senate Bill S4596A

2013-2014 Legislative Session

Relates to certified public accountants

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Archive: Last Bill Status - Passed Senate


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 10, 2014 referred to higher education
delivered to assembly
passed senate
Jun 09, 2014 ordered to third reading cal.1208
committee discharged and committed to rules
Jun 06, 2014 print number 4596b
amend and recommit to higher education
Mar 07, 2014 print number 4596a
amend (t) and recommit to higher education
Jan 08, 2014 referred to higher education
Apr 12, 2013 referred to higher education

Bill Amendments

Original
A
B (Active)
Original
A
B (Active)

Co-Sponsors

S4596 - Bill Details

See Assembly Version of this Bill:
A9771
Current Committee:
Law Section:
Education Law
Laws Affected:
Amd §7408, Ed L; amd §§1503 & 1525, BC L; amd §§2, 121-1500, 121-1502 & 121-101, Partn L; amd §§1207 & 1301, Lim Lil L

S4596 - Bill Texts

view summary

Relates to certified public accountants.

view sponsor memo
BILL NUMBER:S4596

TITLE OF BILL: An act to amend the education law, in relation to
certified public accountants

PURPOSE: This bill would amend the education law to allow non-CPAs to
be minority owners of CPA firms, consistent with 49 other states and
jurisdictions.

SUMMARY OF PROVISIONS:

Section 7408 of the Education Law is amended as follows:

* Licensed CPAs must hold up to a simple majority of the ownership;

* A licensed CPA or CPA with practice privileges must be responsible
for registration of the firm;

* The partner/owner in charge of attest services must be a licensed
CPA;

* All non-CPA owners must be actively engaged in working for the firm
or an affiliated entity; and

* Passive ownership is not permitted.

JUSTIFICATION: By enacting this legislation, New York would be
joining 49 other states and jurisdictions in allowing for non-CPA
ownership of firms. In 2012, Connecticut enacted similar legislation,
leaving New York as the last state in the region without this proposal
in law. The provisions of the legislation are consistent with and
modeled after sections provided in the Uniform Accountancy Act (UAA).

This legislation is needed so that New York CPA firms can better serve
New York clients. As global competition, the complexity of business
structures and rapid technological breakthroughs continue to redefine
commerce, accounting firms of all sizes, use the services of non-CPAs
to help them navigate the dynamic terrain of today's business
environment. These non-CPA professionals are critically important to
the effectiveness of a CPA practice. In today's world, firms want to
provide the best quality audits and this very often requires the
skills of non-CPAs, such as systems engineers and other IT
professionals, valuation specialists, actuaries, industry experts and
others. Clients have come to expect that these specialists will
participate in the CPA firm's work and the audit work product is
better because of it.

CPA firm work, however, remains just that, the work of a CPA firm.
This legislation limits the percentage of allowed non-CPA firm owners,
ensuring that non-licensees can only ever have a minority interest in
the firm. Further, enacting this legislation will even the playing
field so that New York CPA firms will be permitted to have the same
options to diversity their firm resources as firms in neighboring
states who come in to New York to practice under mobility. In
addition, smaller CPA firms will find it easier to have a succession
plan as they transition to the next generation.


Many clients now expect that a CPA firm will employ non-CPAs with
significant expertise in specialized areas such as information
technology. Therefore, CPA firms have a real need to attract and
retain "the best and brightest" in these areas and to incorporate
these individuals into the firm's culture. The vast majority of states
and jurisdictions have recognized this need and have implemented one
method of doing this which is to give an individual an ownership stake
in the firm so that all of these individuals have a shared interest in
the long-term viability of the firm. This bill will benefit firms, the
profession and the state by attracting additional business and job
opportunities.

LEGISLATIVE HISTORY: This is a new bill, however, current State
Education Department regulations already allow for profit sharing with
non-CPA's in a CPA firm of up to 35%

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.

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

                                  4596

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 12, 2013
                               ___________

Introduced  by  Sen. LAVALLE -- read twice and ordered printed, and when
  printed to be committed to the Committee on Higher Education

AN ACT to amend the education  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:

  Section 1. Subdivision 2 of section 7408  of  the  education  law,  as
amended  by  chapter  651  of  the  laws  of 2008, is amended to read as
follows:
  2. A. No firm shall use the words  "certified  public  accountant"  or
"certified  public  accountants"  or  the  letters  "CPA"  or  "CPAs" in
connection with its name unless the sole proprietor of such firm or each
partner of a partnership or limited liability partnership, member  of  a
limited  liability  company  or  shareholder  of  a professional service
corporation engaged within the United States in the practice  of  public
accountancy  is in good standing as a certified public accountant of one
or more of the states of the United States.   NOTWITHSTANDING ANY  OTHER
PROVISIONS  OF LAW TO THE CONTRARY, AN APPLICANT FOR INITIAL ISSUANCE OR
RENEWAL OF A FIRM  PERMIT  TO  PRACTICE  UNDER  THIS  SECTION  SHALL  BE
REQUIRED  TO  SHOW  (1)  THAT  A SIMPLE MAJORITY OF THE OWNERSHIP OF THE
FIRM, IN TERMS OF FINANCIAL INTERESTS AND  VOTING  RIGHTS  HELD  BY  THE
FIRM'S  OWNERS,  BELONGS  TO  INDIVIDUALS  LICENSED  TO  PRACTICE PUBLIC
ACCOUNTANCY IN SOME STATE, AND (2) THAT ALL PARTNERS OF A PARTNERSHIP OR
LIMITED LIABILITY PARTNERSHIP, OR MEMBERS OF A LIMITED LIABILITY  COMPA-
NY,  OR SHAREHOLDERS OF A PROFESSIONAL SERVICE CORPORATION WHOSE PRINCI-
PAL PLACE OF BUSINESS IS IN THIS STATE, AND WHO ARE ENGAGED IN THE PRAC-
TICE OF PUBLIC ACCOUNTANCY IN THIS STATE, HOLD A  VALID  LICENSE  ISSUED
UNDER  SECTION  SEVENTY-FOUR  HUNDRED FOUR OF THIS ARTICLE OR ARE PUBLIC
ACCOUNTANTS LICENSED UNDER SECTION SEVENTY-FOUR  HUNDRED  FIVE  OF  THIS
ARTICLE.  ALTHOUGH  FIRMS  MAY INCLUDE NON-LICENSEE OWNERS, THE FIRM AND
ITS OWNERS MUST COMPLY WITH RULES PROMULGATED  BY  THE  BOARD.  NOTWITH-

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10267-01-3

S. 4596                             2

STANDING  THE  FOREGOING,  A  FIRM REGISTERED UNDER THIS SECTION MAY NOT
HAVE NON-LICENSEE OWNERS IF THE FIRM'S NAME INCLUDES THE  WORDS  "CERTI-
FIED  PUBLIC  ACCOUNTANT,"  OR  "CERTIFIED  PUBLIC  ACCOUNTANTS," OR THE
ABBREVIATIONS "CPA" OR "CPAS."
  B.  EACH  NON-LICENSEE  OWNER  OF A FIRM THAT IS REGISTERED UNDER THIS
SECTION SHALL BE (1) A NATURAL PERSON WHO ACTIVELY PARTICIPATES  IN  THE
BUSINESS  OF  THE  FIRM  OR  ITS  AFFILIATED ENTITIES, OR (2) AN ENTITY,
INCLUDING, BUT NOT LIMITED TO,  A  PARTNERSHIP  OR  PROFESSIONAL  CORPO-
RATION,  PROVIDED  EACH  BENEFICIAL  OWNER OF AN EQUITY INTEREST IN SUCH
ENTITY IS A NATURAL PERSON WHO ACTIVELY  PARTICIPATES  IN  THE  BUSINESS
CONDUCTED  BY THE FIRM OR ITS AFFILIATED ENTITIES.  FOR PURPOSES OF THIS
SUBDIVISION, "ACTIVELY PARTICIPATE" MEANS TO PROVIDE SERVICES TO CLIENTS
OR TO OTHERWISE INDIVIDUALLY TAKE PART IN  THE  DAY-TO-DAY  BUSINESS  OR
MANAGEMENT OF THE FIRM.
  S 2. This act shall take effect immediately.

Co-Sponsors

S4596A - Bill Details

See Assembly Version of this Bill:
A9771
Current Committee:
Law Section:
Education Law
Laws Affected:
Amd §7408, Ed L; amd §§1503 & 1525, BC L; amd §§2, 121-1500, 121-1502 & 121-101, Partn L; amd §§1207 & 1301, Lim Lil L

S4596A - Bill Texts

view summary

Relates to certified public accountants.

view sponsor memo
BILL NUMBER:S4596A

TITLE OF BILL: An act to amend the education law, the business
corporation law, the partnership law and the limited liability company
law, in relation to certified public accountants

PURPOSE: This bill would amend the education law to allow non-CPAs to
be minority owners of CPA firms, consistent with 49 other states and
jurisdictions.

SUMMARY OF PROVISIONS:

Section 7408 of the Education Law is amended as follows:

* Licensed CPAs must hold up to a simple majority of the ownership;

* A licensed CPA or CPA with practice privileges must be responsible
for registration of the firm;

* The partner/owner in charge of attest services must be a licensed
CPA;

* All non-CPA owners must be actively engaged in working for the firm
or an affiliated entity; and

* Passive ownership is not permitted.

Section 1503 of the Business Corporation Law is amended as follows:

* To allow for non-CPA ownership provisions as defined by the
amendments in section 7408 of the education law, to be applicable to
accounting firms who have incorporated as professional service
corporations.

Section 1525 of the Business Corporation Law is amended as follows:

* To allow for non-CPA ownership provisions as defined by the
amendments to section 7408 of the education law, to be applicable to
accounting firms who have incorporated as foreign professional service
corporations.

Section 2 of the Partnership Law is amended as follows:

* To allow for non-CPA ownership provisions as defined by the
amendments to section 7408 of the education law, to be applicable to
accounting firms who have incorporated as professional partnerships.

Section 121-1500 of the Partnership law is amended as follows:

* To allow for non-CPA ownership provisions as defined by the
amendments to section 7408 of the Education Law, to be applicable to
accounting firms who have incorporated as limited liability
partnerships.

Section 121-1502 of the Partnership law is amended as follows:


* To allow for non-CPA ownership provisions as defined by the
amendments to section 7408 of the Education Law, to be applicable to
accounting firms who have incorporated as foreign limited liability
partnerships.

Section 121-101 of the Partnership Law is amended as follows:

* To allow for non-CPA ownership provisions as defined by the
amendments to section 7408 of the Education Law, to be applicable to
accounting firms who have incorporated as limited partnerships.

Section 1207 of the Limited Liability Company Law is amended as
follows:

* To allow for non-CPA ownership provisions as defined by the
amendments to section 7408 of the Education Law, to be applicable to
accounting firms who have incorporated as professional service limited
liability companies.

Section 1301 of the Limited Liability company Law is amended as
follows:

* To allow for non-CPA ownership provisions as defined by the
amendments to section 7408 of the Education Law, to be applicable to
accounting firms who have incorporated as foreign professional service
limited liability companies.

JUSTIFICATION: By enacting this legislation, New York would be
joining 49 other states and jurisdictions in allowing for non-CPA
ownership of firms. In 2012, Connecticut enacted similar legislation,
leaving New York as the last state in the region without this proposal
in law. The provisions of the legislation are consistent with and
modeled after sections provided in the Uniform Accountancy Act (UAA).

This legislation is needed so that New York CPA firms can better serve
New York clients. As global competition, the complexity of business
structures and rapid technological breakthroughs continue to redefine
commerce, accounting firms of all sizes, use the services of non-CPAs
to help them navigate the dynamic terrain of today's business
environment. These non-CPA professionals are critically important to
the effectiveness of a CPA practice. In today's world, firms want to
provide the best quality audits and this very often requires the
skills of non-CPAs, such as systems engineers and other IT
professionals, valuation specialists, actuaries, industry experts and
others. Clients have come to expect that these specialists will
participate in the CPA firm's work and the audit work product is
better because of it.

CPA firm work, however, remains just that, the work of a CPA firm.
This legislation limits the percentage of allowed non-CPA firm owners,
ensuring that non-licensees can only ever have a minority interest in
the firm. Further, enacting this legislation will even the playing
field so that New York CPA firms will be permitted to have the same
options to diversity their firm resources as firms in neighboring
states who come in to New York to practice under mobility In addition,
smaller CPA firms will find it easier to have a succession plan as
they transition to the next generation.


