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Legislative updates

Senate Bill 142, effective November 4, 2023, amends the Business Corporation Act by authorizing entities to convert to a domestic or foreign corporation and domestic corporations to convert to other entities.

Senate Bills 844 and 2533, effective January 18, 2022, amend the Nonprofit Corporation Law regarding Annual Report filing.

Assembly Bill 5549, effective January 10, 2022, amends the Nonprofit Corporation Act regarding remote participation in member meetings.

Assembly Bill 1178, effective September 28, 2021, amends the Business Corporation Act regarding record-keeping and notices with reference to blockchain technology.

Assembly Bill 4918, effective August 24, 2021, amends the Business Corporation Act regarding remote shareholder meetings.

Assembly Bill 4932, effective May 12, 2021, amends the partnership law by authorizing LLPs to adopt alternate names.

Assembly Bill 3861, effective March 20, 2020, amends the Business Corporation Act by authorizing virtual shareholder meetings without a physical location during a state of emergency declared by the Governor.

Effective March 1, 2020, a Streamlined Program will be in effect that will allow certain business entities in revoked status due to Annual Report delinquency to either reinstate or dissolve by paying a single $500 fee without tax clearance or any additional administrative costs associated with dissolution or reinstatement. Entities will have to attest that they have satisfied any known tax obligations. Entities with any outstanding tax obligations will have to first satisfy their tax obligations before becoming eligible for the Program. The Streamlined Program will end on June 15, 2020.

Case summaries

New Business Claims for Lost Profits
Schwartz v. Menas, (A-54/55) (085184), decided August 17, 2022. The New Jersey Supreme Court rejected the per se ban on claims by new businesses for lost profits. Instead of a per se ban, the court ruled that claims for lost damage damages are governed by the standard of reasonable certainty and require a fact-sensitive analysis.

Service of Process on Subsidiary
Crespi v. Zeppy, No. A-2044-20, decided March 18, 2022. The New Jersey Superior Court reversed the law division judge’s denying the defendant, a South Korean corporation’s motion to dismiss for insufficient service of process. The plaintiff attempted to serve the defendant by serving one of its US subsidiaries. The court noted that the judge's decision was devoid of any finding that the defendant so dominated the subsidiary that it had no separate existence from its parent. The judge’s conclusory finding that the subsidiary served as the defendant’s conduit and instrumentality, with nothing more, was not enough to render service of process on the subsidiary the equivalent of service of process on its parent. Simply being a subsidiary is not enough to establish proper service on the parent.

Charging Order
SEC v. Brogdon, Civ. No. 15-8173, decided July 2, 2021. The U.S. District Court for the District of New Jersey held that Sec. 42:2C-43 of the New Jersey LLC Act authorizes the issuance of a charging order against foreign LLCs. Holding otherwise would be inconsistent with the purpose of the charging order, which is to collect upon a judgment.

Personal Liability
Churchill Downs, Inc. v. Ribis, C.A. No. 14-03342, decided November 9, 2020. The U.S. District Court, District of New Jersey, upheld a judgment for breach of an agreement entered into by the individual defendant - purportedly in the name of an LLC he formed. Although it was later discovered the LLC had never been formed, that did not void the judgment entered against the LLC. The individual defendant represented that the LLC was an existing entity and he was at least negligent in failing to disclose to the plaintiff there was no such entity. By failing to actually form the LLC the individual defendant allowed it become a d/b/a for himself and he could be held liable as the person behind the d/b/a.

Piercing an LLC’s Veil
Innoas, Inc. v. Genesis BBQ USA, LLC, No. A-1039-19T, decided November 12, 2020. The New Jersey Superior Court, Appellate Division, affirmed the dismissal of a lawsuit against two corporations that were the direct and indirect members of an LLC that the plaintiff entered into agreements with. The plaintiff failed to present evidence of formation of the LLC to perpetuate a fraud or injustice. The plaintiff was a sophisticated company that understood the agreements were with an LLC and if the plaintiff wanted to protect itself it could have required the parent to be part of the contract or guarantee the obligation of the LLC.

Legal Representation
Goldstein v. Roxborough Real Estate, LLC, C.A. No:15-cv-3835, decided 1/22/2018. The U.S. District Court in New Jersey ruled that a limited partner could not bring a lawsuit on behalf of limited partnerships because he was not an attorney, even if the limited partnerships could not afford an attorney and if all of the partnership interests were assigned to the limited partner.

Other notices

There are no new notices at this time.

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