STATE OF NEW YORK
________________________________________________________________________
2919--C
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 -- again reported from said
committee with amendments, ordered reprinted as amended and recommit-
ted 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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04747-09-0
A. 2919--C 2
1 under article one hundred forty-nine of the education law shall be
2 required to show (1) that a simple majority of the ownership of the
3 firm, in terms of financial interests, and voting rights held by the
4 firm's owners, belongs to individuals licensed to practice public
5 accountancy in some state, and (2) that all shareholders of a profes-
6 sional service corporation whose principal place of business is in this
7 state, and who are engaged in the practice of public accountancy in this
8 state, hold a valid license issued under section seventy-four hundred
9 four of the education law. For purposes of this paragraph, "financial
10 interest" means capital stock, capital accounts, capital contributions,
11 capital interest, or interest in undistributed earnings of a business
12 entity. Although firms may include non-licensee owners, the firm and
13 its owners must comply with rules promulgated by the state board of
14 regents. Notwithstanding the foregoing, a firm incorporated under this
15 section may not have non-licensee owners if the firm's name includes the
16 words "certified public accountant," or "certified public accountants,"
17 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm
18 that is incorporated under this section shall be a natural person who
19 actively participates in the business of the firm or its affiliated
20 entities. For purposes of this subdivision, "actively participate" means
21 to provide services to clients or to otherwise individually take part in
22 the day-to-day business or management of the firm. Such a firm shall
23 have attached to its certificate of incorporation a certificate or
24 certificates demonstrating the firm's compliance with this paragraph, in
25 lieu of the certificate or certificates required by subparagraph (ii) of
26 paragraph (b) of this section.
27 § 2. Section 1507 of the business corporation law is amended by adding
28 a new paragraph (c) to read as follows:
29 (c) Any firm established for the business purpose of incorporating as
30 a professional service corporation pursuant to paragraph (h) of section
31 fifteen hundred three of this article may issue shares to individuals
32 who are authorized by law to practice in this state the profession which
33 such corporation is authorized to practice and who are or have been
34 engaged in the practice of such profession in such corporation or a
35 predecessor entity, or who will engage in the practice of such profes-
36 sion in such corporation within thirty days of the date such shares are
37 issued and may also issue shares to employees of the corporation not
38 licensed as certified public accountants, provided that:
39 (i) at least fifty-one percent of the outstanding shares of stock of
40 the corporation are owned by certified public accountants,
41 (ii) at least fifty-one percent of the directors are certified public
42 accountants,
43 (iii) at least fifty-one percent of the officers are certified public
44 accountants,
45 (iv) the president, the chairperson of the board of directors and the
46 chief executive officer or officers are certified public accountants.
47 No shareholder of a firm established for the business purpose of incor-
48 porating as a professional service corporation pursuant to paragraph (h)
49 of section fifteen hundred three of this article shall enter into a
50 voting trust agreement, proxy or any other type of agreement vesting in
51 another person, other than another shareholder of the same corporation,
52 the authority to exercise voting power of any or all of his or her
53 shares. All shares issued, agreements made or proxies granted in
54 violation of this section shall be void.
55 § 3. Section 1508 of the business corporation law is amended by adding
56 a new paragraph (c) to read as follows:
A. 2919--C 3
1 (c) The directors and officers of any firm established for the busi-
2 ness purpose of incorporating as a professional service corporation
3 pursuant to paragraph (h) of section fifteen hundred three of this arti-
4 cle may include individuals who are not licensed to practice public
5 accountancy, provided however that at least fifty-one percent of the
6 directors, at least fifty-one percent of the officers and the president,
7 the chairperson of the board of directors and the chief executive offi-
8 cer or officers are authorized by law to practice in any state the
9 profession which such corporation is authorized to practice, and are
10 either shareholders of such corporation or engaged in the practice of
11 their professions in such corporation.
12 § 4. Section 1509 of the business corporation law, as amended by chap-
13 ter 550 of the laws of 2011, is amended to read as follows:
14 § 1509. Disqualification of shareholders, directors, officers and
15 employees.
