incorporation and adopt Bylaws consistent with this Agreement. The Shareholders agree to vote their shares as necessary to effectuate such filings and adoptions.

2. PURPOSE AND PROFESSIONAL SERVICES

2.1 Purpose. The Corporation shall engage exclusively in the practice of the following professional services: , and any activities incidental thereto permitted by applicable law.

2.2 Professional Licensure. No person shall be employed by or hold itself out as a professional of the Corporation unless duly licensed and in good standing under the laws governing the profession in this jurisdiction. The Corporation shall maintain records evidencing licensure of all Shareholders and professional employees.

3. PRINCIPAL OFFICE

Principal Office Address:

4. CAPITALIZATION; SHARES

4.1 Authorized Shares. The Corporation is authorized to issue shares of common stock, par value per share, which shall represent all outstanding equity interests unless otherwise determined by amendment to the Articles.

Initial Capital Contributions and Share Issuance (describe each Shareholder's contribution):

4.2 Issuance. The Corporation shall issue shares to each Shareholder in exchange for the capital contributions described above. The certificate for each share shall designate that such share is subject to the restrictions contained in this Agreement.

5. MANAGEMENT; VOTING

5.1 Board of Directors. Management of the Corporation shall be vested in a Board of Directors elected by the Shareholders. The initial number of directors shall be . Directors shall be elected and removed in accordance with the Bylaws.

5.2 Voting. Each share shall carry one vote. Except as otherwise provided by law, these Articles, the Bylaws, or this Agreement, actions of the Corporation requiring Shareholder approval shall require the affirmative vote of Shareholders holding a majority of the outstanding shares.

6. TRANSFER RESTRICTIONS

6.1 Eligibility to Hold Shares. No transfer of shares shall be effective unless the transferee is duly licensed or otherwise eligible under applicable professional licensing laws to perform the professional services of the Corporation. Any purported transfer in violation of this clause shall be null and void and of no force or effect.

6.2 Right of First Refusal. Before transferring any shares to a third party, a Shareholder (the "Selling Shareholder") shall deliver written notice to the Corporation and the other Shareholder(s) stating the terms of the proposed transfer. The non-selling Shareholder(s) shall have a right of first refusal to purchase the offered shares on the same terms within days.

6.3 Mandatory Transfer on Disability or Loss of License. If a Shareholder loses the right to practice the relevant profession or becomes permanently disabled so as to prevent the carrying on of professional duties, the Shareholder or the Shareholder's estate shall be required to transfer the Shareholder's shares in accordance with the terms set forth in Section 11 (Dissolution and Liquidation) or such buyout provisions as the Shareholders shall adopt.

7. COMPENSATION; DISTRIBUTIONS

7.1 Compensation. Directors and Shareholders who are employees or contractors of the Corporation shall be entitled to reasonable compensation as determined by the Board of Directors consistent with applicable law and the Bylaws.

7.2 Distributions. Subject to applicable law and any reasonable reserves determined by the Board, distributions of available cash shall be made to Shareholders in proportion to their respective share ownership, unless otherwise agreed in writing by all Shareholders.

8. BOOKS, RECORDS AND ACCOUNTING

Fiscal Year End:

8.1 Records. The Corporation shall keep complete and accurate books and records of account, minutes of meetings of the Board and Shareholders, and a current record of Shareholders showing ownership of shares. Each Shareholder shall have the right to inspect such books and records during normal business hours upon reasonable notice.

9. REPRESENTATIONS AND WARRANTIES

9.1 Each Shareholder represents and warrants that (a) such Shareholder has full power and authority to enter into this Agreement; (b) all information delivered or to be delivered to the Corporation is true, complete and not misleading in any material respect; and (c) such Shareholder holds all professional licenses necessary to perform professional services provided to or through the Corporation and such licenses are in good standing.

10. INDEMNIFICATION AND INSURANCE

10.1 Indemnification. To the fullest extent permitted by law, the Corporation shall indemnify and hold harmless each Shareholder and director against liabilities, judgments, fines, settlements, and expenses (including reasonable attorneys' fees) incurred in connection with actions taken on behalf of the Corporation, except where such liabilities result from gross negligence, willful misconduct, or knowing violation of law.

10.2 Insurance. The Corporation shall maintain directors' and officers' liability insurance and such professional liability insurance as is customary and prudent in the relevant profession and jurisdiction.

11. DISSOLUTION; LIQUIDATION; BUYOUT

11.1 Dissolution Events. The Corporation shall dissolve upon (a) the written agreement of all Shareholders; (b) entry of a decree of judicial dissolution under applicable law; or (c) as otherwise provided by statute.

