Legal Question in Business Law in New Jersey

professional corporation

Would a sub c professional corporation, in the business of practicing law, still be validly formed if, in lieu of stock, a non-lawyer is issued bonds with 1)voting rights equal to those rights granted to a shareholder ie. 1 bond= 1 vote, 1 share =1 vote, and 2)recieve variable interest on his bonds from the corporation in amounts equal to the dividends granted to the stockholders. The statute specifically says a non-professional may not own equity interest, and makes no such bar on debt, or the granting of voting rights on said debt.


Asked on 5/08/02, 6:31 pm

1 Answer from Attorneys
Ronald Cappuccio Ronald J. Cappuccio, J.D., LL.M.(Tax)

Re: professional corporation

The issue you have not addressed is the Rules of Professional Conduct. Clearly your scheme is a violation of the prohibition of sharing fees with non-lawyers.

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Answered on 5/08/02, 9:34 pm


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