Bill Text: NY A02919 | 2019-2020 | General Assembly | Amended
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-Amended.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-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 2919--B 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, PHEFFER AMATO, DINOWITZ, RODRIGUEZ, PRETLOW, NIOU, ROZIC, D. ROSENTHAL, JOYNER, HUNTER, PICHARDO, SOLAGES, HEVESI, HYNDMAN, GALEF, DenDEKKER, GUNTHER, STIRPE, BUCHWALD, WOERNER, CUSICK, QUART, SCHIMMINGER, FAHY, SANTABARBARA, BICHOTTE, WEPRIN, LAVINE, McDONALD, CYMBROWITZ, WALCZYK, VANEL, ZEBROWSKI, WALLACE, PAULIN, EICHENSTEIN, CARROLL, FALL, REYES, ORTIZ, WALKER, RYAN, FERNANDEZ, SAYEGH, McMAHON, BARNWELL, BARRETT, BUTTENSCHON, ARROYO, COLTON, BARRON, DARLING, BRAUNSTEIN, STERN, CAHILL, GRIFFIN, RAMOS, JONES, BURKE -- Multi-Spon- sored 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 -- recommitted to the Committee on Higher Education in accordance with Assembly Rule 3, sec. 2 -- 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 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD04747-07-0A. 2919--B 2 1 firm, in terms of financial interests, and voting rights held by the 2 firm's owners, belongs to individuals licensed to practice public 3 accountancy in some state, and (2) that all shareholders of a profes- 4 sional service corporation whose principal place of business is in this 5 state, and who are engaged in the practice of public accountancy in this 6 state, hold a valid license issued under section seventy-four hundred 7 four of the education law. For purposes of this paragraph, "financial 8 interest" means capital stock, capital accounts, capital contributions, 9 capital interest, or interest in undistributed earnings of a business 10 entity. Although firms may include non-licensee owners, the firm and 11 its owners must comply with rules promulgated by the state board of 12 regents. Notwithstanding the foregoing, a firm incorporated under this 13 section may not have non-licensee owners if the firm's name includes the 14 words "certified public accountant," or "certified public accountants," 15 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 16 that is incorporated under this section shall be a natural person who 17 actively participates in the business of the firm or its affiliated 18 entities. For purposes of this subdivision, "actively participate" means 19 to provide services to clients or to otherwise individually take part in 20 the day-to-day business or management of the firm. Such a firm shall 21 have attached to its certificate of incorporation a certificate or 22 certificates demonstrating the firm's compliance with this paragraph, in 23 lieu of the certificate or certificates required by subparagraph (ii) of 24 paragraph (b) of this section. 25 § 2. Section 1507 of the business corporation law is amended by adding 26 a new paragraph (c) to read as follows: 27 (c) Any firm established for the business purpose of incorporating as 28 a professional service corporation pursuant to paragraph (h) of section 29 fifteen hundred three of this article may issue shares to individuals 30 who are authorized by law to practice in this state the profession which 31 such corporation is authorized to practice and who are or have been 32 engaged in the practice of such profession in such corporation or a 33 predecessor entity, or who will engage in the practice of such profes- 34 sion in such corporation within thirty days of the date such shares are 35 issued and may also issue shares to employees of the corporation not 36 licensed as certified public accountants, provided that: 37 (i) at least fifty-one percent of the outstanding shares of stock of 38 the corporation are owned by certified public accountants, 39 (ii) at least fifty-one percent of the directors are certified public 40 accountants, 41 (iii) at least fifty-one percent of the officers are certified public 42 accountants, 43 (iv) the president, the chairperson of the board of directors and the 44 chief executive officer or officers are certified public accountants. 45 No shareholder of a firm established for the business purpose of incor- 46 porating as a professional service corporation pursuant to paragraph (h) 47 of section fifteen hundred three of this article shall enter into a 48 voting trust agreement, proxy or any other type of agreement vesting in 49 another person, other than another shareholder of the same corporation, 50 the authority to exercise voting power of any or all of his or her 51 shares. All shares issued, agreements made or proxies granted in 52 violation of this section shall be void. 53 § 3. Section 1508 of the business corporation law is amended by adding 54 a new paragraph (c) to read as follows: 55 (c) The directors and officers of any firm established for the busi- 56 ness purpose of incorporating as a professional service corporationA. 