11.2 Liquidation and Distribution. Upon dissolution, the Corporation shall wind up its affairs, satisfy liabilities to creditors, and distribute remaining assets to Shareholders in accordance with their ownership, after giving effect to any contractual buyout terms described elsewhere in this Agreement or the Bylaws.

12. NOTICES

Notices to Shareholder A: Notices to Shareholder B:

12.1 Method. Notices shall be in writing and delivered personally, by certified mail, return receipt requested, or by nationally recognized overnight courier to the addresses set forth above or such other address as a party may designate by notice.

13. AMENDMENT; WAIVER; COUNTERPARTS

13.1 Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by all Shareholders.

13.2 Waiver. No failure or delay by any party in exercising any right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or further exercise of such right.

13.3 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. Signatures delivered by electronic means shall be effective as original signatures.

14. GOVERNING LAW; ENTIRE AGREEMENT; SEVERABILITY

14.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Incorporation without regard to principles of conflicts of law.

14.2 Entire Agreement. This Agreement, together with the Articles of Incorporation and the Bylaws (as in effect from time to time), constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties.

14.3 Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

15. MISCELLANEOUS PROVISIONS

15.1 Headings. Headings used in this Agreement are for convenience only and shall not affect the interpretation of this Agreement.

15.2 Further Assurances. Each party shall execute and deliver such further documents and take such further actions reasonably necessary to effectuate the purposes of this Agreement.

ACKNOWLEDGMENT

Each Shareholder acknowledges that they have been given the opportunity to obtain independent legal counsel prior to executing this Agreement and that they have read and understood the terms and conditions contained herein.

Shareholder A Printed Name:

By:

Date:

Shareholder B Printed Name:

By:

Date:

What a Professional Corporation Agreement Is

A Professional Corporation Agreement is a legally binding contract that governs the ownership, management, governance, and professional practice rules for a professional corporation (PC). It sets eligibility for shareholders, roles and responsibilities of directors and officers, capital contributions, profit allocation, transfer and buy‑sell procedures, and restrictions tied to professional licensing. The agreement often addresses malpractice insurance, indemnification, and relationships with affiliated practices. Corporations formed under state professional corporation statutes use this document together with articles of incorporation and applicable licensing rules to operate in compliance with state law.

Why this agreement matters for licensed professionals

The Professional Corporation Agreement clarifies control, liability allocation, and continuity for licensed professionals, reduces internal disputes, and creates enforceable transfer and compensation rules while aligning corporate governance with professional licensing requirements.

Who typically prepares and signs this agreement

Lawyers and accountants often draft or review the agreement to ensure state professional corporation statutes and licensing board rules are respected.

Founding shareholders and licensed professionals establishing ownership and voting protocols for the PC.
Corporate officers and directors documenting management powers, indemnities, and fiduciary duties.
Outside counsel, accountants, and practice managers reviewing compliance with state licensing and tax rules.

Typical signatories and reviewers

Shareholder / Professional

A licensed professional who will own shares and practice within the PC. They must meet state licensing eligibility and sign to accept ownership terms, restrictions on transfer, and professional responsibility provisions.

Corporate Counsel

An attorney or compliance specialist who drafts or reviews the agreement, confirms alignment with state statutes and licensing rules, and prepares ancillary filings such as articles of incorporation or shareholder resolutions.

Core elements to include in the agreement

A complete Professional Corporation Agreement covers corporate governance, ownership rules, transfer restrictions, compensation and distributions, professional conduct provisions, and dispute resolution to reduce ambiguity and legal exposure.

Shareholder Eligibility

Define who may hold shares (licensed professions only), required credentials, and procedures for accepting new shareholders to ensure compliance with state licensing boards.

Ownership & Voting

Specify share classes, voting rights, supermajority thresholds for key actions, and any cumulative voting or quorum rules to secure governance clarity.

Transfer Restrictions

Detail right of first refusal, buy‑sell triggers, approval process for transfers, and disability or death buyout mechanics tied to valuation methods.

Compensation & Distributions

Set rules for salary versus distributions, allocation of profits and losses, and formulas or schedules for year‑end distributions and bonus pools.

Professional Compliance

Include clauses requiring malpractice insurance, adherence to licensing board rules, restrictions on non‑licensed ownership, and reporting of disciplinary events.

Dispute Resolution

Establish mediation or arbitration processes, governing law, venue, and procedures for resolving shareholder or management disputes to limit costly litigation.

