New Jersey recently enacted a trio of bills intended to make New Jersey more business friendly by conforming certain of its corporate statutes to those found in neighboring states such as Delaware and New York. These bills became effective on April 2, 2013. The first bill amended the New Jersey Shareholders' Protection Act (the "Act") to provide that all publicly-traded New Jersey corporations are covered by the protections of the Act. Previously, the Act only applied to New Jersey corporations that had principal executive offices or significant business operations in New Jersey. The bill includes a 90-day opt out provision for New Jersey corporations previously not covered by the Act that desire to continue to remain outside the scope of the Act.
Additionally, the bill permits New Jersey corporations to engage in a business combination with an interested stockholder (i.e., generally an owner of 10% or more of the outstanding voting stock) if the transaction that resulted in the person becoming an interested stockholder was approved by the board of directors prior to the consummation of such transaction. The bill also permits a subsequent business combination between a New Jersey corporation and an interested stockholder if such business combination was approved by (i) the board of directors, or a committee of the board of directors, consisting solely of persons who are not employees, officers, directors, stockholders, affiliates or associates of the interested stockholder and (ii) the affirmative vote of the holders of a majority of the voting stock not beneficially owned by the interested stockholder.
Finally, the bill exempts any stockholder from the Act who owns 5% or more of a New Jersey corporation's voting stock, provided that the New Jersey corporation did not have its principal executive offices or conduct significant business operations in New Jersey on the effective date of the bill.
The second bill amended the New Jersey Business Corporation Act to permit stockholders of New Jersey corporations to participate in stockholder meetings by remote communication methods and clarify the remedies available for dissenting stockholders.
The third bill modified the law concerning stockholder derivative suits with the effect that such suits are more difficult to institute and maintain. In particular, this bill permits New Jersey corporations to amend its certificate of incorporation to add provisions affording independent directors greater flexibility to dismiss stockholder derivative litigation they determine is not in the best interest of the corporation.
NJ A-3049/S-2328 (P.L. 2013, C.40), NJ A-3050/S-2327 (P.L. 2013, C.41) and NJ A-3123/S-2326 (P.L. 2013, C.42).