Bill Text: NY A01938 | 2021-2022 | General Assembly | Introduced
Bill Title: Relates to certified public accountants; requires that a majority of the ownership of a professional service corporation formed to lawfully engage in the practice of public accountancy are individuals licensed to practice public accountancy in some state; enacts similar provisions for partnerships and LLCs.
Spectrum: Strong Partisan Bill (Democrat 72-5)
Status: (Introduced - Dead) 2022-01-05 - referred to higher education [A01938 Detail]
Download: New_York-2021-A01938-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 1938 2021-2022 Regular Sessions IN ASSEMBLY January 13, 2021 ___________ Introduced by M. of A. PEOPLES-STOKES, TAYLOR, MAGNARELLI, BENEDETTO, DICKENS, ENGLEBRIGHT, J. RIVERA, JEAN-PIERRE, DE LA ROSA, SEAWRIGHT, MORINELLO, COOK, L. ROSENTHAL, PERRY, LUPARDO, GOTTFRIED, BRONSON, ABBATE, DILAN, RICHARDSON, PHEFFER AMATO, DINOWITZ, RODRIGUEZ, PRET- LOW, NIOU, ROZIC, D. ROSENTHAL, JOYNER, HUNTER, PICHARDO, SOLAGES, HEVESI, HYNDMAN, GALEF, GUNTHER, STIRPE, WOERNER, QUART, CUSICK, FAHY, SANTABARBARA, BICHOTTE HERMELYN, WEPRIN, LAVINE, CYMBROWITZ, WALCZYK, VANEL, ZEBROWSKI, WALLACE, PAULIN, EICHENSTEIN, CARROLL, FALL, REYES, WALKER, FERNANDEZ, SAYEGH, McMAHON, BARNWELL, BARRETT, BUTTENSCHON, COLTON, BARRON, BRAUNSTEIN, DARLING, STERN, CAHILL, GRIFFIN, RAMOS, JONES -- Multi-Sponsored by -- M. of A. DAVILA, J. M. GIGLIO, GOODELL, M. MILLER, THIELE -- read once and referred to the Committee on Higher Education AN ACT to amend the business corporation law, the partnership law and the limited liability company law, in relation to certified public accountants The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 1503 of the business corporation law is amended by 2 adding a new paragraph (h) to read as follows: 3 (h) Any firm established for the business purpose of incorporating as 4 a professional service corporation formed to lawfully engage in the 5 practice of public accountancy, as such practice is respectively defined 6 under article one hundred forty-nine of the education law shall be 7 required to show (1) that a simple majority of the ownership of the 8 firm, in terms of financial interests, and voting rights held by the 9 firm's owners, belongs to individuals licensed to practice public 10 accountancy in some state, and (2) that all shareholders of a profes- 11 sional service corporation whose principal place of business is in this 12 state, and who are engaged in the practice of public accountancy in this 13 state, hold a valid license issued under section seventy-four hundred EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD02385-01-1A. 1938 2 1 four of the education law. For purposes of this paragraph, "financial 2 interest" means capital stock, capital accounts, capital contributions, 3 capital interest, or interest in undistributed earnings of a business 4 entity. Although firms may include non-licensee owners, the firm and 5 its owners must comply with rules promulgated by the state board of 6 regents. Notwithstanding the foregoing, a firm incorporated under this 7 section may not have non-licensee owners if the firm's name includes the 8 words "certified public accountant," or "certified public accountants," 9 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 10 that is incorporated under this section shall be a natural person who 11 actively participates in the business of the firm or its affiliated 12 entities. For purposes of this subdivision, "actively participate" means 13 to provide services to clients or to otherwise individually take part in 14 the day-to-day business or management of the firm. Such a firm shall 15 have attached to its certificate of incorporation a certificate or 16 certificates demonstrating the firm's compliance with this paragraph, in 17 lieu of the certificate or certificates required by subparagraph (ii) of 18 paragraph (b) of this section. 19 § 2. Section 1507 of the business corporation law is amended by adding 20 a new paragraph (c) to read as follows: 21 (c) Any firm established for the business purpose of incorporating as 22 a professional service corporation pursuant to paragraph (h) of section 23 fifteen hundred three of this article may issue shares to individuals 24 who are authorized by law to practice in this state the profession which 25 such corporation is authorized to practice and who are or have been 26 engaged in the practice of such profession in such corporation or a 27 predecessor entity, or who will engage in the practice of such profes- 28 sion in such corporation within thirty days of the date such shares are 29 issued and may also issue shares to employees of the corporation not 30 licensed as certified public accountants, provided that: 31 (i) at least fifty-one percent of the outstanding shares of stock of 32 the corporation are owned by certified public accountants, 33 (ii) at least fifty-one percent of the directors are certified public 34 accountants, 35 (iii) at least fifty-one percent of the officers are certified public 36 accountants, 37 (iv) the president, the chairperson of the board of directors and the 38 chief executive officer or officers are certified public accountants. 