senate Bill S4308

Signed by Governor

Allows a professional service limited liability company to be surviving business entity in the case of a merger with a professional service corporation

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed by Governor
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actions

  • 28 / Mar / 2011
    • REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 04 / May / 2011
    • 1ST REPORT CAL.546
  • 09 / May / 2011
    • 2ND REPORT CAL.
  • 10 / May / 2011
    • ADVANCED TO THIRD READING
  • 11 / May / 2011
    • PASSED SENATE
  • 11 / May / 2011
    • DELIVERED TO ASSEMBLY
  • 11 / May / 2011
    • REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS
  • 17 / Jun / 2011
    • SUBSTITUTED FOR A678
  • 17 / Jun / 2011
    • ORDERED TO THIRD READING RULES CAL.390
  • 17 / Jun / 2011
    • PASSED ASSEMBLY
  • 17 / Jun / 2011
    • RETURNED TO SENATE
  • 12 / Sep / 2011
    • DELIVERED TO GOVERNOR
  • 23 / Sep / 2011
    • SIGNED CHAP.564

Summary

Provides 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.

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Bill Details

See Assembly Version of this Bill:
A678
Versions:
S4308
Legislative Cycle:
2011-2012
Law Section:
Business Corporation Law
Laws Affected:
Amd ยงยง1501 & 1516, BC L
Versions Introduced in Previous Legislative Cycles:
2009-2010: S8330, A246
2007-2008: A11360, A11360

Sponsor Memo

BILL NUMBER:S4308

TITLE OF BILL:
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

PURPOSE:
To allow a surviving business entity of a merger between a
professional service corporation and a professional service limited
liability company to be a limited liability company.

SUMMARY OF PROVISIONS:
Section 1 amends section 1501 of the business corporation law, as
added by chapter 974 of the laws of 1970, to create the definition of
"Other Business Entity."

Section 2 amends section 1516 of the business corporation law, as
amended by chapter 851 of the laws of 1992, to provide 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.

Section 3 establishes an effective date.

JUSTIFICATION:
Under current law, when a professional service corporation and a
professional service limited liability company merge, the surviving
business entity must be a corporation.
This does not take into account the legal needs of the surviving
entity and is inconsistent with other law. This bill would resolve
this problem by allowing a surviving business entity from such a
merger to be a LLC.

LEGISLATIVE HISTORY:
2009-2010: A.246
2007-2008: A.11360

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
Immediately.

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

                                  4308

                       2011-2012 Regular Sessions

                            I N  S E N A T E

                             March 28, 2011
                               ___________

Introduced  by  Sens. DeFRANCISCO, RANZENHOFER -- read twice and ordered
  printed, and when printed to be committed to the Committee  on  Corpo-
  rations, Authorities and Commissions

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-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03146-01-1

S. 4308                             2

RATION, AND INCLUDES A PROFESSIONAL SERVICE  LIMITED  LIABILITY  COMPANY
FORMED  PURSUANT  TO  THE  PROVISIONS  OF THE NEW YORK LIMITED LIABILITY
COMPANY LAW.
  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

S. 4308                             3

shall be limited to those reorganizations defined in  paragraph  one  of
subsection  (a)  of  section  three  hundred sixty-eight of the internal
revenue code.
  (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.

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