As Passed by the Senate 1
122nd General Assembly 4
Regular Session Am. Sub. H. B. No. 170 5
1997-1998 6
REPRESENTATIVES WOMER BENJAMIN-BATCHELDER-TIBERI-HARRIS-MYERS- 8
MASON-SCHULER-LEWIS-BRITTON-SALERNO-TAYLOR-REID-CATES-HAINES- 9
MOTTLEY-JONES-TERWILLEGER-MILLER-COLONNA-THOMPSON-CALLENDER- 10
GARCIA-GRENDELL-VERICH-HOUSEHOLDER-O'BRIEN-OPFER-LOGAN- 11
SENATORS RAY-OELSLAGER-WATTS-DRAKE-LATTA-LATELL-HOWARD 12
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A B I L L
To amend sections 1301.05, 1301.12, 1303.02, 15
1304.01, 1304.02, 1305.10, 1305.13, 1308.03, 16
1308.04, 1308.08, 1308.09, 1308.10, 1308.11, 17
1308.12, 1308.13, 1308.14, 1308.15, 1308.16, 18
1308.17, 1308.22, 1308.31, 1308.37, 1308.38, 19
1308.41, 1308.42, 1309.01, 1309.03, 1309.14, 20
1309.20, 1309.21, 1309.22, 1309.23, 1309.24, 21
1309.25, 1309.28, 1309.31, 1701.01, 1701.24, 22
1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 23
1701.832, 1705.01, 1705.04, 1705.16, 1705.43, 24
1782.33, and 3901.51; to enact new sections 25
1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 26
1308.18, 1308.19, 1308.20, 1308.21, 1308.23, 28
1308.24, 1308.25, 1308.26, 1308.27, 1308.32, 29
1308.33, 1308.39, and 1308.40 and sections 30
1308.51, 1308.52, 1308.53, 1308.54, 1308.55, 31
1308.56, 1308.57, 1308.58, 1308.59, 1308.60, 32
1308.61, 1309.112, and 1309.113; and to repeal 33
sections 1308.01, 1308.02, 1308.05, 1308.06, 34
1308.07, 1308.18, 1308.19, 1308.20, 1308.21, 35
1308.23, 1308.24, 1308.25, 1308.26, 1308.27, 36
1308.28, 1308.32, 1308.33, 1308.34, 1308.35, 37
1308.36, 1308.39, 1308.40, 1308.43, and 1308.44 38
of the Revised Code to adopt the Revised Article 39
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8 of the Uniform Commercial Code--Investment 40
Securities, to adopt modifications to the General 41
Corporation Law regarding control share 42
acquisitions, and to make changes in certain
organizational provisions of the Limited 43
Liability Companies Law and the Limited
Partnerships Law. 44
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 46
Section 1. That sections 1301.05, 1301.12, 1303.02, 48
1304.01, 1304.02, 1305.10, 1305.13, 1308.03, 1308.04, 1308.08, 49
1308.09, 1308.10, 1308.11, 1308.12, 1308.13, 1308.14, 1308.15, 50
1308.16, 1308.17, 1308.22, 1308.31, 1308.37, 1308.38, 1308.41, 51
1308.42, 1309.01, 1309.03, 1309.14, 1309.20, 1309.21, 1309.22, 52
1309.23, 1309.24, 1309.25, 1309.28, 1309.31, 1701.01, 1701.24, 53
1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 1701.832, 1705.01, 54
1705.04, 1705.16, 1705.43, 1782.33, and 3901.51 be amended and 55
new sections 1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 56
1308.18, 1308.19, 1308.20, 1308.21, 1308.23, 1308.24, 1308.25, 57
1308.26, 1308.27, 1308.32, 1308.33, 1308.39, and 1308.40 and 58
sections 1308.51, 1308.52, 1308.53, 1308.54, 1308.55, 1308.56, 59
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: 60
Sec. 1301.05. (A) Except as otherwise provided in this 69
section, when a transaction bears a reasonable relation to this 70
state and also to another state or nation, the parties may agree 71
that the law either of this state or of the other state or nation 72
shall govern their rights and duties. Failing such an agreement 73
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., 75
and 1310. of the Revised Code apply to transactions bearing an 76
appropriate relation to this state.
(B) Where one of the following provisions of Chapters 78
1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309., and 1310. 80
of the Revised Code specifies the applicable law, that provision 81
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governs and a contrary agreement is effective only to the extent 82
permitted by the law, including the conflict of laws rules, so 83
specified:
(1) Rights of creditors against sold goods, as provided in 85
section 1302.43 of the Revised Code; 86
(2) Applicability of sections 1304.01 to 1304.40 of the 88
Revised Code, as provided in section 1304.02 of the Revised Code; 89
(3) Fund transfers under sections 1304.51 to 1304.85 of 91
the Revised Code, as provided in section 1304.85 of the Revised 92
Code; 93
(4) Applicability of sections 1308.01 to 1308.36 CHAPTER 96
1308. of the Revised Code, as provided in section 1308.05 of the 97
Revised Code;
(5) Perfection provisions of section 1309.03 of the 99
Revised Code; 100
(6) Applicability of sections 1310.01 to 1310.78 of the 102
Revised Code, as provided in sections 1310.03 and 1310.04 of the 103
Revised Code. 104
Sec. 1301.12. (A) Except in the cases described in 113
division (B) of this section a contract for the sale of personal 114
property is not enforceable by way of action or defense beyond 115
five thousand dollars in amount or value of remedy unless there 116
is some writing which indicates that a contract for sale has been 117
made between the parties at a defined or stated price, reasonably
identifies the subject matter, and is signed by the party against 118
whom enforcement is sought or by his THAT PARTY'S authorized 119
agent.
(B) Division (A) of this section does not apply to 121
contracts for the sale of goods, section 1302.04 of the Revised 122
Code, nor of securities, section 1308.30 1308.07 of the Revised 123
Code, nor to security agreements, section 1309.14 of the Revised 124
Code.
Sec. 1303.02. (A) This chapter applies to negotiable 133
instruments. It does not apply to money, to payment orders 134
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governed by sections 1304.51 to 1304.85 of the Revised Code, or 135
to securities governed by sections 1308.01 to 1308.44 CHAPTER 137
1308. of the Revised Code.
(B) If there is a conflict between this chapter and either 139
sections 1304.01 to 1304.40 or sections 1309.01 to 1309.50 of the 140
Revised Code, the provisions of sections 1304.01 to 1304.40 or 141
sections 1309.01 to 1309.50 of the Revised Code govern. 142
(C) If any provision of this chapter is inconsistent with 144
any regulation of the board of governors of the federal reserve 145
system or any operating circular of the federal reserve banks, 146
the regulation or the operating circular supersedes the provision 147
of this chapter to the extent of the inconsistency. 148
Sec. 1304.01. (A) As used in sections 1304.01 to 1304.40 157
of the Revised Code, unless the context requires otherwise: 158
(1) "Account" means any deposit or credit account with a 160
bank, including a demand, time, savings, passbook, share draft, 161
or similar account, other than an account evidenced by a 162
certificate of deposit.
(2) "Afternoon" means the period of day between noon and 164
midnight. 165
(3) "Banking day" means the part of a day on which a bank 168
is open to the public for carrying on substantially all of its 169
banking functions.
(4) "Clearing house" means an association of banks or 171
other payors regularly clearing items. 172
(5) "Customer" means a person having an account with a 174
bank or for whom a bank has agreed to collect items, including a 175
bank that maintains an account at another bank. 176
(6) "Documentary draft" means a draft to be presented for 178
acceptance or payment if specified documents, certified 179
securities or instructions for uncertificated securities AS 180
DEFINED IN SECTION 1308.01 OF THE REVISED CODE, or other 181
certificates, statements, or similar documents are to be received
by the drawee or other payor before acceptance or payment of the 182
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draft.
(7) "Draft" means a draft as defined in section 1303.03 of 184
the Revised Code or an item, other than an instrument, that is an 185
order.
(8) "Drawee" means a person ordered in a draft to make 187
payment.
(9) "Item" means an instrument or a promise or order to 189
pay money handled by a bank for collection or payment. "Item" 190
does not include a payment order governed by sections 1304.51 to 191
1304.85 of the Revised Code, a credit slip, or a debit card slip. 192
(10) "Midnight deadline," with respect to a bank, is 194
midnight on its next banking day following the banking day on 195
which it recevies RECEIVES the relevant item or notice or from 196
which the time for taking action commences to run, whichever is 199
later.
(11) "Settle" means to pay in cash, by clearing house 201
settlement, in a charge or credit or by remittance, or otherwise 202
as agreed. A settlement may be either provisional or final. 203
(12) "Suspends payments" with respect to a bank means that 205
it has been closed by order of the supervisory authorities, that 206
a public officer has been appointed to take it over, or that it 207
ceases or refuses to make payments in the ordinary course of 208
business. 209
(B) As used in sections 1304.01 to 1304.40 of the Revised 211
Code:
(1) "Bank" means a person engaged in the business of 213
banking, including a savings bank, a savings and loan 214
association, a credit union, or a trust company. 215
(2) "Depositary bank" means the first bank to take an item 218
even though it is also the payor bank, unless the item is
presented for immediate payment over the counter. 219
(3) "Payor bank" means a bank that is a drawee of a draft. 221
(4) "Intermediary bank" means a bank to which an item is 224
transferred in course of collection except the depositary or
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payor bank. 225
(5) "Collecting bank" means a bank handling an item for 228
collection except the payor bank.
(6) "Presenting bank" means a bank presenting an item 230
except a payor bank. 231
(C) As used in sections 1304.01 to 1304.40 of the Revised 234
Code:
(1) "Acceptance" and "certified check" have the same 236
meanings as in section 1303.46 of the Revised Code. 237
(2) "Alteration" has the same meaning as in section 239
1303.50 of the Revised Code. 240
(3) "Cashier's check," "certificate of deposit," "check," 242
"instrument," and "teller's check" have the same meanings as in 243
section 1303.03 of the Revised Code. 244
(4) "Good faith," "order," "ordinary care," "promise," and 246
"prove" have the same meanings as in section 1303.01 of the 247
Revised Code.
(5) "Holder in due course" has the same meaning as in 249
section 1303.32 of the Revised Code. 250
(6) "Notice of dishonor" has the same meaning as in 252
section 1303.63 of the Revised Code. 253
(7) "Person entitled to enforce" has the same meaning as 255
in section 1303.31 of the Revised Code. 256
(8) "Presentment" has the same meaning as in section 258
1303.61 of the Revised Code. 259
(9) "Unauthorized signature" has the same meaning as in 261
section 1303.43 of the Revised Code. 262
(D) The terms and principles of construction and 264
interpretation in sections 1301.01 to 1301.14 of the Revised Code 265
are applicable to sections 1304.01 to 1303.40 1304.40 of the 266
Revised Code.
Sec. 1304.02. (A) To the extent that items within 275
sections 1304.01 to 1304.40 of the Revised Code are also within 276
the scope of Chapter 1303. and sections 1308.01 to 1308.36 277
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CHAPTER 1308. of the Revised Code, they are subject to that 278
chapter and those sections CHAPTERS. In the event of conflict, 280
the provisions of sections 1304.01 to 1304.40 of the Revised Code 281
govern those of Chapter 1303., but the provisions of sections 282
1308.01 to 1308.36 CHAPTER 1308. of the Revised Code govern those 283
of sections 1304.01 to 1304.40 of the Revised Code. 284
(B) The liability of a bank for action or non-action with 286
respect to any item handled by it for purposes of presentment, 287
payment, or collection is governed by the law of the place where 288
the bank is located. In the case of action or non-action by or 289
at a branch or separate office of a bank, its liability is
governed by the law of the place where the branch or separate 290
office is located. 291
Sec. 1305.10. (A) Unless otherwise agreed, the 300
beneficiary by transferring or presenting a documentary draft or 301
demand for payment warrants to all interested parties that the 302
necessary conditions of the credit have been complied with. This 303
is in addition to any warranties arising under Chapters 1303., 304
1304., and 1308. of the Revised Code.
(B) Unless otherwise agreed, a negotiating, advising, 306
confirming, collecting, or issuing bank presenting or 307
transferring a draft or demand for payment under a credit 308
warrants only the matters warranted by a collecting bank under
sections 1304.01 to 1304.40 of the Revised Code, and any such 309
bank transferring a document warrants only the matters warranted 310
by an A SECURITIES intermediary under sections 1307.01 to 1307.40 311
and 1308.01 to 1308.36 CHAPTER 1308. of the Revised Code. 312
Sec. 1305.13. (A) An issuer must honor a draft or demand 321
for payment that complies with the terms of the relevant credit 322
regardless of whether the goods or documents conform to the 323
underlying contract for sale or other contract between the 324
customer and the beneficiary. The issuer is not excused from 325
honor of such a draft or demand by reason of an additional 326
general term that all documents must be satisfactory to the 327
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issuer, but an issuer may require that specified documents must 328
be satisfactory to it. 329
(B) Unless otherwise agreed when documents appear on their 331
face to comply with the terms of a credit but a required document 332
does not in fact conform to the warranties made on negotiation or 333
transfer of a document of title, pursuant to section 1307.35 of 334
the Revised Code, or of a certificated security pursuant to 335
section 1308.21 1308.20 of the Revised Code, or is forged or 336
fraudulent or there is fraud in the transaction: 338
(1) The issuer must honor the draft or demand for payment 340
if honor is demanded by a negotiating bank or other holder of the 341
draft or demand which has taken the draft or demand under the 342
credit and under circumstances which would make it a holder in 343
due course as provided in section 1303.32 of the Revised Code and 344
in an appropriate case would make it a person to whom a document 345
of title has been duly negotiated, as provided in section 1307.30 346
of the Revised Code, or a bona fide PROTECTED purchaser of a 347
certificated security, as provided in section 1308.17 of the 349
Revised Code; and
(2) In all other cases as against its customer, an issuer 351
acting in good faith may honor the draft or demand for payment 352
despite notification from the customer of fraud, forgery, or 353
other defect not apparent on the face of the documents but a 354
court of appropriate jurisdiction may enjoin such honor. 355
(C) Unless otherwise agreed, an issuer which has duly 357
honored a draft or demand for payment is entitled to immediate 358
reimbursement of any payment made under the credit and to be put 359
in effectively available funds not later than the day before 360
maturity of any acceptance made under the credit. 361
(D) When a credit provides for payment by the issuer on 363
receipt of notice that the required documents are in the 364
possession of a correspondent or other agent of the issuer: 365
(1) Any payment made on receipt of such notice is 367
conditional; and 368
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(2) The issuer may reject documents which do not comply 370
with the credit if it does so within three banking days following 371
its receipt of the documents; and 372
(3) In the event of such rejection, the issuer is entitled 374
by chargeback or otherwise to return of the payment made. 375
(E) In the case covered by division (D) of this section, 377
failure to reject documents within the time specified in division 378
(D)(2) of this section constitutes acceptance of the documents 379
and makes the payment final in favor of the beneficiary. 380
Sec. 1308.01. (A) IN THIS CHAPTER: 382
(1) "ADVERSE CLAIM" MEANS A CLAIM THAT A CLAIMANT HAS A 384
PROPERTY INTEREST IN A FINANCIAL ASSET AND THAT IT IS A VIOLATION 385
OF THE RIGHTS OF THE CLAIMANT FOR ANOTHER PERSON TO HOLD, 386
TRANSFER, OR DEAL WITH THE FINANCIAL ASSET.
(2) "BEARER FORM," AS APPLIED TO A CERTIFICATED SECURITY, 388
MEANS A FORM IN WHICH THE SECURITY IS PAYABLE TO THE BEARER OF 389
THE SECURITY CERTIFICATE ACCORDING TO ITS TERMS BUT NOT BY REASON 390
OF AN INDORSEMENT.
(3) "BROKER" MEANS A PERSON DEFINED AS A BROKER OR DEALER 392
UNDER THE FEDERAL SECURITIES LAWS, BUT WITHOUT EXCLUDING A BANK 393
ACTING IN THAT CAPACITY.
(4) "CERTIFICATED SECURITY" MEANS A SECURITY THAT IS 395
REPRESENTED BY A CERTIFICATE. 396
(5) "CLEARING CORPORATION" MEANS: 398
(a) A PERSON THAT IS REGISTERED AS A "CLEARING AGENCY" 400
UNDER THE FEDERAL SECURITIES LAWS; 401
(b) A FEDERAL RESERVE BANK; OR 403
(c) ANY OTHER PERSON THAT PROVIDES CLEARANCE OR SETTLEMENT 405
SERVICES WITH RESPECT TO FINANCIAL ASSETS THAT WOULD REQUIRE IT 406
TO REGISTER AS A CLEARING AGENCY UNDER THE FEDERAL SECURITIES 407
LAWS BUT FOR AN EXCLUSION OR EXEMPTION FROM THE REGISTRATION 408
REQUIREMENT, IF ITS ACTIVITIES AS A CLEARING CORPORATION, 409
INCLUDING PROMULGATION OF RULES, ARE SUBJECT TO REGULATION BY A
FEDERAL OR STATE GOVERNMENTAL AUTHORITY. 410
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(6) "COMMUNICATE" MEANS TO: 412
(a) SEND A SIGNED WRITING; OR 414
(b) TRANSMIT INFORMATION BY ANY MECHANISM AGREED UPON BY 416
THE PERSONS TRANSMITTING AND RECEIVING THE INFORMATION. 417
(7) "ENTITLEMENT HOLDER" MEANS A PERSON IDENTIFIED IN THE 419
RECORDS OF A SECURITIES INTERMEDIARY AS THE PERSON HAVING A 420
SECURITY ENTITLEMENT AGAINST THE SECURITIES INTERMEDIARY. IF A 421
PERSON ACQUIRES A SECURITY ENTITLEMENT BY VIRTUE OF DIVISION 422
(B)(2) OR (3) OF SECTION 1308.51 OF THE REVISED CODE, THAT PERSON
IS THE ENTITLEMENT HOLDER. 423
(8) "ENTITLEMENT ORDER" MEANS A NOTIFICATION COMMUNICATED 425
TO A SECURITIES INTERMEDIARY DIRECTING TRANSFER OR REDEMPTION OF 426
A FINANCIAL ASSET TO WHICH THE ENTITLEMENT HOLDER HAS A SECURITY 427
ENTITLEMENT.
(9) "FINANCIAL ASSET," EXCEPT AS OTHERWISE PROVIDED IN 429
SECTION 1308.02 OF THE REVISED CODE, MEANS: 430
(a) A SECURITY; 432
(b) AN OBLIGATION OF A PERSON OR A SHARE, PARTICIPATION, 434
OR OTHER INTEREST IN A PERSON OR IN PROPERTY OR AN ENTERPRISE OF 435
A PERSON, WHICH IS, OR IS OF A TYPE, DEALT IN OR TRADED ON 436
FINANCIAL MARKETS, OR WHICH IS RECOGNIZED IN ANY AREA IN WHICH IT 437
IS ISSUED OR DEALT IN AS A MEDIUM FOR INVESTMENT; OR
(c) ANY PROPERTY THAT IS HELD BY A SECURITIES INTERMEDIARY 439
FOR ANOTHER PERSON IN A SECURITIES ACCOUNT IF THE SECURITIES 440
INTERMEDIARY HAS EXPRESSLY AGREED WITH THE OTHER PERSON THAT THE 441
PROPERTY IS TO BE TREATED AS A FINANCIAL ASSET UNDER THIS 442
CHAPTER.
AS CONTEXT REQUIRES, THE TERM MEANS EITHER THE INTEREST 444
ITSELF OR THE MEANS BY WHICH A PERSON'S CLAIM TO IT IS EVIDENCED, 445
INCLUDING A CERTIFICATED OR UNCERTIFICATED SECURITY, A SECURITY 446
CERTIFICATE, OR A SECURITY ENTITLEMENT.
(10) "GOOD FAITH," FOR PURPOSES OF THE OBLIGATION OF GOOD 448
FAITH IN THE PERFORMANCE OR ENFORCEMENT OF CONTRACTS OR DUTIES 449
WITHIN THIS CHAPTER, MEANS HONESTY IN FACT AND THE OBSERVANCE OF 450
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REASONABLE COMMERCIAL STANDARDS OF FAIR DEALING. 451
(11) "INDORSEMENT" MEANS A SIGNATURE THAT ALONE OR 453
ACCOMPANIED BY OTHER WORDS IS MADE ON A SECURITY CERTIFICATE IN 454
REGISTERED FORM OR ON A SEPARATE DOCUMENT FOR THE PURPOSE OF 455
ASSIGNING, TRANSFERRING, OR REDEEMING THE SECURITY OR GRANTING A 456
POWER TO ASSIGN, TRANSFER, OR REDEEM IT.
(12) "INSTRUCTION" MEANS A NOTIFICATION COMMUNICATED TO 458
THE ISSUER OF AN UNCERTIFICATED SECURITY WHICH DIRECTS THAT THE 459
TRANSFER OF THE SECURITY BE REGISTERED OR THAT THE SECURITY BE 460
REDEEMED.
(13) "REGISTERED FORM," AS APPLIED TO A CERTIFICATED 462
SECURITY, MEANS A FORM IN WHICH: 463
(a) THE SECURITY CERTIFICATE SPECIFIES A PERSON ENTITLED 465
TO THE SECURITY; AND 466
(b) A TRANSFER OF THE SECURITY MAY BE REGISTERED UPON 468
BOOKS MAINTAINED FOR THAT PURPOSE BY OR ON BEHALF OF THE ISSUER, 469
OR THE SECURITY CERTIFICATE SO STATES. 470
(14) "SECURITIES INTERMEDIARY" MEANS: 472
(a) A CLEARING CORPORATION; OR 474
(b) A PERSON, INCLUDING A BANK OR BROKER, THAT IN THE 476
ORDINARY COURSE OF ITS BUSINESS MAINTAINS SECURITIES ACCOUNTS FOR 477
OTHERS AND IS ACTING IN THAT CAPACITY. 478
(15) "SECURITY," EXCEPT AS OTHERWISE PROVIDED IN SECTION 480
1308.02 OF THE REVISED CODE, MEANS AN OBLIGATION OF AN ISSUER OR 481
A SHARE, PARTICIPATION, OR OTHER INTEREST IN AN ISSUER OR IN 482
PROPERTY OR AN ENTERPRISE OF AN ISSUER:
(a) WHICH IS REPRESENTED BY A SECURITY CERTIFICATE IN 484
BEARER OR REGISTERED FORM, OR THE TRANSFER OF WHICH MAY BE 485
REGISTERED UPON BOOKS MAINTAINED FOR THAT PURPOSE BY OR ON BEHALF 486
OF THE ISSUER;
(b) WHICH IS ONE OF A CLASS OR SERIES OR BY ITS TERMS IS 488
DIVISIBLE INTO A CLASS OR SERIES OF SHARES, PARTICIPATIONS, 489
INTERESTS, OR OBLIGATIONS; AND 490
(c) WHICH: 492
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(i) IS, OR IS OF A TYPE, DEALT IN OR TRADED ON SECURITIES 494
EXCHANGES OR SECURITIES MARKETS; OR 495
(ii) IS A MEDIUM FOR INVESTMENT AND BY ITS TERMS EXPRESSLY 497
PROVIDES THAT IT IS A SECURITY GOVERNED BY THIS CHAPTER. 498
(16) "SECURITY CERTIFICATE" MEANS A CERTIFICATE 500
REPRESENTING A SECURITY.
(17) "SECURITY ENTITLEMENT" MEANS THE RIGHTS AND PROPERTY 502
INTEREST OF AN ENTITLEMENT HOLDER WITH RESPECT TO A FINANCIAL 503
ASSET SPECIFIED IN SECTIONS 1308.51 TO 1308.61 OF THE REVISED 504
CODE.
(18) "UNCERTIFICATED SECURITY" MEANS A SECURITY THAT IS 506
NOT REPRESENTED BY A CERTIFICATE. 507
(B) OTHER DEFINITIONS APPLYING TO THIS CHAPTER AND THE 509
SECTIONS IN WHICH THEY APPEAR ARE: 510
(1) "APPROPRIATE PERSON," AS DEFINED IN SECTION 1308.23 OF 512
THE REVISED CODE.
(2) "CONTROL," AS DEFINED IN SECTION 1308.24 OF THE 514
REVISED CODE.
(3) "DELIVERY," AS DEFINED IN SECTION 1308.27 OF THE 516
REVISED CODE.
(4) "INVESTMENT COMPANY SECURITY," AS DEFINED IN SECTION 518
1308.02 OF THE REVISED CODE.
(5) "ISSUER," AS DEFINED IN SECTION 1308.08 OF THE REVISED 520
CODE.
(6) "OVERISSUE," AS DEFINED IN SECTION 1308.03 OF THE 522
REVISED CODE.
(7) "PROTECTED PURCHASER," AS DEFINED IN SECTION 1308.17 524
OF THE REVISED CODE.
(8) "SECURITIES ACCOUNT," AS DEFINED IN SECTION 1308.51 OF 526
THE REVISED CODE.
(C) IN ADDITION, CHAPTER 1301. OF THE REVISED CODE 528
CONTAINS GENERAL DEFINITIONS AND PRINCIPLES OF CONSTRUCTION AND 529
INTERPRETATION APPLICABLE THROUGHOUT THIS CHAPTER. 530
(D) THE CHARACTERIZATION OF A PERSON, BUSINESS, OR 532
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TRANSACTION FOR PURPOSES OF THIS CHAPTER DOES NOT DETERMINE THE 533
CHARACTERIZATION OF THE PERSON, BUSINESS, OR TRANSACTION FOR 534
PURPOSES OF ANY OTHER LAW, REGULATION, OR RULE. 535
Sec. 1308.02. (A) A SHARE OR SIMILAR EQUITY INTEREST 537
ISSUED BY A CORPORATION, BUSINESS TRUST, JOINT STOCK COMPANY, OR 538
SIMILAR ENTITY IS A SECURITY. 539
(B) AN "INVESTMENT COMPANY SECURITY" IS A SECURITY. 541
"INVESTMENT COMPANY SECURITY" MEANS A SHARE OR SIMILAR EQUITY 542
INTEREST ISSUED BY AN ENTITY THAT IS REGISTERED AS AN INVESTMENT 543
COMPANY UNDER THE FEDERAL INVESTMENT COMPANY LAWS, AN INTEREST IN 544
A UNIT INVESTMENT TRUST THAT IS SO REGISTERED, OR A FACE-AMOUNT 545
CERTIFICATE ISSUED BY A FACE-AMOUNT CERTIFICATE COMPANY THAT IS
SO REGISTERED. INVESTMENT COMPANY SECURITY DOES NOT INCLUDE AN 546
INSURANCE POLICY OR ENDOWMENT POLICY OR ANNUITY CONTRACT ISSUED 547
BY AN INSURANCE COMPANY.
(C) AN INTEREST IN A PARTNERSHIP OR LIMITED LIABILITY 549
COMPANY IS NOT A SECURITY UNLESS IT IS DEALT IN OR TRADED ON 550
SECURITIES EXCHANGES OR IN SECURITIES MARKETS, ITS TERMS 551
EXPRESSLY PROVIDE THAT IT IS A SECURITY GOVERNED BY THIS CHAPTER, 552
OR IT IS AN INVESTMENT COMPANY SECURITY. HOWEVER, AN INTEREST IN 553
A PARTNERSHIP OR LIMITED LIABILITY COMPANY IS A FINANCIAL ASSET
IF IT IS HELD IN A SECURITIES ACCOUNT. 554
(D) A WRITING THAT IS A SECURITY CERTIFICATE IS GOVERNED 556
BY THIS CHAPTER AND NOT BY CHAPTER 1303. OF THE REVISED CODE, 557
EVEN THOUGH IT ALSO MEETS THE REQUIREMENTS OF THAT CHAPTER. 558
HOWEVER, A NEGOTIABLE INSTRUMENT GOVERNED BY CHAPTER 1303. OF THE 559
REVISED CODE IS A FINANCIAL ASSET IF IT IS HELD IN A SECURITIES
ACCOUNT. 560
(E) AN OPTION OR SIMILAR OBLIGATION ISSUED BY A CLEARING 562
CORPORATION TO ITS PARTICIPANTS IS NOT A SECURITY, BUT IS A 563
FINANCIAL ASSET.
(F) A COMMODITY CONTRACT, AS DEFINED IN SECTION 1309.112 565
OF THE REVISED CODE, IS NOT A SECURITY OR A FINANCIAL ASSET. 566
Sec. 1308.03. (A) The EXCEPT AS OTHERWISE PROVIDED IN 575
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DIVISIONS (A)(1) AND (2) OF THIS SECTION, THE provisions of 576
sections 1308.01 to 1308.44 of the Revised Code THIS CHAPTER 577
which validate a security or compel its issue or reissue do not 579
apply to the extent that validation, issue, or reissue would 580
result in overissue; but if.
(1) An IF AN identical security which does not constitute 582
an overissue is reasonably available for purchase, the person 583
entitled to issue or validation may compel the issuer to purchase 584
the security for him and either to deliver a IT IF certificated 586
security or to register the ITS transfer of an IF uncertificated 587
security to him, against surrender of any certificated security 588
he CERTIFICATE THE PERSON holds; or. 589
(2) A IF A security is not so available for purchase, the 592
A person entitled to issue or validation may recover from the 593
issuer the price he THE PERSON or the last purchaser for value 594
paid for it with interest from the date of his THE PERSON'S 595
demand. 596
(B) "Overissue" means the issue of securities in excess of 598
the amount the issuer has corporate power to issue, BUT AN 599
OVERISSUE DOES NOT OCCUR IF APPROPRIATE ACTION HAS CURED THE 600
OVERISSUE.
Sec. 1308.04. (A) Certificated securities governed by 609
sections 1308.01 to 1308.44 of the Revised Code, are negotiable 610
instruments. 611
(B) Statements as provided in section 1308.44 of the 613
Revised Code, notices, or the like, sent by the issuer of 614
uncertificated securities and instructions as provided in section 615
1308.23 of the Revised Code are neither negotiable instruments 616
nor certificated securities. 617
(C) In any THE FOLLOWING RULES APPLY IN AN action on a 619
CERTIFICATED security AGAINST THE ISSUER: 620
(1)(A) Unless specifically denied in the pleadings, each 622
signature on a certificated security, CERTIFICATE OR in a 623
necessary indorsement, or an initial transaction statement, or on 624
15
an instruction, is admitted; 625
(2)(B) If the effectiveness of a signature is put in 627
issue, the burden of establishing it EFFECTIVENESS is on the 628
party claiming under the signature, but the signature is presumed 629
to be genuine or authorized; 630
(3)(C) If signatures on a certificated security 632
CERTIFICATE are admitted or established, production of the 633
security CERTIFICATE entitles a holder to recover on it unless 635
the defendant establishes a defense or a defect going to the 636
validity of the security;
(4)(D) If signatures on an initial transaction statement 638
are admitted or established, the facts stated in the statement 640
are presumed to be true as of the time of its issuance; and 641
(5) After it is shown that a defense or defect exists, the 643
plaintiff has the burden of establishing that he THE PLAINTIFF or 645
some person under whom he THE PLAINTIFF claims is a person
against whom the defense or defect is ineffective, as provided in 646
section 1308.44 of the Revised Code CANNOT BE ASSERTED. 647
Sec. 1308.05. (A) THE LOCAL LAW OF THE ISSUER'S 649
JURISDICTION, AS SPECIFIED IN DIVISION (D) OF THIS SECTION, 650
GOVERNS:
(1) THE VALIDITY OF A SECURITY; 652
(2) THE RIGHTS AND DUTIES OF THE ISSUER WITH RESPECT TO 654
REGISTRATION OF TRANSFER; 655
(3) THE EFFECTIVENESS OF REGISTRATION OF TRANSFER BY THE 657
ISSUER;
(4) WHETHER THE ISSUER OWES ANY DUTIES TO AN ADVERSE 659
CLAIMANT TO A SECURITY; AND 660
(5) WHETHER AN ADVERSE CLAIM CAN BE ASSERTED AGAINST A 662
PERSON TO WHOM TRANSFER OF A CERTIFICATED OR UNCERTIFICATED 663
SECURITY IS REGISTERED OR A PERSON WHO OBTAINS CONTROL OF AN 664
UNCERTIFICATED SECURITY.
