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S02473 Summary:

S02473 Actions:

S02473 Committee Votes:

S02473 Floor Votes:

S02473 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         2473--A
 
                               2023-2024 Regular Sessions
 
                    IN SENATE
 
                                    January 20, 2023
                                       ___________
 
        Introduced  by Sen. STAVISKY -- read twice and ordered printed, and when
          printed to be committed  to  the  Committee  on  Higher  Education  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee
 
        AN ACT to amend the business corporation law, the  partnership  law  and
          the  limited  liability  company  law, in relation to certified public
          accountants
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. Section 1503 of the business corporation law is amended by
     2  adding a new paragraph (h) to read as follows:
     3    (h) Any firm established for the business purpose of incorporating  as
     4  a  professional  service  corporation  formed  to lawfully engage in the
     5  practice of public accountancy, as such practice is defined under  arti-
     6  cle  one  hundred  forty-nine  of the education law shall be required to
     7  show (1) that a simple majority of the ownership of the firm,  in  terms
     8  of  financial  interests  and  voting  rights held by the firm's owners,
     9  belongs to individuals licensed to practice public accountancy  in  some
    10  state,  and  (2)  that all shareholders of a professional service corpo-
    11  ration whose principal place of business is in this state, and  who  are
    12  engaged  in  the  practice  of  public accountancy in this state, hold a
    13  valid license issued under section  seventy-four  hundred  four  of  the
    14  education  law.  For  purposes  of  this paragraph, "financial interest"
    15  means capital stock, capital accounts,  capital  contributions,  capital
    16  interest,  or  interest  in undistributed earnings of a business entity.
    17  Although firms registered with  the  education  department  may  include
    18  non-licensee  owners,  a registered firm and its owners must comply with
    19  rules promulgated by the state board of regents.    Notwithstanding  the
    20  foregoing,  a  firm incorporated under this section may not have non-li-
    21  censee owners if the firm's name includes the  words  "certified  public
    22  accountant,"  or  "certified  public  accountants," or the abbreviations
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00057-03-3
        S. 2473--A                          2
 
     1  "CPA" or "CPAs".  Each non-licensee owner of a firm that is incorporated
     2  under this section shall be a natural person who  actively  participates
     3  in  the business of the firm or its affiliated entities. For purposes of
     4  this  subdivision,  "actively  participate" means to provide services to
     5  clients or to otherwise individually take part in the  day-to-day  busi-
     6  ness  or  management  of  the firm or an affiliated entity.  Such a firm
     7  shall have attached to its certificate of incorporation a certificate or
     8  certificates demonstrating the firm's compliance with this paragraph, in
     9  lieu of the certificate or certificates required by subparagraph (ii) of
    10  paragraph (b) of this section.
    11    § 2. Section 1507 of the business corporation law is amended by adding
    12  a new paragraph (c) to read as follows:
    13    (c) Any firm established for the business purpose of incorporating  as
    14  a  professional service corporation pursuant to paragraph (h) of section
    15  fifteen hundred three of this article may issue  shares  to  individuals
    16  who are authorized by law to practice in this state the profession which
    17  such  corporation  is  authorized  to practice or who will engage in the
    18  practice of such profession in such corporation within  thirty  days  of
    19  the  date  such shares are issued and may also issue shares to employees
    20  of  the  corporation  not  licensed  as  certified  public  accountants,
    21  provided that:
    22    (i)  at  least a simple majority of the outstanding shares of stock of
    23  the corporation are owned by certified public accountants,
    24    (ii) at least a simple majority of the directors are certified  public
    25  accountants,
    26    (iii)  at least a simple majority of the officers are certified public
    27  accountants,
    28    (iv) the president, the chairperson of the board of directors and  the
    29  chief  executive  officer  or officers are certified public accountants.
    30  No shareholder of a professional service corporation established  pursu-
    31  ant  to  paragraph  (h) of section fifteen hundred three of this article
    32  shall enter into a voting trust agreement, proxy or any  other  type  of
    33  agreement  vesting  in  another person, the authority to exercise voting
    34  power of any or all of his or her shares. All agreements made or proxies
    35  granted in violation of this section shall be void.
    36    § 3. Section 1508 of the business corporation law is amended by adding
    37  a new paragraph (c) to read as follows:
    38    (c) The directors and officers of any firm established for  the  busi-
    39  ness  purpose  of  incorporating  as  a professional service corporation
    40  pursuant to paragraph (h) of section fifteen hundred three of this arti-
    41  cle may include individuals who are  not  licensed  to  practice  public
    42  accountancy in any state, provided however that at least a simple major-
    43  ity of the directors, at least a simple majority of the officers and the
    44  president, the chairperson of the board of directors and the chief exec-
    45  utive officer or officers are authorized by law to practice in any state
    46  the profession which such corporation is authorized to practice, and are
    47  either  shareholders  of  such corporation or engaged in the practice of
    48  their professions in such corporation.
    49    § 4. Section 1509 of the business corporation law, as amended by chap-
    50  ter 550 of the laws of 2011, is amended to read as follows:
    51  § 1509. Disqualification  of  shareholders,  directors,   officers   and
    52            employees.
    53    If  any  shareholder,  director, officer or employee of a professional
    54  service corporation, including  a  design  professional  service  corpo-
    55  ration,  who  has  been  rendering  professional  service  to the public
    56  becomes legally disqualified to practice his or  her  profession  within
        S. 2473--A                          3
 
