N.Y. Business Corporation Law § 1503: Organization

§ 1503. Organization.

(a) Notwithstanding any other provision of law, one or more

individuals duly authorized by law to render the same professional

service within the state may organize, or cause to be organized, a

professional service corporation for pecuniary profit under this article

for the purpose of rendering the same professional service, except that

one or more individuals duly authorized by law to practice professional

engineering, architecture, landscape architecture, land surveying or

geology within the state may organize, or cause to be organized, a

professional service corporation or a design professional service

corporation for pecuniary profit under this article for the purpose of

rendering such professional services as such individuals are authorized

to practice.

(b) The certificate of incorporation of a professional service

corporation shall meet the requirements of this chapter and (i) shall

state the profession or professions to be practiced by such corporation

and the names and residence addresses of all individuals who are to be

the original shareholders, directors and officers of such corporation,

and (ii) shall have attached thereto a certificate or certificates

issued by the licensing authority certifying that each of the proposed

shareholders, directors and officers is authorized by law to practice a

profession which the corporation is being organized to practice and, if

applicable, that one or more of such individuals is authorized to

practice each profession which the corporation will be authorized to

practice.

(b-1) The certificate of incorporation of a design professional

service corporation shall meet the requirements of this chapter,

provided that shareholders may include employee stock ownership plans

(ESOPs) and employees of the corporation not licensed as design

professionals, and provided further however that:

(i) greater than seventy-five percent of the outstanding shares of

stock of the corporation are owned by design professionals and an ESOP

(or ESOPs) with greater than seventy-five percent of the plan's voting

trustees or 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

professionals unless greater than seventy-five percent of the plan's

voting trustees or greater than seventy-five percent of the plan's

committee members are design professionals,

(iii) greater than seventy-five percent of the directors are design

professionals,

(iv) greater than seventy-five percent of the officers are design

professionals,

(v) the president, the chairperson of the board of directors and the

chief executive officer or officers are design professionals, and

(vi) the single largest shareholder is either a design professional or

an ESOP with greater than seventy-five percent of the plan's voting

trustees being design professionals and greater than seventy-five

percent of the plan's committee members being design professionals.

(b-2) The certificate of incorporation of a design professional

service corporation shall:

(i) state the profession or professions to be practiced by such

corporation,

(ii) state the names and residence addresses of all individuals or

ESOPs who are to be the original shareholders, directors and officers of

such corporation,

(iii) indicate the profession or professions of each original

shareholder, director and officer who is a design professional,

(iv) state the ownership interest of each original shareholder, and

(v) indicate the names of the original officers and directors who are

the president, the chairperson of the board of directors and the chief

executive officer or officers.

(b-3) The certificate of incorporation of a design professional

service corporation shall have attached thereto a certificate or

certificates issued by the licensing authority certifying that each of

the proposed shareholders, directors and officers who is listed as a

design professional is authorized by law to practice a profession which

the corporation is being organized to practice and, if applicable, that

one or more of such individuals is authorized to practice each

profession which the corporation will be authorized to practice. The

attached certificate or certificates shall also certify that the

president, the chairperson of the board of directors and the chief

executive officer or officers are authorized by law to practice a

profession which the corporation is being organized to practice.

(b-4) The certificate of incorporation of a design professional

service corporation shall also have attached thereto a certificate or

certificates issued by the licensing authority certifying that each of

the shareholders, officers, directors and owners have been deemed to

have been of good moral character as may be established by the

regulations of the commissioner of education.

