As Reported by House Civil and Commercial Law Committee 1
123rd General Assembly 4
Regular Session Am. H. B. No. 78 5
1999-2000 6
REPRESENTATIVES WOMER BENJAMIN-CALLENDER-MOTTLEY-FORD-BUCHY- 9
WILLAMOWSKI-SALERNO 10
_________________________________________________________________ 11
A B I L L
To amend sections 1151.38, 1151.61, 1701.04, 13
1701.06, 1701.09, 1701.11, 1701.13, 1701.15, 14
1701.18, 1701.24, 1701.33, 1701.45, 1701.59, 15
1701.63, 1701.70, 1701.71, and 1701.95, to enact 16
new section 1701.10, and to repeal section 17
1701.10 of the Revised Code to modify the General 18
Corporation Law, including modifications to alter 19
the requirements for the formation of a 20
corporation, including the contents of the 21
articles of incorporation, the terms of and 22
subscription for shares, and the adoption of 23
corporate regulations; to limit the liability of 24
directors for improper dividends, distributions, 25
purchases, and redemptions of shares; to limit 26
the indemnification of directors; to specify 28
limits on pre-emptive rights of shareholders; to 29
specify the rights of fractional shareholders; to 30
specify the liability of shareholders to the
corporation and its creditors; to specify the 31
determination of the date for measuring the 33
effect of a dividend or distribution on a
corporation; to specify a record date for 34
determining the eligibility of shareholders for a 35
dividend or distribution; to permit a reduction 37
in the size of executive and other committees of 38
directors; to specify the authority of
incorporators, initial directors, and subsequent 39
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directors of a corporation to amend the articles 41
of incorporation; and to make nonsubstantive
technical modifications to the law. 42
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 44
Section 1. That sections 1151.38, 1151.61, 1701.04, 46
1701.06, 1701.09, 1701.11, 1701.13, 1701.15, 1701.18, 1701.24, 47
1701.33, 1701.45, 1701.59, 1701.63, 1701.70, 1701.71, and 1701.95 48
be amended and new section 1701.10 of the Revised Code be enacted 49
to read as follows: 50
Sec. 1151.38. In AS USED IN this section, "federal 59
association" means a federal savings and loan association, and 61
"state association" means a building STATE SAVINGS and loan 62
association.
Any federal association having its home office in this 64
state may convert or reorganize into a state association under 65
this section and section 1151.39 of the Revised Code, by 66
proceeding as follows: 67
(A) The board of directors of the federal association, at 69
any regular or special meeting called for that purpose, shall 70
adopt a plan to convert or reorganize into a state association. 71
(B) Such THE plan and any amendments or additions thereto 74
TO THE PLAN shall be considered, and a vote shall be taken on the 75
question of its adoption, at an annual meeting of the members of 76
the federal association, or at any special meeting of the members 77
of the federal association called to consider such THE action. 78
If the bylaws of the federal association do not require written 79
notice of such THE annual or special meeting, written notice of 80
the time, place, and purpose of such meeting shall be mailed by 82
the federal association, postage prepaid, at least ten days prior 83
to the date on which such meeting convenes, to each member of 84
record of the federal association, but such THE mailing shall not 85
be a condition precedent to, nor shall any defect in such THE 87
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mailing affect the validity of, any such THE meeting. The 89
adoption of such THE plan shall require the vote of fifty-one per 91
cent or more of the votes cast by the members present in person 92
or by proxy at such meeting.
(C) Two copies of the minutes of such meeting, together 94
with a statement showing the giving of such THE WRITTEN notice, 95
and two copies of the minutes of the meeting of the members of 96
the board of the federal association, all verified by an 97
affidavit of the secretary or other proper custodian of the 98
records of the federal association, shall be filed both in the 99
office of the superintendent of building and loan associations 100
FINANCIAL INSTITUTIONS and with the federal home loan bank board. 102
Such verified copies, when filed, shall be presumptive evidence 103
of the holding and action of such meeting. 104
(D) A majority of the members of the board of the federal 106
association, which majority shall consist of not less than three 107
directors, a majority of whom are citizens of the United States, 108
shall subscribe to, acknowledge, and file articles of 109
incorporation in the office of the secretary of state. Two 110
copies of the articles shall be filed with the federal home loan 111
bank board. The articles shall set forth ALL OF THE FOLLOWING: 112
(1) All statements required by paragraphs DIVISIONS 115
(A)(1), (2), AND (3), and (4) of division (A) of section 1701.04 116
of the Revised Code and any desired provision authorized by 117
paragraphs (1) DIVISIONS (B)(3), (2) (4), and (3) of division (B) 118
(5) of such THAT section; 119
(2) A statement showing that the state association is 121
incorporated by conversion or reorganization from the federal 122
association; 123
(3) A statement showing the assumption by the state 125
association of all shares, accounts, and liabilities of the 126
federal association as of the date on which the conversion or 127
reorganization is to be completed, and the manner in which each 128