     1  this  state,  he  or  she shall sever all employment with, and financial
     2  interests (other than interests as  a  creditor)  in,  such  corporation
     3  forthwith  or as otherwise provided in section 1510 of this article. All
     4  provisions of law regulating the rendering of professional services by a
     5  person  elected or appointed to a public office shall be applicable to a
     6  shareholder, director, officer and employee of such corporation  in  the
     7  same  manner  and  to the same extent as if fully set forth herein. Such
     8  legal disqualification to practice his or  her  profession  within  this
     9  state shall be deemed to constitute an irrevocable offer by the disqual-
    10  ified shareholder to sell his or her shares to the corporation, pursuant
    11  to  the provisions of section 1510 of this article or of the certificate
    12  of incorporation, by-laws or agreement among  the  corporation  and  all
    13  shareholders, whichever is applicable. Compliance with the terms of such
    14  offer  shall  be specifically enforceable in the courts of this state. A
    15  professional service corporation's failure to  enforce  compliance  with
    16  this  provision  shall constitute a ground for forfeiture of its certif-
    17  icate of incorporation and its dissolution.
    18    § 5. Paragraph (a) of section 1511 of the business corporation law, as
    19  amended by chapter 550 of the laws of 2011, is amended and a  new  para-
    20  graph (c) is added to read as follows:
    21    (a) No shareholder of a professional service corporation [or], includ-
    22  ing  a design professional service corporation, may sell or transfer his
    23  or her shares in such corporation except to another  individual  who  is
    24  eligible  to  have  shares  issued  to him or her by such corporation or
    25  except in trust to another individual who would be eligible  to  receive
    26  shares  if  he  or  she were employed by the corporation. Nothing herein
    27  contained shall be construed to prohibit the transfer of shares by oper-
    28  ation of law or by court decree.  No transferee of shares  by  operation
    29  of  law  or  court decree may vote the shares for any purpose whatsoever
    30  except with respect to corporate action under sections 909 and  1001  of
    31  this chapter. The restriction in the preceding sentence shall not apply,
    32  however,  where  such transferee would be eligible to have shares issued
    33  to him or her if he or she were an employee of the corporation  and,  if
    34  there  are  other  shareholders,  a  majority of such other shareholders
    35  shall fail to redeem the shares so transferred, pursuant to section 1510
    36  of this article, within sixty days of receiving written notice  of  such
    37  transfer.  Any  sale  or  transfer,  except by operation of law or court
    38  decree or except for a corporation having only one shareholder,  may  be
    39  made only after the same shall have been approved by the board of direc-
    40  tors, or at a shareholders' meeting specially called for such purpose by
    41  such  proportion, not less than a majority, of the outstanding shares as
    42  may be provided in the certificate of incorporation or in the by-laws of
    43  such professional service corporation. At such shareholders' meeting the
    44  shares held by the shareholder proposing to sell or transfer his or  her
    45  shares  may  not  be voted or counted for any purpose, unless all share-
    46  holders consent that such shares be voted or counted. The certificate of
    47  incorporation or the by-laws of the professional service corporation, or
    48  the professional service corporation and  the  shareholders  by  private
    49  agreement,  may  provide,  in  lieu  of  or in addition to the foregoing
    50  provisions, for the alienation of shares and may require the  redemption
    51  or purchase of such shares by such corporation at prices and in a manner
    52  specifically set forth therein. The existence of the restrictions on the
    53  sale  or transfer of shares, as contained in this article and, if appli-
    54  cable, in the certificate of incorporation, by-laws, stock  purchase  or
    55  stock  redemption agreement, shall be noted conspicuously on the face or
    56  back of every certificate for shares issued by  a  professional  service
        S. 2473--A                          4
 
