Bill Text: NY A02919 | 2019-2020 | General Assembly | Amended


Bill Title: Relates to certified public accountants.

Spectrum: Strong Partisan Bill (Democrat 88-8)

Status: (Introduced) 2019-04-30 - print number 2919a [A02919 Detail]

Download: New_York-2019-A02919-Amended.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                         2919--A
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    January 28, 2019
                                       ___________
        Introduced by M. of A. PEOPLES-STOKES, WRIGHT, TAYLOR, JAFFEE, MAGNAREL-
          LI,  BENEDETTO,  DICKENS, ENGLEBRIGHT, RIVERA, MORINELLO, JEAN-PIERRE,
          DE LA ROSA, SEAWRIGHT, D'URSO, LAWRENCE,  COOK,  BLAKE,  L. ROSENTHAL,
          PERRY, LUPARDO, GOTTFRIED, BRONSON, LENTOL, ABBATE, RICHARDSON, DILAN,
          KIM,  MOSLEY,  CRESPO,  PHEFFER AMATO,  DINOWITZ,  RODRIGUEZ, PRETLOW,
          NIOU, ROZIC, D. ROSENTHAL, JOYNER, HUNTER, PICHARDO, SOLAGES,  HEVESI,
          HYNDMAN,  GALEF, DenDEKKER, GUNTHER, STIRPE, BUCHWALD, WOERNER, TITUS,
          CUSICK, QUART,  SCHIMMINGER,  FAHY,  SANTABARBARA,  BICHOTTE,  WEPRIN,
          LAVINE,   McDONALD,  CYMBROWITZ,  WALCZYK,  ROMEO,  VANEL,  ZEBROWSKI,
          WALLACE, PAULIN, EICHENSTEIN, CARROLL,  FALL,  REYES,  ORTIZ,  WALKER,
          RYAN,  FERNANDEZ,  SAYEGH,  McMAHON  -- Multi-Sponsored by -- M. of A.
          BARCLAY, CROUCH, DAVILA, GIGLIO, GOODELL, M. L. MILLER, THIELE -- read
          once and referred to the Committee on Higher  Education  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee
        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
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04747-05-9

        A. 2919--A                          2
     1  state, and who are engaged in the practice of public accountancy in this
     2  state,  hold  a  valid license issued under section seventy-four hundred
     3  four of the education law. For purposes of  this  paragraph,  "financial
     4  interest"  means capital stock, capital accounts, capital contributions,
     5  capital interest, or interest in undistributed earnings  of  a  business
     6  entity.    Although  firms may include non-licensee owners, the firm and
     7  its owners must comply with rules promulgated  by  the  state  board  of
     8  regents.   Notwithstanding the foregoing, a firm incorporated under this
     9  section may not have non-licensee owners if the firm's name includes the
    10  words "certified public accountant," or "certified public  accountants,"
    11  or the abbreviations "CPA" or "CPAs".  Each non-licensee owner of a firm
    12  that  is  incorporated  under this section shall be a natural person who
    13  actively participates in the business of  the  firm  or  its  affiliated
    14  entities. For purposes of this subdivision, "actively participate" means
    15  to provide services to clients or to otherwise individually take part in
    16  the  day-to-day  business  or  management of the firm. Such a firm shall
    17  have attached to its  certificate  of  incorporation  a  certificate  or
    18  certificates demonstrating the firm's compliance with this paragraph, in
    19  lieu of the certificate or certificates required by subparagraph (ii) of
    20  paragraph (b) of this section.
    21    § 2. Section 1507 of the business corporation law is amended by adding
    22  a new paragraph (c) to read as follows:
    23    (c)  Any firm established for the business purpose of incorporating as
    24  a professional service corporation pursuant to paragraph (h) of  section
    25  fifteen  hundred  three  of this article may issue shares to individuals
    26  who are authorized by law to practice in this state the profession which
    27  such corporation is authorized to practice and  who  are  or  have  been
    28  engaged  in  the  practice  of  such profession in such corporation or a
    29  predecessor entity, or who will engage in the practice of  such  profes-
    30  sion  in such corporation within thirty days of the date such shares are
    31  issued and may also issue shares to employees  of  the  corporation  not
    32  licensed as certified public accountants, provided that:
    33    (i)  at  least fifty-one percent of the outstanding shares of stock of
    34  the corporation are owned by certified public accountants,
    35    (ii) at least fifty-one percent of the directors are certified  public
    36  accountants,
    37    (iii)  at least fifty-one percent of the officers are certified public
    38  accountants,
    39    (iv) the president, the chairperson of the board of directors and  the
    40  chief  executive  officer  or officers are certified public accountants.
    41  No shareholder of a firm established for the business purpose of  incor-
    42  porating as a professional service corporation pursuant to paragraph (h)
    43  of  section  fifteen  hundred  three  of this article shall enter into a
    44  voting trust agreement, proxy or any other type of agreement vesting  in
    45  another  person, other than another shareholder of the same corporation,
    46  the authority to exercise voting power of any  or  all  of  his  or  her
    47  shares.  All  shares  issued,  agreements  made  or  proxies  granted in
    48  violation of this section shall be void.
    49    § 3. Section 1508 of the business corporation law is amended by adding
    50  a new paragraph (c) to read as follows:
    51    (c) The directors and officers of any firm established for  the  busi-
    52  ness  purpose  of  incorporating  as  a professional service corporation
    53  pursuant to paragraph (h) of section fifteen hundred three of this arti-
    54  cle may include individuals who are  not  licensed  to  practice  public
    55  accountancy,  provided  however  that  at least fifty-one percent of the
    56  directors, at least fifty-one percent of the officers and the president,

