On April 14, 2020, Sections 15A:5-1 and 15A:5-4 of the New Jersey Nonprofit Corporation Act were amended to permit New Jersey nonprofit corporations to hold member meetings by means of remote communication. During a state of emergency declared by the Governor, meetings may be held in part or solely by means of remote communication, and absent a state of emergency, meetings may be held in part by remote communication. Section 14A:5-1 of the New Jersey Business Corporation Act was previously amended, on March 20, 2020, to permit New Jersey corporations to hold shareholder meetings in part or solely by means of remote communication during a state of emergency declared by the Governor. On March 9, 2020, Governor Phil Murphy declared a state of emergency and a public health emergency, effective immediately, to ramp up New Jersey’s efforts to contain the spread of COVID-19.
Prior to the amendment of Section 14A:5-1 last month, New Jersey for-profit corporations already had the power to hold shareholder meetings in part by remote participation provided the meeting was otherwise called for a designated place. However, New Jersey nonprofit corporations could not do so under Section 15A:5-1. These amendments align New Jersey law for nonprofit and for-profit corporations with respect to remote meetings of members or shareholders.
Process to Authorize Remote Participation
Pursuant to the amendment to Section 15A:5-1, for a New Jersey nonprofit corporation to hold a meeting of members by remote communication, whether in whole or in part, the board of trustees must authorize the meeting and adopt guidelines and procedures governing the meeting. Members will be deemed present in person and entitled to vote at a meeting held in accordance with the statutory requirements. As part of a member meeting that includes remote communication, the nonprofit corporation must implement reasonable measures to do the following:
(a) verify that each person participating remotely is a member or a proxy of a member;
(b) provide each member participating remotely with a reasonable opportunity to participate in the meeting, including an opportunity to vote on matters submitted to the members, and to read or hear the proceedings of the meeting substantially concurrently with those proceedings; and
(c) record and maintain a record of any votes or other actions taken by remote communication at the meeting.
Before a nonprofit corporation undertakes to call a meeting at which members may participate remotely, the certificate of incorporation and by-laws should be reviewed to consider any limitations on remote participation. Depending on the existing provisions, if a meeting is to be held by remote communication only, the by-laws may need to be amended to allow for that possibility. Generally, a board of trustees will have the power to adopt amendments to the by-laws to address any existing limitations.
Notice of Meetings
While member meetings may now be held by remote communication under 15A:5-1, notice of a member meeting must still be provided pursuant to Section 15A:5-4 not less than 10 nor more than 60 days before a meeting. Pursuant to amended Section 15A:5-4, the notice of meeting must describe the means of remote communication if remote participation is authorized.
Pursuant to Section 15A:5-8, a nonprofit corporation is required to have present at a member meeting its list of members who are entitled to vote at the meeting. For remote member meetings, nonprofit corporations should also consider the means by which that list of members will be available for review by members.
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