As Reported by the Senate Finance and 1
Financial Institutions Committee 2
122nd General Assembly 5
Regular Session Sub. H. B. No. 170 6
1997-1998 7
REPRESENTATIVES WOMER BENJAMIN-BATCHELDER-TIBERI-HARRIS-MYERS- 9
MASON-SCHULER-LEWIS-BRITTON-SALERNO-TAYLOR-REID-CATES-HAINES- 10
MOTTLEY-JONES-TERWILLEGER-MILLER-COLONNA-THOMPSON-CALLENDER- 11
GARCIA-GRENDELL-VERICH-HOUSEHOLDER-O'BRIEN-OPFER-LOGAN 12
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A B I L L
To amend sections 1301.05, 1301.12, 1303.02, 16
1304.01, 1304.02, 1305.10, 1305.13, 1308.03, 17
1308.04, 1308.08, 1308.09, 1308.10, 1308.11, 18
1308.12, 1308.13, 1308.14, 1308.15, 1308.16, 19
1308.17, 1308.22, 1308.31, 1308.37, 1308.38, 20
1308.41, 1308.42, 1309.01, 1309.03, 1309.14, 21
1309.20, 1309.21, 1309.22, 1309.23, 1309.24, 22
1309.25, 1309.28, 1309.31, 1701.01, 1701.24, 23
1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 24
1701.832, 1705.01, 1705.04, 1705.16, 1705.43, 25
1782.33, and 3901.51; to enact new sections 26
1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 27
1308.18, 1308.19, 1308.20, 1308.21, 1308.23, 29
1308.24, 1308.25, 1308.26, 1308.27, 1308.32, 30
1308.33, 1308.39, and 1308.40 and sections 31
1308.51, 1308.52, 1308.53, 1308.54, 1308.55, 32
1308.56, 1308.57, 1308.58, 1308.59, 1308.60, 33
1308.61, 1309.112, and 1309.113; and to repeal 34
sections 1308.01, 1308.02, 1308.05, 1308.06, 35
1308.07, 1308.18, 1308.19, 1308.20, 1308.21, 36
1308.23, 1308.24, 1308.25, 1308.26, 1308.27, 37
1308.28, 1308.32, 1308.33, 1308.34, 1308.35, 38
1308.36, 1308.39, 1308.40, 1308.43, and 1308.44 39
of the Revised Code to adopt the Revised Article 40
2
8 of the Uniform Commercial Code--Investment 41
Securities, to adopt modifications to the General 42
Corporation Law regarding control share 43
acquisitions, and to make changes in certain
organizational provisions of the Limited 44
Liability Companies Law and the Limited
Partnerships Law. 45
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 47
Section 1. That sections 1301.05, 1301.12, 1303.02, 49
1304.01, 1304.02, 1305.10, 1305.13, 1308.03, 1308.04, 1308.08, 50
1308.09, 1308.10, 1308.11, 1308.12, 1308.13, 1308.14, 1308.15, 51
1308.16, 1308.17, 1308.22, 1308.31, 1308.37, 1308.38, 1308.41, 52
1308.42, 1309.01, 1309.03, 1309.14, 1309.20, 1309.21, 1309.22, 53
1309.23, 1309.24, 1309.25, 1309.28, 1309.31, 1701.01, 1701.24, 54
1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 1701.832, 1705.01, 55
1705.04, 1705.16, 1705.43, 1782.33, and 3901.51 be amended and 56
new sections 1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 57
1308.18, 1308.19, 1308.20, 1308.21, 1308.23, 1308.24, 1308.25, 58
1308.26, 1308.27, 1308.32, 1308.33, 1308.39, and 1308.40 and 59
sections 1308.51, 1308.52, 1308.53, 1308.54, 1308.55, 1308.56, 60
1308.57, 1308.58, 1308.59, 1308.60, 1308.61, 1309.112, and
1309.113 of the Revised Code be enacted to read as follows: 61
Sec. 1301.05. (A) Except as otherwise provided in this 70
section, when a transaction bears a reasonable relation to this 71
state and also to another state or nation, the parties may agree 72
that the law either of this state or of the other state or nation 73
shall govern their rights and duties. Failing such an agreement 74
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., 76
and 1310. of the Revised Code apply to transactions bearing an 77
appropriate relation to this state.
(B) Where one of the following provisions of Chapters 79
1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., and 1310. 81
of the Revised Code specifies the applicable law, that provision 82
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governs and a contrary agreement is effective only to the extent 83
permitted by the law, including the conflict of laws rules, so 84
specified:
(1) Rights of creditors against sold goods, as provided in 86
section 1302.43 of the Revised Code; 87
(2) Applicability of sections 1304.01 to 1304.40 of the 89
Revised Code, as provided in section 1304.02 of the Revised Code; 90
(3) Fund transfers under sections 1304.51 to 1304.85 of 92
the Revised Code, as provided in section 1304.85 of the Revised 93
Code; 94
(4) Applicability of sections 1308.01 to 1308.36 CHAPTER 97
1308. of the Revised Code, as provided in section 1308.05 of the 98
Revised Code;
(5) Perfection provisions of section 1309.03 of the 100
Revised Code; 101
(6) Applicability of sections 1310.01 to 1310.78 of the 103
Revised Code, as provided in sections 1310.03 and 1310.04 of the 104
Revised Code. 105
Sec. 1301.12. (A) Except in the cases described in 114
division (B) of this section a contract for the sale of personal 115
property is not enforceable by way of action or defense beyond 116
five thousand dollars in amount or value of remedy unless there 117
is some writing which indicates that a contract for sale has been 118
made between the parties at a defined or stated price, reasonably
identifies the subject matter, and is signed by the party against 119
whom enforcement is sought or by his THAT PARTY'S authorized 120
agent.
(B) Division (A) of this section does not apply to 122
contracts for the sale of goods, section 1302.04 of the Revised 123
Code, nor of securities, section 1308.30 1308.07 of the Revised 124
Code, nor to security agreements, section 1309.14 of the Revised 125
Code.
Sec. 1303.02. (A) This chapter applies to negotiable 134
instruments. It does not apply to money, to payment orders 135
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governed by sections 1304.51 to 1304.85 of the Revised Code, or 136
to securities governed by sections 1308.01 to 1308.44 CHAPTER 138
1308. of the Revised Code.
(B) If there is a conflict between this chapter and either 140
sections 1304.01 to 1304.40 or sections 1309.01 to 1309.50 of the 141
Revised Code, the provisions of sections 1304.01 to 1304.40 or 142
sections 1309.01 to 1309.50 of the Revised Code govern. 143
(C) If any provision of this chapter is inconsistent with 145
any regulation of the board of governors of the federal reserve 146
system or any operating circular of the federal reserve banks, 147
the regulation or the operating circular supersedes the provision 148
of this chapter to the extent of the inconsistency. 149
Sec. 1304.01. (A) As used in sections 1304.01 to 1304.40 158
of the Revised Code, unless the context requires otherwise: 159
(1) "Account" means any deposit or credit account with a 161
bank, including a demand, time, savings, passbook, share draft, 162
or similar account, other than an account evidenced by a 163
certificate of deposit.
(2) "Afternoon" means the period of day between noon and 165
midnight. 166
(3) "Banking day" means the part of a day on which a bank 169
is open to the public for carrying on substantially all of its 170
banking functions.
(4) "Clearing house" means an association of banks or 172
other payors regularly clearing items. 173
(5) "Customer" means a person having an account with a 175
bank or for whom a bank has agreed to collect items, including a 176
bank that maintains an account at another bank. 177
(6) "Documentary draft" means a draft to be presented for 179
acceptance or payment if specified documents, certified 180
securities or instructions for uncertificated securities AS 181
DEFINED IN SECTION 1308.01 OF THE REVISED CODE, or other 182
certificates, statements, or similar documents are to be received
by the drawee or other payor before acceptance or payment of the 183
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draft.
(7) "Draft" means a draft as defined in section 1303.03 of 185
the Revised Code or an item, other than an instrument, that is an 186
order.
(8) "Drawee" means a person ordered in a draft to make 188
payment.
(9) "Item" means an instrument or a promise or order to 190
pay money handled by a bank for collection or payment. "Item" 191
does not include a payment order governed by sections 1304.51 to 192
1304.85 of the Revised Code, a credit slip, or a debit card slip. 193
(10) "Midnight deadline," with respect to a bank, is 195
midnight on its next banking day following the banking day on 196
which it recevies RECEIVES the relevant item or notice or from 197
which the time for taking action commences to run, whichever is 200
later.
(11) "Settle" means to pay in cash, by clearing house 202
settlement, in a charge or credit or by remittance, or otherwise 203
as agreed. A settlement may be either provisional or final. 204
(12) "Suspends payments" with respect to a bank means that 206
it has been closed by order of the supervisory authorities, that 207
a public officer has been appointed to take it over, or that it 208
ceases or refuses to make payments in the ordinary course of 209
business. 210
(B) As used in sections 1304.01 to 1304.40 of the Revised 212
Code:
(1) "Bank" means a person engaged in the business of 214
banking, including a savings bank, a savings and loan 215
association, a credit union, or a trust company. 216
(2) "Depositary bank" means the first bank to take an item 219
even though it is also the payor bank, unless the item is
presented for immediate payment over the counter. 220
(3) "Payor bank" means a bank that is a drawee of a draft. 222
(4) "Intermediary bank" means a bank to which an item is 225
transferred in course of collection except the depositary or
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payor bank. 226
(5) "Collecting bank" means a bank handling an item for 229
collection except the payor bank.
(6) "Presenting bank" means a bank presenting an item 231
except a payor bank. 232
(C) As used in sections 1304.01 to 1304.40 of the Revised 235
Code:
(1) "Acceptance" and "certified check" have the same 237
meanings as in section 1303.46 of the Revised Code. 238
(2) "Alteration" has the same meaning as in section 240
1303.50 of the Revised Code. 241
(3) "Cashier's check," "certificate of deposit," "check," 243
"instrument," and "teller's check" have the same meanings as in 244
section 1303.03 of the Revised Code. 245
(4) "Good faith," "order," "ordinary care," "promise," and 247
"prove" have the same meanings as in section 1303.01 of the 248
Revised Code.
(5) "Holder in due course" has the same meaning as in 250
section 1303.32 of the Revised Code. 251
(6) "Notice of dishonor" has the same meaning as in 253
section 1303.63 of the Revised Code. 254
(7) "Person entitled to enforce" has the same meaning as 256
in section 1303.31 of the Revised Code. 257
(8) "Presentment" has the same meaning as in section 259
1303.61 of the Revised Code. 260
(9) "Unauthorized signature" has the same meaning as in 262
section 1303.43 of the Revised Code. 263
(D) The terms and principles of construction and 265
interpretation in sections 1301.01 to 1301.14 of the Revised Code 266
are applicable to sections 1304.01 to 1303.40 1304.40 of the 267
Revised Code.
Sec. 1304.02. (A) To the extent that items within 276
sections 1304.01 to 1304.40 of the Revised Code are also within 277
the scope of Chapter 1303. and sections 1308.01 to 1308.36 278
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CHAPTER 1308. of the Revised Code, they are subject to that 279
chapter and those sections CHAPTERS. In the event of conflict, 281
the provisions of sections 1304.01 to 1304.40 of the Revised Code 282
govern those of Chapter 1303., but the provisions of sections 283
1308.01 to 1308.36 CHAPTER 1308. of the Revised Code govern those 284
of sections 1304.01 to 1304.40 of the Revised Code. 285
(B) The liability of a bank for action or non-action with 287
respect to any item handled by it for purposes of presentment, 288
payment, or collection is governed by the law of the place where 289
the bank is located. In the case of action or non-action by or 290
at a branch or separate office of a bank, its liability is
governed by the law of the place where the branch or separate 291
office is located. 292
Sec. 1305.10. (A) Unless otherwise agreed, the 301
beneficiary by transferring or presenting a documentary draft or 302
demand for payment warrants to all interested parties that the 303
necessary conditions of the credit have been complied with. This 304
is in addition to any warranties arising under Chapters 1303., 305
1304., and 1308. of the Revised Code.
(B) Unless otherwise agreed, a negotiating, advising, 307
confirming, collecting, or issuing bank presenting or 308
transferring a draft or demand for payment under a credit 309
warrants only the matters warranted by a collecting bank under
sections 1304.01 to 1304.40 of the Revised Code, and any such 310
bank transferring a document warrants only the matters warranted 311
by an A SECURITIES intermediary under sections 1307.01 to 1307.40 312
and 1308.01 to 1308.36 CHAPTER 1308. of the Revised Code. 313
Sec. 1305.13. (A) An issuer must honor a draft or demand 322
for payment that complies with the terms of the relevant credit 323
regardless of whether the goods or documents conform to the 324
underlying contract for sale or other contract between the 325
customer and the beneficiary. The issuer is not excused from 326
honor of such a draft or demand by reason of an additional 327
general term that all documents must be satisfactory to the 328
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issuer, but an issuer may require that specified documents must 329
be satisfactory to it. 330
(B) Unless otherwise agreed when documents appear on their 332
face to comply with the terms of a credit but a required document 333
does not in fact conform to the warranties made on negotiation or 334
transfer of a document of title, pursuant to section 1307.35 of 335
the Revised Code, or of a certificated security pursuant to 336
section 1308.21 1308.20 of the Revised Code, or is forged or 337
fraudulent or there is fraud in the transaction: 339
(1) The issuer must honor the draft or demand for payment 341
if honor is demanded by a negotiating bank or other holder of the 342
draft or demand which has taken the draft or demand under the 343
credit and under circumstances which would make it a holder in 344
due course as provided in section 1303.32 of the Revised Code and 345
in an appropriate case would make it a person to whom a document 346
of title has been duly negotiated, as provided in section 1307.30 347
of the Revised Code, or a bona fide PROTECTED purchaser of a 348
certificated security, as provided in section 1308.17 of the 350
Revised Code; and
(2) In all other cases as against its customer, an issuer 352
acting in good faith may honor the draft or demand for payment 353
despite notification from the customer of fraud, forgery, or 354
other defect not apparent on the face of the documents but a 355
court of appropriate jurisdiction may enjoin such honor. 356
(C) Unless otherwise agreed, an issuer which has duly 358
honored a draft or demand for payment is entitled to immediate 359
reimbursement of any payment made under the credit and to be put 360
in effectively available funds not later than the day before 361
maturity of any acceptance made under the credit. 362
(D) When a credit provides for payment by the issuer on 364
receipt of notice that the required documents are in the 365
possession of a correspondent or other agent of the issuer: 366
(1) Any payment made on receipt of such notice is 368
conditional; and 369
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(2) The issuer may reject documents which do not comply 371
with the credit if it does so within three banking days following 372
its receipt of the documents; and 373
(3) In the event of such rejection, the issuer is entitled 375
by chargeback or otherwise to return of the payment made. 376
(E) In the case covered by division (D) of this section, 378
failure to reject documents within the time specified in division 379
(D)(2) of this section constitutes acceptance of the documents 380
and makes the payment final in favor of the beneficiary. 381
Sec. 1308.01. (A) IN THIS CHAPTER: 383
(1) "ADVERSE CLAIM" MEANS A CLAIM THAT A CLAIMANT HAS A 385
PROPERTY INTEREST IN A FINANCIAL ASSET AND THAT IT IS A VIOLATION 386
OF THE RIGHTS OF THE CLAIMANT FOR ANOTHER PERSON TO HOLD, 387
TRANSFER, OR DEAL WITH THE FINANCIAL ASSET.
(2) "BEARER FORM," AS APPLIED TO A CERTIFICATED SECURITY, 389
MEANS A FORM IN WHICH THE SECURITY IS PAYABLE TO THE BEARER OF 390
THE SECURITY CERTIFICATE ACCORDING TO ITS TERMS BUT NOT BY REASON 391
OF AN INDORSEMENT.
(3) "BROKER" MEANS A PERSON DEFINED AS A BROKER OR DEALER 393
UNDER THE FEDERAL SECURITIES LAWS, BUT WITHOUT EXCLUDING A BANK 394
ACTING IN THAT CAPACITY.
(4) "CERTIFICATED SECURITY" MEANS A SECURITY THAT IS 396
REPRESENTED BY A CERTIFICATE. 397
(5) "CLEARING CORPORATION" MEANS: 399
(a) A PERSON THAT IS REGISTERED AS A "CLEARING AGENCY" 401
UNDER THE FEDERAL SECURITIES LAWS; 402
(b) A FEDERAL RESERVE BANK; OR 404
(c) ANY OTHER PERSON THAT PROVIDES CLEARANCE OR SETTLEMENT 406
SERVICES WITH RESPECT TO FINANCIAL ASSETS THAT WOULD REQUIRE IT 407
TO REGISTER AS A CLEARING AGENCY UNDER THE FEDERAL SECURITIES 408
LAWS BUT FOR AN EXCLUSION OR EXEMPTION FROM THE REGISTRATION 409
REQUIREMENT, IF ITS ACTIVITIES AS A CLEARING CORPORATION, 410
INCLUDING PROMULGATION OF RULES, ARE SUBJECT TO REGULATION BY A
FEDERAL OR STATE GOVERNMENTAL AUTHORITY. 411
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(6) "COMMUNICATE" MEANS TO: 413
(a) SEND A SIGNED WRITING; OR 415
(b) TRANSMIT INFORMATION BY ANY MECHANISM AGREED UPON BY 417
THE PERSONS TRANSMITTING AND RECEIVING THE INFORMATION. 418
(7) "ENTITLEMENT HOLDER" MEANS A PERSON IDENTIFIED IN THE 420
RECORDS OF A SECURITIES INTERMEDIARY AS THE PERSON HAVING A 421
SECURITY ENTITLEMENT AGAINST THE SECURITIES INTERMEDIARY. IF A 422
PERSON ACQUIRES A SECURITY ENTITLEMENT BY VIRTUE OF DIVISION 423
(B)(2) OR (3) OF SECTION 1308.51 OF THE REVISED CODE, THAT PERSON
IS THE ENTITLEMENT HOLDER. 424
(8) "ENTITLEMENT ORDER" MEANS A NOTIFICATION COMMUNICATED 426
TO A SECURITIES INTERMEDIARY DIRECTING TRANSFER OR REDEMPTION OF 427
A FINANCIAL ASSET TO WHICH THE ENTITLEMENT HOLDER HAS A SECURITY 428
ENTITLEMENT.
(9) "FINANCIAL ASSET," EXCEPT AS OTHERWISE PROVIDED IN 430
SECTION 1308.02 OF THE REVISED CODE, MEANS: 431
(a) A SECURITY; 433
(b) AN OBLIGATION OF A PERSON OR A SHARE, PARTICIPATION, 435
OR OTHER INTEREST IN A PERSON OR IN PROPERTY OR AN ENTERPRISE OF 436
A PERSON, WHICH IS, OR IS OF A TYPE, DEALT IN OR TRADED ON 437
FINANCIAL MARKETS, OR WHICH IS RECOGNIZED IN ANY AREA IN WHICH IT 438
IS ISSUED OR DEALT IN AS A MEDIUM FOR INVESTMENT; OR
(c) ANY PROPERTY THAT IS HELD BY A SECURITIES INTERMEDIARY 440
FOR ANOTHER PERSON IN A SECURITIES ACCOUNT IF THE SECURITIES 441
INTERMEDIARY HAS EXPRESSLY AGREED WITH THE OTHER PERSON THAT THE 442
PROPERTY IS TO BE TREATED AS A FINANCIAL ASSET UNDER THIS 443
CHAPTER.
AS CONTEXT REQUIRES, THE TERM MEANS EITHER THE INTEREST 445
ITSELF OR THE MEANS BY WHICH A PERSON'S CLAIM TO IT IS EVIDENCED, 446
INCLUDING A CERTIFICATED OR UNCERTIFICATED SECURITY, A SECURITY 447
CERTIFICATE, OR A SECURITY ENTITLEMENT.
(10) "GOOD FAITH," FOR PURPOSES OF THE OBLIGATION OF GOOD 449
FAITH IN THE PERFORMANCE OR ENFORCEMENT OF CONTRACTS OR DUTIES 450
WITHIN THIS CHAPTER, MEANS HONESTY IN FACT AND THE OBSERVANCE OF 451
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REASONABLE COMMERCIAL STANDARDS OF FAIR DEALING. 452
(11) "INDORSEMENT" MEANS A SIGNATURE THAT ALONE OR 454
ACCOMPANIED BY OTHER WORDS IS MADE ON A SECURITY CERTIFICATE IN 455
REGISTERED FORM OR ON A SEPARATE DOCUMENT FOR THE PURPOSE OF 456
ASSIGNING, TRANSFERRING, OR REDEEMING THE SECURITY OR GRANTING A 457
POWER TO ASSIGN, TRANSFER, OR REDEEM IT.
(12) "INSTRUCTION" MEANS A NOTIFICATION COMMUNICATED TO 459
THE ISSUER OF AN UNCERTIFICATED SECURITY WHICH DIRECTS THAT THE 460
TRANSFER OF THE SECURITY BE REGISTERED OR THAT THE SECURITY BE 461
REDEEMED.
(13) "REGISTERED FORM," AS APPLIED TO A CERTIFICATED 463
SECURITY, MEANS A FORM IN WHICH: 464
(a) THE SECURITY CERTIFICATE SPECIFIES A PERSON ENTITLED 466
TO THE SECURITY; AND 467
(b) A TRANSFER OF THE SECURITY MAY BE REGISTERED UPON 469
BOOKS MAINTAINED FOR THAT PURPOSE BY OR ON BEHALF OF THE ISSUER, 470
OR THE SECURITY CERTIFICATE SO STATES. 471
(14) "SECURITIES INTERMEDIARY" MEANS: 473
(a) A CLEARING CORPORATION; OR 475
(b) A PERSON, INCLUDING A BANK OR BROKER, THAT IN THE 477
ORDINARY COURSE OF ITS BUSINESS MAINTAINS SECURITIES ACCOUNTS FOR 478
OTHERS AND IS ACTING IN THAT CAPACITY. 479
(15) "SECURITY," EXCEPT AS OTHERWISE PROVIDED IN SECTION 481
1308.02 OF THE REVISED CODE, MEANS AN OBLIGATION OF AN ISSUER OR 482
A SHARE, PARTICIPATION, OR OTHER INTEREST IN AN ISSUER OR IN 483
PROPERTY OR AN ENTERPRISE OF AN ISSUER:
(a) WHICH IS REPRESENTED BY A SECURITY CERTIFICATE IN 485
BEARER OR REGISTERED FORM, OR THE TRANSFER OF WHICH MAY BE 486
REGISTERED UPON BOOKS MAINTAINED FOR THAT PURPOSE BY OR ON BEHALF 487
OF THE ISSUER;
(b) WHICH IS ONE OF A CLASS OR SERIES OR BY ITS TERMS IS 489
DIVISIBLE INTO A CLASS OR SERIES OF SHARES, PARTICIPATIONS, 490
INTERESTS, OR OBLIGATIONS; AND 491
(c) WHICH: 493
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(i) IS, OR IS OF A TYPE, DEALT IN OR TRADED ON SECURITIES 495
EXCHANGES OR SECURITIES MARKETS; OR 496
(ii) IS A MEDIUM FOR INVESTMENT AND BY ITS TERMS EXPRESSLY 498
PROVIDES THAT IT IS A SECURITY GOVERNED BY THIS CHAPTER. 499
(16) "SECURITY CERTIFICATE" MEANS A CERTIFICATE 501
REPRESENTING A SECURITY.
(17) "SECURITY ENTITLEMENT" MEANS THE RIGHTS AND PROPERTY 503
INTEREST OF AN ENTITLEMENT HOLDER WITH RESPECT TO A FINANCIAL 504
ASSET SPECIFIED IN SECTIONS 1308.51 TO 1308.61 OF THE REVISED 505
CODE.
(18) "UNCERTIFICATED SECURITY" MEANS A SECURITY THAT IS 507
NOT REPRESENTED BY A CERTIFICATE. 508
(B) OTHER DEFINITIONS APPLYING TO THIS CHAPTER AND THE 510
SECTIONS IN WHICH THEY APPEAR ARE: 511
(1) "APPROPRIATE PERSON," AS DEFINED IN SECTION 1308.23 OF 513
THE REVISED CODE.
(2) "CONTROL," AS DEFINED IN SECTION 1308.24 OF THE 515
REVISED CODE.
(3) "DELIVERY," AS DEFINED IN SECTION 1308.27 OF THE 517
REVISED CODE.
(4) "INVESTMENT COMPANY SECURITY," AS DEFINED IN SECTION 519
1308.02 OF THE REVISED CODE.
(5) "ISSUER," AS DEFINED IN SECTION 1308.08 OF THE REVISED 521
CODE.
(6) "OVERISSUE," AS DEFINED IN SECTION 1308.03 OF THE 523
REVISED CODE.
(7) "PROTECTED PURCHASER," AS DEFINED IN SECTION 1308.17 525
OF THE REVISED CODE.
(8) "SECURITIES ACCOUNT," AS DEFINED IN SECTION 1308.51 OF 527
THE REVISED CODE.
(C) IN ADDITION, CHAPTER 1301. OF THE REVISED CODE 529
CONTAINS GENERAL DEFINITIONS AND PRINCIPLES OF CONSTRUCTION AND 530
INTERPRETATION APPLICABLE THROUGHOUT THIS CHAPTER. 531
(D) THE CHARACTERIZATION OF A PERSON, BUSINESS, OR 533
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TRANSACTION FOR PURPOSES OF THIS CHAPTER DOES NOT DETERMINE THE 534
CHARACTERIZATION OF THE PERSON, BUSINESS, OR TRANSACTION FOR 535
PURPOSES OF ANY OTHER LAW, REGULATION, OR RULE. 536
Sec. 1308.02. (A) A SHARE OR SIMILAR EQUITY INTEREST 538
ISSUED BY A CORPORATION, BUSINESS TRUST, JOINT STOCK COMPANY, OR 539
SIMILAR ENTITY IS A SECURITY. 540
(B) AN "INVESTMENT COMPANY SECURITY" IS A SECURITY. 542
"INVESTMENT COMPANY SECURITY" MEANS A SHARE OR SIMILAR EQUITY 543
INTEREST ISSUED BY AN ENTITY THAT IS REGISTERED AS AN INVESTMENT 544
COMPANY UNDER THE FEDERAL INVESTMENT COMPANY LAWS, AN INTEREST IN 545
A UNIT INVESTMENT TRUST THAT IS SO REGISTERED, OR A FACE-AMOUNT 546
CERTIFICATE ISSUED BY A FACE-AMOUNT CERTIFICATE COMPANY THAT IS
SO REGISTERED. INVESTMENT COMPANY SECURITY DOES NOT INCLUDE AN 547
INSURANCE POLICY OR ENDOWMENT POLICY OR ANNUITY CONTRACT ISSUED 548
BY AN INSURANCE COMPANY.
(C) AN INTEREST IN A PARTNERSHIP OR LIMITED LIABILITY 550
COMPANY IS NOT A SECURITY UNLESS IT IS DEALT IN OR TRADED ON 551
SECURITIES EXCHANGES OR IN SECURITIES MARKETS, ITS TERMS 552
EXPRESSLY PROVIDE THAT IT IS A SECURITY GOVERNED BY THIS CHAPTER, 553
OR IT IS AN INVESTMENT COMPANY SECURITY. HOWEVER, AN INTEREST IN 554
A PARTNERSHIP OR LIMITED LIABILITY COMPANY IS A FINANCIAL ASSET
IF IT IS HELD IN A SECURITIES ACCOUNT. 555
(D) A WRITING THAT IS A SECURITY CERTIFICATE IS GOVERNED 557
BY THIS CHAPTER AND NOT BY CHAPTER 1303. OF THE REVISED CODE, 558
EVEN THOUGH IT ALSO MEETS THE REQUIREMENTS OF THAT CHAPTER. 559
HOWEVER, A NEGOTIABLE INSTRUMENT GOVERNED BY CHAPTER 1303. OF THE 560
REVISED CODE IS A FINANCIAL ASSET IF IT IS HELD IN A SECURITIES
ACCOUNT. 561
(E) AN OPTION OR SIMILAR OBLIGATION ISSUED BY A CLEARING 563
CORPORATION TO ITS PARTICIPANTS IS NOT A SECURITY, BUT IS A 564
FINANCIAL ASSET.
(F) A COMMODITY CONTRACT, AS DEFINED IN SECTION 1309.112 566
OF THE REVISED CODE, IS NOT A SECURITY OR A FINANCIAL ASSET. 567
Sec. 1308.03. (A) The EXCEPT AS OTHERWISE PROVIDED IN 576
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DIVISIONS (A)(1) AND (2) OF THIS SECTION, THE provisions of 577
sections 1308.01 to 1308.44 of the Revised Code THIS CHAPTER 578
which validate a security or compel its issue or reissue do not 580
apply to the extent that validation, issue, or reissue would 581
result in overissue; but if.
(1) An IF AN identical security which does not constitute 583
an overissue is reasonably available for purchase, the person 584
entitled to issue or validation may compel the issuer to purchase 585
the security for him and either to deliver a IT IF certificated 587
security or to register the ITS transfer of an IF uncertificated 588
security to him, against surrender of any certificated security 589
he CERTIFICATE THE PERSON holds; or. 590
(2) A IF A security is not so available for purchase, the 593
A person entitled to issue or validation may recover from the 594
issuer the price he THE PERSON or the last purchaser for value 595
paid for it with interest from the date of his THE PERSON'S 596
demand. 597
(B) "Overissue" means the issue of securities in excess of 599
the amount the issuer has corporate power to issue, BUT AN 600
OVERISSUE DOES NOT OCCUR IF APPROPRIATE ACTION HAS CURED THE 601
OVERISSUE.
Sec. 1308.04. (A) Certificated securities governed by 610
sections 1308.01 to 1308.44 of the Revised Code, are negotiable 611
instruments. 612
(B) Statements as provided in section 1308.44 of the 614
Revised Code, notices, or the like, sent by the issuer of 615
uncertificated securities and instructions as provided in section 616
1308.23 of the Revised Code are neither negotiable instruments 617
nor certificated securities. 618
(C) In any THE FOLLOWING RULES APPLY IN AN action on a 620
CERTIFICATED security AGAINST THE ISSUER: 621
(1)(A) Unless specifically denied in the pleadings, each 623
signature on a certificated security, CERTIFICATE OR in a 624
necessary indorsement, or an initial transaction statement, or on 625
15
an instruction, is admitted; 626
(2)(B) If the effectiveness of a signature is put in 628
issue, the burden of establishing it EFFECTIVENESS is on the 629
party claiming under the signature, but the signature is presumed 630
to be genuine or authorized; 631
(3)(C) If signatures on a certificated security 633
CERTIFICATE are admitted or established, production of the 634
security CERTIFICATE entitles a holder to recover on it unless 636
the defendant establishes a defense or a defect going to the 637
validity of the security;
(4)(D) If signatures on an initial transaction statement 639
are admitted or established, the facts stated in the statement 641
are presumed to be true as of the time of its issuance; and 642
(5) After it is shown that a defense or defect exists, the 644
plaintiff has the burden of establishing that he THE PLAINTIFF or 646
some person under whom he THE PLAINTIFF claims is a person
against whom the defense or defect is ineffective, as provided in 647
section 1308.44 of the Revised Code CANNOT BE ASSERTED. 648
Sec. 1308.05. (A) THE LOCAL LAW OF THE ISSUER'S 650
JURISDICTION, AS SPECIFIED IN DIVISION (D) OF THIS SECTION, 651
GOVERNS:
(1) THE VALIDITY OF A SECURITY; 653
(2) THE RIGHTS AND DUTIES OF THE ISSUER WITH RESPECT TO 655
REGISTRATION OF TRANSFER; 656
(3) THE EFFECTIVENESS OF REGISTRATION OF TRANSFER BY THE 658
ISSUER;
(4) WHETHER THE ISSUER OWES ANY DUTIES TO AN ADVERSE 660
CLAIMANT TO A SECURITY; AND 661
(5) WHETHER AN ADVERSE CLAIM CAN BE ASSERTED AGAINST A 663
PERSON TO WHOM TRANSFER OF A CERTIFICATED OR UNCERTIFICATED 664
SECURITY IS REGISTERED OR A PERSON WHO OBTAINS CONTROL OF AN 665
UNCERTIFICATED SECURITY.
