Bill Text: NY A04189 | 2023-2024 | General Assembly | Introduced


Bill Title: Relates to certified public accountants; requires that a majority of the ownership of a professional service corporation formed to lawfully engage in the practice of public accountancy as a firm are individuals licensed to practice public accountancy in some state; enacts similar provisions for partnerships and LLCs.

Spectrum: Strong Partisan Bill (Democrat 66-5)

Status: (Introduced) 2023-05-30 - substituted by s2473a [A04189 Detail]

Download: New_York-2023-A04189-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          4189

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                    February 10, 2023
                                       ___________

        Introduced  by  M.  of A. PEOPLES-STOKES, TAYLOR, MAGNARELLI, BENEDETTO,
          DICKENS, JEAN-PIERRE, SEAWRIGHT, MORINELLO, COOK, L. ROSENTHAL, LUPAR-
          DO, BRONSON, DILAN, PHEFFER AMATO, DINOWITZ, PRETLOW,  ROZIC,  JOYNER,
          HUNTER, HEVESI, HYNDMAN, GUNTHER, STIRPE, WOERNER, FAHY, SANTABARBARA,
          BICHOTTE HERMELYN, WEPRIN, VANEL, ZEBROWSKI, WALLACE, PAULIN, CARROLL,
          FALL,  REYES,  WALKER,  SAYEGH, McMAHON, BARRETT, BUTTENSCHON, COLTON,
          BRAUNSTEIN, DARLING, STERN, RAMOS, JONES, ZINERMAN, BURGOS,  ANDERSON,
          LUNSFORD  --  Multi-Sponsored  by  --  M.  of A. DAVILA, J. M. GIGLIO,
          GOODELL, THIELE -- read once and referred to the Committee  on  Higher
          Education

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

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

     1    Section 1. Section 1503 of the business corporation law is amended  by
     2  adding a new paragraph (h) to read as follows:
     3    (h)  Any firm established for the business purpose of incorporating as
     4  a professional service corporation formed  to  lawfully  engage  in  the
     5  practice  of public accountancy, as such practice is defined under arti-
     6  cle one hundred forty-nine of the education law  shall  be  required  to
     7  show  (1)  that a simple majority of the ownership of the firm, in terms
     8  of financial interests and voting rights  held  by  the  firm's  owners,
     9  belongs  to  individuals licensed to practice public accountancy in some
    10  state, and (2) that all shareholders of a  professional  service  corpo-
    11  ration  whose  principal place of business is in this state, and who are
    12  engaged in the practice of public accountancy  in  this  state,  hold  a
    13  valid  license  issued  under  section  seventy-four hundred four of the
    14  education law. For purposes  of  this  paragraph,  "financial  interest"
    15  means  capital  stock,  capital accounts, capital contributions, capital
    16  interest, or interest in undistributed earnings of  a  business  entity.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00057-04-3

        A. 4189                             2

     1  Although  firms  registered  with  the  education department may include
     2  non-licensee owners, a registered firm and its owners must  comply  with
     3  rules  promulgated  by  the state board of regents.  Notwithstanding the
     4  foregoing,  a  firm incorporated under this section may not have non-li-
     5  censee owners if the firm's name includes the  words  "certified  public
     6  accountant,"  or  "certified  public  accountants," or the abbreviations
     7  "CPA" or "CPAs".  Each non-licensee owner of a firm that is incorporated
     8  under this section shall be a natural person who  actively  participates
     9  in  the business of the firm or its affiliated entities. For purposes of
    10  this subdivision, "actively participate" means to  provide  services  to
    11  clients  or  to otherwise individually take part in the day-to-day busi-
    12  ness or management of the firm or an affiliated entity.    Such  a  firm
    13  shall have attached to its certificate of incorporation a certificate or
    14  certificates demonstrating the firm's compliance with this paragraph, in
    15  lieu of the certificate or certificates required by subparagraph (ii) of
    16  paragraph (b) of this section.
    17    § 2. Section 1507 of the business corporation law is amended by adding
    18  a new paragraph (c) to read as follows:
    19    (c)  Any firm established for the business purpose of incorporating as
    20  a professional service corporation pursuant to paragraph (h) of  section
    21  fifteen  hundred  three  of this article may issue shares to individuals
    22  who are authorized by law to practice in this state the profession which
    23  such corporation is authorized to practice or who  will  engage  in  the
    24  practice  of  such  profession in such corporation within thirty days of
    25  the date such shares are issued and may also issue shares  to  employees
    26  of  the  corporation  not  licensed  as  certified  public  accountants,
    27  provided that:
    28    (i) at least a simple majority of the outstanding shares of  stock  of
    29  the corporation are owned by certified public accountants,
    30    (ii)  at least a simple majority of the directors are certified public
    31  accountants,
    32    (iii) at least a simple majority of the officers are certified  public
    33  accountants,
    34    (iv)  the president, the chairperson of the board of directors and the
    35  chief executive officer or officers are  certified  public  accountants.
    36  No  shareholder of a professional service corporation established pursu-
    37  ant to paragraph (h) of section fifteen hundred three  of  this  article
    38  shall  enter  into  a voting trust agreement, proxy or any other type of
    39  agreement vesting in another person, the authority  to  exercise  voting
    40  power of any or all of his or her shares. All agreements made or proxies
    41  granted in violation of this section shall be void.
    42    § 3. Section 1508 of the business corporation law is amended by adding
    43  a new paragraph (c) to read as follows:
    44    (c)  The  directors and officers of any firm established for the busi-
    45  ness purpose of incorporating  as  a  professional  service  corporation
    46  pursuant to paragraph (h) of section fifteen hundred three of this arti-
    47  cle  may  include  individuals  who  are not licensed to practice public
    48  accountancy in any state, provided however that at least a simple major-
    49  ity of the directors, at least a simple majority of the officers and the
    50  president, the chairperson of the board of directors and the chief exec-
    51  utive officer or officers are authorized by law to practice in any state
    52  the profession which such corporation is authorized to practice, and are
    53  either shareholders of such corporation or engaged in  the  practice  of
    54  their professions in such corporation.
    55    § 4. Section 1509 of the business corporation law, as amended by chap-
    56  ter 550 of the laws of 2011, is amended to read as follows:

        A. 4189                             3

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

        A. 4189                             4

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

        A. 4189                             5

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

        A. 4189                             6

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

        A. 4189                             7

     1  services  as  a firm, whose principal place of business is in this state
     2  and who provides public accountancy services, must be licensed  pursuant
     3  to  article  149  of the education law to practice public accountancy in
     4  this  state.  Each  partner  of  a foreign limited liability partnership
     5  which provides licensed clinical social work services in this state must
     6  be licensed pursuant to article 154 of the  education  law  to  practice
     7  licensed  clinical  social work in this state. Each partner of a foreign
     8  limited liability  partnership  which  provides  creative  arts  therapy
     9  services  in  this state must be licensed pursuant to article 163 of the
    10  education law to practice creative arts  therapy  in  this  state.  Each
    11  partner  of  a  foreign  limited  liability  partnership  which provides
    12  marriage and family therapy services in  this  state  must  be  licensed
    13  pursuant  to  article  163 of the education law to practice marriage and
    14  family therapy in this state. Each partner of a foreign limited  liabil-
    15  ity partnership which provides mental health counseling services in this
    16  state  must  be licensed pursuant to article 163 of the education law to
    17  practice mental health counseling in  this  state.  Each  partner  of  a
    18  foreign  limited  liability  partnership  which  provides psychoanalysis
    19  services in this state must be licensed pursuant to article 163  of  the
    20  education  law to practice psychoanalysis in this state. Each partner of
    21  a foreign limited liability partnership which provides applied  behavior
    22  analysis  services  in this state must be licensed or certified pursuant
    23  to article 167 of the education law to practice applied behavior  analy-
    24  sis  in  this state.   A foreign limited liability partnership formed to
    25  lawfully engage in the practice of public accountancy as a firm, as such
    26  practice is defined under article 149 of the  education  law,  shall  be
    27  required  to  show  (1)  that  a simple majority of the ownership of the
    28  firm, in terms of financial interests and  voting  rights  held  by  the
    29  firm's  owners,  belongs  to  individuals  licensed  to  practice public
    30  accountancy in some state, and (2) that  all  partners  of  the  foreign
    31  limited  liability  partnership  whose principal place of business is in
    32  this state, and who are engaged in the practice of public accountancy in
    33  this state, hold a  valid  license  issued  under  section  seventy-four
    34  hundred  four  of  the  education law. For purposes of this subdivision,
    35  "financial interest" means  capital  stock,  capital  accounts,  capital
    36  contributions,  capital  interest, or interest in undistributed earnings
    37  of a business entity.   Although firms  registered  with  the  education
    38  department  may  include  non-licensee owners, a registered firm and its
    39  owners must comply with rules promulgated by the state board of regents.
    40  Notwithstanding the foregoing, a  firm  registered  with  the  education
    41  department  may not have non-licensee owners if the firm's name includes
    42  the words "certified public accountant," or "certified  public  account-
    43  ants," or the abbreviations "CPA" or "CPAs".  Each non-licensee owner of
    44  a  firm  that is formed under this section shall be (1) a natural person
    45  who actively participates in the business of the firm or its  affiliated
    46  entities, or (2) an entity, including, but not limited to, a partnership
    47  or  professional  corporation, provided that each beneficial owner of an
    48  equity interest in such entity is a natural person who actively  partic-
    49  ipates in the business conducted by the firm or its affiliated entities.
    50  For  purposes  of  this  subdivision,  "actively  participate"  means to
    51  provide services to clients or to otherwise individually  take  part  in
    52  the day-to-day business or management of the firm or an affiliated enti-
    53  ty.
    54    § 10. Subdivision (b) of section 1207 of the limited liability company
    55  law,  as  amended by chapter 475 of the laws of 2014, is amended to read
    56  as follows:

