N.J. Stat. tit. 14A, ch. 7

in effect

N.J. Stat. § 14A:7-1 Authorized shares

(1) Each corporation shall have power to create and issue the number of shares stated in its certificate of incorporation. Such shares may consist of one class or may be divided into two or more classes and any class may be divided into one or more series. Each class and series may have such designation and such relative voting, dividend, liquidation and other rights, preferences, and limitations as shall be stated in the certificate of incorporation, except that all shares of the same class shall be either without par value or shall have the same par value. Each class and series shall be designated so as to distinguish its shares from those of every other class and series. (2) In particular, and without limitation upon the general power granted by subsection 14A:7-1(1), a corporation, when so authorized in its certificate of incorporation, may issue classes of shares and series of shares of any class (a) entitling the holders thereof to cumulative, non-cumulative or partially cumulative dividends; (b) entitling the holders thereof to receive dividends payable on a parity with or in preference to the dividends payable on any other class or series; (c) entitling the holders thereof to preferential rights upon the liquidation of, or upon any distribution of the assets of, the corporation; (d) convertible as provided in section 14A:7-9; (e) redeemable as provided in section 14A:7-6; (f) lacking voting rights or having limited voting rights or enjoying special or multiple voting rights. L.1968, c.350.

N.J. Stat. § 14A:7-2 Issuance of shares in classes and series; board action

(1) The division of shares into classes and into series within any class or classes, the determination of the designation and the number of shares of any class or series, the determination of the relative rights, preferences and limitations of the shares of any class or series, and any or all of such divisions and determinations, may be accomplished by the original certificate of incorporation or may be accomplished by an amendment or amendments thereto. Such an amendment may be made by any procedure to amend the certificate of incorporation provided for in Chapter 9 of this act or as provided in subsection 14A:7-2(2). (2) Such an amendment may be made by action of the board if the certificate of incorporation authorizes the board to make such divisions and determinations. Unless otherwise provided in the certificate of incorporation, authority granted to the board to determine the number of shares of any class or series shall be deemed to include the power to increase the number of shares of such class or series previously determined by it, and to decrease such previously determined number of shares to a number not less than that of the shares then outstanding. Upon any such decrease, the affected shares shall continue as part of the authorized shares and shall have such designation and such relative rights, preferences and limitations as they had before the board first acted to include them in such class or series. Unless otherwise provided in the certificate of incorporation, authority granted to the board to determine the relative rights and preferences of any class or series shall be deemed to include the power to determine relative rights and preferences which are prior or subordinate to, or equal with, the shares of any other class or series, whether or not such other shares are issued and outstanding at the time when the board acts to determine such relative rights and preferences. The certificate of incorporation may authorize the board to change the designation or number of shares, or the relative rights, preferences and limitations of the shares, of any theretofore established class or series no shares of which have been issued. (3) Whenever the board acts under subsection 14A:7-2(2) it shall adopt a resolution setting forth its actions and stating the designation and number of shares, and the relative rights, preferences and limitations of the shares, of each class and series thereby created or with respect to which it has made a determination or change. (4) Before the issue of any shares of a class or series with respect to which the board has acted under subsection 14A:7-2(2), the corporation shall execute and file in the office of the Secretary of State a certificate of amendment to the certificate of incorporation setting forth (a) the name of the corporation; (b) a copy of the resolution of the board required by subsection 14A:7-2(3); (c) that such resolution was duly adopted by the board and the date of such adoption; and (d) that the certificate of incorporation is amended so that the designation and number of shares of each class and series acted upon in the resolution, and the relative rights, preferences and limitations of each such class and series, are as stated in the resolution. L.1968, c.350; amended by L.1973, c. 366, s. 30, eff. May 1, 1974.

N.J. Stat. § 14A:7-3 Subscription for shares.

