CPOM Compliance for North Dakota Healthcare Startups
North Dakota has no California-style standalone CPOM ban. Chapter 10-31 still limits who may own a professional organization, and the practice of medicine follows the patient.
Get a Free CPOM AssessmentThe law in North Dakota
Key authorities (official text)
N.D.C.C. § 10-31-04 · § 10-31-07 · § 10-31-08 · § 43-17-02.3Chapter 10-31 index · Chapter 10-31 PDF · Chapter 43-17 index · Chapter 43-17 PDF · North Dakota Board of Medicine.
North Dakota CPOM is Moderate. The state does not copy California Business and Professions Code § 2400. The Professional Organizations Act (N.D.C.C. chapter 10-31) covers professional corporations, professional limited liability companies, and professional limited liability partnerships. § 10-31-07 says a professional corporation may issue shares only to persons licensed to render the same specific professional services the corporation was incorporated to render, or as § 10-31-07.1 provides. An issuance in violation is void. A transfer needs a certificate from the regulating board that the recipient is licensed to render that service. § 43-17-02.3 says the practice of medicine is deemed to occur in the state where the patient is located, and a practitioner caring for a patient in North Dakota is subject to North Dakota licensing law and shall possess an active North Dakota license, with the narrow exceptions the section lists. Bismarck diligence still wants a physician-owned PC plus a fair-market-value MSA.
Do not read the absence of a California-style ban as permission for a lay operating company to practice medicine. If you use a professional organization under chapter 10-31, the ownership rules and the rendering rules apply. A medical-director title on a North Dakota marketing company does not satisfy § 10-31-07. Foundry still recommends a physician-owned PC plus an FMV MSA for multi-state and venture-backed models that treat North Dakota patients. The Board of Medicine points licensees to chapter 43-17 and the administrative code. Use those texts, not a repealed section number.
§ 10-31-04(1) says a professional organization may be created only to render one specific type of professional service and services ancillary to it, or two or more kinds of professional services only when the licensing laws of each service specifically authorize the combination. Subsection (2) says the organization may not engage in any business other than that service and ancillary services, though it may own property needed for the service and may invest its funds. The MSO, not the professional organization, is where the brand, the software, and the non-clinical payroll belong.
§ 10-31-04(3) is easy to misread. It says a professional organization may have minority owners if expressly authorized under that subsection, and it expressly authorizes minority owners for an organization created to provide the professional services set forth in chapter 43-03. Medicine is chapter 43-17, not chapter 43-03. The operator default for a medical professional corporation is licensed ownership under § 10-31-07. Do not treat the chapter 43-03 sentence as a lay-equity path for a clinic, a med spa, or a telehealth PC. § 10-31-07.4 then says that where minority owners are expressly authorized, they may not end up with majority ownership. That cap is irrelevant until the authorization exists. Confirm with counsel before anyone who is not licensed to practice medicine is offered a share.
§ 10-31-06(1) says an individual may not simultaneously be an executive or owner of more than one professional organization rendering the same professional service. Treat that as a real constraint on stacking North Dakota medical PCs. A single-shareholder corporation needs only one director, who must be that shareholder and who also serves as president and treasurer. Other officers of that one-shareholder corporation need not be licensed in the same field. A retired individual may not continue as an executive or owner. Confirm any multi-entity physician role with counsel before you assume the same doctor can own two North Dakota medical professional organizations.
§ 10-31-07 is the share rule buyers will open. Issuance is limited to licensed persons, or to the retirement-plan path in § 10-31-07.1. A voluntary transfer may go only to a person who owns or is eligible to own the same type of shares. A bad issuance is void. A bad voluntary transfer is void. No share is issued or transferred on the books until the corporation has a regulating-board certificate that the recipient is licensed to render the same specific professional service. § 10-31-07.1 allows a retirement plan trust to hold nonvoting shares for nonlicensed employees and voting shares for licensed employees. That is a narrow statutory path. It is not the way to put an MSO or an investor on the cap table. Foundry's operator default is the licensed physician shareholder, not the retirement-trust sentence.
§ 10-31-08 says no organization created under the chapter may render professional services except through its executives, employees, and agents who are licensed to render professional services in this state. The term employee in that section does not include a clerk, secretary, bookkeeper, nurse, technician, or assistant who is not usually considered to be rendering the licensed professional service. Nurses and technicians can work. They do not replace the licensed physician who owns the practice of medicine. § 10-31-09 says the chapter does not modify the professional relationship with the patient, and it does not restrict the regulating board.