(B) THE LOCAL LAW OF THE SECURITIES INTERMEDIARY'S 666
JURISDICTION, AS SPECIFIED IN DIVISION (E) OF THIS SECTION, 667
16
GOVERNS:
(1) ACQUISITION OF A SECURITY ENTITLEMENT FROM THE 669
SECURITIES INTERMEDIARY; 670
(2) THE RIGHTS AND DUTIES OF THE SECURITIES INTERMEDIARY 672
AND ENTITLEMENT HOLDER ARISING OUT OF A SECURITY ENTITLEMENT; 673
(3) WHETHER THE SECURITIES INTERMEDIARY OWES ANY DUTIES TO 675
AN ADVERSE CLAIMANT TO A SECURITY ENTITLEMENT; AND 676
(4) WHETHER AN ADVERSE CLAIM CAN BE ASSERTED AGAINST A 678
PERSON WHO ACQUIRES A SECURITY ENTITLEMENT FROM THE SECURITIES 679
INTERMEDIARY OR A PERSON WHO PURCHASES A SECURITY ENTITLEMENT OR 680
INTEREST THEREIN FROM AN ENTITLEMENT HOLDER. 681
(C) THE LOCAL LAW OF THE JURISDICTION IN WHICH A SECURITY 683
CERTIFICATE IS LOCATED AT THE TIME OF DELIVERY GOVERNS WHETHER AN 684
ADVERSE CLAIM CAN BE ASSERTED AGAINST A PERSON TO WHOM THE 685
SECURITY CERTIFICATE IS DELIVERED. 686
(D) "ISSUER'S JURISDICTION" MEANS THE JURISDICTION UNDER 688
WHICH THE ISSUER OF THE SECURITY IS ORGANIZED OR, IF PERMITTED BY 689
THE LAW OF THAT JURISDICTION, THE LAW OF ANOTHER JURISDICTION 690
SPECIFIED BY THE ISSUER. AN ISSUER ORGANIZED UNDER THE LAW OF 691
THIS STATE MAY SPECIFY THE LAW OF ANOTHER JURISDICTION AS THE LAW 692
GOVERNING THE MATTERS SPECIFIED IN DIVISIONS (A)(2) TO (5) OF 693
THIS SECTION.
(E) THE FOLLOWING RULES DETERMINE A "SECURITIES 695
INTERMEDIARY'S JURISDICTION" FOR PURPOSES OF THIS SECTION: 696
(1) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 698
AND ITS ENTITLEMENT HOLDER SPECIFIES THAT IT IS GOVERNED BY THE 699
LAW OF A PARTICULAR JURISDICTION, THAT JURISDICTION IS THE 700
SECURITIES INTERMEDIARY'S JURISDICTION.
(2) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 702
AND ITS ENTITLEMENT HOLDER DOES NOT SPECIFY THE GOVERNING LAW AS 703
PROVIDED IN DIVISION (E)(1) OF THIS SECTION, BUT EXPRESSLY 704
SPECIFIES THAT THE SECURITIES ACCOUNT IS MAINTAINED AT AN OFFICE 705
IN A PARTICULAR JURISDICTION, THAT JURISDICTION IS THE SECURITIES 706
INTERMEDIARY'S JURISDICTION.
17
(3) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 708
AND ITS ENTITLEMENT HOLDER DOES NOT SPECIFY A JURISDICTION AS 709
PROVIDED IN DIVISION (E)(1) OR (2) OF THIS SECTION, THE 710
SECURITIES INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN 711
WHICH IS LOCATED THE OFFICE IDENTIFIED IN AN ACCOUNT STATEMENT AS 712
THE OFFICE SERVING THE ENTITLEMENT HOLDER'S ACCOUNT.
(4) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY 714
AND ITS ENTITLEMENT HOLDER DOES NOT SPECIFY A JURISDICTION AS 715
PROVIDED IN DIVISION (E)(1) OR (2) OF THIS SECTION AND AN ACCOUNT 716
STATEMENT DOES NOT IDENTIFY AN OFFICE SERVING THE ENTITLEMENT 717
HOLDER'S ACCOUNT AS PROVIDED IN DIVISION (E)(3) OF THIS SECTION, 718
THE SECURITIES INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN 719
WHICH IS LOCATED THE CHIEF EXECUTIVE OFFICE OF THE SECURITIES 720
INTERMEDIARY.
(F) A SECURITIES INTERMEDIARY'S JURISDICTION IS NOT 722
DETERMINED BY THE PHYSICAL LOCATION OF CERTIFICATES REPRESENTING 723
FINANCIAL ASSETS, OR BY THE JURISDICTION IN WHICH IS ORGANIZED 724
THE ISSUER OF THE FINANCIAL ASSET WITH RESPECT TO WHICH AN 725
ENTITLEMENT HOLDER HAS A SECURITY ENTITLEMENT, OR BY THE LOCATION 726
OF FACILITIES FOR DATA PROCESSING OR OTHER RECORD KEEPING
CONCERNING THE ACCOUNT. 727
Sec. 1308.06. A RULE ADOPTED BY A CLEARING CORPORATION 729
GOVERNING RIGHTS AND OBLIGATIONS AMONG THE CLEARING CORPORATION 730
AND ITS PARTICIPANTS IN THE CLEARING CORPORATION IS EFFECTIVE 731
EVEN IF THE RULE CONFLICTS WITH THIS CHAPTER AND AFFECTS ANOTHER 732
PARTY WHO DOES NOT CONSENT TO THE RULE.
Sec. 1308.07. A CONTRACT OR MODIFICATION OF A CONTRACT FOR 734
THE SALE OR PURCHASE OF A SECURITY IS ENFORCEABLE WHETHER OR NOT 735
THERE IS A WRITING SIGNED OR RECORD AUTHENTICATED BY A PARTY 736
AGAINST WHOM ENFORCEMENT IS SOUGHT, EVEN IF THE CONTRACT OR 737
MODIFICATION IS NOT CAPABLE OF PERFORMANCE WITHIN ONE YEAR OF ITS 738
MAKING.
Sec. 1308.08. (A) With respect to obligations on or 747
defenses to a security, "issuer" includes a person who: 748
18
(1) Places or authorizes the placing of his ITS name on a 750
certificated security CERTIFICATE, otherwise than as 751
authenticating trustee, registrar, transfer agent, or the like, 753
to evidence that it represents a share, participation, or other 754
interest in his ITS property or in an enterprise, or to evidence 756
his ITS duty to perform an obligation represented by the 757
certificated security CERTIFICATE; 758
(2) Creates shares, participations, or other interests in 760
his ITS property or in an enterprise, or undertakes obligations, 762
which shares, participations, interests, or obligations THAT are 763
uncertificated securities;
(3) Directly or indirectly creates fractional interests in 765
his ITS rights or property, which IF THE fractional interests are 767
represented by certificated securities SECURITY CERTIFICATES; or 768
(4) Becomes responsible for, or in place of, any other 770
person described as an issuer in this section. 771
(B) With respect to obligations on or defenses to a 773
security, a guarantor is an issuer to the extent of his ITS 774
guaranty, whether or not his ITS obligation is noted on a 775
certificated security or on statements of uncertificated 776
securities sent pursuant to section 1308.44 of the Revised Code 778
CERTIFICATE.
(C) With respect to registration of transfer, pledge, or 780
release as provided in sections 1308.37 to 1308.44 of the Revised 781
Code, "issuer" means a person on whose behalf transfer books are 782
maintained. 783
Sec. 1308.09. (A) Even against a purchaser for value and 792
without notice, the terms of a CERTIFICATED security include: 793
(1) If the security is certificated, those TERMS stated on 795
the security; 796
(2) If the security is uncertificated, those contained in 798
the initial transaction statement sent to such purchaser or, if 799
his interest is transferred to him other than by registration of 800
transfer, pledge, or release, the initial transaction statement 802
19
sent to the registered owner or registered pledgee; and 803
(3) Those CERTIFICATE AND TERMS made part of the security 805
by reference, on the certificated security or in the initial 806
transaction statement, CERTIFICATE to another instrument, 807
indenture, or document or to a constitution, statute, ordinance, 809
rule, regulation, order, or the like, to the extent that the 810
terms referred to do not conflict with the terms stated on the 811
certificated security or contained in the statement CERTIFICATE. 812
A reference under division (A)(3) of this section does not of 814
itself charge a purchaser for value with notice of a defect going 815
to the validity of the security, even though IF the certificated 816
security or statement CERTIFICATE expressly states that a person 817
accepting it admits notice.
THE TERMS OF AN UNCERTIFICATED SECURITY INCLUDE THOSE 819
STATED IN ANY INSTRUMENT, INDENTURE, OR DOCUMENT, OR IN A 820
CONSTITUTION, STATUTE, ORDINANCE, RULE, REGULATION, ORDER, OR THE 821
LIKE, PURSUANT TO WHICH THE SECURITY IS ISSUED.
(B)(1) THE FOLLOWING RULES APPLY IF AN ISSUER ASSERTS THAT 823
A SECURITY IS NOT VALID: 824
(1) A certificated security in the hands of a purchaser 826
for value or an uncertificated security as to which an initial 827
transaction statement has been sent to a purchaser for value, 828
other than a security ONE issued by a government or governmental 829
SUBDIVISION, agency, or unit INSTRUMENTALITY, even though issued 831
with a defect going to its validity, is valid with respect to the 832
IN THE HANDS OF A purchaser if he is FOR VALUE AND without notice 833
of the particular defect unless the defect involves a violation 834
of A constitutional provisions, in which PROVISION. IN THAT 836
case, the security is valid with respect to IN THE HANDS OF a 837
subsequent purchaser for value and without notice of the defect, 838
OTHER THAN ONE WHO TAKES BY ORIGINAL ISSUE. 839
(2) The provisions of division (B)(1) of this section 841
apply to an issuer that is a government or governmental 842
SUBDIVISION, agency, or unit INSTRUMENTALITY only if either there 844
20
has been substantial compliance with the legal requirements 846
governing the issue or the issuer has received a substantial 847
consideration for the issue as a whole or for the particular 848
security and a stated purpose of the issue is one for which the 849
issuer has power to borrow money or issue the security. 850
(C) Except as OTHERWISE provided in the case of certain 852
unauthorized signatures on issue under section 1308.12 of the 854
Revised Code, lack of genuineness of a certificated security or 855
an initial transaction statement is a complete defense, even 856
against a purchaser for value and without notice. 857
(D) All other defenses of the issuer of a certificated or 859
uncertificated security, including nondelivery and conditional 860
delivery of a certificated security, are ineffective against a 861
purchaser for value who has taken THE CERTIFICATED SECURITY 862
without notice of the particular defense. 863
(E) Nothing in this THIS section shall be construed to 865
DOES NOT affect the right of a party to CANCEL a CONTRACT FOR A 867
SECURITY "when, as and if issued" or a "when distributed" 868
contract to cancel the contract in the event of a material change 869
in the character of the security that is the subject of the
contract or in the plan or arrangement pursuant to which the 871
security is to be issued or distributed.
(F) IF A SECURITY IS HELD BY A SECURITIES INTERMEDIARY 873
AGAINST WHOM AN ENTITLEMENT HOLDER HAS A SECURITY ENTITLEMENT 874
WITH RESPECT TO THE SECURITY, THE ISSUER MAY NOT ASSERT ANY 875
DEFENSE THAT THE ISSUER COULD NOT ASSERT IF THE ENTITLEMENT 876
HOLDER HELD THE SECURITY DIRECTLY.
Sec. 1308.10. (A) After an act or event, OTHER THAN A 885
CALL THAT HAS BEEN REVOKED, creating a right to immediate 887
performance of the principal obligation represented by a 888
certificated security or that sets a date on or after which the 889
security is to be presented or surrendered for redemption or
exchange, a purchaser is charged with notice of any defect in its 890
issue or defense of the issuer if THE ACT OR EVENT: 891
21
(1) The act or event is one requiring (A) REQUIRES the 894
payment of money, the delivery of A certificated securities
SECURITY, the registration of transfer of AN uncertificated 896
securities SECURITY, or any of these THEM on presentation or 897
surrender of the certificated security CERTIFICATE, the funds 898
MONEY or securities are SECURITY IS available on the date set for 899
payment or exchange, and he THE PURCHASER takes the security more 901
than one year after that date; and OR 902
(2) The act or event is (B) IS not covered by division 905
(A)(1) of this section and he THE PURCHASER takes the security 906
more than two years after the date set for surrender or 907
presentation or the date on which performance became due. 908
(B) A call that has been revoked is not within division 910
(A) of this section. 911
Sec. 1308.11. (A) A restriction on transfer of a security 920
imposed by the issuer, even though IF otherwise lawful, is 921
ineffective against any A person without actual knowledge of it 922
unless: 923
(A)(1) The security is certificated and the restriction is 925
noted conspicuously thereon ON THE SECURITY CERTIFICATE; or 926
(B)(2) The security is uncertificated and a notation of 929
the restriction is contained in the initial transaction statement
sent to the person or, if his interest is transferred to him 931
other than by registration of transfer, pledge, or release, the 932
initial transaction statement sent to the registered owner or the 934
registered pledgee HAS BEEN NOTIFIED OF THE RESTRICTION. 935
(B) A LIEN IN FAVOR OF AN ISSUER UPON A CERTIFICATED 937
SECURITY IS VALID AGAINST A PURCHASER ONLY IF THE RIGHT OF THE 938
ISSUER TO THE LIEN IS NOTED CONSPICUOUSLY ON THE SECURITY 939
CERTIFICATE.
Sec. 1308.12. An unauthorized signature placed on a 948
certificated security prior to CERTIFICATE BEFORE or in the 950
course of issue or placed on an initial transaction statement is
ineffective, but the signature is effective in favor of a 952
22
purchaser for value of the certificated security or a purchaser 953
for value of an uncertified security to whom the initial 954
transaction statement has been sent, if the purchaser is without 955
notice of the lack of authority and if the signing has been done 956
by: 957
(A) An authenticating trustee, registrar, transfer agent, 959
or other person entrusted by the issuer with the signing of the 960
security, CERTIFICATE OR of similar securities SECURITY 962
CERTIFICATES, or of initial transaction statements or the 963
immediate preparation for signing of any of them; or 964
(B) An employee of the issuer, or of any of the foregoing 966
PERSONS LISTED IN DIVISION (A) OF THIS SECTION, entrusted with 967
responsible handling of the security or initial transaction 968
statement CERTIFICATE. 969
Sec. 1308.13. (A) If a certificated security CERTIFICATE 978
contains the signatures necessary to its issue or transfer but is 980
incomplete in any other respect: 981
(1) Any person may complete it by filling in the blanks as 983
authorized; and 984
(2) Even though IF the blanks are incorrectly filled in, 986
the security as completed is enforceable by a purchaser who took 987
it for value and without notice of the incorrectness. 988
(B) A complete certificated security CERTIFICATE that has 990
been improperly altered, even though IF fraudulently, remains 991
enforceable, but only according to its original terms. 992
(C) If an initial transaction statement contains the 994
signatures necessary to its validity, but is incomplete in any 995
other respect: 996
(1) Any person may complete it by filling in the blanks as 998
authorized; and 999
(2) Even though the blanks are incorrectly filled in, the 1,001
statement as completed is effective in favor of the person to 1,002
whom it is sent if he purchased the security referred to therein 1,004
for value and without notice of the incorrectness.
23
(D) A complete initial transaction statement that has been 1,006
improperly altered, even though fraudulently, is effective in 1,007
favor of a purchaser to whom it has been sent, but only according 1,008
to its original terms. 1,009
Sec. 1308.14. (A) Prior to BEFORE due presentment for 1,018
registration of transfer of a certificated security in registered 1,019
form OR OF AN INSTRUCTION REQUESTING REGISTRATION OF TRANSFER OF 1,020
AN UNCERTIFICATED SECURITY, the issuer or indenture trustee may 1,021
treat the registered owner as the person exclusively entitled to 1,022
vote, to receive notifications, and otherwise to exercise all the 1,023
rights and powers of an owner. 1,024
(B) Subject to the provisions of divisions (C), (D), and 1,026
(F) of this section, the issuer or indenture trustee may treat 1,027
the registered owner of an uncertificated security as the person 1,028
exclusively entitled to vote, to receive notifications, and 1,029
otherwise to exercise all the rights and powers of an owner. 1,030
(C) The registered owner of an uncertificated security 1,032
that is subject to a registered pledge is not entitled to 1,033
registration of transfer prior to the due presentment to the 1,034
issuer of a release instruction. The exercise of conversion 1,035
rights with respect to a convertible uncertificated security is a 1,036
transfer within the meaning of this section. 1,037
(D) Upon due presentment of a transfer instruction from 1,039
the registered pledgee of an uncertificated security, the issuer 1,040
shall: 1,041
(1) Register the transfer of the security to the new owner 1,043
free of pledge, if the instruction specifies a new owner, who may 1,044
be the registered pledgee, and does not specify a pledgee; 1,045
(2) Register the transfer of the security to the new owner 1,047
subject to the interest of the existing pledgee, if the 1,048
instruction specifies a new owner and the existing pledgee; or 1,049
(3) Register the release of the security from the existing 1,051
pledge and register the pledge of the security to the other 1,052
pledgee, if the instruction specifies the existing owner and 1,053
24
another pledgee. 1,054
(E) Continuity of perfection of a security interest is not 1,056
broken by registration of transfer under division (D)(2) of this 1,057
section or by registration of release and pledge under division 1,058
(D)(3) of this section, if the security interest is assigned. 1,059
(F) If an uncertificated security is subject to a 1,061
registered pledge: 1,062
(1) Any uncertificated securities issued in exchange for 1,064
or distributed with respect to the pledged security shall be 1,065
registered subject to the pledge; 1,066
(2) Any certificated securities issued in exchange for or 1,068
distributed with respect to the pledged security shall be 1,069
delivered to the registered pledgee; and 1,070
(3) Any money paid in exchange for or in redemption of 1,072
part or all of the security shall be paid to the registered 1,073
pledgee. 1,074
(G) Nothing in sections 1308.01 to 1308.44 of the Revised 1,076
Code shall be construed to THIS CHAPTER DOES NOT affect the 1,077
liability of the registered owner of a security for calls, 1,078
assessments, or the like. 1,079
Sec. 1308.15. (A) A person placing his signature upon 1,088
SIGNING a certificated security or an initial transaction 1,089
statement CERTIFICATE as authenticating trustee, registrar, 1,090
transfer agent, or the like, warrants to a purchaser for value of 1,091
the certificated security or a purchaser for value of an 1,093
uncertificated security to whom the initial transaction statement 1,094
has been sent, if the purchaser is without notice of the 1,095
particular defect, that:
(1) The certificated security or initial transaction 1,097
CERTIFICATE is genuine; 1,098
(2) His THE PERSON'S own participation in the issue or 1,100
registration of the transfer, pledge, or release of the security 1,101
is within his THE PERSON'S capacity and within the scope of the 1,102
authority received by him THE PERSON from the issuer; and 1,103
25
(3) He THE PERSON has reasonable grounds to believe the 1,105
CERTIFICATED security is in the form and within the amount the 1,106
issuer is authorized to issue. 1,108
(B) Unless otherwise agreed, a person by so placing his 1,110
signature SIGNING UNDER DIVISION (A) OF THIS SECTION does not 1,112
assume responsibility for the validity of the security in other
respects.
Sec. 1308.16. (A) Upon transfer EXCEPT AS OTHERWISE 1,121
PROVIDED IN DIVISIONS (B) AND (C) OF THIS SECTION, UPON DELIVERY 1,122
of a CERTIFICATED OR UNCERTIFICATED security to a purchaser as 1,123
provided in section 1308.28 of the Revised Code, the purchaser 1,125
acquires the ALL rights in the security which his THAT THE 1,126
transferor had or had actual authority POWER to convey unless the 1,128
purchaser's rights are limited by division (D) of section 1308.17
of the Revised Code TRANSFER. 1,129
(B) A transferee PURCHASER of a limited interest acquires 1,131
rights only to the extent of the interest transferred PURCHASED. 1,133
The creation or release of a security interest in a security is 1,134
the transfer of a limited interest in that security. 1,135
(C) A PURCHASER OF A CERTIFICATED SECURITY WHO AS A 1,137
PREVIOUS HOLDER HAD NOTICE OF AN ADVERSE CLAIM DOES NOT IMPROVE 1,138
ITS POSITION BY TAKING FROM A PROTECTED PURCHASER. 1,139
Sec. 1308.17. (A) A "bona fide PROTECTED purchaser" is 1,148
MEANS a purchaser for value in good faith and without OF A 1,149
CERTIFICATED OR UNCERTIFICATED SECURITY, OR OF AN INTEREST 1,150
THEREIN, WHO:
(1) GIVES VALUE; 1,152
(2) DOES NOT HAVE notice of any adverse claim: 1,154
(1) Who takes delivery TO THE SECURITY; AND 1,156
(3) OBTAINS CONTROL of a THE certificated OR 1,158
UNCERTIFICATED security in bearer form or in registered form, 1,159
issued or indorsed to him or in blank; 1,160
(2) To whom the transfer, pledge, or release of an 1,162
uncertificated security is registered on the books of the issuer; 1,163
26
or 1,164
(3) To whom a security is transferred under the provisions 1,166
of division (A)(3), (4)(a), or (7) of section 1308.28 of the 1,167
Revised Code. 1,168
(B) "Adverse claim" includes a claim that a transfer was 1,170
or would be wrongful or that a particular adverse person is the 1,171
owner of or has an interest in the security. 1,172
(C) A bona fide purchaser in IN addition to acquiring the 1,174
rights of a purchaser, as provided in section 1308.16 of the 1,175
Revised Code, A PROTECTED PURCHASER also acquires his ITS 1,177
interest in the security free of any adverse claim. 1,178
(D) Notwithstanding division (A) of section 1308.16 of the 1,180
Revised Code, the transferee of a particular certificated 1,181
security who has been a party to any fraud or illegality 1,182
affecting the security, or who as a prior holder of that 1,183
certificated security had notice of an adverse claim, cannot 1,184
improve his position by taking from a bona fide purchaser. 1,185
Sec. 1308.18. (A) A PERSON ACQUIRES A SECURITY OR AN 1,187
INTEREST THEREIN, UNDER THIS CHAPTER, IF: 1,188
(1) THE PERSON IS A PURCHASER TO WHOM A SECURITY IS 1,190
DELIVERED PURSUANT TO SECTION 1308.27 OF THE REVISED CODE; OR 1,191
(2) THE PERSON ACQUIRES A SECURITY ENTITLEMENT TO THE 1,193
SECURITY PURSUANT TO SECTION 1308.51 OF THE REVISED CODE. 1,194
(B) A PERSON ACQUIRES A FINANCIAL ASSET, OTHER THAN A 1,196
SECURITY, OR AN INTEREST THEREIN, UNDER THIS CHAPTER, IF THE 1,197
PERSON ACQUIRES A SECURITY ENTITLEMENT TO THE FINANCIAL ASSET. 1,198
(C) A PERSON WHO ACQUIRES A SECURITY ENTITLEMENT TO A 1,200
SECURITY OR OTHER FINANCIAL ASSET HAS THE RIGHTS SPECIFIED IN 1,201
SECTIONS 1308.51 TO 1308.61 OF THE REVISED CODE, BUT IS A 1,202
PURCHASER OF ANY SECURITY, SECURITY ENTITLEMENT, OR OTHER
FINANCIAL ASSET HELD BY THE SECURITIES INTERMEDIARY ONLY TO THE 1,203
EXTENT PROVIDED IN SECTION 1308.53 OF THE REVISED CODE. 1,204
(D) UNLESS THE CONTEXT SHOWS THAT A DIFFERENT MEANING IS 1,206
INTENDED, A PERSON WHO IS REQUIRED BY OTHER LAW, REGULATION, 1,207
27
RULE, OR AGREEMENT TO TRANSFER, DELIVER, PRESENT, SURRENDER, 1,208
EXCHANGE, OR OTHERWISE PUT IN THE POSSESSION OF ANOTHER PERSON A 1,209
SECURITY OR FINANCIAL ASSET SATISFIES THAT REQUIREMENT BY CAUSING 1,210
THE OTHER PERSON TO ACQUIRE AN INTEREST IN THE SECURITY OR 1,211
FINANCIAL ASSET PURSUANT TO DIVISION (A) OR (B) OF THIS SECTION. 1,212
Sec. 1308.19. (A) A PERSON HAS NOTICE OF AN ADVERSE CLAIM 1,214
IF:
(1) THE PERSON KNOWS OF THE ADVERSE CLAIM; 1,216
(2) THE PERSON IS AWARE OF FACTS SUFFICIENT TO INDICATE 1,218
THAT THERE IS A SIGNIFICANT PROBABILITY THAT THE ADVERSE CLAIM 1,219
EXISTS AND DELIBERATELY AVOIDS INFORMATION THAT WOULD ESTABLISH 1,220
THE EXISTENCE OF THE ADVERSE CLAIM; OR
(3) THE PERSON HAS A DUTY, IMPOSED BY STATUTE OR RULE, TO 1,222
INVESTIGATE WHETHER AN ADVERSE CLAIM EXISTS, AND THE 1,223
INVESTIGATION SO REQUIRED WOULD ESTABLISH THE EXISTENCE OF THE 1,224
ADVERSE CLAIM.
(B) HAVING KNOWLEDGE THAT A FINANCIAL ASSET OR INTEREST 1,226
THEREIN IS OR HAS BEEN TRANSFERRED BY A REPRESENTATIVE IMPOSES NO 1,227
DUTY OF INQUIRY INTO THE RIGHTFULNESS OF A TRANSACTION AND IS NOT 1,228
NOTICE OF AN ADVERSE CLAIM. HOWEVER, A PERSON WHO KNOWS THAT A 1,229
REPRESENTATIVE HAS TRANSFERRED A FINANCIAL ASSET OR INTEREST 1,230
THEREIN IN A TRANSACTION THAT IS, OR WHOSE PROCEEDS ARE BEING 1,231
USED, FOR THE INDIVIDUAL BENEFIT OF THE REPRESENTATIVE OR
OTHERWISE IN BREACH OF DUTY HAS NOTICE OF AN ADVERSE CLAIM. 1,232
(C) AN ACT OR EVENT THAT CREATES A RIGHT TO IMMEDIATE 1,234
PERFORMANCE OF THE PRINCIPAL OBLIGATION REPRESENTED BY A SECURITY 1,235
CERTIFICATE OR SETS A DATE ON OR AFTER WHICH THE CERTIFICATE IS 1,236
TO BE PRESENTED OR SURRENDERED FOR REDEMPTION OR EXCHANGE DOES 1,237
NOT ITSELF CONSTITUTE NOTICE OF AN ADVERSE CLAIM EXCEPT IN THE 1,238
CASE OF A TRANSFER MORE THAN:
(1) ONE YEAR AFTER A DATE SET FOR PRESENTMENT OR SURRENDER 1,240
FOR REDEMPTION OR EXCHANGE; OR 1,241
(2) SIX MONTHS AFTER A DATE SET FOR PAYMENT OF MONEY 1,243
AGAINST PRESENTATION OR SURRENDER OF THE CERTIFICATE, IF MONEY 1,244
28
WAS AVAILABLE FOR PAYMENT ON THAT DATE. 1,245
(D) A PURCHASER OF A CERTIFICATED SECURITY HAS NOTICE OF 1,247
AN ADVERSE CLAIM IF THE SECURITY CERTIFICATE: 1,248
(1) WHETHER IN BEARER OR REGISTERED FORM, HAS BEEN 1,250
INDORSED "FOR COLLECTION" OR "FOR SURRENDER" OR FOR SOME OTHER 1,251
PURPOSE NOT INVOLVING TRANSFER; OR 1,252
(2) IS IN BEARER FORM AND HAS ON IT AN UNAMBIGUOUS 1,254
STATEMENT THAT IT IS THE PROPERTY OF A PERSON OTHER THAN THE 1,255
TRANSFEROR, BUT THE MERE WRITING OF A NAME ON THE CERTIFICATE IS 1,256
NOT SUCH A STATEMENT.
(E) FILING OF A FINANCING STATEMENT UNDER CHAPTER 1309. OF 1,259
THE REVISED CODE IS NOT NOTICE OF AN ADVERSE CLAIM TO A FINANCIAL
ASSET.
Sec. 1308.20. (A) A PERSON WHO TRANSFERS A CERTIFICATED 1,261
SECURITY TO A PURCHASER FOR VALUE WARRANTS TO THE PURCHASER, AND 1,262
AN INDORSER, IF THE TRANSFER IS BY INDORSEMENT, WARRANTS TO ANY 1,263
SUBSEQUENT PURCHASER, THAT:
(1) THE CERTIFICATE IS GENUINE AND HAS NOT BEEN MATERIALLY 1,265
ALTERED;
(2) THE TRANSFEROR OR INDORSER DOES NOT KNOW OF ANY FACT 1,267
THAT MIGHT IMPAIR THE VALIDITY OF THE SECURITY; 1,268
(3) THERE IS NO ADVERSE CLAIM TO THE SECURITY; 1,270
(4) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON 1,272
TRANSFER;
(5) IF THE TRANSFER IS BY INDORSEMENT, THE INDORSEMENT IS 1,274
MADE BY AN APPROPRIATE PERSON, OR IF THE INDORSEMENT IS BY AN 1,275
AGENT, THE AGENT HAS ACTUAL AUTHORITY TO ACT ON BEHALF OF THE 1,276
APPROPRIATE PERSON; AND
(6) THE TRANSFER IS OTHERWISE EFFECTIVE AND RIGHTFUL. 1,278
(B) A PERSON WHO ORIGINATES AN INSTRUCTION FOR 1,280
REGISTRATION OF TRANSFER OF AN UNCERTIFICATED SECURITY TO A 1,281
PURCHASER FOR VALUE WARRANTS TO THE PURCHASER THAT: 1,282
(1) THE INSTRUCTION IS MADE BY AN APPROPRIATE PERSON, OR 1,284
IF THE INSTRUCTION IS BY AN AGENT, THE AGENT HAS ACTUAL AUTHORITY 1,285
29
TO ACT ON BEHALF OF THE APPROPRIATE PERSON; 1,286
(2) THE SECURITY IS VALID; 1,288
(3) THERE IS NO ADVERSE CLAIM TO THE SECURITY; AND 1,290
(4) AT THE TIME THE INSTRUCTION IS PRESENTED TO THE 1,292
ISSUER:
(a) THE PURCHASER WILL BE ENTITLED TO THE REGISTRATION OF 1,294
TRANSFER; 1,295
(b) THE TRANSFER WILL BE REGISTERED BY THE ISSUER FREE 1,297
FROM ALL LIENS, SECURITY INTERESTS, RESTRICTIONS, AND CLAIMS 1,298
OTHER THAN THOSE SPECIFIED IN THE INSTRUCTION; 1,299
(c) THE TRANSFER WILL NOT VIOLATE ANY RESTRICTION ON 1,301
TRANSFER; AND 1,302
(d) THE REQUESTED TRANSFER WILL OTHERWISE BE EFFECTIVE AND 1,304
RIGHTFUL. 1,305
(C) A PERSON WHO TRANSFERS AN UNCERTIFICATED SECURITY TO A 1,307
PURCHASER FOR VALUE AND DOES NOT ORIGINATE AN INSTRUCTION IN 1,308
CONNECTION WITH THE TRANSFER WARRANTS THAT: 1,309
(1) THE UNCERTIFICATED SECURITY IS VALID; 1,311
(2) THERE IS NO ADVERSE CLAIM TO THE SECURITY; 1,313
(3) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON 1,315
TRANSFER; AND
(4) THE TRANSFER IS OTHERWISE EFFECTIVE AND RIGHTFUL. 1,317
(D) A PERSON WHO INDORSES A SECURITY CERTIFICATE WARRANTS 1,319
TO THE ISSUER THAT: 1,320
(1) THERE IS NO ADVERSE CLAIM TO THE SECURITY; AND 1,322
(2) THE INDORSEMENT IS EFFECTIVE. 1,324
(E) A PERSON WHO ORIGINATES AN INSTRUCTION FOR 1,326
REGISTRATION OF TRANSFER OF AN UNCERTIFICATED SECURITY WARRANTS 1,327
TO THE ISSUER THAT:
(1) THE INSTRUCTION IS EFFECTIVE; AND 1,329
(2) AT THE TIME THE INSTRUCTION IS PRESENTED TO THE ISSUER 1,331
THE PURCHASER WILL BE ENTITLED TO THE REGISTRATION OF TRANSFER. 1,332
(F) A PERSON WHO PRESENTS A CERTIFICATED SECURITY FOR 1,334
REGISTRATION OF TRANSFER OR FOR PAYMENT OR EXCHANGE WARRANTS TO 1,335
30
THE ISSUER THAT THE PERSON IS ENTITLED TO THE REGISTRATION, 1,336
PAYMENT, OR EXCHANGE, BUT A PURCHASER FOR VALUE AND WITHOUT 1,337
NOTICE OF ADVERSE CLAIMS TO WHOM TRANSFER IS REGISTERED WARRANTS 1,338
ONLY THAT THE PERSON HAS NO KNOWLEDGE OF ANY UNAUTHORIZED
SIGNATURE IN A NECESSARY INDORSEMENT. 1,339
(G) IF A PERSON ACTS AS AGENT OF ANOTHER IN DELIVERING A 1,341
CERTIFICATED SECURITY TO A PURCHASER, THE IDENTITY OF THE 1,342
PRINCIPAL WAS KNOWN TO THE PERSON TO WHOM THE CERTIFICATE WAS 1,343
DELIVERED, AND THE CERTIFICATE DELIVERED BY THE AGENT WAS 1,344
RECEIVED BY THE AGENT FROM THE PRINCIPAL OR RECEIVED BY THE AGENT 1,345
FROM ANOTHER PERSON AT THE DIRECTION OF THE PRINCIPAL, THE PERSON 1,346
DELIVERING THE SECURITY CERTIFICATE WARRANTS ONLY THAT THE
DELIVERING PERSON HAS AUTHORITY TO ACT FOR THE PRINCIPAL AND DOES 1,347
NOT KNOW OF ANY ADVERSE CLAIM TO THE CERTIFICATED SECURITY. 1,348
(H) A SECURED PARTY WHO REDELIVERS A SECURITY CERTIFICATE 1,350
RECEIVED, OR AFTER PAYMENT AND ON ORDER OF THE DEBTOR DELIVERS 1,351
THE SECURITY CERTIFICATE TO ANOTHER PERSON, MAKES ONLY THE 1,352
WARRANTIES OF AN AGENT UNDER DIVISION (G) OF THIS SECTION. 1,353
(I) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (G) OF THIS 1,355
SECTION, A BROKER ACTING FOR A CUSTOMER MAKES TO THE ISSUER AND A 1,356
PURCHASER THE WARRANTIES PROVIDED IN DIVISIONS (A) TO (F) OF THIS 1,357
SECTION. A BROKER THAT DELIVERS A SECURITY CERTIFICATE TO ITS 1,358
CUSTOMER, OR CAUSES ITS CUSTOMER TO BE REGISTERED AS THE OWNER OF 1,359
AN UNCERTIFICATED SECURITY, MAKES TO THE CUSTOMER THE WARRANTIES 1,360
PROVIDED IN DIVISION (A) OR (B) OF THIS SECTION, AND HAS THE 1,361
RIGHTS AND PRIVILEGES OF A PURCHASER UNDER THIS SECTION. THE 1,362
WARRANTIES OF AND IN FAVOR OF THE BROKER ACTING AS AN AGENT ARE 1,363
IN ADDITION TO APPLICABLE WARRANTIES GIVEN BY AND IN FAVOR OF THE 1,364
CUSTOMER.
