PTBC (Physical Therapy Board of California) California Law Practice Exam

What happens to shares when a shareholder in a PT professional corporation dies or is disqualified for more than 90 days?

1. Shares are auctioned off to the highest bidder

2. Shares must be sold and transferred within specific time frames

3. Shares are donated to charity

4. Shares automatically transfer to the executive officer

The correct answer is: Shares must be sold and transferred within specific time frames

When a shareholder in a PT professional corporation dies or is disqualified for more than 90 days, their shares must be sold and transferred within specific time frames. This is because PT professional corporations are typically governed by strict laws and regulations that dictate ownership and transfers of shares. Option A of auctioning off shares to the highest bidder would not be feasible as it goes against the predetermined ownership structure of the corporation. Option C of donating shares to charity would also not be allowed under these regulations. Option D of shares automatically transferring to the executive officer may be true in some cases, but it ultimately depends on the specific guidelines set forth by the corporation and state laws. Therefore, the most accurate answer is B as it is the most common and established process for handling the transfer of shares for a deceased or disqualified shareholder.