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NJ SIGNS BENEFIT CORPORATION LEGISLATION INTO LAW

With a stroke of the pen Gov. Chris Christie made NJ the third state to enact Benefit Corporation legislation. S-2170, the benefit corporation legislation, passed the both houses of the New Jersey state legislature unanimously. Not a single vote was cast against this legislation.

This version of the Benefit Corporation is unique from Maryland’s version in 3 distinct ways:

1. Appointing of a Benefit Director. The Benefit Director is an independent member of the board of directors that is responsible for monitoring and reporting on the success and/or failure of that Benefit Corporation in meeting it’s General Public Benefit and Specific Public Benefits. He is responsible for issuing an annual Benefit Report .

2. The Benefit Report. This annual report must be available to the public, sent to the shareholders and filed with the NJ Secretary of State for a filing fee of $70. The filing with the Secretary of State adds additional cost and administrative burden, but more importantly, this is the first time we have seen states, interested in the publication of the Benefit Report.

3. Benefit Enforcement Proceeding. If the directors of a Benefit Corporation are not acting to further the General Public Benefit or the Specific Public Benefit, a claim can be brought against them in a Benefit Enforcement Proceeding only by:

(1)   Directly by the benefit corporation; or

(2)   Derivatively by:

(a)   a shareholder;

(b)   a director;

(c)   a person or group of persons that owns beneficially or of record 10% or more of the equity interests in an entity of which the benefit corporation is a subsidiary; or

(d)   such other persons as may be specified in the certificate of incorporation or by-laws of the benefit corporation.

Photo by: Marty.FM