14A:7-3. Subscription for shares. (1) Unless otherwise provided by the subscription agreement or unless all of the subscribers consent to the revocation of such subscription, a subscription for shares of a corporation to be formed shall be irrevocable for a period of six months if no certificate of incorporation shall be filed within such period. If the certificate of incorporation is filed within such period, or if it is filed at any later time before revocation, such subscription shall also be irrevocable until 60 days after the filing of the certificate of incorporation. Subscriptions for shares, whether made before or after the organization of a corporation, shall be accepted or rejected by the board, unless the certificate of incorporation or the bylaws require action by the shareholders. (2) (Deleted by amendment, P.L.1997, c.252.) (3) A subscriber shall not become a holder of any shares for which the full consideration has not been paid. Unless otherwise provided by the subscription agreement (a) Any payment made by the subscriber, in accordance with the subscription agreement or as called for by the board, shall be applied to pay the full consideration for as many whole shares as possible and any remaining balance of such payment shall be applied as part payment of a share; (b) A share certificate shall be registered in the name of the subscriber for the number of shares so paid for in full; and (c) The corporation shall be entitled to retain such share certificate as security for the performance by the subscriber of his obligations under the subscription agreement and subject to the power of sale or rescission upon default provided in paragraphs 14A:7-3(5)(b) and 14A:7-3(5)(c). (4) Unless otherwise provided by the subscription agreement (a) Subscriptions for shares, whether made before or after the organization of a corporation, shall be paid in full at such time, or in such installments and at such times, as shall be determined by the board; (b) Any call made by the board for payment on subscriptions shall be uniform as to all shares of the same class or as to all shares of the same series, as the case may be; (c) All such calls for payments on subscriptions shall be upon 30 days' notice thereof and of the time and place of payment, which notice shall be given personally or by registered or certified mail. (5) In the event of default in the payment of any installment or call or other amount due under the terms of the subscription agreement, including any amount which may become due as a result of a default in the performance of any provision thereof, the corporation shall have the following rights and duties: (a) It may proceed to collect the amount due in the same manner as any other debt owing to it. At any time before full satisfaction of the claim or any judgment therefor, it may proceed as provided in paragraph 14A:7-3(5)(b). (b) It may sell the shares in any reasonable manner. Notice of the time and place of any public sale or of the time after which any private sale may be had, together with a statement of the amount due upon each share, shall be given in writing to the subscriber personally or by registered or certified mail at least 20 days before any such time stated in the notice. Unless otherwise provided in the subscription agreement, the corporation may not be the purchaser at any sale. Any excess of net proceeds realized over the amount due plus interest shall be paid over to the subscriber. If the sale is made in good faith, in a reasonable manner and upon the notice required by this paragraph, the corporation may recover the difference between the amount due plus interest and the net proceeds of the sale. A good faith purchaser for value shall acquire title to the sold shares free of any rights of the subscriber even though the corporation fails to comply with one or more of the requirements of this subsection. (c) It may rescind the subscription, with the effect provided in subsection 14A:7-3(6), and may recover damages for breach of contract. Unless special circumstances show proximate damages of a different amount, the measure of damages shall be the difference between the market price at the time and place for tender of the shares and the unpaid contract price. Liquidated damages may be provided for in the subscription agreement in an amount which is reasonable under the circumstances, including the difficulties of proof of loss. The subscriber shall be entitled to restitution of any amount by which the sum of his payments exceeds the corporation's damages for breach of contract, whether fixed by agreement or judgment. The rights and duties set forth in subsection 14A:7-3(5) shall be interpreted as cumulative so far as is consistent with the purpose of entitling the corporation to a full and single recovery of the amount due or its damages. The subscription agreement may limit the rights and remedies of the corporation set forth in subsection 14A:7-3(5), and may add to them so far as is consistent with the preceding sentence. (6) The rescission by the corporation of a subscription under which a portion of the shares subscribed for have been issued and in which the corporation retains a security interest, as provided in subsection 14A:7-3(3), shall effect the cancellation of such shares. (7) A contract made with a corporation to purchase its shares is a subscription agreement and not an executory contract to purchase shares, unless otherwise provided in the agreement. L.1968, c.350; amended 1973,c.366,s.31; 1988,c.94,s.35, 1997,c.252,s.20.

