senate Bill S2987

Signed By Governor
2011-2012 Legislative Session

Authorizes a new type of professional service corporation to be known as a professional service corporation

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Archive: Last Bill Status - Signed by Governor


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Sep 23, 2011 signed chap.550
Sep 12, 2011 delivered to governor
Jun 06, 2011 returned to senate
passed assembly
ordered to third reading rules cal.49
substituted for a4581
Mar 10, 2011 referred to higher education
delivered to assembly
passed senate
Mar 07, 2011 advanced to third reading
Mar 03, 2011 2nd report cal.
Mar 02, 2011 1st report cal.150
Feb 04, 2011 referred to corporations, authorities and commissions

Votes

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Mar 2, 2011 - Corporations, Authorities and Commissions committee Vote

S2987
6
0
committee
6
Aye
0
Nay
0
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show Corporations, Authorities and Commissions committee vote details

Corporations, Authorities and Commissions Committee Vote: Mar 2, 2011

Co-Sponsors

S2987 - Bill Details

See Assembly Version of this Bill:
A4581
Law Section:
Business Corporation Law
Laws Affected:
Amd BC L, generally; amd ยงยง7209, 7210, 7307 & 7327, Ed L
Versions Introduced in 2009-2010 Legislative Session:
S3226A, A6787A

S2987 - Bill Texts

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Permits the incorporation of design professional service corporations (engineering, architecture, landscape architecture, land surveying, or any combination thereof) in which non-professionals may own a non-majority (less than 25 percent) of shares and hold less than 25 percent of director and officer positions; requires disclosures of identities and status of shareholders, officers, and directors.

view sponsor memo
BILL NUMBER:S2987

TITLE OF BILL:
An act
to amend the business corporation law and the education law,
in relation to
design
professional service corporations

PURPOSE:
This bill authorizes a new type of professional service corporation to
be known as a design professional service corporation. Under current
law, professional service corporations in New York restrict ownership
to design professionals licensed pursuant to education law.
Specifically, these professions include professional engineering,
architecture, landscape architecture and land surveying. The bill
will permit design firms the flexibility of offering an ownership
interest in the corporation to non-licensees via the design
professional service corporation. This legislation also requires that
greater than 75% of the directors and officers must be licensed
design professionals and the largest single shareholder must be a
design professional. The president, chief executive officer and the
chair of the board of directors also must be design professionals.
The super majority ownership and management requirements are intended
to insure that professional considerations predominate the corporate
decision-making processes.

SUMMARY OF PROVISIONS:
Sections 1 through 12 amend the business corporation law to permit the
formation of "design professional service corporations" by specified
design professionals including professional engineers, architects,
landscape architects and land surveyors. Shareholders may include
employees of the corporation not licensed as design professionals or
employee stock ownership plans (ESOP's), provided that greater than
75% of the voting shares of the corporation shall be owned by design
professionals and greater than 75% of the directors and officers
shall be design professionals. The president, chair of the board,
chief executive officer and the single largest shareholder also must
be design professionals. In addition, each of the shareholders,
officers, directors and owners shall be deemed to be of good moral
character as may be established by regulation of the commissioner of
education.

Sections 13 through 16 amend the education law to allow the formation
of "design professional service corporations" and require them to
obtain certificates of authorization to practice design services in
New York.

Section 17 is the effective date.

JUSTIFICATION:
Under current New York law, a professional design firm desirous of
offering key personnel such as human resources managers, computer
information specialists and/or geologists an equity share in a design
firm are prohibited from doing so. In contrast, virtually every other
state in the country would allow such equity shares to these key


personnel. Many states allow unlimited corporate practice of
engineering and other design services, while many others impose
ownership and management restrictions similar to those proposed in
this bill.

New York's competitiveness both nationally and internationally will be
enhanced by virtue of the liberalization of its corporate practice
regarding engineering and other professional design services. Design
professional service corporations will be able to attract and retain
key personnel by affording them an opportunity to share an equity
position in the Corporation. At the same time, the requirement that
ownership and management continue to be controlled by design
professionals assures that the public health and safety remains
paramount. Finally, design professional service corporations will be
subject to the licensing authority of the board of regents, including
the powers of suspension and revocation.

LEGISLATIVE HISTORY:
2009-10: S.3226A/A.6787A
2007-08: S.930B/A.2060B
2005-06: S.1477A/A.2755A
2003-04: S.530/A.1035
2001-02: S.1799A/A.3160A
1999-00: S.4989/A.2391

FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This bill takes effect on the first day of January 2012.

