Bill Text: NY S04221 | 2021-2022 | 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 are individuals licensed to practice public accountancy in some state; enacts similar provisions for partnerships and LLCs.
Spectrum: Partisan Bill (Democrat 13-0)
Status: (Engrossed - Dead) 2022-05-10 - referred to higher education [S04221 Detail]
Download: New_York-2021-S04221-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 4221 2021-2022 Regular Sessions IN SENATE February 3, 2021 ___________ Introduced by Sens. STAVISKY, ADDABBO, COMRIE, GOUNARDES, HOYLMAN, KAMINSKY, KENNEDY, MAYER, RAMOS, SALAZAR, SEPULVEDA -- 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 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD02385-01-1S. 4221 2 1 that is incorporated under this section shall be a natural person who 2 actively participates in the business of the firm or its affiliated 3 entities. For purposes of this subdivision, "actively participate" means 4 to provide services to clients or to otherwise individually take part in 5 the day-to-day business or management of the firm. Such a firm shall 6 have attached to its certificate of incorporation a certificate or 7 certificates demonstrating the firm's compliance with this paragraph, in 8 lieu of the certificate or certificates required by subparagraph (ii) of 9 paragraph (b) of this section. 10 § 2. Section 1507 of the business corporation law is amended by adding 11 a new paragraph (c) to read as follows: 12 (c) Any firm established for the business purpose of incorporating as 13 a professional service corporation pursuant to paragraph (h) of section 14 fifteen hundred three of this article may issue shares to individuals 15 who are authorized by law to practice in this state the profession which 16 such corporation is authorized to practice and who are or have been 17 engaged in the practice of such profession in such corporation or a 18 predecessor entity, or who will engage in the practice of such profes- 19 sion in such corporation within thirty days of the date such shares are 20 issued and may also issue shares to employees of the corporation not 21 licensed as certified public accountants, provided that: 22 (i) at least fifty-one percent of the outstanding shares of stock of 23 the corporation are owned by certified public accountants, 24 (ii) at least fifty-one percent of the directors are certified public 25 accountants, 26 (iii) at least fifty-one percent of the officers are certified public 27 accountants, 28 (iv) the president, the chairperson of the board of directors and the 29 chief executive officer or officers are certified public accountants. 30 No shareholder of a firm established for the business purpose of incor- 31 porating as a professional service corporation pursuant to paragraph (h) 32 of section fifteen hundred three of this article shall enter into a 33 voting trust agreement, proxy or any other type of agreement vesting in 34 another person, other than another shareholder of the same corporation, 35 the authority to exercise voting power of any or all of his or her 36 shares. All shares issued, agreements made or proxies granted in 37 violation of this section shall be void. 38 § 3. Section 1508 of the business corporation law is amended by adding 39 a new paragraph (c) to read as follows: 40 (c) The directors and officers of any firm established for the busi- 41 ness purpose of incorporating as a professional service corporation 42 pursuant to paragraph (h) of section fifteen hundred three of this arti- 43 cle may include individuals who are not licensed to practice public 44 accountancy, provided however that at least fifty-one percent of the 45 directors, at least fifty-one percent of the officers and the president, 46 the chairperson of the board of directors and the chief executive offi- 47 cer or officers are authorized by law to practice in any state the 48 profession which such corporation is authorized to practice, and are 49 either shareholders of such corporation or engaged in the practice of 50 their professions in such corporation. 51 § 4. Section 1509 of the business corporation law, as amended by chap- 52 ter 550 of the laws of 2011, is amended to read as follows: 53 § 1509. Disqualification of shareholders, directors, officers and 54 employees. 55 If any shareholder, director, officer or employee of a professional 56 service corporation, including a design professional service corpo-S. 4221 3 1 ration, who has been rendering professional service to the public 2 becomes legally disqualified to practice his or her profession within 3 this state, he or she shall sever all employment with, and financial 4 interests (other than interests as a creditor) in, such corporation 5 forthwith or as otherwise provided in section 1510 of this article. All 6 provisions of law regulating the rendering of professional services by a 7 person elected or appointed to a public office shall be applicable to a 8 shareholder, director, officer and employee of such corporation in the 9 same manner and to the same extent as if fully set forth herein. Such 10 legal disqualification to practice his or her profession within this 11 state shall be deemed to constitute an irrevocable offer by the disqual- 12 ified shareholder to sell his or her shares to the corporation, pursuant 13 to the provisions of section 1510 of this article or of the certificate 14 of incorporation, by-laws or agreement among the corporation and all 15 shareholders, whichever is applicable. Compliance with the terms of such 16 offer shall be specifically enforceable in the courts of this state. A 17 professional service corporation's failure to enforce compliance with 18 this provision shall constitute a ground for forfeiture of its certif- 19 icate of incorporation and its dissolution. 