2023 New York Laws › BSC - Business Corporation › Article 15 - Professional Service Corporations › 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,
* NB Effective until July 21, 2024
* (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,
* NB Effective July 21, 2024
* (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,
* NB Effective until July 21, 2024
* (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,
* NB Effective July 21, 2024
(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.
* NB Effective June 8, 2024