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

    S. 2987                                                  A. 4581

                       2011-2012 Regular Sessions

                      S E N A T E - A S S E M B L Y

                            February 4, 2011
                               ___________

IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered print-
  ed, and when printed to be committed to the Committee on Corporations,
  Authorities and Commissions

IN  ASSEMBLY -- Introduced by M. of A. CANESTRARI, ENGLEBRIGHT, CALHOUN,
  CUSICK, JAFFEE -- Multi-Sponsored by -- M. of A. ABBATE, COOK,  MAGEE,
  MAGNARELLI,  MARKEY,  McENENY,  MORELLE, PRETLOW, TOBACCO -- read once
  and referred to the Committee on Higher Education

AN ACT to amend the business corporation law and the education  law,  in
  relation to design professional service corporations

  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 profession.
  (d) "Professional  service  corporation" means a corporation organized
under this article.
  (e) "DESIGN PROFESSIONAL  SERVICE  CORPORATION"  MEANS  A  CORPORATION
ORGANIZED UNDER THIS ARTICLE PRACTICING PROFESSIONAL ENGINEERING, ARCHI-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD06069-01-1

S. 2987                             2                            A. 4581

TECTURE,  LANDSCAPE  ARCHITECTURE,  OR LAND SURVEYING, OR PRACTICING ANY
COMBINATION OF SUCH PROFESSIONS, FIRST ORGANIZED  ON  OR  AFTER  JANUARY
FIRST,  TWO  THOUSAND TWELVE.  THE PROVISIONS OF THIS ARTICLE APPLICABLE
TO  PROFESSIONAL SERVICE CORPORATIONS SHALL APPLY TO DESIGN PROFESSIONAL
SERVICE CORPORATIONS EXCEPT TO THE EXTENT THAT ANY PROVISION  IS  EITHER
INCONSISTENT  WITH A PROVISION EXPRESSLY APPLYING TO DESIGN PROFESSIONAL
SERVICE CORPORATIONS OR NOT RELEVANT THERETO.
  (F) "DESIGN PROFESSIONAL" MEANS AN INDIVIDUAL LICENSED AND  REGISTERED
PURSUANT  TO  TITLE  EIGHT OF THE EDUCATION LAW TO PRACTICE PROFESSIONAL
ENGINEERING, ARCHITECTURE, LANDSCAPE ARCHITECTURE OR LAND SURVEYING.
  (G) "EMPLOYEE STOCK OWNERSHIP PLAN" (ESOP) MEANS  A  DEFINED  CONTRIB-
UTION  PLAN  ESTABLISHED  PURSUANT TO SECTION 4975(E)(7) OF THE INTERNAL
REVENUE CODE.
  (H) "Officer" does not include the secretary or an assistant secretary
of a corporation having only one shareholder.
  S 2. Paragraphs (a), (d) and (f)  of  section  1503  of  the  business
corporation  law,  paragraphs (a) and (f) as added by chapter 974 of the
laws of 1970 and paragraph (d) as amended by chapter 109 of the laws  of
1975,  are amended and four new paragraphs (b-1), (b-2), (b-3) and (b-4)
are added to read as follows:
  (a) Notwithstanding any other provision of law, one or  more  individ-
uals  duly  authorized  by  law  to render the same professional service
within the state may organize, or cause to be organized, a  professional
service  corporation  for  pecuniary  profit  under this article for the
purpose of rendering the same professional service, except that  one  or
more  individuals  duly authorized by law to practice professional engi-
neering, architecture, landscape architecture or land  surveying  within
the state may organize, or cause to be organized, a professional service
corporation  OR  A DESIGN PROFESSIONAL SERVICE CORPORATION for pecuniary
profit under this article for the purpose of rendering such professional
services as such individuals are authorized to practice.
  (B-1) THE  CERTIFICATE  OF  INCORPORATION  OF  A  DESIGN  PROFESSIONAL
SERVICE  CORPORATION  SHALL  MEET  THE  REQUIREMENTS  OF  THIS  CHAPTER,
PROVIDED THAT SHAREHOLDERS MAY INCLUDE EMPLOYEE  STOCK  OWNERSHIP  PLANS
(ESOPS)  AND EMPLOYEES OF THE CORPORATION NOT LICENSED AS DESIGN PROFES-
SIONALS, AND PROVIDED FURTHER HOWEVER THAT:
  (I) GREATER THAN SEVENTY-FIVE PERCENT OF  THE  OUTSTANDING  SHARES  OF
STOCK OF THE CORPORATION ARE OWNED BY DESIGN PROFESSIONALS,
  (II)  AN ESOP, EITHER IN PART OR IN ITS ENTIRETY, SHALL NOT CONSTITUTE
PART OF THE GREATER THAN SEVENTY-FIVE PERCENT OWNED  BY  DESIGN  PROFES-
SIONALS,
  (III)  GREATER  THAN  SEVENTY-FIVE PERCENT OF THE DIRECTORS ARE DESIGN
PROFESSIONALS,
  (IV) GREATER THAN SEVENTY-FIVE PERCENT  OF  THE  OFFICERS  ARE  DESIGN
PROFESSIONALS,
  (V)  THE  PRESIDENT, THE CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE
CHIEF EXECUTIVE OFFICER OR OFFICERS ARE DESIGN PROFESSIONALS, AND
  (VI) THE SINGLE LARGEST SHAREHOLDER IS EITHER A DESIGN PROFESSIONAL OR
AN ESOP WITH GREATER THAN SEVENTY-FIVE  PERCENT  OF  THE  PLAN'S  VOTING
TRUSTEES  BEING  DESIGN  PROFESSIONALS  AND  GREATER  THAN  SEVENTY-FIVE
PERCENT OF THE PLAN'S COMMITTEE MEMBERS BEING DESIGN PROFESSIONALS.
  (B-2) THE  CERTIFICATE  OF  INCORPORATION  OF  A  DESIGN  PROFESSIONAL
SERVICE CORPORATION SHALL:
  (I) STATE THE PROFESSION OR PROFESSIONS TO BE PRACTICED BY SUCH CORPO-
RATION,