N.J. Stat. § 14A:7-4 Consideration for shares

(1) Subject to any restriction contained in the certificate of incorporation, shares may be issued for such consideration as shall be fixed from time to time by the board or as shall be determined in accordance with a general formula or at not less than such minimum consideration as the board shall authorize. (2) The shareholders may reserve in the certificate of incorporation the right to fix the consideration to be received for shares. If such right is reserved as to any shares, the shareholders shall either fix the consideration to be received for such shares or authorize the board to fix such consideration. (3) (Deleted by amendment, P.L. 1988, c. 94.) (4) (Deleted by amendment, P.L. 1988, c. 94.) (5) (Deleted by amendment, P.L. 1988, c. 94.) (6) A good faith judgment of the board of directors or the shareholders, as the case may be, as to the value of the consideration is conclusive. L.1968, c.350; amended 1988,c.94,s.36.

N.J. Stat. § 14A:7-5 Payment for shares; nonassessability

(1) Subject to any restrictions contained in the certificate of incorporation, the consideration for the issuance of shares may be paid, in whole or in part, in: (a) money, (b) real property,(c) tangible or intangible personal property, including stock of another corporation, and obligations of the subscriber or of another person, whether secured or unsecured, (d) labor or services actually performed for the corporation or in its formation, or (e) labor or services to be performed in the future for the corporation. A new employee's termination of employment with a prior employer or the employee's acceptance of employment with the corporation is adequate consideration for the issuance of shares. (2) When payment of the full consideration for which shares are to be issued is made, the subscriber shall thereupon become entitled to all the rights and privileges of a holder of such shares, including the registration in his name of a certificate representing them, and such shares shall be fully paid and nonassessable. L.1968, c.350; amended 1973,c.366,s.32; 1988,c.94,s.37.

N.J. Stat. § 14A:7-6 Redeemable shares

(1) A corporation may provide in its certificate of incorporation for one or more classes or series of shares which are redeemable, in whole or in part, at the option of the corporation in cash, its bonds or other property, at such price or prices, within such period or periods, and under such conditions as are stated in the certificate of incorporation. A sinking fund may be created for the redemption of any class or series of redeemable shares. (2) A corporation which is an open-end investment company, as defined in an Act of Congress entitled "Investment Company Act of 1940," as amended or supplemented, or any act adopted in substitution therefor, may, if its certificate of incorporation so provides and upon compliance with that act, issue shares which are redeemable at the option of the holder at a price approximately equal to the shares' proportionate interest in the net assets of the corporation, and a shareholder may compel redemption of such shares in accordance with their terms. (3) A corporation may provide, in its certificate of incorporation for one or more classes or series of shares which are redeemable, in whole or in part, at the option of the shareholder. Subject to the restrictions imposed by section 14A:7-16, such shares may be redeemable in cash, bonds of the corporation or other property, at such price or prices, as are fixed, or established by formula, within such period or periods and under such conditions as are stated in the certificate of incorporation, and such shares may also be redeemable at the option of the corporation, as provided in subsection 14A:7-6(1). If any shares redeemable at the option of the shareholder are outstanding, the certificate of incorporation may be amended to delete or limit the provisions concerning redeemability with respect to those outstanding shares only with the unanimous approval of the holders of those shares. The provisions of this subsection shall not be applicable to an open-end investment company. (4) (Deleted by amendment, P.L. 1988, c. 94.) L.1968, c.350; amended 1969,c.102,ss.8,17; 1973,c.366,s.33; 1988,c.94,s.38.

