N.J. Stat. tit. 14A, ch. 6

in effect

N.J. Stat. § 14A:6-1 Board of Directors

14A:6-1. Board of directors. (1) The business and affairs of a corporation shall be managed by or under the direction of its board, except as in this act or in its certificate of incorporation otherwise provided. Directors shall be at least 18 years of age and need not be United States citizens or residents of this State or shareholders of the corporation unless the certificate of incorporation or by-laws so require. The certificate of incorporation or by-laws may prescribe other qualifications for directors. (2) In discharging his duties to the corporation and in determining what he reasonably believes to be in the best interest of the corporation, a director may, in addition to considering the effects of any action on shareholders, consider any of the following: (a) the effects of the action on the corporation's employees, suppliers, creditors and customers; (b) the effects of the action on the community in which the corporation operates; and (c) the long term as well as the short-term interests of the corporation and its shareholders, including the possibility that these interests may best be served by the continued independence of the corporation. (3) If on the basis of the factors described in subsection (2) of this section, the board of directors determines that any proposal or offer to acquire the corporation is not in the best interest of the corporation, it may reject such proposal or offer. If the board of directors determines to reject any such proposal or offer, the board of directors shall have no obligation to facilitate, remove any barriers to, or refrain from impeding the proposal or offer. L.1968, c.350; amended 1973,c.366,s.21; 1988,c.94,s.24; 1989,c.106,s.1.

N.J. Stat. § 14A:6-2 Number of directors

The board of directors of a corporation shall consist of one or more members. Subject to any provisions contained in the certificate of incorporation, the by-laws shall specify the number of directors, or that the number of directors shall not be less than a stated minimum nor more than a stated maximum, with the actual number to be determined in the manner prescribed in the by-laws, except as to the number constituting the first board. L.1968, c.350.; amended by L.1969, c. 102, s. 6; L.1973, c. 366, s. 22, eff. May 1, 1974.

N.J. Stat. § 14A:6-3 Term of directors; resignation.

14A:6-3. Term of directors; resignation. (1) The directors named in the certificate of incorporation shall hold office until the first annual meeting of shareholders, and until their successors shall have been elected and qualified. At the first annual meeting of shareholders and at each annual meeting thereafter the shareholders shall elect directors to hold office until the next succeeding annual meeting, except in case of the classification of directors pursuant to subsection (1) of N.J.S.14A:6-4 and in the case of directors whose terms expire as provided for in subsection (2) of N.J.S.14A:6-4. Each director shall hold office for the term for which he is elected and until his successor shall have been elected and qualified. (2) A director may resign by written notice to the corporation. The resignation shall be effective upon receipt thereof by the corporation of that notice, or at such subsequent time as shall be specified in the notice of resignation, or upon the occurrence of a certain event or events specified in the notice of resignation. Any resignation which is contingent upon a director failing to receive a specified vote for re-election shall provide that the resignation is irrevocable. Amended 1988, c.94, s.25; 2009, c.9.

N.J. Stat. § 14A:6-4 Classification of directors; restriction of right to choose directors

(1) A corporation may provide in its certificate of incorporation for the classification of its directors in respect to the time for which they shall severally hold office, but no class of directors shall hold office for a term shorter than one year or longer than five years, and the term of office of at least one class shall expire in each year. No classification of directors shall be effective prior to the first annual meeting of shareholders. (2) Any corporation having more than one class or series of shares may provide in its certificate of incorporation for the election of one or more directors by the shareholders of any class or series, to the exclusion of other shareholders. The certificate of incorporation may grant shareholders of a class or series of shares the right to elect one or more directors upon the occurrence of stated events for a specific term or a term ending upon the occurrence of stated events. L.1968, c.350; amended 1988,c.94,s.26.

