In 1970, Virginia enacted the Professional Corporation Act which permits members of certain professions to form corporations for the purpose of rendering professional services. It is available to most professionals as an alternative to practicing individually or in partnerships. While many professionals have formed such corporations to avail themselves of certain tax benefits, others have formed professional corporations simply to gain the advantages of practicing in the corporate form. One traditional advantage of the corporate form is that shareholders are shielded from personal liability for the negligent acts committed by agents or employees of the corporation and for the debts or obligations of the corporation. Given the current escalation in malpractice liability, the possibility of limited liability may indeed be the primary allure of professional corporations to many professionals today.
Laura R. Brown,
Limited Liability for Shareholders in Virginia Professional Corporations: Fact or Fiction?,
U. Rich. L. Rev.
Available at: http://scholarship.richmond.edu/lawreview/vol21/iss3/6