New Jersey-2014-A579-Introduced

An Act authorizing the establishment of Garden State Corporations and supplementing Title 14A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the "Garden State Manufacturing Jobs Act."

2. As used in this act, "Garden State Corporation" means a corporation:

a. Which principally engages in manufacturing and principally utilizes facilities located within the State of New Jersey;

b. Which is organized under provisions of the "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq.; and

c. Which has elected to become subject to this act, and whose status as a Garden State Corporation has not been terminated as provided in this act.

3. A Garden State Corporation shall be formed in accordance with chapter 2 of Title 14A of the New Jersey Statutes, except that the formation of the corporation shall be conducted in a manner consistent with the provisions of this act and its certificate of incorporation shall state that it is a Garden State Corporation. A Garden State Corporation may include the words "Garden State," "codetermined," "co-managed," "employer-employee," "manufacturing" or any combination of those terms in its corporate name.

4. a. A corporation organized under the provisions of the "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq., may become a Garden State Corporation under this act by amending its certificate of incorporation so that it contains a statement that the corporation is a Garden State Corporation and it complies with the other provisions of this act.

b. If a corporation that is not a Garden State Corporation is a party to a merger or consolidation or is the exchanging corporation in a share exchange, and the surviving or new corporation in the merger, consolidation, or share exchange is to be a Garden State Corporation, then the plan of merger, consolidation, or share exchange shall not be effective unless it is adopted pursuant to the provisions of the "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq.

5. a. A Garden State Corporation may terminate its status as a Garden State Corporation and cease to be subject to this act by a vote of the majority of the board of directors of that Garden State Corporation and by amending its certificate of incorporation to delete the provision required by section 3 and subsection a. of section 4 of this act, pursuant to the provisions of the "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq.

b. If a plan of merger, consolidation, or exchange would have the effect of terminating the status of a corporation as a Garden State Corporation, then the plan of merger, consolidation, or share exchange shall not be effective unless the Garden State Corporation has first terminated its status as a Garden State Corporation pursuant to subsection a. of this section and the plan is adopted pursuant to the provisions of the "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq.

6. The certificate of incorporation or by-laws of a Garden State Corporation shall provide that half of the members of the board of directors of the corporation are elected by the employees of the corporation who work in facilities in New Jersey and provide that the employee-elected members of the board shall have access to all documents and records of the corporation and equal authority with other members of the board regarding all matters affecting the business and affairs of the corporation, including: the selection and removal of officers of the corporation; the location of corporation facilities; the amendment or repealing of the by-laws or the certificate of incorporation of the corporation; any decision to seek to obtain or terminate the status of the corporation as a benefit corporation under the provisions of P.L.2011, c.30 (C.14A:18-1 et seq.); and any decision that may result in the termination of the status of the corporation as a Garden State Corporation under the provisions of this act.

7. The certificate of incorporation or by-laws of a Garden State Corporation shall provide for the election, terms, classifications, if any, and removal of directors and officers pursuant to the provisions of "New Jersey Business Corporation Act," N.J.S.14A:1-1 et seq., and the provisions of this act, and shall provide the procedures for the election of employee-elected members of the board of directors of the Garden State Corporation. Those procedures shall include requirements that:

a. Only employees of the Garden State Corporation who work in facilities in New Jersey shall be eligible to seek election and serve as employee-elected members of the board of directors;

b. Each employee of the Garden State Corporation who works in facilities in New Jersey, without respect to the position or rank of the employee or the amount of any ownership interest that the employee may have in the Garden State Corporation, shall have the right to vote in the selection of the employee-elected members of the board of directors, with the vote of each employee having equal weight with the vote of any other employee, and shall have the right to seek election as an employee-elected member of the board of directors and serve on the board if elected.

Vacancies in employee-elected director positions resulting from death, resignation, or removal shall be filled for the remainder of the term by a majority vote of the employee-elected members of the board of directors of the Garden State Corporation.

8. a. If a corporation is a Garden State Corporation but has not obtained the status of a benefit corporation under the provisions of P.L.2011, c.30 (C.14A:18-1 et seq.), it shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), as follows:

(1) During each of the first five tax years in which it is continuously a Garden State Corporation, but is not a benefit corporation, an amount equal to 35% of the corporation's liability for such tax;

(2) During the sixth and seventh tax years in which it is continuously a Garden State Corporation, but is not a benefit corporation, an amount equal to 25% of the corporation's liability for such tax; and

(3) During the eight and ninth tax years in which it is continuously a Garden State Corporation, but is not a benefit corporation, an amount equal to 15% of the corporation's liability for such tax.