Many clients now expect that a CPA firm will employ non-CPAs with
significant expertise in specialized areas such as information
technology. Therefore, CPA firms have a real need to attract and
retain "the best and brightest" in these areas and to incorporate
these individuals into the firm's culture. The vast majority of states
and jurisdictions have recognized this need and have implemented one
method of doing this which is to give an individual an ownership stake
in the firm so that all of these individuals have a shared interest in
the long-term viability of the firm. This bill will benefit firms, the
profession and the state by attracting additional business and job
opportunities.

LEGISLATIVE HISTORY: This is a new bill, however, current State
Education Department regulations already allow for profit sharing with
non-CPA's in a CPA firm of up to 35%.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 4596--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 12, 2013
                               ___________

Introduced by Sens. LAVALLE, STAVISKY -- read twice and ordered printed,
  and  when printed to be committed to the Committee on Higher Education
  -- recommitted to the Committee on Higher Education in accordance with
  Senate Rule 6, sec. 8 -- committee discharged, bill  amended,  ordered
  reprinted as amended and recommitted to said committee

AN  ACT  to  amend  the education law, 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:

  Section 1. Subdivision 2 of section 7408  of  the  education  law,  as
amended  by  chapter  651  of  the  laws  of 2008, is amended to read as
follows:
  2. A. No firm shall use the words  "certified  public  accountant"  or
"certified  public  accountants"  or  the  letters  "CPA"  or  "CPAs" in
connection with its name unless the sole proprietor of such firm or each
partner of a partnership or limited liability partnership, member  of  a
limited  liability  company  or  shareholder  of  a professional service
corporation engaged within the United States in the practice  of  public
accountancy  is in good standing as a certified public accountant of one
or more of the states of the United States.   NOTWITHSTANDING ANY  OTHER
PROVISIONS  OF  LAW,  AN  APPLICANT FOR INITIAL ISSUANCE OR RENEWAL OF A
FIRM PERMIT TO PRACTICE UNDER THIS SECTION SHALL BE REQUIRED TO SHOW (1)
THAT A SIMPLE MAJORITY OF THE OWNERSHIP OF THE FIRM, IN TERMS OF  FINAN-
CIAL  INTERESTS,  INCLUDING  OWNERSHIP-BASED  COMPENSATION,  AND  VOTING
RIGHTS HELD BY THE FIRM'S OWNERS, BELONGS  TO  INDIVIDUALS  LICENSED  TO
PRACTICE  PUBLIC ACCOUNTANCY IN SOME STATE, AND (2) THAT ALL PARTNERS OF
A PARTNERSHIP OR LIMITED LIABILITY PARTNERSHIP, OR MEMBERS OF A  LIMITED
LIABILITY COMPANY, OR SHAREHOLDERS OF A PROFESSIONAL SERVICE CORPORATION
WHOSE  PRINCIPAL PLACE OF BUSINESS IS IN THIS STATE, AND WHO ARE ENGAGED
IN THE PRACTICE OF PUBLIC  ACCOUNTANCY  IN  THIS  STATE,  HOLD  A  VALID

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10267-02-4

S. 4596--A                          2

LICENSE  ISSUED  UNDER SECTION SEVENTY-FOUR HUNDRED FOUR OF THIS ARTICLE
OR ARE PUBLIC ACCOUNTANTS LICENSED UNDER  SECTION  SEVENTY-FOUR  HUNDRED
FIVE  OF  THIS  ARTICLE. ALTHOUGH FIRMS MAY INCLUDE NON-LICENSEE OWNERS,
THE FIRM AND ITS OWNERS MUST COMPLY WITH RULES PROMULGATED BY THE BOARD.
NOTWITHSTANDING  THE FOREGOING, A FIRM REGISTERED UNDER THIS SECTION MAY
NOT HAVE NON-LICENSEE OWNERS IF  THE  FIRM'S  NAME  INCLUDES  THE  WORDS
"CERTIFIED PUBLIC ACCOUNTANT," OR "CERTIFIED PUBLIC ACCOUNTANTS," OR THE
ABBREVIATIONS "CPA" OR "CPAS."
  B.  EACH  NON-LICENSEE  OWNER  OF A FIRM THAT IS REGISTERED UNDER THIS
SECTION SHALL BE (1) A NATURAL PERSON WHO ACTIVELY PARTICIPATES  IN  THE
BUSINESS  OF  THE  FIRM  OR  ITS  AFFILIATED ENTITIES, OR (2) AN ENTITY,
INCLUDING, BUT NOT LIMITED TO,  A  PARTNERSHIP  OR  PROFESSIONAL  CORPO-
RATION,  PROVIDED  EACH  BENEFICIAL  OWNER OF AN EQUITY INTEREST IN SUCH
ENTITY IS A NATURAL PERSON WHO ACTIVELY  PARTICIPATES  IN  THE  BUSINESS
CONDUCTED  BY THE FIRM OR ITS AFFILIATED ENTITIES.  FOR PURPOSES OF THIS
SUBDIVISION, "ACTIVELY PARTICIPATE" MEANS TO PROVIDE SERVICES TO CLIENTS
OR TO OTHERWISE INDIVIDUALLY TAKE PART IN  THE  DAY-TO-DAY  BUSINESS  OR
MANAGEMENT OF THE FIRM.
  S 2. Section 1503 of the business corporation law is amended by adding
a new paragraph (h) to read as follows:
  (H) ANY FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF LAWFULLY ENGAGING
IN  THE  PRACTICE OF PUBLIC ACCOUNTANCY THAT IS REGISTERED UNDER SECTION
SEVENTY-FOUR HUNDRED EIGHT OF THE EDUCATION LAW MAY BE INCORPORATED AS A
PROFESSIONAL SERVICE CORPORATION UNDER THIS ARTICLE.  SUCH A FIRM  SHALL
HAVE  ATTACHED  TO  ITS  CERTIFICATE  OF  INCORPORATION A CERTIFICATE OR
CERTIFICATES DEMONSTRATING THE FIRM'S COMPLIANCE  WITH  PARAGRAPH  A  OF
SUBDIVISION  TWO  OF SECTION SEVENTY-FOUR HUNDRED EIGHT OF THE EDUCATION
LAW, IN LIEU OF THE CERTIFICATE OR CERTIFICATES REQUIRED BY SUBPARAGRAPH
(II) OF PARAGRAPH (B) OF THIS SECTION.
  S 3. Paragraph (d) of section 1525 of the business corporation law, as
added by chapter 505 of the laws of 1983, is amended to read as follows:
  (d) "Foreign professional service corporation"  means  a  professional
service corporation, whether or not denominated as such, organized under
the  laws of a jurisdiction other than this state, all of the sharehold-
ers, directors and officers of which  are  authorized  and  licensed  to
practice  the  profession  for  which such corporation is licensed to do
business; except that all shareholders,  directors  and  officers  of  a
foreign  professional service corporation which provides health services
in this state shall be licensed in this state.  ANY FIRM ESTABLISHED FOR
THE BUSINESS PURPOSE OF LAWFULLY ENGAGING  IN  THE  PRACTICE  OF  PUBLIC
ACCOUNTANCY THAT IS LICENSED UNDER SECTION SEVENTY-FOUR HUNDRED EIGHT OF
THE  EDUCATION LAW MAY BE INCORPORATED AS A FOREIGN PROFESSIONAL SERVICE
CORPORATION UNDER THIS ARTICLE.
  S 4. The fourteenth undesignated paragraph of section 2 of  the  part-
nership  law, as added by chapter 576 of the laws of 1994, is amended to
read as follows:
  "Professional partnership" means (1)  a  partnership  without  limited
partners  each  of whose partners is a professional authorized by law to
render a professional service within this state, (2) a partnership with-
out limited partners each of whose partners is a professional, at  least
one of whom is authorized by law to render a professional service within
this  state or (3) a partnership without limited partners authorized by,
or holding a license, certificate, registration or permit issued by  the
licensing  authority  pursuant  to the education law to render a profes-
sional service within this state; except that all partners of a  profes-
sional  partnership that provides medical services in this state must be

S. 4596--A                          3

licensed pursuant to article 131 of the education law to practice  medi-
cine  in  this state and all partners of a professional partnership that
provides dental services in this state  must  be  licensed  pursuant  to
article  133  of  the education law to practice dentistry in this state;
[and further] except that all partners  of  a  professional  partnership
that  provides  professional  engineering, land surveying, architectural
and/or landscape architectural services in this state must  be  licensed
pursuant to article 145, article 147 and/or article 148 of the education
law  to  practice  one  or  more  of such professions in this state; AND
FURTHER EXCEPT THAT ALL PARTNERS  OF  A  PROFESSIONAL  PARTNERSHIP  THAT
PROVIDES  PUBLIC ACCOUNTANCY SERVICES, WHOSE PRINCIPAL PLACE OF BUSINESS
IS IN THIS STATE AND WHO PROVIDE PUBLIC ACCOUNTANCY  SERVICES,  MUST  BE
LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO PRACTICE PUBLIC
ACCOUNTANCY IN THIS STATE.
  S  5.  Subdivision  (q) of section 121-1500 of the partnership law, as
amended by chapter 554 of the laws  of  2013,  is  amended  to  read  as
follows:
  (q)  Each partner of a registered limited liability partnership formed
to provide medical services in this state must be licensed  pursuant  to
article  131 of the education law to practice medicine in this state and
each partner of a registered limited  liability  partnership  formed  to
provide dental services in this state must be licensed pursuant to arti-
cle  133 of the education law to practice dentistry in this state.  Each
partner of a registered limited liability partnership formed to  provide
veterinary  services  in this state must be licensed pursuant to article
135 of the education law to practice veterinary medicine in this  state.
EACH  PARTNER  OF  A  REGISTERED LIMITED LIABILITY PARTNERSHIP FORMED TO
PROVIDE PUBLIC ACCOUNTANCY SERVICES, WHOSE PRINCIPAL PLACE  OF  BUSINESS
IS  IN  THIS STATE AND WHO PROVIDES PUBLIC ACCOUNTANCY SERVICES, MUST BE
LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO PRACTICE PUBLIC
ACCOUNTANCY IN THIS STATE. Each partner of a registered limited  liabil-
ity partnership formed to provide professional engineering, land survey-
ing, architectural and/or landscape architectural services in this state
must be licensed pursuant to article 145, article 147 and/or article 148
of the education law to practice one or more of such professions in this
state. Each partner of a registered limited liability partnership formed
to  provide licensed clinical social work services in this state must be
licensed pursuant to article 154 of the education law to practice  clin-
ical  social  work  in  this state. Each partner of a registered limited
liability partnership formed to provide creative arts  therapy  services
in  this state must be licensed pursuant to article 163 of the education
law to practice creative arts therapy in this state. Each partner  of  a
registered  limited liability partnership formed to provide marriage and
family therapy services in this state must be licensed pursuant to arti-
cle 163 of the education law to practice marriage and family therapy  in
this  state.  Each partner of a registered limited liability partnership
formed to provide mental health counseling services in this  state  must
be  licensed  pursuant  to  article 163 of the education law to practice
mental health counseling in this state. Each  partner  of  a  registered
limited  liability partnership formed to provide psychoanalysis services
in this state must be licensed pursuant to article 163 of the  education
law  to  practice psychoanalysis in this state. Each partner of a regis-
tered limited liability partnership formed to provide  applied  behavior
analysis service in this state must be licensed or certified pursuant to
article  167  of the education law to practice applied behavior analysis
in this state.