39 No shareholder of a firm established for the business purpose of incor- 40 porating as a professional service corporation pursuant to paragraph (h) 41 of section fifteen hundred three of this article shall enter into a 42 voting trust agreement, proxy or any other type of agreement vesting in 43 another person, other than another shareholder of the same corporation, 44 the authority to exercise voting power of any or all of his or her 45 shares. All shares issued, agreements made or proxies granted in 46 violation of this section shall be void. 47 § 3. Section 1508 of the business corporation law is amended by adding 48 a new paragraph (c) to read as follows: 49 (c) The directors and officers of any firm established for the busi- 50 ness purpose of incorporating as a professional service corporation 51 pursuant to paragraph (h) of section fifteen hundred three of this arti- 52 cle may include individuals who are not licensed to practice public 53 accountancy, provided however that at least fifty-one percent of the 54 directors, at least fifty-one percent of the officers and the president, 55 the chairperson of the board of directors and the chief executive offi- 56 cer or officers are authorized by law to practice in any state theA. 1938 3 1 profession which such corporation is authorized to practice, and are 2 either shareholders of such corporation or engaged in the practice of 3 their professions in such corporation. 4 § 4. Section 1509 of the business corporation law, as amended by chap- 5 ter 550 of the laws of 2011, is amended to read as follows: 6 § 1509. Disqualification of shareholders, directors, officers and 7 employees. 8 If any shareholder, director, officer or employee of a professional 9 service corporation, including a design professional service corpo- 10 ration, who has been rendering professional service to the public 11 becomes legally disqualified to practice his or her profession within 12 this state, he or she shall sever all employment with, and financial 13 interests (other than interests as a creditor) in, such corporation 14 forthwith or as otherwise provided in section 1510 of this article. All 15 provisions of law regulating the rendering of professional services by a 16 person elected or appointed to a public office shall be applicable to a 17 shareholder, director, officer and employee of such corporation in the 18 same manner and to the same extent as if fully set forth herein. Such 19 legal disqualification to practice his or her profession within this 20 state shall be deemed to constitute an irrevocable offer by the disqual- 21 ified shareholder to sell his or her shares to the corporation, pursuant 22 to the provisions of section 1510 of this article or of the certificate 23 of incorporation, by-laws or agreement among the corporation and all 24 shareholders, whichever is applicable. Compliance with the terms of such 25 offer shall be specifically enforceable in the courts of this state. A 26 professional service corporation's failure to enforce compliance with 27 this provision shall constitute a ground for forfeiture of its certif- 28 icate of incorporation and its dissolution. 29 § 5. Paragraph (a) of section 1511 of the business corporation law, as 30 amended by chapter 550 of the laws of 2011, is amended and a new para- 31 graph (c) is added to read as follows: 32 (a) No shareholder of a professional service corporation [or], includ- 33 ing a design professional service corporation, may sell or transfer his 34 or her shares in such corporation except to another individual who is 35 eligible to have shares issued to him or her by such corporation or 36 except in trust to another individual who would be eligible to receive 37 shares if he or she were employed by the corporation. Nothing herein 38 contained shall be construed to prohibit the transfer of shares by oper- 39 ation of law or by court decree. No transferee of shares by operation 40 of law or court decree may vote the shares for any purpose whatsoever 41 except with respect to corporate action under sections 909 and 1001 of 42 this chapter. The restriction in the preceding sentence shall not apply, 43 however, where such transferee would be eligible to have shares issued 44 to him or her if he or she were an employee of the corporation and, if 45 there are other shareholders, a majority of such other shareholders 46 shall fail to redeem the shares so transferred, pursuant to section 1510 47 of this article, within sixty days of receiving written notice of such 48 transfer. Any sale or transfer, except by operation of law or court 49 decree or except for a corporation having only one shareholder, may be 50 made only after the same shall have been approved by the board of direc- 51 tors, or at a shareholders' meeting specially called for such purpose by 52 such proportion, not less than a majority, of the outstanding shares as 53 may be provided in the certificate of incorporation or in the by-laws of 54 such professional service corporation. At such shareholders' meeting the 55 shares held by the shareholder proposing to sell or transfer his or her 56 shares may not be voted or counted for any purpose, unless all share-A. 1938 4 1 holders consent that such shares be voted or counted. The certificate of 2 incorporation or the by-laws of the professional service corporation, or 3 the professional service corporation and the shareholders by private 4 agreement, may provide, in lieu of or in addition to the foregoing 5 provisions, for the alienation of shares and may require the redemption 6 or purchase of such shares by such corporation at prices and in a manner 7 specifically set forth therein. The existence of the restrictions on the 8 sale or transfer of shares, as contained in this article and, if appli- 9 cable, in the certificate of incorporation, by-laws, stock purchase or 10 stock redemption agreement, shall be noted conspicuously on the face or 11 back of every certificate for shares issued by a professional service 12 corporation. Any sale or transfer in violation of such restrictions 13 shall be void. 14 (c) A firm established for the business purpose of incorporating as a 15 professional service corporation pursuant to paragraph (h) of section 16 fifteen hundred three of this article, shall purchase or redeem the 17 shares of a non-licensed professional shareholder in the case of his or 18 her termination of employment within thirty days after such termination. 