16 If any shareholder, director, officer or employee of a professional
17 service corporation, including a design professional service corpo-
18 ration, who has been rendering professional service to the public
19 becomes legally disqualified to practice his or her profession within
20 this state, he or she shall sever all employment with, and financial
21 interests (other than interests as a creditor) in, such corporation
22 forthwith or as otherwise provided in section 1510 of this article. All
23 provisions of law regulating the rendering of professional services by a
24 person elected or appointed to a public office shall be applicable to a
25 shareholder, director, officer and employee of such corporation in the
26 same manner and to the same extent as if fully set forth herein. Such
27 legal disqualification to practice his or her profession within this
28 state shall be deemed to constitute an irrevocable offer by the disqual-
29 ified shareholder to sell his or her shares to the corporation, pursuant
30 to the provisions of section 1510 of this article or of the certificate
31 of incorporation, by-laws or agreement among the corporation and all
32 shareholders, whichever is applicable. Compliance with the terms of such
33 offer shall be specifically enforceable in the courts of this state. A
34 professional service corporation's failure to enforce compliance with
35 this provision shall constitute a ground for forfeiture of its certif-
36 icate of incorporation and its dissolution.
37 § 5. Paragraph (a) of section 1511 of the business corporation law, as
38 amended by chapter 550 of the laws of 2011, is amended and a new para-
39 graph (c) is added to read as follows:
40 (a) No shareholder of a professional service corporation [or], includ-
41 ing a design professional service corporation, may sell or transfer his
42 or her shares in such corporation except to another individual who is
43 eligible to have shares issued to him or her by such corporation or
44 except in trust to another individual who would be eligible to receive
45 shares if he or she were employed by the corporation. Nothing herein
46 contained shall be construed to prohibit the transfer of shares by oper-
47 ation of law or by court decree. No transferee of shares by operation
48 of law or court decree may vote the shares for any purpose whatsoever
49 except with respect to corporate action under sections 909 and 1001 of
50 this chapter. The restriction in the preceding sentence shall not apply,
51 however, where such transferee would be eligible to have shares issued
52 to him or her if he or she were an employee of the corporation and, if
53 there are other shareholders, a majority of such other shareholders
54 shall fail to redeem the shares so transferred, pursuant to section 1510
55 of this article, within sixty days of receiving written notice of such
56 transfer. Any sale or transfer, except by operation of law or court
A. 2919--C 4
1 decree or except for a corporation having only one shareholder, may be
2 made only after the same shall have been approved by the board of direc-
3 tors, or at a shareholders' meeting specially called for such purpose by
4 such proportion, not less than a majority, of the outstanding shares as
5 may be provided in the certificate of incorporation or in the by-laws of
6 such professional service corporation. At such shareholders' meeting the
7 shares held by the shareholder proposing to sell or transfer his or her
8 shares may not be voted or counted for any purpose, unless all share-
9 holders consent that such shares be voted or counted. The certificate of
10 incorporation or the by-laws of the professional service corporation, or
11 the professional service corporation and the shareholders by private
12 agreement, may provide, in lieu of or in addition to the foregoing
13 provisions, for the alienation of shares and may require the redemption
14 or purchase of such shares by such corporation at prices and in a manner
15 specifically set forth therein. The existence of the restrictions on the
16 sale or transfer of shares, as contained in this article and, if appli-
17 cable, in the certificate of incorporation, by-laws, stock purchase or
18 stock redemption agreement, shall be noted conspicuously on the face or
19 back of every certificate for shares issued by a professional service
20 corporation. Any sale or transfer in violation of such restrictions
21 shall be void.
22 (c) A firm established for the business purpose of incorporating as a
23 professional service corporation pursuant to paragraph (h) of section
24 fifteen hundred three of this article, shall purchase or redeem the
25 shares of a non-licensed professional shareholder in the case of his or
26 her termination of employment within thirty days after such termination.
