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(TRENTON) – A legislative package sponsored by Assembly members Patrick J. Diegnan, Jr., Cleopatra G. Tucker and Annette Quijano making New Jersey’s laws governing corporations more in line with Delaware’s business friendly statutes are now law..
“In these awful economic times, it is more important than ever to always strive to make New Jersey more 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 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 law (A-3253) gives 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 will give corporations the option to give greater flexibility to their most experienced and trusted officers.”
The second law (A-3254) amends 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 makes sense to ensure that our corporate laws match our neighbors as closely as possible.”
“Keeping our businesses on the cutting edge is a constant goal,” said Quijano (D-Union). “That means we always have to be aware of whether our corporate governance laws match today’s reality. With these changes, we’re better positioning New Jersey businesses to succeed.”