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; requires that a majority of the ownership of a professional service corporation formed to lawfully engage in the practice of public accountancy are individuals licensed to practice public accountancy in some state; enacts similar provisions for partnerships and LLCs.
STATE OF NEW YORK
________________________________________________________________________
1938
2021-2022 Regular Sessions
IN ASSEMBLY
January 13, 2021
___________
Introduced by M. of A. PEOPLES-STOKES, TAYLOR, MAGNARELLI, BENEDETTO,
DICKENS, ENGLEBRIGHT, J. RIVERA, JEAN-PIERRE, DE LA ROSA, SEAWRIGHT,
MORINELLO, COOK, L. ROSENTHAL, PERRY, LUPARDO, GOTTFRIED, BRONSON,
ABBATE, DILAN, RICHARDSON, PHEFFER AMATO, DINOWITZ, RODRIGUEZ, PRET-
LOW, NIOU, ROZIC, D. ROSENTHAL, JOYNER, HUNTER, PICHARDO, SOLAGES,
HEVESI, HYNDMAN, GALEF, GUNTHER, STIRPE, WOERNER, QUART, CUSICK, FAHY,
SANTABARBARA, BICHOTTE HERMELYN, WEPRIN, LAVINE, CYMBROWITZ, WALCZYK,
VANEL, ZEBROWSKI, WALLACE, PAULIN, EICHENSTEIN, CARROLL, FALL, REYES,
WALKER, FERNANDEZ, SAYEGH, McMAHON, BARNWELL, BARRETT, BUTTENSCHON,
COLTON, BARRON, BRAUNSTEIN, DARLING, STERN, CAHILL, GRIFFIN, RAMOS,
JONES -- Multi-Sponsored by -- M. of A. DAVILA, J. M. GIGLIO, GOODELL,
M. MILLER, THIELE -- read once and referred to the Committee on Higher
Education
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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02385-01-1
A. 1938 2
1 four of the education law. For purposes of this paragraph, "financial
2 interest" means capital stock, capital accounts, capital contributions,
3 capital interest, or interest in undistributed earnings of a business
4 entity. Although firms may include non-licensee owners, the firm and
5 its owners must comply with rules promulgated by the state board of
6 regents. Notwithstanding the foregoing, a firm incorporated under this
7 section may not have non-licensee owners if the firm's name includes the
8 words "certified public accountant," or "certified public accountants,"
9 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm
10 that is incorporated under this section shall be a natural person who
11 actively participates in the business of the firm or its affiliated
12 entities. For purposes of this subdivision, "actively participate" means
13 to provide services to clients or to otherwise individually take part in
14 the day-to-day business or management of the firm. Such a firm shall
15 have attached to its certificate of incorporation a certificate or
16 certificates demonstrating the firm's compliance with this paragraph, in
17 lieu of the certificate or certificates required by subparagraph (ii) of
18 paragraph (b) of this section.
19 § 2. Section 1507 of the business corporation law is amended by adding
20 a new paragraph (c) to read as follows:
21 (c) Any firm established for the business purpose of incorporating as
22 a professional service corporation pursuant to paragraph (h) of section
23 fifteen hundred three of this article may issue shares to individuals
24 who are authorized by law to practice in this state the profession which
25 such corporation is authorized to practice and who are or have been
26 engaged in the practice of such profession in such corporation or a
27 predecessor entity, or who will engage in the practice of such profes-
28 sion in such corporation within thirty days of the date such shares are
29 issued and may also issue shares to employees of the corporation not
30 licensed as certified public accountants, provided that:
31 (i) at least fifty-one percent of the outstanding shares of stock of
32 the corporation are owned by certified public accountants,
33 (ii) at least fifty-one percent of the directors are certified public
34 accountants,
35 (iii) at least fifty-one percent of the officers are certified public
36 accountants,
37 (iv) the president, the chairperson of the board of directors and the
38 chief executive officer or officers are certified public accountants.