20 § 5. Paragraph (a) of section 1511 of the business corporation law, as 21 amended by chapter 550 of the laws of 2011, is amended and a new para- 22 graph (c) is added to read as follows: 23 (a) No shareholder of a professional service corporation [or], includ- 24 ing a design professional service corporation, may sell or transfer his 25 or her shares in such corporation except to another individual who is 26 eligible to have shares issued to him or her by such corporation or 27 except in trust to another individual who would be eligible to receive 28 shares if he or she were employed by the corporation. Nothing herein 29 contained shall be construed to prohibit the transfer of shares by oper- 30 ation of law or by court decree. No transferee of shares by operation 31 of law or court decree may vote the shares for any purpose whatsoever 32 except with respect to corporate action under sections 909 and 1001 of 33 this chapter. The restriction in the preceding sentence shall not apply, 34 however, where such transferee would be eligible to have shares issued 35 to him or her if he or she were an employee of the corporation and, if 36 there are other shareholders, a majority of such other shareholders 37 shall fail to redeem the shares so transferred, pursuant to section 1510 38 of this article, within sixty days of receiving written notice of such 39 transfer. Any sale or transfer, except by operation of law or court 40 decree or except for a corporation having only one shareholder, may be 41 made only after the same shall have been approved by the board of direc- 42 tors, or at a shareholders' meeting specially called for such purpose by 43 such proportion, not less than a majority, of the outstanding shares as 44 may be provided in the certificate of incorporation or in the by-laws of 45 such professional service corporation. At such shareholders' meeting the 46 shares held by the shareholder proposing to sell or transfer his or her 47 shares may not be voted or counted for any purpose, unless all share- 48 holders consent that such shares be voted or counted. The certificate of 49 incorporation or the by-laws of the professional service corporation, or 50 the professional service corporation and the shareholders by private 51 agreement, may provide, in lieu of or in addition to the foregoing 52 provisions, for the alienation of shares and may require the redemption 53 or purchase of such shares by such corporation at prices and in a manner 54 specifically set forth therein. The existence of the restrictions on the 55 sale or transfer of shares, as contained in this article and, if appli- 56 cable, in the certificate of incorporation, by-laws, stock purchase orS. 4221 4 1 stock redemption agreement, shall be noted conspicuously on the face or 2 back of every certificate for shares issued by a professional service 3 corporation. Any sale or transfer in violation of such restrictions 4 shall be void. 5 (c) A firm established for the business purpose of incorporating as a 6 professional service corporation pursuant to paragraph (h) of section 7 fifteen hundred three of this article, shall purchase or redeem the 8 shares of a non-licensed professional shareholder in the case of his or 9 her termination of employment within thirty days after such termination. 10 A firm established for the business purpose of incorporating as a 11 professional service corporation pursuant to paragraph (h) of section 12 fifteen hundred three of this article, shall not be required to purchase 13 or redeem the shares of a terminated non-licensed professional share- 14 holder if such shares, within thirty days after such termination, are 15 sold or transferred to another employee of the corporation pursuant to 16 this article. 17 § 6. Section 1514 of the business corporation law is amended by adding 18 a new paragraph (c) to read as follows: 19 (c) Each 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 shall, at least once every three 22 years on or before the date prescribed by the licensing authority, 23 furnish a statement to the licensing authority listing the names and 24 residence addresses of each shareholder, director and officer of such 25 corporation and certify as the date of certification and at all times 26 over the entire three year period that: 27 (i) at least fifty-one percent of the outstanding shares of stock of 28 the corporation are and were owned by certified public accountants, 29 (ii) at least fifty-one percent of the directors are and were certi- 30 fied public accountants, 31 (iii) at least fifty-one percent of the officers are and were certi- 32 fied public accountants, 33 (iv) the president, the chairperson of the board of directors and the 34 chief executive officer or officers are and were certified public 35 accountants. 