N.J. Stat. § 14A:6-5 Vacancies and newly created directorships

(1) Unless otherwise provided in the certificate of incorporation or the by-laws, any directorship not filled at the annual meeting, any vacancy, however caused, occurring in the board, and newly created directorships resulting from an increase in the authorized number of directors may be filled by the affirmative vote of a majority of the remaining directors even though less than a quorum of the board, or by a sole remaining director. A director so elected by the board shall hold office until the next succeeding annual meeting of shareholders and until his successor shall have been elected and qualified. (2) Unless otherwise provided in the certificate of incorporation or by-laws, when one or more directors shall resign from the board effective at a future date, a majority of the directors, then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as herein provided in the filling of other vacancies. (3) Any directorship not filled by the board may be filled by the shareholders at an annual meeting or at a special meeting of shareholders called for that purpose. (4) If by reason of death, resignation or other cause a corporation has no directors in office, any shareholder or the executor or administrator of a deceased shareholder may call a special meeting of shareholders for the election of directors and, over his own signature, shall give notice of said meeting in accordance with section 14A:5-4 except to the extent that such notice is waived pursuant to section 14A:5-5. L.1968, c.350; amended 1988,c.94,s.27.

N.J. Stat. § 14A:6-6 Removal of directors

(1) One or more or all the directors of a corporation may be removed for cause or, unless otherwise provided in the certificate of incorporation, without cause by the shareholders by the affirmative vote of the majority of the votes cast by the holders of shares entitled to vote for the election of directors. (2) Unless otherwise provided in the certificate of incorporation, the removal of directors, with or without cause, by vote of the shareholders as provided in subsection 14A:6-6(1), is subject to the following qualifications (a) In any case where cumulative voting is authorized, if less than the total number of directors then serving on the board is to be removed by the shareholders, no one of the directors may be so removed if the votes cast against his removal would be sufficient to elect him if then voted cumulatively at an election of the entire board; or, if there are classes of directors, at an election of the class of directors of which he is a part; (b) A director elected by a class vote, as authorized by subsection 14A:6-4(2), may be removed only by a class vote of the holders of shares entitled to vote for his election; (c) If the certificate of incorporation requires a greater vote than a plurality of the votes cast for the election of directors, no director may be removed except by the greater vote required to elect him; and (d) Shareholders of a corporation whose board of directors is classified as provided in subsection 14A:6-4(1) shall not be entitled to remove directors without cause. (3) The certificate of incorporation or a by-law adopted by the shareholders may provide that the board shall have the power to remove directors for cause and to suspend directors pending a final determination that cause exists for removal. (4) The Superior Court, in an action in which the court may proceed in a summary manner or otherwise, may review the removal or suspension of a director for cause. (5) No act of the board done during the period when a director has been suspended or removed for cause shall be impugned or invalidated solely on account of the suspension or removal if the suspension or removal is thereafter rescinded by the shareholders or by the board or by the final judgment of the court. L.1968, c.350; amended 1988,c.94,s.28.

N.J. Stat. § 14A:6-7.1 Directors' voting; quorum of board of directors and committees; action of board and committees; action of directors without a meeting.

14A:6-7.1. Directors' voting; quorum of board of directors and committees; action of board and committees; action of directors without a meeting. (1) Each director shall have one vote at meetings of the board or at meetings of board committees unless the certificate of incorporation provides the director is entitled to more than one vote pursuant to a provision in the certificate of incorporation consistent with subsection 14A:6-7.1(2). (2) The certificate of incorporation may provide either that one or more directors elected by the holders of shares of a class or series shall have more than one vote or that the shareholders at an annual or special meeting shall have the right to designate one or more directors who shall have more than one vote. The certificate of incorporation shall also specify either the number of votes which those directors shall have or that the shareholders electing those directors shall have the right to specify the number of votes which the directors shall have. Any person appointed by the board to fill a vacancy of a directorship with more than one vote shall have only one vote unless otherwise provided by the certificate of incorporation. If a director has more than one vote as provided in this subsection, any reference in this act to the vote or act of a majority of the board, of the directors, or of the entire board, or similar language, means the vote or act of directors who are entitled to cast a majority of the votes. (3) The participation of directors with a majority of the votes of the entire board, or of any committee thereof, shall constitute a quorum for the transaction of business, unless the certificate of incorporation or the by-laws provide that a greater or lesser proportion shall constitute a quorum, which in no case shall be less than one-third of the votes of the entire board or committee. (4) Any action approved by a majority of the votes of directors present at a meeting at which a quorum is present shall be the act of the board or of the committee, unless this act, or the certificate of incorporation, or the by-laws require a greater proportion, including a unanimous vote. (5) Unless otherwise provided by the certificate of incorporation or by-laws, any action required or permitted to be taken pursuant to authorization voted at a meeting of the board or any committee thereof, may be taken without a meeting if, prior or subsequent to the action, all members of the board or of such committee, as the case may be, consent thereto in writing or by electronic transmission and the written consents or electronic transmissions are filed with the minutes of the proceedings of the board or committee. Such consent or electronic transmission shall have the same effect as a unanimous vote of the board or committee for all purposes, and may be stated as a unanimous vote in any certificate or other document filed with the Secretary of State. The filing of written consents or electronic transmissions shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. "Electronic transmission" shall have the meaning contained in section 14A:1-8.1. (added) 1988, c.94, s.29; amended 2017, c.363.