N.J. Stat. § 14A:7-7 Share rights and options

14A:7-7. Share rights and options. (1) Subject to any provisions in respect thereof set forth in its certificate of incorporation in effect before the authorization and issuance of the rights or options, a corporation may create and issue, whether or not in connection with the issuance and sale of any of its shares or bonds, rights or options entitling the holders thereof to purchase from the corporation shares of any class or series for such consideration and upon such terms and conditions as may be fixed by the board. Such rights or options shall be evidenced in such manner as the board shall approve and, without limiting the generality of the foregoing, may be evidenced by warrants attached to or forming part of bond instruments or share certificates or existing independently thereof. The instruments evidencing such rights or options shall set forth or incorporate by reference the terms and conditions of their exercise, including the time or times, which may be limited or unlimited in duration, within which, and the price or prices at which such shares may be purchased from the corporation, and any limitations on the transferability of any such right or option. The rights or options may contain provisions which adjust the rights or options in the event of an acquisition of shares or a reorganization, merger, consolidation, sale of assets or other occurrence. The consideration for shares to be purchased upon the exercise of any such right or option shall comply with the requirements of sections 14A:7-4 and 14A:7-5. A good faith judgment of the board as to the adequacy of the consideration received for such rights or options is conclusive. (2) (Deleted by amendment, P.L.1988, c.94.) (3) Notwithstanding N.J.S.14A:7-1 and N.J.S.14A:7-2 and any other provision of chapter 7 of Title 14A of the New Jersey Statutes, and unless otherwise provided in the certificate of incorporation in effect before the authorization and issuance of the rights or options, a corporation may before, on or after the effective date of this 1989 amendatory act, authorize and issue rights or options which include conditions that prevent the holder of a specified percentage of the outstanding shares of the corporation, including subsequent transferees of the holder, from exercising those rights or options or which invalidate any rights or options beneficially owned by the holder of a specified percentage of the outstanding shares of the corporation, including subsequent transferees of the holder. L.1968, c.350; amended 1969,c.102,ss.9,17; 1973,c.366,s.34; 1988,c.94,s.39; 1989,c.107,s.1.

N.J. Stat. § 14A:7-8.1 Par value of shares and stated capital.

(1) Unless otherwise provided in the certificate of incorporation, all shares shall have no par value and no stated capital shall be required to be maintained. (2) A corporation in its certificate of incorporation may specify a par value for any class or series of its shares, may require that a specified stated capital be maintained, or may impose any other capitalization requirements. A corporation which specifies in its certificate of incorporation the par value for its shares or a specified stated capital shall not be subject to any limitations on distributions other than those set forth in section 14A:7-14.1, unless other restrictions are set forth in the certificate of incorporation. (3) If for any reason the laws of this State or those of any other jurisdiction require that the par value of shares or stated capital of a corporation be ascertained, then solely for that purpose a domestic corporation which has not otherwise made express provision therefor in its certificate of incorporation shall be deemed to have declared and be entitled to declare that its capital stock has a par value of one mill per share and a stated capital of one mill times the number of shares then outstanding. (added) 1988,c.94,s.40.

N.J. Stat. § 14A:7-9 Convertible shares and bonds.

(1) When so provided in its certificate of incorporation, a corporation may issue shares of any class or series convertible, at the option of the holder or of the corporation or both, into shares of any other class or classes or of any series of the same or any other class or classes. (2) Unless otherwise provided in its certificate of incorporation, a corporation may issue bonds convertible, at the option of the holder or of the corporation or both, into shares of any class or classes or of any series of any class or classes, upon such terms and conditions as may be fixed by the board. The bond instrument shall set forth or incorporate by reference the terms and conditions of the conversion privilege. (3) No issue of shares or bonds convertible into shares of the corporation shall be made unless a sufficient number of shares of the appropriate class or classes or series, either authorized but unissued or treasury shares, are reserved by the board to be issued or disposed of only in satisfaction of the conversion privileges of the convertible shares or bonds being issued. (4) If there is shareholder approval of the issue of shares or bonds convertible into shares of the corporation, such approval may provide that the board is authorized upon such issue to increase the authorized shares of any class or series to such number as will be not more than sufficient, when added to the previously authorized but unissued shares of such class or series, to satisfy the conversion privileges of the convertible shares or bonds being issued. The board, when so authorized, may increase the authorized shares of the corporation by filing a certificate of amendment to the certificate of incorporation. The certificate shall be executed on behalf of the corporation and shall set forth (a) The name of the corporation; (b) The date of adoption of the amendment; (c) The amendment so adopted; (d) That the amendment is made pursuant to authority granted by the shareholders in connection with shareholder approval of the issue of shares or bonds of the corporation convertible into the shares being authorized by the amendment; and (e) The designation of the convertible shares or bonds and the date of such shareholder approval. (5) (Deleted by amendment, P.L. 1988, c. 94.) (6) (Deleted by amendment, P.L. 1988, c. 94.) (7) When bonds have been converted, they shall be cancelled and not reissued. The disposition of converted shares is provided for in section 14A:7-18. L.1968, c.350; amended 1988,c.94,s.41.

