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California Professional Corporation for Dentists Law

Corporations – Professional Corporation – California

CALIFORNIA CORPORATIONS CODE, §§13400-13410 (Moscone-Knox Professional Corporation Act)

CALIFORNIA BUSINESS AND PROFESSIONS CODE, §§ 1800-1808 (Dental Corporations)

CALIFORNIA CORPORATIONS CODE,

§§13400-13410 (Moscone-Knox Professional Corporation Act)

“Professional services” are any type of professional services that may be lawfully rendered only pursuant to a license, certification, or registration authorized by the Business and Professions Code, the Chiropractic Act, or the Osteopathic Act.

A “professional corporation” is a corporation organized under the General Corporation Law or the Moscone-Knox Professional Corporation Act and that is engaged in rendering professional services in a single profession (except as otherwise authorized in §13401.5) pursuant to a certificate of registration issued by the governmental agency regulating the profession and that in its practice or business designates itself as a professional or other corporation as may be required by statute. However, any professional corporation rendering professional services by persons duly licensed by the Dental Board of California, or any examining committee under the jurisdiction of the board, is not required to obtain a certificate of registration in order to render those professional services.

A “licensed person” is any natural person who is duly licensed under the provisions of the Business and Professions Code to render the same professional services as are or will be rendered by the professional corporation of which he or she is or intends to become, an officer, director, shareholder, or employee.

A “disqualified person” means a licensed person who for any reason becomes legally disqualified (temporarily or permanently) to render the professional services that the particular professional corporation of which he or she is an officer, director, shareholder, or employee is or was rendering.

The Corporations Code does not provide that anyone other than a licensed dentist may be a shareholder, officer, or director of a professional dental corporation.

The provisions of the General Corporation Law apply to professional corporations, except where such provisions are in conflict with or inconsistent with the provisions of the Moscone-Knox Professional Corporation Act.

A professional corporation which has only one shareholder need have only one director who shall be such shareholder and who shall also serve as the president and treasurer of the corporation. The other officers of the corporation in such situation need not be licensed persons. A professional corporation which has only two shareholders need have only two directors who shall be such shareholders. The two shareholders between them shall fill the offices of president, vice president, secretary and treasurer.

The articles of incorporation of a professional corporation must contain a specific statement that the corporation is a professional corporation within the Moscone-Knox Professional Corporation Act.

No professional corporation can render professional services in this California without a currently effective certificate of registration issued by the governmental agency regulating the profession in which such corporation is or proposes to be engaged.

A professional corporation may lawfully render professional services in this state, but only through employees who are licensed persons. The corporation may employ persons not so licensed, but such persons may not render any professional services rendered or to be rendered by the corporation. A professional corporation may render professional services outside of California, but only through employees who are licensed to render the same professional services in the jurisdiction or jurisdictions in which the person practices.

Shares of capital stock in a professional corporation may be issued only to a licensed person or to a person who is licensed to render the same professional services in the jurisdiction or jurisdictions in which the person practices, and any shares issued in violation of this restriction are void.

No shareholder of a professional corporation qualified to render professional services in California may enter into a voting trust, proxy, or any other arrangement vesting another person (other than another person who is a shareholder of the same corporation) with the authority to exercise the voting power of any or all of his or her shares, and any such purported voting trust, proxy or other arrangement is void.

Shares in a professional qualified to render professional services in California may be transferred only to a licensed person, to a shareholder of the same corporation, to a person licensed to practice the same profession in the jurisdiction or jurisdictions in which the person practices, or to such professional corporation, and any transfer in violation of this restriction is void.

A professional corporation may purchase its own shares without regard to any restrictions provided by law upon the repurchase of shares, if at least one share remains issued and outstanding.

A professional corporation qualified to render professional services in California must acquire all of the shares of a shareholder who is disqualified from rendering professional services in California or of a deceased shareholder who was, on his or her date of death, licensed to render professional services in this state. If a disqualified shareholder or the representative of a deceased shareholder fails to transfer his shares to the corporation, to another shareholder of the corporation, to a person licensed to practice the same profession in the jurisdiction or jurisdictions in which the person practices, or to a licensed person, within 90 days following the date of disqualification, or within six months following the date of death of such shareholder, then the certificate of registration of such corporation may be suspended or revoked by the governmental agency regulating the profession in which such corporation is engaged. In the event of such suspension or revocation such corporation shall cease forthwith to render professional services in California.