S. 4596--A                          4

  S 6. Subdivision (q) of section 121-1502 of the  partnership  law,  as
amended  by  chapter  554  of  the  laws  of 2013, is amended to read as
follows:
  (q)  Each  partner  of  a  foreign limited liability partnership which
provides medical services in this state must  be  licensed  pursuant  to
article  131  of the education law to practice medicine in the state and
each partner of a foreign limited liability partnership  which  provides
dental services in the state must be licensed pursuant to article 133 of
the education law to practice dentistry in this state. Each partner of a
foreign  limited liability partnership which provides veterinary service
in the state shall be licensed pursuant to article 135 of the  education
law  to  practice  veterinary  medicine in this state. Each partner of a
foreign limited liability partnership which provides professional  engi-
neering,  land  surveying,  architectural and/or landscape architectural
services in this state must be licensed pursuant to article 145, article
147 and/or article 148 of the education law to practice one or  more  of
such  professions.  EACH PARTNER OF A REGISTERED FOREIGN LIMITED LIABIL-
ITY PARTNERSHIP FORMED TO PROVIDE  PUBLIC  ACCOUNTANCY  SERVICES,  WHOSE
PRINCIPAL  PLACE  OF  BUSINESS  IS IN THIS STATE AND WHO PROVIDES PUBLIC
ACCOUNTANCY SERVICES, MUST BE LICENSED PURSUANT TO ARTICLE  149  OF  THE
EDUCATION LAW TO PRACTICE PUBLIC ACCOUNTANCY IN THIS STATE. Each partner
of a foreign limited liability partnership which provides licensed clin-
ical  social  work  services  in this state must be licensed pursuant to
article 154 of the education law to practice  licensed  clinical  social
work in this state. Each partner of a foreign limited liability partner-
ship which provides creative arts therapy services in this state must be
licensed  pursuant to article 163 of the education law to practice crea-
tive arts therapy in this state.  Each  partner  of  a  foreign  limited
liability   partnership  which  provides  marriage  and  family  therapy
services in this state must be licensed pursuant to article 163  of  the
education  law  to  practice  marriage and family therapy in this state.
Each partner of a foreign limited liability partnership  which  provides
mental  health counseling services in this state must be licensed pursu-
ant to article 163 of the education law to practice mental health  coun-
seling  in this state. Each partner of a foreign limited liability part-
nership which provides psychoanalysis services in  this  state  must  be
licensed  pursuant  to  article  163  of  the  education law to practice
psychoanalysis in this state. Each partner of a foreign limited  liabil-
ity  partnership  which  provides  applied behavior analysis services in
this state must be licensed or certified pursuant to article 167 of  the
education law to practice applied behavior analysis in this state.
  S  7.  Subdivision  (h)  of section 121-101 of the partnership law, as
added by chapter 950 of the laws of 1990, is amended to read as follows:
  (h) "Limited partnership" and  "domestic  limited  partnership"  mean,
unless  the  context otherwise requires, a partnership (i) formed by two
or more persons pursuant to this article or which complies with subdivi-
sion (a) of section 121-1202 of this article and (ii) having one or more
general partners and one or more limited partners.  ANY FIRM ESTABLISHED
FOR THE BUSINESS PURPOSE OF LAWFULLY ENGAGING IN THE PRACTICE OF  PUBLIC
ACCOUNTANCY THAT IS LICENSED UNDER SECTION SEVENTY-FOUR HUNDRED EIGHT OF
ARTICLE  149 OF THE EDUCATION LAW MAY BE FORMED AS A LIMITED PARTNERSHIP
UNDER THIS ARTICLE.
  S 8. Subdivision (b) of section 1207 of the limited liability  company
law,  as  amended by chapter 554 of the laws of 2013, is amended to read
as follows:

S. 4596--A                          5

  (b) With respect to a professional service limited  liability  company
formed to provide medical services as such services are defined in arti-
cle  131  of  the  education  law, each member of such limited liability
company must be licensed pursuant to article 131 of the education law to
practice  medicine in this state. With respect to a professional service
limited liability company formed to  provide  dental  services  as  such
services are defined in article 133 of the education law, each member of
such  limited liability company must be licensed pursuant to article 133
of the education law to practice dentistry in this state.  With  respect
to  a  professional  service limited liability company formed to provide
veterinary services as such services are defined in article 135  of  the
education  law,  each  member  of such limited liability company must be
licensed pursuant to article 135 of the education law to practice veter-
inary medicine in this state. With respect  to  a  professional  service
limited  liability  company  formed to provide professional engineering,
land surveying, architectural and/or landscape architectural services as
such services are defined in article 145, article 147 and article 148 of
the education law, each member of such limited liability company must be
licensed pursuant to article 145, article 147 and/or article 148 of  the
education law to practice one or more of such professions in this state.
WITH  RESPECT TO A PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY FORMED
TO PROVIDE PUBLIC ACCOUNTANCY SERVICES AS SUCH SERVICES ARE  DEFINED  IN
ARTICLE  149  OF THE EDUCATION LAW EACH MEMBER OF SUCH LIMITED LIABILITY
COMPANY WHOSE PRINCIPAL PLACE OF BUSINESS  IS  IN  THIS  STATE  AND  WHO
PROVIDES PUBLIC ACCOUNTANCY SERVICES, MUST BE LICENSED PURSUANT TO ARTI-
CLE  149  OF  THE  EDUCATION  LAW TO PRACTICE PUBLIC ACCOUNTANCY IN THIS
STATE. With respect to a professional service limited liability  company
formed  to  provide  licensed  clinical  social  work  services  as such
services are defined in article 154 of the education law, each member of
such limited liability company shall be licensed pursuant to article 154
of the education law to practice licensed clinical social work  in  this
state.  With respect to a professional service limited liability company
formed to provide creative arts therapy services as  such  services  are
defined in article 163 of the education law, each member of such limited
liability company must be licensed pursuant to article 163 of the educa-
tion  law  to practice creative arts therapy in this state. With respect
to a professional service limited liability company  formed  to  provide
marriage  and  family  therapy  services as such services are defined in
article 163 of the education law, each member of such limited  liability
company must be licensed pursuant to article 163 of the education law to
practice  marriage  and  family therapy in this state. With respect to a
professional service limited liability company formed to provide  mental
health  counseling  services as such services are defined in article 163
of the education law, each member of such limited liability company must
be licensed pursuant to article 163 of the  education  law  to  practice
mental  health  counseling in this state. With respect to a professional
service limited  liability  company  formed  to  provide  psychoanalysis
services  as  such  services are defined in article 163 of the education
law, each member of such limited  liability  company  must  be  licensed
pursuant  to article 163 of the education law to practice psychoanalysis
in this state. With respect to a professional service limited  liability
company  formed  to  provide  applied behavior analysis services as such
services are defined in article 167 of the education law, each member of
such limited liability company must be licensed or certified pursuant to
article 167 of the education law to practice applied  behavior  analysis
in this state.

S. 4596--A                          6

  S 9. Subdivisions (a) and (f) of section 1301 of the limited liability
company  law,  subdivision  (a) as amended by chapter 554 of the laws of
2013 and subdivision (f) as amended by chapter 170 of the laws of  1996,
are amended to read as follows:
  (a)  "Foreign  professional service limited liability company" means a
professional service limited liability company, whether or  not  denomi-
nated  as  such,  organized  under the laws of a jurisdiction other than
this state, (i) each of whose members and managers, if any, is a profes-
sional authorized by law to render a professional  service  within  this
state  and who is or has been engaged in the practice of such profession
in such professional service limited liability company or a  predecessor
entity, or will engage in the practice of such profession in the profes-
sional  service limited liability company within thirty days of the date
such professional becomes a member, or each of whose members and  manag-
ers,  if  any, is a professional at least one of such members is author-
ized by law to render a professional service within this state  and  who
is  or  has  been  engaged  in  the  practice of such profession in such
professional service limited liability company or a predecessor  entity,
or  will  engage  in the practice of such profession in the professional
service limited liability company within thirty days of  the  date  such
professional  becomes  a  member,  or  (ii)  authorized by, or holding a
license, certificate, registration or permit  issued  by  the  licensing
authority  pursuant  to,  the  education  law  to  render a professional
service within this state; except that all members and managers, if any,
of  a  foreign  professional  service  limited  liability  company  that
provides  health services in this state shall be licensed in this state.
With respect to a foreign professional service limited liability company
which provides veterinary services as such services are defined in arti-
cle 135 of the education law, each member of such  foreign  professional
service  limited liability company shall be licensed pursuant to article
135 of the education law to practice veterinary medicine.  With  respect
to  a  foreign  professional  service  limited  liability  company which
provides medical services as such services are defined in article 131 of
the education law, each member  of  such  foreign  professional  service
limited  liability  company  must be licensed pursuant to article 131 of
the education law to practice medicine in this state.  With respect to a
foreign professional service limited liability  company  which  provides
dental  services  as  such  services  are  defined in article 133 of the
education law, each member of such foreign professional service  limited
liability company must be licensed pursuant to article 133 of the educa-
tion  law to practice dentistry in this state. With respect to a foreign
professional service limited liability company  which  provides  profes-
sional  engineering,  land  surveying,  architectural  and/or  landscape
architectural services as such services  are  defined  in  article  145,
article  147  and  article 148 of the education law, each member of such
foreign professional service limited liability company must be  licensed
pursuant to article 145, article 147 and/or article 148 of the education
law  to  practice  one  or more of such professions in this state.  WITH
RESPECT TO A FOREIGN  PROFESSIONAL  SERVICE  LIMITED  LIABILITY  COMPANY
WHICH  PROVIDES PUBLIC ACCOUNTANCY SERVICES AS SUCH SERVICES ARE DEFINED
IN ARTICLE 149 OF THE EDUCATION LAW, EACH MEMBER OF SUCH FOREIGN PROFES-
SIONAL SERVICE LIMITED LIABILITY COMPANY WHOSE PRINCIPAL PLACE OF  BUSI-
NESS  IS  IN  THIS  STATE  AND WHO PROVIDES PUBLIC ACCOUNTANCY SERVICES,
SHALL BE LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO  PRAC-
TICE PUBLIC ACCOUNTANCY IN THIS STATE. With respect to a foreign profes-
sional  service  limited liability company which provides licensed clin-

S. 4596--A                          7

ical social work services as such services are defined in article 154 of
the education law, each member  of  such  foreign  professional  service
limited  liability  company shall be licensed pursuant to article 154 of
the  education  law to practice clinical social work in this state. With
respect to a foreign  professional  service  limited  liability  company
which  provides  creative  arts  therapy  services  as such services are
defined in article 163 of the education law, each member of such foreign
professional service limited liability company must be licensed pursuant
to article 163 of the education law to practice creative arts therapy in
this state. With respect  to  a  foreign  professional  service  limited
liability company which provides marriage and family therapy services as
such  services  are  defined  in  article 163 of the education law, each
member of such foreign professional service  limited  liability  company
must  be  licensed pursuant to article 163 of the education law to prac-
tice marriage and family therapy  in  this  state.  With  respect  to  a
foreign  professional  service  limited liability company which provides
mental health counseling services as such services are defined in  arti-
cle  163  of the education law, each member of such foreign professional
service limited liability company must be licensed pursuant  to  article
163  of  the  education law to practice mental health counseling in this
state. With respect to a foreign professional service limited  liability
company  which  provides  psychoanalysis  services  as such services are
defined in article 163 of the education law, each member of such foreign
professional service limited liability company must be licensed pursuant
to article 163 of the education law to practice psychoanalysis  in  this
state.  With respect to a foreign professional service limited liability
company which  provides  applied  behavior  analysis  services  as  such
services are defined in article 167 of the education law, each member of
such  foreign  professional  service  limited  liability company must be
licensed or certified pursuant to article 167 of the  education  law  to
practice applied behavior analysis in this state.
  (f) "Professional partnership" means (1) a partnership without limited
partners  each  of whose partners is a professional authorized by law to
render a professional service within this state, (2) a partnership with-
out limited partners each of whose partners is a professional, at  least
one of whom is authorized by law to render a professional service within
this  state or (3) a partnership without limited partners authorized by,
or holding a license, certificate, registration or permit issued by  the
licensing  authority  pursuant  to the education law to render a profes-
sional service within this state; except that all partners of a  profes-
sional  partnership that provides medical services in this state must be
licensed pursuant to article 131 of the education law to practice  medi-
cine  in  this state and all partners of a professional partnership that
provides dental services in this state  must  be  licensed  pursuant  to
article  133  of  the education law to practice dentistry in this state;
except that all partners of a  professional  partnership  that  provides
veterinary  services  in this state must be licensed pursuant to article
135 of the education law to practice veterinary medicine in this  state;
and  further except that all partners of a professional partnership that
provides professional engineering, land surveying, architectural, and/or
landscape architectural services in this state must be licensed pursuant
to article 145, article 147 and/or article 148 of the education  law  to
practice  one  or  more of such professions.   WITH RESPECT TO A PROFES-
SIONAL PARTNERSHIP WHICH PROVIDES PUBLIC ACCOUNTANCY  SERVICES  AS  SUCH
SERVICES ARE DEFINED IN ARTICLE 149 OF THE EDUCATION LAW, EACH MEMBER OF
SUCH  PROFESSIONAL  PARTNERSHIP  WHOSE PRINCIPAL PLACE OF BUSINESS IS IN

S. 4596--A                          8

THIS STATE AND  WHO  PROVIDES  PUBLIC  ACCOUNTANCY  SERVICES,  SHALL  BE
LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO PRACTICE PUBLIC
ACCOUNTANCY.
  S 10. This act shall take effect immediately.