N.J. Stat. § 14A:7-10 Expenses of organization, reorganization and financing

The reasonable charges and expenses of organization or reorganization of a corporation, and the reasonable expenses of and compensation for the sale or underwriting of its shares, may be paid or allowed by such corporation out of the consideration received by it in payment for its shares without thereby rendering such shares assessable or not fully paid. L.1968, c.350.

N.J. Stat. § 14A:7-11 Certificates representing shares

(1) The shares of a corporation shall be represented by certificates or, in accordance with subsection 14A:7-11(6), shall be uncertificated shares. Certificates shall be signed by, or in the name of the corporation by, the chairman or vice-chairman of the board, or the president or a vice-president, and may be countersigned by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation and may be sealed with the seal of the corporation or a facsimile thereof. Any or all signatures upon a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon such certificate, shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of its issue. (2) Every share certificate delivered after the effective date of this act by a corporation which is authorized to issue shares of more than one class shall set forth upon the face or back of the certificate, a full statement (a) Of the designations, relative rights, preferences and limitations of the shares of each class and series authorized to be issued, so far as the same have been determined, and (b) Of the authority of the board to divide the shares into classes or series and to determine and change the relative rights, preferences and limitations of any class or series, or shall set forth that the corporation will furnish to any shareholder, upon request and without charge, such a full statement. (3) Each certificate representing shares shall state upon the face thereof (a) That the corporation is organized under the laws of this State; (b) The name of the person to whom issued; and (c) The number and class of shares, and the designation of the series, if any, which such certificate represents. (4) No certificate shall be issued for any share until such share is fully paid. (5) A card which is punched, magnetically coded or otherwise treated so as to facilitate machine or automatic processing, may be used as a share certificate if it otherwise complies with the provisions of this section. (6) The board may provide that some or all of the shares of any class or series shall be represented by uncertificated shares. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates by subsections 14A:7-11(2) and 14A:7-11(3), and if required, 14A:7-12(2). Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical. L.1968, c.350; amended 1973,c.366,s.36; 1988,c.94,s.42.

N.J. Stat. § 14A:7-12 Transfer of shares and restrictions on transfer

(1) The shares of a corporation shall be personal property and shall be transferable in accordance with the provisions of Chapter 8 of the Uniform Commercial Code (N.J.S. 12A:8-101 et seq.), as amended from time to time, except as otherwise provided in this act. (2) Any reasonable restriction on the transfer or registration of transfer of shares, or other securities having conversion or option rights, may be enforced against the holder of the restricted securities and any successor or transferee of the holder, including any fiduciary entrusted with responsibility for the person or property of the holder. Such restriction shall be valid only if imposed by the certificate of incorporation or by-laws or by the provisions of an employee benefit plan permitted by Chapter 8 of this act, or by a written agreement among any number of shareholders or among such holders and the corporation. No restriction shall be valid with respect to any securities issued prior to the imposition of the restriction unless their holders shall have voted in favor of the imposition of the restriction or are parties to the agreement imposing it. Unless noted conspicuously on the security or contained in the information statement required by subsection 14A:7-11(6), a restriction shall not be valid against a person who becomes the holder of the security without actual knowledge of the restriction. (3) In particular and without limitation of the generality of the power granted by subsection 14A:7-12(2) to impose restrictions, a restriction on the transfer or registration of transfer of shares, or other securities having conversion or option rights, may be enforced as provided in subsection 14A:7-12(2), if it: (a) Obligates the holder of the restricted securities to offer to the corporation or to any other holders of securities of the corporation or to any other person or to any combination of the foregoing, a prior opportunity, to be exercised within a reasonable time, to acquire the restricted securities; (b) Obligates the corporation or any holder of securities of the corporation or any other person or any combination of the foregoing, to purchase the securities which are the subject of an agreement respecting the purchase and sale of the restricted securities; (c) Requires the corporation or the holders of any class or series of securities of the corporation to consent to any proposed transfer of the restricted securities or to approve the proposed transferee of the restricted securities; (d) Prohibits the transfer of the restricted securities to designated persons or classes of persons, and such designation is not manifestly unreasonable; or (e) Exists for the purpose of maintaining the status of the corporation as an electing small business corporation under subchapter S of the United States Internal Revenue Code. (4) If a restriction on transfer of shares or other securities having conversion or option rights is held not to be authorized by the law of this State, the corporation shall nevertheless have an option for a period of 30 days after the judgment setting aside the restriction becomes final, to acquire the restricted securities at a price to be agreed upon by the parties, or if no agreement is reached as to price, then at their fair value as determined by any court having jurisdiction. In order to determine fair value, the court may appoint an appraiser to receive evidence and report to the court his findings and recommendations as to fair value. The appraiser shall have such powers and shall proceed so far as applicable, in the same manner as an appraiser appointed under section 14A:11-8. L.1968, c.350; amended 1988,c.94,s.43.