(B) THE LOCAL LAW OF THE SECURITIES INTERMEDIARY'S 667
JURISDICTION, AS SPECIFIED IN DIVISION (E) OF THIS SECTION, 668
16
GOVERNS:
(1) ACQUISITION OF A SECURITY ENTITLEMENT FROM THE 670
SECURITIES INTERMEDIARY; 671
(2) THE RIGHTS AND DUTIES OF THE SECURITIES INTERMEDIARY 673
AND ENTITLEMENT HOLDER ARISING OUT OF A SECURITY ENTITLEMENT; 674
(3) WHETHER THE SECURITIES INTERMEDIARY OWES ANY DUTIES TO 676
AN ADVERSE CLAIMANT TO A SECURITY ENTITLEMENT; AND 677
(4) WHETHER AN ADVERSE CLAIM CAN BE ASSERTED AGAINST A 679
PERSON WHO ACQUIRES A SECURITY ENTITLEMENT FROM THE SECURITIES 680
INTERMEDIARY OR A PERSON WHO PURCHASES A SECURITY ENTITLEMENT OR 681
INTEREST THEREIN FROM AN ENTITLEMENT HOLDER. 682
(C) THE LOCAL LAW OF THE JURISDICTION IN WHICH A SECURITY 684
CERTIFICATE IS LOCATED AT THE TIME OF DELIVERY GOVERNS WHETHER AN 685
ADVERSE CLAIM CAN BE ASSERTED AGAINST A PERSON TO WHOM THE 686
SECURITY CERTIFICATE IS DELIVERED. 687
(D) "ISSUER'S JURISDICTION" MEANS THE JURISDICTION UNDER 689
WHICH THE ISSUER OF THE SECURITY IS ORGANIZED OR, IF PERMITTED BY 690
THE LAW OF THAT JURISDICTION, THE LAW OF ANOTHER JURISDICTION 691
SPECIFIED BY THE ISSUER. AN ISSUER ORGANIZED UNDER THE LAW OF 692
THIS STATE MAY SPECIFY THE LAW OF ANOTHER JURISDICTION AS THE LAW 693
GOVERNING THE MATTERS SPECIFIED IN DIVISIONS (A)(2) TO (5) OF 694
THIS SECTION.
(E) THE FOLLOWING RULES DETERMINE A "SECURITIES 696
INTERMEDIARY'S JURISDICTION" FOR PURPOSES OF THIS SECTION: 697
(1) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 699
AND ITS ENTITLEMENT HOLDER SPECIFIES THAT IT IS GOVERNED BY THE 700
LAW OF A PARTICULAR JURISDICTION, THAT JURISDICTION IS THE 701
SECURITIES INTERMEDIARY'S JURISDICTION.
(2) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 703
AND ITS ENTITLEMENT HOLDER DOES NOT SPECIFY THE GOVERNING LAW AS 704
PROVIDED IN DIVISION (E)(1) OF THIS SECTION, BUT EXPRESSLY 705
SPECIFIES THAT THE SECURITIES ACCOUNT IS MAINTAINED AT AN OFFICE 706
IN A PARTICULAR JURISDICTION, THAT JURISDICTION IS THE SECURITIES 707
INTERMEDIARY'S JURISDICTION.
17
(3) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 709
AND ITS ENTITLEMENT HOLDER DOES NOT SPECIFY A JURISDICTION AS 710
PROVIDED IN DIVISION (E)(1) OR (2) OF THIS SECTION, THE 711
SECURITIES INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN 712
WHICH IS LOCATED THE OFFICE IDENTIFIED IN AN ACCOUNT STATEMENT AS 713
THE OFFICE SERVING THE ENTITLEMENT HOLDER'S ACCOUNT.
(4) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 715
AND ITS ENTITLEMENT HOLDER DOES NOT SPECIFY A JURISDICTION AS 716
PROVIDED IN DIVISION (E)(1) OR (2) OF THIS SECTION AND AN ACCOUNT 717
STATEMENT DOES NOT IDENTIFY AN OFFICE SERVING THE ENTITLEMENT 718
HOLDER'S ACCOUNT AS PROVIDED IN DIVISION (E)(3) OF THIS SECTION, 719
THE SECURITIES INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN 720
WHICH IS LOCATED THE CHIEF EXECUTIVE OFFICE OF THE SECURITIES 721
INTERMEDIARY.
(F) A SECURITIES INTERMEDIARY'S JURISDICTION IS NOT 723
DETERMINED BY THE PHYSICAL LOCATION OF CERTIFICATES REPRESENTING 724
FINANCIAL ASSETS, OR BY THE JURISDICTION IN WHICH IS ORGANIZED 725
THE ISSUER OF THE FINANCIAL ASSET WITH RESPECT TO WHICH AN 726
ENTITLEMENT HOLDER HAS A SECURITY ENTITLEMENT, OR BY THE LOCATION 727
OF FACILITIES FOR DATA PROCESSING OR OTHER RECORD KEEPING
CONCERNING THE ACCOUNT. 728
Sec. 1308.06. A RULE ADOPTED BY A CLEARING CORPORATION 730
GOVERNING RIGHTS AND OBLIGATIONS AMONG THE CLEARING CORPORATION 731
AND ITS PARTICIPANTS IN THE CLEARING CORPORATION IS EFFECTIVE 732
EVEN IF THE RULE CONFLICTS WITH THIS CHAPTER AND AFFECTS ANOTHER 733
PARTY WHO DOES NOT CONSENT TO THE RULE.
Sec. 1308.07. A CONTRACT OR MODIFICATION OF A CONTRACT FOR 735
THE SALE OR PURCHASE OF A SECURITY IS ENFORCEABLE WHETHER OR NOT 736
THERE IS A WRITING SIGNED OR RECORD AUTHENTICATED BY A PARTY 737
AGAINST WHOM ENFORCEMENT IS SOUGHT, EVEN IF THE CONTRACT OR 738
MODIFICATION IS NOT CAPABLE OF PERFORMANCE WITHIN ONE YEAR OF ITS 739
MAKING.
Sec. 1308.08. (A) With respect to obligations on or 748
defenses to a security, "issuer" includes a person who: 749
18
(1) Places or authorizes the placing of his ITS name on a 751
certificated security CERTIFICATE, otherwise than as 752
authenticating trustee, registrar, transfer agent, or the like, 754
to evidence that it represents a share, participation, or other 755
interest in his ITS property or in an enterprise, or to evidence 757
his ITS duty to perform an obligation represented by the 758
certificated security CERTIFICATE; 759
(2) Creates shares, participations, or other interests in 761
his ITS property or in an enterprise, or undertakes obligations, 763
which shares, participations, interests, or obligations THAT are 764
uncertificated securities;
(3) Directly or indirectly creates fractional interests in 766
his ITS rights or property, which IF THE fractional interests are 768
represented by certificated securities SECURITY CERTIFICATES; or 769
(4) Becomes responsible for, or in place of, any other 771
person described as an issuer in this section. 772
(B) With respect to obligations on or defenses to a 774
security, a guarantor is an issuer to the extent of his ITS 775
guaranty, whether or not his ITS obligation is noted on a 776
certificated security or on statements of uncertificated 777
securities sent pursuant to section 1308.44 of the Revised Code 779
CERTIFICATE.
(C) With respect to registration of transfer, pledge, or 781
release as provided in sections 1308.37 to 1308.44 of the Revised 782
Code, "issuer" means a person on whose behalf transfer books are 783
maintained. 784
Sec. 1308.09. (A) Even against a purchaser for value and 793
without notice, the terms of a CERTIFICATED security include: 794
(1) If the security is certificated, those TERMS stated on 796
the security; 797
(2) If the security is uncertificated, those contained in 799
the initial transaction statement sent to such purchaser or, if 800
his interest is transferred to him other than by registration of 801
transfer, pledge, or release, the initial transaction statement 803
19
sent to the registered owner or registered pledgee; and 804
(3) Those CERTIFICATE AND TERMS made part of the security 806
by reference, on the certificated security or in the initial 807
transaction statement, CERTIFICATE to another instrument, 808
indenture, or document or to a constitution, statute, ordinance, 810
rule, regulation, order, or the like, to the extent that the 811
terms referred to do not conflict with the terms stated on the 812
certificated security or contained in the statement CERTIFICATE. 813
A reference under division (A)(3) of this section does not of 815
itself charge a purchaser for value with notice of a defect going 816
to the validity of the security, even though IF the certificated 817
security or statement CERTIFICATE expressly states that a person 818
accepting it admits notice.
THE TERMS OF AN UNCERTIFICATED SECURITY INCLUDE THOSE 820
STATED IN ANY INSTRUMENT, INDENTURE, OR DOCUMENT, OR IN A 821
CONSTITUTION, STATUTE, ORDINANCE, RULE, REGULATION, ORDER, OR THE 822
LIKE, PURSUANT TO WHICH THE SECURITY IS ISSUED.
(B)(1) THE FOLLOWING RULES APPLY IF AN ISSUER ASSERTS THAT 824
A SECURITY IS NOT VALID: 825
(1) A certificated security in the hands of a purchaser 827
for value or an uncertificated security as to which an initial 828
transaction statement has been sent to a purchaser for value, 829
other than a security ONE issued by a government or governmental 830
SUBDIVISION, agency, or unit INSTRUMENTALITY, even though issued 832
with a defect going to its validity, is valid with respect to the 833
IN THE HANDS OF A purchaser if he is FOR VALUE AND without notice 834
of the particular defect unless the defect involves a violation 835
of A constitutional provisions, in which PROVISION. IN THAT 837
case, the security is valid with respect to IN THE HANDS OF a 838
subsequent purchaser for value and without notice of the defect, 839
OTHER THAN ONE WHO TAKES BY ORIGINAL ISSUE. 840
(2) The provisions of division (B)(1) of this section 842
apply to an issuer that is a government or governmental 843
SUBDIVISION, agency, or unit INSTRUMENTALITY only if either there 845
20
has been substantial compliance with the legal requirements 847
governing the issue or the issuer has received a substantial 848
consideration for the issue as a whole or for the particular 849
security and a stated purpose of the issue is one for which the 850
issuer has power to borrow money or issue the security. 851
(C) Except as OTHERWISE provided in the case of certain 853
unauthorized signatures on issue under section 1308.12 of the 855
Revised Code, lack of genuineness of a certificated security or 856
an initial transaction statement is a complete defense, even 857
against a purchaser for value and without notice. 858
(D) All other defenses of the issuer of a certificated or 860
uncertificated security, including nondelivery and conditional 861
delivery of a certificated security, are ineffective against a 862
purchaser for value who has taken THE CERTIFICATED SECURITY 863
without notice of the particular defense. 864
(E) Nothing in this THIS section shall be construed to 866
DOES NOT affect the right of a party to CANCEL a CONTRACT FOR A 868
SECURITY "when, as and if issued" or a "when distributed" 869
contract to cancel the contract in the event of a material change 870
in the character of the security that is the subject of the
contract or in the plan or arrangement pursuant to which the 872
security is to be issued or distributed.
(F) IF A SECURITY IS HELD BY A SECURITIES INTERMEDIARY 874
AGAINST WHOM AN ENTITLEMENT HOLDER HAS A SECURITY ENTITLEMENT 875
WITH RESPECT TO THE SECURITY, THE ISSUER MAY NOT ASSERT ANY 876
DEFENSE THAT THE ISSUER COULD NOT ASSERT IF THE ENTITLEMENT 877
HOLDER HELD THE SECURITY DIRECTLY.
Sec. 1308.10. (A) After an act or event, OTHER THAN A 886
CALL THAT HAS BEEN REVOKED, creating a right to immediate 888
performance of the principal obligation represented by a 889
certificated security or that sets a date on or after which the 890
security is to be presented or surrendered for redemption or
exchange, a purchaser is charged with notice of any defect in its 891
issue or defense of the issuer if THE ACT OR EVENT: 892
21
(1) The act or event is one requiring (A) REQUIRES the 895
payment of money, the delivery of A certificated securities
SECURITY, the registration of transfer of AN uncertificated 897
securities SECURITY, or any of these THEM on presentation or 898
surrender of the certificated security CERTIFICATE, the funds 899
MONEY or securities are SECURITY IS available on the date set for 900
payment or exchange, and he THE PURCHASER takes the security more 902
than one year after that date; and OR 903
(2) The act or event is (B) IS not covered by division 906
(A)(1) of this section and he THE PURCHASER takes the security 907
more than two years after the date set for surrender or 908
presentation or the date on which performance became due. 909
(B) A call that has been revoked is not within division 911
(A) of this section. 912
Sec. 1308.11. (A) A restriction on transfer of a security 921
imposed by the issuer, even though IF otherwise lawful, is 922
ineffective against any A person without actual knowledge of it 923
unless: 924
(A)(1) The security is certificated and the restriction is 926
noted conspicuously thereon ON THE SECURITY CERTIFICATE; or 927
(B)(2) The security is uncertificated and a notation of 930
the restriction is contained in the initial transaction statement
sent to the person or, if his interest is transferred to him 932
other than by registration of transfer, pledge, or release, the 933
initial transaction statement sent to the registered owner or the 935
registered pledgee HAS BEEN NOTIFIED OF THE RESTRICTION. 936
(B) A LIEN IN FAVOR OF AN ISSUER UPON A CERTIFICATED 938
SECURITY IS VALID AGAINST A PURCHASER ONLY IF THE RIGHT OF THE 939
ISSUER TO THE LIEN IS NOTED CONSPICUOUSLY ON THE SECURITY 940
CERTIFICATE.
Sec. 1308.12. An unauthorized signature placed on a 949
certificated security prior to CERTIFICATE BEFORE or in the 951
course of issue or placed on an initial transaction statement is
ineffective, but the signature is effective in favor of a 953
22
purchaser for value of the certificated security or a purchaser 954
for value of an uncertified security to whom the initial 955
transaction statement has been sent, if the purchaser is without 956
notice of the lack of authority and if the signing has been done 957
by: 958
(A) An authenticating trustee, registrar, transfer agent, 960
or other person entrusted by the issuer with the signing of the 961
security, CERTIFICATE OR of similar securities SECURITY 963
CERTIFICATES, or of initial transaction statements or the 964
immediate preparation for signing of any of them; or 965
(B) An employee of the issuer, or of any of the foregoing 967
PERSONS LISTED IN DIVISION (A) OF THIS SECTION, entrusted with 968
responsible handling of the security or initial transaction 969
statement CERTIFICATE. 970
Sec. 1308.13. (A) If a certificated security CERTIFICATE 979
contains the signatures necessary to its issue or transfer but is 981
incomplete in any other respect: 982
(1) Any person may complete it by filling in the blanks as 984
authorized; and 985
(2) Even though IF the blanks are incorrectly filled in, 987
the security as completed is enforceable by a purchaser who took 988
it for value and without notice of the incorrectness. 989
(B) A complete certificated security CERTIFICATE that has 991
been improperly altered, even though IF fraudulently, remains 992
enforceable, but only according to its original terms. 993
(C) If an initial transaction statement contains the 995
signatures necessary to its validity, but is incomplete in any 996
other respect: 997
(1) Any person may complete it by filling in the blanks as 999
authorized; and 1,000
(2) Even though the blanks are incorrectly filled in, the 1,002
statement as completed is effective in favor of the person to 1,003
whom it is sent if he purchased the security referred to therein 1,005
for value and without notice of the incorrectness.
23
(D) A complete initial transaction statement that has been 1,007
improperly altered, even though fraudulently, is effective in 1,008
favor of a purchaser to whom it has been sent, but only according 1,009
to its original terms. 1,010
Sec. 1308.14. (A) Prior to BEFORE due presentment for 1,019
registration of transfer of a certificated security in registered 1,020
form OR OF AN INSTRUCTION REQUESTING REGISTRATION OF TRANSFER OF 1,021
AN UNCERTIFICATED SECURITY, the issuer or indenture trustee may 1,022
treat the registered owner as the person exclusively entitled to 1,023
vote, to receive notifications, and otherwise to exercise all the 1,024
rights and powers of an owner. 1,025
(B) Subject to the provisions of divisions (C), (D), and 1,027
(F) of this section, the issuer or indenture trustee may treat 1,028
the registered owner of an uncertificated security as the person 1,029
exclusively entitled to vote, to receive notifications, and 1,030
otherwise to exercise all the rights and powers of an owner. 1,031
(C) The registered owner of an uncertificated security 1,033
that is subject to a registered pledge is not entitled to 1,034
registration of transfer prior to the due presentment to the 1,035
issuer of a release instruction. The exercise of conversion 1,036
rights with respect to a convertible uncertificated security is a 1,037
transfer within the meaning of this section. 1,038
(D) Upon due presentment of a transfer instruction from 1,040
the registered pledgee of an uncertificated security, the issuer 1,041
shall: 1,042
(1) Register the transfer of the security to the new owner 1,044
free of pledge, if the instruction specifies a new owner, who may 1,045
be the registered pledgee, and does not specify a pledgee; 1,046
(2) Register the transfer of the security to the new owner 1,048
subject to the interest of the existing pledgee, if the 1,049
instruction specifies a new owner and the existing pledgee; or 1,050
(3) Register the release of the security from the existing 1,052
pledge and register the pledge of the security to the other 1,053
pledgee, if the instruction specifies the existing owner and 1,054
24
another pledgee. 1,055
(E) Continuity of perfection of a security interest is not 1,057
broken by registration of transfer under division (D)(2) of this 1,058
section or by registration of release and pledge under division 1,059
(D)(3) of this section, if the security interest is assigned. 1,060
(F) If an uncertificated security is subject to a 1,062
registered pledge: 1,063
(1) Any uncertificated securities issued in exchange for 1,065
or distributed with respect to the pledged security shall be 1,066
registered subject to the pledge; 1,067
(2) Any certificated securities issued in exchange for or 1,069
distributed with respect to the pledged security shall be 1,070
delivered to the registered pledgee; and 1,071
(3) Any money paid in exchange for or in redemption of 1,073
part or all of the security shall be paid to the registered 1,074
pledgee. 1,075
(G) Nothing in sections 1308.01 to 1308.44 of the Revised 1,077
Code shall be construed to THIS CHAPTER DOES NOT affect the 1,078
liability of the registered owner of a security for calls, 1,079
assessments, or the like. 1,080
Sec. 1308.15. (A) A person placing his signature upon 1,089
SIGNING a certificated security or an initial transaction 1,090
statement CERTIFICATE as authenticating trustee, registrar, 1,091
transfer agent, or the like, warrants to a purchaser for value of 1,092
the certificated security or a purchaser for value of an 1,094
uncertificated security to whom the initial transaction statement 1,095
has been sent, if the purchaser is without notice of the 1,096
particular defect, that:
(1) The certificated security or initial transaction 1,098
CERTIFICATE is genuine; 1,099
(2) His THE PERSON'S own participation in the issue or 1,101
registration of the transfer, pledge, or release of the security 1,102
is within his THE PERSON'S capacity and within the scope of the 1,103
authority received by him THE PERSON from the issuer; and 1,104
25
(3) He THE PERSON has reasonable grounds to believe the 1,106
CERTIFICATED security is in the form and within the amount the 1,107
issuer is authorized to issue. 1,109
(B) Unless otherwise agreed, a person by so placing his 1,111
signature SIGNING UNDER DIVISION (A) OF THIS SECTION does not 1,113
assume responsibility for the validity of the security in other
respects.
Sec. 1308.16. (A) Upon transfer EXCEPT AS OTHERWISE 1,122
PROVIDED IN DIVISIONS (B) AND (C) OF THIS SECTION, UPON DELIVERY 1,123
of a CERTIFICATED OR UNCERTIFICATED security to a purchaser as 1,124
provided in section 1308.28 of the Revised Code, the purchaser 1,126
acquires the ALL rights in the security which his THAT THE 1,127
transferor had or had actual authority POWER to convey unless the 1,129
purchaser's rights are limited by division (D) of section 1308.17
of the Revised Code TRANSFER. 1,130
(B) A transferee PURCHASER of a limited interest acquires 1,132
rights only to the extent of the interest transferred PURCHASED. 1,134
The creation or release of a security interest in a security is 1,135
the transfer of a limited interest in that security. 1,136
(C) A PURCHASER OF A CERTIFICATED SECURITY WHO AS A 1,138
PREVIOUS HOLDER HAD NOTICE OF AN ADVERSE CLAIM DOES NOT IMPROVE 1,139
ITS POSITION BY TAKING FROM A PROTECTED PURCHASER. 1,140
Sec. 1308.17. (A) A "bona fide PROTECTED purchaser" is 1,149
MEANS a purchaser for value in good faith and without OF A 1,150
CERTIFICATED OR UNCERTIFICATED SECURITY, OR OF AN INTEREST 1,151
THEREIN, WHO:
(1) GIVES VALUE; 1,153
(2) DOES NOT HAVE notice of any adverse claim: 1,155
(1) Who takes delivery TO THE SECURITY; AND 1,157
(3) OBTAINS CONTROL of a THE certificated OR 1,159
UNCERTIFICATED security in bearer form or in registered form, 1,160
issued or indorsed to him or in blank; 1,161
(2) To whom the transfer, pledge, or release of an 1,163
uncertificated security is registered on the books of the issuer; 1,164
26
or 1,165
(3) To whom a security is transferred under the provisions 1,167
of division (A)(3), (4)(a), or (7) of section 1308.28 of the 1,168
Revised Code. 1,169
(B) "Adverse claim" includes a claim that a transfer was 1,171
or would be wrongful or that a particular adverse person is the 1,172
owner of or has an interest in the security. 1,173
(C) A bona fide purchaser in IN addition to acquiring the 1,175
rights of a purchaser, as provided in section 1308.16 of the 1,176
Revised Code, A PROTECTED PURCHASER also acquires his ITS 1,178
interest in the security free of any adverse claim. 1,179
(D) Notwithstanding division (A) of section 1308.16 of the 1,181
Revised Code, the transferee of a particular certificated 1,182
security who has been a party to any fraud or illegality 1,183
affecting the security, or who as a prior holder of that 1,184
certificated security had notice of an adverse claim, cannot 1,185
improve his position by taking from a bona fide purchaser. 1,186
Sec. 1308.18. (A) A PERSON ACQUIRES A SECURITY OR AN 1,188
INTEREST THEREIN, UNDER THIS CHAPTER, IF: 1,189
(1) THE PERSON IS A PURCHASER TO WHOM A SECURITY IS 1,191
DELIVERED PURSUANT TO SECTION 1308.27 OF THE REVISED CODE; OR 1,192
(2) THE PERSON ACQUIRES A SECURITY ENTITLEMENT TO THE 1,194
SECURITY PURSUANT TO SECTION 1308.51 OF THE REVISED CODE. 1,195
(B) A PERSON ACQUIRES A FINANCIAL ASSET, OTHER THAN A 1,197
SECURITY, OR AN INTEREST THEREIN, UNDER THIS CHAPTER, IF THE 1,198
PERSON ACQUIRES A SECURITY ENTITLEMENT TO THE FINANCIAL ASSET. 1,199
(C) A PERSON WHO ACQUIRES A SECURITY ENTITLEMENT TO A 1,201
SECURITY OR OTHER FINANCIAL ASSET HAS THE RIGHTS SPECIFIED IN 1,202
SECTIONS 1308.51 TO 1308.61 OF THE REVISED CODE, BUT IS A 1,203
PURCHASER OF ANY SECURITY, SECURITY ENTITLEMENT, OR OTHER
FINANCIAL ASSET HELD BY THE SECURITIES INTERMEDIARY ONLY TO THE 1,204
EXTENT PROVIDED IN SECTION 1308.53 OF THE REVISED CODE. 1,205
(D) UNLESS THE CONTEXT SHOWS THAT A DIFFERENT MEANING IS 1,207
INTENDED, A PERSON WHO IS REQUIRED BY OTHER LAW, REGULATION, 1,208
27
RULE, OR AGREEMENT TO TRANSFER, DELIVER, PRESENT, SURRENDER, 1,209
EXCHANGE, OR OTHERWISE PUT IN THE POSSESSION OF ANOTHER PERSON A 1,210
SECURITY OR FINANCIAL ASSET SATISFIES THAT REQUIREMENT BY CAUSING 1,211
THE OTHER PERSON TO ACQUIRE AN INTEREST IN THE SECURITY OR 1,212
FINANCIAL ASSET PURSUANT TO DIVISION (A) OR (B) OF THIS SECTION. 1,213
Sec. 1308.19. (A) A PERSON HAS NOTICE OF AN ADVERSE CLAIM 1,215
IF:
(1) THE PERSON KNOWS OF THE ADVERSE CLAIM; 1,217
(2) THE PERSON IS AWARE OF FACTS SUFFICIENT TO INDICATE 1,219
THAT THERE IS A SIGNIFICANT PROBABILITY THAT THE ADVERSE CLAIM 1,220
EXISTS AND DELIBERATELY AVOIDS INFORMATION THAT WOULD ESTABLISH 1,221
THE EXISTENCE OF THE ADVERSE CLAIM; OR
(3) THE PERSON HAS A DUTY, IMPOSED BY STATUTE OR RULE, TO 1,223
INVESTIGATE WHETHER AN ADVERSE CLAIM EXISTS, AND THE 1,224
INVESTIGATION SO REQUIRED WOULD ESTABLISH THE EXISTENCE OF THE 1,225
ADVERSE CLAIM.
(B) HAVING KNOWLEDGE THAT A FINANCIAL ASSET OR INTEREST 1,227
THEREIN IS OR HAS BEEN TRANSFERRED BY A REPRESENTATIVE IMPOSES NO 1,228
DUTY OF INQUIRY INTO THE RIGHTFULNESS OF A TRANSACTION AND IS NOT 1,229
NOTICE OF AN ADVERSE CLAIM. HOWEVER, A PERSON WHO KNOWS THAT A 1,230
REPRESENTATIVE HAS TRANSFERRED A FINANCIAL ASSET OR INTEREST 1,231
THEREIN IN A TRANSACTION THAT IS, OR WHOSE PROCEEDS ARE BEING 1,232
USED, FOR THE INDIVIDUAL BENEFIT OF THE REPRESENTATIVE OR
OTHERWISE IN BREACH OF DUTY HAS NOTICE OF AN ADVERSE CLAIM. 1,233
(C) AN ACT OR EVENT THAT CREATES A RIGHT TO IMMEDIATE 1,235
PERFORMANCE OF THE PRINCIPAL OBLIGATION REPRESENTED BY A SECURITY 1,236
CERTIFICATE OR SETS A DATE ON OR AFTER WHICH THE CERTIFICATE IS 1,237
TO BE PRESENTED OR SURRENDERED FOR REDEMPTION OR EXCHANGE DOES 1,238
NOT ITSELF CONSTITUTE NOTICE OF AN ADVERSE CLAIM EXCEPT IN THE 1,239
CASE OF A TRANSFER MORE THAN:
(1) ONE YEAR AFTER A DATE SET FOR PRESENTMENT OR SURRENDER 1,241
FOR REDEMPTION OR EXCHANGE; OR 1,242
(2) SIX MONTHS AFTER A DATE SET FOR PAYMENT OF MONEY 1,244
AGAINST PRESENTATION OR SURRENDER OF THE CERTIFICATE, IF MONEY 1,245
28
WAS AVAILABLE FOR PAYMENT ON THAT DATE. 1,246
(D) A PURCHASER OF A CERTIFICATED SECURITY HAS NOTICE OF 1,248
AN ADVERSE CLAIM IF THE SECURITY CERTIFICATE: 1,249
(1) WHETHER IN BEARER OR REGISTERED FORM, HAS BEEN 1,251
INDORSED "FOR COLLECTION" OR "FOR SURRENDER" OR FOR SOME OTHER 1,252
PURPOSE NOT INVOLVING TRANSFER; OR 1,253
(2) IS IN BEARER FORM AND HAS ON IT AN UNAMBIGUOUS 1,255
STATEMENT THAT IT IS THE PROPERTY OF A PERSON OTHER THAN THE 1,256
TRANSFEROR, BUT THE MERE WRITING OF A NAME ON THE CERTIFICATE IS 1,257
NOT SUCH A STATEMENT.
(E) FILING OF A FINANCING STATEMENT UNDER CHAPTER 1309. OF 1,260
THE REVISED CODE IS NOT NOTICE OF AN ADVERSE CLAIM TO A FINANCIAL
ASSET.
Sec. 1308.20. (A) A PERSON WHO TRANSFERS A CERTIFICATED 1,262
SECURITY TO A PURCHASER FOR VALUE WARRANTS TO THE PURCHASER, AND 1,263
AN INDORSER, IF THE TRANSFER IS BY INDORSEMENT, WARRANTS TO ANY 1,264
SUBSEQUENT PURCHASER, THAT:
(1) THE CERTIFICATE IS GENUINE AND HAS NOT BEEN MATERIALLY 1,266
ALTERED;
(2) THE TRANSFEROR OR INDORSER DOES NOT KNOW OF ANY FACT 1,268
THAT MIGHT IMPAIR THE VALIDITY OF THE SECURITY; 1,269
(3) THERE IS NO ADVERSE CLAIM TO THE SECURITY; 1,271
(4) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON 1,273
TRANSFER;
(5) IF THE TRANSFER IS BY INDORSEMENT, THE INDORSEMENT IS 1,275
MADE BY AN APPROPRIATE PERSON, OR IF THE INDORSEMENT IS BY AN 1,276
AGENT, THE AGENT HAS ACTUAL AUTHORITY TO ACT ON BEHALF OF THE 1,277
APPROPRIATE PERSON; AND
(6) THE TRANSFER IS OTHERWISE EFFECTIVE AND RIGHTFUL. 1,279
(B) A PERSON WHO ORIGINATES AN INSTRUCTION FOR 1,281
REGISTRATION OF TRANSFER OF AN UNCERTIFICATED SECURITY TO A 1,282
PURCHASER FOR VALUE WARRANTS TO THE PURCHASER THAT: 1,283
(1) THE INSTRUCTION IS MADE BY AN APPROPRIATE PERSON, OR 1,285
IF THE INSTRUCTION IS BY AN AGENT, THE AGENT HAS ACTUAL AUTHORITY 1,286
29
TO ACT ON BEHALF OF THE APPROPRIATE PERSON; 1,287
(2) THE SECURITY IS VALID; 1,289
(3) THERE IS NO ADVERSE CLAIM TO THE SECURITY; AND 1,291
(4) AT THE TIME THE INSTRUCTION IS PRESENTED TO THE 1,293
ISSUER:
(a) THE PURCHASER WILL BE ENTITLED TO THE REGISTRATION OF 1,295
TRANSFER; 1,296
(b) THE TRANSFER WILL BE REGISTERED BY THE ISSUER FREE 1,298
FROM ALL LIENS, SECURITY INTERESTS, RESTRICTIONS, AND CLAIMS 1,299
OTHER THAN THOSE SPECIFIED IN THE INSTRUCTION; 1,300
(c) THE TRANSFER WILL NOT VIOLATE ANY RESTRICTION ON 1,302
TRANSFER; AND 1,303
(d) THE REQUESTED TRANSFER WILL OTHERWISE BE EFFECTIVE AND 1,305
RIGHTFUL. 1,306
(C) A PERSON WHO TRANSFERS AN UNCERTIFICATED SECURITY TO A 1,308
PURCHASER FOR VALUE AND DOES NOT ORIGINATE AN INSTRUCTION IN 1,309
CONNECTION WITH THE TRANSFER WARRANTS THAT: 1,310
(1) THE UNCERTIFICATED SECURITY IS VALID; 1,312
(2) THERE IS NO ADVERSE CLAIM TO THE SECURITY; 1,314
(3) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON 1,316
TRANSFER; AND
(4) THE TRANSFER IS OTHERWISE EFFECTIVE AND RIGHTFUL. 1,318
(D) A PERSON WHO INDORSES A SECURITY CERTIFICATE WARRANTS 1,320
TO THE ISSUER THAT: 1,321
(1) THERE IS NO ADVERSE CLAIM TO THE SECURITY; AND 1,323
(2) THE INDORSEMENT IS EFFECTIVE. 1,325
(E) A PERSON WHO ORIGINATES AN INSTRUCTION FOR 1,327
REGISTRATION OF TRANSFER OF AN UNCERTIFICATED SECURITY WARRANTS 1,328
TO THE ISSUER THAT:
(1) THE INSTRUCTION IS EFFECTIVE; AND 1,330
(2) AT THE TIME THE INSTRUCTION IS PRESENTED TO THE ISSUER 1,332
THE PURCHASER WILL BE ENTITLED TO THE REGISTRATION OF TRANSFER. 1,333
(F) A PERSON WHO PRESENTS A CERTIFICATED SECURITY FOR 1,335
REGISTRATION OF TRANSFER OR FOR PAYMENT OR EXCHANGE WARRANTS TO 1,336
30
THE ISSUER THAT THE PERSON IS ENTITLED TO THE REGISTRATION, 1,337
PAYMENT, OR EXCHANGE, BUT A PURCHASER FOR VALUE AND WITHOUT 1,338
NOTICE OF ADVERSE CLAIMS TO WHOM TRANSFER IS REGISTERED WARRANTS 1,339
ONLY THAT THE PERSON HAS NO KNOWLEDGE OF ANY UNAUTHORIZED
SIGNATURE IN A NECESSARY INDORSEMENT. 1,340
(G) IF A PERSON ACTS AS AGENT OF ANOTHER IN DELIVERING A 1,342
CERTIFICATED SECURITY TO A PURCHASER, THE IDENTITY OF THE 1,343
PRINCIPAL WAS KNOWN TO THE PERSON TO WHOM THE CERTIFICATE WAS 1,344
DELIVERED, AND THE CERTIFICATE DELIVERED BY THE AGENT WAS 1,345
RECEIVED BY THE AGENT FROM THE PRINCIPAL OR RECEIVED BY THE AGENT 1,346
FROM ANOTHER PERSON AT THE DIRECTION OF THE PRINCIPAL, THE PERSON 1,347
DELIVERING THE SECURITY CERTIFICATE WARRANTS ONLY THAT THE
DELIVERING PERSON HAS AUTHORITY TO ACT FOR THE PRINCIPAL AND DOES 1,348
NOT KNOW OF ANY ADVERSE CLAIM TO THE CERTIFICATED SECURITY. 1,349
(H) A SECURED PARTY WHO REDELIVERS A SECURITY CERTIFICATE 1,351
RECEIVED, OR AFTER PAYMENT AND ON ORDER OF THE DEBTOR DELIVERS 1,352
THE SECURITY CERTIFICATE TO ANOTHER PERSON, MAKES ONLY THE 1,353
WARRANTIES OF AN AGENT UNDER DIVISION (G) OF THIS SECTION. 1,354
(I) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (G) OF THIS 1,356
SECTION, A BROKER ACTING FOR A CUSTOMER MAKES TO THE ISSUER AND A 1,357
PURCHASER THE WARRANTIES PROVIDED IN DIVISIONS (A) TO (F) OF THIS 1,358
SECTION. A BROKER THAT DELIVERS A SECURITY CERTIFICATE TO ITS 1,359
CUSTOMER, OR CAUSES ITS CUSTOMER TO BE REGISTERED AS THE OWNER OF 1,360
AN UNCERTIFICATED SECURITY, MAKES TO THE CUSTOMER THE WARRANTIES 1,361
PROVIDED IN DIVISION (A) OR (B) OF THIS SECTION, AND HAS THE 1,362
RIGHTS AND PRIVILEGES OF A PURCHASER UNDER THIS SECTION. THE 1,363
WARRANTIES OF AND IN FAVOR OF THE BROKER ACTING AS AN AGENT ARE 1,364
IN ADDITION TO APPLICABLE WARRANTIES GIVEN BY AND IN FAVOR OF THE 1,365
CUSTOMER.