class of such shares, accounts, and liabilities will be 129
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discharged or adjusted by the state association. 130
Upon receipt of the articles, the secretary of state shall 132
forthwith transmit to the superintendent a copy of such THE 133
articles. If it appears that the state association, if formed, 134
will be entitled to commence the business for which it is 135
organized, the superintendent shall so certify to the secretary 136
of state, who shall thereupon record such THE articles UPON THAT 137
CERTIFICATE. 138
(E) On the day and hour of such recording, the federal 140
association shall be deemed converted or reorganized into the 141
state association, and thereupon UPON THAT CONVERSION OR 142
REORGANIZATION, BOTH OF THE FOLLOWING APPLY: 143
(1) All the federal association's property and assets, and 145
every right, privilege, and interest then existing, belonging or 146
pertaining to it or which would inure to it, shall immediately, 147
without any conveyance or transfer and without any further act, 148
SHALL be vested in and become the property of the successor state 149
association, which shall hold and enjoy them in its own right, to 150
the same extent as they were held and enjoyed by the federal 151
association. All liens upon the property and assets of such THE 152
federal association existing at the time of conversion shall be 153
preserved unimpaired and limited in lien to the property or 154
assets then affected thereby BY LIENS. This section does not 155
deprive any person, firm, or corporation of any substantive right 157
existing at the time of such conversion against such THE federal 158
association, nor of the right to enforce any such right OF THAT 160
NATURE by proceedings against the property and assets transferred 162
by operation of this division, in the event and to the extent 163
that such THE substantive right is not satisfied or adjusted by 164
the successor state association in accordance with its articles. 165
(2) The state association shall commence business and 167
shall be subject to the laws of this state relating to domestic 168
building SAVINGS and loan associations. 169
Any action or proceeding pending by or against such THE 171
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federal association at the time of such THE conversion or 172
reorganization may be prosecuted to judgment, with right of 174
appeal, as in other cases, as if such THE conversion or 175
reorganization had not taken place, or the successor state 176
association may be substituted for such THE federal association. 177
A copy of the articles recorded in the office of the 179
secretary of state, certified by the secretary of state under the 180
seal of his THE SECRETARY OF STATE'S office and showing the day 181
and hour of recording, shall be recorded in the office of the 183
county recorder of the county in which the federal association 184
had its principal office or place of business at the time of its 185
conversion or reorganization, and in each county in the state in 186
which such THE federal association owned real estate at the time 187
of its conversion or reorganization, for which recording the 188
recorder shall charge the same fees as for the recording of 189
deeds. Two copies of the articles, as so recorded and certified, 190
and showing the date and hour of such THE recording, shall be 191
filed with the federal home loan bank board. 192
Sec. 1151.61. A building SAVINGS and loan association may 201
be reorganized, with the written consent of the DEPUTY 202
superintendent of building SAVINGS and loan associations, in the 203
following manner:
(A) The board of directors may adopt a plan of 205
reorganization, which may include any change in the articles of 206
incorporation, including changes of issued or unissued shares, 207
which could be effected by amendment to the articles, except as 208
otherwise provided in this section; the increase or reduction of 209
the authorized capital stock, the stock credits, and the fully 210
paid and issued capital stock; the determination or 211
redetermination of the fair value to the association of its 212
assets, tangible or intangible ASSETS; the allotment of a part of 214
the amount so determined or redetermined to stock credits and to 215
fully paid and issued capital stock, and a part to the reserve 216
fund; the retention as reserve and undivided profits of any of 217
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the existing reserve and undivided profits; the manner, terms, 218
and basis of converting or exchanging shares; and such ANY other 219
details as THAT the board considers necessary or desirable. The 221
board shall not adopt, and the superintendent shall not approve, 223
any plan which THAT, by amendment to the articles or otherwise, 224
changes the purpose of the association from that of a building 226
SAVINGS and loan association within the meaning of section 228
1151.01 of the Revised Code. 229
(B) A special meeting of the stockholders shall be called, 231
of which notice shall be given to each stockholder at his THE 232
STOCKHOLDER'S last known post-office address as it appears on the 234
records of the association, whether or not he THE STOCKHOLDER is 235
entitled to vote. At such meeting, the plan of reorganization, 237
including any amendments of or additions to the plan proposed at 238
such THE meeting, shall be considered, and a vote shall be taken 239
on the question of its adoption. The adoption of such THE plan 240
requires the vote, in person or by proxy, of the holders of 241