19 A firm established for the business purpose of incorporating as a 20 professional service corporation pursuant to paragraph (h) of section 21 fifteen hundred three of this article, shall not be required to purchase 22 or redeem the shares of a terminated non-licensed professional share- 23 holder if such shares, within thirty days after such termination, are 24 sold or transferred to another employee of the corporation pursuant to 25 this article. 26 § 6. Section 1514 of the business corporation law is amended by adding 27 a new paragraph (c) to read as follows: 28 (c) Each firm established for the business purpose of incorporating as 29 a professional service corporation pursuant to paragraph (h) of section 30 fifteen hundred three of this article shall, at least once every three 31 years on or before the date prescribed by the licensing authority, 32 furnish a statement to the licensing authority listing the names and 33 residence addresses of each shareholder, director and officer of such 34 corporation and certify as the date of certification and at all times 35 over the entire three year period that: 36 (i) at least fifty-one percent of the outstanding shares of stock of 37 the corporation are and were owned by certified public accountants, 38 (ii) at least fifty-one percent of the directors are and were certi- 39 fied public accountants, 40 (iii) at least fifty-one percent of the officers are and were certi- 41 fied public accountants, 42 (iv) the president, the chairperson of the board of directors and the 43 chief executive officer or officers are and were certified public 44 accountants. 45 The statement shall be signed by the president or any certified public 46 accountant vice-president and attested to by the secretary or any 47 assistant secretary of the corporation. 48 § 7. Paragraph (d) of section 1525 of the business corporation law, as 49 added by chapter 505 of the laws of 1983, is amended to read as follows: 50 (d) "Foreign professional service corporation" means a professional 51 service corporation, whether or not denominated as such, organized under 52 the laws of a jurisdiction other than this state, all of the sharehold- 53 ers, directors and officers of which are authorized and licensed to 54 practice the profession for which such corporation is licensed to do 55 business; except that all shareholders, directors and officers of a 56 foreign professional service corporation which provides health servicesA. 1938 5 1 in this state shall be licensed in this state. A foreign professional 2 service corporation formed to lawfully engage in the practice of public 3 accountancy, as such practice is defined under article one hundred 4 forty-nine of the education law, or equivalent state law, shall be 5 required to show (1) that a simple majority of the ownership of the 6 firm, in terms of financial interests, and voting rights held by the 7 firm's owners, belongs to individuals licensed to practice public 8 accountancy in some state, and (2) that all shareholders of a foreign 9 professional service corporation whose principal place of business is in 10 this state, and who are engaged in the practice of public accountancy in 11 this state, hold a valid license issued under section seventy-four 12 hundred four of the education law. For purposes of this paragraph, 13 "financial interest" means capital stock, capital accounts, capital 14 contributions, capital interest, or interest in undistributed earnings 15 of a business entity. Although firms may include non-licensee owners, 16 the firm and its owners must comply with rules promulgated by the state 17 board of regents. Notwithstanding the foregoing, a firm registered 18 under this section may not have non-licensee owners if the firm's name 19 includes the words "certified public accountant," or "certified public 20 accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee 21 owner of a firm that is operating under this section shall be a natural 22 person who actively participates in the business of the firm or its 23 affiliated entities, provided each beneficial owner of an equity inter- 24 est in such entity is a natural person who actively participates in the 25 business conducted by the firm or its affiliated entities. For purposes 26 of this paragraph, "actively participate" means to provide services to 27 clients or to otherwise individually take part in the day-to-day busi- 28 ness or management of the firm. 29 § 8. Subdivision (q) of section 121-1500 of the partnership law, as 30 amended by chapter 475 of the laws of 2014, is amended to read as 31 follows: 32 (q) Each partner of a registered limited liability partnership formed 33 to provide medical services in this state must be licensed pursuant to 34 article 131 of the education law to practice medicine in this state and 35 each partner of a registered limited liability partnership formed to 36 provide dental services in this state must be licensed pursuant to arti- 37 cle 133 of the education law to practice dentistry in this state. Each 38 partner of a registered limited liability partnership formed to provide 39 veterinary services in this state must be licensed pursuant to article 40 135 of the education law to practice veterinary medicine in this state. 