Sec. 1308.21. (A) A PERSON WHO ORIGINATES AN ENTITLEMENT 1,367
ORDER TO A SECURITIES INTERMEDIARY WARRANTS TO THE SECURITIES 1,368
INTERMEDIARY THAT:
(1) THE ENTITLEMENT ORDER IS MADE BY AN APPROPRIATE 1,370
PERSON, OR IF THE ENTITLEMENT ORDER IS BY AN AGENT, THE AGENT HAS 1,371
31
ACTUAL AUTHORITY TO ACT ON BEHALF OF THE APPROPRIATE PERSON; AND 1,372
(2) THERE IS NO ADVERSE CLAIM TO THE SECURITY ENTITLEMENT. 1,374
(B) A PERSON WHO DELIVERS A SECURITY CERTIFICATE TO A 1,376
SECURITIES INTERMEDIARY FOR CREDIT TO A SECURITIES ACCOUNT OR 1,377
ORIGINATES AN INSTRUCTION WITH RESPECT TO AN UNCERTIFICATED 1,378
SECURITY DIRECTING THAT THE UNCERTIFICATED SECURITY BE CREDITED 1,379
TO A SECURITIES ACCOUNT MAKES TO THE SECURITIES INTERMEDIARY THE 1,380
WARRANTIES SPECIFIED IN DIVISION (A) OR (B) OF SECTION 1308.20 OF 1,381
THE REVISED CODE.
(C) IF A SECURITIES INTERMEDIARY DELIVERS A SECURITY 1,383
CERTIFICATE TO ITS ENTITLEMENT HOLDER OR CAUSES ITS ENTITLEMENT 1,384
HOLDER TO BE REGISTERED AS THE OWNER OF AN UNCERTIFICATED 1,385
SECURITY, THE SECURITIES INTERMEDIARY MAKES TO THE ENTITLEMENT 1,386
HOLDER THE WARRANTIES SPECIFIED IN DIVISION (A) OR (B) OF SECTION 1,387
1308.20 OF THE REVISED CODE.
Sec. 1308.22. (A) AN INDORSEMENT MAY BE IN BLANK OR 1,396
SPECIAL. AN INDORSEMENT IN BLANK INCLUDES AN INDORSEMENT TO 1,398
BEARER. A SPECIAL INDORSEMENT SPECIFIES TO WHOM A SECURITY IS TO 1,399
BE TRANSFERRED OR WHO HAS POWER TO TRANSFER IT. A HOLDER MAY 1,401
CONVERT A BLANK INDORSEMENT TO A SPECIAL INDORSEMENT.
(B) AN INDORSEMENT PURPORTING TO BE ONLY OF PART OF A 1,403
SECURITY CERTIFICATE REPRESENTING UNITS INTENDED BY THE ISSUER TO 1,404
BE SEPARATELY TRANSFERABLE IS EFFECTIVE TO THE EXTENT OF THE 1,405
INDORSEMENT.
(C) AN INDORSEMENT, WHETHER SPECIAL OR IN BLANK, DOES NOT 1,407
CONSTITUTE A TRANSFER UNTIL DELIVERY OF THE CERTIFICATE ON WHICH 1,408
IT APPEARS OR, IF THE INDORSEMENT IS ON A SEPARATE DOCUMENT, 1,410
UNTIL DELIVERY OF BOTH THE DOCUMENT AND THE CERTIFICATE. 1,411
(D) If a certificated security CERTIFICATE in registered 1,414
form has been delivered to a purchaser without a necessary 1,415
indorsement he, THE PURCHASER may become a bona fide PROTECTED 1,416
purchaser only as of the time WHEN the indorsement is supplied; 1,417
but. HOWEVER, against the A transferor, the A transfer is 1,419
complete upon delivery and the purchaser has a specifically 1,420
32
enforceable right to have any necessary indorsement supplied. 1,421
(E) AN INDORSEMENT OF A SECURITY CERTIFICATE IN BEARER 1,423
FORM MAY GIVE NOTICE OF AN ADVERSE CLAIM TO THE CERTIFICATE, BUT 1,424
IT DOES NOT OTHERWISE AFFECT A RIGHT TO REGISTRATION THAT THE 1,425
HOLDER POSSESSES.
(F) UNLESS OTHERWISE AGREED, A PERSON MAKING AN 1,427
INDORSEMENT ASSUMES ONLY THE OBLIGATIONS PROVIDED IN SECTION 1,428
1308.20 OF THE REVISED CODE AND NOT AN OBLIGATION THAT THE 1,429
SECURITY WILL BE HONORED BY THE ISSUER.
Sec. 1308.23. (A) "APPROPRIATE PERSON" MEANS: 1,431
(1) WITH RESPECT TO AN INDORSEMENT, THE PERSON SPECIFIED 1,433
BY A SECURITY CERTIFICATE OR BY AN EFFECTIVE SPECIAL INDORSEMENT 1,434
TO BE ENTITLED TO THE SECURITY; 1,435
(2) WITH RESPECT TO AN INSTRUCTION, THE REGISTERED OWNER 1,437
OF AN UNCERTIFICATED SECURITY; 1,438
(3) WITH RESPECT TO AN ENTITLEMENT ORDER, THE ENTITLEMENT 1,440
HOLDER;
(4) IF THE PERSON DESIGNATED IN DIVISION (A)(1), (2), OR 1,442
(3) OF THIS SECTION IS DECEASED, THE DESIGNATED PERSON'S 1,443
SUCCESSOR TAKING UNDER OTHER LAW OR THE DESIGNATED PERSON'S 1,444
PERSONAL REPRESENTATIVE ACTING FOR THE ESTATE OF THE DECEDENT; OR 1,445
(5) IF THE PERSON DESIGNATED IN DIVISION (A)(1), (2), OR 1,447
(3) OF THIS SECTION LACKS CAPACITY, THE DESIGNATED PERSON'S 1,448
GUARDIAN, CONSERVATOR, OR OTHER SIMILAR REPRESENTATIVE WHO HAS 1,449
POWER UNDER OTHER LAW TO TRANSFER THE SECURITY OR FINANCIAL 1,450
ASSET.
(B) AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT ORDER IS 1,452
EFFECTIVE IF: 1,453
(1) IT IS MADE BY THE APPROPRIATE PERSON; 1,455
(2) IT IS MADE BY A PERSON WHO HAS POWER UNDER THE LAW OF 1,457
AGENCY TO TRANSFER THE SECURITY OR FINANCIAL ASSET ON BEHALF OF 1,458
THE APPROPRIATE PERSON, INCLUDING, IN THE CASE OF AN INSTRUCTION 1,459
OR ENTITLEMENT ORDER, A PERSON WHO HAS CONTROL UNDER DIVISION 1,460
(C)(2) OR (D)(2) OF SECTION 1308.24 OF THE REVISED CODE; OR 1,461
33
(3) THE APPROPRIATE PERSON HAS RATIFIED IT OR IS OTHERWISE 1,463
PRECLUDED FROM ASSERTING ITS INEFFECTIVENESS. 1,464
(C) AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT ORDER MADE 1,466
BY A REPRESENTATIVE IS EFFECTIVE EVEN IF: 1,467
(1) THE REPRESENTATIVE HAS FAILED TO COMPLY WITH A 1,469
CONTROLLING INSTRUMENT OR WITH THE LAW OF THE STATE HAVING 1,470
JURISDICTION OF THE REPRESENTATIVE RELATIONSHIP, INCLUDING ANY 1,471
LAW REQUIRING THE REPRESENTATIVE TO OBTAIN COURT APPROVAL OF THE 1,472
TRANSACTION; OR
(2) THE REPRESENTATIVE'S ACTION IN MAKING THE INDORSEMENT, 1,474
INSTRUCTION, OR ENTITLEMENT ORDER OR USING THE PROCEEDS OF THE 1,475
TRANSACTION IS OTHERWISE A BREACH OF DUTY. 1,476
(D) IF A SECURITY IS REGISTERED IN THE NAME OF OR 1,478
SPECIALLY INDORSED TO A PERSON DESCRIBED AS A REPRESENTATIVE, OR 1,479
IF A SECURITIES ACCOUNT IS MAINTAINED IN THE NAME OF A PERSON 1,480
DESCRIBED AS A REPRESENTATIVE, AN INDORSEMENT, INSTRUCTION, OR 1,481
ENTITLEMENT ORDER MADE BY THE PERSON IS EFFECTIVE EVEN THOUGH THE 1,482
PERSON IS NO LONGER SERVING IN THE DESCRIBED CAPACITY.
(E) EFFECTIVENESS OF AN INDORSEMENT, INSTRUCTION, OR 1,484
ENTITLEMENT ORDER IS DETERMINED AS OF THE DATE THE INDORSEMENT, 1,485
INSTRUCTION, OR ENTITLEMENT ORDER IS MADE, AND AN INDORSEMENT, 1,486
INSTRUCTION, OR ENTITLEMENT ORDER DOES NOT BECOME INEFFECTIVE BY 1,487
REASON OF ANY LATER CHANGE OF CIRCUMSTANCES. 1,488
Sec. 1308.24. (A) A PURCHASER HAS "CONTROL" OF A 1,490
CERTIFICATED SECURITY IN BEARER FORM IF THE CERTIFICATED SECURITY 1,491
IS DELIVERED TO THE PURCHASER. 1,492
(B) A PURCHASER HAS "CONTROL" OF A CERTIFICATED SECURITY 1,494
IN REGISTERED FORM IF THE CERTIFICATED SECURITY IS DELIVERED TO 1,495
THE PURCHASER, AND: 1,496
(1) THE CERTIFICATE IS INDORSED TO THE PURCHASER OR IN 1,498
BLANK BY AN EFFECTIVE INDORSEMENT; OR 1,499
(2) THE CERTIFICATE IS REGISTERED IN THE NAME OF THE 1,501
PURCHASER, UPON ORIGINAL ISSUE OR REGISTRATION OF TRANSFER BY THE 1,502
ISSUER.
34
(C) A PURCHASER HAS "CONTROL" OF AN UNCERTIFICATED 1,504
SECURITY IF:
(1) THE UNCERTIFICATED SECURITY IS DELIVERED TO THE 1,506
PURCHASER; OR
(2) THE ISSUER HAS AGREED THAT IT WILL COMPLY WITH 1,508
INSTRUCTIONS ORIGINATED BY THE PURCHASER WITHOUT FURTHER CONSENT 1,509
BY THE REGISTERED OWNER.
(D) A PURCHASER HAS "CONTROL" OF A SECURITY ENTITLEMENT 1,511
IF:
(1) THE PURCHASER BECOMES THE ENTITLEMENT HOLDER; OR 1,513
(2) THE SECURITIES INTERMEDIARY HAS AGREED THAT IT WILL 1,515
COMPLY WITH ENTITLEMENT ORDERS ORIGINATED BY THE PURCHASER 1,516
WITHOUT FURTHER CONSENT BY THE ENTITLEMENT HOLDER. 1,517
(E) IF AN INTEREST IN A SECURITY ENTITLEMENT IS GRANTED BY 1,519
THE ENTITLEMENT HOLDER TO THE ENTITLEMENT HOLDER'S OWN SECURITIES 1,520
INTERMEDIARY, THE SECURITIES INTERMEDIARY HAS CONTROL. 1,521
(F) A PURCHASER WHO HAS SATISFIED THE REQUIREMENTS OF 1,523
DIVISION (C)(2) OR (D)(2) OF THIS SECTION HAS CONTROL EVEN IF THE 1,524
REGISTERED OWNER IN THE CASE OF DIVISION (C)(2) OF THIS SECTION 1,525
OR THE ENTITLEMENT HOLDER IN THE CASE OF DIVISION (D)(2) OF THIS 1,526
SECTION RETAINS THE RIGHT TO MAKE SUBSTITUTIONS FOR THE 1,527
UNCERTIFICATED SECURITY OR SECURITY ENTITLEMENT, TO ORIGINATE 1,528
INSTRUCTIONS OR ENTITLEMENT ORDERS TO THE ISSUER OR SECURITIES 1,529
INTERMEDIARY, OR OTHERWISE TO DEAL WITH THE UNCERTIFICATED 1,530
SECURITY OR SECURITY ENTITLEMENT. 1,531
(G) AN ISSUER OR A SECURITIES INTERMEDIARY MAY NOT ENTER 1,533
INTO AN AGREEMENT OF THE KIND DESCRIBED IN DIVISION (C)(2) OR 1,534
(D)(2) OF THIS SECTION WITHOUT THE CONSENT OF THE REGISTERED 1,535
OWNER OR ENTITLEMENT HOLDER, BUT AN ISSUER OR A SECURITIES 1,536
INTERMEDIARY IS NOT REQUIRED TO ENTER INTO SUCH AN AGREEMENT EVEN 1,537
THOUGH THE REGISTERED OWNER OR ENTITLEMENT HOLDER SO DIRECTS. AN 1,538
ISSUER OR SECURITIES INTERMEDIARY THAT HAS ENTERED INTO SUCH AN 1,539
AGREEMENT IS NOT REQUIRED TO CONFIRM THE EXISTENCE OF THE
AGREEMENT TO ANOTHER PARTY UNLESS REQUESTED TO DO SO BY THE 1,540
35
REGISTERED OWNER OR ENTITLEMENT HOLDER. 1,541
Sec. 1308.25. (A) IF AN INSTRUCTION HAS BEEN ORIGINATED 1,543
BY AN APPROPRIATE PERSON BUT IS INCOMPLETE IN ANY OTHER RESPECT, 1,544
ANY PERSON MAY COMPLETE IT AS AUTHORIZED AND THE ISSUER MAY RELY 1,545
ON IT AS COMPLETED, EVEN THOUGH IT HAS BEEN COMPLETED 1,546
INCORRECTLY.
(B) UNLESS OTHERWISE AGREED, A PERSON INITIATING AN 1,548
INSTRUCTION ASSUMES ONLY THE OBLIGATIONS IMPOSED BY SECTION 1,549
1308.20 OF THE REVISED CODE AND NOT AN OBLIGATION THAT THE 1,550
SECURITY WILL BE HONORED BY THE ISSUER.
Sec. 1308.26. (A) A PERSON WHO GUARANTEES A SIGNATURE OF 1,552
AN INDORSER OF A SECURITY CERTIFICATE WARRANTS THAT AT THE TIME 1,553
OF SIGNING:
(1) THE SIGNATURE WAS GENUINE; 1,555
(2) THE SIGNER WAS AN APPROPRIATE PERSON TO INDORSE, OR IF 1,557
THE SIGNATURE IS BY AN AGENT, THE AGENT HAD ACTUAL AUTHORITY TO 1,558
ACT ON BEHALF OF THE APPROPRIATE PERSON; AND 1,559
(3) THE SIGNER HAD LEGAL CAPACITY TO SIGN. 1,561
(B) A PERSON WHO GUARANTEES A SIGNATURE OF THE ORIGINATOR 1,563
OF AN INSTRUCTION WARRANTS THAT AT THE TIME OF SIGNING: 1,564
(1) THE SIGNATURE WAS GENUINE; 1,566
(2) THE SIGNER WAS AN APPROPRIATE PERSON TO ORIGINATE THE 1,568
INSTRUCTION, OR IF THE SIGNATURE IS BY AN AGENT, THE AGENT HAD 1,569
ACTUAL AUTHORITY TO ACT ON BEHALF OF THE APPROPRIATE PERSON, IF 1,570
THE PERSON SPECIFIED IN THE INSTRUCTION AS THE REGISTERED OWNER 1,571
WAS, IN FACT, THE REGISTERED OWNER, AS TO WHICH FACT THE 1,572
SIGNATURE GUARANTOR DOES NOT MAKE A WARRANTY; AND
(3) THE SIGNER HAD LEGAL CAPACITY TO SIGN. 1,575
(C) A PERSON WHO SPECIALLY GUARANTEES THE SIGNATURE OF AN 1,577
ORIGINATOR OF AN INSTRUCTION MAKES THE WARRANTIES OF A SIGNATURE 1,578
GUARANTOR UNDER DIVISION (B) OF THIS SECTION AND ALSO WARRANTS 1,579
THAT AT THE TIME THE INSTRUCTION IS PRESENTED TO THE ISSUER: 1,580
(1) THE PERSON SPECIFIED IN THE INSTRUCTION AS THE 1,582
REGISTERED OWNER OF THE UNCERTIFICATED SECURITY WILL BE THE 1,583
36
REGISTERED OWNER; AND
(2) THE TRANSFER OF THE UNCERTIFICATED SECURITY REQUESTED 1,585
IN THE INSTRUCTION WILL BE REGISTERED BY THE ISSUER FREE FROM ALL 1,586
LIENS, SECURITY INTERESTS, RESTRICTIONS, AND CLAIMS OTHER THAN 1,587
THOSE SPECIFIED IN THE INSTRUCTION. 1,588
(D) A GUARANTOR UNDER DIVISIONS (A) AND (B) OF THIS 1,591
SECTION OR A SPECIAL GUARANTOR UNDER DIVISION (C) OF THIS SECTION 1,592
DOES NOT OTHERWISE WARRANT THE RIGHTFULNESS OF THE TRANSFER.
(E) A PERSON WHO GUARANTEES AN INDORSEMENT OF A SECURITY 1,594
CERTIFICATE MAKES THE WARRANTIES OF A SIGNATURE GUARANTOR UNDER 1,595
DIVISION (A) OF THIS SECTION AND ALSO WARRANTS THE RIGHTFULNESS 1,596
OF THE TRANSFER IN ALL RESPECTS. 1,597
(F) A PERSON WHO GUARANTEES AN INSTRUCTION REQUESTING THE 1,599
TRANSFER OF AN UNCERTIFICATED SECURITY MAKES THE WARRANTIES OF A 1,600
SPECIAL SIGNATURE GUARANTOR UNDER DIVISION (C) OF THIS SECTION 1,601
AND ALSO WARRANTS THE RIGHTFULNESS OF THE TRANSFER IN ALL 1,602
RESPECTS.
(G) AN ISSUER MAY NOT REQUIRE A SPECIAL GUARANTY OF 1,604
SIGNATURE, A GUARANTY OF INDORSEMENT, OR A GUARANTY OF 1,605
INSTRUCTION AS A CONDITION TO REGISTRATION OF TRANSFER. 1,606
(H) THE WARRANTIES UNDER THIS SECTION ARE MADE TO A PERSON 1,608
TAKING OR DEALING WITH THE SECURITY IN RELIANCE ON THE GUARANTY, 1,609
AND THE GUARANTOR IS LIABLE TO THE PERSON FOR LOSS RESULTING FROM 1,610
THEIR BREACH. AN INDORSER OR ORIGINATOR OF AN INSTRUCTION WHOSE 1,611
SIGNATURE, INDORSEMENT, OR INSTRUCTION HAS BEEN GUARANTEED IS 1,612
LIABLE TO A GUARANTOR FOR ANY LOSS SUFFERED BY THE GUARANTOR AS A 1,613
RESULT OF BREACH OF THE WARRANTIES OF THE GUARANTOR.
Sec. 1308.27. (A) DELIVERY OF A CERTIFICATED SECURITY TO 1,615
A PURCHASER OCCURS WHEN: 1,616
(1) THE PURCHASER ACQUIRES POSSESSION OF THE SECURITY 1,618
CERTIFICATE;
(2) ANOTHER PERSON, OTHER THAN A SECURITIES INTERMEDIARY, 1,620
EITHER ACQUIRES POSSESSION OF THE SECURITY CERTIFICATE ON BEHALF 1,621
OF THE PURCHASER OR, HAVING PREVIOUSLY ACQUIRED POSSESSION OF THE 1,622
37
CERTIFICATE, ACKNOWLEDGES THAT IT HOLDS FOR THE PURCHASER; OR 1,623
(3) A SECURITIES INTERMEDIARY ACTING ON BEHALF OF THE 1,625
PURCHASER ACQUIRES POSSESSION OF THE SECURITY CERTIFICATE, ONLY 1,626
IF THE CERTIFICATE IS IN REGISTERED FORM AND HAS BEEN SPECIALLY 1,627
INDORSED TO THE PURCHASER BY AN EFFECTIVE INDORSEMENT. 1,628
(B) DELIVERY OF AN UNCERTIFICATED SECURITY TO A PURCHASER 1,630
OCCURS WHEN: 1,631
(1) THE ISSUER REGISTERS THE PURCHASER AS THE REGISTERED 1,633
OWNER, UPON ORIGINAL ISSUE OR REGISTRATION OF TRANSFER; OR 1,634
(2) ANOTHER PERSON, OTHER THAN A SECURITIES INTERMEDIARY, 1,636
EITHER BECOMES THE REGISTERED OWNER OF THE UNCERTIFICATED 1,637
SECURITY ON BEHALF OF THE PURCHASER OR, HAVING PREVIOUSLY BECOME 1,638
THE REGISTERED OWNER, ACKNOWLEDGES THAT IT HOLDS FOR THE 1,639
PURCHASER.
Sec. 1308.31. Unless otherwise agreed, the transferor of a 1,648
certificated security or the transferor, pledgor, or pledgee of 1,650
an uncertificated security on due demand must SHALL supply his 1,651
THE purchaser with any proof of his authority to transfer, 1,653
pledge, or release or with any other requisite necessary to 1,654
obtain registration of the transfer, pledge, or release of the 1,656
security, but if the transfer, pledge, or release is not for 1,657
value, a transferor, pledgor, or pledgee need not do so COMPLY 1,658
unless the purchaser furnishes PAYS the necessary expenses. 1,659
Failure IF THE TRANSFEROR FAILS within a reasonable time to 1,660
comply with a THE demand made gives, the purchaser the right to 1,662
MAY reject or rescind the transfer, pledge, or release. 1,663
Sec. 1308.32. (A) THE INTEREST OF A DEBTOR IN A 1,665
CERTIFICATED SECURITY MAY BE REACHED BY A CREDITOR ONLY BY ACTUAL 1,666
SEIZURE OF THE SECURITY CERTIFICATE BY THE OFFICER MAKING THE 1,667
ATTACHMENT OR LEVY, EXCEPT AS OTHERWISE PROVIDED IN DIVISION (D) 1,668
OF THIS SECTION. HOWEVER, A CERTIFICATED SECURITY FOR WHICH THE 1,669
CERTIFICATE HAS BEEN SURRENDERED TO THE ISSUER MAY BE REACHED BY 1,670
A CREDITOR BY LEGAL PROCESS UPON THE ISSUER.
(B) THE INTEREST OF A DEBTOR IN AN UNCERTIFICATED SECURITY 1,672
38
MAY BE REACHED BY A CREDITOR ONLY BY LEGAL PROCESS UPON THE 1,673
ISSUER AT ITS CHIEF EXECUTIVE OFFICE IN THE UNITED STATES, EXCEPT 1,674
AS OTHERWISE PROVIDED IN DIVISION (D) OF THIS SECTION. 1,675
(C) THE INTEREST OF A DEBTOR IN A SECURITY ENTITLEMENT MAY 1,677
BE REACHED BY A CREDITOR ONLY BY LEGAL PROCESS UPON THE 1,678
SECURITIES INTERMEDIARY WITH WHOM THE DEBTOR'S SECURITIES ACCOUNT 1,679
IS MAINTAINED, EXCEPT AS OTHERWISE PROVIDED IN DIVISION (D) OF 1,680
THIS SECTION.
(D) THE INTEREST OF A DEBTOR IN A CERTIFICATED SECURITY 1,682
FOR WHICH THE CERTIFICATE IS IN THE POSSESSION OF A SECURED 1,683
PARTY, OR IN AN UNCERTIFICATED SECURITY REGISTERED IN THE NAME OF 1,684
A SECURED PARTY, OR A SECURITY ENTITLEMENT MAINTAINED IN THE NAME 1,685
OF A SECURED PARTY, MAY BE REACHED BY A CREDITOR BY LEGAL PROCESS 1,686
UPON THE SECURED PARTY.
(E) A CREDITOR WHOSE DEBTOR IS THE OWNER OF A CERTIFICATED 1,688
SECURITY, UNCERTIFICATED SECURITY, OR SECURITY ENTITLEMENT IS 1,689
ENTITLED TO AID FROM A COURT OF COMPETENT JURISDICTION, BY 1,690
INJUNCTION OR OTHERWISE, IN REACHING THE CERTIFICATED SECURITY, 1,691
UNCERTIFICATED SECURITY, OR SECURITY ENTITLEMENT OR IN SATISFYING 1,692
THE CLAIM BY MEANS ALLOWED AT LAW OR IN EQUITY IN REGARD TO 1,693
PROPERTY THAT CANNOT READILY BE REACHED BY OTHER LEGAL PROCESS.
Sec. 1308.33. (A) A SECURITIES INTERMEDIARY THAT HAS 1,695
TRANSFERRED A FINANCIAL ASSET PURSUANT TO AN EFFECTIVE 1,696
ENTITLEMENT ORDER, OR A BROKER OR OTHER AGENT OR BAILEE THAT HAS 1,697
DEALT WITH A FINANCIAL ASSET AT THE DIRECTION OF ITS CUSTOMER OR 1,698
PRINCIPAL, IS NOT LIABLE TO A PERSON HAVING AN ADVERSE CLAIM TO 1,699
THE FINANCIAL ASSET, UNLESS THE SECURITIES INTERMEDIARY, OR
BROKER OR OTHER AGENT OR BAILEE: 1,700
(1) TOOK THE ACTION AFTER IT HAD BEEN SERVED WITH AN 1,702
INJUNCTION, RESTRAINING ORDER, OR OTHER LEGAL PROCESS ENJOINING 1,703
IT FROM DOING SO, ISSUED BY A COURT OF COMPETENT JURISDICTION, 1,704
AND HAD A REASONABLE OPPORTUNITY TO ACT ON THE INJUNCTION, 1,705
RESTRAINING ORDER, OR OTHER LEGAL PROCESS; OR
(2) ACTED IN COLLUSION WITH THE WRONGDOER IN VIOLATING THE 1,707
39
RIGHTS OF THE ADVERSE CLAIMANT; OR 1,708
(3) IN THE CASE OF A SECURITY CERTIFICATE THAT HAS BEEN 1,710
STOLEN, ACTED WITH NOTICE OF THE ADVERSE CLAIM. 1,711
(B) A SECURITIES INTERMEDIARY THAT RECEIVES A FINANCIAL 1,713
ASSET AND ESTABLISHES A SECURITY ENTITLEMENT TO THE FINANCIAL 1,714
ASSET IN FAVOR OF AN ENTITLEMENT HOLDER IS A PURCHASER FOR VALUE 1,715
OF THE FINANCIAL ASSET. A SECURITIES INTERMEDIARY THAT ACQUIRES 1,716
A SECURITY ENTITLEMENT TO A FINANCIAL ASSET FROM ANOTHER 1,717
SECURITIES INTERMEDIARY ACQUIRES THE SECURITY ENTITLEMENT FOR 1,718
VALUE IF THE SECURITIES INTERMEDIARY ACQUIRING THE SECURITY
ENTITLEMENT ESTABLISHES A SECURITY ENTITLEMENT TO THE FINANCIAL 1,719
ASSET IN FAVOR OF AN ENTITLEMENT HOLDER. 1,720
Sec. 1308.37. (A) If a certificated security in 1,729
registered form is presented to the issuer with a request to 1,730
register transfer or an instruction is presented to the issuer 1,731
with a request to register transfer, pledge, or release OF AN 1,732
UNCERTIFICATED SECURITY, the issuer shall register the transfer, 1,733
pledge, or release as requested if: 1,734
(1) UNDER THE TERMS OF THE SECURITY THE PERSON SEEKING 1,736
REGISTRATION OF TRANSFER IS ELIGIBLE TO HAVE THE SECURITY 1,737
REGISTERED IN ITS NAME;
(2) The security is indorsed INDORSEMENT or the 1,739
instruction was originated IS MADE by the appropriate person or 1,740
persons, as provided in section 1308.23 of the Revised Code BY AN 1,742
AGENT WHO HAS ACTUAL AUTHORITY TO ACT ON BEHALF OF THE 1,743
APPROPRIATE PERSON;
(2)(3) Reasonable assurance is given that those 1,745
indorsements THE INDORSEMENT or instructions are INSTRUCTION IS 1,747
genuine and effective AUTHORIZED, as provided in section 1308.38 1,749
of the Revised Code;
(3) The issuer has no duty as to adverse claims or has 1,751
discharged the duty as provided in section 1308.39 of the Revised 1,752
Code; 1,753
(4) Any applicable law relating to the collection of taxes 1,755
40
has been complied with; 1,756
(5) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON 1,758
TRANSFER IMPOSED BY THE ISSUER IN ACCORDANCE WITH SECTION 1308.11 1,759
OF THE REVISED CODE;
(6) A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER HAS NOT 1,761
BECOME EFFECTIVE UNDER SECTION 1308.39 OF THE REVISED CODE, OR 1,763
THE ISSUER HAS COMPLIED WITH DIVISION (B) OF THAT SECTION BUT NO 1,764
LEGAL PROCESS OR INDEMNITY BOND IS OBTAINED AS PROVIDED IN 1,766
DIVISION (D) OF THAT SECTION; and
(5)(7) The transfer, pledge, or release is in fact 1,768
rightful or is to a bona fide PROTECTED purchaser;. 1,770
(B) If an issuer is under a duty to register a transfer, 1,772
pledge, or release of a security, the issuer is also liable to 1,773
the person presenting a certificated security or an instruction 1,774
for registration or his THE PERSON'S principal for loss resulting 1,776
from any unreasonable delay in registration or from failure or 1,777
refusal to register the transfer, pledge, or release.