     1  corporation.  Any  sale  or  transfer  in violation of such restrictions
     2  shall be void.
     3    (c)  A firm established for the business purpose of incorporating as a
     4  professional service corporation pursuant to paragraph  (h)  of  section
     5  fifteen  hundred  three  of  this  article, shall purchase or redeem the
     6  shares of a non-licensed professional shareholder in the case of his  or
     7  her termination of employment within thirty days after such termination.
     8  A  firm  established  for  the  business  purpose  of incorporating as a
     9  professional service corporation pursuant to paragraph  (h)  of  section
    10  fifteen hundred three of this article, shall not be required to purchase
    11  or  redeem  the  shares of a terminated non-licensed professional share-
    12  holder if such shares, within thirty days after  such  termination,  are
    13  sold  or  transferred to another employee of the corporation pursuant to
    14  this article.
    15    § 6. Section 1514 of the business corporation law is amended by adding
    16  a new paragraph (c) to read as follows:
    17    (c) Each firm established for the business purpose of incorporating as
    18  a professional service corporation pursuant to paragraph (h) of  section
    19  fifteen  hundred  three of this article shall, at least once every three
    20  years on or before the  date  prescribed  by  the  licensing  authority,
    21  furnish  a  statement  to  the licensing authority listing the names and
    22  residence addresses of each shareholder, director and  officer  of  such
    23  corporation  and  certify  as the date of certification and at all times
    24  over the entire three year period that:
    25    (i) at least a simple majority of the outstanding shares of  stock  of
    26  the corporation are and were owned by certified public accountants,
    27    (ii)  at  least a simple majority of the directors are and were certi-
    28  fied public accountants,
    29    (iii) at least a simple majority of the officers are and  were  certi-
    30  fied public accountants,
    31    (iv)  the president, the chairperson of the board of directors and the
    32  chief executive officer  or  officers  are  and  were  certified  public
    33  accountants.
    34  The  statement  shall be signed by the president or any certified public
    35  accountant vice-president and  attested  to  by  the  secretary  or  any
    36  assistant secretary of the corporation.
    37    § 7. Paragraph (d) of section 1525 of the business corporation law, as
    38  added by chapter 505 of the laws of 1983, is amended to read as follows:
    39    (d) "Foreign  professional  service  corporation" means a professional
    40  service corporation, whether or not denominated as such, organized under
    41  the laws of a jurisdiction other than this state, all of the  sharehold-
    42  ers,  directors  and  officers  of  which are authorized and licensed to
    43  practice the profession for which such corporation  is  licensed  to  do
    44  business;  except  that  all  shareholders,  directors and officers of a
    45  foreign professional service corporation which provides health  services
    46  in  this  state  shall be licensed in this state. A foreign professional
    47  service corporation formed to lawfully engage in the practice of  public
    48  accountancy  as  a  firm,  as such practice is defined under article one
    49  hundred forty-nine of the education law, or equivalent state law,  shall
    50  be  required  to show (1) that a simple majority of the ownership of the
    51  firm, in terms of financial interests and  voting  rights  held  by  the
    52  firm's  owners,  belongs  to  individuals  licensed  to  practice public
    53  accountancy in some state, and (2) that all shareholders  of  a  foreign
    54  professional service corporation whose principal place of business is in
    55  this state, and who are engaged in the practice of public accountancy in
    56  this  state,  hold  a  valid  license  issued under section seventy-four
        S. 2473--A                          5
 
