Nevada Revised Statutes 89.240 – Duties upon legal disqualification of member or employee; redemption of and restrictions on transfer and ownership of member’s interest
1. If any member or employee of a professional association who has been rendering professional service to the public becomes legally disqualified to render the professional service within this State, the member or employee shall sever within a reasonable period all professional service with and financial interest in the association; but this chapter does not prevent a professional association from entering into a contract with a member or employee which provides for severance pay or for compensation for past services upon termination of professional service, whether by death or otherwise. Upon the death of a member of the association who has transferred his or her interest in the association to a revocable trust as permitted by subsection 2, the trustee of the revocable trust may continue to retain any interest so transferred for a reasonable period, but may not exercise any authority concerning the rendering of professional services and may not, except as otherwise provided in NRS 623.349, distribute the interest in the association or its assets to any person not licensed to render the services for which the association was organized.
Terms Used In Nevada Revised Statutes 89.240
- Articles: means either the articles of incorporation of a professional corporation or the articles of organization of a professional limited-liability company. See Nevada Revised Statutes 89.020
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Contract: A legal written agreement that becomes binding when signed.
- Employee: means a person licensed or otherwise legally authorized to render professional service within this State who renders such service through a professional entity or a professional association, but does not include clerks, bookkeepers, technicians or other persons who are not usually considered by custom and practice of the profession to be rendering professional services to the public. See Nevada Revised Statutes 89.020
- Licensed: means legally authorized by the appropriate regulating board of this State to engage in a regulated profession in this State. See Nevada Revised Statutes 89.020
- person: means a natural person, any form of business or social organization and any other nongovernmental legal entity including, but not limited to, a corporation, partnership, association, trust or unincorporated organization. See Nevada Revised Statutes 0.039
- Professional association: means a common-law association of two or more persons licensed or otherwise legally authorized to render professional service within this State when created by written articles of association which contain in substance the following provisions characteristic of corporate entities:
(a) The death, insanity, bankruptcy, retirement, resignation, expulsion or withdrawal of any member of the association does not cause its dissolution. See Nevada Revised Statutes 89.020
- Professional service: means any type of personal service which may legally be performed only pursuant to a license, certificate of registration or other legal authorization. See Nevada Revised Statutes 89.020
- Revocable trust: A trust agreement that can be canceled, rescinded, revoked, or repealed by the grantor (person who establishes the trust).
- Trustee: A person or institution holding and administering property in trust.
2. Except as otherwise authorized by NRS 623.349, a membership interest in a professional association may not be sold or transferred except to a natural person who is eligible to be a member of the association or to the personal representative or estate of a deceased or legally incapacitated member, except as provided in this subsection. The personal representative of such a member may continue to own such interest for a reasonable period, but may not participate in any decisions concerning the rendering of professional service. A member may transfer his or her interest in the association or any other interest in the assets of the association to a revocable trust if the member acts as trustee of the revocable trust and any person who acts as cotrustee and is not licensed to perform the services for which the association is organized does not participate in any decisions concerning the rendering of those professional services.
3. The articles of association may provide specifically for additional restrictions on the transfer of members’ interests and may provide for the redemption or purchase of such an interest by the association or its other members at prices and in a manner specifically set forth in the articles.