Legislation which revises the law concerning derivative proceedings and shareholder class action lawsuits was signed into law by Governor Christie. It was part of a package of bills sponsored by Assemblyman Patrick Diegnan (D-Middlesex) and Senator Nia Gill (D-Essex)to advance economic-growth initiatives as recommended by the Corporate and Business Law Study Commission.
A derivative action is a suit brought by a small or minority shareholder against the corporation’s management or directors. A-3123 establishes a minimum value of shares one needs in order to file such a suit. It would also amend the parameters under which such a suit may be filed, allowing corporations to avoid unnecessary litigation and costs.
Assemblyman Diegnan said this legislation would make New Jersey “even more attractive for businesses looking to set up shop or expand their presence in the state,” calling it a “common-sense update to our corporate business law to show that New Jersey is truly ‘open for business’” [read statement].
This sentiment was echoed by Assemblyman John Burzichelli (D-Gloucester) a cosponsor:
“With fierce competition on all sides from our neighboring states, we must seize any advantage that will help make New Jersey an even more attractive place in which to do business,” he said.
NJCJI thanks Governor Christie for signing A-3123, as well as the sponsors and cosponsors for addressing this issue.