Bill Text: NY A02919 | 2019-2020 | General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relates to certified public accountants.
Spectrum: Strong Partisan Bill (Democrat 89-8)
Status: (Introduced - Dead) 2020-08-17 - print number 2919c [A02919 Detail]
Download: New_York-2019-A02919-Introduced.html
Bill Title: Relates to certified public accountants.
Spectrum: Strong Partisan Bill (Democrat 89-8)
Status: (Introduced - Dead) 2020-08-17 - print number 2919c [A02919 Detail]
Download: New_York-2019-A02919-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 2919 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 -- Multi-Sponsored by -- M. of A. BARCLAY, CROUCH, DAVILA, GIGLIO, GOODELL, M. L. MILLER, THIELE -- read once and referred to the Commit- tee on Higher Education AN ACT to amend the education law, 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 7408 of the education law is amended by adding a 2 new subdivision 6 to read as follows: 3 6. Notwithstanding any other provision of law, any firm established to 4 lawfully engage in the practice of public accountancy pursuant to arti- 5 cle fifteen of the business corporation law, articles one and eight-B of 6 the partnership law, or articles twelve and thirteen of the limited 7 liability company law shall be deemed eligible to register pursuant to 8 this section. 9 § 2. Section 1503 of the business corporation law is amended by adding 10 a new paragraph (h) to read as follows: 11 (h) Any firm established for the business purpose of incorporating as 12 a professional service corporation formed to lawfully engage in the 13 practice of public accountancy, as such practice is respectively defined 14 under article one hundred forty-nine of the education law shall be 15 required to show (1) that a simple majority of the ownership of the EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD04747-01-9A. 2919 2 1 firm, in terms of financial interests, including ownership-based compen- 2 sation, and voting rights held by the firm's owners, belongs to individ- 3 uals licensed to practice public accountancy in some state, and (2) that 4 all shareholders of a professional service corporation whose principal 5 place of business is in this state, and who are engaged in the practice 6 of public accountancy in this state, hold a valid license issued under 7 section seventy-four hundred four of the education law or are public 8 accountants licensed under section seventy-four hundred five of the 9 education law. Although firms may include non-licensee owners, the firm 10 and its owners must comply with rules promulgated by the state board of 11 regents. Notwithstanding the provisions of this paragraph, a firm 12 incorporated under this section may not have non-licensee owners if the 13 firm's name includes the words "certified public accountant," or "certi- 14 fied public accountants," or the abbreviations "CPA" or "CPAs". Each 15 non-licensee owner of a firm that is incorporated under this section 16 shall be a natural person who actively participates in the business of 17 the firm or its affiliated entities. For purposes of this subdivision, 18 "actively participate" means to provide services to clients or to other- 19 wise individually take part in the day-to-day business or management of 20 the firm. Such a firm shall have attached to its certificate of incorpo- 21 ration a certificate or certificates demonstrating the firm's compliance 22 with this paragraph, in lieu of the certificate or certificates required 23 by subparagraph (ii) of paragraph (b) of this section. 24 § 3. Section 1507 of the business corporation law is amended by adding 25 a new paragraph (c) to read as follows: 26 (c) Any firm established for the business purpose of incorporating as 27 a professional service corporation pursuant to paragraph (h) of section 28 fifteen hundred three of this article may issue shares to individuals 29 who are authorized by law to practice in this state a profession which 30 such corporation is authorized to practice and who are or have been 31 engaged in the practice of such profession in such corporation or a 32 predecessor entity, or who will engage in the practice of such profes- 33 sion in such corporation within thirty days of the date such shares are 34 issued and may also issue shares to employees of the corporation not 35 licensed as certified public accountants, provided that: 36 (i) at least fifty-one percent of the outstanding shares of stock of 37 the corporation are owned by certified public accountants, 38 (ii) at least fifty-one percent of the directors are certified public 39 accountants, 40 (iii) at least fifty-one percent of the officers are certified public 41 accountants, 42 (iv) the president, the chairperson of the board of directors and the 43 chief executive officer or officers are certified public accountants. 