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. LBD00057-04-3A. 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 redemptionA. 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 theA. 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 aA. 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 accountancyA. 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. AA. 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 ofA. 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.
