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



                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.
                                                                   LBD04747-07-0

        A. 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  corporation

        A. 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  of

        A. 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 of

        A. 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 equity

        A. 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  business

        A. 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.
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