Proposed Bill Would Allow Remote Attendance at Shareholders’ Meetings

Proposed Bill Would Allow Remote Attendance at Shareholders’ Meetings

Legislation designed to make New Jersey a more “business friendly” has passed both the state Senate and Assembly. The bills are part of a package that includes important changes that limit the opportunity for shareholder derivative suits.

To reflect advances in technology, S-2327/A-3050 would amend the “New Jersey Shareholders’ Protection Act” to allow corporate shareholder meeting attendance and participation by remote communication.

Under the proposed amendments, “a shareholder participating in a meeting of shareholders by means of remote communication would be deemed present and entitled to vote at the meeting if the corporation has implemented reasonable measures to (a) verify that each person participating remotely is a shareholder; and (b) provide each shareholder participating remotely with a reasonable opportunity to participate in the meeting, including an opportunity to vote on matters submitted to the shareholders, and to read or hear the proceedings of the meeting substantially concurrently with those proceedings.”  This would appear to be a sensible change that takes into account the prevalence of relatively inexpensive technology that makes such remote participation feasible.

The bill also seeks to clarify remedies for dissenting shareholders.  A new proposed paragraph provides that dissenter’s rights are the exclusive remedy for dissatisfied shareholders in corporate mergers and corporate transactions. As detailed in the bill, “The sponsor’s intent for these provisions of the bill is that dissenter’s rights should be the exclusive remedy for shareholders who are dissatisfied with the corporate actions enumerated in paragraph (1) (regardless of whether the shareholder has exercised his or her right to dissent), with the exception that a shareholder may bring an action only if the corporation has not complied with Chapter 11 of Title 14A of the New Jersey Statutes or if the corporation has engaged in fraudulent or material misrepresentation, or deceptive means, in obtaining approval of such transactions.”

The New Jersey Corporation and Business Law Study Commission recommended these proposed changes as they now more closely track the Model Business Corporation Act.