Key compliance and security items to track

Encryption: AES-256 at rest; TLS 1.2/1.3 in transit

Audit Trail: Timestamps, IP, and action log

HIPAA Support: BAA available where required

Regulatory Standards: SOC 2 Type II and ISO 27001

FDA / 21 CFR: 21 CFR Part 11 controls available

Privacy Compliance: GDPR and CCPA alignment

Step-by-step: completing a Professional Corporation Agreement

Follow this sequence to prepare, review, and execute a Professional Corporation Agreement in a compliant and auditable manner.

01

Draft core terms: Define ownership, governance, and buy‑sell provisions.
02

Confirm licensing: Verify each shareholder meets state licensing requirements.
03

Legal review: Have corporate and licensing counsel review all provisions.
04

Execute and retain: Obtain signatures, notarize if required, and store retained copies securely.

How to configure an online signing workflow

Set up a clear signing order, authentication, and retention rules when using an eSignature platform to execute the agreement.

Field	Configuration
Signing Order	Sequential or parallel as required
Authentication	Email plus SMS code or KBA
Notary / RON	Enable remote notarization if allowed
Retention	Export signed PDF with audit trail

Digital signing and technical requirements

Confirm the vendor can deliver tamper-evident signed PDFs, long-term retention exports, and any specialized compliance add-ons required by your industry.

Authentication: Email link, SMS code, or KBA
Integrations: Salesforce, NetSuite, Google Workspace
File formats: PDF, DOCX, and generated audit report

Typical electronic execution flow

This sequence shows common steps when executing the agreement using an eSignature workflow.

Upload document: Sender uploads finalized agreement
Place fields: Add signature, date, and initial blocks
Set signer order: Assign sequence or parallel signing
Capture audit: Platform logs IP, timestamp, and actions

Timelines and processing expectations

Expect variation in timing depending on state filing, notary availability, and whether you use expedited or remote services.

State filing turnaround:

Standard 1–3 weeks; expedited options available

Remote notarization:

Sessions may be scheduled within 24–72 hours

Legal review period:

Allow 3–10 business days for counsel review

Shareholder signoff:

Collect signatures within 7–14 days typically

Record retention export:

Download signed PDF and audit trail immediately

Key milestones for forming or amending a PC agreement

Track these sequential milestones from drafting through filing and post-execution obligations.

01

Draft and negotiate

Parties agree on terms and prepare final draft.

02

Legal and licensing review

Counsel verifies compliance with state professional rules.

03

Signature and notarization

Obtain required signatures and notarizations if applicable.

04

Filing and recordkeeping

File any required registration; retain executed copies.

Common errors to avoid when preparing the agreement

Using informal or imprecise buy‑sell formulas that lead to valuation disputes later.
Failing to verify each shareholder's professional license status with the appropriate state board.
Omitting indemnity, insurance, or malpractice provisions tailored to the profession's risk profile.
Neglecting to align governing law or venue with the entity's principal place of business.

Consequences and compliance risks to note

Tax reporting penalties: 1099/section errors: $60–$660+ per form (IRC §6721)

I-9 violations: Penalty range $281–$2,789 per violation (8 CFR §274a.2)

Licensing sanctions: State disciplinary action; fines and suspension

Contract disputes: Litigation costs and potential damages

Improper transfers: Invalid share transfers and forced buyouts

Notary errors: Rejection of document by filing agency

Sample eSignature vendor pricing and capability comparison

Basic vendor pricing and capability snapshots for executing and storing Professional Corporation Agreements. Place signNow first per table convention.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	No trial noted	No trial noted	Yes, limited	Yes, limited
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Frequently asked questions about the Professional Corporation Agreement

Answers to common questions about signing, enforceability, notarization, state rules, and recordkeeping for Professional Corporation Agreements.

Need help? Contact support

Can this agreement be signed electronically?
Yes. Electronic signatures are legally valid under the federal ESIGN Act (15 U.S.C. ch. 96) and state UETA statutes where adopted; confirm any state-specific exceptions before e-signing.
Is notarization required for the agreement?
Not always. Notarization depends on state law and the specific corporate action; some filings or third‑party acceptance may require notarized signatures or a notary acknowledgment.
Who must be a shareholder in a PC?
Shareholders generally must be licensed professionals in the practice area per state professional corporation statutes; include eligibility rules in the agreement to enforce that requirement.
How should disputes be handled?
Include a clear dispute resolution clause specifying mediation or arbitration, governing law, and venue to reduce litigation risk and preserve confidentiality.
What records should be retained after signing?
Keep executed agreements, signed amendments, and the audit trail for the active term plus recommended retention periods (see retention timeline), and follow HIPAA or IRS rules where applicable.
When should I involve counsel?
Involve corporate and licensing counsel prior to execution to confirm compliance with state professional statutes, tax implications, and to draft enforceable buy‑sell provisions.

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