N.J. Stat. § 14A:7-13 Issuance of fractional shares or scrip

Unless otherwise provided in its certificate of incorporation, a corporation may, but shall not be obliged to, issue fractions of a share and certificates therefor. By action of its board, a corporation may, in lieu of issuing fractional shares, pay cash equal to the value of such fractional share, or issue scrip in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip aggregating a full share. A certificate for a fractional share shall entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any distribution of assets of the corporation in the event of liquidation, but scrip shall not entitle the holder to exercise such voting rights, receive dividends or participate in any such distribution of assets unless such scrip shall so provide. All scrip shall be issued subject to the condition that it shall become void if not exchanged for certificates representing full shares before a specified date. If such scrip is not so exchanged, the corporation shall either sell the shares for which such scrip was exchangeable and distribute the proceeds thereof pro rata to the holders of such scrip, or pay, pro rata, to the holders of such scrip the market value of the shares for which such scrip was exchangeable as of the day when such scrip became void. L.1968, c.350; amended by L.1973, c. 366, s. 37, eff. May 1, 1974.

N.J. Stat. § 14A:7-14.1 Limitations on distributions to shareholders

(1) "Distribution" means a direct or indirect transfer of money or other property (except its own shares) or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. A distribution may be in the form of a dividend, a purchase, redemption or other acquisition of its shares, or otherwise. (2) A corporation may not make a distribution if, after giving effect thereto, either: (a) The corporation would be unable to pay its debts as they become due in the usual course of its business; or (b) The corporation's total assets would be less than its total liabilities. (3) Determinations under paragraph 14A:7-14.1(2)(b) may be based upon (i) financial statements prepared on the basis of generally accepted accounting principles, (ii) financial statements prepared on the basis of other accounting practices and principles that are reasonable in the circumstances, or (iii) a fair valuation or other method that is reasonable in the circumstances. (4) In the case of a purchase, redemption or other acquisition by a corporation of its own shares, the effect of a distribution shall be measured as of the earlier of (i) the date money or other property is transferred or debt is incurred by the corporation, or (ii) the date the shareholder ceases to be a shareholder with respect to the acquired shares. In all other cases, the effect of a distribution shall be measured (i) as of the date of its authorization if payment occurs 120 days or less following the date of authorization, or (ii) as of the date of payment if payment occurs more than 120 days following the date of authorization. (5) A corporation's indebtedness to a shareholder incurred by reason of a distribution made in accordance with this section shall not be subordinated to the corporation's indebtedness to its general, unsecured creditors except to the extent subordinated by agreement. (added) 1988,c.94,s.44.

