Gov. Phil Murphy today signed legislation authorizing corporations and certain financial institutions to conduct fully remote shareholder meetings.
The law, which Senator Patrick J. Diegnan Jr. sponsored, makes permanent a previous measure that permitted such shareholder meetings solely for corporations during the COVID-19 pandemic, and now also extends the virtual-only option to banks, savings and loan associations, saving banks, and capital stock associations.
After the legislation passed both houses in late June, New Jersey Business and Industry Association Vice President of Government Affairs Christopher Emigholz said in a press release companies that held shareholder meetings online to avoid mass gatherings during the pandemic found their virtual meetings generated higher attendance and greater engagement.
“Online meetings are often less expensive for the companies holding them and more convenient for participants to attend,” Emigholz said. “Companies have also saved time and money by switching from in-person meetings to virtual meetings and it would be smart policy to allow corporations the flexibility to continue doing so if they wish.”
The new legislation builds off a previous bill Diegnan sponsored and Murphy signed into law during the pandemic’s onset in March 2020, at which time the New Jersey Business Corporation Act was amended to permit corporations to hold remote shareholder meetings solely or in part while a state of emergency was in effect (hybrid meetings had previously been allowed).
According to a Rutgers Law School Center for Corporate Law and Governance Report on the 2020 practices of virtual shareholder meetings, remote meetings in multiple states including New Jersey were born last year out of necessity.
“The unprecedented halt to the U.S. and global economies, as well as normal social engagement, caused by the COVID-19 pandemic have had reverberating impacts within corporate America, including on annual meetings of shareholders,” the report stated. “As companies faced evolving uncertainties around business gatherings and travel during the 2020 proxy season, many found themselves forced to move their annual meetings online.”
According to the report, the 2020 proxy season “saw a tidal wave of annual meetings held through virtual platforms” with nearly 2,400 such meetings (a seven-fold increase from the previous year) directly resulting from the pandemic and related health concerns that restricted travel and the size of public indoor gatherings.
While the pandemic showed signs of abating earlier this year when Murphy signed legislation and an executive order to end the COVID-19 Public Health Emergency, the Delta variant strain of the virus has resulted in a resurgence of positive tests.
The U.S. Centers for Disease Control and Prevention today classified all 21 of New Jersey’s counties as having “high” rates of coronavirus transmission. The CDC recommends residents of those counties wear masks while inside public places.
Hilary Chebra, manager of government affairs at the Chamber of Commerce Southern New Jersey, supported the new virtual shareholder meeting law, which Assemblyman Louis D. Greenwald sponsored in the lower house.
“The CCSNJ is extremely pleased to see the Legislature’s continued focus on assuring that businesses have the additional flexibility and protections they need as they continue to navigate the pandemic’s impact on their operations,” Chebra wrote in a March 2021 position paper.
“The COVID-19 pandemic has forced businesses to adapt day to day operations to meet the realities of the pandemic. Some of these adaptations have proven to be beneficial in more ways that just meeting the health and safety requirements of the current climate, and companies should be allowed to keep these new beneficial practices in place.”