New Jersey Legislature Considers Corporate and Business Law Reforms

A series of bills that would reform the New Jersey Business Corporation Act (“NJBCA”) are slowly churning their way through the New Jersey State Legislature. The pending legislation is modeled upon provisions of the “Delaware Business Corporation Law” and the recommendations of the “New Jersey Corporate and Business Law Study Commission.” In sum, the proposed revisions would generally benefit corporate boards of directors and modernize provisions of the NJBCA. Inspections of Corporate Books and Records Assembly Bill 2975 (Pinkin)/Senate Bill 2238 (Diegnan) modifies the NJBCA to allow corporations to impose reasonable limitations or conditions on the use or distribution of requested corporate books and records. While the bill does not define such “limitations and conditions,” the legislative statement accompanying A-2975/S-2238 provides an example of conditioning the receipt of requested materials on the demanding shareholder agreeing to customary confidentiality obligations. The bill preserves the ultimate authority of a court to decide and order relief in actions brought by shareholders for inspection of materials. On January 23, 2017, A-2975 passed the General Assembly by a vote of 69-0. On June 19, 2017, S-2238 passed the Senate Commerce Committee by a vote of 4-0. This bill is now awaiting a vote in the full...

With the 2017 Primary Over, It’s Murphy versus Guadagno for Governor

On Tuesday, June 6, 2017, New Jersey voters went to the polls to select their party’s nominees for Governor and all 120 seats in the Legislature. After a 2016 election cycle full of surprises, New Jersey’s 2017 primary resulted in wins for the gubernatorial front-runners, Democrat Phil Murphy and Republican Kim Guadagno. Those legislative districts with contested primaries also resulted in no major upsets and saw the expected candidates emerge with victories. Governor’s Race Former Ambassador Phil Murphy won the Democratic primary with 48 percent of the vote (241,353). His next closest competitor, former U.S. Treasury official Jim Johnson, garnered 22 percent (109,260), followed by Assemblyman John Wisniewski who also received 22 percent (107,872). Senator Raymond Lesniak came in fourth with 5 percent (24,136). Lt. Governor Kim Guadagno won the Republican primary with 47 percent of the vote (113,404). Assemblyman Jack Ciattarelli tallied 31 percent (75,275). In both contests, turnout was low. About one-quarter of Democratic voters, and only 20 percent of Republicans, participated in the primary. With New Jersey and Virginia being only states to hold a gubernatorial election in 2017, national groups are expected to make these two elections a referendum on President Trump and his agenda. Legislative...

21st Century Cures Act Lands in Federal Budget Blueprint

President Trump’s proposed FY 2018 Budget (a/k/a the “skinny budget”) presented a departure from his predecessor’s proposed annual budgets – namely a $54 billion increase in defense and military spending paired with corresponding cuts to virtually every other federal department. But one area President Trump did not cut was the implementation of the 21st Century Cures Act (the “Cures Act”), which also happens to be one of the last bills signed into law by then-President Obama. The FY 2018 budget blueprint proposes to appropriate $1.1 billion towards the Cures Act’s implementation in the upcoming fiscal year. The Cures Act strives to expedite the discovery, development, and delivery of new treatments and cures. Those in the medical, biotechnology, and pharmaceutical industry should look to the Cures Act as the potential game-changer that the bipartisan sponsors of the law hoped it would be. Not only does the Cures Act provide the National Institute of Health with significant new funds to speed up research into diseases like cancer and Alzheimer’s, but it also attempts to speed up the process by which new treatments are reviewed and approved by the FDA. The Cures Act also focuses on changes to the treatment of mental health and...

NJ Legislative Budget Committees Receive Fiscal Updates

The Legislature received testimony regarding State revenues earlier this week. In separate appearances before the Assembly Budget Committee and the Senate Budget and Appropriations Committee, the State Treasurer and the Office of Legislative Services (OLS) testified regarding the revenue picture for the current fiscal year (FY 2017), and the anticipated revenues for the upcoming fiscal year (FY 2018). The OLS reported to the Committees that incoming revenues for FY 2017 are currently forecasted to be $228 million less than expected. However, the 2016 financial market rally and estimated tax payments by high-income earners suggest that FY 2017 revenues could push closer to the originally forecasted amounts. A more accurate revenue forecast will be available in May, after the April tax filing deadline passes. For FY 2018, both the Executive Branch and the OLS have similar projections for growth in the upcoming fiscal year. The Executive Branch anticipating growth that is only 0.6 percent higher than the OLS. While a small percentage amount, this still results in a difference of $212.9 million between the Executive Branch and OLS revenue estimates. The OLS Tax and Revenue Outlook can be accessed here. The State Treasurer’s testimony to the Assembly and Senate Budget Committees...

Governor Christie Presents the FY 2018 Budget

Earlier this week, Governor Christie announced his final State Budget to a joint session of the Legislature. The Governor’s Fiscal Year 2018 budget of $35.5 billion represents a 2.6 percent increase from the prior year. It assumes annual growth in the State’s major tax revenues (gross income tax, sales tax, and corporate business tax) and also reallocates funding between programs. The highlights of the FY 2018 Budget include: $17.4 billion in school and local aid, representing almost half of all State spending; A $2.5 billion contribution to the State pension system, with payments occurring quarterly; Cuts to most Executive Departments including Agriculture, Community Affairs, Corrections, Environmental Protection, Labor, Law and Public Safety, Military and Veterans Affairs, Transportation, and Treasury; Funding increases to the Departments of Health and Human Services for the expansion of FamilyCare, opioid addiction treatment, and graduate medical education; $20 million appropriation for lead remediation assistance for low and moderate income households; Additional State health benefit reforms, saving the State $125 million in FY 2018; and A lump-sum contribution from the State Lottery system to the State’s pension system to reduce the existing unfunded liability. Governor Christie also proposed a supplemental appropriation in the current fiscal year of...