36 The statement shall be signed by the president or any certified public 37 accountant vice-president and attested to by the secretary or any 38 assistant secretary of the corporation. 39 § 7. Paragraph (d) of section 1525 of the business corporation law, as 40 added by chapter 505 of the laws of 1983, is amended to read as follows: 41 (d) "Foreign professional service corporation" means a professional 42 service corporation, whether or not denominated as such, organized under 43 the laws of a jurisdiction other than this state, all of the sharehold- 44 ers, directors and officers of which are authorized and licensed to 45 practice the profession for which such corporation is licensed to do 46 business; except that all shareholders, directors and officers of a 47 foreign professional service corporation which provides health services 48 in this state shall be licensed in this state. A foreign professional 49 service corporation formed to lawfully engage in the practice of public 50 accountancy, as such practice is defined under article one hundred 51 forty-nine of the education law, or equivalent state law, shall be 52 required to show (1) that a simple majority of the ownership of the 53 firm, in terms of financial interests, and voting rights held by the 54 firm's owners, belongs to individuals licensed to practice public 55 accountancy in some state, and (2) that all shareholders of a foreign 56 professional service corporation whose principal place of business is inS. 4221 5 1 this state, and who are engaged in the practice of public accountancy in 2 this state, hold a valid license issued under section seventy-four 3 hundred four of the education law. For purposes of this paragraph, 4 "financial interest" means capital stock, capital accounts, capital 5 contributions, capital interest, or interest in undistributed earnings 6 of a business entity. Although firms may include non-licensee owners, 7 the firm and its owners must comply with rules promulgated by the state 8 board of regents. Notwithstanding the foregoing, a firm registered 9 under this section may not have non-licensee owners if the firm's name 10 includes the words "certified public accountant," or "certified public 11 accountants," or the abbreviations "CPA" or "CPAs". Each non-licensee 12 owner of a firm that is operating under this section shall be a natural 13 person who actively participates in the business of the firm or its 14 affiliated entities, provided each beneficial owner of an equity inter- 15 est 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 paragraph, "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 § 8. Subdivision (q) of section 121-1500 of the partnership law, as 21 amended by chapter 475 of the laws of 2014, is amended to read as 22 follows: 23 (q) Each partner of a registered limited liability partnership formed 24 to provide medical services in this state must be licensed pursuant to 25 article 131 of the education law to practice medicine in this state and 26 each partner of a registered limited liability partnership formed to 27 provide dental services in this state must be licensed pursuant to arti- 28 cle 133 of the education law to practice dentistry in this state. Each 29 partner of a registered limited liability partnership formed to provide 30 veterinary services in this state must be licensed pursuant to article 31 135 of the education law to practice veterinary medicine in this state. 32 Each partner of a registered limited liability partnership formed to 33 provide public accountancy services, whose principal place of business 34 is in this state and who provides public accountancy services, must be 35 licensed pursuant to article 149 of the education law to practice public 36 accountancy in this state. Each partner of a registered limited liabil- 37 ity partnership formed to provide professional engineering, land survey- 38 ing, geological services, architectural and/or landscape architectural 39 services in this state must be licensed pursuant to article 145, article 40 147 and/or article 148 of the education law to practice one or more of 41 such professions in this state. Each partner of a registered limited 42 liability partnership formed to provide licensed clinical social work 43 services in this state must be licensed pursuant to article 154 of the 44 education law to practice clinical social work in this state. Each part- 45 ner of a registered limited liability partnership formed to provide 46 creative arts therapy services in this state must be licensed pursuant 47 to article 163 of the education law to practice creative arts therapy in 48 