Co-Sponsors

S4596B (ACTIVE) - Bill Details

See Assembly Version of this Bill:
A9771
Current Committee:
Law Section:
Education Law
Laws Affected:
Amd §7408, Ed L; amd §§1503 & 1525, BC L; amd §§2, 121-1500, 121-1502 & 121-101, Partn L; amd §§1207 & 1301, Lim Lil L

S4596B (ACTIVE) - Bill Texts

view summary

Relates to certified public accountants.

view sponsor memo
BILL NUMBER:S4596B

TITLE OF BILL: An act to amend the education law, the business corpo-
ration law, the partnership law and the limited liability company law,
in relation to certified public accountants

PURPOSE: This bill would amend the education law to allow non-CPAs to
be minority owners of CPA firms, consistent with 49 other states and
jurisdictions.

SUMMARY OF PROVISIONS:

Section 7408 of the education law is amended to authorize firms estab-
lished pursuant to the business corporation, partnership and limited
liability company laws to register with the State Education Department.

Section 1503 of the business corporation law is amended to authorize
non-CPA ownership of a firm provided:

* Licensed CPAs must hold up to a simple majority of the ownership;

* A licensed CPA or CPA with practice privileges must be responsible for
registration of the firm;

* The partner/owner in charge of attest services must be a licensed CPA;

* All non-CPA owners must be actively engaged in working for the firm or
an affiliated entity; and

* Passive ownership is not permitted

Section 1507 of the business corporation law is amended to permit the
issuance of shares provided at least 51 percent of the outstanding
shares of stock of the corporation are owned by certified public
accountants, at least 51 percent of the directors and officers are CPAs,
and the president, chairperson of the board and CEO are CPAs.

Section 1508 of the business corporation law is amended to permit non-
licensees to be directors and officers of firms

Section 1509 of the business corporation law is amended to clarify
provisions regarding the disqualification of shareholders, directors,
officers and employees in a professional service corporation incorpo-
rated to allow non-CPA ownership.

Section 1511 of the business corporation law is amended to require the
redemption or purchase of shares within 30 days in the event that a
non-licensed professional shareholder is terminated, unless such shares
are transferred or sold to another employee within the corporation.

Section 1512 of the business corporation law is amended to provide that
the name of the accounting firms established as professional service

corporations may only contain words which could be used in the name of a
partnership practicing accounting at the time of incorporation.

Section 1514 is amended to require that firms established as profes-
sional service corporations furnish statements to the State Education
Department with relevant information for each shareholder, director and
officer.

Section 1525 of the business corporation law is amended to authorize the
incorporation of accounting firms with non-CPA owners as foreign profes-
sional service corporations.

Section 2 of the partnership law is amended to authorize non-CPAs to
become partners of a professional partnership formed to provide accoun-
tancy services.

Section 121-1500 of the partnership law is amended to allow non-CPAs to
become partners in a limited liability partnership formed to provide
accountancy services.

Section 121-1502 of the partnership law is amended to allow non-CPAs to
become partners in a foreign limited liability partnership formed to
provide accountancy services.

Section 121-101 of the partnership law is amended to allow non-CPAs to
become partners in a limited partnership or domestic limited partnership
formed to provide accountancy services.

Section 1207 of the limited liability company law is amended to allow
non-CPAs to become members of a professional service limited liability
company formed to provide accountancy services

Section 1301 of the limited liability company law is amended to allow
non-CPAs to become members of a foreign professional services limited
liability company formed to provide accountancy services.

JUSTIFICATION: By enacting this legislation, New York would be joining
49 other states and jurisdictions in allowing for non-CPA ownership of
firms. In 2012, Connecticut enacted similar legislation, leaving New
York as the last state in the region without this proposal in law. The
provisions of the legislation are consistent with and modeled after
sections provided in the Uniform Accountancy Act (UAA)

This legislation is needed so that New York CPA firms can better serve
New York clients As global competition, the complexity of business
structures and rapid technological breakthroughs continue to redefine
commerce, accounting firms of all sizes, use the services of non-CPAs to
help them navigate the dynamic terrain of today's business environment.
These non-CPA professionals are critically important to the effective-
ness of a CPA practice. In today's world, firms want to provide the best
quality audits and this very often requires the skills of non-CPAs, such
as systems engineers and other IT professionals, valuation specialists,

actuaries, industry experts and others. Clients have come to expect that
these specialists will participate in the CPA firm's work and the audit
work product is better because of it.

CPA firm work, however, remains just that, the work of a CPA firm. This
legislation limits the percentage of allowed non-CPA firm owners, ensur-
ing that non-licensees can only ever have a minority interest in the
firm Further, enacting this legislation will even the playing field so
that New York CPA firms will be permitted to have the same options to
diversity their firm resources as firms in neighboring states who come
in to New York to practice under mobility. In addition, smaller CPA
firms will find it easier to have a succession plan as they transition
to the next generation.

Many clients now expect that a CPA firm will employ non-CPAs with
significant expertise in specialized areas such as information technolo-
gy. Therefore, CPA firms have a real need to attract and retain "the
best and brightest" in these areas and to incorporate these individuals
into the firm's culture The vast majority of states and jurisdictions
have recognized this need and have implemented one method of doing this
which is to give an individual an ownership stake in the firm so that
all of these individuals have a shared interest in the long-term viabil-
ity of the firm. This bill will benefit firms, the profession and the
state by attracting additional business and job opportunities.

LEGISLATIVE HISTORY: This is a new bill, however, current State Educa-
tion Department regulations already allow for profit sharing with
non-CPA's in a CPA firm of up to 35%.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.

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

                                 4596--B

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             April 12, 2013
                               ___________

Introduced by Sens. LAVALLE, STAVISKY -- read twice and ordered printed,
  and  when printed to be committed to the Committee on Higher Education
  -- recommitted to the Committee on Higher Education in accordance with
  Senate Rule 6, sec. 8 -- committee discharged, bill  amended,  ordered
  reprinted  as  amended  and recommitted to said committee -- committee
  discharged, bill amended, ordered reprinted as amended and recommitted
  to said committee

AN ACT to amend the education law, 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:

  Section  1.  Section  7408 of the education law is amended by adding a
new subdivision 6 to read as follows:
  6. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, ANY FIRM ESTABLISHED TO
LAWFULLY ENGAGE IN THE PRACTICE OF PUBLIC ACCOUNTANCY PURSUANT TO  ARTI-
CLE FIFTEEN OF THE BUSINESS CORPORATION LAW, ARTICLES ONE AND EIGHT-B OF
THE  PARTNERSHIP  LAW,  OR  ARTICLES  TWELVE AND THIRTEEN OF THE LIMITED
LIABILITY COMPANY LAW SHALL BE DEEMED AUTHORIZED TO REGISTER PURSUANT TO
THIS SECTION.
  S 2. Section 1503 of the business corporation law is amended by adding
a new paragraph (h) to read as follows:
  (H) ANY FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF INCORPORATING  AS
A  PROFESSIONAL  SERVICE  CORPORATION  FORMED  TO LAWFULLY ENGAGE IN THE
PRACTICE OF PUBLIC ACCOUNTANCY, AS SUCH PRACTICE IS RESPECTIVELY DEFINED
UNDER ARTICLE ONE HUNDRED FORTY-NINE  OF  THE  EDUCATION  LAW  SHALL  BE
REQUIRED  TO  SHOW  (1)  THAT  A SIMPLE MAJORITY OF THE OWNERSHIP OF THE
FIRM, IN TERMS OF FINANCIAL INTERESTS, INCLUDING OWNERSHIP-BASED COMPEN-
SATION, AND VOTING RIGHTS HELD BY THE FIRM'S OWNERS, BELONGS TO INDIVID-
UALS LICENSED TO PRACTICE PUBLIC ACCOUNTANCY IN SOME STATE, AND (2) THAT
ALL SHAREHOLDERS OF A PROFESSIONAL SERVICE CORPORATION  WHOSE  PRINCIPAL

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10267-07-4

S. 4596--B                          2

PLACE  OF BUSINESS IS IN THIS STATE, AND WHO ARE ENGAGED IN THE PRACTICE
OF PUBLIC ACCOUNTANCY IN THIS STATE, HOLD A VALID LICENSE  ISSUED  UNDER
SECTION  SEVENTY-FOUR  HUNDRED  FOUR  OF THE EDUCATION LAW OR ARE PUBLIC
ACCOUNTANTS  LICENSED  UNDER  SECTION  SEVENTY-FOUR  HUNDRED FIVE OF THE
EDUCATION LAW. ALTHOUGH FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE  FIRM
AND ITS OWNERS MUST COMPLY WITH RULES PROMULGATED BY THE STATE BOARD FOR
PUBLIC ACCOUNTANCY.  NOTWITHSTANDING THE PROVISIONS OF THIS PARAGRAPH, A
FIRM INCORPORATED UNDER THIS SECTION MAY NOT HAVE NON-LICENSEE OWNERS IF
THE  FIRM'S  NAME  INCLUDES  THE WORDS "CERTIFIED PUBLIC ACCOUNTANT," OR
"CERTIFIED PUBLIC ACCOUNTANTS," OR THE ABBREVIATIONS  "CPA"  OR  "CPAS".
EACH  NON-LICENSEE  OWNER  OF  A  FIRM  THAT  IS INCORPORATED UNDER THIS
SECTION SHALL BE (1) A NATURAL PERSON WHO ACTIVELY PARTICIPATES  IN  THE
BUSINESS  OF  THE  FIRM  OR  ITS  AFFILIATED ENTITIES, OR (2) AN ENTITY,
INCLUDING, BUT NOT LIMITED TO,  A  PARTNERSHIP  OR  PROFESSIONAL  CORPO-
RATION,  PROVIDED  EACH  BENEFICIAL  OWNER OF AN EQUITY INTEREST IN SUCH
ENTITY IS A NATURAL PERSON WHO ACTIVELY  PARTICIPATES  IN  THE  BUSINESS
CONDUCTED  BY  THE FIRM OR ITS AFFILIATED ENTITIES. FOR PURPOSES OF THIS
SUBDIVISION, "ACTIVELY PARTICIPATE" MEANS TO PROVIDE SERVICES TO CLIENTS
OR TO OTHERWISE INDIVIDUALLY TAKE PART IN  THE  DAY-TO-DAY  BUSINESS  OR
MANAGEMENT  OF  THE FIRM. SUCH A FIRM SHALL HAVE ATTACHED TO ITS CERTIF-
ICATE OF INCORPORATION A CERTIFICATE OR CERTIFICATES  DEMONSTRATING  THE
FIRM'S  COMPLIANCE  WITH  THIS  PARAGRAPH, IN LIEU OF THE CERTIFICATE OR
CERTIFICATES REQUIRED BY SUBPARAGRAPH (II)  OF  PARAGRAPH  (B)  OF  THIS
SECTION.
  S 3. Section 1507 of the business corporation law is amended by adding
a new paragraph (c) to read as follows:
  (C)  ANY FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF INCORPORATING AS
A PROFESSIONAL SERVICE CORPORATION PURSUANT TO PARAGRAPH (H) OF  SECTION
FIFTEEN  HUNDRED  THREE  OF THIS ARTICLE 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  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  AND  MAY  ALSO  ISSUE SHARES TO EMPLOYEES OF THE CORPORATION NOT
LICENSED AS CERTIFIED PUBLIC ACCOUNTANTS, PROVIDED THAT:
  (I) AT LEAST FIFTY-ONE PERCENT OF THE OUTSTANDING SHARES OF  STOCK  OF
THE CORPORATION ARE OWNED BY CERTIFIED PUBLIC ACCOUNTANTS,
  (II)  AT LEAST FIFTY-ONE PERCENT OF THE DIRECTORS ARE CERTIFIED PUBLIC
ACCOUNTANTS,
  (III) AT LEAST FIFTY-ONE PERCENT OF THE OFFICERS ARE CERTIFIED  PUBLIC
ACCOUNTANTS,
  (IV)  THE PRESIDENT, THE CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE
CHIEF EXECUTIVE OFFICER OR OFFICERS ARE  CERTIFIED  PUBLIC  ACCOUNTANTS.
NO  SHAREHOLDER OF A FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF INCOR-
PORATING AS A PROFESSIONAL SERVICE CORPORATION PURSUANT TO PARAGRAPH (H)
OF SECTION FIFTEEN HUNDRED THREE OF THIS  ARTICLE  SHALL  ENTER  INTO  A
VOTING  TRUST AGREEMENT, PROXY OR ANY OTHER TYPE OF AGREEMENT 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 4. Section 1508 of the business corporation law is amended by adding
a new paragraph (c) to read as follows:
  (C)  THE  DIRECTORS AND OFFICERS OF ANY FIRM ESTABLISHED FOR THE BUSI-
NESS PURPOSE OF INCORPORATING  AS  A  PROFESSIONAL  SERVICE  CORPORATION