        A. 4189                             8

     1    (b) With respect to a professional service limited  liability  company
     2  formed to provide medical services as such services are defined in arti-
     3  cle  131  of  the  education  law, each member of such limited liability
     4  company must be licensed pursuant to article 131 of the education law to
     5  practice medicine in this state.  With respect to a professional service
     6  limited  liability  company  formed  to  provide dental services as such
     7  services are defined in article 133 of the education law, each member of
     8  such limited liability company must be licensed pursuant to article  133
     9  of  the  education law to practice dentistry in this state. With respect
    10  to a professional service limited liability company  formed  to  provide
    11  veterinary  services  as such services are defined in article 135 of the
    12  education law, each member of such limited  liability  company  must  be
    13  licensed pursuant to article 135 of the education law to practice veter-
    14  inary  medicine  in  this  state. With respect to a professional service
    15  limited liability company formed to  provide  professional  engineering,
    16  land surveying, architectural, landscape architectural and/or geological
    17  services  as  such  services are defined in article 145, article 147 and
    18  article 148 of the education law, each member of such limited  liability
    19  company  must  be  licensed  pursuant to article 145, article 147 and/or
    20  article 148 of the education  law  to  practice  one  or  more  of  such
    21  professions  in  this  state.    With  respect to a professional service
    22  limited liability company formed to provide public accountancy  services
    23  as  such  services  are defined in article 149 of the education law each
    24  member of such limited liability company whose principal place of  busi-
    25  ness is in this state and who provides public accountancy services, must
    26  be  licensed  pursuant  to  article 149 of the education law to practice
    27  public accountancy in this state. With respect to a professional service
    28  limited liability company formed to  provide  licensed  clinical  social
    29  work  services as such services are defined in article 154 of the educa-
    30  tion law, each  member  of  such  limited  liability  company  shall  be
    31  licensed  pursuant  to  article  154  of  the  education law to practice
    32  licensed clinical social work in this state. With respect to  a  profes-
    33  sional service limited liability company formed to provide creative arts
    34  therapy  services  as  such  services  are defined in article 163 of the
    35  education law, each member of such limited  liability  company  must  be
    36  licensed  pursuant to article 163 of the education law to practice crea-
    37  tive arts therapy in this state. With respect to a professional  service
    38  limited  liability company formed to provide marriage and family therapy
    39  services as such services are defined in article 163  of  the  education
    40  law,  each  member  of  such  limited liability company must be licensed
    41  pursuant to article 163 of the education law to  practice  marriage  and
    42  family  therapy  in  this  state. With respect to a professional service
    43  limited liability company formed to  provide  mental  health  counseling
    44  services  as  such  services are defined in article 163 of the education
    45  law, each member of such limited  liability  company  must  be  licensed
    46  pursuant  to  article 163 of the education law to practice mental health
    47  counseling in this state. With respect to a professional service limited
    48  liability company formed to  provide  psychoanalysis  services  as  such
    49  services are defined in article 163 of the education law, each member of
    50  such  limited liability company must be licensed pursuant to article 163
    51  of the education law to practice  psychoanalysis  in  this  state.  With
    52  respect  to  a  professional service limited liability company formed to
    53  provide applied behavior analysis services as such services are  defined
    54  in article 167 of the education law, each member of such limited liabil-
    55  ity company must be licensed or certified pursuant to article 167 of the
    56  education  law  to  practice  applied behavior analysis in this state. A