Sec. 1308.21. (A) A PERSON WHO ORIGINATES AN ENTITLEMENT 1,366
ORDER TO A SECURITIES INTERMEDIARY WARRANTS TO THE SECURITIES 1,367
INTERMEDIARY THAT:
(1) THE ENTITLEMENT ORDER IS MADE BY AN APPROPRIATE 1,369
PERSON, OR IF THE ENTITLEMENT ORDER IS BY AN AGENT, THE AGENT HAS 1,370
31
ACTUAL AUTHORITY TO ACT ON BEHALF OF THE APPROPRIATE PERSON; AND 1,371
(2) THERE IS NO ADVERSE CLAIM TO THE SECURITY ENTITLEMENT. 1,373
(B) A PERSON WHO DELIVERS A SECURITY CERTIFICATE TO A 1,375
SECURITIES INTERMEDIARY FOR CREDIT TO A SECURITIES ACCOUNT OR 1,376
ORIGINATES AN INSTRUCTION WITH RESPECT TO AN UNCERTIFICATED 1,377
SECURITY DIRECTING THAT THE UNCERTIFICATED SECURITY BE CREDITED 1,378
TO A SECURITIES ACCOUNT MAKES TO THE SECURITIES INTERMEDIARY THE 1,379
WARRANTIES SPECIFIED IN DIVISION (A) OR (B) OF SECTION 1308.20 OF 1,380
THE REVISED CODE.
(C) IF A SECURITIES INTERMEDIARY DELIVERS A SECURITY 1,382
CERTIFICATE TO ITS ENTITLEMENT HOLDER OR CAUSES ITS ENTITLEMENT 1,383
HOLDER TO BE REGISTERED AS THE OWNER OF AN UNCERTIFICATED 1,384
SECURITY, THE SECURITIES INTERMEDIARY MAKES TO THE ENTITLEMENT 1,385
HOLDER THE WARRANTIES SPECIFIED IN DIVISION (A) OR (B) OF SECTION 1,386
1308.20 OF THE REVISED CODE.
Sec. 1308.22. (A) AN INDORSEMENT MAY BE IN BLANK OR 1,395
SPECIAL. AN INDORSEMENT IN BLANK INCLUDES AN INDORSEMENT TO 1,397
BEARER. A SPECIAL INDORSEMENT SPECIFIES TO WHOM A SECURITY IS TO 1,398
BE TRANSFERRED OR WHO HAS POWER TO TRANSFER IT. A HOLDER MAY 1,400
CONVERT A BLANK INDORSEMENT TO A SPECIAL INDORSEMENT.
(B) AN INDORSEMENT PURPORTING TO BE ONLY OF PART OF A 1,402
SECURITY CERTIFICATE REPRESENTING UNITS INTENDED BY THE ISSUER TO 1,403
BE SEPARATELY TRANSFERABLE IS EFFECTIVE TO THE EXTENT OF THE 1,404
INDORSEMENT.
(C) AN INDORSEMENT, WHETHER SPECIAL OR IN BLANK, DOES NOT 1,406
CONSTITUTE A TRANSFER UNTIL DELIVERY OF THE CERTIFICATE ON WHICH 1,407
IT APPEARS OR, IF THE INDORSEMENT IS ON A SEPARATE DOCUMENT, 1,409
UNTIL DELIVERY OF BOTH THE DOCUMENT AND THE CERTIFICATE. 1,410
(D) If a certificated security CERTIFICATE in registered 1,413
form has been delivered to a purchaser without a necessary 1,414
indorsement he, THE PURCHASER may become a bona fide PROTECTED 1,415
purchaser only as of the time WHEN the indorsement is supplied; 1,416
but. HOWEVER, against the A transferor, the A transfer is 1,418
complete upon delivery and the purchaser has a specifically 1,419
32
enforceable right to have any necessary indorsement supplied. 1,420
(E) AN INDORSEMENT OF A SECURITY CERTIFICATE IN BEARER 1,422
FORM MAY GIVE NOTICE OF AN ADVERSE CLAIM TO THE CERTIFICATE, BUT 1,423
IT DOES NOT OTHERWISE AFFECT A RIGHT TO REGISTRATION THAT THE 1,424
HOLDER POSSESSES.
(F) UNLESS OTHERWISE AGREED, A PERSON MAKING AN 1,426
INDORSEMENT ASSUMES ONLY THE OBLIGATIONS PROVIDED IN SECTION 1,427
1308.20 OF THE REVISED CODE AND NOT AN OBLIGATION THAT THE 1,428
SECURITY WILL BE HONORED BY THE ISSUER.
Sec. 1308.23. (A) "APPROPRIATE PERSON" MEANS: 1,430
(1) WITH RESPECT TO AN INDORSEMENT, THE PERSON SPECIFIED 1,432
BY A SECURITY CERTIFICATE OR BY AN EFFECTIVE SPECIAL INDORSEMENT 1,433
TO BE ENTITLED TO THE SECURITY; 1,434
(2) WITH RESPECT TO AN INSTRUCTION, THE REGISTERED OWNER 1,436
OF AN UNCERTIFICATED SECURITY; 1,437
(3) WITH RESPECT TO AN ENTITLEMENT ORDER, THE ENTITLEMENT 1,439
HOLDER;
(4) IF THE PERSON DESIGNATED IN DIVISION (A)(1), (2), OR 1,441
(3) OF THIS SECTION IS DECEASED, THE DESIGNATED PERSON'S 1,442
SUCCESSOR TAKING UNDER OTHER LAW OR THE DESIGNATED PERSON'S 1,443
PERSONAL REPRESENTATIVE ACTING FOR THE ESTATE OF THE DECEDENT; OR 1,444
(5) IF THE PERSON DESIGNATED IN DIVISION (A)(1), (2), OR 1,446
(3) OF THIS SECTION LACKS CAPACITY, THE DESIGNATED PERSON'S 1,447
GUARDIAN, CONSERVATOR, OR OTHER SIMILAR REPRESENTATIVE WHO HAS 1,448
POWER UNDER OTHER LAW TO TRANSFER THE SECURITY OR FINANCIAL 1,449
ASSET.
(B) AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT ORDER IS 1,451
EFFECTIVE IF: 1,452
(1) IT IS MADE BY THE APPROPRIATE PERSON; 1,454
(2) IT IS MADE BY A PERSON WHO HAS POWER UNDER THE LAW OF 1,456
AGENCY TO TRANSFER THE SECURITY OR FINANCIAL ASSET ON BEHALF OF 1,457
THE APPROPRIATE PERSON, INCLUDING, IN THE CASE OF AN INSTRUCTION 1,458
OR ENTITLEMENT ORDER, A PERSON WHO HAS CONTROL UNDER DIVISION 1,459
(C)(2) OR (D)(2) OF SECTION 1308.24 OF THE REVISED CODE; OR 1,460
33
(3) THE APPROPRIATE PERSON HAS RATIFIED IT OR IS OTHERWISE 1,462
PRECLUDED FROM ASSERTING ITS INEFFECTIVENESS. 1,463
(C) AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT ORDER MADE 1,465
BY A REPRESENTATIVE IS EFFECTIVE EVEN IF: 1,466
(1) THE REPRESENTATIVE HAS FAILED TO COMPLY WITH A 1,468
CONTROLLING INSTRUMENT OR WITH THE LAW OF THE STATE HAVING 1,469
JURISDICTION OF THE REPRESENTATIVE RELATIONSHIP, INCLUDING ANY 1,470
LAW REQUIRING THE REPRESENTATIVE TO OBTAIN COURT APPROVAL OF THE 1,471
TRANSACTION; OR
(2) THE REPRESENTATIVE'S ACTION IN MAKING THE INDORSEMENT, 1,473
INSTRUCTION, OR ENTITLEMENT ORDER OR USING THE PROCEEDS OF THE 1,474
TRANSACTION IS OTHERWISE A BREACH OF DUTY. 1,475
(D) IF A SECURITY IS REGISTERED IN THE NAME OF OR 1,477
SPECIALLY INDORSED TO A PERSON DESCRIBED AS A REPRESENTATIVE, OR 1,478
IF A SECURITIES ACCOUNT IS MAINTAINED IN THE NAME OF A PERSON 1,479
DESCRIBED AS A REPRESENTATIVE, AN INDORSEMENT, INSTRUCTION, OR 1,480
ENTITLEMENT ORDER MADE BY THE PERSON IS EFFECTIVE EVEN THOUGH THE 1,481
PERSON IS NO LONGER SERVING IN THE DESCRIBED CAPACITY.
(E) EFFECTIVENESS OF AN INDORSEMENT, INSTRUCTION, OR 1,483
ENTITLEMENT ORDER IS DETERMINED AS OF THE DATE THE INDORSEMENT, 1,484
INSTRUCTION, OR ENTITLEMENT ORDER IS MADE, AND AN INDORSEMENT, 1,485
INSTRUCTION, OR ENTITLEMENT ORDER DOES NOT BECOME INEFFECTIVE BY 1,486
REASON OF ANY LATER CHANGE OF CIRCUMSTANCES. 1,487
Sec. 1308.24. (A) A PURCHASER HAS "CONTROL" OF A 1,489
CERTIFICATED SECURITY IN BEARER FORM IF THE CERTIFICATED SECURITY 1,490
IS DELIVERED TO THE PURCHASER. 1,491
(B) A PURCHASER HAS "CONTROL" OF A CERTIFICATED SECURITY 1,493
IN REGISTERED FORM IF THE CERTIFICATED SECURITY IS DELIVERED TO 1,494
THE PURCHASER, AND: 1,495
(1) THE CERTIFICATE IS INDORSED TO THE PURCHASER OR IN 1,497
BLANK BY AN EFFECTIVE INDORSEMENT; OR 1,498
(2) THE CERTIFICATE IS REGISTERED IN THE NAME OF THE 1,500
PURCHASER, UPON ORIGINAL ISSUE OR REGISTRATION OF TRANSFER BY THE 1,501
ISSUER.
34
(C) A PURCHASER HAS "CONTROL" OF AN UNCERTIFICATED 1,503
SECURITY IF:
(1) THE UNCERTIFICATED SECURITY IS DELIVERED TO THE 1,505
PURCHASER; OR
(2) THE ISSUER HAS AGREED THAT IT WILL COMPLY WITH 1,507
INSTRUCTIONS ORIGINATED BY THE PURCHASER WITHOUT FURTHER CONSENT 1,508
BY THE REGISTERED OWNER.
(D) A PURCHASER HAS "CONTROL" OF A SECURITY ENTITLEMENT 1,510
IF:
(1) THE PURCHASER BECOMES THE ENTITLEMENT HOLDER; OR 1,512
(2) THE SECURITIES INTERMEDIARY HAS AGREED THAT IT WILL 1,514
COMPLY WITH ENTITLEMENT ORDERS ORIGINATED BY THE PURCHASER 1,515
WITHOUT FURTHER CONSENT BY THE ENTITLEMENT HOLDER. 1,516
(E) IF AN INTEREST IN A SECURITY ENTITLEMENT IS GRANTED BY 1,518
THE ENTITLEMENT HOLDER TO THE ENTITLEMENT HOLDER'S OWN SECURITIES 1,519
INTERMEDIARY, THE SECURITIES INTERMEDIARY HAS CONTROL. 1,520
(F) A PURCHASER WHO HAS SATISFIED THE REQUIREMENTS OF 1,522
DIVISION (C)(2) OR (D)(2) OF THIS SECTION HAS CONTROL EVEN IF THE 1,523
REGISTERED OWNER IN THE CASE OF DIVISION (C)(2) OF THIS SECTION 1,524
OR THE ENTITLEMENT HOLDER IN THE CASE OF DIVISION (D)(2) OF THIS 1,525
SECTION RETAINS THE RIGHT TO MAKE SUBSTITUTIONS FOR THE 1,526
UNCERTIFICATED SECURITY OR SECURITY ENTITLEMENT, TO ORIGINATE 1,527
INSTRUCTIONS OR ENTITLEMENT ORDERS TO THE ISSUER OR SECURITIES 1,528
INTERMEDIARY, OR OTHERWISE TO DEAL WITH THE UNCERTIFICATED 1,529
SECURITY OR SECURITY ENTITLEMENT. 1,530
(G) AN ISSUER OR A SECURITIES INTERMEDIARY MAY NOT ENTER 1,532
INTO AN AGREEMENT OF THE KIND DESCRIBED IN DIVISION (C)(2) OR 1,533
(D)(2) OF THIS SECTION WITHOUT THE CONSENT OF THE REGISTERED 1,534
OWNER OR ENTITLEMENT HOLDER, BUT AN ISSUER OR A SECURITIES 1,535
INTERMEDIARY IS NOT REQUIRED TO ENTER INTO SUCH AN AGREEMENT EVEN 1,536
THOUGH THE REGISTERED OWNER OR ENTITLEMENT HOLDER SO DIRECTS. AN 1,537
ISSUER OR SECURITIES INTERMEDIARY THAT HAS ENTERED INTO SUCH AN 1,538
AGREEMENT IS NOT REQUIRED TO CONFIRM THE EXISTENCE OF THE
AGREEMENT TO ANOTHER PARTY UNLESS REQUESTED TO DO SO BY THE 1,539
35
REGISTERED OWNER OR ENTITLEMENT HOLDER. 1,540
Sec. 1308.25. (A) IF AN INSTRUCTION HAS BEEN ORIGINATED 1,542
BY AN APPROPRIATE PERSON BUT IS INCOMPLETE IN ANY OTHER RESPECT, 1,543
ANY PERSON MAY COMPLETE IT AS AUTHORIZED AND THE ISSUER MAY RELY 1,544
ON IT AS COMPLETED, EVEN THOUGH IT HAS BEEN COMPLETED 1,545
INCORRECTLY.
(B) UNLESS OTHERWISE AGREED, A PERSON INITIATING AN 1,547
INSTRUCTION ASSUMES ONLY THE OBLIGATIONS IMPOSED BY SECTION 1,548
1308.20 OF THE REVISED CODE AND NOT AN OBLIGATION THAT THE 1,549
SECURITY WILL BE HONORED BY THE ISSUER.
Sec. 1308.26. (A) A PERSON WHO GUARANTEES A SIGNATURE OF 1,551
AN INDORSER OF A SECURITY CERTIFICATE WARRANTS THAT AT THE TIME 1,552
OF SIGNING:
(1) THE SIGNATURE WAS GENUINE; 1,554
(2) THE SIGNER WAS AN APPROPRIATE PERSON TO INDORSE, OR IF 1,556
THE SIGNATURE IS BY AN AGENT, THE AGENT HAD ACTUAL AUTHORITY TO 1,557
ACT ON BEHALF OF THE APPROPRIATE PERSON; AND 1,558
(3) THE SIGNER HAD LEGAL CAPACITY TO SIGN. 1,560
(B) A PERSON WHO GUARANTEES A SIGNATURE OF THE ORIGINATOR 1,562
OF AN INSTRUCTION WARRANTS THAT AT THE TIME OF SIGNING: 1,563
(1) THE SIGNATURE WAS GENUINE; 1,565
(2) THE SIGNER WAS AN APPROPRIATE PERSON TO ORIGINATE THE 1,567
INSTRUCTION, OR IF THE SIGNATURE IS BY AN AGENT, THE AGENT HAD 1,568
ACTUAL AUTHORITY TO ACT ON BEHALF OF THE APPROPRIATE PERSON, IF 1,569
THE PERSON SPECIFIED IN THE INSTRUCTION AS THE REGISTERED OWNER 1,570
WAS, IN FACT, THE REGISTERED OWNER, AS TO WHICH FACT THE 1,571
SIGNATURE GUARANTOR DOES NOT MAKE A WARRANTY; AND
(3) THE SIGNER HAD LEGAL CAPACITY TO SIGN. 1,574
(C) A PERSON WHO SPECIALLY GUARANTEES THE SIGNATURE OF AN 1,576
ORIGINATOR OF AN INSTRUCTION MAKES THE WARRANTIES OF A SIGNATURE 1,577
GUARANTOR UNDER DIVISION (B) OF THIS SECTION AND ALSO WARRANTS 1,578
THAT AT THE TIME THE INSTRUCTION IS PRESENTED TO THE ISSUER: 1,579
(1) THE PERSON SPECIFIED IN THE INSTRUCTION AS THE 1,581
REGISTERED OWNER OF THE UNCERTIFICATED SECURITY WILL BE THE 1,582
36
REGISTERED OWNER; AND
(2) THE TRANSFER OF THE UNCERTIFICATED SECURITY REQUESTED 1,584
IN THE INSTRUCTION WILL BE REGISTERED BY THE ISSUER FREE FROM ALL 1,585
LIENS, SECURITY INTERESTS, RESTRICTIONS, AND CLAIMS OTHER THAN 1,586
THOSE SPECIFIED IN THE INSTRUCTION. 1,587
(D) A GUARANTOR UNDER DIVISIONS (A) AND (B) OF THIS 1,590
SECTION OR A SPECIAL GUARANTOR UNDER DIVISION (C) OF THIS SECTION 1,591
DOES NOT OTHERWISE WARRANT THE RIGHTFULNESS OF THE TRANSFER.
(E) A PERSON WHO GUARANTEES AN INDORSEMENT OF A SECURITY 1,593
CERTIFICATE MAKES THE WARRANTIES OF A SIGNATURE GUARANTOR UNDER 1,594
DIVISION (A) OF THIS SECTION AND ALSO WARRANTS THE RIGHTFULNESS 1,595
OF THE TRANSFER IN ALL RESPECTS. 1,596
(F) A PERSON WHO GUARANTEES AN INSTRUCTION REQUESTING THE 1,598
TRANSFER OF AN UNCERTIFICATED SECURITY MAKES THE WARRANTIES OF A 1,599
SPECIAL SIGNATURE GUARANTOR UNDER DIVISION (C) OF THIS SECTION 1,600
AND ALSO WARRANTS THE RIGHTFULNESS OF THE TRANSFER IN ALL 1,601
RESPECTS.
(G) AN ISSUER MAY NOT REQUIRE A SPECIAL GUARANTY OF 1,603
SIGNATURE, A GUARANTY OF INDORSEMENT, OR A GUARANTY OF 1,604
INSTRUCTION AS A CONDITION TO REGISTRATION OF TRANSFER. 1,605
(H) THE WARRANTIES UNDER THIS SECTION ARE MADE TO A PERSON 1,607
TAKING OR DEALING WITH THE SECURITY IN RELIANCE ON THE GUARANTY, 1,608
AND THE GUARANTOR IS LIABLE TO THE PERSON FOR LOSS RESULTING FROM 1,609
THEIR BREACH. AN INDORSER OR ORIGINATOR OF AN INSTRUCTION WHOSE 1,610
SIGNATURE, INDORSEMENT, OR INSTRUCTION HAS BEEN GUARANTEED IS 1,611
LIABLE TO A GUARANTOR FOR ANY LOSS SUFFERED BY THE GUARANTOR AS A 1,612
RESULT OF BREACH OF THE WARRANTIES OF THE GUARANTOR.
Sec. 1308.27. (A) DELIVERY OF A CERTIFICATED SECURITY TO 1,614
A PURCHASER OCCURS WHEN: 1,615
(1) THE PURCHASER ACQUIRES POSSESSION OF THE SECURITY 1,617
CERTIFICATE;
(2) ANOTHER PERSON, OTHER THAN A SECURITIES INTERMEDIARY, 1,619
EITHER ACQUIRES POSSESSION OF THE SECURITY CERTIFICATE ON BEHALF 1,620
OF THE PURCHASER OR, HAVING PREVIOUSLY ACQUIRED POSSESSION OF THE 1,621
37
CERTIFICATE, ACKNOWLEDGES THAT IT HOLDS FOR THE PURCHASER; OR 1,622
(3) A SECURITIES INTERMEDIARY ACTING ON BEHALF OF THE 1,624
PURCHASER ACQUIRES POSSESSION OF THE SECURITY CERTIFICATE, ONLY 1,625
IF THE CERTIFICATE IS IN REGISTERED FORM AND HAS BEEN SPECIALLY 1,626
INDORSED TO THE PURCHASER BY AN EFFECTIVE INDORSEMENT. 1,627
(B) DELIVERY OF AN UNCERTIFICATED SECURITY TO A PURCHASER 1,629
OCCURS WHEN: 1,630
(1) THE ISSUER REGISTERS THE PURCHASER AS THE REGISTERED 1,632
OWNER, UPON ORIGINAL ISSUE OR REGISTRATION OF TRANSFER; OR 1,633
(2) ANOTHER PERSON, OTHER THAN A SECURITIES INTERMEDIARY, 1,635
EITHER BECOMES THE REGISTERED OWNER OF THE UNCERTIFICATED 1,636
SECURITY ON BEHALF OF THE PURCHASER OR, HAVING PREVIOUSLY BECOME 1,637
THE REGISTERED OWNER, ACKNOWLEDGES THAT IT HOLDS FOR THE 1,638
PURCHASER.
Sec. 1308.31. Unless otherwise agreed, the transferor of a 1,647
certificated security or the transferor, pledgor, or pledgee of 1,649
an uncertificated security on due demand must SHALL supply his 1,650
THE purchaser with any proof of his authority to transfer, 1,652
pledge, or release or with any other requisite necessary to 1,653
obtain registration of the transfer, pledge, or release of the 1,655
security, but if the transfer, pledge, or release is not for 1,656
value, a transferor, pledgor, or pledgee need not do so COMPLY 1,657
unless the purchaser furnishes PAYS the necessary expenses. 1,658
Failure IF THE TRANSFEROR FAILS within a reasonable time to 1,659
comply with a THE demand made gives, the purchaser the right to 1,661
MAY reject or rescind the transfer, pledge, or release. 1,662
Sec. 1308.32. (A) THE INTEREST OF A DEBTOR IN A 1,664
CERTIFICATED SECURITY MAY BE REACHED BY A CREDITOR ONLY BY ACTUAL 1,665
SEIZURE OF THE SECURITY CERTIFICATE BY THE OFFICER MAKING THE 1,666
ATTACHMENT OR LEVY, EXCEPT AS OTHERWISE PROVIDED IN DIVISION (D) 1,667
OF THIS SECTION. HOWEVER, A CERTIFICATED SECURITY FOR WHICH THE 1,668
CERTIFICATE HAS BEEN SURRENDERED TO THE ISSUER MAY BE REACHED BY 1,669
A CREDITOR BY LEGAL PROCESS UPON THE ISSUER.
(B) THE INTEREST OF A DEBTOR IN AN UNCERTIFICATED SECURITY 1,671
38
MAY BE REACHED BY A CREDITOR ONLY BY LEGAL PROCESS UPON THE 1,672
ISSUER AT ITS CHIEF EXECUTIVE OFFICE IN THE UNITED STATES, EXCEPT 1,673
AS OTHERWISE PROVIDED IN DIVISION (D) OF THIS SECTION. 1,674
(C) THE INTEREST OF A DEBTOR IN A SECURITY ENTITLEMENT MAY 1,676
BE REACHED BY A CREDITOR ONLY BY LEGAL PROCESS UPON THE 1,677
SECURITIES INTERMEDIARY WITH WHOM THE DEBTOR'S SECURITIES ACCOUNT 1,678
IS MAINTAINED, EXCEPT AS OTHERWISE PROVIDED IN DIVISION (D) OF 1,679
THIS SECTION.
(D) THE INTEREST OF A DEBTOR IN A CERTIFICATED SECURITY 1,681
FOR WHICH THE CERTIFICATE IS IN THE POSSESSION OF A SECURED 1,682
PARTY, OR IN AN UNCERTIFICATED SECURITY REGISTERED IN THE NAME OF 1,683
A SECURED PARTY, OR A SECURITY ENTITLEMENT MAINTAINED IN THE NAME 1,684
OF A SECURED PARTY, MAY BE REACHED BY A CREDITOR BY LEGAL PROCESS 1,685
UPON THE SECURED PARTY.
(E) A CREDITOR WHOSE DEBTOR IS THE OWNER OF A CERTIFICATED 1,687
SECURITY, UNCERTIFICATED SECURITY, OR SECURITY ENTITLEMENT IS 1,688
ENTITLED TO AID FROM A COURT OF COMPETENT JURISDICTION, BY 1,689
INJUNCTION OR OTHERWISE, IN REACHING THE CERTIFICATED SECURITY, 1,690
UNCERTIFICATED SECURITY, OR SECURITY ENTITLEMENT OR IN SATISFYING 1,691
THE CLAIM BY MEANS ALLOWED AT LAW OR IN EQUITY IN REGARD TO 1,692
PROPERTY THAT CANNOT READILY BE REACHED BY OTHER LEGAL PROCESS.
Sec. 1308.33. (A) A SECURITIES INTERMEDIARY THAT HAS 1,694
TRANSFERRED A FINANCIAL ASSET PURSUANT TO AN EFFECTIVE 1,695
ENTITLEMENT ORDER, OR A BROKER OR OTHER AGENT OR BAILEE THAT HAS 1,696
DEALT WITH A FINANCIAL ASSET AT THE DIRECTION OF ITS CUSTOMER OR 1,697
PRINCIPAL, IS NOT LIABLE TO A PERSON HAVING AN ADVERSE CLAIM TO 1,698
THE FINANCIAL ASSET, UNLESS THE SECURITIES INTERMEDIARY, OR
BROKER OR OTHER AGENT OR BAILEE: 1,699
(1) TOOK THE ACTION AFTER IT HAD BEEN SERVED WITH AN 1,701
INJUNCTION, RESTRAINING ORDER, OR OTHER LEGAL PROCESS ENJOINING 1,702
IT FROM DOING SO, ISSUED BY A COURT OF COMPETENT JURISDICTION, 1,703
AND HAD A REASONABLE OPPORTUNITY TO ACT ON THE INJUNCTION, 1,704
RESTRAINING ORDER, OR OTHER LEGAL PROCESS; OR
(2) ACTED IN COLLUSION WITH THE WRONGDOER IN VIOLATING THE 1,706
39
RIGHTS OF THE ADVERSE CLAIMANT; OR 1,707
(3) IN THE CASE OF A SECURITY CERTIFICATE THAT HAS BEEN 1,709
STOLEN, ACTED WITH NOTICE OF THE ADVERSE CLAIM. 1,710
(B) A SECURITIES INTERMEDIARY THAT RECEIVES A FINANCIAL 1,712
ASSET AND ESTABLISHES A SECURITY ENTITLEMENT TO THE FINANCIAL 1,713
ASSET IN FAVOR OF AN ENTITLEMENT HOLDER IS A PURCHASER FOR VALUE 1,714
OF THE FINANCIAL ASSET. A SECURITIES INTERMEDIARY THAT ACQUIRES 1,715
A SECURITY ENTITLEMENT TO A FINANCIAL ASSET FROM ANOTHER 1,716
SECURITIES INTERMEDIARY ACQUIRES THE SECURITY ENTITLEMENT FOR 1,717
VALUE IF THE SECURITIES INTERMEDIARY ACQUIRING THE SECURITY
ENTITLEMENT ESTABLISHES A SECURITY ENTITLEMENT TO THE FINANCIAL 1,718
ASSET IN FAVOR OF AN ENTITLEMENT HOLDER. 1,719
Sec. 1308.37. (A) If a certificated security in 1,728
registered form is presented to the issuer with a request to 1,729
register transfer or an instruction is presented to the issuer 1,730
with a request to register transfer, pledge, or release OF AN 1,731
UNCERTIFICATED SECURITY, the issuer shall register the transfer, 1,732
pledge, or release as requested if: 1,733
(1) UNDER THE TERMS OF THE SECURITY THE PERSON SEEKING 1,735
REGISTRATION OF TRANSFER IS ELIGIBLE TO HAVE THE SECURITY 1,736
REGISTERED IN ITS NAME;
(2) The security is indorsed INDORSEMENT or the 1,738
instruction was originated IS MADE by the appropriate person or 1,739
persons, as provided in section 1308.23 of the Revised Code BY AN 1,741
AGENT WHO HAS ACTUAL AUTHORITY TO ACT ON BEHALF OF THE 1,742
APPROPRIATE PERSON;
(2)(3) Reasonable assurance is given that those 1,744
indorsements THE INDORSEMENT or instructions are INSTRUCTION IS 1,746
genuine and effective AUTHORIZED, as provided in section 1308.38 1,748
of the Revised Code;
(3) The issuer has no duty as to adverse claims or has 1,750
discharged the duty as provided in section 1308.39 of the Revised 1,751
Code; 1,752
(4) Any applicable law relating to the collection of taxes 1,754
40
has been complied with; 1,755
(5) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON 1,757
TRANSFER IMPOSED BY THE ISSUER IN ACCORDANCE WITH SECTION 1308.11 1,758
OF THE REVISED CODE;
(6) A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER HAS NOT 1,760
BECOME EFFECTIVE UNDER SECTION 1308.39 OF THE REVISED CODE, OR 1,762
THE ISSUER HAS COMPLIED WITH DIVISION (B) OF THAT SECTION BUT NO 1,763
LEGAL PROCESS OR INDEMNITY BOND IS OBTAINED AS PROVIDED IN 1,765
DIVISION (D) OF THAT SECTION; and
(5)(7) The transfer, pledge, or release is in fact 1,767
rightful or is to a bona fide PROTECTED purchaser;. 1,769
(B) If an issuer is under a duty to register a transfer, 1,771
pledge, or release of a security, the issuer is also liable to 1,772
the person presenting a certificated security or an instruction 1,773
for registration or his THE PERSON'S principal for loss resulting 1,775
from any unreasonable delay in registration or from failure or 1,776
refusal to register the transfer, pledge, or release.
Sec. 1308.38. (A) The AN issuer may require the following 1,785
assurance that each necessary indorsement of a certificated 1,786
security or each instruction, as provided in section 1308.23 of 1,787
the Revised Code, is genuine and effective AUTHORIZED: 1,788
(1) In all cases, a guarantee GUARANTY of the signature, 1,790
as provided in division (A) or (B) of section 1308.27 of the 1,791
Revised Code, of the person indorsing a certificated security 1,792
MAKING AN INDORSEMENT or originating an instruction including, in 1,793
the case of an instruction, a warranty of the taxpayer 1,794
identification number or, in the absence thereof, other 1,795
reasonable assurance of identity; and
(2) If the indorsement is made or the instruction is 1,797
originated by an agent, appropriate assurance of ACTUAL authority 1,798
to sign; 1,799
(3) If the indorsement is made or the instruction is 1,801
originated by a fiduciary PURSUANT TO DIVISION (A)(4) OR (5) OF 1,802
SECTION 1308.23 OF THE REVISED CODE, appropriate evidence of 1,803
41
appointment, or incumbency; 1,804
(4) If there is more than one fiduciary, reasonable 1,806
assurance that all who are required to sign have done so; and 1,807
(5) If the indorsement is made or the instruction is 1,809
originated by a person not covered by any of the foregoing 1,810
ANOTHER PROVISION OF DIVISION (A) OF THIS SECTION, assurance 1,811
appropriate to the case corresponding as nearly as may be to the 1,813
foregoing SUCH PROVISIONS.