N.J. Stat. § 14A:6-8 Director conflicts of interest

(1) No contract or other transaction between a corporation and one or more of its directors, or between a corporation and any domestic or foreign corporation, firm or association of any type or kind in which one or more of its directors are directors or are otherwise interested, shall be void or voidable solely by reason of such common directorship or interest, or solely because such director or directors are present at the meeting of the board or a committee thereof which authorizes or approves the contract or transaction, or solely because his or their votes are counted for such purpose, if any one of the following is true: (a) The contract or other transaction is fair and reasonable as to the corporation at the time it is authorized, approved or ratified; or (b) The fact of the common directorship or interest is disclosed or known to the board or committee and the board or committee authorizes, approves, or ratifies the contract or transaction by unanimous written consent, provided at least one director so consenting is disinterested, or by affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (c) The fact of the common directorship or interest is disclosed or known to the shareholders, and they authorize, approve or ratify the contract or transaction. (2) Common or interested directors may be counted in determining the presence of a quorum at a board or committee meeting at which a contract or transaction described in subsection 14A:6-8(1) is authorized, approved or ratified. (3) The board, by the affirmative vote of a majority of directors in office and irrespective of any personal interest of any of them, shall have authority to establish reasonable compensation of directors for services to the corporation as directors, officers, or otherwise. L.1968, c.350; amended 1973,c.366,s.24; 1988,c.94,s.30.

N.J. Stat. § 14A:6-9 Executive committee; other committees

(1) If the certificate of incorporation or the by-laws so provide, the board, by resolution adopted by a majority of the entire board, may appoint from among its members an executive committee and one or more other committees, each of which shall have one or more members. To the extent provided in such resolution, or in the certificate of incorporation or in the by-laws, each such committee shall have and may exercise all the authority of the board, except that no such committee shall (a) make, alter or repeal any by-law of the corporation; (b) elect or appoint any director, or remove any officer or director; (c) submit to shareholders any action that requires shareholders' approval; or (d) amend or repeal any resolution theretofore adopted by the board which by its terms is amendable or repealable only by the board. (2) The board, by resolution adopted by a majority of the entire board may, (a) fill any vacancy in any such committee; (b) appoint one or more directors to serve as alternate members of any such committee, to act in the absence or disability of members of any such committee with all the powers of such absent or disabled members; (c) abolish any such committee at its pleasure; and (d) remove any director from membership on such committee at any time, with or without cause. (3) Actions taken at a meeting of any such committee shall be reported to the board at its next meeting following such committee meeting; except that, when the meeting of the board is held within 2 days after the committee meeting, such report shall, if not made at the first meeting, be made to the board at its second meeting following such committee meeting. (4) The designation of any such committee and the delegation thereto of authority shall not operate to relieve the board, or any member thereof, of any responsibility imposed by law. L.1968, c.350; amended by L.1971, c. 394, s. 1, eff. Jan. 7, 1972; L.1973, c. 366, s. 25, eff. May 1, 1974.

N.J. Stat. § 14A:6-10 Place and notice of directors' meetings

(1) Meetings of the board may be held either within or without this State, unless otherwise provided by the certificate of incorporation or the by-laws. (2) Regular meetings of the board may be held with or without notice as prescribed in the by-laws. Special meetings of the board shall be held upon such notice as is prescribed in the by-laws. Notice of any meeting need not be given to any director who signs a waiver of notice, whether before or after the meeting. The attendance of any director at a meeting without protesting prior to the conclusion of the meeting the lack of notice of such meeting shall constitute a waiver of notice by him. Neither the business to be transacted at, nor the purpose of, any meeting of the board need be specified in the notice or waiver of notice of such meeting unless required by the by-laws. Notice of an adjourned meeting need not be given if the time and place are fixed at the meeting adjourning and if the period of adjournment does not exceed ten days in any one adjournment. (3) Where appropriate communication facilities are reasonably available, any or all directors shall have the right to participate in all or any part of a meeting of the board or a committee of the board by means of conference telephone or any means of communication by which all persons participating in the meeting are able to hear each other, unless otherwise provided in the certificate of incorporation or the by-laws. L.1968, c.350; amended 1969,c.102,ss.7,17; 1988,c.94,s.31.