fifty-one per cent of the stock. If the plan so provides, the 242
board may, within forty-five days after the day on which such THE 243
vote is taken, MAY rescind the action of the shareholders if in 245
its judgment the consummation of the plan will be against the 246
best interests of the association because of the number of 247
dissenting shareholders or the amount of stock owned by them. 248
(C) All shareholders dissenting from such plan are 250
entitled to relief in the manner and under the conditions 251
provided in section 1701.85 of the Revised Code, except that when 252
the plan includes only a reduction in the authorized capital 253
stock, in the stock credits, and in the fully paid and issued 254
capital stock, the filing of his THE DISSENTING SHAREHOLDER'S 255
demand for payment of the fair cash value of his THE DISSENTING 257
SHAREHOLDER'S stock credits shall constitute an application for 259
withdrawal or repurchase, and the fair cash value of his THE
DISSENTING SHAREHOLDER'S stock credits as finally determined in 261
accordance with such THAT section shall be payable only at such 262
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THE times as THAT are permitted under his THE DISSENTING 264
SHAREHOLDER'S right of withdrawal or repurchase at the time such 265
an application is filed. 266
(D) The plan shall become effective when it has been 268
adopted by the shareholders and approved in writing by the 269
superintendent, and the president or a vice-president, and the 270
secretary or an assistant secretary, of the association have 271
signed and filed in the office of the secretary of state a 272
certificate of reorganization, with the consent of the 273
superintendent indorsed thereon ENDORSED ON THE CERTIFICATE, 274
containing a copy of the plan of reorganization, and also 276
containing the following items, unless the item in question is 277
included in such THE plan:
(1) All statements required by paragraphs DIVISIONS 280
(A)(1), (2), and (4) of division (A) (3) of section 1701.04 of 281
the Revised Code to be included in the original articles of 282
incorporation, and any provisions authorized by paragraphs (1) 283
DIVISIONS (B)(3), (2) (4), and (3) of division (B) (5) of such 285
THAT section which are to remain in effect or to be included as 287
part of the plan;
(2) A statement of the amount of fully paid and issued 289
capital stock, the amount of stock credits, and the amount of 290
authorized capital stock, both before and after such THE 291
reorganization. 292
(E) Any such AN association whose plan of reorganization 294
is disapproved by the superintendent may, within thirty days 295
after such THE disapproval and by leave of court first obtained, 296
MAY file, in the court of common pleas of Franklin county or of 299
the county in which the association has its principal place of 300
business, an action against the superintendent, alleging the 301
facts upon which it relies for a reversal of his THE 302
SUPERINTENDENT'S action and praying for such a reversal. The 304
action of the superintendent shall not be reversed unless the 305
court finds that he THE SUPERINTENDENT exceeded his THE 306
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SUPERINTENDENT'S power or abused his THE SUPERINTENDENT'S 307
discretion in disapproving such THE plan. 308
No order of court shall restrain the superintendent from 310
making an examination of such THE association and its affairs at 311
any time under sections 1155.09 and 1155.10 of the Revised Code. 312
Sec. 1701.04. (A) Any person, singly or jointly with 321
others, and without regard to residence, domicile, or state of 322
incorporation, may form a corporation by signing and filing with 323
the secretary of state articles of incorporation which shall set 324
forth ALL OF THE FOLLOWING: 325
(1) The name of the corporation, which shall be in 327
compliance with the provisions of division (A) of section 1701.05 328
of the Revised Code; 329
(2) The place in this state where the principal office of 331
the corporation is to be located; 332
(3) The purpose or purposes for which the corporation is 334
formed, which may consist of a statement that the purpose, either 335
alone or with other specified purposes, is to engage in any 336
lawful act or activity for which corporations may be formed under 337
this chapter. By such statement, all lawful acts and activities 338
of the corporation conforming to the conditions and limitations, 339
if any, specified in the articles are within the purposes of the 340
corporation. 341
(4) The authorized number and the par value per share of 343
shares with par value, and the authorized number of shares 344
without par value, except that the articles of a banking, safe 345
deposit, trust, or insurance corporation shall not authorize 346
shares without par value; the express terms, if any, of the 347
shares; and, if the shares are classified, the designation of 348
each class, the authorized number and par value per share, if 349
any, of the shares of each class, and the express terms of the 350
shares of each class; 351
(5)(4) If the corporation is to have an initial stated 353
capital, the amount of that stated capital. 354
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(B) The articles also may set forth ANY OF THE FOLLOWING: 356
(1) THE NAMES OF THE INDIVIDUALS WHO ARE TO SERVE AS 358
INITIAL DIRECTORS; 359
(2) THE PURPOSE OR PURPOSES FOR WHICH THE CORPORATION IS 362
FORMED, BUT IN THE ABSENCE OF A STATEMENT OF THE PURPOSE OR
PURPOSES OR EXCEPT AS EXPRESSLY SET FORTH IN SUCH STATEMENT, THE 364
