Bill Text: NY A02919 | 2019-2020 | General Assembly | Amended


Bill Title: Relates to certified public accountants.

Spectrum: Strong Partisan Bill (Democrat 89-8)

Status: (Introduced - Dead) 2020-08-17 - print number 2919c [A02919 Detail]

Download: New_York-2019-A02919-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         2919--C

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                    January 28, 2019
                                       ___________

        Introduced by M. of A. PEOPLES-STOKES, WRIGHT, TAYLOR, JAFFEE, MAGNAREL-
          LI,  BENEDETTO,  DICKENS, ENGLEBRIGHT, RIVERA, MORINELLO, JEAN-PIERRE,
          DE LA ROSA, SEAWRIGHT, D'URSO, LAWRENCE,  COOK,  BLAKE,  L. ROSENTHAL,
          PERRY, LUPARDO, GOTTFRIED, BRONSON, LENTOL, ABBATE, RICHARDSON, DILAN,
          KIM, MOSLEY, PHEFFER AMATO, DINOWITZ, RODRIGUEZ, PRETLOW, NIOU, ROZIC,
          D. ROSENTHAL,  JOYNER,  HUNTER,  PICHARDO,  SOLAGES,  HEVESI, HYNDMAN,
          GALEF, DenDEKKER, GUNTHER, STIRPE, BUCHWALD, WOERNER,  CUSICK,  QUART,
          SCHIMMINGER,  FAHY,  SANTABARBARA, BICHOTTE, WEPRIN, LAVINE, McDONALD,
          CYMBROWITZ, WALCZYK, VANEL, ZEBROWSKI, WALLACE,  PAULIN,  EICHENSTEIN,
          CARROLL, FALL, REYES, ORTIZ, WALKER, RYAN, FERNANDEZ, SAYEGH, McMAHON,
          BARNWELL,  BARRETT,  BUTTENSCHON,  ARROYO,  COLTON,  BARRON,  DARLING,
          BRAUNSTEIN, STERN, CAHILL, GRIFFIN, RAMOS, JONES, BURKE -- Multi-Spon-
          sored by --  M.  of  A.  BARCLAY,  CROUCH,  DAVILA,  GIGLIO,  GOODELL,
          M. L. MILLER,  THIELE  --  read  once and referred to the Committee on
          Higher  Education  --  committee  discharged,  bill  amended,  ordered
          reprinted  as amended and recommitted to said committee -- recommitted
          to the Committee on Higher Education in accordance with Assembly  Rule
          3,  sec. 2 -- committee discharged, bill amended, ordered reprinted as
          amended and recommitted to said committee -- again reported from  said
          committee  with amendments, ordered reprinted as amended and recommit-
          ted to said committee

        AN ACT to amend the business corporation law, the  partnership  law  and
          the  limited  liability  company  law, in relation to certified public
          accountants

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1. Section 1503 of the business corporation law is amended by
     2  adding a new paragraph (h) to read as follows:
     3    (h) Any firm established for the business purpose of incorporating  as
     4  a  professional  service  corporation  formed  to lawfully engage in the
     5  practice of public accountancy, as such practice is respectively defined