(b-5) On or after January first, two thousand twelve, the state

education department and the department of state shall allow an existing

professional service corporation organized under this article and

practicing professional engineering, architecture, landscape

architecture, geology or land surveying, or practicing any combination

of such professions to become a design professional service corporation

as defined in this article, provided the professional service

corporation meets all of the requirements to become a design

professional service corporation, including that its name shall end with

the words "design professional corporation" or the abbreviation

"D.P.C.", by amending its certificate of incorporation so that it

contains the following statements:

(1) the names and residence addresses of all individuals or ESOPs who

will be the shareholders, directors and officers of the original design

professional service corporation; and

(2) the profession or professions of each shareholder, director and

officer who is a design professional of the original design professional

service corporation; and

(3) the ownership interest of each shareholder of the original design

professional service corporation; and

(4) the names of the officers and directors who will be the president,

the chairperson of the board of directors and the chief executive

officer or officers of the original design professional service

corporation.

(i) The certificate of amendment shall have attached thereto a

certificate or certificates issued by the licensing authority certifying

that each of the proposed shareholders, directors and officers who is

listed as a design professional is authorized by law to practice a

profession which the corporation is organized to practice and, if

applicable, that one or more of such individuals is authorized to

practice each profession which the corporation will be authorized to

practice. The attached certificate or certificates shall also certify

that the proposed president, the chairperson of the board of directors

and the chief executive officer or officers are authorized by law to

practice a profession which the corporation is organized to practice.

(ii) The certificate of amendment shall also have attached thereto a

certificate or certificates issued by the licensing authority certifying

that each of the proposed shareholders, officers, directors and owners

listed have been deemed to have been of good moral character as may be

established by the regulations of the commissioner of education.

(iii) The certificate of amendment shall also have attached thereto:

(A) a tax clearance issued by the department of taxation and finance

certifying that the existing professional service corporation is current

with respect to payment of its state tax liabilities and (B) a

certificate of good standing from the state education department

certifying that the existing professional service corporation is

authorized to provide professional services without restriction.

(b-6) (1) Prior to the first day of March, two thousand nineteen, the

state education department and the department of state shall allow an

existing business corporation organized under article four of this

chapter to become a professional service corporation as defined in this

article for the purpose of practicing professional geology, provided

that the surviving corporation meet all of the requirements to become a

professional service corporation, including that the name of a

professional service corporation shall end with the words "professional

corporation" or the abbreviation "P.C." by amending its certificate of

incorporation so that it contains the following:

(i) the names and residence addresses of all individuals who will be

the original shareholders, directors and officers of the professional

service corporation;

(ii) a statement that the professional service corporation is formed

pursuant to this section; and

(iii) a statement that the amendment shall not effect a dissolution of

the corporation, but shall be deemed a continuation of its corporate

existence, without affecting its then existing property rights or

liabilities or the liabilities of its members or officers as such, but

thereafter it shall have only such rights, powers and privileges, and be

subject only to such other duties and liabilities, as a corporation

created for the same purposes under this article.

(2) The certificate of amendment shall have attached thereto a

certificate or certificates issued by the licensing authority certifying

that each of the proposed shareholders, directors and officers listed:

(i) is authorized by law to practice a profession which the

corporation is organized to practice and, if applicable, that one or

more of such individuals is authorized to practice each profession which

the corporation will be authorized to practice; and

(ii) has been deemed to be of good moral character as may be

established by the regulations of the commissioner of education.

(3) The certificate of amendment shall also have attached thereto a

tax clearance issued by the department of taxation and finance

certifying that the existing business corporation is current with

respect to payment of its state tax liabilities.

(4) Notwithstanding any provision of law to the contrary, any

corporation formed under this section shall be required to comply with

all applicable laws, rules, or regulations relating to the practice of a

profession under title eight of the education law.

