S03842 Summary:

BILL NOS03842D
 
SAME ASSAME AS A02919-C
 
SPONSORSTAVISKY
 
COSPNSRLAVALLE, ADDABBO, COMRIE, FUNKE, GOUNARDES, HOYLMAN, KAMINSKY, KENNEDY, MAYER, RAMOS, SALAZAR, SEPULVEDA
 
MLTSPNSR
 
Amd §§1503, 1507, 1508, 1509, 1511, 1514 & 1525, BC L; amd §§121-1500, 121-1502 & 121-101, Partn L; amd §§1207 & 1301, Lim Lil L
 
Relates to certified public accountants.
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S03842 Actions:

BILL NOS03842D
 
02/19/2019REFERRED TO HIGHER EDUCATION
04/15/2019AMEND (T) AND RECOMMIT TO HIGHER EDUCATION
04/15/2019PRINT NUMBER 3842A
04/24/2019AMEND AND RECOMMIT TO HIGHER EDUCATION
04/24/2019PRINT NUMBER 3842B
04/30/20191ST REPORT CAL.477
05/01/20192ND REPORT CAL.
05/06/2019ADVANCED TO THIRD READING
05/07/2019PASSED SENATE
05/07/2019DELIVERED TO ASSEMBLY
05/07/2019referred to higher education
01/08/2020died in assembly
01/08/2020returned to senate
01/08/2020REFERRED TO HIGHER EDUCATION
07/15/2020AMEND AND RECOMMIT TO HIGHER EDUCATION
07/15/2020PRINT NUMBER 3842C
08/03/2020AMEND AND RECOMMIT TO HIGHER EDUCATION
08/03/2020PRINT NUMBER 3842D
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S03842 Committee Votes:

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S03842 Floor Votes:

There are no votes for this bill in this legislative session.
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S03842 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         3842--D
 
                               2019-2020 Regular Sessions
 
                    IN SENATE
 
                                    February 19, 2019
                                       ___________
 
        Introduced   by   Sens.   STAVISKY,  LAVALLE,  ADDABBO,  COMRIE,  FUNKE,
          GOUNARDES, HOYLMAN, KAMINSKY, KENNEDY, MAYER, RAMOS, SALAZAR, SEPULVE-
          DA -- 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 commit-
          tee --  committee  discharged,  bill  amended,  ordered  reprinted  as
          amended  and  recommitted  to  said  committee  --  recommitted to the
          Committee on Higher Education in accordance with Senate Rule 6, sec. 8
          -- committee discharged, bill amended, ordered  reprinted  as  amended
          and  recommitted  to  said  committee  --  committee  discharged, bill
          amended, ordered reprinted as amended and recommitted to said  commit-
          tee
 
        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
     8  firm,  in  terms  of  financial interests, and voting rights held by the
     9  firm's owners,  belongs  to  individuals  licensed  to  practice  public
    10  accountancy  in  some  state, and (2) that all shareholders of a profes-
    11  sional service corporation whose principal place of business is in  this
    12  state, and who are engaged in the practice of public accountancy in this
    13  state,  hold  a  valid license issued under section seventy-four hundred
    14  four of the education law. For purposes of  this  paragraph,  "financial
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04747-08-0

        S. 3842--D                          2
 
     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 incorporated 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 incorporated under this section shall be a  natural  person  who
    10  actively  participates  in  the  business  of the firm or its affiliated
    11  entities. For purposes of this subdivision, "actively participate" means
    12  to provide services to clients or to otherwise individually take part in
    13  the day-to-day business or management of the firm.  Such  a  firm  shall
    14  have  attached  to  its  certificate  of  incorporation a certificate or
    15  certificates demonstrating the firm's compliance with this paragraph, in
    16  lieu of the certificate or certificates required by subparagraph (ii) of
    17  paragraph (b) of this section.
    18    § 2. Section 1507 of the business corporation law is amended by adding
    19  a new paragraph (c) to read as follows:
    20    (c) Any firm established for the business purpose of incorporating  as
    21  a  professional service corporation pursuant to paragraph (h) of section
    22  fifteen hundred three of this article may issue  shares  to  individuals
    23  who are authorized by law to practice in this state the profession which
    24  such  corporation  is  authorized  to  practice and who are or have been
    25  engaged in the practice of such profession  in  such  corporation  or  a
    26  predecessor  entity,  or who will engage in the practice of such profes-
    27  sion in such corporation within thirty days of the date such shares  are
    28  issued  and  may  also  issue shares to employees of the corporation not
    29  licensed as certified public accountants, provided that:
    30    (i) at least fifty-one percent of the outstanding shares of  stock  of
    31  the corporation are owned by certified public accountants,
    32    (ii)  at least fifty-one percent of the directors are certified public
    33  accountants,
    34    (iii) at least fifty-one percent of the officers are certified  public
    35  accountants,
    36    (iv)  the president, the chairperson of the board of directors and the
    37  chief executive officer or officers are  certified  public  accountants.
    38  No  shareholder of a firm established for the business purpose of incor-
    39  porating as a professional service corporation pursuant to paragraph (h)
    40  of section fifteen hundred three of this  article  shall  enter  into  a
    41  voting  trust agreement, proxy or any other type of agreement vesting in
    42  another person, other than another shareholder of the same  corporation,
    43  the  authority  to  exercise  voting  power  of any or all of his or her
    44  shares. All  shares  issued,  agreements  made  or  proxies  granted  in
    45  violation of this section shall be void.
    46    § 3. Section 1508 of the business corporation law is amended by adding
    47  a new paragraph (c) to read as follows:
    48    (c)  The  directors and officers of any firm established for the busi-
    49  ness purpose of incorporating  as  a  professional  service  corporation
    50  pursuant to paragraph (h) of section fifteen hundred three of this arti-
    51  cle  may  include  individuals  who  are not licensed to practice public
    52  accountancy, provided however that at least  fifty-one  percent  of  the
    53  directors, at least fifty-one percent of the officers and the president,
    54  the  chairperson of the board of directors and the chief executive offi-
    55  cer or officers are authorized by law  to  practice  in  any  state  the
    56  profession  which  such  corporation  is authorized to practice, and are

