(1) As used in this section, professional corporation means a professional corporation organized for the purpose of practicing medicine. (2) In a professional corporation: (a) Physicians who are licensed in this state to practice medicine must hold the majority of each class of shares that are entitled to vote. (b) Physicians who are licensed in this state to practice medicine must be a majority of the directors. (c) All officers except the secretary and treasurer, if any, must be physicians who are licensed in this state to practice medicine. The same person may hold any two or more offices. (d) Except as otherwise provided by law, the Oregon Medical Board may expressly require that physicians who are licensed in this state to practice medicine hold more than a majority of each class of shares that is entitled to vote. (e) Except as otherwise provided by law, the Oregon Medical Board may expressly require that physicians who are licensed in this state to practice medicine be more than a majority of the directors. (3) A corporation that is not organized for the purpose of practicing medicine may be a shareholder of a professional corporation solely for the purpose of effecting a reorganization as defined in the Internal Revenue Code. (4)(a) Except as provided in paragraph (b) of this subsection, a professional corporation may not provide in the professional corporations articles of incorporation or bylaws, or by means of a contract or other agreement or arrangement, for removing a director described in subsection (2)(b) of this section from the professional corporations board of directors, or an officer described in subsection (2)(c) of this section from an office of the professional corporation, except by a majority vote of the shareholders described in subsection (2)(a) of this section or, as appropriate, a majority vote of the directors described in subsection (2)(b) of this section. (b) A professional corporation may remove a director or officer by means other than a majority vote of the shareholders described in subsection (2)(a) of this section or a majority vote of the directors described in subsection (2)(b) of this section if the director or officer that is subject to removal: (A) Violated a duty of care, a duty of loyalty or another fiduciary duty to the professional corporation; (B) Was the subject of a disciplinary proceeding by the Oregon Medical Board in which the board suspended or revoked the directors or officers license to practice medicine in this state; (C) Engaged in fraud, misfeasance or malfeasance with respect to the directors or officers performance of duties for or on behalf of the professional corporation; (D) Resigned, separated or was terminated from employment with the professional corporation; or (E) Failed to meet standards or criteria the professional corporation established for a position as a director or officer. (5) A professional corporation may relinquish or transfer control over the professional corporations administrative, business or clinical operations only if the professional corporation executes a shareholder agreement exclusively between or among and for the benefit of a majority of shareholders who are physicians licensed in this state to practice medicine and the shareholder agreement complies with the provisions of ORS 60.265. (6)(a) The provisions of this section do not apply to: (A) A nonprofit corporation that is organized under the laws of this state to provide medical services to migrant, rural, homeless or other medically underserved populations under 42 U.S.C. 254b or 254c, as in effect on June 9, 2025; (B) A health center that is qualified under 42 U.S.C. 1396d(1)(2)(B), as in effect on June 9, 2025, that operates in compliance with other applicable state or federal law; or (C) Except as provided in paragraph (b) of this subsection, a for-profit or nonprofit business entity that is incorporated or organized under the laws of this state, that provides the entirety of the business entitys medical services through one or more rural health clinics, as defined in 42 U.S.C. 1395x, as in effect on June 9, 2025, and that operates in compliance with state and federal laws that apply to rural health clinics. (b) A business entity is exempt under this subsection for a period of up to one year after the business entity establishes a rural health clinic, even though the rural health clinic that the business entity establishes does not meet all of the elements of the definition set forth in 42 U.S.C. 1395x, as in effect on June 9, 2025, if during the one-year period an applicable certification for the rural health clinic is pending. [Formerly 58.375]
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