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. LBD04747-09-0A. 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 courtA. 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 architecturalA. 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 andA. 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 affiliatedA. 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 theA. 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, "financialA. 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.