Session Laws

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to immediately regulate the practice of public accountancy, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 87A of chapter 112 of the General Laws, as appearing in the 1994 Official Edition, is hereby amended by striking out the definition of "Firm" and inserting in place thereof the following definition:-

"Firm", a business or professional corporation, general or registered limited liability company, or any other organizational form of entity legally permitted to engage in the practice of public accounting.

SECTION 2. Section 87B> of said chapter 112, as so appearing, is hereby amended by inserting after the word "partner", in lines 18 and 21, in each instance, the following word:- , member.

SECTION 3. Said section 87B> of said chapter 112, as so appearing, is hereby further amended by inserting after the word "partners", in line 35, the following word:- , members.

SECTION 4. Said section 87B> of said chapter 112, as so appearing, is hereby further amended by striking out, in line 40, the word "engaged" and inserting in place thereof the following words:- , including a registered limited liability partnership, registered pursuant to the laws of any state, engaged.

SECTION 5. Said section 87B> of said chapter 112, as so appearing, is hereby further amended by striking out, in lines 47, 50 and 55, the word "paragraph (g)" and inserting in place thereof, in each instance, the following words:- paragraph (h) or a business corporation registered under paragraph (i).

SECTION 6. Said section 87B> of said chapter 112, as so appearing, is hereby further amended by striking out paragraphs (g) and (h) and inserting in place thereof the following four paragraphs:-

(g) A limited liability company registered pursuant to the laws of any state engaged within the commonwealth in the practice of public accounting may register with the board as a limited liability company of certified public accountants; provided, however, that:

(1) each member thereof personally and regularly engaged within the commonwealth in the practice of public accounting as a member thereof is a certified public accountant registered under section eighty-seven A> and holds a valid biennial license issued under section eighty-seven B or is a professional or business corporation registered under paragraph (h) or (i) respectively;

(2) each active member thereof who is a resident of the United States is a certified public accountant in good standing of one state or is a professional or business corporation registered under paragraph (h) or (i) respectively; and

(3) each resident manager in charge of an office of the firm located within the commonwealth is a certified public accountant registered under section eighty-seven A> and holds a valid biennial license issued under section eighty-seven B or is a professional or business corporation registered under paragraph (h) or (i) respectively.

Application for such registration shall be made upon the affidavit of a member of such limited liability company who is a certified public accountant registered under section eighty-seven A> and who holds a valid biennial license issued under section eighty-seven B. The board shall in each case determine whether the applicant is eligible for registration. A limited liability company which is so registered and which holds a valid biennial license issued under section eighty-seven B> may use the words "certified public accountants" or the abbreviation "CPA" in connection with its company name. Notification shall be given the board within ninety days after the admission to or withdrawal of a member from any limited liability company so registered, and after the commencement or termination of any member's personal and regular practice of public accounting in the commonwealth as a member thereof. The board shall collect a fee for the registration of such a limited liability company.

(h) A professional corporation engaged within the commonwealth in the practice of public accounting may register with the board as a professional corporation of certified public accountants; provided, however, that such professional corporation either is organized pursuant to the provisions of chapter one hundred and fifty-six A or agrees to comply with all requirements of sections ten, eleven and twelve of chapter one hundred and fifty-six A. Application for such registration shall be made upon the affidavit of an officer, director or shareholder of such professional corporation who is a certified public accountant registered under section eighty-seven A> and who holds a valid biennial license issued under section eighty-seven B. The board shall in each case determine whether the applicant is eligible for registration.

A professional corporation which is so registered and which holds a valid biennial license issued under section eighty-seven B> may use the words "certified public accountants" or the abbreviation "CPA" in connection with the professional corporate name. Notification shall be given the board within ninety days after the admission to or withdrawal of an officer, director or shareholder from any professional corporation so registered, and after the commencement or termination of any officer's, director's or shareholder's personal and regular practice of public accounting in this state as a member thereof. The board shall collect a fee for the registration of such a professional corporation.

(i) A business corporation engaged within the commonwealth in the practice of public accounting may register with the board as a corporation of certified public accountants; provided, however, that:

(A) Such corporation may issue share, fractional shares, and rights or options to purchase shares only to the following, which shall be deemed "qualified persons" for purposes of this section:

(1) natural persons who are licensed in the commonwealth or in any other state or territory of the United States or the District of Columbia to practice public accounting;

(2) general or registered limited liability partnerships in which all partners are natural persons described in clause (1);

(3) professional or other business corporations authorized by law to render public accounting services; and

(4) limited liability companies authorized by law to render public accounting services.