Sec. 1308.38. (A) The AN issuer may require the following 1,786
assurance that each necessary indorsement of a certificated 1,787
security or each instruction, as provided in section 1308.23 of 1,788
the Revised Code, is genuine and effective AUTHORIZED: 1,789
(1) In all cases, a guarantee GUARANTY of the signature, 1,791
as provided in division (A) or (B) of section 1308.27 of the 1,792
Revised Code, of the person indorsing a certificated security 1,793
MAKING AN INDORSEMENT or originating an instruction including, in 1,794
the case of an instruction, a warranty of the taxpayer 1,795
identification number or, in the absence thereof, other 1,796
reasonable assurance of identity; and
(2) If the indorsement is made or the instruction is 1,798
originated by an agent, appropriate assurance of ACTUAL authority 1,799
to sign; 1,800
(3) If the indorsement is made or the instruction is 1,802
originated by a fiduciary PURSUANT TO DIVISION (A)(4) OR (5) OF 1,803
SECTION 1308.23 OF THE REVISED CODE, appropriate evidence of 1,804
41
appointment, or incumbency; 1,805
(4) If there is more than one fiduciary, reasonable 1,807
assurance that all who are required to sign have done so; and 1,808
(5) If the indorsement is made or the instruction is 1,810
originated by a person not covered by any of the foregoing 1,811
ANOTHER PROVISION OF DIVISION (A) OF THIS SECTION, assurance 1,812
appropriate to the case corresponding as nearly as may be to the 1,814
foregoing SUCH PROVISIONS.
(B) A AN ISSUER MAY ELECT TO REQUIRE REASONABLE ASSURANCE 1,816
BEYOND THAT SPECIFIED IN THIS SECTION. 1,817
(C) IN THIS SECTION: 1,819
(1) "guarantee GUARANTY of the signature" in division (A) 1,822
of this section means a guarantee GUARANTY signed by or on behalf 1,823
of a person reasonably believed by the issuer to be responsible. 1,824
The issuer may adopt standards with respect to responsibility if 1,825
they are not manifestly unreasonable. 1,826
(C)(2) "Appropriate evidence of appointment or incumbency" 1,828
in division (A) of this section means: 1,829
(1)(a) In the case of a fiduciary appointed or qualified 1,831
by a court, a certificate issued by or under the direction or 1,832
supervision of that court or an officer thereof and dated within 1,833
sixty days before the date of presentation for transfer, pledge, 1,834
or release; or 1,835
(2)(b) In any other case, a copy of a document showing the 1,837
appointment or a certificate issued by or on behalf of a person 1,838
reasonably believed by the issuer to be responsible or, in the 1,839
absence of that document or certificate, other evidence 1,840
reasonably deemed by the issuer to be REASONABLY CONSIDERED 1,842
appropriate. The issuer may adopt standards with respect to the 1,843
evidence if they are not manifestly unreasonable. The issuer is 1,844
not charged with notice of the contents of any document obtained 1,845
pursuant to division (C)(2) of this section except to the extent 1,846
that the contents relate directly to the appointment or 1,847
incumbency.
42
(D) The issuer may elect to require reasonable assurance 1,849
beyond that specified in this section, but if it does so and, for 1,850
a purpose other than that specified in division (C)(2) of this 1,851
section, both requires and obtains a copy of a will, trust, 1,852
indenture, articles of co-partnership, by-laws, or other 1,853
controlling instrument, it is charged with notice of all matters 1,854
contained therein affecting the transfer, pledge, or release. 1,855
Sec. 1308.39. (A) A PERSON WHO IS AN APPROPRIATE PERSON 1,857
TO MAKE AN INDORSEMENT OR ORIGINATE AN INSTRUCTION MAY DEMAND 1,858
THAT THE ISSUER NOT REGISTER TRANSFER OF A SECURITY BY 1,859
COMMUNICATING TO THE ISSUER A NOTIFICATION THAT IDENTIFIES THE 1,860
REGISTERED OWNER AND THE ISSUE OF WHICH THE SECURITY IS A PART 1,861
AND PROVIDES AN ADDRESS FOR COMMUNICATIONS DIRECTED TO THE PERSON
MAKING THE DEMAND. THE DEMAND IS EFFECTIVE ONLY IF IT IS 1,862
RECEIVED BY THE ISSUER AT A TIME AND IN A MANNER AFFORDING THE 1,863
ISSUER REASONABLE OPPORTUNITY TO ACT ON IT.
(B) IF A CERTIFICATED SECURITY IN REGISTERED FORM IS 1,865
PRESENTED TO AN ISSUER WITH A REQUEST TO REGISTER TRANSFER OR AN 1,866
INSTRUCTION IS PRESENTED TO AN ISSUER WITH A REQUEST TO REGISTER 1,867
TRANSFER OF AN UNCERTIFICATED SECURITY AFTER A DEMAND THAT THE 1,868
ISSUER NOT REGISTER TRANSFER HAS BECOME EFFECTIVE, THE ISSUER 1,869
SHALL PROMPTLY COMMUNICATE TO THE PERSON WHO INITIATED THE DEMAND
AT THE ADDRESS PROVIDED IN THE DEMAND AND THE PERSON WHO 1,870
PRESENTED THE SECURITY FOR REGISTRATION OF TRANSFER OR INITIATED 1,871
THE INSTRUCTION REQUESTING REGISTRATION OF TRANSFER A 1,872
NOTIFICATION STATING THAT:
(1) THE CERTIFICATED SECURITY HAS BEEN PRESENTED FOR 1,874
REGISTRATION OF TRANSFER OR THE INSTRUCTION FOR REGISTRATION OF 1,875
TRANSFER OF THE UNCERTIFICATED SECURITY HAS BEEN RECEIVED; 1,876
(2) A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER HAD 1,878
PREVIOUSLY BEEN RECEIVED; AND 1,879
(3) THE ISSUER WILL WITHHOLD REGISTRATION OF TRANSFER FOR 1,881
A PERIOD OF TIME STATED IN THE NOTIFICATION IN ORDER TO PROVIDE 1,882
THE PERSON WHO INITIATED THE DEMAND AN OPPORTUNITY TO OBTAIN 1,883
43
LEGAL PROCESS OR AN INDEMNITY BOND.
(C) THE PERIOD DESCRIBED IN DIVISION (B)(3) OF THIS 1,885
SECTION MAY NOT EXCEED THIRTY DAYS AFTER THE DATE OF 1,886
COMMUNICATION OF THE NOTIFICATION. A SHORTER PERIOD MAY BE 1,887
SPECIFIED BY THE ISSUER IF IT IS NOT MANIFESTLY UNREASONABLE. 1,888
(D) AN ISSUER IS NOT LIABLE TO A PERSON WHO INITIATED A 1,890
DEMAND THAT THE ISSUER NOT REGISTER TRANSFER FOR ANY LOSS THE 1,891
PERSON SUFFERS AS A RESULT OF REGISTRATION OF A TRANSFER PURSUANT 1,892
TO AN EFFECTIVE INDORSEMENT OR INSTRUCTION IF THE PERSON WHO 1,893
INITIATED THE DEMAND DOES NOT, WITHIN THE TIME STATED IN THE 1,894
ISSUER'S COMMUNICATION, EITHER:
(1) OBTAIN AN APPROPRIATE RESTRAINING ORDER, INJUNCTION, 1,896
OR OTHER PROCESS FROM A COURT OF COMPETENT JURISDICTION ENJOINING 1,897
THE ISSUER FROM REGISTERING THE TRANSFER; OR 1,898
(2) FILE WITH THE ISSUER AN INDEMNITY BOND, SUFFICIENT IN 1,900
THE ISSUER'S JUDGMENT TO PROTECT THE ISSUER AND ANY TRANSFER 1,901
AGENT, REGISTRAR, OR OTHER AGENT OF THE ISSUER INVOLVED FROM ANY 1,902
LOSS IT OR THEY MAY SUFFER BY REFUSING TO REGISTER THE TRANSFER. 1,903
(E) THIS SECTION DOES NOT RELIEVE AN ISSUER FROM LIABILITY 1,905
FOR REGISTERING TRANSFER PURSUANT TO AN INDORSEMENT OR 1,906
INSTRUCTION THAT WAS NOT EFFECTIVE. 1,907
Sec. 1308.40. (A) EXCEPT AS OTHERWISE PROVIDED IN SECTION 1,909
1308.41 OF THE REVISED CODE, AN ISSUER IS LIABLE FOR WRONGFUL 1,910
REGISTRATION OF TRANSFER IF THE ISSUER HAS REGISTERED A TRANSFER 1,911
OF A SECURITY TO A PERSON NOT ENTITLED TO IT, AND THE TRANSFER 1,912
WAS REGISTERED:
(1) PURSUANT TO AN INEFFECTIVE INDORSEMENT OR INSTRUCTION; 1,914
(2) AFTER A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER 1,916
BECAME EFFECTIVE UNDER DIVISION (A) OF SECTION 1308.39 OF THE 1,917
REVISED CODE AND THE ISSUER DID NOT COMPLY WITH DIVISION (B) OF 1,918
THAT SECTION;
(3) AFTER THE ISSUER HAD BEEN SERVED WITH AN INJUNCTION, 1,920
RESTRAINING ORDER, OR OTHER LEGAL PROCESS ENJOINING IT FROM 1,921
REGISTERING THE TRANSFER, ISSUED BY A COURT OF COMPETENT 1,922
44
JURISDICTION, AND THE ISSUER HAD A REASONABLE OPPORTUNITY TO ACT 1,923
ON THE INJUNCTION, RESTRAINING ORDER, OR OTHER LEGAL PROCESS; OR 1,924
(4) BY AN ISSUER ACTING IN COLLUSION WITH THE WRONGDOER. 1,926
(B) AN ISSUER THAT IS LIABLE FOR WRONGFUL REGISTRATION OF 1,928
TRANSFER UNDER DIVISION (A) OF THIS SECTION ON DEMAND SHALL 1,929
PROVIDE THE PERSON ENTITLED TO THE SECURITY WITH A LIKE 1,930
CERTIFICATED OR UNCERTIFICATED SECURITY, AND ANY PAYMENTS OR 1,931
DISTRIBUTIONS THAT THE PERSON DID NOT RECEIVE AS A RESULT OF THE 1,932
WRONGFUL REGISTRATION. IF AN OVERISSUE WOULD RESULT, THE
ISSUER'S LIABILITY TO PROVIDE THE PERSON WITH A LIKE SECURITY IS 1,933
GOVERNED BY SECTION 1308.03 OF THE REVISED CODE. 1,934
(C) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (A) OF THIS 1,936
SECTION OR IN A LAW RELATING TO THE COLLECTION OF TAXES, AN 1,937
ISSUER IS NOT LIABLE TO AN OWNER OR OTHER PERSON SUFFERING LOSS 1,938
AS A RESULT OF THE REGISTRATION OF A TRANSFER OF A SECURITY IF 1,939
REGISTRATION WAS MADE PURSUANT TO AN EFFECTIVE INDORSEMENT OR 1,940
INSTRUCTION.
Sec. 1308.41. (A) If a certificated security CERTIFICATE 1,948
has been lost, apparently destroyed, or wrongfully taken and the 1,950
owner fails to notify the issuer of that fact within a reasonable 1,951
time after he THE OWNER has notice of it and the issuer registers 1,952
a transfer of the security before receiving notification, the 1,953
owner is precluded from asserting MAY NOT ASSERT against the 1,954
issuer any A claim for registering the transfer under section 1,956
1308.40 of the Revised Code or any claim to a new security under 1,957
this section.
(B) If the owner of a certificated security, WHETHER IN 1,959
REGISTERED OR BEARER FORM, claims that the security has been 1,961
lost, destroyed, or wrongfully taken, the issuer shall issue a 1,962
new certificated security or, at the option of the issuer, an 1,963
equivalent uncertificated security in place of the original 1,964
security CERTIFICATE if the owner:
(1) So requests before the issuer has notice that the 1,966
security has been acquired by a bona fide PROTECTED purchaser; 1,967
45
(2) Files with the issuer any A SUFFICIENT indemnity bond, 1,969
the issuer reasonably requires; and 1,971
(3) Satisfies any other reasonable requirements imposed by 1,973
the issuer. 1,974
(C) If, after the issue of a new certificated or 1,976
uncertificated security CERTIFICATE, a bona fide PROTECTED 1,978
purchaser of the original security presents it for registration 1,979
of transfer, the issuer shall register the transfer unless 1,980
registration AN OVERISSUE would result in overissue, in which 1,982
event. IN THAT CASE, the issuer's liability is governed by 1,983
section 1308.03 of the Revised Code. In addition to any rights 1,984
on the indemnity bond, the issuer may recover the new 1,985
certificated security CERTIFICATE from the person to whom it was 1,986
issued or any person taking under him THAT PERSON, except a bona 1,988
fide PROTECTED purchaser or may cancel the uncertificated 1,989
security unless a bona fide purchaser or any person taking under 1,991
a bona fide purchaser is then the registered owner or registered 1,992
pledgee thereof.
Sec. 1308.42. (A) If a A person acts ACTING as 2,001
authenticating trustee, transfer agent, registrar, or other agent 2,003
for an issuer in the registration of transfers A TRANSFER of its 2,004
certificated securities or in the registration of transfers, 2,006
pledges, and releases of its uncertificated securities, in the 2,007
issue of new SECURITY CERTIFICATES OR UNCERTIFICATED securities, 2,008
or in the cancellation of surrendered securities: 2,009
(1) He is under a duty to the issuer to exercise good 2,012
faith and due diligence in performing his functions; and 2,013
(2) With regard to the particular functions he performs, 2,015
he SECURITY CERTIFICATES, has the same obligation to the holder 2,017
or owner of a certificated OR UNCERTIFICATED security or to the 2,018
owner or pledgee of an uncertificated security and has the same 2,019
rights and privileges WITH REGARD TO THE PARTICULAR FUNCTIONS 2,020
PERFORMED as the issuer has in regard to those functions. 2,021
(B) Notice to an authenticating trustee, transfer agent, 2,023
46
registrar or other agent is notice to the issuer with respect to 2,024
the functions performed by the agent. 2,025
Sec. 1308.51. (A) "SECURITIES ACCOUNT" MEANS AN ACCOUNT 2,027
TO WHICH A FINANCIAL ASSET IS OR MAY BE CREDITED IN ACCORDANCE 2,028
WITH AN AGREEMENT UNDER WHICH THE PERSON MAINTAINING THE ACCOUNT 2,029
UNDERTAKES TO TREAT THE PERSON FOR WHOM THE ACCOUNT IS MAINTAINED 2,030
AS ENTITLED TO EXERCISE THE RIGHTS THAT COMPRISE THE FINANCIAL 2,031
ASSET.
(B) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (D) AND (E) 2,034
OF THIS SECTION, A PERSON ACQUIRES A SECURITY ENTITLEMENT IF A
SECURITIES INTERMEDIARY: 2,035
(1) INDICATES BY BOOK ENTRY THAT A FINANCIAL ASSET HAS 2,037
BEEN CREDITED TO THE PERSON'S SECURITIES ACCOUNT; 2,038
(2) RECEIVES A FINANCIAL ASSET FROM THE PERSON OR ACQUIRES 2,040
A FINANCIAL ASSET FOR THE PERSON AND, IN EITHER CASE, ACCEPTS IT 2,041
FOR CREDIT TO THE PERSON'S SECURITIES ACCOUNT; OR 2,042
(3) BECOMES OBLIGATED UNDER OTHER LAW, REGULATION, OR RULE 2,044
TO CREDIT A FINANCIAL ASSET TO THE PERSON'S SECURITIES ACCOUNT. 2,045
(C) IF A CONDITION OF DIVISION (B) OF THIS SECTION HAS 2,047
BEEN MET, A PERSON HAS A SECURITY ENTITLEMENT EVEN THOUGH THE 2,048
SECURITIES INTERMEDIARY DOES NOT ITSELF HOLD THE FINANCIAL ASSET. 2,049
(D) IF A SECURITIES INTERMEDIARY HOLDS A FINANCIAL ASSET 2,051
FOR ANOTHER PERSON, AND THE FINANCIAL ASSET IS REGISTERED IN THE 2,052
NAME OF, PAYABLE TO THE ORDER OF, OR SPECIALLY INDORSED TO THE 2,053
OTHER PERSON, AND HAS NOT BEEN INDORSED TO THE SECURITIES 2,054
INTERMEDIARY OR IN BLANK, THE OTHER PERSON IS TREATED AS HOLDING 2,055
THE FINANCIAL ASSET DIRECTLY RATHER THAN AS HAVING A SECURITY 2,056
ENTITLEMENT WITH RESPECT TO THE FINANCIAL ASSET.
(E) ISSUANCE OF A SECURITY IS NOT ESTABLISHMENT OF A 2,058
SECURITY ENTITLEMENT. 2,059
Sec. 1308.52. AN ACTION BASED ON AN ADVERSE CLAIM TO A 2,061
FINANCIAL ASSET, WHETHER FRAMED IN CONVERSION, REPLEVIN, 2,062
CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR OTHER THEORY, MAY NOT BE 2,063
ASSERTED AGAINST A PERSON WHO ACQUIRES A SECURITY ENTITLEMENT 2,064
47
UNDER SECTION 1308.51 OF THE REVISED CODE FOR VALUE AND WITHOUT
NOTICE OF THE ADVERSE CLAIM. 2,065
Sec. 1308.53. (A) TO THE EXTENT NECESSARY FOR A 2,067
SECURITIES INTERMEDIARY TO SATISFY ALL SECURITY ENTITLEMENTS WITH 2,068
RESPECT TO A PARTICULAR FINANCIAL ASSET, ALL INTERESTS IN THAT 2,069
FINANCIAL ASSET HELD BY THE SECURITIES INTERMEDIARY ARE HELD BY 2,070
THE SECURITIES INTERMEDIARY FOR THE ENTITLEMENT HOLDERS, ARE NOT 2,071
PROPERTY OF THE SECURITIES INTERMEDIARY, AND ARE NOT SUBJECT TO 2,072
CLAIMS OF CREDITORS OF THE SECURITIES INTERMEDIARY, EXCEPT AS 2,073
OTHERWISE PROVIDED IN SECTION 1308.61 OF THE REVISED CODE.
(B) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT 2,075
TO A PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS 2,076
SECTION IS A PRO RATA PROPERTY INTEREST IN ALL INTERESTS IN THAT 2,077
FINANCIAL ASSET HELD BY THE SECURITIES INTERMEDIARY, WITHOUT 2,078
REGARD TO THE TIME THE ENTITLEMENT HOLDER ACQUIRED THE SECURITY 2,079
ENTITLEMENT OR THE TIME THE SECURITIES INTERMEDIARY ACQUIRED THE 2,080
INTEREST IN THAT FINANCIAL ASSET.
(C) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT 2,082
TO A PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS 2,083
SECTION MAY BE ENFORCED AGAINST THE SECURITIES INTERMEDIARY ONLY 2,084
BY EXERCISE OF THE ENTITLEMENT HOLDER'S RIGHTS UNDER SECTIONS 2,085
1308.55 TO 1308.58 OF THE REVISED CODE.
(D) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT 2,087
TO A PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS 2,088
SECTION MAY BE ENFORCED AGAINST A PURCHASER OF THE FINANCIAL 2,089
ASSET OR INTEREST THEREIN ONLY IF: 2,090
(1) INSOLVENCY PROCEEDINGS HAVE BEEN INITIATED BY OR 2,092
AGAINST THE SECURITIES INTERMEDIARY; 2,093
(2) THE SECURITIES INTERMEDIARY DOES NOT HAVE SUFFICIENT 2,095
INTERESTS IN THE FINANCIAL ASSET TO SATISFY THE SECURITY 2,096
ENTITLEMENTS OF ALL OF ITS ENTITLEMENT HOLDERS TO THAT FINANCIAL 2,097
ASSET;
(3) THE SECURITIES INTERMEDIARY VIOLATED ITS OBLIGATIONS 2,099
UNDER SECTION 1308.54 OF THE REVISED CODE BY TRANSFERRING THE 2,100
48
FINANCIAL ASSET OR INTEREST THEREIN TO THE PURCHASER; AND 2,101
(4) THE PURCHASER IS NOT PROTECTED UNDER DIVISION (E) OF 2,103
THIS SECTION. THE TRUSTEE OR OTHER LIQUIDATOR, ACTING ON BEHALF 2,104
OF ALL ENTITLEMENT HOLDERS HAVING SECURITY ENTITLEMENTS WITH 2,105
RESPECT TO A PARTICULAR FINANCIAL ASSET, MAY RECOVER THE 2,106
FINANCIAL ASSET, OR INTEREST THEREIN, FROM THE PURCHASER. IF THE 2,107
TRUSTEE OR OTHER LIQUIDATOR ELECTS NOT TO PURSUE THAT RIGHT, AN 2,108
ENTITLEMENT HOLDER WHOSE SECURITY ENTITLEMENT REMAINS UNSATISFIED
HAS THE RIGHT TO RECOVER ITS INTEREST IN THE FINANCIAL ASSET FROM 2,109
THE PURCHASER. 2,110
(E) AN ACTION BASED ON THE ENTITLEMENT HOLDER'S PROPERTY 2,112
INTEREST WITH RESPECT TO A PARTICULAR FINANCIAL ASSET UNDER 2,113
DIVISION (A) OF THIS SECTION, WHETHER FRAMED IN CONVERSION, 2,114
REPLEVIN, CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR OTHER THEORY, 2,115
MAY NOT BE ASSERTED AGAINST ANY PURCHASER OF A FINANCIAL ASSET OR 2,116
INTEREST THEREIN WHO GIVES VALUE, OBTAINS CONTROL, AND DOES NOT 2,117
ACT IN COLLUSION WITH THE SECURITIES INTERMEDIARY IN VIOLATING
THE SECURITIES INTERMEDIARY'S OBLIGATIONS UNDER SECTION 1308.54 2,119
OF THE REVISED CODE.
Sec. 1308.54. (A) A SECURITIES INTERMEDIARY SHALL 2,121
PROMPTLY OBTAIN AND THEREAFTER MAINTAIN A FINANCIAL ASSET IN A 2,122
QUANTITY CORRESPONDING TO THE AGGREGATE OF ALL SECURITY 2,123
ENTITLEMENTS IT HAS ESTABLISHED IN FAVOR OF ITS ENTITLEMENT 2,124
HOLDERS WITH RESPECT TO THAT FINANCIAL ASSET. THE SECURITIES
INTERMEDIARY MAY MAINTAIN THOSE FINANCIAL ASSETS DIRECTLY OR 2,125
THROUGH ONE OR MORE OTHER SECURITIES INTERMEDIARIES. 2,126
(B) EXCEPT TO THE EXTENT OTHERWISE AGREED BY ITS 2,128
ENTITLEMENT HOLDER, A SECURITIES INTERMEDIARY MAY NOT GRANT ANY 2,129
SECURITY INTERESTS IN A FINANCIAL ASSET IT IS OBLIGATED TO 2,130
MAINTAIN PURSUANT TO DIVISION (A) OF THIS SECTION. 2,131
(C) A SECURITIES INTERMEDIARY SATISFIES THE DUTY IN 2,133
DIVISION (A) OF THIS SECTION IF: 2,134
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,136
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,137
49
INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,139
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,140
COMMERCIAL STANDARDS TO OBTAIN AND MAINTAIN THE FINANCIAL ASSET. 2,141
(D) THIS SECTION DOES NOT APPLY TO A CLEARING CORPORATION 2,143
THAT IS ITSELF THE OBLIGOR OF AN OPTION OR SIMILAR OBLIGATION TO 2,144
WHICH ITS ENTITLEMENT HOLDERS HAVE SECURITY ENTITLEMENTS. 2,145
Sec. 1308.55. (A) A SECURITIES INTERMEDIARY SHALL TAKE 2,147
ACTION TO OBTAIN A PAYMENT OR DISTRIBUTION MADE BY THE ISSUER OF 2,148
A FINANCIAL ASSET. A SECURITIES INTERMEDIARY SATISFIES THE DUTY 2,149
IF:
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,151
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,152
INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,154
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,155
COMMERCIAL STANDARDS TO ATTEMPT TO OBTAIN THE PAYMENT OR 2,156
DISTRIBUTION.
(B) A SECURITIES INTERMEDIARY IS OBLIGATED TO ITS 2,158
ENTITLEMENT HOLDER FOR A PAYMENT OR DISTRIBUTION MADE BY THE 2,159
ISSUER OF A FINANCIAL ASSET IF THE PAYMENT OR DISTRIBUTION IS 2,160
RECEIVED BY THE SECURITIES INTERMEDIARY.
Sec. 1308.56. A SECURITIES INTERMEDIARY SHALL EXERCISE 2,162
RIGHTS WITH RESPECT TO A FINANCIAL ASSET IF DIRECTED TO DO SO BY 2,163
AN ENTITLEMENT HOLDER. A SECURITIES INTERMEDIARY SATISFIES THE 2,164
DUTY IF:
(A) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,166
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,167
INTERMEDIARY; OR
(B) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,169
INTERMEDIARY EITHER PLACES THE ENTITLEMENT HOLDER IN A POSITION 2,170
TO EXERCISE THE RIGHTS DIRECTLY OR EXERCISES DUE CARE IN 2,171
ACCORDANCE WITH REASONABLE COMMERCIAL STANDARDS TO FOLLOW THE 2,172
DIRECTION OF THE ENTITLEMENT HOLDER.
50
Sec. 1308.57. (A) A SECURITIES INTERMEDIARY SHALL COMPLY 2,174
WITH AN ENTITLEMENT ORDER IF THE ENTITLEMENT ORDER IS ORIGINATED 2,175
BY THE APPROPRIATE PERSON, THE SECURITIES INTERMEDIARY HAS HAD 2,176
REASONABLE OPPORTUNITY TO ASSURE ITSELF THAT THE ENTITLEMENT 2,177
ORDER IS GENUINE AND AUTHORIZED, AND THE SECURITIES INTERMEDIARY 2,178
HAS HAD REASONABLE OPPORTUNITY TO COMPLY WITH THE ENTITLEMENT 2,179
ORDER. A SECURITIES INTERMEDIARY SATISFIES THE DUTY IF:
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,181
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,182
INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,184
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,185
COMMERCIAL STANDARDS TO COMPLY WITH THE ENTITLEMENT ORDER. 2,186
(B) IF A SECURITIES INTERMEDIARY TRANSFERS A FINANCIAL 2,188
ASSET PURSUANT TO AN INEFFECTIVE ENTITLEMENT ORDER, THE 2,189
SECURITIES INTERMEDIARY SHALL REESTABLISH A SECURITY ENTITLEMENT 2,190
IN FAVOR OF THE PERSON ENTITLED TO IT, AND PAY OR CREDIT ANY 2,191
PAYMENTS OR DISTRIBUTIONS THAT THE PERSON DID NOT RECEIVE AS A 2,192
RESULT OF THE WRONGFUL TRANSFER. IF THE SECURITIES INTERMEDIARY
DOES NOT REESTABLISH A SECURITY ENTITLEMENT, THE SECURITIES 2,193
INTERMEDIARY IS LIABLE TO THE ENTITLEMENT HOLDER FOR DAMAGES. 2,194
Sec. 1308.58. A SECURITIES INTERMEDIARY SHALL ACT AT THE 2,196
DIRECTION OF AN ENTITLEMENT HOLDER TO CHANGE A SECURITY 2,197
ENTITLEMENT INTO ANOTHER AVAILABLE FORM OF HOLDING FOR WHICH THE 2,198
ENTITLEMENT HOLDER IS ELIGIBLE, OR TO CAUSE THE FINANCIAL ASSET 2,199
TO BE TRANSFERRED TO A SECURITIES ACCOUNT OF THE ENTITLEMENT
HOLDER WITH ANOTHER SECURITIES INTERMEDIARY. A SECURITIES 2,200
INTERMEDIARY SATISFIES THE DUTY IF: 2,201
(A) THE SECURITIES INTERMEDIARY ACTS AS AGREED UPON BY THE 2,203
ENTITLEMENT HOLDER AND THE SECURITIES INTERMEDIARY; OR 2,204
(B) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,206
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,207
COMMERCIAL STANDARDS TO FOLLOW THE DIRECTION OF THE ENTITLEMENT 2,208
HOLDER.
51
Sec. 1308.59. (A) IF THE SUBSTANCE OF A DUTY IMPOSED UPON 2,210
A SECURITIES INTERMEDIARY BY SECTIONS 1308.54 TO 1308.58 OF THE 2,211
REVISED CODE IS THE SUBJECT OF OTHER STATUTE, REGULATION, OR 2,212
RULE, COMPLIANCE WITH THAT STATUTE, REGULATION, OR RULE SATISFIES 2,213
THE DUTY.
(B) TO THE EXTENT THAT SPECIFIC STANDARDS FOR THE 2,215
PERFORMANCE OF THE DUTIES OF A SECURITIES INTERMEDIARY OR THE 2,216
EXERCISE OF THE RIGHTS OF AN ENTITLEMENT HOLDER ARE NOT SPECIFIED 2,217
BY OTHER STATUTE, REGULATION, OR RULE OR BY AGREEMENT BETWEEN THE 2,218
SECURITIES INTERMEDIARY AND ENTITLEMENT HOLDER, THE SECURITIES 2,219
INTERMEDIARY SHALL PERFORM ITS DUTIES AND THE ENTITLEMENT HOLDER
SHALL EXERCISE ITS RIGHTS IN A COMMERCIALLY REASONABLE MANNER. 2,220
(C) THE OBLIGATION OF A SECURITIES INTERMEDIARY TO PERFORM 2,222
THE DUTIES IMPOSED BY SECTIONS 1308.54 TO 1308.58 OF THE REVISED 2,223
CODE IS SUBJECT TO:
(1) RIGHTS OF THE SECURITIES INTERMEDIARY ARISING OUT OF A 2,225
SECURITY INTEREST UNDER A SECURITY AGREEMENT WITH THE ENTITLEMENT 2,226
HOLDER OR OTHERWISE; AND 2,227
(2) RIGHTS OF THE SECURITIES INTERMEDIARY UNDER OTHER LAW, 2,229
REGULATION, RULE, OR AGREEMENT TO WITHHOLD PERFORMANCE OF ITS 2,230
DUTIES AS A RESULT OF UNFULFILLED OBLIGATIONS OF THE ENTITLEMENT 2,231
HOLDER TO THE SECURITIES INTERMEDIARY. 2,232
(D) SECTIONS 1308.54 TO 1308.58 OF THE REVISED CODE DO NOT 2,234
REQUIRE A SECURITIES INTERMEDIARY TO TAKE ANY ACTION THAT IS 2,235
PROHIBITED BY OTHER STATUTE, REGULATION, OR RULE. 2,236
Sec. 1308.60. (A) AN ACTION BASED ON AN ADVERSE CLAIM TO 2,238
A FINANCIAL ASSET OR SECURITY ENTITLEMENT, WHETHER FRAMED IN 2,239
CONVERSION, REPLEVIN, CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR 2,240
OTHER THEORY, MAY NOT BE ASSERTED AGAINST A PERSON WHO PURCHASES 2,241
A SECURITY ENTITLEMENT, OR AN INTEREST THEREIN, FROM AN 2,242
ENTITLEMENT HOLDER IF THE PURCHASER GIVES VALUE, DOES NOT HAVE 2,243
NOTICE OF THE ADVERSE CLAIM, AND OBTAINS CONTROL.
(B) IF AN ADVERSE CLAIM COULD NOT HAVE BEEN ASSERTED 2,245
AGAINST AN ENTITLEMENT HOLDER UNDER SECTION 1308.52 OF THE 2,246
52
REVISED CODE, THE ADVERSE CLAIM CANNOT BE ASSERTED AGAINST A 2,247
PERSON WHO PURCHASES A SECURITY ENTITLEMENT, OR AN INTEREST
THEREIN, FROM THE ENTITLEMENT HOLDER. 2,248
(C) IN A CASE NOT COVERED BY THE PRIORITY RULES IN CHAPTER 2,251
1309. OF THE REVISED CODE, A PURCHASER FOR VALUE OF A SECURITY
ENTITLEMENT, OR AN INTEREST THEREIN, WHO OBTAINS CONTROL HAS 2,252
PRIORITY OVER A PURCHASER OF A SECURITY ENTITLEMENT, OR AN 2,253
INTEREST THEREIN, WHO DOES NOT OBTAIN CONTROL. PURCHASERS WHO 2,254
HAVE CONTROL RANK EQUALLY, EXCEPT THAT A SECURITIES INTERMEDIARY 2,255
AS PURCHASER HAS PRIORITY OVER A CONFLICTING PURCHASER WHO HAS
CONTROL UNLESS OTHERWISE AGREED BY THE SECURITIES INTERMEDIARY. 2,256
Sec. 1308.61. (A) EXCEPT AS OTHERWISE PROVIDED IN 2,258
DIVISIONS (B) AND (C) OF THIS SECTION, IF A SECURITIES 2,259
INTERMEDIARY DOES NOT HAVE SUFFICIENT INTERESTS IN A PARTICULAR 2,260
FINANCIAL ASSET TO SATISFY BOTH ITS OBLIGATIONS TO ENTITLEMENT 2,261
HOLDERS WHO HAVE SECURITY ENTITLEMENTS TO THAT FINANCIAL ASSET 2,262
AND ITS OBLIGATION TO A CREDITOR OF THE SECURITIES INTERMEDIARY 2,263
WHO HAS A SECURITY INTEREST IN THAT FINANCIAL ASSET, THE CLAIMS
OF ENTITLEMENT HOLDERS, OTHER THAN THE CREDITOR, HAVE PRIORITY 2,264
OVER THE CLAIM OF THE CREDITOR. 2,265
(B) A CLAIM OF A CREDITOR OF A SECURITIES INTERMEDIARY WHO 2,267
HAS A SECURITY INTEREST IN A FINANCIAL ASSET HELD BY A SECURITIES 2,268
INTERMEDIARY HAS PRIORITY OVER CLAIMS OF THE SECURITIES 2,269
INTERMEDIARY'S ENTITLEMENT HOLDERS WHO HAVE SECURITY ENTITLEMENTS 2,270
WITH RESPECT TO THAT FINANCIAL ASSET IF THE CREDITOR HAS CONTROL 2,271
OVER THE FINANCIAL ASSET.