S. 4596--B                          3

PURSUANT TO PARAGRAPH (H) OF SECTION FIFTEEN HUNDRED THREE OF THIS ARTI-
CLE  MAY  INCLUDE  INDIVIDUALS  WHO  ARE NOT LICENSED TO PRACTICE PUBLIC
ACCOUNTANCY, PROVIDED HOWEVER THAT AT LEAST  FIFTY-ONE  PERCENT  OF  THE
DIRECTORS, AT LEAST FIFTY-ONE PERCENT OF THE OFFICERS AND THE PRESIDENT,
THE  CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE CHIEF EXECUTIVE OFFI-
CER 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 5. Section 1509 of the business corporation law, as amended by chap-
ter 550 of the laws of 2011, is amended to read as follows:
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, OR ANY FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF  INCORPORAT-
ING  AS  A PROFESSIONAL SERVICE CORPORATION PURSUANT TO PARAGRAPH (H) OF
SECTION FIFTEEN HUNDRED THREE OF THIS ARTICLE, who  has  been  rendering
professional service to the public becomes legally disqualified to prac-
tice  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  profes-
sional  services  by  a  person  elected or appointed to a public office
shall be applicable to a shareholder, 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  shareholder  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, whichever 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  compli-
ance with this provision shall constitute a ground for forfeiture of its
certificate of incorporation and its dissolution.
  S 6. Paragraph (a) of section 1511 of the business corporation law, as
amended by chapter 550 of the laws of 2011, is amended and new paragraph
(c) is added to read as follows:
  (a) No shareholder of a professional service corporation [or], INCLUD-
ING  a  design professional service corporation, OR ANY FIRM ESTABLISHED
FOR THE BUSINESS PURPOSE OF  INCORPORATING  AS  A  PROFESSIONAL  SERVICE
CORPORATION  PURSUANT  TO PARAGRAPH (H) OF SECTION FIFTEEN HUNDRED THREE
OF THIS ARTICLE, 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  individual  who
would  be  eligible  to receive shares if he were employed by the corpo-
ration. Nothing herein contained shall  be  construed  to  prohibit  the
transfer of shares by operation of law or by court decree.  No transfer-
ee of shares by operation of law or court decree may vote the shares for
any  purpose  whatsoever  except  with respect to corporate action under
sections 909 and 1001 of this chapter. The restriction in the  preceding
sentence shall not apply, however, where such transferee would be eligi-
ble  to  have  shares issued to him if he were an employee of the corpo-
ration and, if there are other shareholders, a majority  of  such  other
shareholders shall fail to redeem the shares so transferred, pursuant to

S. 4596--B                          4

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 share-
holder,  may be made only after the same shall have been approved by the
board of directors, 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  incorpo-
ration  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 incorporation or the by-laws of the profes-
sional service corporation, or the professional service corporation  and
the  shareholders  by  private  agreement, 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 corpo-
ration 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.
  (C) A FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF INCORPORATING AS  A
PROFESSIONAL  SERVICE  CORPORATION  PURSUANT TO PARAGRAPH (H) OF SECTION
FIFTEEN HUNDRED THREE OF THIS ARTICLE,  SHALL  PURCHASE  OR  REDEEM  THE
SHARES  OF A NON-LICENSED PROFESSIONAL SHAREHOLDER IN THE CASE OF HIS OR
HER TERMINATION OF EMPLOYMENT WITHIN THIRTY DAYS AFTER SUCH TERMINATION.
A FIRM ESTABLISHED FOR  THE  BUSINESS  PURPOSE  OF  INCORPORATING  AS  A
PROFESSIONAL  SERVICE  CORPORATION  PURSUANT TO PARAGRAPH (H) OF SECTION
FIFTEEN HUNDRED THREE OF THIS ARTICLE, SHALL NOT BE REQUIRED TO PURCHASE
OR REDEEM THE SHARES OF A TERMINATED  NON-LICENSED  PROFESSIONAL  SHARE-
HOLDER  IF  SUCH  SHARES, WITHIN THIRTY DAYS AFTER SUCH TERMINATION, ARE
SOLD OR TRANSFERRED TO ANOTHER EMPLOYEE OF THE CORPORATION  PURSUANT  TO
THIS ARTICLE.
  S 7. Paragraph (a) of section 1512 of the business corporation law, as
amended  by  chapter  550  of  the  laws  of 2011, is amended to read as
follows:
  (a) Notwithstanding any other provision of law, the name of a  profes-
sional  service  corporation,  including  a  design professional service
corporation AND ANY FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF  INCOR-
PORATING AS A PROFESSIONAL SERVICE CORPORATION PURSUANT TO PARAGRAPH (H)
OF  SECTION  FIFTEEN HUNDRED THREE OF THIS ARTICLE, 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.
  S 8. Section 1514 of the business corporation law is amended by adding
a new paragraph (c) to read as follows:

S. 4596--B                          5

  (C) EACH FIRM ESTABLISHED FOR THE BUSINESS PURPOSE OF INCORPORATING AS
A  PROFESSIONAL SERVICE CORPORATION PURSUANT TO PARAGRAPH (H) OF SECTION
FIFTEEN HUNDRED THREE OF THIS ARTICLE 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) AT LEAST FIFTY-ONE PERCENT OF THE OUTSTANDING SHARES OF  STOCK  OF
THE CORPORATION ARE AND WERE OWNED BY CERTIFIED PUBLIC ACCOUNTANTS,
  (II)  AT  LEAST FIFTY-ONE PERCENT OF THE DIRECTORS ARE AND WERE CERTI-
FIED PUBLIC ACCOUNTANTS,
  (III) AT LEAST FIFTY-ONE PERCENT OF THE OFFICERS ARE AND  WERE  CERTI-
FIED PUBLIC ACCOUNTANTS,
  (IV)  THE PRESIDENT, THE CHAIRPERSON OF THE BOARD OF DIRECTORS AND THE
CHIEF EXECUTIVE OFFICER  OR  OFFICERS  ARE  AND  WERE  CERTIFIED  PUBLIC
ACCOUNTANTS.
THE  STATEMENT  SHALL BE SIGNED BY THE PRESIDENT OR ANY CERTIFIED PUBLIC
ACCOUNTANT VICE-PRESIDENT AND  ATTESTED  TO  BY  THE  SECRETARY  OR  ANY
ASSISTANT SECRETARY OF THE CORPORATION.
  S 9. Paragraph (d) of section 1525 of the business corporation law, as
added by chapter 505 of the laws of 1983, is amended to read as follows:
  (d) "Foreign  professional  service  corporation" means a professional
service corporation, whether or not denominated as such, organized under
the laws of a jurisdiction other than this state, all of the  sharehold-
ers,  directors  and  officers  of  which are authorized and licensed to
practice the profession for which such corporation  is  licensed  to  do
business;  except  that  all  shareholders,  directors and officers of a
foreign professional service corporation which provides health  services
in this state shall be licensed in this state. NOTWITHSTANDING ANY OTHER
PROVISION  OF  LAW  A FOREIGN PROFESSIONAL SERVICE CORPORATION FORMED TO
LAWFULLY ENGAGE IN THE PRACTICE OF PUBLIC ACCOUNTANCY, AS SUCH  PRACTICE
IS  RESPECTIVELY  DEFINED  UNDER  ARTICLE  ONE HUNDRED FORTY-NINE OF THE
EDUCATION LAW, SHALL BE REQUIRED TO SHOW (1) THAT A SIMPLE  MAJORITY  OF
THE  OWNERSHIP  OF  THE FIRM, IN TERMS OF FINANCIAL INTERESTS, INCLUDING
OWNERSHIP-BASED COMPENSATION, AND  VOTING  RIGHTS  HELD  BY  THE  FIRM'S
OWNERS,  BELONGS  TO INDIVIDUALS LICENSED TO PRACTICE PUBLIC ACCOUNTANCY
IN SOME STATE, AND (2) THAT ALL SHAREHOLDERS OF A  FOREIGN  PROFESSIONAL
SERVICE  CORPORATION WHOSE PRINCIPAL PLACE OF BUSINESS IS IN THIS STATE,
AND WHO ARE ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY IN THIS STATE,
HOLD A VALID LICENSE ISSUED UNDER SECTION SEVENTY-FOUR HUNDRED  FOUR  OF
THE  EDUCATION  LAW  OR  ARE  PUBLIC  ACCOUNTANTS LICENSED UNDER SECTION
SEVENTY-FOUR HUNDRED FIVE OF  THE  EDUCATION  LAW.  ALTHOUGH  FIRMS  MAY
INCLUDE  NON-LICENSEE  OWNERS,  THE FIRM AND ITS OWNERS MUST COMPLY WITH
RULES PROMULGATED BY THE STATE BOARD FOR PUBLIC ACCOUNTANCY.    NOTWITH-
STANDING  THE  FOREGOING,  A  FIRM REGISTERED UNDER THIS SECTION MAY NOT
HAVE NON-LICENSEE OWNERS IF THE FIRM'S NAME INCLUDES THE  WORDS  "CERTI-
FIED  PUBLIC  ACCOUNTANT,"  OR  "CERTIFIED  PUBLIC  ACCOUNTANTS," OR THE
ABBREVIATIONS "CPA" OR "CPAS." EACH NON-LICENSEE OWNER OF A FIRM THAT IS
INCORPORATED UNDER THIS SECTION  SHALL  BE  (1)  A  NATURAL  PERSON  WHO
ACTIVELY  PARTICIPATES  IN  THE  BUSINESS  OF THE FIRM OR ITS AFFILIATED
ENTITIES, OR (2) AN ENTITY, INCLUDING, BUT NOT LIMITED TO, A PARTNERSHIP
OR PROFESSIONAL CORPORATION, PROVIDED EACH BENEFICIAL OWNER OF AN EQUITY
INTEREST IN SUCH ENTITY IS A NATURAL PERSON WHO ACTIVELY PARTICIPATES IN
THE BUSINESS CONDUCTED BY THE  FIRM  OR  ITS  AFFILIATED  ENTITIES.  FOR
PURPOSES  OF  THIS  SUBDIVISION, "ACTIVELY PARTICIPATE" MEANS TO PROVIDE