2919--B 3 1 pursuant to paragraph (h) of section fifteen hundred three of this arti- 2 cle may include individuals who are not licensed to practice public 3 accountancy, provided however that at least fifty-one percent of the 4 directors, at least fifty-one percent of the officers and the president, 5 the chairperson of the board of directors and the chief executive offi- 6 cer or officers are authorized by law to practice in any state the 7 profession which such corporation is authorized to practice, and are 8 either shareholders of such corporation or engaged in the practice of 9 their professions in such corporation. 10 § 4. Section 1509 of the business corporation law, as amended by chap- 11 ter 550 of the laws of 2011, is amended to read as follows: 12 § 1509. Disqualification of shareholders, directors, officers and 13 employees. 14 If any shareholder, director, officer or employee of a professional 15 service corporation, including a design professional service corpo- 16 ration, who has been rendering professional service to the public 17 becomes legally disqualified to practice his or her profession within 18 this state, he or she shall sever all employment with, and financial 19 interests (other than interests as a creditor) in, such corporation 20 forthwith or as otherwise provided in section 1510 of this article. All 21 provisions of law regulating the rendering of professional services by a 22 person elected or appointed to a public office shall be applicable to a 23 shareholder, director, officer and employee of such corporation in the 24 same manner and to the same extent as if fully set forth herein. Such 25 legal disqualification to practice his or her profession within this 26 state shall be deemed to constitute an irrevocable offer by the disqual- 27 ified shareholder to sell his or her shares to the corporation, pursuant 28 to the provisions of section 1510 of this article or of the certificate 29 of incorporation, by-laws or agreement among the corporation and all 30 shareholders, whichever is applicable. Compliance with the terms of such 31 offer shall be specifically enforceable in the courts of this state. A 32 professional service corporation's failure to enforce compliance with 33 this provision shall constitute a ground for forfeiture of its certif- 34 icate of incorporation and its dissolution. 35 § 5. Paragraph (a) of section 1511 of the business corporation law, as 36 amended by chapter 550 of the laws of 2011, is amended and a new para- 37 graph (c) is added to read as follows: 38 (a) No shareholder of a professional service corporation [or], includ- 39 ing a design professional service corporation, may sell or transfer his 40 or her shares in such corporation except to another individual who is 41 eligible to have shares issued to him or her by such corporation or 42 except in trust to another individual who would be eligible to receive 43 shares if he or she were employed by the corporation. Nothing herein 44 contained shall be construed to prohibit the transfer of shares by oper- 45 ation of law or by court decree. No transferee of shares by operation 46 of law or court decree may vote the shares for any purpose whatsoever 47 except with respect to corporate action under sections 909 and 1001 of 48 this chapter. The restriction in the preceding sentence shall not apply, 49 however, where such transferee would be eligible to have shares issued 50 to him or her if he or she were an employee of the corporation and, if 51 there are other shareholders, a majority of such other shareholders 52 shall fail to redeem the shares so transferred, pursuant to section 1510 53 of this article, within sixty days of receiving written notice of such 54 transfer. Any sale or transfer, except by operation of law or court 55 decree or except for a corporation having only one shareholder, may be 56 made only after the same shall have been approved by the board of direc-A. 2919--B 4 1 tors, or at a shareholders' meeting specially called for such purpose by 2 such proportion, not less than a majority, of the outstanding shares as 3 may be provided in the certificate of incorporation or in the by-laws of 4 such professional service corporation. At such shareholders' meeting the 5 shares held by the shareholder proposing to sell or transfer his or her 6 shares may not be voted or counted for any purpose, unless all share- 7 holders consent that such shares be voted or counted. The certificate of 8 incorporation or the by-laws of the professional service corporation, or 9 the professional service corporation and the shareholders by private 10 agreement, may provide, in lieu of or in addition to the foregoing 11 provisions, for the alienation of shares and may require the redemption 12 or purchase of such shares by such corporation at prices and in a manner 13 specifically set forth therein. The existence of the restrictions on the 14 sale or transfer of shares, as contained in this article and, if appli- 15 cable, in the certificate of incorporation, by-laws, stock purchase or 16 stock redemption agreement, shall be noted conspicuously on the face or 17 back of every certificate for shares issued by a professional service 18 corporation. Any sale or transfer in violation of such restrictions 19 shall be void. 20 (c) A firm established for the business purpose of incorporating as a 21 professional service corporation pursuant to paragraph (h) of section 22 fifteen hundred three of this article, shall purchase or redeem the 23 shares of a non-licensed professional shareholder in the case of his or 24 her termination of employment within thirty days after such termination. 