27 A firm established for the business purpose of incorporating as a
28 professional service corporation pursuant to paragraph (h) of section
29 fifteen hundred three of this article, shall not be required to purchase
30 or redeem the shares of a terminated non-licensed professional share-
31 holder if such shares, within thirty days after such termination, are
32 sold or transferred to another employee of the corporation pursuant to
33 this article.
34 § 6. Section 1514 of the business corporation law is amended by adding
35 a new paragraph (c) to read as follows:
36 (c) Each firm established for the business purpose of incorporating as
37 a professional service corporation pursuant to paragraph (h) of section
38 fifteen hundred three of this article shall, at least once every three
39 years on or before the date prescribed by the licensing authority,
40 furnish a statement to the licensing authority listing the names and
41 residence addresses of each shareholder, director and officer of such
42 corporation and certify as the date of certification and at all times
43 over the entire three year period that:
44 (i) at least fifty-one percent of the outstanding shares of stock of
45 the corporation are and were owned by certified public accountants,
46 (ii) at least fifty-one percent of the directors are and were certi-
47 fied public accountants,
48 (iii) at least fifty-one percent of the officers are and were certi-
49 fied public accountants,
50 (iv) the president, the chairperson of the board of directors and the
51 chief executive officer or officers are and were certified public
52 accountants.
53 The statement shall be signed by the president or any certified public
54 accountant vice-president and attested to by the secretary or any
55 assistant secretary of the corporation.
A. 2919--C 5
1 § 7. Paragraph (d) of section 1525 of the business corporation law, as
2 added by chapter 505 of the laws of 1983, is amended to read as follows:
3 (d) "Foreign professional service corporation" means a professional
4 service corporation, whether or not denominated as such, organized under
5 the laws of a jurisdiction other than this state, all of the sharehold-
6 ers, directors and officers of which are authorized and licensed to
7 practice the profession for which such corporation is licensed to do
8 business; except that all shareholders, directors and officers of a
9 foreign professional service corporation which provides health services
10 in this state shall be licensed in this state. A foreign professional
11 service corporation formed to lawfully engage in the practice of public
12 accountancy, as such practice is defined under article one hundred
13 forty-nine of the education law, or equivalent state law, shall be
14 required to show (1) that a simple majority of the ownership of the
15 firm, in terms of financial interests, and voting rights held by the
16 firm's owners, belongs to individuals licensed to practice public
17 accountancy in some state, and (2) that all shareholders of a foreign
18 professional service corporation whose principal place of business is in
19 this state, and who are engaged in the practice of public accountancy in
20 this state, hold a valid license issued under section seventy-four
21 hundred four of the education law. For purposes of this paragraph,
22 "financial interest" means capital stock, capital accounts, capital
23 contributions, capital interest, or interest in undistributed earnings
24 of a business entity. Although firms may include non-licensee owners,
25 the firm and its owners must comply with rules promulgated by the state
26 board of regents. Notwithstanding the foregoing, a firm registered
27 under this section may not have non-licensee owners if the firm's name
28 includes the words "certified public accountant," or "certified public
29 accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee
30 owner of a firm that is operating under this section shall be a natural
31 person who actively participates in the business of the firm or its
32 affiliated entities, provided each beneficial owner of an equity inter-
33 est in such entity is a natural person who actively participates in the
34 business conducted by the firm or its affiliated entities. For purposes
35 of this paragraph, "actively participate" means to provide services to
36 clients or to otherwise individually take part in the day-to-day busi-
37 ness or management of the firm.
38 § 8. Subdivision (q) of section 121-1500 of the partnership law, as
39 amended by chapter 475 of the laws of 2014, is amended to read as
40 follows:
41 (q) Each partner of a registered limited liability partnership formed
42 to provide medical services in this state must be licensed pursuant to
43 article 131 of the education law to practice medicine in this state and
44 each partner of a registered limited liability partnership formed to
45 provide dental services in this state must be licensed pursuant to arti-
46 cle 133 of the education law to practice dentistry in this state. Each
47 partner of a registered limited liability partnership formed to provide
48 veterinary services in this state must be licensed pursuant to article
49 135 of the education law to practice veterinary medicine in this state.