N.J. Stat. § 14A:7-15 Authority to pay dividends

(1) Subject to any restrictions contained in the certificate of incorporation and to the provisions of section 14A:7-14.1, a corporation may, from time to time, by resolution of its board, pay dividends on its shares in cash, in its own shares, in its bonds or in other property, including the shares or bonds of other corporations. (2) (Deleted by amendment, P.L. 1988, c. 94.) (3) (Deleted by amendment, P.L. 1988, c. 94.) (4) (Deleted by amendment, P.L. 1988, c. 94.) (5) Unless the certificate of incorporation otherwise provides, a dividend may be paid in shares having a preference in the assets of the corporation upon liquidation, whether or not the net assets at the time of the share dividend are less than the aggregate amount of such prior and newly created preferences. (6) (Deleted by amendment, P.L. 1988, c. 94.) L.1968, c.350; amended 1988,c.94,s.45.

N.J. Stat. § 14A:7-15.1 Share dividends, share divisions and combinations

14A:7-15.1. Share dividends, share divisions and combinations. (1) A corporation may effect a share dividend or a division or combination of its shares in the manner hereinafter set forth. As used in this section, the terms "division" and "combination" mean dividing or combining shares of any class or series, whether issued or unissued, into a greater or lesser number of shares of the same class or series. (2) Except as otherwise provided in the certificate of incorporation, a share dividend, a division or combination may be effected by action of the board alone; except that any division which adversely affects the shares of another class shall be made by amendment. The board in effecting a share dividend, combination or division shall have authority to amend the certificate of incorporation to increase or decrease the par value of shares, increase or decrease the number of authorized shares and to make any other change necessary or appropriate to assure that the rights or preferences of the holders of outstanding shares of any class or series will not be adversely affected by such combination or division. Notwithstanding the foregoing sentence, the board shall not have the authority to amend the certificate of incorporation, and shareholder approval for the amendment shall be required in accordance with subsection 14A:9-2(4) and section 14A:9-3, if as a result of the amendment: (a) The rights or preferences of the holders of outstanding shares of any class or series will be adversely affected; or (b) The percentage of authorized shares that remains unissued after the share dividend, division or combination will exceed the percentage of authorized shares that was unissued before the share dividend, division or combination. (3) If a share dividend, division or combination is effected by board action without shareholder approval and includes an amendment of the certificate of incorporation, there shall be executed on behalf of the corporation and filed in the office of the Secretary of State a certificate of amendment setting forth (a) The name of the corporation; (b) The date of adoption by the board of the resolution approving the dividend, division or combination; (c) That the amendment to the certificate of incorporation will not adversely affect the rights or preferences of the holders of outstanding shares of any class or series and will not result in the percentage of authorized shares that remains unissued after the share dividend, division or combination exceeding the percentage of authorized shares that was unissued before the share dividend, division or combination; (d) The class or series and number of shares thereof subject to the dividend, division or combination and the number of shares to be issued on the dividend or into which they are to be divided or combined; (e) The amendment of the certificate of incorporation made in connection with the dividend, division or combination; and (f) If the dividend, division or combination is to become effective at a time subsequent to the time of filing, the date, which may not exceed 90 days from the date of filing, when the same is to become effective. (4) If a share dividend, division or combination is effected by action of the board and the shareholders, there shall be executed on behalf of the corporation and filed in the office of the Secretary of State a certificate of amendment as provided in subsection 14A:9-4(3), which certificate shall set forth, in addition to all information required by said subsection, the information required by paragraph 14A:7-15.1(3)(d). (5) Upon a combination becoming effective, the authorized shares of the class or series subject thereto shall be reduced by the same percentage by which the issued shares of such class or series were reduced as a result of the combination unless the certificate of incorporation otherwise provides or the combination was approved by the shareholders in accordance with subsection 14A:9-2(4) and section 14A:9-3. (6) (Deleted by amendment, P.L.1988, c.94.) L.1973, c.366, s.38; amended 1988,c.94,s.46; 1995,c.279,s.8.