44 No shareholder of a firm established for the business purpose of incor- 45 porating as a professional service corporation pursuant to paragraph (h) 46 of section fifteen hundred three of this article shall enter into a 47 voting trust agreement, proxy or any other type of agreement vesting in 48 another person, other than another shareholder of the same corporation, 49 the authority to exercise voting power of any or all of his or her 50 shares. All shares issued, agreements made or proxies granted in 51 violation of this section shall be void. 52 § 4. Section 1508 of the business corporation law is amended by adding 53 a new paragraph (c) to read as follows: 54 (c) The directors and officers of any firm established for the busi- 55 ness purpose of incorporating as a professional service corporation 56 pursuant to paragraph (h) of section fifteen hundred three of this arti-A. 2919 3 1 cle may include individuals who are not licensed to practice public 2 accountancy, provided however that at least fifty-one percent of the 3 directors, at least fifty-one percent of the officers and the president, 4 the chairperson of the board of directors and the chief executive offi- 5 cer or officers are authorized by law to practice in this state a 6 profession which such corporation is authorized to practice, and are 7 either shareholders of such corporation or engaged in the practice of 8 their professions in such corporation. 9 § 5. Section 1509 of the business corporation law, as amended by chap- 10 ter 550 of the laws of 2011, is amended to read as follows: 11 § 1509. Disqualification of shareholders, directors, officers and 12 employees. 13 If any shareholder, director, officer or employee of a professional 14 service corporation, including a design professional service corpo- 15 ration, or any firm established for the business purpose of incorporat- 16 ing as a professional service corporation pursuant to paragraph (h) of 17 section fifteen hundred three of this article, who has been rendering 18 professional service to the public becomes legally disqualified to prac- 19 tice his profession within this state, he or she shall sever all employ- 20 ment with, and financial interests (other than interests as a creditor) 21 in, such corporation forthwith or as otherwise provided in section 1510 22 of this article. All provisions of law regulating the rendering of 23 professional services by a person elected or appointed to a public 24 office shall be applicable to a shareholder, director, officer and 25 employee of such corporation in the same manner and to the same extent 26 as if fully set forth herein. Such legal disqualification to practice 27 his or her profession within this state shall be deemed to constitute an 28 irrevocable offer by the disqualified shareholder to sell his or her 29 shares to the corporation, pursuant to the provisions of section 1510 of 30 this article or of the certificate of incorporation, by-laws or agree- 31 ment among the corporation and all shareholders, whichever is applica- 32 ble. Compliance with the terms of such offer shall be specifically 33 enforceable in the courts of this state. A professional service corpo- 34 ration's failure to enforce compliance with this provision shall consti- 35 tute a ground for forfeiture of its certificate of incorporation and its 36 dissolution. 37 § 6. Paragraph (a) of section 1511 of the business corporation law, as 38 amended by chapter 550 of the laws of 2011, is amended and a new para- 39 graph (c) is added to read as follows: 40 (a) No shareholder of a professional service corporation [or], includ- 41 ing a design professional service corporation, or any firm established 42 for the business purpose of incorporating as a professional service 43 corporation pursuant to paragraph (h) of section fifteen hundred three 44 of this article, may sell or transfer his or her shares in such corpo- 45 ration except to another individual who is eligible to have shares 46 issued to him or her by such corporation or except in trust to another 47 individual who would be eligible to receive shares if he or she were 48 employed by the corporation. Nothing herein contained shall be construed 49 to prohibit the transfer of shares by operation of law or by court 50 decree. No transferee of shares by operation of law or court decree may 51 vote the shares for any purpose whatsoever except with respect to corpo- 52 rate action under sections 909 and 1001 of this chapter. The restriction 53 in the preceding sentence shall not apply, however, where such transfer- 54 ee would be eligible to have shares issued to him or her if he or she 55 were an employee of the corporation and, if there are other sharehold- 56 ers, a majority of such other shareholders shall fail to redeem theA. 2919 4 1 shares so transferred, pursuant to section 1510 of this article, within 2 sixty days of receiving written notice of such transfer. Any sale or 3 transfer, except by operation of law or court decree or except for a 4 corporation having only one shareholder, may be made only after the same 5 shall have been approved by the board of directors, or at a sharehold- 6 ers' meeting specially called for such purpose by such proportion, not 7 less than a majority, of the outstanding shares as may be provided in 8 the certificate of incorporation or in the by-laws of such professional 9 service corporation. At such shareholders' meeting the shares held by 10 the shareholder proposing to sell or transfer his or her shares may not 11 be voted or counted for any purpose, unless all shareholders consent 12 that such shares be voted or counted. The certificate of incorporation 13 or the by-laws of the professional service corporation, or the profes- 14 sional service corporation and the shareholders by private agreement, 15 may provide, in lieu of or in addition to the foregoing provisions, for 16 the alienation of shares and may require the redemption or purchase of 17 such shares by such corporation at prices and in a manner specifically 18 set forth therein. The existence of the restrictions on the sale or 19 transfer of shares, as contained in this article and, if applicable, in 20 the certificate of incorporation, by-laws, stock purchase or stock 21 redemption agreement, shall be noted conspicuously on the face or back 22 of every certificate for shares issued by a professional service corpo- 23 ration. Any sale or transfer in violation of such restrictions shall be 24 void. 25 (c) A firm established for the business purpose of incorporating as a 26 professional service corporation pursuant to paragraph (h) of section 27 fifteen hundred three of this article, shall purchase or redeem the 28 shares of a non-licensed professional shareholder in the case of his or 29 her termination of employment within thirty days after such termination. 