Bill Text: NY S02473 | 2023-2024 | General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
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: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2023-12-08 - APPROVAL MEMO.47 [S02473 Detail]
Download: New_York-2023-S02473-Introduced.html
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: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2023-12-08 - APPROVAL MEMO.47 [S02473 Detail]
Download: New_York-2023-S02473-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 2473 2023-2024 Regular Sessions IN SENATE January 20, 2023 ___________ Introduced by Sen. STAVISKY -- read twice and ordered printed, and when printed to be committed to the Committee on Higher Education AN ACT to amend the business corporation law, the partnership law and the limited liability company law, in relation to certified public accountants The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 1503 of the business corporation law is amended by 2 adding a new paragraph (h) to read as follows: 3 (h) Any firm established for the business purpose of incorporating as 4 a professional service corporation formed to lawfully engage in the 5 practice of public accountancy, as such practice is respectively defined 6 under article one hundred forty-nine of the education law shall be 7 required to show (1) that a simple majority of the ownership of the 8 firm, in terms of financial interests, and voting rights held by the 9 firm's owners, belongs to individuals licensed to practice public 10 accountancy in some state, and (2) that all shareholders of a profes- 11 sional service corporation whose principal place of business is in this 12 state, and who are engaged in the practice of public accountancy in this 13 state, hold a valid license issued under section seventy-four hundred 14 four of the education law. For purposes of this paragraph, "financial 15 interest" means capital stock, capital accounts, capital contributions, 16 capital interest, or interest in undistributed earnings of a business 17 entity. Although firms may include non-licensee owners, the firm and 18 its owners must comply with rules promulgated by the state board of 19 regents. Notwithstanding the foregoing, a firm incorporated under this 20 section may not have non-licensee owners if the firm's name includes the 21 words "certified public accountant," or "certified public accountants," 22 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 23 that is incorporated under this section shall be a natural person who 24 actively participates in the business of the firm or its affiliated EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD00057-01-3S. 2473 2 1 entities. For purposes of this subdivision, "actively participate" means 2 to provide services to clients or to otherwise individually take part in 3 the day-to-day business or management of the firm. Such a firm shall 4 have attached to its certificate of incorporation a certificate or 5 certificates demonstrating the firm's compliance with this paragraph, in 6 lieu of the certificate or certificates required by subparagraph (ii) of 7 paragraph (b) of this section. 8 § 2. Section 1507 of the business corporation law is amended by adding 9 a new paragraph (c) to read as follows: 10 (c) Any firm established for the business purpose of incorporating as 11 a professional service corporation pursuant to paragraph (h) of section 12 fifteen hundred three of this article may issue shares to individuals 13 who are authorized by law to practice in this state the profession which 14 such corporation is authorized to practice and who are or have been 15 engaged in the practice of such profession in such corporation or a 16 predecessor entity, or who will engage in the practice of such profes- 17 sion in such corporation within thirty days of the date such shares are 18 issued and may also issue shares to employees of the corporation not 19 licensed as certified public accountants, provided that: 20 (i) at least fifty-one percent of the outstanding shares of stock of 21 the corporation are owned by certified public accountants, 22 (ii) at least fifty-one percent of the directors are certified public 23 accountants, 24 (iii) at least fifty-one percent of the officers are certified public 25 accountants, 26 (iv) the president, the chairperson of the board of directors and the 27 chief executive officer or officers are certified public accountants. 28 No shareholder of a firm established for the business purpose of incor- 29 porating as a professional service corporation pursuant to paragraph (h) 30 of section fifteen hundred three of this article shall enter into a 31 voting trust agreement, proxy or any other type of agreement vesting in 32 another person, other than another shareholder of the same corporation, 33 the authority to exercise voting power of any or all of his or her 34 shares. All shares issued, agreements made or proxies granted in 35 violation of this section shall be void. 36 § 3. Section 1508 of the business corporation law is amended by adding 37 a new paragraph (c) to read as follows: 38 (c) The directors and officers of any firm established for the busi- 39 ness purpose of incorporating as a professional service corporation 40 pursuant to paragraph (h) of section fifteen hundred three of this arti- 41 cle may include individuals who are not licensed to practice public 42 accountancy, provided however that at least fifty-one percent of the 43 directors, at least fifty-one percent of the officers and the president, 44 the chairperson of the board of directors and the chief executive offi- 45 cer or officers are authorized by law to practice in any state the 46 profession which such corporation is authorized to practice, and are 47 either shareholders of such corporation or engaged in the practice of 48 their professions in such corporation. 