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Questions to Answer When Forming Your California Professional Nursing Corporation

Registered nurses are entitled to form California professional nursing corporations here in California. A California professional nursing corporation is a specific type of professional corporation permitted by the Moscone-Knox Professional Corporation Act. See Cal. Corp. Code, §13400 et seq.  As one would expect from the name, a California professional nursing corporation is a corporation that provides services which are generally considered part of the nursing profession. California professional corporations, including California professional nursing corporations, must be formed and maintained annually with the California Secretary of State. An experienced San Diego corporate attorney can provide advice and counsel with respect to forming your professional nursing corporation. Likewise, trusted counsel can help with the annual maintenance and ensure that your California professional nursing corporation remains in good standing. When formed, a California professional nursing corporation becomes an independent legal entity separate and apart from the individuals that own the corporation. However, that legal status can lapse if the corporation is not properly maintained. Here are some questions to be answered as you prepare to form your California professional nursing corporation.

Are all of your proposed owners either licensed nurses or allied professionals?

Under California law, only specific registered/licensed professionals may own a California professional corporation. In general, at least 51% of the owners of a given type of California professional corporation must be members of the profession of the corporation being formed. Thus, for a nursing corporation, at least 51% of the ownership must be held by licensed/registered nurses. The remainder may be licensed professionals set forth in California Corporations Code §13401.5(f). Again, it is important to consult an experienced San Diego corporate lawyer when forming your California professional nursing corporation.

Are all of your proposed board members and senior management licensed nurses?

California professional nursing corporations are also limited in who may be on the board of directors and in who may be hired as senior management. This is understandable since you want registered and licensed nurses on the board and making decisions for the corporation. Furthermore, you want registered and licensed nurses being in charge of the day-to-day operations of the nursing corporation. However, senior level employees who are not providing nursing services can be non-nurses provided that they are not serving as officers of directors. See Cal. Bus. & Prof. Code, §2775.

Is your proposed corporate name compliant with the legal requirements?

After ensuring that your owners are licensed and in the proper professions, to form your California professional nursing corporation, you must file articles of incorporation with the California Secretary of State. In doing so, you must ensure that your corporation name is compliant with the legal rules. First, generally, your corporation name must be unique. If there is already a “Martinez Nursing Professional Corporation,” then you cannot use that name. Second, your professional nursing corporation must contain the words “nursing” or “registered nursing” and wording or abbreviations denoting corporate existence. See Cal. Bus. & Prof. Code, §2778. Note that your California professional nursing corporation can use a fictitious business name. A “fictitious business name” is often called a “doing business as” (“DBA”) name. This is allowable, but you must comply with California statutes with respect to DBA names and the DBA must comply with the name requirements for a California professional nursing corporation.

After you have formed your nursing corporation, there are other steps to take. Corporation bylaws are needed and an ownership agreement should be custom drafted.

Contact San Diego Corporate Law

For more information, call Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Mr. Leonard can be reached at (858) 483-9200 or via email. Like us on Facebook.

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