30 A firm established for the business purpose of incorporating as a 31 professional service corporation pursuant to paragraph (h) of section 32 fifteen hundred three of this article, shall not be required to purchase 33 or redeem the shares of a terminated non-licensed professional share- 34 holder if such shares, within thirty days after such termination, are 35 sold or transferred to another employee of the corporation pursuant to 36 this article. 37 § 7. Paragraph (a) of section 1512 of the business corporation law, as 38 amended by chapter 550 of the laws of 2011, is amended to read as 39 follows: 40 (a) Notwithstanding any other provision of law, the name of a profes- 41 sional service corporation, including a design professional service 42 corporation and any firm established for the business purpose of incor- 43 porating as a professional service corporation pursuant to paragraph (h) 44 of section fifteen hundred three of this article, may contain any word 45 which, at the time of incorporation, could be used in the name of a 46 partnership practicing a profession which the corporation is authorized 47 to practice, and may not contain any word which could not be used by 48 such a partnership. Provided, however, the name of a professional 49 service corporation may not contain the name of a deceased person unless 50 (1) such person's name was part of the corporate name at the time of 51 such person's death; or 52 (2) such person's name was part of the name of an existing partnership 53 and at least two-thirds of such partnership's partners become sharehold- 54 ers of the corporation. 55 § 8. Section 1514 of the business corporation law is amended by adding 56 a new paragraph (c) to read as follows:A. 2919 5 1 (c) Each firm established for the business purpose of incorporating as 2 a professional service corporation pursuant to paragraph (h) of section 3 fifteen hundred three of this article shall, at least once every three 4 years on or before the date prescribed by the licensing authority, 5 furnish a statement to the licensing authority listing the names and 6 residence addresses of each shareholder, director and officer of such 7 corporation and certify as the date of certification and at all times 8 over the entire three year period that: 9 (i) at least fifty-one percent of the outstanding shares of stock of 10 the corporation are and were owned by certified public accountants, 11 (ii) at least fifty-one percent of the directors are and were certi- 12 fied public accountants, 13 (iii) at least fifty-one percent of the officers are and were certi- 14 fied public accountants, 15 (iv) the president, the chairperson of the board of directors and the 16 chief executive officer or officers are and were certified public 17 accountants. 18 The statement shall be signed by the president or any certified public 19 accountant vice-president and attested to by the secretary or any 20 assistant secretary of the corporation. 21 § 9. Paragraph (d) of section 1525 of the business corporation law, as 22 added by chapter 505 of the laws of 1983, is amended to read as follows: 23 (d) "Foreign professional service corporation" means a professional 24 service corporation, whether or not denominated as such, organized under 25 the laws of a jurisdiction other than this state, all of the sharehold- 26 ers, directors and officers of which are authorized and licensed to 27 practice the profession for which such corporation is licensed to do 28 business; except that all shareholders, directors and officers of a 29 foreign professional service corporation which provides health services 30 in this state shall be licensed in this state. Notwithstanding any other 31 provision of law a foreign professional service corporation formed to 32 lawfully engage in the practice of public accountancy, as such practice 33 is defined under article one hundred forty-nine of the education law, or 34 equivalent state law, shall be required to show (1) that a simple major- 35 ity of the ownership of the firm, in terms of financial interests, 36 including ownership-based compensation, and voting rights held by the 37 firm's owners, belongs to individuals licensed to practice public 38 accountancy in some state, and (2) that all shareholders of a foreign 39 professional service corporation whose principal place of business is in 40 this state, and who are engaged in the practice of public accountancy in 41 this state, hold a valid license issued under section seventy-four 42 hundred four of the education law or are public accountants licensed 43 under section seventy-four hundred five of the education law. Although 44 firms may include non-licensee owners, the firm and its owners must 45 comply with rules promulgated by the state board of regents. Notwith- 46 standing the foregoing, a firm registered under this section may not 47 have non-licensee owners if