(B) No proxy for shares of such a business corporation shall be valid unless it shall be given to a qualified person. A voting trust with respect to shares of such a business corporation shall not be valid unless all the trustees and beneficiaries thereof are qualified persons, except that such voting trust may be validly continued for a period of not more than six months after the death of a trustee or beneficiary or for a period of not more than six months after a trustee or beneficiary has become a disqualified person.

(C)(1) It shall be provided in the articles of organization or by-laws of such a business corporation, or in an agreement binding upon all of its shareholders, that the corporation shall redeem all the shares of a shareholder upon the occurrence of any one or more of the following events, unless said shares are transferred to a qualified person within twelve months after occurrence of the event:

(i) if such shareholder dies;

(ii) if such shareholder is determined to be disqualified for a period of six months or more;

(iii) if such shareholder is determined in the manner set forth in the applicable instrument, to be incompetent or permanently disabled so as to be unable to render public accounting services on behalf of the corporation;

(iv) if any of the shares of such shareholder are transferred voluntarily or by operation of law to a disqualified person; or

(v) if any other event specified in the articles of organization or by-laws or said shareholder agreement shall occur.

(2) The redemption of shares shall take place within twelve months after the occurrence of any of the events described in subclause (1), unless a shorter time is specified in the articles of organization, by-laws or said shareholder agreement. The consideration for such redemption shall be an amount equal to the fair value of such shares on the dates of said event, unless otherwise provided in the articles of organization, by-laws or said shareholder agreement. In lieu of such redemption, all the shares of such shareholder may be transferred to a qualified person within such twelve month period.

(3) If a redemption or transfer of such shares of such a business corporation is not completed within the prescribed time period, such shares may be canceled by the corporation and the holder shall have no further interest or rights of a shareholder of the corporation other than the right to receive an amount equal to the fair value of such shareholder's shares under clause (2), unless otherwise provided in the articles of organization, by-laws or said shareholder agreement.

(4) Nothing contained herein shall affect the obligations of such a business corporation to a shareholder whose interest in the corporation is terminated hereunder with respect to compensation, benefits or other matters accrued prior to such shareholder's termination or disqualification.

(5) During the pendency of a redemption or transfer hereunder of the shares of a shareholder who is deceased, disabled or incompetent said shares may be voted by the personal representatives of such shareholder.

A regulating board may by rule further restrict the authority of a business corporation registering under this paragraph (i) to issue or transfer shares, but no such rule shall have the effect of causing a shareholder of such corporation at the time such rule becomes effective to become a disqualified person.

A shareholder of a business corporation registering under this paragraph (i) may transfer shares and rights or options to purchase shares of the corporation only to qualified persons, as defined herein; provided, however, that subject to subparagraph (C), nothing contained herein shall prohibit the pledge of shares of such corporation to a disqualified person or the transfer of such shares by operation of law or court decree to a disqualified person.

Nothing contained herein shall prevent a business corporation registering under this paragraph (i) from adopting other restrictions on the transfer of its shares or requiring that transferees be approved by its shareholders or directors under provisions of its articles of organization, by-laws or an agreement binding on all of its shareholders.

Every certificate issued representing shares of a business corporation registering under this paragraph (i) shall state thereon in bold print that the shares represented thereby are subject to restrictions on transfer imposed hereby and any further restrictions on transfer imposed by the appropriate regulating board or boards from time to time pursuant to this chapter.

Application for such registration shall be made upon the affidavit of an officer, director or shareholder of such corporation who is a certified public accountant registered under section eighty-seven A> and who holds a valid biennial license issued under section eighty-seven B. The board shall in each case determine whether the applicant is eligible for registration.

A business corporation which is so registered and which holds a valid biennial license issued under section eighty-seven B> may use the words "certified public accountants" or the abbreviation "CPA" in connection with its corporate name. Notification shall be given the board within ninety days after the admission to or withdrawal of an officer, director or shareholder from any business corporation so registered, and after the commencement or termination of any officer's, director's or shareholder's personal and regular practice of public accounting in this state as a member thereof. The board shall collect a fee for the registration of such a business corporation.