     1  hundred four of the education  law.  For  purposes  of  this  paragraph,
     2  "financial  interest"  means  capital  stock,  capital accounts, capital
     3  contributions, capital interest, or interest in  undistributed  earnings
     4  of  a  business  entity.    Although firms registered with the education
     5  department may include non-licensee owners, a registered  firm  and  its
     6  owners must comply with rules promulgated by the state board of regents.
     7  Notwithstanding  the  foregoing,  a  firm  registered with the education
     8  department may not have non-licensee owners if the firm's name  includes
     9  the  words  "certified public accountant," or "certified public account-
    10  ants," or the abbreviations "CPA" or "CPAs". Each non-licensee owner  of
    11  a  firm  that  is operating under this section shall be a natural person
    12  who actively participates in the business of the firm or its  affiliated
    13  entities,  provided  each beneficial owner of an equity interest in such
    14  entity is a natural person who actively  participates  in  the  business
    15  conducted  by  the firm or its affiliated entities. For purposes of this
    16  paragraph, "actively participate" means to provide services  to  clients
    17  or  to  otherwise  individually  take part in the day-to-day business or
    18  management of the firm or an affiliated entity.
    19    § 8. Subdivision (q) of section 121-1500 of the  partnership  law,  as
    20  amended  by  chapter  475  of  the  laws  of 2014, is amended to read as
    21  follows:
    22    (q) Each partner of a registered limited liability partnership  formed
    23  to  provide  medical services in this state must be licensed pursuant to
    24  article 131 of the education law to practice medicine in this state  and
    25  each  partner  of  a  registered limited liability partnership formed to
    26  provide dental services in this state must be licensed pursuant to arti-
    27  cle 133 of the education law to practice dentistry in this state.   Each
    28  partner  of a registered limited liability partnership formed to provide
    29  veterinary services in this state must be licensed pursuant  to  article
    30  135  of the education law to practice veterinary medicine in this state.
    31  Each partner of a registered limited  liability  partnership  formed  to
    32  provide  public accountancy services as a firm, whose principal place of
    33  business is in this state and who provides public accountancy  services,
    34  must  be  licensed pursuant to article 149 of the education law to prac-
    35  tice public accountancy in this state.  Each  partner  of  a  registered
    36  limited  liability  partnership formed to provide professional engineer-
    37  ing, land surveying, geological services, architectural and/or landscape
    38  architectural services in this state must be licensed pursuant to  arti-
    39  cle 145, article 147 and/or article 148 of the education law to practice
    40  one  or more of such professions in this state. Each partner of a regis-
    41  tered limited liability partnership formed to provide licensed  clinical
    42  social  work services in this state must be licensed pursuant to article
    43  154 of the education law to practice clinical social work in this state.
    44  Each partner of a registered limited  liability  partnership  formed  to
    45  provide  creative  arts  therapy services in this state must be licensed
    46  pursuant to article 163 of the education law to practice  creative  arts
    47  therapy  in  this  state. Each partner of a registered limited liability
    48  partnership formed to provide marriage and family  therapy  services  in
    49  this state must be licensed pursuant to article 163 of the education law
    50  to practice marriage and family therapy in this state. Each partner of a
    51  registered limited liability partnership formed to provide mental health
    52  counseling  services  in this state must be licensed pursuant to article
    53  163 of the education law to practice mental health  counseling  in  this
    54  state. Each partner of a registered limited liability partnership formed
    55  to provide psychoanalysis services in this state must be licensed pursu-
    56  ant  to  article  163 of the education law to practice psychoanalysis in
        S. 2473--A                          6
 