this state. Each partner of a registered limited liability partnership 49 formed to provide marriage and family therapy services in this state 50 must be licensed pursuant to article 163 of the education law to prac- 51 tice marriage and family therapy in this state. Each partner of a regis- 52 tered limited liability partnership formed to provide mental health 53 counseling services in this state must be licensed pursuant to article 54 163 of the education law to practice mental health counseling in this 55 state. Each partner of a registered limited liability partnership formed 56 to provide psychoanalysis services in this state must be licensed pursu-S. 4221 6 1 ant to article 163 of the education law to practice psychoanalysis in 2 this state. Each partner of a registered limited liability partnership 3 formed to provide applied behavior analysis service in this state must 4 be licensed or certified pursuant to article 167 of the education law to 5 practice applied behavior analysis in this state. A limited liability 6 partnership formed to lawfully engage in the practice of public accoun- 7 tancy, as such practice is respectively defined under article 149 of the 8 education law, shall be required to show (1) that a simple majority of 9 the ownership of the firm, in terms of financial interests, and voting 10 rights held by the firm's owners, belongs to individuals licensed to 11 practice public accountancy in some state, and (2) that all partners of 12 a limited liability partnership whose principal place of business is in 13 this state, and who are engaged in the practice of public accountancy in 14 this state, hold a valid license issued under section seventy-four 15 hundred four of the education law. For purposes of this subdivision, 16 "financial interest" means capital stock, capital accounts, capital 17 contributions, capital interest, or interest in undistributed earnings 18 of a business entity. Although firms may include non-licensee owners, 19 the firm and its owners must comply with rules promulgated by the state 20 board of regents. Notwithstanding the foregoing, a firm registered under 21 this section may not have non-licensee owners if the firm's name 22 includes the words "certified public accountant," or "certified public 23 accounts," or the abbreviations "CPA" or "CPAs". Each non-licensee owner 24 of a firm that is formed under this section shall be (1) a natural 25 person who actively participates in the business of the firm or its 26 affiliated entities, or (2) an entity, including, but not limited to, a 27 partnership or professional corporation, provided each beneficial owner 28 of an equity interest in such entity is a natural person who actively 29 participates in the business conducted by the firm or its affiliated 30 entities. For purposes of this subdivision, "actively participate" means 31 to provide services to clients or to otherwise individually take part in 32 the day-to-day business or management of the firm. 33 § 9. Subdivision (q) of section 121-1502 of the partnership law, as 34 amended by chapter 475 of the laws of 2014, is amended to read as 35 follows: 36 (q) Each partner of a foreign limited liability partnership which 37 provides medical services in this state must be licensed pursuant to 38 article 131 of the education law to practice medicine in the state and 39 each partner of a foreign limited liability partnership which provides 40 dental services in the state must be licensed pursuant to article 133 of 41 the education law to practice dentistry in this state. Each partner of a 42 foreign limited liability partnership which provides veterinary service 43 in the state shall be licensed pursuant to article 135 of the education 44 law to practice veterinary medicine in this state. Each partner of a 45 foreign limited liability partnership which provides professional engi- 46 neering, land surveying, geological services, architectural and/or land- 47 scape architectural services in this state must be licensed pursuant to 48 article 145, article 147 and/or article 148 of the education law to 49 practice one or more of such professions. Each partner of a foreign 50 registered limited liability partnership formed to provide public 51 accountancy services, whose principal place of business is in this state 52 and who provides public accountancy services, must be licensed pursuant 53 to article 149 of the education law to practice public accountancy in 54 this state. Each partner of a foreign limited liability partnership 55 which provides licensed clinical social work services in this state must 56 be licensed pursuant to article 154 of the education law to practiceS. 