S. 4596--B                          6

SERVICES TO CLIENTS OR  TO  OTHERWISE  INDIVIDUALLY  TAKE  PART  IN  THE
DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.
  S  10. The fourteenth undesignated paragraph of section 2 of the part-
nership law, as added by chapter 576 of the laws of 1994, is amended  to
read as follows:
  "Professional  partnership"  means  (1)  a partnership without limited
partners each of whose partners is a professional authorized by  law  to
render a professional service within this state, (2) a partnership with-
out  limited partners each of whose partners is a professional, at least
one of whom is authorized by law to render a professional service within
this state or (3) a partnership without limited partners authorized  by,
or  holding a license, certificate, registration or permit issued by the
licensing authority pursuant to the education law to  render  a  profes-
sional  service within this state; except that all partners of a profes-
sional partnership that provides medical services in this state must  be
licensed  pursuant to article 131 of the education law to practice medi-
cine in this state and all partners of a professional  partnership  that
provides  dental  services  in  this  state must be licensed pursuant to
article 133 of the education law to practice dentistry  in  this  state;
[and  further]  except  that  all partners of a professional partnership
that provides professional engineering,  land  surveying,  architectural
and/or  landscape  architectural services in this state must be licensed
pursuant to article 145, article 147 and/or article 148 of the education
law to practice one or more of  such  professions  in  this  state;  AND
FURTHER  EXCEPT  THAT  ALL  PARTNERS  OF A PROFESSIONAL PARTNERSHIP THAT
PROVIDES PUBLIC ACCOUNTANCY SERVICES, WHOSE PRINCIPAL PLACE OF  BUSINESS
IS  IN  THIS  STATE AND WHO PROVIDE PUBLIC ACCOUNTANCY SERVICES, MUST BE
LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO PRACTICE PUBLIC
ACCOUNTANCY IN THIS STATE.  NOTWITHSTANDING ANY OTHER PROVISIONS OF  LAW
A  PROFESSIONAL PARTNERSHIP FORMED TO LAWFULLY ENGAGE IN THE PRACTICE OF
PUBLIC ACCOUNTANCY, AS SUCH PRACTICE IS RESPECTIVELY DEFINED UNDER ARTI-
CLE 149 OF THE EDUCATION LAW, SHALL BE  REQUIRED  TO  SHOW  (1)  THAT  A
SIMPLE  MAJORITY  OF  THE  OWNERSHIP  OF THE FIRM, IN TERMS OF FINANCIAL
INTERESTS, INCLUDING OWNERSHIP-BASED  COMPENSATION,  AND  VOTING  RIGHTS
HELD  BY  THE FIRM'S OWNERS, BELONGS TO INDIVIDUALS LICENSED TO PRACTICE
PUBLIC ACCOUNTANCY IN SOME STATE, AND (2) THAT  ALL  SHAREHOLDERS  OF  A
PROFESSIONAL  PARTNERSHIP  WHOSE  PRINCIPAL PLACE OF BUSINESS IS IN THIS
STATE, AND WHO ARE ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY IN THIS
STATE, HOLD A VALID LICENSE ISSUED UNDER SECTION 7404 OF  THE  EDUCATION
LAW  OR ARE PUBLIC ACCOUNTANTS LICENSED UNDER SECTION 7405 OF THE EDUCA-
TION LAW. ALTHOUGH FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE  FIRM  AND
ITS  OWNERS  MUST  COMPLY  WITH RULES PROMULGATED BY THE STATE BOARD FOR
PUBLIC ACCOUNTANCY.  NOTWITHSTANDING THE FOREGOING,  A  FIRM  REGISTERED
UNDER  THIS  SECTION MAY NOT HAVE NON-LICENSEE OWNERS IF THE FIRM'S NAME
INCLUDES THE WORDS "CERTIFIED PUBLIC ACCOUNTANT," OR  "CERTIFIED  PUBLIC
ACCOUNTANTS,"  OR  THE  ABBREVIATIONS "CPA" OR "CPAS." EACH NON-LICENSEE
OWNER OF A FIRM THAT IS INCORPORATED UNDER THIS SECTION SHALL BE  (1)  A
NATURAL  PERSON WHO ACTIVELY PARTICIPATES IN THE BUSINESS OF THE FIRM OR
ITS AFFILIATED ENTITIES, OR (2) AN ENTITY, INCLUDING,  BUT  NOT  LIMITED
TO,  A PARTNERSHIP OR PROFESSIONAL CORPORATION, PROVIDED EACH BENEFICIAL
OWNER OF AN EQUITY INTEREST IN SUCH  ENTITY  IS  A  NATURAL  PERSON  WHO
ACTIVELY  PARTICIPATES  IN  THE  BUSINESS  CONDUCTED  BY THE FIRM OR ITS
AFFILIATED ENTITIES. FOR PURPOSES OF THIS SUBDIVISION, "ACTIVELY PARTIC-
IPATE" MEANS TO PROVIDE SERVICES TO CLIENTS OR TO OTHERWISE INDIVIDUALLY
TAKE PART IN THE DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.

S. 4596--B                          7

  S 11. Subdivision (q) of section 121-1500 of the partnership  law,  as
amended  by  chapter  554  of  the  laws  of 2013, is amended to read as
follows:
  (q)  Each partner of a registered limited liability partnership formed
to provide medical services in this state must be licensed  pursuant  to
article  131 of the education law to practice medicine in this state and
each partner of a registered limited  liability  partnership  formed  to
provide dental services in this state must be licensed pursuant to arti-
cle  133 of the education law to practice dentistry in this state.  Each
partner of a registered limited liability partnership formed to  provide
veterinary  services  in this state must be licensed pursuant to article
135 of the education law to practice veterinary medicine in this  state.
EACH  PARTNER  OF  A  REGISTERED LIMITED LIABILITY PARTNERSHIP FORMED TO
PROVIDE PUBLIC ACCOUNTANCY SERVICES, WHOSE PRINCIPAL PLACE  OF  BUSINESS
IS  IN  THIS STATE AND WHO PROVIDES PUBLIC ACCOUNTANCY SERVICES, MUST BE
LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO PRACTICE PUBLIC
ACCOUNTANCY IN THIS STATE. Each partner of a registered limited  liabil-
ity partnership formed to provide professional engineering, land survey-
ing, architectural and/or landscape architectural services in this state
must be licensed pursuant to article 145, article 147 and/or article 148
of the education law to practice one or more of such professions in this
state. Each partner of a registered limited liability partnership formed
to  provide licensed clinical social work services in this state must be
licensed pursuant to article 154 of the education law to practice  clin-
ical  social  work  in  this state. Each partner of a registered limited
liability partnership formed to provide creative arts  therapy  services
in  this state must be licensed pursuant to article 163 of the education
law to practice creative arts therapy in this state. Each partner  of  a
registered  limited liability partnership formed to provide marriage and
family therapy services in this state must be licensed pursuant to arti-
cle 163 of the education law to practice marriage and family therapy  in
this  state.  Each partner of a registered limited liability partnership
formed to provide mental health counseling services in this  state  must
be  licensed  pursuant  to  article 163 of the education law to practice
mental health counseling in this state. Each  partner  of  a  registered
limited  liability partnership formed to provide psychoanalysis services
in this state must be licensed pursuant to article 163 of the  education
law  to  practice psychoanalysis in this state. Each partner of a regis-
tered limited liability partnership formed to provide  applied  behavior
analysis service in this state must be licensed or certified pursuant to
article  167  of the education law to practice applied behavior analysis
in this state.  NOTWITHSTANDING ANY OTHER PROVISIONS OF  LAW  A  LIMITED
LIABILITY  PARTNERSHIP  FORMED  TO  LAWFULLY  ENGAGE  IN THE PRACTICE OF
PUBLIC ACCOUNTANCY, AS SUCH PRACTICE IS RESPECTIVELY DEFINED UNDER ARTI-
CLE 149 OF THE EDUCATION LAW, SHALL BE  REQUIRED  TO  SHOW  (1)  THAT  A
SIMPLE  MAJORITY  OF  THE  OWNERSHIP  OF THE FIRM, IN TERMS OF FINANCIAL
INTERESTS, INCLUDING OWNERSHIP-BASED  COMPENSATION,  AND  VOTING  RIGHTS
HELD  BY  THE FIRM'S OWNERS, BELONGS TO INDIVIDUALS LICENSED TO PRACTICE
PUBLIC ACCOUNTANCY IN SOME STATE, AND (2) THAT ALL PARTNERS OF A LIMITED
LIABILITY PARTNERSHIP WHOSE PRINCIPAL  PLACE  OF  BUSINESS  IS  IN  THIS
STATE, AND WHO ARE ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY IN THIS
STATE,  HOLD  A VALID LICENSE ISSUED UNDER SECTION 7404 OF THE EDUCATION
LAW OR ARE PUBLIC ACCOUNTANTS LICENSED UNDER SECTION 7405 OF THE  EDUCA-
TION  LAW.  ALTHOUGH FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE FIRM AND
ITS OWNERS MUST COMPLY WITH RULES PROMULGATED BY  THE  STATE  BOARD  FOR
PUBLIC  ACCOUNTANCY.    NOTWITHSTANDING THE FOREGOING, A FIRM REGISTERED

S. 4596--B                          8

UNDER THIS SECTION MAY NOT HAVE NON-LICENSEE OWNERS IF THE  FIRM'S  NAME
INCLUDES  THE  WORDS "CERTIFIED PUBLIC ACCOUNTANT," OR "CERTIFIED PUBLIC
ACCOUNTANTS," OR THE ABBREVIATIONS "CPA" OR  "CPAS."  EACH  NON-LICENSEE
OWNER  OF  A FIRM THAT IS INCORPORATED UNDER THIS SECTION SHALL BE (1) A
NATURAL PERSON WHO ACTIVELY PARTICIPATES IN THE BUSINESS OF THE FIRM  OR
ITS  AFFILIATED  ENTITIES,  OR (2) AN ENTITY, INCLUDING, BUT NOT LIMITED
TO, A PARTNERSHIP OR PROFESSIONAL CORPORATION, PROVIDED EACH  BENEFICIAL
OWNER  OF  AN  EQUITY  INTEREST  IN  SUCH ENTITY IS A NATURAL PERSON WHO
ACTIVELY PARTICIPATES IN THE BUSINESS  CONDUCTED  BY  THE  FIRM  OR  ITS
AFFILIATED ENTITIES. FOR PURPOSES OF THIS SUBDIVISION, "ACTIVELY PARTIC-
IPATE" MEANS TO PROVIDE SERVICES TO CLIENTS OR TO OTHERWISE INDIVIDUALLY
TAKE PART IN THE DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.
  S  12.  Subdivision (q) of section 121-1502 of the partnership law, as
amended by chapter 554 of the laws  of  2013,  is  amended  to  read  as
follows:
  (q)  Each  partner  of  a  foreign limited liability partnership which
provides medical services in this state must  be  licensed  pursuant  to
article  131  of the education law to practice medicine in the state and
each partner of a foreign limited liability partnership  which  provides
dental services in the state must be licensed pursuant to article 133 of
the education law to practice dentistry in this state. Each partner of a
foreign  limited liability partnership which provides veterinary service
in the state shall be licensed pursuant to article 135 of the  education
law  to  practice  veterinary  medicine in this state. Each partner of a
foreign limited liability partnership which provides professional  engi-
neering,  land  surveying,  architectural and/or landscape architectural
services in this state must be licensed pursuant to article 145, article
147 and/or article 148 of the education law to practice one or  more  of
such professions. EACH PARTNER OF A FOREIGN REGISTERED LIMITED LIABILITY
PARTNERSHIP FORMED TO PROVIDE PUBLIC ACCOUNTANCY SERVICES, WHOSE PRINCI-
PAL  PLACE  OF BUSINESS IS IN THIS STATE AND WHO PROVIDES PUBLIC ACCOUN-
TANCY SERVICES, MUST BE LICENSED PURSUANT TO ARTICLE 149 OF  THE  EDUCA-
TION LAW TO PRACTICE PUBLIC ACCOUNTANCY IN THIS STATE. Each partner of a
foreign  limited  liability partnership which provides licensed clinical
social work services in this state must be licensed pursuant to  article
154  of  the  education law to practice licensed clinical social work in
this state. Each partner of  a  foreign  limited  liability  partnership
which  provides  creative  arts  therapy  services in this state must be
licensed pursuant to article 163 of the education law to practice  crea-
tive  arts  therapy  in  this  state.  Each partner of a foreign limited
liability  partnership  which  provides  marriage  and  family   therapy
services  in  this state must be licensed pursuant to article 163 of the
education law to practice marriage and family  therapy  in  this  state.
Each  partner  of a foreign limited liability partnership which provides
mental health counseling services in this state must be licensed  pursu-
ant  to article 163 of the education law to practice mental health coun-
seling in this state. Each partner of a foreign limited liability  part-
nership  which  provides  psychoanalysis  services in this state must be
licensed pursuant to article  163  of  the  education  law  to  practice
psychoanalysis  in this state. Each partner of a foreign limited liabil-
ity partnership which provides applied  behavior  analysis  services  in
this  state must be licensed or certified pursuant to article 167 of the
education law to practice  applied  behavior  analysis  in  this  state.
NOTWITHSTANDING  ANY OTHER PROVISIONS OF LAW A FOREIGN LIMITED LIABILITY
PARTNERSHIP FORMED TO LAWFULLY ENGAGE IN THE PRACTICE OF PUBLIC  ACCOUN-
TANCY, AS SUCH PRACTICE IS RESPECTIVELY DEFINED UNDER ARTICLE 149 OF THE