49 § 4. Section 1509 of the business corporation law, as amended by chap- 50 ter 550 of the laws of 2011, is amended to read as follows: 51 § 1509. Disqualification of shareholders, directors, officers and 52 employees. 53 If any shareholder, director, officer or employee of a professional 54 service corporation, including a design professional service corpo- 55 ration, who has been rendering professional service to the public 56 becomes legally disqualified to practice his or her profession withinS. 2473 3 1 this state, he or she shall sever all employment with, and financial 2 interests (other than interests as a creditor) in, such corporation 3 forthwith or as otherwise provided in section 1510 of this article. All 4 provisions of law regulating the rendering of professional services by a 5 person elected or appointed to a public office shall be applicable to a 6 shareholder, director, officer and employee of such corporation in the 7 same manner and to the same extent as if fully set forth herein. Such 8 legal disqualification to practice his or her profession within this 9 state shall be deemed to constitute an irrevocable offer by the disqual- 10 ified shareholder to sell his or her shares to the corporation, pursuant 11 to the provisions of section 1510 of this article or of the certificate 12 of incorporation, by-laws or agreement among the corporation and all 13 shareholders, whichever is applicable. Compliance with the terms of such 14 offer shall be specifically enforceable in the courts of this state. A 15 professional service corporation's failure to enforce compliance with 16 this provision shall constitute a ground for forfeiture of its certif- 17 icate of incorporation and its dissolution. 18 § 5. Paragraph (a) of section 1511 of the business corporation law, as 19 amended by chapter 550 of the laws of 2011, is amended and a new para- 20 graph (c) is added to read as follows: 21 (a) No shareholder of a professional service corporation [or], includ- 22 ing a design professional service corporation, may sell or transfer his 23 or her shares in such corporation except to another individual who is 24 eligible to have shares issued to him or her by such corporation or 25 except in trust to another individual who would be eligible to receive 26 shares if he or she were employed by the corporation. Nothing herein 27 contained shall be construed to prohibit the transfer of shares by oper- 28 ation of law or by court decree. No transferee of shares by operation 29 of law or court decree may vote the shares for any purpose whatsoever 30 except with respect to corporate action under sections 909 and 1001 of 31 this chapter. The restriction in the preceding sentence shall not apply, 32 however, where such transferee would be eligible to have shares issued 33 to him or her if he or she were an employee of the corporation and, if 34 there are other shareholders, a majority of such other shareholders 35 shall fail to redeem the shares so transferred, pursuant to section 1510 36 of this article, within sixty days of receiving written notice of such 37 transfer. Any sale or transfer, except by operation of law or court 38 decree or except for a corporation having only one shareholder, may be 39 made only after the same shall have been approved by the board of direc- 40 tors, or at a shareholders' meeting specially called for such purpose by 41 such proportion, not less than a majority, of the outstanding shares as 42 may be provided in the certificate of incorporation or in the by-laws of 43 such professional service corporation. At such shareholders' meeting the 44 shares held by the shareholder proposing to sell or transfer his or her 45 shares may not be voted or counted for any purpose, unless all share- 46 holders consent that such shares be voted or counted. The certificate of 47 incorporation or the by-laws of the professional service corporation, or 48 the professional service corporation and the shareholders by private 49 agreement, may provide, in lieu of or in addition to the foregoing 50 provisions, for the alienation of shares and may require the redemption 51 or purchase of such shares by such corporation at prices and in a manner 52 specifically set forth therein. The existence of the restrictions on the 53 sale or transfer of shares, as contained in this article and, if appli- 54 cable, in the certificate of incorporation, by-laws, stock purchase or 55 stock redemption agreement, shall be noted conspicuously on the face or 56 back of every certificate for shares issued by a professional serviceS. 