50 Each partner of a registered limited liability partnership formed to
51 provide public accountancy services, whose principal place of business
52 is in this state and who provides public accountancy services, must be
53 licensed pursuant to article 149 of the education law to practice public
54 accountancy in this state. Each partner of a registered limited liabil-
55 ity partnership formed to provide professional engineering, land survey-
56 ing, geological services, architectural and/or landscape architectural
A. 2919--C 6
1 services in this state must be licensed pursuant to article 145, article
2 147 and/or article 148 of the education law to practice one or more of
3 such professions in this state. Each partner of a registered limited
4 liability partnership formed to provide licensed clinical social work
5 services in this state must be licensed pursuant to article 154 of the
6 education law to practice clinical social work in this state. Each part-
7 ner of a registered limited liability partnership formed to provide
8 creative arts therapy services in this state must be licensed pursuant
9 to article 163 of the education law to practice creative arts therapy in
10 this state. Each partner of a registered limited liability partnership
11 formed to provide marriage and family therapy services in this state
12 must be licensed pursuant to article 163 of the education law to prac-
13 tice marriage and family therapy in this state. Each partner of a regis-
14 tered limited liability partnership formed to provide mental health
15 counseling services in this state must be licensed pursuant to article
16 163 of the education law to practice mental health counseling in this
17 state. Each partner of a registered limited liability partnership formed
18 to provide psychoanalysis services in this state must be licensed pursu-
19 ant to article 163 of the education law to practice psychoanalysis in
20 this state. Each partner of a registered limited liability partnership
21 formed to provide applied behavior analysis service in this state must
22 be licensed or certified pursuant to article 167 of the education law to
23 practice applied behavior analysis in this state. A limited liability
24 partnership formed to lawfully engage in the practice of public accoun-
25 tancy, as such practice is respectively defined under article 149 of the
26 education law, shall be required to show (1) that a simple majority of
27 the ownership of the firm, in terms of financial interests, and voting
28 rights held by the firm's owners, belongs to individuals licensed to
29 practice public accountancy in some state, and (2) that all partners of
30 a limited liability partnership whose principal place of business is in
31 this state, and who are engaged in the practice of public accountancy in
32 this state, hold a valid license issued under section seventy-four
33 hundred four of the education law. For purposes of this subdivision,
34 "financial interest" means capital stock, capital accounts, capital
35 contributions, capital interest, or interest in undistributed earnings
36 of a business entity. Although firms may include non-licensee owners,
37 the firm and its owners must comply with rules promulgated by the state
38 board of regents. Notwithstanding the foregoing, a firm registered under
39 this section may not have non-licensee owners if the firm's name
40 includes the words "certified public accountant," or "certified public
41 accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner
42 of a firm that is formed under this section shall be (1) a natural
43 person who actively participates in the business of the firm or its
44 affiliated entities, or (2) an entity, including, but not limited to, a
45 partnership or professional corporation, provided each beneficial owner
46 of an equity interest in such entity is a natural person who actively
47 participates in the business conducted by the firm or its affiliated
48 entities. For purposes of this subdivision, "actively participate" means
49 to provide services to clients or to otherwise individually take part in
50 the day-to-day business or management of the firm.