the firm's name includes the words "certi- 48 fied public accountant," or "certified public accountants," or the 49 abbreviations "CPA" or "CPAs." Each non-licensee owner of a firm that is 50 operating under this section shall be a natural person who actively 51 participates in the business of the firm or its affiliated entities, 52 provided each beneficial owner of an equity interest in such entity is a 53 natural person who actively participates in the business conducted by 54 the firm or its affiliated entities. For purposes of this subdivision, 55 "actively participate" means to provide services to clients or to other-A. 2919 6 1 wise individually take part in the day-to-day business or management of 2 the firm. 3 § 10. Subdivision (q) of section 121-1500 of the partnership law, as 4 amended by chapter 475 of the laws of 2014, is amended to read as 5 follows: 6 (q) Each partner of a registered limited liability partnership formed 7 to provide medical services in this state must be licensed pursuant to 8 article 131 of the education law to practice medicine in this state and 9 each partner of a registered limited liability partnership formed to 10 provide dental services in this state must be licensed pursuant to arti- 11 cle 133 of the education law to practice dentistry in this state. Each 12 partner of a registered limited liability partnership formed to provide 13 veterinary services in this state must be licensed pursuant to article 14 135 of the education law to practice veterinary medicine in this state. 15 Each partner of a registered limited liability partnership formed to 16 provide public accountancy services, whose principal place of business 17 is in this state and who provides public accountancy services, must be 18 licensed pursuant to article 149 of the education law to practice public 19 accountancy in this state. Each partner of a registered limited liabil- 20 ity partnership formed to provide professional engineering, land survey- 21 ing, geological services, architectural and/or landscape architectural 22 services in this state must be licensed pursuant to article 145, article 23 147 and/or article 148 of the education law to practice one or more of 24 such professions in this state. Each partner of a registered limited 25 liability partnership formed to provide licensed clinical social work 26 services in this state must be licensed pursuant to article 154 of the 27 education law to practice clinical social work in this state. Each part- 28 ner of a registered limited liability partnership formed to provide 29 creative arts therapy services in this state must be licensed pursuant 30 to article 163 of the education law to practice creative arts therapy in 31 this state. Each partner of a registered limited liability partnership 32 formed to provide marriage and family therapy services in this state 33 must be licensed pursuant to article 163 of the education law to prac- 34 tice marriage and family therapy in this state. Each partner of a regis- 35 tered limited liability partnership formed to provide mental health 36 counseling services in this state must be licensed pursuant to article 37 163 of the education law to practice mental health counseling in this 38 state. Each partner of a registered limited liability partnership formed 39 to provide psychoanalysis services in this state must be licensed pursu- 40 ant to article 163 of the education law to practice psychoanalysis in 41 this state. Each partner of a registered limited liability partnership 42 formed to provide applied behavior analysis service in this state must 43 be licensed or certified pursuant to article 167 of the education law to 44 practice applied behavior analysis in this state. Notwithstanding any 45 other provisions of law a limited liability partnership formed to 46 lawfully engage in the practice of public accountancy, as such practice 47 is respectively defined under article 149 of the education law, shall be 48 required to show (1) that a simple majority of the ownership of the 49 firm, in terms of financial interests, including ownership-based compen- 50 sation, and voting rights held by the firm's owners, belongs to individ- 51 uals licensed to practice public accountancy in some state, and (2) that 52 all partners of a limited liability partnership whose principal place of 53 business is in this state, and who are engaged in the practice of public 54 accountancy in this state, hold a valid license issued under section 55 seventy-four hundred four of the education law or are public accountants 56 licensed under section seventy-four hundred five of the education law.A. 2919 7 1 Although firms may include non-licensee owners, the firm and its owners 2 must comply with rules promulgated by the state board of regents. 