2473 4 1 corporation. Any sale or transfer in violation of such restrictions 2 shall be void. 3 (c) A firm established for the business purpose of incorporating as a 4 professional service corporation pursuant to paragraph (h) of section 5 fifteen hundred three of this article, shall purchase or redeem the 6 shares of a non-licensed professional shareholder in the case of his or 7 her termination of employment within thirty days after such termination. 8 A firm established for the business purpose of incorporating as a 9 professional service corporation pursuant to paragraph (h) of section 10 fifteen hundred three of this article, shall not be required to purchase 11 or redeem the shares of a terminated non-licensed professional share- 12 holder if such shares, within thirty days after such termination, are 13 sold or transferred to another employee of the corporation pursuant to 14 this article. 15 § 6. Section 1514 of the business corporation law is amended by adding 16 a new paragraph (c) to read as follows: 17 (c) Each firm established for the business purpose of incorporating as 18 a professional service corporation pursuant to paragraph (h) of section 19 fifteen hundred three of this article shall, at least once every three 20 years on or before the date prescribed by the licensing authority, 21 furnish a statement to the licensing authority listing the names and 22 residence addresses of each shareholder, director and officer of such 23 corporation and certify as the date of certification and at all times 24 over the entire three year period that: 25 (i) at least fifty-one percent of the outstanding shares of stock of 26 the corporation are and were owned by certified public accountants, 27 (ii) at least fifty-one percent of the directors are and were certi- 28 fied public accountants, 29 (iii) at least fifty-one percent of the officers are and were certi- 30 fied public accountants, 31 (iv) the president, the chairperson of the board of directors and the 32 chief executive officer or officers are and were certified public 33 accountants. 34 The statement shall be signed by the president or any certified public 35 accountant vice-president and attested to by the secretary or any 36 assistant secretary of the corporation. 37 § 7. Paragraph (d) of section 1525 of the business corporation law, as 38 added by chapter 505 of the laws of 1983, is amended to read as follows: 39 (d) "Foreign professional service corporation" means a professional 40 service corporation, whether or not denominated as such, organized under 41 the laws of a jurisdiction other than this state, all of the sharehold- 42 ers, directors and officers of which are authorized and licensed to 43 practice the profession for which such corporation is licensed to do 44 business; except that all shareholders, directors and officers of a 45 foreign professional service corporation which provides health services 46 in this state shall be licensed in this state. A foreign professional 47 service corporation formed to lawfully engage in the practice of public 48 accountancy, as such practice is defined under article one hundred 49 forty-nine of the education law, or equivalent state law, shall be 50 required to show (1) that a simple majority of the ownership of the 51 firm, in terms of financial interests, and voting rights held by the 52 firm's owners, belongs to individuals licensed to practice public 53 accountancy in some state, and (2) that all shareholders of a foreign 54 professional service corporation whose principal place of business is in 55 this state, and who are engaged in the practice of public accountancy in 56 this state, hold a valid license issued under section seventy-fourS. 2473 5 1 hundred four of the education law. For purposes of this paragraph, 2 "financial interest" means capital stock, capital accounts, capital 3 contributions, capital interest, or interest in undistributed earnings 4 of a business entity. Although firms may include non-licensee owners, 5 the firm and its owners must comply with rules promulgated by the state 6 board of regents. Notwithstanding the foregoing, a firm registered 7 under this section may not have non-licensee owners if the firm's name 8 includes the words "certified public accountant," or "certified public 9 accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee 10 owner of a firm that is operating under this section shall be a natural 11 person who actively participates in the business of the firm or its 12 affiliated entities, provided each beneficial owner of an equity inter- 13 est in such entity is a natural person who actively participates in the 14 business conducted by the firm or its affiliated entities. For purposes 15 of this paragraph, "actively participate" means to provide services to 16 clients or to otherwise individually take part in the day-to-day busi- 17 ness or management of the firm. 18 § 8. Subdivision (q) of section 121-1500 of the partnership law, as 19 amended by chapter 475 of the laws of 2014, is amended to read as 20 follows: 21 (q) Each partner of a registered limited liability partnership formed 22 to provide medical services in this state must be licensed pursuant to 23 article 131 of the education law to practice medicine in this state and 24 each partner of a registered limited liability partnership formed to 25 provide dental services in this state must be licensed pursuant to arti- 26 cle 133 of the education law to practice dentistry in this state. Each 27 partner of a registered limited liability partnership formed to provide 28 veterinary services in this state must be licensed pursuant to article 29 135 of the education law to practice veterinary medicine in this state. 