4221 7 1 licensed clinical social work in this state. Each partner of a foreign 2 limited liability partnership which provides creative arts therapy 3 services in this state must be licensed pursuant to article 163 of the 4 education law to practice creative arts therapy in this state. Each 5 partner of a foreign limited liability partnership which provides 6 marriage and family therapy services in this state must be licensed 7 pursuant to article 163 of the education law to practice marriage and 8 family therapy in this state. Each partner of a foreign limited liabil- 9 ity partnership which provides mental health counseling services in this 10 state must be licensed pursuant to article 163 of the education law to 11 practice mental health counseling in this state. Each partner of a 12 foreign limited liability partnership which provides psychoanalysis 13 services in this state must be licensed pursuant to article 163 of the 14 education law to practice psychoanalysis in this state. Each partner of 15 a foreign limited liability partnership which provides applied behavior 16 analysis services in this state must be licensed or certified pursuant 17 to article 167 of the education law to practice applied behavior analy- 18 sis in this state. A foreign limited liability partnership formed to 19 lawfully engage in the practice of public accountancy, as such practice 20 is respectively defined under article 149 of the education law, shall be 21 required to show (1) that a simple majority of the ownership of the 22 firm, in terms of financial interests, and voting rights held by the 23 firm's owners, belongs to individuals licensed to practice public 24 accountancy in some state, and (2) that all partners of a foreign limit- 25 ed liability partnership whose principal place of business is in this 26 state, and who are engaged in the practice of public accountancy in this 27 state, hold a valid license issued under section seventy-four hundred 28 four of the education law. For purposes of this subdivision, "financial 29 interest" means capital stock, capital accounts, capital contributions, 30 capital interest, or interest in undistributed earnings of a business 31 entity. Although firms may include non-licensee owners, the firm and 32 its owners must comply with rules promulgated by the state board of 33 regents. Notwithstanding the foregoing, a firm registered under this 34 section may not have non-licensee owners if the firm's name includes the 35 words "certified public accountant," or "certified public accountants," 36 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 37 that is formed under this section shall be (1) a natural person who 38 actively participates in the business of the firm or its affiliated 39 entities, or (2) an entity, including, but not limited to, a partnership 40 or professional corporation, provided each beneficial owner of an equity 41 interest in such entity is a natural person who actively participates in 42 the business conducted by the firm or its affiliated entities. For 43 purposes of this subdivision, "actively participate" means to provide 44 services to clients or to otherwise individually take part in the day- 45 to-day business or management of the firm. 46 § 10. Subdivision (h) of section 121-101 of the partnership law, as 47 added by chapter 950 of the laws of 1990, is amended to read as follows: 48 (h) "Limited partnership" and "domestic limited partnership" mean, 49 unless the context otherwise requires, a partnership (i) formed by two 50 or more persons pursuant to this article or which complies with subdivi- 51 sion (a) of section 121-1202 of this article and (ii) having one or more 52 general partners and one or more limited partners. Notwithstanding any 53 other provisions of law a limited partnership or domestic limited part- 54 nership formed to lawfully engage in the practice of public accountancy, 55 as such practice is respectively defined under article 149 of the educa- 56 tion law shall be required to show (1) that a simple majority of theS. 4221 8 1 ownership of the firm, in terms of financial interests, including owner- 2 ship-based compensation, and voting rights held by the firm's owners, 3 belongs to individuals licensed to practice public accountancy in some 4 state, and (2) that all partners of a limited partnership or domestic 5 limited partnership, whose principal place of business is in this state, 6 and who are engaged in the practice of public accountancy in this state, 7 hold a valid license issued under section seventy-four hundred four of 8 the education law or are public accountants licensed under section 9 seventy-four hundred five of the education law. Although firms may 10 include non-licensee owners, the firm and its owners must comply with 11 rules promulgated by the state board of regents. Notwithstanding the 12 foregoing, a firm registered under this section may not have non-licen- 13 see owners if the firm's name includes the words "certified public 14 accountant," or "certified public accountants," or the abbreviations 15 "CPA" or "CPAs". Each non-licensee owner of a firm that is registered 16 under this section shall be (1) a natural person who actively partic- 17 ipates in the business of the firm or its affiliated entities, or (2) an 18 entity, including, but not limited to, a partnership or professional 19 corporation, provided each beneficial owner of an equity interest in 20 such entity is a natural person who actively