NY State Senate Bill 2017-S3771A

Senate Bill S3771A

2017-2018 Legislative Session

Provides for expanded ownership in design professional corporations by employee stock ownership plans and non-licensed employees

download bill text pdf

Archive: Last Bill Status - In Assembly Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 06, 2018	referred to higher education delivered to assembly passed senate ordered to third reading cal.1550
Jun 05, 2018	committee discharged and committed to rules
Jan 03, 2018	referred to corporations, authorities and commissions
Mar 03, 2017	print number 3771a
Mar 03, 2017	amend and recommit to corporations, authorities and commissions
Jan 26, 2017	referred to corporations, authorities and commissions

Votes

- Jun 6, 2018 - Floor Vote
  S3771A
  
  61
  
  Aye
  
  0
  
  Nay
  
  0
  
  Absent
  
  2
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 6, 2018
      
      aye (61)
      
      Addabbo Jr.
      
      Akshar
      
      Alcantara
      
      Avella
      
      Bailey
      
      Benjamin
      
      Bonacic
      
      Boyle
      
      Breslin
      
      Brooks
      
      Carlucci
      
      Comrie
      
      DeFrancisco
      
      Dilan
      
      Felder
      
      Flanagan
      
      Funke
      
      Gallivan
      
      Gianaris
      
      Golden
      
      Griffo
      
      Hamilton
      
      Hannon
      
      Helming
      
      Hoylman-Sigal
      
      Jacobs
      
      Kaminsky
      
      Kavanagh
      
      Kennedy
      
      Klein
      
      Krueger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Little
      
      Marcellino
      
      Marchione
      
      Mayer
      
      Montgomery
      
      Murphy
      
      O'Mara
      
      Ortt
      
      Parker
      
      Peralta
      
      Persaud
      
      Phillips
      
      Ranzenhofer
      
      Ritchie
      
      Rivera
      
      Robach
      
      Sanders Jr.
      
      Savino
      
      Sepúlveda
      
      Serino
      
      Serrano
      
      Seward
      
      Stavisky
      
      Stewart-Cousins
      
      Tedisco
      
      Valesky
      
      Young
      
      excused (2)
      
      Amedore
      
      Croci
  Jun 5, 2018 - Rules Committee Vote
  S3771A
  
  25
  
  Aye
  
  0
  
  Nay
  
  0
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Rules Committee Vote: Jun 5, 2018
      
      aye (25)
      
      Bonacic
      
      Breslin
      
      DeFrancisco
      
      Dilan
      
      Flanagan
      
      Gianaris
      
      Griffo
      
      Hannon
      
      Kennedy
      
      Klein
      
      Krueger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Little
      
      Marcellino
      
      Montgomery
      
      Parker
      
      Ranzenhofer
      
      Rivera
      
      Robach
      
      Savino
      
      Seward
      
      Stewart-Cousins
      
      Valesky

Bill Amendments

Original

A (Active)

2017-S3771 - Details

See Assembly Version of this Bill:: A3460
Current Committee:: Assembly Higher Education
Law Section:: Business Corporation Law
Laws Affected:: Amd §§1503, 1507 & 1514, BC L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S2709, A3514
2021-2022: A1891

2017-S3771 - Summary

Provides for expanded ownership in design professional corporations by employee stock ownership plans and non-licensed employees.

2017-S3771 - Sponsor Memo

                                 BILL NUMBER:  S3771

 TITLE OF BILL :  An act to amend the business corporation law, in
relation to providing for expanded ownership in design professional
corporations by employee stock ownership plans and non-licensed
employees

 PURPOSE :

To expand ownership of design professional corporations by employee
stock ownership plans (ESOP) and non- licensed professionals while
still preserving the current 75% control of design professional
corporations by licensed design professionals.

 SUMMARY OF PROVISIONS :

Section 1 - Amends section 1503 of the business corporation law (which
is related to the organization of design professional corporations) to
permit greater ownership by ESOPs so long as greater than 75% of the
plan remains controlled by design professionals.

Section 2 - Amend section 1507 of the business corporation law (which
is related to the issuance of shares) to permit greater ownership by
ESOPs of issued shares so long as greater than 75% of the plan remains
controlled by design professionals.

Section 3 - Amends section 1514 of the business corporation law to
make conforming changes to the triennial statement required under the
business corporation law.

Section 4 - Effective Date

 EXISTING LAW :

Since 2012, New York law has permitted design professional
corporations to have less than 25% of their outstanding shares owned
by employee stock ownership plans and non-licensed employees under
certain conditions. These conditions include:

1. Greater than 75% of the outstanding shares must be owned by design
professionals,

2. An ESOP, either in part or in its entirety, may not constitute part
of the greater than 75% owned by design professionals,

3. Greater than 75% of the directors must be design professionals,

4. Greater than 75% of the officers must be design professionals,

5. The president, the chairperson of the board of directors and the
chief executive officer must be design professionals, and

6. The single largest shareholder must be either a design professional
or am employee stock ownership plan with greater than 75% of the
plan's voting trustees and greater than 75% of the plan's committee
members being design professionals.