No professional corporation may be formed so as to cause any violation of law, or any applicable rules and regulations, relating to fee splitting, kickbacks, or other similar practices by physicians and surgeons or psychologists, including, but not limited to, §650 or §2960(e) of the Business and Professions Code. A violation of any such provisions shall be grounds for the suspension or revocation of the certificate of registration of the professional corporation.

A professional corporation may adopt any name permitted by a law expressly applicable to the profession in which such corporation is engaged or by a rule or regulation of the governmental agency regulating such profession. The §201(b) requirements do not apply to the name of a professional corporation if the name contains or is restricted to the name or the last name of one or more of the present, prospective, or former shareholders or of persons who were associated with a predecessor person, partnership or other organization or whose name or names appeared in the name of such predecessor organization, and the Secretary of State shall have no authority by reason of §201(b) to refuse to file articles of incorporation which set forth such a name.

The name of a professional corporation cannot be substantially the same as the name of a domestic corporation, the name of a foreign corporation qualified to render professional services in this state which is authorized to transact business in this state, or a name which is under reservation for another corporation.

A professional qualified to render professional services in California is subject to the applicable rules and regulations adopted by, and all the disciplinary provisions of the Business and Professions Code expressly governing the practice of the profession in this state, and to the powers of, the governmental agency regulating the profession in which such corporation is engaged. Nothing in the Moscone-Knox Professional Corporation Act affects or impairs the disciplinary powers of any governmental agency over licensed persons or any law, rule or regulation pertaining to the standards for professional conduct of licensed persons or to the professional relationship between any licensed person furnishing professional services and the person receiving such services.

CALIFORNIA BUSINESS AND PROFESSIONS CODE,
§§ 1800-1808 (Dental Corporations)

A dental corporation is a corporation that is authorized to render professional services if that corporation, its shareholders, officers, directors, and are dentists and are in compliance with the Moscone-Knox Professional Corporation Act, §§1800-1808 of the Business and Professions Code, and any other statutes, rules, and regulations applicable to a dental corporation and the conduct of its affairs.

The name of a dental corporation, and any name or names under which it renders professional services, must contain (and be limited to) the name or the last name of one or more of the present, prospective, or former shareholders and must include the words “dental corporation” or wording or abbreviations denoting corporate existence.

Except as provided in Section 13403 of the Corporations Code, each director, shareholder, and officer of a dental corporation must be a licensed person as defined in the Moscone-Knox Professional Corporation Act.

The income of a dental corporation attributable to professional services rendered while a shareholder is a disqualified person (as defined in the Moscone-Knox Professional Corporation Act) cannot in any manner accrue to the benefit of that shareholder or his or her shares in a dental corporation.

A dental corporation cannot do or fail to do any act which would constitute unprofessional conduct under any statute, rule or regulation now or hereafter in effect. In the conduct of its practice, a dental corporation must observe and be bound by all statutes, rules and regulations to the same extent as a person holding a license to practice dentistry.

The Dental Board of California (Board) has the same powers of suspension, revocation and discipline against a dental corporation as are now or hereafter authorized, or by any other similar statute against individual licensees. Proceedings against a dental corporation are conducted in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code. The Board has all the of the powers granted in that Chapter.

The Board may formulate and enforce rules and regulations to carry out the purposes and objectives of the provisions set forth in the Business and Professions Code and the Moscone-Knox Professional Corporation Act, including
Rules and regulations requiring that the articles of incorporation or bylaws of a dental corporation must include a provision whereby the capital stock of a dental corporation owned by a disqualified person (as defined in the Moscone-Knox Professional Corporation Act), or a deceased person, must be sold to the corporation or to the remaining shareholders of that corporation within the time as the rules and regulations may provide, and
That a dental corporation must provide adequate security by insurance or otherwise for claims against it by its patients arising out of the rendering of professional services.

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Inside California Professional Corporation for Dentists Law