     1  this state. Each partner of a registered limited  liability  partnership
     2  formed  to  provide applied behavior analysis service in this state must
     3  be licensed or certified pursuant to article 167 of the education law to
     4  practice  applied  behavior analysis in this state. A registered limited
     5  liability partnership formed to  lawfully  engage  in  the  practice  of
     6  public  accountancy as a firm, as such practice is defined under article
     7  149 of the education law, shall be required to show (1)  that  a  simple
     8  majority  of  the ownership of the firm, in terms of financial interests
     9  and voting rights held by the  firm's  owners,  belongs  to  individuals
    10  licensed  to practice public accountancy in some state, and (2) that all
    11  partners of a limited liability partnership  whose  principal  place  of
    12  business is in this state, and who are engaged in the practice of public
    13  accountancy  in  this  state,  hold a valid license issued under section
    14  seventy-four hundred four of the education law.  For  purposes  of  this
    15  subdivision, "financial interest" means capital stock, capital accounts,
    16  capital  contributions,  capital  interest, or interest in undistributed
    17  earnings of a business entity.    Although  firms  registered  with  the
    18  education  department  may include non-licensee owners, the firm and its
    19  owners must comply with rules promulgated by the state board of regents.
    20  Notwithstanding the foregoing, a  firm  registered  with  the  education
    21  department  may not have non-licensee owners if the firm's name includes
    22  the words "certified public accountant," or "certified public accounts,"
    23  or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a  firm
    24  that  is  formed  under  this  section shall be (1) a natural person who
    25  actively participates in the business of  the  firm  or  its  affiliated
    26  entities, or (2) an entity, including, but not limited to, a partnership
    27  or professional corporation, provided each beneficial owner of an equity
    28  interest in such entity is a natural person who actively participates in
    29  the  business  conducted  by  the  firm  or its affiliated entities. For
    30  purposes of this subdivision, "actively participate"  means  to  provide
    31  services  to  clients or to otherwise individually take part in the day-
    32  to-day business or management of the firm or an affiliated entity.
    33    § 9. Subdivision (q) of section 121-1502 of the  partnership  law,  as
    34  amended  by  chapter  475  of  the  laws  of 2014, is amended to read as
    35  follows:
    36    (q) Each partner of a  foreign  limited  liability  partnership  which
    37  provides  medical  services  in  this state must be licensed pursuant to
    38  article 131 of the education law to practice medicine in the  state  and
    39  each  partner  of a foreign limited liability partnership which provides
    40  dental services in the state must be licensed pursuant to article 133 of
    41  the education law to practice dentistry in this state. Each partner of a
    42  foreign limited liability partnership which provides veterinary  service
    43  in  the state shall be licensed pursuant to article 135 of the education
    44  law to practice veterinary medicine in this state.  Each  partner  of  a
    45  foreign  limited liability partnership which provides professional engi-
    46  neering, land surveying, geological services, architectural and/or land-
    47  scape architectural services in this state must be licensed pursuant  to
    48  article  145,  article  147  and/or  article 148 of the education law to
    49  practice one or more of such professions.   Each partner  of  a  foreign
    50  limited  liability  partnership  formed  to  provide  public accountancy
    51  services as a firm, whose principal place of business is in  this  state
    52  and  who provides public accountancy services, must be licensed pursuant
    53  to article 149 of the education law to practice  public  accountancy  in
    54  this  state.  Each  partner  of  a foreign limited liability partnership
    55  which provides licensed clinical social work services in this state must
    56  be licensed pursuant to article 154 of the  education  law  to  practice
        S. 2473--A                          7
 
     1  licensed  clinical  social work in this state. Each partner of a foreign
     2  limited liability  partnership  which  provides  creative  arts  therapy
     3  services  in  this state must be licensed pursuant to article 163 of the
     4  education  law  to  practice  creative  arts therapy in this state. Each
     5  partner of  a  foreign  limited  liability  partnership  which  provides
     6  marriage  and  family  therapy  services  in this state must be licensed
     7  pursuant to article 163 of the education law to  practice  marriage  and
     8  family  therapy in this state. Each partner of a foreign limited liabil-
     9  ity partnership which provides mental health counseling services in this
    10  state must be licensed pursuant to article 163 of the education  law  to
    11  practice  mental  health  counseling  in  this  state. Each partner of a
    12  foreign limited  liability  partnership  which  provides  psychoanalysis
    13  services  in  this state must be licensed pursuant to article 163 of the
    14  education law to practice psychoanalysis in this state. Each partner  of
    15  a  foreign limited liability partnership which provides applied behavior
    16  analysis services in this state must be licensed or  certified  pursuant
    17  to  article 167 of the education law to practice applied behavior analy-
    18  sis in this state.  A foreign limited liability  partnership  formed  to
    19  lawfully engage in the practice of public accountancy as a firm, as such
    20  practice  is  defined  under  article 149 of the education law, shall be
    21  required to show (1) that a simple majority  of  the  ownership  of  the
    22  firm,  in  terms  of  financial  interests and voting rights held by the
    23  firm's owners,  belongs  to  individuals  licensed  to  practice  public
    24  accountancy  in  some  state,  and  (2) that all partners of the foreign
    25  limited liability partnership whose principal place of  business  is  in
    26  this state, and who are engaged in the practice of public accountancy in
    27  this  state,  hold  a  valid  license  issued under section seventy-four
    28  hundred four of the education law. For  purposes  of  this  subdivision,
    29  "financial  interest"  means  capital  stock,  capital accounts, capital
    30  contributions, capital interest, or interest in  undistributed  earnings
    31  of  a  business  entity.    Although firms registered with the education
    32  department may include non-licensee owners, a registered  firm  and  its
    33  owners must comply with rules promulgated by the state board of regents.
    34  Notwithstanding  the  foregoing,  a  firm  registered with the education
    35  department may not have non-licensee owners if the firm's name  includes
    36  the  words  "certified public accountant," or "certified public account-
    37  ants," or the abbreviations "CPA" or "CPAs".  Each non-licensee owner of
    38  a firm that is formed under this section shall be (1) a  natural  person
    39  who  actively participates in the business of the firm or its affiliated
    40  entities, or (2) an entity, including, but not limited to, a partnership
    41  or professional corporation, provided that each beneficial owner  of  an
    42  equity  interest in such entity is a natural person who actively partic-
    43  ipates in the business conducted by the firm or its affiliated entities.
    44  For purposes  of  this  subdivision,  "actively  participate"  means  to
    45  provide  services  to  clients or to otherwise individually take part in
    46  the day-to-day business or management of the firm or an affiliated enti-
    47  ty.
    48    § 10. Subdivision (b) of section 1207 of the limited liability company
    49  law, as amended by chapter 475 of the laws of 2014, is amended  to  read
    50  as follows:
    51    (b)  With  respect to a professional service limited liability company
    52  formed to provide medical services as such services are defined in arti-
    53  cle 131 of the education law, each  member  of  such  limited  liability
    54  company must be licensed pursuant to article 131 of the education law to
    55  practice medicine in this state.  With respect to a professional service
    56  limited  liability  company  formed  to  provide dental services as such
        S. 2473--A                          8
 