25 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 not be required to purchase 28 or redeem the shares of a terminated non-licensed professional share- 29 holder if such shares, within thirty days after such termination, are 30 sold or transferred to another employee of the corporation pursuant to 31 this article. 32 § 6. Section 1514 of the business corporation law is amended by adding 33 a new paragraph (c) to read as follows: 34 (c) Each firm established for the business purpose of incorporating as 35 a professional service corporation pursuant to paragraph (h) of section 36 fifteen hundred three of this article shall, at least once every three 37 years on or before the date prescribed by the licensing authority, 38 furnish a statement to the licensing authority listing the names and 39 residence addresses of each shareholder, director and officer of such 40 corporation and certify as the date of certification and at all times 41 over the entire three year period that: 42 (i) at least fifty-one percent of the outstanding shares of stock of 43 the corporation are and were owned by certified public accountants, 44 (ii) at least fifty-one percent of the directors are and were certi- 45 fied public accountants, 46 (iii) at least fifty-one percent of the officers are and were certi- 47 fied public accountants, 48 (iv) the president, the chairperson of the board of directors and the 49 chief executive officer or officers are and were certified public 50 accountants. 51 The statement shall be signed by the president or any certified public 52 accountant vice-president and attested to by the secretary or any 53 assistant secretary of the corporation. 54 § 7. Paragraph (d) of section 1525 of the business corporation law, as 55 added by chapter 505 of the laws of 1983, is amended to read as follows:A. 2919--B 5 1 (d) "Foreign professional service corporation" means a professional 2 service corporation, whether or not denominated as such, organized under 3 the laws of a jurisdiction other than this state, all of the sharehold- 4 ers, directors and officers of which are authorized and licensed to 5 practice the profession for which such corporation is licensed to do 6 business; except that all shareholders, directors and officers of a 7 foreign professional service corporation which provides health services 8 in this state shall be licensed in this state. A foreign professional 9 service corporation formed to lawfully engage in the practice of public 10 accountancy, as such practice is defined under article one hundred 11 forty-nine of the education law, or equivalent state law, shall be 12 required to show (1) that a simple majority of the ownership of the 13 firm, in terms of financial interests, and voting rights held by the 14 firm's owners, belongs to individuals licensed to practice public 15 accountancy in some state, and (2) that all shareholders of a foreign 16 professional service corporation whose principal place of business is in 17 this state, and who are engaged in the practice of public accountancy in 18 this state, hold a valid license issued under section seventy-four 19 hundred four of the education law. For purposes of this paragraph, 20 "financial interest" means capital stock, capital accounts, capital 21 contributions, capital interest, or interest in undistributed earnings 22 of a business entity. Although firms may include non-licensee owners, 23 the firm and its owners must comply with rules promulgated by the state 24 board of regents. Notwithstanding the foregoing, a firm registered 25 under this section may not have non-licensee owners if the firm's name 26 includes the words "certified public accountant," or "certified public 27 accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee 28 owner of a firm that is operating under this section shall be a natural 29 person who actively participates in the business of the firm or its 30 affiliated entities, provided each beneficial owner of an equity inter- 31 est in such entity is a natural person who actively participates in the 32 business conducted by the firm or its affiliated entities. For purposes 33 of this paragraph, "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 § 8. Subdivision (q) of section 121-1500 of the partnership law, as 37 amended by chapter 475 of the laws of 2014, is amended to read as 38 follows: 39 (q) Each partner of a registered limited liability partnership formed 40 to provide medical services in this state must be licensed pursuant to 41 article 131 of the education law to practice medicine in this state and 42 each partner of a registered limited liability partnership formed to 43 provide dental services in this state must be licensed pursuant to arti- 44 cle 133 of the education law to practice dentistry in this state. Each 45 partner of a registered limited liability partnership formed to provide 46 veterinary services in this state must be licensed pursuant to article 47 135 of the education law to practice veterinary medicine in this state. 