CHAPTER 47-13A
PROFESSIONAL CORPORATIONS FOR THE PRACTICE OF LAW
47-13A-1 Professional corporations for practice of law authorized--Limited liability company.
47-13A-1.1 Definition of terms.
47-13A-2 Contents of articles of incorporation.
47-13A-2.1 Revocable trust as shareholder--Conditions.
47-13A-2.2 Personal liability of shareholders, directors, and officers of professional corporations or members or managers of limited liability companies limited for corporate or individual obligations--Exception.
47-13A-2.3 Amendment of articles of incorporation to be consistent with law.
47-13A-2.4 Application of repealed provisions to acts, errors, or omissions occurring before July 1, 2005.
47-13A-3 Certified copy of articles and amendments filed with Supreme Court clerk.
47-13A-4 List of shareholders and employees filed with Supreme Court clerk.
47-13A-5 Corporation's violation of standards of professional conduct and rules of court prohibited--Compliance with standards and provisions of chapter.
47-13A-6 Violation as grounds for termination or suspension of right to practice law.
47-13A-7 Attorneys employed by corporation subject to standards of professional conduct--Personal liability.
47-13A-8 Attorney-client privilege unaffected.
47-13A-9 Adoption of pension, profit-sharing, and insurance plans authorized.
47-13A-10 Practice of law by corporations prohibited--Professional service corporations not deemed to be lay agencies.
47-13A-1. Professional corporations for practice of law authorized--Limited liability company.
One or more lawyers licensed pursuant to chapter 16-16 may form professional service corporations for the practice of law under §§ 47-1A-101 to 47-1A-863.3, inclusive, §§47-1A-1401 to 47-1A-1440, inclusive, and §§ 47-1A-1601 to 47-1A-1621.3, inclusive, or may form limited liability companies under the South Dakota Limited Liability Company Act, providing that such corporations and limited liability companies are organized and operated in accordance with the provisions of this chapter. In any corporation formed under this chapter one or more persons may act as the sole stockholders, directors or officers of such corporation. However, any limited liability company formed under this chapter shall comply with the South Dakota Limited Liability Act, as amended.
Source: SL 1968, ch 10, § 1; SL 1973, ch 283; SL 1993, ch 344, § 39U; SL 2005, ch 202, § 4.
47-13A-1.1. Definition of terms.
Terms used in this chapter mean:
(1) "Articles of incorporation," includes the articles of organization of a limited liability company;
(2) "Corporation," both corporations under the South Dakota Business Corporations Act and limited liability companies under the South Dakota Limited Liability Company Act;
(3) "Director" or "officer," includes any manager of a limited liability company or the members of a limited liability company that does not have managers;
(4) "Incorporation," includes the members of a limited liability company;
(5) "Shareholders," includes the members of a limited liability company;
(6) "Shares" or "stock," includes membership interests in a limited liability company.
Source: SL 1993, ch 344, § 39V.
47-13A-2. Contents of articles of incorporation.
The articles of incorporation of such corporations shall contain provisions complying with the following requirements:
(1) The name of a corporation shall contain the words "professional company" or "professional corporation" or abbreviations thereof, such as "Prof. Co.," "Prof. Corp.", "P.C.", or "PC". The name of a limited liability company shall contain the words "professional limited liability company" or the abbreviation "Prof. L.L.C.", "Prof. LLC", "P.L.L.C.", "PLLC". In addition, the name of the corporation shall always meet the ethical standards established for the names of law firms by the Rules of Professional Conduct of the Supreme Court of South Dakota as if all the stockholders of the corporation were partners.
(2) The corporation shall be organized solely for the purpose of conducting the practice of law only through persons qualified to practice law in the State of South Dakota.
(3) The corporation may exercise the powers and privileges conferred upon corporations by the laws of the State of South Dakota only in furtherance of and subject to its corporate purpose.
(4) All shareholders of the corporation shall be persons duly licensed by the Supreme Court of the State of South Dakota to practice law in the State of South Dakota, and who at all times own their shares in their own right. They shall be individuals who, except for illness, accident, time spent in the armed services, on vacations, and on leaves of absence not to exceed one year, are actively engaged in the practice of law in the offices of the corporation.
(5) Provisions shall be made requiring any shareholder who ceases to be eligible to be a shareholder to dispose of all his shares forthwith either to the corporation or to any person having the qualifications prescribed in subdivision (4).
(6) The president shall be a shareholder and a director, and to the extent possible all other directors and officers shall be persons having the qualifications prescribed in subdivision (4). Lay directors and officers may not exercise any authority whatsoever over professional matters.
(7) Repealed by SL 2005, ch 240, § 9.
Source: SL 1968, ch 10, § 1; SL 1989, ch 30, § 76; SL 1993, ch 344, § 39W; SL 2005, ch 240, § 9; SL 2020, ch 197, § 9.
47-13A-2.1. Revocable trust as shareholder--Conditions.
Notwithstanding any other provisions of this chapter, a revocable trust may be a shareholder in a corporation or limited liability company organized under this chapter, for so long as the grantor of the revocable trust is living and is eligible to be a shareholder of a corporation organized under this chapter. After the death of the grantor, the shares owned by a revocable trust are subject to any divestiture and redemption provisions of this chapter as if the shares were directly owned by the grantor of the trust.