§ 10-31-13.1 lets a foreign professional organization practice in North Dakota only through executives, owners, employees, and agents who are licensed in North Dakota. The practice stays subject to North Dakota law. A certificate of authority for a foreign corporation has to identify the profession and the directors and shareholders who practice in the state, and it has to include a regulating-board certificate that those people are licensed in North Dakota. That is a licensure gate. It is not a plug-in national PC, and it does not move clinical revenue or the claim TIN into a marketing company. If the clinical work is yours, the shareholder ledger should be yours.
N.D.C.C. § 43-17-16 is no longer a live "license required" statute. The official chapter PDF marks it repealed (S.L. 1987, ch. 525, § 13). The live patient-location rule is § 43-17-02.3. The live application and qualification rules include § 43-17-17 and § 43-17-18. § 43-17-34 says a person who practices medicine in the state without complying with the chapter, when no other penalty is specified, is guilty of a class B misdemeanor, and an injunction is available. A lay LLC that holds itself out as practicing medicine does not become compliant because the old section number was repealed.
Do not treat a North Dakota charter as a CPOM passport. § 43-17-02.3 already says the practice occurs where the patient is. If you treat Minnesota, Montana, or South Dakota patients, those states control. If Utah patients are on the panel, Utah needs a domestic professional entity under Utah Code § 16-11-7. See Utah CPOM. Foundry does not cover any of those states with a plug-in network. Collaboration for PAs is a different job from owning the Professional Corporation. See collaborating physician vs physician PC owner.
Typical PC / MSO structure in North Dakota
When North Dakota patients or a North Dakota clinical entity are in scope, form a professional organization under chapter 10-31 owned by a physician licensed to render that service, with the board certificate § 10-31-07 requires before shares issue. The MSO provides non-clinical services under a written MSA at fair market value. Clinical revenue lands in the PC. The PC renders medicine only through people § 10-31-08 allows. Foundry forms that structure ($15,000) and matches a friendly PC owner ($3,000/mo). Not a rented Super PC. Not a reading of the chapter 43-03 minority-owner sentence as coverage for a medical PC.
If you also treat Minnesota or Montana patients, North Dakota's Moderate label does not control those states. Start with the CPOM 50-state guide. Neighboring Minnesota and Montana have their own pages.
When you still need a PC vs only an MSO
Use the table as an operator rule, not a filing opinion. Confirm with counsel.
| North Dakota fact pattern | Typical entity | Why |
|---|---|---|
| North Dakota-only, cash-pay, physician already owns the practice | May stay on the existing professional organization | Still document clinical control and FMV admin if an MSO is in the picture |
| Venture-backed or multi-state telehealth that includes Fargo, Bismarck, Grand Forks, or Minot patients | Professional corporation + FMV MSA, with a North Dakota license for the clinicians who see those patients | Buyers and payers test CPOM compliance the same way they do in strict states. § 43-17-02.3 follows the patient |
| North Dakota HQ with patients only in other states | Form for the patient states; a North Dakota HQ alone is not enough | CPOM follows the patient, not the HQ charter |
| Foreign professional organization offered as the clinical layer | North Dakota licenses for the people who practice here, plus the § 10-31-13.1 certificate file | A foreign organization is not a waiver of licensure or of your own shareholder ledger |
| North Dakota plus Minnesota or Montana | Form for the neighboring states you treat, then the North Dakota organization if North Dakota patients are in scope | A Moderate label does not soften Minnesota § 147.081 or Montana MCA 35-4-301 |
Fee-splitting and funds-flow risk
Licensed ownership plus the patient-location rule are the overlay buyers still test. A percentage-of-collections management fee is the pattern that looks most like a split of professional fees and like de facto control. Prefer a fixed or FMV-supported admin fee. Clinical cash lands in the PC. The MSO invoices the PC. Pair North Dakota with the fee-risk table on CPOM compliance.