48 Each partner of a registered limited liability partnership formed to 49 provide public accountancy services, whose principal place of business 50 is in this state and who provides public accountancy services, must be 51 licensed pursuant to article 149 of the education law to practice public 52 accountancy in this state. Each partner of a registered limited liabil- 53 ity partnership formed to provide professional engineering, land survey- 54 ing, geological services, architectural and/or landscape architectural 55 services in this state must be licensed pursuant to article 145, article 56 147 and/or article 148 of the education law to practice one or more ofA. 2919--B 6 1 such professions in this state. Each partner of a registered limited 2 liability partnership formed to provide licensed clinical social work 3 services in this state must be licensed pursuant to article 154 of the 4 education law to practice clinical social work in this state. Each part- 5 ner of a registered limited liability partnership formed to provide 6 creative arts therapy services in this state must be licensed pursuant 7 to article 163 of the education law to practice creative arts therapy in 8 this state. Each partner of a registered limited liability partnership 9 formed to provide marriage and family therapy services in this state 10 must be licensed pursuant to article 163 of the education law to prac- 11 tice marriage and family therapy in this state. Each partner of a regis- 12 tered limited liability partnership formed to provide mental health 13 counseling services in this state must be licensed pursuant to article 14 163 of the education law to practice mental health counseling in this 15 state. Each partner of a registered limited liability partnership formed 16 to provide psychoanalysis services in this state must be licensed pursu- 17 ant to article 163 of the education law to practice psychoanalysis in 18 this state. Each partner of a registered limited liability partnership 19 formed to provide applied behavior analysis service in this state must 20 be licensed or certified pursuant to article 167 of the education law to 21 practice applied behavior analysis in this state. A limited liability 22 partnership formed to lawfully engage in the practice of public accoun- 23 tancy, as such practice is respectively defined under article 149 of the 24 education law, shall be required to show (1) that a simple majority of 25 the ownership of the firm, in terms of financial interests, and voting 26 rights held by the firm's owners, belongs to individuals licensed to 27 practice public accountancy in some state, and (2) that all partners of 28 a limited liability partnership whose principal place of business is in 29 this state, and who are engaged in the practice of public accountancy in 30 this state, hold a valid license issued under section seventy-four 31 hundred four of the education law. For purposes of this subdivision, 32 "financial interest" means capital stock, capital accounts, capital 33 contributions, capital interest, or interest in undistributed earnings 34 of a business entity. Although firms may include non-licensee owners, 35 the firm and its owners must comply with rules promulgated by the state 36 board of regents. Notwithstanding the foregoing, a firm registered under 37 this section may not have non-licensee owners if the firm's name 38 includes the words "certified public accountant," or "certified public 39 accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner 40 of a firm that is formed under this section shall be (1) a natural 41 person who actively participates in the business of the firm or its 42 affiliated entities, or (2) an entity, including, but not limited to, a 43 partnership or professional corporation, provided each beneficial owner 44 of an equity interest in such entity is a natural person who actively 45 participates in the business conducted by the firm or its affiliated 46 entities. For purposes of this subdivision, "actively participate" means 47 to provide services to clients or to otherwise individually take part in 48 the day-to-day business or management of the firm. 49 § 9. Subdivision (q) of section 121-1502 of the partnership law, as 50 amended by chapter 475 of the laws of 2014, is amended to read as 51 follows: 52 (q) Each partner of a foreign limited liability partnership which 53 provides medical services in this state must be licensed pursuant to 54 article 131 of the education law to practice medicine in the state and 55 each partner of a foreign limited liability partnership which provides 56 dental services in the state must be licensed pursuant to article 133 ofA. 2919--B 7 1 the education law to practice dentistry in this state. Each partner of a 2 foreign limited liability partnership which provides veterinary service 3 in the state shall be licensed