3 Notwithstanding the foregoing, a firm registered under this section may 4 not have non-licensee owners if the firm's name includes the words 5 "certified public accountant," or "certified public accounts," or the 6 abbreviations "CPA" or "CPAs." Each non-licensee owner of a firm that is 7 incorporated under this section shall be (1) a natural person who 8 actively participates in the business of the firm or its affiliated 9 entities, or (2) an entity, including, but not limited to, a partnership 10 or professional corporation, provided each beneficial owner of an equity 11 interest in such entity is a natural person who actively participates in 12 the business conducted by the firm or its affiliated entities. For 13 purposes of this subdivision, "actively participate" means to provide 14 services to clients or to otherwise individually take part in the day- 15 to-day business or management of the firm. 16 § 11. Subdivision (q) of section 121-1502 of the partnership law, as 17 amended by chapter 475 of the laws of 2014, is amended to read as 18 follows: 19 (q) Each partner of a foreign limited liability partnership which 20 provides medical services in this state must be licensed pursuant to 21 article 131 of the education law to practice medicine in the state and 22 each partner of a foreign limited liability partnership which provides 23 dental services in the state must be licensed pursuant to article 133 of 24 the education law to practice dentistry in this state. Each partner of a 25 foreign limited liability partnership which provides veterinary service 26 in the state shall be licensed pursuant to article 135 of the education 27 law to practice veterinary medicine in this state. Each partner of a 28 foreign limited liability partnership which provides professional engi- 29 neering, land surveying, geological services, architectural and/or land- 30 scape architectural services in this state must be licensed pursuant to 31 article 145, article 147 and/or article 148 of the education law to 32 practice one or more of such professions. Each partner of a foreign 33 registered limited liability partnership formed to provide public 34 accountancy services, whose principal place of business is in this state 35 and who provides public accountancy services, must be licensed pursuant 36 to article 149 of the education law to practice public accountancy in 37 this state. Each partner of a foreign limited liability partnership 38 which provides licensed clinical social work services in this state must 39 be licensed pursuant to article 154 of the education law to practice 40 licensed clinical social work in this state. Each partner of a foreign 41 limited liability partnership which provides creative arts therapy 42 services in this state must be licensed pursuant to article 163 of the 43 education law to practice creative arts therapy in this state. Each 44 partner of a foreign limited liability partnership which provides 45 marriage and family therapy services in this state must be licensed 46 pursuant to article 163 of the education law to practice marriage and 47 family therapy in this state. Each partner of a foreign limited liabil- 48 ity partnership which provides mental health counseling services in this 49 state must be licensed pursuant to article 163 of the education law to 50 practice mental health counseling in this state. Each partner of a 51 foreign limited liability partnership which provides psychoanalysis 52 services in this state must be licensed pursuant to article 163 of the 53 education law to practice psychoanalysis in this state. Each partner of 54 a foreign limited liability partnership which provides applied behavior 55 analysis services in this state must be licensed or certified pursuant 56 to article 167 of the education law to practice applied behavior analy-A. 2919 8 1 sis in this state. Notwithstanding any other provisions of law a 2 foreign limited liability partnership formed to lawfully engage in the 3 practice of public accountancy, as such practice is respectively defined 4 under article 149 of the education law, shall be required to show (1) 5 that a simple majority of the ownership of the firm, in terms of finan- 6 cial interests, including ownership-based compensation, and voting 7 rights held by the firm's owners, belongs to individuals licensed to 8 practice public accountancy in some state, and (2) that all partners of 9 a foreign limited liability partnership whose principal place of busi- 10 ness is in this state, and who are engaged in the practice of public 11 accountancy in this state, hold a valid licence issued under section 12 seventy-four hundred four of the education law or are public accountants 13 licensed under section seventy-four hundred five of the education law. 14 Although firms may include non-licensee owners, the firm and its owners 15 must comply with rules promulgated by the state board of regents. 16 Notwithstanding the foregoing, a firm registered under this section may 17 not have non-licensee owners if the firm's name includes the words 18 "certified public accountant," or "certified public accountants," or the 19 abbreviations "CPA" or "CPAs." Each non-licensee owner of a firm that 20 is incorporated under this section shall be (1) a natural person who 21 actively participates in the business of the firm or its affiliated 22 entities, or (2) an entity, including, but not limited to, a partnership 23 or professional corporation, provided each beneficial owner of an equity 24 interest in such entity is a natural person who actively participates in 25 the business conducted by the firm or its affiliated entities. For 26 purposes of this subdivision, "actively participate" means to provide 27 services to clients or to otherwise individually take part in the day- 28 to-day business or management of the firm. 29 § 12. Subdivision (h) of section 121-101 of the partnership law, as 30 added by chapter 950 of the laws of 1990, is amended to read as follows: 31 (h) "Limited partnership" and "domestic limited partnership" mean, 32 unless the context otherwise requires, a partnership (i) formed by two 33 or more persons pursuant to this article or which complies with subdivi- 34 sion (a) of section 121-1202 of this article and (ii) having