        S. 3842--D                          3
 
     1  either shareholders of such corporation or engaged in  the  practice  of
     2  their professions in such corporation.
     3    § 4. Section 1509 of the business corporation law, as amended by chap-
     4  ter 550 of the laws of 2011, is amended to read as follows:
     5  § 1509. Disqualification   of   shareholders,  directors,  officers  and
     6            employees.
     7    If any shareholder, director, officer or employee  of  a  professional
     8  service  corporation,  including  a  design  professional service corpo-
     9  ration, who has  been  rendering  professional  service  to  the  public
    10  becomes  legally  disqualified  to practice his or her profession within
    11  this state, he or she shall sever all  employment  with,  and  financial
    12  interests  (other  than  interests  as  a creditor) in, such corporation
    13  forthwith or as otherwise provided in section 1510 of this article.  All
    14  provisions of law regulating the rendering of professional services by a
    15  person  elected or appointed to a public office shall be applicable to a
    16  shareholder, director, officer and employee of such corporation  in  the
    17  same  manner  and  to the same extent as if fully set forth herein. Such
    18  legal disqualification to practice his or  her  profession  within  this
    19  state shall be deemed to constitute an irrevocable offer by the disqual-
    20  ified shareholder to sell his or her shares to the corporation, pursuant
    21  to  the provisions of section 1510 of this article or of the certificate
    22  of incorporation, by-laws or agreement among  the  corporation  and  all
    23  shareholders, whichever is applicable. Compliance with the terms of such
    24  offer  shall  be specifically enforceable in the courts of this state. A
    25  professional service corporation's failure to  enforce  compliance  with
    26  this  provision  shall constitute a ground for forfeiture of its certif-
    27  icate of incorporation and its dissolution.
    28    § 5. Paragraph (a) of section 1511 of the business corporation law, as
    29  amended by chapter 550 of the laws of 2011, is amended and a  new  para-
    30  graph (c) is added to read as follows:
    31    (a) No shareholder of a professional service corporation [or], includ-
    32  ing  a design professional service corporation, may sell or transfer his
    33  or her shares in such corporation except to another  individual  who  is
    34  eligible  to  have  shares  issued  to him or her by such corporation or
    35  except in trust to another individual who would be eligible  to  receive
    36  shares  if  he  or  she were employed by the corporation. Nothing herein
    37  contained shall be construed to prohibit the transfer of shares by oper-
    38  ation of law or by court decree.  No transferee of shares  by  operation
    39  of  law  or  court decree may vote the shares for any purpose whatsoever
    40  except with respect to corporate action under sections 909 and  1001  of
    41  this chapter. The restriction in the preceding sentence shall not apply,
    42  however,  where  such transferee would be eligible to have shares issued
    43  to him or her if he or she were an employee of the corporation  and,  if
    44  there  are  other  shareholders,  a  majority of such other shareholders
    45  shall fail to redeem the shares so transferred, pursuant to section 1510
    46  of this article, within sixty days of receiving written notice  of  such
    47  transfer.  Any  sale  or  transfer,  except by operation of law or court
    48  decree or except for a corporation having only one shareholder,  may  be
    49  made only after the same shall have been approved by the board of direc-
    50  tors, or at a shareholders' meeting specially called for such purpose by
    51  such  proportion, not less than a majority, of the outstanding shares as
    52  may be provided in the certificate of incorporation or in the by-laws of
    53  such professional service corporation. At such shareholders' meeting the
    54  shares held by the shareholder proposing to sell or transfer his or  her
    55  shares  may  not  be voted or counted for any purpose, unless all share-
    56  holders consent that such shares be voted or counted. The certificate of