        A. 2919--A                          3
     1  the chairperson of the board of directors and the chief executive  offi-
     2  cer  or  officers  are  authorized  by  law to practice in any state the
     3  profession which such corporation is authorized  to  practice,  and  are
     4  either  shareholders  of  such corporation or engaged in the practice of
     5  their professions in such corporation.
     6    § 4. Section 1509 of the business corporation law, as amended by chap-
     7  ter 550 of the laws of 2011, is amended to read as follows:
     8  § 1509. Disqualification  of  shareholders,  directors,   officers   and
     9            employees.
    10    If  any  shareholder,  director, officer or employee of a professional
    11  service corporation, including  a  design  professional  service  corpo-
    12  ration,  who  has  been  rendering  professional  service  to the public
    13  becomes legally disqualified to practice his or  her  profession  within
    14  this  state,  he  or  she shall sever all employment with, and financial
    15  interests (other than interests as  a  creditor)  in,  such  corporation
    16  forthwith  or as otherwise provided in section 1510 of this article. All
    17  provisions of law regulating the rendering of professional services by a
    18  person elected or appointed to a public office shall be applicable to  a
    19  shareholder,  director,  officer and employee of such corporation in the
    20  same manner and to the same extent as if fully set  forth  herein.  Such
    21  legal  disqualification  to  practice  his or her profession within this
    22  state shall be deemed to constitute an irrevocable offer by the disqual-
    23  ified shareholder to sell his or her shares to the corporation, pursuant
    24  to the provisions of section 1510 of this article or of the  certificate
    25  of  incorporation,  by-laws  or  agreement among the corporation and all
    26  shareholders, whichever is applicable. Compliance with the terms of such
    27  offer shall be specifically enforceable in the courts of this  state.  A
    28  professional  service  corporation's  failure to enforce compliance with
    29  this provision shall constitute a ground for forfeiture of  its  certif-
    30  icate of incorporation and its dissolution.
    31    § 5. Paragraph (a) of section 1511 of the business corporation law, as
    32  amended  by  chapter 550 of the laws of 2011, is amended and a new para-
    33  graph (c) is added to read as follows:
    34    (a) No shareholder of a professional service corporation [or], includ-
    35  ing a design professional service corporation, may sell or transfer  his
    36  or  her  shares  in such corporation except to another individual who is
    37  eligible to have shares issued to him or  her  by  such  corporation  or
    38  except  in  trust to another individual who would be eligible to receive
    39  shares if he or she were employed by  the  corporation.  Nothing  herein
    40  contained shall be construed to prohibit the transfer of shares by oper-
    41  ation  of  law or by court decree.  No transferee of shares by operation
    42  of law or court decree may vote the shares for  any  purpose  whatsoever
    43  except  with  respect to corporate action under sections 909 and 1001 of
    44  this chapter. The restriction in the preceding sentence shall not apply,
    45  however, where such transferee would be eligible to have  shares  issued
    46  to  him  or her if he or she were an employee of the corporation and, if
    47  there are other shareholders, a  majority  of  such  other  shareholders
    48  shall fail to redeem the shares so transferred, pursuant to section 1510
    49  of  this  article, within sixty days of receiving written notice of such
    50  transfer. Any sale or transfer, except by  operation  of  law  or  court
    51  decree  or  except for a corporation having only one shareholder, may be
    52  made only after the same shall have been approved by the board of direc-
    53  tors, or at a shareholders' meeting specially called for such purpose by
    54  such proportion, not less than a majority, of the outstanding shares  as
    55  may be provided in the certificate of incorporation or in the by-laws of
    56  such professional service corporation. At such shareholders' meeting the

