Who is allowed to own a licensed business, and what a sale does to the license

In New York, a membership interest in a medical PLLC transferred to someone without a license is void. Not voidable, not a violation to be fined: void, by statute. The operating agreement can say anything it likes about transfers. The licensing law decided first.

That is the general shape of the problem. LLC statutes let anyone own anything. Licensing laws were written on the assumption that a licensed human answers for the work, and many of them reach up into the ownership of the business to protect that assumption. Nearly every licensed profession uses one of four models, and the model decides what a sale of the company can do to the license.

In a licensed business, the licensing law decides who may own the company before the operating agreement gets a vote.

Model one: licensees only

The strictest model allows only licensed professionals to own the firm. New York’s professional LLC statute requires that for medicine, dentistry, engineering, architecture and other listed professions, every member be licensed in that profession (N.Y. Ltd. Liab. Co. Law § 1203(a)). Members may only be professionals who practice, or will within 30 days practice, the firm’s profession, and a voting trust or proxy given to anyone else is void (§ 1207). New York applies the same rule to licensed behavior analysts: its Office of the Professions says ownership of a behavior analysis PLLC or professional corporation “is restricted to persons licensed” in the profession.

Some states reach the same result through the definition of practice rather than an entity statute. North Carolina defines the practice of dentistry to include owning, managing or controlling any enterprise where dental acts are performed (N.C. Gen. Stat. § 90-29(b)(11)). A non-dentist who owns a dental practice is not breaching an ownership rule. Under the statute, that person is practicing dentistry without a license.

When owning the business is itself defined as practicing the profession, an unlicensed owner is an unlicensed practitioner.

Model two: a licensed majority

The middle model lets outsiders own a minority. Accounting is the standard example. The Uniform Accountancy Act, the model most state boards follow, requires that a simple majority of a CPA firm’s ownership, in both equity and voting rights, be held by CPAs, according to the national association of state boards. Florida writes it into statute: CPAs must own at least 51% of the financial interest and voting rights of a CPA firm, and every non-CPA owner must work in the firm’s business as a principal occupation (Fla. Stat. § 473.309).

Design professions use a higher bar in some states. Michigan allows a firm to offer architecture, engineering or surveying only if at least two-thirds of its principals are licensees (Mich. Comp. Laws § 339.2010). Virginia requires two-thirds of the membership interests in a design-profession PLLC to be held by licensees (Va. Code § 13.1-1111).

Pharmacy is usually open to anyone, with one durable exception. North Dakota issues a pharmacy permit only to pharmacists, or to an entity in which licensed pharmacists hold a majority of the interests and are actively managing the pharmacy (N.D. Cent. Code § 43-15-35(5)). The state Board of Pharmacy’s LLC ownership affidavit requires the owners to swear to that majority.

Model three: a licensed person in charge

The third model lets anyone own the business but requires a licensed person to stand behind the work. The license rests on that person, which makes the person a single point of failure.

Florida does this for engineering. A business may practice engineering only if a Florida-licensed engineer qualifies it, and if its only qualifying agent leaves, it must requalify within 60 days and generally may not practice in the meantime (Fla. Stat. § 471.023). Florida’s architecture rule works the same way (§ 481.219). Neither statute sets an ownership percentage.

Texas uses the model for real estate brokerages, with a twist that turns ownership back into a licensing input. A brokerage entity must hold its own license and designate a licensed broker to manage it, and if that designated broker owns less than 10% of the entity, the entity must carry errors and omissions insurance of at least $1,000,000 per occurrence (Tex. Occ. Code § 1101.355).

In a qualifier state, the firm’s license walks out the door with one employee, so the employment agreement is a licensing document.

Model four: the license belongs to the entity

The fourth model does not restrict who may own. It licenses the business itself, at a location, and then controls what happens when ownership changes. This is where most healthcare agencies and pharmacies sit, and where sales go wrong most often, because every agency picks its own trigger.

