PART 1 OF 4: Ownership and Governance Terms

Who owns what, and who decides what.

The first set of terms in a partnership agreement establishes the basic structure of co-ownership: each owner's stake and how the owners govern the practice together. These terms shape every decision the practice makes, and ambiguity here is a frequent source of conflict. This part tours the ownership and governance terms.

Ownership interests

The agreement should state each owner's ownership interest precisely, including the percentage owned and the class of interest if there is more than one. In a healthcare practice, these terms must also respect the rules on who may hold an ownership interest, so the ownership provisions and the practice's compliance obligations work together rather than at cross purposes.

Capital contributions

The agreement should address what each owner has contributed or must contribute, and what happens if additional capital is needed. Clear capital terms prevent disputes over who put in what and over how future capital needs are met, which can otherwise become contentious as the practice grows or faces a shortfall.

Voting and decision-making

The governance terms define how the owners make decisions, and they deserve careful thought:

• Which decisions require unanimous consent and which a majority.
• How voting power relates to ownership percentage.
• Who has authority over day-to-day versus major decisions.
• How the owners break a deadlock.

Management structure

Beyond voting, the agreement should define how the practice is managed day to day, whether by all owners jointly, by a managing owner, or through some other structure. Clarity about who runs the practice, and within what limits, prevents both paralysis and overreach.

Why these terms set the tone

The ownership and governance terms establish how the owners relate to one another in every decision that follows. An agreement that leaves control ambiguous, or that gives no path through disagreement, invites conflict into ordinary operations. Getting these foundational terms right makes the whole relationship more workable.

How West Coast Health Law Can Help

We draft the ownership and governance terms of healthcare partnership agreements so control, capital, and decision-making are clear and compliant from the start.

West Coast Health Law offers a FREE consultation which you may schedule by clicking the button on our website.

This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Laws change and every agreement is different; consult a qualified attorney about your specific situation.