        S. 3842--D                          4
 
     1  incorporation or the by-laws of the professional service corporation, or
     2  the professional service corporation and  the  shareholders  by  private
     3  agreement,  may  provide,  in  lieu  of  or in addition to the foregoing
     4  provisions,  for the alienation of shares and may require the redemption
     5  or purchase of such shares by such corporation at prices and in a manner
     6  specifically set forth therein. The existence of the restrictions on the
     7  sale or transfer of shares, as contained in this article and, if  appli-
     8  cable,  in  the certificate of incorporation, by-laws, stock purchase or
     9  stock redemption agreement, shall be noted conspicuously on the face  or
    10  back  of  every  certificate for shares issued by a professional service
    11  corporation. Any sale or transfer  in  violation  of  such  restrictions
    12  shall be void.
    13    (c)  A firm established for the business purpose of incorporating as a
    14  professional service corporation pursuant to paragraph  (h)  of  section
    15  fifteen  hundred  three  of  this  article, shall purchase or redeem the
    16  shares of a non-licensed professional shareholder in the case of his  or
    17  her termination of employment within thirty days after such termination.
    18  A  firm  established  for  the  business  purpose  of incorporating as a
    19  professional service corporation pursuant to paragraph  (h)  of  section
    20  fifteen hundred three of this article, shall not be required to purchase
    21  or  redeem  the  shares of a terminated non-licensed professional share-
    22  holder if such shares, within thirty days after  such  termination,  are
    23  sold  or  transferred to another employee of the corporation pursuant to
    24  this article.
    25    § 6. Section 1514 of the business corporation law is amended by adding
    26  a new paragraph (c) to read as follows:
    27    (c) Each 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 shall, at least once every three
    30  years on or before the  date  prescribed  by  the  licensing  authority,
    31  furnish  a  statement  to  the licensing authority listing the names and
    32  residence addresses of each shareholder, director and  officer  of  such
    33  corporation  and  certify  as the date of certification and at all times
    34  over the entire three year period that:
    35    (i) at least fifty-one percent of the outstanding shares of  stock  of
    36  the corporation are and were owned by certified public accountants,
    37    (ii)  at  least fifty-one percent of the directors are and were certi-
    38  fied public accountants,
    39    (iii) at least fifty-one percent of the officers are and  were  certi-
    40  fied public accountants,
    41    (iv)  the president, the chairperson of the board of directors and the
    42  chief executive officer  or  officers  are  and  were  certified  public
    43  accountants.
    44  The  statement  shall be signed by the president or any certified public
    45  accountant vice-president and  attested  to  by  the  secretary  or  any
    46  assistant secretary of the corporation.
    47    § 7. Paragraph (d) of section 1525 of the business corporation law, as
    48  added by chapter 505 of the laws of 1983, is amended to read as follows:
    49    (d) "Foreign  professional  service  corporation" means a professional
    50  service corporation, whether or not denominated as such, organized under
    51  the laws of a jurisdiction other than this state, all of the  sharehold-
    52  ers,  directors  and  officers  of  which are authorized and licensed to
    53  practice the profession for which such corporation  is  licensed  to  do
    54  business;  except  that  all  shareholders,  directors and officers of a
    55  foreign professional service corporation which provides health  services
    56  in  this  state  shall be licensed in this state. A foreign professional