N.J. Stat. § 14A:7-16 Acquisitions of a corporation's own shares

14A:7-16. Acquisitions of a corporation's own shares. (1) Subject to the provisions of section 14A:7-14.1, a corporation may acquire its own shares. (2) (Deleted by amendment, P.L.1988, c.94.) (3) (Deleted by amendment, P.L.1988, c.94.) (4) (Deleted by amendment, P.L.1988, c.94.) (5) No acquisition of its own shares shall be made by a corporation (a) Contrary to any restrictions contained in the certificate of incorporation; (b) (Deleted by amendment, P.L.1988, c.94.) (c) Unless after such acquisition there remain outstanding one or more classes or series of shares possessing, among them collectively, voting rights and unlimited residual rights as to dividends and distribution of assets on liquidation; or (d) In the case of redeemable shares and within the period of their redeemability, at a price greater than the applicable redemption price plus, in the case of shares entitled to cumulative dividends, the dividends which would have accrued to the next dividend date following the date of acquisition. (6) (Deleted by amendment, P.L.1988, c.94.) (7) Unless the certificate of incorporation otherwise provides, a corporation may acquire its shares whether or not the net assets remaining after the transaction are less than the aggregate amount of the preferences of outstanding shares in the assets of the corporation upon liquidation. (8) In connection with an agreement to acquire its shares, a corporation may grant a security interest in the acquired shares to secure an obligation to pay for the acquisition. The shares shall not be deemed to be reacquired by the corporation and cancelled on its books until the obligation of the corporation is fully paid or discharged. (9) A corporation may acquire or agree to acquire its shares, notwithstanding that the acquisition would constitute a distribution prohibited under section 14A:7-14.1, if all or part of the purchase price is deferred until such time as the payment would not constitute a prohibited distribution. L.1968, c.350; amended 1988,c.94,s.47; 1995,c.279,s.9.

N.J. Stat. § 14A:7-18 Cancellation of reacquired shares

14A:7-18. Cancellation of reacquired shares. (1) When shares of a corporation are reacquired by purchase, by redemption or by their conversion into other shares of the corporation, the reacquisition shall effect their cancellation, unless the board determines that the shares shall be treasury shares or the bylaws so provide. In addition, any shares which were treasury shares on or before December 1, 1988, shall continue to be treasury shares unless cancelled by the board. The board may cancel treasury shares at any time. Upon their cancellation, shares shall be restored to the status of authorized but unissued shares, unless the certificate of incorporation, or the plan of merger or consolidation in the case of shares acquired by the corporation pursuant to Chapter 11 of this act, provides that such shares shall not be reissued, in which case a certificate of amendment to the certificate of incorporation shall be filed, pursuant to a resolution of the board, reducing the authorized number of shares by the number of shares so cancelled. (2) The certificate of amendment reducing the authorized shares shall be executed on behalf of the corporation and filed in the office of the Secretary of State not later than 30 days after the cancellation of the reacquired shares not to be reissued. The statement shall set forth: (a) The name of the corporation; (b) The number of shares cancelled, itemized by classes and series, and the date of adoption of the resolution of the board cancelling such shares; (c) The aggregate number of authorized shares, itemized by classes and series, after giving effect to such cancellation; (d) A statement that the certificate of incorporation or plan of merger provides that the shares cancelled shall not be reissued; and (e) That the certificate of incorporation is amended by decreasing the aggregate number of shares which the corporation is authorized to issue by the number of shares cancelled. (f) (Deleted by amendment, P.L.1988, c.94.) (3) (Deleted by amendment, P.L.1988, c.94.) (4) A certificate of amendment reducing the authorized shares because of the conversion of convertible shares shall be filed only if the certificate of incorporation provides that such shares shall not be reissued. The certificate of amendment shall set forth the information required by subsection 14A:7-18(2) and in the case of cancellation of converted shares, the certificate of amendment shall be filed not later than 90 days after the close of the fiscal year in which the shares were reacquired. (5) Nothing contained in this section shall be construed to forbid a cancellation of shares or a reduction of authorized shares in any other manner permitted by this act. L.1968, c.350; amended 1973,c.366,s.40; 1988,c.94,s.48; 1995,c.279,s.10.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026