b. Except as provided in subsection c. of this section, if the corporation is a Garden State Corporation and has also obtained the status of a benefit corporation, it shall be allowed a credit against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5), as follows:

(1) During each of the first five tax years in which it is continuously both a Garden State Corporation and a benefit corporation, an amount equal to 60% of the corporation's liability for such tax;

(2) During the sixth and seventh tax years in which it is continuously both a Garden State Corporation and a benefit corporation, an amount equal to 45% of the corporation's liability for such tax; and

(3) During the eight and ninth tax years in which it is continuously both a Garden State Corporation and a benefit corporation, an amount equal to 30% of the corporation's liability for such tax.

c. For each year that the corporation receives a tax credit pursuant to paragraph (1) of subsection b. of this section, the maximum number of years for which the corporation may receive a tax credit pursuant to paragraph (1) of subsection a. of this section shall be reduced by one year. For each year that the corporation receives a tax credit pursuant to paragraph (2) of subsection b. of this section, the maximum number of years for which the corporation may receive a tax credit pursuant to paragraph (2) of subsection a. of this section shall be reduced by one year. For each year that the corporation receives a tax credit pursuant to paragraph (3) of subsection b. of this section, the maximum number of years for which the corporation may receive a tax credit pursuant to paragraph (3) of subsection a. of this section shall be reduced by one year.

d. The order of priority of the application of the credit allowed under this section and any other credits allowed by law shall be as prescribed by the Director of the Division of Taxation. The amount of the credit applied under this section against the tax imposed pursuant to section 5 of P.L.1945, c.162 (C.54:10A-5) for a privilege period shall not exceed the amount of any credit granted pursuant to this section plus the amount of any other credits allowed by law that shall reduce the total tax liability otherwise due by not more than 25 percent, and shall not reduce the tax liability to an amount less than the statutory minimum provided in subsection (e) of section 5 of P.L.1945, c.162 (C.54:10A-5). An unused credit may be carried forward, if necessary, for use in the first privilege period following the privilege period for which the credit is allowed.

e. The director shall develop, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), criteria for determining eligibility under this section, in consultation with the State Treasurer and the New Jersey Economic Development Authority.

9. This act shall take effect on the July 1 next following the date of enactment.

STATEMENT

This bill permits the establishment of Garden State Corporations which are principally engaged in manufacturing, and principally utilizing facilities located in New Jersey.

Under the bill, the certificate of incorporation or by-laws of a Garden State Corporation is required to provide that half of the members of the board of directors of the corporation are elected by the employees of the corporation who work in New Jersey facilities. It is required that the employee-elected members of the board have access to all corporation documents and records and equal authority with other members of the board regarding all matters affecting the business and affairs of the corporation, including:

1. The selection and removal of officers of the corporation;

2. The amendment or repealing of the by-laws or the certificate of incorporation of the corporation;

3. Any decision regarding the location of corporation facilities;

4. Any decision to seek to obtain or terminate the status of the corporation as a benefit corporation under the provisions of P.L.2011, c.30 (C.14A:18-1 et seq.); and

5. Any decision that may result in the termination of the status of the corporation as a Garden State Corporation.

The bill requires a Garden State Corporation to have procedures regarding the election of the employee-elected board members which require that only employees of the Garden State Corporation who work in facilities in New Jersey are eligible to seek election and serve as employee-elected members of the board of directors. It also requires that each employee of the corporation who works in facilities in New Jersey, without respect the position or rank of the employee or the amount of any ownership interest that the employee may have in the corporation, have the right to vote in the selection of the employee-elected members of the board of directors, with the vote of the employee vote having equal weight with the vote of any other employee, and the right to seek election as an employee-elected member of the board of directors and serve on the board if elected.

The bill also provides for procedures for conversion to or from Garden State Corporation status for other corporations.

Finally, the bill provides the credits against the corporation business tax. If a corporation is a Garden State Corporation under the bill but not a "benefit corporation" under P.L.2011, c.30 (C.14A:18-1 et seq.), it is allowed credits against its liability for the corporation business tax of: 35% during the first five tax years in which it is continuously a Garden State Corporation; 25% during the sixth and seventh tax years, and 15% during the eight and ninth tax years. If a corporation is both a Garden State Corporation and a "benefit corporation," it is allowed credits against its liability for the corporation business tax of: 60% during the first five tax years in which it is continuously both a Garden State Corporation and a benefit corporation; 45% during the sixth and seventh tax years, and 30% during the eight and ninth tax years. The number of tax years in which the lower tax credit for being only a Garden State Corporation applies would be reduced by the number of years in which the higher tax credit for being both a Garden State Corporation and a "benefit corporation" applies, thus limiting to nine the total number of tax years to which the credits may apply.