PURPOSE FOR WHICH ANY CORPORATION IS FORMED IS TO ENGAGE IN ANY 365
LAWFUL ACT OR ACTIVITY FOR WHICH A CORPORATION MAY BE FORMED 366
UNDER THIS CHAPTER, AND ALL LAWFUL ACTS AND ACTIVITIES OF THE 367
CORPORATION ARE WITHIN THE PURPOSES OF THE CORPORATION; 368
(3) Any lawful provision for the purpose of defining, 370
limiting, or regulating the exercise of the authority of the 371
corporation, the incorporators, the directors, the officers, the 372
shareholders, or the holders of any class of shares; 373
(2)(4) Any provision that may be set forth in the 375
regulations; 376
(3)(5) A provision specifying the period of existence of 378
the corporation if it is to be otherwise than perpetual; 379
(4)(6) Subject to division (C) of this section, any 381
additional provision permitted by this chapter. 382
(C) Original articles of a corporation may not set forth 384
any provision that eliminates the rights of shareholders under 385
this chapter to cumulate the voting power that they possess in 386
the election of directors. 387
(D) A written appointment of a statutory agent for the 389
purposes set forth in section 1701.07 of the Revised Code shall 390
be filed with the articles, unless the corporation belongs to one 391
of the classes mentioned in division (O) of that section. 392
(E) The legal existence of the corporation shall begin 394
upon the filing of the articles, and, unless the articles 395
otherwise provide, its period of existence shall be perpetual. 396
Sec. 1701.06. (A) The express terms of shares may include 405
statements specifying ANY OF THE FOLLOWING: 406
(1) Dividend or distribution rights, which may be: 408
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cumulative or noncumulative; at a specified rate, amount, or 409
proportion; with or without further participation rights; and in 410
preference to, junior to, or on a parity in whole or in part with 411
dividend or distribution rights of shares of any other class; 412
(2) Liquidation rights, preferences, and price; 414
(3) Redemption rights and price; 416
(4) Sinking fund retirements REQUIREMENTS, which may 418
require the corporation to provide a sinking fund out of earnings 420
or otherwise for the purchase or redemption of such THE shares or 421
for dividends or distributions on them; 423
(5) Voting rights, which may be full, limited, or denied, 425
except as otherwise required by law; 426
(6) Pre-emptive rights, or the denial or limitation of 428
them; 429
(7) Conversion rights; 431
(8) Restrictions on the issuance of shares; 433
(9) Rights of alteration of express terms; 435
(10) The division of any class of shares into series; 437
(11) The designation and authorized number of shares of 439
each series; 440
(12) The right of the directors, subject to such ANY 442
limitations as THAT may be stated, to adopt amendments to the 443
articles in respect of any unissued or treasury shares of any 445
class and thereby to fix or change: the division of such shares 446
into series and the designation and authorized number of shares 447
of each series; the dividend or distribution rate; the dates of 448
payment of dividends or distributions and the dates from which 449
they are cumulative; liquidation price; redemption rights and 450
price; sinking fund requirements; conversion rights; and 451
restrictions on the issuance of shares of any class or series 452
DETERMINING, IN WHOLE OR IN PART, THE EXPRESS TERMS, WITHIN THE 454
LIMITS SET FORTH IN THIS CHAPTER, OF ANY CLASS OF SHARES BEFORE 455
THE ISSUANCE OF ANY SHARES OF THAT CLASS, OR OF ONE OR MORE 456
SERIES WITHIN A CLASS BEFORE THE ISSUANCE OF ANY SHARES OF THAT 457
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SERIES;
(13) Any other relative, participating, optional, or other 459
special rights and privileges of, and qualifications or 460
restrictions on, the rights of holders of shares of any class or 461
series. 462
(B) The express terms of shares of different series of any 464
particular class shall be identical, except that there may be 465
variations in respect of: the dividend or distribution rate; the 466
dates of payment of dividends or distributions and the dates from 467
which they are cumulative; redemption rights and price; 468
liquidation price; sinking fund requirements; conversion rights; 469
and restrictions on the issuance of shares of the same series or 470
of any other class or series EACH SERIES OF A CLASS SHALL BE 471
GIVEN A DISTINGUISHING DESIGNATION. ALL SHARES OF A SERIES SHALL 473
HAVE EXPRESS TERMS IDENTICAL WITH THOSE OF OTHER SHARES OF THE 474
SAME SERIES. ANY OF THE EXPRESS TERMS OF ANY CLASS OR SERIES OF 475
SHARES MAY BE MADE DEPENDENT UPON FACTS ASCERTAINABLE OUTSIDE THE 476
ARTICLES OR ANY AMENDMENT TO THOSE ARTICLES, PROVIDED THAT THE 477
MANNER IN WHICH THE FACTS OPERATE UPON THE EXPRESS TERMS IS SET 478
FORTH IN THE ARTICLES OR ANY AMENDMENT TO THOSE ARTICLES. 479
Sec. 1701.09. (A) After the articles have been filed, the 488
incorporators or a majority of them shall MAY receive 489
subscriptions for shares at such time and place as THAT they may 491
determine.
(B) Unless the articles fix the consideration for which 493
subscriptions are to be received, ALL OF THE FOLLOWING APPLY: 494
(1) If subscriptions are to be received for shares without 496
par value, the incorporators shall fix the consideration for 497
which they will receive subscriptions for such shares. 498
(2) If subscriptions are to be received for shares with 500
par value, the consideration for the shares shall be the par 501
value or such THE greater consideration as THAT the incorporators 503
fix.