N.J. Stat. § 14A:6-11 Loans to directors, officers or employees

A corporation may lend money to, or guarantee any obligation of, or otherwise assist, any director, officer or employee of the corporation or of any subsidiary, whenever, in the judgment of the directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be made with or without interest, and may be unsecured, or secured in such manner as the board shall approve, including, without limitation, a pledge of shares of the corporation, and may be made upon such other terms and conditions as the board may determine. L.1968, c.350; amended 1973,c.366,s.26; 1988,c.94,s.32.

N.J. Stat. § 14A:6-12 Liability of directors in certain cases

(1) In addition to any other liabilities imposed by law upon directors of a corporation, directors who vote for, or concur in, any of the following corporate actions (a) the declaration of any dividend or other distribution of assets to the shareholders contrary to the provisions of this act or contrary to any restrictions contained in the certificate of incorporation; (b) the purchase of the shares of the corporation contrary to the provisions of this act or contrary to any restrictions contained in the certificate of incorporation; (c) the distribution of assets to shareholders during or after dissolution of the corporation without paying, or adequately providing for, all known debts, obligations and liabilities of the corporation, except that the directors shall be liable only to the extent of the value of assets so distributed and to the extent that such debts, obligations and liabilities of the corporation are not thereafter paid, discharged, or barred by statute or otherwise; (d) the complete liquidation of the corporation and distribution of all of its assets to its shareholders without dissolving or providing for the dissolution of the corporation and the payment of all fees, taxes, and other expenses incidental thereto, except that the directors shall be liable only to the extent of the value of assets so distributed and to the extent that such fees, taxes, and other expenses incidental to dissolution are not thereafter paid; (e) the making of any loan to an officer, director or employee of the corporation or of any subsidiary thereof contrary to the provisions of this act; shall be jointly and severally liable to the corporation for the benefit of its creditors or shareholders, to the extent of any injury suffered by such persons, respectively, as a result of any such action. (2) Any director against whom a claim is successfully asserted under this section shall be entitled to contribution from the other directors who voted for, or concurred in, the action upon which the claim is asserted. (3) Directors against whom a claim is successfully asserted under this section shall be entitled, to the extent of the amounts paid by them to the corporation as a result of such claims, (a) upon payment to the corporation of any amount of an improper dividend or distribution, to be subrogated to the rights of the corporation against shareholders who received such dividend or distribution with knowledge of facts indicating that it was not authorized by this act, in proportion to the amounts received by them respectively; (b) upon payment to the corporation of any amount of the purchase price of an improper purchase of shares, to have the corporation rescind such purchase of shares and recover for their benefit, but at their expense, the amount of such purchase price from any seller who sold such shares with knowledge of facts indicating that such purchase of shares by the corporation was not authorized by this act; (c) upon payment to the corporation of the claim of any creditor by reason of a violation of paragraph 14A:6-12(1)(c), to be subrogated to the rights of the corporation against shareholders who received an improper distribution of assets; (d) upon payment to the corporation of the amount of any loan made improperly, to be subrogated to the rights of the corporation against the person who received the improper loan. (4) A director shall not be liable under this section if, in the circumstances, he discharged his duty to the corporation under section 14A:6-14. (5) Every action against a director for recovery upon a liability imposed by subsection 14A:6-12(1) shall be commenced within six years next after the cause of any such action shall have accrued. L.1968, c.350; amended by L.1973, c. 366, s. 27, eff. May 1, 1974.

