§ 1503 — Organization

New York § 1503

• Jurisdiction: New York
• Law BSC: Business Corporation
• Art. 15: Professional Service Corporations

Text

§ 1503. Organization.\n (a) Notwithstanding any other provision of law, one or more\nindividuals duly authorized by law to render the same professional\nservice within the state may organize, or cause to be organized, a\nprofessional service corporation for pecuniary profit under this article\nfor the purpose of rendering the same professional service, except that\none or more individuals duly authorized by law to practice professional\nengineering, architecture, landscape architecture, land surveying or\ngeology within the state may organize, or cause to be organized, a\nprofessional service corporation or a design professional service\ncorporation for pecuniary profit under this article for the purpose of\nrendering such professional services as such individuals are authorized\nto practice.\n (b) The certificate of incorporation of a professional service\ncorporation shall meet the requirements of this chapter and (i) shall\nstate the profession or professions to be practiced by such corporation\nand the names and residence addresses of all individuals who are to be\nthe original shareholders, directors and officers of such corporation,\nand (ii) shall have attached thereto a certificate or certificates\nissued by the licensing authority certifying that each of the proposed\nshareholders, directors and officers is authorized by law to practice a\nprofession which the corporation is being organized to practice and, if\napplicable, that one or more of such individuals is authorized to\npractice each profession which the corporation will be authorized to\npractice.\n (b-1) The certificate of incorporation of a design professional\nservice corporation shall meet the requirements of this chapter,\nprovided that shareholders may include employee stock ownership plans\n(ESOPs) and employees of the corporation not licensed as design\nprofessionals, and provided further however that:\n (i) greater than seventy-five percent of the outstanding shares of\nstock of the corporation are owned by design professionals and an ESOP\n(or ESOPs) with greater than seventy-five percent of the plan's voting\ntrustees or greater than seventy-five percent of the plan's committee\nmembers being design professionals,\n (ii) an ESOP, either in part or in its entirety, shall not constitute\npart of the greater than seventy-five percent owned by design\nprofessionals unless greater than seventy-five percent of the plan's\nvoting trustees or greater than seventy-five percent of the plan's\ncommittee members are design professionals,\n (iii) greater than seventy-five percent of the directors are design\nprofessionals,\n (iv) greater than seventy-five percent of the officers are design\nprofessionals,\n (v) the president, the chairperson of the board of directors and the\nchief executive officer or officers are design professionals, and\n (vi) the single largest shareholder is either a design professional or\nan ESOP with greater than seventy-five percent of the plan's voting\ntrustees being design professionals and greater than seventy-five\npercent of the plan's committee members being design professionals.\n (b-2) The certificate of incorporation of a design professional\nservice corporation shall:\n (i) state the profession or professions to be practiced by such\ncorporation,\n (ii) state the names and residence addresses of all individuals or\nESOPs who are to be the original shareholders, directors and officers of\nsuch corporation,\n (iii) indicate the profession or professions of each original\nshareholder, director and officer who is a design professional,\n (iv) state the ownership interest of each original shareholder, and\n (v) indicate the names of the original officers and directors who are\nthe president, the chairperson of the board of directors and the chief\nexecutive officer or officers.\n (b-3) The certificate of incorporation of a design professional\nservice corporation shall have attached thereto a certificate or\ncertificates issued by the licensing authority certifying that each of\nthe proposed shareholders, directors and officers who is listed as a\ndesign professional is authorized by law to practice a profession which\nthe corporation is being organized to practice and, if applicable, that\none or more of such individuals is authorized to practice each\nprofession which the corporation will be authorized to practice. The\nattached certificate or certificates shall also certify that the\npresident, the chairperson of the board of directors and the chief\nexecutive officer or officers are authorized by law to practice a\nprofession which the corporation is being organized to practice.\n (b-4) The certificate of incorporation of a design professional\nservice corporation shall also have attached thereto a certificate or\ncertificates issued by the licensing authority certifying that each of\nthe shareholders, officers, directors and owners have been deemed to\nhave been of good moral character as may be established by the\nregulations of the commissioner of education.\n (b-5) On or after January first, two thousand twelve, the state\neducation department and the department of state shall allow an existing\nprofessional service corporation organized under this article and\npracticing professional engineering, architecture, landscape\narchitecture, geology or land surveying, or practicing any combination\nof such professions to become a design professional service corporation\nas defined in this article, provided the professional service\ncorporation meets all of the requirements to become a design\nprofessional service corporation, including that its name shall end with\nthe words "design professional corporation" or the abbreviation\n"D.P.C.", by amending its certificate of incorporation so that it\ncontains the following statements:\n (1) the names and residence addresses of all individuals or ESOPs who\nwill be the shareholders, directors and officers of the original design\nprofessional service corporation; and\n (2) the profession or professions of each shareholder, director and\nofficer who is a design professional of the original design professional\nservice corporation; and\n (3) the ownership interest of each shareholder of the original design\nprofessional service corporation; and\n (4) the names of the officers and directors who will be the president,\nthe chairperson of the board of directors and the chief executive\nofficer or officers of the original design professional service\ncorporation.