(3) If any subscriptions are to be payable otherwise than 505
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in money, the incorporators may determine the fair value to the 506
corporation of the consideration for such THE shares. 507
(C) No subscriptions for shares shall be received by the 509
incorporators IF THE ARTICLES NAME THE INITIAL DIRECTORS OR after 510
THE MEETING OF THE SHAREHOLDERS OR INCORPORATORS AT WHICH the 511
INITIAL election of directors OCCURS. 512
(D) The failure of incorporators of a corporation formed 514
or attempted to be formed under the laws of this state then in 515
effect to file in the office of the secretary of state a 516
certificate of subscripion SUBSCRIPTION required by such THOSE 517
laws to be filed does not make the existence of said THE 518
corporation or any of its acts subject to question. 519
Sec. 1701.10. (A) AFTER INCORPORATION, ALL OF THE 521
FOLLOWING APPLY: 522
(1) IF THE INITIAL DIRECTORS ARE NAMED IN THE ARTICLES, 524
THE INITIAL DIRECTORS SHALL HOLD AN ORGANIZATIONAL MEETING, AT 525
THE CALL OF A MAJORITY OF THE DIRECTORS, TO COMPLETE THE 526
ORGANIZATION OF THE CORPORATION BY RECEIVING SUBSCRIPTIONS, 527
APPOINTING OFFICERS, ADOPTING REGULATIONS, AND CARRYING ON ANY 528
OTHER BUSINESS BROUGHT BEFORE THE MEETING. 529
(2) IF THE INITIAL DIRECTORS ARE NOT NAMED IN THE 531
ARTICLES, THE INCORPORATOR OR INCORPORATORS EITHER SHALL RECEIVE 532
SUBSCRIPTIONS AS PROVIDED IN DIVISION (A) OF SECTION 1701.09 OF 534
THE REVISED CODE OR SHALL HOLD AN ORGANIZATIONAL MEETING AT THE 536
CALL OF A MAJORITY OF THE INCORPORATORS TO ELECT DIRECTORS WHO 537
SHALL COMPLETE THE ORGANIZATION OF THE CORPORATION AS PROVIDED IN 538
DIVISION (A)(1) OF THIS SECTION. IF SUBSCRIPTIONS FOR SHARES ARE 539
RECEIVED BY THE INCORPORATORS, THE INCORPORATORS, OR A MAJORITY 540
OF THEM, SHALL GIVE NOT LESS THAN SEVEN DAYS' WRITTEN NOTICE TO 541
THE SHAREHOLDERS, UNLESS WRITTEN NOTICE IS WAIVED BY THE 542
SHAREHOLDERS, TO MEET AT A SPECIFIED TIME AND PLACE FOR THE 543
PURPOSES OF ADOPTING REGULATIONS, ELECTING DIRECTORS, AND 544
TRANSACTING ANY OTHER BUSINESS. THE SHAREHOLDERS SHALL MEET FOR 545
THOSE PURPOSES AT THE TIME AND PLACE SPECIFIED. 546
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(3) NOTWITHSTANDING DIVISIONS (A)(1) AND (2) OF THIS 548
SECTION, IF REGULATIONS HAVE NOT BEEN ADOPTED WITHIN NINETY DAYS 549
AFTER THE FORMATION OF THE CORPORATION, REGULATIONS MAY BE 550
ADOPTED ONLY BY THE SHAREHOLDERS IN EITHER OF THE FOLLOWING WAYS: 551
(a) AT A MEETING OF SHAREHOLDERS CALLED FOR THAT PURPOSE 554
BY THE DIRECTORS OR, IF NO DIRECTORS HAVE BEEN NAMED IN THE 555
ARTICLES OR ELECTED, AT A MEETING OF SHAREHOLDERS CALLED FOR THAT 556
PURPOSE BY AT LEAST A MAJORITY OF THE INCORPORATORS. THE 557
DIRECTORS OR INCORPORATORS SHALL GIVE NOT LESS THAN SEVEN DAYS' 558
WRITTEN NOTICE TO THE SHAREHOLDERS, UNLESS WRITTEN NOTICE IS 559
WAIVED BY THE SHAREHOLDERS, TO MEET AT A SPECIFIED TIME AND PLACE 560
FOR THE PURPOSES OF ADOPTING REGULATIONS AND TRANSACTING ANY 561
OTHER BUSINESS;
(b) WITHOUT A MEETING, BY THE WRITTEN CONSENT OF THE 564
HOLDERS OF SHARES ENTITLING THEM TO EXERCISE TWO-THIRDS OF THE 565
VOTING POWER ON THE PROPOSAL.
(4) IN NO EVENT MAY THE DIRECTORS TAKE ANY ACTION TO ADOPT 569
OR AMEND REGULATIONS AFTER THE SHAREHOLDERS HAVE ADOPTED
REGULATIONS. 570
(B) ACTION REQUIRED OR PERMITTED BY THIS CHAPTER TO BE 573
TAKEN BY THE INCORPORATORS AT AN ORGANIZATIONAL MEETING MAY BE 574
TAKEN WITHOUT A MEETING IF THE ACTION TAKEN IS EVIDENCED BY ONE 575
OR MORE WRITTEN CONSENTS DESCRIBING THE ACTION TAKEN AND SIGNED 576
BY EACH INCORPORATOR. 577
(C) AN ORGANIZATIONAL MEETING MAY BE HELD IN OR OUT OF 580
THIS STATE.