one or more 35 general partners and one or more limited partners. Notwithstanding any 36 other provisions of law a limited partnership or domestic limited part- 37 nership formed to lawfully engage in the practice of public accountancy, 38 as such practice is respectively defined under article 149 of the educa- 39 tion law shall be required to show (1) that a simple majority of the 40 ownership of the firm, in terms of financial interests, including owner- 41 ship-based compensation, 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 partners of a limited partnership or domestic 44 limited partnership, whose principal place of business is in this state, 45 and who are engaged in the practice of public accountancy in this state, 46 hold a valid license issued under section seventy-four hundred four of 47 the education law or are public accountants licensed under section 48 seventy-four hundred five of the education law. Although firms may 49 include non-licensee owners, the firm and its owners must comply with 50 rules promulgated by the state board of regents. Notwithstanding the 51 foregoing, a firm registered under this section may not have non-licen- 52 see owners if the firm's name includes the words "certified public 53 accountant," or "certified public accountants," or the abbreviations 54 "CPA" or "CPAs." Each non-licensee owner of a firm that is registered 55 under this section shall be (1) a natural person who actively partic- 56 ipates in the business of the firm or its affiliated entities, or (2) anA. 2919 9 1 entity, including, but not limited to, a partnership or professional 2 corporation, provided each beneficial owner of an equity interest in 3 such entity is a natural person who actively participates in the busi- 4 ness conducted by the firm or its affiliated entities. For purposes of 5 this subdivision, "actively participate" means to provide services to 6 clients or to otherwise individually take part in the day-to-day busi- 7 ness or management of the firm. 8 § 13. Subdivision (b) of section 1207 of the limited liability company 9 law, as amended by chapter 475 of the laws of 2014, is amended to read 10 as follows: 11 (b) With respect to a professional service limited liability company 12 formed to provide medical services as such services are defined in arti- 13 cle 131 of the education law, each member of such limited liability 14 company must be licensed pursuant to article 131 of the education law to 15 practice medicine in this state. With respect to a professional service 16 limited liability company formed to provide dental services as such 17 services are defined in article 133 of the education law, each member of 18 such limited liability company must be licensed pursuant to article 133 19 of the education law to practice dentistry in this state. With respect 20 to a professional service limited liability company formed to provide 21 veterinary services as such services are defined in article 135 of the 22 education law, each member of such limited liability company must be 23 licensed pursuant to article 135 of the education law to practice veter- 24 inary medicine in this state. With respect to a professional service 25 limited liability company formed to provide professional engineering, 26 land surveying, architectural, landscape architectural and/or geological 27 services as such services are defined in article 145, article 147 and 28 article 148 of the education law, each member of such limited liability 29 company must be licensed pursuant to article 145, article 147 and/or 30 article 148 of the education law to practice one or more of such 31 professions in this state. With respect to a professional service 32 limited liability company formed to provide public accountancy services 33 as such services are defined in article 149 of the education law each 34 member of such limited liability company whose principal place of busi- 35 ness is in this state and who provides public accountancy services, must 36 be licensed pursuant to article 149 of the education law to practice 37 public accountancy in this state. With respect to a professional service 38 limited liability company formed to provide licensed clinical social 39 work services as such services are defined in article 154 of the educa- 40 tion law, each member of such limited liability company shall be 41 licensed pursuant to article 154 of the education law to practice 42 licensed clinical social work in this state. With respect to a profes- 43 sional service limited liability company formed to provide creative arts 44 therapy services as such services are defined in article 163 of the 45 education law, each member of such limited liability company must be 46 licensed pursuant to article 163 of the education law to practice crea- 47 tive arts therapy in this state. With respect to a professional service 48 limited liability company formed to provide marriage and family therapy 49 services as such services are defined in article 163 of the education 50 law, each member of such limited liability company must be licensed 51 pursuant to article 163 of the education law to practice marriage and 52 family therapy in this state. With respect to a professional service 53 limited liability company formed to provide mental health counseling 54 services as such services are defined in article 163 of the education 55 law, each member of such limited liability company must be licensed 56 pursuant to article 163 of the education law to practice mental healthA. 