\n (i) The certificate of amendment shall have attached thereto a\ncertificate or certificates issued by the licensing authority certifying\nthat each of the proposed shareholders, directors and officers who is\nlisted as a design professional is authorized by law to practice a\nprofession which the corporation is organized to practice and, if\napplicable, that one or more of such individuals is authorized to\npractice each profession which the corporation will be authorized to\npractice. The attached certificate or certificates shall also certify\nthat the proposed president, the chairperson of the board of directors\nand the chief executive officer or officers are authorized by law to\npractice a profession which the corporation is organized to practice.\n (ii) The certificate of amendment shall also have attached thereto a\ncertificate or certificates issued by the licensing authority certifying\nthat each of the proposed shareholders, officers, directors and owners\nlisted have been deemed to have been of good moral character as may be\nestablished by the regulations of the commissioner of education.\n (iii) The certificate of amendment shall also have attached thereto:\n(A) a tax clearance issued by the department of taxation and finance\ncertifying that the existing professional service corporation is current\nwith respect to payment of its state tax liabilities and (B) a\ncertificate of good standing from the state education department\ncertifying that the existing professional service corporation is\nauthorized to provide professional services without restriction.\n (b-6) (1) Prior to the first day of March, two thousand nineteen, the\nstate education department and the department of state shall allow an\nexisting business corporation organized under article four of this\nchapter to become a professional service corporation as defined in this\narticle for the purpose of practicing professional geology, provided\nthat the surviving corporation meet all of the requirements to become a\nprofessional service corporation, including that the name of a\nprofessional service corporation shall end with the words "professional\ncorporation" or the abbreviation "P.C." by amending its certificate of\nincorporation so that it contains the following:\n (i) the names and residence addresses of all individuals who will be\nthe original shareholders, directors and officers of the professional\nservice corporation;\n (ii) a statement that the professional service corporation is formed\npursuant to this section; and\n (iii) a statement that the amendment shall not effect a dissolution of\nthe corporation, but shall be deemed a continuation of its corporate\nexistence, without affecting its then existing property rights or\nliabilities or the liabilities of its members or officers as such, but\nthereafter it shall have only such rights, powers and privileges, and be\nsubject only to such other duties and liabilities, as a corporation\ncreated for the same purposes under this article.\n (2) The certificate of amendment shall have attached thereto a\ncertificate or certificates issued by the licensing authority certifying\nthat each of the proposed shareholders, directors and officers listed:\n (i) is authorized by law to practice a profession which the\ncorporation is organized to practice and, if applicable, that one or\nmore of such individuals is authorized to practice each profession which\nthe corporation will be authorized to practice; and\n (ii) has been deemed to be of good moral character as may be\nestablished by the regulations of the commissioner of education.\n (3) The certificate of amendment shall also have attached thereto a\ntax clearance issued by the department of taxation and finance\ncertifying that the existing business corporation is current with\nrespect to payment of its state tax liabilities.\n (4) Notwithstanding any provision of law to the contrary, any\ncorporation formed under this section shall be required to comply with\nall applicable laws, rules, or regulations relating to the practice of a\nprofession under title eight of the education law.\n (b-7) (1) Prior to the first day of March, two thousand nineteen, the\nstate education department and the department of state shall allow an\nexisting business corporation organized under article four of this\nchapter to become a design professional service corporation as defined\nin this article for the purpose of practicing professional geology,\nprovided that the surviving corporation meet all of the requirements to\nbecome a design professional service corporation, including that the\nname shall end with the words "design professional service corporation"\nor the abbreviation "D.P.C." by amending its certificate of\nincorporation so that it contains the following:\n (i) the names and residence addresses of all individuals or ESOPs who\nwill be the original shareholders, directors and officers of the\nprofessional service corporation;\n (ii) a statement that the design professional service corporation is\nformed pursuant to this section;\n (iii) the profession or profession of each shareholder, director and\nofficer who is a design professional of the original design professional\nservice corporation;\n (iv) the names of the officers and directors who will be the\npresident, the chairperson of the board of directors and the chief\nexecutive officer or officers of the original design professional\nservice corporation;\n (v) the ownership interest of each shareholder of the original design\nprofessional service corporation; and\n (vi) a statement that the amendment shall not effect a dissolution of\nthe corporation, but shall be deemed a continuation of its corporate\nexistence, without affecting its then existing property rights or\nliabilities or the liabilities of its members or officers as such, but\nthereafter it shall have only such rights, powers and privileges, and be\nsubject only to such other duties and liabilities, as a corporation\ncreated for the same purposes under this article.