(C) IF A CLEARING CORPORATION DOES NOT HAVE SUFFICIENT 2,273
FINANCIAL ASSETS TO SATISFY BOTH ITS OBLIGATIONS TO ENTITLEMENT 2,274
HOLDERS WHO HAVE SECURITY ENTITLEMENTS WITH RESPECT TO A 2,275
FINANCIAL ASSET AND ITS OBLIGATION TO A CREDITOR OF THE CLEARING 2,276
CORPORATION WHO HAS A SECURITY INTEREST IN THAT FINANCIAL ASSET, 2,277
THE CLAIM OF THE CREDITOR HAS PRIORITY OVER THE CLAIMS OF
ENTITLEMENT HOLDERS. 2,278
Sec. 1309.01. (A) As used in sections 1309.01 to 1309.50 2,287
53
of the Revised Code, unless the context otherwise requires: 2,288
(1) "Account debtor" means the person who is obligated on 2,290
an account, chattel paper, or general intangible. 2,291
(2) "Chattel paper" means a writing or writings which 2,293
evidence both a monetary obligation and a security interest in or 2,294
a lease of specific goods, but a charter or other contract 2,295
involving the use or hire of a vessel is not chattel paper. When 2,296
a transaction is evidenced both by such a security agreement or a 2,297
lease and by an instrument or a series of instruments, the group 2,298
of writings taken together constitutes chattel paper. 2,299
(3) "Collateral" means the property subject to a security 2,301
interest, and includes accounts and chattel paper which have been 2,302
sold. 2,303
(4) "Debtor" means the person who owes payment or other 2,305
performance of the obligations secured, whether or not he THE 2,306
PERSON owns or has rights in the collateral, and includes the 2,307
seller of accounts or chattel paper. Where the debtor and the 2,308
owner of the collateral are not the same person, the term 2,309
"debtor" means the owner of the collateral in any provision of 2,310
sections 1309.01 to 1309.50 of the Revised Code dealing with the 2,311
collateral, the obligor in any provision dealing with the 2,312
obligation and may include both where the context so requires. 2,313
(5) "Deposit account" means a demand, time, savings, 2,315
passbook or like account maintained with a bank, savings and loan 2,316
association, credit union, or like organization, other than an 2,317
account evidenced by a certificate of deposit. 2,318
(6) "Document" means document of title as defined in 2,320
division (O) of section 1301.01 of the Revised Code, and a 2,321
receipt of the kind described in division (B) of section 1307.06 2,322
of the Revised Code. 2,323
(7) "Encumbrance" includes real estate mortgages and other 2,325
liens on real estate and all other rights in real estate that are 2,326
not ownership interests. 2,327
(8) "Goods" includes all things which are movable at the 2,329
54
time the security interest attaches or which are fixtures under 2,330
section 1309.32 of the Revised Code, but does not include money, 2,331
documents, instruments, INVESTMENT PROPERTY, COMMODITY CONTRACTS, 2,333
accounts, chattel paper, general intangibles, or minerals or the 2,334
like, including oil and gas, before extraction. "Goods" also 2,335
include standing timber which is to be cut and removed under a 2,336
conveyance or contract for sale, the unborn young of animals, and 2,337
growing crops.
(9) "Instrument" means a negotiable instrument as defined 2,339
in section 1303.03 of the Revised Code, or a certificated 2,340
security as defined in section 1308.01 of the Revised Code, or 2,341
any other writing which evidences a right to the payment of money 2,342
and is not itself a security agreement or lease and is of a type 2,343
which is in ordinary course of business transferred by delivery 2,344
with any necessary indorsement or assignment. "INSTRUMENT" DOES 2,345
NOT INCLUDE INVESTMENT PROPERTY. 2,347
(10) "Mortgage" means a consensual interest created by a 2,349
real estate mortgage, a trust deed on real estate, or the like. 2,350
(11) An advance is made "pursuant to commitment" if the 2,352
secured party has bound himself ITSELF to make it, whether or not 2,354
a subsequent event of default or other event not within his THE
SECURED PARTY'S control has relieved or may relieve him THE 2,355
SECURED PARTY from his THE SECURED PARTY'S obligation. 2,356
(12) "Security agreement" means an agreement which creates 2,358
or provides for a security interest. 2,359
(13) "Secured party" means a lender, seller, or other 2,361
person in whose favor there is a security interest, including a 2,362
person to whom accounts or chattel paper have been sold. When 2,363
the holders of obligations issued under an indenture of trust, 2,364
equipment trust agreement, or the like are represented by a 2,365
trustee or other person, the representative is the secured party. 2,366
(14) "Transmitting utility" means any person primarily 2,368
engaged in the railroad, street railway, or trolley bus business, 2,369
the electric or electronic communications business, the 2,370
55
transmission of goods by pipeline, or the transmission or the 2,371
production and transmission of electricity, steam, gas, or water, 2,372
or the provision of sewer service. 2,373
(15) "Account" means any right to payment for goods sold 2,375
or leased or for services rendered which is not evidenced by an 2,376
instrument or chattel paper, whether or not it has been earned by 2,377
performance. 2,378
(16) "General intangible INTANGIBLES" means any personal 2,380
property, including things in action, other than goods, accounts, 2,382
chattel paper, documents, instruments, INVESTMENT PROPERTY, and 2,383
money. All rights to payment earned or unearned under a charter 2,385
or other contract involving the use or hire of a vessel and all 2,386
rights incident to the charter or contract are accounts. 2,387
(B) Other definitions applying to sections 1309.01 to 2,389
1309.50 of the Revised Code are: 2,390
(1) "Attach," as defined in section 1309.14 of the Revised 2,392
Code; 2,393
(2) "Construction mortgage," as defined in section 1309.32 2,395
of the Revised Code; 2,396
(3) "Consumer goods," as defined in section 1309.07 of the 2,398
Revised Code; 2,399
(4) "Equipment," as defined in section 1309.07 of the 2,401
Revised Code; 2,402
(5) "Farm products," as defined in section 1309.07 of the 2,404
Revised Code; 2,405
(6) "Fixture," as defined in section 1309.32 of the 2,407
Revised Code; 2,408
(7) "Fixture filing," as defined in section 1309.32 of the 2,410
Revised Code; 2,411
(8) "Inventory," as defined in section 1309.07 of the 2,413
Revised Code; 2,414
(9) "Lien creditor," as defined in section 1309.20 of the 2,416
Revised Code; 2,417
(10) "Proceeds," as defined in section 1309.25 of the 2,419
56
Revised Code; 2,420
(11) "Purchase money security interest," as defined in 2,422
section 1309.05 of the Revised Code; 2,423
(12) "COMMODITY CONTRACT," "COMMODITY CUSTOMER," 2,425
"COMMODITY INTERMEDIARY," "CONTROL," AND "INVESTMENT PROPERTY," 2,426
AS DEFINED IN SECTION 1309.112 OF THE REVISED CODE; 2,427
(13) "United States," as defined in section 1309.03 of the 2,429
Revised Code. 2,430
(C) As used in sections 1309.01 to 1309.50 of the Revised 2,432
Code, "check" and "note" have the meaning set forth in section 2,433
1303.03 of the Revised Code; "contract for sale" and "sale" have 2,434
the meaning set forth in section 1302.01 of the Revised Code; and 2,435
"holder in due course" has the meaning set forth in section 2,436
1303.31 of the Revised Code. 2,437
(D) The terms and principles of construction and 2,439
interpretation set forth in sections 1301.01 to 1301.14 of the 2,440
Revised Code are applicable to sections 1309.01 to 1309.50 of the 2,441
Revised Code. 2,442
Sec. 1309.03. (A) Documents, instruments, and ordinary 2,451
goods: 2,452
(1) This division applies to documents and instruments and 2,454
to goods other than those covered by a certificate of title 2,455
described in division (B) of this section, mobile goods described 2,456
in division (C) of this section, and minerals described in 2,457
division (E) of this section. 2,458
(2) Except as otherwise provided in this division, 2,460
perfection and the effect of perfection or nonperfection of a 2,461
security interest in collateral are governed by the law of the 2,462
jurisdiction where the collateral is when the last event occurs 2,463
on which is based the assertion that the security interest is 2,464
perfected or unperfected. 2,465
(3) If the parties to a transaction creating a purchase 2,467
money security interest in goods in one jurisdiction understand 2,468
at the time that the security interest attaches that the goods 2,469
57
will be kept in another jurisdiction, then the law of the other 2,470
jurisdiction governs the perfection and the effect of perfection 2,471
or nonperfection of the security interest from the time it 2,472
attaches until thirty days after the debtor receives possession 2,473
of the goods and thereafter if the goods are taken to the other 2,474
jurisdiction before the end of the thirty-day period. 2,475
(4) When collateral is brought into and kept in this state 2,477
while subject to a security interest perfected under the law of 2,478
the jurisdiction from which the collateral was removed, the 2,479
security interest remains perfected, but if action is required by 2,480
sections 1309.20 to 1309.37 of the Revised Code to perfect the 2,481
security interest: 2,482
(a) If the action is not taken before the expiration of 2,484
the period of perfection in the other jurisdiction or the end of 2,485
four months after the collateral is brought into this state, 2,486
whichever period first expires, the security interest becomes 2,487
unperfected at the end of that period and is thereafter deemed to 2,488
have been unperfected as against a person who became a purchaser 2,489
after removal; 2,490
(b) If the action is taken before the expiration of the 2,492
period specified in division (A)(4)(a) of this section, the 2,493
security interest continues perfected thereafter; 2,494
(c) For the purpose of priority over a buyer of consumer 2,496
goods, division (B) of section 1309.26 of the Revised Code, the 2,497
period of the effectiveness of a filing in the jurisdiction from 2,498
which the collateral is removed is governed by the rules with 2,499
respect to perfection in divisions (A)(4)(a) and (b) of this 2,500
section. 2,501
(B) Certificate of title. 2,503
(1) This division applies to goods covered by a 2,505
certificate of title issued under a statute of this state or of 2,506
another jurisdiction under the law of which indication of a 2,507
security interest on the certificate is required as a condition 2,508
of perfection. 2,509
58
(2) Except as otherwise provided in this division, 2,511
perfection and the effect of perfection or nonperfection of the 2,512
security interest are governed by the law, including the conflict 2,513
of laws rules, of the jurisdiction issuing the certificate until 2,514
four months after the goods are removed from that jurisdiction 2,515
and thereafter until the goods are registered in another 2,516
jurisdiction, but in any event not beyond surrender of the 2,517
certificate. After the expiration of that period, the goods are 2,518
not covered by the certificate of title within the meaning of 2,519
this section. 2,520
(3) Except with respect to the rights of a buyer described 2,522
in division (B)(4) of this section a security interest, perfected 2,523
in another jurisdiction otherwise than by notation on a 2,524
certificate of title, in goods brought into this state and 2,525
thereafter covered by a certificate of title issued by this state 2,526
is subject to the rules stated in division (A)(4) of this 2,527
section. 2,528
(4) If goods are brought into this state while a security 2,530
interest therein is perfected in any manner under the law of the 2,531
jurisdiction from which the goods are removed and a certificate 2,532
of title is issued by this state and the certificate does not 2,533
show that the goods are subject to the security interest or that 2,534
they may be subject to security interests not shown on the 2,535
certificate, the security interest is subordinate to the rights 2,536
of a buyer of the goods who is not in the business of selling 2,537
goods of that kind to the extent that he THE BUYER gives value 2,538
and receives delivery of the goods after issuance of the 2,539
certificate and without knowledge of the security interest. 2,540
(C) Accounts, general intangibles, and mobile goods. 2,542
(1) This division applies to accounts, other than an 2,544
account described in division (E) of this section on minerals, 2,545
and general intangibles, other than uncertificated securities, 2,546
and to goods which are mobile and which are of a type normally 2,547
used in more than one jurisdiction, such as motor vehicles, 2,548
59
trailers, rolling stock, airplanes, shipping containers, road 2,549
building and construction machinery, and commercial harvesting 2,550
machinery and the like, if the goods are equipment or are 2,551
inventory leased or held for lease by the debtor to others, and 2,552
are not covered by a certificate of title described in division 2,553
(B) of this section. 2,554
(2) The law, including the conflict of laws rules, of the 2,556
jurisdiction in which the debtor is located governs the 2,557
perfection and the effect of perfection or nonperfection of the 2,558
security interest. 2,559
(3) If, however, the debtor is located in a jurisdiction 2,561
which is not a part of the United States, and which does not 2,562
provide for perfection of the security interest by filing or 2,563
recording in that jurisdiction, the law of the jurisdiction in 2,564
the United States in which the debtor has its major executive 2,565
office in the United States governs the perfection and the effect 2,566
of perfection or nonperfection of the security interest through 2,567
filing. In the alternative, if the debtor is located in a 2,568
jurisdiction which is not a part of the United States or Canada 2,569
and the collateral is accounts or general intangibles for money 2,570
due or to become due, the security interest may be perfected by 2,571
notification to the account debtor. As used in this division, 2,572
"United States" includes its territories and possessions and the 2,573
Commonwealth of Puerto Rico. 2,574
(4) A debtor shall be deemed located at his THE DEBTOR'S 2,576
place of business if he THE DEBTOR has one, at his THE DEBTOR'S 2,578
chief executive office if he DEBTOR has more than one place of 2,579
business; otherwise at his THE DEBTOR'S residence. If, however, 2,580
the debtor is a foreign air carrier under the "Federal Aviation
Act of 1958," as amended, it shall be deemed located at the 2,582
designated office of the agent upon whom service of process may 2,583
be made on behalf of the foreign air carrier.
(5) A security interest perfected under the law of the 2,585
jurisdiction of the location of the debtor is perfected until the 2,586
60
expiration of four months after a change of the debtor's location 2,587
to another jurisdiction, or until perfection would have ceased by 2,588
the law of the first jurisdiction, whichever period first 2,589
expires. Unless perfected in the new jurisdiction before the end 2,590
of that period, it becomes unperfected thereafter and is deemed 2,591
to have been unperfected as against a person who became a 2,592
purchaser after the change. 2,593
(D) Chattel Paper. 2,595
The rules stated for goods in division (A) of this section 2,597
apply to a possessory security interest in chattel paper. The 2,598
rule stated for accounts in division (C) of this section applies 2,599
to a nonpossessory security in chattel paper, but the security 2,600
interest may not be perfected by notification to the account 2,601
debtor. 2,602
(E) Minerals. 2,604
Perfection and the effect of perfection or nonperfection of 2,606
a security interest which is created by a debtor who has an 2,607
interest in minerals or the like, including oil and gas, before 2,608
extraction and which attaches thereto as extracted, or which 2,609
attaches to an account resulting from the sale thereof at the 2,610
wellhead or minehead are governed by the law, including the 2,611
conflict of laws rules, of the jurisdiction wherein the wellhead 2,612
or minehead is located. 2,613
(F) Uncertificated securities INVESTMENT PROPERTY. 2,615
The law, including the conflict of laws rules, of the 2,617
jurisdiction of organization of the issuer governs the perfection 2,618
and the effect of perfection or non-perfection of a security 2,620
interest in uncertificated securities.
(1) THIS DIVISION APPLIES TO INVESTMENT PROPERTY. 2,622
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,624
THIS SECTION, DURING THE TIME THAT A SECURITY CERTIFICATE IS 2,625
LOCATED IN A JURISDICTION, PERFECTION OF A SECURITY INTEREST, THE 2,626
EFFECT OF PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A 2,627
SECURITY INTEREST IN THE CERTIFICATED SECURITY REPRESENTED 2,628
61
THEREBY ARE GOVERNED BY THE LOCAL LAW OF THAT JURISDICTION. 2,629
(3) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,631
THIS SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF 2,632
PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A SECURITY 2,633
INTEREST IN AN UNCERTIFICATED SECURITY ARE GOVERNED BY THE LOCAL 2,634
LAW OF THE ISSUER'S JURISDICTION AS SPECIFIED IN DIVISION (D) OF 2,635
SECTION 1308.05 OF THE REVISED CODE.
(4) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,637
THIS SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF 2,638
PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A SECURITY 2,639
INTEREST IN A SECURITY ENTITLEMENT OR SECURITIES ACCOUNT ARE 2,640
GOVERNED BY THE LOCAL LAW OF THE SECURITIES INTERMEDIARY'S 2,641
JURISDICTION AS SPECIFIED IN DIVISION (E) OF SECTION 1308.05 OF 2,642
THE REVISED CODE.
(5) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,644
THIS SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF 2,645
PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A SECURITY 2,646
INTEREST IN A COMMODITY CONTRACT OR COMMODITY ACCOUNT ARE 2,647
GOVERNED BY THE LOCAL LAW OF THE COMMODITY INTERMEDIARY'S 2,648
JURISDICTION. THE FOLLOWING RULES DETERMINE A "COMMODITY
INTERMEDIARY'S JURISDICTION" FOR PURPOSES OF THIS DIVISION: 2,649
(a) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,651
COMMODITY CUSTOMER SPECIFIES THAT IT IS GOVERNED BY THE LAW OF A 2,652
PARTICULAR JURISDICTION, THAT JURISDICTION IS THE COMMODITY 2,653
INTERMEDIARY'S JURISDICTION.
(b) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,655
COMMODITY CUSTOMER DOES NOT SPECIFY THE GOVERNING LAW AS PROVIDED 2,656
IN DIVISION (F)(5)(a) OF THIS SECTION, BUT EXPRESSLY SPECIFIES 2,657
THAT THE COMMODITY ACCOUNT IS MAINTAINED AT AN OFFICE IN A 2,658
PARTICULAR JURISDICTION, THAT JURISDICTION IS THE COMMODITY 2,659
INTERMEDIARY'S JURISDICTION.
(c) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,661
COMMODITY CUSTOMER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN 2,662
DIVISION (F)(5)(a) OR (b) OF THIS SECTION, THE COMMODITY 2,664
62
INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN WHICH IS
LOCATED THE OFFICE IDENTIFIED IN AN ACCOUNT STATEMENT AS THE 2,665
OFFICE SERVING THE COMMODITY CUSTOMER'S ACCOUNT. 2,666
(d) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,668
COMMODITY CUSTOMER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN 2,669
DIVISION (F)(5)(a) OR (b) OF THIS SECTION AND AN ACCOUNT 2,671
STATEMENT DOES NOT IDENTIFY AN OFFICE SERVING THE COMMODITY
CUSTOMER'S ACCOUNT AS PROVIDED IN DIVISION (F)(5)(c) OF THIS 2,672
SECTION, THE COMMODITY INTERMEDIARY'S JURISDICTION IS THE 2,673
JURISDICTION IN WHICH IS LOCATED THE CHIEF EXECUTIVE OFFICE OF 2,674
THE COMMODITY INTERMEDIARY.
(6) PERFECTION OF A SECURITY INTEREST BY FILING, AUTOMATIC 2,676
PERFECTION OF A SECURITY INTEREST IN INVESTMENT PROPERTY GRANTED 2,677
BY A BROKER OR SECURITIES INTERMEDIARY, AND AUTOMATIC PERFECTION 2,678
OF A SECURITY INTEREST IN A COMMODITY CONTRACT OR COMMODITY 2,679
ACCOUNT GRANTED BY A COMMODITY INTERMEDIARY ARE GOVERNED BY THE 2,680
LOCAL LAW OF THE JURISDICTION IN WHICH THE DEBTOR IS LOCATED.
Sec. 1309.112. (A) IN THIS CHAPTER: 2,682
(1) "COMMODITY ACCOUNT" MEANS AN ACCOUNT MAINTAINED BY A 2,684
COMMODITY INTERMEDIARY IN WHICH A COMMODITY CONTRACT IS CARRIED 2,685
FOR A COMMODITY CUSTOMER. 2,686
(2) "COMMODITY CONTRACT" MEANS A COMMODITY FUTURES 2,688
CONTRACT, AN OPTION ON A COMMODITY FUTURES CONTRACT, A COMMODITY 2,689
OPTION, OR OTHER CONTRACT THAT, IN EACH CASE, IS: 2,690
(a) TRADED ON OR SUBJECT TO THE RULES OF A BOARD OF TRADE 2,692
THAT HAS BEEN DESIGNATED AS A CONTRACT MARKET FOR SUCH A CONTRACT 2,693
PURSUANT TO THE FEDERAL COMMODITIES LAWS; OR 2,694
(b) TRADED ON A FOREIGN COMMODITY BOARD OF TRADE, 2,696
EXCHANGE, OR MARKET, AND IS CARRIED ON THE BOOKS OF A COMMODITY 2,697
INTERMEDIARY FOR A COMMODITY CUSTOMER. 2,698
(3) "COMMODITY CUSTOMER" MEANS A PERSON FOR WHOM A 2,700
COMMODITY INTERMEDIARY CARRIES A COMMODITY CONTRACT ON ITS BOOKS. 2,701
(4) "COMMODITY INTERMEDIARY" MEANS: 2,703
(a) A PERSON WHO IS REGISTERED AS A FUTURES COMMISSION 2,705
63
MERCHANT UNDER THE FEDERAL COMMODITIES LAWS; OR 2,706
(b) A PERSON WHO IN THE ORDINARY COURSE OF ITS BUSINESS 2,708
PROVIDES CLEARANCE OR SETTLEMENT SERVICES FOR A BOARD OF TRADE 2,709
THAT HAS BEEN DESIGNATED AS A CONTRACT MARKET PURSUANT TO THE 2,710
FEDERAL COMMODITIES LAWS.
(5) "CONTROL" WITH RESPECT TO A CERTIFICATED SECURITY, 2,712
UNCERTIFICATED SECURITY, OR SECURITY ENTITLEMENT HAS THE MEANING 2,713
SPECIFIED IN SECTION 1308.24 OF THE REVISED CODE. A SECURED 2,714
PARTY HAS CONTROL OVER A COMMODITY CONTRACT IF BY AGREEMENT AMONG 2,715
THE COMMODITY CUSTOMER, THE COMMODITY INTERMEDIARY, AND THE
SECURED PARTY, THE COMMODITY INTERMEDIARY HAS AGREED THAT IT WILL 2,716
APPLY ANY VALUE DISTRIBUTED ON ACCOUNT OF THE COMMODITY CONTRACT 2,717
AS DIRECTED BY THE SECURED PARTY WITHOUT FURTHER CONSENT BY THE 2,718
COMMODITY CUSTOMER. IF A COMMODITY CUSTOMER GRANTS A SECURITY 2,719
INTEREST IN A COMMODITY CONTRACT TO ITS OWN COMMODITY 2,720
INTERMEDIARY, THE COMMODITY INTERMEDIARY AS SECURED PARTY HAS
CONTROL. A SECURED PARTY HAS CONTROL OVER A SECURITIES ACCOUNT 2,721
OR COMMODITY ACCOUNT IF THE SECURED PARTY HAS CONTROL OVER ALL 2,722
SECURITY ENTITLEMENTS OR COMMODITY CONTRACTS CARRIED IN THE 2,723
SECURITIES ACCOUNT OR COMMODITY ACCOUNT.
(6) "INVESTMENT PROPERTY" MEANS: 2,725
(a) A SECURITY, WHETHER CERTIFICATED OR UNCERTIFICATED; 2,727
(b) A SECURITY ENTITLEMENT; 2,729
(c) A SECURITIES ACCOUNT; 2,731
(d) A COMMODITY CONTRACT; OR 2,733
(e) A COMMODITY ACCOUNT. 2,735
(B) ATTACHMENT OR PERFECTION OF A SECURITY INTEREST IN A 2,737
SECURITIES ACCOUNT IS ALSO ATTACHMENT OR PERFECTION OF A SECURITY 2,738
INTEREST IN ALL SECURITY ENTITLEMENTS CARRIED IN THE SECURITIES 2,739
ACCOUNT. ATTACHMENT OR PERFECTION OF A SECURITY INTEREST IN A 2,740
COMMODITY ACCOUNT IS ALSO ATTACHMENT OR PERFECTION OF A SECURITY 2,741
INTEREST IN ALL COMMODITY CONTRACTS CARRIED IN THE COMMODITY 2,742
ACCOUNT.
(C) A DESCRIPTION OF COLLATERAL IN A SECURITY AGREEMENT OR 2,744
64
FINANCING STATEMENT IS SUFFICIENT TO CREATE OR PERFECT A SECURITY 2,745
INTEREST IN A CERTIFICATED SECURITY, UNCERTIFICATED SECURITY, 2,746
SECURITY ENTITLEMENT, SECURITIES ACCOUNT, COMMODITY CONTRACT, OR 2,747
COMMODITY ACCOUNT WHETHER IT DESCRIBES THE COLLATERAL BY THOSE 2,748
TERMS, OR AS INVESTMENT PROPERTY, OR BY DESCRIPTION OF THE 2,749
UNDERLYING SECURITY, FINANCIAL ASSET, OR COMMODITY CONTRACT. A 2,750
DESCRIPTION OF INVESTMENT PROPERTY COLLATERAL IN A SECURITY
AGREEMENT OR FINANCING STATEMENT IS SUFFICIENT IF IT IDENTIFIES 2,751
THE COLLATERAL BY SPECIFIC LISTING, BY CATEGORY, BY QUANTITY, BY 2,752
A COMPUTATIONAL OR ALLOCATIONAL FORMULA OR PROCEDURE, OR BY ANY 2,753
OTHER METHOD, IF THE IDENTITY OF THE COLLATERAL IS OBJECTIVELY 2,754
DETERMINABLE.
(D) PERFECTION OF A SECURITY INTEREST IN INVESTMENT 2,756
PROPERTY IS GOVERNED BY THE FOLLOWING RULES: 2,757
(1) A SECURITY INTEREST IN INVESTMENT PROPERTY MAY BE 2,759
PERFECTED BY CONTROL. 2,760
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (D)(3) AND 2,762
(4) OF THIS SECTION, A SECURITY INTEREST IN INVESTMENT PROPERTY 2,763
MAY BE PERFECTED BY FILING. 2,764
(3) IF THE DEBTOR IS A BROKER OR SECURITIES INTERMEDIARY, 2,766
A SECURITY INTEREST IN INVESTMENT PROPERTY IS PERFECTED WHEN IT 2,767
ATTACHES. THE FILING OF A FINANCING STATEMENT WITH RESPECT TO A 2,768
SECURITY INTEREST IN INVESTMENT PROPERTY GRANTED BY A BROKER OR 2,769
SECURITIES INTERMEDIARY HAS NO EFFECT FOR PURPOSES OF PERFECTION 2,770
OR PRIORITY WITH RESPECT TO THAT SECURITY INTEREST.
(4) IF A DEBTOR IS A COMMODITY INTERMEDIARY, A SECURITY 2,772
INTEREST IN A COMMODITY CONTRACT OR A COMMODITY ACCOUNT IS 2,773
PERFECTED WHEN IT ATTACHES. THE FILING OF A FINANCING STATEMENT 2,774
WITH RESPECT TO A SECURITY INTEREST IN A COMMODITY CONTRACT OR A 2,775
COMMODITY ACCOUNT GRANTED BY A COMMODITY INTERMEDIARY HAS NO 2,776
EFFECT FOR PURPOSES OF PERFECTION OR PRIORITY WITH RESPECT TO
THAT SECURITY INTEREST. 2,777
(E) PRIORITY BETWEEN CONFLICTING SECURITY INTERESTS IN THE 2,779
SAME INVESTMENT PROPERTY IS GOVERNED BY THE FOLLOWING RULES: 2,780
65
(1) A SECURITY INTEREST OF A SECURED PARTY WHO HAS CONTROL 2,782
OVER INVESTMENT PROPERTY HAS PRIORITY OVER A SECURITY INTEREST OF 2,783
A SECURED PARTY WHO DOES NOT HAVE CONTROL OVER THE INVESTMENT 2,784
PROPERTY.
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (E)(3) AND 2,786
(4) OF THIS SECTION, CONFLICTING SECURITY INTERESTS OF SECURED 2,787
PARTIES EACH OF WHOM HAS CONTROL RANK EQUALLY. 2,788
(3) EXCEPT AS OTHERWISE AGREED BY THE SECURITIES 2,790
INTERMEDIARY, A SECURITY INTEREST IN A SECURITY ENTITLEMENT OR A 2,791
SECURITIES ACCOUNT GRANTED TO THE DEBTOR'S OWN SECURITIES 2,792
INTERMEDIARY HAS PRIORITY OVER ANY SECURITY INTEREST GRANTED BY 2,793
THE DEBTOR TO ANOTHER SECURED PARTY.
(4) EXCEPT AS OTHERWISE AGREED BY THE COMMODITY 2,795
INTERMEDIARY, A SECURITY INTEREST IN A COMMODITY CONTRACT OR A 2,796
COMMODITY ACCOUNT GRANTED TO THE DEBTOR'S OWN COMMODITY 2,797
INTERMEDIARY HAS PRIORITY OVER ANY SECURITY INTEREST GRANTED BY 2,798
THE DEBTOR TO ANOTHER SECURED PARTY.
(5) CONFLICTING SECURITY INTERESTS GRANTED BY A BROKER, A 2,800
SECURITIES INTERMEDIARY, OR A COMMODITY INTERMEDIARY WHICH ARE 2,801
PERFECTED WITHOUT CONTROL RANK EQUALLY. 2,802
(6) IN ALL OTHER CASES, PRIORITY BETWEEN CONFLICTING 2,804
SECURITY INTERESTS IN INVESTMENT PROPERTY IS GOVERNED BY 2,805
DIVISIONS (E), (F), AND (G) OF SECTION 1309.31 OF THE REVISED 2,806
CODE. DIVISION (D) OF SECTION 1309.31 OF THE REVISED CODE DOES 2,807
NOT APPLY TO INVESTMENT PROPERTY.
(F) IF A SECURITY CERTIFICATE IN REGISTERED FORM IS 2,809
DELIVERED TO A SECURED PARTY PURSUANT TO AGREEMENT, A WRITTEN 2,810
SECURITY AGREEMENT IS NOT REQUIRED FOR ATTACHMENT OR 2,811
ENFORCEABILITY OF THE SECURITY INTEREST, DELIVERY SUFFICES FOR 2,812
PERFECTION OF THE SECURITY INTEREST, AND THE SECURITY INTEREST
HAS PRIORITY OVER A CONFLICTING SECURITY INTEREST PERFECTED BY 2,813
MEANS OTHER THAN CONTROL, EVEN IF A NECESSARY INDORSEMENT IS 2,814
LACKING.
Sec. 1309.113. (A) IF A PERSON BUYS A FINANCIAL ASSET 2,816
66
THROUGH A SECURITIES INTERMEDIARY IN A TRANSACTION IN WHICH THE 2,817
BUYER IS OBLIGATED TO PAY THE PURCHASE PRICE TO THE SECURITIES 2,818
INTERMEDIARY AT THE TIME OF THE PURCHASE, AND THE SECURITIES 2,819
INTERMEDIARY CREDITS THE FINANCIAL ASSET TO THE BUYER'S 2,820
SECURITIES ACCOUNT BEFORE THE BUYER PAYS THE SECURITIES
INTERMEDIARY, THE SECURITIES INTERMEDIARY HAS A SECURITY INTEREST 2,821
IN THE BUYER'S SECURITY ENTITLEMENT SECURING THE BUYER'S 2,822
OBLIGATION TO PAY. A SECURITY AGREEMENT IS NOT REQUIRED FOR 2,823
ATTACHMENT OR ENFORCEABILITY OF THE SECURITY INTEREST, AND THE 2,824
SECURITY INTEREST IS AUTOMATICALLY PERFECTED.