(B) A AN ISSUER MAY ELECT TO REQUIRE REASONABLE ASSURANCE 1,815
BEYOND THAT SPECIFIED IN THIS SECTION. 1,816
(C) IN THIS SECTION: 1,818
(1) "guarantee GUARANTY of the signature" in division (A) 1,821
of this section means a guarantee GUARANTY signed by or on behalf 1,822
of a person reasonably believed by the issuer to be responsible. 1,823
The issuer may adopt standards with respect to responsibility if 1,824
they are not manifestly unreasonable. 1,825
(C)(2) "Appropriate evidence of appointment or incumbency" 1,827
in division (A) of this section means: 1,828
(1)(a) In the case of a fiduciary appointed or qualified 1,830
by a court, a certificate issued by or under the direction or 1,831
supervision of that court or an officer thereof and dated within 1,832
sixty days before the date of presentation for transfer, pledge, 1,833
or release; or 1,834
(2)(b) In any other case, a copy of a document showing the 1,836
appointment or a certificate issued by or on behalf of a person 1,837
reasonably believed by the issuer to be responsible or, in the 1,838
absence of that document or certificate, other evidence 1,839
reasonably deemed by the issuer to be REASONABLY CONSIDERED 1,841
appropriate. The issuer may adopt standards with respect to the 1,842
evidence if they are not manifestly unreasonable. The issuer is 1,843
not charged with notice of the contents of any document obtained 1,844
pursuant to division (C)(2) of this section except to the extent 1,845
that the contents relate directly to the appointment or 1,846
incumbency.
42
(D) The issuer may elect to require reasonable assurance 1,848
beyond that specified in this section, but if it does so and, for 1,849
a purpose other than that specified in division (C)(2) of this 1,850
section, both requires and obtains a copy of a will, trust, 1,851
indenture, articles of co-partnership, by-laws, or other 1,852
controlling instrument, it is charged with notice of all matters 1,853
contained therein affecting the transfer, pledge, or release. 1,854
Sec. 1308.39. (A) A PERSON WHO IS AN APPROPRIATE PERSON 1,856
TO MAKE AN INDORSEMENT OR ORIGINATE AN INSTRUCTION MAY DEMAND 1,857
THAT THE ISSUER NOT REGISTER TRANSFER OF A SECURITY BY 1,858
COMMUNICATING TO THE ISSUER A NOTIFICATION THAT IDENTIFIES THE 1,859
REGISTERED OWNER AND THE ISSUE OF WHICH THE SECURITY IS A PART 1,860
AND PROVIDES AN ADDRESS FOR COMMUNICATIONS DIRECTED TO THE PERSON
MAKING THE DEMAND. THE DEMAND IS EFFECTIVE ONLY IF IT IS 1,861
RECEIVED BY THE ISSUER AT A TIME AND IN A MANNER AFFORDING THE 1,862
ISSUER REASONABLE OPPORTUNITY TO ACT ON IT.
(B) IF A CERTIFICATED SECURITY IN REGISTERED FORM IS 1,864
PRESENTED TO AN ISSUER WITH A REQUEST TO REGISTER TRANSFER OR AN 1,865
INSTRUCTION IS PRESENTED TO AN ISSUER WITH A REQUEST TO REGISTER 1,866
TRANSFER OF AN UNCERTIFICATED SECURITY AFTER A DEMAND THAT THE 1,867
ISSUER NOT REGISTER TRANSFER HAS BECOME EFFECTIVE, THE ISSUER 1,868
SHALL PROMPTLY COMMUNICATE TO THE PERSON WHO INITIATED THE DEMAND
AT THE ADDRESS PROVIDED IN THE DEMAND AND THE PERSON WHO 1,869
PRESENTED THE SECURITY FOR REGISTRATION OF TRANSFER OR INITIATED 1,870
THE INSTRUCTION REQUESTING REGISTRATION OF TRANSFER A 1,871
NOTIFICATION STATING THAT:
(1) THE CERTIFICATED SECURITY HAS BEEN PRESENTED FOR 1,873
REGISTRATION OF TRANSFER OR THE INSTRUCTION FOR REGISTRATION OF 1,874
TRANSFER OF THE UNCERTIFICATED SECURITY HAS BEEN RECEIVED; 1,875
(2) A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER HAD 1,877
PREVIOUSLY BEEN RECEIVED; AND 1,878
(3) THE ISSUER WILL WITHHOLD REGISTRATION OF TRANSFER FOR 1,880
A PERIOD OF TIME STATED IN THE NOTIFICATION IN ORDER TO PROVIDE 1,881
THE PERSON WHO INITIATED THE DEMAND AN OPPORTUNITY TO OBTAIN 1,882
43
LEGAL PROCESS OR AN INDEMNITY BOND.
(C) THE PERIOD DESCRIBED IN DIVISION (B)(3) OF THIS 1,884
SECTION MAY NOT EXCEED THIRTY DAYS AFTER THE DATE OF 1,885
COMMUNICATION OF THE NOTIFICATION. A SHORTER PERIOD MAY BE 1,886
SPECIFIED BY THE ISSUER IF IT IS NOT MANIFESTLY UNREASONABLE. 1,887
(D) AN ISSUER IS NOT LIABLE TO A PERSON WHO INITIATED A 1,889
DEMAND THAT THE ISSUER NOT REGISTER TRANSFER FOR ANY LOSS THE 1,890
PERSON SUFFERS AS A RESULT OF REGISTRATION OF A TRANSFER PURSUANT 1,891
TO AN EFFECTIVE INDORSEMENT OR INSTRUCTION IF THE PERSON WHO 1,892
INITIATED THE DEMAND DOES NOT, WITHIN THE TIME STATED IN THE 1,893
ISSUER'S COMMUNICATION, EITHER:
(1) OBTAIN AN APPROPRIATE RESTRAINING ORDER, INJUNCTION, 1,895
OR OTHER PROCESS FROM A COURT OF COMPETENT JURISDICTION ENJOINING 1,896
THE ISSUER FROM REGISTERING THE TRANSFER; OR 1,897
(2) FILE WITH THE ISSUER AN INDEMNITY BOND, SUFFICIENT IN 1,899
THE ISSUER'S JUDGMENT TO PROTECT THE ISSUER AND ANY TRANSFER 1,900
AGENT, REGISTRAR, OR OTHER AGENT OF THE ISSUER INVOLVED FROM ANY 1,901
LOSS IT OR THEY MAY SUFFER BY REFUSING TO REGISTER THE TRANSFER. 1,902
(E) THIS SECTION DOES NOT RELIEVE AN ISSUER FROM LIABILITY 1,904
FOR REGISTERING TRANSFER PURSUANT TO AN INDORSEMENT OR 1,905
INSTRUCTION THAT WAS NOT EFFECTIVE. 1,906
Sec. 1308.40. (A) EXCEPT AS OTHERWISE PROVIDED IN SECTION 1,908
1308.41 OF THE REVISED CODE, AN ISSUER IS LIABLE FOR WRONGFUL 1,909
REGISTRATION OF TRANSFER IF THE ISSUER HAS REGISTERED A TRANSFER 1,910
OF A SECURITY TO A PERSON NOT ENTITLED TO IT, AND THE TRANSFER 1,911
WAS REGISTERED:
(1) PURSUANT TO AN INEFFECTIVE INDORSEMENT OR INSTRUCTION; 1,913
(2) AFTER A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER 1,915
BECAME EFFECTIVE UNDER DIVISION (A) OF SECTION 1308.39 OF THE 1,916
REVISED CODE AND THE ISSUER DID NOT COMPLY WITH DIVISION (B) OF 1,917
THAT SECTION;
(3) AFTER THE ISSUER HAD BEEN SERVED WITH AN INJUNCTION, 1,919
RESTRAINING ORDER, OR OTHER LEGAL PROCESS ENJOINING IT FROM 1,920
REGISTERING THE TRANSFER, ISSUED BY A COURT OF COMPETENT 1,921
44
JURISDICTION, AND THE ISSUER HAD A REASONABLE OPPORTUNITY TO ACT 1,922
ON THE INJUNCTION, RESTRAINING ORDER, OR OTHER LEGAL PROCESS; OR 1,923
(4) BY AN ISSUER ACTING IN COLLUSION WITH THE WRONGDOER. 1,925
(B) AN ISSUER THAT IS LIABLE FOR WRONGFUL REGISTRATION OF 1,927
TRANSFER UNDER DIVISION (A) OF THIS SECTION ON DEMAND SHALL 1,928
PROVIDE THE PERSON ENTITLED TO THE SECURITY WITH A LIKE 1,929
CERTIFICATED OR UNCERTIFICATED SECURITY, AND ANY PAYMENTS OR 1,930
DISTRIBUTIONS THAT THE PERSON DID NOT RECEIVE AS A RESULT OF THE 1,931
WRONGFUL REGISTRATION. IF AN OVERISSUE WOULD RESULT, THE
ISSUER'S LIABILITY TO PROVIDE THE PERSON WITH A LIKE SECURITY IS 1,932
GOVERNED BY SECTION 1308.03 OF THE REVISED CODE. 1,933
(C) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (A) OF THIS 1,935
SECTION OR IN A LAW RELATING TO THE COLLECTION OF TAXES, AN 1,936
ISSUER IS NOT LIABLE TO AN OWNER OR OTHER PERSON SUFFERING LOSS 1,937
AS A RESULT OF THE REGISTRATION OF A TRANSFER OF A SECURITY IF 1,938
REGISTRATION WAS MADE PURSUANT TO AN EFFECTIVE INDORSEMENT OR 1,939
INSTRUCTION.
Sec. 1308.41. (A) If a certificated security CERTIFICATE 1,947
has been lost, apparently destroyed, or wrongfully taken and the 1,949
owner fails to notify the issuer of that fact within a reasonable 1,950
time after he THE OWNER has notice of it and the issuer registers 1,951
a transfer of the security before receiving notification, the 1,952
owner is precluded from asserting MAY NOT ASSERT against the 1,953
issuer any A claim for registering the transfer under section 1,955
1308.40 of the Revised Code or any claim to a new security under 1,956
this section.
(B) If the owner of a certificated security, WHETHER IN 1,958
REGISTERED OR BEARER FORM, claims that the security has been 1,960
lost, destroyed, or wrongfully taken, the issuer shall issue a 1,961
new certificated security or, at the option of the issuer, an 1,962
equivalent uncertificated security in place of the original 1,963
security CERTIFICATE if the owner:
(1) So requests before the issuer has notice that the 1,965
security has been acquired by a bona fide PROTECTED purchaser; 1,966
45
(2) Files with the issuer any A SUFFICIENT indemnity bond, 1,968
the issuer reasonably requires; and 1,970
(3) Satisfies any other reasonable requirements imposed by 1,972
the issuer. 1,973
(C) If, after the issue of a new certificated or 1,975
uncertificated security CERTIFICATE, a bona fide PROTECTED 1,977
purchaser of the original security presents it for registration 1,978
of transfer, the issuer shall register the transfer unless 1,979
registration AN OVERISSUE would result in overissue, in which 1,981
event. IN THAT CASE, the issuer's liability is governed by 1,982
section 1308.03 of the Revised Code. In addition to any rights 1,983
on the indemnity bond, the issuer may recover the new 1,984
certificated security CERTIFICATE from the person to whom it was 1,985
issued or any person taking under him THAT PERSON, except a bona 1,987
fide PROTECTED purchaser or may cancel the uncertificated 1,988
security unless a bona fide purchaser or any person taking under 1,990
a bona fide purchaser is then the registered owner or registered 1,991
pledgee thereof.
Sec. 1308.42. (A) If a A person acts ACTING as 2,000
authenticating trustee, transfer agent, registrar, or other agent 2,002
for an issuer in the registration of transfers A TRANSFER of its 2,003
certificated securities or in the registration of transfers, 2,005
pledges, and releases of its uncertificated securities, in the 2,006
issue of new SECURITY CERTIFICATES OR UNCERTIFICATED securities, 2,007
or in the cancellation of surrendered securities: 2,008
(1) He is under a duty to the issuer to exercise good 2,011
faith and due diligence in performing his functions; and 2,012
(2) With regard to the particular functions he performs, 2,014
he SECURITY CERTIFICATES, has the same obligation to the holder 2,016
or owner of a certificated OR UNCERTIFICATED security or to the 2,017
owner or pledgee of an uncertificated security and has the same 2,018
rights and privileges WITH REGARD TO THE PARTICULAR FUNCTIONS 2,019
PERFORMED as the issuer has in regard to those functions. 2,020
(B) Notice to an authenticating trustee, transfer agent, 2,022
46
registrar or other agent is notice to the issuer with respect to 2,023
the functions performed by the agent. 2,024
Sec. 1308.51. (A) "SECURITIES ACCOUNT" MEANS AN ACCOUNT 2,026
TO WHICH A FINANCIAL ASSET IS OR MAY BE CREDITED IN ACCORDANCE 2,027
WITH AN AGREEMENT UNDER WHICH THE PERSON MAINTAINING THE ACCOUNT 2,028
UNDERTAKES TO TREAT THE PERSON FOR WHOM THE ACCOUNT IS MAINTAINED 2,029
AS ENTITLED TO EXERCISE THE RIGHTS THAT COMPRISE THE FINANCIAL 2,030
ASSET.
(B) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (D) AND (E) 2,033
OF THIS SECTION, A PERSON ACQUIRES A SECURITY ENTITLEMENT IF A
SECURITIES INTERMEDIARY: 2,034
(1) INDICATES BY BOOK ENTRY THAT A FINANCIAL ASSET HAS 2,036
BEEN CREDITED TO THE PERSON'S SECURITIES ACCOUNT; 2,037
(2) RECEIVES A FINANCIAL ASSET FROM THE PERSON OR ACQUIRES 2,039
A FINANCIAL ASSET FOR THE PERSON AND, IN EITHER CASE, ACCEPTS IT 2,040
FOR CREDIT TO THE PERSON'S SECURITIES ACCOUNT; OR 2,041
(3) BECOMES OBLIGATED UNDER OTHER LAW, REGULATION, OR RULE 2,043
TO CREDIT A FINANCIAL ASSET TO THE PERSON'S SECURITIES ACCOUNT. 2,044
(C) IF A CONDITION OF DIVISION (B) OF THIS SECTION HAS 2,046
BEEN MET, A PERSON HAS A SECURITY ENTITLEMENT EVEN THOUGH THE 2,047
SECURITIES INTERMEDIARY DOES NOT ITSELF HOLD THE FINANCIAL ASSET. 2,048
(D) IF A SECURITIES INTERMEDIARY HOLDS A FINANCIAL ASSET 2,050
FOR ANOTHER PERSON, AND THE FINANCIAL ASSET IS REGISTERED IN THE 2,051
NAME OF, PAYABLE TO THE ORDER OF, OR SPECIALLY INDORSED TO THE 2,052
OTHER PERSON, AND HAS NOT BEEN INDORSED TO THE SECURITIES 2,053
INTERMEDIARY OR IN BLANK, THE OTHER PERSON IS TREATED AS HOLDING 2,054
THE FINANCIAL ASSET DIRECTLY RATHER THAN AS HAVING A SECURITY 2,055
ENTITLEMENT WITH RESPECT TO THE FINANCIAL ASSET.
(E) ISSUANCE OF A SECURITY IS NOT ESTABLISHMENT OF A 2,057
SECURITY ENTITLEMENT. 2,058
Sec. 1308.52. AN ACTION BASED ON AN ADVERSE CLAIM TO A 2,060
FINANCIAL ASSET, WHETHER FRAMED IN CONVERSION, REPLEVIN, 2,061
CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR OTHER THEORY, MAY NOT BE 2,062
ASSERTED AGAINST A PERSON WHO ACQUIRES A SECURITY ENTITLEMENT 2,063
47
UNDER SECTION 1308.51 OF THE REVISED CODE FOR VALUE AND WITHOUT
NOTICE OF THE ADVERSE CLAIM. 2,064
Sec. 1308.53. (A) TO THE EXTENT NECESSARY FOR A 2,066
SECURITIES INTERMEDIARY TO SATISFY ALL SECURITY ENTITLEMENTS WITH 2,067
RESPECT TO A PARTICULAR FINANCIAL ASSET, ALL INTERESTS IN THAT 2,068
FINANCIAL ASSET HELD BY THE SECURITIES INTERMEDIARY ARE HELD BY 2,069
THE SECURITIES INTERMEDIARY FOR THE ENTITLEMENT HOLDERS, ARE NOT 2,070
PROPERTY OF THE SECURITIES INTERMEDIARY, AND ARE NOT SUBJECT TO 2,071
CLAIMS OF CREDITORS OF THE SECURITIES INTERMEDIARY, EXCEPT AS 2,072
OTHERWISE PROVIDED IN SECTION 1308.61 OF THE REVISED CODE.
(B) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT 2,074
TO A PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS 2,075
SECTION IS A PRO RATA PROPERTY INTEREST IN ALL INTERESTS IN THAT 2,076
FINANCIAL ASSET HELD BY THE SECURITIES INTERMEDIARY, WITHOUT 2,077
REGARD TO THE TIME THE ENTITLEMENT HOLDER ACQUIRED THE SECURITY 2,078
ENTITLEMENT OR THE TIME THE SECURITIES INTERMEDIARY ACQUIRED THE 2,079
INTEREST IN THAT FINANCIAL ASSET.
(C) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT 2,081
TO A PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS 2,082
SECTION MAY BE ENFORCED AGAINST THE SECURITIES INTERMEDIARY ONLY 2,083
BY EXERCISE OF THE ENTITLEMENT HOLDER'S RIGHTS UNDER SECTIONS 2,084
1308.55 TO 1308.58 OF THE REVISED CODE.
(D) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT 2,086
TO A PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS 2,087
SECTION MAY BE ENFORCED AGAINST A PURCHASER OF THE FINANCIAL 2,088
ASSET OR INTEREST THEREIN ONLY IF: 2,089
(1) INSOLVENCY PROCEEDINGS HAVE BEEN INITIATED BY OR 2,091
AGAINST THE SECURITIES INTERMEDIARY; 2,092
(2) THE SECURITIES INTERMEDIARY DOES NOT HAVE SUFFICIENT 2,094
INTERESTS IN THE FINANCIAL ASSET TO SATISFY THE SECURITY 2,095
ENTITLEMENTS OF ALL OF ITS ENTITLEMENT HOLDERS TO THAT FINANCIAL 2,096
ASSET;
(3) THE SECURITIES INTERMEDIARY VIOLATED ITS OBLIGATIONS 2,098
UNDER SECTION 1308.54 OF THE REVISED CODE BY TRANSFERRING THE 2,099
48
FINANCIAL ASSET OR INTEREST THEREIN TO THE PURCHASER; AND 2,100
(4) THE PURCHASER IS NOT PROTECTED UNDER DIVISION (E) OF 2,102
THIS SECTION. THE TRUSTEE OR OTHER LIQUIDATOR, ACTING ON BEHALF 2,103
OF ALL ENTITLEMENT HOLDERS HAVING SECURITY ENTITLEMENTS WITH 2,104
RESPECT TO A PARTICULAR FINANCIAL ASSET, MAY RECOVER THE 2,105
FINANCIAL ASSET, OR INTEREST THEREIN, FROM THE PURCHASER. IF THE 2,106
TRUSTEE OR OTHER LIQUIDATOR ELECTS NOT TO PURSUE THAT RIGHT, AN 2,107
ENTITLEMENT HOLDER WHOSE SECURITY ENTITLEMENT REMAINS UNSATISFIED
HAS THE RIGHT TO RECOVER ITS INTEREST IN THE FINANCIAL ASSET FROM 2,108
THE PURCHASER. 2,109
(E) AN ACTION BASED ON THE ENTITLEMENT HOLDER'S PROPERTY 2,111
INTEREST WITH RESPECT TO A PARTICULAR FINANCIAL ASSET UNDER 2,112
DIVISION (A) OF THIS SECTION, WHETHER FRAMED IN CONVERSION, 2,113
REPLEVIN, CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR OTHER THEORY, 2,114
MAY NOT BE ASSERTED AGAINST ANY PURCHASER OF A FINANCIAL ASSET OR 2,115
INTEREST THEREIN WHO GIVES VALUE, OBTAINS CONTROL, AND DOES NOT 2,116
ACT IN COLLUSION WITH THE SECURITIES INTERMEDIARY IN VIOLATING
THE SECURITIES INTERMEDIARY'S OBLIGATIONS UNDER SECTION 1308.54 2,118
OF THE REVISED CODE.
Sec. 1308.54. (A) A SECURITIES INTERMEDIARY SHALL 2,120
PROMPTLY OBTAIN AND THEREAFTER MAINTAIN A FINANCIAL ASSET IN A 2,121
QUANTITY CORRESPONDING TO THE AGGREGATE OF ALL SECURITY 2,122
ENTITLEMENTS IT HAS ESTABLISHED IN FAVOR OF ITS ENTITLEMENT 2,123
HOLDERS WITH RESPECT TO THAT FINANCIAL ASSET. THE SECURITIES
INTERMEDIARY MAY MAINTAIN THOSE FINANCIAL ASSETS DIRECTLY OR 2,124
THROUGH ONE OR MORE OTHER SECURITIES INTERMEDIARIES. 2,125
(B) EXCEPT TO THE EXTENT OTHERWISE AGREED BY ITS 2,127
ENTITLEMENT HOLDER, A SECURITIES INTERMEDIARY MAY NOT GRANT ANY 2,128
SECURITY INTERESTS IN A FINANCIAL ASSET IT IS OBLIGATED TO 2,129
MAINTAIN PURSUANT TO DIVISION (A) OF THIS SECTION. 2,130
(C) A SECURITIES INTERMEDIARY SATISFIES THE DUTY IN 2,132
DIVISION (A) OF THIS SECTION IF: 2,133
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,135
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,136
49
INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,138
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,139
COMMERCIAL STANDARDS TO OBTAIN AND MAINTAIN THE FINANCIAL ASSET. 2,140
(D) THIS SECTION DOES NOT APPLY TO A CLEARING CORPORATION 2,142
THAT IS ITSELF THE OBLIGOR OF AN OPTION OR SIMILAR OBLIGATION TO 2,143
WHICH ITS ENTITLEMENT HOLDERS HAVE SECURITY ENTITLEMENTS. 2,144
Sec. 1308.55. (A) A SECURITIES INTERMEDIARY SHALL TAKE 2,146
ACTION TO OBTAIN A PAYMENT OR DISTRIBUTION MADE BY THE ISSUER OF 2,147
A FINANCIAL ASSET. A SECURITIES INTERMEDIARY SATISFIES THE DUTY 2,148
IF:
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,150
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,151
INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,153
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,154
COMMERCIAL STANDARDS TO ATTEMPT TO OBTAIN THE PAYMENT OR 2,155
DISTRIBUTION.
(B) A SECURITIES INTERMEDIARY IS OBLIGATED TO ITS 2,157
ENTITLEMENT HOLDER FOR A PAYMENT OR DISTRIBUTION MADE BY THE 2,158
ISSUER OF A FINANCIAL ASSET IF THE PAYMENT OR DISTRIBUTION IS 2,159
RECEIVED BY THE SECURITIES INTERMEDIARY.
Sec. 1308.56. A SECURITIES INTERMEDIARY SHALL EXERCISE 2,161
RIGHTS WITH RESPECT TO A FINANCIAL ASSET IF DIRECTED TO DO SO BY 2,162
AN ENTITLEMENT HOLDER. A SECURITIES INTERMEDIARY SATISFIES THE 2,163
DUTY IF:
(A) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,165
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,166
INTERMEDIARY; OR
(B) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,168
INTERMEDIARY EITHER PLACES THE ENTITLEMENT HOLDER IN A POSITION 2,169
TO EXERCISE THE RIGHTS DIRECTLY OR EXERCISES DUE CARE IN 2,170
ACCORDANCE WITH REASONABLE COMMERCIAL STANDARDS TO FOLLOW THE 2,171
DIRECTION OF THE ENTITLEMENT HOLDER.
50
Sec. 1308.57. (A) A SECURITIES INTERMEDIARY SHALL COMPLY 2,173
WITH AN ENTITLEMENT ORDER IF THE ENTITLEMENT ORDER IS ORIGINATED 2,174
BY THE APPROPRIATE PERSON, THE SECURITIES INTERMEDIARY HAS HAD 2,175
REASONABLE OPPORTUNITY TO ASSURE ITSELF THAT THE ENTITLEMENT 2,176
ORDER IS GENUINE AND AUTHORIZED, AND THE SECURITIES INTERMEDIARY 2,177
HAS HAD REASONABLE OPPORTUNITY TO COMPLY WITH THE ENTITLEMENT 2,178
ORDER. A SECURITIES INTERMEDIARY SATISFIES THE DUTY IF:
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE 2,180
DUTY AS AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES 2,181
INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,183
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,184
COMMERCIAL STANDARDS TO COMPLY WITH THE ENTITLEMENT ORDER. 2,185
(B) IF A SECURITIES INTERMEDIARY TRANSFERS A FINANCIAL 2,187
ASSET PURSUANT TO AN INEFFECTIVE ENTITLEMENT ORDER, THE 2,188
SECURITIES INTERMEDIARY SHALL REESTABLISH A SECURITY ENTITLEMENT 2,189
IN FAVOR OF THE PERSON ENTITLED TO IT, AND PAY OR CREDIT ANY 2,190
PAYMENTS OR DISTRIBUTIONS THAT THE PERSON DID NOT RECEIVE AS A 2,191
RESULT OF THE WRONGFUL TRANSFER. IF THE SECURITIES INTERMEDIARY
DOES NOT REESTABLISH A SECURITY ENTITLEMENT, THE SECURITIES 2,192
INTERMEDIARY IS LIABLE TO THE ENTITLEMENT HOLDER FOR DAMAGES. 2,193
Sec. 1308.58. A SECURITIES INTERMEDIARY SHALL ACT AT THE 2,195
DIRECTION OF AN ENTITLEMENT HOLDER TO CHANGE A SECURITY 2,196
ENTITLEMENT INTO ANOTHER AVAILABLE FORM OF HOLDING FOR WHICH THE 2,197
ENTITLEMENT HOLDER IS ELIGIBLE, OR TO CAUSE THE FINANCIAL ASSET 2,198
TO BE TRANSFERRED TO A SECURITIES ACCOUNT OF THE ENTITLEMENT
HOLDER WITH ANOTHER SECURITIES INTERMEDIARY. A SECURITIES 2,199
INTERMEDIARY SATISFIES THE DUTY IF: 2,200
(A) THE SECURITIES INTERMEDIARY ACTS AS AGREED UPON BY THE 2,202
ENTITLEMENT HOLDER AND THE SECURITIES INTERMEDIARY; OR 2,203
(B) IN THE ABSENCE OF AGREEMENT, THE SECURITIES 2,205
INTERMEDIARY EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE 2,206
COMMERCIAL STANDARDS TO FOLLOW THE DIRECTION OF THE ENTITLEMENT 2,207
HOLDER.
51
Sec. 1308.59. (A) IF THE SUBSTANCE OF A DUTY IMPOSED UPON 2,209
A SECURITIES INTERMEDIARY BY SECTIONS 1308.54 TO 1308.58 OF THE 2,210
REVISED CODE IS THE SUBJECT OF OTHER STATUTE, REGULATION, OR 2,211
RULE, COMPLIANCE WITH THAT STATUTE, REGULATION, OR RULE SATISFIES 2,212
THE DUTY.
(B) TO THE EXTENT THAT SPECIFIC STANDARDS FOR THE 2,214
PERFORMANCE OF THE DUTIES OF A SECURITIES INTERMEDIARY OR THE 2,215
EXERCISE OF THE RIGHTS OF AN ENTITLEMENT HOLDER ARE NOT SPECIFIED 2,216
BY OTHER STATUTE, REGULATION, OR RULE OR BY AGREEMENT BETWEEN THE 2,217
SECURITIES INTERMEDIARY AND ENTITLEMENT HOLDER, THE SECURITIES 2,218
INTERMEDIARY SHALL PERFORM ITS DUTIES AND THE ENTITLEMENT HOLDER
SHALL EXERCISE ITS RIGHTS IN A COMMERCIALLY REASONABLE MANNER. 2,219
(C) THE OBLIGATION OF A SECURITIES INTERMEDIARY TO PERFORM 2,221
THE DUTIES IMPOSED BY SECTIONS 1308.54 TO 1308.58 OF THE REVISED 2,222
CODE IS SUBJECT TO:
(1) RIGHTS OF THE SECURITIES INTERMEDIARY ARISING OUT OF A 2,224
SECURITY INTEREST UNDER A SECURITY AGREEMENT WITH THE ENTITLEMENT 2,225
HOLDER OR OTHERWISE; AND 2,226
(2) RIGHTS OF THE SECURITIES INTERMEDIARY UNDER OTHER LAW, 2,228
REGULATION, RULE, OR AGREEMENT TO WITHHOLD PERFORMANCE OF ITS 2,229
DUTIES AS A RESULT OF UNFULFILLED OBLIGATIONS OF THE ENTITLEMENT 2,230
HOLDER TO THE SECURITIES INTERMEDIARY. 2,231
(D) SECTIONS 1308.54 TO 1308.58 OF THE REVISED CODE DO NOT 2,233
REQUIRE A SECURITIES INTERMEDIARY TO TAKE ANY ACTION THAT IS 2,234
PROHIBITED BY OTHER STATUTE, REGULATION, OR RULE. 2,235
Sec. 1308.60. (A) AN ACTION BASED ON AN ADVERSE CLAIM TO 2,237
A FINANCIAL ASSET OR SECURITY ENTITLEMENT, WHETHER FRAMED IN 2,238
CONVERSION, REPLEVIN, CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR 2,239
OTHER THEORY, MAY NOT BE ASSERTED AGAINST A PERSON WHO PURCHASES 2,240
A SECURITY ENTITLEMENT, OR AN INTEREST THEREIN, FROM AN 2,241
ENTITLEMENT HOLDER IF THE PURCHASER GIVES VALUE, DOES NOT HAVE 2,242
NOTICE OF THE ADVERSE CLAIM, AND OBTAINS CONTROL.
(B) IF AN ADVERSE CLAIM COULD NOT HAVE BEEN ASSERTED 2,244
AGAINST AN ENTITLEMENT HOLDER UNDER SECTION 1308.52 OF THE 2,245
52
REVISED CODE, THE ADVERSE CLAIM CANNOT BE ASSERTED AGAINST A 2,246
PERSON WHO PURCHASES A SECURITY ENTITLEMENT, OR AN INTEREST
THEREIN, FROM THE ENTITLEMENT HOLDER. 2,247
(C) IN A CASE NOT COVERED BY THE PRIORITY RULES IN CHAPTER 2,250
1309. OF THE REVISED CODE, A PURCHASER FOR VALUE OF A SECURITY
ENTITLEMENT, OR AN INTEREST THEREIN, WHO OBTAINS CONTROL HAS 2,251
PRIORITY OVER A PURCHASER OF A SECURITY ENTITLEMENT, OR AN 2,252
INTEREST THEREIN, WHO DOES NOT OBTAIN CONTROL. PURCHASERS WHO 2,253
HAVE CONTROL RANK EQUALLY, EXCEPT THAT A SECURITIES INTERMEDIARY 2,254
AS PURCHASER HAS PRIORITY OVER A CONFLICTING PURCHASER WHO HAS
CONTROL UNLESS OTHERWISE AGREED BY THE SECURITIES INTERMEDIARY. 2,255
Sec. 1308.61. (A) EXCEPT AS OTHERWISE PROVIDED IN 2,257
DIVISIONS (B) AND (C) OF THIS SECTION, IF A SECURITIES 2,258
INTERMEDIARY DOES NOT HAVE SUFFICIENT INTERESTS IN A PARTICULAR 2,259
FINANCIAL ASSET TO SATISFY BOTH ITS OBLIGATIONS TO ENTITLEMENT 2,260
HOLDERS WHO HAVE SECURITY ENTITLEMENTS TO THAT FINANCIAL ASSET 2,261
AND ITS OBLIGATION TO A CREDITOR OF THE SECURITIES INTERMEDIARY 2,262
WHO HAS A SECURITY INTEREST IN THAT FINANCIAL ASSET, THE CLAIMS
OF ENTITLEMENT HOLDERS, OTHER THAN THE CREDITOR, HAVE PRIORITY 2,263
OVER THE CLAIM OF THE CREDITOR. 2,264
(B) A CLAIM OF A CREDITOR OF A SECURITIES INTERMEDIARY WHO 2,266
HAS A SECURITY INTEREST IN A FINANCIAL ASSET HELD BY A SECURITIES 2,267
INTERMEDIARY HAS PRIORITY OVER CLAIMS OF THE SECURITIES 2,268
INTERMEDIARY'S ENTITLEMENT HOLDERS WHO HAVE SECURITY ENTITLEMENTS 2,269
WITH RESPECT TO THAT FINANCIAL ASSET IF THE CREDITOR HAS CONTROL 2,270
OVER THE FINANCIAL ASSET.
