Jun 30, 2021
Governor Murphy Receives Bill to Make Virtual Shareholder Meeting Option Permanent
On March 09, 2020, as a result of the COVID-19 pandemic, New Jersey’s Governor Phil Murphy issued Executive Order 103 declaring a State of Emergency and a Public Health Emergency.
Daily life drastically changed and as a society, we began implementing and practicing safety measures to eradicate the virus. On March 20, 2020, as it relates to New Jersey corporations, one safety measure to avoid mass gatherings was the implementation of a bill (A-3861) that allows New Jersey corporations to hold shareholder meetings in part or solely by means of remote communication during a state of emergency.
It has now been over a year since Gov. Murphy’s declaration of a State of Emergency and Public Health Emergency and the State has made tremendous strides in removing the virus. On May 04, 2021, Gov. Murphy issued Executive Order 244 declaring the lifting of the Public Health Emergency, but extended the State of Emergency, which includes bill A-3861, to finish the fight against the virus. In anticipation of the State of Emergency being lifted, bill A-4918, sponsored by Assembly Majority leader Lou Greenwald and Assembly Speaker Pro Tempore Gordon Johnson, was introduced and seeks to make permanent, among other things, the virtual shareholder meeting option.
Bill A-4918 was recently passed by the Senate and House and now waits on Gov. Murphy’s desk for signature. Virtual shareholder meetings can often be less expensive for corporations and provide a more convenient manner for shareholders to participate and attend. However, virtual meetings may also induce additional cybersecurity costs to ensure authenticity and privacy of the meetings and may pose a problem for shareholders that do not have technological access.
If Gov. Murphy signs bill A-4918 into law, we recommend that corporations decide whether it is in the best interest of the corporation to invoke the virtual shareholder meeting option. While this option can provide benefits, it should be considered carefully in light of a corporation’s individual facts and goals. For more information on this Legal Alert or related issues, please contact the corporate law attorneys at Schenck Price.
DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.