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD04747-09-0

        A. 2919--C                          2

     1  under article one hundred forty-nine  of  the  education  law  shall  be
     2  required  to  show  (1)  that  a simple majority of the ownership of the
     3  firm, in terms of financial interests, and voting  rights  held  by  the
     4  firm's  owners,  belongs  to  individuals  licensed  to  practice public
     5  accountancy in some state, and (2) that all shareholders  of  a  profes-
     6  sional  service corporation whose principal place of business is in this
     7  state, and who are engaged in the practice of public accountancy in this
     8  state, hold a valid license issued under  section  seventy-four  hundred
     9  four  of  the  education law. For purposes of this paragraph, "financial
    10  interest" means capital stock, capital accounts, capital  contributions,
    11  capital  interest,  or  interest in undistributed earnings of a business
    12  entity.  Although firms may include non-licensee owners,  the  firm  and
    13  its  owners  must  comply  with  rules promulgated by the state board of
    14  regents.  Notwithstanding the foregoing, a firm incorporated under  this
    15  section may not have non-licensee owners if the firm's name includes the
    16  words  "certified public accountant," or "certified public accountants,"
    17  or the abbreviations "CPA" or "CPAs".  Each non-licensee owner of a firm
    18  that is incorporated under this section shall be a  natural  person  who
    19  actively  participates  in  the  business  of the firm or its affiliated
    20  entities. For purposes of this subdivision, "actively participate" means
    21  to provide services to clients or to otherwise individually take part in
    22  the day-to-day business or management of the firm.  Such  a  firm  shall
    23  have  attached  to  its  certificate  of  incorporation a certificate or
    24  certificates demonstrating the firm's compliance with this paragraph, in
    25  lieu of the certificate or certificates required by subparagraph (ii) of
    26  paragraph (b) of this section.
    27    § 2. Section 1507 of the business corporation law is amended by adding
    28  a new paragraph (c) to read as follows:
    29    (c) Any firm established for the business purpose of incorporating  as
    30  a  professional service corporation pursuant to paragraph (h) of section
    31  fifteen hundred three of this article may issue  shares  to  individuals
    32  who are authorized by law to practice in this state the profession which
    33  such  corporation  is  authorized  to  practice and who are or have been
    34  engaged in the practice of such profession  in  such  corporation  or  a
    35  predecessor  entity,  or who will engage in the practice of such profes-
    36  sion in such corporation within thirty days of the date such shares  are
    37  issued  and  may  also  issue shares to employees of the corporation not
    38  licensed as certified public accountants, provided that:
    39    (i) at least fifty-one percent of the outstanding shares of  stock  of
    40  the corporation are owned by certified public accountants,
    41    (ii)  at least fifty-one percent of the directors are certified public
    42  accountants,
    43    (iii) at least fifty-one percent of the officers are certified  public
    44  accountants,
    45    (iv)  the president, the chairperson of the board of directors and the
    46  chief executive officer or officers are  certified  public  accountants.
    47  No  shareholder of a firm established for the business purpose of incor-
    48  porating as a professional service corporation pursuant to paragraph (h)
    49  of section fifteen hundred three of this  article  shall  enter  into  a
    50  voting  trust agreement, proxy or any other type of agreement vesting in
    51  another person, other than another shareholder of the same  corporation,
    52  the  authority  to  exercise  voting  power  of any or all of his or her
    53  shares. All  shares  issued,  agreements  made  or  proxies  granted  in
    54  violation of this section shall be void.
    55    § 3. Section 1508 of the business corporation law is amended by adding
    56  a new paragraph (c) to read as follows:

        A. 2919--C                          3

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

        A. 2919--C                          4

     1  decree  or  except for a corporation having only one shareholder, may be
     2  made only after the same shall have been approved by the board of direc-
     3  tors, or at a shareholders' meeting specially called for such purpose by
     4  such  proportion, not less than a majority, of the outstanding shares as
     5  may be provided in the certificate of incorporation or in the by-laws of
     6  such professional service corporation. At such shareholders' meeting the
     7  shares held by the shareholder proposing to sell or transfer his or  her
     8  shares  may  not  be voted or counted for any purpose, unless all share-
     9  holders consent that such shares be voted or counted. The certificate of
    10  incorporation or the by-laws of the professional service corporation, or
    11  the professional service corporation and  the  shareholders  by  private
    12  agreement,  may  provide,  in  lieu  of  or in addition to the foregoing
    13  provisions, for the alienation of shares and may require the  redemption
    14  or purchase of such shares by such corporation at prices and in a manner
    15  specifically set forth therein. The existence of the restrictions on the
    16  sale  or transfer of shares, as contained in this article and, if appli-
    17  cable, in the certificate of incorporation, by-laws, stock  purchase  or
    18  stock  redemption agreement, shall be noted conspicuously on the face or
    19  back of every certificate for shares issued by  a  professional  service
    20  corporation.  Any  sale  or  transfer  in violation of such restrictions
    21  shall be void.
    22    (c) A firm established for the business purpose of incorporating as  a
    23  professional  service  corporation  pursuant to paragraph (h) of section
    24  fifteen hundred three of this article,  shall  purchase  or  redeem  the
    25  shares  of a non-licensed professional shareholder in the case of his or
    26  her termination of employment within thirty days after such termination.
    27  A firm established for  the  business  purpose  of  incorporating  as  a
    28  professional  service  corporation  pursuant to paragraph (h) of section
    29  fifteen hundred three of this article, shall not be required to purchase
    30  or redeem the shares of a terminated  non-licensed  professional  share-
    31  holder  if  such  shares, within thirty days after such termination, are
    32  sold or transferred to another employee of the corporation  pursuant  to
    33  this article.
    34    § 6. Section 1514 of the business corporation law is amended by adding
    35  a new paragraph (c) to read as follows:
    36    (c) Each firm established for the business purpose of incorporating as
    37  a  professional service corporation pursuant to paragraph (h) of section
    38  fifteen hundred three of this article shall, at least once  every  three
    39  years  on  or  before  the  date  prescribed by the licensing authority,
    40  furnish a statement to the licensing authority  listing  the  names  and
    41  residence  addresses  of  each shareholder, director and officer of such
    42  corporation and certify as the date of certification and  at  all  times
    43  over the entire three year period that:
    44    (i)  at  least fifty-one percent of the outstanding shares of stock of
    45  the corporation are and were owned by certified public accountants,
    46    (ii) at least fifty-one percent of the directors are and  were  certi-
    47  fied public accountants,
    48    (iii)  at  least fifty-one percent of the officers are and were certi-
    49  fied public accountants,
    50    (iv) the president, the chairperson of the board of directors and  the
    51  chief  executive  officer  or  officers  are  and  were certified public
    52  accountants.
    53  The statement shall be signed by the president or any  certified  public
    54  accountant  vice-president  and  attested  to  by  the  secretary or any
    55  assistant secretary of the corporation.