(C) IF A CLEARING CORPORATION DOES NOT HAVE SUFFICIENT 2,272
FINANCIAL ASSETS TO SATISFY BOTH ITS OBLIGATIONS TO ENTITLEMENT 2,273
HOLDERS WHO HAVE SECURITY ENTITLEMENTS WITH RESPECT TO A 2,274
FINANCIAL ASSET AND ITS OBLIGATION TO A CREDITOR OF THE CLEARING 2,275
CORPORATION WHO HAS A SECURITY INTEREST IN THAT FINANCIAL ASSET, 2,276
THE CLAIM OF THE CREDITOR HAS PRIORITY OVER THE CLAIMS OF
ENTITLEMENT HOLDERS. 2,277
Sec. 1309.01. (A) As used in sections 1309.01 to 1309.50 2,286
53
of the Revised Code, unless the context otherwise requires: 2,287
(1) "Account debtor" means the person who is obligated on 2,289
an account, chattel paper, or general intangible. 2,290
(2) "Chattel paper" means a writing or writings which 2,292
evidence both a monetary obligation and a security interest in or 2,293
a lease of specific goods, but a charter or other contract 2,294
involving the use or hire of a vessel is not chattel paper. When 2,295
a transaction is evidenced both by such a security agreement or a 2,296
lease and by an instrument or a series of instruments, the group 2,297
of writings taken together constitutes chattel paper. 2,298
(3) "Collateral" means the property subject to a security 2,300
interest, and includes accounts and chattel paper which have been 2,301
sold. 2,302
(4) "Debtor" means the person who owes payment or other 2,304
performance of the obligations secured, whether or not he THE 2,305
PERSON owns or has rights in the collateral, and includes the 2,306
seller of accounts or chattel paper. Where the debtor and the 2,307
owner of the collateral are not the same person, the term 2,308
"debtor" means the owner of the collateral in any provision of 2,309
sections 1309.01 to 1309.50 of the Revised Code dealing with the 2,310
collateral, the obligor in any provision dealing with the 2,311
obligation and may include both where the context so requires. 2,312
(5) "Deposit account" means a demand, time, savings, 2,314
passbook or like account maintained with a bank, savings and loan 2,315
association, credit union, or like organization, other than an 2,316
account evidenced by a certificate of deposit. 2,317
(6) "Document" means document of title as defined in 2,319
division (O) of section 1301.01 of the Revised Code, and a 2,320
receipt of the kind described in division (B) of section 1307.06 2,321
of the Revised Code. 2,322
(7) "Encumbrance" includes real estate mortgages and other 2,324
liens on real estate and all other rights in real estate that are 2,325
not ownership interests. 2,326
(8) "Goods" includes all things which are movable at the 2,328
54
time the security interest attaches or which are fixtures under 2,329
section 1309.32 of the Revised Code, but does not include money, 2,330
documents, instruments, INVESTMENT PROPERTY, COMMODITY CONTRACTS, 2,332
accounts, chattel paper, general intangibles, or minerals or the 2,333
like, including oil and gas, before extraction. "Goods" also 2,334
include standing timber which is to be cut and removed under a 2,335
conveyance or contract for sale, the unborn young of animals, and 2,336
growing crops.
(9) "Instrument" means a negotiable instrument as defined 2,338
in section 1303.03 of the Revised Code, or a certificated 2,339
security as defined in section 1308.01 of the Revised Code, or 2,340
any other writing which evidences a right to the payment of money 2,341
and is not itself a security agreement or lease and is of a type 2,342
which is in ordinary course of business transferred by delivery 2,343
with any necessary indorsement or assignment. "INSTRUMENT" DOES 2,344
NOT INCLUDE INVESTMENT PROPERTY. 2,346
(10) "Mortgage" means a consensual interest created by a 2,348
real estate mortgage, a trust deed on real estate, or the like. 2,349
(11) An advance is made "pursuant to commitment" if the 2,351
secured party has bound himself ITSELF to make it, whether or not 2,353
a subsequent event of default or other event not within his THE
SECURED PARTY'S control has relieved or may relieve him THE 2,354
SECURED PARTY from his THE SECURED PARTY'S obligation. 2,355
(12) "Security agreement" means an agreement which creates 2,357
or provides for a security interest. 2,358
(13) "Secured party" means a lender, seller, or other 2,360
person in whose favor there is a security interest, including a 2,361
person to whom accounts or chattel paper have been sold. When 2,362
the holders of obligations issued under an indenture of trust, 2,363
equipment trust agreement, or the like are represented by a 2,364
trustee or other person, the representative is the secured party. 2,365
(14) "Transmitting utility" means any person primarily 2,367
engaged in the railroad, street railway, or trolley bus business, 2,368
the electric or electronic communications business, the 2,369
55
transmission of goods by pipeline, or the transmission or the 2,370
production and transmission of electricity, steam, gas, or water, 2,371
or the provision of sewer service. 2,372
(15) "Account" means any right to payment for goods sold 2,374
or leased or for services rendered which is not evidenced by an 2,375
instrument or chattel paper, whether or not it has been earned by 2,376
performance. 2,377
(16) "General intangible INTANGIBLES" means any personal 2,379
property, including things in action, other than goods, accounts, 2,381
chattel paper, documents, instruments, INVESTMENT PROPERTY, and 2,382
money. All rights to payment earned or unearned under a charter 2,384
or other contract involving the use or hire of a vessel and all 2,385
rights incident to the charter or contract are accounts. 2,386
(B) Other definitions applying to sections 1309.01 to 2,388
1309.50 of the Revised Code are: 2,389
(1) "Attach," as defined in section 1309.14 of the Revised 2,391
Code; 2,392
(2) "Construction mortgage," as defined in section 1309.32 2,394
of the Revised Code; 2,395
(3) "Consumer goods," as defined in section 1309.07 of the 2,397
Revised Code; 2,398
(4) "Equipment," as defined in section 1309.07 of the 2,400
Revised Code; 2,401
(5) "Farm products," as defined in section 1309.07 of the 2,403
Revised Code; 2,404
(6) "Fixture," as defined in section 1309.32 of the 2,406
Revised Code; 2,407
(7) "Fixture filing," as defined in section 1309.32 of the 2,409
Revised Code; 2,410
(8) "Inventory," as defined in section 1309.07 of the 2,412
Revised Code; 2,413
(9) "Lien creditor," as defined in section 1309.20 of the 2,415
Revised Code; 2,416
(10) "Proceeds," as defined in section 1309.25 of the 2,418
56
Revised Code; 2,419
(11) "Purchase money security interest," as defined in 2,421
section 1309.05 of the Revised Code; 2,422
(12) "COMMODITY CONTRACT," "COMMODITY CUSTOMER," 2,424
"COMMODITY INTERMEDIARY," "CONTROL," AND "INVESTMENT PROPERTY," 2,425
AS DEFINED IN SECTION 1309.112 OF THE REVISED CODE; 2,426
(13) "United States," as defined in section 1309.03 of the 2,428
Revised Code. 2,429
(C) As used in sections 1309.01 to 1309.50 of the Revised 2,431
Code, "check" and "note" have the meaning set forth in section 2,432
1303.03 of the Revised Code; "contract for sale" and "sale" have 2,433
the meaning set forth in section 1302.01 of the Revised Code; and 2,434
"holder in due course" has the meaning set forth in section 2,435
1303.31 of the Revised Code. 2,436
(D) The terms and principles of construction and 2,438
interpretation set forth in sections 1301.01 to 1301.14 of the 2,439
Revised Code are applicable to sections 1309.01 to 1309.50 of the 2,440
Revised Code. 2,441
Sec. 1309.03. (A) Documents, instruments, and ordinary 2,450
goods: 2,451
(1) This division applies to documents and instruments and 2,453
to goods other than those covered by a certificate of title 2,454
described in division (B) of this section, mobile goods described 2,455
in division (C) of this section, and minerals described in 2,456
division (E) of this section. 2,457
(2) Except as otherwise provided in this division, 2,459
perfection and the effect of perfection or nonperfection of a 2,460
security interest in collateral are governed by the law of the 2,461
jurisdiction where the collateral is when the last event occurs 2,462
on which is based the assertion that the security interest is 2,463
perfected or unperfected. 2,464
(3) If the parties to a transaction creating a purchase 2,466
money security interest in goods in one jurisdiction understand 2,467
at the time that the security interest attaches that the goods 2,468
57
will be kept in another jurisdiction, then the law of the other 2,469
jurisdiction governs the perfection and the effect of perfection 2,470
or nonperfection of the security interest from the time it 2,471
attaches until thirty days after the debtor receives possession 2,472
of the goods and thereafter if the goods are taken to the other 2,473
jurisdiction before the end of the thirty-day period. 2,474
(4) When collateral is brought into and kept in this state 2,476
while subject to a security interest perfected under the law of 2,477
the jurisdiction from which the collateral was removed, the 2,478
security interest remains perfected, but if action is required by 2,479
sections 1309.20 to 1309.37 of the Revised Code to perfect the 2,480
security interest: 2,481
(a) If the action is not taken before the expiration of 2,483
the period of perfection in the other jurisdiction or the end of 2,484
four months after the collateral is brought into this state, 2,485
whichever period first expires, the security interest becomes 2,486
unperfected at the end of that period and is thereafter deemed to 2,487
have been unperfected as against a person who became a purchaser 2,488
after removal; 2,489
(b) If the action is taken before the expiration of the 2,491
period specified in division (A)(4)(a) of this section, the 2,492
security interest continues perfected thereafter; 2,493
(c) For the purpose of priority over a buyer of consumer 2,495
goods, division (B) of section 1309.26 of the Revised Code, the 2,496
period of the effectiveness of a filing in the jurisdiction from 2,497
which the collateral is removed is governed by the rules with 2,498
respect to perfection in divisions (A)(4)(a) and (b) of this 2,499
section. 2,500
(B) Certificate of title. 2,502
(1) This division applies to goods covered by a 2,504
certificate of title issued under a statute of this state or of 2,505
another jurisdiction under the law of which indication of a 2,506
security interest on the certificate is required as a condition 2,507
of perfection. 2,508
58
(2) Except as otherwise provided in this division, 2,510
perfection and the effect of perfection or nonperfection of the 2,511
security interest are governed by the law, including the conflict 2,512
of laws rules, of the jurisdiction issuing the certificate until 2,513
four months after the goods are removed from that jurisdiction 2,514
and thereafter until the goods are registered in another 2,515
jurisdiction, but in any event not beyond surrender of the 2,516
certificate. After the expiration of that period, the goods are 2,517
not covered by the certificate of title within the meaning of 2,518
this section. 2,519
(3) Except with respect to the rights of a buyer described 2,521
in division (B)(4) of this section a security interest, perfected 2,522
in another jurisdiction otherwise than by notation on a 2,523
certificate of title, in goods brought into this state and 2,524
thereafter covered by a certificate of title issued by this state 2,525
is subject to the rules stated in division (A)(4) of this 2,526
section. 2,527
(4) If goods are brought into this state while a security 2,529
interest therein is perfected in any manner under the law of the 2,530
jurisdiction from which the goods are removed and a certificate 2,531
of title is issued by this state and the certificate does not 2,532
show that the goods are subject to the security interest or that 2,533
they may be subject to security interests not shown on the 2,534
certificate, the security interest is subordinate to the rights 2,535
of a buyer of the goods who is not in the business of selling 2,536
goods of that kind to the extent that he THE BUYER gives value 2,537
and receives delivery of the goods after issuance of the 2,538
certificate and without knowledge of the security interest. 2,539
(C) Accounts, general intangibles, and mobile goods. 2,541
(1) This division applies to accounts, other than an 2,543
account described in division (E) of this section on minerals, 2,544
and general intangibles, other than uncertificated securities, 2,545
and to goods which are mobile and which are of a type normally 2,546
used in more than one jurisdiction, such as motor vehicles, 2,547
59
trailers, rolling stock, airplanes, shipping containers, road 2,548
building and construction machinery, and commercial harvesting 2,549
machinery and the like, if the goods are equipment or are 2,550
inventory leased or held for lease by the debtor to others, and 2,551
are not covered by a certificate of title described in division 2,552
(B) of this section. 2,553
(2) The law, including the conflict of laws rules, of the 2,555
jurisdiction in which the debtor is located governs the 2,556
perfection and the effect of perfection or nonperfection of the 2,557
security interest. 2,558
(3) If, however, the debtor is located in a jurisdiction 2,560
which is not a part of the United States, and which does not 2,561
provide for perfection of the security interest by filing or 2,562
recording in that jurisdiction, the law of the jurisdiction in 2,563
the United States in which the debtor has its major executive 2,564
office in the United States governs the perfection and the effect 2,565
of perfection or nonperfection of the security interest through 2,566
filing. In the alternative, if the debtor is located in a 2,567
jurisdiction which is not a part of the United States or Canada 2,568
and the collateral is accounts or general intangibles for money 2,569
due or to become due, the security interest may be perfected by 2,570
notification to the account debtor. As used in this division, 2,571
"United States" includes its territories and possessions and the 2,572
Commonwealth of Puerto Rico. 2,573
(4) A debtor shall be deemed located at his THE DEBTOR'S 2,575
place of business if he THE DEBTOR has one, at his THE DEBTOR'S 2,577
chief executive office if he DEBTOR has more than one place of 2,578
business; otherwise at his THE DEBTOR'S residence. If, however, 2,579
the debtor is a foreign air carrier under the "Federal Aviation
Act of 1958," as amended, it shall be deemed located at the 2,581
designated office of the agent upon whom service of process may 2,582
be made on behalf of the foreign air carrier.
(5) A security interest perfected under the law of the 2,584
jurisdiction of the location of the debtor is perfected until the 2,585
60
expiration of four months after a change of the debtor's location 2,586
to another jurisdiction, or until perfection would have ceased by 2,587
the law of the first jurisdiction, whichever period first 2,588
expires. Unless perfected in the new jurisdiction before the end 2,589
of that period, it becomes unperfected thereafter and is deemed 2,590
to have been unperfected as against a person who became a 2,591
purchaser after the change. 2,592
(D) Chattel Paper. 2,594
The rules stated for goods in division (A) of this section 2,596
apply to a possessory security interest in chattel paper. The 2,597
rule stated for accounts in division (C) of this section applies 2,598
to a nonpossessory security in chattel paper, but the security 2,599
interest may not be perfected by notification to the account 2,600
debtor. 2,601
(E) Minerals. 2,603
Perfection and the effect of perfection or nonperfection of 2,605
a security interest which is created by a debtor who has an 2,606
interest in minerals or the like, including oil and gas, before 2,607
extraction and which attaches thereto as extracted, or which 2,608
attaches to an account resulting from the sale thereof at the 2,609
wellhead or minehead are governed by the law, including the 2,610
conflict of laws rules, of the jurisdiction wherein the wellhead 2,611
or minehead is located. 2,612
(F) Uncertificated securities INVESTMENT PROPERTY. 2,614
The law, including the conflict of laws rules, of the 2,616
jurisdiction of organization of the issuer governs the perfection 2,617
and the effect of perfection or non-perfection of a security 2,619
interest in uncertificated securities.
(1) THIS DIVISION APPLIES TO INVESTMENT PROPERTY. 2,621
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,623
THIS SECTION, DURING THE TIME THAT A SECURITY CERTIFICATE IS 2,624
LOCATED IN A JURISDICTION, PERFECTION OF A SECURITY INTEREST, THE 2,625
EFFECT OF PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A 2,626
SECURITY INTEREST IN THE CERTIFICATED SECURITY REPRESENTED 2,627
61
THEREBY ARE GOVERNED BY THE LOCAL LAW OF THAT JURISDICTION. 2,628
(3) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,630
THIS SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF 2,631
PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A SECURITY 2,632
INTEREST IN AN UNCERTIFICATED SECURITY ARE GOVERNED BY THE LOCAL 2,633
LAW OF THE ISSUER'S JURISDICTION AS SPECIFIED IN DIVISION (D) OF 2,634
SECTION 1308.05 OF THE REVISED CODE.
(4) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,636
THIS SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF 2,637
PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A SECURITY 2,638
INTEREST IN A SECURITY ENTITLEMENT OR SECURITIES ACCOUNT ARE 2,639
GOVERNED BY THE LOCAL LAW OF THE SECURITIES INTERMEDIARY'S 2,640
JURISDICTION AS SPECIFIED IN DIVISION (E) OF SECTION 1308.05 OF 2,641
THE REVISED CODE.
(5) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF 2,643
THIS SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF 2,644
PERFECTION OR NONPERFECTION, AND THE PRIORITY OF A SECURITY 2,645
INTEREST IN A COMMODITY CONTRACT OR COMMODITY ACCOUNT ARE 2,646
GOVERNED BY THE LOCAL LAW OF THE COMMODITY INTERMEDIARY'S 2,647
JURISDICTION. THE FOLLOWING RULES DETERMINE A "COMMODITY
INTERMEDIARY'S JURISDICTION" FOR PURPOSES OF THIS DIVISION: 2,648
(a) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,650
COMMODITY CUSTOMER SPECIFIES THAT IT IS GOVERNED BY THE LAW OF A 2,651
PARTICULAR JURISDICTION, THAT JURISDICTION IS THE COMMODITY 2,652
INTERMEDIARY'S JURISDICTION.
(b) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,654
COMMODITY CUSTOMER DOES NOT SPECIFY THE GOVERNING LAW AS PROVIDED 2,655
IN DIVISION (F)(5)(a) OF THIS SECTION, BUT EXPRESSLY SPECIFIES 2,656
THAT THE COMMODITY ACCOUNT IS MAINTAINED AT AN OFFICE IN A 2,657
PARTICULAR JURISDICTION, THAT JURISDICTION IS THE COMMODITY 2,658
INTERMEDIARY'S JURISDICTION.
(c) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,660
COMMODITY CUSTOMER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN 2,661
DIVISION (F)(5)(a) OR (b) OF THIS SECTION, THE COMMODITY 2,663
62
INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN WHICH IS
LOCATED THE OFFICE IDENTIFIED IN AN ACCOUNT STATEMENT AS THE 2,664
OFFICE SERVING THE COMMODITY CUSTOMER'S ACCOUNT. 2,665
(d) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND 2,667
COMMODITY CUSTOMER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN 2,668
DIVISION (F)(5)(a) OR (b) OF THIS SECTION AND AN ACCOUNT 2,670
STATEMENT DOES NOT IDENTIFY AN OFFICE SERVING THE COMMODITY
CUSTOMER'S ACCOUNT AS PROVIDED IN DIVISION (F)(5)(c) OF THIS 2,671
SECTION, THE COMMODITY INTERMEDIARY'S JURISDICTION IS THE 2,672
JURISDICTION IN WHICH IS LOCATED THE CHIEF EXECUTIVE OFFICE OF 2,673
THE COMMODITY INTERMEDIARY.
(6) PERFECTION OF A SECURITY INTEREST BY FILING, AUTOMATIC 2,675
PERFECTION OF A SECURITY INTEREST IN INVESTMENT PROPERTY GRANTED 2,676
BY A BROKER OR SECURITIES INTERMEDIARY, AND AUTOMATIC PERFECTION 2,677
OF A SECURITY INTEREST IN A COMMODITY CONTRACT OR COMMODITY 2,678
ACCOUNT GRANTED BY A COMMODITY INTERMEDIARY ARE GOVERNED BY THE 2,679
LOCAL LAW OF THE JURISDICTION IN WHICH THE DEBTOR IS LOCATED.
Sec. 1309.112. (A) IN THIS CHAPTER: 2,681
(1) "COMMODITY ACCOUNT" MEANS AN ACCOUNT MAINTAINED BY A 2,683
COMMODITY INTERMEDIARY IN WHICH A COMMODITY CONTRACT IS CARRIED 2,684
FOR A COMMODITY CUSTOMER. 2,685
(2) "COMMODITY CONTRACT" MEANS A COMMODITY FUTURES 2,687
CONTRACT, AN OPTION ON A COMMODITY FUTURES CONTRACT, A COMMODITY 2,688
OPTION, OR OTHER CONTRACT THAT, IN EACH CASE, IS: 2,689
(a) TRADED ON OR SUBJECT TO THE RULES OF A BOARD OF TRADE 2,691
THAT HAS BEEN DESIGNATED AS A CONTRACT MARKET FOR SUCH A CONTRACT 2,692
PURSUANT TO THE FEDERAL COMMODITIES LAWS; OR 2,693
(b) TRADED ON A FOREIGN COMMODITY BOARD OF TRADE, 2,695
EXCHANGE, OR MARKET, AND IS CARRIED ON THE BOOKS OF A COMMODITY 2,696
INTERMEDIARY FOR A COMMODITY CUSTOMER. 2,697
(3) "COMMODITY CUSTOMER" MEANS A PERSON FOR WHOM A 2,699
COMMODITY INTERMEDIARY CARRIES A COMMODITY CONTRACT ON ITS BOOKS. 2,700
(4) "COMMODITY INTERMEDIARY" MEANS: 2,702
(a) A PERSON WHO IS REGISTERED AS A FUTURES COMMISSION 2,704
63
MERCHANT UNDER THE FEDERAL COMMODITIES LAWS; OR 2,705
(b) A PERSON WHO IN THE ORDINARY COURSE OF ITS BUSINESS 2,707
PROVIDES CLEARANCE OR SETTLEMENT SERVICES FOR A BOARD OF TRADE 2,708
THAT HAS BEEN DESIGNATED AS A CONTRACT MARKET PURSUANT TO THE 2,709
FEDERAL COMMODITIES LAWS.
(5) "CONTROL" WITH RESPECT TO A CERTIFICATED SECURITY, 2,711
UNCERTIFICATED SECURITY, OR SECURITY ENTITLEMENT HAS THE MEANING 2,712
SPECIFIED IN SECTION 1308.24 OF THE REVISED CODE. A SECURED 2,713
PARTY HAS CONTROL OVER A COMMODITY CONTRACT IF BY AGREEMENT AMONG 2,714
THE COMMODITY CUSTOMER, THE COMMODITY INTERMEDIARY, AND THE
SECURED PARTY, THE COMMODITY INTERMEDIARY HAS AGREED THAT IT WILL 2,715
APPLY ANY VALUE DISTRIBUTED ON ACCOUNT OF THE COMMODITY CONTRACT 2,716
AS DIRECTED BY THE SECURED PARTY WITHOUT FURTHER CONSENT BY THE 2,717
COMMODITY CUSTOMER. IF A COMMODITY CUSTOMER GRANTS A SECURITY 2,718
INTEREST IN A COMMODITY CONTRACT TO ITS OWN COMMODITY 2,719
INTERMEDIARY, THE COMMODITY INTERMEDIARY AS SECURED PARTY HAS
CONTROL. A SECURED PARTY HAS CONTROL OVER A SECURITIES ACCOUNT 2,720
OR COMMODITY ACCOUNT IF THE SECURED PARTY HAS CONTROL OVER ALL 2,721
SECURITY ENTITLEMENTS OR COMMODITY CONTRACTS CARRIED IN THE 2,722
SECURITIES ACCOUNT OR COMMODITY ACCOUNT.
(6) "INVESTMENT PROPERTY" MEANS: 2,724
(a) A SECURITY, WHETHER CERTIFICATED OR UNCERTIFICATED; 2,726
(b) A SECURITY ENTITLEMENT; 2,728
(c) A SECURITIES ACCOUNT; 2,730
(d) A COMMODITY CONTRACT; OR 2,732
(e) A COMMODITY ACCOUNT. 2,734
(B) ATTACHMENT OR PERFECTION OF A SECURITY INTEREST IN A 2,736
SECURITIES ACCOUNT IS ALSO ATTACHMENT OR PERFECTION OF A SECURITY 2,737
INTEREST IN ALL SECURITY ENTITLEMENTS CARRIED IN THE SECURITIES 2,738
ACCOUNT. ATTACHMENT OR PERFECTION OF A SECURITY INTEREST IN A 2,739
COMMODITY ACCOUNT IS ALSO ATTACHMENT OR PERFECTION OF A SECURITY 2,740
INTEREST IN ALL COMMODITY CONTRACTS CARRIED IN THE COMMODITY 2,741
ACCOUNT.
(C) A DESCRIPTION OF COLLATERAL IN A SECURITY AGREEMENT OR 2,743
64
FINANCING STATEMENT IS SUFFICIENT TO CREATE OR PERFECT A SECURITY 2,744
INTEREST IN A CERTIFICATED SECURITY, UNCERTIFICATED SECURITY, 2,745
SECURITY ENTITLEMENT, SECURITIES ACCOUNT, COMMODITY CONTRACT, OR 2,746
COMMODITY ACCOUNT WHETHER IT DESCRIBES THE COLLATERAL BY THOSE 2,747
TERMS, OR AS INVESTMENT PROPERTY, OR BY DESCRIPTION OF THE 2,748
UNDERLYING SECURITY, FINANCIAL ASSET, OR COMMODITY CONTRACT. A 2,749
DESCRIPTION OF INVESTMENT PROPERTY COLLATERAL IN A SECURITY
AGREEMENT OR FINANCING STATEMENT IS SUFFICIENT IF IT IDENTIFIES 2,750
THE COLLATERAL BY SPECIFIC LISTING, BY CATEGORY, BY QUANTITY, BY 2,751
A COMPUTATIONAL OR ALLOCATIONAL FORMULA OR PROCEDURE, OR BY ANY 2,752
OTHER METHOD, IF THE IDENTITY OF THE COLLATERAL IS OBJECTIVELY 2,753
DETERMINABLE.
(D) PERFECTION OF A SECURITY INTEREST IN INVESTMENT 2,755
PROPERTY IS GOVERNED BY THE FOLLOWING RULES: 2,756
(1) A SECURITY INTEREST IN INVESTMENT PROPERTY MAY BE 2,758
PERFECTED BY CONTROL. 2,759
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (D)(3) AND 2,761
(4) OF THIS SECTION, A SECURITY INTEREST IN INVESTMENT PROPERTY 2,762
MAY BE PERFECTED BY FILING. 2,763
(3) IF THE DEBTOR IS A BROKER OR SECURITIES INTERMEDIARY, 2,765
A SECURITY INTEREST IN INVESTMENT PROPERTY IS PERFECTED WHEN IT 2,766
ATTACHES. THE FILING OF A FINANCING STATEMENT WITH RESPECT TO A 2,767
SECURITY INTEREST IN INVESTMENT PROPERTY GRANTED BY A BROKER OR 2,768
SECURITIES INTERMEDIARY HAS NO EFFECT FOR PURPOSES OF PERFECTION 2,769
OR PRIORITY WITH RESPECT TO THAT SECURITY INTEREST.
(4) IF A DEBTOR IS A COMMODITY INTERMEDIARY, A SECURITY 2,771
INTEREST IN A COMMODITY CONTRACT OR A COMMODITY ACCOUNT IS 2,772
PERFECTED WHEN IT ATTACHES. THE FILING OF A FINANCING STATEMENT 2,773
WITH RESPECT TO A SECURITY INTEREST IN A COMMODITY CONTRACT OR A 2,774
COMMODITY ACCOUNT GRANTED BY A COMMODITY INTERMEDIARY HAS NO 2,775
EFFECT FOR PURPOSES OF PERFECTION OR PRIORITY WITH RESPECT TO
THAT SECURITY INTEREST. 2,776
(E) PRIORITY BETWEEN CONFLICTING SECURITY INTERESTS IN THE 2,778
SAME INVESTMENT PROPERTY IS GOVERNED BY THE FOLLOWING RULES: 2,779
65
(1) A SECURITY INTEREST OF A SECURED PARTY WHO HAS CONTROL 2,781
OVER INVESTMENT PROPERTY HAS PRIORITY OVER A SECURITY INTEREST OF 2,782
A SECURED PARTY WHO DOES NOT HAVE CONTROL OVER THE INVESTMENT 2,783
PROPERTY.
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (E)(3) AND 2,785
(4) OF THIS SECTION, CONFLICTING SECURITY INTERESTS OF SECURED 2,786
PARTIES EACH OF WHOM HAS CONTROL RANK EQUALLY. 2,787
(3) EXCEPT AS OTHERWISE AGREED BY THE SECURITIES 2,789
INTERMEDIARY, A SECURITY INTEREST IN A SECURITY ENTITLEMENT OR A 2,790
SECURITIES ACCOUNT GRANTED TO THE DEBTOR'S OWN SECURITIES 2,791
INTERMEDIARY HAS PRIORITY OVER ANY SECURITY INTEREST GRANTED BY 2,792
THE DEBTOR TO ANOTHER SECURED PARTY.
(4) EXCEPT AS OTHERWISE AGREED BY THE COMMODITY 2,794
INTERMEDIARY, A SECURITY INTEREST IN A COMMODITY CONTRACT OR A 2,795
COMMODITY ACCOUNT GRANTED TO THE DEBTOR'S OWN COMMODITY 2,796
INTERMEDIARY HAS PRIORITY OVER ANY SECURITY INTEREST GRANTED BY 2,797
THE DEBTOR TO ANOTHER SECURED PARTY.
(5) CONFLICTING SECURITY INTERESTS GRANTED BY A BROKER, A 2,799
SECURITIES INTERMEDIARY, OR A COMMODITY INTERMEDIARY WHICH ARE 2,800
PERFECTED WITHOUT CONTROL RANK EQUALLY. 2,801
(6) IN ALL OTHER CASES, PRIORITY BETWEEN CONFLICTING 2,803
SECURITY INTERESTS IN INVESTMENT PROPERTY IS GOVERNED BY 2,804
DIVISIONS (E), (F), AND (G) OF SECTION 1309.31 OF THE REVISED 2,805
CODE. DIVISION (D) OF SECTION 1309.31 OF THE REVISED CODE DOES 2,806
NOT APPLY TO INVESTMENT PROPERTY.
(F) IF A SECURITY CERTIFICATE IN REGISTERED FORM IS 2,808
DELIVERED TO A SECURED PARTY PURSUANT TO AGREEMENT, A WRITTEN 2,809
SECURITY AGREEMENT IS NOT REQUIRED FOR ATTACHMENT OR 2,810
ENFORCEABILITY OF THE SECURITY INTEREST, DELIVERY SUFFICES FOR 2,811
PERFECTION OF THE SECURITY INTEREST, AND THE SECURITY INTEREST
HAS PRIORITY OVER A CONFLICTING SECURITY INTEREST PERFECTED BY 2,812
MEANS OTHER THAN CONTROL, EVEN IF A NECESSARY INDORSEMENT IS 2,813
LACKING.
Sec. 1309.113. (A) IF A PERSON BUYS A FINANCIAL ASSET 2,815
66
THROUGH A SECURITIES INTERMEDIARY IN A TRANSACTION IN WHICH THE 2,816
BUYER IS OBLIGATED TO PAY THE PURCHASE PRICE TO THE SECURITIES 2,817
INTERMEDIARY AT THE TIME OF THE PURCHASE, AND THE SECURITIES 2,818
INTERMEDIARY CREDITS THE FINANCIAL ASSET TO THE BUYER'S 2,819
SECURITIES ACCOUNT BEFORE THE BUYER PAYS THE SECURITIES
INTERMEDIARY, THE SECURITIES INTERMEDIARY HAS A SECURITY INTEREST 2,820
IN THE BUYER'S SECURITY ENTITLEMENT SECURING THE BUYER'S 2,821
OBLIGATION TO PAY. A SECURITY AGREEMENT IS NOT REQUIRED FOR 2,822
ATTACHMENT OR ENFORCEABILITY OF THE SECURITY INTEREST, AND THE 2,823
SECURITY INTEREST IS AUTOMATICALLY PERFECTED.
(B) IF A CERTIFICATED SECURITY, OR OTHER FINANCIAL ASSET 2,825
REPRESENTED BY A WRITING WHICH IN THE ORDINARY COURSE OF BUSINESS 2,826
IS TRANSFERRED BY DELIVERY WITH ANY NECESSARY INDORSEMENT OR 2,827
ASSIGNMENT IS DELIVERED PURSUANT TO AN AGREEMENT BETWEEN PERSONS 2,828
IN THE BUSINESS OF DEALING WITH SUCH SECURITIES OR FINANCIAL 2,829
ASSETS AND THE AGREEMENT CALLS FOR DELIVERY VERSUS PAYMENT, THE 2,830
PERSON DELIVERING THE CERTIFICATE OR OTHER FINANCIAL ASSET HAS A 2,831
SECURITY INTEREST IN THE CERTIFICATED SECURITY OR OTHER FINANCIAL
ASSET SECURING THE SELLER'S RIGHT TO RECEIVE PAYMENT. A SECURITY 2,832
AGREEMENT IS NOT REQUIRED FOR ATTACHMENT OR ENFORCEABILITY OF THE 2,833
SECURITY INTEREST, AND THE SECURITY INTEREST IS AUTOMATICALLY 2,834
PERFECTED.