41 Each partner of a registered limited liability partnership formed to 42 provide public accountancy services, whose principal place of business 43 is in this state and who provides public accountancy services, must be 44 licensed pursuant to article 149 of the education law to practice public 45 accountancy in this state. Each partner of a registered limited liabil- 46 ity partnership formed to provide professional engineering, land survey- 47 ing, geological services, architectural and/or landscape architectural 48 services in this state must be licensed pursuant to article 145, article 49 147 and/or article 148 of the education law to practice one or more of 50 such professions in this state. Each partner of a registered limited 51 liability partnership formed to provide licensed clinical social work 52 services in this state must be licensed pursuant to article 154 of the 53 education law to practice clinical social work in this state. Each part- 54 ner of a registered limited liability partnership formed to provide 55 creative arts therapy services in this state must be licensed pursuant 56 to article 163 of the education law to practice creative arts therapy inA. 1938 6 1 this state. Each partner of a registered limited liability partnership 2 formed to provide marriage and family therapy services in this state 3 must be licensed pursuant to article 163 of the education law to prac- 4 tice marriage and family therapy in this state. Each partner of a regis- 5 tered limited liability partnership formed to provide mental health 6 counseling services in this state must be licensed pursuant to article 7 163 of the education law to practice mental health counseling in this 8 state. Each partner of a registered limited liability partnership formed 9 to provide psychoanalysis services in this state must be licensed pursu- 10 ant to article 163 of the education law to practice psychoanalysis in 11 this state. Each partner of a registered limited liability partnership 12 formed to provide applied behavior analysis service in this state must 13 be licensed or certified pursuant to article 167 of the education law to 14 practice applied behavior analysis in this state. A limited liability 15 partnership formed to lawfully engage in the practice of public accoun- 16 tancy, as such practice is respectively defined under article 149 of the 17 education law, shall be required to show (1) that a simple majority of 18 the ownership of the firm, in terms of financial interests, and voting 19 rights held by the firm's owners, belongs to individuals licensed to 20 practice public accountancy in some state, and (2) that all partners of 21 a limited liability partnership whose principal place of business is in 22 this state, and who are engaged in the practice of public accountancy in 23 this state, hold a valid license issued under section seventy-four 24 hundred four of the education law. For purposes of this subdivision, 25 "financial interest" means capital stock, capital accounts, capital 26 contributions, capital interest, or interest in undistributed earnings 27 of a business entity. Although firms may include non-licensee owners, 28 the firm and its owners must comply with rules promulgated by the state 29 board of regents. Notwithstanding the foregoing, a firm registered under 30 this section may not have non-licensee owners if the firm's name 31 includes the words "certified public accountant," or "certified public 32 accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner 33 of a firm that is formed under this section shall be (1) a natural 34 person who actively participates in the business of the firm or its 35 affiliated entities, or (2) an entity, including, but not limited to, a 36 partnership or professional corporation, provided each beneficial owner 37 of an equity interest in such entity is a natural person who actively 38 participates in the business conducted by the firm or its affiliated 39 entities. For purposes of this subdivision, "actively participate" means 40 to provide services to clients or to otherwise individually take part in 41 the day-to-day business or management of the firm. 42 § 9. Subdivision (q) of section 121-1502 of the partnership law, as 43 amended by chapter 475 of the laws of 2014, is amended to read as 44 follows: 45 (q) Each partner of a foreign limited liability partnership which 46 provides medical services in this state must be licensed pursuant to 47 article 131 of the education law to practice medicine in the state and 48 each partner of a foreign limited liability partnership which provides 49 dental services in the state must be licensed pursuant to article 133 of 50 the education law to practice dentistry in this state. Each partner of a 51 foreign limited liability partnership which