     1  services are defined in article 133 of the education law, each member of
     2  such limited liability company must be licensed pursuant to article  133
     3  of  the  education law to practice dentistry in this state. With respect
     4  to  a  professional  service limited liability company formed to provide
     5  veterinary services as such services are defined in article 135  of  the
     6  education  law,  each  member  of such limited liability company must be
     7  licensed pursuant to article 135 of the education law to practice veter-
     8  inary medicine in this state. With respect  to  a  professional  service
     9  limited  liability  company  formed to provide professional engineering,
    10  land surveying, architectural, landscape architectural and/or geological
    11  services as such services are defined in article 145,  article  147  and
    12  article  148 of the education law, each member of such limited liability
    13  company must be licensed pursuant to article  145,  article  147  and/or
    14  article  148  of  the  education  law  to  practice  one or more of such
    15  professions in this state.   With  respect  to  a  professional  service
    16  limited  liability company formed to provide public accountancy services
    17  as such services are defined in article 149 of the  education  law  each
    18  member  of such limited liability company whose principal place of busi-
    19  ness is in this state and who provides public accountancy services, must
    20  be licensed pursuant to article 149 of the  education  law  to  practice
    21  public accountancy in this state. With respect to a professional service
    22  limited  liability  company  formed  to provide licensed clinical social
    23  work services as such services are defined in article 154 of the  educa-
    24  tion  law,  each  member  of  such  limited  liability  company shall be
    25  licensed pursuant to article  154  of  the  education  law  to  practice
    26  licensed  clinical  social work in this state. With respect to a profes-
    27  sional service limited liability company formed to provide creative arts
    28  therapy services as such services are defined  in  article  163  of  the
    29  education  law,  each  member  of such limited liability company must be
    30  licensed pursuant to article 163 of the education law to practice  crea-
    31  tive  arts therapy in this state. With respect to a professional service
    32  limited liability company formed to provide marriage and family  therapy
    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 marriage and
    36  family therapy in this state. With respect  to  a  professional  service
    37  limited  liability  company  formed  to provide mental health counseling
    38  services as such services are defined in article 163  of  the  education
    39  law,  each  member  of  such  limited liability company must be licensed
    40  pursuant to article 163 of the education law to practice  mental  health
    41  counseling in this state. With respect to a professional service limited
    42  liability  company  formed  to  provide  psychoanalysis services as such
    43  services are defined in article 163 of the education law, each member of
    44  such limited liability company must be licensed pursuant to article  163
    45  of  the  education  law  to  practice psychoanalysis in this state. With
    46  respect to a professional service limited liability  company  formed  to
    47  provide  applied behavior analysis services as such services are defined
    48  in article 167 of the education law, each member of such limited liabil-
    49  ity company must be licensed or certified pursuant to article 167 of the
    50  education law to practice applied behavior analysis  in  this  state.  A
    51  professional service limited liability company formed to lawfully engage
    52  in  the  practice  of  public accountancy as a firm, as such practice is
    53  defined under article 149 of the education law shall be required to show
    54  (1) that a simple majority of the ownership of the  firm,  in  terms  of
    55  financial interests and voting rights held by the firm's owners, belongs
    56  to  individuals  licensed  to practice public accountancy in some state,
        S. 2473--A                          9
 