Sec. 1309.14. (A) Subject to the provisions of section 2,843
1304.20 of the Revised Code on the security interest of a 2,844
collecting bank, section 1308.36 SECTIONS 1309.112 AND 1309.113 2,846
of the Revised Code on security interests in securities 2,847
INVESTMENT PROPERTY, and section 1309.11 of the Revised Code on a 2,849
security interest arising under sections 1302.01 to 1302.98 of 2,850
the Revised Code, a security interest is not enforceable against 2,851
the debtor or third parties with respect to the collateral and 2,852
does not attach unless:
(1) The collateral is in the possession of the secured 2,854
party pursuant to agreement, THE COLLATERAL IS INVESTMENT 2,855
PROPERTY AND THE SECURED PARTY HAS CONTROL PURSUANT TO AGREEMENT, 2,856
67
or the debtor has signed a security agreement which contains a 2,858
description of the collateral and in addition, when the security 2,859
interest covers crops growing or to be grown or timber to be cut, 2,860
a description of the land concerned; and 2,861
(2) Value has been given; and 2,863
(3) The debtor has rights in the collateral. 2,865
(B) A security interest attaches when it becomes 2,867
enforceable against the debtor with respect to the collateral. 2,868
Attachment occurs as soon as all of the events specified in 2,869
division (A) of this section have taken place unless explicit 2,870
agreement postpones the time of attaching. 2,871
(C) Unless otherwise agreed, a security agreement gives 2,873
the secured party the rights to proceeds provided by section 2,874
1309.25 of the Revised Code. 2,875
(D) A transaction although subject to sections 1309.01 to 2,877
1309.50 of the Revised Code, is also subject to sections 1317.01 2,878
to 1317.99 and 1321.01 to 1321.33 of the Revised Code, and 2,879
divisions (A), (B), and (C) of section 1321.99 of the Revised 2,880
Code and in the event of conflict between the provisions of 2,881
sections 1309.01 to 1309.50, and 1317.01 to 1317.99, 1321.01 to 2,882
1321.33 of the Revised Code, and divisions (A), (B), and (C) of 2,883
section 1321.99 of the Revised Code, the provisions of sections 2,884
1317.01 to 1317.99, 1321.01 to 1321.33 of the Revised Code, and 2,885
divisions (A), (B), and (C) of section 1321.99 of the Revised 2,886
Code shall prevail. Failure to comply with such provisions has 2,887
only the effect provided therein. 2,888
Sec. 1309.20. (A) Except as otherwise provided in 2,897
division (B) of this section, an unperfected security interest is 2,898
subordinate to the rights of: 2,899
(1) Persons entitled to priority under section 1309.31 of 2,901
the Revised Code; 2,902
(2) A person who becomes a lien creditor before the 2,904
security interest is perfected; 2,905
(3) In the case of goods, instruments, documents, and 2,907
68
chattel paper, a person who is not a secured party and who is a 2,908
transferee in bulk or other buyer not in ordinary course of 2,909
business, or is a buyer of farm products in ordinary course of 2,910
business, to the extent that he THE PERSON gives value and 2,911
receives delivery of the collateral without knowledge of the 2,912
security interest and before it is perfected; 2,914
(4) In the case of accounts and, general intangibles, AND 2,916
INVESTMENT PROPERTY, a person who is not a secured party and who 2,918
is a transferee to the extent that he THE PERSON gives value 2,919
without knowledge of the security interest and before it is 2,920
perfected.
(B) If the secured party files with respect to a purchase 2,922
money security interest before or within twenty days after the 2,923
debtor receives possession of the collateral he THE SECURED PARTY 2,925
takes priority over the rights of a transferee in bulk or of a
lien creditor which arise between the time the security interest 2,926
attaches and the time of filing. 2,927
(C) A "lien creditor" means a creditor who has acquired a 2,929
lien on the property involved by attachment, levy or the like and 2,930
includes an assignee for benefit of creditors from the time of 2,931
assignment, and a trustee in bankruptcy from the date of the 2,932
filing of the petition or a receiver in equity from the time of 2,933
appointment. 2,934
(D) A person who becomes a lien creditor while a security 2,936
interest is perfected takes subject to the security interest only 2,937
to the extent that it secures advances made before he THE PERSON 2,938
becomes a lien creditor or within forty-five days thereafter or 2,939
made without knowledge of the lien or pursuant to a commitment 2,940
entered into without knowledge of the lien. 2,941
Sec. 1309.21. (A) A financing statement must be filed to 2,950
perfect all security interests except the following: 2,951
(1) A security interest in collateral in possession of the 2,953
secured party under section 1309.24 of the Revised Code; 2,954
(2) A security interest temporarily perfected in 2,956
69
instruments, CERTIFICATED SECURITIES, or documents without 2,958
delivery under section 1309.23 of the Revised Code or in proceeds 2,959
for a ten-day period under section 1309.25 of the Revised Code; 2,960
(3) A security interest created by an assignment of a 2,962
beneficial interest in a trust or a decedent's estate; 2,963
(4) A purchase money security interest in consumer goods; 2,965
but fixture filing is required for a priority over conflicting 2,966
interests in fixtures to the extent provided in section 1309.32 2,967
of the Revised Code; 2,968
(5) An assignment of accounts which does not alone or in 2,970
conjunction with other assignments to the same assignee transfer 2,971
a significant part of the outstanding accounts of the assignor; 2,972
(6) A security interest of a collecting bank as provided 2,974
in section 1304.20 of the Revised Code, or in securities as 2,975
provided in section 1308.36 of the Revised Code, or arising under 2,976
sections 1302.01 to 1302.98 of the Revised Code, or covered in 2,977
division (C) of this section; 2,978
(7) An assignment for the benefit of all the creditors of 2,980
the transferor, and subsequent transfers by the assignee 2,981
thereunder; 2,982
(8) A SECURITY INTEREST IN INVESTMENT PROPERTY WHICH IS 2,984
PERFECTED WITHOUT FILING UNDER SECTION 1309.112 OR 1309.113 OF 2,985
THE REVISED CODE.
(B) If a secured party assigns a perfected security 2,987
interest, no filing under sections 1309.01 to 1309.50 of the 2,988
Revised Code is required in order to continue the perfected 2,989
status of the security interest against creditors of and 2,990
transferees from the original debtor. 2,991
(C) The filing of a financing statement otherwise required 2,993
by sections 1309.01 to 1309.50 of the Revised Code is not 2,994
necessary or effective to perfect a security interest in property 2,995
subject to: 2,996
(1) A statute or treaty of the United States which 2,998
provides for a national or international registration or a 2,999
70
national or international certificate of title or which specifies 3,000
a place of filing different from that specified in sections 3,001
1309.01 to 1309.50 of the Revised Code for filing of the security 3,002
interest; or 3,003
(2) The following statutes of this state: sections 3,005
1548.20, 1701.66, 4505.13 except to the extent provided in 3,006
division (A) of such section, and 4969.05 of the Revised Code; or 3,007
(3) A certificate of title statute of another jurisdiction 3,009
under the law of which indication of a security interest on the 3,010
certificate is required as a condition of perfection, division 3,011
(B) of section 1309.03 of the Revised Code. 3,012
(D) Compliance with a statute or treaty described in 3,014
division (C) of this section is equivalent to the filing of a 3,015
financing statement under sections 1309.01 to 1309.50 of the 3,016
Revised Code, and a security interest in property subject to the 3,017
statute or treaty can be perfected only by compliance therewith 3,018
except as provided in section 1309.03 of the Revised Code on 3,019
multiple state transactions. Duration and renewal of perfection 3,020
of a security interest perfected by compliance with the statute 3,021
or treaty are governed by the provisions of the statute or 3,022
treaty; in other respects the security interest is subject to 3,023
sections 1309.01 to 1309.50 of the Revised Code. 3,024
Sec. 1309.22. (A) A security interest is perfected when 3,033
it has attached and when all of the applicable steps required for 3,034
perfection have been taken, as provided in sections 1309.112, 3,035
1309.21, 1309.23, 1309.24, and 1309.25 of the Revised Code. If 3,037
such steps are taken before the security interest attaches, it is
perfected at the time when it attaches. 3,038
(B) If a security interest is originally perfected in any 3,040
way permitted under sections 1309.01 to 1309.50, inclusive, of 3,041
the Revised Code, and is subsequently perfected in some other way 3,042
under sections 1309.01 to 1309.50, inclusive, of the Revised 3,043
Code, without an intermediate period when it was unperfected, the 3,044
security interest shall be deemed to be perfected continuously 3,045
71
for the purposes of such sections.
(C) A security interest by whatever name designated by any 3,047
law in effect prior to July 1, 1962, which was perfected prior to 3,048
such date and in connection with which any statement, instrument, 3,049
document, or notice was filed, refiled, or recorded pursuant to 3,050
such law, shall, if such law required a further filing, refiling, 3,051
or recording to continue the perfection of such security 3,052
interest, continue to be perfected without any further filing,
refiling, or recording of any statement, instrument, document, or 3,053
notice until the date provided by such law or July 1, 1964, 3,054
whichever date is later and will thereupon lapse, unless a 3,055
continuation statement has been filed after July 1, 1962, and 3,056
prior to the lapse of such statement, instrument, document, or 3,057
notice pursuant to this section. Section 1309.38 of the Revised
Code determines the proper place to file such continuation 3,058
statement and succeeding continuation statements and, except as 3,059
otherwise provided in this section, division (C) of section 3,060
1309.40 of the Revised Code applies to and governs the period of 3,061
effectiveness and the requirements respecting such continuation
statements. 3,062
Sec. 1309.23. (A) A security interest in chattel paper or 3,071
negotiable documents may be perfected by filing. A security 3,072
interest in money or instruments, other than certificated 3,073
securities or instruments which constitute part of chattel paper, 3,074
can be perfected only by the secured party's taking possession, 3,075
except as provided in divisions (D) and (E) of this section and 3,076
divisions (B) and (C) of section 1309.25 of the Revised Code on 3,077
proceeds. 3,078
(B) During the period that goods are in the possession of 3,080
the issuer of a negotiable document therefor, a security interest 3,081
in the goods is perfected by perfecting a security interest in 3,082
the document, and any security interest in the goods otherwise 3,083
perfected during such period is subject thereto. 3,084
(C) A security interest in goods in the possession of a 3,086
72
bailee other than one who has issued a negotiable document 3,087
therefor is perfected by issuance of a document in the name of 3,088
the secured party or by the bailee's receipt of notification of 3,089
the secured party's interest or by filing as to the goods. 3,090
(D) A security interest in instruments, other than 3,092
certificated securities, or negotiable documents is perfected 3,093
without filing or the taking of possession for a period of 3,094
twenty-one days from the time it attaches to the extent that it 3,095
arises for new value given under a written security agreement. 3,096
(E) A security interest remains perfected for a period of 3,098
twenty-one days without filing where a secured party having a 3,099
perfected security interest in an instrument, other than a 3,100
certificated security, a negotiable document, or goods in 3,101
possession of a bailee other than one who has issued a negotiable 3,102
document therefor: 3,103
(1) Makes available to the debtor the goods or documents 3,105
representing the goods for the purpose of ultimate sale or 3,106
exchange or for the purpose of loading, unloading, storing, 3,107
shipping, trans-shipping, manufacturing, processing, or otherwise 3,108
dealing with them in a manner preliminary to their sale or 3,109
exchange, but priority between conflicting security interests in 3,110
the goods is subject to division (C) of section 1309.31 of the 3,111
Revised Code; or 3,112
(2) Delivers the instrument OR CERTIFICATED SECURITY to 3,114
the debtor for the purpose of ultimate sale or exchange or of 3,116
presentation, collection, renewal, or registration of transfer. 3,117
(F) After the twenty-one day period set forth in divisions 3,119
(D) and (E) of this section, perfection depends upon compliance 3,120
with applicable provisions of sections 1309.01 to 1309.50 of the 3,121
Revised Code. 3,122
Sec. 1309.24. A security interest in letters of credit and 3,131
advices of credit, as provided in division (B)(1) of section 3,132
1305.15 of the Revised Code, goods, instruments, other than 3,133
certificated securities, negotiable documents, money, or chattel 3,134
73
paper may be perfected by the secured party's taking possession 3,135
of the collateral. If such collateral other than goods covered 3,136
by a negotiable document is held by a bailee, the secured party 3,137
is deemed to have possession from the time the bailee receives 3,138
notification of the secured party's interest. A security 3,139
interest is perfected by possession from the time possession is 3,140
taken without relation back and continues only so long as 3,141
possession is retained, unless otherwise specified in sections 3,142
1309.01 to 1309.50 of the Revised Code. The security interest 3,143
may be otherwise perfected as provided in sections 1309.01 to 3,144
1309.50 of the Revised Code, before or after the period of 3,145
possession by the secured party. 3,146
Sec. 1309.25. (A) "Proceeds" includes whatever is 3,155
received upon the sale, exchange, collection, or other 3,156
disposition of collateral or proceeds. Insurance payable by 3,157
reason of loss or damage to the collateral is proceeds, except to 3,158
the extent that it is payable to a person other than a party to 3,159
the security agreement. Moneys ANY PAYMENTS OR DISTRIBUTIONS 3,160
MADE WITH RESPECT TO INVESTMENT PROPERTY COLLATERAL ARE PROCEEDS. 3,161
MONEY, checks, deposit accounts, and the like are "cash 3,163
proceeds." All other proceeds are "non-cash proceeds." 3,164
(B) Except where sections 1309.01 to 1309.50 of the 3,166
Revised Code otherwise provide, a security interest continues in 3,167
collateral notwithstanding sale, exchange, or other disposition 3,168
thereof unless the disposition was authorized by the secured 3,169
party in the security agreement or otherwise, and also continues 3,170
in any identifiable proceeds including collections received by 3,171
the debtor. 3,172
(C) The security interest in proceeds is a continuously 3,174
perfected security interest if the interest in the original 3,175
collateral was perfected but it ceases to be a perfected security 3,176
interest and becomes unperfected ten days after receipt of the 3,177
proceeds by the debtor unless: 3,178
(1) a A filed financing statement covers the original 3,180
74
collateral and the proceeds are collateral in which a security 3,181
interest may be perfected by filing in the office or offices 3,182
where the financing statement has been filed and, if the proceeds 3,183
are acquired with cash proceeds, the description of the 3,184
collateral in the financing statement indicates the types of 3,185
property constituting the proceeds; or 3,186
(2) a A filed financing statement covers the original 3,188
collateral and the proceeds are identifiable cash proceeds; or 3,189
(3) the THE ORIGINAL COLLATERAL WAS INVESTMENT PROPERTY 3,191
AND THE PROCEEDS ARE IDENTIFIABLE CASH PROCEEDS; OR 3,192
(4) THE security interest in the proceeds is perfected 3,194
before the expiration of the ten day period. Except as provided 3,195
in this section, a security interest in proceeds can be perfected 3,196
only by the methods or under the circumstances permitted in 3,197
sections 1309.01 to 1309.50 of the Revised Code for original 3,198
collateral of the same type. 3,199
(D) In the event of insolvency proceedings instituted by 3,201
or against a debtor, a secured party with a perfected security 3,202
interest in proceeds has a perfected security interest only in 3,203
the following proceeds: 3,204
(1) in IN identifiable non-cash proceeds and in separate 3,206
deposit accounts containing only proceeds; 3,207
(2) in IN identifiable cash proceeds in the form of money 3,209
which is neither commingled with other money nor deposited in a 3,210
deposit account prior to the insolvency proceedings; 3,211
(3) in IN identifiable cash proceeds in the form of checks 3,213
and the like which are not deposited in a deposit account prior 3,214
to the insolvency proceedings; and 3,215
(4) in IN all cash and deposit accounts of the debtor in 3,217
which proceeds have been commingled with other funds, but the 3,218
perfected security interest under this division is: 3,219
(a) subject SUBJECT to any right of set-off; and 3,221
(b) limited LIMITED to an amount not greater than the 3,223
amount of any cash proceeds received by the debtor within ten 3,224
75
days before the institution of the insolvency proceedings, less 3,225
the sum of (i) the payments to the secured party on account of 3,226
cash proceeds received by the debtor; and (ii) the cash proceeds 3,227
received by the debtor during such period to which the secured 3,228
party is entitled under divisions (D)(1) to (3) of this section. 3,229
(E) If a sale of goods results in an account or chattel 3,231
paper which is transferred by the seller to a secured party, and 3,232
if the goods are returned to or are repossessed by the seller or 3,233
the secured party, the following rules determine priorities: 3,234
(1) If the goods were collateral at the time of sale for 3,236
an indebtedness of the seller which is still unpaid, the original 3,237
security interest attaches again to the goods and continues as a 3,238
perfected security interest if it was perfected at the time when 3,239
the goods were sold. If the security interest was originally 3,240
perfected by a filing which is still effective, nothing further 3,241
is required to continue the perfected status; in any other case, 3,242
the secured party must take possession of the returned or 3,243
repossessed goods or must file. 3,244
(2) An unpaid transferee of the chattel paper has a 3,246
security interest in the goods against the transferor. Such 3,247
security interest is prior to a security interest asserted under 3,248
division (E)(1) of this section to the extent that the transferee 3,249
of the chattel paper was entitled to priority under section 3,250
1309.27 of the Revised Code. 3,251
(3) An unpaid transferee of the account has a security 3,253
interest in the goods against the transferor. Such security 3,254
interest is subordinate to a security interest asserted under 3,255
division (E)(1) of this section. 3,256
(4) A security interest of an unpaid transferee asserted 3,258
under division (E)(2) or (3) of this section must be perfected 3,259
for protection against creditors of the transferor and purchasers 3,260
of the returned or repossessed goods. 3,261
Sec. 1309.28. Nothing in sections 1309.01 to 1309.50 of 3,270
the Revised Code, limit LIMITS the rights of a holder in due 3,271
76
course of a negotiable instrument, as defined in section 1303.32 3,273
of the Revised Code, or a holder to whom a negotiable document of 3,274
title has been duly negotiated under section 1307.29 of the 3,275
Revised Code, or a bona fide PROTECTED purchaser of a security 3,276
under section 1308.17 of the Revised Code, and such holders or 3,278
purchasers take priority over an earlier security interest even 3,279
though perfected. Filing under sections 1309.01 to 1309.50 of the 3,280
Revised Code, does not constitute notice of the security interest 3,281
to such holders or purchasers. 3,282
Sec. 1309.31. (A) The rules of priority stated in 3,291
sections 1309.20 to 1309.27 of the Revised Code and in the 3,292
following sections shall govern where applicable: section 3,293
1304.20 of the Revised Code with respect to the security 3,294
interests of collecting banks in items being collected, 3,295
accompanying documents, and proceeds; section 1309.03 of the 3,296
Revised Code on security interests related to other 3,297
jurisdictions; section 1309.111 of the Revised Code on 3,298
consignments; SECTION 1309.112 OF THE REVISED CODE ON SECURITY 3,299
INTERESTS IN INVESTMENT PROPERTY. 3,300
(B) A perfected security interest in crops for new value 3,302
given to enable the debtor to produce the crops during the 3,303
production season and given not more than three months before the 3,304
crops become growing crops by planting or otherwise takes 3,305
priority over an earlier perfected security interest to the 3,306
extent that such earlier interest secures obligations due more 3,307
than six months before the crops become growing crops by planting 3,308
or otherwise, even though the person giving new value had 3,309
knowledge of the earlier security interest. 3,310
(C) A perfected purchase money security interest in 3,312
inventory has priority over a conflicting security interest in 3,313
the same inventory and also has priority in identifiable cash 3,314
proceeds received on or before the delivery of the inventory to a 3,315
buyer if: 3,316
(1) The purchase money security interest is perfected at 3,318
77
the time the debtor receives possession of the inventory; and 3,319
(2) The purchase money secured party gives notification in 3,321
writing to the holder of the conflicting security interest if the 3,322
holder had filed a financing statement covering the same types of 3,323
inventory: 3,324
(a) Before the date of the filing made by the purchase 3,326
money secured party; or 3,327
(b) Before the beginning of the twenty-one-day period 3,329
where the purchase money security interest is temporarily 3,330
perfected without filing or possession pursuant to division (E) 3,331
of section 1309.23 of the Revised Code; and 3,332
(3) The holder of the conflicting security interest 3,334
receives the notification within five years before the debtor 3,335
receives possession of the inventory; and 3,336
(4) The notification states that the person giving the 3,338
notice has or expects to acquire a purchase money security 3,339
interest in inventory of the debtor, describing such inventory by 3,340
item or type. 3,341
(D) A purchase money security interest in collateral other 3,343
than inventory has priority over a conflicting security interest 3,344
in the same collateral or its proceeds if the purchase money 3,345
security interest is perfected at the time the debtor receives 3,346
possession of the collateral or within twenty days thereafter. 3,347
(E) In all cases not governed by other rules stated in 3,349
this section, including cases of purchase money security 3,350
interests which do not qualify for the special priorities set 3,351
forth in divisions (C) and (D) of this section, priority between 3,352
conflicting security interests in the same collateral shall be 3,353
determined according to the following rules: 3,354
(1) Conflicting security interests rank according to 3,356
priority in time of filing or perfection. Priority dates from 3,357
the time a filing is first made covering the collateral or the 3,358
time the security interest is first perfected, whichever is 3,359
earlier, provided that there is no period thereafter when there 3,360
78
is neither filing nor perfection. 3,361
(2) So long as conflicting security interests are 3,363
unperfected, the first to attach has priority. 3,364
(F) For the purpose of division (E) of this section, a 3,366
date of filing or perfection as to collateral is also a date of 3,367
filing or perfection as to proceeds. 3,368
(G) If future advances are made while a security interest 3,370
is perfected by filing, the taking of possession, or under 3,371
section 1308.36 1309.112 OR 1309.113 of the Revised Code on 3,373
securities INVESTMENT PROPERTY, the security interest has the 3,374
same priority for the purposes of division (E) of this section OR 3,375
DIVISION (E) OF SECTION 1309.112 OF THE REVISED CODE with respect 3,376
to the future advances as it does with respect to the first 3,377
advance. If a commitment is made before or while the security 3,378
interest is so perfected, the security interest has the same 3,379
priority with respect to advances made pursuant thereto. In 3,380
other cases a perfected security interest has priority from the 3,381
date the advance is made.
Sec. 1701.01. As used in sections 1701.01 to 1701.98 of 3,390
the Revised Code, unless the context otherwise requires: 3,391
(A) "Corporation" or "domestic corporation" means a 3,393
corporation for profit formed under the laws of this state. 3,394
(B) "Foreign corporation" means a corporation for profit 3,396
formed under the laws of another state, and "foreign entity" 3,397
means an entity formed under the laws of another state. 3,398
(C) "State" means the United States; any state, territory, 3,400
insular possession, or other political subdivision of the United 3,401
States, including the District of Columbia; any foreign country 3,402
or nation; and any province, territory, or other political 3,403
subdivision of such foreign country or nation. 3,404
(D) "Articles" includes original articles of 3,406
incorporation, certificates of reorganization, amended articles, 3,408
and amendments to any of these, and, in the case of a corporation 3,409
created before September 1, 1851, the special charter and any 3,410
79
amendments to it made by special act of the general assembly or 3,411
pursuant to general law. 3,412
(E) "Incorporator" means a person who signed the original 3,414
articles of incorporation. 3,415
(F) "Shareholder" means a person whose name appears on the 3,417
books of the corporation as the owner of shares of such 3,418
corporation. Unless the articles, the regulations, or the 3,419
contract of subscription otherwise provides, "shareholder" 3,420
includes a subscriber to shares, whether the subscription is 3,421
received by the incorporators or pursuant to authorization by the 3,422
directors, and such shares shall be deemed to be outstanding 3,423
shares. 3,424
(G) "Person" includes, without limitation, A NATURAL 3,426
PERSON, a corporation, whether nonprofit or for profit, a 3,427
partnership, a limited liability company, an unincorporated 3,428
society or association, and two or more persons having a joint or 3,429
common interest. 3,430
(H) The location of the "principal office" of a 3,432
corporation is the place named as the principal office in its 3,433
articles.
(I) The "express terms" of shares of a class are the 3,435
statements expressed in the articles with respect to such shares. 3,436
(J) Shares of a class are "junior" to shares of another 3,438
class when any of their dividend or distribution rights are 3,439
subordinate to, or dependent or contingent upon, any right of, or 3,440
dividend on, or distribution to, shares of such other class. 3,441
(K) "Treasury shares" means shares belonging to the 3,443
corporation and not retired that have been either issued and 3,444
thereafter acquired by the corporation or paid as a dividend or 3,445
distribution in shares of the corporation on treasury shares of 3,446
the same class; such shares shall be deemed to be issued, but 3,447
they shall not be considered as an asset or a liability of the 3,448
corporation, or as outstanding for dividend or distribution, 3,449
quorum, voting, or other purposes, except, when authorized by the 3,450
80
directors, for dividends or distributions in authorized but 3,451
unissued shares of the corporation of the same class. 3,452
(L) To "retire" a share means to restore it to the status 3,454
of an authorized but unissued share. 3,455
(M) "Redemption price of shares" means the amount required 3,457
by the articles to be paid on redemption of shares. 3,458
(N) "Liquidation price" means the amount or portion of 3,460
assets required by the articles to be distributed to the holders 3,461
of shares of any class upon dissolution, liquidation, merger, or 3,462
consolidation of the corporation, or upon sale of all or 3,463
substantially all of its assets. 3,464
(O) "Insolvent" means that the corporation is unable to 3,466
pay its obligations as they become due in the usual course of its 3,467
affairs. 3,468
(P) "Parent corporation" or "parent" means a domestic or 3,470
foreign corporation that owns and holds of record shares of 3,472
another corporation, domestic or foreign, entitling the holder of 3,473
the shares at the time to exercise a majority of the voting power 3,474
in the election of the directors of the other corporation without 3,475
regard to voting power that may thereafter exist upon a default, 3,477
failure, or other contingency; "subsidiary corporation" or 3,478
"subsidiary" means a domestic or foreign corporation of which 3,479
another corporation, domestic or foreign, is the parent. 3,480
(Q) "Combination" means a transaction, other than a merger 3,482
or consolidation, wherein either of the following applies: 3,483
(1) Voting shares of a domestic corporation are issued or 3,485
transferred in consideration in whole or in part for the transfer 3,486
to itself or to one or more of its subsidiaries, domestic or 3,487
foreign, of all or substantially all the assets of one or more 3,488
corporations, domestic or foreign, with or without good will or 3,489
the assumption of liabilities; 3,490
(2) Voting shares of a foreign parent corporation are 3,492
issued or transferred in consideration in whole or in part for 3,493
the transfer of such assets to one or more of its domestic 3,494
81
subsidiaries. 3,495
"Transferee corporation" in a combination means the 3,497
corporation, domestic or foreign, to which the assets are 3,498
transferred, and "transferor corporation" in a combination means 3,499
the corporation, domestic or foreign, transferring such assets 3,500
and to which, or to the shareholders of which, the voting shares 3,501
of the domestic or foreign corporation are issued or transferred. 3,502
(R) "Majority share acquisition" means the acquisition of 3,504
shares of a corporation, domestic or foreign, entitling the 3,505
holder of the shares to exercise a majority of the voting power 3,506
in the election of directors of such corporation without regard 3,507
to voting power that may thereafter exist upon a default, 3,508
failure, or other contingency, by either of the following: 3,509
(1) A domestic corporation in consideration in whole or in 3,511
part, for the issuance or transfer of its voting shares; 3,512
(2) A domestic or foreign subsidiary in consideration in 3,514
whole or in part for the issuance or transfer of voting shares of 3,515
its domestic parent. 3,516
(S) "Acquiring corporation" in a combination means the 3,518
domestic corporation whose voting shares are issued or 3,519
transferred by it or its subsidiary or subsidiaries to the 3,520
transferor corporation or corporations or the shareholders of the 3,521
transferor corporation or corporations; and "acquiring 3,522
corporation" in a majority share acquisition means the domestic 3,523
corporation whose voting shares are issued or transferred by it 3,524
or its subsidiary in consideration for shares of a domestic or 3,525
foreign corporation entitling the holder of the shares to 3,526
exercise a majority of the voting power in the election of 3,527
directors of such corporation. 3,528
(T) When used in connection with a combination or a 3,530
majority share acquisition, "voting shares" means shares of a 3,531
corporation, domestic or foreign, entitling the holder of the 3,532
shares to vote at the time in the election of directors of such 3,533
corporation without regard to voting power which may thereafter 3,534
82
exist upon a default, failure, or other contingency. 3,535
(U) "An emergency" exists when the governor, or any other 3,537
person lawfully exercising the power and discharging the duties 3,538
of the office of governor, proclaims that an attack on the United 3,539
States or any nuclear, atomic, or other disaster has caused an 3,540
emergency for corporations, and such an emergency shall continue 3,541
until terminated by proclamation of the governor or any other 3,542
person lawfully exercising the powers and discharging the duties 3,543
of the office of governor. 3,544
(V) "Constituent corporation" means an existing 3,546
corporation merging into or into which is being merged one or 3,547
more other entities in a merger or an existing corporation being 3,549
consolidated with one or more other entities into a new entity in 3,550
a consolidation, whether any of the entities is domestic or 3,551
foreign, and "constituent entity" means any entity merging into
or into which is being merged one or more other entities in a 3,552
merger, or an existing entity being consolidated with one or more 3,553
other entities into a new entity in a consolidation, whether any 3,554
of the entities is domestic or foreign. 3,555
(W) "Surviving corporation" means the constituent domestic 3,558
or foreign corporation that is specified as the corporation into 3,559
which one or more other constituent entities are to be or have 3,560
been merged, and "surviving entity" means the constituent
domestic or foreign entity that is specified as the entity into 3,561
which one or more other constituent entities are to be or have 3,562
been merged.