2919 10 1 counseling in this state. With respect to a professional service limited 2 liability company formed to provide psychoanalysis services as such 3 services are defined in article 163 of the education law, each member of 4 such limited liability company must be licensed pursuant to article 163 5 of the education law to practice psychoanalysis in this state. With 6 respect to a professional service limited liability company formed to 7 provide applied behavior analysis services as such services are defined 8 in article 167 of the education law, each member of such limited liabil- 9 ity company must be licensed or certified pursuant to article 167 of the 10 education law to practice applied behavior analysis in this state. 11 Notwithstanding any other provisions of law a professional service 12 limited liability company formed to lawfully engage in the practice of 13 public accountancy, as such practice is respectively defined under arti- 14 cle 149 of the education law shall be required to show (1) that a simple 15 majority of the ownership of the firm, in terms of financial interests, 16 including ownership-based compensation, and voting rights held by the 17 firm's owners, belongs to individuals licensed to practice public 18 accountancy in some state, and (2) that all members of a limited profes- 19 sional service limited liability company, whose principal place of busi- 20 ness is in this state, and who are engaged in the practice of public 21 accountancy in this state, hold a valid license issued under section 22 seventy-four hundred four of the education law or are public accountants 23 licensed under section seventy-four hundred five of the education law. 24 Although firms may include non-licensee owners, the firm and its owners 25 must comply with rules promulgated by the state board of regents. 26 Notwithstanding the foregoing, a firm registered under this section may 27 not have non-licensee owners if the firm's name includes the words 28 "certified public accountant," or "certified public accountants," or the 29 abbreviations "CPA" or "CPAs." Each non-licensee owner of a firm that is 30 registered under this section shall be (1) a natural person who actively 31 participates in the business of the firm or its affiliated entities, or 32 (2) an entity, including, but not limited to, a partnership or profes- 33 sional corporation, provided each beneficial owner of an equity interest 34 in such entity is a natural person who actively participates in the 35 business conducted by the firm or its affiliated entities. For purposes 36 of this subdivision, "actively participate" means to provide services to 37 clients or to otherwise individually take part in the day-to-day busi- 38 ness or management of the firm. 39 § 14. Subdivision (a) of section 1301 of the limited liability company 40 law, as amended by chapter 475 of the laws of 2014, is amended to read 41 as follows: 42 (a) "Foreign professional service limited liability company" means a 43 professional service limited liability company, whether or not denomi- 44 nated as such, organized under the laws of a jurisdiction other than 45 this state, (i) each of whose members and managers, if any, is a profes- 46 sional authorized by law to render a professional service within this 47 state and who is or has been engaged in the practice of such profession 48 in such professional service limited liability company or a predecessor 49 entity, or will engage in the practice of such profession in the profes- 50 sional service limited liability company within thirty days of the date 51 such professional becomes a member, or each of whose members and manag- 52 ers, if any, is a professional at least one of such members is author- 53 ized by law to render a professional service within this state and who 54 is or has been engaged in the practice of such profession in such 55 professional service limited liability company or a predecessor entity, 56 or will engage in the practice of such profession in the professionalA. 2919 11 1 service limited liability company within thirty days of the date such 2 professional becomes a member, or (ii) authorized by, or holding a 3 license, certificate, registration or permit issued by the licensing 4 authority pursuant to, the education law to render a professional 5 service within this state; except that all members and managers, if any, 6 of a foreign professional service limited liability company that 7 provides health services in this state shall be licensed in this state. 8 With respect to a foreign professional service limited liability company 9 which provides veterinary services as such services are defined in arti- 10 cle 135 of the education law, each member of such foreign professional 11 service limited liability company shall be licensed pursuant to article 12 135 of the education law to practice veterinary medicine. With respect 13 to a foreign professional service limited liability company which 14 provides medical services as such services are defined in article 131 of 15 the education law, each member of such foreign professional service 16 limited liability company must be licensed pursuant to article 131 of 17 the education law to practice medicine in this state. With respect to a 18 foreign professional service limited liability company which provides 19 dental services as such services are defined in article 133 of the 20 education law, each member of such foreign professional service limited 21 liability company must be licensed pursuant to article 133 of the educa- 22 tion law to practice dentistry in this state. With respect to a foreign 23 professional service limited liability company which provides profes- 24 sional engineering, land surveying, geologic, architectural and/or land- 25 scape architectural services as such services are defined in article 26 145, article 147 and article 148 of the education law, each member of 27 such foreign professional service limited liability company must be 28 licensed pursuant to article 145, article 147 and/or article 148 of the 29 education law to practice one or more of such professions in this state. 