S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  8330

                            I N  S E N A T E

                              June 23, 2010
                               ___________

Introduced  by  Sen. VALESKY -- read twice and ordered printed, and when
  printed to be committed to the Committee on Rules

AN ACT to amend the business corporation law, in relation  to  providing
  that  the  surviving business entity in the case of a merger between a
  professional service corporation and a  professional  service  limited
  liability  company  may  be  a  professional service limited liability
  company

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Section 1501 of the business corporation law, as added by
chapter 974 of the laws of 1970, is amended to read as follows:
S 1501. Definitions.
  As used in this article, unless the context  otherwise  requires,  the
term:  (a)  "licensing authority" means the regents of the university of
the state of New York or the state education department, as the case may
be, in the case of all professions licensed under  title  eight  of  the
education  law,  and  the  appropriate appellate division of the supreme
court in the case of the profession of law.
  (b) "Profession" includes any practice as an attorney  and  counselor-
at-law,  or as a licensed physician, and those occupations designated in
title eight of the education law.
  (c) "Professional service" means any type of  service  to  the  public
which  may  be  lawfully rendered by a member of a profession within the
purview of his OR HER profession.
  (d) "Professional service corporation" means a  corporation  organized
under this article.
  (e) "Officer" does not include the secretary or an assistant secretary
of a corporation having only one shareholder.
  (F)  "OTHER  BUSINESS  ENTITY"  MEANS  ANY PERSON OTHER THAN A NATURAL
PERSON, GENERAL PARTNERSHIP OR A DOMESTIC  OR  FOREIGN  BUSINESS  CORPO-
RATION,  AND  INCLUDES  A PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY
FORMED PURSUANT TO THE PROVISIONS OF  THE  NEW  YORK  LIMITED  LIABILITY
COMPANY LAW.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD00556-01-9
              

S. 8330                             2

  S 2. Section 1516 of the business corporation law, as amended by chap-
ter 851 of the laws of 1992, is amended to read as follows:
S 1516. Corporate mergers, consolidations and other reorganizations.
  (A)  Notwithstanding  any  inconsistent  provision  of this article, a
professional service corporation, pursuant to the provisions of  article
nine  of this chapter, may be merged or consolidated with another corpo-
ration formed pursuant to the provisions  of  this  chapter  or  with  a
corporation  authorized  and  registered to practice the same profession
pursuant to the applicable provisions  of  subdivision  six  of  section
seventy-two  hundred  nine  of  the  education  law  (engineer  or  land
surveyor) or subdivision four of section seventy-three hundred seven  of
the  education  law (architect) of article one hundred forty-five of the
education law, or with a foreign corporation, OR OTHER  BUSINESS  ENTITY
PRACTICING THE SAME PROFESSION OR PROFESSIONS IN THIS STATE OR THE STATE
OF  ITS  FORMATION,  or  may be otherwise reorganized, provided that the
corporation which survives or which is  formed  pursuant  thereto  is  a
professional service corporation, A PROFESSIONAL SERVICE LIMITED LIABIL-
ITY COMPANY or a foreign professional service corporation practicing the
same  profession  or  professions in this state or the state of incorpo-
ration or, if one of the original corporations is authorized to practice
pursuant to the provisions of either subdivision six of  section  [seven
thousand  two]  SEVENTY-TWO  hundred nine or subdivision four of section
[seven  thousand  three]  SEVENTY-THREE  hundred  seven,  a  corporation
authorized  and  registered  to practice the same profession pursuant to
the applicable provisions of  subdivision  six  of  section  seventy-two
hundred  nine of the education law (engineer or land surveyor) or subdi-
vision four of section seventy-three hundred seven of the education  law
(architect) of article one hundred forty-five of the education law.
  [The]  (B)  IF  THE SURVIVING BUSINESS ENTITY IS A PROFESSIONAL CORPO-
RATION, THE restrictions on the issuance, transfer or sale of shares  of
a  professional  service corporation shall be suspended for a period not
exceeding thirty days with respect to any issuance, transfer or sale  of
shares  made  pursuant  to such merger, consolidation or reorganization,
provided that: (i) no person who would not be eligible to  be  a  share-
holder  in  the  absence  of  this  section  shall vote the shares of or
receive any distribution from such corporation; (ii) after such  merger,
consolidation  or  reorganization,  any professional service corporation
which survives or which is created thereby shall be subject  to  all  of
the  provisions of this article[,]; and (iii) shares thereafter only may
be held by persons who are eligible to receive shares  of  such  profes-
sional  service  corporation  or  such  other corporation authorized and
registered to practice the same profession pursuant  to  the  applicable
provisions of subdivision six of section seventy-two hundred nine of the
education law (engineer or land surveyor) or subdivision four of section
seventy-three  hundred seven of the education law (architect) of article
one hundred forty-five of the education  law,  which  survives.  Nothing
herein  contained  shall  be  construed  as permitting the practice of a
profession in this state by a  corporation  which  is  not  incorporated
pursuant  to the provisions of this article or authorized to do business
in this state pursuant to the provisions of article  fifteen-A  of  this
chapter  or  authorized and registered to practice a profession pursuant
to the applicable provisions of article one hundred  forty-five  of  the
education  law.  For the purposes of this section, other reorganizations
shall be limited to those reorganizations defined in  paragraph  one  of
subsection  (a)  of  section  three  hundred sixty-eight of the internal
revenue code.