(X) "Close corporation agreement" means an agreement that 3,564
satisfies the three requirements of division (A) of section 3,565
1701.591 of the Revised Code. 3,566
(Y) "Issuing public corporation" means a domestic 3,568
corporation with fifty or more shareholders that has its 3,569
principal place of business, its principal executive offices, 3,570
assets having substantial value, or a substantial percentage of 3,571
its assets within this state, and as to which no valid close 3,572
83
corporation agreement exists under division (H) of section 3,573
1701.591 of the Revised Code. 3,574
(Z)(1) "Control share acquisition" means the acquisition, 3,576
directly or indirectly, by any person of shares of an issuing 3,577
public corporation that, when added to all other shares of the 3,578
issuing public corporation in respect of which such person may 3,579
exercise or direct the exercise of voting power as provided in 3,580
this division, would entitle such person, immediately after such 3,581
acquisition, directly or indirectly, alone or with others, to 3,582
exercise or direct the exercise of the voting power of the 3,583
issuing public corporation in the election of directors within 3,584
any of the following ranges of such voting power: 3,585
(a) One-fifth or more but less than one-third of such 3,587
voting power; 3,588
(b) One-third or more but less than a majority of such 3,590
voting power; 3,591
(c) A majority or more of such voting power. 3,593
A bank, broker, nominee, trustee, or other person who 3,595
acquires shares in the ordinary course of business for the 3,596
benefit of others in good faith and not for the purpose of 3,597
circumventing section 1701.831 of the Revised Code shall, 3,598
however, be deemed to have voting power only of shares in respect 3,599
of which such person would be able, without further instructions 3,600
from others, to exercise or direct the exercise of votes on a 3,601
proposed control share acquisition at a meeting of shareholders 3,602
called under section 1701.831 of the Revised Code. 3,603
(2) The acquisition by any person of any shares of an 3,605
issuing public corporation does not constitute a control share 3,606
acquisition for the purpose of section 1701.831 of the Revised 3,607
Code if the acquisition was or is consummated in, results from, 3,608
or is the consequence of any of the following circumstances: 3,609
(a) Prior to November 19, 1982; 3,611
(b) Pursuant to a contract existing prior to November 19, 3,613
1982; 3,614
84
(c) By bequest or inheritance, by operation of law upon 3,616
the death of an individual, or by any other transfer without 3,617
valuable consideration, including a gift, that is made in good 3,618
faith and not for the purpose of circumventing section 1701.831 3,619
of the Revised Code; 3,620
(d) Pursuant to the satisfaction of a pledge or other 3,622
security interest created in good faith and not for the purpose 3,623
of circumventing section 1701.831 of the Revised Code; 3,624
(e) Pursuant to a merger or consolidation adopted, or a 3,626
combination or majority share acquisition authorized, by 3,627
shareholder vote in compliance with section 1701.78, 1701.781, or 3,629
1701.83 of the Revised Code provided the issuing public 3,630
corporation is the surviving or new corporation in the merger or 3,631
consolidation or is the acquiring corporation in the combination 3,632
or majority share acquisition;
(f) The person's being entitled, immediately thereafter, 3,634
to exercise or direct the exercise of voting power of the issuing 3,635
public corporation in the election of directors within the same 3,636
range theretofore attained by that person either in compliance 3,637
with the provisions of section 1701.831 of the Revised Code or as 3,638
a result solely of the issuing public corporation's purchase of 3,639
shares issued by it. 3,640
The acquisition by any person of shares of an issuing 3,642
public corporation in a manner described under division (Z)(2) of 3,643
this section shall be deemed a control share acquisition 3,644
authorized pursuant to section 1701.831 of the Revised Code 3,645
within the range of voting power under division (Z)(1)(a), (b), 3,646
or (c) of this section that such person is entitled to exercise 3,647
after such acquisition, provided, in the case of an acquisition 3,648
in a manner described under division (Z)(2)(c) or (d) of this 3,649
section, the transferor of shares to such person had previously 3,650
obtained any authorization of shareholders required under section 3,651
1701.831 of the Revised Code in connection with such transferor's 3,652
acquisition of shares of the issuing public corporation. 3,653
85
(3) The acquisition of shares of an issuing public 3,655
corporation in good faith and not for the purpose of 3,656
circumventing section 1701.831 of the Revised Code from any 3,657
person whose control share acquisition previously had been 3,658
authorized by shareholders in compliance with section 1701.831 of 3,659
the Revised Code, or from any person whose previous acquisition 3,660
of shares of an issuing public corporation would have constituted 3,661
a control share acquisition but for division (Z)(2) or (3) of 3,662
this section, does not constitute a control share acquisition for 3,663
the purpose of section 1701.831 of the Revised Code unless such 3,664
acquisition entitles the person making the acquisition, directly 3,665
or indirectly, alone or with others, to exercise or direct the 3,666
exercise of voting power of the corporation in the election of 3,667
directors in excess of the range of such voting power authorized 3,668
pursuant to section 1701.831 of the Revised Code, or deemed to be 3,669
so authorized under division (Z)(2) of this section. 3,670
(AA) "Acquiring person" means any person who has delivered 3,672
an acquiring person statement to an issuing public corporation 3,673
pursuant to section 1701.831 of the Revised Code. 3,674
(BB) "Acquiring person statement" means a written 3,676
statement that complies with division (B) of section 1701.831 of 3,677
the Revised Code. 3,678
(CC)(1) "Interested shares" means the shares of an issuing 3,680
public corporation in respect of which any of the following 3,681
persons may exercise or direct the exercise of the voting power 3,682
of the corporation in the election of directors: 3,683
(a) An acquiring person; 3,685
(b) Any officer of the issuing public corporation elected 3,687
or appointed by the directors of the issuing public corporation; 3,688
(c) Any employee of the issuing public corporation who is 3,690
also a director of such corporation.; 3,691
(2) "Interested shares" also means any shares of an 3,693
issuing public corporation acquired, directly or indirectly, by 3,694
any (d) ANY person from the holder or holders thereof for a THAT 3,696
86
ACQUIRES SUCH SHARES FOR valuable consideration during the period 3,697
beginning with the date of the first public disclosure of a 3,698
proposed control share acquisition of the issuing public 3,699
corporation or any proposed merger, consolidation, or other 3,700
transaction that would result in a change in control of the 3,701
corporation or all or substantially all of its assets, and ending 3,702
on the RECORD date of any special meeting of the corporation's 3,703
shareholders held thereafter pursuant to section 1701.831 of the 3,704
Revised Code, for the purpose of voting on a control share 3,705
acquisition proposed by any acquiring person ESTABLISHED BY THE 3,706
DIRECTORS PURSUANT TO SECTION 1701.45 AND DIVISION (D) OF SECTION 3,707
1701.831 OF THE REVISED CODE, if either of the following applies: 3,708
(a)(i) The aggregate consideration paid or given by the 3,710
person who acquired the shares, and any other persons acting in 3,711
concert with the person, for all such shares exceeds two hundred 3,713
fifty thousand dollars;
(b)(ii) The number of shares acquired by the person who 3,715
acquired the shares, and any other persons acting in concert with 3,716
the person, exceeds one-half of one per cent of the outstanding 3,718
shares of the corporation entitled to vote in the election of 3,719
directors.
(e) ANY PERSON THAT TRANSFERS SUCH SHARES FOR VALUABLE 3,721
CONSIDERATION AFTER THE RECORD DATE DESCRIBED IN DIVISION 3,723
(CC)(1)(d) OF THIS SECTION AS TO SHARES SO TRANSFERRED, IF 3,724
ACCOMPANIED BY THE VOTING POWER IN THE FORM OF A BLANK PROXY, AN 3,725
AGREEMENT TO VOTE AS INSTRUCTED BY THE TRANSFEREE, OR OTHERWISE.
(3)(2) If any part of this division is held to be illegal 3,727
or invalid in application, the illegality or invalidity does not 3,728
affect any legal and valid application thereof or any other 3,729
provision or application of this division or section 1701.831 of 3,730
the Revised Code that can be given effect without the invalid or 3,732
illegal provision, and the parts and applications of this 3,733
division are severable. 3,734
(DD) "Certificated security" and "uncertificated security" 3,736
87
have the same meanings as in section 1308.01 of the Revised Code. 3,737
(EE) "Entity" means any of the following: 3,739
(1) A for profit corporation existing under the laws of 3,741
this state or any other state; 3,742
(2) Any of the following organizations existing under the 3,744
laws of this state, the United States, or any other state: 3,745
(a) A business trust or association; 3,747
(b) A real estate investment trust; 3,749
(c) A common law trust; 3,751
(d) An unincorporated business or for profit organization, 3,753
including a general or limited partnership; 3,754
(e) A limited liability company. 3,756
Sec. 1701.24. (A) The shares of a corporation are 3,765
personal property. 3,766
(B) Each holder of shares is entitled to one or more 3,768
certificates, signed by the chairman CHAIRPERSON of the board or 3,769
the president or a vice-president and by the secretary, an 3,770
assistant secretary, the treasurer, or an assistant treasurer of 3,771
the corporation, which shall certify the number and class of 3,772
shares held by him THE HOLDER in such corporation, but no 3,773
certificate for shares shall be executed or delivered until such 3,774
shares are fully paid. When such a certificate is countersigned 3,775
by an incorporated transfer agent or registrar, the signature of 3,776
any of said SUCH officers of the corporation may be facsimile, 3,777
engraved, stamped, or printed. Although any officer of the 3,778
corporation whose manual or facsimile signature is affixed to 3,779
such a certificate ceases to be such officer before the 3,780
certificate is delivered, such certificate nevertheless shall be 3,781
effective in all respects when delivered. 3,782
(C) A corporation is not obligated to but may issue 3,784
fractional shares. In the case of uncertificated securities, the 3,785
corporation may treat the issuance of fractional shares in 3,786
accordance with the procedures set forth in section 1308.44 of 3,787
the Revised Code, or may proceed as provided in divisions (C)(1) 3,788
88
and (2) of this section. In the case of certificated securities 3,789
the corporation may execute and deliver a certificate for or 3,790
including a fraction of a share; or, in lieu thereof, may: 3,791
(1) Pay to the person otherwise entitled to become a 3,793
holder of a fraction of a share an amount in cash specified as 3,794
the value thereof in the articles, a resolution of the directors, 3,795
or other agreement or instrument pursuant to which such fraction 3,796
of a share would otherwise be issued, or, if not so specified, 3,797
then the amount determined for such purpose by the directors of 3,798
the issuing corporation, or the amount realized upon sale of such 3,799
fraction of a share; 3,800
(2) Provide reasonable means to afford to such person the 3,802
opportunity, on specified terms and conditions, to purchase or 3,803
sell fractional interests in shares, to the exclusion of all 3,804
rights he might otherwise have; 3,805
(3) Execute and deliver registered or bearer scrip over 3,807
the manual or facsimile signature of an officer of the 3,808
corporation or of its agent for that purpose, exchangeable as 3,809
therein provided for full shares, but such scrip shall not 3,810
entitle the holder to any rights as a shareholder except as 3,811
therein provided. The scrip may provide that it shall become 3,812
void unless the rights of the holders are exercised within a 3,813
specified period and may contain any other provisions that the 3,814
corporation deems advisable. Whenever any such scrip ceases to 3,815
be exchangeable for full shares, the shares that would otherwise 3,816
have been issuable as therein provided shall be deemed to be 3,817
treasury shares unless the scrip contains other provision for 3,818
their disposition. 3,819
(D) A joint estate with the incidents of a joint estate as 3,821
at common law, including the right of survivorship, may be 3,822
created in shares by registering the same in the case of 3,823
uncertificated securities, or by executing and delivering a 3,824
certificate therefor in the case of certificated securities to 3,825
two or more persons with the words "as joint tenants" or "as 3,826
89
joint tenants with right of survivorship and not as tenants in 3,827
common" following their names. Upon receipt by the corporation 3,828
of proof satisfactory to it of the death of one or more of such 3,829
joint tenants, it may register the transfer to, or execute and 3,830
deliver a new certificate to the survivor or survivors. 3,831
(E) Whenever a corporation has determined that any 3,833
outstanding certificates for shares should be canceled and 3,834
exchanged for other certificates, the corporation may order and 3,835
require the holders of the outstanding certificates to surrender 3,836
them for such purpose within a reasonable time to be fixed by the 3,837
corporation. Such order may provide that, until compliance 3,838
therewith, any or all rights as a shareholder of the holder of 3,839
any certificate so required to be surrendered shall be suspended 3,840
with respect to the shares represented thereby. Not less than 3,841
ten days before any such order is to become effective, the 3,842
corporation shall give notice thereof by mail to each shareholder 3,843
affected thereby at his address as it appears on the records of 3,844
the corporation. 3,845
(F) Unless otherwise provided by the articles or 3,847
regulations, the directors may provide by resolution that some or 3,848
all of any or all classes and series of shares of a corporation 3,849
shall be uncertificated shares, provided that such resolution 3,850
shall not apply to shares represented by a certificate until such 3,851
certificate is surrendered to the corporation as provided in 3,852
division (B) of section 1308.43 of the Revised Code, and that 3,853
such resolution shall not apply to a certificated security issued 3,854
in exchange for an uncertificated security as provided in 3,855
division (C) of section 1308.43 of the Revised Code. Within a 3,856
reasonable time after the issuance or transfer of uncertificated 3,857
shares, the corporation shall send to the registered owner 3,858
thereof a written notice containing the information required to 3,859
be set forth or stated on certificates pursuant to division (A) 3,860
of section 1701.25 of the Revised Code. Such notice may be 3,861
contained in the statement required by section 1308.44 of the 3,862
90
Revised Code. Except as otherwise expressly provided by law, the 3,863
rights and obligations of the holders of uncertificated shares 3,864
and the rights and obligations of the holders of certificates 3,865
representing shares of the same class and series shall be 3,866
identical. 3,867
Sec. 1701.25. (A) Each certificate for shares of a 3,876
corporation shall state: 3,877
(1) That the corporation is organized under the laws of 3,879
this state; 3,880
(2) The name of the person to whom the shares represented 3,882
by the certificate are issued; 3,883
(3) The number of shares represented by the certificate; 3,885
(4) If the shares of the corporation are classified, the 3,887
designation of the class, and the series, if any, of the shares 3,888
represented by the certificate; 3,889
(5) On the face or the back of the certificate: 3,891
(a) The express terms, if any, of the shares represented 3,893
by the certificate and of the other class or classes and series 3,894
of shares, if any, which the corporation is authorized to issue; 3,895
or 3,896
(b) A summary of such express terms; or 3,898
(c) That the corporation will mail to the shareholder a 3,900
copy of such express terms without charge within five days after 3,901
receipt of written request therefor; or 3,902
(d) That a copy of such express terms is attached to and 3,904
by reference made a part of such certificate and that the 3,905
corporation will mail to the shareholder a copy of such express 3,906
terms without charge within five days after receipt of written 3,907
request therefor if the copy has become detached from the 3,908
certificate. 3,909
(B) No restriction on the right to transfer shares and no 3,911
reservation of lien on shares shall be effective against a 3,912
transferee of such shares unless, as to uncertificated 3,913
securities, there is set forth in the initial transaction 3,914
91
statement required for liens by section 1308.02 of the Revised 3,915
Code, and for restrictions on transfer by THERE HAS BEEN 3,916
COMPLIANCE WITH section 1308.11 of the Revised Code, and unless, 3,918
as to certificated securities, there is set forth on the face or 3,919
the back of the certificate therefor:
(1) A statement of the terms of such restriction or 3,921
reservation; or 3,922
(2) A summary of the terms of such restriction or 3,924
reservation and a statement that the corporation will mail to the 3,925
shareholder a copy of such restriction or reservation without 3,926
charge within five days after receipt of written request 3,927
therefor; or 3,928
(3) If such restriction or reservation is contained in the 3,930
articles or regulations of the corporation, or in an instrument 3,931
in writing to which the corporation is a party, a statement to 3,932
that effect and a statement that the corporation will mail to the 3,933
shareholder a copy of such restriction or reservation without 3,934
charge within five days after receipt of written request 3,935
therefor; or 3,936
(4) If such restriction or reservation is contained in an 3,938
instrument in writing (other than the articles or regulations of 3,939
the corporation or an instrument in writing to which the 3,940
corporation is a party), a statement to that effect identifying 3,941
the instrument by title, date, and parties. 3,942
(C) A corporation shall mail to a shareholder without 3,944
charge within five days after receipt of written request therefor 3,945
the copy or copies referred to in paragraphs (5)(c) and (5)(d) of 3,946
division (A) and paragraphs (2) and (3) of division (B) of this 3,947
section. 3,948
Sec. 1701.27. (A) In case a certificate for shares is 3,957
lost, stolen, or destroyed, the court of common pleas or the 3,958
probate court of the county in which the principal office of the 3,959
corporation is located shall have jurisdiction to hear and 3,960
determine all questions respecting such loss, theft, or 3,961
92
destruction, the person interested therein, the bond required to
be given to protect the corporation or any person injured by the 3,962
execution and delivery of a new certificate, the terms on which a 3,963
new certificate shall be executed and delivered, and the costs 3,964
and counsel fees, if any, to be allowed to the corporation. 3,965
(B) A corporation which voluntarily and in good faith 3,967
executes and delivers a new certificate in lieu of one believed 3,968
to have been lost, stolen, or destroyed, or which executes and 3,969
delivers a new certificate in compliance with an order of a court 3,970
of competent jurisdiction, may recognize the person named in the 3,971
new certificate, or any certificate thereafter executed and
delivered in exchange or substitution for such new certificate, 3,972
as the owner of the shares described therein for all purposes, 3,973
until the owner of the original certificate, or a transferee 3,974
thereof without notice and for value, enjoins the corporation and 3,975
the holder of any new certificate, or any certificate executed
and delivered in exchange or substitution for such new 3,976
certificate, from so acting. 3,977
(C) Special provisions in sections 1308.01 to 1308.36, 3,979
inclusive, of the Revised Code, (particularly section 1308.35 3,980
1308.41 of the Revised Code) relating to the replacement of lost, 3,982
apparently destroyed, or wrongfully taken securities shall govern 3,983
to the exclusion of the provisions of this section on this
subject, except where it clearly appears that a special provision 3,984
is cumulative, in which case it and the provisions of this 3,985
section on the same subject shall apply. 3,986
Sec. 1701.49. (A) By written agreement certificates for 3,995
shares of a corporation may be deposited within or without this 3,996
state by any holder or holders thereof with one or more persons 3,997
as trustees, or with any depositary designated by or pursuant to 3,998
such agreement to act for such trustees, for the purpose and with 3,999
the effect of granting to such trustees or a majority of them, or 4,000
to such persons as may be designated by or pursuant to such 4,001
agreement, all the voting, consenting, or other rights in respect 4,002
93
of the shares represented by such certificates, or such of these 4,003
rights as may be specified in the agreement, or for such other 4,004
lawful purposes as may be specified in the agreement, for such 4,005
period and upon such terms as may be stated therein. 4,006
In the case of uncertificated securities, the deposit of 4,008
the shares may be accomplished by registration in the name of the 4,009
trustee or trustees as provided in division (F) of this section. 4,010
(B) No such agreement which grants the voting or 4,012
consenting rights in respect of shares shall be irrevocable for a 4,013
period of more than ten years, unless the voting or consenting 4,014
rights granted thereby are coupled with an interest in the shares 4,015
to which such rights relate, except that, if the agreement so 4,016
provides, such irrevocable grant may be extended for additional 4,017
periods of not more than ten years each, upon the affirmative 4,018
vote or assent of the beneficial owners of not less than a 4,019
majority of the shares deposited under the agreement. Such 4,020
rights shall be deemed coupled with an interest in the shares if 4,021
granted in connection with: an option, authority, or contract to 4,022
buy or sell the shares or a part thereof; a pledge of the shares 4,023
to secure the performance or nonperformance of any act; the 4,024
performance or nonperformance of any act, or agreement for an 4,025
act, by the corporation issuing the shares; or any other act or 4,026
thing constituting an interest sufficient in law to support a 4,027
power coupled therewith. 4,028
(C) The trustees under the agreement may issue, or cause 4,030
to be issued by their depositary or agent, voting trust 4,031
certificates registered in the name of the owners thereof. So 4,032
far as consistent with the agreement and the voting trust 4,033
certificates issued thereunder, the provisions of sections 4,034
1308.01 to 1308.44 CHAPTER 1308., and of sections 1701.01 to 4,036
1701.99 of the Revised Code, with respect to the transfer of 4,037
certificates for shares shall apply to transfers of such voting 4,038
trust certificates. 4,039
Voting trust certificates must be in certificated form, and 4,041
94
interests in a voting trust shall not be eligible for treatment 4,042
as uncertificated securities. 4,043
(D) The agreement may include any terms not repugnant to 4,045
law, including provisions defining, limiting, or regulating the 4,046
exercise of the authority, and the liability of, the trustees, or 4,047
of such persons as are designated by or pursuant to any such 4,048
agreement to exercise the voting, consenting, or other rights in 4,049
respect of the deposited shares or to act as depositary 4,050
thereunder. 4,051
(E) An executed counterpart of the agreement may be filed 4,053
with the secretary of the corporation, and upon such filing shall 4,054
be open to inspection by any shareholder at the office of the 4,055
corporation at all reasonable times. 4,056
(F) The certificates for shares so deposited may be 4,058
surrendered to and canceled by the issuing corporation, and if 4,059
this is done new certificates therefor shall be issued by the 4,060
corporation in the names of the trustees or of such persons as 4,061
are designated by or pursuant to the agreement, as specified in a 4,062
writing signed by the trustees and delivered to the issuing 4,063
corporation. The new certificates shall be delivered to the 4,064
trustees, or to any depositary, as the trustees may direct. The 4,065
new certificates shall be issued in such manner that it shall 4,066
appear that they are issued pursuant to the agreement, and in the 4,067
entry of ownership in the proper books of the corporation that 4,068
fact shall also be noted. 4,069
If the corporation has elected to issue uncertificated 4,071
securities, shares in uncertificated form may be deposited, with 4,072
the effect provided by division (A) of this section, by 4,073
registration in the name of the trustee or trustees or of such 4,074
persons as are designated by or pursuant to the agreement, in 4,075
accordance with sections 1308.01 to 1308.44 CHAPTER 1308. of the 4,077
Revised Code.
(G) Shares issued by a foreign corporation may be made the 4,079
subject of an agreement under this section. 4,080
95
(H) The rights conferred by this section are in addition 4,082
to rights at common law, and no limitation established by this 4,083
section shall limit rights at common law. 4,084
(I) Any such agreement shall be conclusively deemed to 4,086
have been made under the common law, and not under this section, 4,087
if the agreement so states. 4,088
Sec. 1701.591. (A) In order to qualify as a close 4,097
corporation agreement under this section, the agreement shall 4,098
meet the following requirements: 4,099
(1) Every person who is a shareholder of the corporation 4,101
at the time of the agreement's adoption, whether or not entitled 4,102
to vote, shall have assented to the agreement in writing; 4,103
(2) The agreement shall be set forth in the articles, the 4,105
regulations, or another written instrument; 4,106
(3) The agreement shall include a statement that it is to 4,108
be governed by this section. 4,109
(B) A close corporation agreement that is not set forth in 4,111
the articles or the regulations shall be entered in the record of 4,112
minutes of the proceedings of the shareholders of the corporation 4,113
and shall be subject to the provisions of division (C) of section 4,114
1701.92 of the Revised Code. 4,115
(C) Irrespective of any other provisions of this chapter, 4,117
but subject to division (D)(2) of this section, a close 4,118
corporation agreement may contain provisions, which shall be 4,119
binding on the corporation and all of its shareholders, 4,120
regulating any aspect of the internal affairs of the corporation 4,121
or the relations of the shareholders among themselves, including 4,122
the following: 4,123
(1) Regulation of the management of the business and 4,125
affairs of the corporation; 4,126
(2) The right of one or more shareholders to dissolve the 4,128
corporation at will or on the occurrence of a specified event or 4,129
contingency; 4,130
(3) The obligation to vote the shares of a person as 4,132
96
specified, or voting requirements, including the requirement of 4,133
the affirmative vote or approval of all shareholders or of all 4,134
directors, which voting requirements need not appear in the 4,135
articles unless the close corporation agreement is set forth in 4,136
the articles; 4,137
(4) The designation of the persons who shall be the 4,139
officers or directors of the corporation; 4,140
(5) The authority of any individual who holds more than 4,142
one office of the corporation to execute, acknowledge, or certify 4,143
in more than one capacity any instrument required to be executed, 4,144
acknowledged, or certified by the holders of two or more offices; 4,145
(6) The terms and conditions of employment of an officer 4,147
or employee of the corporation without regard to the period of 4,148
his employment; 4,149
(7) The declaration and payment of dividends or 4,151
distributions or the division of profits; 4,152
(8) Elimination of the board of directors, restrictions 4,154
upon the exercise by directors of their authority, or delegation 4,155
to one or more shareholders or other persons of all or part of 4,156
the authority of the directors; 4,157
(9) Conferring on any shareholder or his agent OF A 4,159
SHAREHOLDER the absolute right, without the necessity of stating 4,160
any purpose, to examine and copy during usual business hours any 4,161
of the corporation's records or documents to which reference is 4,162
made in section 1701.37 of the Revised Code; 4,163
(10) Prohibition of or limitation upon the issuance or 4,165
sale by the corporation of any of its shares, including treasury 4,166
shares, without the affirmative vote or approval of the holders 4,167
of all or a proportion of the outstanding shares or unless other 4,168
specified terms and conditions are met; 4,169
(11) Arbitration of issues on which the shareholders are 4,171
deadlocked in voting power or on which the directors or other 4,172
parties managing the corporation are deadlocked; 4,173
(12) Dispensing with the annual meeting of shareholders 4,175
97
unless a shareholder, by written notice to the president or 4,176
secretary either by personal delivery or by mail within thirty 4,177
days after the end of the most recent fiscal year of the 4,178
corporation, requests that the meeting be held. 4,179
(D) Except as may be necessary to give effect to divisions 4,181
(C)(3), (5), (8), (9), and (12) and division (I) of this section, 4,182
any provision of a close corporation agreement that does either 4,183
of the following shall be invalid: 4,184
(1) Eliminates the filing with the secretary of state of 4,186
any document required under this chapter or changes the required 4,187
form or content of the document; 4,188
(2) Waives or alters the effect of any of the provisions 4,190
of section 1701.03, 1701.18, 1701.24, 1701.25, 1701.30, 1701.31, 4,191
1701.32, 1701.33, 1701.35, 1701.37, 1701.38, 1701.39, 1701.591, 4,192
1701.91, 1701.93, 1701.94, 1701.95, or the first sentence of 4,193
section 1701.64 of the Revised Code. 4,194
Unless otherwise provided in the close corporation 4,196
agreement, the invalidity of a provision pursuant to this 4,197
division does not affect the validity of the remainder of the 4,198
agreement. 4,199
Any certificate that is required to be filed with the 4,201
secretary of state with respect to the authorization or taking of 4,202
any action pursuant to a close corporation agreement that would 4,203
not be permitted under this chapter in the absence of division 4,204
(C) of this section shall recite the existence of a close 4,205
corporation agreement that authorizes the action. 4,206
(E)(1) Except as provided in division (E)(2) of this 4,208
section, a close corporation agreement may be amended or 4,209
terminated by the affirmative vote or written consent of the 4,210
holders, then parties to the close corporation agreement, of all 4,211
of the outstanding shares of each class or, as may be provided by 4,212
the close corporation agreement, of the holders, then parties to 4,213
the close corporation agreement, of a proportion of not less than 4,214
four-fifths of the outstanding shares of each class. If a close 4,215
98
corporation agreement is amended or terminated by the written 4,216
consent of the holders of fewer than all of the shares, the 4,217
secretary of the corporation shall mail a copy of the amendment 4,218
or a notice of the termination to each shareholder who did not so 4,219
consent. If a close corporation agreement set forth in the 4,220
articles is amended, the amendment shall not be effective unless 4,221
it is filed as an amendment to the articles pursuant to section 4,222
1701.73 of the Revised Code. No corporation with respect to 4,223
which a close corporation agreement is in effect shall cause to 4,224
occur any of the actions described in division (I)(1)(a), (b), or 4,225
(c) of this section unless the action has been authorized by the 4,226
affirmative vote or written consent of the holders, then parties 4,227
to the close corporation agreement, of that proportion of shares 4,228
of each class that is required to terminate the close corporation 4,229
agreement. 4,230
(2) A close corporation agreement that was in existence on 4,232
December 31, 1993, and that did not specify on that date and that 4,233
has not specified since that date the proportion of shares 4,234
required to amend or terminate the close corporation agreement 4,235
may be amended or terminated by the affirmative vote or written 4,236
consent of the holders, then parties to the close corporation 4,237
agreement, of four-fifths of the outstanding shares of each 4,238
class. 4,239
(F) No close corporation agreement is invalid among the 4,241
parties or in respect of the corporation on any of the following 4,242
grounds: 4,243
(1) The agreement is an attempt to treat the corporation 4,245
as if it were a partnership or to arrange the relationship of the 4,246
parties in a manner that would be appropriate only among 4,247
partners; 4,248
(2) The agreement provides for the conduct of the affairs 4,250
of a corporation or relations among shareholders in any manner 4,251
that would be inappropriate or unlawful under provisions of this 4,252
chapter other than those set forth in division (D)(2) of this 4,253
99
section or under other applicable law; 4,254
(3) The agreement interferes with the authority or 4,256
discretion of the directors; 4,257
(4) The agreement has not been filed with the minutes as 4,259
required by division (B) of this section. 4,260
(G) If a close corporation agreement provides that there 4,262
shall be no board of directors, both of the following apply: 4,263
(1) The shareholders, for the purposes of any statute or 4,265
rule of law relating to corporations, are deemed to be the 4,266
directors and to have all of the liabilities, immunities, 4,267
defenses, and indemnifications of directors with respect to any 4,268
action or inaction of the corporation, except that any 4,269
shareholder who is not permitted by the articles, the 4,270
regulations, or the close corporation agreement to vote on or 4,271
assent to an action or assent to an inaction shall not be liable 4,272
as a director with respect to the action or inaction. 4,273
(2) Except to the extent that the voting rights of the 4,275
shares of a class are increased, limited, or denied by the 4,276
articles, the regulations, or the close corporation agreement, 4,277
each outstanding share regardless of class shall entitle its 4,278
holder to one vote on each matter, including any matter normally 4,279
voted on by directors, that is properly submitted to the 4,280
shareholders for their vote, consent, waiver, release, or other 4,281
action. 4,282
(H) The existence of a close corporation agreement shall 4,284
be noted conspicuously on the face or the back of every 4,285
certificate for shares of the corporation and a purchaser or 4,286
transferee of shares represented by a certificate on which such a 4,287
notation so appears shall be conclusively considered to have 4,288
taken delivery with notice of the close corporation agreement. 4,289
Any transferee of shares by gift, bequest, or inheritance and any 4,290
purchaser or transferee of shares with knowledge or notice of a 4,291
close corporation agreement is bound by the agreement and shall 4,292
be considered to be a party to the agreement. 4,293
100
(I)(1) A close corporation agreement becomes invalid under 4,295
any of the following circumstances: 4,296
(a) Shares of the corporation are listed on a national 4,298
securities exchange. 4,299
(b) Shares of the corporation are registered under section 4,301
12(g) of the "Securities Exchange Act of 1934," 48 Stat. 892, 15 4,302
U.S.C. 781, as amended. 4,303
(c) Shares of the corporation have been included in a 4,305
registration statement that has become effective pursuant to the 4,306
"Securities Act of 1933," 84 Stat. 74, 15 U.S.C. 77a-77aa, and 4,307
the corporation is required to file periodic reports and 4,308
information pursuant to section 15(d) of the "Securities Exchange 4,309
Act of 1934," 48 Stat. 892, 15 U.S.C. 77m, as amended. 4,310
(d) Shares of the corporation are transferred or issued to 4,312
a person who takes delivery of the certificate for the shares 4,313
other than by gift, bequest, or inheritance and without knowledge 4,314
or notice of the close corporation agreement; that person 4,315
delivers to the corporation a written rejection of the close 4,316
corporation agreement within ninety days after the date on which 4,317
that person first received notice of the existence of the close 4,318
corporation agreement or within three years of the date of 4,319
transfer or issuance, whichever is earlier; and the corporation 4,320
does not offer in writing, within thirty days after the date on 4,321
which the corporation received the written rejection, to purchase 4,322
the shares from that person for the full amount paid for the 4,323
shares, or, having made an offer to purchase the shares for that 4,324
amount, the corporation, upon that person's acceptance of the 4,325
offer, does not purchase the shares in accordance with division 4,326
(I)(3) of this section. 4,327
(2) A close corporation agreement does not become invalid 4,329
and the person to whom the shares are transferred or issued is 4,330
not entitled to any payment from the corporation pursuant to 4,331
division (I)(3) of this section if both of the following apply: 4,332
(a) Shares of the corporation are transferred or issued to 4,334
101
a person who takes delivery of the certificate for the shares 4,335
other than by gift, bequest, or inheritance and without knowledge 4,336
or notice of the close corporation agreement; 4,337
(b) That person does either of the following: 4,339
(i) Fails to deliver a written rejection of the close 4,341
corporation agreement to the corporation within ninety days after 4,342
the date on which that person first received notice of the 4,343
existence of the close corporation agreement or within three 4,344
years of the date of transfer or issuance, whichever is earlier; 4,345
(ii) Fails, within thirty days after the date on which 4,347
that person receives a written offer by the corporation to 4,348
purchase the shares from that person for the full amount paid for 4,349
the shares, to accept the offer. 4,350
(3) If shares of a corporation are transferred or issued 4,352
to a person who takes delivery of the certificate for the shares 4,353
other than by gift, bequest, or inheritance and without knowledge 4,354
or notice of the close corporation agreement and that person 4,355
accepts an offer by the corporation to purchase the shares, the 4,356
corporation shall pay to that person the full amount paid for the 4,357
shares within seven days after that person delivers to the 4,358
corporation the certificate for the shares and proof of payment 4,359
of the amount paid for the shares. If the amount paid for the 4,360
shares included property other than cash, the corporation, at its 4,361
option, may return the property to that person or may pay to that 4,362
person cash in an amount equal to the fair market value of the 4,363
property on the date of transfer or issuance of the shares, as 4,364
determined in good faith by the corporation. A shareholder who 4,365
transfers shares to a person who takes delivery of the 4,366
certificate for the shares other than by gift, bequest, or 4,367
inheritance and without knowledge or notice of the close 4,368
corporation agreement is liable to the corporation, upon the 4,369
corporation's written demand made upon the shareholder within 4,370
ninety days after the date on which the corporation made payment 4,371
for the shares, for the full amount that the corporation paid for 4,372
102
the shares. Upon receiving payment in that amount from the 4,373
shareholder, the corporation shall transfer the shares to the 4,374
shareholder. 4,375
(4) In the event of the invalidity of a close corporation 4,377
agreement and unless otherwise provided in the close corporation 4,378
agreement, any provision contained in the close corporation 4,379
agreement that would not be invalid under any other section of 4,380
this chapter or under other applicable law remains valid and 4,381
binding on the parties to the close corporation agreement. 4,382
Any officer of the corporation who learns of the occurrence 4,384
of any event causing the invalidity of the close corporation 4,385
agreement shall immediately give written notice of the invalidity 4,386
to all of the shareholders. 4,387
If a close corporation agreement set forth in the articles 4,389
of the corporation is terminated or becomes invalid, the officers 4,390
of the corporation shall promptly sign and file the certificate 4,391
of amendment prescribed by section 1701.73 of the Revised Code, 4,392
setting forth the reason for the termination or invalidity and 4,393
deleting the close corporation agreement from the articles. If 4,394
the officers fail to execute and file the certificate within 4,395
thirty days after the occurrence of the event giving rise to the 4,396
termination or invalidity, the certificate may be signed and 4,397
filed by any shareholder and shall set forth a statement that the 4,398
person signing the certificate is a shareholder and is filing the 4,399
certificate because of the failure of the officers to do so. 4,400
(J) A close corporation agreement, in the sound discretion 4,402
of a court exercising its equity powers, is enforceable by 4,403
injunction, specific performance, or other relief that the court 4,404
may determine to be fair and appropriate. 4,405
(K) This section shall not be construed as prohibiting any 4,407
other lawful agreement among two or more shareholders. 4,408
(L) No corporation with respect to which a close 4,410
corporation agreement is in effect, shall issue shares in 4,411
uncertificated form, and any resolution of the directors of such 4,412
103
a corporation, providing for the issuance of shares in 4,413
uncertificated form, shall be ineffective during any period in 4,414
which a close corporation agreement is in effect. The adoption 4,415
of a close corporation agreement shall act as a transfer 4,416
instruction to the corporation to replace uncertificated 4,417
securities with appropriate certificated securities in accordance 4,418
with division (C) of section 1308.43 of the Revised Code. 4,419
(M) If the annual meeting of the shareholders is dispensed 4,421
with in accordance with a provision in the close corporation 4,422
agreement authorized by division (C)(12) of this section, the 4,423
annual financial statements required by section 1701.38 of the 4,424
Revised Code shall be delivered to each shareholder on or before 4,425
the last date upon which the annual meeting otherwise could have 4,426
been held. 4,427
(N) The amendments to this section that are effective 4,429
April 4, 1985, are remedial in nature and apply to all close 4,430
corporation agreements created on or after November 17, 1981. The 4,432
amendments to this section that are effective December 31, 1993, 4,433
are remedial in nature and, except as those amendments otherwise 4,434
provide, apply to all close corporation agreements created on or 4,435
after November 17, 1981.