        A. 2919--C                          5

     1    § 7. Paragraph (d) of section 1525 of the business corporation law, as
     2  added by chapter 505 of the laws of 1983, is amended to read as follows:
     3    (d) "Foreign  professional  service  corporation" means a professional
     4  service corporation, whether or not denominated as such, organized under
     5  the laws of a jurisdiction other than this state, all of the  sharehold-
     6  ers,  directors  and  officers  of  which are authorized and licensed to
     7  practice the profession for which such corporation  is  licensed  to  do
     8  business;  except  that  all  shareholders,  directors and officers of a
     9  foreign professional service corporation which provides health  services
    10  in  this  state  shall be licensed in this state. A foreign professional
    11  service corporation formed to lawfully engage in the practice of  public
    12  accountancy,  as  such  practice  is  defined  under article one hundred
    13  forty-nine of the education law,  or  equivalent  state  law,  shall  be
    14  required  to  show  (1)  that  a simple majority of the ownership of the
    15  firm, in terms of financial interests, and voting  rights  held  by  the
    16  firm's  owners,  belongs  to  individuals  licensed  to  practice public
    17  accountancy in some state, and (2) that all shareholders  of  a  foreign
    18  professional service corporation whose principal place of business is in
    19  this state, and who are engaged in the practice of public accountancy in
    20  this  state,  hold  a  valid  license  issued under section seventy-four
    21  hundred four of the education  law.  For  purposes  of  this  paragraph,
    22  "financial  interest"  means  capital  stock,  capital accounts, capital
    23  contributions, capital interest, or interest in  undistributed  earnings
    24  of  a  business entity.  Although firms may include non-licensee owners,
    25  the firm and its owners must comply with rules promulgated by the  state
    26  board  of  regents.    Notwithstanding  the foregoing, a firm registered
    27  under this section may not have non-licensee owners if the  firm's  name
    28  includes  the  words "certified public accountant," or "certified public
    29  accountants," or the abbreviations "CPA" or  "CPAs".  Each  non-licensee
    30  owner  of a firm that is operating under this section shall be a natural
    31  person who actively participates in the business  of  the  firm  or  its
    32  affiliated  entities, provided each beneficial owner of an equity inter-
    33  est in such entity is a natural person who actively participates in  the
    34  business  conducted by the firm or its affiliated entities. For purposes
    35  of this paragraph, "actively participate" means to provide  services  to
    36  clients  or  to otherwise individually take part in the day-to-day busi-
    37  ness or management of the firm.
    38    § 8. Subdivision (q) of section 121-1500 of the  partnership  law,  as
    39  amended  by  chapter  475  of  the  laws  of 2014, is amended to read as
    40  follows:
    41    (q) Each partner of a registered limited liability partnership  formed
    42  to  provide  medical services in this state must be licensed pursuant to
    43  article 131 of the education law to practice medicine in this state  and
    44  each  partner  of  a  registered limited liability partnership formed to
    45  provide dental services in this state must be licensed pursuant to arti-
    46  cle 133 of the education law to practice dentistry in this state.   Each
    47  partner  of a registered limited liability partnership formed to provide
    48  veterinary services in this state must be licensed pursuant  to  article
    49  135  of the education law to practice veterinary medicine in this state.
    50  Each partner of a registered limited  liability  partnership  formed  to
    51  provide  public  accountancy services, whose principal place of business
    52  is in this state and who provides public accountancy services,  must  be
    53  licensed pursuant to article 149 of the education law to practice public
    54  accountancy  in this state. Each partner of a registered limited liabil-
    55  ity partnership formed to provide professional engineering, land survey-
    56  ing, geological services, architectural and/or  landscape  architectural

