New Law Changes Design Industry Changes Requirements for Licensing

As a construction attorney I can say that it is rare that a change is made in the law which revolutionizes the design industry. Up until now, the laws in the State of New York only allowed architectural and engineering firms to be owned solely by licensed individuals in those respective fields. In other words, an architectural or engineering firm may have employees who have worked for them for twenty years, but who have for some reason never became licensed in that field. There may be interior designers who have perhaps gone to architectural school, but never became licensed. These individuals could never become shareholders in the firm under the existing law, which limited their advancement within the company. This also caused some people to perhaps “secretly” do what they knew they could not do openly.

Design Professionals Take Note

However all of this is about to change, effective January 1, 2012, with the enactment of a new statute in the State of New York creating a new entity to be known as a “Design Professional Service Corporation.”

On September 23, 2011, Governor Andrew Cuomo signed into law Bill S2987/A4581 which significantly changes the laws regulating design professional corporations. This new entity form will require that "greater than seventy-five percent" of the outstanding shares be owned by a licensed design professional or professionals. In addition "greater than seventy-five percent" of the officers and directors must also be licensed. (The president, CEO and chairman must also be licensed individuals). However, there is an ownership interest of just less than 25% that can consist of non-licensed individuals. This bill marks the end of an era in New York where all owners of a design firm (except grandfathered corporations) were required to be licensed design professionals.

Unlicensed Individuals

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