Cal. Code Regs. tit. 16 § 1345

Current through Register 2024 Notice Reg. No. 16, April 19, 2024

Section 1345 - Shares: Ownership and Transfer

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

(1) Dies; or

(2) Becomes a disqualified person as defined in Section 13401(d) of the Corporations Code. His or her shares shall be sold and transferred to the corporation, its shareholders or other eligible licensed persons on such terms as are agreed upon. Such sale or transfer shall not be later than six (6) months after any such death and not later than ninety (90) days after the date the shareholder becomes a disqualified person. The requirements of this subsection of this section shall be set forth in the professional corporation's articles of incorporation or bylaws.

(b) 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 or she again becomes an eligible shareholder.

(c) The share certificates of a professional corporation shall contain an appropriate legend setting forth the restrictions of subsection (b), where applicable.

(d) Nothing in these regulations shall be construed to prohibit a professional corporation from owning shares in a nonprofessional corporation.

Cal. Code Regs. Tit. 16, § 1345

1. Amendment of subsections (b) and (e) filed 5-10-78; effective thirtieth day thereafter (Register 78, No. 19).
2. Amendment of subsection (b)(2) filed 6-4-79; effective thirtieth day thereafter (Register 79, No. 23).
3. Amendment of subsection (e) filed 4-11-80; effective thirtieth day thereafter (Register 80, No. 15).
4. Amendment of subsection (f) filed 8-5-81; effective thirtieth day thereafter (Register 81, No. 32).
5. Amendment filed 9-21-83; effective thirtieth day thereafter (Register 83, No. 39).

Note: Authority cited: Sections 2018 and 2412, Business and Professions Code. Reference: Sections 2409 and 2412, Business and Professions Code; and Sections 13401, 13403, 13406 and 13407, Corporations Code.