        A. 2919--C                          6

     1  services in this state must be licensed pursuant to article 145, article
     2  147  and/or  article 148 of the education law to practice one or more of
     3  such professions in this state. Each partner  of  a  registered  limited
     4  liability  partnership  formed  to provide licensed clinical social work
     5  services in this state must be licensed pursuant to article 154  of  the
     6  education law to practice clinical social work in this state. Each part-
     7  ner  of  a  registered  limited  liability partnership formed to provide
     8  creative arts therapy services in this state must be  licensed  pursuant
     9  to article 163 of the education law to practice creative arts therapy in
    10  this  state.  Each partner of a registered limited liability partnership
    11  formed to provide marriage and family therapy  services  in  this  state
    12  must  be  licensed pursuant to article 163 of the education law to prac-
    13  tice marriage and family therapy in this state. Each partner of a regis-
    14  tered limited liability partnership  formed  to  provide  mental  health
    15  counseling  services  in this state must be licensed pursuant to article
    16  163 of the education law to practice mental health  counseling  in  this
    17  state. Each partner of a registered limited liability partnership formed
    18  to provide psychoanalysis services in this state must be licensed pursu-
    19  ant  to  article  163 of the education law to practice psychoanalysis in
    20  this state. Each partner of a registered limited  liability  partnership
    21  formed  to  provide applied behavior analysis service in this state must
    22  be licensed or certified pursuant to article 167 of the education law to
    23  practice applied behavior analysis in this state.  A  limited  liability
    24  partnership  formed to lawfully engage in the practice of public accoun-
    25  tancy, as such practice is respectively defined under article 149 of the
    26  education law, shall be required to show (1) that a simple  majority  of
    27  the  ownership  of the firm, in terms of financial interests, and voting
    28  rights held by the firm's owners, belongs  to  individuals  licensed  to
    29  practice  public accountancy in some state, and (2) that all partners of
    30  a limited liability partnership whose principal place of business is  in
    31  this state, and who are engaged in the practice of public accountancy in
    32  this  state,  hold  a  valid  license  issued under section seventy-four
    33  hundred four of the education law. For  purposes  of  this  subdivision,
    34  "financial  interest"  means  capital  stock,  capital accounts, capital
    35  contributions, capital interest, or interest in  undistributed  earnings
    36  of  a  business entity.  Although firms may include non-licensee owners,
    37  the firm and its owners must comply with rules promulgated by the  state
    38  board of regents. Notwithstanding the foregoing, a firm registered under
    39  this  section  may  not  have  non-licensee  owners  if  the firm's name
    40  includes the words "certified public accountant," or  "certified  public
    41  accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner
    42  of  a  firm  that  is  formed  under this section shall be (1) a natural
    43  person who actively participates in the business  of  the  firm  or  its
    44  affiliated  entities, or (2) an entity, including, but not limited to, a
    45  partnership or professional corporation, provided each beneficial  owner
    46  of  an  equity  interest in such entity is a natural person who actively
    47  participates in the business conducted by the  firm  or  its  affiliated
    48  entities. For purposes of this subdivision, "actively participate" means
    49  to provide services to clients or to otherwise individually take part in
    50  the day-to-day business or management of the firm.
    51    §  9.  Subdivision  (q) of section 121-1502 of the partnership law, as
    52  amended by chapter 475 of the laws  of  2014,  is  amended  to  read  as
    53  follows:
    54    (q)  Each  partner  of  a  foreign limited liability partnership which
    55  provides medical services in this state must  be  licensed  pursuant  to
    56  article  131  of the education law to practice medicine in the state and