51 § 9. Subdivision (q) of section 121-1502 of the partnership law, as
52 amended by chapter 475 of the laws of 2014, is amended to read as
53 follows:
54 (q) Each partner of a foreign limited liability partnership which
55 provides medical services in this state must be licensed pursuant to
56 article 131 of the education law to practice medicine in the state and
A. 2919--C 7
1 each partner of a foreign limited liability partnership which provides
2 dental services in the state must be licensed pursuant to article 133 of
3 the education law to practice dentistry in this state. Each partner of a
4 foreign limited liability partnership which provides veterinary service
5 in the state shall be licensed pursuant to article 135 of the education
6 law to practice veterinary medicine in this state. Each partner of a
7 foreign limited liability partnership which provides professional engi-
8 neering, land surveying, geological services, architectural and/or land-
9 scape architectural services in this state must be licensed pursuant to
10 article 145, article 147 and/or article 148 of the education law to
11 practice one or more of such professions. Each partner of a foreign
12 registered limited liability partnership formed to provide public
13 accountancy services, whose principal place of business is in this state
14 and who provides public accountancy services, must be licensed pursuant
15 to article 149 of the education law to practice public accountancy in
16 this state. Each partner of a foreign limited liability partnership
17 which provides licensed clinical social work services in this state must
18 be licensed pursuant to article 154 of the education law to practice
19 licensed clinical social work in this state. Each partner of a foreign
20 limited liability partnership which provides creative arts therapy
21 services in this state must be licensed pursuant to article 163 of the
22 education law to practice creative arts therapy in this state. Each
23 partner of a foreign limited liability partnership which provides
24 marriage and family therapy services in this state must be licensed
25 pursuant to article 163 of the education law to practice marriage and
26 family therapy in this state. Each partner of a foreign limited liabil-
27 ity partnership which provides mental health counseling services in this
28 state must be licensed pursuant to article 163 of the education law to
29 practice mental health counseling in this state. Each partner of a
30 foreign limited liability partnership which provides psychoanalysis
31 services in this state must be licensed pursuant to article 163 of the
32 education law to practice psychoanalysis in this state. Each partner of
33 a foreign limited liability partnership which provides applied behavior
34 analysis services in this state must be licensed or certified pursuant
35 to article 167 of the education law to practice applied behavior analy-
36 sis in this state. A foreign limited liability partnership formed to
37 lawfully engage in the practice of public accountancy, as such practice
38 is respectively defined under article 149 of the education law, shall be
39 required to show (1) that a simple majority of the ownership of the
40 firm, in terms of financial interests, and voting rights held by the
41 firm's owners, belongs to individuals licensed to practice public
42 accountancy in some state, and (2) that all partners of a foreign limit-
43 ed liability partnership whose principal place of business is in this
44 state, and who are engaged in the practice of public accountancy in this
45 state, hold a valid license issued under section seventy-four hundred
46 four of the education law. For purposes of this subdivision, "financial
47 interest" means capital stock, capital accounts, capital contributions,
48 capital interest, or interest in undistributed earnings of a business
49 entity. Although firms may include non-licensee owners, the firm and
50 its owners must comply with rules promulgated by the state board of
51 regents. Notwithstanding the foregoing, a firm registered under this
52 section may not have non-licensee owners if the firm's name includes the
53 words "certified public accountant," or "certified public accountants,"
54 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm
55 that is formed under this section shall be (1) a natural person who
56 actively participates in the business of the firm or its affiliated
A. 2919--C 8
1 entities, or (2) an entity, including, but not limited to, a partnership
2 or professional corporation, provided each beneficial owner of an equity
3 interest in such entity is a natural person who actively participates in
4 the business conducted by the firm or its affiliated entities. For
5 purposes of this subdivision, "actively participate" means to provide
6 services to clients or to otherwise individually take part in the day-
7 to-day business or management of the firm.