        A. 4189                             9

     1  professional service limited liability company formed to lawfully engage
     2  in the practice of public accountancy as a firm,  as  such  practice  is
     3  defined under article 149 of the education law shall be required to show
     4  (1)  that  a  simple  majority of the ownership of the firm, in terms of
     5  financial interests and voting rights held by the firm's owners, belongs
     6  to individuals licensed to practice public accountancy  in  some  state,
     7  and  (2)  that  all  members  of  a limited professional service limited
     8  liability company, whose principal place of business is in  this  state,
     9  and who are engaged in the practice of public accountancy in this state,
    10  hold  a  valid license issued under section seventy-four hundred four of
    11  the education law. For purposes of this subdivision,  "financial  inter-
    12  est" means capital stock, capital accounts, capital contributions, capi-
    13  tal  interest, or interest in undistributed earnings of a business enti-
    14  ty.  Although firms registered with the education department may include
    15  non-licensee owners, a registered firm and its owners must  comply  with
    16  rules  promulgated  by  the state board of regents.  Notwithstanding the
    17  foregoing, a firm registered with the education department may not  have
    18  non-licensee  owners  if  the  firm's name includes the words "certified
    19  public accountant," or "certified public accountants," or  the  abbrevi-
    20  ations "CPA" or "CPAs". Each non-licensee owner of a firm that is regis-
    21  tered  under  this  section  shall  be (1) a natural person who actively
    22  participates in the business of the firm or its affiliated entities,  or
    23  (2)  an  entity, including, but not limited to, a partnership or profes-
    24  sional corporation, provided each beneficial owner of an equity interest
    25  in such entity is a natural person  who  actively  participates  in  the
    26  business  conducted by the firm or its affiliated entities. For purposes
    27  of this subdivision, "actively participate" means to provide services to
    28  clients or to otherwise individually take part in the  day-to-day  busi-
    29  ness or management of the firm or an affiliated entity.
    30    § 11. Subdivision (a) of section 1301 of the limited liability company
    31  law,  as  amended by chapter 475 of the laws of 2014, is amended to read
    32  as follows:
    33    (a) "Foreign professional service limited liability company"  means  a
    34  professional  service  limited liability company, whether or not denomi-
    35  nated as such, organized under the laws of  a  jurisdiction  other  than
    36  this state, (i) each of whose members and managers, if any, is a profes-
    37  sional  authorized  by  law to render a professional service within this
    38  state and who is or has been engaged in the practice of such  profession
    39  in  such professional service limited liability company or a predecessor
    40  entity, or will engage in the practice of such profession in the profes-
    41  sional service limited liability company within thirty days of the  date
    42  such  professional becomes a member, or each of whose members and manag-
    43  ers, if any, is a professional at least one of such members  is  author-
    44  ized  by  law to render a professional service within this state and who
    45  is or has been engaged in  the  practice  of  such  profession  in  such
    46  professional  service limited liability company or a predecessor entity,
    47  or will engage in the practice of such profession  in  the  professional
    48  service  limited  liability  company within thirty days of the date such
    49  professional becomes a member, or  (ii)  authorized  by,  or  holding  a
    50  license,  certificate,  registration  or  permit issued by the licensing
    51  authority pursuant to,  the  education  law  to  render  a  professional
    52  service within this state; except that all members and managers, if any,
    53  of  a  foreign  professional  service  limited  liability  company  that
    54  provides health services in this state shall be licensed in this  state.
    55  With respect to a foreign professional service limited liability company
    56  which provides veterinary services as such services are defined in arti-

