TRENTON – Legislation to simplify New Jersey’s corporate governance statutes is closer to becoming law.
The bills – part of a multi-bill package – were recently approved by the Senate after being approved by the Assembly in September. They now go the governor.
“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 Assemblyman Patrick J. Diegnan Jr. (D-Middlesex).
According to the sponsors of the legislation, the proposed changes in New Jersey’s corporate business laws stem largely from conversations with business leaders and from a desire to be more cognizant of how corporations work and operate in the instant-access global marketplace. The bills would:
• 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 passed the Senate 38-0 and the Assembly 79-0.
• 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 passed the Senate 37-1 and the Assembly 79-0.
The bills are part of a multi-bill corporate reform package. Gov. Jon S. Corzine signed two of the bills into law in January. They would:
• 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).
• 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).
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