provides veterinary service 52 in the state shall be licensed pursuant to article 135 of the education 53 law to practice veterinary medicine in this state. Each partner of a 54 foreign limited liability partnership which provides professional engi- 55 neering, land surveying, geological services, architectural and/or land- 56 scape architectural services in this state must be licensed pursuant toA. 1938 7 1 article 145, article 147 and/or article 148 of the education law to 2 practice one or more of such professions. Each partner of a foreign 3 registered limited liability partnership formed to provide public 4 accountancy services, whose principal place of business is in this state 5 and who provides public accountancy services, must be licensed pursuant 6 to article 149 of the education law to practice public accountancy in 7 this state. Each partner of a foreign limited liability partnership 8 which provides licensed clinical social work services in this state must 9 be licensed pursuant to article 154 of the education law to practice 10 licensed clinical social work in this state. Each partner of a foreign 11 limited liability partnership which provides creative arts therapy 12 services in this state must be licensed pursuant to article 163 of the 13 education law to practice creative arts therapy in this state. Each 14 partner of a foreign limited liability partnership which provides 15 marriage and family therapy services in this state must be licensed 16 pursuant to article 163 of the education law to practice marriage and 17 family therapy in this state. Each partner of a foreign limited liabil- 18 ity partnership which provides mental health counseling services in this 19 state must be licensed pursuant to article 163 of the education law to 20 practice mental health counseling in this state. Each partner of a 21 foreign limited liability partnership which provides psychoanalysis 22 services in this state must be licensed pursuant to article 163 of the 23 education law to practice psychoanalysis in this state. Each partner of 24 a foreign limited liability partnership which provides applied behavior 25 analysis services in this state must be licensed or certified pursuant 26 to article 167 of the education law to practice applied behavior analy- 27 sis in this state. A foreign limited liability partnership formed to 28 lawfully engage in the practice of public accountancy, as such practice 29 is respectively defined under article 149 of the education law, shall be 30 required to show (1) that a simple majority of the ownership of the 31 firm, in terms of financial interests, and voting rights held by the 32 firm's owners, belongs to individuals licensed to practice public 33 accountancy in some state, and (2) that all partners of a foreign limit- 34 ed liability partnership whose principal place of business is in this 35 state, and who are engaged in the practice of public accountancy in this 36 state, hold a valid license issued under section seventy-four hundred 37 four of the education law. For purposes of this subdivision, "financial 38 interest" means capital stock, capital accounts, capital contributions, 39 capital interest, or interest in undistributed earnings of a business 40 entity. Although firms may include non-licensee owners, the firm and 41 its owners must comply with rules promulgated by the state board of 42 regents. Notwithstanding the foregoing, a firm registered under this 43 section may not have non-licensee owners if the firm's name includes the 44 words "certified public accountant," or "certified public accountants," 45 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 46 that is formed under this section shall be (1) a natural person who 47 actively participates in the business of the firm or its affiliated 48 entities, or (2) an entity, including, but not limited to, a partnership 49 or professional corporation, provided each beneficial owner of an equity 50 interest in such entity is a natural person who actively participates in 51 the business conducted by the firm or its affiliated entities. For 52 purposes of this subdivision, "actively participate" means to provide 53 services to clients or to otherwise individually take part in the day- 54 to-day business or management of the firm. 55 § 10. Subdivision (h) of section 121-101 of the partnership law, as 56 added by chapter 950 of the laws of 1990, is amended to read as follows:A. 1938 8 1 (h) "Limited partnership" and "domestic limited partnership" mean, 2 unless the context otherwise requires, a partnership (i) formed by two 3 or more persons pursuant to this article or which complies with subdivi- 4 sion (a) of section 121-1202 of this article and (ii) having one or more 5 general partners and one or more limited partners. Notwithstanding any 6 other provisions of law a limited partnership or domestic limited part- 7 nership formed to lawfully engage in the practice of public accountancy, 8 as such practice is respectively defined under article 149 of the educa- 9 tion law shall be required to show (1) that a simple majority of the 10 ownership of the firm, in terms of financial interests, including owner- 11 ship-based compensation, and voting rights held by the firm's owners, 12 belongs to individuals licensed to practice public accountancy in some 13 state, and (2) that all partners of a limited partnership or domestic 14 limited partnership, whose principal place