        S. 3842--D                          5
 
     1  service corporation formed to lawfully engage in the practice of  public
     2  accountancy,  as  such  practice  is  defined  under article one hundred
     3  forty-nine of the education law,  or  equivalent  state  law,  shall  be
     4  required  to  show  (1)  that  a simple majority of the ownership of the
     5  firm, in terms of financial interests, and voting  rights  held  by  the
     6  firm's  owners,  belongs  to  individuals  licensed  to  practice public
     7  accountancy in some state, and (2) that all shareholders  of  a  foreign
     8  professional service corporation whose principal place of business is in
     9  this state, and who are engaged in the practice of public accountancy in
    10  this  state,  hold  a  valid  license  issued under section seventy-four
    11  hundred four of the education  law.  For  purposes  of  this  paragraph,
    12  "financial  interest"  means  capital  stock,  capital accounts, capital
    13  contributions, capital interest, or interest in  undistributed  earnings
    14  of  a  business entity.  Although firms may include non-licensee owners,
    15  the firm and its owners must comply with rules promulgated by the  state
    16  board  of  regents.    Notwithstanding  the foregoing, a firm registered
    17  under this section may not have non-licensee owners if the  firm's  name
    18  includes  the  words "certified public accountant," or "certified public
    19  accountants," or the abbreviations "CPA" or  "CPAs".  Each  non-licensee
    20  owner  of a firm that is operating under this section shall be a natural
    21  person who actively participates in the business  of  the  firm  or  its
    22  affiliated  entities, provided each beneficial owner of an equity inter-
    23  est in such entity is a natural person who actively participates in  the
    24  business  conducted by the firm or its affiliated entities. For purposes
    25  of this paragraph, "actively participate" means to provide  services  to
    26  clients  or  to otherwise individually take part in the day-to-day busi-
    27  ness or management of the firm.
    28    § 8. Subdivision (q) of section 121-1500 of the  partnership  law,  as
    29  amended  by  chapter  475  of  the  laws  of 2014, is amended to read as
    30  follows:
    31    (q) Each partner of a registered limited liability partnership  formed
    32  to  provide  medical services in this state must be licensed pursuant to
    33  article 131 of the education law to practice medicine in this state  and
    34  each  partner  of  a  registered limited liability partnership formed to
    35  provide dental services in this state must be licensed pursuant to arti-
    36  cle 133 of the education law to practice dentistry in this state.   Each
    37  partner  of a registered limited liability partnership formed to provide
    38  veterinary services in this state must be licensed pursuant  to  article
    39  135  of the education law to practice veterinary medicine in this state.
    40  Each partner of a registered limited  liability  partnership  formed  to
    41  provide  public  accountancy services, whose principal place of business
    42  is in this state and who provides public accountancy services,  must  be
    43  licensed pursuant to article 149 of the education law to practice public
    44  accountancy  in this state. Each partner of a registered limited liabil-
    45  ity partnership formed to provide professional engineering, land survey-
    46  ing, geological services, architectural and/or  landscape  architectural
    47  services in this state must be licensed pursuant to article 145, article
    48  147  and/or  article 148 of the education law to practice one or more of
    49  such professions in this state. Each partner  of  a  registered  limited
    50  liability  partnership  formed  to provide licensed clinical social work
    51  services in this state must be licensed pursuant to article 154  of  the
    52  education law to practice clinical social work in this state. Each part-
    53  ner  of  a  registered  limited  liability partnership formed to provide
    54  creative arts therapy services in this state must be  licensed  pursuant
    55  to article 163 of the education law to practice creative arts therapy in
    56  this  state.  Each partner of a registered limited liability partnership

        S. 3842--D                          6

     1  formed to provide marriage and family therapy  services  in  this  state
     2  must  be  licensed pursuant to article 163 of the education law to prac-
     3  tice marriage and family therapy in this state. Each partner of a regis-
     4  tered  limited  liability  partnership  formed  to provide mental health
     5  counseling services in this state must be licensed pursuant  to  article
     6  163  of  the  education law to practice mental health counseling in this
     7  state. Each partner of a registered limited liability partnership formed
     8  to provide psychoanalysis services in this state must be licensed pursu-
     9  ant to article 163 of the education law to  practice  psychoanalysis  in
    10  this  state.  Each partner of a registered limited liability partnership
    11  formed to provide applied behavior analysis service in this  state  must
    12  be licensed or certified pursuant to article 167 of the education law to
    13  practice  applied  behavior  analysis in this state. A limited liability
    14  partnership formed to lawfully engage in the practice of public  accoun-
    15  tancy, as such practice is respectively defined under article 149 of the
    16  education  law,  shall be required to show (1) that a simple majority of
    17  the ownership of the firm, in terms of financial interests,  and  voting
    18  rights  held  by  the  firm's owners, belongs to individuals licensed to
    19  practice public accountancy in some state, and (2) that all partners  of
    20  a  limited liability partnership whose principal place of business is in
    21  this state, and who are engaged in the practice of public accountancy in
    22  this state, hold a  valid  license  issued  under  section  seventy-four
    23  hundred  four  of  the  education law. For purposes of this subdivision,
    24  "financial interest" means  capital  stock,  capital  accounts,  capital
    25  contributions,  capital  interest, or interest in undistributed earnings
    26  of a business entity.  Although firms may include  non-licensee  owners,
    27  the  firm and its owners must comply with rules promulgated by the state
    28  board of regents. Notwithstanding the foregoing, a firm registered under
    29  this section may  not  have  non-licensee  owners  if  the  firm's  name
    30  includes  the  words "certified public accountant," or "certified public
    31  accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner
    32  of a firm that is formed under this  section  shall  be  (1)  a  natural
    33  person  who  actively  participates  in  the business of the firm or its
    34  affiliated entities, or (2) an entity, including, but not limited to,  a
    35  partnership  or professional corporation, provided each beneficial owner
    36  of an equity interest in such entity is a natural  person  who  actively
    37  participates  in  the  business  conducted by the firm or its affiliated
    38  entities. For purposes of this subdivision, "actively participate" means
    39  to provide services to clients or to otherwise individually take part in
    40  the day-to-day business or management of the firm.
    41    § 9. Subdivision (q) of section 121-1502 of the  partnership  law,  as
    42  amended  by  chapter  475  of  the  laws  of 2014, is amended to read as
    43  follows:
    44    (q) Each partner of a  foreign  limited  liability  partnership  which
    45  provides  medical  services  in  this state must be licensed pursuant to
    46  article 131 of the education law to practice medicine in the  state  and
    47  each  partner  of a foreign limited liability partnership which provides
    48  dental services in the state must be licensed pursuant to article 133 of
    49  the education law to practice dentistry in this state. Each partner of a
    50  foreign limited liability partnership which provides veterinary  service
    51  in  the state shall be licensed pursuant to article 135 of the education
    52  law to practice veterinary medicine in this state.  Each  partner  of  a
    53  foreign  limited liability partnership which provides professional engi-
    54  neering, land surveying, geological services, architectural and/or land-
    55  scape architectural services in this state must be licensed pursuant  to
    56  article  145,  article  147  and/or  article 148 of the education law to