        A. 2919--A                          4
     1  shares  held by the shareholder proposing to sell or transfer his or her
     2  shares may not be voted or counted for any purpose,  unless  all  share-
     3  holders consent that such shares be voted or counted. The certificate of
     4  incorporation or the by-laws of the professional service corporation, or
     5  the  professional  service  corporation  and the shareholders by private
     6  agreement, may provide, in lieu of  or  in  addition  to  the  foregoing
     7  provisions,  for the alienation of shares and may require the redemption
     8  or purchase of such shares by such corporation at prices and in a manner
     9  specifically set forth therein. The existence of the restrictions on the
    10  sale or transfer of shares, as contained in this article and, if  appli-
    11  cable,  in  the certificate of incorporation, by-laws, stock purchase or
    12  stock redemption agreement, shall be noted conspicuously on the face  or
    13  back  of  every  certificate for shares issued by a professional service
    14  corporation. Any sale or transfer  in  violation  of  such  restrictions
    15  shall be void.
    16    (c)  A firm established for the business purpose of incorporating as a
    17  professional service corporation pursuant to paragraph  (h)  of  section
    18  fifteen  hundred  three  of  this  article, shall purchase or redeem the
    19  shares of a non-licensed professional shareholder in the case of his  or
    20  her termination of employment within thirty days after such termination.
    21  A  firm  established  for  the  business  purpose  of incorporating as a
    22  professional service corporation pursuant to paragraph  (h)  of  section
    23  fifteen hundred three of this article, shall not be required to purchase
    24  or  redeem  the  shares of a terminated non-licensed professional share-
    25  holder if such shares, within thirty days after  such  termination,  are
    26  sold  or  transferred to another employee of the corporation pursuant to
    27  this article.
    28    § 6. Section 1514 of the business corporation law is amended by adding
    29  a new paragraph (c) to read as follows:
    30    (c) Each firm established for the business purpose of incorporating as
    31  a professional service corporation pursuant to paragraph (h) of  section
    32  fifteen  hundred  three of this article shall, at least once every three
    33  years on or before the  date  prescribed  by  the  licensing  authority,
    34  furnish  a  statement  to  the licensing authority listing the names and
    35  residence addresses of each shareholder, director and  officer  of  such
    36  corporation  and  certify  as the date of certification and at all times
    37  over the entire three year period that:
    38    (i) at least fifty-one percent of the outstanding shares of  stock  of
    39  the corporation are and were owned by certified public accountants,
    40    (ii)  at  least fifty-one percent of the directors are and were certi-
    41  fied public accountants,
    42    (iii) at least fifty-one percent of the officers are and  were  certi-
    43  fied public accountants,
    44    (iv)  the president, the chairperson of the board of directors and the
    45  chief executive officer  or  officers  are  and  were  certified  public
    46  accountants.
    47  The  statement  shall be signed by the president or any certified public
    48  accountant vice-president and  attested  to  by  the  secretary  or  any
    49  assistant secretary of the corporation.
    50    § 7. Paragraph (d) of section 1525 of the business corporation law, as
    51  added by chapter 505 of the laws of 1983, is amended to read as follows:
    52    (d) "Foreign  professional  service  corporation" means a professional
    53  service corporation, whether or not denominated as such, organized under
    54  the laws of a jurisdiction other than this state, all of the  sharehold-
    55  ers,  directors  and  officers  of  which are authorized and licensed to
    56  practice the profession for which such corporation  is  licensed  to  do