S. 2987                             3                            A. 4581

  (II)  STATE  THE  NAMES  AND RESIDENCE ADDRESSES OF ALL INDIVIDUALS OR
ESOPS WHO ARE TO BE THE ORIGINAL SHAREHOLDERS, DIRECTORS AND OFFICERS OF
SUCH CORPORATION,
  (III)  INDICATE  THE PROFESSION OR PROFESSIONS OF EACH ORIGINAL SHARE-
HOLDER, DIRECTOR AND OFFICER WHO IS A DESIGN PROFESSIONAL,
  (IV) STATE THE OWNERSHIP INTEREST OF EACH ORIGINAL SHAREHOLDER, AND
  (V) INDICATE THE NAMES OF THE ORIGINAL OFFICERS AND DIRECTORS WHO  ARE
THE  PRESIDENT,  THE CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE CHIEF
EXECUTIVE OFFICER OR OFFICERS.
  (B-3) THE  CERTIFICATE  OF  INCORPORATION  OF  A  DESIGN  PROFESSIONAL
SERVICE CORPORATION SHALL HAVE ATTACHED THERETO A CERTIFICATE OR CERTIF-
ICATES  ISSUED  BY  THE  LICENSING AUTHORITY CERTIFYING THAT EACH OF THE
PROPOSED SHAREHOLDERS, DIRECTORS AND OFFICERS WHO IS LISTED AS A  DESIGN
PROFESSIONAL  IS  AUTHORIZED  BY  LAW TO PRACTICE A PROFESSION WHICH THE
CORPORATION IS BEING ORGANIZED TO PRACTICE AND, IF APPLICABLE, THAT  ONE
OR  MORE  OF  SUCH INDIVIDUALS IS AUTHORIZED TO PRACTICE EACH PROFESSION
WHICH THE CORPORATION WILL  BE  AUTHORIZED  TO  PRACTICE.  THE  ATTACHED
CERTIFICATE  OR  CERTIFICATES SHALL ALSO CERTIFY THAT THE PRESIDENT, THE
CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE CHIEF EXECUTIVE OFFICER OR
OFFICERS ARE AUTHORIZED BY LAW TO PRACTICE A PROFESSION WHICH THE CORPO-
RATION IS BEING ORGANIZED TO PRACTICE.
  (B-4) THE  CERTIFICATE  OF  INCORPORATION  OF  A  DESIGN  PROFESSIONAL
SERVICE  CORPORATION  SHALL  ALSO HAVE ATTACHED THERETO A CERTIFICATE OR
CERTIFICATES ISSUED BY THE LICENSING AUTHORITY CERTIFYING THAT  EACH  OF
THE  SHAREHOLDERS,  OFFICERS,  DIRECTORS  AND OWNERS HAVE BEEN DEEMED TO
HAVE BEEN OF GOOD MORAL CHARACTER AS MAY BE  ESTABLISHED  BY  THE  REGU-
LATIONS OF THE COMMISSIONER OF EDUCATION.
  (d)  A  professional  service  corporation, INCLUDING A DESIGN PROFES-
SIONAL SERVICE CORPORATION, other than a corporation authorized to prac-
tice law, shall be under the supervision of the regents of the universi-
ty of the state of New York and be subject to  disciplinary  proceedings
and  penalties, and its certificate of incorporation shall be subject to
suspension, revocation or annulment for cause, in the same manner and to
the same extent as is provided with respect  to  individuals  and  their
licenses,  certificates,  and registrations in title eight of the educa-
tion law relating to  the  applicable  profession.  Notwithstanding  the
provisions  of  this  [subdivision]  PARAGRAPH,  a  professional service
corporation authorized to practice medicine  shall  be  subject  to  the
prehearing procedures and hearing procedures as is provided with respect
to  individual  physicians  and  their licenses in [Title] TITLE II-A of
article two of the public health law.
  (f) The order of suspension, revocation or annulment  of  the  certif-
icate of incorporation of a professional service corporation pursuant to
[subdivisions  (e) and (f)] PARAGRAPHS (D) AND (E) of this section shall
be effective upon the filing of such order with the department of state.
  S 3. Paragraphs (a) and (b) of section 1504  of  the  business  corpo-
ration  law, as added by chapter 974 of the laws of 1970, are amended to
read as follows:
  (a) No professional service corporation, INCLUDING  A  DESIGN  PROFES-
SIONAL  SERVICE  CORPORATION,  may  render  professional services except
through individuals  authorized  by  law  to  render  such  professional
services as individuals.
  (b)  Each  final plan and report made or issued by a corporation prac-
ticing  ONE OR MORE OF  THE  PROFESSIONS  OF  professional  engineering,
architecture,  landscape  architecture  or land surveying shall bear the
name and seal of one or more professional engineers,  architects,  land-