| North Dakota pattern | Risk | Safer pattern |
|---|---|---|
| Lay LLC holds itself out as practicing medicine | High: § 43-17-02.3 and § 43-17-34 | Licensed-physician ownership of the professional organization |
| MSO paid a percentage of professional collections | High: diligence and fee-split overlay | Fixed FMV admin fee with a memo |
| Lay equity, or shares outside § 10-31-07 | High: void issuance | Licensed physician shareholder. Retirement-trust path only with counsel |
| Minority lay owners copied from the chapter 43-03 sentence | Wrong chapter for medicine | Do not use § 10-31-04(3)'s chapter 43-03 authorization for a chapter 43-17 practice |
| Same person stacked as owner of more than one organization rendering medicine | § 10-31-06 problem until counsel clears it | One North Dakota medical owner role, confirmed in writing |
| Cite the North Dakota charter as covering MN, MT, or UT patients | Wrong read: the practice follows the patient | Form for each patient state. Utah needs a domestic professional entity |
| Physician PC + FMV MSA + separate books | Base case | Revisit FMV when volume changes |
Board vs buyer / payer checks
Licensing boards discipline licensees. Buyers and payers run a different file. Use both columns. Full operating map: CPOM compliance.
| Who checks | What they sample | North Dakota fail signal |
|---|---|---|
| North Dakota Board of Medicine | Active license under chapter 43-17; owner and renderer list vs chapter 10-31; board certificate on share issuance | Figurehead PC owner; MSO writing protocols; practice into North Dakota without the license § 43-17-02.3 requires |
| Buyer diligence | Shareholder ledger vs § 10-31-07; § 10-31-06 one-organization question; one claim from payer to PC bank to MSA invoice | MSO lockbox; percentage MSA; lay shares; a second medical organization the same physician already owns |
| Payer / credentialing | Claim TIN and group NPI on the physician-owned PC | Marketing MSO TIN on the claim |
What North Dakota founders need to know
- North Dakota is Moderate. Chapter 10-31 still limits shares, rendering, and how many professional organizations one person may own in the same service.
- § 10-31-07 voids a bad issuance. The regulating-board certificate is part of the issuance file, not a later cleanup.
- The minority-owner sentence in § 10-31-04(3) points at chapter 43-03. Medicine is chapter 43-17.
- § 43-17-16 is repealed. Cite § 43-17-02.3, § 43-17-18, and § 43-17-34 instead.
- A North Dakota charter is not a CPOM passport for Minnesota, Montana, South Dakota, or Utah.
- Foundry does not drop clients into a plug-in 50-state PC. Multi-state needs a 50-state licensed physician as owner of your PC.
Operational checklist: CPOM compliance. Setup path: MSO-PC formation ($15,000). Full map: CPOM 50-state guide. Book a call · Pricing.
Sources
- N.D.C.C. chapter 10-31, Professional Organizations Act (section index). Full text: chapter 10-31 PDF, including §§ 10-31-04, 10-31-06, 10-31-07, 10-31-07.1, 10-31-08, and 10-31-13.1. Reviewed 16 October 2026.
- N.D.C.C. chapter 43-17, physicians, resident physicians, and physician assistants (section index). Full text: chapter 43-17 PDF, including § 43-17-02.3, § 43-17-18, and § 43-17-34. § 43-17-16 is repealed in that PDF.
- North Dakota Board of Medicine, laws and rules.
North Dakota CPOM FAQ
Does North Dakota have CPOM?
North Dakota is Moderate on the CPOM 50-state guide. There is no California B&P § 2400 analogue. Chapter 10-31 still limits who may own a professional organization and who may render its service. § 43-17-02.3 still places the practice of medicine where the patient is located.
Do I still need an MSO-PC in North Dakota?
Yes for most venture-backed and multi-state models that treat North Dakota patients or use a North Dakota clinical entity. The professional entity holds clinical care; the MSO is paid fair market value for non-clinical services.
Can unlicensed owners hold a North Dakota medical professional corporation?
§ 10-31-07 limits shares to licensed persons. § 10-31-07.1 is a retirement-plan path, not the operator default. § 10-31-04(3) expressly authorizes minority owners for chapter 43-03 services, not for medicine under chapter 43-17. Confirm current text with counsel.
Does a North Dakota entity replace state-by-state CPOM?
No. The practice follows the patient. Form for each patient state on the CPOM 50-state guide, including Minnesota and Montana when those patients are on the panel. Utah patients need a domestic Utah professional entity. See Utah CPOM.
How does Foundry help with North Dakota CPOM?
MSO-PC formation is $15,000 one-time. A licensed physician PC owner is $3,000/mo. Foundry is not a law firm.