S. 4596--B                          9

EDUCATION  LAW,  SHALL BE REQUIRED TO SHOW (1) THAT A SIMPLE MAJORITY OF
THE OWNERSHIP OF THE FIRM, IN TERMS OF  FINANCIAL  INTERESTS,  INCLUDING
OWNERSHIP-BASED  COMPENSATION,  AND  VOTING  RIGHTS  HELD  BY THE FIRM'S
OWNERS,  BELONGS  TO INDIVIDUALS LICENSED TO PRACTICE PUBLIC ACCOUNTANCY
IN SOME STATE, AND (2) THAT ALL PARTNERS OF A FOREIGN LIMITED  LIABILITY
PARTNERSHIP  WHOSE PRINCIPAL PLACE OF BUSINESS IS IN THIS STATE, AND WHO
ARE ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY IN THIS STATE, HOLD  A
VALID  LICENSE  ISSUED  UNDER  SECTION  7404 OF THE EDUCATION LAW OR ARE
PUBLIC ACCOUNTANTS LICENSED UNDER SECTION 7405  OF  THE  EDUCATION  LAW.
ALTHOUGH  FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE FIRM AND ITS OWNERS
MUST COMPLY WITH RULES PROMULGATED BY THE STATE BOARD FOR PUBLIC ACCOUN-
TANCY.   NOTWITHSTANDING THE FOREGOING, A  FIRM  REGISTERED  UNDER  THIS
SECTION MAY NOT HAVE NON-LICENSEE OWNERS IF THE FIRM'S NAME INCLUDES THE
WORDS  "CERTIFIED PUBLIC ACCOUNTANT," OR "CERTIFIED PUBLIC ACCOUNTANTS,"
OR THE ABBREVIATIONS "CPA" OR "CPAS." EACH NON-LICENSEE OWNER OF A  FIRM
THAT  IS  INCORPORATED  UNDER THIS SECTION SHALL BE (1) A NATURAL PERSON
WHO ACTIVELY PARTICIPATES IN THE BUSINESS OF THE FIRM OR ITS  AFFILIATED
ENTITIES, OR (2) AN ENTITY, INCLUDING, BUT NOT LIMITED TO, A PARTNERSHIP
OR PROFESSIONAL CORPORATION, PROVIDED EACH BENEFICIAL OWNER OF AN EQUITY
INTEREST IN SUCH ENTITY IS A NATURAL PERSON WHO ACTIVELY PARTICIPATES IN
THE  BUSINESS  CONDUCTED  BY  THE  FIRM OR ITS AFFILIATED ENTITIES.  FOR
PURPOSES OF THIS SUBDIVISION, "ACTIVELY PARTICIPATE"  MEANS  TO  PROVIDE
SERVICES  TO  CLIENTS  OR  TO  OTHERWISE  INDIVIDUALLY  TAKE PART IN THE
DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.
  S 13. Subdivision (h) of section 121-101 of the  partnership  law,  as
added by chapter 950 of the laws of 1990, is amended to read as follows:
  (h)  "Limited  partnership"  and  "domestic limited partnership" mean,
unless the context otherwise requires, a partnership (i) formed  by  two
or more persons pursuant to this article or which complies with subdivi-
sion (a) of section 121-1202 of this article and (ii) having one or more
general  partners and one or more limited partners.  NOTWITHSTANDING ANY
OTHER PROVISIONS OF LAW A LIMITED PARTNERSHIP OR DOMESTIC LIMITED  PART-
NERSHIP FORMED TO LAWFULLY ENGAGE IN THE PRACTICE OF PUBLIC ACCOUNTANCY,
AS SUCH PRACTICE IS RESPECTIVELY DEFINED UNDER ARTICLE 149 OF THE EDUCA-
TION  LAW  SHALL  BE  REQUIRED TO SHOW (1) THAT A SIMPLE MAJORITY OF THE
OWNERSHIP OF THE FIRM, IN TERMS OF FINANCIAL INTERESTS, INCLUDING OWNER-
SHIP-BASED COMPENSATION, AND VOTING RIGHTS HELD BY  THE  FIRM'S  OWNERS,
BELONGS  TO  INDIVIDUALS LICENSED TO PRACTICE PUBLIC ACCOUNTANCY IN SOME
STATE, AND (2) THAT ALL PARTNERS OF A LIMITED  PARTNERSHIP  OR  DOMESTIC
LIMITED PARTNERSHIP, WHOSE PRINCIPAL PLACE OF BUSINESS IS IN THIS STATE,
AND WHO ARE ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY IN THIS STATE,
HOLD  A  VALID LICENSE ISSUED UNDER SECTION 7404 OF THE EDUCATION LAW OR
ARE PUBLIC ACCOUNTANTS LICENSED UNDER SECTION 7405 OF THE EDUCATION LAW.
ALTHOUGH FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE FIRM AND ITS  OWNERS
MUST COMPLY WITH RULES PROMULGATED BY THE STATE BOARD FOR PUBLIC ACCOUN-
TANCY.    NOTWITHSTANDING  THE  FOREGOING,  A FIRM REGISTERED UNDER THIS
SECTION MAY NOT HAVE NON-LICENSEE OWNERS IF THE FIRM'S NAME INCLUDES THE
WORDS "CERTIFIED PUBLIC ACCOUNTANT," OR "CERTIFIED PUBLIC  ACCOUNTANTS,"
OR  THE ABBREVIATIONS "CPA" OR "CPAS." EACH NON-LICENSEE OWNER OF A FIRM
THAT IS REGISTERED UNDER THIS SECTION SHALL BE (1) A NATURAL PERSON  WHO
ACTIVELY  PARTICIPATES  IN  THE  BUSINESS  OF THE FIRM OR ITS AFFILIATED
ENTITIES, OR (2) AN ENTITY, INCLUDING, BUT NOT LIMITED TO, A PARTNERSHIP
OR PROFESSIONAL CORPORATION, PROVIDED EACH BENEFICIAL OWNER OF AN EQUITY
INTEREST IN SUCH ENTITY IS A NATURAL PERSON WHO ACTIVELY PARTICIPATES IN
THE BUSINESS CONDUCTED BY THE  FIRM  OR  ITS  AFFILIATED  ENTITIES.  FOR
PURPOSES  OF  THIS  SUBDIVISION, "ACTIVELY PARTICIPATE" MEANS TO PROVIDE

S. 4596--B                         10

SERVICES TO CLIENTS OR  TO  OTHERWISE  INDIVIDUALLY  TAKE  PART  IN  THE
DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.
  S 14. Subdivision (b) of section 1207 of the limited liability company
law,  as  amended by chapter 554 of the laws of 2013, is amended to read
as follows:
  (b) With respect to a professional service limited  liability  company
formed to provide medical services as such services are defined in arti-
cle  131  of  the  education  law, each member of such limited liability
company must be licensed pursuant to article 131 of the education law to
practice medicine in this state. With respect to a professional  service
limited  liability  company  formed  to  provide dental services as such
services are defined in article 133 of the education law, each member of
such limited liability company must be licensed pursuant to article  133
of  the  education law to practice dentistry in this state. With respect
to a professional service limited liability company  formed  to  provide
veterinary  services  as such services are defined in article 135 of the
education law, each member of such limited  liability  company  must  be
licensed pursuant to article 135 of the education law to practice veter-
inary  medicine  in  this  state. With respect to a professional service
limited liability company formed to  provide  professional  engineering,
land surveying, architectural and/or landscape architectural services as
such services are defined in article 145, article 147 and article 148 of
the education law, each member of such limited liability company must be
licensed  pursuant to article 145, article 147 and/or article 148 of the
education law to practice one or more of such professions in this state.
WITH RESPECT TO A PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY  FORMED
TO  PROVIDE  PUBLIC ACCOUNTANCY SERVICES AS SUCH SERVICES ARE DEFINED IN
ARTICLE 149 OF THE EDUCATION LAW EACH MEMBER OF SUCH  LIMITED  LIABILITY
COMPANY  WHOSE  PRINCIPAL  PLACE  OF  BUSINESS  IS IN THIS STATE AND WHO
PROVIDES PUBLIC ACCOUNTANCY SERVICES, MUST BE LICENSED PURSUANT TO ARTI-
CLE 149 OF THE EDUCATION LAW TO  PRACTICE  PUBLIC  ACCOUNTANCY  IN  THIS
STATE.  With respect to a professional service limited liability company
formed to  provide  licensed  clinical  social  work  services  as  such
services are defined in article 154 of the education law, each member of
such limited liability company shall be licensed pursuant to article 154
of  the  education law to practice licensed clinical social work in this
state. With respect to a professional service limited liability  company
formed  to  provide  creative arts therapy services as such services are
defined in article 163 of the education law, each member of such limited
liability company must be licensed pursuant to article 163 of the educa-
tion law to practice creative arts therapy in this state.  With  respect
to  a  professional  service limited liability company formed to provide
marriage and family therapy services as such  services  are  defined  in
article  163 of the education law, each member of such limited liability
company must be licensed pursuant to article 163 of the education law to
practice marriage and family therapy in this state. With  respect  to  a
professional  service limited liability company formed to provide mental
health counseling services as such services are defined in  article  163
of the education law, each member of such limited liability company must
be  licensed  pursuant  to  article 163 of the education law to practice
mental health counseling in this state. With respect to  a  professional
service  limited  liability  company  formed  to  provide psychoanalysis
services as such services are defined in article 163  of  the  education
law,  each  member  of  such  limited liability company must be licensed
pursuant to article 163 of the education law to practice  psychoanalysis
in  this state. With respect to a professional service limited liability

S. 4596--B                         11

company formed to provide applied behavior  analysis  services  as  such
services are defined in article 167 of the education law, each member of
such limited liability company must be licensed or certified pursuant to
article  167  of the education law to practice applied behavior analysis
in this state. NOTWITHSTANDING ANY OTHER PROVISIONS  OF  LAW  A  PROFES-
SIONAL  SERVICE  LIMITED  LIABILITY COMPANY FORMED TO LAWFULLY ENGAGE IN
THE PRACTICE OF PUBLIC ACCOUNTANCY, AS  SUCH  PRACTICE  IS  RESPECTIVELY
DEFINED UNDER ARTICLE 149 OF THE EDUCATION LAW SHALL BE REQUIRED TO SHOW
(1)  THAT  A  SIMPLE  MAJORITY OF THE OWNERSHIP OF THE FIRM, IN TERMS OF
FINANCIAL INTERESTS, INCLUDING OWNERSHIP-BASED COMPENSATION, AND  VOTING
RIGHTS  HELD  BY  THE  FIRM'S OWNERS, BELONGS TO INDIVIDUALS LICENSED TO
PRACTICE PUBLIC ACCOUNTANCY IN SOME STATE, AND (2) THAT ALL MEMBERS OF A
LIMITED PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY, WHOSE  PRINCIPAL
PLACE  OF BUSINESS IS IN THIS STATE, AND WHO ARE ENGAGED IN THE PRACTICE
OF PUBLIC ACCOUNTANCY IN THIS STATE, HOLD A VALID LICENSE  ISSUED  UNDER
SECTION  7404 OF ARTICLE 149 OF THE EDUCATION LAW OR ARE PUBLIC ACCOUNT-
ANTS LICENSED UNDER SECTION 7405 OF ARTICLE 149 OF  THE  EDUCATION  LAW.
ALTHOUGH  FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE FIRM AND ITS OWNERS
MUST COMPLY WITH RULES PROMULGATED BY THE STATE BOARD FOR PUBLIC ACCOUN-
TANCY.   NOTWITHSTANDING THE FOREGOING, A  FIRM  REGISTERED  UNDER  THIS
SECTION MAY NOT HAVE NON-LICENSEE OWNERS IF THE FIRM'S NAME INCLUDES THE
WORDS  "CERTIFIED PUBLIC ACCOUNTANT," OR "CERTIFIED PUBLIC ACCOUNTANTS,"
OR THE ABBREVIATIONS "CPA" OR "CPAS." EACH NON-LICENSEE OWNER OF A  FIRM
THAT  IS REGISTERED UNDER THIS SECTION SHALL BE (1) A NATURAL PERSON WHO
ACTIVELY PARTICIPATES IN THE BUSINESS OF  THE  FIRM  OR  ITS  AFFILIATED
ENTITIES, OR (2) AN ENTITY, INCLUDING, BUT NOT LIMITED TO, A PARTNERSHIP
OR PROFESSIONAL CORPORATION, PROVIDED EACH BENEFICIAL OWNER OF AN EQUITY
INTEREST IN SUCH ENTITY IS A NATURAL PERSON WHO ACTIVELY PARTICIPATES IN
THE  BUSINESS  CONDUCTED  BY  THE  FIRM  OR ITS AFFILIATED ENTITIES. FOR
PURPOSES OF THIS SUBDIVISION, "ACTIVELY PARTICIPATE"  MEANS  TO  PROVIDE
SERVICES  TO  CLIENTS  OR  TO  OTHERWISE  INDIVIDUALLY  TAKE PART IN THE
DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.
  S 15. Subdivisions (a) and (f) of section 1301 of the limited  liabil-
ity  company  law, subdivision (a) as amended by chapter 554 of the laws
of 2013 and subdivision (f) as amended by chapter 170  of  the  laws  of
1996, are amended to read as follows:
  (a)  "Foreign  professional service limited liability company" means a
professional service limited liability company, whether or  not  denomi-
nated  as  such,  organized  under the laws of a jurisdiction other than
this state, (i) each of whose members and managers, if any, is a profes-
sional authorized by law to render a professional  service  within  this
state  and who is or has been engaged in the practice of such profession
in such professional service limited liability company or a  predecessor
entity, or will engage in the practice of such profession in the profes-
sional  service limited liability company within thirty days of the date
such professional becomes a member, or each of whose members and  manag-
ers,  if  any, is a professional at least one of such members is author-
ized by law to render a professional service within this state  and  who
is  or  has  been  engaged  in  the  practice of such profession in such
professional service limited liability company or a predecessor  entity,
or  will  engage  in the practice of such profession in the professional
service limited liability company within thirty days of  the  date  such
professional  becomes  a  member,  or  (ii)  authorized by, or holding a
license, certificate, registration or permit  issued  by  the  licensing
authority  pursuant  to,  the  education  law  to  render a professional
service within this state; except that all members and managers, if any,