        S. 3842--D                          7
 
     1  practice one or more of such professions.   Each partner  of  a  foreign
     2  registered  limited  liability  partnership  formed  to  provide  public
     3  accountancy services, whose principal place of business is in this state
     4  and  who provides public accountancy services, must be licensed pursuant
     5  to article 149 of the education law to practice  public  accountancy  in
     6  this  state.  Each  partner  of  a foreign limited liability partnership
     7  which provides licensed clinical social work services in this state must
     8  be licensed pursuant to article 154 of the  education  law  to  practice
     9  licensed  clinical  social work in this state. Each partner of a foreign
    10  limited liability  partnership  which  provides  creative  arts  therapy
    11  services  in  this state must be licensed pursuant to article 163 of the
    12  education law to practice creative arts  therapy  in  this  state.  Each
    13  partner  of  a  foreign  limited  liability  partnership  which provides
    14  marriage and family therapy services in  this  state  must  be  licensed
    15  pursuant  to  article  163 of the education law to practice marriage and
    16  family therapy in this state. Each partner of a foreign limited  liabil-
    17  ity partnership which provides mental health counseling services in this
    18  state  must  be licensed pursuant to article 163 of the education law to
    19  practice mental health counseling in  this  state.  Each  partner  of  a
    20  foreign  limited  liability  partnership  which  provides psychoanalysis
    21  services in this state must be licensed pursuant to article 163  of  the
    22  education  law to practice psychoanalysis in this state. Each partner of
    23  a foreign limited liability partnership which provides applied  behavior
    24  analysis  services  in this state must be licensed or certified pursuant
    25  to article 167 of the education law to practice applied behavior  analy-
    26  sis  in  this state.   A foreign limited liability partnership formed to
    27  lawfully engage in the practice of public accountancy, as such  practice
    28  is respectively defined under article 149 of the education law, shall be
    29  required  to  show  (1)  that  a simple majority of the ownership of the
    30  firm, in terms of financial interests, and voting  rights  held  by  the
    31  firm's  owners,  belongs  to  individuals  licensed  to  practice public
    32  accountancy in some state, and (2) that all partners of a foreign limit-
    33  ed liability partnership whose principal place of business  is  in  this
    34  state, and who are engaged in the practice of public accountancy in this
    35  state,  hold  a  valid license issued under section seventy-four hundred
    36  four of the education law. For purposes of this subdivision,  "financial
    37  interest"  means capital stock, capital accounts, capital contributions,
    38  capital interest, or interest in undistributed earnings  of  a  business
    39  entity.    Although  firms may include non-licensee owners, the firm and
    40  its owners must comply with rules promulgated  by  the  state  board  of
    41  regents.  Notwithstanding  the  foregoing,  a firm registered under this
    42  section may not have non-licensee owners if the firm's name includes the
    43  words "certified public accountant," or "certified public  accountants,"
    44  or the abbreviations "CPA" or "CPAs".  Each non-licensee owner of a firm
    45  that  is  formed  under  this  section shall be (1) a natural person who
    46  actively participates in the business of  the  firm  or  its  affiliated
    47  entities, or (2) an entity, including, but not limited to, a partnership
    48  or professional corporation, provided each beneficial owner of an equity
    49  interest in such entity is a natural person who actively participates in
    50  the  business  conducted  by  the  firm or its affiliated entities.  For
    51  purposes of this subdivision, "actively participate"  means  to  provide
    52  services  to  clients or to otherwise individually take part in the day-
    53  to-day business or management of the firm.
    54    § 10. Subdivision (h) of section 121-101 of the  partnership  law,  as
    55  added by chapter 950 of the laws of 1990, is amended to read as follows:

        S. 3842--D                          8
 
     1    (h)  "Limited  partnership"  and  "domestic limited partnership" mean,
     2  unless the context otherwise requires, a partnership (i) formed  by  two
     3  or more persons pursuant to this article or which complies with subdivi-
     4  sion (a) of section 121-1202 of this article and (ii) having one or more
     5  general  partners and one or more limited partners.  Notwithstanding any
     6  other provisions of law a limited partnership or domestic limited  part-
     7  nership formed to lawfully engage in the practice of public accountancy,
     8  as such practice is respectively defined under article 149 of the educa-
     9  tion  law  shall  be  required to show (1) that a simple majority of the
    10  ownership of the firm, in terms of financial interests, including owner-
    11  ship-based compensation, and voting rights held by  the  firm's  owners,
    12  belongs  to  individuals licensed to practice public accountancy in some
    13  state, and (2) that all partners of a limited  partnership  or  domestic
    14  limited partnership, whose principal place of business is in this state,
    15  and who are engaged in the practice of public accountancy in this state,
    16  hold  a  valid license issued under section seventy-four hundred four of
    17  the education law or  are  public  accountants  licensed  under  section
    18  seventy-four  hundred  five  of  the  education  law. Although firms may
    19  include non-licensee owners, the firm and its owners  must  comply  with
    20  rules  promulgated  by  the state board of regents.  Notwithstanding the
    21  foregoing, a firm registered under this section may not have  non-licen-
    22  see  owners  if  the  firm's  name  includes the words "certified public
    23  accountant," or "certified public  accountants,"  or  the  abbreviations
    24  "CPA"  or  "CPAs".  Each non-licensee owner of a firm that is registered
    25  under this section shall be (1) a natural person  who  actively  partic-
    26  ipates in the business of the firm or its affiliated entities, or (2) an
    27  entity,  including,  but  not  limited to, a partnership or professional
    28  corporation, provided each beneficial owner of  an  equity  interest  in
    29  such  entity  is a natural person who actively participates in the busi-
    30  ness conducted by the firm or its affiliated entities. For  purposes  of
    31  this  subdivision,  "actively  participate" means to provide services to
    32  clients or to otherwise individually take part in the  day-to-day  busi-
    33  ness or management of the firm.
    34    § 11. Subdivision (b) of section 1207 of the limited liability company
    35  law,  as  amended by chapter 475 of the laws of 2014, is amended to read
    36  as follows:
    37    (b) With respect to a professional service limited  liability  company
    38  formed to provide medical services as such services are defined in arti-
    39  cle  131  of  the  education  law, each member of such limited liability
    40  company must be licensed pursuant to article 131 of the education law to
    41  practice medicine in this state.  With respect to a professional service
    42  limited liability company formed to  provide  dental  services  as  such
    43  services are defined in article 133 of the education law, each member of
    44  such  limited liability company must be licensed pursuant to article 133
    45  of the education law to practice dentistry in this state.  With  respect
    46  to  a  professional  service limited liability company formed to provide
    47  veterinary services as such services are defined in article 135  of  the
    48  education  law,  each  member  of such limited liability company must be
    49  licensed pursuant to article 135 of the education law to practice veter-
    50  inary medicine in this state. With respect  to  a  professional  service
    51  limited  liability  company  formed to provide professional engineering,
    52  land surveying, architectural, landscape architectural and/or geological
    53  services as such services are defined in article 145,  article  147  and
    54  article  148 of the education law, each member of such limited liability
    55  company must be licensed pursuant to article  145,  article  147  and/or
    56  article  148  of  the  education  law  to  practice  one or more of such