participates in the busi- 21 ness conducted by the firm or its affiliated entities. For purposes of 22 this subdivision, "actively participate" means to provide services to 23 clients or to otherwise individually take part in the day-to-day busi- 24 ness or management of the firm. 25 § 11. Subdivision (b) of section 1207 of the limited liability company 26 law, as amended by chapter 475 of the laws of 2014, is amended to read 27 as follows: 28 (b) With respect to a professional service limited liability company 29 formed to provide medical services as such services are defined in arti- 30 cle 131 of the education law, each member of such limited liability 31 company must be licensed pursuant to article 131 of the education law to 32 practice medicine in this state. With respect to a professional service 33 limited liability company formed to provide dental services as such 34 services are defined in article 133 of the education law, each member of 35 such limited liability company must be licensed pursuant to article 133 36 of the education law to practice dentistry in this state. With respect 37 to a professional service limited liability company formed to provide 38 veterinary services as such services are defined in article 135 of the 39 education law, each member of such limited liability company must be 40 licensed pursuant to article 135 of the education law to practice veter- 41 inary medicine in this state. With respect to a professional service 42 limited liability company formed to provide professional engineering, 43 land surveying, architectural, landscape architectural and/or geological 44 services as such services are defined in article 145, article 147 and 45 article 148 of the education law, each member of such limited liability 46 company must be licensed pursuant to article 145, article 147 and/or 47 article 148 of the education law to practice one or more of such 48 professions in this state. With respect to a professional service 49 limited liability company formed to provide public accountancy services 50 as such services are defined in article 149 of the education law each 51 member of such limited liability company whose principal place of busi- 52 ness is in this state and who provides public accountancy services, must 53 be licensed pursuant to article 149 of the education law to practice 54 public accountancy in this state. With respect to a professional service 55 limited liability company formed to provide licensed clinical social 56 work services as such services are defined in article 154 of the educa-S. 4221 9 1 tion law, each member of such limited liability company shall be 2 licensed pursuant to article 154 of the education law to practice 3 licensed clinical social work in this state. With respect to a profes- 4 sional service limited liability company formed to provide creative arts 5 therapy services as such services are defined in article 163 of the 6 education law, each member of such limited liability company must be 7 licensed pursuant to article 163 of the education law to practice crea- 8 tive arts therapy in this state. With respect to a professional service 9 limited liability company formed to provide marriage and family therapy 10 services as such services are defined in article 163 of the education 11 law, each member of such limited liability company must be licensed 12 pursuant to article 163 of the education law to practice marriage and 13 family therapy in this state. With respect to a professional service 14 limited liability company formed to provide mental health counseling 15 services as such services are defined in article 163 of the education 16 law, each member of such limited liability company must be licensed 17 pursuant to article 163 of the education law to practice mental health 18 counseling in this state. With respect to a professional service limited 19 liability company formed to provide psychoanalysis services as such 20 services are defined in article 163 of the education law, each member of 21 such limited liability company must be licensed pursuant to article 163 22 of the education law to practice psychoanalysis in this state. With 23 respect to a professional service limited liability company formed to 24 provide applied behavior analysis services as such services are defined 25 in article 167 of the education law, each member of such limited liabil- 26 ity company must be licensed or certified pursuant to article 167 of the 27 education law to practice applied behavior analysis in this state. A 28 professional service limited liability company formed to lawfully engage 29 in the practice of public accountancy, as such practice is respectively 30 defined under article 149 of the education law shall be required to show 31 (1) that a simple majority of the ownership of the firm, in terms of 32 financial interests, and voting rights held by the firm's owners, 33 belongs to individuals licensed to practice public accountancy in some 34 state, and (2) that all members of a limited professional service limit- 35 ed liability company, whose