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

                                  3172

                       2009-2010 Regular Sessions

                          I N  A S S E M B L Y

                            January 23, 2009
                               ___________

Introduced  by M. of A. BRADLEY -- read once and referred to the Commit-
  tee on Corporations, Authorities and Commissions

AN ACT to amend the business corporation law, in relation to  the  issu-
  ance of shares of professional service corporations

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

  Section 1. Section 1507 of the business corporation law, as amended by
chapter 1022 of the laws of 1971, is amended to read as follows:
S 1507. Issuance of shares.
  [A] (A) EXCEPT AS PROVIDED PURSUANT TO PARAGRAPH (B) OF THIS  SECTION,
A  professional service corporation may issue shares only to individuals
who are authorized by law to practice in this state a  profession  which
such  corporation  is  authorized  to  practice and who are or have been
engaged in the practice of such profession  in  such  corporation  or  a
predecessor  entity,  or who will engage in the practice of such profes-
sion in such corporation within thirty days of the date such shares  are
issued. No shareholder of a professional service corporation shall enter
into  a voting trust agreement, proxy, or any other type agreement vest-
ing in another person, other than another shareholder of the same corpo-
ration or a person who would be eligible  to  become  a  shareholder  if
employed  by  the corporation, the authority to exercise voting power of
any or all of his OR HER shares.  All shares issued, agreements made, or
proxies granted in violation of this section shall be void.
  (B) A PROFESSIONAL SERVICE CORPORATION ORGANIZED FOR THE  PURPOSES  OF
THE PRACTICE OF LAW MAY ISSUE SHARES ONLY TO INDIVIDUALS WHO ARE AUTHOR-
IZED  BY LAW TO PRACTICE LAW BY THE STATE OF NEW YORK, OR TO INDIVIDUALS
WHO ARE MEMBERS IN GOOD STANDING OF A BAR OF THE UNITED STATES OF AMERI-
CA, AND WHO ARE OR HAVE BEEN ENGAGED IN THE PRACTICE OF SUCH  PROFESSION
IN  SUCH  CORPORATION OR A PREDECESSOR ENTITY, OR WHO WILL ENGAGE IN THE
PRACTICE OF SUCH PROFESSION IN SUCH CORPORATION WITHIN  THIRTY  DAYS  OF
THE  DATE  SUCH  SHARES  ARE  ISSUED.  NO  SHAREHOLDER OF A PROFESSIONAL

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03353-01-9
              

A. 3172                             2

SERVICE CORPORATION ORGANIZED FOR THE PURPOSES OF THE  PRACTICE  OF  LAW
SHALL  ENTER  INTO  A  VOTING  TRUST AGREEMENT, PROXY, OR ANY OTHER TYPE
AGREEMENT VESTING IN ANOTHER PERSON, OTHER THAN ANOTHER  SHAREHOLDER  OF
THE  SAME  CORPORATION  OR  A  PERSON  WHO WOULD BE ELIGIBLE TO BECOME A
SHAREHOLDER IF EMPLOYED BY THE CORPORATION, THE  AUTHORITY  TO  EXERCISE
VOTING  POWER  OF  ANY  OR  ALL OF HIS OR HER SHARES. ALL SHARES ISSUED,
AGREEMENTS MADE, OR PROXIES GRANTED IN VIOLATION OF THIS  SECTION  SHALL
BE VOID.
  (C)  NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, NOTH-
ING CONTAINED WITHIN THE TERMS OF PARAGRAPH (B) OF  THIS  SECTION  SHALL
AUTHORIZE A SHAREHOLDER OF A PROFESSIONAL SERVICE CORPORATION WHO IS NOT
LICENSED  TO  PRACTICE LAW WITHIN THE STATE OF NEW YORK, TO OTHERWISE BE
PERMITTED TO EITHER PRACTICE LAW BEFORE THE COURTS OF THE STATE  OF  NEW
YORK OR SUPERVISE OTHER ATTORNEYS FOR THE PURPOSE OF THE PRACTICE OF LAW
BEFORE THE COURTS OF THE STATE OF NEW YORK.
  S 2. This act shall take effect immediately.