Sec. 1701.11. (A)(1) Regulations for the government of a 589
corporation, the conduct of its affairs, and the management of 590
its property, consistent with law and the articles, may be 591
adopted by IN ANY OF THE FOLLOWING WAYS: 592
(a) WITHIN NINETY DAYS AFTER THE CORPORATION IS FORMED, BY 594
THE DIRECTORS IN ACCORDANCE WITH SECTION 1701.10 OF THE REVISED 595
CODE;
(b) BY the shareholders at a meeting held for that 597
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purpose, by the affirmative vote of the holders of shares 598
entitling them to exercise a majority of the voting power of the 599
corporation on the proposal, or may be adopted without; 600
(c) WITHOUT a meeting, by the written consent of the 603
holders of shares entitling them to exercise two-thirds of the
voting power OF THE CORPORATION on the proposal; and the. 604
(2) THE regulations may be amended, or new regulations may 606
be adopted, in like manner and by like vote or consent, or, if 607
EITHER OF THE FOLLOWING WAYS: 608
(a) BY THE SHAREHOLDERS AT A MEETING HELD FOR THAT 611
PURPOSE, BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF SHARES 612
ENTITLING THEM TO EXERCISE A MAJORITY OF THE VOTING POWER OF THE 613
CORPORATION ON THE PROPOSAL;
(b) WITHOUT A MEETING, BY THE WRITTEN CONSENT OF THE 616
HOLDERS OF SHARES ENTITLING THEM TO EXERCISE TWO-THIRDS OF THE 617
VOTING POWER OF THE CORPORATION ON THE PROPOSAL. 618
(3) IF the articles or the regulations THAT HAVE BEEN 621
ADOPTED so provide or permit, REGULATIONS MAY BE ADOPTED OR 622
AMENDED OR NEW REGULATIONS MAY BE ADOPTED by the affirmative vote 623
or written consent of the holders of shares entitling them to 624
exercise a greater or lesser proportion but not less than a
majority of the voting power OF THE CORPORATION. 625
(B) Without limiting the generality of the authority 627
described in division (A) of this section, the regulations may 628
include provisions with respect to ALL OF THE FOLLOWING: 629
(1) The time and place for holding, the manner of and 631
authority for calling, giving notice of, and conducting, and the 632
requirements of a quorum for, meetings of shareholders; 633
(2) The taking of a record of shareholders or the 635
temporary closing of books against transfers of shares; 636
(3) The number, classification, manner of fixing or 638
changing the number, qualifications, term of office, and 639
compensation or manner of fixing compensation, of directors; 640
(4) The time and place for holding, the manner of and 642
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authority for calling, giving notice of, and conducting, and the 643
requirements of a quorum for, meetings of the directors; 644
(5) The appointment of an executive and other committees 646
of the directors, and their authority; 647
(6) The titles, qualifications, duties, term of office, 649
compensation or manner of fixing compensation, and the removal, 650
of officers; 651
(7) The terms on which new certificates for shares may be 653
issued in the place of lost, stolen, or destroyed certificates; 654
(8) The manner in which and conditions upon which a 656
certificated security, and the conditions upon which an 657
uncertificated security, and the shares represented by a 658
certificated or uncertificated security, may be transferred, 659
restrictions on the right to transfer the shares, and 660
reservations of liens on the shares.; 661
(9)(a) Restrictions on the transfer and the right to 663
transfer shares of either of the following: 664
(i) An issuing public corporation to any person in a 666
control share acquisition; 667
(ii) A corporation with fifty or more shareholders to any 669
person in an acquisition that would be a control share 670
acquisition if the corporation were an issuing public 671
corporation. 672
(b) The restrictions on the transfer and the right to 674
transfer shares described in division (B)(9)(a)(i) and (ii) of 675
this section may include requirements and procedures for consent 676
to such an acquisition OF THE SHARES by directors based on a 677
determination by the directors of the best interests of the 679
corporation and its shareholders, consent to such an acquisition 680
OF THE SHARES by shareholders, and reasonable sanctions for a 682
violation of such THOSE requirements, including the right of the 683
corporation to refuse to transfer, to redeem, or to deny voting 684
or other shareholder rights appurtenant to shares acquired in 685
such an acquisition OF THE SHARES.