(b-7) (1) Prior to the first day of March, two thousand nineteen, the

state education department and the department of state shall allow an

existing business corporation organized under article four of this

chapter to become a design professional service corporation as defined

in this article for the purpose of practicing professional geology,

provided that the surviving corporation meet all of the requirements to

become a design professional service corporation, including that the

name shall end with the words "design professional service corporation"

or the abbreviation "D.P.C." by amending its certificate of

incorporation so that it contains the following:

(i) the names and residence addresses of all individuals or ESOPs who

will be the original shareholders, directors and officers of the

professional service corporation;

(ii) a statement that the design professional service corporation is

formed pursuant to this section;

(iii) the profession or profession of each shareholder, director and

officer who is a design professional of the original design professional

service corporation;

(iv) the names of the officers and directors who will be the

president, the chairperson of the board of directors and the chief

executive officer or officers of the original design professional

service corporation;

(v) the ownership interest of each shareholder of the original design

professional service corporation; and

(vi) a statement that the amendment shall not effect a dissolution of

the corporation, but shall be deemed a continuation of its corporate

existence, without affecting its then existing property rights or

liabilities or the liabilities of its members or officers as such, but

thereafter it shall have only such rights, powers and privileges, and be

subject only to such other duties and liabilities, as a corporation

created for the same purposes under this article.

(2) The certificate of amendment shall have attached thereto a

certificate or certificates issued by the licensing authority certifying

that each of the proposed shareholders, directors and officers listed:

(i) is authorized by law to practice a profession which the

corporation is organized to practice and, if applicable, that one or

more of such individuals is authorized to practice each profession which

the corporation will be authorized to practice; and

(ii) has been deemed to be of good moral character as may be

established by the regulations of the commissioner of education.

(3) The certificate of amendment shall also have attached thereto a

tax clearance issued by the department of taxation and finance

certifying that the existing business corporation is current with

respect to payment of its state tax liabilities.

(4) Notwithstanding any provision of law to the contrary, any

corporation formed under this section shall be required to comply with

all applicable laws, rules, or regulations relating to the practice of a

profession under title eight of the education law.

(c) A certified copy of the certificate of incorporation and of each

amendment thereto shall be filed by the corporation with the licensing

authority within thirty days after the filing of such certificate or

amendment with the department of state.

(d) A professional service corporation, including a design

professional service corporation, other than a corporation authorized to

practice law, shall be under the supervision of the regents of the

university of the state of New York and be subject to disciplinary

proceedings and penalties, and its certificate of incorporation shall be

subject to suspension, revocation or annulment for cause, in the same

manner and to the same extent as is provided with respect to individuals

and their licenses, certificates, and registrations in title eight of

the education law relating to the applicable profession. Notwithstanding

the provisions of this paragraph, a professional service corporation

authorized to practice medicine shall be subject to the prehearing

procedures and hearing procedures as is provided with respect to

individual physicians and their licenses in title II-A of article two of

the public health law.

(e) A corporation authorized to practice law shall be subject to the

regulation and control of, and its certificate of incorporation shall be

subject to suspension, revocation or annulment for cause by, the

appellate division of the supreme court and the court of appeals in the

same manner and to the same extent provided in the judiciary law with

respect to individual attorneys and counselors-at-law. Such corporation

need not qualify for any certification under section four hundred

sixty-four of the judiciary law, take an oath of office under section

four hundred sixty-six of such law or register under section four

hundred sixty-seven of such law.

(f) The order of suspension, revocation or annulment of the

certificate of incorporation of a professional service corporation

pursuant to paragraphs (d) and (e) of this section shall be effective

upon the filing of such order with the department of state.

(g) The practices of creative arts therapy, marriage and family

therapy, mental health counseling, and psychoanalysis shall not be

deemed the same professional service for the purpose of paragraph (a) of

this section, notwithstanding that such practices are all licensed under

article one hundred sixty-three of the education law.

(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 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 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 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. For purposes of this paragraph, "financial interest"

means capital stock, capital accounts, capital contributions, capital

interest, or interest in undistributed earnings of a business entity.

Although firms registered with the education department may include

non-licensee owners, a registered firm and its owners must comply with

rules promulgated by the state board of regents. Notwithstanding the

foregoing, 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 a natural person who actively

participates in the business of 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 or an affiliated entity.

Such a firm shall have attached to its certificate 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.