principal place of business is in this 36 state, and who are engaged in the practice of public accountancy in this 37 state, hold a valid license issued under section seventy-four hundred 38 four of the education law. For purposes of this subdivision, "financial 39 interest" means capital stock, capital accounts, capital contributions, 40 capital interest, or interest in undistributed earnings of a business 41 entity. Although firms may include non-licensee owners, the firm and 42 its owners must comply with rules promulgated by the state board of 43 regents. Notwithstanding the foregoing, a firm registered under this 44 section may not have non-licensee owners if the firm's name includes the 45 words "certified public accountant," or "certified public accountants," 46 or the abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm 47 that is registered under this section shall be (1) a natural person who 48 actively participates in the business of the firm or its affiliated 49 entities, or (2) an entity, including, but not limited to, a partnership 50 or professional corporation, provided each beneficial owner of an equity 51 interest in such entity is a natural person who actively participates in 52 the business conducted by the firm or its affiliated entities. For 53 purposes of this subdivision, "actively participate" means to provide 54 services to clients or to otherwise individually take part in the day- 55 to-day business or management of the firm.S. 4221 10 1 § 12. Subdivision (a) of section 1301 of the limited liability company 2 law, as amended by chapter 475 of the laws of 2014, is amended to read 3 as follows: 4 (a) "Foreign professional service limited liability company" means a 5 professional service limited liability company, whether or not denomi- 6 nated as such, organized under the laws of a jurisdiction other than 7 this state, (i) each of whose members and managers, if any, is a profes- 8 sional authorized by law to render a professional service within this 9 state and who is or has been engaged in the practice of such profession 10 in such professional service limited liability company or a predecessor 11 entity, or will engage in the practice of such profession in the profes- 12 sional service limited liability company within thirty days of the date 13 such professional becomes a member, or each of whose members and manag- 14 ers, if any, is a professional at least one of such members is author- 15 ized by law to render a professional service within this state and who 16 is or has been engaged in the practice of such profession in such 17 professional service limited liability company or a predecessor entity, 18 or will engage in the practice of such profession in the professional 19 service limited liability company within thirty days of the date such 20 professional becomes a member, or (ii) authorized by, or holding a 21 license, certificate, registration or permit issued by the licensing 22 authority pursuant to, the education law to render a professional 23 service within this state; except that all members and managers, if any, 24 of a foreign professional service limited liability company that 25 provides health services in this state shall be licensed in this state. 26 With respect to a foreign professional service limited liability company 27 which provides veterinary services as such services are defined in arti- 28 cle 135 of the education law, each member of such foreign professional 29 service limited liability company shall be licensed pursuant to article 30 135 of the education law to practice veterinary medicine. With respect 31 to a foreign professional service limited liability company which 32 provides medical services as such services are defined in article 131 of 33 the education law, each member of such foreign professional service 34 limited liability company must be licensed pursuant to article 131 of 35 the education law to practice medicine in this state. With respect to a 36 foreign professional service limited liability company which provides 37 dental services as such services are defined in article 133 of the 38 education law, each member of such foreign professional service limited 39 liability company must be licensed pursuant to article 133 of the educa- 40 tion law to practice dentistry in this state. With respect to a foreign 41 professional service limited liability company which provides profes- 42 sional engineering, land surveying, geologic, architectural and/or land- 43 scape architectural services as such services are defined in article 44 145, article 147 and article 148 of the education law, each member of 45 such foreign professional service limited liability company must be 46 licensed pursuant to article 145, article 147 and/or article 148 of the 47 education law to practice one or more of such professions in this state. 