        A. 2919--A                          5
     1  business;  except  that  all  shareholders,  directors and officers of a
     2  foreign professional service corporation which provides health  services
     3  in  this  state  shall be licensed in this state. A foreign professional
     4  service  corporation formed to lawfully engage in the practice of public
     5  accountancy, as such practice  is  defined  under  article  one  hundred
     6  forty-nine  of  the  education  law,  or  equivalent state 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 foreign
    11  professional service corporation whose principal place of business is in
    12  this state, and who are engaged in the practice of public accountancy in
    13  this state, hold a  valid  license  issued  under  section  seventy-four
    14  hundred  four  of  the  education  law.  For purposes of this paragraph,
    15  "financial interest" means  capital  stock,  capital  accounts,  capital
    16  contributions,  capital  interest, or interest in undistributed earnings
    17  of a business entity.  Although firms may include  non-licensee  owners,
    18  the  firm and its owners must comply with rules promulgated by the state
    19  board of regents.   Notwithstanding the  foregoing,  a  firm  registered
    20  under  this  section may not have non-licensee owners if the firm's name
    21  includes the words "certified public accountant," or  "certified  public
    22  accountants,"  or  the  abbreviations "CPA" or "CPAs". Each non-licensee
    23  owner of a firm that is operating under this section shall be a  natural
    24  person  who  actively  participates  in  the business of the firm or its
    25  affiliated entities, provided each beneficial owner of an equity  inter-
    26  est  in such entity is a natural person who actively participates in the
    27  business conducted by the firm or its affiliated entities. For  purposes
    28  of  this  paragraph, "actively participate" means to provide services to
    29  clients or to otherwise individually take part in the  day-to-day  busi-
    30  ness or management of the firm.
    31    §  8.  Subdivision  (q) of section 121-1500 of the partnership law, as
    32  amended by chapter 475 of the laws  of  2014,  is  amended  to  read  as
    33  follows:
    34    (q)  Each partner of a registered limited liability partnership formed
    35  to provide medical services in this state must be licensed  pursuant  to
    36  article  131 of the education law to practice medicine in this state and
    37  each partner of a registered limited  liability  partnership  formed  to
    38  provide dental services in this state must be licensed pursuant to arti-
    39  cle  133 of the education law to practice dentistry in this state.  Each
    40  partner of a registered limited liability partnership formed to  provide
    41  veterinary  services  in this state must be licensed pursuant to article
    42  135 of the education law to practice veterinary medicine in this  state.
    43  Each  partner  of  a  registered limited liability partnership formed to
    44  provide public accountancy services, whose principal place  of  business
    45  is  in  this state and who provides public accountancy services, must be
    46  licensed pursuant to article 149 of the education law to practice public
    47  accountancy in this state. Each partner of a registered limited  liabil-
    48  ity partnership formed to provide professional engineering, land survey-
    49  ing,  geological  services, architectural and/or landscape architectural
    50  services in this state must be licensed pursuant to article 145, article
    51  147 and/or article 148 of the education law to practice one or  more  of
    52  such  professions  in  this  state. Each partner of a registered limited
    53  liability partnership formed to provide licensed  clinical  social  work
    54  services  in  this state must be licensed pursuant to article 154 of the
    55  education law to practice clinical social work in this state. Each part-
    56  ner of a registered limited  liability  partnership  formed  to  provide

        A. 2919--A                          6
     1  creative  arts  therapy services in this state must be licensed pursuant
     2  to article 163 of the education law to practice creative arts therapy in
     3  this state. Each partner of a registered limited  liability  partnership
     4  formed  to  provide  marriage  and family therapy services in this state
     5  must be licensed pursuant to article 163 of the education law  to  prac-
     6  tice marriage and family therapy in this state. Each partner of a regis-
     7  tered  limited  liability  partnership  formed  to provide mental health
     8  counseling services in this state must be licensed pursuant  to  article
     9  163  of  the  education law to practice mental health counseling in this
    10  state. Each partner of a registered limited liability partnership formed
    11  to provide psychoanalysis services in this state must be licensed pursu-
    12  ant to article 163 of the education law to  practice  psychoanalysis  in
    13  this  state.  Each partner of a registered limited liability partnership
    14  formed to provide applied behavior analysis service in this  state  must
    15  be licensed or certified pursuant to article 167 of the education law to
    16  practice  applied  behavior  analysis in this state. A limited liability
    17  partnership formed to lawfully engage in the practice of public  accoun-
    18  tancy, as such practice is respectively defined under article 149 of the
    19  education  law,  shall be required to show (1) that a simple majority of
    20  the ownership of the firm, in terms of financial interests,  and  voting
    21  rights  held  by  the  firm's owners, belongs to individuals licensed to
    22  practice public accountancy in some state, and (2) that all partners  of
    23  a  limited liability partnership whose principal place of business is in
    24  this state, and who are engaged in the practice of public accountancy in
    25  this state, hold a  valid  license  issued  under  section  seventy-four
    26  hundred  four  of  the  education law. For purposes of this subdivision,
    27  "financial interest" means  capital  stock,  capital  accounts,  capital
    28  contributions,  capital  interest, or interest in undistributed earnings
    29  of a business entity.  Although firms may include  non-licensee  owners,
    30  the  firm and its owners must comply with rules promulgated by the state
    31  board of regents. Notwithstanding the foregoing, a firm registered under
    32  this section may  not  have  non-licensee  owners  if  the  firm's  name
    33  includes  the  words "certified public accountant," or "certified public
    34  accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner
    35  of a firm that is formed under this  section  shall  be  (1)  a  natural
    36  person  who  actively  participates  in  the business of the firm or its
    37  affiliated entities, or (2) an entity, including, but not limited to,  a
    38  partnership  or professional corporation, provided each beneficial owner
    39  of an equity interest in such entity is a natural  person  who  actively
    40  participates  in  the  business  conducted by the firm or its affiliated
    41  entities. For purposes of this subdivision, "actively participate" means
    42  to provide services to clients or to otherwise individually take part in
    43  the day-to-day business or management of the firm.
    44    § 9. Subdivision (q) of section 121-1502 of the  partnership  law,  as
    45  amended  by  chapter  475  of  the  laws  of 2014, is amended to read as
    46  follows:
    47    (q) Each partner of a  foreign  limited  liability  partnership  which
    48  provides  medical  services  in  this state must be licensed pursuant to
    49  article 131 of the education law to practice medicine in the  state  and
    50  each  partner  of a foreign limited liability partnership which provides
    51  dental services in the state must be licensed pursuant to article 133 of
    52  the education law to practice dentistry in this state. Each partner of a
    53  foreign limited liability partnership which provides veterinary  service
    54  in  the state shall be licensed pursuant to article 135 of the education
    55  law to practice veterinary medicine in this state.  Each  partner  of  a
    56  foreign  limited liability partnership which provides professional engi-