8 § 10. Subdivision (h) of section 121-101 of the partnership law, as
9 added by chapter 950 of the laws of 1990, is amended to read as follows:
10 (h) "Limited partnership" and "domestic limited partnership" mean,
11 unless the context otherwise requires, a partnership (i) formed by two
12 or more persons pursuant to this article or which complies with subdivi-
13 sion (a) of section 121-1202 of this article and (ii) having one or more
14 general partners and one or more limited partners. Notwithstanding any
15 other provisions of law a limited partnership or domestic limited part-
16 nership formed to lawfully engage in the practice of public accountancy,
17 as such practice is respectively defined under article 149 of the educa-
18 tion law shall be required to show (1) that a simple majority of the
19 ownership of the firm, in terms of financial interests, including owner-
20 ship-based compensation, and voting rights held by the firm's owners,
21 belongs to individuals licensed to practice public accountancy in some
22 state, and (2) that all partners of a limited partnership or domestic
23 limited partnership, whose principal place of business is in this state,
24 and who are engaged in the practice of public accountancy in this state,
25 hold a valid license issued under section seventy-four hundred four of
26 the education law or are public accountants licensed under section
27 seventy-four hundred five of the education law. Although firms may
28 include non-licensee owners, the firm and its owners must comply with
29 rules promulgated by the state board of regents. Notwithstanding the
30 foregoing, a firm registered under this section may not have non-licen-
31 see owners if the firm's name includes the words "certified public
32 accountant," or "certified public accountants," or the abbreviations
33 "CPA" or "CPAs". Each non-licensee owner of a firm that is registered
34 under this section shall be (1) a natural person who actively partic-
35 ipates in the business of the firm or its affiliated entities, or (2) an
36 entity, including, but not limited to, a partnership or professional
37 corporation, provided each beneficial owner of an equity interest in
38 such entity is a natural person who actively participates in the busi-
39 ness conducted by the firm or its affiliated entities. For purposes of
40 this subdivision, "actively participate" means to provide services to
41 clients or to otherwise individually take part in the day-to-day busi-
42 ness or management of the firm.
43 § 11. Subdivision (b) of section 1207 of the limited liability company
44 law, as amended by chapter 475 of the laws of 2014, is amended to read
45 as follows:
46 (b) With respect to a professional service limited liability company
47 formed to provide medical services as such services are defined in arti-
48 cle 131 of the education law, each member of such limited liability
49 company must be licensed pursuant to article 131 of the education law to
50 practice medicine in this state. With respect to a professional service
51 limited liability company formed to provide dental services as such
52 services are defined in article 133 of the education law, each member of
53 such limited liability company must be licensed pursuant to article 133
54 of the education law to practice dentistry in this state. With respect
55 to a professional service limited liability company formed to provide
56 veterinary services as such services are defined in article 135 of the
A. 2919--C 9
1 education law, each member of such limited liability company must be
2 licensed pursuant to article 135 of the education law to practice veter-
3 inary medicine in this state. With respect to a professional service
4 limited liability company formed to provide professional engineering,
5 land surveying, architectural, landscape architectural and/or geological
6 services as such services are defined in article 145, article 147 and
7 article 148 of the education law, each member of such limited liability
8 company must be licensed pursuant to article 145, article 147 and/or
9 article 148 of the education law to practice one or more of such
10 professions in this state. With respect to a professional service
11 limited liability company formed to provide public accountancy services
12 as such services are defined in article 149 of the education law each
13 member of such limited liability company whose principal place of busi-
14 ness is in this state and who provides public accountancy services, must
15 be licensed pursuant to article 149 of the education law to practice
16 public accountancy in this state. With respect to a professional service
17 limited liability company formed to provide licensed clinical social
18 work services as such services are defined in article 154 of the educa-
19 tion law, each member of such limited liability company shall be
20 licensed pursuant to article 154 of the education law to practice
21 licensed clinical social work in this state. With respect to a profes-
22 sional service limited liability company formed to provide creative arts
23 therapy services as such services are defined in article 163 of the
24 education law, each member of such limited liability company must be
25 licensed pursuant to article 163 of the education law to practice crea-
26 tive arts therapy in this state. With respect to a professional service
27 limited liability company formed to provide marriage and family therapy
28 services as such services are defined in article 163 of the education
29 law, each member of such limited liability company must be licensed
30 pursuant to article 163 of the education law to practice marriage and
31 family therapy in this state. With respect to a professional service
32 limited liability company formed to provide mental health counseling
33 services as such services are defined in article 163 of the education
34 law, each member of such limited liability company must be licensed
35 pursuant to article 163 of the education law to practice mental health
36 counseling in this state. With respect to a professional service limited