30 Each partner of a registered limited liability partnership formed to 31 provide public accountancy services, whose principal place of business 32 is in this state and who provides public accountancy services, must be 33 licensed pursuant to article 149 of the education law to practice public 34 accountancy in this state. Each partner of a registered limited liabil- 35 ity partnership formed to provide professional engineering, land survey- 36 ing, geological services, architectural and/or landscape architectural 37 services in this state must be licensed pursuant to article 145, article 38 147 and/or article 148 of the education law to practice one or more of 39 such professions in this state. Each partner of a registered limited 40 liability partnership formed to provide licensed clinical social work 41 services in this state must be licensed pursuant to article 154 of the 42 education law to practice clinical social work in this state. Each part- 43 ner of a registered limited liability partnership formed to provide 44 creative arts therapy services in this state must be licensed pursuant 45 to article 163 of the education law to practice creative arts therapy in 46 this state. Each partner of a registered limited liability partnership 47 formed to provide marriage and family therapy services in this state 48 must be licensed pursuant to article 163 of the education law to prac- 49 tice marriage and family therapy in this state. Each partner of a regis- 50 tered limited liability partnership formed to provide mental health 51 counseling services in this state must be licensed pursuant to article 52 163 of the education law to practice mental health counseling in this 53 state. Each partner of a registered limited liability partnership formed 54 to provide psychoanalysis services in this state must be licensed pursu- 55 ant to article 163 of the education law to practice psychoanalysis in 56 this state. Each partner of a registered limited liability partnershipS. 2473 6 1 formed to provide applied behavior analysis service in this state must 2 be licensed or certified pursuant to article 167 of the education law to 3 practice applied behavior analysis in this state. A limited liability 4 partnership formed to lawfully engage in the practice of public accoun- 5 tancy, as such practice is respectively defined under article 149 of the 6 education law, shall be required to show (1) that a simple majority of 7 the ownership of the firm, in terms of financial interests, and voting 8 rights held by the firm's owners, belongs to individuals licensed to 9 practice public accountancy in some state, and (2) that all partners of 10 a limited liability partnership whose principal place of business is in 11 this state, and who are engaged in the practice of public accountancy in 12 this state, hold a valid license issued under section seventy-four 13 hundred four of the education law. For purposes of this subdivision, 14 "financial interest" means capital stock, capital accounts, capital 15 contributions, capital interest, or interest in undistributed earnings 16 of a business entity. Although firms may include non-licensee owners, 17 the firm and its owners must comply with rules promulgated by the state 18 board of regents. Notwithstanding the foregoing, a firm registered under 19 this section may not have non-licensee owners if the firm's name 20 includes the words "certified public accountant," or "certified public 21 accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner 22 of a firm that is formed under this section shall be (1) a natural 23 person who actively participates in the business of the firm or its 24 affiliated entities, or (2) an entity, including, but not limited to, a 25 partnership or professional corporation, provided each beneficial owner 26 of an equity interest in such entity is a natural person who actively 27 participates in the business conducted by the firm or its affiliated 28 entities. For purposes of this subdivision, "actively participate" means 29 to provide services to clients or to otherwise individually take part in 30 the day-to-day business or management of the firm. 31 § 9. Subdivision (q) of section 121-1502 of the partnership law, as 32 amended by chapter 475 of the laws of 2014, is amended to read as 33 follows: 34 (q) Each partner of a foreign limited liability partnership which 35 provides medical services in this state must be licensed pursuant to 36 article 131 of the education law to practice medicine in the state and 37 each partner of a foreign limited liability partnership which provides 38 dental services in the state must be licensed pursuant to article 133 of 39 the education law to practice dentistry in this state. Each partner of a 40 foreign limited liability partnership which provides veterinary service 41 in the state shall be licensed pursuant to article 135 of the education 42 law to practice veterinary medicine in this state. Each partner of a 43 foreign limited liability partnership which provides professional engi- 44 neering, land surveying, geological services, architectural and/or land- 45 scape architectural services in this state must be licensed pursuant