        S. 3842--D                          9
 
     1  professions in this state.   With  respect  to  a  professional  service
     2  limited  liability company formed to provide public accountancy services
     3  as such services are defined in article 149 of the  education  law  each
     4  member  of such limited liability company whose principal place of busi-
     5  ness is in this state and who provides public accountancy services, must
     6  be licensed pursuant to article 149 of the  education  law  to  practice
     7  public accountancy in this state. With respect to a professional service
     8  limited  liability  company  formed  to provide licensed clinical social
     9  work services as such services are defined in article 154 of the  educa-
    10  tion  law,  each  member  of  such  limited  liability  company shall be
    11  licensed pursuant to article  154  of  the  education  law  to  practice
    12  licensed  clinical  social work in this state. With respect to a profes-
    13  sional service limited liability company formed to provide creative arts
    14  therapy services as such services are defined  in  article  163  of  the
    15  education  law,  each  member  of such limited liability company must be
    16  licensed pursuant to article 163 of the education law to practice  crea-
    17  tive  arts therapy in this state. With respect to a professional service
    18  limited liability company formed to provide marriage and family  therapy
    19  services  as  such  services are defined in article 163 of the education
    20  law, each member of such limited  liability  company  must  be  licensed
    21  pursuant  to  article  163 of the education law to practice marriage and
    22  family therapy in this state. With respect  to  a  professional  service
    23  limited  liability  company  formed  to provide mental health counseling
    24  services as such services are defined in article 163  of  the  education
    25  law,  each  member  of  such  limited liability company must be licensed
    26  pursuant to article 163 of the education law to practice  mental  health
    27  counseling in this state. With respect to a professional service limited
    28  liability  company  formed  to  provide  psychoanalysis services as such
    29  services are defined in article 163 of the education law, each member of
    30  such limited liability company must be licensed pursuant to article  163
    31  of  the  education  law  to  practice psychoanalysis in this state. With
    32  respect to a professional service limited liability  company  formed  to
    33  provide  applied behavior analysis services as such services are defined
    34  in article 167 of the education law, each member of such limited liabil-
    35  ity company must be licensed or certified pursuant to article 167 of the
    36  education law to practice applied behavior analysis  in  this  state.  A
    37  professional service limited liability company formed to lawfully engage
    38  in  the practice of public accountancy, as such practice is respectively
    39  defined under article 149 of the education law shall be required to show
    40  (1) that a simple majority of the ownership of the  firm,  in  terms  of
    41  financial  interests,  and  voting  rights  held  by  the firm's owners,
    42  belongs to individuals licensed to practice public accountancy  in  some
    43  state, and (2) that all members of a limited professional service limit-
    44  ed  liability  company,  whose  principal  place  of business is in this
    45  state, and who are engaged in the practice of public accountancy in this
    46  state, hold a valid license issued under  section  seventy-four  hundred
    47  four  of the education law. For purposes of this subdivision, "financial
    48  interest" means capital stock, capital accounts, capital  contributions,
    49  capital  interest,  or  interest in undistributed earnings of a business
    50  entity.  Although firms may include non-licensee owners,  the  firm  and
    51  its  owners  must  comply  with  rules promulgated by the state board of
    52  regents.  Notwithstanding the foregoing, a firm  registered  under  this
    53  section may not have non-licensee owners if the firm's name includes the
    54  words  "certified public accountant," or "certified public accountants,"
    55  or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a  firm
    56  that  is registered under this section shall be (1) a natural person who

        S. 3842--D                         10
 
     1  actively participates in the business of  the  firm  or  its  affiliated
     2  entities, or (2) an entity, including, but not limited to, a partnership
     3  or professional corporation, provided each beneficial owner of an equity
     4  interest in such entity is a natural person who actively participates in
     5  the  business  conducted  by  the  firm  or its affiliated entities. For
     6  purposes of this subdivision, "actively participate"  means  to  provide
     7  services  to  clients or to otherwise individually take part in the day-
     8  to-day business or management of the firm.
     9    § 12. Subdivision (a) of section 1301 of the limited liability company
    10  law, as amended by chapter 475 of the laws of 2014, is amended  to  read
    11  as follows:
    12    (a)  "Foreign  professional service limited liability company" means a
    13  professional service limited liability company, whether or  not  denomi-
    14  nated  as  such,  organized  under the laws of a jurisdiction other than
    15  this state, (i) each of whose members and managers, if any, is a profes-
    16  sional authorized by law to render a professional  service  within  this
    17  state  and who is or has been engaged in the practice of such profession
    18  in such professional service limited liability company or a  predecessor
    19  entity, or will engage in the practice of such profession in the profes-
    20  sional  service limited liability company within thirty days of the date
    21  such professional becomes a member, or each of whose members and  manag-
    22  ers,  if  any, is a professional at least one of such members is author-
    23  ized by law to render a professional service within this state  and  who
    24  is  or  has  been  engaged  in  the  practice of such profession in such
    25  professional service limited liability company or a predecessor  entity,
    26  or  will  engage  in the practice of such profession in the professional
    27  service limited liability company within thirty days of  the  date  such
    28  professional  becomes  a  member,  or  (ii)  authorized by, or holding a
    29  license, certificate, registration or permit  issued  by  the  licensing
    30  authority  pursuant  to,  the  education  law  to  render a professional
    31  service within this state; except that all members and managers, if any,
    32  of  a  foreign  professional  service  limited  liability  company  that
    33  provides  health services in this state shall be licensed in this state.
    34  With respect to a foreign professional service limited liability company
    35  which provides veterinary services as such services are defined in arti-
    36  cle 135 of the education law, each member of such  foreign  professional
    37  service  limited liability company shall be licensed pursuant to article
    38  135 of the education law to practice veterinary medicine.  With  respect
    39  to  a  foreign  professional  service  limited  liability  company which
    40  provides medical services as such services are defined in article 131 of
    41  the education law, each member  of  such  foreign  professional  service
    42  limited  liability  company  must be licensed pursuant to article 131 of
    43  the education law to practice medicine in this state.  With respect to a
    44  foreign professional service limited liability  company  which  provides
    45  dental  services  as  such  services  are  defined in article 133 of the
    46  education law, each member of such foreign professional service  limited
    47  liability company must be licensed pursuant to article 133 of the educa-
    48  tion  law to practice dentistry in this state. With respect to a foreign
    49  professional service limited liability company  which  provides  profes-
    50  sional engineering, land surveying, geologic, architectural and/or land-
    51  scape  architectural  services  as  such services are defined in article
    52  145, article 147 and article 148 of the education law,  each  member  of
    53  such  foreign  professional  service  limited  liability company must be
    54  licensed pursuant to article 145, article 147 and/or article 148 of  the
    55  education law to practice one or more of such professions in this state.
    56  With respect to a foreign professional service limited liability company