     1  and (2) that all members  of  a  limited  professional  service  limited
     2  liability  company,  whose principal place of business is in this state,
     3  and who are engaged in the practice of public accountancy in this state,
     4  hold  a  valid license issued under section seventy-four hundred four of
     5  the education law. For purposes of this subdivision,  "financial  inter-
     6  est" means capital stock, capital accounts, capital contributions, capi-
     7  tal  interest, or interest in undistributed earnings of a business enti-
     8  ty.  Although firms registered with the education department may include
     9  non-licensee owners, a registered firm and its owners must  comply  with
    10  rules  promulgated  by  the state board of regents.  Notwithstanding the
    11  foregoing, a firm registered with the education department may not  have
    12  non-licensee  owners  if  the  firm's name includes the words "certified
    13  public accountant," or "certified public accountants," or  the  abbrevi-
    14  ations "CPA" or "CPAs". Each non-licensee owner of a firm that is regis-
    15  tered  under  this  section  shall  be (1) a natural person who actively
    16  participates in the business of the firm or its affiliated entities,  or
    17  (2)  an  entity, including, but not limited to, a partnership or profes-
    18  sional corporation, provided each beneficial owner of an equity interest
    19  in such entity is a natural person  who  actively  participates  in  the
    20  business  conducted by the firm or its affiliated entities. For purposes
    21  of this subdivision, "actively participate" means to provide services to
    22  clients or to otherwise individually take part in the  day-to-day  busi-
    23  ness or management of the firm or an affiliated entity.
    24    § 11. Subdivision (a) of section 1301 of the limited liability company
    25  law,  as  amended by chapter 475 of the laws of 2014, is amended to read
    26  as follows:
    27    (a) "Foreign professional service limited liability company"  means  a
    28  professional  service  limited liability company, whether or not denomi-
    29  nated as such, organized under the laws of  a  jurisdiction  other  than
    30  this state, (i) each of whose members and managers, if any, is a profes-
    31  sional  authorized  by  law to render a professional service within this
    32  state and who is or has been engaged in the practice of such  profession
    33  in  such professional service limited liability company or a predecessor
    34  entity, or will engage in the practice of such profession in the profes-
    35  sional service limited liability company within thirty days of the  date
    36  such  professional becomes a member, or each of whose members and manag-
    37  ers, if any, is a professional at least one of such members  is  author-
    38  ized  by  law to render a professional service within this state and who
    39  is or has been engaged in  the  practice  of  such  profession  in  such
    40  professional  service limited liability company or a predecessor entity,
    41  or will engage in the practice of such profession  in  the  professional
    42  service  limited  liability  company within thirty days of the date such
    43  professional becomes a member, or  (ii)  authorized  by,  or  holding  a
    44  license,  certificate,  registration  or  permit issued by the licensing
    45  authority pursuant to,  the  education  law  to  render  a  professional
    46  service within this state; except that all members and managers, if any,
    47  of  a  foreign  professional  service  limited  liability  company  that
    48  provides health services in this state shall be licensed in this  state.
    49  With respect to a foreign professional service limited liability company
    50  which provides veterinary services as such services are defined in arti-
    51  cle  135  of the education law, each member of such foreign professional
    52  service limited liability company shall be licensed pursuant to  article
    53  135  of  the education law to practice veterinary medicine. With respect
    54  to a  foreign  professional  service  limited  liability  company  which
    55  provides medical services as such services are defined in article 131 of
    56  the  education  law,  each  member  of such foreign professional service
        S. 2473--A                         10
 
