Arizona § 10-2220 - Issuance of shares

§ 10-2220. Issuance of shares

A. A professional corporation may issue voting shares, fractional voting shares and rights or options to purchase voting shares only to:

1. Individuals who are licensed by law in this or another state to render a professional service described in the corporation's articles of incorporation.

2. General partnerships, registered limited liability partnerships and other partnerships and joint ventures, domestic or foreign, in which all of the partners are qualified persons with respect to the professional corporation and in which at least one partner is authorized by law in this state to render a professional service described in the corporation's articles of incorporation.

3. Professional corporations, professional limited liability companies and other persons, domestic or foreign, authorized by law in this state to render a professional service described in the corporation's articles of incorporation.

4. Other persons, if after the issuance of voting shares the other persons in the aggregate do not hold more than forty-nine per cent of the voting shares, unless a greater or lesser percentage is prescribed by the licensing authority.

5. An employee stock ownership plan as defined in section 4975(e)(7) of the internal revenue code of 1986, as amended, if both of the following apply:

(a) All of the voting trustees of the plan are professionals who are licensed to provide at least one category of the professional services described in the corporation's articles of incorporation.

(b) The ownership interests are not directly issued to persons other than the employee stock ownership plan trust or professionals who are licensed to provide at least one category of the professional services described in the corporation's articles of incorporation.

B. The following are not violations of subsection A, paragraph 1 of this section:

1. Any community interest of an unlicensed spouse in the voting shares issued to a licensed spouse in which the unlicensed spouse with a community interest in the voting shares does not have the right to vote the shares.

2. Issuance of voting shares to a trust established for the benefit of the licensed individual or members of the licensed individual's immediate family in which the licensed individual has the right to vote the shares and the trust and the members of the licensed individual's immediate family do not have the right to vote the shares.

C. Subsection B of this section does not prohibit an issuance to an unlicensed spouse or to a trust in accordance with subsection A, paragraph 4 of this section or section 10-2231, subsection B.

D. An issuance made in violation of subsection A of this section is void.