        S. 3842--D                         11
 
     1  which  provides public accountancy services as such services are defined
     2  in article 149 of the education law, each member of such foreign profes-
     3  sional service limited liability company whose principal place of  busi-
     4  ness  is  in  this  state  and who provides public accountancy services,
     5  shall be licensed pursuant to article 149 of the education law to  prac-
     6  tice public accountancy in this state. With respect to a foreign profes-
     7  sional  service  limited liability company which provides licensed clin-
     8  ical social work services as such services are defined in article 154 of
     9  the education law, each member  of  such  foreign  professional  service
    10  limited  liability  company shall be licensed pursuant to article 154 of
    11  the education law to practice clinical social work in this  state.  With
    12  respect  to  a  foreign  professional  service limited liability company
    13  which provides creative arts  therapy  services  as  such  services  are
    14  defined in article 163 of the education law, each member of such foreign
    15  professional service limited liability company must be licensed pursuant
    16  to article 163 of the education law to practice creative arts therapy in
    17  this  state.  With  respect  to  a  foreign professional service limited
    18  liability company which provides marriage and family therapy services as
    19  such services are defined in article 163  of  the  education  law,  each
    20  member  of  such  foreign professional service limited liability company
    21  must be licensed pursuant to article 163 of the education law  to  prac-
    22  tice  marriage  and  family  therapy  in  this  state. With respect to a
    23  foreign professional service limited liability  company  which  provides
    24  mental  health counseling services as such services are defined in arti-
    25  cle 163 of the education law, each member of such  foreign  professional
    26  service  limited  liability company must be licensed pursuant to article
    27  163 of the education law to practice mental health  counseling  in  this
    28  state.  With respect to a foreign professional service limited liability
    29  company which provides psychoanalysis  services  as  such  services  are
    30  defined in article 163 of the education law, each member of such foreign
    31  professional service limited liability company must be licensed pursuant
    32  to  article  163 of the education law to practice psychoanalysis in this
    33  state. With respect to a foreign professional service limited  liability
    34  company  which  provides  applied  behavior  analysis  services  as such
    35  services are defined in article 167 of the education law, each member of
    36  such foreign professional service  limited  liability  company  must  be
    37  licensed  or  certified  pursuant to article 167 of the education law to
    38  practice applied behavior analysis in this state. A foreign professional
    39  service limited liability company formed to lawfully engage in the prac-
    40  tice of public accountancy, as such  practice  is  respectively  defined
    41  under  article  149  of  the education law shall be required to show (1)
    42  that a simple majority of the ownership of the firm, in terms of  finan-
    43  cial  interests, and voting rights held by the firm's owners, belongs to
    44  individuals licensed to practice public accountancy in some  state,  and
    45  (2)  that  all members of a foreign limited professional service limited
    46  liability company, whose principal place of business is in  this  state,
    47  and who are engaged in the practice of public accountancy in this state,
    48  hold  a  valid license issued under section seventy-four hundred four of
    49  the education law. For purposes of this subdivision,  "financial  inter-
    50  est" means capital stock, capital accounts, capital contributions, capi-
    51  tal  interest, or interest in undistributed earnings of a business enti-
    52  ty.  Although firms may include non-licensee owners, the  firm  and  its
    53  owners must comply with rules promulgated by the state board of regents.
    54  Notwithstanding  the foregoing, a firm registered under this section may
    55  not have non-licensee owners if  the  firm's  name  includes  the  words
    56  "certified public accountant," or "certified public accountants," or the

        S. 3842--D                         12
 
     1  abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is
     2  registered under this section shall be (1) a natural person who actively
     3  participates  in the business of the firm or its affiliated entities, or
     4  (2)  an  entity, including, but not limited to, a partnership or profes-
     5  sional corporation, provided each beneficial owner of an equity interest
     6  in such entity is a natural person  who  actively  participates  in  the
     7  business  conducted by the firm or its affiliated entities. For purposes
     8  of this subdivision, "actively participate" means to provide services to
     9  clients or to otherwise individually take part in the  day-to-day  busi-
    10  ness or management of the firm.
    11    §  13.  Notwithstanding  any  other  provision of law to the contrary,
    12  there is hereby established a fee for each non-licensee owner of a  firm
    13  that  is  registered in this state to lawfully engage in the practice of
    14  public accountancy. Such non-licensee owner shall  pay  a  fee  of  nine
    15  hundred dollars to the department of education on a triennial basis.
    16    § 14. This act shall take effect immediately.
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