        A. 2919--A                          7
     1  neering, land surveying, geological services, architectural and/or land-
     2  scape architectural services in this state must be licensed pursuant  to
     3  article  145,  article  147  and/or  article 148 of the education law to
     4  practice  one  or  more of such professions.   Each partner of a foreign
     5  registered  limited  liability  partnership  formed  to  provide  public
     6  accountancy services, whose principal place of business is in this state
     7  and  who provides public accountancy services, must be licensed pursuant
     8  to article 149 of the education law to practice  public  accountancy  in
     9  this  state.  Each  partner  of  a foreign limited liability partnership
    10  which provides licensed clinical social work services in this state must
    11  be licensed pursuant to article 154 of the  education  law  to  practice
    12  licensed  clinical  social work in this state. Each partner of a foreign
    13  limited liability  partnership  which  provides  creative  arts  therapy
    14  services  in  this state must be licensed pursuant to article 163 of the
    15  education law to practice creative arts  therapy  in  this  state.  Each
    16  partner  of  a  foreign  limited  liability  partnership  which provides
    17  marriage and family therapy services in  this  state  must  be  licensed
    18  pursuant  to  article  163 of the education law to practice marriage and
    19  family therapy in this state. Each partner of a foreign limited  liabil-
    20  ity partnership which provides mental health counseling services in this
    21  state  must  be licensed pursuant to article 163 of the education law to
    22  practice mental health counseling in  this  state.  Each  partner  of  a
    23  foreign  limited  liability  partnership  which  provides psychoanalysis
    24  services in this state must be licensed pursuant to article 163  of  the
    25  education  law to practice psychoanalysis in this state. Each partner of
    26  a foreign limited liability partnership which provides applied  behavior
    27  analysis  services  in this state must be licensed or certified pursuant
    28  to article 167 of the education law to practice applied behavior  analy-
    29  sis  in  this state.   A foreign limited liability partnership formed to
    30  lawfully engage in the practice of public accountancy, as such  practice
    31  is respectively defined under article 149 of the education law, shall be
    32  required  to  show  (1)  that  a simple majority of the ownership of the
    33  firm, in terms of financial interests, and voting  rights  held  by  the
    34  firm's  owners,  belongs  to  individuals  licensed  to  practice public
    35  accountancy in some state, and (2) that all partners of a foreign limit-
    36  ed liability partnership whose principal place of business  is  in  this
    37  state, and who are engaged in the practice of public accountancy in this
    38  state,  hold  a  valid license issued under section seventy-four hundred
    39  four of the education law. For purposes of this subdivision,  "financial
    40  interest"  means capital stock, capital accounts, capital contributions,
    41  capital interest, or interest in undistributed earnings  of  a  business
    42  entity.    Although  firms may include non-licensee owners, the firm and
    43  its owners must comply with rules promulgated  by  the  state  board  of
    44  regents.  Notwithstanding  the  foregoing,  a firm registered under this
    45  section may not have non-licensee owners if the firm's name includes the
    46  words "certified public accountant," or "certified public  accountants,"
    47  or the abbreviations "CPA" or "CPAs".  Each non-licensee owner of a firm
    48  that  is  formed  under  this  section shall be (1) a natural person who
    49  actively participates in the business of  the  firm  or  its  affiliated
    50  entities, or (2) an entity, including, but not limited to, a partnership
    51  or professional corporation, provided each beneficial owner of an equity
    52  interest in such entity is a natural person who actively participates in
    53  the  business  conducted  by  the  firm or its affiliated entities.  For
    54  purposes of this subdivision, "actively participate"  means  to  provide
    55  services  to  clients or to otherwise individually take part in the day-
    56  to-day business or management of the firm.

