Bill S4308-2011

Allows a professional service limited liability company to be surviving business entity in the case of a merger with a professional service corporation

Provides that the surviving business entity in the case of a merger between a professional service corporation and a professional service limited liability company may be a professional service limited liability company.

Details

Actions

  • Sep 23, 2011: SIGNED CHAP.564
  • Sep 12, 2011: DELIVERED TO GOVERNOR
  • Jun 17, 2011: returned to senate
  • Jun 17, 2011: passed assembly
  • Jun 17, 2011: ordered to third reading rules cal.390
  • Jun 17, 2011: substituted for a678
  • May 11, 2011: referred to corporations, authorities and commissions
  • May 11, 2011: DELIVERED TO ASSEMBLY
  • May 11, 2011: PASSED SENATE
  • May 10, 2011: ADVANCED TO THIRD READING
  • May 9, 2011: 2ND REPORT CAL.
  • May 4, 2011: 1ST REPORT CAL.546
  • Mar 28, 2011: REFERRED TO CORPORATIONS, AUTHORITIES AND COMMISSIONS

Meetings

Calendars

Votes

VOTE: COMMITTEE VOTE: - Corporations, Authorities and Commissions - May 4, 2011
Ayes (5): Ranzenhofer, Flanagan, Larkin, Martins, Squadron
Ayes W/R (1): Perkins

Memo

BILL NUMBER:S4308

TITLE OF BILL: An act to amend the business corporation law, in relation to providing that the surviving business entity in the case of a merger between a professional service corporation and a professional service limited liability company may be a professional service limited liability company

PURPOSE: To allow a surviving business entity of a merger between a professional service corporation and a professional service limited liability company to be a limited liability company.

SUMMARY OF PROVISIONS: Section 1 amends section 1501 of the business corporation law, as added by chapter 974 of the laws of 1970, to create the definition of "Other Business Entity."

Section 2 amends section 1516 of the business corporation law, as amended by chapter 851 of the laws of 1992, to provide that the surviving business entity in the case of a merger between a professional service corporation and a professional service limited liability company may be a professional service limited liability company.

Section 3 establishes an effective date.

JUSTIFICATION: Under current law, when a professional service corporation and a professional service limited liability company merge, the surviving business entity must be a corporation. This does not take into account the legal needs of the surviving entity and is inconsistent with other law. This bill would resolve this problem by allowing a surviving business entity from such a merger to be a LLC.

LEGISLATIVE HISTORY: 2009-2010: A.246 2007-2008: A.11360

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: Immediately.


