Video Summary:

In this transcript from a video, Andy Gale of Gale & Vallance explains who can own a nursing corporation in California and addresses key legal considerations when forming and operating one. Based in Orange County, Andy answers real questions from a nurse practitioner, covering topics like share ownership, working across state lines, bringing on investors, and structuring physician relationships.

To learn more about ownership rules and compliance, check out our detailed article on who can own a nursing corporation in California and how to stay legally compliant.

This video does not constitute legal advice. For help with your specific situation, we strongly recommend contacting a qualified attorney.

00:00:00 – Introduction: Common Questions About Nursing Corporations

Transcript:
Most nurse practitioners have no idea who can own their corporation or how to price their
[Music]

00:00:12 – Emily’s Situation: Forming and Structuring a Nursing Corporation

Transcript:
Emily, a nurse practitioner, reached out with several important questions about forming and structuring her professional nursing corporation.
Like many health care professionals, she was navigating the complexities of California’s professional corporation requirements while considering family investments, practicing in multiple states, and managing collaboration with supervising doctors.
Her concerns highlighted key issues faced by many nurse practitioners as they set up their corporations.
 [Music]

00:00:50 – Selling Shares: How Many Shares is 2.5%?

Transcript:
Emily’s primary question was, “I want to sell 10 to 20% of my corporation in 2.5% increments for $25,000 per increment. How many shares would be in that 2.5%?”
To answer this, the first step is to calculate how many shares represent 2.5% of the total authorized shares.
Assuming her corporation is authorized to issue 25,000 shares, 2.5% of that would be:
25,000 shares × 2.5% = 625 shares

Next, we calculate the total value of the company.
Given that 2.5% of it is valued at $25,000, the full company value can be estimated by:
$25,000 ÷ 0.025 = $1,000,000

Thus, the company’s total value is approximately $1 million, and each share would be worth:
$1,000,000 ÷ 25,000 shares = $40 per share

In summary, when Emily sells 2.5% of her company for $25,000, she would be selling 625 shares at a rate of $40 per share.
This calculation ensures Emily understands how the number of shares, the percentage of ownership, and the company’s overall value are connected when offering equity to investors.
[Music]

00:02:36 – Can Family Members Invest in a Nursing Corporation?

Transcript:
Emily also wanted to know whether her parents could invest in her professional nursing corporation.
Family investments are a common consideration for many professionals, but in California, professional corporations have strict rules about who is allowed to hold shares.

According to the law, only certain licensed professionals can own shares in a nursing corporation, including:

  • Licensed nurses

  • Licensed physicians and surgeons

  • Licensed psychologists

  • Licensed clinical social workers

  • Licensed marriage and family therapists

  • Licensed optometrists

  • …and more

Since Emily’s parents are not licensed in any of these professions, they would not be eligible to become shareholders.
This restriction ensures that ownership of the corporation remains within the hands of qualified professionals, which helps maintain the integrity of the health care services provided.
 [Music]

00:03:38 – Expanding to New York: Should She Use the Same Corporation?

Transcript:
Emily planned to expand her practice to New York, raising the question of whether she could use the same corporation for both states.

While it is possible to register a California corporation as a foreign entity in New York, I advised Emily to form a separate corporation in New York.
This approach offers several advantages:

1. Cost Efficiency
Forming a new entity in New York is more cost-effective than altering her California corporation and registering it as a foreign entity.

2. Compliance with Naming Rules
New York has strict name compliance rules that differ from those in California, which could require significant changes to her corporate name.

3. Simplified Business Sale
Keeping the two corporations separate would simplify financial management and future business sales.
If Emily decided to sell her practice in California or New York, having independent financials for each entity would make it easier to manage or sell one portion of the business without complications.

This strategy offers Emily flexibility and better control over her business as she expands across state lines.
 [Music]

00:04:59 – Collaboration Agreements with Supervising Physicians

Transcript:
Lastly, Emily needed assistance in drafting a collaboration agreement and standardized procedures with her supervising physician.

We strongly recommend that all medical professionals consult with attorneys who specialize in healthcare law for such matters.
These legal experts are essential in ensuring that healthcare-related agreements comply with the complex regulations governing the field.

By working with a qualified attorney, Emily can create a legally compliant standardized procedure agreement that meets California’s specific regulatory requirements.
 [Music]

Conclusion: Who Can Own a Nursing Corporation in California?

This video offered practical insights for nurse practitioners who are forming a nursing corporation, selling shares, expanding to new states, or working with a supervising doctor. Understanding who can own a nursing corporation in California is a critical part of compliance—and it’s one of the first questions health professionals need answered when structuring their business.

To avoid costly mistakes, always consult an attorney experienced in California professional corporations. For more legal content like this, subscribe to our channel or visit Gale & Vallance for updates and professional resources.