New York Architecture & Engineering Firms Will Now Benefit from ESOPs
On July 21, 2022, New York Governor Hochul signed into law an amendment to the Design Professional Corporation (DPC) law that allows an employee stock ownership plan (ESOP) to own 100% of a DPC starting in July 2024. Previously, the state licensing rules prohibited ESOPs from owning 25% or more of the firm, severely limiting the viability of an ESOP as an option for A&E firms operating in New York State. In order to qualify, more than 75% of the ESOP’s voting trustees or committee members must be licensed design professionals.
Ever since 2012, when the New York Business Corporation Law was amended and the DPC was born, many have advocated for the elimination of the restrictions which prohibited an ESOP from being the largest single shareholder, and which did not allow the ESOP to be part of the “more than 75%” owned by licensed professionals.
This is a big victory for New York A&E firms as it will allow another ownership option that can both reward and incentivize employees and provide greater flexibility for ownership transitions.