Governor Christie Delivers 2017 State of the State Address

On January 10, 2017, Governor Chris Christie delivered his State of the State address to a joint session of the New Jersey Legislature. The Governor concentrated his remarks on his accomplishments over the past seven years, and his goals for the final year of his Administration. The Governor noted that during his tenure, the State saw seven consecutive years of job creation, decreasing the unemployment rate from 9.8% to 5.0%. The collective size of State, county, and local government was reduced by 31,000 employees and Discretionary State spending is $2.3 billion less today than it was nine years ago. The State contributed $6.3 billion to the State pension system since the Governor took office, double the amount that has been contributed over the past sixteen years. Governor Christie also stated that 2017 will be the first year since 1996 that New Jersey residents will see broad-based tax cuts, including a reduction in the sales tax, the phase-out of the estate tax, increases in retirement income tax exclusions, and increases in the earned income tax credit.






New Jersey’s Legislature Attempts to Override Governor’s Objections to “Equal Pay” Bill

The sponsors of pay equity legislation passed by the New Jersey Senate and Assembly earlier this year have announced that the State Senate will attempt to override Governor Christie’s veto of the bill on December 19, 2016. Senate Bill 992/Assembly Bill 2750 would amend the Law Against Discrimination (“LAD”) to promote gender pay equality. The New Jersey bill follows a trend of recently enacted state laws, in California, New York, Maryland, and Massachusetts, that aim to make it easier for plaintiffs to bring pay equity claims and subject employers to potentially greater damages. The bill would make it an unlawful employment practice, under the LAD, to discriminate against employees on the basis of sex by compensating an employee of one sex at a lesser rate than an employee of the other sex for “substantially similar work.” The “substantially similar” standard, which diverges from the “equal work” standard of the federal Equal Pay Act, mirrors the California Fair Pay Act, which became effective in January 2016. Under the proposed legislation, an employer would be permitted to pay a different rate to an employee if it can show that the positions are not “substantially similar” and the difference in compensation is based on...

Equity Crowdfunding Turns Six Months Old: Looking at Title III for Investors and Businesses

November 16, 2016 marked the six-month anniversary of Title III of the JOBS Act of 2012 being fully implemented. Title III and the rules promulgated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) allow businesses to raise capital through “equity crowdfunding.” This is the act of raising capital from others via the internet, by seeking small investments from a large number of potential investors through the use of licensed broker-dealers or internet funding portals. These investments are exempt from the traditional security registration requirements. People are generally familiar with existing “crowdfunding” platforms such as Kickstarter, Indiegogo, and GoFundMe which have been in existence since at least 2008. These platforms practice rewards-based crowdfunding.  Backers give a “campaign” money, and the backer gets back a “reward,” i.e., a thank you note or the first edition of a product. Title III, however, allows for “equity crowdfunding,” which is the ability to buy ownership in an early-stage company and hopefully reap a monetary return on that investment. Instead of getting that thank you note or new product, the investor is getting a piece of equity in the company he or she just invested in. Many industry professionals and...

Are New Jersey’s Business Loan, Incentive, and Grant Programs Right for You?

Ronald Reagan famously said that the nine most terrifying words in the English language are, “I’m from the government and I’m here to help.” But for businesses starting up, expanding, or relocating into New Jersey, state government can be helpful, if you know where to start. We regularly counsel clients on government incentives, loans, and business assistance offered through the nationally-recognized New Jersey Economic Development Authority (NJEDA) and other State agencies. The NJEDA’s programs assist businesses of all sizes access loans/loan guarantees, as well as business and tax incentives. A few of the many programs offered are listed below. Loan Programs The NJEDA offers several loan programs that support small and mid-sized companies acquiring fixed assets, obtaining working capital, and refinancing debt: The Premier Lender Program provides loan and line of credit participations/guarantees in varying amounts. The NJEDA has a group of preferred lenders, and rates are generally at or below traditional loans. In return for the NJEDA’s assistance, the business has to agree to add one new full-time employee for every $65,000 of NJEDA exposure. The Small Business Fund provides up to $500,000 for small businesses, minority or woman owned businesses, and nonprofits that have been in business for...

Innovation Brewing in the New Jersey Legislature

Every summer, New Jersey legislators travel to the annual conferences of the National Conference of State Legislators (“NCSL”), the Council of State Governments (“CSG”), and the American Legislative Exchange Council (“ALEC”) to educate themselves about policy innovations occurring throughout the United States. While we wait to learn about their experiences, right now is a good opportunity to focus on innovative legislation currently before the New Jersey Legislature. As of August 15, 2016, 7,068 bills have been introduced in the New Jersey Legislature, 4,379 in the Assembly and 2,689 in the Senate, and only 87 have been signed into law. The following list of bills currently in committee represent examples by legislators looking to encourage innovation in New Jersey: S158 (Madden)/A3631 (Quijano) would promote investment in New Jersey by broadening the types of New Jersey emerging technology businesses that are eligible to receive investments under the New Jersey Angel Investor Tax Credit Act; A3187 (Munoz)/ S948 (Singer) would create a program within the New Jersey Economic Development Authority that would create a pathway to the commercial market for technology developed at a New Jersey college or university. Under this legislation, New Jersey would stimulate the economy while recapturing the state’s investment...