to 46 article 145, article 147 and/or article 148 of the education law to 47 practice one or more of such professions. Each partner of a foreign 48 registered limited liability partnership formed to provide public 49 accountancy services, whose principal place of business is in this state 50 and who provides public accountancy services, must be licensed pursuant 51 to article 149 of the education law to practice public accountancy in 52 this state. Each partner of a foreign limited liability partnership 53 which provides licensed clinical social work services in this state must 54 be licensed pursuant to article 154 of the education law to practice 55 licensed clinical social work in this state. Each partner of a foreign 56 limited liability partnership which provides creative arts therapyS. 2473 7 1 services in this state must be licensed pursuant to article 163 of the 2 education law to practice creative arts therapy in this state. Each 3 partner of a foreign limited liability partnership which provides 4 marriage and family therapy services in this state must be licensed 5 pursuant to article 163 of the education law to practice marriage and 6 family therapy in this state. Each partner of a foreign limited liabil- 7 ity partnership which provides mental health counseling services in this 8 state must be licensed pursuant to article 163 of the education law to 9 practice mental health counseling in this state. Each partner of a 10 foreign limited liability partnership which provides psychoanalysis 11 services in this state must be licensed pursuant to article 163 of the 12 education law to practice psychoanalysis in this state. Each partner of 13 a foreign limited liability partnership which provides applied behavior 14 analysis services in this state must be licensed or certified pursuant 15 to article 167 of the education law to practice applied behavior analy- 16 sis in this state. A foreign limited liability partnership formed to 17 lawfully engage in the practice of public accountancy, as such practice 18 is respectively defined under article 149 of the education law, shall be 19 required to show (1) that a simple majority of the ownership of the 20 firm, in terms of financial interests, and voting rights held by the 21 firm's owners, belongs to individuals licensed to practice public 22 accountancy in some state, and (2) that all partners of a foreign limit- 23 ed liability partnership whose principal place of business is in this 24 state, and who are engaged in the practice of public accountancy in this 25 state, hold a valid license issued under section seventy-four hundred 26 four of the education law. For purposes of this subdivision, "financial 27 interest" means capital stock, capital accounts, capital contributions, 28 capital interest, or interest in undistributed earnings of a business 29 entity. Although firms may include non-licensee owners, the firm and 30 its owners must comply with rules promulgated by the state board of 31 regents. Notwithstanding the foregoing, a firm registered under this 32 section may not have non-licensee owners if the firm's name includes the 33 words "certified public accountant," or "certified public accountants," 34 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 35 that is formed under this section shall be (1) a natural person who 36 actively participates in the business of the firm or its affiliated 37 entities, or (2) an entity, including, but not limited to, a partnership 38 or professional corporation, provided each beneficial owner of an equity 39 interest in such entity is a natural person who actively participates in 40 the business conducted by the firm or its affiliated entities. For 41 purposes of this subdivision, "actively participate" means to provide 42 services to clients or to otherwise individually take part in the day- 43 to-day business or management of the firm. 44 § 10. Subdivision (h) of section 121-101 of the partnership law, as 45 added by chapter 950 of the laws of 1990, is amended to read as follows: 46 (h) "Limited partnership" and "domestic limited partnership" mean, 47 unless the context otherwise requires, a partnership (i) formed by two 48 or more persons pursuant to this article or which complies with subdivi- 49 sion (a) of section 121-1202 of this article and (ii) having one or more 50 general partners and one or more limited partners. Notwithstanding any 51 other provisions of law a limited partnership or domestic limited part- 52 nership formed to lawfully engage in the practice of public accountancy, 53 as such practice is respectively defined under article 149 of the educa- 54 tion law shall be required to show (1) that a simple majority of the 55 ownership of the firm, in terms of financial interests, including owner- 56 ship-based compensation, and voting rights held by the firm's owners,S. 2473 8 1 belongs to individuals licensed to practice public accountancy in some 2 state, and (2) that all partners of a limited partnership or domestic 3 limited partnership, whose principal place of business is in this state, 4 and who are engaged in the practice of public accountancy in this state, 5 hold a valid license issued under section seventy-four hundred four of 6 the education law or are public accountants licensed under section 7 seventy-four hundred five of the education