ASSEMBLY DEMOCRATS: Assembly Passes Seven-Bill Package to Update, Improve NJ's Corporate Business Laws

ASSEMBLY PASSES SEVEN-BILL PACKAGE TO UPDATE, IMPROVE NJ'S CORPORATE BUSINESS LAWS

Measures Would Make State More Business Friendly; Make NJ's Corporate Business Laws Similar to Delaware's

(TRENTON) - The General Assembly today passed a seven-bill package sponsored by Assemblymen Patrick J. Diegnan, Joseph Vas, Matthew W. Milam, Nelson T. Albano and Wayne P. DeAngelo to simplify many of New Jersey's corporate governance statutes and make the state more attractive to businesses.

"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).  "By making the state more business friendly, we can actively combat the national economic recession, and begin to reverse New Jersey's pervasive stigma as state hostile to business."

According to the sponsors, the proposed changes in New Jersey's corporate business laws stem largely from recent conversations they had with business leaders and from a desire to be more cognizant of how corporations work and operate in the instant-access global marketplace.  The sponsors also studied policies in neighboring states - particularly Delaware, which is widely regarded as being very accepting when it comes to corporate governance.  Portions of the package mirror Delaware's General Corporation Laws; portions go even further.

"Making these changes will help reignite the engines of private commerce in the Garden State," said Vas (D-Middlesex), chairman of the Assembly Commerce and Economic Development Committee.  "And that, in turn, will stimulate the economy, boost private sector job growth, and help reverse the state's reputation as being business unfriendly."

If enacted into law, the Diegnan/Vas/Milam/Albano/DeAngelo initiative would:

• 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 is sponsored by Diegnan, Vas, Upendra Chivukula (D-Somerset) and DeAngelo.
• Eliminate the 10-day notice period required for certain types of shareholder actions.  That requirement creates inefficiencies in standard transactions and causes unnecessary delays for corporations seeking to complete routine business (A-2880).  The measure is sponsored by Diegnan, Vas and Chivukula.
• 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).  The measure is sponsored by Vas, Albert Coutinho (D-Essex) and Diegnan.
• Provide true one-hour and two-hour options for expedited over-the-counter corporate service requests.  Currently, expedited service is considered priority same day service, which is processed within 8.5 hours from the time the request is received (A-2882).  The measure is sponsored by Diegnan, Vas and Milam.
• 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.  Current law requires a corporation to amend the certificate of incorporation for any such changes (A-2883).  The measure is sponsored by DeAngelo, Chivukula, Coutinho, Diegnan and Vas.
• 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 would eliminate 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 is sponsored by Albano, DeAngelo, Sandra Love (D-Camden), Diegnan and Vas.
• 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).  The measure is sponsored by Milam, Love, Albano, Diegnan and Vas.

"With increasing turbulence in our national economy, we must do everything we can to ensure that New Jersey remains an excellent place to do business," said Milam (D-Cumberland/Atlantic/Cape May).  "In the current competitive marketplace, simply relying on our proximity to New York and Philadelphia is no longer enough."

"This package will send a message that we are serious about working with the businesses that choose to call New Jersey home," said Albano (D-Cumberland/Atlantic/Cape May).  "If they choose to make a good-faith effort to become partners in our economic future, they should not have to put up with archaic and outdated laws to do so."

"These changes will help bring new jobs and new opportunities to the state," said DeAngelo (D-Mercer/Middlesex).  "With a full-blown recession looming on the horizon, working to bolster and protect the state's private sector now only makes sense."

The measures all were passed by unanimous vote. They now head to the Senate for further consideration.

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