        A. 2919--A                          8
     1    § 10. Subdivision (h) of section 121-101 of the  partnership  law,  as
     2  added by chapter 950 of the laws of 1990, is amended to read as follows:
     3    (h)  "Limited  partnership"  and  "domestic limited partnership" mean,
     4  unless the context otherwise requires, a partnership (i) formed  by  two
     5  or more persons pursuant to this article or which complies with subdivi-
     6  sion (a) of section 121-1202 of this article and (ii) having one or more
     7  general  partners and one or more limited partners.  Notwithstanding any
     8  other provisions of law a limited partnership or domestic limited  part-
     9  nership formed to lawfully engage in the practice of public accountancy,
    10  as such practice is respectively defined under article 149 of the educa-
    11  tion  law  shall  be  required to show (1) that a simple majority of the
    12  ownership of the firm, in terms of financial interests, including owner-
    13  ship-based compensation, and voting rights held by  the  firm's  owners,
    14  belongs  to  individuals licensed to practice public accountancy in some
    15  state, and (2) that all partners of a limited  partnership  or  domestic
    16  limited partnership, whose principal place of business is in this state,
    17  and who are engaged in the practice of public accountancy in this state,
    18  hold  a  valid license issued under section seventy-four hundred four of
    19  the education law or  are  public  accountants  licensed  under  section
    20  seventy-four  hundred  five  of  the  education  law. Although firms may
    21  include non-licensee owners, the firm and its owners  must  comply  with
    22  rules  promulgated  by  the state board of regents.  Notwithstanding the
    23  foregoing, a firm registered under this section may not have  non-licen-
    24  see  owners  if  the  firm's  name  includes the words "certified public
    25  accountant," or "certified public  accountants,"  or  the  abbreviations
    26  "CPA"  or  "CPAs".  Each non-licensee owner of a firm that is registered
    27  under this section shall be (1) a natural person  who  actively  partic-
    28  ipates in the business of the firm or its affiliated entities, or (2) an
    29  entity,  including,  but  not  limited to, a partnership or professional
    30  corporation, provided each beneficial owner of  an  equity  interest  in
    31  such  entity  is a natural person who actively participates in the busi-
    32  ness conducted by the firm or its affiliated entities. For  purposes  of
    33  this  subdivision,  "actively  participate" means to provide services to
    34  clients or to otherwise individually take part in the  day-to-day  busi-
    35  ness or management of the firm.
    36    § 11. Subdivision (b) of section 1207 of the limited liability company
    37  law,  as  amended by chapter 475 of the laws of 2014, is amended to read
    38  as follows:
    39    (b) With respect to a professional service limited  liability  company
    40  formed to provide medical services as such services are defined in arti-
    41  cle  131  of  the  education  law, each member of such limited liability
    42  company must be licensed pursuant to article 131 of the education law to
    43  practice medicine in this state.  With respect to a professional service
    44  limited liability company formed to  provide  dental  services  as  such
    45  services are defined in article 133 of the education law, each member of
    46  such  limited liability company must be licensed pursuant to article 133
    47  of the education law to practice dentistry in this state.  With  respect
    48  to  a  professional  service limited liability company formed to provide
    49  veterinary services as such services are defined in article 135  of  the
    50  education  law,  each  member  of such limited liability company must be
    51  licensed pursuant to article 135 of the education law to practice veter-
    52  inary medicine in this state. With respect  to  a  professional  service
    53  limited  liability  company  formed to provide professional engineering,
    54  land surveying, architectural, landscape architectural and/or geological
    55  services as such services are defined in article 145,  article  147  and
    56  article  148 of the education law, each member of such limited liability

