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april 3, 2020
Dental CORPORATIONS
Naming
California Business and Professions Code Section 1804 states that a dental corporation must include the name or last name of one of the present, prospective, or former shareholders of the dental corporation. The statute also provides that the name shall include “dental corporation” or wording denoting similar importance to show that the entity is a corporation.
Fictitious Business Names
The Dental Board requires that a dental corporation which uses a name other than its corporate name shall have a fictitious name permit validly issued by the California Dental Board.
The Board has a permit application at the following website: https://www.dbc.ca.gov/formspubs/app_fnp.pdf
Formation
The Articles of Incorporation for a dental corporation shall contain a specific statement that the corporation is a dental corporation within the meaning set forth of the relevant statues.
The California Secretary of State’s office has set language they want to see in each of the dental corporation’s Articles which can be found here: https://bpd.cdn.sos.ca.gov/corp/pdf/articles/arts-pc.pdf
March 12, 2020
Corporate Structure
Corporations in the State of California have three groups of individuals who own and control the business. They are:
1. Shareholders
2. Directors
3. Officers
Professional dental corporations have special considerations concerning who may be a shareholder, director and officer. These special considerations are detailed below.
Shareholders
Shareholders are the individuals who own the corporation. The shareholders may be trusts, other business entities (corporations, LLCs, partnerships, etc.), or individuals. The shareholders receive the profits from the operations of the corporation.
The Shareholders have the ultimate authority over major decisions in the corporation.
They should have regular meetings to consider the affairs of the corporation and to vote on the board of directors.
Only a “licensed person” within the meaning of the California Corporation’s Code may be a shareholder of a dental corporation. Generally speaking, a “licensed person” is someone who is duly licensed under the Business and Professions code to render the same professional services as are rendered by the professional corporation in question (See California Corporations Code Section 13401(d)).
There are some exceptions to the general rule that dentists must own the corporation’s shares. Corporations Code Section 13401.5(n) states that the following individuals may own up to 49% of the shares of a dental corporation, provided the number of these individuals is not greater than the number of dentist shareholders: (1) licensed physicians and surgeons; (2) Dental assistants; (3) Registered dental assistants; (4) Registered dental assistants in extended functions; (5) Registered dental hygienists; (6) Registered dental hygienists in extended functions; and, (7) Registered dental hygienists in alternative practice.
Directors
The directors of the corporation generally provide oversight to the officers and management of the business.
The number of the individuals serving on the board is set forth in the Corporation’s bylaws. These individuals will serve for the time provided in the corporate bylaws. For a California dental corporation, if there is only one shareholder, then there need be only one director.
The directors should also have regular meetings to consider the affairs of the Corporation and to appoint officers.
Generally speaking, licensed dentists would serve as directors of a dental corporation.
Officers
The number of officers of corporation can be determined by the Board of Directors and can be set forth in the corporation’s bylaws. However, generally at a minimum, there will be at least a President/CEO, Chief Financial Officers/Treasurer, and Corporate Secretary.
These three officers are reported on the California Secretary of State’s annual Statement of Information.
For a dental corporation, a licensed person (i.e. a licensed dentist) would serve as the President and Chief Financial Officer. However, the law does provide for a single-shareholder dental corporation to have its corporate secretary be a non-licensed person. If there is more than one shareholder in a dental corporation, then the two or more shareholders must fill all of the following positions: president, vice president, secretary and treasurer/chief financial officer.