30 With respect to a foreign professional service limited liability company 31 which provides public accountancy services as such services are defined 32 in article 149 of the education law, each member of such foreign profes- 33 sional service limited liability company whose principal place of busi- 34 ness is in this state and who provides public accountancy services, 35 shall be licensed pursuant to article 149 of the education law to prac- 36 tice public accountancy in this state. With respect to a foreign profes- 37 sional service limited liability company which provides licensed clin- 38 ical social work services as such services are defined in article 154 of 39 the education law, each member of such foreign professional service 40 limited liability company shall be licensed pursuant to article 154 of 41 the education law to practice clinical social work in this state. With 42 respect to a foreign professional service limited liability company 43 which provides creative arts therapy services as such services are 44 defined in article 163 of the education law, each member of such foreign 45 professional service limited liability company must be licensed pursuant 46 to article 163 of the education law to practice creative arts therapy in 47 this state. With respect to a foreign professional service limited 48 liability company which provides marriage and family therapy services as 49 such services are defined in article 163 of the education law, each 50 member of such foreign professional service limited liability company 51 must be licensed pursuant to article 163 of the education law to prac- 52 tice marriage and family therapy in this state. With respect to a 53 foreign professional service limited liability company which provides 54 mental health counseling services as such services are defined in arti- 55 cle 163 of the education law, each member of such foreign professional 56 service limited liability company must be licensed pursuant to articleA. 2919 12 1 163 of the education law to practice mental health counseling in this 2 state. With respect to a foreign professional service limited liability 3 company which provides psychoanalysis services as such services are 4 defined in article 163 of the education law, each member of such foreign 5 professional service limited liability company must be licensed pursuant 6 to article 163 of the education law to practice psychoanalysis in this 7 state. With respect to a foreign professional service limited liability 8 company which provides applied behavior analysis services as such 9 services are defined in article 167 of the education law, each member of 10 such foreign professional service limited liability company must be 11 licensed or certified pursuant to article 167 of the education law to 12 practice applied behavior analysis in this state. Notwithstanding any 13 other provisions of law a foreign professional service limited liability 14 company formed to lawfully engage in the practice of public accountancy, 15 as such practice is respectively defined under article 149 of the educa- 16 tion law shall be required to show (1) that a simple majority of the 17 ownership of the firm, in terms of financial interests, including owner- 18 ship-based compensation, and voting rights held by the firm's owners, 19 belongs to individuals licensed to practice public accountancy in some 20 state, and (2) that all members of a foreign limited professional 21 service limited liability company, whose principal place of business is 22 in this state, and who are engaged in the practice of public accountancy 23 in this state, hold a valid license issued under section seventy-four 24 hundred four of the education law or are public accountants licensed 25 under section seventy-four hundred five of the education law. Although 26 firms may include non-licensee owners, the firm and its owners must 27 comply with rules promulgated by the state board of regents. Notwith- 28 standing the foregoing, a firm registered under this section may not 29 have non-licensee owners if the firm's name includes the words "certi- 30 fied public accountant," or "certified public accountants," or the 31 abbreviations "CPA" or "CPAs." Each non-licensee owner of a firm that is 32 registered under this section shall be (1) a natural person who actively 33 participates in the business of the firm or its affiliated entities, or 34 (2) an entity, including, but not limited to, a partnership or profes- 35 sional corporation, provided each beneficial owner of an equity interest 36 in such entity is a natural person who actively participates in the 37 business conducted by the firm or its affiliated entities. For purposes 38 of this subdivision, "actively participate" means to provide services to 39 clients or to otherwise individually take part in the day-to-day busi- 40 ness or management of the firm. 41 § 15. This act shall take effect immediately.
