NJBIA Supports Pro-Business Revisions to Laws Governing New Jersey Corporations

The New Jersey Business & Industry Association (NJBIA) today urged lawmakers to support two pro-business reforms designed to make New Jersey’s corporate governance laws competitive with other states. They are scheduled for a vote in the Assembly today.

NJBIA supports allowing companies to approve actions electronically and including a “forum selection clause” in their corporate bylaws. The two measures are part of a six-bill package supported by NJBIA.

“This legislation would make New Jersey more business friendly and more competitive with states such as Delaware, Pennsylvania and New York, which have already incorporated changes regarding shareholder matters and other business reforms,” said Mary Beaumont, NJBIA’s vice president for Health and Legal Affairs.

In the 20th century, other states began enacting more business friendly corporate governance laws that made them more attractive as a location for incorporating businesses. For example, Delaware is now the legal home of more than 66 percent of all publicly traded companies in the U.S., according to the Delaware Department of State’s website.

The two bills scheduled for a vote today are A-2971 and A-2162, both sponsored by former Assemblyman and now Senator Patrick Diegnan and Assemblyman Jay Webber.

A-2971 would clarify that corporate boards of directors may approve actions by electronic transmission without a formal meeting, if all members consent beforehand to do so. The bill is recognition of changing technology.

A-2162 would allow a corporation’s bylaws to include a “forum selection clause” stating that federal and state courts in New Jersey are the sole and exclusive forum for litigation related to derivative actions brought on behalf of the corporation or by shareholders making claims against the corporation or its officers.

The six-bill package implements the recommendations of the New Jersey Corporate and Business Law Study Commission, which was tasked with reviewing all laws and court decisions related to business entities.