law. Although firms may 8 include non-licensee owners, the firm and its owners must comply with 9 rules promulgated by the state board of regents. Notwithstanding the 10 foregoing, a firm registered under this section may not have non-licen- 11 see owners if the firm's name includes the words "certified public 12 accountant," or "certified public accountants," or the abbreviations 13 "CPA" or "CPAs". Each non-licensee owner of a firm that is registered 14 under this section shall be (1) a natural person who actively partic- 15 ipates in the business of the firm or its affiliated entities, or (2) an 16 entity, including, but not limited to, a partnership or professional 17 corporation, provided each beneficial owner of an equity interest in 18 such entity is a natural person who actively participates in the busi- 19 ness conducted by the firm or its affiliated entities. For purposes of 20 this subdivision, "actively participate" means to provide services to 21 clients or to otherwise individually take part in the day-to-day busi- 22 ness or management of the firm. 23 § 11. Subdivision (b) of section 1207 of the limited liability company 24 law, as amended by chapter 475 of the laws of 2014, is amended to read 25 as follows: 26 (b) With respect to a professional service limited liability company 27 formed to provide medical services as such services are defined in arti- 28 cle 131 of the education law, each member of such limited liability 29 company must be licensed pursuant to article 131 of the education law to 30 practice medicine in this state. With respect to a professional service 31 limited liability company formed to provide dental services as such 32 services are defined in article 133 of the education law, each member of 33 such limited liability company must be licensed pursuant to article 133 34 of the education law to practice dentistry in this state. With respect 35 to a professional service limited liability company formed to provide 36 veterinary services as such services are defined in article 135 of the 37 education law, each member of such limited liability company must be 38 licensed pursuant to article 135 of the education law to practice veter- 39 inary medicine in this state. With respect to a professional service 40 limited liability company formed to provide professional engineering, 41 land surveying, architectural, landscape architectural and/or geological 42 services as such services are defined in article 145, article 147 and 43 article 148 of the education law, each member of such limited liability 44 company must be licensed pursuant to article 145, article 147 and/or 45 article 148 of the education law to practice one or more of such 46 professions in this state. With respect to a professional service 47 limited liability company formed to provide public accountancy services 48 as such services are defined in article 149 of the education law each 49 member of such limited liability company whose principal place of busi- 50 ness is in this state and who provides public accountancy services, must 51 be licensed pursuant to article 149 of the education law to practice 52 public accountancy in this state. With respect to a professional service 53 limited liability company formed to provide licensed clinical social 54 work services as such services are defined in article 154 of the educa- 55 tion law, each member of such limited liability company shall be 56 licensed pursuant to article 154 of the education law to practiceS. 2473 9 1 licensed clinical social work in this state. With respect to a profes- 2 sional service limited liability company formed to provide creative arts 3 therapy services as such services are defined in article 163 of the 4 education law, each member of such limited liability company must be 5 licensed pursuant to article 163 of the education law to practice crea- 6 tive arts therapy in this state. With respect to a professional service 7 limited liability company formed to provide marriage and family therapy 8 services as such services are defined in article 163 of the education 9 law, each member of such limited liability company must be licensed 10 pursuant to article 163 of the education law to practice marriage and 11 family therapy in this state. With respect to a professional service 12 limited liability company formed to provide mental health counseling 13 services as such services are defined in article 163 of the education 14 law, each member of such limited liability company must be licensed 15 pursuant to article 163 of the education law to practice mental health 16 counseling in this state. With respect to a professional service limited 17 liability company formed to provide psychoanalysis services as such 18 services are defined in article 163 of the education law, each member of 19 such limited liability company must be licensed pursuant to article 163 20 of the education law to practice psychoanalysis in this state. With 21 respect to a professional service limited liability company formed to 22 provide applied behavior analysis services as such services are defined 23 in article 167 of the education law, each member of such limited liabil- 24 ity company must be licensed or certified pursuant to article 167 of the 25 education law to practice applied behavior analysis in this state. A 26 