Incorporating a Psychotherapy Professional Corporation in Ontario

Registered psychotherapists in Ontario are permitted to practise through a professional corporation, and there are often sound tax and planning reasons to do so. What surprises many practitioners is how little flexibility the structure allows. A psychotherapy professional corporation is governed by the Business Corporations Act (Ontario), the Regulated Health Professions Act, 1991, the Psychotherapy Act, 2007, and the by-laws of the College of Registered Psychotherapists of Ontario. The combined effect of those instruments is a corporate form that is prescribed in almost every material respect.

The most significant restriction concerns share ownership. Under section 3.2 of the OBCA, all issued and outstanding shares of a professional corporation must be owned both legally and beneficially by one or more members of the same profession. For a psychotherapy professional corporation, that means every share must be held by a CRPO registrant. Family members cannot hold shares, whether or not they are involved in the practice. Neither can holding companies, silent investors, or any other party outside the profession. Any agreement purporting to grant voting rights to a non-shareholder is void.

The restriction extends to governance. All directors and officers of the corporation must themselves be shareholders, which means a practitioner cannot appoint an experienced outside director to strengthen the board. Unanimous shareholder agreements remain available, but only where every shareholder is a CRPO member.

Naming is similarly constrained. Ontario Regulation 39/02 requires that the corporate name include the surname of one or more shareholders exactly as registered with the College, state the profession being practised, and contain no additional wording beyond those required elements. The name must include the words "Professional Corporation," and a numbered company name is not permitted. Jane Smith Psychotherapy Professional Corporation is acceptable. A trade name chosen for its marketing appeal is not, at least as the corporate name itself.

The corporation's permitted activities are also limited. It may carry on the practice of psychotherapy and activities directly related to that practice, and it may invest surplus funds that it earns. It cannot be used as a vehicle for unrelated business ventures.

Incorporation alone does not permit the corporation to operate. A psychotherapy professional corporation must obtain a Certificate of Authorization from the CRPO before it can lawfully provide services. The application requires the College's prescribed form, a corporate profile report from the Ministry of Government and Consumer Services dated within a short window of the application, and payment of the applicable fee. The certificate must then be renewed annually, with a further fee. Because College fee schedules are periodically revised, current amounts should be confirmed directly with the CRPO at the time of application.

None of this makes incorporation a poor decision. For many practitioners the tax deferral available through a professional corporation is substantial, and the administrative requirements are manageable once established. But it is worth approaching the process with a clear understanding that the structure is not being designed so much as complied with. The decisions that genuinely remain open — whether to incorporate at all, when to do so, and how to plan around the restrictions on ownership — are made before the articles are filed rather than after.

Practitioners considering incorporation should seek advice early, ideally before committing to a corporate name or an operating structure that may need to be unwound.