On July 7, 2026, Governor Stein signed S.B. 257, eliminating mandatory board review of management arrangements. The substantive rules survive; the pre-clearance step does not. Verify the session-law text on ncleg.gov with counsel, and watch the legislation tracker.
1. CPOD status
Tier: Strict, with express proprietorship, management-agreement, and fee rules- G.S. 90-29(b)(11): a person is deemed to be practicing dentistry who “[o]wns, manages, supervises, controls or conducts, either himself, by and through another person or other persons, or by use of any electronic or other digital means, any enterprise” where dental acts are done, attempted, or represented to be done. S.L. 2021-95 added the digital-means language, bringing teledentistry platforms within the text.
- G.S. 90-40: unauthorized practice is a Class 1 misdemeanor, each day a separate offense.
- G.S. 90-40.1: unlicensed practice is a declared public nuisance, and the Attorney General, any district attorney, the Board, or any resident citizen may sue to enjoin it. (A common miscitation: 90-40.1 is the injunction section; the management-arrangement statute is 90-40.2.)
- Exemptions (G.S. 90-29(c)) include approved nonprofit facilities serving low-income populations, dental and hygiene schools, and government practice.
2. Other professions
This page covers dentistry only. Medicine, optometry, veterinary practice, and other professions are governed by different statutes and boards, even within the same state. For medical-practice sources, use the MSO-PC Wiki. Hygienists may not co-own: ch. 55B’s mixed-profession list covers medical combinations only, and dentistry is absent (§ 55B-14(c)).3. Professional entity forms
Permitted forms: PC under the Professional Corporation Act (ch. 55B) or PLLC under ch. 57D, subject to ch. 55B. Ownership: All shares must be held by licensees of the profession (§ 55B-4(2)); issuance and transfer require licensing-board certification, voting trusts and proxies to non-licensees are prohibited, and violative transfers are void (§ 55B-6(a)). Also confirm before filing:- Naming rules, designator requirements, and any limits tied to licensed owners’ names; several states regulate dental trade names separately
- Board pre-approval or certificates, whether the dental board must act before (or after) the secretary of state will file
- Officer and director licensure, including states that restrict these roles as well as ownership to licensees
4. Fee-splitting and management-fee structure
Revenue-linked fees are banned by board rule. The Management Arrangements Rule, 21 NCAC 16X .0101, took effect April 1, 2001 and predates the statute. It prohibits compensation “based on a formula that foreseeably rises or falls with profitability, gross or net revenues,” subject to exceptions for cost-savings adjustments and pass-through collection arrangements. It separately prohibits fees foreseeably and purposely in excess of the practice’s likely profits. A fixed or properly documented cost-plus fee may address the revenue-linkage issue but is not a safe harbor from the rule’s other compensation and control limits. For the MSA, test whether a percentage-of-collections fee is permitted under the state’s dental, fee-splitting, referral, tax, and contract rules. Several states expressly restrict revenue-linked dental management fees, and the Aspen Dental settlements imposed related party-specific terms. Flat and cost-plus formulas are not automatic safe harbors; the services, calculation, amount, control rights, and actual payments still matter. See Fee-splitting rules and Set the management fee.5. Dentist noncompetes
No dental-specific noncompete statute was identified in the sources this page relies on; enforceability runs on North Carolina’s general restrictive-covenant law. Verify with counsel before including one. Federal noncompete policy changed substantially in 2025 and 2026. The FTC’s Non-Compete Rule was vacated, the agency dismissed its appeals in September 2025, and the rule was removed from 16 C.F.R. pt. 910 effective February 12, 2026. State law remains central. Dental enforcement resolutions in New York and California have also restricted noncompetes for the settling parties as a corporate-practice remedy. Verify the current rule, worker, agreement type, transaction context, effective date, and remedy in this state. See the legislation tracker.6. DSO-specific law and registration
Yes. A statute and a rule both address management arrangements by name:- G.S. 90-40.2 (S.L. 2012-195, effective 2012) defines “management arrangement,” “management company,” “professional entity,” and “ancillary personnel.” A management company is a nonprofessional entity providing any combination of specified business-support services, such as accounting, billing and collection, records, HR, fixed-asset acquisition, office and equipment maintenance, marketing, IT, compliance, or clerical work. A management arrangement executed on or after January 1, 2013 is invalid unless the following warning appears more conspicuously than anything else in the document: “WARNING – YOU HAVE THE RIGHT AND ARE ENCOURAGED TO HAVE THIS CONTRACT REVIEWED BY YOUR OWN LEGAL COUNSEL PRIOR TO SIGNING.” The statute also authorizes Board cooperation with law enforcement against management companies engaged in unauthorized practice.
- 21 NCAC 16X .0101 requires a management arrangement to be written, signed, and complete, with all material terms and either aggregate compensation or a precise methodology. It prohibits giving the management company ownership or control of the clinical business or revenue distribution, ownership or exclusive control of patient records, control or input over clinical practices, control over hiring or firing clinical personnel, authority over the PC’s dentist contracts, or control over transfers of professional-entity ownership interests. An anti-circumvention provision also applies.
- The July 2026 change: the rule originally required arrangements to “be reviewed by the Board.” According to the Board’s Management Arrangements page, S.B. 257 (signed July 7, 2026) eliminated mandatory review. Parties no longer submit agreements, and the Board has published an example management services agreement that it considers compliant. The substantive restrictions remain.
7. Death and transition window
§ 55B-7(b): the PC must report a shareholder’s death to the licensing board within 30 days, and within one year of death all shares must be transferred to the PC or to qualified persons (default price: fair market value, not less than book value as of the end of the month preceding death). If the decedent owned all shares, the successors may hold them “for such period of time as may be necessary to liquidate the corporation.” See Plan for succession.8. Practical structuring notes
Mandatory review ended, but the substantive rules remain. A North Carolina management services agreement (MSA) still needs the conspicuous § 90-40.2(b) warning, compliant compensation, PC ownership of records and revenue, and dentist control of clinical hiring. The contract is invalid without the warning. Use the Board’s published example MSA as a starting point. Section 90-40.1 also permits any resident citizen to sue to enjoin an arrangement as a public nuisance, so the Board is not the only potential enforcement actor.9. Verification checklist
- Confirmed the permitted entity form for dentistry in this state
- Confirmed whether dental board pre-approval or a certificate is required before filing
- Confirmed whether officers and directors must be licensed dentists
- Confirmed the management fee structure is lawful here, including any restriction on revenue-linked fees
- Clinical carve-out drafted against this state’s current statutory language, including any enumerated control prohibitions
- Transfer restriction and succession documents checked against this state’s death-transition window
- Noncompete provisions checked against current state law
- DSO foreign-qualified before it has employees here
- Any DSO registration, licensure, or disclosure obligation identified and calendared
- Trade-name and advertising-disclosure rules for dental practices checked
10. Sources and where to verify
For the cases and statutes referenced above, see DSO & dental case law and the 51-jurisdiction table. For enacted and pending legislation, see the dental legislation tracker.