professional service limited liability company formed to lawfully engage 27 in the practice of public accountancy, as such practice is respectively 28 defined under article 149 of the education law shall be required to show 29 (1) that a simple majority of the ownership of the firm, in terms of 30 financial interests, and voting rights held by the firm's owners, 31 belongs to individuals licensed to practice public accountancy in some 32 state, and (2) that all members of a limited professional service limit- 33 ed liability company, whose principal place of business is in this 34 state, and who are engaged in the practice of public accountancy in this 35 state, hold a valid license issued under section seventy-four hundred 36 four of the education law. For purposes of this subdivision, "financial 37 interest" means capital stock, capital accounts, capital contributions, 38 capital interest, or interest in undistributed earnings of a business 39 entity. Although firms may include non-licensee owners, the firm and 40 its owners must comply with rules promulgated by the state board of 41 regents. Notwithstanding the foregoing, a firm registered under this 42 section may not have non-licensee owners if the firm's name includes the 43 words "certified public accountant," or "certified public accountants," 44 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 45 that is registered under this section shall be (1) a natural person who 46 actively participates in the business of the firm or its affiliated 47 entities, or (2) an entity, including, but not limited to, a partnership 48 or professional corporation, provided each beneficial owner of an equity 49 interest in such entity is a natural person who actively participates in 50 the business conducted by the firm or its affiliated entities. For 51 purposes of this subdivision, "actively participate" means to provide 52 services to clients or to otherwise individually take part in the day- 53 to-day business or management of the firm. 54 § 12. Subdivision (a) of section 1301 of the limited liability company 55 law, as amended by chapter 475 of the laws of 2014, is amended to read 56 as follows:S. 2473 10 1 (a) "Foreign professional service limited liability company" means a 2 professional service limited liability company, whether or not denomi- 3 nated as such, organized under the laws of a jurisdiction other than 4 this state, (i) each of whose members and managers, if any, is a profes- 5 sional authorized by law to render a professional service within this 6 state and who is or has been engaged in the practice of such profession 7 in such professional service limited liability company or a predecessor 8 entity, or will engage in the practice of such profession in the profes- 9 sional service limited liability company within thirty days of the date 10 such professional becomes a member, or each of whose members and manag- 11 ers, if any, is a professional at least one of such members is author- 12 ized by law to render a professional service within this state and who 13 is or has been engaged in the practice of such profession in such 14 professional service limited liability company or a predecessor entity, 15 or will engage in the practice of such profession in the professional 16 service limited liability company within thirty days of the date such 17 professional becomes a member, or (ii) authorized by, or holding a 18 license, certificate, registration or permit issued by the licensing 19 authority pursuant to, the education law to render a professional 20 service within this state; except that all members and managers, if any, 21 of a foreign professional service limited liability company that 22 provides health services in this state shall be licensed in this state. 23 With respect to a foreign professional service limited liability company 24 which provides veterinary services as such services are defined in arti- 25 cle 135 of the education law, each member of such foreign professional 26 service limited liability company shall be licensed pursuant to article 27 135 of the education law to practice veterinary medicine. With respect 28 to a foreign professional service limited liability company which 29 provides medical services as such services are defined in article 131 of 30 the education law, each member of such foreign professional service 31 limited liability company must be licensed pursuant to article 131 of 32 the education law to practice medicine in this state. With respect to a 33 foreign professional service limited liability company which provides 34 dental services as such services are defined in article 133 of the 35 education law, each member of such foreign professional service limited 36 liability company must be licensed pursuant to article 133 of the educa- 37 tion law to practice dentistry in this state. With respect to a foreign 38 professional service limited liability company which provides profes- 39 sional engineering, land surveying, geologic, architectural and/or land- 40 scape architectural services as such services are defined in article 41 145, article 147 and article 148 of the education law, each member of 42 such foreign professional service limited liability company must be 43 licensed pursuant to article 145, article 147 and/or article 148 of the 44 education law to practice one or more of such professions in this state. 