39 No shareholder of a firm established for the business purpose of incor-
40 porating as a professional service corporation pursuant to paragraph (h)
41 of section fifteen hundred three of this article shall enter into a
42 voting trust agreement, proxy or any other type of agreement vesting in
43 another person, other than another shareholder of the same corporation,
44 the authority to exercise voting power of any or all of his or her
45 shares. All shares issued, agreements made or proxies granted in
46 violation of this section shall be void.
47 § 3. Section 1508 of the business corporation law is amended by adding
48 a new paragraph (c) to read as follows:
49 (c) The directors and officers of any firm established for the busi-
50 ness purpose of incorporating as a professional service corporation
51 pursuant to paragraph (h) of section fifteen hundred three of this arti-
52 cle may include individuals who are not licensed to practice public
53 accountancy, provided however that at least fifty-one percent of the
54 directors, at least fifty-one percent of the officers and the president,
55 the chairperson of the board of directors and the chief executive offi-
56 cer or officers are authorized by law to practice in any state the
A. 1938 3
1 profession which such corporation is authorized to practice, and are
2 either shareholders of such corporation or engaged in the practice of
3 their professions in such corporation.
4 § 4. Section 1509 of the business corporation law, as amended by chap-
5 ter 550 of the laws of 2011, is amended to read as follows:
6 § 1509. Disqualification of shareholders, directors, officers and
7 employees.
8 If any shareholder, director, officer or employee of a professional
9 service corporation, including a design professional service corpo-
10 ration, who has been rendering professional service to the public
11 becomes legally disqualified to practice his or her profession within
12 this state, he or she shall sever all employment with, and financial
13 interests (other than interests as a creditor) in, such corporation
14 forthwith or as otherwise provided in section 1510 of this article. All
15 provisions of law regulating the rendering of professional services by a
16 person elected or appointed to a public office shall be applicable to a
17 shareholder, director, officer and employee of such corporation in the
18 same manner and to the same extent as if fully set forth herein. Such
19 legal disqualification to practice his or her profession within this
20 state shall be deemed to constitute an irrevocable offer by the disqual-
21 ified shareholder to sell his or her shares to the corporation, pursuant
22 to the provisions of section 1510 of this article or of the certificate
23 of incorporation, by-laws or agreement among the corporation and all
24 shareholders, whichever is applicable. Compliance with the terms of such
25 offer shall be specifically enforceable in the courts of this state. A
26 professional service corporation's failure to enforce compliance with
27 this provision shall constitute a ground for forfeiture of its certif-
28 icate of incorporation and its dissolution.
29 § 5. Paragraph (a) of section 1511 of the business corporation law, as
30 amended by chapter 550 of the laws of 2011, is amended and a new para-
31 graph (c) is added to read as follows:
32 (a) No shareholder of a professional service corporation [or], includ-
33 ing a design professional service corporation, may sell or transfer his
34 or her shares in such corporation except to another individual who is
35 eligible to have shares issued to him or her by such corporation or
36 except in trust to another individual who would be eligible to receive
37 shares if he or she were employed by the corporation. Nothing herein
38 contained shall be construed to prohibit the transfer of shares by oper-
39 ation of law or by court decree. No transferee of shares by operation
40 of law or court decree may vote the shares for any purpose whatsoever
41 except with respect to corporate action under sections 909 and 1001 of
42 this chapter. The restriction in the preceding sentence shall not apply,
43 however, where such transferee would be eligible to have shares issued
44 to him or her if he or she were an employee of the corporation and, if
45 there are other shareholders, a majority of such other shareholders
46 shall fail to redeem the shares so transferred, pursuant to section 1510
47 of this article, within sixty days of receiving written notice of such
48 transfer. Any sale or transfer, except by operation of law or court
49 decree or except for a corporation having only one shareholder, may be
50 made only after the same shall have been approved by the board of direc-
51 tors, or at a shareholders' meeting specially called for such purpose by
52 such proportion, not less than a majority, of the outstanding shares as
53 may be provided in the certificate of incorporation or in the by-laws of
54 such professional service corporation. At such shareholders' meeting the
55 shares held by the shareholder proposing to sell or transfer his or her
56 shares may not be voted or counted for any purpose, unless all share-
A. 1938 4
1 holders consent that such shares be voted or counted. The certificate of
2 incorporation or the by-laws of the professional service corporation, or
3 the professional service corporation and the shareholders by private
4 agreement, may provide, in lieu of or in addition to the foregoing
5 provisions, for the alienation of shares and may require the redemption
6 or purchase of such shares by such corporation at prices and in a manner
7 specifically set forth therein. The existence of the restrictions on the
8 sale or transfer of shares, as contained in this article and, if appli-
9 cable, in the certificate of incorporation, by-laws, stock purchase or
10 stock redemption agreement, shall be noted conspicuously on the face or
11 back of every certificate for shares issued by a professional service
12 corporation. Any sale or transfer in violation of such restrictions
13 shall be void.