16
(10) Defining, limiting, or regulating the exercise of the 687
authority of the corporation, the directors, the officers, or all 688
the shareholders. 689
(C) The shareholders of a corporation may adopt and may 691
authorize the directors to adopt, either before or during an 692
emergency, as that term is defined in division (U) of section 693
1701.01 of the Revised Code, emergency regulations which THAT 694
shall be operative only during an emergency. The emergency 696
regulations may include such ANY provisions as THAT are 697
authorized to be included in regulations by divisions (A) and (B) 699
of this section. In addition, unless expressly prohibited by the 700
articles or the regulations, the emergency regulations may make 701
any provision, notwithstanding any different provisions in 702
sections 1701.01 to 1701.98 of the Revised Code THIS CHAPTER and 703
notwithstanding any different provisions in the articles or the 705
regulations that are not expressly stated to be operative during 706
an emergency, that may be practical or necessary with respect to 707
the following:
(1) The time and place for holding, the manner of and 709
authority for calling, giving notice of, and conducting, and the 710
requirements of a quorum for, meetings of the directors; 711
(2) The creation and appointment of an executive and other 713
committees of the directors and the delegation of authority to 714
the committees by the board; 715
(3) The creation, existence, and filling of vacancies, 717
including temporary vacancies, in the office of director; 718
(4) The selection, by appointment, election, or otherwise, 720
of officers and other persons to serve as directors for a meeting 721
of the board in the absence from the meeting of one or more of 722
the directors; 723
(5) The creation, existence, and filling of vacancies, 725
including temporary vacancies, in any office; 726
(6) The order of rank and the succession to the duties and 728
authority of officers. 729
17
(D) If the regulations are amended or new regulations are 731
adopted, without a meeting of the shareholders, the secretary of 732
the corporation shall mail a copy of the amendment or the new 733
regulations to each shareholder who would have been entitled to 734
vote on the adoption of the amendment or the new regulations and 735
did not participate in the adoption of the amendment or the new 736
regulations. 737
(E) No person dealing with the corporation shall be 739
charged with constructive notice of the regulations. 740
(F) Unless expressly prohibited by the articles or the 742
regulations or unless otherwise provided by the emergency 743
regulations, the following special rules shall be applicable 744
during an emergency notwithstanding any different provision 745
elsewhere in sections 1701.01 to 1701.98 of the Revised Code THIS 746
CHAPTER: 747
(1) Meetings of the directors may be called by any officer 749
or director. 750
(2) Notice of the time and place of each meeting of the 752
directors shall be given to such of the directors as it may be 753
feasible to reach at the time and by such THE means of 754
communication, written or oral, personal or mass, as may be 756
practicable at the time. 757
(3) The director or directors present at any meeting of 759
the directors that has been duly called and notice of which has 760
been duly given shall constitute a quorum for the meeting, and, 761
in the absence of one or more of the directors, the director or 762
directors present may appoint one or more of the officers of the 763
corporation directors for the meeting. 764
(4) If none of the directors attends a meeting of the 766
directors that has been duly called and notice of which has been 767
duly given, the officers of the corporation who are present, not 768
exceeding three, in order of rank, shall be directors for the 769
meeting, shall constitute a quorum for the meeting, and may 770
appoint one or more of the other officers of the corporation 771
18
directors for the meeting. 772
(5) If the chief executive officer dies, is missing, or 774
for any other reason is temporarily or permanently incapable of 775
discharging the duties of his THE office, the next ranking 776
officer who is available shall assume the duties and authority of 778
the office of the deceased, missing, or incapacitated chief 779
executive officer until such time as the directors shall 780
otherwise order.
(6) The offices of secretary and treasurer shall be deemed 782
to be of equal rank, and, within the same office and as between 783
the offices of secretary and treasurer, rank shall be determined 784
by priority in time of the first election to the office or, if 785
two or more persons shall have been first elected to the office 786
at the same time, by seniority in age. 787
Sec. 1701.13. (A) A corporation may sue and be sued. 796
(B) A corporation may adopt and alter a corporate seal and 798
use the same or a facsimile of the corporate seal, but failure to 800
affix the corporate seal shall not affect the validity of any 801
instrument.
(C) At the request or direction of the United States 803
government or any agency of the United States government, a 804
corporation may transact any lawful business in aid of national 805
defense or in the prosecution of any war in which the nation is 806
engaged. 807
(D) Unless otherwise provided in the articles, a 809
corporation may take property of any description, or any interest 810
in property, by gift, devise, or bequest, and may make donations 811
for the public welfare or for charitable, scientific, or 812
educational purposes. 813
(E)(1) A corporation may indemnify or agree to indemnify 815
any person who was or is a party, or is threatened to be made a 816
party, to any threatened, pending, or completed action, suit, or 817
proceeding, whether civil, criminal, administrative, or 818
investigative, other than an action by or in the right of the 819
19
corporation, by reason of the fact that he THE PERSON is or was a 821
director, officer, employee, or agent of the corporation, or is 822
or was serving at the request of the corporation as a director, 823
trustee, officer, employee, member, manager, or agent of another 824
corporation, domestic or foreign, nonprofit or for profit, a 826
limited liability company, or a partnership, joint venture, 827
trust, or other enterprise, against expenses, including 828
attorney's fees, judgments, fines, and amounts paid in settlement 829
actually and reasonably incurred by him THE PERSON in connection 830
with such action, suit, or proceeding, if he THE PERSON acted in 832
good faith and in a manner he THE PERSON reasonably believed to 834
be in or not opposed to the best interests of the corporation, 836
and, with respect to any criminal action or proceeding, if he THE 837
PERSON had no reasonable cause to believe his THE PERSON'S 838
conduct was unlawful. The termination of any action, suit, or 839
proceeding by judgment, order, settlement, or conviction, or upon 840
a plea of nolo contendere or its equivalent, shall not, of 841
itself, create a presumption that the person did not act in good 842
faith and in a manner he THE PERSON reasonably believed to be in 843
or not opposed to the best interests of the corporation, and, 845
with respect to any criminal action or proceeding, he THE PERSON 846
had reasonable cause to believe that his THE PERSON'S conduct was 848
unlawful.