        A. 2919--C                          7

     1  each partner of a foreign limited liability partnership  which  provides
     2  dental services in the state must be licensed pursuant to article 133 of
     3  the education law to practice dentistry in this state. Each partner of a
     4  foreign  limited liability partnership which provides veterinary service
     5  in the state shall be licensed pursuant to article 135 of the  education
     6  law  to  practice  veterinary  medicine in this state. Each partner of a
     7  foreign limited liability partnership which provides professional  engi-
     8  neering, land surveying, geological services, architectural and/or land-
     9  scape  architectural services in this state must be licensed pursuant to
    10  article 145, article 147 and/or article 148  of  the  education  law  to
    11  practice  one  or  more of such professions.   Each partner of a foreign
    12  registered  limited  liability  partnership  formed  to  provide  public
    13  accountancy services, whose principal place of business is in this state
    14  and  who provides public accountancy services, must be licensed pursuant
    15  to article 149 of the education law to practice  public  accountancy  in
    16  this  state.  Each  partner  of  a foreign limited liability partnership
    17  which provides licensed clinical social work services in this state must
    18  be licensed pursuant to article 154 of the  education  law  to  practice
    19  licensed  clinical  social work in this state. Each partner of a foreign
    20  limited liability  partnership  which  provides  creative  arts  therapy
    21  services  in  this state must be licensed pursuant to article 163 of the
    22  education law to practice creative arts  therapy  in  this  state.  Each
    23  partner  of  a  foreign  limited  liability  partnership  which provides
    24  marriage and family therapy services in  this  state  must  be  licensed
    25  pursuant  to  article  163 of the education law to practice marriage and
    26  family therapy in this state. Each partner of a foreign limited  liabil-
    27  ity partnership which provides mental health counseling services in this
    28  state  must  be licensed pursuant to article 163 of the education law to
    29  practice mental health counseling in  this  state.  Each  partner  of  a
    30  foreign  limited  liability  partnership  which  provides psychoanalysis
    31  services in this state must be licensed pursuant to article 163  of  the
    32  education  law to practice psychoanalysis in this state. Each partner of
    33  a foreign limited liability partnership which provides applied  behavior
    34  analysis  services  in this state must be licensed or certified pursuant
    35  to article 167 of the education law to practice applied behavior  analy-
    36  sis  in  this state.   A foreign limited liability partnership formed to
    37  lawfully engage in the practice of public accountancy, as such  practice
    38  is respectively defined under article 149 of the education law, shall be
    39  required  to  show  (1)  that  a simple majority of the ownership of the
    40  firm, in terms of financial interests, and voting  rights  held  by  the
    41  firm's  owners,  belongs  to  individuals  licensed  to  practice public
    42  accountancy in some state, and (2) that all partners of a foreign limit-
    43  ed liability partnership whose principal place of business  is  in  this
    44  state, and who are engaged in the practice of public accountancy in this
    45  state,  hold  a  valid license issued under section seventy-four hundred
    46  four of the education law. For purposes of this subdivision,  "financial
    47  interest"  means capital stock, capital accounts, capital contributions,
    48  capital interest, or interest in undistributed earnings  of  a  business
    49  entity.    Although  firms may include non-licensee owners, the firm and
    50  its owners must comply with rules promulgated  by  the  state  board  of
    51  regents.  Notwithstanding  the  foregoing,  a firm registered under this
    52  section may not have non-licensee owners if the firm's name includes the
    53  words "certified public accountant," or "certified public  accountants,"
    54  or the abbreviations "CPA" or "CPAs".  Each non-licensee owner of a firm
    55  that  is  formed  under  this  section shall be (1) a natural person who
    56  actively participates in the business of  the  firm  or  its  affiliated