of business is in this state, 15 and who are engaged in the practice of public accountancy in this state, 16 hold a valid license issued under section seventy-four hundred four of 17 the education law or are public accountants licensed under section 18 seventy-four hundred five of the education law. Although firms may 19 include non-licensee owners, the firm and its owners must comply with 20 rules promulgated by the state board of regents. Notwithstanding the 21 foregoing, a firm registered under this section may not have non-licen- 22 see owners if the firm's name includes the words "certified public 23 accountant," or "certified public accountants," or the abbreviations 24 "CPA" or "CPAs". Each non-licensee owner of a firm that is registered 25 under this section shall be (1) a natural person who actively partic- 26 ipates in the business of the firm or its affiliated entities, or (2) an 27 entity, including, but not limited to, a partnership or professional 28 corporation, provided each beneficial owner of an equity interest in 29 such entity is a natural person who actively participates in the busi- 30 ness conducted by the firm or its affiliated entities. For purposes of 31 this subdivision, "actively participate" means to provide services to 32 clients or to otherwise individually take part in the day-to-day busi- 33 ness or management of the firm. 34 § 11. Subdivision (b) of section 1207 of the limited liability company 35 law, as amended by chapter 475 of the laws of 2014, is amended to read 36 as follows: 37 (b) With respect to a professional service limited liability company 38 formed to provide medical services as such services are defined in arti- 39 cle 131 of the education law, each member of such limited liability 40 company must be licensed pursuant to article 131 of the education law to 41 practice medicine in this state. With respect to a professional service 42 limited liability company formed to provide dental services as such 43 services are defined in article 133 of the education law, each member of 44 such limited liability company must be licensed pursuant to article 133 45 of the education law to practice dentistry in this state. With respect 46 to a professional service limited liability company formed to provide 47 veterinary services as such services are defined in article 135 of the 48 education law, each member of such limited liability company must be 49 licensed pursuant to article 135 of the education law to practice veter- 50 inary medicine in this state. With respect to a professional service 51 limited liability company formed to provide professional engineering, 52 land surveying, architectural, landscape architectural and/or geological 53 services as such services are defined in article 145, article 147 and 54 article 148 of the education law, each member of such limited liability 55 company must be licensed pursuant to article 145, article 147 and/or 56 article 148 of the education law to practice one or more of suchA. 1938 9 1 professions in this state. With respect to a professional service 2 limited liability company formed to provide public accountancy services 3 as such services are defined in article 149 of the education law each 4 member of such limited liability company whose principal place of busi- 5 ness is in this state and who provides public accountancy services, must 6 be licensed pursuant to article 149 of the education law to practice 7 public accountancy in this state. With respect to a professional service 8 limited liability company formed to provide licensed clinical social 9 work services as such services are defined in article 154 of the educa- 10 tion law, each member of such limited liability company shall be 11 licensed pursuant to article 154 of the education law to practice 12 licensed clinical social work in this state. With respect to a profes- 13 sional service limited liability company formed to provide creative arts 14 therapy services as such services are defined in article 163 of the 15 education law, each member of such limited liability company must be 16 licensed pursuant to article 163 of the education law to practice crea- 17 tive arts therapy in this state. With respect to a professional service 18 limited liability company formed to provide marriage and family therapy 19 services as such services are defined in article 163 of the education 20 law, each member of such limited liability company must be licensed 21 pursuant to article 163 of the education law to practice marriage and 22 family therapy in this state. With respect to a professional service 23 limited liability company formed to provide mental health counseling 24 services as such services are defined in article 163 of the education 25 law, each member of such limited liability company must be licensed 26 pursuant to article 163 of the education law to practice mental health 27 counseling in this state. With respect to a professional service limited 28 liability company formed to provide psychoanalysis services as such 29 services are defined in article 163 of the education law, each member of 30 such limited liability company must be licensed pursuant to article 163 31 of the education law to practice psychoanalysis in this state. With 32 respect to a professional service limited liability company formed to 33 provide applied behavior analysis services as such services are defined 34 in article 167 of the education