(B) IF A CERTIFICATED SECURITY, OR OTHER FINANCIAL ASSET 2,826
REPRESENTED BY A WRITING WHICH IN THE ORDINARY COURSE OF BUSINESS 2,827
IS TRANSFERRED BY DELIVERY WITH ANY NECESSARY INDORSEMENT OR 2,828
ASSIGNMENT IS DELIVERED PURSUANT TO AN AGREEMENT BETWEEN PERSONS 2,829
IN THE BUSINESS OF DEALING WITH SUCH SECURITIES OR FINANCIAL 2,830
ASSETS AND THE AGREEMENT CALLS FOR DELIVERY VERSUS PAYMENT, THE 2,831
PERSON DELIVERING THE CERTIFICATE OR OTHER FINANCIAL ASSET HAS A 2,832
SECURITY INTEREST IN THE CERTIFICATED SECURITY OR OTHER FINANCIAL
ASSET SECURING THE SELLER'S RIGHT TO RECEIVE PAYMENT. A SECURITY 2,833
AGREEMENT IS NOT REQUIRED FOR ATTACHMENT OR ENFORCEABILITY OF THE 2,834
SECURITY INTEREST, AND THE SECURITY INTEREST IS AUTOMATICALLY 2,835
PERFECTED.
Sec. 1309.14. (A) Subject to the provisions of section 2,844
1304.20 of the Revised Code on the security interest of a 2,845
collecting bank, section 1308.36 SECTIONS 1309.112 AND 1309.113 2,847
of the Revised Code on security interests in securities 2,848
INVESTMENT PROPERTY, and section 1309.11 of the Revised Code on a 2,850
security interest arising under sections 1302.01 to 1302.98 of 2,851
the Revised Code, a security interest is not enforceable against 2,852
the debtor or third parties with respect to the collateral and 2,853
does not attach unless:
(1) The collateral is in the possession of the secured 2,855
party pursuant to agreement, THE COLLATERAL IS INVESTMENT 2,856
PROPERTY AND THE SECURED PARTY HAS CONTROL PURSUANT TO AGREEMENT, 2,857
67
or the debtor has signed a security agreement which contains a 2,859
description of the collateral and in addition, when the security 2,860
interest covers crops growing or to be grown or timber to be cut, 2,861
a description of the land concerned; and 2,862
(2) Value has been given; and 2,864
(3) The debtor has rights in the collateral. 2,866
(B) A security interest attaches when it becomes 2,868
enforceable against the debtor with respect to the collateral. 2,869
Attachment occurs as soon as all of the events specified in 2,870
division (A) of this section have taken place unless explicit 2,871
agreement postpones the time of attaching. 2,872
(C) Unless otherwise agreed, a security agreement gives 2,874
the secured party the rights to proceeds provided by section 2,875
1309.25 of the Revised Code. 2,876
(D) A transaction although subject to sections 1309.01 to 2,878
1309.50 of the Revised Code, is also subject to sections 1317.01 2,879
to 1317.99 and 1321.01 to 1321.33 of the Revised Code, and 2,880
divisions (A), (B), and (C) of section 1321.99 of the Revised 2,881
Code and in the event of conflict between the provisions of 2,882
sections 1309.01 to 1309.50, and 1317.01 to 1317.99, 1321.01 to 2,883
1321.33 of the Revised Code, and divisions (A), (B), and (C) of 2,884
section 1321.99 of the Revised Code, the provisions of sections 2,885
1317.01 to 1317.99, 1321.01 to 1321.33 of the Revised Code, and 2,886
divisions (A), (B), and (C) of section 1321.99 of the Revised 2,887
Code shall prevail. Failure to comply with such provisions has 2,888
only the effect provided therein. 2,889
Sec. 1309.20. (A) Except as otherwise provided in 2,898
division (B) of this section, an unperfected security interest is 2,899
subordinate to the rights of: 2,900
(1) Persons entitled to priority under section 1309.31 of 2,902
the Revised Code; 2,903
(2) A person who becomes a lien creditor before the 2,905
security interest is perfected; 2,906
(3) In the case of goods, instruments, documents, and 2,908
68
chattel paper, a person who is not a secured party and who is a 2,909
transferee in bulk or other buyer not in ordinary course of 2,910
business, or is a buyer of farm products in ordinary course of 2,911
business, to the extent that he THE PERSON gives value and 2,912
receives delivery of the collateral without knowledge of the 2,913
security interest and before it is perfected; 2,915
(4) In the case of accounts and, general intangibles, AND 2,917
INVESTMENT PROPERTY, a person who is not a secured party and who 2,919
is a transferee to the extent that he THE PERSON gives value 2,920
without knowledge of the security interest and before it is 2,921
perfected.
(B) If the secured party files with respect to a purchase 2,923
money security interest before or within twenty days after the 2,924
debtor receives possession of the collateral he THE SECURED PARTY 2,926
takes priority over the rights of a transferee in bulk or of a
lien creditor which arise between the time the security interest 2,927
attaches and the time of filing. 2,928
(C) A "lien creditor" means a creditor who has acquired a 2,930
lien on the property involved by attachment, levy or the like and 2,931
includes an assignee for benefit of creditors from the time of 2,932
assignment, and a trustee in bankruptcy from the date of the 2,933
filing of the petition or a receiver in equity from the time of 2,934
appointment. 2,935
(D) A person who becomes a lien creditor while a security 2,937
interest is perfected takes subject to the security interest only 2,938
to the extent that it secures advances made before he THE PERSON 2,939
becomes a lien creditor or within forty-five days thereafter or 2,940
made without knowledge of the lien or pursuant to a commitment 2,941
entered into without knowledge of the lien. 2,942
Sec. 1309.21. (A) A financing statement must be filed to 2,951
perfect all security interests except the following: 2,952
(1) A security interest in collateral in possession of the 2,954
secured party under section 1309.24 of the Revised Code; 2,955
(2) A security interest temporarily perfected in 2,957
69
instruments, CERTIFICATED SECURITIES, or documents without 2,959
delivery under section 1309.23 of the Revised Code or in proceeds 2,960
for a ten-day period under section 1309.25 of the Revised Code; 2,961
(3) A security interest created by an assignment of a 2,963
beneficial interest in a trust or a decedent's estate; 2,964
(4) A purchase money security interest in consumer goods; 2,966
but fixture filing is required for a priority over conflicting 2,967
interests in fixtures to the extent provided in section 1309.32 2,968
of the Revised Code; 2,969
(5) An assignment of accounts which does not alone or in 2,971
conjunction with other assignments to the same assignee transfer 2,972
a significant part of the outstanding accounts of the assignor; 2,973
(6) A security interest of a collecting bank as provided 2,975
in section 1304.20 of the Revised Code, or in securities as 2,976
provided in section 1308.36 of the Revised Code, or arising under 2,977
sections 1302.01 to 1302.98 of the Revised Code, or covered in 2,978
division (C) of this section; 2,979
(7) An assignment for the benefit of all the creditors of 2,981
the transferor, and subsequent transfers by the assignee 2,982
thereunder; 2,983
(8) A SECURITY INTEREST IN INVESTMENT PROPERTY WHICH IS 2,985
PERFECTED WITHOUT FILING UNDER SECTION 1309.112 OR 1309.113 OF 2,986
THE REVISED CODE.
(B) If a secured party assigns a perfected security 2,988
interest, no filing under sections 1309.01 to 1309.50 of the 2,989
Revised Code is required in order to continue the perfected 2,990
status of the security interest against creditors of and 2,991
transferees from the original debtor. 2,992
(C) The filing of a financing statement otherwise required 2,994
by sections 1309.01 to 1309.50 of the Revised Code is not 2,995
necessary or effective to perfect a security interest in property 2,996
subject to: 2,997
(1) A statute or treaty of the United States which 2,999
provides for a national or international registration or a 3,000
70
national or international certificate of title or which specifies 3,001
a place of filing different from that specified in sections 3,002
1309.01 to 1309.50 of the Revised Code for filing of the security 3,003
interest; or 3,004
(2) The following statutes of this state: sections 3,006
1548.20, 1701.66, 4505.13 except to the extent provided in 3,007
division (A) of such section, and 4969.05 of the Revised Code; or 3,008
(3) A certificate of title statute of another jurisdiction 3,010
under the law of which indication of a security interest on the 3,011
certificate is required as a condition of perfection, division 3,012
(B) of section 1309.03 of the Revised Code. 3,013
(D) Compliance with a statute or treaty described in 3,015
division (C) of this section is equivalent to the filing of a 3,016
financing statement under sections 1309.01 to 1309.50 of the 3,017
Revised Code, and a security interest in property subject to the 3,018
statute or treaty can be perfected only by compliance therewith 3,019
except as provided in section 1309.03 of the Revised Code on 3,020
multiple state transactions. Duration and renewal of perfection 3,021
of a security interest perfected by compliance with the statute 3,022
or treaty are governed by the provisions of the statute or 3,023
treaty; in other respects the security interest is subject to 3,024
sections 1309.01 to 1309.50 of the Revised Code. 3,025
Sec. 1309.22. (A) A security interest is perfected when 3,034
it has attached and when all of the applicable steps required for 3,035
perfection have been taken, as provided in sections 1309.112, 3,036
1309.21, 1309.23, 1309.24, and 1309.25 of the Revised Code. If 3,038
such steps are taken before the security interest attaches, it is
perfected at the time when it attaches. 3,039
(B) If a security interest is originally perfected in any 3,041
way permitted under sections 1309.01 to 1309.50, inclusive, of 3,042
the Revised Code, and is subsequently perfected in some other way 3,043
under sections 1309.01 to 1309.50, inclusive, of the Revised 3,044
Code, without an intermediate period when it was unperfected, the 3,045
security interest shall be deemed to be perfected continuously 3,046
71
for the purposes of such sections.
(C) A security interest by whatever name designated by any 3,048
law in effect prior to July 1, 1962, which was perfected prior to 3,049
such date and in connection with which any statement, instrument, 3,050
document, or notice was filed, refiled, or recorded pursuant to 3,051
such law, shall, if such law required a further filing, refiling, 3,052
or recording to continue the perfection of such security 3,053
interest, continue to be perfected without any further filing,
refiling, or recording of any statement, instrument, document, or 3,054
notice until the date provided by such law or July 1, 1964, 3,055
whichever date is later and will thereupon lapse, unless a 3,056
continuation statement has been filed after July 1, 1962, and 3,057
prior to the lapse of such statement, instrument, document, or 3,058
notice pursuant to this section. Section 1309.38 of the Revised
Code determines the proper place to file such continuation 3,059
statement and succeeding continuation statements and, except as 3,060
otherwise provided in this section, division (C) of section 3,061
1309.40 of the Revised Code applies to and governs the period of 3,062
effectiveness and the requirements respecting such continuation
statements. 3,063
Sec. 1309.23. (A) A security interest in chattel paper or 3,072
negotiable documents may be perfected by filing. A security 3,073
interest in money or instruments, other than certificated 3,074
securities or instruments which constitute part of chattel paper, 3,075
can be perfected only by the secured party's taking possession, 3,076
except as provided in divisions (D) and (E) of this section and 3,077
divisions (B) and (C) of section 1309.25 of the Revised Code on 3,078
proceeds. 3,079
(B) During the period that goods are in the possession of 3,081
the issuer of a negotiable document therefor, a security interest 3,082
in the goods is perfected by perfecting a security interest in 3,083
the document, and any security interest in the goods otherwise 3,084
perfected during such period is subject thereto. 3,085
(C) A security interest in goods in the possession of a 3,087
72
bailee other than one who has issued a negotiable document 3,088
therefor is perfected by issuance of a document in the name of 3,089
the secured party or by the bailee's receipt of notification of 3,090
the secured party's interest or by filing as to the goods. 3,091
(D) A security interest in instruments, other than 3,093
certificated securities, or negotiable documents is perfected 3,094
without filing or the taking of possession for a period of 3,095
twenty-one days from the time it attaches to the extent that it 3,096
arises for new value given under a written security agreement. 3,097
(E) A security interest remains perfected for a period of 3,099
twenty-one days without filing where a secured party having a 3,100
perfected security interest in an instrument, other than a 3,101
certificated security, a negotiable document, or goods in 3,102
possession of a bailee other than one who has issued a negotiable 3,103
document therefor: 3,104
(1) Makes available to the debtor the goods or documents 3,106
representing the goods for the purpose of ultimate sale or 3,107
exchange or for the purpose of loading, unloading, storing, 3,108
shipping, trans-shipping, manufacturing, processing, or otherwise 3,109
dealing with them in a manner preliminary to their sale or 3,110
exchange, but priority between conflicting security interests in 3,111
the goods is subject to division (C) of section 1309.31 of the 3,112
Revised Code; or 3,113
(2) Delivers the instrument OR CERTIFICATED SECURITY to 3,115
the debtor for the purpose of ultimate sale or exchange or of 3,117
presentation, collection, renewal, or registration of transfer. 3,118
(F) After the twenty-one day period set forth in divisions 3,120
(D) and (E) of this section, perfection depends upon compliance 3,121
with applicable provisions of sections 1309.01 to 1309.50 of the 3,122
Revised Code. 3,123
Sec. 1309.24. A security interest in letters of credit and 3,132
advices of credit, as provided in division (B)(1) of section 3,133
1305.15 of the Revised Code, goods, instruments, other than 3,134
certificated securities, negotiable documents, money, or chattel 3,135
73
paper may be perfected by the secured party's taking possession 3,136
of the collateral. If such collateral other than goods covered 3,137
by a negotiable document is held by a bailee, the secured party 3,138
is deemed to have possession from the time the bailee receives 3,139
notification of the secured party's interest. A security 3,140
interest is perfected by possession from the time possession is 3,141
taken without relation back and continues only so long as 3,142
possession is retained, unless otherwise specified in sections 3,143
1309.01 to 1309.50 of the Revised Code. The security interest 3,144
may be otherwise perfected as provided in sections 1309.01 to 3,145
1309.50 of the Revised Code, before or after the period of 3,146
possession by the secured party. 3,147
Sec. 1309.25. (A) "Proceeds" includes whatever is 3,156
received upon the sale, exchange, collection, or other 3,157
disposition of collateral or proceeds. Insurance payable by 3,158
reason of loss or damage to the collateral is proceeds, except to 3,159
the extent that it is payable to a person other than a party to 3,160
the security agreement. Moneys ANY PAYMENTS OR DISTRIBUTIONS 3,161
MADE WITH RESPECT TO INVESTMENT PROPERTY COLLATERAL ARE PROCEEDS. 3,162
MONEY, checks, deposit accounts, and the like are "cash 3,164
proceeds." All other proceeds are "non-cash proceeds." 3,165
(B) Except where sections 1309.01 to 1309.50 of the 3,167
Revised Code otherwise provide, a security interest continues in 3,168
collateral notwithstanding sale, exchange, or other disposition 3,169
thereof unless the disposition was authorized by the secured 3,170
party in the security agreement or otherwise, and also continues 3,171
in any identifiable proceeds including collections received by 3,172
the debtor. 3,173
(C) The security interest in proceeds is a continuously 3,175
perfected security interest if the interest in the original 3,176
collateral was perfected but it ceases to be a perfected security 3,177
interest and becomes unperfected ten days after receipt of the 3,178
proceeds by the debtor unless: 3,179
(1) a A filed financing statement covers the original 3,181
74
collateral and the proceeds are collateral in which a security 3,182
interest may be perfected by filing in the office or offices 3,183
where the financing statement has been filed and, if the proceeds 3,184
are acquired with cash proceeds, the description of the 3,185
collateral in the financing statement indicates the types of 3,186
property constituting the proceeds; or 3,187
(2) a A filed financing statement covers the original 3,189
collateral and the proceeds are identifiable cash proceeds; or 3,190
(3) the THE ORIGINAL COLLATERAL WAS INVESTMENT PROPERTY 3,192
AND THE PROCEEDS ARE IDENTIFIABLE CASH PROCEEDS; OR 3,193
(4) THE security interest in the proceeds is perfected 3,195
before the expiration of the ten day period. Except as provided 3,196
in this section, a security interest in proceeds can be perfected 3,197
only by the methods or under the circumstances permitted in 3,198
sections 1309.01 to 1309.50 of the Revised Code for original 3,199
collateral of the same type. 3,200
(D) In the event of insolvency proceedings instituted by 3,202
or against a debtor, a secured party with a perfected security 3,203
interest in proceeds has a perfected security interest only in 3,204
the following proceeds: 3,205
(1) in IN identifiable non-cash proceeds and in separate 3,207
deposit accounts containing only proceeds; 3,208
(2) in IN identifiable cash proceeds in the form of money 3,210
which is neither commingled with other money nor deposited in a 3,211
deposit account prior to the insolvency proceedings; 3,212
(3) in IN identifiable cash proceeds in the form of checks 3,214
and the like which are not deposited in a deposit account prior 3,215
to the insolvency proceedings; and 3,216
(4) in IN all cash and deposit accounts of the debtor in 3,218
which proceeds have been commingled with other funds, but the 3,219
perfected security interest under this division is: 3,220
(a) subject SUBJECT to any right of set-off; and 3,222
(b) limited LIMITED to an amount not greater than the 3,224
amount of any cash proceeds received by the debtor within ten 3,225
75
days before the institution of the insolvency proceedings, less 3,226
the sum of (i) the payments to the secured party on account of 3,227
cash proceeds received by the debtor; and (ii) the cash proceeds 3,228
received by the debtor during such period to which the secured 3,229
party is entitled under divisions (D)(1) to (3) of this section. 3,230
(E) If a sale of goods results in an account or chattel 3,232
paper which is transferred by the seller to a secured party, and 3,233
if the goods are returned to or are repossessed by the seller or 3,234
the secured party, the following rules determine priorities: 3,235
(1) If the goods were collateral at the time of sale for 3,237
an indebtedness of the seller which is still unpaid, the original 3,238
security interest attaches again to the goods and continues as a 3,239
perfected security interest if it was perfected at the time when 3,240
the goods were sold. If the security interest was originally 3,241
perfected by a filing which is still effective, nothing further 3,242
is required to continue the perfected status; in any other case, 3,243
the secured party must take possession of the returned or 3,244
repossessed goods or must file. 3,245
(2) An unpaid transferee of the chattel paper has a 3,247
security interest in the goods against the transferor. Such 3,248
security interest is prior to a security interest asserted under 3,249
division (E)(1) of this section to the extent that the transferee 3,250
of the chattel paper was entitled to priority under section 3,251
1309.27 of the Revised Code. 3,252
(3) An unpaid transferee of the account has a security 3,254
interest in the goods against the transferor. Such security 3,255
interest is subordinate to a security interest asserted under 3,256
division (E)(1) of this section. 3,257
(4) A security interest of an unpaid transferee asserted 3,259
under division (E)(2) or (3) of this section must be perfected 3,260
for protection against creditors of the transferor and purchasers 3,261
of the returned or repossessed goods. 3,262
Sec. 1309.28. Nothing in sections 1309.01 to 1309.50 of 3,271
the Revised Code, limit LIMITS the rights of a holder in due 3,272
76
course of a negotiable instrument, as defined in section 1303.32 3,274
of the Revised Code, or a holder to whom a negotiable document of 3,275
title has been duly negotiated under section 1307.29 of the 3,276
Revised Code, or a bona fide PROTECTED purchaser of a security 3,277
under section 1308.17 of the Revised Code, and such holders or 3,279
purchasers take priority over an earlier security interest even 3,280
though perfected. Filing under sections 1309.01 to 1309.50 of the 3,281
Revised Code, does not constitute notice of the security interest 3,282
to such holders or purchasers. 3,283
Sec. 1309.31. (A) The rules of priority stated in 3,292
sections 1309.20 to 1309.27 of the Revised Code and in the 3,293
following sections shall govern where applicable: section 3,294
1304.20 of the Revised Code with respect to the security 3,295
interests of collecting banks in items being collected, 3,296
accompanying documents, and proceeds; section 1309.03 of the 3,297
Revised Code on security interests related to other 3,298
jurisdictions; section 1309.111 of the Revised Code on 3,299
consignments; SECTION 1309.112 OF THE REVISED CODE ON SECURITY 3,300
INTERESTS IN INVESTMENT PROPERTY. 3,301
(B) A perfected security interest in crops for new value 3,303
given to enable the debtor to produce the crops during the 3,304
production season and given not more than three months before the 3,305
crops become growing crops by planting or otherwise takes 3,306
priority over an earlier perfected security interest to the 3,307
extent that such earlier interest secures obligations due more 3,308
than six months before the crops become growing crops by planting 3,309
or otherwise, even though the person giving new value had 3,310
knowledge of the earlier security interest. 3,311
(C) A perfected purchase money security interest in 3,313
inventory has priority over a conflicting security interest in 3,314
the same inventory and also has priority in identifiable cash 3,315
proceeds received on or before the delivery of the inventory to a 3,316
buyer if: 3,317
(1) The purchase money security interest is perfected at 3,319
77
the time the debtor receives possession of the inventory; and 3,320
(2) The purchase money secured party gives notification in 3,322
writing to the holder of the conflicting security interest if the 3,323
holder had filed a financing statement covering the same types of 3,324
inventory: 3,325
(a) Before the date of the filing made by the purchase 3,327
money secured party; or 3,328
(b) Before the beginning of the twenty-one-day period 3,330
where the purchase money security interest is temporarily 3,331
perfected without filing or possession pursuant to division (E) 3,332
of section 1309.23 of the Revised Code; and 3,333
(3) The holder of the conflicting security interest 3,335
receives the notification within five years before the debtor 3,336
receives possession of the inventory; and 3,337
(4) The notification states that the person giving the 3,339
notice has or expects to acquire a purchase money security 3,340
interest in inventory of the debtor, describing such inventory by 3,341
item or type. 3,342
(D) A purchase money security interest in collateral other 3,344
than inventory has priority over a conflicting security interest 3,345
in the same collateral or its proceeds if the purchase money 3,346
security interest is perfected at the time the debtor receives 3,347
possession of the collateral or within twenty days thereafter. 3,348
(E) In all cases not governed by other rules stated in 3,350
this section, including cases of purchase money security 3,351
interests which do not qualify for the special priorities set 3,352
forth in divisions (C) and (D) of this section, priority between 3,353
conflicting security interests in the same collateral shall be 3,354
determined according to the following rules: 3,355
(1) Conflicting security interests rank according to 3,357
priority in time of filing or perfection. Priority dates from 3,358
the time a filing is first made covering the collateral or the 3,359
time the security interest is first perfected, whichever is 3,360
earlier, provided that there is no period thereafter when there 3,361
78
is neither filing nor perfection. 3,362
(2) So long as conflicting security interests are 3,364
unperfected, the first to attach has priority. 3,365
(F) For the purpose of division (E) of this section, a 3,367
date of filing or perfection as to collateral is also a date of 3,368
filing or perfection as to proceeds. 3,369
(G) If future advances are made while a security interest 3,371
is perfected by filing, the taking of possession, or under 3,372
section 1308.36 1309.112 OR 1309.113 of the Revised Code on 3,374
securities INVESTMENT PROPERTY, the security interest has the 3,375
same priority for the purposes of division (E) of this section OR 3,376
DIVISION (E) OF SECTION 1309.112 OF THE REVISED CODE with respect 3,377
to the future advances as it does with respect to the first 3,378
advance. If a commitment is made before or while the security 3,379
interest is so perfected, the security interest has the same 3,380
priority with respect to advances made pursuant thereto. In 3,381
other cases a perfected security interest has priority from the 3,382
date the advance is made.
Sec. 1701.01. As used in sections 1701.01 to 1701.98 of 3,391
the Revised Code, unless the context otherwise requires: 3,392
(A) "Corporation" or "domestic corporation" means a 3,394
corporation for profit formed under the laws of this state. 3,395
(B) "Foreign corporation" means a corporation for profit 3,397
formed under the laws of another state, and "foreign entity" 3,398
means an entity formed under the laws of another state. 3,399
(C) "State" means the United States; any state, territory, 3,401
insular possession, or other political subdivision of the United 3,402
States, including the District of Columbia; any foreign country 3,403
or nation; and any province, territory, or other political 3,404
subdivision of such foreign country or nation. 3,405
(D) "Articles" includes original articles of 3,407
incorporation, certificates of reorganization, amended articles, 3,409
and amendments to any of these, and, in the case of a corporation 3,410
created before September 1, 1851, the special charter and any 3,411
79
amendments to it made by special act of the general assembly or 3,412
pursuant to general law. 3,413
(E) "Incorporator" means a person who signed the original 3,415
articles of incorporation. 3,416
(F) "Shareholder" means a person whose name appears on the 3,418
books of the corporation as the owner of shares of such 3,419
corporation. Unless the articles, the regulations, or the 3,420
contract of subscription otherwise provides, "shareholder" 3,421
includes a subscriber to shares, whether the subscription is 3,422
received by the incorporators or pursuant to authorization by the 3,423
directors, and such shares shall be deemed to be outstanding 3,424
shares. 3,425
(G) "Person" includes, without limitation, A NATURAL 3,427
PERSON, a corporation, whether nonprofit or for profit, a 3,428
partnership, a limited liability company, an unincorporated 3,429
society or association, and two or more persons having a joint or 3,430
common interest. 3,431
(H) The location of the "principal office" of a 3,433
corporation is the place named as the principal office in its 3,434
articles.
(I) The "express terms" of shares of a class are the 3,436
statements expressed in the articles with respect to such shares. 3,437
(J) Shares of a class are "junior" to shares of another 3,439
class when any of their dividend or distribution rights are 3,440
subordinate to, or dependent or contingent upon, any right of, or 3,441
dividend on, or distribution to, shares of such other class. 3,442
(K) "Treasury shares" means shares belonging to the 3,444
corporation and not retired that have been either issued and 3,445
thereafter acquired by the corporation or paid as a dividend or 3,446
distribution in shares of the corporation on treasury shares of 3,447
the same class; such shares shall be deemed to be issued, but 3,448
they shall not be considered as an asset or a liability of the 3,449
corporation, or as outstanding for dividend or distribution, 3,450
quorum, voting, or other purposes, except, when authorized by the 3,451
80
directors, for dividends or distributions in authorized but 3,452
unissued shares of the corporation of the same class. 3,453
(L) To "retire" a share means to restore it to the status 3,455
of an authorized but unissued share. 3,456
(M) "Redemption price of shares" means the amount required 3,458
by the articles to be paid on redemption of shares. 3,459
(N) "Liquidation price" means the amount or portion of 3,461
assets required by the articles to be distributed to the holders 3,462
of shares of any class upon dissolution, liquidation, merger, or 3,463
consolidation of the corporation, or upon sale of all or 3,464
substantially all of its assets. 3,465
(O) "Insolvent" means that the corporation is unable to 3,467
pay its obligations as they become due in the usual course of its 3,468
affairs. 3,469
(P) "Parent corporation" or "parent" means a domestic or 3,471
foreign corporation that owns and holds of record shares of 3,473
another corporation, domestic or foreign, entitling the holder of 3,474
the shares at the time to exercise a majority of the voting power 3,475
in the election of the directors of the other corporation without 3,476
regard to voting power that may thereafter exist upon a default, 3,478
failure, or other contingency; "subsidiary corporation" or 3,479
"subsidiary" means a domestic or foreign corporation of which 3,480
another corporation, domestic or foreign, is the parent. 3,481
(Q) "Combination" means a transaction, other than a merger 3,483
or consolidation, wherein either of the following applies: 3,484
(1) Voting shares of a domestic corporation are issued or 3,486
transferred in consideration in whole or in part for the transfer 3,487
to itself or to one or more of its subsidiaries, domestic or 3,488
foreign, of all or substantially all the assets of one or more 3,489
corporations, domestic or foreign, with or without good will or 3,490
the assumption of liabilities; 3,491
(2) Voting shares of a foreign parent corporation are 3,493
issued or transferred in consideration in whole or in part for 3,494
the transfer of such assets to one or more of its domestic 3,495
81
subsidiaries. 3,496
"Transferee corporation" in a combination means the 3,498
corporation, domestic or foreign, to which the assets are 3,499
transferred, and "transferor corporation" in a combination means 3,500
the corporation, domestic or foreign, transferring such assets 3,501
and to which, or to the shareholders of which, the voting shares 3,502
of the domestic or foreign corporation are issued or transferred. 3,503
(R) "Majority share acquisition" means the acquisition of 3,505
shares of a corporation, domestic or foreign, entitling the 3,506
holder of the shares to exercise a majority of the voting power 3,507
in the election of directors of such corporation without regard 3,508
to voting power that may thereafter exist upon a default, 3,509
failure, or other contingency, by either of the following: 3,510
(1) A domestic corporation in consideration in whole or in 3,512
part, for the issuance or transfer of its voting shares; 3,513
(2) A domestic or foreign subsidiary in consideration in 3,515
whole or in part for the issuance or transfer of voting shares of 3,516
its domestic parent. 3,517
(S) "Acquiring corporation" in a combination means the 3,519
domestic corporation whose voting shares are issued or 3,520
transferred by it or its subsidiary or subsidiaries to the 3,521
transferor corporation or corporations or the shareholders of the 3,522
transferor corporation or corporations; and "acquiring 3,523
corporation" in a majority share acquisition means the domestic 3,524
corporation whose voting shares are issued or transferred by it 3,525
or its subsidiary in consideration for shares of a domestic or 3,526
foreign corporation entitling the holder of the shares to 3,527
exercise a majority of the voting power in the election of 3,528
directors of such corporation. 3,529
(T) When used in connection with a combination or a 3,531
majority share acquisition, "voting shares" means shares of a 3,532
corporation, domestic or foreign, entitling the holder of the 3,533
shares to vote at the time in the election of directors of such 3,534
corporation without regard to voting power which may thereafter 3,535
82
exist upon a default, failure, or other contingency. 3,536
(U) "An emergency" exists when the governor, or any other 3,538
person lawfully exercising the power and discharging the duties 3,539
of the office of governor, proclaims that an attack on the United 3,540
States or any nuclear, atomic, or other disaster has caused an 3,541
emergency for corporations, and such an emergency shall continue 3,542
until terminated by proclamation of the governor or any other 3,543
person lawfully exercising the powers and discharging the duties 3,544
of the office of governor. 3,545
(V) "Constituent corporation" means an existing 3,547
corporation merging into or into which is being merged one or 3,548
more other entities in a merger or an existing corporation being 3,550
consolidated with one or more other entities into a new entity in 3,551
a consolidation, whether any of the entities is domestic or 3,552
foreign, and "constituent entity" means any entity merging into
or into which is being merged one or more other entities in a 3,553
merger, or an existing entity being consolidated with one or more 3,554
other entities into a new entity in a consolidation, whether any 3,555
of the entities is domestic or foreign. 3,556
(W) "Surviving corporation" means the constituent domestic 3,559
or foreign corporation that is specified as the corporation into 3,560
which one or more other constituent entities are to be or have 3,561
been merged, and "surviving entity" means the constituent
domestic or foreign entity that is specified as the entity into 3,562
which one or more other constituent entities are to be or have 3,563
been merged.
