When a Company wants to merge or consolidate with another business or wishes to buy another company or be sold to another company, the Company needs the approval of its shareholders. That approval can occur in two ways. First the Company can have a meeting of its shareholders where the proposal is voted on by the shareholders. The second method, unless forbidden, by the corporate documents, is for the action to be approved by the shareholders through their written consent.
Recently, New Jersey has amended the time frames controlling the use of approval by written consent. P.L. 2010 c. 105 amends NJSA 14A:5-6’s time frames. The new law requires the corporation to notify any who did not consent that the proposed action was approved and will take place no sooner than 20 days from the notice. This notice must also provide that the shareholder has a right to dissent and to be paid the fair value of the shareholder’s shares. Under the original statute, shareholders only received 10 days notice.
The new law also provides that the corporation can eliminate the post approval notice by providing in its original request for the written consent of its shareholders, the date that all of the written consents will be counted. This request for written consent must be at least 20 days and not longer than 60 days before the counting of the “votes”. This solicitation of consent must follow other requirements as well but they have not been changed from the original statute.
In short, P.L. 2010 c. 105 doubles the existing notice period for certain actions.