Cal. Code Regs. Tit. 16, § 1060 - Shares: Ownership and Transfer

(a) The shares of a dental corporation may be owned only by a dental corporation or by licensed dentists, hereinafter referred to as eligible shareholders; provided, however, that no issuance or transfer of shares may be made which violates the provisions of Article 3.5, Chapter 4 of Division 2 of the Code (Sections 1658 through 1658.7 of the Code).

(b) Where there are two or more shareholders in a dental corporation and one of the shareholders:

(1) Dies;

(2) Ceases to be an eligible shareholder; or

(3) Becomes a disqualified person as defined in Section 13401(d) of the Corporations Code, for a period exceeding 90 days; his shares shall be sold and transferred to the corporation, its shareholders, or other eligible persons on such terms as are agreed upon. Such sale or transfer shall be not later than six months after any such death and not later than 90 days after the date he ceases to be an eligible shareholder, or 90 days after the date he becomes a disqualified person. The requirements of subsections (a) and (b) of this section shall be set forth in the dental corporation's articles of incorporation or bylaws, except that the terms of the sale or transfer provided for in said subsection need not be set forth in said articles or bylaws if they are set forth in a written agreement.

(c) A corporation and its shareholders may, but need not, agree that shares sold to it by a person who becomes a disqualified person may be resold to such person if and when he again becomes an eligible shareholder.

(d) The share certificates of a dental corporation shall contain an appropriate legend setting forth the restrictions of section (a) and, where applicable, the restrictions of sections (b) and (c).

(e) The income of a dental corporation attributable to dental services rendered while a shareholder is a disqualified person shall not in any manner accrue to the benefit of such shareholder or his shares.

Notes

Cal. Code Regs. Tit. 16, § 1060

Note: Authority cited: Sections 1614 and 1608, Business and Professions Code. Reference: Sections 1806 and 1808, Business and Professions Code.