Text

STATE OF NEW YORK ________________________________________________________________________ 4308 2011-2012 Regular Sessions IN SENATE March 28, 2011 ___________
Introduced by Sens. DeFRANCISCO, RANZENHOFER -- read twice and ordered printed, and when printed to be committed to the Committee on Corpo- rations, Authorities and Commissions AN ACT to amend the business corporation law, in relation to providing that the surviving business entity in the case of a merger between a professional service corporation and a professional service limited liability company may be a professional service limited liability company THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 1501 of the business corporation law, as added by chapter 974 of the laws of 1970, is amended to read as follows: S 1501. Definitions. As used in this article, unless the context otherwise requires, the term: (a) "licensing authority" means the regents of the university of the state of New York or the state education department, as the case may be, in the case of all professions licensed under title eight of the education law, and the appropriate appellate division of the supreme court in the case of the profession of law. (b) "Profession" includes any practice as an attorney and counselor- at-law, or as a licensed physician, and those occupations designated in title eight of the education law. (c) "Professional service" means any type of service to the public which may be lawfully rendered by a member of a profession within the purview of his OR HER profession. (d) "Professional service corporation" means a corporation organized under this article. (e) "Officer" does not include the secretary or an assistant secretary of a corporation having only one shareholder. (F) "OTHER BUSINESS ENTITY" MEANS ANY PERSON OTHER THAN A NATURAL PERSON, GENERAL PARTNERSHIP OR A DOMESTIC OR FOREIGN BUSINESS CORPO-
RATION, AND INCLUDES A PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY FORMED PURSUANT TO THE PROVISIONS OF THE NEW YORK LIMITED LIABILITY COMPANY LAW. S 2. Section 1516 of the business corporation law, as amended by chap- ter 851 of the laws of 1992, is amended to read as follows: S 1516. Corporate mergers, consolidations and other reorganizations. (A) Notwithstanding any inconsistent provision of this article, a professional service corporation, pursuant to the provisions of article nine of this chapter, may be merged or consolidated with another corpo- ration formed pursuant to the provisions of this chapter or with a corporation authorized and registered to practice the same profession pursuant to the applicable provisions of subdivision six of section seventy-two hundred nine of the education law (engineer or land surveyor) or subdivision four of section seventy-three hundred seven of the education law (architect) of article one hundred forty-five of the education law, or with a foreign corporation, OR OTHER BUSINESS ENTITY PRACTICING THE SAME PROFESSION OR PROFESSIONS IN THIS STATE OR THE STATE OF ITS FORMATION, or may be otherwise reorganized, provided that the corporation which survives or which is formed pursuant thereto is a professional service corporation, A PROFESSIONAL SERVICE LIMITED LIABIL- ITY COMPANY or a foreign professional service corporation practicing the same profession or professions in this state or the state of incorpo- ration or, if one of the original corporations is authorized to practice pursuant to the provisions of either subdivision six of section [seven thousand two] SEVENTY-TWO hundred nine or subdivision four of section [seven thousand three] SEVENTY-THREE hundred seven, a corporation authorized and registered to practice the same profession pursuant to the applicable provisions of subdivision six of section seventy-two hundred nine of the education law (engineer or land surveyor) or subdi- vision four of section seventy-three hundred seven of the education law (architect) of article one hundred forty-five of the education law. [The] (B) IF THE SURVIVING BUSINESS ENTITY IS A PROFESSIONAL CORPO- RATION, THE restrictions on the issuance, transfer or sale of shares of a professional service corporation shall be suspended for a period not exceeding thirty days with respect to any issuance, transfer or sale of shares made pursuant to such merger, consolidation or reorganization, provided that: (i) no person who would not be eligible to be a share- holder in the absence of this section shall vote the shares of or receive any distribution from such corporation; (ii) after such merger, consolidation or reorganization, any professional service corporation which survives or which is created thereby shall be subject to all of the provisions of this article[,]; and (iii) shares thereafter only may be held by persons who are eligible to receive shares of such profes- sional service corporation or such other corporation authorized and registered to practice the same profession pursuant to the applicable provisions of subdivision six of section seventy-two hundred nine of the education law (engineer or land surveyor) or subdivision four of section seventy-three hundred seven of the education law (architect) of article one hundred forty-five of the education law, which survives. Nothing herein contained shall be construed as permitting the practice of a profession in this state by a corporation which is not incorporated pursuant to the provisions of this article or authorized to do business in this state pursuant to the provisions of article fifteen-A of this chapter or authorized and registered to practice a profession pursuant to the applicable provisions of article one hundred forty-five of the education law. For the purposes of this section, other reorganizations
shall be limited to those reorganizations defined in paragraph one of subsection (a) of section three hundred sixty-eight of the internal revenue code. (C) IF THE SURVIVING BUSINESS ENTITY IS A PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY, THE RESTRICTIONS ON THE ISSUANCE, TRANSFER OR SALE OF MEMBERSHIP INTERESTS OF A PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY OTHER THAN THE REQUIREMENTS OF THE FIRST TWO SENTENCES OF SUBDIVISION (C) OF SECTION TWELVE HUNDRED ELEVEN OF THE LIMITED LIABILITY COMPANY LAW, SHALL BE SUSPENDED FOR A PERIOD NOT EXCEEDING THIRTY DAYS WITH RESPECT TO ANY ISSUANCE, TRANSFER OR SALE OF MEMBERSHIP INTERESTS MADE PURSUANT TO SUCH MERGER OR CONSOLIDATION, PROVIDED THAT: (I) NO PERSON OR BUSINESS ENTITY WHO WOULD NOT BE ELIGIBLE TO BE A MEMBER IN THE ABSENCE OF THIS SECTION SHALL VOTE OR RECEIVE ANY DISTRIBUTION FROM SUCH LIMITED LIABILITY COMPANY; (II) AFTER SUCH MERGER OR CONSOLIDATION, ANY PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY THAT SURVIVES OR THAT IS CREATED THEREBY SHALL BE SUBJECT TO ALL THE PROVISIONS OF THE LIMITED LIABILITY COMPANY LAW; AND (III) MEMBERSHIP INTERESTS THEREAFTER MAY BE HELD ONLY BY PERSONS OR BUSINESS ENTITIES WHO ARE ELIGIBLE TO BE A MEMBER OF SUCH PROFESSIONAL SERVICE LIMITED LIABILITY COMPANY. NOTHING HEREIN CONTAINED SHALL BE CONSTRUED AS PERMITTING THE PRACTICE OF A PROFESSION IN THIS STATE BY A LIMITED LIABILITY COMPANY THAT IS NOT FORMED PURSUANT TO THE PROVISIONS OF THE LIMITED LIABILITY COMPANY LAW OR AUTHORIZED TO DO BUSINESS IN THE STATE PURSUANT TO THE PROVISIONS OF ARTICLE THIRTEEN OF THE LIMITED LIABILITY COMPANY LAW. S 3. This act shall take effect immediately.

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