        A. 2919--A                          9
     1  company must be licensed pursuant to article  145,  article  147  and/or
     2  article  148  of  the  education  law  to  practice  one or more of such
     3  professions in this state.   With  respect  to  a  professional  service
     4  limited  liability company formed to provide public accountancy services
     5  as such services are defined in article 149 of the  education  law  each
     6  member  of such limited liability company whose principal place of busi-
     7  ness is in this state and who provides public accountancy services, must
     8  be licensed pursuant to article 149 of the  education  law  to  practice
     9  public accountancy in this state. With respect to a professional service
    10  limited  liability  company  formed  to provide licensed clinical social
    11  work services as such services are defined in article 154 of the  educa-
    12  tion  law,  each  member  of  such  limited  liability  company shall be
    13  licensed pursuant to article  154  of  the  education  law  to  practice
    14  licensed  clinical  social work in this state. With respect to a profes-
    15  sional service limited liability company formed to provide creative arts
    16  therapy services as such services are defined  in  article  163  of  the
    17  education  law,  each  member  of such limited liability company must be
    18  licensed pursuant to article 163 of the education law to practice  crea-
    19  tive  arts therapy in this state. With respect to a professional service
    20  limited liability company formed to provide marriage and family  therapy
    21  services  as  such  services are defined in article 163 of the education
    22  law, each member of such limited  liability  company  must  be  licensed
    23  pursuant  to  article  163 of the education law to practice marriage and
    24  family therapy in this state. With respect  to  a  professional  service
    25  limited  liability  company  formed  to provide mental health counseling
    26  services as such services are defined in article 163  of  the  education
    27  law,  each  member  of  such  limited liability company must be licensed
    28  pursuant to article 163 of the education law to practice  mental  health
    29  counseling in this state. With respect to a professional service limited
    30  liability  company  formed  to  provide  psychoanalysis services as such
    31  services are defined in article 163 of the education law, each member of
    32  such limited liability company must be licensed pursuant to article  163
    33  of  the  education  law  to  practice psychoanalysis in this state. With
    34  respect to a professional service limited liability  company  formed  to
    35  provide  applied behavior analysis services as such services are defined
    36  in article 167 of the education law, each member of such limited liabil-
    37  ity company must be licensed or certified pursuant to article 167 of the
    38  education law to practice applied behavior analysis  in  this  state.  A
    39  professional service limited liability company formed to lawfully engage
    40  in  the practice of public accountancy, as such practice is respectively
    41  defined under article 149 of the education law shall be required to show
    42  (1) that a simple majority of the ownership of the  firm,  in  terms  of
    43  financial  interests,  and  voting  rights  held  by  the firm's owners,
    44  belongs to individuals licensed to practice public accountancy  in  some
    45  state, and (2) that all members of a limited professional service limit-
    46  ed  liability  company,  whose  principal  place  of business is in this
    47  state, and who are engaged in the practice of public accountancy in this
    48  state, hold a valid license issued under  section  seventy-four  hundred
    49  four  of the education law. For purposes of this subdivision, "financial
    50  interest" means capital stock, capital accounts, capital  contributions,
    51  capital  interest,  or  interest in undistributed earnings of a business
    52  entity.  Although firms may include non-licensee owners,  the  firm  and
    53  its  owners  must  comply  with  rules promulgated by the state board of
    54  regents.  Notwithstanding the foregoing, a firm  registered  under  this
    55  section may not have non-licensee owners if the firm's name includes the
    56  words  "certified public accountant," or "certified public accountants,"

        A. 2919--A                         10
     1  or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a  firm
     2  that  is registered under this section shall be (1) a natural person who
     3  actively participates in the business of  the  firm  or  its  affiliated
     4  entities, or (2) an entity, including, but not limited to, a partnership
     5  or professional corporation, provided each beneficial owner of an equity
     6  interest in such entity is a natural person who actively participates in
     7  the  business  conducted  by  the  firm  or its affiliated entities. For
     8  purposes of this subdivision, "actively participate"  means  to  provide
     9  services  to  clients or to otherwise individually take part in the day-
    10  to-day business or management of the firm.
    11    § 12. Subdivision (a) of section 1301 of the limited liability company
    12  law, as amended by chapter 475 of the laws of 2014, is amended  to  read
    13  as follows:
    14    (a)  "Foreign  professional service limited liability company" means a
    15  professional service limited liability company, whether or  not  denomi-
    16  nated  as  such,  organized  under the laws of a jurisdiction other than
    17  this state, (i) each of whose members and managers, if any, is a profes-
    18  sional authorized by law to render a professional  service  within  this
    19  state  and who is or has been engaged in the practice of such profession
    20  in such professional service limited liability company or a  predecessor
    21  entity, or will engage in the practice of such profession in the profes-
    22  sional  service limited liability company within thirty days of the date
    23  such professional becomes a member, or each of whose members and  manag-
    24  ers,  if  any, is a professional at least one of such members is author-
    25  ized by law to render a professional service within this state  and  who
    26  is  or  has  been  engaged  in  the  practice of such profession in such
    27  professional service limited liability company or a predecessor  entity,
    28  or  will  engage  in the practice of such profession in the professional
    29  service limited liability company within thirty days of  the  date  such
    30  professional  becomes  a  member,  or  (ii)  authorized by, or holding a
    31  license, certificate, registration or permit  issued  by  the  licensing
    32  authority  pursuant  to,  the  education  law  to  render a professional
    33  service within this state; except that all members and managers, if any,
    34  of  a  foreign  professional  service  limited  liability  company  that
    35  provides  health services in this state shall be licensed in this state.
    36  With respect to a foreign professional service limited liability company
    37  which provides veterinary services as such services are defined in arti-
    38  cle 135 of the education law, each member of such  foreign  professional
    39  service  limited liability company shall be licensed pursuant to article
    40  135 of the education law to practice veterinary medicine.  With  respect
    41  to  a  foreign  professional  service  limited  liability  company which
    42  provides medical services as such services are defined in article 131 of
    43  the education law, each member  of  such  foreign  professional  service
    44  limited  liability  company  must be licensed pursuant to article 131 of
    45  the education law to practice medicine in this state.  With respect to a
    46  foreign professional service limited liability  company  which  provides
    47  dental  services  as  such  services  are  defined in article 133 of the
    48  education law, each member of such foreign professional service  limited
    49  liability company must be licensed pursuant to article 133 of the educa-
    50  tion  law to practice dentistry in this state. With respect to a foreign
    51  professional service limited liability company  which  provides  profes-
    52  sional engineering, land surveying, geologic, architectural and/or land-
    53  scape  architectural  services  as  such services are defined in article
    54  145, article 147 and article 148 of the education law,  each  member  of
    55  such  foreign  professional  service  limited  liability company must be
    56  licensed pursuant to article 145, article 147 and/or article 148 of  the

