{ Banner Image }

What Should Be in Your Physician Shareholder Agreement?

By Dorothy Vinsky
HealthCare Provider.com
June 5, 2015

Dorothy Vinsky's article, "What Should Be in Your Physician Shareholder Agreement?" was published on HealthCare Provider.com on June 5, 2015.

From the article...

" Prior to partnering with one or more physicians, doctors should consider drafting a shareholder agreement that outlines the terms of the relationship, as well as the goals of the corporation. Shareholder agreements anticipate problems and disputes by detailing what will transpire in the event of death, retirement, suspension, disagreements, unlawful competition (and solicitation) or withdrawal from a professional corporation. These agreements are imperative for a medical professional corporation to be able to transfer, sell and value shares, and they act as the blueprint for navigating and managing the internal affairs of the corporation, as well as defining the relationships amongst the physicians. While shareholder agreements will vary based on a corporation’s  circumstances, there are several components that every medical professional corporation should be sure to include.

Mandatory Termination

It is surprising how many physicians are unaware that professional corporations must buy back a deceased or disqualified physician owner’s shares within a specific time period. In California, the shares must be repurchased by the corporation within six months in the case of death, and within 90 days in the event of disqualification (e.g., loss of license). In the absence of a shareholder agreement, the company shareholders often find themselves negotiating price and drafting repurchase agreements with the deceased physician’s estate, which could have been avoided with a carefully crafted shareholder agreement."

View Article (subscription required)