(X) "Close corporation agreement" means an agreement that 3,565
satisfies the three requirements of division (A) of section 3,566
1701.591 of the Revised Code. 3,567
(Y) "Issuing public corporation" means a domestic 3,569
corporation with fifty or more shareholders that has its 3,570
principal place of business, its principal executive offices, 3,571
assets having substantial value, or a substantial percentage of 3,572
its assets within this state, and as to which no valid close 3,573
83
corporation agreement exists under division (H) of section 3,574
1701.591 of the Revised Code. 3,575
(Z)(1) "Control share acquisition" means the acquisition, 3,577
directly or indirectly, by any person of shares of an issuing 3,578
public corporation that, when added to all other shares of the 3,579
issuing public corporation in respect of which such person may 3,580
exercise or direct the exercise of voting power as provided in 3,581
this division, would entitle such person, immediately after such 3,582
acquisition, directly or indirectly, alone or with others, to 3,583
exercise or direct the exercise of the voting power of the 3,584
issuing public corporation in the election of directors within 3,585
any of the following ranges of such voting power: 3,586
(a) One-fifth or more but less than one-third of such 3,588
voting power; 3,589
(b) One-third or more but less than a majority of such 3,591
voting power; 3,592
(c) A majority or more of such voting power. 3,594
A bank, broker, nominee, trustee, or other person who 3,596
acquires shares in the ordinary course of business for the 3,597
benefit of others in good faith and not for the purpose of 3,598
circumventing section 1701.831 of the Revised Code shall, 3,599
however, be deemed to have voting power only of shares in respect 3,600
of which such person would be able, without further instructions 3,601
from others, to exercise or direct the exercise of votes on a 3,602
proposed control share acquisition at a meeting of shareholders 3,603
called under section 1701.831 of the Revised Code. 3,604
(2) The acquisition by any person of any shares of an 3,606
issuing public corporation does not constitute a control share 3,607
acquisition for the purpose of section 1701.831 of the Revised 3,608
Code if the acquisition was or is consummated in, results from, 3,609
or is the consequence of any of the following circumstances: 3,610
(a) Prior to November 19, 1982; 3,612
(b) Pursuant to a contract existing prior to November 19, 3,614
1982; 3,615
84
(c) By bequest or inheritance, by operation of law upon 3,617
the death of an individual, or by any other transfer without 3,618
valuable consideration, including a gift, that is made in good 3,619
faith and not for the purpose of circumventing section 1701.831 3,620
of the Revised Code; 3,621
(d) Pursuant to the satisfaction of a pledge or other 3,623
security interest created in good faith and not for the purpose 3,624
of circumventing section 1701.831 of the Revised Code; 3,625
(e) Pursuant to a merger or consolidation adopted, or a 3,627
combination or majority share acquisition authorized, by 3,628
shareholder vote in compliance with section 1701.78, 1701.781, or 3,630
1701.83 of the Revised Code provided the issuing public 3,631
corporation is the surviving or new corporation in the merger or 3,632
consolidation or is the acquiring corporation in the combination 3,633
or majority share acquisition;
(f) The person's being entitled, immediately thereafter, 3,635
to exercise or direct the exercise of voting power of the issuing 3,636
public corporation in the election of directors within the same 3,637
range theretofore attained by that person either in compliance 3,638
with the provisions of section 1701.831 of the Revised Code or as 3,639
a result solely of the issuing public corporation's purchase of 3,640
shares issued by it. 3,641
The acquisition by any person of shares of an issuing 3,643
public corporation in a manner described under division (Z)(2) of 3,644
this section shall be deemed a control share acquisition 3,645
authorized pursuant to section 1701.831 of the Revised Code 3,646
within the range of voting power under division (Z)(1)(a), (b), 3,647
or (c) of this section that such person is entitled to exercise 3,648
after such acquisition, provided, in the case of an acquisition 3,649
in a manner described under division (Z)(2)(c) or (d) of this 3,650
section, the transferor of shares to such person had previously 3,651
obtained any authorization of shareholders required under section 3,652
1701.831 of the Revised Code in connection with such transferor's 3,653
acquisition of shares of the issuing public corporation. 3,654
85
(3) The acquisition of shares of an issuing public 3,656
corporation in good faith and not for the purpose of 3,657
circumventing section 1701.831 of the Revised Code from any 3,658
person whose control share acquisition previously had been 3,659
authorized by shareholders in compliance with section 1701.831 of 3,660
the Revised Code, or from any person whose previous acquisition 3,661
of shares of an issuing public corporation would have constituted 3,662
a control share acquisition but for division (Z)(2) or (3) of 3,663
this section, does not constitute a control share acquisition for 3,664
the purpose of section 1701.831 of the Revised Code unless such 3,665
acquisition entitles the person making the acquisition, directly 3,666
or indirectly, alone or with others, to exercise or direct the 3,667
exercise of voting power of the corporation in the election of 3,668
directors in excess of the range of such voting power authorized 3,669
pursuant to section 1701.831 of the Revised Code, or deemed to be 3,670
so authorized under division (Z)(2) of this section. 3,671
(AA) "Acquiring person" means any person who has delivered 3,673
an acquiring person statement to an issuing public corporation 3,674
pursuant to section 1701.831 of the Revised Code. 3,675
(BB) "Acquiring person statement" means a written 3,677
statement that complies with division (B) of section 1701.831 of 3,678
the Revised Code. 3,679
(CC)(1) "Interested shares" means the shares of an issuing 3,681
public corporation in respect of which any of the following 3,682
persons may exercise or direct the exercise of the voting power 3,683
of the corporation in the election of directors: 3,684
(a) An acquiring person; 3,686
(b) Any officer of the issuing public corporation elected 3,688
or appointed by the directors of the issuing public corporation; 3,689
(c) Any employee of the issuing public corporation who is 3,691
also a director of such corporation.; 3,692
(2) "Interested shares" also means any shares of an 3,694
issuing public corporation acquired, directly or indirectly, by 3,695
any (d) ANY person from the holder or holders thereof for a THAT 3,697
86
ACQUIRES SUCH SHARES FOR valuable consideration during the period 3,698
beginning with the date of the first public disclosure of a 3,699
proposed control share acquisition of the issuing public 3,700
corporation or any proposed merger, consolidation, or other 3,701
transaction that would result in a change in control of the 3,702
corporation or all or substantially all of its assets, and ending 3,703
on the RECORD date of any special meeting of the corporation's 3,704
shareholders held thereafter pursuant to section 1701.831 of the 3,705
Revised Code, for the purpose of voting on a control share 3,706
acquisition proposed by any acquiring person ESTABLISHED BY THE 3,707
DIRECTORS PURSUANT TO SECTION 1701.45 AND DIVISION (D) OF SECTION 3,708
1701.831 OF THE REVISED CODE, if either of the following applies: 3,709
(a)(i) The aggregate consideration paid or given by the 3,711
person who acquired the shares, and any other persons acting in 3,712
concert with the person, for all such shares exceeds two hundred 3,714
fifty thousand dollars;
(b)(ii) The number of shares acquired by the person who 3,716
acquired the shares, and any other persons acting in concert with 3,717
the person, exceeds one-half of one per cent of the outstanding 3,719
shares of the corporation entitled to vote in the election of 3,720
directors.
(e) ANY PERSON THAT TRANSFERS SUCH SHARES FOR VALUABLE 3,722
CONSIDERATION AFTER THE RECORD DATE DESCRIBED IN DIVISION 3,724
(CC)(1)(d) OF THIS SECTION AS TO SHARES SO TRANSFERRED, IF 3,725
ACCOMPANIED BY THE VOTING POWER IN THE FORM OF A BLANK PROXY, AN 3,726
AGREEMENT TO VOTE AS INSTRUCTED BY THE TRANSFEREE, OR OTHERWISE.
(3)(2) If any part of this division is held to be illegal 3,728
or invalid in application, the illegality or invalidity does not 3,729
affect any legal and valid application thereof or any other 3,730
provision or application of this division or section 1701.831 of 3,731
the Revised Code that can be given effect without the invalid or 3,733
illegal provision, and the parts and applications of this 3,734
division are severable. 3,735
(DD) "Certificated security" and "uncertificated security" 3,737
87
have the same meanings as in section 1308.01 of the Revised Code. 3,738
(EE) "Entity" means any of the following: 3,740
(1) A for profit corporation existing under the laws of 3,742
this state or any other state; 3,743
(2) Any of the following organizations existing under the 3,745
laws of this state, the United States, or any other state: 3,746
(a) A business trust or association; 3,748
(b) A real estate investment trust; 3,750
(c) A common law trust; 3,752
(d) An unincorporated business or for profit organization, 3,754
including a general or limited partnership; 3,755
(e) A limited liability company. 3,757
Sec. 1701.24. (A) The shares of a corporation are 3,766
personal property. 3,767
(B) Each holder of shares is entitled to one or more 3,769
certificates, signed by the chairman CHAIRPERSON of the board or 3,770
the president or a vice-president and by the secretary, an 3,771
assistant secretary, the treasurer, or an assistant treasurer of 3,772
the corporation, which shall certify the number and class of 3,773
shares held by him THE HOLDER in such corporation, but no 3,774
certificate for shares shall be executed or delivered until such 3,775
shares are fully paid. When such a certificate is countersigned 3,776
by an incorporated transfer agent or registrar, the signature of 3,777
any of said SUCH officers of the corporation may be facsimile, 3,778
engraved, stamped, or printed. Although any officer of the 3,779
corporation whose manual or facsimile signature is affixed to 3,780
such a certificate ceases to be such officer before the 3,781
certificate is delivered, such certificate nevertheless shall be 3,782
effective in all respects when delivered. 3,783
(C) A corporation is not obligated to but may issue 3,785
fractional shares. In the case of uncertificated securities, the 3,786
corporation may treat the issuance of fractional shares in 3,787
accordance with the procedures set forth in section 1308.44 of 3,788
the Revised Code, or may proceed as provided in divisions (C)(1) 3,789
88
and (2) of this section. In the case of certificated securities 3,790
the corporation may execute and deliver a certificate for or 3,791
including a fraction of a share; or, in lieu thereof, may: 3,792
(1) Pay to the person otherwise entitled to become a 3,794
holder of a fraction of a share an amount in cash specified as 3,795
the value thereof in the articles, a resolution of the directors, 3,796
or other agreement or instrument pursuant to which such fraction 3,797
of a share would otherwise be issued, or, if not so specified, 3,798
then the amount determined for such purpose by the directors of 3,799
the issuing corporation, or the amount realized upon sale of such 3,800
fraction of a share; 3,801
(2) Provide reasonable means to afford to such person the 3,803
opportunity, on specified terms and conditions, to purchase or 3,804
sell fractional interests in shares, to the exclusion of all 3,805
rights he might otherwise have; 3,806
(3) Execute and deliver registered or bearer scrip over 3,808
the manual or facsimile signature of an officer of the 3,809
corporation or of its agent for that purpose, exchangeable as 3,810
therein provided for full shares, but such scrip shall not 3,811
entitle the holder to any rights as a shareholder except as 3,812
therein provided. The scrip may provide that it shall become 3,813
void unless the rights of the holders are exercised within a 3,814
specified period and may contain any other provisions that the 3,815
corporation deems advisable. Whenever any such scrip ceases to 3,816
be exchangeable for full shares, the shares that would otherwise 3,817
have been issuable as therein provided shall be deemed to be 3,818
treasury shares unless the scrip contains other provision for 3,819
their disposition. 3,820
(D) A joint estate with the incidents of a joint estate as 3,822
at common law, including the right of survivorship, may be 3,823
created in shares by registering the same in the case of 3,824
uncertificated securities, or by executing and delivering a 3,825
certificate therefor in the case of certificated securities to 3,826
two or more persons with the words "as joint tenants" or "as 3,827
89
joint tenants with right of survivorship and not as tenants in 3,828
common" following their names. Upon receipt by the corporation 3,829
of proof satisfactory to it of the death of one or more of such 3,830
joint tenants, it may register the transfer to, or execute and 3,831
deliver a new certificate to the survivor or survivors. 3,832
(E) Whenever a corporation has determined that any 3,834
outstanding certificates for shares should be canceled and 3,835
exchanged for other certificates, the corporation may order and 3,836
require the holders of the outstanding certificates to surrender 3,837
them for such purpose within a reasonable time to be fixed by the 3,838
corporation. Such order may provide that, until compliance 3,839
therewith, any or all rights as a shareholder of the holder of 3,840
any certificate so required to be surrendered shall be suspended 3,841
with respect to the shares represented thereby. Not less than 3,842
ten days before any such order is to become effective, the 3,843
corporation shall give notice thereof by mail to each shareholder 3,844
affected thereby at his address as it appears on the records of 3,845
the corporation. 3,846
(F) Unless otherwise provided by the articles or 3,848
regulations, the directors may provide by resolution that some or 3,849
all of any or all classes and series of shares of a corporation 3,850
shall be uncertificated shares, provided that such resolution 3,851
shall not apply to shares represented by a certificate until such 3,852
certificate is surrendered to the corporation as provided in 3,853
division (B) of section 1308.43 of the Revised Code, and that 3,854
such resolution shall not apply to a certificated security issued 3,855
in exchange for an uncertificated security as provided in 3,856
division (C) of section 1308.43 of the Revised Code. Within a 3,857
reasonable time after the issuance or transfer of uncertificated 3,858
shares, the corporation shall send to the registered owner 3,859
thereof a written notice containing the information required to 3,860
be set forth or stated on certificates pursuant to division (A) 3,861
of section 1701.25 of the Revised Code. Such notice may be 3,862
contained in the statement required by section 1308.44 of the 3,863
90
Revised Code. Except as otherwise expressly provided by law, the 3,864
rights and obligations of the holders of uncertificated shares 3,865
and the rights and obligations of the holders of certificates 3,866
representing shares of the same class and series shall be 3,867
identical. 3,868
Sec. 1701.25. (A) Each certificate for shares of a 3,877
corporation shall state: 3,878
(1) That the corporation is organized under the laws of 3,880
this state; 3,881
(2) The name of the person to whom the shares represented 3,883
by the certificate are issued; 3,884
(3) The number of shares represented by the certificate; 3,886
(4) If the shares of the corporation are classified, the 3,888
designation of the class, and the series, if any, of the shares 3,889
represented by the certificate; 3,890
(5) On the face or the back of the certificate: 3,892
(a) The express terms, if any, of the shares represented 3,894
by the certificate and of the other class or classes and series 3,895
of shares, if any, which the corporation is authorized to issue; 3,896
or 3,897
(b) A summary of such express terms; or 3,899
(c) That the corporation will mail to the shareholder a 3,901
copy of such express terms without charge within five days after 3,902
receipt of written request therefor; or 3,903
(d) That a copy of such express terms is attached to and 3,905
by reference made a part of such certificate and that the 3,906
corporation will mail to the shareholder a copy of such express 3,907
terms without charge within five days after receipt of written 3,908
request therefor if the copy has become detached from the 3,909
certificate. 3,910
(B) No restriction on the right to transfer shares and no 3,912
reservation of lien on shares shall be effective against a 3,913
transferee of such shares unless, as to uncertificated 3,914
securities, there is set forth in the initial transaction 3,915
91
statement required for liens by section 1308.02 of the Revised 3,916
Code, and for restrictions on transfer by THERE HAS BEEN 3,917
COMPLIANCE WITH section 1308.11 of the Revised Code, and unless, 3,919
as to certificated securities, there is set forth on the face or 3,920
the back of the certificate therefor:
(1) A statement of the terms of such restriction or 3,922
reservation; or 3,923
(2) A summary of the terms of such restriction or 3,925
reservation and a statement that the corporation will mail to the 3,926
shareholder a copy of such restriction or reservation without 3,927
charge within five days after receipt of written request 3,928
therefor; or 3,929
(3) If such restriction or reservation is contained in the 3,931
articles or regulations of the corporation, or in an instrument 3,932
in writing to which the corporation is a party, a statement to 3,933
that effect and a statement that the corporation will mail to the 3,934
shareholder a copy of such restriction or reservation without 3,935
charge within five days after receipt of written request 3,936
therefor; or 3,937
(4) If such restriction or reservation is contained in an 3,939
instrument in writing (other than the articles or regulations of 3,940
the corporation or an instrument in writing to which the 3,941
corporation is a party), a statement to that effect identifying 3,942
the instrument by title, date, and parties. 3,943
(C) A corporation shall mail to a shareholder without 3,945
charge within five days after receipt of written request therefor 3,946
the copy or copies referred to in paragraphs (5)(c) and (5)(d) of 3,947
division (A) and paragraphs (2) and (3) of division (B) of this 3,948
section. 3,949
Sec. 1701.27. (A) In case a certificate for shares is 3,958
lost, stolen, or destroyed, the court of common pleas or the 3,959
probate court of the county in which the principal office of the 3,960
corporation is located shall have jurisdiction to hear and 3,961
determine all questions respecting such loss, theft, or 3,962
92
destruction, the person interested therein, the bond required to
be given to protect the corporation or any person injured by the 3,963
execution and delivery of a new certificate, the terms on which a 3,964
new certificate shall be executed and delivered, and the costs 3,965
and counsel fees, if any, to be allowed to the corporation. 3,966
(B) A corporation which voluntarily and in good faith 3,968
executes and delivers a new certificate in lieu of one believed 3,969
to have been lost, stolen, or destroyed, or which executes and 3,970
delivers a new certificate in compliance with an order of a court 3,971
of competent jurisdiction, may recognize the person named in the 3,972
new certificate, or any certificate thereafter executed and
delivered in exchange or substitution for such new certificate, 3,973
as the owner of the shares described therein for all purposes, 3,974
until the owner of the original certificate, or a transferee 3,975
thereof without notice and for value, enjoins the corporation and 3,976
the holder of any new certificate, or any certificate executed
and delivered in exchange or substitution for such new 3,977
certificate, from so acting. 3,978
(C) Special provisions in sections 1308.01 to 1308.36, 3,980
inclusive, of the Revised Code, (particularly section 1308.35 3,981
1308.41 of the Revised Code) relating to the replacement of lost, 3,983
apparently destroyed, or wrongfully taken securities shall govern 3,984
to the exclusion of the provisions of this section on this
subject, except where it clearly appears that a special provision 3,985
is cumulative, in which case it and the provisions of this 3,986
section on the same subject shall apply. 3,987
Sec. 1701.49. (A) By written agreement certificates for 3,996
shares of a corporation may be deposited within or without this 3,997
state by any holder or holders thereof with one or more persons 3,998
as trustees, or with any depositary designated by or pursuant to 3,999
such agreement to act for such trustees, for the purpose and with 4,000
the effect of granting to such trustees or a majority of them, or 4,001
to such persons as may be designated by or pursuant to such 4,002
agreement, all the voting, consenting, or other rights in respect 4,003
93
of the shares represented by such certificates, or such of these 4,004
rights as may be specified in the agreement, or for such other 4,005
lawful purposes as may be specified in the agreement, for such 4,006
period and upon such terms as may be stated therein. 4,007
In the case of uncertificated securities, the deposit of 4,009
the shares may be accomplished by registration in the name of the 4,010
trustee or trustees as provided in division (F) of this section. 4,011
(B) No such agreement which grants the voting or 4,013
consenting rights in respect of shares shall be irrevocable for a 4,014
period of more than ten years, unless the voting or consenting 4,015
rights granted thereby are coupled with an interest in the shares 4,016
to which such rights relate, except that, if the agreement so 4,017
provides, such irrevocable grant may be extended for additional 4,018
periods of not more than ten years each, upon the affirmative 4,019
vote or assent of the beneficial owners of not less than a 4,020
majority of the shares deposited under the agreement. Such 4,021
rights shall be deemed coupled with an interest in the shares if 4,022
granted in connection with: an option, authority, or contract to 4,023
buy or sell the shares or a part thereof; a pledge of the shares 4,024
to secure the performance or nonperformance of any act; the 4,025
performance or nonperformance of any act, or agreement for an 4,026
act, by the corporation issuing the shares; or any other act or 4,027
thing constituting an interest sufficient in law to support a 4,028
power coupled therewith. 4,029
(C) The trustees under the agreement may issue, or cause 4,031
to be issued by their depositary or agent, voting trust 4,032
certificates registered in the name of the owners thereof. So 4,033
far as consistent with the agreement and the voting trust 4,034
certificates issued thereunder, the provisions of sections 4,035
1308.01 to 1308.44 CHAPTER 1308., and of sections 1701.01 to 4,037
1701.99 of the Revised Code, with respect to the transfer of 4,038
certificates for shares shall apply to transfers of such voting 4,039
trust certificates. 4,040
Voting trust certificates must be in certificated form, and 4,042
94
interests in a voting trust shall not be eligible for treatment 4,043
as uncertificated securities. 4,044
(D) The agreement may include any terms not repugnant to 4,046
law, including provisions defining, limiting, or regulating the 4,047
exercise of the authority, and the liability of, the trustees, or 4,048
of such persons as are designated by or pursuant to any such 4,049
agreement to exercise the voting, consenting, or other rights in 4,050
respect of the deposited shares or to act as depositary 4,051
thereunder. 4,052
(E) An executed counterpart of the agreement may be filed 4,054
with the secretary of the corporation, and upon such filing shall 4,055
be open to inspection by any shareholder at the office of the 4,056
corporation at all reasonable times. 4,057
(F) The certificates for shares so deposited may be 4,059
surrendered to and canceled by the issuing corporation, and if 4,060
this is done new certificates therefor shall be issued by the 4,061
corporation in the names of the trustees or of such persons as 4,062
are designated by or pursuant to the agreement, as specified in a 4,063
writing signed by the trustees and delivered to the issuing 4,064
corporation. The new certificates shall be delivered to the 4,065
trustees, or to any depositary, as the trustees may direct. The 4,066
new certificates shall be issued in such manner that it shall 4,067
appear that they are issued pursuant to the agreement, and in the 4,068
entry of ownership in the proper books of the corporation that 4,069
fact shall also be noted. 4,070
If the corporation has elected to issue uncertificated 4,072
securities, shares in uncertificated form may be deposited, with 4,073
the effect provided by division (A) of this section, by 4,074
registration in the name of the trustee or trustees or of such 4,075
persons as are designated by or pursuant to the agreement, in 4,076
accordance with sections 1308.01 to 1308.44 CHAPTER 1308. of the 4,078
Revised Code.
(G) Shares issued by a foreign corporation may be made the 4,080
subject of an agreement under this section. 4,081
95
(H) The rights conferred by this section are in addition 4,083
to rights at common law, and no limitation established by this 4,084
section shall limit rights at common law. 4,085
(I) Any such agreement shall be conclusively deemed to 4,087
have been made under the common law, and not under this section, 4,088
if the agreement so states. 4,089
Sec. 1701.591. (A) In order to qualify as a close 4,098
corporation agreement under this section, the agreement shall 4,099
meet the following requirements: 4,100
(1) Every person who is a shareholder of the corporation 4,102
at the time of the agreement's adoption, whether or not entitled 4,103
to vote, shall have assented to the agreement in writing; 4,104
(2) The agreement shall be set forth in the articles, the 4,106
regulations, or another written instrument; 4,107
(3) The agreement shall include a statement that it is to 4,109
be governed by this section. 4,110
(B) A close corporation agreement that is not set forth in 4,112
the articles or the regulations shall be entered in the record of 4,113
minutes of the proceedings of the shareholders of the corporation 4,114
and shall be subject to the provisions of division (C) of section 4,115
1701.92 of the Revised Code. 4,116
(C) Irrespective of any other provisions of this chapter, 4,118
but subject to division (D)(2) of this section, a close 4,119
corporation agreement may contain provisions, which shall be 4,120
binding on the corporation and all of its shareholders, 4,121
regulating any aspect of the internal affairs of the corporation 4,122
or the relations of the shareholders among themselves, including 4,123
the following: 4,124
(1) Regulation of the management of the business and 4,126
affairs of the corporation; 4,127
(2) The right of one or more shareholders to dissolve the 4,129
corporation at will or on the occurrence of a specified event or 4,130
contingency; 4,131
(3) The obligation to vote the shares of a person as 4,133
96
specified, or voting requirements, including the requirement of 4,134
the affirmative vote or approval of all shareholders or of all 4,135
directors, which voting requirements need not appear in the 4,136
articles unless the close corporation agreement is set forth in 4,137
the articles; 4,138
(4) The designation of the persons who shall be the 4,140
officers or directors of the corporation; 4,141
(5) The authority of any individual who holds more than 4,143
one office of the corporation to execute, acknowledge, or certify 4,144
in more than one capacity any instrument required to be executed, 4,145
acknowledged, or certified by the holders of two or more offices; 4,146
(6) The terms and conditions of employment of an officer 4,148
or employee of the corporation without regard to the period of 4,149
his employment; 4,150
(7) The declaration and payment of dividends or 4,152
distributions or the division of profits; 4,153
(8) Elimination of the board of directors, restrictions 4,155
upon the exercise by directors of their authority, or delegation 4,156
to one or more shareholders or other persons of all or part of 4,157
the authority of the directors; 4,158
(9) Conferring on any shareholder or his agent OF A 4,160
SHAREHOLDER the absolute right, without the necessity of stating 4,161
any purpose, to examine and copy during usual business hours any 4,162
of the corporation's records or documents to which reference is 4,163
made in section 1701.37 of the Revised Code; 4,164
(10) Prohibition of or limitation upon the issuance or 4,166
sale by the corporation of any of its shares, including treasury 4,167
shares, without the affirmative vote or approval of the holders 4,168
of all or a proportion of the outstanding shares or unless other 4,169
specified terms and conditions are met; 4,170
(11) Arbitration of issues on which the shareholders are 4,172
deadlocked in voting power or on which the directors or other 4,173
parties managing the corporation are deadlocked; 4,174
(12) Dispensing with the annual meeting of shareholders 4,176
97
unless a shareholder, by written notice to the president or 4,177
secretary either by personal delivery or by mail within thirty 4,178
days after the end of the most recent fiscal year of the 4,179
corporation, requests that the meeting be held. 4,180
(D) Except as may be necessary to give effect to divisions 4,182
(C)(3), (5), (8), (9), and (12) and division (I) of this section, 4,183
any provision of a close corporation agreement that does either 4,184
of the following shall be invalid: 4,185
(1) Eliminates the filing with the secretary of state of 4,187
any document required under this chapter or changes the required 4,188
form or content of the document; 4,189
(2) Waives or alters the effect of any of the provisions 4,191
of section 1701.03, 1701.18, 1701.24, 1701.25, 1701.30, 1701.31, 4,192
1701.32, 1701.33, 1701.35, 1701.37, 1701.38, 1701.39, 1701.591, 4,193
1701.91, 1701.93, 1701.94, 1701.95, or the first sentence of 4,194
section 1701.64 of the Revised Code. 4,195
Unless otherwise provided in the close corporation 4,197
agreement, the invalidity of a provision pursuant to this 4,198
division does not affect the validity of the remainder of the 4,199
agreement. 4,200
Any certificate that is required to be filed with the 4,202
secretary of state with respect to the authorization or taking of 4,203
any action pursuant to a close corporation agreement that would 4,204
not be permitted under this chapter in the absence of division 4,205
(C) of this section shall recite the existence of a close 4,206
corporation agreement that authorizes the action. 4,207
(E)(1) Except as provided in division (E)(2) of this 4,209
section, a close corporation agreement may be amended or 4,210
terminated by the affirmative vote or written consent of the 4,211
holders, then parties to the close corporation agreement, of all 4,212
of the outstanding shares of each class or, as may be provided by 4,213
the close corporation agreement, of the holders, then parties to 4,214
the close corporation agreement, of a proportion of not less than 4,215
four-fifths of the outstanding shares of each class. If a close 4,216
98
corporation agreement is amended or terminated by the written 4,217
consent of the holders of fewer than all of the shares, the 4,218
secretary of the corporation shall mail a copy of the amendment 4,219
or a notice of the termination to each shareholder who did not so 4,220
consent. If a close corporation agreement set forth in the 4,221
articles is amended, the amendment shall not be effective unless 4,222
it is filed as an amendment to the articles pursuant to section 4,223
1701.73 of the Revised Code. No corporation with respect to 4,224
which a close corporation agreement is in effect shall cause to 4,225
occur any of the actions described in division (I)(1)(a), (b), or 4,226
(c) of this section unless the action has been authorized by the 4,227
affirmative vote or written consent of the holders, then parties 4,228
to the close corporation agreement, of that proportion of shares 4,229
of each class that is required to terminate the close corporation 4,230
agreement. 4,231
(2) A close corporation agreement that was in existence on 4,233
December 31, 1993, and that did not specify on that date and that 4,234
has not specified since that date the proportion of shares 4,235
required to amend or terminate the close corporation agreement 4,236
may be amended or terminated by the affirmative vote or written 4,237
consent of the holders, then parties to the close corporation 4,238
agreement, of four-fifths of the outstanding shares of each 4,239
class. 4,240
(F) No close corporation agreement is invalid among the 4,242
parties or in respect of the corporation on any of the following 4,243
grounds: 4,244
(1) The agreement is an attempt to treat the corporation 4,246
as if it were a partnership or to arrange the relationship of the 4,247
parties in a manner that would be appropriate only among 4,248
partners; 4,249
(2) The agreement provides for the conduct of the affairs 4,251
of a corporation or relations among shareholders in any manner 4,252
that would be inappropriate or unlawful under provisions of this 4,253
chapter other than those set forth in division (D)(2) of this 4,254
99
section or under other applicable law; 4,255
(3) The agreement interferes with the authority or 4,257
discretion of the directors; 4,258
(4) The agreement has not been filed with the minutes as 4,260
required by division (B) of this section. 4,261
(G) If a close corporation agreement provides that there 4,263
shall be no board of directors, both of the following apply: 4,264
(1) The shareholders, for the purposes of any statute or 4,266
rule of law relating to corporations, are deemed to be the 4,267
directors and to have all of the liabilities, immunities, 4,268
defenses, and indemnifications of directors with respect to any 4,269
action or inaction of the corporation, except that any 4,270
shareholder who is not permitted by the articles, the 4,271
regulations, or the close corporation agreement to vote on or 4,272
assent to an action or assent to an inaction shall not be liable 4,273
as a director with respect to the action or inaction. 4,274
(2) Except to the extent that the voting rights of the 4,276
shares of a class are increased, limited, or denied by the 4,277
articles, the regulations, or the close corporation agreement, 4,278
each outstanding share regardless of class shall entitle its 4,279
holder to one vote on each matter, including any matter normally 4,280
voted on by directors, that is properly submitted to the 4,281
shareholders for their vote, consent, waiver, release, or other 4,282
action. 4,283
(H) The existence of a close corporation agreement shall 4,285
be noted conspicuously on the face or the back of every 4,286
certificate for shares of the corporation and a purchaser or 4,287
transferee of shares represented by a certificate on which such a 4,288
notation so appears shall be conclusively considered to have 4,289
taken delivery with notice of the close corporation agreement. 4,290
Any transferee of shares by gift, bequest, or inheritance and any 4,291
purchaser or transferee of shares with knowledge or notice of a 4,292
close corporation agreement is bound by the agreement and shall 4,293
be considered to be a party to the agreement. 4,294
100
(I)(1) A close corporation agreement becomes invalid under 4,296
any of the following circumstances: 4,297
(a) Shares of the corporation are listed on a national 4,299
securities exchange. 4,300
(b) Shares of the corporation are registered under section 4,302
12(g) of the "Securities Exchange Act of 1934," 48 Stat. 892, 15 4,303
U.S.C. 781, as amended. 4,304
(c) Shares of the corporation have been included in a 4,306
registration statement that has become effective pursuant to the 4,307
"Securities Act of 1933," 84 Stat. 74, 15 U.S.C. 77a-77aa, and 4,308
the corporation is required to file periodic reports and 4,309
information pursuant to section 15(d) of the "Securities Exchange 4,310
Act of 1934," 48 Stat. 892, 15 U.S.C. 77m, as amended. 4,311
(d) Shares of the corporation are transferred or issued to 4,313
a person who takes delivery of the certificate for the shares 4,314
other than by gift, bequest, or inheritance and without knowledge 4,315
or notice of the close corporation agreement; that person 4,316
delivers to the corporation a written rejection of the close 4,317
corporation agreement within ninety days after the date on which 4,318
that person first received notice of the existence of the close 4,319
corporation agreement or within three years of the date of 4,320
transfer or issuance, whichever is earlier; and the corporation 4,321
does not offer in writing, within thirty days after the date on 4,322
which the corporation received the written rejection, to purchase 4,323
the shares from that person for the full amount paid for the 4,324
shares, or, having made an offer to purchase the shares for that 4,325
amount, the corporation, upon that person's acceptance of the 4,326
offer, does not purchase the shares in accordance with division 4,327
(I)(3) of this section. 4,328
(2) A close corporation agreement does not become invalid 4,330
and the person to whom the shares are transferred or issued is 4,331
not entitled to any payment from the corporation pursuant to 4,332
division (I)(3) of this section if both of the following apply: 4,333
(a) Shares of the corporation are transferred or issued to 4,335
101
a person who takes delivery of the certificate for the shares 4,336
other than by gift, bequest, or inheritance and without knowledge 4,337
or notice of the close corporation agreement; 4,338
(b) That person does either of the following: 4,340
(i) Fails to deliver a written rejection of the close 4,342
corporation agreement to the corporation within ninety days after 4,343
the date on which that person first received notice of the 4,344
existence of the close corporation agreement or within three 4,345
years of the date of transfer or issuance, whichever is earlier; 4,346
(ii) Fails, within thirty days after the date on which 4,348
that person receives a written offer by the corporation to 4,349
purchase the shares from that person for the full amount paid for 4,350
the shares, to accept the offer. 4,351
(3) If shares of a corporation are transferred or issued 4,353
to a person who takes delivery of the certificate for the shares 4,354
other than by gift, bequest, or inheritance and without knowledge 4,355
or notice of the close corporation agreement and that person 4,356
accepts an offer by the corporation to purchase the shares, the 4,357
corporation shall pay to that person the full amount paid for the 4,358
shares within seven days after that person delivers to the 4,359
corporation the certificate for the shares and proof of payment 4,360
of the amount paid for the shares. If the amount paid for the 4,361
shares included property other than cash, the corporation, at its 4,362
option, may return the property to that person or may pay to that 4,363
person cash in an amount equal to the fair market value of the 4,364
property on the date of transfer or issuance of the shares, as 4,365
determined in good faith by the corporation. A shareholder who 4,366
transfers shares to a person who takes delivery of the 4,367
certificate for the shares other than by gift, bequest, or 4,368
inheritance and without knowledge or notice of the close 4,369
corporation agreement is liable to the corporation, upon the 4,370
corporation's written demand made upon the shareholder within 4,371
ninety days after the date on which the corporation made payment 4,372
for the shares, for the full amount that the corporation paid for 4,373
102
the shares. Upon receiving payment in that amount from the 4,374
shareholder, the corporation shall transfer the shares to the 4,375
shareholder. 4,376
(4) In the event of the invalidity of a close corporation 4,378
agreement and unless otherwise provided in the close corporation 4,379
agreement, any provision contained in the close corporation 4,380
agreement that would not be invalid under any other section of 4,381
this chapter or under other applicable law remains valid and 4,382
binding on the parties to the close corporation agreement. 4,383
Any officer of the corporation who learns of the occurrence 4,385
of any event causing the invalidity of the close corporation 4,386
agreement shall immediately give written notice of the invalidity 4,387
to all of the shareholders. 4,388
If a close corporation agreement set forth in the articles 4,390
of the corporation is terminated or becomes invalid, the officers 4,391
of the corporation shall promptly sign and file the certificate 4,392
of amendment prescribed by section 1701.73 of the Revised Code, 4,393
setting forth the reason for the termination or invalidity and 4,394
deleting the close corporation agreement from the articles. If 4,395
the officers fail to execute and file the certificate within 4,396
thirty days after the occurrence of the event giving rise to the 4,397
termination or invalidity, the certificate may be signed and 4,398
filed by any shareholder and shall set forth a statement that the 4,399
person signing the certificate is a shareholder and is filing the 4,400
certificate because of the failure of the officers to do so. 4,401
(J) A close corporation agreement, in the sound discretion 4,403
of a court exercising its equity powers, is enforceable by 4,404
injunction, specific performance, or other relief that the court 4,405
may determine to be fair and appropriate. 4,406
(K) This section shall not be construed as prohibiting any 4,408
other lawful agreement among two or more shareholders. 4,409
(L) No corporation with respect to which a close 4,411
corporation agreement is in effect, shall issue shares in 4,412
uncertificated form, and any resolution of the directors of such 4,413
103
a corporation, providing for the issuance of shares in 4,414
uncertificated form, shall be ineffective during any period in 4,415
which a close corporation agreement is in effect. The adoption 4,416
of a close corporation agreement shall act as a transfer 4,417
instruction to the corporation to replace uncertificated 4,418
securities with appropriate certificated securities in accordance 4,419
with division (C) of section 1308.43 of the Revised Code. 4,420
(M) If the annual meeting of the shareholders is dispensed 4,422
with in accordance with a provision in the close corporation 4,423
agreement authorized by division (C)(12) of this section, the 4,424
annual financial statements required by section 1701.38 of the 4,425
Revised Code shall be delivered to each shareholder on or before 4,426
the last date upon which the annual meeting otherwise could have 4,427
been held. 4,428
(N) The amendments to this section that are effective 4,430
April 4, 1985, are remedial in nature and apply to all close 4,431
corporation agreements created on or after November 17, 1981. The 4,433
amendments to this section that are effective December 31, 1993, 4,434
are remedial in nature and, except as those amendments otherwise 4,435
provide, apply to all close corporation agreements created on or 4,436
after November 17, 1981.