\n (2) The certificate of amendment shall have attached thereto a\ncertificate or certificates issued by the licensing authority certifying\nthat each of the proposed shareholders, directors and officers listed:\n (i) is authorized by law to practice a profession which the\ncorporation is organized to practice and, if applicable, that one or\nmore of such individuals is authorized to practice each profession which\nthe corporation will be authorized to practice; and\n (ii) has been deemed to be of good moral character as may be\nestablished by the regulations of the commissioner of education.\n (3) The certificate of amendment shall also have attached thereto a\ntax clearance issued by the department of taxation and finance\ncertifying that the existing business corporation is current with\nrespect to payment of its state tax liabilities.\n (4) Notwithstanding any provision of law to the contrary, any\ncorporation formed under this section shall be required to comply with\nall applicable laws, rules, or regulations relating to the practice of a\nprofession under title eight of the education law.\n (c) A certified copy of the certificate of incorporation and of each\namendment thereto shall be filed by the corporation with the licensing\nauthority within thirty days after the filing of such certificate or\namendment with the department of state.\n (d) A professional service corporation, including a design\nprofessional service corporation, other than a corporation authorized to\npractice law, shall be under the supervision of the regents of the\nuniversity of the state of New York and be subject to disciplinary\nproceedings and penalties, and its certificate of incorporation shall be\nsubject to suspension, revocation or annulment for cause, in the same\nmanner and to the same extent as is provided with respect to individuals\nand their licenses, certificates, and registrations in title eight of\nthe education law relating to the applicable profession. Notwithstanding\nthe provisions of this paragraph, a professional service corporation\nauthorized to practice medicine shall be subject to the prehearing\nprocedures and hearing procedures as is provided with respect to\nindividual physicians and their licenses in title II-A of article two of\nthe public health law.\n (e) A corporation authorized to practice law shall be subject to the\nregulation and control of, and its certificate of incorporation shall be\nsubject to suspension, revocation or annulment for cause by, the\nappellate division of the supreme court and the court of appeals in the\nsame manner and to the same extent provided in the judiciary law with\nrespect to individual attorneys and counselors-at-law. Such corporation\nneed not qualify for any certification under section four hundred\nsixty-four of the judiciary law, take an oath of office under section\nfour hundred sixty-six of such law or register under section four\nhundred sixty-seven of such law.\n (f) The order of suspension, revocation or annulment of the\ncertificate of incorporation of a professional service corporation\npursuant to paragraphs (d) and (e) of this section shall be effective\nupon the filing of such order with the department of state.\n (g) The practices of creative arts therapy, marriage and family\ntherapy, mental health counseling, and psychoanalysis shall not be\ndeemed the same professional service for the purpose of paragraph (a) of\nthis section, notwithstanding that such practices are all licensed under\narticle one hundred sixty-three of the education law.\n (h) Any firm established for the business purpose of incorporating as\na professional service corporation formed to lawfully engage in the\npractice of public accountancy, as such practice is defined under\narticle one hundred forty-nine of the education law shall be required to\nshow (1) that a simple majority of the ownership of the firm, in terms\nof financial interests and voting rights held by the firm's owners,\nbelongs to individuals licensed to practice public accountancy in some\nstate, and (2) that all shareholders of a professional service\ncorporation whose principal place of business is in this state, and who\nare engaged in the practice of public accountancy in this state, hold a\nvalid license issued under section seventy-four hundred four of the\neducation law. For purposes of this paragraph, "financial interest"\nmeans capital stock, capital accounts, capital contributions, capital\ninterest, or interest in undistributed earnings of a business entity.\nAlthough firms registered with the education department may include\nnon-licensee owners, a registered firm and its owners must comply with\nrules promulgated by the state board of regents. Notwithstanding the\nforegoing, a firm incorporated under this section may not have\nnon-licensee owners if the firm's name includes the words "certified\npublic accountant," or "certified public accountants," or the\nabbreviations "CPA" or "CPAs". Each non-licensee owner of a firm that is\nincorporated under this section shall be a natural person who actively\nparticipates in the business of the firm or its affiliated entities. For\npurposes of this subdivision, "actively participate" means to provide\nservices to clients or to otherwise individually take part in the\nday-to-day business or management of the firm or an affiliated entity.\nSuch a firm shall have attached to its certificate of incorporation a\ncertificate or certificates demonstrating the firm's compliance with\nthis paragraph, in lieu of the certificate or certificates required by\nsubparagraph (ii) of paragraph (b) of this section.\n