(j) The board shall revoke the registration of a partnership, including a registered limited liability partnership, or limited liability company, or a professional or business corporation registered as certified public accountants under this section, or corresponding provisions of prior law or as public accountants under the laws of the commonwealth if at any time it does not have all the qualifications prescribed by the provisions of law under which it qualified for registration, and the board may revoke or suspend any such registration of a partnership, including a registered limited liability partnership or limited liability company, or a professional or business corporation or may revoke, suspend or refuse to renew any biennial license issued to such partnership, including a registered limited liability partnership, or limited liability company, or professional or business corporation so registered for any of the causes enumerated in section eighty-seven D and for the following additional causes:-

(1) the revocation or suspension of the certificate, registration or biennial license of any partner or any officer, director, shareholder, member or employee thereof;

(2) the cancellation, revocation, suspension or refusal to renew the authority of the partnership, including a registered limited liability partnership, or limited liability company, or the professional or business corporation or any partner or officer, director, shareholder, member or employee thereof to practice public accounting in any other state, for any cause other than failure to pay a registration fee in such another state.

SECTION 7. Section 87C of said chapter 112, as so appearing, is hereby amended by striking out, in line 141, the word "engaged" and inserting in place thereof the following words:- , including a registered limited liability partnership, registered pursuant to the laws of any state, engaged.

SECTION 8. Said section 87C of said chapter 112, as so appearing, is hereby further amended by striking out, in lines 150 and 151, the words "professional corporation registered under the provisions of paragraph (g)" and inserting in place thereof the following words:- limited liability company, professional or business corporation registered pursuant to paragraph (g), (h) or (i).

SECTION 9. Said section 87C of said chapter 112, as so appearing, is hereby further amended by adding the following two paragraphs:-

(e) A business corporation engaged within the commonwealth in the practice of public accounting may register with the public accountants administrative committee as a corporation of public accountants; provided, however, that each officer, director of shareholder personally and regularly engaged within the commonwealth in the practice of public accounting as a member thereof, is a certified public accountant registered under section eighty-seven A> or a registered public accountant under section eighty-seven C and holds a valid biennial license issued under section eighty-seven B>; and provided, further, that the corporation complies with the restrictions and transfer of shares and validity of proxies and voting trusts set forth in paragraph (i) of section eighty-seven B>. Application for such registration shall be made upon the affidavit of an officer, director or shareholder who meets the requirements of this paragraph.

The public accountants administrative committee shall in each case determine whether the business corporation is eligible for registration. A business corporation which is so registered and which holds a valid biennial license issued under section eighty-seven B> may use the words "public accountants" or the abbreviation "PA" in connection with its corporate name. Notification shall be given said committee within ninety days after the admission or withdrawal of an officer, director or shareholder from any business corporation so registered, and after the commencement or termination of any officer's, directors or shareholder's personal and regular practice of public accounting within the commonwealth as a member thereof. The committee shall collect a fee for the registration of such a business corporation.

(f) A limited liability company registered pursuant to the laws of any state engaged within the commonwealth in the practice of public accounting may register with the public accountants administrative committee as a limited liability company of public accountants; provided, however, that each member thereof personally and regularly engaged within the commonwealth in the practice of public accounting is a certified public accountant registered under section eighty-seven A> or a registered public accountant under section eighty-seven C and holds a valid biennial license issued under said section eighty-seven B>. Application for such registration shall be made upon the affidavit of a member who meets the requirement of this paragraph.

The public accountant's administrative committee should in each case determine whether the limited liability company is eligible for registration. A limited liability company which is registered and which holds a valid biennial license issued under section eighty-seven B> may use the words "public accountants" or the abbreviation "PA" in connection with its company name. Notification shall be given said committee within ninety days after the admission to or withdrawal of a member from any limited liability company so registered, and after the commencement or termination of any member's personal and regular practice of public accounting within the commonwealth as a member thereof. The committee shall collect a fee for the registration of such a limited liability company.

SECTION 10. Section 87C> of said chapter 112, as so appearing, is hereby amended by inserting after the word "director", in line 93, the following word:- , member.

SECTION 11. Section 87D of said chapter 112, as so appearing, is hereby amended by inserting after the word "officers", in line 33, the following word:- , members.

SECTION 12. Said section 87D of said chapter 112, as so appearing, is hereby further amended by inserting after the word "officer", in line 62, the following word:- , member.

SECTION 13. Said section 87D of said chapter 112, as so appearing, is hereby further amended by inserting after the word "partners", in lines 74 and 76, in each instance, the following word:- , members.

SECTION 14. Section 87E of said chapter 112, as so appearing, is hereby amended by inserting after the word "partner", in lines 2, 11, 12 and 26, in each instance, the following word:- , member.

SECTION 15. This act shall take effect on January first, nineteen hundred and ninety-seven.