S. 2987                             4                            A. 4581

scape  architects, or land surveyors, respectively, who are in responsi-
ble charge of such plan or report.
  S  4. Sections 1505 and 1506 of the business corporation law, as added
by chapter 974 of the laws of 1970, are amended to read as follows:
S 1505. Professional relationships and liabilities.
  (a) Each shareholder, employee or  agent  of  a  professional  service
corporation  AND  A  DESIGN  PROFESSIONAL  SERVICE  CORPORATION shall be
personally and fully liable and accountable for any negligent or  wrong-
ful act or misconduct committed by him or by any person under his direct
supervision  and control while rendering professional services on behalf
of such corporation.
  (b) The relationship of an individual to a professional service corpo-
ration OR A DESIGN PROFESSIONAL  SERVICE  CORPORATION  with  which  such
individual  is  associated,  whether  as shareholder, director, officer,
employee or agent, shall not modify or diminish  the  jurisdiction  over
him  of the licensing authority and in the case of an attorney and coun-
sellor-at-law, the other courts of this state.
S 1506. Purposes of incorporation.
  No professional service corporation  OR  DESIGN  PROFESSIONAL  SERVICE
CORPORATION shall engage in any business other than the rendering of the
professional  services for which it was incorporated; provided that such
corporation may invest its funds  in  real  estate,  mortgages,  stocks,
bonds or any other type of investments.
  S 5. Section 1507 of the business corporation law, as amended by chap-
ter 1022 of the laws of 1971, is amended to read as follows:
S 1507. Issuance of shares.
  (A)  A professional service corporation may issue shares only to indi-
viduals 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 shares.  All shares issued, agreements made, or  prox-
ies granted in violation of this section shall be void.
  (B)  A  DESIGN  PROFESSIONAL  SERVICE  CORPORATION MAY ISSUE SHARES 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  CORPO-
RATION  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.  A DESIGN PROFESSIONAL SERVICE CORPORATION MAY ALSO
ISSUE SHARES TO EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS) AND EMPLOYEES  OF
THE CORPORATION NOT LICENSED AS DESIGN PROFESSIONALS, PROVIDED THAT:
  (I)  GREATER  THAN  SEVENTY-FIVE  PERCENT OF THE OUTSTANDING SHARES OF
STOCK OF THE CORPORATION ARE OWNED BY DESIGN PROFESSIONALS,
  (II) AN ESOP, EITHER IN PART OR IN ITS ENTIRETY, SHALL NOT  CONSTITUTE
PART  OF  THE  GREATER THAN SEVENTY-FIVE PERCENT OWNED BY DESIGN PROFES-
SIONALS,
  (III) GREATER THAN SEVENTY-FIVE PERCENT OF THE  DIRECTORS  ARE  DESIGN
PROFESSIONALS,

S. 2987                             5                            A. 4581

  (IV)  GREATER  THAN  SEVENTY-FIVE  PERCENT  OF THE OFFICERS ARE DESIGN
PROFESSIONALS,
  (V)  THE  PRESIDENT, THE CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE
CHIEF EXECUTIVE OFFICER OR OFFICERS ARE DESIGN PROFESSIONALS, AND
  (VI) THE SINGLE LARGEST SHAREHOLDER IS EITHER A DESIGN PROFESSIONAL OR
AN ESOP WITH GREATER THAN SEVENTY-FIVE  PERCENT  OF  THE  PLAN'S  VOTING
TRUSTEES  BEING  DESIGN  PROFESSIONALS  AND  GREATER  THAN  SEVENTY-FIVE
PERCENT OF THE PLAN'S COMMITTEE MEMBERS BEING DESIGN PROFESSIONALS.
  NO SHAREHOLDER OF A  DESIGN  PROFESSIONAL  SERVICE  CORPORATION  SHALL
ENTER  INTO  A VOTING TRUST AGREEMENT, PROXY OR ANY OTHER TYPE OF AGREE-
MENT VESTING IN ANOTHER PERSON, OTHER THAN ANOTHER  SHAREHOLDER  OF  THE
SAME  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.
  S  6. Sections 1508 and 1509 of the business corporation law, as added
by chapter 974 of the laws of 1970, are amended to read as follows:
S 1508. Directors and officers.
  (A) No individual may be a  director  or  officer  of  a  professional
service  corporation  unless he is authorized by law to practice in this
state a profession which such corporation is authorized to practice  and
is  either  a shareholder of such corporation or engaged in the practice
of his profession in such corporation.
  (B) THE DIRECTORS AND OFFICERS OF A DESIGN PROFESSIONAL SERVICE CORPO-
RATION  MAY  INCLUDE  INDIVIDUALS  WHO  ARE  NOT  DESIGN  PROFESSIONALS,
PROVIDED  HOWEVER  THAT  GREATER THAN SEVENTY-FIVE PERCENT OF THE DIREC-
TORS, GREATER THAN SEVENTY-FIVE PERCENT OF THE OFFICERS AND  THE  PRESI-
DENT,  THE CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE CHIEF EXECUTIVE
OFFICER OR OFFICERS ARE AUTHORIZED BY LAW TO PRACTICE IN  THIS  STATE  A
PROFESSION  WHICH  SUCH  CORPORATION  IS AUTHORIZED TO PRACTICE, AND ARE
EITHER SHAREHOLDERS OF SUCH CORPORATION OR ENGAGED IN  THE  PRACTICE  OF
THEIR PROFESSIONS IN SUCH CORPORATION.
S 1509. Disqualification   of   shareholders,  directors,  officers  and
          employees.
  If any shareholder, director, officer or employee  of  a  professional
service  corporation,  INCLUDING  A  DESIGN  PROFESSIONAL SERVICE CORPO-
RATION, who has  been  rendering  professional  service  to  the  public
becomes  legally  disqualified  to  practice  his profession within this
state, he shall sever  all  employment  with,  and  financial  interests
(other  than  interests as a creditor) in, such corporation forthwith or
as otherwise provided in section 1510 OF THIS ARTICLE. All provisions of
law regulating the  rendering  of  professional  services  by  a  person
elected  or appointed to a public office shall be applicable to a share-
holder, director, officer and employee of such corporation in  the  same
manner  and  to the same extent as if fully set forth herein. Such legal
disqualification to practice his profession within this state  shall  be
deemed to constitute an irrevocable offer by the disqualified sharehold-
er  to sell his shares to the corporation, pursuant to the provisions of
section 1510 OF THIS ARTICLE or of  the  certificate  of  incorporation,
by-laws  or agreement among the corporation and all shareholders, which-
ever is applicable.  Compliance with the terms of such  offer  shall  be
specifically  enforceable  in  the  courts of this state. A professional
service corporation's failure to enforce compliance with this  provision
shall  constitute a ground for forfeiture of its certificate of incorpo-
ration and its dissolution.
  S 7. Section 1510 of the business corporation law, as amended by chap-
ter 1022 of the laws of 1971, is amended to read as follows:

S. 2987                             6                            A. 4581

S 1510. [(a)] Death or disqualification of shareholders.
  (A)  A  professional  service  corporation, INCLUDING A DESIGN PROFES-
SIONAL SERVICE CORPORATION, shall purchase or redeem  the  shares  of  a
shareholder  in  case  of  his death or disqualification pursuant to the
provisions of section 1509 OF THIS ARTICLE, within six months after  the
appointment  of  the  executor or administrator or other legal represen-
tative of the estate of such deceased shareholder, or within six  months
after  such disqualification, at the book value of such shares as of the
end of the month immediately preceding the death or disqualification  of
the  shareholder  as determined from the books and records of the corpo-
ration in accordance with its regular method of accounting. The  certif-
icate  of  incorporation, the by-laws of the corporation or an agreement
among the corporation and all shareholders may modify  this  section  by
providing  for  a shorter period of purchase or redemption, or an alter-
nate method of determining the price to be paid for the shares, or both.
If the corporation shall fail to purchase or redeem such  shares  within
the  required period, a successful plaintiff in an action to recover the
purchase price of such shares shall also be  awarded  reasonable  attor-
neys'  fees  and  costs.  Limitations  on  the purchase or redemption of
shares set forth in section [five hundred thirteen] 513 OF THIS  CHAPTER
shall not apply to the purchase or redemption of shares pursuant to this
section.  Nothing  herein  contained  shall  prevent  a corporation from
paying pension benefits or other deferred compensation to or  on  behalf
of  a former or deceased officer, director or employee thereof as other-
wise permitted by law. The provisions  of  this  section  shall  not  be
deemed  to  require  the purchase of the shares of a disqualified share-
holder where the period of disqualification is for less than six months,
and the shareholder again becomes eligible to  practice  his  profession
within six months from the date of disqualification.
  (b)  Notwithstanding  the provisions of [subdivision] PARAGRAPH (a) OF
THIS SECTION, the corporation shall  not  be  required  to  purchase  or
redeem  the  shares  of  a  deceased or disqualified shareholder if such
shares, within the time limit prescribed by [subdivision] PARAGRAPH  (a)
OF  THIS SECTION, are sold or transferred to another professional pursu-
ant to the provisions of section 1511 OF THIS ARTICLE.
  S 8. Section 1511 of the business corporation law, as amended by chap-
ter 1022 of the laws of 1971, is amended to read as follows:
S 1511. Transfer of shares.
  (A) No shareholder of a professional service corporation OR  A  DESIGN
PROFESSIONAL SERVICE CORPORATION may sell or transfer his shares in such
corporation  except to another individual who is eligible to have shares
issued to him by such corporation or except in trust to another individ-
ual who would be eligible to receive shares if he were employed  by  the
corporation. Nothing herein contained shall be construed to prohibit the
transfer of shares by operation of law or by court decree. No transferee
of  shares  by  operation of law or court decree may vote the shares for
any purpose whatsoever except with respect  to  corporate  action  under
[section  nine  hundred  nine and section one thousand one] SECTIONS 909
AND 1001 OF THIS CHAPTER.   The restriction in  the  preceding  sentence
shall  not  apply,  however,  where such transferee would be eligible to
have shares issued to him if he were an employee of the corporation and,
if there are other shareholders, a majority of such  other  shareholders
shall fail to redeem the shares so transferred, pursuant to section 1510
OF  THIS  ARTICLE, within sixty days of receiving written notice of such
transfer. Any sale or transfer, except by  operation  of  law  or  court
decree  or  except for a corporation having only one shareholder, may be