pursuant to article 135 of the education 4 law to practice veterinary medicine in this state. Each partner of a 5 foreign limited liability partnership which provides professional engi- 6 neering, land surveying, geological services, architectural and/or land- 7 scape architectural services in this state must be licensed pursuant to 8 article 145, article 147 and/or article 148 of the education law to 9 practice one or more of such professions. Each partner of a foreign 10 registered limited liability partnership formed to provide public 11 accountancy services, whose principal place of business is in this state 12 and who provides public accountancy services, must be licensed pursuant 13 to article 149 of the education law to practice public accountancy in 14 this state. Each partner of a foreign limited liability partnership 15 which provides licensed clinical social work services in this state must 16 be licensed pursuant to article 154 of the education law to practice 17 licensed clinical social work in this state. Each partner of a foreign 18 limited liability partnership which provides creative arts therapy 19 services in this state must be licensed pursuant to article 163 of the 20 education law to practice creative arts therapy in this state. Each 21 partner of a foreign limited liability partnership which provides 22 marriage and family therapy services in this state must be licensed 23 pursuant to article 163 of the education law to practice marriage and 24 family therapy in this state. Each partner of a foreign limited liabil- 25 ity partnership which provides mental health counseling services in this 26 state must be licensed pursuant to article 163 of the education law to 27 practice mental health counseling in this state. Each partner of a 28 foreign limited liability partnership which provides psychoanalysis 29 services in this state must be licensed pursuant to article 163 of the 30 education law to practice psychoanalysis in this state. Each partner of 31 a foreign limited liability partnership which provides applied behavior 32 analysis services in this state must be licensed or certified pursuant 33 to article 167 of the education law to practice applied behavior analy- 34 sis in this state. A foreign limited liability partnership formed to 35 lawfully engage in the practice of public accountancy, as such practice 36 is respectively defined under article 149 of the education law, shall be 37 required to show (1) that a simple majority of the ownership of the 38 firm, in terms of financial interests, and voting rights held by the 39 firm's owners, belongs to individuals licensed to practice public 40 accountancy in some state, and (2) that all partners of a foreign limit- 41 ed liability partnership whose principal place of business is in this 42 state, and who are engaged in the practice of public accountancy in this 43 state, hold a valid license issued under section seventy-four hundred 44 four of the education law. For purposes of this subdivision, "financial 45 interest" means capital stock, capital accounts, capital contributions, 46 capital interest, or interest in undistributed earnings of a business 47 entity. Although firms may include non-licensee owners, the firm and 48 its owners must comply with rules promulgated by the state board of 49 regents. Notwithstanding the foregoing, a firm registered under this 50 section may not have non-licensee owners if the firm's name includes the 51 words "certified public accountant," or "certified public accountants," 52 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 53 that is formed under this section shall be (1) a natural person who 54 actively participates in the business of the firm or its affiliated 55 entities, or (2) an entity, including, but not limited to, a partnership 56 or professional corporation, provided each beneficial owner of an equityA. 2919--B 8 1 interest in such entity is a natural person who actively participates in 2 the business conducted by the firm or its affiliated entities. For 3 purposes of this subdivision, "actively participate" means to provide 4 services to clients or to otherwise individually take part in the day- 5 to-day business or management of the firm. 6 § 10. Subdivision (h) of section 121-101 of the partnership law, as 7 added by chapter 950 of the laws of 1990, is amended to read as follows: 8 (h) "Limited partnership" and "domestic limited partnership" mean, 9 unless the context otherwise requires, a partnership (i) formed by two 10 or more persons pursuant to this article or which complies with subdivi- 11 sion (a) of section 121-1202 of this article and (ii) having one or more 12 general partners and one or more limited partners. Notwithstanding any 13 other provisions of law a limited partnership or domestic limited part- 14 nership 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 partners of a limited partnership or domestic 21 limited partnership, whose principal place of business is in this state, 22 and who are engaged in the practice of public accountancy in this state, 23 hold a valid license issued under