Apr 16, 2020

Revisions to New Jersey Business Corporation and Nonprofit Corporation Law to Allow Meetings by Remote Communications

By:  Farah N. Ansari, Esq. and Ira J. Hammer, Esq.

On April 14, 2020, Governor Murphy signed legislation amending the New Jersey Nonprofit Corporation Act to allow members of New Jersey nonprofit corporations to participate in member meetings by using remote communication and to allow nonprofit corporations to hold meetings solely (or in part) by means of remote communication during a state of emergency declared by the Governor. These revisions went into effect immediately.   

Prior to the adoption of these amendments, all member meetings for New Jersey nonprofit corporations were required to be held at a physical location in accordance with N.J.S.A. 15A:5.1 and the Nonprofit Corporation Act did not expressly provide for members to participate in a meeting by remote means.  The amendment opened the door for participation by members in members’ meetings by remote communication provided that the board of trustees of the nonprofit authorizes that participation.  The amendment also allows for a meeting to be held by remote means only, during a state of emergency declared by the Governor, if the board of trustees of the nonprofit corporation authorizes and adopts guidelines and procedures governing such a meeting.  A member that participates in such a meeting shall be deemed to be present in person and shall be entitled to vote at the meeting, regardless of whether the meeting is held at a designated place or solely by means of remote communication.  In any such meeting, the nonprofit corporation must implement reasonable measures to:  (i) verify that the person participating remotely is a member or a proxy of a member; (ii) provide each member that is participating remotely a reasonable opportunity to participate in the meeting including an opportunity to vote on matters; and (iii) record any votes and other actions taken by remote communications during such meeting. 

Approximately one month ago, in reaction to the limitations imposed to deal with the COVID-19 crisis, the legislature amended the New Jersey Business Corporation Act, N.J.S.A. 14A:5-1, to allow for shareholder meetings to be held by remote communication in the event of a state of emergency declared by the Governor.  A shareholder that participates in such a meeting shall be deemed to be present in person and entitled to vote at such meeting, regardless of whether the meeting is held at a designated place or solely by means of remote communication.  The corporation must also implement the measures set forth above relating to nonprofit corporations that require the verification of identification, the ability of the shareholders participating remotely to participate in the meeting and vote, and that a record be kept of votes and other actions taken by remote communications.  Notably, the New Jersey legislature had previously amended the New Jersey Business Corporation Act to allow for participation of shareholders in shareholder’s meetings by remote communications in April, 2013. 

Whether you’re a trustee or director on the board of a New Jersey corporation or an adviser to such entities, it’s important to keep abreast of changes to corporate governance requirements. In the unusual circumstances of today, changes providing additional flexibility like the ones in these statutory amendments are welcome.  Schenck Price is always available to assist you with your corporate legal needs.

For more information, please contact Farah N. Ansari at fna@spsk.com / 973-540-7344 or Ira J. Hammer at ijh@spsk.com / 973-631-7859
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