N.Y. Business Corporation Law § 1507 : Business Corporation — Professional Service Corporations — Issuance of shares

  • Date:

Current through 2016 New York Laws, Chapters 1 to 237

(a) A professional service corporation may issue shares only to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice and who are or have been engaged in the practice of such profession in such corporation or a predecessor entity, or who will engage in the practice of such profession in such corporation within thirty days of the date such shares are issued. No shareholder of a professional service corporation shall enter into a voting trust agreement, proxy, or any other type agreement vesting in another person, other than another shareholder of the same corporation or a person who would be eligible to become a shareholder if employed by the corporation, the authority to exercise voting power of any or all of his shares. All shares issued, agreements made, or proxies granted in violation of this section shall be void.
(b) A design professional service corporation may issue shares to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice and who are or have been engaged in the practice of such profession in such corporation or a predecessor entity, or who will engage in the practice of such profession in such corporation within thirty days of the date such shares are issued. A design professional service corporation may also issue shares to employee stock ownership plans (ESOPs) and employees of the corporation not licensed as design professionals, provided that:
(i) greater than seventy-five percent of the outstanding shares of stock of the corporation are owned by 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,
(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.

No shareholder of a design professional service corporation shall enter into a voting trust agreement, proxy or any other type of agreement vesting in another person, other than another shareholder of the same corporation, the authority to exercise voting power of any or all of his or her shares. All shares issued, agreements made or proxies granted in violation of this section shall be void.

N.Y. Bus. Corp. Law § 1507
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