     1  limited liability company must be licensed pursuant to  article  131  of
     2  the education law to practice medicine in this state.  With respect to a
     3  foreign  professional  service  limited liability company which provides
     4  dental  services  as  such  services  are  defined in article 133 of the
     5  education law, each member of such foreign professional service  limited
     6  liability company must be licensed pursuant to article 133 of the educa-
     7  tion  law to practice dentistry in this state. With respect to a foreign
     8  professional service limited liability company  which  provides  profes-
     9  sional engineering, land surveying, geologic, architectural and/or land-
    10  scape  architectural  services  as  such services are defined in article
    11  145, article 147 and article 148 of the education law,  each  member  of
    12  such  foreign  professional  service  limited  liability company must be
    13  licensed pursuant to article 145, article 147 and/or article 148 of  the
    14  education law to practice one or more of such professions in this state.
    15  With respect to a foreign professional service limited liability company
    16  which  provides public accountancy services as such services are defined
    17  in article 149 of the education law, each member of such foreign profes-
    18  sional service limited liability company whose principal place of  busi-
    19  ness  is  in  this  state  and who provides public accountancy services,
    20  shall be licensed pursuant to article 149 of the education law to  prac-
    21  tice public accountancy in this state. With respect to a foreign profes-
    22  sional  service  limited liability company which provides licensed clin-
    23  ical social work services as such services are defined in article 154 of
    24  the education law, each member  of  such  foreign  professional  service
    25  limited  liability  company shall be licensed pursuant to article 154 of
    26  the education law to practice clinical social work in this  state.  With
    27  respect  to  a  foreign  professional  service limited liability company
    28  which provides creative arts  therapy  services  as  such  services  are
    29  defined in article 163 of the education law, each member of such foreign
    30  professional service limited liability company must be licensed pursuant
    31  to article 163 of the education law to practice creative arts therapy in
    32  this  state.  With  respect  to  a  foreign professional service limited
    33  liability company which provides marriage and family therapy services as
    34  such services are defined in article 163  of  the  education  law,  each
    35  member  of  such  foreign professional service limited liability company
    36  must be licensed pursuant to article 163 of the education law  to  prac-
    37  tice  marriage  and  family  therapy  in  this  state. With respect to a
    38  foreign professional service limited liability  company  which  provides
    39  mental  health counseling services as such services are defined in arti-
    40  cle 163 of the education law, each member of such  foreign  professional
    41  service  limited  liability company must be licensed pursuant to article
    42  163 of the education law to practice mental health  counseling  in  this
    43  state.  With respect to a foreign professional service limited liability
    44  company which provides psychoanalysis  services  as  such  services  are
    45  defined in article 163 of the education law, each member of such foreign
    46  professional service limited liability company must be licensed pursuant
    47  to  article  163 of the education law to practice psychoanalysis in this
    48  state. With respect to a foreign professional service limited  liability
    49  company  which  provides  applied  behavior  analysis  services  as such
    50  services are defined in article 167 of the education law, each member of
    51  such foreign professional service  limited  liability  company  must  be
    52  licensed  or  certified  pursuant to article 167 of the education law to
    53  practice applied behavior analysis in this state. A foreign professional
    54  service limited liability company formed to lawfully engage in the prac-
    55  tice of public accountancy as a firm, as such practice is defined  under
    56  article  149  of  the education law shall be required to show (1) that a
        S. 2473--A                         11
 
     1  simple majority of the ownership of the  firm,  in  terms  of  financial
     2  interests  and voting rights held by the firm's owners, belongs to indi-
     3  viduals licensed to practice public accountancy in some state,  and  (2)
     4  that  all  members  of  a  foreign  limited professional service limited
     5  liability company, whose principal place of business is in  this  state,
     6  and who are engaged in the practice of public accountancy in this state,
     7  hold  a  valid license issued under section seventy-four hundred four of
     8  the education law. For purposes of this subdivision,  "financial  inter-
     9  est" means capital stock, capital accounts, capital contributions, capi-
    10  tal  interest, or interest in undistributed earnings of a business enti-
    11  ty.  Although firms registered with the education department may include
    12  non-licensee owners, a registered firm and its owners must  comply  with
    13  rules  promulgated  by  the state board of regents.  Notwithstanding the
    14  foregoing, a firm registered with the education department may not  have
    15  non-licensee  owners  if  the  firm's name includes the words "certified
    16  public accountant," or "certified public accountants," or  the  abbrevi-
    17  ations "CPA" or "CPAs". Each non-licensee owner of a firm that is regis-
    18  tered  under  this  section  shall  be (1) a natural person who actively
    19  participates in the business of the firm or its affiliated entities,  or
    20  (2)  an  entity, including, but not limited to, a partnership or profes-
    21  sional corporation, provided each beneficial owner of an equity interest
    22  in such entity is a natural person  who  actively  participates  in  the
    23  business  conducted by the firm or its affiliated entities. For purposes
    24  of this subdivision, "actively participate" means to provide services to
    25  clients or to otherwise individually take part in the  day-to-day  busi-
    26  ness or management of the firm or an affiliated entity.
    27    § 12. Notwithstanding any other provision of law to the contrary, if a
    28  firm  which  is  registered  with  the  education department to lawfully
    29  engage in the practice of public accountancy has one or more  non-licen-
    30  see  owners,  each  such  non-licensee owner of the firm whose principal
    31  place of business is in the state of New York shall pay a  fee  of  nine
    32  hundred dollars to the department of education on a triennial basis.
    33    § 13. This act shall take effect immediately.