        A. 2919--C                          8

     1  entities, or (2) an entity, including, but not limited to, a partnership
     2  or professional corporation, provided each beneficial owner of an equity
     3  interest in such entity is a natural person who actively participates in
     4  the  business  conducted  by  the  firm or its affiliated entities.  For
     5  purposes of this subdivision, "actively participate"  means  to  provide
     6  services  to  clients or to otherwise individually take part in the day-
     7  to-day business or management of the firm.
     8    § 10. Subdivision (h) of section 121-101 of the  partnership  law,  as
     9  added by chapter 950 of the laws of 1990, is amended to read as follows:
    10    (h)  "Limited  partnership"  and  "domestic limited partnership" mean,
    11  unless the context otherwise requires, a partnership (i) formed  by  two
    12  or more persons pursuant to this article or which complies with subdivi-
    13  sion (a) of section 121-1202 of this article and (ii) having one or more
    14  general  partners and one or more limited partners.  Notwithstanding any
    15  other provisions of law a limited partnership or domestic limited  part-
    16  nership formed to lawfully engage in the practice of public accountancy,
    17  as such practice is respectively defined under article 149 of the educa-
    18  tion  law  shall  be  required to show (1) that a simple majority of the
    19  ownership of the firm, in terms of financial interests, including owner-
    20  ship-based compensation, and voting rights held by  the  firm's  owners,
    21  belongs  to  individuals licensed to practice public accountancy in some
    22  state, and (2) that all partners of a limited  partnership  or  domestic
    23  limited partnership, whose principal place of business is in this state,
    24  and who are engaged in the practice of public accountancy in this state,
    25  hold  a  valid license issued under section seventy-four hundred four of
    26  the education law or  are  public  accountants  licensed  under  section
    27  seventy-four  hundred  five  of  the  education  law. Although firms may
    28  include non-licensee owners, the firm and its owners  must  comply  with
    29  rules  promulgated  by  the state board of regents.  Notwithstanding the
    30  foregoing, a firm registered under this section may not have  non-licen-
    31  see  owners  if  the  firm's  name  includes the words "certified public
    32  accountant," or "certified public  accountants,"  or  the  abbreviations
    33  "CPA"  or  "CPAs".  Each non-licensee owner of a firm that is registered
    34  under this section shall be (1) a natural person  who  actively  partic-
    35  ipates in the business of the firm or its affiliated entities, or (2) an
    36  entity,  including,  but  not  limited to, a partnership or professional
    37  corporation, provided each beneficial owner of  an  equity  interest  in
    38  such  entity  is a natural person who actively participates in the busi-
    39  ness conducted by the firm or its affiliated entities. For  purposes  of
    40  this  subdivision,  "actively  participate" means to provide services to
    41  clients or to otherwise individually take part in the  day-to-day  busi-
    42  ness or management of the firm.
    43    § 11. Subdivision (b) of section 1207 of the limited liability company
    44  law,  as  amended by chapter 475 of the laws of 2014, is amended to read
    45  as follows:
    46    (b) With respect to a professional service limited  liability  company
    47  formed to provide medical services as such services are defined in arti-
    48  cle  131  of  the  education  law, each member of such limited liability
    49  company must be licensed pursuant to article 131 of the education law to
    50  practice medicine in this state.  With respect to a professional service
    51  limited liability company formed to  provide  dental  services  as  such
    52  services are defined in article 133 of the education law, each member of
    53  such  limited liability company must be licensed pursuant to article 133
    54  of the education law to practice dentistry in this state.  With  respect
    55  to  a  professional  service limited liability company formed to provide
    56  veterinary services as such services are defined in article 135  of  the

        A. 2919--C                          9

     1  education  law,  each  member  of such limited liability company must be
     2  licensed pursuant to article 135 of the education law to practice veter-
     3  inary medicine in this state. With respect  to  a  professional  service
     4  limited  liability  company  formed to provide professional engineering,
     5  land surveying, architectural, landscape architectural and/or geological
     6  services as such services are defined in article 145,  article  147  and
     7  article  148 of the education law, each member of such limited liability
     8  company must be licensed pursuant to article  145,  article  147  and/or
     9  article  148  of  the  education  law  to  practice  one or more of such
    10  professions in this state.   With  respect  to  a  professional  service
    11  limited  liability company formed to provide public accountancy services
    12  as such services are defined in article 149 of the  education  law  each
    13  member  of such limited liability company whose principal place of busi-
    14  ness is in this state and who provides public accountancy services, must
    15  be licensed pursuant to article 149 of the  education  law  to  practice
    16  public accountancy in this state. With respect to a professional service
    17  limited  liability  company  formed  to provide licensed clinical social
    18  work services as such services are defined in article 154 of the  educa-
    19  tion  law,  each  member  of  such  limited  liability  company shall be
    20  licensed pursuant to article  154  of  the  education  law  to  practice
    21  licensed  clinical  social work in this state. With respect to a profes-
    22  sional service limited liability company formed to provide creative arts
    23  therapy services as such services are defined  in  article  163  of  the
    24  education  law,  each  member  of such limited liability company must be
    25  licensed pursuant to article 163 of the education law to practice  crea-
    26  tive  arts therapy in this state. With respect to a professional service
    27  limited liability company formed to provide marriage and family  therapy
    28  services  as  such  services are defined in article 163 of the education
    29  law, each member of such limited  liability  company  must  be  licensed
    30  pursuant  to  article  163 of the education law to practice marriage and
    31  family therapy in this state. With respect  to  a  professional  service
    32  limited  liability  company  formed  to provide mental health counseling
    33  services as such services are defined in article 163  of  the  education
    34  law,  each  member  of  such  limited liability company must be licensed
    35  pursuant to article 163 of the education law to practice  mental  health
    36  counseling in this state. With respect to a professional service limited
    37  liability  company  formed  to  provide  psychoanalysis services as such
    38  services are defined in article 163 of the education law, each member of
    39  such limited liability company must be licensed pursuant to article  163
    40  of  the  education  law  to  practice psychoanalysis in this state. With
    41  respect to a professional service limited liability  company  formed  to
    42  provide  applied behavior analysis services as such services are defined
    43  in article 167 of the education law, each member of such limited liabil-
    44  ity company must be licensed or certified pursuant to article 167 of the
    45  education law to practice applied behavior analysis  in  this  state.  A
    46  professional service limited liability company formed to lawfully engage
    47  in  the practice of public accountancy, as such practice is respectively
    48  defined under article 149 of the education law shall be required to show
    49  (1) that a simple majority of the ownership of the  firm,  in  terms  of
    50  financial  interests,  and  voting  rights  held  by  the firm's owners,
    51  belongs to individuals licensed to practice public accountancy  in  some
    52  state, and (2) that all members of a limited professional service limit-
    53  ed  liability  company,  whose  principal  place  of business is in this
    54  state, and who are engaged in the practice of public accountancy in this
    55  state, hold a valid license issued under  section  seventy-four  hundred
    56  four  of the education law. For purposes of this subdivision, "financial

