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Who can be a Shareholder in a San Diego Dental Hygienist Professional Corporation?

If you are a registered and licensed dental hygienist in San Diego, you can form and operate a California professional dental hygienist in alternative practice corporation. There are restrictions on who may be shareholders of such a corporation. The shareholders are limited to the following licensed professionals:

  • Registered dental hygienists
  • Registered dental assistants
  • Registered dental hygienists in extended functions and
  • Licensed dentists

Note that registered dental hygienists in alternative practice cannot form a standard corporation or a limited liability company through which to operate their practice. Only professional corporations are allowed. This is mandated by the Moscone-Knox Professional Corporation Act (the “Moscone-Knox Act” or the “Act”) which was passed by the California State Assembly in 1968. See Cal. Corp. Code, §13400 et seq.  The Act gave healing arts professionals the ability to form professional corporations instead of having to operate their practices as general partnerships. The advantage of corporations is that they provide a shield that protects personal and family assets from being taken by business creditors and litigation judgment creditors to pay business-related obligations, judgments, and liabilities. Moreover, as a general partnership, each individual partner could be held liable for the obligations of some other partner. This made forming a medical practice financially dangerous and was cumbersome. Thus, at the urging of the medical and professional community, the Moscone-Knox Act was passed and remains in effect today. Professionals named in the Moscone-Knox Act now need to use a California professional corporation to conduct their practices if they have expanded beyond sole proprietorship or a partnership.

Setting up and running your California professional dental hygienist in alternative practice corporation can be tricky, so it is important to have an experienced San Diego corporate attorney provide advice and assistance with setting up your corporation and keeping it in good standing. There are annual maintenance requirements for all California corporations. For example, in addition to limitations on who may be shareholders in your California professional dental hygienist in alternative practice corporation, there are rules with respect to percentage of ownership. At least 51% of the ownership must be held by registered dental hygienists in alternative practice — the other 49% can be held by those detailed on the above list. Similar restrictions exist for who may serve on the board of directors. As many know, a corporation — including California professional corporations — are run by their respective boards of directors. The directors are elected by the shareholders and are collectively responsible for running the company at a broad strategic level. The directors then hire senior management to run the company on the day-to-day level. Only those listed above can be elected to the board of directors (other than an Assistant Treasurer and an Assistant Secretary). Any member of senior management that is engaged in providing dental hygienist or assistant services must also have licensure. Otherwise, your California professional dental hygienist in alternative practice corporation can hire employees in the normal manner.

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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