§ 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 2 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 § 464 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 § 7404 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