N.J. Stat. § 14A:6-13 Liability of directors; presumption of assent to action taken at a meeting

A director of a corporation who is present at a meeting of its board, or any committee thereof of which he is a member, at which action on any corporate matter referred to in section 14A:6-12 is taken shall be presumed to have concurred in the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before or promptly after the adjournment thereof. Such right to dissent shall not apply to a director who voted in favor of such action. A director who is absent from a meeting of the board, or any committee thereof of which he is a member, at which any such action is taken shall be presumed to have concurred in the action unless he shall file his dissent with the secretary of the corporation within a reasonable time after learning of such action. L.1968, c.350; amended by L.1973, c. 366, s. 28, eff. May 1, 1974.

N.J. Stat. § 14A:6-14 Liability of directors; reliance on records and reports

Liability of directors; reliance on records and reports. (1) Directors and members of any committee designated by the board shall discharge their duties in good faith and with that degree of diligence, care and skill which ordinarily prudent people would exercise under similar circumstances in like positions. (2) In discharging their duties, directors and members of any committee designated by the board shall not be liable if, acting in good faith, they rely (a) Upon the opinion of counsel for the corporation; (b) Upon written reports setting forth financial data concerning the corporation and prepared by an independent public accountant or certified public accountant or firm of such accountants; (c) Upon financial statements, books of account or reports of the corporation represented to them to be correct by the president, the officer of the corporation having charge of its books of account, or the person presiding at a meeting of the board; or (d) Upon written reports of committees of the board. (3) A director shall not be personally liable to the corporation or its shareholders for damages for breach of duty as a director if and to the extent that such liability has been eliminated or limited by a provision in the certificate of incorporation authorized by subsection (3) of N.J.S. 14A:2-7. (4) In taking action, including, without limitation, action which may involve or relate to a change or potential change in the control of the corporation, a director shall be entitled to consider, without limitation, both the long-term and the short-term interests of the corporation and its shareholders. For the purpose of this subsection, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the corporation, whether through the ownership of voting shares, by contract or otherwise. L.1968, c.350; amended 1987,c.35,s.3; 1988,c.94,s.33; 1989,c.17,s.3.

N.J. Stat. § 14A:6-15 Officers

(1) The officers of a corporation shall consist of a president, a secretary, a treasurer, and, if desired, a chairman of the board, one or more vice presidents, and such other officers as may be prescribed by the by-laws. Unless otherwise provided in the by-laws, the officers shall be elected by the board. (2) Any two or more offices may be held by the same person but no officer shall execute, acknowledge, or verify any instrument in more than one capacity if such instrument is required by law or by the by-laws to be executed, acknowledged, or verified by two or more officers. (3) Any officer elected as herein provided shall hold office for the term for which he is so elected and until a successor is elected and has qualified, subject to earlier termination by removal or resignation. (4) All officers of the corporation, as between themselves and the corporation, shall have such authority and perform such duties in the management of the corporation as may be provided in the by-laws, or as may be determined by resolution of the board not inconsistent with the by-laws. L.1968, c.350; amended by L.1973, c. 366, s. 29, eff. May 1, 1974.

N.J. Stat. § 14A:6-16 Removal and resignation of officers; filling of vacancies

(1) Any officer elected by the board may be removed by the board with or without cause. An officer elected by the shareholders may be removed, with or without cause, only by vote of the shareholders but his authority to act as an officer may be suspended by the board for cause. The removal of an officer shall be without prejudice to his contract rights, if any. Election of an officer shall not of itself create contract rights. (2) An officer may resign by written notice to the corporation. The resignation shall be effective upon receipt thereof by the corporation or at such subsequent time as shall be specified in the notice of resignation. (3) Any vacancy occurring among the officers, however caused, shall be filled in the manner provided in the by-laws. In the absence of such provision, any vacancy shall be filled by the board. L.1968, c.350; amended 1988,c.94,s.34.

N.J. Stat. § 14A:6-17 Bonds; facsimile signatures and seals

The seal of the corporation and any or all signatures of the officers or other agents of the corporation upon a bond and any coupon attached thereto may be facsimiles if the bond is countersigned by an officer or other agent of a trustee or other certifying or authenticating authority. In case any officer or other agent who has signed or whose facsimile signature has been placed upon such bond or coupon shall have ceased to be such officer or agent before such bond is issued, it may be issued by the corporation with the same effect as if he were such officer or agent at the date of its issue. L.1968, c.350.

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