 JUSTIFICATION :

Current law limits non-licensed ownership in a design firm to less
than 25% of the firms outstanding shares. The vast majority of other
states are less restrictive and allow for higher percentage of
ownership of design firms by ESOPS and individuals. Increasing the
allowable ownership by ESOPs will bring New York more in line with
other states practices. By changing ownership practices, New York
design firms will be more competitive in attracting and retaining
talented professionals to serve in design firms. Persons who will
benefit under this proposal include environmental science, accounting
and finance, human resources, marketing and information technology
personnel, who although not licensed professionals, still provide
essential services.

 LEGISLATIVE HISTORY :

This is a new bill.

 FISCAL IMPLICATIONS :

None

 EFFECTIVE DATE :
Immediately

2017-S3771 - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   3771
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 26, 2017
                                ___________
 
 Introduced  by  Sen. VALESKY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and Commissions
 
 AN  ACT  to amend the business corporation law, in relation to providing
   for expanded ownership in design professional corporations by employee
   stock ownership plans and non-licensed employees
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subparagraphs  (i) and (ii) of paragraph (b-1) of section
 1503 of the business corporation law, as added by chapter 550 of the law
 of 2011, are amended to read as follows:
   (i) greater than seventy-five percent of  the  outstanding  shares  of
 stock  of  the corporation are owned by design professionals AND AN ESOP
 (OR ESOPS) WITH GREATER THAN SEVENTY-FIVE PERCENT OF THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS BEING DESIGN PROFESSIONALS,
   (ii) an ESOP, either in part or in its entirety, shall not  constitute
 part  of  the  greater than seventy-five percent owned by design profes-
 sionals UNLESS GREATER THAN SEVENTY-FIVE PERCENT OF  THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS ARE DESIGN PROFESSIONALS,
   § 2. Subparagraphs (i) and (ii) of paragraph (b) of  section  1507  of
 the  business  corporation  law,  as  added by chapter 550 of the law of
 2011, are amended to read as follows:
   (i) greater than seventy-five percent of  the  outstanding  shares  of
 stock  of  the corporation are owned by design professionals AND AN ESOP
 (OR ESOPS) WITH GREATER THAN SEVENTY-FIVE PERCENT OF THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS BEING DESIGN PROFESSIONALS,
   (ii) an ESOP, either in part or in its entirety, shall not  constitute
 part  of  the  greater than seventy-five percent owned by design profes-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD09028-01-7

 S. 3771                             2
 
 sionals UNLESS GREATER THAN SEVENTY-FIVE PERCENT OF  THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS ARE DESIGN PROFESSIONALS,
   § 3. Subparagraph (i) of paragraph (b) of section 1514 of the business
 corporation  law, as added by chapter 550 of the law of 2011, is amended
 to read as follows:
   (i) greater than seventy-five percent of  the  outstanding  shares  of
 stock  of the corporation are and were owned by design professionals AND
 AN ESOP (OR ESOPS) WITH GREATER THAN SEVENTY-FIVE PERCENT OF THE  PLAN'S
 VOTING  TRUSTEES  AND  GREATER  THAN  SEVENTY-FIVE PERCENT OF THE PLAN'S
 COMMITTEE MEMBERS BEING DESIGN PROFESSIONALS,
   § 4. This act shall take effect immediately.

co-Sponsors

2017-S3771A (ACTIVE) - Details

See Assembly Version of this Bill:: A3460
Current Committee:: Assembly Higher Education
Law Section:: Business Corporation Law
Laws Affected:: Amd §§1503, 1507 & 1514, BC L
Versions Introduced in Other Legislative Sessions:: 2019-2020: S2709, A3514
2021-2022: A1891

2017-S3771A (ACTIVE) - Summary

Provides for expanded ownership in design professional corporations by employee stock ownership plans and non-licensed employees.

2017-S3771A (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S3771A

 TITLE OF BILL :  An act to amend the business corporation law, in
relation to providing for expanded ownership in design professional
corporations by employee stock ownership plans and non-licensed
employees

 PURPOSE :

To expand ownership of design professional corporations by employee
stock ownership plans (ESOP) and non- licensed professionals while
still preserving the current 75% control of design professional
corporations by licensed design professionals.

 SUMMARY OF PROVISIONS :

Section 1 - Amends section 1503 of the business corporation law (which
is related to the organization of design professional corporations) to
permit greater ownership by ESOPs so long as greater than 75% of the
plan remains controlled by design professionals.