Source: SL 2002, ch 205, § 9.
47-13A-2.2. Personal liability of shareholders, directors, and officers of professional corporations or members or managers of limited liability companies limited for corporate or individual obligations--Exception.
An obligation of a professional corporation or limited liability company formed pursuant to chapter 47-11A, 47-11B, 47-11C, 47-11D, 47-11E, 47-13A, or 47-13B, whether arising in contract, tort, or otherwise, is the obligation of the professional corporation or limited liability company and the individual whose act or omission gives rise to the obligation. No shareholder, director, or officer of a professional corporation or member or manager of a limited liability company is personally liable, directly or indirectly, by way of contribution or otherwise, for such obligation based solely on such person's capacity as a shareholder, director, or officer of a professional corporation or member or manager of a limited liability company. This limitation of liability does not extend to amounts owed to the State of South Dakota or its political subdivisions for any taxes, or any penalty or interest on such taxes.
Source: SL 2005, ch 240, § 1.
47-13A-2.3. Amendment of articles of incorporation to be consistent with law.
Any professional corporation or limited liability company may amend its articles of incorporation to be consistent with SL 2005, ch 240.
Source: SL 2005, ch 240, § 2.
47-13A-2.4. Application of repealed provisions to acts, errors, or omissions occurring before July 1, 2005.
The repealed provisions contained in SL 2005, ch 240, that limited the liability of a shareholder, director, or officer of a professional corporation or member or manager of a limited liability company by limiting or eliminating the joint and several liability of such person for any act, error, or omission of an employee of the professional corporation or limited liability company by maintaining professional liability insurance meeting certain standards, shall remain in effect for any act, error, or omission, whether arising in contract, tort, or otherwise, occurring before July 1, 2005.
Source: SL 2005, ch 240, § 11.
47-13A-3. Certified copy of articles and amendments filed with Supreme Court clerk.
A copy certified by the secretary of state of the articles of incorporation of any corporation formed pursuant to this chapter shall be filed with the clerk of the Supreme Court of South Dakota, together with a certified copy of all amendments thereto.
Source: SL 1968, ch 10, § 2.
47-13A-4. List of shareholders and employees filed with Supreme Court clerk.
At the time of filing the original articles with the clerk of the Supreme Court, the corporation shall file with him a written list of shareholders setting forth the names and addresses of each and a written list containing the names and addresses of all persons who are not shareholders who are employed by the corporation and who are authorized to practice law in South Dakota. Within ten days after any change in such shareholders or employees, a written list setting forth the information required by the preceding sentence shall be filed with the said clerk.
Source: SL 1968, ch 10, § 2.
47-13A-5. Corporation's violation of standards of professional conduct and rules of court prohibited--Compliance with standards and provisions of chapter.
The corporation shall do nothing which if done by an attorney employed by it would violate the standards of professional conduct established for such attorney pursuant to law, including rules of court. The corporation shall at all times comply with the standards of professional conduct established by the Supreme Court of South Dakota and the provisions of this chapter.
Source: SL 1968, ch 10, § 2; SL 1969, ch 18.
47-13A-6. Violation as grounds for termination or suspension of right to practice law.
Any violation of this chapter by the corporation shall be grounds for the Supreme Court to terminate or suspend its, or any of its members' right to practice law.
Source: SL 1968, ch 10, § 2; SL 1969, ch 18.
47-13A-7. Attorneys employed by corporation subject to standards of professional conduct--Personal liability.
Nothing in this chapter shall be deemed to diminish or change the obligation of each attorney employed by the corporation to conduct his practice in accordance with the standards of professional conduct promulgated by the State Bar of South Dakota or by the Supreme Court of South Dakota; any attorney who by act or omission causes the corporation to act or fail to act in a way which violates such standards of professional conduct, including any provision of this rule, shall be deemed personally responsible for such act or omission and shall be subject to discipline therefor.
Source: SL 1968, ch 10, § 2.
47-13A-8. Attorney-client privilege unaffected.
Nothing in this chapter shall be deemed to modify the attorney-client privilege established by the Legislature and any comparable common law privilege.
Source: SL 1968, ch 10, § 2.
47-13A-9. Adoption of pension, profit-sharing, and insurance plans authorized.
A professional service corporation may adopt a pension, profit-sharing (whether cash or deferred), health and accident, insurance, or welfare plan for all or part of its employees including lay employees, providing that such plan does not require or result in the sharing of specific or identifiable fees with lay employees and any payments made to lay employees or into any such plan in behalf of lay employees are based upon their compensation or length of service, or both, rather than the amount of fees or income received.
Source: SL 1968, ch 10, § 3.
47-13A-10. Practice of law by corporations prohibited--Professional service corporations not deemed to be lay agencies.
Except as provided in this chapter, corporations may not engage in the practice of law. Professional service corporations organized and operated in accordance with the provisions of this chapter may not be deemed lay agencies within the meaning of the Rules of Professional Conduct.
Source: SL 1968, ch 10, § 4; SL 1989, ch 30, §§ 52, 76A.
