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1 such assumption of office or other disqualification. For pur

2 poses of section 29-1116, he shall be referred to as a 'dis3 qualified shareholder'.

4 "829-1116. Stock of disqualified, deceased, legally incom

5

6

petent shareholder

"A disqualified shareholder and personal representatives, 7 legatees, or heirs of a deceased or legally incompetent share8 holder may continue to own shares of a professional corpo9 ration subject to the limitations of this section but shall not 10 be permitted to participate in any decisions concerning the 11 rendering of professional services by the corporation. The 12 articles of incorporation, bylaws, or an agreement among 13 the shareholders of a professional corporation may provide, 14 consistent with the provisions of this section, for the disposi15 tion of shares of a disqualified, deceased, or legally incompe16 tent shareholder.

17

"(1) The articles of incorporation, bylaws, or an agree18 ment among shareholders may provide that, within ninety 19 days (or any earlier date) after the date a shareholder be20 comes a disqualified shareholder, the disqualified shareholder 21 shall sell and surrender, and the corporation or any individ22 uals qualified to be shareholders shall purchase and receive, 23 his shares of stock of the corporation. In the absence of any 24 such provision, the disqualified shareholder shall sell and 25 surrender, and the corporation shall purchase and receive, his

62-364 713

13

1 shares of stock of the corporation within thirty days after 2 the date he becomes a disqualified shareholder. Unless other3 wise provided by the articles of incorporation, bylaws, or an 4 agreement among the shareholders, payment for the shares 5 of stock purchased pursuant to the foregoing provisions shall 6 be made in full no later than six months from the expiration 7 of the thirty- or ninety-day period, as the case may be, by 8 which the purchase must be made.

9

"(2) The articles of incorporation, bylaws, or an agree10 ment among shareholders may provide that, within one year (or any earlier date) after the date of death of a shareholder, 12 his personal representative, legatees, or heirs shall sell and 13 surrender, and the corporation or any individuals qualified 14 to be shareholders shall purchase and receive, the shares of 15 stock of the corporation owned by the deceased shareholder. 16 In the absence of any such provision, the personal repre17 sentative, legatees, or heirs shall sell and surrender, and the 18 corporation shall purchase and receive, the shares of stock 19 of the corporation within one hundred and eighty days after 20 the date of death of the shareholder. Unless otherwise pro21 vided by the articles of incorporation, bylaws, or an agreement among the shareholders, payment for the shares of stock 23 purchased pursuant to the foregoing provision shall be made

22

24 in full no later than one year from the date of death of the 25 shareholder.

14

1 "829-1117. Redemption price

2 "In the event the articles of incorporation, bylaws, or an

3 agreement among the shareholders, do not fix the price at 4 which the corporation or its shareholders may purchase the 5 shares of a disqualified, deceased, legally incompetent, retired, 6 or expelled shareholder, or a method of determining such 7 price, then the price for such shares shall be the book value 8 of such shares at the end of the month immediately preceding 9 the disqualification, death, adjudication of incompetence, re10 tirement or expulsion of the shareholder, determined under 11 generally accepted accounting methods, consistent with the 12 method of accounting used by the corporation for Federal 13 income tax purposes, by an independent certified public 14 accountant employed by the corporation for the purpose. 15 "§ 29-1118. Perpetual existence; dissolution

16

"A professional corporation shall have perpetual exis17 tence: Provided, That whenever all shareholders of a pro18 fessional corporation cease at any time for any reason to be 19 licensed to perform the professional services for which the 20 corporation was organized, the professional corporation shall 21 be treated as converted into a corporation organized under 22 the District of Columbia Business Corporation Act. Unless 23 the holders of all of the outstanding shares of the corporation 24 unanimously amend the articles of incorporation to adopt

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25

purposes consistent with the District of Columbia Business

15

1 Corporation Act within sixty days, the dissolution of the 2 corporation shall be deemed to have been authorized by the 3 act of the corporation and any shareholder may at any time 4 thereafter file with the Council, on behalf of the corporation, 5 a statement of intent to dissolve.

6 "8 29-1119. Annual report

7

"The annual reports of a professional corporation shall 8 meet the requirements of the District of Columbia Business 9 Corporation Act and, in addition, shall set forth:

10

11

12

13

14

15

"(1) The names and addresses, including street and number, if any, of all shareholders of the corporation.

"(2) A statement that each shareholder, director, and officer of the corporation is currently licensed to

render a professional service for which the corporation is organized.

16 "§ 29-1120. Noncompliance; penalties

17

"The failure of a professional corporation to comply, or 18 to require compliance with any provision of this chapter, 19 shall be a ground for the involuntary dissolution of such 20 corporation. Any person, including a corporation, who vio21 lates any provision of this chapter or who fails to comply 22 with any provision thereof, for which violation or failure no 23 penalty is provided therein or elsewhere in the laws of the 24 District of Columbia, shall be deemed guilty of a misde25 meanor and upon conviction thereof by a court of competent

16

1 jurisdiction shall be fined not exceeding $500 for each and

2 every violation or failure.

3 "829-1121. Council-duties and functions; filing fees

4

"The provisions of sections 935 through 937, title 29

5 of the District of Columbia Code, as altered by Reorganiza6 tion Plan Numbered 3 of 1967, shall apply to corporations 7 organized under this chapter."

8 AMENDMENT TO THE DISTRICT OF COLUMBIA INCOME AND

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10

FRANCHISE TAX ACT OF 1947

SEC. 2. The second sentence of section 1 of title VIII

11 of the District of Columbia Income and Franchise Tax Act 12 of 1947 (D.C. Code, sec. 47-1574) is amended to read as 13 follows: "The words 'unincorporated business' do not in14 clude any trade or business which by law, customs, or ethics 15 cannot be incorporated, any trade, business, or profession 16 which can be incorporated only under the District of Colum17 bia Professional Corporation Act, or any trade or business 18 in which more than 80 per centum of the gross income is 19 derived from the personal services actually rendered by 20 the individual or members of the partnership or other en21 tity in the conducting or carrying on of any trade or business 22 and in which capital is not a material income-producing 23 factor.".