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Remote Only Shareholder Meetings Now Permitted During a State of Emergency Under the Amended New Jersey Business Corporation Act

On March 20, 2020, Phil Murphy, the Governor of New Jersey, signed into law an amendment to the New Jersey Business Corporation Act to permit corporations organized in New Jersey to conduct shareholder meetings solely by means of remote communication.  This change assists corporations planning to hold shareholder meetings during COVID-19 as the prior version of Section 14A:5-1 only permitted remote meetings so long as a location for shareholders to attend the meeting in-person was also designated. All such remote only shareholder meetings may only be held during a state of emergency declared by the Governor provided, that the board of directors authorizes and adopts guidelines and procedures governing the remote only shareholder meeting.

Prior to holding a remote shareholder meeting, whether or not the Governor has declared a state of emergency, a New Jersey corporation must review its certificate of incorporation and by-laws to confirm that remote participation by shareholders is not restricted or prohibited. If remote shareholder meetings are restricted, consideration should be given as to whether amendments to such documents are necessary prior to proceeding with the remote meeting.

Additionally, Section 14A:5-1 requires that the corporation implement reasonable measures to:

(a) verify that each person participating remotely is a shareholder or a proxy of a shareholder;

(b) provide each shareholder participating remotely with a reasonable opportunity to participate in the meeting, including an opportunity to vote and to read or hear the proceedings substantially simultaneously with those proceedings; and

(c) record and maintain a record of any shareholder votes or other actions taken by remote communication at the meeting.

It is important to note that remote shareholder meetings are only permitted during a state of emergency in New Jersey. As such, a New Jersey corporation is not permitted to hold remote only shareholder meetings due to the existence of a state of emergency in any other state even if the shareholder meeting is held in a state other than New Jersey.

Given the requirement that New Jersey be in a state of emergency during the time of the shareholder meeting for remote only meetings to be permissible, in the event the state of emergency is lifted prior to, or on the day of the meeting, a physical location for the shareholder meeting is required. As such, New Jersey corporations should have a contingency plan should the state of emergency be lifted prior to the time of the shareholder meeting.

As a result of COVID-19, the Securities and Exchange Commission (the SEC) prepared guidance for public corporations conducting shareholder meetings during the pandemic (click here to view SEC’s guidance).  According to the SEC, shareholders, intermediaries in the proxy process, and other market participants must be notified of plans to conduct remote only meetings in a timely manner and disclose clear logistical directions relating to the meeting, including, how to access, participate in, and vote at the meeting.  Any corporation that has already mailed and filed its definitive proxy materials can change the form of shareholder meeting from in-person to remote only without mailing additional soliciting materials or amending its proxy materials if it issues and files an 8-K announcing the change and takes all reasonable steps to inform other intermediaries in the proxy process and other relevant market participants of such change.

© 2020 Giordano, Halleran & Ciesla, P.C. All Rights Reserved National Law Review, Volume X, Number 147
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John A. Aiello, Corporate and Securities Attorney, Giordano Law Firm, Shareholder
Shareholder

John, chair of the Corporate and Securities Law Practice Area, concentrates his practice on corporate and securities matters. His practice focuses on various aspects of corporate finance, including private placements and initial public offerings of securities, as well as mergers, acquisitions and restructurings. In addition, John provides general corporate counseling and advice with respect to litigation strategy to a number of corporations, both public and private.

In over forty years of practice, John has advised clients on the formation of business organizations, professional...

732-741-3900
Philip D. Forlenza, Giordano Law Firm, Shareholder,
Shareholder

Phil's practice is devoted primarily to Corporate Finance/Securities Law, Acquisitions/ Mergers and Business Law.

Phil counsels clients with respect to the raising of capital in the public and private markets. He prepares prospectuses and private offering documents required in connection with the public and private sale of securities and advises as to ongoing compliance with the rules of the Securities and Exchange Commission and state securities bureaus, including the preparation and review of periodic reports required to be filed by issuers of securities.

Phil represents purchasers and sellers of businesses, including transactions involving mergers, consolidations and asset sales. He also counsels clients as to the appropriate structure of acquisition transactions and prepares securities filings and public disclosure documents required in connection with the purchase and sale of publicly traded corporations.

Phil advises clients in the formation and establishment of businesses, including corporations, general partnerships, limited partnerships, investment funds, joint ventures and limited liability companies. He prepares shareholder agreements for new and existing owners of corporations, including "buy/sell" arrangements and handles ongoing counseling of clients in various business agreements, such as license agreements, distributorship agreements, technology transfer agreements and employment agreements.

732-741-3900
Paul T. Colella  Shareholder  Business Law, Mergers and Acquisitions Corporate Finance.
Co-Managing Shareholder/Chief Financial Officer

Paul's practice is devoted primarily to Business Law, Mergers and Acquisitions, and Corporate Finance.

Paul's Business Law practice includes counseling clients in the formation and organization of a business or professional practice, including corporations, general partnerships, limited partnerships and limited liability companies. He also provides business planning advice, including the preparation of shareholders' agreements, employment agreements, consulting agreements and other types of business agreements, and participates in the resolution of disputes between or among the...

732-741-3900
Gerald Lally Corporate Finance Attorney Giordano Halleran Ciesla
Shareholder

Jerry is a transactional lawyer who has extensive experience in mergers and acquisitions, corporate finance, securities law, business law and tax law. He represents acquirers and sellers of businesses in a wide range of public and private transactions. He counsels clients in capital raising transactions, including public offerings, private placements, PIPES, strategic investments and secured and unsecured financings. Jerry also advises clients on securities law compliance and disclosure issues.

In the practice of business law, Jerry represents various closely-held business...

732-741-3900
Patrick S. Convery Giordano Law firm, Acquisitions and Mergers Corporate Law Business Contracts Health Care Transactions Corporate Finance Shareholder Disputes Business Litigation Cannabis Law
Shareholder

Pat's practice is devoted primarily to Mergers and Acquisitions, Corporate Law, Business Transactions and Business Litigation. He has counseled clients on a wide variety of business matters.

Pat represents purchasers and sellers of businesses, including transactions involving asset sales, stock purchases, mergers and consolidations. He also advises clients in the planning, formation, organization, establishment and restructuring of businesses, including corporations, general partnerships, limited partnerships and limited liability companies. He prepares shareholder agreements and...

732-741-3900
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