TRENTON, NJ – Legislation co-sponsored by Assemblyman Roy Freiman (D-16th) to modernize business filing statutes to include entity conversion and domestication has been approved 75-0 by the full state Assembly.
Conversion involves converting from one type of business entity to another. Domestication is the process of an out-of-state business entity converting to a domestic corporation. Because of a lack of clear statutory authority in New Jersey, entities wishing to convert or domesticate are forced to use a process that requires two or three indirect steps. This bill revises the statutes to allow for conversion or domestication in a single, direct, and more efficient transaction.
“Outdated laws are tying the hands of new businesses trying to open their doors in New Jersey,” said Freiman, whose district includes towns in Somerset, Mercer, Middlesex, and Hunterdon counties.). “My bill cuts the red tape and says ‘We’re open for business.’ ”
Freiman is a resident of Hillsborough.
The bill would modify the applicable business filing statutes contained in the “New Jersey Business Corporation Act” by adding domestication and conversion provisions across all business entity types. The bill would be effective 180 days following enactment.
At least 34 other states allow conversion where businesses can convert from one type of entity to another type. And at least 28 states allow domestication where an out-of-state business entity can convert to a domestic corporation.
The bill will now go to the Senate for further consideration.