S. 2987                             7                            A. 4581

made only after the same shall have been approved by the board of direc-
tors, or at a shareholders' meeting specially called for such purpose by
such proportion, not less than a majority, of the outstanding shares  as
may be provided in the certificate of incorporation or in the by-laws of
such professional service corporation. At such shareholders' meeting the
shares  held by the shareholder proposing to sell or transfer his shares
may not be voted or counted for any  purpose,  unless  all  shareholders
consent  that such shares be voted or counted. The certificate of incor-
poration or the by-laws of the professional service corporation, or  the
professional  service corporation and the shareholders by private agree-
ment,  may  provide,  in  lieu  of  or  in  addition  to  the  foregoing
provisions,  for the alienation of shares and may require the redemption
or purchase of such shares by such corporation at prices and in a manner
specifically set forth therein.  The existence of  the  restrictions  on
the  sale  or  transfer  of shares, as contained in this article and, if
applicable, in the certificate of incorporation, by-laws, stock purchase
or stock redemption agreement, shall be noted conspicuously on the  face
or back of every certificate for shares issued by a professional service
corporation.    Any  sale  or transfer in violation of such restrictions
shall be void.
  (B) A DESIGN PROFESSIONAL SERVICE CORPORATION SHALL PURCHASE OR REDEEM
THE SHARES OF A NON-DESIGN PROFESSIONAL SHAREHOLDER IN THE CASE  OF  HIS
OR  HER  TERMINATION  OF EMPLOYMENT WITHIN THIRTY DAYS AFTER SUCH TERMI-
NATION. A DESIGN PROFESSIONAL SERVICE CORPORATION SHALL NOT BE  REQUIRED
TO PURCHASE OR REDEEM THE SHARES OF A TERMINATED NON-DESIGN PROFESSIONAL
SHAREHOLDER  IF  SUCH SHARES, WITHIN THIRTY DAYS AFTER SUCH TERMINATION,
ARE SOLD OR TRANSFERRED TO ANOTHER EMPLOYEE OF THE CORPORATION  PURSUANT
TO THIS ARTICLE.
  S 9. Section 1512 of the business corporation law, as added by chapter
974 of the laws of 1970, is amended to read as follows:
S 1512. Corporate name.
  (a) Notwithstanding  any other provision of law, the name of a profes-
sional service corporation,  INCLUDING  A  DESIGN  PROFESSIONAL  SERVICE
CORPORATION,  may  contain any word which, at the time of incorporation,
could be used in the name of a partnership practicing a profession which
the corporation is authorized to practice, and may not contain any  word
which  could  not  be used by such a partnership. Provided, however, the
name of a professional service corporation may not contain the name of a
deceased person unless
  (1) such person's name was part of the corporate name at the  time  of
such person's death; or
  (2) such person's name was part of the name of an existing partnership
and at least two-thirds of such partnership's partners become sharehold-
ers of the corporation.
  (b) [Such  corporate]  THE  name OF A PROFESSIONAL SERVICE CORPORATION
shall end with the words "Professional Corporation" or the  abbreviation
"P.C."  THE  NAME OF A DESIGN PROFESSIONAL SERVICE CORPORATION SHALL END
WITH THE WORDS "DESIGN PROFESSIONAL  CORPORATION"  OR  THE  ABBREVIATION
"D.P.C." The provisions of [paragraph] SUBPARAGRAPH one of [subdivision]
PARAGRAPH  (a)  of section [three hundred one] 301 OF THIS CHAPTER shall
not apply to a professional service corporation.
  S 10. Section 1513 of the business  corporation  law,  as  amended  by
chapter 576 of the laws of 1994, is amended to read as follows:
S 1513. Business corporation law applicable.
  This  chapter,  except  article  [thirteen] 13 and article [fifteen-A]
15-A, shall be applicable to a professional service corporation, INCLUD-