14 (c) A firm established for the business purpose of incorporating as a
15 professional service corporation pursuant to paragraph (h) of section
16 fifteen hundred three of this article, shall purchase or redeem the
17 shares of a non-licensed professional shareholder in the case of his or
18 her termination of employment within thirty days after such termination.
19 A firm established for the business purpose of incorporating as a
20 professional service corporation pursuant to paragraph (h) of section
21 fifteen hundred three of this article, shall not be required to purchase
22 or redeem the shares of a terminated non-licensed professional share-
23 holder if such shares, within thirty days after such termination, are
24 sold or transferred to another employee of the corporation pursuant to
25 this article.
26 § 6. Section 1514 of the business corporation law is amended by adding
27 a new paragraph (c) to read as follows:
28 (c) Each firm established for the business purpose of incorporating as
29 a professional service corporation pursuant to paragraph (h) of section
30 fifteen hundred three of this article shall, at least once every three
31 years on or before the date prescribed by the licensing authority,
32 furnish a statement to the licensing authority listing the names and
33 residence addresses of each shareholder, director and officer of such
34 corporation and certify as the date of certification and at all times
35 over the entire three year period that:
36 (i) at least fifty-one percent of the outstanding shares of stock of
37 the corporation are and were owned by certified public accountants,
38 (ii) at least fifty-one percent of the directors are and were certi-
39 fied public accountants,
40 (iii) at least fifty-one percent of the officers are and were certi-
41 fied public accountants,
42 (iv) the president, the chairperson of the board of directors and the
43 chief executive officer or officers are and were certified public
44 accountants.
45 The statement shall be signed by the president or any certified public
46 accountant vice-president and attested to by the secretary or any
47 assistant secretary of the corporation.
48 § 7. Paragraph (d) of section 1525 of the business corporation law, as
49 added by chapter 505 of the laws of 1983, is amended to read as follows:
50 (d) "Foreign professional service corporation" means a professional
51 service corporation, whether or not denominated as such, organized under
52 the laws of a jurisdiction other than this state, all of the sharehold-
53 ers, directors and officers of which are authorized and licensed to
54 practice the profession for which such corporation is licensed to do
55 business; except that all shareholders, directors and officers of a
56 foreign professional service corporation which provides health services
A. 1938 5
1 in this state shall be licensed in this state. A foreign professional
2 service corporation formed to lawfully engage in the practice of public
3 accountancy, as such practice is defined under article one hundred
4 forty-nine of the education law, or equivalent state law, shall be
5 required to show (1) that a simple majority of the ownership of the
6 firm, in terms of financial interests, and voting rights held by the
7 firm's owners, belongs to individuals licensed to practice public
8 accountancy in some state, and (2) that all shareholders of a foreign
9 professional service corporation whose principal place of business is in
10 this state, and who are engaged in the practice of public accountancy in
11 this state, hold a valid license issued under section seventy-four
12 hundred four of the education law. For purposes of this paragraph,
13 "financial interest" means capital stock, capital accounts, capital
14 contributions, capital interest, or interest in undistributed earnings
15 of a business entity. Although firms may include non-licensee owners,
16 the firm and its owners must comply with rules promulgated by the state
17 board of regents. Notwithstanding the foregoing, a firm registered
18 under this section may not have non-licensee owners if the firm's name
19 includes the words "certified public accountant," or "certified public
20 accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee
21 owner of a firm that is operating under this section shall be a natural
22 person who actively participates in the business of the firm or its
23 affiliated entities, provided each beneficial owner of an equity inter-
24 est in such entity is a natural person who actively participates in the
25 business conducted by the firm or its affiliated entities. For purposes
26 of this paragraph, "actively participate" means to provide services to
27 clients or to otherwise individually take part in the day-to-day busi-
28 ness or management of the firm.