section seventy-four hundred four of 24 the education law or are public accountants licensed under section 25 seventy-four hundred five of the education law. Although firms may 26 include non-licensee owners, the firm and its owners must comply with 27 rules promulgated by the state board of regents. Notwithstanding the 28 foregoing, a firm registered under this section may not have non-licen- 29 see owners if the firm's name includes the words "certified public 30 accountant," or "certified public accountants," or the abbreviations 31 "CPA" or "CPAs". Each non-licensee owner of a firm that is registered 32 under this section shall be (1) a natural person who actively partic- 33 ipates in the business of the firm or its affiliated entities, or (2) an 34 entity, including, but not limited to, a partnership or professional 35 corporation, provided each beneficial owner of an equity interest in 36 such entity is a natural person who actively participates in the busi- 37 ness conducted by the firm or its affiliated entities. For purposes of 38 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 § 11. Subdivision (b) of section 1207 of the limited liability company 42 law, as amended by chapter 475 of the laws of 2014, is amended to read 43 as follows: 44 (b) With respect to a professional service limited liability company 45 formed to provide medical services as such services are defined in arti- 46 cle 131 of the education law, each member of such limited liability 47 company must be licensed pursuant to article 131 of the education law to 48 practice medicine in this state. With respect to a professional service 49 limited liability company formed to provide dental services as such 50 services are defined in article 133 of the education law, each member of 51 such limited liability company must be licensed pursuant to article 133 52 of the education law to practice dentistry in this state. With respect 53 to a professional service limited liability company formed to provide 54 veterinary services as such services are defined in article 135 of the 55 education law, each member of such limited liability company must be 56 licensed pursuant to article 135 of the education law to practice veter-A. 2919--B 9 1 inary medicine in this state. With respect to a professional service 2 limited liability company formed to provide professional engineering, 3 land surveying, architectural, landscape architectural and/or geological 4 services as such services are defined in article 145, article 147 and 5 article 148 of the education law, each member of such limited liability 6 company must be licensed pursuant to article 145, article 147 and/or 7 article 148 of the education law to practice one or more of such 8 professions in this state. With respect to a professional service 9 limited liability company formed to provide public accountancy services 10 as such services are defined in article 149 of the education law each 11 member of such limited liability company whose principal place of busi- 12 ness is in this state and who provides public accountancy services, must 13 be licensed pursuant to article 149 of the education law to practice 14 public accountancy in this state. With respect to a professional service 15 limited liability company formed to provide licensed clinical social 16 work services as such services are defined in article 154 of the educa- 17 tion law, each member of such limited liability company shall be 18 licensed pursuant to article 154 of the education law to practice 19 licensed clinical social work in this state. With respect to a profes- 20 sional service limited liability company formed to provide creative arts 21 therapy services as such services are defined in article 163 of the 22 education law, each member of such limited liability company must be 23 licensed pursuant to article 163 of the education law to practice crea- 24 tive arts therapy in this state. With respect to a professional service 25 limited liability company formed to provide marriage and family therapy 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 marriage and 29 family therapy in this state. With respect to a professional service 30 limited liability company formed to provide mental health counseling 31 services as such services are defined in article 163 of the education 32 law, each member of such limited liability company must be licensed 33 pursuant to article 163 of the education law to practice mental health 34 counseling in this state. With respect to a professional service limited 35 liability company formed to provide psychoanalysis services as such 36 services are defined in article 163 of the education law, each member of 37 such limited liability company must be licensed pursuant to article 163 38 of the education law to practice psychoanalysis in this state. With 39 respect to a professional service limited liability company formed to 40 provide applied behavior analysis services as such services are defined 41 in article 167 of the education law, each member of such limited liabil- 42 ity company must be licensed or certified pursuant