law, each member of such limited liabil- 35 ity company must be licensed or certified pursuant to article 167 of the 36 education law to practice applied behavior analysis in this state. A 37 professional service limited liability company formed to lawfully engage 38 in the practice of public accountancy, as such practice is respectively 39 defined under article 149 of the education law shall be required to show 40 (1) that a simple majority of the ownership of the firm, in terms of 41 financial interests, and voting rights held by the firm's owners, 42 belongs to individuals licensed to practice public accountancy in some 43 state, and (2) that all members of a limited professional service limit- 44 ed liability company, whose principal place of business is in this 45 state, and who are engaged in the practice of public accountancy in this 46 state, hold a valid license issued under section seventy-four hundred 47 four of the education law. For purposes of this subdivision, "financial 48 interest" means capital stock, capital accounts, capital contributions, 49 capital interest, or interest in undistributed earnings of a business 50 entity. Although firms may include non-licensee owners, the firm and 51 its owners must comply with rules promulgated by the state board of 52 regents. Notwithstanding the foregoing, a firm registered under this 53 section may not have non-licensee owners if the firm's name includes the 54 words "certified public accountant," or "certified public accountants," 55 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 56 that is registered under this section shall be (1) a natural person whoA. 1938 10 1 actively participates in the business of the firm or its affiliated 2 entities, or (2) an entity, including, but not limited to, a partnership 3 or professional corporation, provided each beneficial owner of an equity 4 interest in such entity is a natural person who actively participates in 5 the business conducted by the firm or its affiliated entities. For 6 purposes of this subdivision, "actively participate" means to provide 7 services to clients or to otherwise individually take part in the day- 8 to-day business or management of the firm. 9 § 12. Subdivision (a) of section 1301 of the limited liability company 10 law, as amended by chapter 475 of the laws of 2014, is amended to read 11 as follows: 12 (a) "Foreign professional service limited liability company" means a 13 professional service limited liability company, whether or not denomi- 14 nated as such, organized under the laws of a jurisdiction other than 15 this state, (i) each of whose members and managers, if any, is a profes- 16 sional authorized by law to render a professional service within this 17 state and who is or has been engaged in the practice of such profession 18 in such professional service limited liability company or a predecessor 19 entity, or will engage in the practice of such profession in the profes- 20 sional service limited liability company within thirty days of the date 21 such professional becomes a member, or each of whose members and manag- 22 ers, if any, is a professional at least one of such members is author- 23 ized by law to render a professional service within this state and who 24 is or has been engaged in the practice of such profession in such 25 professional service limited liability company or a predecessor entity, 26 or will engage in the practice of such profession in the professional 27 service limited liability company within thirty days of the date such 28 professional becomes a member, or (ii) authorized by, or holding a 29 license, certificate, registration or permit issued by the licensing 30 authority pursuant to, the education law to render a professional 31 service within this state; except that all members and managers, if any, 32 of a foreign professional service limited liability company that 33 provides health services in this state shall be licensed in this state. 34 With respect to a foreign professional service limited liability company 35 which provides veterinary services as such services are defined in arti- 36 cle 135 of the education law, each member of such foreign professional 37 service limited liability company shall be licensed pursuant to article 38 135 of the education law to practice veterinary medicine. With respect 39 to a foreign professional service limited liability company which 40 provides medical services as such services are defined in article 131 of 41 the education law, each member of such foreign professional service 42 limited liability company must be licensed pursuant to article 131 of 43 the education law to practice medicine in this state. With respect to a 44 foreign professional service limited liability company which provides 45 dental services as such services are defined in article 133 of the 46 education law, each member of such foreign professional service limited 47 liability company must be licensed pursuant to article 133 of the educa- 48 tion law to practice dentistry in this state. With respect to a foreign 49 professional service limited liability company which provides profes- 50 sional engineering, land surveying, geologic, architectural and/or land- 51 scape architectural services as such services are defined in article 52 145, article 147 and article 148 of the education law, each member of 53 such foreign professional service limited liability company must be 54 licensed pursuant to article 145, article 147 and/or article 148 of the 55 education law to practice one or more of such professions in this state. 