Recently, we were approached by a physician assistant (PA) who had an important question regarding the ownership structure of a medical corporation. The PA asked:

“Can my physician assistant corporation be the majority owner of a medical corporation?”

This is a great question and one we encounter often when helping PAs and other licensed professionals navigate their business formation options.

The Answer: Understanding Ownership Rules for Professional Medical Corporations

In California, the short answer is no—a professional physician assistant corporation cannot be the majority owner of a professional medical corporation. Under California law, a professional medical corporation requires that the majority ownership (at least 51%) be held by a licensed physician. While PAs can be shareholders in a professional medical corporation, they cannot control the corporation by holding a majority interest.

A professional physician assistant corporation is specifically designed for PAs, allowing them to hold at least 51% of the shares within that entity. However, the rules are different for professional medical corporations, where physicians must hold the primary controlling interest.

Who Can Own Shares in a Professional Medical Corporation?

It’s important to note that ownership of a professional medical corporation isn’t limited to just physicians. The law allows for a variety of licensed professionals to hold shares in the corporation, though the majority ownership must always be with a licensed physician. Below is a list of the professionals who are legally allowed to be shareholders in a professional medical corporation:

1. Licensed doctors of podiatric medicine
2. Licensed psychologists
3. Registered nurses
4. Licensed optometrists
5. Licensed marriage and family therapists
6. Licensed clinical social workers
7. Licensed physician assistants
8. Licensed chiropractors
9. Licensed acupuncturists
10. Naturopathic doctors
11. Licensed professional clinical counselors
12. Licensed physical therapists
13. Licensed pharmacists

Why Is This Important?

Including this list of acceptable shareholders is crucial because it clarifies who can own a portion of a professional medical corporation. It ensures that only licensed professionals, bound by specific regulatory standards, are allowed to have a financial interest in the medical corporation. This structure helps maintain a high standard of care and ensures that medical professionals—especially physicians—have ultimate control over medical decisions within the corporation.

For physician assistants who want to form their own corporation, it is essential to understand these distinctions and structure the ownership properly to comply with California law.