Section 2 - Amend section 1507 of the business corporation law (which
is related to the issuance of shares) to permit greater ownership by
ESOPs of issued shares so long as greater than 75% of the plan remains
controlled by design professionals.

Section 3 - Amends section 1514 of the business corporation law to
make conforming changes to the triennial statement required under the
business corporation law.

Section 4 - Effective Date

 EXISTING LAW :

Since 2012, New York law has permitted design professional
corporations to have less than 25% of their outstanding shares owned
by employee stock ownership plans and non-licensed employees under
certain conditions. These conditions include:

1. Greater than 75% of the outstanding shares must be owned by design
professionals,

2. An ESOP, either in part or in its entirety, may not constitute part
of the greater than 75% owned by design professionals,

3. Greater than 75% of the directors must be design professionals,

4. Greater than 75% of the officers must be design professionals,

5. The president, the chairperson of the board of directors and the
chief executive officer must be design professionals, and

6. The single largest shareholder must be either a design professional
or am employee stock ownership plan with greater than 75% of the
plan's voting trustees and greater than 75% of the plan's committee
members being design professionals.

 JUSTIFICATION :

Current law limits non-licensed ownership in a design firm to less
than 25% of the firms outstanding shares. The vast majority of other
states are less restrictive and allow for higher percentage of
ownership of design firms by ESOPS and individuals. Increasing the
allowable ownership by ESOPs will bring New York more in line with
other states practices. By changing ownership practices, New York
design firms will be more competitive in attracting and retaining
talented professionals to serve in design firms. Persons who will
benefit under this proposal include environmental science, accounting
and finance, human resources, marketing and information technology
personnel, who although not licensed professionals, still provide
essential services.

 LEGISLATIVE HISTORY :

This is a new bill.

 FISCAL IMPLICATIONS :

None

 EFFECTIVE DATE :
Immediately

2017-S3771A (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  3771--A
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             January 26, 2017
                                ___________
 
 Introduced  by  Sen. VALESKY -- read twice and ordered printed, and when
   printed to be committed to the Committee on Corporations,  Authorities
   and   Commissions  --  committee  discharged,  bill  amended,  ordered
   reprinted as amended and recommitted to said committee
 
 AN ACT to amend the business corporation law, in relation  to  providing
   for expanded ownership in design professional corporations by employee
   stock ownership plans and non-licensed employees
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subparagraphs (i) and (ii) of paragraph  (b-1)  of  section
 1503  of  the  business  corporation law, as added by chapter 550 of the
 laws of 2011, are amended to read as follows:
   (i) greater than seventy-five percent of  the  outstanding  shares  of
 stock  of  the corporation are owned by design professionals AND AN ESOP
 (OR ESOPS) WITH GREATER THAN SEVENTY-FIVE PERCENT OF THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS BEING DESIGN PROFESSIONALS,
   (ii) an ESOP, either in part or in its entirety, shall not  constitute
 part  of  the  greater than seventy-five percent owned by design profes-
 sionals UNLESS GREATER THAN SEVENTY-FIVE PERCENT OF  THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS ARE DESIGN PROFESSIONALS,
   § 2. Subparagraphs (i) and (ii) of paragraph (b) of  section  1507  of
 the  business  corporation  law,  as added by chapter 550 of the laws of
 2011, are amended to read as follows:
   (i) greater than seventy-five percent of  the  outstanding  shares  of
 stock  of  the corporation are owned by design professionals AND AN ESOP
 (OR ESOPS) WITH GREATER THAN SEVENTY-FIVE PERCENT OF THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS BEING DESIGN PROFESSIONALS,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09028-02-7

 S. 3771--A                          2
 
   (ii) an ESOP, either in part or in its entirety, shall not  constitute
 part  of  the  greater than seventy-five percent owned by design profes-
 sionals UNLESS GREATER THAN SEVENTY-FIVE PERCENT OF  THE  PLAN'S  VOTING
 TRUSTEES  AND  GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S COMMITTEE
 MEMBERS ARE DESIGN PROFESSIONALS,
   § 3. Subparagraph (i) of paragraph (b) of section 1514 of the business
 corporation law, as added by chapter 550 of the laws of 2011, is amended
 to read as follows:
   (i)  greater  than  seventy-five  percent of the outstanding shares of
 stock of the corporation are and were owned by design professionals  AND
 AN  ESOP (OR ESOPS) WITH GREATER THAN SEVENTY-FIVE PERCENT OF THE PLAN'S
 VOTING TRUSTEES AND GREATER THAN  SEVENTY-FIVE  PERCENT  OF  THE  PLAN'S
 COMMITTEE MEMBERS BEING DESIGN PROFESSIONALS,
   § 4. This act shall take effect immediately.

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