to article 167 of the 43 education law to practice applied behavior analysis in this state. A 44 professional service limited liability company formed to lawfully engage 45 in the practice of public accountancy, as such practice is respectively 46 defined under article 149 of the education law shall be required to show 47 (1) that a simple majority of the ownership of the firm, in terms of 48 financial interests, and voting rights held by the firm's owners, 49 belongs to individuals licensed to practice public accountancy in some 50 state, and (2) that all members of a limited professional service limit- 51 ed liability company, whose principal place of business is in this 52 state, and who are engaged in the practice of public accountancy in this 53 state, hold a valid license issued under section seventy-four hundred 54 four of the education law. For purposes of this subdivision, "financial 55 interest" means capital stock, capital accounts, capital contributions, 56 capital interest, or interest in undistributed earnings of a businessA. 2919--B 10 1 entity. Although firms may include non-licensee owners, the firm and 2 its owners must comply with rules promulgated by the state board of 3 regents. Notwithstanding the foregoing, a firm registered under this 4 section may not have non-licensee owners if the firm's name includes the 5 words "certified public accountant," or "certified public accountants," 6 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 7 that is registered 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 § 12. Subdivision (a) of section 1301 of the limited liability company 17 law, as amended by chapter 475 of the laws of 2014, is amended to read 18 as follows: 19 (a) "Foreign professional service limited liability company" means a 20 professional service limited liability company, whether or not denomi- 21 nated as such, organized under the laws of a jurisdiction other than 22 this state, (i) each of whose members and managers, if any, is a profes- 23 sional authorized by law to render a professional service within this 24 state and who is or has been engaged in the practice of such profession 25 in such professional service limited liability company or a predecessor 26 entity, or will engage in the practice of such profession in the profes- 27 sional service limited liability company within thirty days of the date 28 such professional becomes a member, or each of whose members and manag- 29 ers, if any, is a professional at least one of such members is author- 30 ized by law to render a professional service within this state and who 31 is or has been engaged in the practice of such profession in such 32 professional service limited liability company or a predecessor entity, 33 or will engage in the practice of such profession in the professional 34 service limited liability company within thirty days of the date such 35 professional becomes a member, or (ii) authorized by, or holding a 36 license, certificate, registration or permit issued by the licensing 37 authority pursuant to, the education law to render a professional 38 service within this state; except that all members and managers, if any, 39 of a foreign professional service limited liability company that 40 provides health services in this state shall be licensed in this state. 41 With respect to a foreign professional service limited liability company 42 which provides veterinary services as such services are defined in arti- 43 cle 135 of the education law, each member of such foreign professional 44 service limited liability company shall be licensed pursuant to article 45 135 of the education law to practice veterinary medicine. With respect 46 to a foreign professional service limited liability company which 47 provides medical services as such services are defined in article 131 of 48 the education law, each member of such foreign professional service 49 limited liability company must be licensed pursuant to article 131 of 50 the education law to practice medicine in this state. With respect to a 51 foreign professional service limited liability company which provides 52 dental services as such services are defined in article 133 of the 53 education law, each member of such foreign professional service limited 54 liability company must be licensed pursuant to article 133 of the educa- 55 tion law to practice dentistry in this state. With respect to a foreign 56 professional service limited liability company which provides profes-A. 2919--B 11 1 sional engineering, land surveying, geologic, architectural and/or land- 2 scape architectural services as such services are defined in article 3 145, article 147 and article 148 of the education law, each member of 4 such foreign professional service limited liability company must be 5 licensed pursuant to article 145, article 147 and/or article 148 of the 6 education law to practice one or more of such professions in this state. 