S. 2987                             8                            A. 4581

ING A DESIGN PROFESSIONAL SERVICE CORPORATION, except to the extent that
the provisions  thereof  conflict  with  this  article.  A  professional
service  corporation,  INCLUDING  A  DESIGN  PROFESSIONAL SERVICE CORPO-
RATION, may consolidate or merge only with another corporation organized
under  this  article  or  authorized  to do business in this state under
article [fifteen-A] 15-A of this chapter or authorized and registered to
practice the same profession, OR IN THE CASE OF  A  DESIGN  PROFESSIONAL
SERVICE CORPORATION ONE OR MORE PROFESSIONS AS PROVIDED IN PARAGRAPH (E)
OF  SECTION  1501 OF THIS ARTICLE, pursuant to the applicable provisions
of subdivision six of section seventy-two hundred nine of the  education
law [or], subdivision four of section seventy-three hundred seven of the
education law OR SUBDIVISION FOUR OF SECTION SEVENTY-THREE HUNDRED TWEN-
TY-SEVEN  OF  THE  EDUCATION  LAW,  or may be a member of a professional
service limited liability company, a foreign professional service limit-
ed liability company, a  registered  limited  liability  partnership  or
foreign   limited   liability  partnership,  and  only  if  all  of  the
professions practiced by such corporations, limited liability  companies
or  limited liability partnerships could be practiced by a single corpo-
ration organized under this article.
  S 11. The opening paragraph of section 1514  of  the  business  corpo-
ration  law is designated paragraph (a) and a new paragraph (b) is added
to read as follows:
  (B) EACH DESIGN PROFESSIONAL SERVICE CORPORATION SHALL, AT LEAST  ONCE
EVERY  THREE  YEARS  ON  OR  BEFORE THE DATE PRESCRIBED BY THE LICENSING
AUTHORITY, FURNISH A STATEMENT TO THE LICENSING  AUTHORITY  LISTING  THE
NAMES  AND RESIDENCE ADDRESSES OF EACH SHAREHOLDER, DIRECTOR AND OFFICER
OF SUCH CORPORATION AND CERTIFY AS THE DATE OF CERTIFICATION AND AT  ALL
TIMES OVER THE ENTIRE THREE YEAR PERIOD THAT:
  (I)  GREATER  THAN  SEVENTY-FIVE  PERCENT OF THE OUTSTANDING SHARES OF
STOCK OF THE CORPORATION ARE AND WERE OWNED BY DESIGN PROFESSIONALS,
  (II) GREATER THAN SEVENTY-FIVE PERCENT OF THE DIRECTORS ARE  AND  WERE
DESIGN PROFESSIONALS,
  (III)  GREATER  THAN SEVENTY-FIVE PERCENT OF THE OFFICERS ARE AND WERE
DESIGN PROFESSIONALS,
  (IV) THE PRESIDENT, THE CHAIRPERSON OF THE BOARD OF DIRECTORS AND  THE
CHIEF  EXECUTIVE  OFFICER OR OFFICERS ARE AND WERE DESIGN PROFESSIONALS,
AND
  (V) THE SINGLE LARGEST SHAREHOLDER IS AND WAS EITHER A DESIGN  PROFES-
SIONAL  OR  AN ESOP WITH GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S
VOTING TRUSTEES BEING DESIGN PROFESSIONALS AND GREATER THAN SEVENTY-FIVE
PERCENT OF THE PLAN'S COMMITTEE MEMBERS BEING DESIGN PROFESSIONALS.
  THE STATEMENT SHALL BE SIGNED BY THE PRESIDENT OR ANY  DESIGN  PROFES-
SIONAL  VICE-PRESIDENT AND ATTESTED TO BY THE SECRETARY OR ANY ASSISTANT
SECRETARY OF THE CORPORATION.
  S 12. Section 1516 of the business  corporation  law,  as  amended  by
chapter 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, AND
SUBJECT TO THE LIMITATIONS IN PARAGRAPH (B) OF THIS SECTION,  a  profes-
sional  service  corporation,  INCLUDING  A  DESIGN PROFESSIONAL SERVICE
CORPORATION, pursuant to the provisions of  article  [nine]  9  of  this
chapter,  may  be merged or consolidated with another corporation 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],

S. 2987                             9                            A. 4581

subdivision four of section seventy-three hundred seven of the education
law (architect) OR SUBDIVISION FOUR  OF  SECTION  SEVENTY-THREE  HUNDRED
TWENTY-SEVEN  OF  THE  EDUCATION  LAW (LANDSCAPE ARCHITECT) of [article]
ARTICLES one hundred forty-five, ONE HUNDRED FORTY-SEVEN AND ONE HUNDRED
FORTY-EIGHT  of the education law, or with a foreign corporation, or may
be otherwise reorganized, provided that the corporation OR ENTITY  which
survives  or  which is formed pursuant thereto is a professional service
corporation, A  DESIGN  PROFESSION  SERVICE  CORPORATION  or  a  foreign
professional  service  corporation  practicing  the  same  profession or
professions in this state or the state of incorporation 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] OF THE EDUCATION LAW, subdivision four of
section [seven thousand three] SEVENTY-THREE hundred seven OF THE EDUCA-
TION  LAW  OR  SUBDIVISION  FOUR  OF   SECTION   SEVENTY-THREE   HUNDRED
TWENTY-SEVEN  OF THE  EDUCATION LAW, a corporation authorized and regis-
tered 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]  ARTICLES  one hundred forty-five, ONE HUNDRED FORTY-SEVEN AND
ONE HUNDRED FORTY-EIGHT of the education  law  OR  SUBDIVISION  FOUR  OF
SECTION  SEVENTY-THREE  HUNDRED TWENTY-SEVEN OF THE EDUCATION LAW (LAND-
SCAPE ARCHITECT). The restrictions on the issuance, transfer or sale  of
shares  of  a  professional service corporation OR A DESIGN 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  shareholder  in  the
absence of this section shall vote the shares of or receive any distrib-
ution  from  such  corporation; (ii) after such merger, consolidation or
reorganization, any professional service corporation OR  DESIGN  PROFES-
SIONAL  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 professional service corporation, DESIGN  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)  OR
SUBDIVISION  FOUR  OF  SECTION SEVENTY-THREE HUNDRED TWENTY-SEVEN OF THE
EDUCATION LAW (LANDSCAPE ARCHITECT) of [article]  ARTICLES  one  hundred
forty-five,  ONE  HUNDRED FORTY-SEVEN AND ONE HUNDRED FORTY-EIGHT 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]  15-A  of  this chapter, AUTHORIZED
PURSUANT TO SUBDIVISION SIX OF SECTION SEVENTY-TWO HUNDRED NINE  OF  THE
EDUCATION LAW, AUTHORIZED PURSUANT TO SUBDIVISION FOUR OF SECTION SEVEN-
TY-THREE  HUNDRED  SEVEN  OF  THE  EDUCATION LAW, AUTHORIZED PURSUANT TO
SUBDIVISION FOUR OF SECTION  SEVENTY-THREE HUNDRED TWENTY-SEVEN OF   THE
EDUCATION  LAW  or  authorized  and  registered to practice a profession
pursuant to the applicable provisions of article one hundred forty-five,
ARTICLE ONE HUNDRED FORTY-SEVEN OR ARTICLE ONE  HUNDRED  FORTY-EIGHT  of