Sec. 1701.831. (A) Unless the articles or the regulations 4,444
of the issuing public corporation provide that this section does 4,445
not apply to control share acquisitions of shares of such 4,446
corporation, any control share acquisition of an issuing public 4,447
corporation shall be made only with the prior authorization of 4,448
the shareholders of such corporation in accordance with this 4,449
section. 4,450
(B) Any person who proposes to make a control share 4,452
acquisition shall deliver an acquiring person statement to the 4,453
issuing public corporation at the issuing public corporation's 4,454
principal executive offices. Such acquiring person statement 4,455
shall set forth all of the following: 4,456
(1) The identity of the acquiring person; 4,458
104
(2) A statement that the acquiring person statement is 4,460
given pursuant to this section; 4,461
(3) The number of shares of the issuing public corporation 4,463
owned, directly or indirectly, by the acquiring person; 4,464
(4) The range of voting power, described in division 4,466
(Z)(1)(a), (b), or (c) of section 1701.01 of the Revised Code, 4,467
under which the proposed control share acquisition would, if 4,468
consummated, fall; 4,469
(5) A description in reasonable detail of the terms of the 4,471
proposed control share acquisition; 4,472
(6) Representations of the acquiring person, together with 4,474
a statement in reasonable detail of the facts upon which they are 4,475
based, that the proposed control share acquisition, if 4,476
consummated, will not be contrary to law, and that the acquiring 4,477
person has the financial capacity to make the proposed control 4,478
share acquisition. 4,479
(C) Within ten days after receipt of an acquiring person 4,481
statement that complies with division (B) of this section, the 4,482
directors of the issuing public corporation shall call a special 4,483
meeting of shareholders of the issuing public corporation for the 4,484
purpose of voting on the proposed control share acquisition. 4,485
Unless the acquiring person agrees in writing to another date, 4,486
such special meeting of shareholders shall be held within fifty 4,487
days after receipt by the issuing public corporation of the 4,488
acquiring person statement. If the acquiring person so requests 4,489
in writing at the time of delivery of the acquiring person 4,490
statement, such special meetings shall be held no sooner than 4,491
thirty days after receipt by the issuing public corporation of 4,492
the acquiring person statement. Such special meeting of 4,493
shareholders shall be held no later than any other special 4,494
meeting of shareholders that is called, after receipt by the 4,495
issuing public corporation of the acquiring person statement, in 4,496
compliance with section 1701.76, 1701.78, 1701.79, 1701.83, or 4,497
1701.831 of the Revised Code. 4,498
105
(D) Notice of the special meeting of shareholders shall be 4,500
given as promptly as reasonably practicable by the issuing public 4,501
corporation to all shareholders of record as of the record date 4,502
set for such meeting, whether or not entitled to vote thereat. 4,503
Such notice shall include or be accompanied by both of the 4,504
following: 4,505
(1) A copy of the acquiring person statement delivered to 4,507
the issuing public corporation pursuant to this section; 4,508
(2) A statement by the issuing public corporation, 4,510
authorized by its directors, of its position or recommendation, 4,511
or that it is taking no position or making no recommendation, 4,512
with respect to the proposed control share acquisition. 4,513
(E) The acquiring person may make the proposed control 4,515
share acquisition if both of the following occur: 4,516
(1) The shareholders of the issuing public corporation who 4,518
hold shares AS OF THE RECORD DATE of such corporation entitling 4,519
them to vote in the election of directors authorize such THE 4,521
acquisition at the special meeting held for that purpose at which 4,523
a quorum is present by an affirmative vote of a majority of the 4,524
voting power of such corporation in the election of directors 4,525
represented at such THE meeting in person or by proxy, and a 4,526
majority of the portion of such THE voting power excluding the 4,527
voting power of interested shares REPRESENTED AT THE MEETING IN 4,528
PERSON OR BY PROXY. A quorum shall be deemed to be present at 4,529
such THE special meeting if at least a majority of the voting 4,530
power of the issuing public corporation in the election of 4,531
directors, and a majority of the portion of such voting power 4,532
excluding the voting power of interested shares are IS 4,533
represented at such THE meeting in person or by proxy. 4,534
(2) Such THE acquisition is consummated, in accordance 4,536
with the terms so authorized, no later than three hundred sixty 4,537
days following shareholder authorization of the control share 4,538
acquisition. 4,539
(F) Except as expressly improved PROVIDED in this section, 4,541
106
nothing in this section shall be construed to affect or impair 4,542
any right, remedy, obligation, duty, power, or authority of any 4,543
acquiring person, any issuing public corporation, the directors 4,544
of any acquiring person or issuing public corporation, or any 4,545
other person under the laws of this or any other state or of the 4,546
United States. 4,547
(G) If any application of any provision of this section is 4,549
for any reason held to be illegal or invalid, the illegality or 4,550
invalidity shall not affect any legal and valid provision or 4,551
application of this section, and the parts and applications of 4,552
this section are severable. 4,553
Sec. 1701.832. (A) In enacting Amended Substitute House 4,562
Bill No. 822 of the 114th general assembly, which amended 4,563
sections 1701.01, 1701.11, 1701.37, 1701.48, 1707.01, 1707.23, 4,564
1707.26, 1707.29, and 1707.99 and enacted sections 1701.831 and 4,565
1707.042 of the Revised Code, the general assembly found and 4,566
continues to find that: 4,567
(1) Existing Ohio corporate law was designed to deal with 4,569
traditional methods of transfer of control of Ohio corporations. 4,570
The tender offer has evolved as an alternative device to acquire 4,571
control of a public corporation that has been in widespread use 4,572
in the past several decades. The acquisition of significant 4,573
blocks of the securities of a public company in the open market 4,574
or private transactions in connection with actual or apparent 4,575
efforts to acquire control has become more common in recent years 4,576
and has further complicated the impact of tender offers upon a 4,577
corporation and its shareholders. Numerous Ohio corporations 4,578
have been the subject of tender offers and accumulations of 4,579
significant blocks of securities. 4,580
(2) The accumulation of a large block of a corporation's 4,582
voting shares, or other securities convertible into voting 4,583
shares, through direct or indirect acquisition from one or more 4,584
existing shareholders of the corporation has not been subject to 4,585
the normal corporate approval mechanisms involved in other 4,586
107
typical types of acquisition transactions such as mergers, 4,587
consolidations, combinations, and majority share acquisitions. 4,588
Such accumulations, however, can result in shifts of effective 4,589
corporate control and hence, from a business and financial 4,590
perspective, directly or indirectly, can result in significant 4,591
changes in a variety of basic corporate circumstances identical 4,592
or substantially similar to those arising as a result of the 4,593
above-mentioned transactions. For instance, a change in 4,594
corporate control accompanying a large accumulation of shares 4,595
will very often result in a fundamental change in the ongoing 4,596
business of the corporation and a concomitant fundamental change 4,597
in the nature of the shareholders' investment in it. Thus the 4,598
potential that such changes in corporate circumstances will occur 4,599
gives rise to basic issues concerning the internal affairs of the 4,600
corporation typical of those arising in mergers, consolidations, 4,601
combinations, and majority share acquisitions. The form of the 4,602
transaction in which such issues arise should not alter the basic 4,603
corporate mechanisms by which such issues are presented and 4,604
resolved. 4,605
(3) Tender offers almost always involve a change in 4,607
corporate control and, therefore, give rise to these same basic 4,608
issues concerning internal corporate affairs. Although tender 4,609
offers in theory offer shareholders the opportunity to consider 4,610
such issues in deciding whether or not to tender their shares, in 4,611
practice they do not. Tender offers are coercive in the sense 4,612
that shareholders are normally concerned that a majority of their 4,613
fellow shareholders will tender their shares, leaving them in a 4,614
minority position with one controlling shareholder. Thus, 4,615
shareholders often feel compelled to tender their shares, 4,616
regardless of how they feel about the corporate control issues 4,617
inherent in any tender offer. The opportunity for reasoned 4,618
decision-making is further hindered by the short time periods in 4,619
which tender offers can be consummated, the structures of many 4,620
recent tender offers, which are designed to encourage prompt 4,621
108
tenders, and the fact that individual shareholders typically 4,622
receive or obtain tender offer materials much later than 4,623
institutional shareholders. 4,624
(4) It is in the public interest for shareholders to have 4,626
a reasonable opportunity to express their views by voting on a 4,627
proposed shift of control, an opportunity currently available 4,628
under Ohio GENERAL corporation law, CHAPTER 1701. OF THE REVISED 4,630
CODE, in transactions with similar effects. The general assembly
also believes that it is in the public interest for Ohio 4,632
securities laws, CHAPTER 1707. OF THE REVISED CODE, to provide 4,633
evenhanded protection of offerors and shareholders from 4,634
fraudulent and manipulative transactions arising in connection 4,635
with control acquisitions. 4,636
(5) Initial state efforts to deal with tender offer 4,638
developments have been questioned by the federal courts. The 4,639
general assembly observes that responsibility for general 4,640
corporate laws is the function of state legislation and that no 4,641
federal law of corporations exists. The general assembly 4,642
observes that securities law protection of state residents has 4,643
long been recognized as an appropriate subject of state law 4,644
regulation under the federal system. The general assembly 4,645
acknowledges an in loco parentis responsibility to shareholders 4,646
who invest in corporations created under the laws of Ohio and to 4,647
shareholders generally who reside in Ohio. 4,648
(B) Sections 1701.01, 1701.11, 1701.37, 1701.48, 1707.01, 4,650
1707.23, 1707.26, 1707.29, and 1707.99, as amended by Amended 4,651
Substitute House Bill No. 822 of the 114th general assembly, and 4,652
sections 1701.831 and 1707.042, as enacted by that act, were a 4,653
recognition of the state's responsibility with respect to the 4,654
subject matter of the act. Nevertheless, with a view to avoiding 4,655
an undue burden on interstate commerce, as expressed in recent 4,656
court decisions, the amendments were designed to have the minimum 4,657
impact upon interstate commerce consistent with Ohio 4,658
responsibility in respect to the subject matter. Accordingly, 4,659
109
the security law amendments made by that act to sections 1707.23, 4,660
1707.26, 1707.29, and 1707.99 and in newly enacted section 4,661
1707.042 of the Revised Code were limited to application to Ohio 4,662
resident investors, and the corporate law amendments made by that 4,663
act to sections 1701.01, 1701.11, 1701.37, and 1701.48 and in 4,664
newly enacted section 1701.831 of the Revised Code were limited 4,665
to corporations created under the laws of Ohio with the strong 4,666
Ohio ties provided in the amendments. The corporate legislation 4,667
does not include a requirement for Ohio resident investors 4,668
because of the difficulty of ascertainment by potential acquirers 4,669
and others of the residence of shareholders. The general 4,670
assembly finds that corporations satisfying the jurisdictional 4,671
nexus provided by the amendments may be deemed to have a 4,672
substantial and significant shareholder base in the state. 4,673
(C) The general assembly confirms all of the findings of 4,675
this section as enacted by Amended Substitute House Bill No. 822 4,676
of the 114th general assembly, except that the general assembly 4,677
declares that, from the effective date of this amendment, 4,679
NOVEMBER 2, 1989, and the concurrent amendment of section 1701.11 4,680
of the Revised Code by the addition of division (B)(9)(a)(ii) to 4,681
that section, the standards of that division are permitted, as an 4,682
alternative to the ties with Ohio essential to the status of a 4,683
control share acquisition, to qualify for the authorized 4,684
restrictions on transfer of shares. The general assembly further 4,685
finds that the omission of a reference to "1701.01" immediately 4,686
following the phrase "the corporate law amendments in sections" 4,687
in the enactment of division (B) of this section was inadvertent. 4,688
(D) THE GENERAL ASSEMBLY CONFIRMS ALL OF THE FINDINGS OF 4,691
THIS SECTION AS ENACTED BY AMENDED SUBSTITUTE HOUSE BILL NO. 822 4,693
OF THE 114th GENERAL ASSEMBLY, AND AS AMENDED BY AMENDED 4,694
SUBSTITUTE HOUSE BILL NO. 358 OF THE 118th GENERAL ASSEMBLY, AND 4,695
FURTHER FINDS ALL OF THE FOLLOWING: 4,696
(1) ALTHOUGH OHIO GENERAL CORPORATION LAW, CHAPTER 1701. 4,699
OF THE REVISED CODE, REQUIRES THAT A SPECIAL MEETING BE HELD TO 4,701
110
ENABLE SHAREHOLDERS OF AN ISSUING PUBLIC CORPORATION TO VOTE ON 4,702
ANY CONTROL SHARE ACQUISITION, IT DESCRIBES MEETING PROCEDURES, 4,703
LIKE OTHER STATES, PRIMARILY IN GENERAL TERMS. 4,704
(2) WHERE THE LAW, OR THE ARTICLES OF INCORPORATION AND 4,706
CODE OF REGULATIONS OF THE ISSUING PUBLIC CORPORATION, DO NOT 4,707
MANDATE SPECIFIC MEETING PROCEDURES, THE DIRECTORS OF THE 4,708
CORPORATION MUST DEFINE APPROPRIATE PROCEDURES CONSISTENT WITH 4,710
THEIR FIDUCIARY DUTIES AS PROVIDED IN SECTION 1701.59 OF THE 4,711
REVISED CODE. IN CARRYING OUT THESE DUTIES, PRACTICES AND 4,713
PROCEDURES HAVE DEVELOPED FROM EXPERIENCE IN THIS STATE AND 4,714
ELSEWHERE TO ENSURE FAIR AND EFFICIENT MEETINGS. THESE PRACTICES 4,715
AND PROCEDURES INCLUDE THE USE OF A VARIETY AND NUMBER OF 4,716
PRESUMPTIONS AND FORMS OF PROXY.
(3) THE USE OF PRESUMPTIONS AND FORMS OF PROXY REFLECTS 4,718
THE FACT THAT, IN THIS STATE AND OTHER STATES WITH SIMILAR LAWS, 4,719
EFFICIENCY AND FINALITY ARE NECESSARY PRIORITIES OVER PRECISION 4,720
AND CERTITUDE IN THE CONDUCT OF A MEETING. IT IS THE 4,721
RESPONSIBILITY OF THE DIRECTORS TO UTILIZE PRACTICES AND 4,722
PROCEDURES, INCLUDING PRESUMPTIONS AND FORMS OF PROXY, THAT ARE 4,723
CONSISTENT WITH THEIR FIDUCIARY DUTIES. 4,724
Sec. 1705.01. As used in this chapter: 4,733
(A) "Business" means every trade, occupation, or 4,735
profession. 4,736
(B) "Contribution" means any cash, property, services 4,738
rendered, promissory note, or other binding obligation to 4,739
contribute cash or property or to perform services that a member 4,740
contributes to a limited liability company in his THE capacity as 4,742
a member. 4,743
(C) "Conveyance" means every assignment, lease, mortgage, 4,745
or encumbrance. 4,746
(D) "Entity" means any of the following: 4,748
(1) A for profit corporation existing under the laws of 4,750
this state or any other state; 4,751
(2) Any of the following organizations existing under the 4,753
111
laws of this state, the United States, or any other state: 4,754
(a) A business trust or association; 4,756
(b) A real estate investment trust; 4,758
(c) A common law trust; 4,760
(d) An unincorporated business or for profit organization, 4,762
including a general or limited partnership; 4,763
(e) A limited liability company. 4,765
(E) "Incompetent" has the same meaning as in section 4,767
2111.01 of the Revised Code. 4,768
(F) "Knowledge," of a fact, means actual knowledge of that 4,770
fact and knowledge of other facts that under the circumstances 4,771
shows bad faith. 4,772
(G) "Member" means a person whose name appears on the 4,774
records of the limited liability company as the owner of a 4,775
membership interest in that company. 4,776
(H) "Membership interest" means a member's share of the 4,778
profits and losses of a limited liability company and the right 4,779
to receive distributions from that company. 4,780
(I) "Notice" means that the person who claims the benefit 4,782
of the notice has done one of the following: 4,783
(1) Stated the fact to the person entitled to notice; 4,785
(2) Delivered through the mail or by other means of 4,787
communication a written statement of the fact to the person 4,788
entitled to notice or to a proper person at the place of business 4,789
or residence of the person entitled to receive a notice. 4,790
(J) "Operating agreement" means all of the valid written 4,792
or oral agreements of the members OR, IN THE CASE OF A LIMITED 4,793
LIABILITY COMPANY CONSISTING OF ONE MEMBER, A WRITTEN DECLARATION 4,794
OF THAT MEMBER, as to the affairs of a limited liability company 4,796
and the conduct of its business.
(K) "Person" means any natural person; partnership, 4,798
limited partnership, trust, estate, association, limited 4,799
liability company, or corporation; any custodian, nominee, 4,800
trustee, executor, administrator, or other fiduciary; or any 4,801
112
other individual or entity in its own or any representative 4,802
capacity. 4,803
(L) "Professional association" and "professional service" 4,805
have the same meanings as in section 1785.01 of the Revised Code. 4,806
(M) "State" has the same meaning as in section 1.59 of the 4,808
Revised Code and additionally includes a foreign country and any 4,809
province, territory, or other political subdivision of a foreign 4,810
country. 4,811
Sec. 1705.04. (A) Two ONE or more persons, without regard 4,820
to residence, domicile, or state of organization, may form a 4,821
limited liability company. The entity is formed when one or more 4,823
persons or their authorized representative signs and files with 4,824
the secretary of state articles of organization that set forth 4,825
all of the following: 4,826
(1) The name of the company; 4,828
(2) Except as provided in division (B) of this section, 4,830
the period of its duration, which may be perpetual; 4,831
(3) The address to which interested persons may direct 4,833
requests for copies of any operating agreement and any bylaws of 4,834
the company; 4,835
(4) Any other provisions that are from the operating 4,837
agreement or that are not inconsistent with applicable law and 4,838
that the members elect to set out in the articles for the 4,839
regulation of the affairs of the company. 4,840
(B) If the articles of organization OR OPERATING AGREEMENT 4,842
do not set forth the period of the duration of the limited 4,844
liability company, its duration shall be perpetual. 4,845
(C) If a limited liability company is formed under this 4,847
chapter for the purpose of rendering a professional service or 4,848
the kinds of professional services authorized under Chapters 4,849
4703. and 4733. of the Revised Code, the following apply: 4,850
(1) Each member, employee, or other agent of the company 4,852
who renders a professional service in this state and, if the 4,853
management of the company is not reserved to its members, each 4,854
113
manager of the company who renders a professional service in this 4,855
state shall be licensed or otherwise legally authorized to render 4,856
in this state the same kind of professional service or, if 4,857
applicable, the kinds of professional services authorized under 4,858
Chapters 4703. and 4733. of the Revised Code. 4,859
(2) Each member, employee, or other agent of the company 4,861
who renders a professional service in another state and, if the 4,862
management of the company is not reserved to its members, each 4,863
manager of the company who renders a professional service in 4,864
another state shall be licensed or otherwise legally authorized 4,865
to render that professional service in the other state. 4,866
(D) Except for the provisions of this chapter pertaining 4,868
to the personal liability of members, employees, or other agents 4,869
of a limited liability company and, if the management of the 4,870
company is not reserved to its members, the personal liability of 4,871
managers of the company, this chapter does not restrict, limit, 4,872
or otherwise affect the authority or responsibilities of any 4,873
agency, board, commission, department, office, or other entity to 4,874
license, register, and otherwise regulate the professional 4,875
conduct of individuals or organizations of any kind rendering 4,876
professional services in this state or to regulate the practice 4,877
of any profession that is within the jurisdiction of the agency, 4,878
board, commission, department, office, or other entity, 4,879
notwithstanding that the individual is a member or manager of a 4,880
limited liability company and is rendering the professional 4,881
services or engaging in the practice of the profession through 4,882
the limited liability company or that the organization is a 4,883
limited liability company. 4,884
Sec. 1705.16. (A) If EXCEPT AS PROVIDED IN DIVISION (C) 4,894
OF THIS SECTION, IF the management of a limited liability company 4,896
is reserved to its members, a member may withdraw from the 4,897
company at any time by giving written notice to the other 4,898
members. If the withdrawal violates the operating agreement, 4,899
then, in addition to exercising any remedies otherwise available 4,900
114
under applicable law, the company may recover from the
withdrawing member damages for breach of the operating agreement 4,901
and may offset the damages against the amount otherwise 4,902
distributable to him THE WITHDRAWING MEMBER on account of his THE 4,904
WITHDRAWING MEMBER'S membership interest.
(B) If EXCEPT AS PROVIDED IN DIVISION (C) OF THIS SECTION, 4,906
IF the management of a limited liability company is not reserved 4,908
to its members, the operating agreement may prohibit withdrawal 4,909
or may specify the time at which or the events the occurrence of 4,910
which entitle a member to withdraw. If the operating agreement 4,911
does not prohibit withdrawal, does not specify the time at which 4,912
or the events upon the occurrence of which a member may withdraw, 4,913
and does not indicate a definite time for the dissolution and the 4,914
winding up of the company, a member may withdraw after giving at 4,915
least six-months written notice of the proposed withdrawal to 4,916
each nonwithdrawing member at its address as set forth in the 4,917
records of the company that are required to be kept under section 4,918
1705.28 of the Revised Code. 4,919
(C) IF THE LIMITED LIABILITY COMPANY WAS FORMED ON OR 4,921
AFTER THE EFFECTIVE DATE OF THIS AMENDMENT, OR THE COMPANY WAS 4,922
FORMED PRIOR TO THE EFFECTIVE DATE OF THIS AMENDMENT AND ITS 4,923
ARTICLES OF ORGANIZATION OR OPERATING AGREEMENT SPECIFICALLY 4,924
STATE THAT THIS DIVISION APPLIES TO THE COMPANY, A MEMBER MAY 4,925
WITHDRAW FROM THE COMPANY ONLY AT THE TIME OR UPON THE OCCURRENCE
OF AN EVENT SPECIFIED IN WRITING IN THE ARTICLES OF ORGANIZATION 4,926
OR THE OPERATING AGREEMENT. 4,927
Sec. 1705.43. (A) A limited liability company organized 4,936
under this chapter shall be dissolved upon the occurrence of any 4,937
of the following events: 4,938
(1) The expiration of the period, if any, fixed by the 4,940
operating agreement or articles of organization for the duration 4,942
of the company;
(2) One or more events specified in writing in the 4,944
operating agreement as causing the dissolution of the company; 4,945
115
(3) The unanimous written agreement of all members to 4,947
dissolve the company; 4,948
(4) The withdrawal of a member of the company, unless the 4,950
business of the company is continued by the consent of all of the 4,951
remaining members or under a right to continue the company that 4,952
is stated in writing in the operating agreement; 4,953
(5) At any time when there are less than two members; 4,955
(6) Upon entry of a decree of judicial dissolution under 4,957
section 1705.47 of the Revised Code. 4,958
(B) Following the occurrence of any of the events 4,960
specified in division (A) of this section, the limited liability 4,961
company shall deliver to the secretary of state for filing a 4,962
certificate of dissolution on a form that is prescribed by the 4,963
secretary of state and that includes the name of the company and 4,964
the effective date of its dissolution. 4,965
Sec. 1782.33. A (A) EXCEPT AS PROVIDED IN DIVISION (B) OF 4,976
THIS SECTION, A limited partner may withdraw from a limited 4,977
partnership at the time, or upon the happening of events, 4,978
specified in writing in the partnership agreement. If the 4,979
partnership agreement does not specify in writing the time or 4,980
events upon the happening of which a limited partner may withdraw 4,981
or a definite time for the dissolution and winding up of the
limited partnership, a limited partner may withdraw upon not less 4,982
than six months' prior written notice to each general partner at 4,983
his THE GENERAL PARTNER'S address on the books of the limited 4,984
partnership at its office in this state. 4,985
(B) IF THE LIMITED PARTNERSHIP WAS FORMED ON OR AFTER THE 4,987
EFFECTIVE DATE OF THIS AMENDMENT, OR THE LIMITED PARTNERSHIP WAS 4,988
FORMED PRIOR TO THE EFFECTIVE DATE OF THIS AMENDMENT AND ITS 4,989
CERTIFICATE OF LIMITED PARTNERSHIP OR PARTNERSHIP AGREEMENT 4,990
SPECIFICALLY STATES THAT THIS DIVISION APPLIES TO THE LIMITED 4,991
PARTNERSHIP, A LIMITED PARTNER MAY WITHDRAW FROM THE LIMITED 4,992
PARTNERSHIP ONLY AT THE TIME OR UPON THE OCCURRENCE OF AN EVENT
SPECIFIED IN WRITING IN THE PARTNERSHIP AGREEMENT. 4,993
116
Sec. 3901.51. As used in sections 3901.51 to 3901.55 of 5,002
the Revised Code: 5,003
(A) "Clearing corporation" has the same meaning as in 5,005
division (C) of section 1308.01 of the Revised Code, except that 5,006
with respect to securities issued by institutions organized or 5,007
existing under the laws of any foreign country or securities used 5,008
to meet the deposit requirements pursuant to the laws of a 5,009
foreign country as a condition of doing business in that country, 5,010
"clearing corporation" includes a corporation that is organized 5,011
or existing under the laws of any foreign country and is legally 5,012
qualified under those laws to effect transactions in securities 5,013
by computerized book-entry. 5,014
(B) "Direct participant" means a bank, trust company, or 5,016
other entity that maintains an account in its name in a clearing 5,017
corporation and through which an insurance company participates 5,018
in a clearing corporation. 5,019
(C) "Federal reserve book-entry system" means the 5,021
computerized systems sponsored by the United States department of 5,022
the treasury and agencies and instrumentalities of the United 5,023
States for holding and transferring securities of the United 5,024
States government and agencies and instrumentalities in federal 5,025
reserve banks through banks that are members of the federal 5,026
reserve system or that otherwise have access to these 5,027
computerized systems. 5,028
(D) "Member bank" means a national or state bank or a 5,030
trust company that is a member of the federal reserve system and 5,031
through which an insurance company participates in the federal 5,032
reserve book-entry system. 5,033
(E) "Provisions of the insurance laws of this state" means 5,035
provisions of Title XXXIX of the Revised Code related to the 5,036
deposit of securities for the benefit and security of 5,037
policyholders, and includes, but is not limited to, sections 5,038
3901.18, 3903.73, 3905.24, 3905.25, 3905.41, 3907.07, 3909.03, 5,039
3909.09, 3909.17, 3913.01, 3913.04, 3919.13, 3919.36, 3919.37, 5,040
117
3919.41, 3925.07, 3927.02, 3927.06, 3929.01, 3929.07, 3929.08, 5,041
3929.09, 3929.10, 3929.11, 3941.30, 3941.31, 3941.32, 3941.33, 5,042
3941.34, 3941.42, 3953.06, 3953.11, and 3957.03 of the Revised 5,043
Code.
(F) "Securities" has the same meaning as in division 5,045
(A)(3) of section 1308.01 of the Revised Code. 5,046
Section 2. That existing sections 1301.05, 1301.12, 5,048
1303.02, 1304.01, 1304.02, 1305.10, 1305.13, 1308.03, 1308.04, 5,049
1308.08, 1308.09, 1308.10, 1308.11, 1308.12, 1308.13, 1308.14, 5,050
1308.15, 1308.16, 1308.17, 1308.22, 1308.31, 1308.37, 1308.38, 5,051
1308.41, 1308.42, 1309.01, 1309.03, 1309.14, 1309.20, 1309.21, 5,052
1309.22, 1309.23, 1309.24, 1309.25, 1309.28, 1309.31, 1701.01, 5,053
1701.24, 1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 1701.832, 5,054
1705.01, 1705.04, 1705.16, 1705.43, 1782.33, and 3901.51 and 5,056
sections 1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 1308.18, 5,057
1308.19, 1308.20, 1308.21, 1308.23, 1308.24, 1308.25, 1308.26, 5,058
1308.27, 1308.28, 1308.32, 1308.33, 1308.34, 1308.35, 1308.36, 5,059
1308.39, 1308.40, 1308.43, and 1308.44 of the Revised Code are 5,060
hereby repealed.
Section 3. Sections 1 and 2 of this act, except for 5,062
sections 1701.01, 1701.831, 1701.832, 1705.01, 1705.04, 1705.16, 5,063
1705.43, and 1782.33 of the Revised Code, shall take effect on 5,064
January 1, 1998. Sections 1701.01, 1701.831, 1701.832, 1705.01, 5,065
1705.04, 1705.16, 1705.43, and 1782.33 of the Revised Code, as 5,066
amended by this act, shall take effect at the earliest time
permitted by law. 5,067
Section 4. (A) Sections 1301.05, 1301.12, 1303.02, 5,069
1304.01, 1304.02, 1305.10, 1305.13, 1308.01, 1308.02, 1308.03, 5,070
1308.04, 1308.05, 1308.06, 1308.07, 1308.08, 1308.09, 1308.10, 5,071
1308.11, 1308.12, 1308.13, 1308.14, 1308.15, 1308.16, 1308.17, 5,072
1308.18, 1308.19, 1308.20, 1308.21, 1308.22, 1308.23, 1308.24, 5,073
1308.25, 1308.26, 1308.27, 1308.28, 1308.31, 1308.32, 1308.33,
1308.34, 1308.35, 1308.36, 1308.37, 1308.38, 1308.39, 1308.40, 5,074
1308.41, 1308.42, 1308.43, 1308.44, 1308.51, 1308.52, 1308.53, 5,075
118
1308.54, 1308.55, 1308.56, 1308.57, 1308.58, 1308.59, 1308.60, 5,076
1308.61, 1309.01, 1309.03, 1309.112, 1309.113, 1309.14, 1309.20, 5,077
1309.21, 1309.22, 1309.23, 1309.24, 1309.25, 1309.28, 1309.31, 5,078
1701.24, 1701.25, 1701.27, 1701.49, 1701.591, and 3901.51 of the 5,079
Revised Code, as amended, enacted, or repealed by this act, do
not affect an action or proceeding commenced before January 1, 5,080
1998.
(B) If a security interest in a security is perfected at 5,082
January 1, 1998, and the action by which the security interest 5,083
was perfected would suffice to perfect a security interest under 5,085
this act, no further action is required to continue perfection. 5,086
If a security interest in a security is perfected at January 1, 5,087
1998, but the action by which the security interest was perfected 5,088
would not suffice to perfect a security interest under this act, 5,089
the security interest remains perfected for the period ending 5,091
April 30, 1998, and continues perfected thereafter if appropriate 5,092
action to perfect under this act is taken within that period. If
a security interest is perfected at January 1, 1998, and the 5,093
security interest can be perfected by filing under this act, a 5,094
financing statement signed by the secured party instead of the 5,095
debtor may be filed within that period to continue perfection or 5,096
thereafter to perfect.