Missouri voids a home health agency’s license when the agency is sold or its ownership, management or corporate status changes, and the new operator must apply at least 90 days before the change (Mo. Rev. Stat. § 197.420). New York requires state health council approval before anyone transfers 10% or more of the interests in a licensed home care agency (N.Y. Pub. Health Law § 3611-a). California requires notice to the Board of Pharmacy within 30 days when 10% or more of a pharmacy’s beneficial interest moves to a new holder, and a new license application before closing when the buyer will hold 50% or more (16 Cal. Code Regs. § 1709). Florida says a substance abuse provider license may not be transferred, defines a transfer to include moving a majority of the ownership, and screens new owners at 5% (Fla. Stat. § 397.407(6)).

There is no uniform trigger for a change of ownership: Missouri uses any change, New York 10%, California 10% and 50%, and Florida a majority.

The federal answer is different again

For a business that bills Medicare, a third set of rules sits on top. Medicare’s provider agreement regulation defines a change of ownership by entity type. A merger creating a new corporation is a change of ownership. A transfer of corporate stock is not, so the provider agreement stays with the company (42 C.F.R. § 489.18(a)). Adding, removing or substituting a partner in a partnership is a change of ownership unless the partners agree otherwise.

The regulation does not mention LLCs.

Two federal rules apply whatever the answer. Physician practices and most other providers must report a change of ownership or control to Medicare within 30 days (42 C.F.R. § 424.516). And for home health agencies and hospices, a change in majority ownership within 36 months of initial enrollment or the last majority change means the provider agreement and billing privileges do not convey: the buyer enrolls as a new provider and needs a new survey or accreditation. The 36-month count expressly includes stock transfers and the cumulative effect of several deals (42 C.F.R. §§ 424.502, 424.550(b)). Buying the equity of a young agency does not get around it.

Medicaid adds disclosure. A state Medicaid agency must collect the identity of every person with a 5% or greater direct or indirect ownership interest, and must collect it again within 35 days after any change in ownership (42 C.F.R. §§ 455.101, 455.104). The definition reaches through any chain of entities, so a fund several layers up is a disclosable owner. It also reaches lenders: a person holding 5% or more of a mortgage or other obligation secured by the provider, where that interest equals at least 5% of the provider’s assets, counts as a person with an ownership or control interest. A seller-financed note on a practice sale can make the seller a disclosable owner of the business it just sold.

For Medicaid, a large enough secured loan to a provider is an ownership interest that has to be disclosed.

What this does to the choice between selling equity and selling assets

Selling membership interests keeps the same legal entity, which usually means the same licenses, the same tax identification number and the same Medicare and Medicaid enrollments, with reporting deadlines running. It also means the buyer inherits the entity’s history: overpayments, open surveys and compliance exposure stay with the company. Selling assets moves the business into a new entity with no licenses and no enrollments, so the buyer applies fresh and faces a billing gap and state notice periods, in exchange for a cleaner liability profile.

That is the usual framing, and it misses the trap. An equity sale that is not a change of ownership for Medicare can still void or require a new state license, because the state agency uses its own test. A buyer of a Missouri home health agency’s stock keeps the Medicare provider agreement and loses the state license. In a licensee-only profession, the equity sale may not be possible at all: a New York PLLC interest cannot go to an unlicensed buyer.

The structuring consequence: the purchase agreement in a licensed business has to be drafted against three definitions of a change of ownership, the state license, Medicare and Medicaid, and the closing date has to sit behind the longest advance-notice period among them.

The bottom line

Licensing law can restrict who may own a company in ways the LLC statute never mentions, and the licensing rule controls.

Nearly every profession uses one of four models: licensees only, a licensed majority, a licensed person in charge, or a license held by the entity.

State agencies each define a change of ownership differently, from any change in Missouri to 10% in New York to a majority in Florida.

Medicare treats a stock sale as no change of ownership, says nothing about LLC interest sales, and counts stock transfers for home health and hospice anyway.

Medicaid requires disclosure of 5% owners within 35 days of a change, including indirect owners and some secured lenders.

What this page does not cover

The healthcare rules, including the corporate practice of medicine and management services organizations, are on healthcare licensing. Brokerage licensing is on real estate licensing. Professional LLCs and the rules for law, accounting and design firms are on licensed professions. Liquor licenses are on liquor licenses and LLC sales, and contracting companies licensed through one person are on contractor qualifiers. Mortgage lenders and brokers are on mortgage companies, and insurance agencies on insurance agencies. Transfer restrictions inside the operating agreement are on transfers and buy-sell.

Last verified October 2026.