45 With respect to a foreign professional service limited liability company 46 which provides public accountancy services as such services are defined 47 in article 149 of the education law, each member of such foreign profes- 48 sional service limited liability company whose principal place of busi- 49 ness is in this state and who provides public accountancy services, 50 shall be licensed pursuant to article 149 of the education law to prac- 51 tice public accountancy in this state. With respect to a foreign profes- 52 sional service limited liability company which provides licensed clin- 53 ical social work services as such services are defined in article 154 of 54 the education law, each member of such foreign professional service 55 limited liability company shall be licensed pursuant to article 154 of 56 the education law to practice clinical social work in this state. WithS. 2473 11 1 respect to a foreign professional service limited liability company 2 which provides creative arts therapy services as such services are 3 defined in article 163 of the education law, each member of such foreign 4 professional service limited liability company must be licensed pursuant 5 to article 163 of the education law to practice creative arts therapy in 6 this state. With respect to a foreign professional service limited 7 liability company which provides marriage and family therapy services as 8 such services are defined in article 163 of the education law, each 9 member of such foreign professional service limited liability company 10 must be licensed pursuant to article 163 of the education law to prac- 11 tice marriage and family therapy in this state. With respect to a 12 foreign professional service limited liability company which provides 13 mental health counseling services as such services are defined in arti- 14 cle 163 of the education law, each member of such foreign professional 15 service limited liability company must be licensed pursuant to article 16 163 of the education law to practice mental health counseling in this 17 state. With respect to a foreign professional service limited liability 18 company which provides psychoanalysis services as such services are 19 defined in article 163 of the education law, each member of such foreign 20 professional service limited liability company must be licensed pursuant 21 to article 163 of the education law to practice psychoanalysis in this 22 state. With respect to a foreign professional service limited liability 23 company which provides applied behavior analysis services as such 24 services are defined in article 167 of the education law, each member of 25 such foreign professional service limited liability company must be 26 licensed or certified pursuant to article 167 of the education law to 27 practice applied behavior analysis in this state. A foreign professional 28 service limited liability company formed to lawfully engage in the prac- 29 tice of public accountancy, as such practice is respectively defined 30 under article 149 of the education law shall be required to show (1) 31 that a simple majority of the ownership of the firm, in terms of finan- 32 cial interests, and voting rights held by the firm's owners, belongs to 33 individuals licensed to practice public accountancy in some state, and 34 (2) that all members of a foreign limited professional service limited 35 liability company, whose principal place of business is in this state, 36 and who are engaged in the practice of public accountancy in this state, 37 hold a valid license issued under section seventy-four hundred four of 38 the education law. For purposes of this subdivision, "financial inter- 39 est" means capital stock, capital accounts, capital contributions, capi- 40 tal interest, or interest in undistributed earnings of a business enti- 41 ty. Although firms may include non-licensee owners, the firm and its 42 owners must comply with rules promulgated by the state board of regents. 43 Notwithstanding the foregoing, a firm registered under this section may 44 not have non-licensee owners if the firm's name includes the words 45 "certified public accountant," or "certified public accountants," or the 46 abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is 47 registered under this section shall be (1) a natural person who actively 48 participates in the business of the firm or its affiliated entities, or 49 (2) an entity, including, but not limited to, a partnership or profes- 50 sional corporation, provided each beneficial owner of an equity interest 51 in such entity is a natural person who actively participates in the 52 business conducted by the firm or its affiliated entities. For purposes 53 of this subdivision, "actively participate" means to provide services to 54 clients or to otherwise individually take part in the day-to-day busi- 55 ness or management of the firm.S. 2473 12 1 § 13. Notwithstanding any other provision of law to the contrary, 2 there is hereby established a fee for each non-licensee owner of a firm 3 that is registered in this state to lawfully engage in the practice of 4 public accountancy. Such non-licensee owner shall pay a fee of nine 5 hundred dollars to the department of education on a triennial basis. 6 § 14. This act shall take effect immediately.