37 liability company formed to provide psychoanalysis services as such
38 services are defined in article 163 of the education law, each member of
39 such limited liability company must be licensed pursuant to article 163
40 of the education law to practice psychoanalysis in this state. With
41 respect to a professional service limited liability company formed to
42 provide applied behavior analysis services as such services are defined
43 in article 167 of the education law, each member of such limited liabil-
44 ity company must be licensed or certified pursuant to article 167 of the
45 education law to practice applied behavior analysis in this state. A
46 professional service limited liability company formed to lawfully engage
47 in the practice of public accountancy, as such practice is respectively
48 defined under article 149 of the education law shall be required to show
49 (1) that a simple majority of the ownership of the firm, in terms of
50 financial interests, and voting rights held by the firm's owners,
51 belongs to individuals licensed to practice public accountancy in some
52 state, and (2) that all members of a limited professional service limit-
53 ed liability company, whose principal place of business is in this
54 state, and who are engaged in the practice of public accountancy in this
55 state, hold a valid license issued under section seventy-four hundred
56 four of the education law. For purposes of this subdivision, "financial
A. 2919--C 10
1 interest" means capital stock, capital accounts, capital contributions,
2 capital interest, or interest in undistributed earnings of a business
3 entity. Although firms may include non-licensee owners, the firm and
4 its owners must comply with rules promulgated by the state board of
5 regents. Notwithstanding the foregoing, a firm registered under this
6 section may not have non-licensee owners if the firm's name includes the
7 words "certified public accountant," or "certified public accountants,"
8 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm
9 that is registered under this section shall be (1) a natural person who
10 actively participates in the business of the firm or its affiliated
11 entities, or (2) an entity, including, but not limited to, a partnership
12 or professional corporation, provided each beneficial owner of an equity
13 interest in such entity is a natural person who actively participates in
14 the business conducted by the firm or its affiliated entities. For
15 purposes of this subdivision, "actively participate" means to provide
16 services to clients or to otherwise individually take part in the day-
17 to-day business or management of the firm.
18 § 12. Subdivision (a) of section 1301 of the limited liability company
19 law, as amended by chapter 475 of the laws of 2014, is amended to read
20 as follows:
21 (a) "Foreign professional service limited liability company" means a
22 professional service limited liability company, whether or not denomi-
23 nated as such, organized under the laws of a jurisdiction other than
24 this state, (i) each of whose members and managers, if any, is a profes-
25 sional authorized by law to render a professional service within this
26 state and who is or has been engaged in the practice of such profession
27 in such professional service limited liability company or a predecessor
28 entity, or will engage in the practice of such profession in the profes-
29 sional service limited liability company within thirty days of the date
30 such professional becomes a member, or each of whose members and manag-
31 ers, if any, is a professional at least one of such members is author-
32 ized by law to render a professional service within this state and who
33 is or has been engaged in the practice of such profession in such
34 professional service limited liability company or a predecessor entity,
35 or will engage in the practice of such profession in the professional
36 service limited liability company within thirty days of the date such
37 professional becomes a member, or (ii) authorized by, or holding a
38 license, certificate, registration or permit issued by the licensing
39 authority pursuant to, the education law to render a professional
40 service within this state; except that all members and managers, if any,
41 of a foreign professional service limited liability company that
42 provides health services in this state shall be licensed in this state.
43 With respect to a foreign professional service limited liability company
44 which provides veterinary services as such services are defined in arti-
45 cle 135 of the education law, each member of such foreign professional
46 service limited liability company shall be licensed pursuant to article
47 135 of the education law to practice veterinary medicine. With respect
48 to a foreign professional service limited liability company which
49 provides medical services as such services are defined in article 131 of
50 the education law, each member of such foreign professional service
51 limited liability company must be licensed pursuant to article 131 of
52 the education law to practice medicine in this state. With respect to a
53 foreign professional service limited liability company which provides
54 dental services as such services are defined in article 133 of the
55 education law, each member of such foreign professional service limited
56 liability company must be licensed pursuant to article 133 of the educa-
A. 2919--C 11
1 tion law to practice dentistry in this state. With respect to a foreign
2 professional service limited liability company which provides profes-
3 sional engineering, land surveying, geologic, architectural and/or land-
4 scape architectural services as such services are defined in article
5 145, article 147 and article 148 of the education law, each member of
6 such foreign professional service limited liability company must be
7 licensed pursuant to article 145, article 147 and/or article 148 of the
8 education law to practice one or more of such professions in this state.