Sec. 1701.831. (A) Unless the articles or the regulations 4,445
of the issuing public corporation provide that this section does 4,446
not apply to control share acquisitions of shares of such 4,447
corporation, any control share acquisition of an issuing public 4,448
corporation shall be made only with the prior authorization of 4,449
the shareholders of such corporation in accordance with this 4,450
section. 4,451
(B) Any person who proposes to make a control share 4,453
acquisition shall deliver an acquiring person statement to the 4,454
issuing public corporation at the issuing public corporation's 4,455
principal executive offices. Such acquiring person statement 4,456
shall set forth all of the following: 4,457
(1) The identity of the acquiring person; 4,459
104
(2) A statement that the acquiring person statement is 4,461
given pursuant to this section; 4,462
(3) The number of shares of the issuing public corporation 4,464
owned, directly or indirectly, by the acquiring person; 4,465
(4) The range of voting power, described in division 4,467
(Z)(1)(a), (b), or (c) of section 1701.01 of the Revised Code, 4,468
under which the proposed control share acquisition would, if 4,469
consummated, fall; 4,470
(5) A description in reasonable detail of the terms of the 4,472
proposed control share acquisition; 4,473
(6) Representations of the acquiring person, together with 4,475
a statement in reasonable detail of the facts upon which they are 4,476
based, that the proposed control share acquisition, if 4,477
consummated, will not be contrary to law, and that the acquiring 4,478
person has the financial capacity to make the proposed control 4,479
share acquisition. 4,480
(C) Within ten days after receipt of an acquiring person 4,482
statement that complies with division (B) of this section, the 4,483
directors of the issuing public corporation shall call a special 4,484
meeting of shareholders of the issuing public corporation for the 4,485
purpose of voting on the proposed control share acquisition. 4,486
Unless the acquiring person agrees in writing to another date, 4,487
such special meeting of shareholders shall be held within fifty 4,488
days after receipt by the issuing public corporation of the 4,489
acquiring person statement. If the acquiring person so requests 4,490
in writing at the time of delivery of the acquiring person 4,491
statement, such special meetings shall be held no sooner than 4,492
thirty days after receipt by the issuing public corporation of 4,493
the acquiring person statement. Such special meeting of 4,494
shareholders shall be held no later than any other special 4,495
meeting of shareholders that is called, after receipt by the 4,496
issuing public corporation of the acquiring person statement, in 4,497
compliance with section 1701.76, 1701.78, 1701.79, 1701.83, or 4,498
1701.831 of the Revised Code. 4,499
105
(D) Notice of the special meeting of shareholders shall be 4,501
given as promptly as reasonably practicable by the issuing public 4,502
corporation to all shareholders of record as of the record date 4,503
set for such meeting, whether or not entitled to vote thereat. 4,504
Such notice shall include or be accompanied by both of the 4,505
following: 4,506
(1) A copy of the acquiring person statement delivered to 4,508
the issuing public corporation pursuant to this section; 4,509
(2) A statement by the issuing public corporation, 4,511
authorized by its directors, of its position or recommendation, 4,512
or that it is taking no position or making no recommendation, 4,513
with respect to the proposed control share acquisition. 4,514
(E) The acquiring person may make the proposed control 4,516
share acquisition if both of the following occur: 4,517
(1) The shareholders of the issuing public corporation who 4,519
hold shares AS OF THE RECORD DATE of such corporation entitling 4,520
them to vote in the election of directors authorize such THE 4,522
acquisition at the special meeting held for that purpose at which 4,524
a quorum is present by an affirmative vote of a majority of the 4,525
voting power of such corporation in the election of directors 4,526
represented at such THE meeting in person or by proxy, and a 4,527
majority of the portion of such THE voting power excluding the 4,528
voting power of interested shares REPRESENTED AT THE MEETING IN 4,529
PERSON OR BY PROXY. A quorum shall be deemed to be present at 4,530
such THE special meeting if at least a majority of the voting 4,531
power of the issuing public corporation in the election of 4,532
directors, and a majority of the portion of such voting power 4,533
excluding the voting power of interested shares are IS 4,534
represented at such THE meeting in person or by proxy. 4,535
(2) Such THE acquisition is consummated, in accordance 4,537
with the terms so authorized, no later than three hundred sixty 4,538
days following shareholder authorization of the control share 4,539
acquisition. 4,540
(F) Except as expressly improved PROVIDED in this section, 4,542
106
nothing in this section shall be construed to affect or impair 4,543
any right, remedy, obligation, duty, power, or authority of any 4,544
acquiring person, any issuing public corporation, the directors 4,545
of any acquiring person or issuing public corporation, or any 4,546
other person under the laws of this or any other state or of the 4,547
United States. 4,548
(G) If any application of any provision of this section is 4,550
for any reason held to be illegal or invalid, the illegality or 4,551
invalidity shall not affect any legal and valid provision or 4,552
application of this section, and the parts and applications of 4,553
this section are severable. 4,554
Sec. 1701.832. (A) In enacting Amended Substitute House 4,563
Bill No. 822 of the 114th general assembly, which amended 4,564
sections 1701.01, 1701.11, 1701.37, 1701.48, 1707.01, 1707.23, 4,565
1707.26, 1707.29, and 1707.99 and enacted sections 1701.831 and 4,566
1707.042 of the Revised Code, the general assembly found and 4,567
continues to find that: 4,568
(1) Existing Ohio corporate law was designed to deal with 4,570
traditional methods of transfer of control of Ohio corporations. 4,571
The tender offer has evolved as an alternative device to acquire 4,572
control of a public corporation that has been in widespread use 4,573
in the past several decades. The acquisition of significant 4,574
blocks of the securities of a public company in the open market 4,575
or private transactions in connection with actual or apparent 4,576
efforts to acquire control has become more common in recent years 4,577
and has further complicated the impact of tender offers upon a 4,578
corporation and its shareholders. Numerous Ohio corporations 4,579
have been the subject of tender offers and accumulations of 4,580
significant blocks of securities. 4,581
(2) The accumulation of a large block of a corporation's 4,583
voting shares, or other securities convertible into voting 4,584
shares, through direct or indirect acquisition from one or more 4,585
existing shareholders of the corporation has not been subject to 4,586
the normal corporate approval mechanisms involved in other 4,587
107
typical types of acquisition transactions such as mergers, 4,588
consolidations, combinations, and majority share acquisitions. 4,589
Such accumulations, however, can result in shifts of effective 4,590
corporate control and hence, from a business and financial 4,591
perspective, directly or indirectly, can result in significant 4,592
changes in a variety of basic corporate circumstances identical 4,593
or substantially similar to those arising as a result of the 4,594
above-mentioned transactions. For instance, a change in 4,595
corporate control accompanying a large accumulation of shares 4,596
will very often result in a fundamental change in the ongoing 4,597
business of the corporation and a concomitant fundamental change 4,598
in the nature of the shareholders' investment in it. Thus the 4,599
potential that such changes in corporate circumstances will occur 4,600
gives rise to basic issues concerning the internal affairs of the 4,601
corporation typical of those arising in mergers, consolidations, 4,602
combinations, and majority share acquisitions. The form of the 4,603
transaction in which such issues arise should not alter the basic 4,604
corporate mechanisms by which such issues are presented and 4,605
resolved. 4,606
(3) Tender offers almost always involve a change in 4,608
corporate control and, therefore, give rise to these same basic 4,609
issues concerning internal corporate affairs. Although tender 4,610
offers in theory offer shareholders the opportunity to consider 4,611
such issues in deciding whether or not to tender their shares, in 4,612
practice they do not. Tender offers are coercive in the sense 4,613
that shareholders are normally concerned that a majority of their 4,614
fellow shareholders will tender their shares, leaving them in a 4,615
minority position with one controlling shareholder. Thus, 4,616
shareholders often feel compelled to tender their shares, 4,617
regardless of how they feel about the corporate control issues 4,618
inherent in any tender offer. The opportunity for reasoned 4,619
decision-making is further hindered by the short time periods in 4,620
which tender offers can be consummated, the structures of many 4,621
recent tender offers, which are designed to encourage prompt 4,622
108
tenders, and the fact that individual shareholders typically 4,623
receive or obtain tender offer materials much later than 4,624
institutional shareholders. 4,625
(4) It is in the public interest for shareholders to have 4,627
a reasonable opportunity to express their views by voting on a 4,628
proposed shift of control, an opportunity currently available 4,629
under Ohio GENERAL corporation law, CHAPTER 1701. OF THE REVISED 4,631
CODE, in transactions with similar effects. The general assembly
also believes that it is in the public interest for Ohio 4,633
securities laws, CHAPTER 1707. OF THE REVISED CODE, to provide 4,634
evenhanded protection of offerors and shareholders from 4,635
fraudulent and manipulative transactions arising in connection 4,636
with control acquisitions. 4,637
(5) Initial state efforts to deal with tender offer 4,639
developments have been questioned by the federal courts. The 4,640
general assembly observes that responsibility for general 4,641
corporate laws is the function of state legislation and that no 4,642
federal law of corporations exists. The general assembly 4,643
observes that securities law protection of state residents has 4,644
long been recognized as an appropriate subject of state law 4,645
regulation under the federal system. The general assembly 4,646
acknowledges an in loco parentis responsibility to shareholders 4,647
who invest in corporations created under the laws of Ohio and to 4,648
shareholders generally who reside in Ohio. 4,649
(B) Sections 1701.01, 1701.11, 1701.37, 1701.48, 1707.01, 4,651
1707.23, 1707.26, 1707.29, and 1707.99, as amended by Amended 4,652
Substitute House Bill No. 822 of the 114th general assembly, and 4,653
sections 1701.831 and 1707.042, as enacted by that act, were a 4,654
recognition of the state's responsibility with respect to the 4,655
subject matter of the act. Nevertheless, with a view to avoiding 4,656
an undue burden on interstate commerce, as expressed in recent 4,657
court decisions, the amendments were designed to have the minimum 4,658
impact upon interstate commerce consistent with Ohio 4,659
responsibility in respect to the subject matter. Accordingly, 4,660
109
the security law amendments made by that act to sections 1707.23, 4,661
1707.26, 1707.29, and 1707.99 and in newly enacted section 4,662
1707.042 of the Revised Code were limited to application to Ohio 4,663
resident investors, and the corporate law amendments made by that 4,664
act to sections 1701.01, 1701.11, 1701.37, and 1701.48 and in 4,665
newly enacted section 1701.831 of the Revised Code were limited 4,666
to corporations created under the laws of Ohio with the strong 4,667
Ohio ties provided in the amendments. The corporate legislation 4,668
does not include a requirement for Ohio resident investors 4,669
because of the difficulty of ascertainment by potential acquirers 4,670
and others of the residence of shareholders. The general 4,671
assembly finds that corporations satisfying the jurisdictional 4,672
nexus provided by the amendments may be deemed to have a 4,673
substantial and significant shareholder base in the state. 4,674
(C) The general assembly confirms all of the findings of 4,676
this section as enacted by Amended Substitute House Bill No. 822 4,677
of the 114th general assembly, except that the general assembly 4,678
declares that, from the effective date of this amendment, 4,680
NOVEMBER 2, 1989, and the concurrent amendment of section 1701.11 4,681
of the Revised Code by the addition of division (B)(9)(a)(ii) to 4,682
that section, the standards of that division are permitted, as an 4,683
alternative to the ties with Ohio essential to the status of a 4,684
control share acquisition, to qualify for the authorized 4,685
restrictions on transfer of shares. The general assembly further 4,686
finds that the omission of a reference to "1701.01" immediately 4,687
following the phrase "the corporate law amendments in sections" 4,688
in the enactment of division (B) of this section was inadvertent. 4,689
(D) THE GENERAL ASSEMBLY CONFIRMS ALL OF THE FINDINGS OF 4,692
THIS SECTION AS ENACTED BY AMENDED SUBSTITUTE HOUSE BILL NO. 822 4,694
OF THE 114th GENERAL ASSEMBLY, AND AS AMENDED BY AMENDED 4,695
SUBSTITUTE HOUSE BILL NO. 358 OF THE 118th GENERAL ASSEMBLY, AND 4,696
FURTHER FINDS ALL OF THE FOLLOWING: 4,697
(1) ALTHOUGH OHIO GENERAL CORPORATION LAW, CHAPTER 1701. 4,700
OF THE REVISED CODE, REQUIRES THAT A SPECIAL MEETING BE HELD TO 4,702
110
ENABLE SHAREHOLDERS OF AN ISSUING PUBLIC CORPORATION TO VOTE ON 4,703
ANY CONTROL SHARE ACQUISITION, IT DESCRIBES MEETING PROCEDURES, 4,704
LIKE OTHER STATES, PRIMARILY IN GENERAL TERMS. 4,705
(2) WHERE THE LAW, OR THE ARTICLES OF INCORPORATION AND 4,707
CODE OF REGULATIONS OF THE ISSUING PUBLIC CORPORATION, DO NOT 4,708
MANDATE SPECIFIC MEETING PROCEDURES, THE DIRECTORS OF THE 4,709
CORPORATION MUST DEFINE APPROPRIATE PROCEDURES CONSISTENT WITH 4,711
THEIR FIDUCIARY DUTIES AS PROVIDED IN SECTION 1701.59 OF THE 4,712
REVISED CODE. IN CARRYING OUT THESE DUTIES, PRACTICES AND 4,714
PROCEDURES HAVE DEVELOPED FROM EXPERIENCE IN THIS STATE AND 4,715
ELSEWHERE TO ENSURE FAIR AND EFFICIENT MEETINGS. THESE PRACTICES 4,716
AND PROCEDURES INCLUDE THE USE OF A VARIETY AND NUMBER OF 4,717
PRESUMPTIONS AND FORMS OF PROXY.
(3) THE USE OF PRESUMPTIONS AND FORMS OF PROXY REFLECTS 4,719
THE FACT THAT, IN THIS STATE AND OTHER STATES WITH SIMILAR LAWS, 4,720
EFFICIENCY AND FINALITY ARE NECESSARY PRIORITIES OVER PRECISION 4,721
AND CERTITUDE IN THE CONDUCT OF A MEETING. IT IS THE 4,722
RESPONSIBILITY OF THE DIRECTORS TO UTILIZE PRACTICES AND 4,723
PROCEDURES, INCLUDING PRESUMPTIONS AND FORMS OF PROXY, THAT ARE 4,724
CONSISTENT WITH THEIR FIDUCIARY DUTIES. 4,725
Sec. 1705.01. As used in this chapter: 4,734
(A) "Business" means every trade, occupation, or 4,736
profession. 4,737
(B) "Contribution" means any cash, property, services 4,739
rendered, promissory note, or other binding obligation to 4,740
contribute cash or property or to perform services that a member 4,741
contributes to a limited liability company in his THE capacity as 4,743
a member. 4,744
(C) "Conveyance" means every assignment, lease, mortgage, 4,746
or encumbrance. 4,747
(D) "Entity" means any of the following: 4,749
(1) A for profit corporation existing under the laws of 4,751
this state or any other state; 4,752
(2) Any of the following organizations existing under the 4,754
111
laws of this state, the United States, or any other state: 4,755
(a) A business trust or association; 4,757
(b) A real estate investment trust; 4,759
(c) A common law trust; 4,761
(d) An unincorporated business or for profit organization, 4,763
including a general or limited partnership; 4,764
(e) A limited liability company. 4,766
(E) "Incompetent" has the same meaning as in section 4,768
2111.01 of the Revised Code. 4,769
(F) "Knowledge," of a fact, means actual knowledge of that 4,771
fact and knowledge of other facts that under the circumstances 4,772
shows bad faith. 4,773
(G) "Member" means a person whose name appears on the 4,775
records of the limited liability company as the owner of a 4,776
membership interest in that company. 4,777
(H) "Membership interest" means a member's share of the 4,779
profits and losses of a limited liability company and the right 4,780
to receive distributions from that company. 4,781
(I) "Notice" means that the person who claims the benefit 4,783
of the notice has done one of the following: 4,784
(1) Stated the fact to the person entitled to notice; 4,786
(2) Delivered through the mail or by other means of 4,788
communication a written statement of the fact to the person 4,789
entitled to notice or to a proper person at the place of business 4,790
or residence of the person entitled to receive a notice. 4,791
(J) "Operating agreement" means all of the valid written 4,793
or oral agreements of the members OR, IN THE CASE OF A LIMITED 4,794
LIABILITY COMPANY CONSISTING OF ONE MEMBER, A WRITTEN DECLARATION 4,795
OF THAT MEMBER, as to the affairs of a limited liability company 4,797
and the conduct of its business.
(K) "Person" means any natural person; partnership, 4,799
limited partnership, trust, estate, association, limited 4,800
liability company, or corporation; any custodian, nominee, 4,801
trustee, executor, administrator, or other fiduciary; or any 4,802
112
other individual or entity in its own or any representative 4,803
capacity. 4,804
(L) "Professional association" and "professional service" 4,806
have the same meanings as in section 1785.01 of the Revised Code. 4,807
(M) "State" has the same meaning as in section 1.59 of the 4,809
Revised Code and additionally includes a foreign country and any 4,810
province, territory, or other political subdivision of a foreign 4,811
country. 4,812
Sec. 1705.04. (A) Two ONE or more persons, without regard 4,821
to residence, domicile, or state of organization, may form a 4,822
limited liability company. The entity is formed when one or more 4,824
persons or their authorized representative signs and files with 4,825
the secretary of state articles of organization that set forth 4,826
all of the following: 4,827
(1) The name of the company; 4,829
(2) Except as provided in division (B) of this section, 4,831
the period of its duration, which may be perpetual; 4,832
(3) The address to which interested persons may direct 4,834
requests for copies of any operating agreement and any bylaws of 4,835
the company; 4,836
(4) Any other provisions that are from the operating 4,838
agreement or that are not inconsistent with applicable law and 4,839
that the members elect to set out in the articles for the 4,840
regulation of the affairs of the company. 4,841
(B) If the articles of organization OR OPERATING AGREEMENT 4,843
do not set forth the period of the duration of the limited 4,845
liability company, its duration shall be perpetual. 4,846
(C) If a limited liability company is formed under this 4,848
chapter for the purpose of rendering a professional service or 4,849
the kinds of professional services authorized under Chapters 4,850
4703. and 4733. of the Revised Code, the following apply: 4,851
(1) Each member, employee, or other agent of the company 4,853
who renders a professional service in this state and, if the 4,854
management of the company is not reserved to its members, each 4,855
113
manager of the company who renders a professional service in this 4,856
state shall be licensed or otherwise legally authorized to render 4,857
in this state the same kind of professional service or, if 4,858
applicable, the kinds of professional services authorized under 4,859
Chapters 4703. and 4733. of the Revised Code. 4,860
(2) Each member, employee, or other agent of the company 4,862
who renders a professional service in another state and, if the 4,863
management of the company is not reserved to its members, each 4,864
manager of the company who renders a professional service in 4,865
another state shall be licensed or otherwise legally authorized 4,866
to render that professional service in the other state. 4,867
(D) Except for the provisions of this chapter pertaining 4,869
to the personal liability of members, employees, or other agents 4,870
of a limited liability company and, if the management of the 4,871
company is not reserved to its members, the personal liability of 4,872
managers of the company, this chapter does not restrict, limit, 4,873
or otherwise affect the authority or responsibilities of any 4,874
agency, board, commission, department, office, or other entity to 4,875
license, register, and otherwise regulate the professional 4,876
conduct of individuals or organizations of any kind rendering 4,877
professional services in this state or to regulate the practice 4,878
of any profession that is within the jurisdiction of the agency, 4,879
board, commission, department, office, or other entity, 4,880
notwithstanding that the individual is a member or manager of a 4,881
limited liability company and is rendering the professional 4,882
services or engaging in the practice of the profession through 4,883
the limited liability company or that the organization is a 4,884
limited liability company. 4,885
Sec. 1705.16. (A) If EXCEPT AS PROVIDED IN DIVISION (C) 4,895
OF THIS SECTION, IF the management of a limited liability company 4,897
is reserved to its members, a member may withdraw from the 4,898
company at any time by giving written notice to the other 4,899
members. If the withdrawal violates the operating agreement, 4,900
then, in addition to exercising any remedies otherwise available 4,901
114
under applicable law, the company may recover from the
withdrawing member damages for breach of the operating agreement 4,902
and may offset the damages against the amount otherwise 4,903
distributable to him THE WITHDRAWING MEMBER on account of his THE 4,905
WITHDRAWING MEMBER'S membership interest.
(B) If EXCEPT AS PROVIDED IN DIVISION (C) OF THIS SECTION, 4,907
IF the management of a limited liability company is not reserved 4,909
to its members, the operating agreement may prohibit withdrawal 4,910
or may specify the time at which or the events the occurrence of 4,911
which entitle a member to withdraw. If the operating agreement 4,912
does not prohibit withdrawal, does not specify the time at which 4,913
or the events upon the occurrence of which a member may withdraw, 4,914
and does not indicate a definite time for the dissolution and the 4,915
winding up of the company, a member may withdraw after giving at 4,916
least six-months written notice of the proposed withdrawal to 4,917
each nonwithdrawing member at its address as set forth in the 4,918
records of the company that are required to be kept under section 4,919
1705.28 of the Revised Code. 4,920
(C) IF THE LIMITED LIABILITY COMPANY WAS FORMED ON OR 4,922
AFTER THE EFFECTIVE DATE OF THIS AMENDMENT, OR THE COMPANY WAS 4,923
FORMED PRIOR TO THE EFFECTIVE DATE OF THIS AMENDMENT AND ITS 4,924
ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT SPECIFICALLY 4,925
STATE THAT THIS DIVISION APPLIES TO THE COMPANY, A MEMBER MAY 4,926
WITHDRAW FROM THE COMPANY ONLY AT THE TIME OR UPON THE OCCURRENCE
OF AN EVENT SPECIFIED IN WRITING IN THE ARTICLES OF ORGANIZATION 4,927
OR THE OPERATING AGREEMENT. 4,928
Sec. 1705.43. (A) A limited liability company organized 4,937
under this chapter shall be dissolved upon the occurrence of any 4,938
of the following events: 4,939
(1) The expiration of the period, if any, fixed by the 4,941
operating agreement or articles of organization for the duration 4,943
of the company;
(2) One or more events specified in writing in the 4,945
operating agreement as causing the dissolution of the company; 4,946
115
(3) The unanimous written agreement of all members to 4,948
dissolve the company; 4,949
(4) The withdrawal of a member of the company, unless the 4,951
business of the company is continued by the consent of all of the 4,952
remaining members or under a right to continue the company that 4,953
is stated in writing in the operating agreement; 4,954
(5) At any time when there are less than two members; 4,956
(6) Upon entry of a decree of judicial dissolution under 4,958
section 1705.47 of the Revised Code. 4,959
(B) Following the occurrence of any of the events 4,961
specified in division (A) of this section, the limited liability 4,962
company shall deliver to the secretary of state for filing a 4,963
certificate of dissolution on a form that is prescribed by the 4,964
secretary of state and that includes the name of the company and 4,965
the effective date of its dissolution. 4,966
Sec. 1782.33. A (A) EXCEPT AS PROVIDED IN DIVISION (B) OF 4,977
THIS SECTION, A limited partner may withdraw from a limited 4,978
partnership at the time, or upon the happening of events, 4,979
specified in writing in the partnership agreement. If the 4,980
partnership agreement does not specify in writing the time or 4,981
events upon the happening of which a limited partner may withdraw 4,982
or a definite time for the dissolution and winding up of the
limited partnership, a limited partner may withdraw upon not less 4,983
than six months' prior written notice to each general partner at 4,984
his THE GENERAL PARTNER'S address on the books of the limited 4,985
partnership at its office in this state. 4,986
(B) IF THE LIMITED PARTNERSHIP WAS FORMED ON OR AFTER THE 4,988
EFFECTIVE DATE OF THIS AMENDMENT, OR THE LIMITED PARTNERSHIP WAS 4,989
FORMED PRIOR TO THE EFFECTIVE DATE OF THIS AMENDMENT AND ITS 4,990
CERTIFICATE OF LIMITED PARTNERSHIP OR PARTNERSHIP AGREEMENT 4,991
SPECIFICALLY STATES THAT THIS DIVISION APPLIES TO THE LIMITED 4,992
PARTNERSHIP, A LIMITED PARTNER MAY WITHDRAW FROM THE LIMITED 4,993
PARTNERSHIP ONLY AT THE TIME OR UPON THE OCCURRENCE OF AN EVENT
SPECIFIED IN WRITING IN THE PARTNERSHIP AGREEMENT. 4,994
116
Sec. 3901.51. As used in sections 3901.51 to 3901.55 of 5,003
the Revised Code: 5,004
(A) "Clearing corporation" has the same meaning as in 5,006
division (C) of section 1308.01 of the Revised Code, except that 5,007
with respect to securities issued by institutions organized or 5,008
existing under the laws of any foreign country or securities used 5,009
to meet the deposit requirements pursuant to the laws of a 5,010
foreign country as a condition of doing business in that country, 5,011
"clearing corporation" includes a corporation that is organized 5,012
or existing under the laws of any foreign country and is legally 5,013
qualified under those laws to effect transactions in securities 5,014
by computerized book-entry. 5,015
(B) "Direct participant" means a bank, trust company, or 5,017
other entity that maintains an account in its name in a clearing 5,018
corporation and through which an insurance company participates 5,019
in a clearing corporation. 5,020
(C) "Federal reserve book-entry system" means the 5,022
computerized systems sponsored by the United States department of 5,023
the treasury and agencies and instrumentalities of the United 5,024
States for holding and transferring securities of the United 5,025
States government and agencies and instrumentalities in federal 5,026
reserve banks through banks that are members of the federal 5,027
reserve system or that otherwise have access to these 5,028
computerized systems. 5,029
(D) "Member bank" means a national or state bank or a 5,031
trust company that is a member of the federal reserve system and 5,032
through which an insurance company participates in the federal 5,033
reserve book-entry system. 5,034
(E) "Provisions of the insurance laws of this state" means 5,036
provisions of Title XXXIX of the Revised Code related to the 5,037
deposit of securities for the benefit and security of 5,038
policyholders, and includes, but is not limited to, sections 5,039
3901.18, 3903.73, 3905.24, 3905.25, 3905.41, 3907.07, 3909.03, 5,040
3909.09, 3909.17, 3913.01, 3913.04, 3919.13, 3919.36, 3919.37, 5,041
117
3919.41, 3925.07, 3927.02, 3927.06, 3929.01, 3929.07, 3929.08, 5,042
3929.09, 3929.10, 3929.11, 3941.30, 3941.31, 3941.32, 3941.33, 5,043
3941.34, 3941.42, 3953.06, 3953.11, and 3957.03 of the Revised 5,044
Code.
(F) "Securities" has the same meaning as in division 5,046
(A)(3) of section 1308.01 of the Revised Code. 5,047
Section 2. That existing sections 1301.05, 1301.12, 5,049
1303.02, 1304.01, 1304.02, 1305.10, 1305.13, 1308.03, 1308.04, 5,050
1308.08, 1308.09, 1308.10, 1308.11, 1308.12, 1308.13, 1308.14, 5,051
1308.15, 1308.16, 1308.17, 1308.22, 1308.31, 1308.37, 1308.38, 5,052
1308.41, 1308.42, 1309.01, 1309.03, 1309.14, 1309.20, 1309.21, 5,053
1309.22, 1309.23, 1309.24, 1309.25, 1309.28, 1309.31, 1701.01, 5,054
1701.24, 1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 1701.832, 5,055
1705.01, 1705.04, 1705.16, 1705.43, 1782.33, and 3901.51 and 5,057
sections 1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 1308.18, 5,058
1308.19, 1308.20, 1308.21, 1308.23, 1308.24, 1308.25, 1308.26, 5,059
1308.27, 1308.28, 1308.32, 1308.33, 1308.34, 1308.35, 1308.36, 5,060
1308.39, 1308.40, 1308.43, and 1308.44 of the Revised Code are 5,061
hereby repealed.
Section 3. Sections 1 and 2 of this act shall take effect 5,063
on January 1, 1998.
Section 4. (A) Sections 1 and 2 of this act do not affect 5,065
an action or proceeding commenced before this act takes effect. 5,066
(B) If a security interest in a security is perfected at 5,068
the date this act takes effect, and the action by which the 5,069
security interest was perfected would suffice to perfect a 5,071
security interest under this act, no further action is required 5,072
to continue perfection. If a security interest in a security is
perfected at the date this act takes effect but the action by 5,073
which the security interest was perfected would not suffice to 5,074
perfect a security interest under this act, the security interest 5,075
remains perfected for a period of four months after the effective 5,076
date and continues perfected thereafter if appropriate action to 5,077
perfect under this act is taken within that period. If a 5,078
118
security interest is perfected at the date this act takes effect
and the security interest can be perfected by filing under this 5,079
act, a financing statement signed by the secured party instead of 5,080
the debtor may be filed within that period to continue perfection 5,081
or thereafter to perfect.