29 § 8. Subdivision (q) of section 121-1500 of the partnership law, as
30 amended by chapter 475 of the laws of 2014, is amended to read as
31 follows:
32 (q) Each partner of a registered limited liability partnership formed
33 to provide medical services in this state must be licensed pursuant to
34 article 131 of the education law to practice medicine in this state and
35 each partner of a registered limited liability partnership formed to
36 provide dental services in this state must be licensed pursuant to arti-
37 cle 133 of the education law to practice dentistry in this state. Each
38 partner of a registered limited liability partnership formed to provide
39 veterinary services in this state must be licensed pursuant to article
40 135 of the education law to practice veterinary medicine in this state.
41 Each partner of a registered limited liability partnership formed to
42 provide public accountancy services, whose principal place of business
43 is in this state and who provides public accountancy services, must be
44 licensed pursuant to article 149 of the education law to practice public
45 accountancy in this state. Each partner of a registered limited liabil-
46 ity partnership formed to provide professional engineering, land survey-
47 ing, geological services, architectural and/or landscape architectural
48 services in this state must be licensed pursuant to article 145, article
49 147 and/or article 148 of the education law to practice one or more of
50 such professions in this state. Each partner of a registered limited
51 liability partnership formed to provide licensed clinical social work
52 services in this state must be licensed pursuant to article 154 of the
53 education law to practice clinical social work in this state. Each part-
54 ner of a registered limited liability partnership formed to provide
55 creative arts therapy services in this state must be licensed pursuant
56 to article 163 of the education law to practice creative arts therapy in
A. 1938 6
1 this state. Each partner of a registered limited liability partnership
2 formed to provide marriage and family therapy services in this state
3 must be licensed pursuant to article 163 of the education law to prac-
4 tice marriage and family therapy in this state. Each partner of a regis-
5 tered limited liability partnership formed to provide mental health
6 counseling services in this state must be licensed pursuant to article
7 163 of the education law to practice mental health counseling in this
8 state. Each partner of a registered limited liability partnership formed
9 to provide psychoanalysis services in this state must be licensed pursu-
10 ant to article 163 of the education law to practice psychoanalysis in
11 this state. Each partner of a registered limited liability partnership
12 formed to provide applied behavior analysis service in this state must
13 be licensed or certified pursuant to article 167 of the education law to
14 practice applied behavior analysis in this state. A limited liability
15 partnership formed to lawfully engage in the practice of public accoun-
16 tancy, as such practice is respectively defined under article 149 of the
17 education law, shall be required to show (1) that a simple majority of
18 the ownership of the firm, in terms of financial interests, and voting
19 rights held by the firm's owners, belongs to individuals licensed to
20 practice public accountancy in some state, and (2) that all partners of
21 a limited liability partnership whose principal place of business is in
22 this state, and who are engaged in the practice of public accountancy in
23 this state, hold a valid license issued under section seventy-four
24 hundred four of the education law. For purposes of this subdivision,
25 "financial interest" means capital stock, capital accounts, capital
26 contributions, capital interest, or interest in undistributed earnings
27 of a business entity. Although firms may include non-licensee owners,
28 the firm and its owners must comply with rules promulgated by the state
29 board of regents. Notwithstanding the foregoing, a firm registered under
30 this section may not have non-licensee owners if the firm's name
31 includes the words "certified public accountant," or "certified public
32 accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner
33 of a firm that is formed under this section shall be (1) a natural
34 person who actively participates in the business of the firm or its
35 affiliated entities, or (2) an entity, including, but not limited to, a
36 partnership or professional corporation, provided each beneficial owner
37 of an equity interest in such entity is a natural person who actively
38 participates in the business conducted by the firm or its affiliated
39 entities. For purposes of this subdivision, "actively participate" means
40 to provide services to clients or to otherwise individually take part in
41 the day-to-day business or management of the firm.