7 With respect to a foreign professional service limited liability company 8 which provides public accountancy services as such services are defined 9 in article 149 of the education law, each member of such foreign profes- 10 sional service limited liability company whose principal place of busi- 11 ness is in this state and who provides public accountancy services, 12 shall be licensed pursuant to article 149 of the education law to prac- 13 tice public accountancy in this state. With respect to a foreign profes- 14 sional service limited liability company which provides licensed clin- 15 ical social work services as such services are defined in article 154 of 16 the education law, each member of such foreign professional service 17 limited liability company shall be licensed pursuant to article 154 of 18 the education law to practice clinical social work in this state. With 19 respect to a foreign professional service limited liability company 20 which provides creative arts therapy services as such services are 21 defined in article 163 of the education law, each member of such foreign 22 professional service limited liability company must be licensed pursuant 23 to article 163 of the education law to practice creative arts therapy in 24 this state. With respect to a foreign professional service limited 25 liability company which provides marriage and family therapy services as 26 such services are defined in article 163 of the education law, each 27 member of such foreign professional service limited liability company 28 must be licensed pursuant to article 163 of the education law to prac- 29 tice marriage and family therapy in this state. With respect to a 30 foreign professional service limited liability company which provides 31 mental health counseling services as such services are defined in arti- 32 cle 163 of the education law, each member of such foreign professional 33 service limited liability company must be licensed pursuant to article 34 163 of the education law to practice mental health counseling in this 35 state. With respect to a foreign professional service limited liability 36 company which provides psychoanalysis services as such services are 37 defined in article 163 of the education law, each member of such foreign 38 professional service limited liability company must be licensed pursuant 39 to article 163 of the education law to practice psychoanalysis in this 40 state. With respect to a foreign professional service limited liability 41 company which provides applied behavior analysis services as such 42 services are defined in article 167 of the education law, each member of 43 such foreign professional service limited liability company must be 44 licensed or certified pursuant to article 167 of the education law to 45 practice applied behavior analysis in this state. A foreign professional 46 service limited liability company formed to lawfully engage in the prac- 47 tice of public accountancy, as such practice is respectively defined 48 under article 149 of the education law shall be required to show (1) 49 that a simple majority of the ownership of the firm, in terms of finan- 50 cial interests, and voting rights held by the firm's owners, belongs to 51 individuals licensed to practice public accountancy in some state, and 52 (2) that all members of a foreign limited professional service limited 53 liability company, whose principal place of business is in this state, 54 and who are engaged in the practice of public accountancy in this state, 55 hold a valid license issued under section seventy-four hundred four of 56 the education law. For purposes of this subdivision, "financial inter-A. 2919--B 12 1 est" means capital stock, capital accounts, capital contributions, capi- 2 tal interest, or interest in undistributed earnings of a business enti- 3 ty. Although firms may include non-licensee owners, the firm and its 4 owners must comply with rules promulgated by the state board of regents. 5 Notwithstanding the foregoing, a firm registered under this section may 6 not have non-licensee owners if the firm's name includes the words 7 "certified public accountant," or "certified public accountants," or the 8 abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is 9 registered under this section shall be (1) a natural person who actively 10 participates in the business of the firm or its affiliated entities, or 11 (2) an entity, including, but not limited to, a partnership or profes- 12 sional corporation, provided each beneficial owner of an equity interest 13 in such entity is a natural person who actively participates in the 14 business conducted by the firm or its affiliated entities. For purposes 15 of this subdivision, "actively participate" means to provide services to 16 clients or to otherwise individually take part in the day-to-day busi- 17 ness or management of the firm. 18 § 13. Notwithstanding any other provision of law to the contrary, 19 there is hereby established a fee for each non-licensee owner of a firm 20 that is registered in this state to lawfully engage in the practice of 21 public accountancy. Such non-licensee owner shall pay a fee of nine 22 hundred dollars to the department of education on a triannual basis. 23 § 14. This act shall take effect immediately.