The Role of Ownership Restrictions in California Professional Corporations

California has stringent ownership laws that apply to Professional Corporations (PCs), particularly in the medical field. These restrictions are designed to ensure that only licensed professionals control and make decisions regarding medical practices. Understanding and complying with these rules is crucial for avoiding legal complications.

Licensing Requirements for Shareholders

In California, shareholders of a medical PC must hold active medical licenses. For example, in a medical corporation, only licensed physicians can own shares, although certain other licensed professionals, such as nurse practitioners, may own minority stakes.

Avoiding Violations of the Corporate Practice of Medicine Doctrine

The Corporate Practice of Medicine (CPM) doctrine prohibits non-physicians from influencing medical decisions. Non-compliance can result in penalties or loss of licensure. Structuring your ownership correctly is critical.

Role of Management Services Organizations (MSOs)

MSOs allow non-physicians to participate in the business side of a medical practice. A well-drafted MSO agreement can clarify boundaries and prevent interference in clinical decisions.

The Law Office of Kris Mukherji has extensive experience navigating California’s ownership restrictions and can provide tailored solutions for your practice. Contact the Law Office of Kris Mukherji at www.kmsdlawoffice.com to learn how we can assist with your legal needs.