9 With respect to a foreign professional service limited liability company
10 which provides public accountancy services as such services are defined
11 in article 149 of the education law, each member of such foreign profes-
12 sional service limited liability company whose principal place of busi-
13 ness is in this state and who provides public accountancy services,
14 shall be licensed pursuant to article 149 of the education law to prac-
15 tice public accountancy in this state. With respect to a foreign profes-
16 sional service limited liability company which provides licensed clin-
17 ical social work services as such services are defined in article 154 of
18 the education law, each member of such foreign professional service
19 limited liability company shall be licensed pursuant to article 154 of
20 the education law to practice clinical social work in this state. With
21 respect to a foreign professional service limited liability company
22 which provides creative arts therapy services as such services are
23 defined in article 163 of the education law, each member of such foreign
24 professional service limited liability company must be licensed pursuant
25 to article 163 of the education law to practice creative arts therapy in
26 this state. With respect to a foreign professional service limited
27 liability company which provides marriage and family therapy services as
28 such services are defined in article 163 of the education law, each
29 member of such foreign professional service limited liability company
30 must be licensed pursuant to article 163 of the education law to prac-
31 tice marriage and family therapy in this state. With respect to a
32 foreign professional service limited liability company which provides
33 mental health counseling services as such services are defined in arti-
34 cle 163 of the education law, each member of such foreign professional
35 service limited liability company must be licensed pursuant to article
36 163 of the education law to practice mental health counseling in this
37 state. With respect to a foreign professional service limited liability
38 company which provides psychoanalysis services as such services are
39 defined in article 163 of the education law, each member of such foreign
40 professional service limited liability company must be licensed pursuant
41 to article 163 of the education law to practice psychoanalysis in this
42 state. With respect to a foreign professional service limited liability
43 company which provides applied behavior analysis services as such
44 services are defined in article 167 of the education law, each member of
45 such foreign professional service limited liability company must be
46 licensed or certified pursuant to article 167 of the education law to
47 practice applied behavior analysis in this state. A foreign professional
48 service limited liability company formed to lawfully engage in the prac-
49 tice of public accountancy, as such practice is respectively defined
50 under article 149 of the education law shall be required to show (1)
51 that a simple majority of the ownership of the firm, in terms of finan-
52 cial interests, and voting rights held by the firm's owners, belongs to
53 individuals licensed to practice public accountancy in some state, and
54 (2) that all members of a foreign limited professional service limited
55 liability company, whose principal place of business is in this state,
56 and who are engaged in the practice of public accountancy in this state,
A. 2919--C 12
1 hold a valid license issued under section seventy-four hundred four of
2 the education law. For purposes of this subdivision, "financial inter-
3 est" means capital stock, capital accounts, capital contributions, capi-
4 tal interest, or interest in undistributed earnings of a business enti-
5 ty. Although firms may include non-licensee owners, the firm and its
6 owners must comply with rules promulgated by the state board of regents.
7 Notwithstanding the foregoing, a firm registered under this section may
8 not have non-licensee owners if the firm's name includes the words
9 "certified public accountant," or "certified public accountants," or the
10 abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is
11 registered under this section shall be (1) a natural person who actively
12 participates in the business of the firm or its affiliated entities, or
13 (2) an entity, including, but not limited to, a partnership or profes-
14 sional corporation, provided each beneficial owner of an equity interest
15 in such entity is a natural person who actively participates in the
16 business conducted by the firm or its affiliated entities. For purposes
17 of this subdivision, "actively participate" means to provide services to
18 clients or to otherwise individually take part in the day-to-day busi-
19 ness or management of the firm.
20 § 13. Notwithstanding any other provision of law to the contrary,
21 there is hereby established a fee for each non-licensee owner of a firm
22 that is registered in this state to lawfully engage in the practice of
23 public accountancy. Such non-licensee owner shall pay a fee of nine
24 hundred dollars to the department of education on a triennial basis.
25 § 14. This act shall take effect immediately.