S. 4596--B                         12

of  a  foreign  professional  service  limited  liability  company  that
provides  health services in this state shall be licensed in this state.
With respect to a foreign professional service limited liability company
which provides veterinary services as such services are defined in arti-
cle  135  of the education law, each member of such foreign professional
service limited liability company shall be licensed pursuant to  article
135  of  the education law to practice veterinary medicine. With respect
to a  foreign  professional  service  limited  liability  company  which
provides medical services as such services are defined in article 131 of
the  education  law,  each  member  of such foreign professional service
limited liability company must be licensed pursuant to  article  131  of
the education law to practice medicine in this state.  With respect to a
foreign  professional  service  limited liability company which provides
dental services as such services are  defined  in  article  133  of  the
education  law, each member of such foreign professional service limited
liability company must be licensed pursuant to article 133 of the educa-
tion law to practice dentistry in this state. With respect to a  foreign
professional  service  limited  liability company which provides profes-
sional  engineering,  land  surveying,  architectural  and/or  landscape
architectural  services  as  such  services  are defined in article 145,
article 147 and article 148 of the education law, each  member  of  such
foreign  professional service limited liability company must be licensed
pursuant to article 145, article 147 and/or article 148 of the education
law to practice one or more of such  professions  in  this  state.  WITH
RESPECT  TO  A  FOREIGN  PROFESSIONAL  SERVICE LIMITED LIABILITY COMPANY
WHICH PROVIDES PUBLIC ACCOUNTANCY SERVICES AS SUCH SERVICES ARE  DEFINED
IN ARTICLE 149 OF THE EDUCATION LAW, EACH MEMBER OF SUCH FOREIGN PROFES-
SIONAL  SERVICE LIMITED LIABILITY COMPANY WHOSE PRINCIPAL PLACE OF BUSI-
NESS IS IN THIS STATE AND  WHO  PROVIDES  PUBLIC  ACCOUNTANCY  SERVICES,
SHALL  BE LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO PRAC-
TICE PUBLIC ACCOUNTANCY IN THIS STATE. With respect to a foreign profes-
sional service limited liability company which provides  licensed  clin-
ical social work services as such services are defined in article 154 of
the  education  law,  each  member  of such foreign professional service
limited liability company shall be licensed pursuant to article  154  of
the  education  law to practice clinical social work in this state. With
respect to a foreign  professional  service  limited  liability  company
which  provides  creative  arts  therapy  services  as such services are
defined in article 163 of the education law, each member of such foreign
professional service limited liability company must be licensed pursuant
to article 163 of the education law to practice creative arts therapy in
this state. With respect  to  a  foreign  professional  service  limited
liability company which provides marriage and family therapy services as
such  services  are  defined  in  article 163 of the education law, each
member of such foreign professional service  limited  liability  company
must  be  licensed pursuant to article 163 of the education law to prac-
tice marriage and family therapy  in  this  state.  With  respect  to  a
foreign  professional  service  limited liability company which provides
mental health counseling services as such services are defined in  arti-
cle  163  of the education law, each member of such foreign professional
service limited liability company must be licensed pursuant  to  article
163  of  the  education law to practice mental health counseling in this
state. With respect to a foreign professional service limited  liability
company  which  provides  psychoanalysis  services  as such services are
defined in article 163 of the education law, each member of such foreign
professional service limited liability company must be licensed pursuant

S. 4596--B                         13

to article 163 of the education law to practice psychoanalysis  in  this
state.  With respect to a foreign professional service limited liability
company which  provides  applied  behavior  analysis  services  as  such
services are defined in article 167 of the education law, each member of
such  foreign  professional  service  limited  liability company must be
licensed or certified pursuant to article 167 of the  education  law  to
practice  applied  behavior analysis in this state.  NOTWITHSTANDING ANY
OTHER PROVISIONS OF LAW A FOREIGN PROFESSIONAL SERVICE LIMITED LIABILITY
COMPANY FORMED TO LAWFULLY ENGAGE IN THE PRACTICE OF PUBLIC ACCOUNTANCY,
AS SUCH PRACTICE IS RESPECTIVELY DEFINED UNDER ARTICLE 149 OF THE EDUCA-
TION LAW SHALL BE REQUIRED TO SHOW (1) THAT A  SIMPLE  MAJORITY  OF  THE
OWNERSHIP OF THE FIRM, IN TERMS OF FINANCIAL INTERESTS, INCLUDING OWNER-
SHIP-BASED  COMPENSATION,  AND  VOTING RIGHTS HELD BY THE FIRM'S OWNERS,
BELONGS TO INDIVIDUALS LICENSED TO PRACTICE PUBLIC ACCOUNTANCY  IN  SOME
STATE,  AND  (2)  THAT  ALL  MEMBERS  OF  A FOREIGN LIMITED PROFESSIONAL
SERVICE LIMITED LIABILITY COMPANY, WHOSE PRINCIPAL PLACE OF BUSINESS  IS
IN THIS STATE, AND WHO ARE ENGAGED IN THE PRACTICE OF PUBLIC ACCOUNTANCY
IN  THIS  STATE,  HOLD  A VALID LICENSE ISSUED UNDER SECTION 7404 OF THE
EDUCATION LAW OR ARE PUBLIC ACCOUNTANTS LICENSED UNDER SECTION  7405  OF
THE  EDUCATION  LAW. ALTHOUGH FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE
FIRM AND ITS OWNERS MUST COMPLY WITH  RULES  PROMULGATED  BY  THE  STATE
BOARD  FOR  PUBLIC  ACCOUNTANCY.   NOTWITHSTANDING THE FOREGOING, A FIRM
REGISTERED UNDER THIS SECTION MAY NOT HAVE NON-LICENSEE  OWNERS  IF  THE
FIRM'S NAME INCLUDES THE WORDS "CERTIFIED PUBLIC ACCOUNTANT," OR "CERTI-
FIED  PUBLIC  ACCOUNTANTS,"  OR THE ABBREVIATIONS "CPA" OR "CPAS."  EACH
NON-LICENSEE OWNER OF A FIRM THAT IS REGISTERED UNDER THIS SECTION SHALL
BE (1) A NATURAL PERSON WHO ACTIVELY PARTICIPATES IN THE BUSINESS OF THE
FIRM OR ITS AFFILIATED ENTITIES, OR (2) AN ENTITY,  INCLUDING,  BUT  NOT
LIMITED  TO,  A  PARTNERSHIP  OR PROFESSIONAL CORPORATION, PROVIDED EACH
BENEFICIAL OWNER OF AN EQUITY INTEREST  IN  SUCH  ENTITY  IS  A  NATURAL
PERSON  WHO  ACTIVELY PARTICIPATES IN THE BUSINESS CONDUCTED BY THE FIRM
OR ITS AFFILIATED ENTITIES. FOR PURPOSES OF THIS SUBDIVISION,  "ACTIVELY
PARTICIPATE"  MEANS TO PROVIDE SERVICES TO CLIENTS OR TO OTHERWISE INDI-
VIDUALLY TAKE PART IN THE DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.
  (f) "Professional partnership" means (1) a partnership without limited
partners each of whose partners is a professional authorized by  law  to
render a professional service within this state, (2) a partnership with-
out  limited partners each of whose partners is a professional, at least
one of whom is authorized by law to render a professional service within
this state or (3) a partnership without limited partners authorized  by,
or  holding a license, certificate, registration or permit issued by the
licensing authority pursuant to the education law to  render  a  profes-
sional  service within this state; except that all partners of a profes-
sional partnership that provides medical services in this state must  be
licensed  pursuant to article 131 of the education law to practice medi-
cine in this state and all partners of a professional  partnership  that
provides  dental  services  in  this  state must be licensed pursuant to
article 133 of the education law to practice dentistry  in  this  state;
except  that  all  partners  of a professional partnership that provides
veterinary services in this state must be licensed pursuant  to  article
135  of the education law to practice veterinary medicine in this state;
and further except that all partners of a professional partnership  that
provides professional engineering, land surveying, architectural, and/or
landscape architectural services in this state must be licensed pursuant
to  article  145, article 147 and/or article 148 of the education law to
practice one or more of such professions.   WITH RESPECT  TO  A  PROFES-

S. 4596--B                         14

SIONAL  PARTNERSHIP  WHICH  PROVIDES PUBLIC ACCOUNTANCY SERVICES AS SUCH
SERVICES ARE DEFINED IN ARTICLE 149 OF THE EDUCATION LAW, EACH MEMBER OF
SUCH PROFESSIONAL PARTNERSHIP WHOSE PRINCIPAL PLACE OF  BUSINESS  IS  IN
THIS  STATE  AND  WHO  PROVIDES  PUBLIC  ACCOUNTANCY  SERVICES, SHALL BE
LICENSED PURSUANT TO ARTICLE 149 OF THE EDUCATION LAW TO PRACTICE PUBLIC
ACCOUNTANCY. NOTWITHSTANDING ANY OTHER PROVISIONS OF LAW A  PROFESSIONAL
PARTNERSHIP  FORMED TO LAWFULLY ENGAGE IN THE PRACTICE OF PUBLIC ACCOUN-
TANCY, AS SUCH PRACTICE IS RESPECTIVELY DEFINED UNDER ARTICLE 149 OF THE
EDUCATION LAW SHALL BE REQUIRED TO SHOW (1) THAT A  SIMPLE  MAJORITY  OF
THE  OWNERSHIP  OF  THE FIRM, IN TERMS OF FINANCIAL INTERESTS, INCLUDING
OWNERSHIP-BASED COMPENSATION, AND  VOTING  RIGHTS  HELD  BY  THE  FIRM'S
OWNERS,  BELONGS  TO INDIVIDUALS LICENSED TO PRACTICE PUBLIC ACCOUNTANCY
IN SOME STATE, AND (2) THAT ALL MEMBERS OF A LIMITED PROFESSIONAL  PART-
NERSHIP, WHOSE PRINCIPAL PLACE OF BUSINESS IS IN THIS STATE, AND WHO ARE
ENGAGED  IN  THE  PRACTICE  OF  PUBLIC ACCOUNTANCY IN THIS STATE, HOLD A
VALID LICENSE ISSUED UNDER SECTION 7404 OF  THE  EDUCATION  LAW  OR  ARE
PUBLIC  ACCOUNTANTS  LICENSED  UNDER  SECTION 7405 OF THE EDUCATION LAW.
ALTHOUGH FIRMS MAY INCLUDE NON-LICENSEE OWNERS, THE FIRM AND ITS  OWNERS
MUST COMPLY WITH RULES PROMULGATED BY THE STATE BOARD FOR PUBLIC ACCOUN-
TANCY.    NOTWITHSTANDING  THE  FOREGOING,  A FIRM REGISTERED UNDER THIS
SECTION MAY NOT HAVE NON-LICENSEE OWNERS IF THE FIRM'S NAME INCLUDES THE
WORDS "CERTIFIED PUBLIC ACCOUNTANT," OR "CERTIFIED PUBLIC  ACCOUNTANTS,"
OR THE ABBREVIATIONS "CPA" OR "CPAS."  EACH NON-LICENSEE OWNER OF A FIRM
THAT  IS REGISTERED UNDER THIS SECTION SHALL BE (1) A NATURAL PERSON WHO
ACTIVELY PARTICIPATES IN THE BUSINESS OF  THE  FIRM  OR  ITS  AFFILIATED
ENTITIES, OR (2) AN ENTITY, INCLUDING, BUT NOT LIMITED TO, A PARTNERSHIP
OR PROFESSIONAL CORPORATION, PROVIDED EACH BENEFICIAL OWNER OF AN EQUITY
INTEREST IN SUCH ENTITY IS A NATURAL PERSON WHO ACTIVELY PARTICIPATES IN
THE  BUSINESS  CONDUCTED  BY  THE  FIRM  OR ITS AFFILIATED ENTITIES. FOR
PURPOSES OF THIS SUBDIVISION, "ACTIVELY PARTICIPATE"  MEANS  TO  PROVIDE
SERVICES  TO  CLIENTS  OR  TO  OTHERWISE  INDIVIDUALLY  TAKE PART IN THE
DAY-TO-DAY BUSINESS OR MANAGEMENT OF THE FIRM.
  S 16. This act shall take effect immediately.

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