        A. 2919--C                         10

     1  interest" means capital stock, capital accounts, capital  contributions,
     2  capital  interest,  or  interest in undistributed earnings of a business
     3  entity.  Although firms may include non-licensee owners,  the  firm  and
     4  its  owners  must  comply  with  rules promulgated by the state board of
     5  regents.  Notwithstanding the foregoing, a firm  registered  under  this
     6  section may not have non-licensee owners if the firm's name includes the
     7  words  "certified public accountant," or "certified public accountants,"
     8  or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a  firm
     9  that  is registered under this section shall be (1) a natural person who
    10  actively participates in the business of  the  firm  or  its  affiliated
    11  entities, or (2) an entity, including, but not limited to, a partnership
    12  or professional corporation, provided each beneficial owner of an equity
    13  interest in such entity is a natural person who actively participates in
    14  the  business  conducted  by  the  firm  or its affiliated entities. For
    15  purposes of this subdivision, "actively participate"  means  to  provide
    16  services  to  clients or to otherwise individually take part in the day-
    17  to-day business or management of the firm.
    18    § 12. Subdivision (a) of section 1301 of the limited liability company
    19  law, as amended by chapter 475 of the laws of 2014, is amended  to  read
    20  as follows:
    21    (a)  "Foreign  professional service limited liability company" means a
    22  professional service limited liability company, whether or  not  denomi-
    23  nated  as  such,  organized  under the laws of a jurisdiction other than
    24  this state, (i) each of whose members and managers, if any, is a profes-
    25  sional authorized by law to render a professional  service  within  this
    26  state  and who is or has been engaged in the practice of such profession
    27  in such professional service limited liability company or a  predecessor
    28  entity, or will engage in the practice of such profession in the profes-
    29  sional  service limited liability company within thirty days of the date
    30  such professional becomes a member, or each of whose members and  manag-
    31  ers,  if  any, is a professional at least one of such members is author-
    32  ized by law to render a professional service within this state  and  who
    33  is  or  has  been  engaged  in  the  practice of such profession in such
    34  professional service limited liability company or a predecessor  entity,
    35  or  will  engage  in the practice of such profession in the professional
    36  service limited liability company within thirty days of  the  date  such
    37  professional  becomes  a  member,  or  (ii)  authorized by, or holding a
    38  license, certificate, registration or permit  issued  by  the  licensing
    39  authority  pursuant  to,  the  education  law  to  render a professional
    40  service within this state; except that all members and managers, if any,
    41  of  a  foreign  professional  service  limited  liability  company  that
    42  provides  health services in this state shall be licensed in this state.
    43  With respect to a foreign professional service limited liability company
    44  which provides veterinary services as such services are defined in arti-
    45  cle 135 of the education law, each member of such  foreign  professional
    46  service  limited liability company shall be licensed pursuant to article
    47  135 of the education law to practice veterinary medicine.  With  respect
    48  to  a  foreign  professional  service  limited  liability  company which
    49  provides medical services as such services are defined in article 131 of
    50  the education law, each member  of  such  foreign  professional  service
    51  limited  liability  company  must be licensed pursuant to article 131 of
    52  the education law to practice medicine in this state.  With respect to a
    53  foreign professional service limited liability  company  which  provides
    54  dental  services  as  such  services  are  defined in article 133 of the
    55  education law, each member of such foreign professional service  limited
    56  liability company must be licensed pursuant to article 133 of the educa-

