Bill is Final Piece of 7-bill Assembly Democratic Reform Package

(TRENTON) — Legislation sponsored by five Assembly Democratic lawmakers to streamline New Jersey’s corporate laws to make the state more attractive to businesses was released Thursday by an Assembly panel.

The bill is sponsored by Assembly members Patrick J. Diegnan Jr, Peter J. Barnes III, Craig J. Coughlin, Bonnie Watson Coleman and Pamela Lampitt and is the final piece of an Assembly Democratic reform package signed into law during the last legislative session.

“For New Jersey to be competitive as a home for industry in the global marketplace, we need laws that will allow them to operate in real time, using 21st century technology,” said Diegnan (D-Middlesex), who crafted the bill package.

The bill (A-2420) eliminates the 10-day waiting period for certain shareholder actions not concerning mergers and acquisition activity governed by state law. This 10-day waiting period can create inefficiencies in transactions and delay closings while the notice period runs. As an example, this type of delay can occur when the certificate of incorporation needs to be amended in connection with a private placement of stock to increase the number of authorized shares or to create a new class of stock.

The bill eliminates that type of delay, and makes New Jersey consistent with Delaware General Corporation Law for shareholder approvals that do not involve mergers and acquisitions.

“This is common sense proposal that modernizes our law and puts and makes us even more competitive with nearby states when it comes to luring and attracting businesses that employ our residents,” said Barnes (D-Middlesex).

“We need to always be sure we’re updating our laws and keeping pace with change as we work to enhance New Jersey’s business climate and ensure a strong economy for our workers,” said Coughlin (D-Middlesex).

“With continued turbulence in our national economy, we must do everything we can to ensure that New Jersey remains an excellent place to do business,” said Watson Coleman (D-Mercer).

“Ensuring New Jersey businesses and the workers they employ can emerge strong from this economic meltdown with the momentum they need has been a top priority, and this is yet another step in that direction,” said Lampitt (D-Camden).

The bill was released 5-0 by the Assembly Commerce and Economic Development Committee.

The following six bills that were part of this package were signed into law during the last legislative session (the bill numbers listed below are from the 2008-09 session):

  • Allow any notice required under the provisions of the “New Jersey Business Corporation Act” to be issued electronically, saving corporations time and money and allowing for more immediate, direct access to corporate directors and shareholders (A-2879). The measure was sponsored by Diegnan, Upendra Chivukula (D-Somerset/Middlesex), Wayne DeAngelo (D-Mercer/Middlesex), Watson Coleman and Lampitt.
  • Provide true one-hour and two-hour options for expedited over-the-counter corporate service requests. Formerly, expedited service was considered priority same day service, which was processed within 8.5 hours from the time the request is received (A-2882). The measure was sponsored by Diegnan, Matt Milam (D-Atlantic/Cape May/Cumberland), Watson Coleman and Lampitt.
  • Enable corporate directors to provide a notice of resignation that is only effective when certain events occur, providing for smoother transitions in many circumstances — such as when a director doesn’t receive a majority vote at a shareholder’s meeting. (A-2881). It was sponsored by Albert Coutinho (D-Essex), Diegnan, Watson Coleman and Lampitt.
  • Allow a corporation to eliminate plurality voting for director elections using the corporation’s bylaws, giving New Jersey corporations greater flexibility in adopting other voting methods concerning the selection of directors. Former law required a corporation to amend the certificate of incorporation for any such changes (A-2883). It was sponsored by DeAngelo, Chivukula, Coutinho, Diegnan, Watson Coleman and Lampitt.
  • Modernize state law to better account for the expanded scope of global business interactions by amending the definition of a foreign corporation to mirror the definition used in the Uniform Limited Partnership Law and the New Jersey Limited Liability Company Act. The measure eliminated confusion caused by the differing definitions and also allow unincorporated entities beyond the traditional partnerships and limited liability companies to merge with New Jersey corporations (A-2884). It was sponsored by Nelson Albano. (D-Atlantic/Cape May/Cumberland), DeAngelo, Diegnan, Watson Coleman and Lampitt.
  • Provide greater flexibility in the types of equity awards a corporation may use, in recognition of the corporate trend away from granting stock options in favor of more restricted stock grants (A-2885). It was sponsored by Milam, Albano, Diegnan, Watson Coleman and Lampitt.
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