42 § 9. Subdivision (q) of section 121-1502 of the partnership law, as
43 amended by chapter 475 of the laws of 2014, is amended to read as
44 follows:
45 (q) Each partner of a foreign limited liability partnership which
46 provides medical services in this state must be licensed pursuant to
47 article 131 of the education law to practice medicine in the state and
48 each partner of a foreign limited liability partnership which provides
49 dental services in the state must be licensed pursuant to article 133 of
50 the education law to practice dentistry in this state. Each partner of a
51 foreign limited liability partnership which provides veterinary service
52 in the state shall be licensed pursuant to article 135 of the education
53 law to practice veterinary medicine in this state. Each partner of a
54 foreign limited liability partnership which provides professional engi-
55 neering, land surveying, geological services, architectural and/or land-
56 scape architectural services in this state must be licensed pursuant to
A. 1938 7
1 article 145, article 147 and/or article 148 of the education law to
2 practice one or more of such professions. Each partner of a foreign
3 registered limited liability partnership formed to provide public
4 accountancy services, whose principal place of business is in this state
5 and who provides public accountancy services, must be licensed pursuant
6 to article 149 of the education law to practice public accountancy in
7 this state. Each partner of a foreign limited liability partnership
8 which provides licensed clinical social work services in this state must
9 be licensed pursuant to article 154 of the education law to practice
10 licensed clinical social work in this state. Each partner of a foreign
11 limited liability partnership which provides creative arts therapy
12 services in this state must be licensed pursuant to article 163 of the
13 education law to practice creative arts therapy in this state. Each
14 partner of a foreign limited liability partnership which provides
15 marriage and family therapy services in this state must be licensed
16 pursuant to article 163 of the education law to practice marriage and
17 family therapy in this state. Each partner of a foreign limited liabil-
18 ity partnership which provides mental health counseling services in this
19 state must be licensed pursuant to article 163 of the education law to
20 practice mental health counseling in this state. Each partner of a
21 foreign limited liability partnership which provides psychoanalysis
22 services in this state must be licensed pursuant to article 163 of the
23 education law to practice psychoanalysis in this state. Each partner of
24 a foreign limited liability partnership which provides applied behavior
25 analysis services in this state must be licensed or certified pursuant
26 to article 167 of the education law to practice applied behavior analy-
27 sis in this state. A foreign limited liability partnership formed to
28 lawfully engage in the practice of public accountancy, as such practice
29 is respectively defined under article 149 of the education law, shall be
30 required to show (1) that a simple majority of the ownership of the
31 firm, in terms of financial interests, and voting rights held by the
32 firm's owners, belongs to individuals licensed to practice public
33 accountancy in some state, and (2) that all partners of a foreign limit-
34 ed liability partnership whose principal place of business is in this
35 state, and who are engaged in the practice of public accountancy in this
36 state, hold a valid license issued under section seventy-four hundred
37 four of the education law. For purposes of this subdivision, "financial
38 interest" means capital stock, capital accounts, capital contributions,
39 capital interest, or interest in undistributed earnings of a business
40 entity. Although firms may include non-licensee owners, the firm and
41 its owners must comply with rules promulgated by the state board of
42 regents. Notwithstanding the foregoing, a firm registered under this
43 section may not have non-licensee owners if the firm's name includes the
44 words "certified public accountant," or "certified public accountants,"
45 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm
46 that is formed under this section shall be (1) a natural person who
47 actively participates in the business of the firm or its affiliated
48 entities, or (2) an entity, including, but not limited to, a partnership
49 or professional corporation, provided each beneficial owner of an equity
50 interest in such entity is a natural person who actively participates in
51 the business conducted by the firm or its affiliated entities. For
52 purposes of this subdivision, "actively participate" means to provide
53 services to clients or to otherwise individually take part in the day-
54 to-day business or management of the firm.
55 § 10. Subdivision (h) of section 121-101 of the partnership law, as
56 added by chapter 950 of the laws of 1990, is amended to read as follows:
A. 1938 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
A. 1938 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
A. 1938 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
A. 1938 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
A. 1938 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.