        A. 2919--A                         11
     1  education law to practice one or more of such professions in this state.
     2  With respect to a foreign professional service limited liability company
     3  which  provides public accountancy services as such services are defined
     4  in article 149 of the education law, each member of such foreign profes-
     5  sional  service limited liability company whose principal place of busi-
     6  ness is in this state and  who  provides  public  accountancy  services,
     7  shall  be licensed pursuant to article 149 of the education law to prac-
     8  tice public accountancy in this state. With respect to a foreign profes-
     9  sional service limited liability company which provides  licensed  clin-
    10  ical social work services as such services are defined in article 154 of
    11  the  education  law,  each  member  of such foreign professional service
    12  limited liability company shall be licensed pursuant to article  154  of
    13  the  education  law to practice clinical social work in this state. With
    14  respect to a foreign  professional  service  limited  liability  company
    15  which  provides  creative  arts  therapy  services  as such services are
    16  defined in article 163 of the education law, each member of such foreign
    17  professional service limited liability company must be licensed pursuant
    18  to article 163 of the education law to practice creative arts therapy in
    19  this state. With respect  to  a  foreign  professional  service  limited
    20  liability company which provides marriage and family therapy services as
    21  such  services  are  defined  in  article 163 of the education law, each
    22  member of such foreign professional service  limited  liability  company
    23  must  be  licensed pursuant to article 163 of the education law to prac-
    24  tice marriage and family therapy  in  this  state.  With  respect  to  a
    25  foreign  professional  service  limited liability company which provides
    26  mental health counseling services as such services are defined in  arti-
    27  cle  163  of the education law, each member of such foreign professional
    28  service limited liability company must be licensed pursuant  to  article
    29  163  of  the  education law to practice mental health counseling in this
    30  state. With respect to a foreign professional service limited  liability
    31  company  which  provides  psychoanalysis  services  as such services are
    32  defined in article 163 of the education law, each member of such foreign
    33  professional service limited liability company must be licensed pursuant
    34  to article 163 of the education law to practice psychoanalysis  in  this
    35  state.  With respect to a foreign professional service limited liability
    36  company which  provides  applied  behavior  analysis  services  as  such
    37  services are defined in article 167 of the education law, each member of
    38  such  foreign  professional  service  limited  liability company must be
    39  licensed or certified pursuant to article 167 of the  education  law  to
    40  practice applied behavior analysis in this state. A foreign professional
    41  service limited liability company formed to lawfully engage in the prac-
    42  tice  of  public  accountancy,  as such practice is respectively defined
    43  under article 149 of the education law shall be  required  to  show  (1)
    44  that  a simple majority of the ownership of the firm, in terms of finan-
    45  cial interests, and voting rights held by the firm's owners, belongs  to
    46  individuals  licensed  to practice public accountancy in some state, and
    47  (2) that all members of a foreign limited professional  service  limited
    48  liability  company,  whose principal place of business is in this state,
    49  and who are engaged in the practice of public accountancy in this state,
    50  hold a valid license issued under section seventy-four hundred  four  of
    51  the  education  law. For purposes of this subdivision, "financial inter-
    52  est" means capital stock, capital accounts, capital contributions, capi-
    53  tal interest, or interest in undistributed earnings of a business  enti-
    54  ty.    Although  firms may include non-licensee owners, the firm and its
    55  owners must comply with rules promulgated by the state board of regents.
    56  Notwithstanding the foregoing, a firm registered under this section  may

        A. 2919--A                         12
     1  not  have  non-licensee  owners  if  the  firm's name includes the words
     2  "certified public accountant," or "certified public accountants," or the
     3  abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is
     4  registered under this section shall be (1) a natural person who actively
     5  participates  in the business of the firm or its affiliated entities, or
     6  (2) an entity, including, but not limited to, a partnership  or  profes-
     7  sional corporation, provided each beneficial owner of an equity interest
     8  in  such  entity  is  a  natural person who actively participates in the
     9  business conducted by the firm or its affiliated entities. For  purposes
    10  of this subdivision, "actively participate" means to provide services to
    11  clients  or  to otherwise individually take part in the day-to-day busi-
    12  ness or management of the firm.
    13    § 13. This act shall take effect immediately.
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