(TRENTON) – Legislation sponsored by Assemblymen Roy Freiman and Raj Mukherji to modernize business filing statutes to include entity conversion and domestication was approved 75-0 by the full Assembly Thursday.
Conversion involves converting from one type of business entity to another. Domestication is the process of an out-of-state business entity converting to a domestic corporation. Because of a lack of clear statutory authority in New Jersey, entities wishing to convert or domesticate are forced to use a process that requires two or three indirect steps. This bill revises the statutes to allow for conversion or domestication in a single, direct, and more efficient transaction.
“Outdated laws are tying the hands of new businesses trying to open their doors in New Jersey,” said Freiman (D-Somerset, Mercer, Middlesex, Hunterdon). “My bill cuts the red tape and says ‘We’re open for business.’ “
The bill (A-4133) would modify the applicable business filing statutes contained in the “New Jersey Business Corporation Act” by adding domestication and conversion provisions across all business entity types. The bill would be effective 180 days following enactment.
“We can make New Jersey a more attractive state for the incorporation of businesses by bringing state law in line with many other states that allow domestication and conversion,” said Mukherji (D-Hudson). “This legislation would open a door to the business community that has been closed and create a friendlier business environment for those who would like to incorporate in New Jersey.”
At least 34 other states allow conversion where businesses can convert from one type of entity to another type. And at least 28 states allow domestication where an out-of-state business entity can convert to a domestic corporation.
The bill will now go to the Senate for further consideration.