S. 8330                             3

  (C) IF THE SURVIVING BUSINESS ENTITY IS A PROFESSIONAL SERVICE LIMITED
LIABILITY COMPANY, THE RESTRICTIONS ON THE ISSUANCE, TRANSFER OR SALE OF
MEMBERSHIP INTERESTS OF A PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY
OTHER THAN THE REQUIREMENTS OF THE FIRST TWO  SENTENCES  OF  SUBDIVISION
(C)  OF  SECTION  TWELVE HUNDRED ELEVEN OF THE LIMITED LIABILITY COMPANY
LAW, SHALL BE SUSPENDED FOR A PERIOD  NOT  EXCEEDING  THIRTY  DAYS  WITH
RESPECT  TO  ANY ISSUANCE, TRANSFER OR SALE OF MEMBERSHIP INTERESTS MADE
PURSUANT TO SUCH MERGER OR CONSOLIDATION, PROVIDED THAT:  (I) NO  PERSON
OR  BUSINESS  ENTITY  WHO  WOULD  NOT  BE ELIGIBLE TO BE A MEMBER IN THE
ABSENCE OF THIS SECTION SHALL VOTE OR RECEIVE ANY DISTRIBUTION FROM SUCH
LIMITED LIABILITY COMPANY; (II) AFTER SUCH MERGER OR CONSOLIDATION,  ANY
PROFESSIONAL  SERVICE LIMITED LIABILITY COMPANY THAT SURVIVES OR THAT IS
CREATED THEREBY SHALL BE SUBJECT TO ALL THE PROVISIONS  OF  THE  LIMITED
LIABILITY COMPANY LAW; AND (III) MEMBERSHIP  INTERESTS THEREAFTER MAY BE
HELD  ONLY  BY  PERSONS  OR  BUSINESS  ENTITIES WHO ARE ELIGIBLE TO BE A
MEMBER OF SUCH PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY.   NOTHING
HEREIN  CONTAINED  SHALL  BE  CONSTRUED  AS PERMITTING THE PRACTICE OF A
PROFESSION IN THIS STATE BY A LIMITED  LIABILITY  COMPANY  THAT  IS  NOT
FORMED  PURSUANT  TO THE PROVISIONS OF THE LIMITED LIABILITY COMPANY LAW
OR AUTHORIZED TO DO BUSINESS IN THE STATE PURSUANT TO THE PROVISIONS  OF
ARTICLE THIRTEEN OF THE LIMITED LIABILITY COMPANY LAW.
  S 3. This act shall take effect immediately.