56 With respect to a foreign professional service limited liability companyA. 1938 11 1 which provides public accountancy services as such services are defined 2 in article 149 of the education law, each member of such foreign profes- 3 sional service limited liability company whose principal place of busi- 4 ness is in this state and who provides public accountancy services, 5 shall be licensed pursuant to article 149 of the education law to prac- 6 tice public accountancy in this state. With respect to a foreign profes- 7 sional service limited liability company which provides licensed clin- 8 ical social work services as such services are defined in article 154 of 9 the education law, each member of such foreign professional service 10 limited liability company shall be licensed pursuant to article 154 of 11 the education law to practice clinical social work in this state. With 12 respect to a foreign professional service limited liability company 13 which provides creative arts therapy services as such services are 14 defined in article 163 of the education law, each member of such foreign 15 professional service limited liability company must be licensed pursuant 16 to article 163 of the education law to practice creative arts therapy in 17 this state. With respect to a foreign professional service limited 18 liability company which provides marriage and family therapy services as 19 such services are defined in article 163 of the education law, each 20 member of such foreign professional service limited liability company 21 must be licensed pursuant to article 163 of the education law to prac- 22 tice marriage and family therapy in this state. With respect to a 23 foreign professional service limited liability company which provides 24 mental health counseling services as such services are defined in arti- 25 cle 163 of the education law, each member of such foreign professional 26 service limited liability company must be licensed pursuant to article 27 163 of the education law to practice mental health counseling in this 28 state. With respect to a foreign professional service limited liability 29 company which provides psychoanalysis services as such services are 30 defined in article 163 of the education law, each member of such foreign 31 professional service limited liability company must be licensed pursuant 32 to article 163 of the education law to practice psychoanalysis in this 33 state. With respect to a foreign professional service limited liability 34 company which provides applied behavior analysis services as such 35 services are defined in article 167 of the education law, each member of 36 such foreign professional service limited liability company must be 37 licensed or certified pursuant to article 167 of the education law to 38 practice applied behavior analysis in this state. A foreign professional 39 service limited liability company formed to lawfully engage in the prac- 40 tice of public accountancy, as such practice is respectively defined 41 under article 149 of the education law shall be required to show (1) 42 that a simple majority of the ownership of the firm, in terms of finan- 43 cial interests, and voting rights held by the firm's owners, belongs to 44 individuals licensed to practice public accountancy in some state, and 45 (2) that all members of a foreign limited professional service limited 46 liability company, whose principal place of business is in this state, 47 and who are engaged in the practice of public accountancy in this state, 48 hold a valid license issued under section seventy-four hundred four of 49 the education law. For purposes of this subdivision, "financial inter- 50 est" means capital stock, capital accounts, capital contributions, capi- 51 tal interest, or interest in undistributed earnings of a business enti- 52 ty. Although firms may include non-licensee owners, the firm and its 53 owners must comply with rules promulgated by the state board of regents. 54 Notwithstanding the foregoing, a firm registered under this section may 55 not have non-licensee owners if the firm's name includes the words 56 "certified public accountant," or "certified public accountants," or theA. 1938 12 1 abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is 2 registered under this section shall be (1) a natural person who actively 3 participates in the business of the firm or its affiliated entities, or 4 (2) an entity, including, but not limited to, a partnership or profes- 5 sional corporation, provided each beneficial owner of an equity interest 6 in such entity is a natural person who actively participates in the 7 business conducted by the firm or its affiliated entities. For purposes 8 of this subdivision, "actively participate" means to provide services to 9 clients or to otherwise individually take part in the day-to-day busi- 10 ness or management of the firm. 11 § 13. Notwithstanding any other provision of law to the contrary, 12 there is hereby established a fee for each non-licensee owner of a firm 13 that is registered in this state to lawfully engage in the practice of 14 public accountancy. Such non-licensee owner shall pay a fee of nine 15 hundred dollars to the department of education on a triennial basis. 16 § 14. This act shall take effect immediately.