        A. 2919--C                         11

     1  tion  law to practice dentistry in this state. With respect to a foreign
     2  professional service limited liability company  which  provides  profes-
     3  sional engineering, land surveying, geologic, architectural and/or land-
     4  scape  architectural  services  as  such services are defined in article
     5  145, article 147 and article 148 of the education law,  each  member  of
     6  such  foreign  professional  service  limited  liability company must be
     7  licensed pursuant to article 145, article 147 and/or article 148 of  the
     8  education law to practice one or more of such professions in this state.
     9  With respect to a foreign professional service limited liability company
    10  which  provides public accountancy services as such services are defined
    11  in article 149 of the education law, each member of such foreign profes-
    12  sional service limited liability company whose principal place of  busi-
    13  ness  is  in  this  state  and who provides public accountancy services,
    14  shall be licensed pursuant to article 149 of the education law to  prac-
    15  tice public accountancy in this state. With respect to a foreign profes-
    16  sional  service  limited liability company which provides licensed clin-
    17  ical social work services as such services are defined in article 154 of
    18  the education law, each member  of  such  foreign  professional  service
    19  limited  liability  company shall be licensed pursuant to article 154 of
    20  the education law to practice clinical social work in this  state.  With
    21  respect  to  a  foreign  professional  service limited liability company
    22  which provides creative arts  therapy  services  as  such  services  are
    23  defined in article 163 of the education law, each member of such foreign
    24  professional service limited liability company must be licensed pursuant
    25  to article 163 of the education law to practice creative arts therapy in
    26  this  state.  With  respect  to  a  foreign professional service limited
    27  liability company which provides marriage and family therapy services as
    28  such services are defined in article 163  of  the  education  law,  each
    29  member  of  such  foreign professional service limited liability company
    30  must be licensed pursuant to article 163 of the education law  to  prac-
    31  tice  marriage  and  family  therapy  in  this  state. With respect to a
    32  foreign professional service limited liability  company  which  provides
    33  mental  health counseling services as such services are defined in arti-
    34  cle 163 of the education law, each member of such  foreign  professional
    35  service  limited  liability company must be licensed pursuant to article
    36  163 of the education law to practice mental health  counseling  in  this
    37  state.  With respect to a foreign professional service limited liability
    38  company which provides psychoanalysis  services  as  such  services  are
    39  defined in article 163 of the education law, each member of such foreign
    40  professional service limited liability company must be licensed pursuant
    41  to  article  163 of the education law to practice psychoanalysis in this
    42  state. With respect to a foreign professional service limited  liability
    43  company  which  provides  applied  behavior  analysis  services  as such
    44  services are defined in article 167 of the education law, each member of
    45  such foreign professional service  limited  liability  company  must  be
    46  licensed  or  certified  pursuant to article 167 of the education law to
    47  practice applied behavior analysis in this state. A foreign professional
    48  service limited liability company formed to lawfully engage in the prac-
    49  tice of public accountancy, as such  practice  is  respectively  defined
    50  under  article  149  of  the education law shall be required to show (1)
    51  that a simple majority of the ownership of the firm, in terms of  finan-
    52  cial  interests, and voting rights held by the firm's owners, belongs to
    53  individuals licensed to practice public accountancy in some  state,  and
    54  (2)  that  all members of a foreign limited professional service limited
    55  liability company, whose principal place of business is in  this  state,
    56  and who are engaged in the practice of public accountancy in this state,

        A. 2919--C                         12

     1  hold  a  valid license issued under section seventy-four hundred four of
     2  the education law. For purposes of this subdivision,  "financial  inter-
     3  est" means capital stock, capital accounts, capital contributions, capi-
     4  tal  interest, or interest in undistributed earnings of a business enti-
     5  ty.  Although firms may include non-licensee owners, the  firm  and  its
     6  owners must comply with rules promulgated by the state board of regents.
     7  Notwithstanding  the foregoing, a firm registered under this section may
     8  not have non-licensee owners if  the  firm's  name  includes  the  words
     9  "certified public accountant," or "certified public accountants," or the
    10  abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is
    11  registered under this section shall be (1) a natural person who actively
    12  participates  in the business of the firm or its affiliated entities, or
    13  (2) an entity, including, but not limited to, a partnership  or  profes-
    14  sional corporation, provided each beneficial owner of an equity interest
    15  in  such  entity  is  a  natural person who actively participates in the
    16  business conducted by the firm or its affiliated entities. For  purposes
    17  of this subdivision, "actively participate" means to provide services to
    18  clients  or  to otherwise individually take part in the day-to-day busi-
    19  ness or management of the firm.
    20    § 13. Notwithstanding any other provision  of  law  to  the  contrary,
    21  there  is hereby established a fee for each non-licensee owner of a firm
    22  that is registered in this state to lawfully engage in the  practice  of
    23  public  accountancy.  Such  non-licensee  owner  shall pay a fee of nine
    24  hundred dollars to the department of education on a triennial basis.
    25    § 14. This act shall take effect immediately.
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