        A. 4189                            10

     1  cle  135  of the education law, each member of such foreign professional
     2  service limited liability company shall be licensed pursuant to  article
     3  135  of  the education law to practice veterinary medicine. With respect
     4  to  a  foreign  professional  service  limited  liability  company which
     5  provides medical services as such services are defined in article 131 of
     6  the education law, each member  of  such  foreign  professional  service
     7  limited  liability  company  must be licensed pursuant to article 131 of
     8  the education law to practice medicine in this state.  With respect to a
     9  foreign professional service limited liability  company  which  provides
    10  dental  services  as  such  services  are  defined in article 133 of the
    11  education law, each member of such foreign professional service  limited
    12  liability company must be licensed pursuant to article 133 of the educa-
    13  tion  law to practice dentistry in this state. With respect to a foreign
    14  professional service limited liability company  which  provides  profes-
    15  sional engineering, land surveying, geologic, architectural and/or land-
    16  scape  architectural  services  as  such services are defined in article
    17  145, article 147 and article 148 of the education law,  each  member  of
    18  such  foreign  professional  service  limited  liability company must be
    19  licensed pursuant to article 145, article 147 and/or article 148 of  the
    20  education law to practice one or more of such professions in this state.
    21  With respect to a foreign professional service limited liability company
    22  which  provides public accountancy services as such services are defined
    23  in article 149 of the education law, each member of such foreign profes-
    24  sional service limited liability company whose principal place of  busi-
    25  ness  is  in  this  state  and who provides public accountancy services,
    26  shall be licensed pursuant to article 149 of the education law to  prac-
    27  tice public accountancy in this state. With respect to a foreign profes-
    28  sional  service  limited liability company which provides licensed clin-
    29  ical social work services as such services are defined in article 154 of
    30  the education law, each member  of  such  foreign  professional  service
    31  limited  liability  company shall be licensed pursuant to article 154 of
    32  the education law to practice clinical social work in this  state.  With
    33  respect  to  a  foreign  professional  service limited liability company
    34  which provides creative arts  therapy  services  as  such  services  are
    35  defined in article 163 of the education law, each member of such foreign
    36  professional service limited liability company must be licensed pursuant
    37  to article 163 of the education law to practice creative arts therapy in
    38  this  state.  With  respect  to  a  foreign professional service limited
    39  liability company which provides marriage and family therapy services as
    40  such services are defined in article 163  of  the  education  law,  each
    41  member  of  such  foreign professional service limited liability company
    42  must be licensed pursuant to article 163 of the education law  to  prac-
    43  tice  marriage  and  family  therapy  in  this  state. With respect to a
    44  foreign professional service limited liability  company  which  provides
    45  mental  health counseling services as such services are defined in arti-
    46  cle 163 of the education law, each member of such  foreign  professional
    47  service  limited  liability company must be licensed pursuant to article
    48  163 of the education law to practice mental health  counseling  in  this
    49  state.  With respect to a foreign professional service limited liability
    50  company which provides psychoanalysis  services  as  such  services  are
    51  defined in article 163 of the education law, each member of such foreign
    52  professional service limited liability company must be licensed pursuant
    53  to  article  163 of the education law to practice psychoanalysis in this
    54  state. With respect to a foreign professional service limited  liability
    55  company  which  provides  applied  behavior  analysis  services  as such
    56  services are defined in article 167 of the education law, each member of

        A. 4189                            11

     1  such foreign professional service  limited  liability  company  must  be
     2  licensed  or  certified  pursuant to article 167 of the education law to
     3  practice applied behavior analysis in this state. A foreign professional
     4  service limited liability company formed to lawfully engage in the prac-
     5  tice  of public accountancy as a firm, as such practice is defined under
     6  article 149 of the education law shall be required to show  (1)  that  a
     7  simple  majority  of  the  ownership  of the firm, in terms of financial
     8  interests and voting rights held by the firm's owners, belongs to  indi-
     9  viduals  licensed  to practice public accountancy in some state, and (2)
    10  that all members of  a  foreign  limited  professional  service  limited
    11  liability  company,  whose principal place of business is in this state,
    12  and who are engaged in the practice of public accountancy in this state,
    13  hold a valid license issued under section seventy-four hundred  four  of
    14  the  education  law. For purposes of this subdivision, "financial inter-
    15  est" means capital stock, capital accounts, capital contributions, capi-
    16  tal interest, or interest in undistributed earnings of a business  enti-
    17  ty.  Although firms registered with the education department may include
    18  non-licensee  owners,  a registered firm and its owners must comply with
    19  rules promulgated by the state board of regents.    Notwithstanding  the
    20  foregoing,  a firm registered with the education department may not have
    21  non-licensee owners if the firm's name  includes  the  words  "certified
    22  public  accountant,"  or "certified public accountants," or the abbrevi-
    23  ations "CPA" or "CPAs". Each non-licensee owner of a firm that is regis-
    24  tered under this section shall be (1)  a  natural  person  who  actively
    25  participates  in the business of the firm or its affiliated entities, or
    26  (2) an entity, including, but not limited to, a partnership  or  profes-
    27  sional corporation, provided each beneficial owner of an equity interest
    28  in  such  entity  is  a  natural person who actively participates in the
    29  business conducted by the firm or its affiliated entities. For  purposes
    30  of this subdivision, "actively participate" means to provide services to
    31  clients  or  to otherwise individually take part in the day-to-day busi-
    32  ness or management of the firm or an affiliated entity.
    33    § 12. Notwithstanding any other provision of law to the contrary, if a
    34  firm which is registered  with  the  education  department  to  lawfully
    35  engage  in the practice of public accountancy has one or more non-licen-
    36  see owners, each such non-licensee owner of  the  firm  whose  principal
    37  place  of  business  is in the state of New York shall pay a fee of nine
    38  hundred dollars to the department of education on a triennial basis.
    39    § 13. This act shall take effect immediately.
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