On April
14, 2020, Governor Phil Murphy signed into law a bill (S2342) to permit members
of nonprofit corporations to participate in meetings by means of remote
communication, and to further permit nonprofit corporations to hold members’
meetings in part or solely by means of remote communication during a state of
emergency declared by the Governor, with immediate effect. The bill
passed both houses of the New Jersey State Legislature unanimously on April 13,
2020.
Prior to
this, the New Jersey Nonprofit Corporation Act required meetings of members of
nonprofit corporations to be held at a physical location, and there was no
provision for members to participate by means of remote communication at all.
Under the new law, so long as the board of trustees authorizes and adopts
guidelines and procedures governing such a meeting, a meeting of members may be
held during a state of emergency solely by means of remote communication.
Members participating in such a meeting shall be deemed present in person and
entitled to vote at such meeting, regardless of whether the meeting is held at
a designated place or solely by means of remote communication. The
nonprofit corporation is also required to implement reasonable measures in
connection with any members’ meeting conducted in part or solely by means of
remote communication to (i) verify that each person participating remotely is a
member or proxy of a member, (ii) provide each member participating remotely
with a reasonable opportunity to participate in the meeting, and (iii) record
and maintain a record of any member votes or other actions taken by remote
communication at the meeting. This bill is based on the amendments made
to the New Jersey Business Corporation Act with respect to shareholders’
meetings, as we discussed in a prior
client alert regarding these amendments and emergency bylaws for for-profit and
nonprofit corporations.
If you
have any questions about this bill, or any other questions regarding the impact
of the current crisis on the governance of for-profit and nonprofit
corporations and other business entities, feel free to reach out to Jason Navarino or Christine Restrepo in Riker’s Corporate Group.
Please
visit Riker Danzig’s COVID-19
Resource Center to stay up to date on all related legal issues.
