By: Michael Psathas
The state of New Jersey recently amended its corporate laws under the New Jersey Business Corporation Act (NJBCA) in an effort to provide clarity for companies incorporated within the state. The changes closely align with Delaware law and provide guidance to business owners on a host of important issues concerning the operations of corporations. The changes became effective on January 16, 2018. Below is a brief summary of some of the more significant changes:
- Corporate directors may use “electronic transmission” (e.g., email) to approve actions by unanimous written consent. This amendment codifies the generally accepted practice of using email to approve actions by corporate boards.
- The bylaws of a corporation may include a forum selection clause requiring certain types of cases to be litigated in New Jersey federal or state courts. This provision is significant because it has the potential to drastically reduce the costs and burdens of certain litigations that would otherwise be brought in another state.
- The bylaws of a corporation may now contain any provision that is “not inconsistent with law or certificate of incorporation.” This provision clarifies the scope of bylaws in New Jersey and generally reflects accepted norms under Delaware law.
- A corporation may establish through its bylaws “procedures or conditions” under which certain material, with respect to shareholder-nominated individuals, will be included in the company’s proxy solicitation materials. For example, a company may include conditions limiting nominations of directors who have previously served on the board.
We will continue to monitor updates to the NJBCA, the New Jersey Revised Uniform Limited Liability Company Act and the New Jersey Uniform Partnership Act.