The New Jersey Business & Industry Association on Monday said it supports legislation approved today that would make the Garden State more attractive to businesses by revising provisions of the NJ Business Corporation Act governing derivative proceedings and shareholder class-action suits.
“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 into their laws,” said Mary Beaumont, NJBIA’s Vice President for Health and Legal Affairs.
The legislation, A-2970, which was approved by the Assembly Financial Institutions and Insurance Committee, is part of a package of bills—some already enacted into law—that were based on the recommendations of the New Jersey Corporate and Business Law Study Commission.
Under current state law, the derivative proceedings and shareholder class-action provisions of the NJ Business Corporation Act apply only if a corporation deems them applicable in its certificate of incorporation. A-2970 makes technical changes to the law to allow a corporation to “vary the applicability” of law’s provisions in its certificate of incorporation.
The legislation also clarifies that certificates of incorporation can supersede the law’s provisions regarding how courts allocate expenses at the termination of a derivative proceeding or shareholder class action, as well as how much money a plaintiff is required to provide as security for reasonable expenses related to the derivative proceeding or class action.