S. 2987                            10                            A. 4581

the  education  law. For the purposes of this section, other reorganiza-
tions shall be limited to those reorganizations defined in paragraph one
of subsection (a) of section three hundred sixty-eight of  the  internal
revenue code.
  (B)  NOTWITHSTANDING THE PROVISIONS CONTAINED IN PARAGRAPH (A) OF THIS
SECTION, NO DESIGN PROFESSIONAL SERVICE CORPORATION SHALL BE  MERGED  OR
CONSOLIDATED  WITH ANY ENTITY UNLESS SUCH ENTITY IS A PROFESSIONAL BUSI-
NESS ORGANIZATION LAWFULLY ORGANIZED TO  PROVIDE  PROFESSIONAL  SERVICES
PURSUANT TO ARTICLES ONE HUNDRED FORTY-FIVE, ONE HUNDRED FORTY-SEVEN AND
ONE HUNDRED FORTY-EIGHT OF THE EDUCATION LAW.
  S  13. Subdivision 4 of section 7209 of the education law, as added by
chapter 987 of the laws of 1971, is amended to read as follows:
  4. Engineers, land surveyors, architects, and landscape architects may
join in the formation of a joint  enterprise,  or  a  partnership  or  a
professional service corporation OR A DESIGN PROFESSIONAL SERVICE CORPO-
RATION  or  may form any desired combination of such professions and may
use in the name of such corporation the title of any of the  professions
which  will  be  practiced.  After  the  name  of each member his OR HER
profession shall be indicated.
  S 14. Subdivision 1 of section 7210 of the education law,  as  amended
by chapter 483 of the laws of 2001, is amended to read as follows:
  1.  Domestic  or  foreign  professional  service  corporations, DESIGN
PROFESSIONAL SERVICE CORPORATIONS, professional service limited  liabil-
ity companies, foreign professional service limited liability companies,
registered  limited  liability partnerships, New York registered foreign
limited liability partnerships, partnerships and joint enterprises spec-
ified in subdivision four of section seventy-two hundred  nine  of  this
article,  provided  each  of  the  foregoing  entities  is authorized to
provide professional engineering or land surveying services and  general
business  corporations authorized to provide professional engineering or
land surveying services pursuant to subdivision six of section  seventy-
two hundred nine of this article may offer to provide or provide profes-
sional  engineering  or  land  surveying services only after obtaining a
certificate of authorization from the department.  Except  as  otherwise
authorized  by  statute, rule or regulation, other business entities are
not authorized to offer or  provide  professional  engineering  or  land
surveying  services  and  may  not  obtain certificates of authorization
provided that nothing contained herein shall prohibit an individual  who
is licensed to practice professional engineering or land surveying under
this article from obtaining a certificate of authorization upon applica-
tion  and  payment  of  the  appropriate  fees  provided  for under this
section.
  S 15. Subdivision 2 of section 7307 of the education law, as added  by
chapter 987 of the laws of 1971, is amended to read as follows:
  2.  Engineers, land surveyors, architects and landscape architects may
join in the formation of a joint  enterprise,  or  a  partnership  or  a
professional service corporation OR A DESIGN PROFESSIONAL SERVICE CORPO-
RATION  or  may form any desired combination of such professions and may
use in the name of such corporation the title of any of the  professions
which  will  be  practiced.  After  the  name  of each member his OR HER
profession shall be indicated.
  S 16. Subdivision 2 of section 7327 of the education law, as added  by
chapter 987 of the laws of 1971, is amended to read as follows:
  2.  Engineers, land surveyors, architects and landscape architects may
join in the formation of a joint  enterprise,  or  a  partnership  or  a
professional service corporation OR A DESIGN PROFESSIONAL SERVICE CORPO-

S. 2987                            11                            A. 4581

RATION  or  may form any desired combination of such professions and may
use in the name of such corporation the title of any of the  professions
which  will  be  practiced.  After  the  name  of each member his OR HER
profession shall be indicated.
  S  17.  This act shall take effect January 1, 2012. Provided, however,
that effective immediately, the addition, amendment and/or repeal of any
rule or regulation necessary for the implementation of this act  on  its
effective  date  are authorized and directed to be made and completed on
or before such effective date.

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