48 With respect to a foreign professional service limited liability company 49 which provides public accountancy services as such services are defined 50 in article 149 of the education law, each member of such foreign profes- 51 sional service limited liability company whose principal place of busi- 52 ness is in this state and who provides public accountancy services, 53 shall be licensed pursuant to article 149 of the education law to prac- 54 tice public accountancy in this state. With respect to a foreign profes- 55 sional service limited liability company which provides licensed clin- 56 ical social work services as such services are defined in article 154 ofS. 4221 11 1 the education law, each member of such foreign professional service 2 limited liability company shall be licensed pursuant to article 154 of 3 the education law to practice clinical social work in this state. With 4 respect to a foreign professional service limited liability company 5 which provides creative arts therapy services as such services are 6 defined in article 163 of the education law, each member of such foreign 7 professional service limited liability company must be licensed pursuant 8 to article 163 of the education law to practice creative arts therapy in 9 this state. With respect to a foreign professional service limited 10 liability company which provides marriage and family therapy services as 11 such services are defined in article 163 of the education law, each 12 member of such foreign professional service limited liability company 13 must be licensed pursuant to article 163 of the education law to prac- 14 tice marriage and family therapy in this state. With respect to a 15 foreign professional service limited liability company which provides 16 mental health counseling services as such services are defined in arti- 17 cle 163 of the education law, each member of such foreign professional 18 service limited liability company must be licensed pursuant to article 19 163 of the education law to practice mental health counseling in this 20 state. With respect to a foreign professional service limited liability 21 company which provides psychoanalysis services as such services are 22 defined in article 163 of the education law, each member of such foreign 23 professional service limited liability company must be licensed pursuant 24 to article 163 of the education law to practice psychoanalysis in this 25 state. With respect to a foreign professional service limited liability 26 company which provides applied behavior analysis services as such 27 services are defined in article 167 of the education law, each member of 28 such foreign professional service limited liability company must be 29 licensed or certified pursuant to article 167 of the education law to 30 practice applied behavior analysis in this state. A foreign professional 31 service limited liability company formed to lawfully engage in the prac- 32 tice of public accountancy, as such practice is respectively defined 33 under article 149 of the education law shall be required to show (1) 34 that a simple majority of the ownership of the firm, in terms of finan- 35 cial interests, and voting rights held by the firm's owners, belongs to 36 individuals licensed to practice public accountancy in some state, and 37 (2) that all members of a foreign limited professional service limited 38 liability company, whose principal place of business is in this state, 39 and who are engaged in the practice of public accountancy in this state, 40 hold a valid license issued under section seventy-four hundred four of 41 the education law. For purposes of this subdivision, "financial inter- 42 est" means capital stock, capital accounts, capital contributions, capi- 43 tal interest, or interest in undistributed earnings of a business enti- 44 ty. Although firms may include non-licensee owners, the firm and its 45 owners must comply with rules promulgated by the state board of regents. 46 Notwithstanding the foregoing, a firm registered under this section may 47 not have non-licensee owners if the firm's name includes the words 48 "certified public accountant," or "certified public accountants," or the 49 abbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is 50 registered under this section shall be (1) a natural person who actively 51 participates in the business of the firm or its affiliated entities, or 52 (2) an entity, including, but not limited to, a partnership or profes- 53 sional corporation, provided each beneficial owner of an equity interest 54 in such entity is a natural person who actively participates in the 55 business conducted by the firm or its affiliated entities. For purposes 56 of this subdivision, "actively participate" means to provide services toS. 4221 12 1 clients or to otherwise individually take part in the day-to-day busi- 2 ness or management of the firm. 3 § 13. Notwithstanding any other provision of law to the contrary, 4 there is hereby established a fee for each non-licensee owner of a firm 5 that is registered in this state to lawfully engage in the practice of 6 public accountancy. Such non-licensee owner shall pay a fee of nine 7 hundred dollars to the department of education on a triennial basis. 8 § 14. This act shall take effect immediately.
