Two-Bill Package Would Bring NJ Law in Line with Delaware
(TRENTON) — A legislative package sponsored by Assembly members Patrick J. Diegnan, Jr., and Cleopatra G. Tucker making New Jersey’s laws governing corporations more in line with Delaware’s business friendly statutes received final legislative approval Monday.
Over 50 percent of U.S. publicly traded corporations, and 60 percent of Fortune 500 companies, are incorporated in Delaware.
“In these awful economic times, it is more important than ever to make New Jersey business friendly,” said Diegnan (D-Middlesex), who worked in conjunction with the New Jersey Corporate and Business Law Study Commission to craft the bill package. “Delaware is the obvious model to follow. These bills reflect areas of existing New Jersey law that should change to help make our state a more attractive place for businesses to incorporate and grow.”
The first bill (A-3253) would give New Jersey corporations the option to renounce the ‘corporate opportunity doctrine,’ which limits corporate officers’ ability to pursue potential business opportunities before obtaining full board approval.
“We found it is becoming increasingly difficult for New Jersey businesses to attract and keep talented board members because of our state’s inflexibility concerning the corporate opportunity doctrine,” said Diegnan. “This legislation would give corporations the option to give greater flexibility to their most experienced and trusted officers.”
The second measure (A-3254) would amend the “New Jersey Business Corporation Act” to prevent corporations from refusing to provide legal protection to their officers or directors unless specifically stated in the corporations’ bylaws or certificate of incorporation.
The amendment brings New Jersey law in line with Delaware’s. Delaware revised its law to prevent corporations from refusing to provide legal protections to their officers, despite having guaranteed that protection in their charter.
“It would be very difficult to convince talented people to work for big corporations in our state if they knew that their job could decide to withdraw its legal protections at any time,” said Tucker (D-Essex). “If we plan on enticing more corporations into our state, it would make sense to ensure that our corporate laws match our neighbors as closely as possible.”
The bill package, which is part of the Democratic legislative “Back to Work NJ” effort to create jobs and economic development, now heads to the governor, who may sign it, veto it or modify it using his power of conditional veto.