(2) A corporation may indemnify or agree to indemnify any 850
person who was or is a party, or is threatened to be made a 851
party, to any threatened, pending, or completed action or suit by 852
or in the right of the corporation to procure a judgment in its 853
favor, by reason of the fact that he THE PERSON is or was a 854
director, officer, employee, or agent of the corporation, or is 856
or was serving at the request of the corporation as a director, 857
trustee, officer, employee, member, manager, or agent of another 858
corporation, domestic or foreign, nonprofit or for profit, a 860
limited liability company, or a partnership, joint venture, 861
trust, or other enterprise, against expenses, including 862
20
attorney's fees, actually and reasonably incurred by him THE 863
PERSON in connection with the defense or settlement of such 865
action or suit, if he THE PERSON acted in good faith and in a 867
manner he THE PERSON reasonably believed to be in or not opposed 869
to the best interests of the corporation. HOWEVER, except that 870
no indemnification shall be made in respect of any EITHER of the 871
following UNLESS, AND ONLY TO THE EXTENT THAT, THE COURT OF 872
COMMON PLEAS OR THE COURT IN WHICH THE ACTION OR SUIT WAS BROUGHT 873
DETERMINES, UPON APPLICATION, THAT, DESPITE THE ADJUDICATION OF 874
LIABILITY, BUT IN VIEW OF ALL THE CIRCUMSTANCES OF THE CASE, THE 875
PERSON IS FAIRLY AND REASONABLY ENTITLED TO INDEMNITY FOR THE 876
EXPENSES THAT THE COURT OF COMMON PLEAS OR OTHER COURT DETERMINES 878
TO BE PROPER:
(a) Any claim, issue, or matter as to which such THE 880
person is adjudged to be liable IN DAMAGES for negligence or 881
misconduct in the performance of his THE PERSON'S duty to the 882
corporation unless, and only to the extent that, the court of 884
common pleas or the court in which such action or suit was 885
brought determines, upon application, that, despite the 886
adjudication of liability, but in view of all the circumstances 887
of the case, such person is fairly and reasonably entitled to 888
indemnity for such expenses as the court of common pleas or such 889
other court shall deem proper;
(b) Any action or suit in which the only liability 891
asserted against a director is pursuant to ADJUDGED TO BE LIABLE 892
IN DAMAGES UNDER DIVISION (D) OF section 1701.95 1701.59 of the 894
Revised Code.
(3) To the extent that a director, trustee, officer, 896
employee, member, manager, or agent has been successful on the 897
merits or otherwise in defense of any action, suit, or proceeding 898
referred to in division (E)(1) or (2) of this section, or in 899
defense of any claim, issue, or matter therein, he THE PERSON 900
shall be indemnified against expenses, including attorney's fees, 902
actually and reasonably incurred by him THE PERSON in connection 903
21
with the action, suit, or proceeding. 904
(4) Any indemnification under division (E)(1) or (2) of 906
this section, unless ordered by a court, shall be made by the 907
corporation only as authorized in the specific case, upon a 908
determination that indemnification of the director, trustee, 909
officer, employee, member, manager, or agent is proper in the 910
circumstances because he THE PERSON has met the applicable 911
standard of conduct set forth in division (E)(1) or (2) of this 913
section. Such determination shall be made as follows: 914
(a) By a majority vote of a quorum consisting of directors 916
of the indemnifying corporation who were not and are not parties 917
to or threatened with the action, suit, or proceeding referred to 918
in division (E)(1) or (2) of this section; 919
(b) If the quorum described in division (E)(4)(a) of this 921
section is not obtainable or if a majority vote of a quorum of 922
disinterested directors so directs, in a written opinion by 923
independent legal counsel other than an attorney, or a firm 924
having associated with it an attorney, who has been retained by 925
or who has performed services for the corporation or any person 926
to be indemnified within the past five years; 927
(c) By the shareholders; 929
(d) By the court of common pleas or the court in which the 932
action, suit, or proceeding referred to in division (E)(1) or (2)
of this section was brought. 933
Any determination made by the disinterested directors under 935
division (E)(4)(a) or by independent legal counsel under division 936
(E)(4)(b) of this section shall be promptly communicated to the 937
person who threatened or brought the action or suit by or in the 938
right of the corporation under division (E)(2) of this section, 939
and, within ten days after receipt of such notification, such THE 941
person shall have the right to petition the court of common pleas
or the court in which such THE action or suit was brought to 942
review the reasonableness of such THE determination. 943
(5)(a) Unless at the time of a director's act or omission 945
22
that is the subject of an action, suit, or proceeding referred to 946
in division (E)(1) or (2) of this section, the articles or the 947
regulations of a corporation state, by specific reference to this 948
division, that the provisions of this division do not apply to 949
the corporation and unless the only liability asserted against a 950
director in an action, suit, or proceeding referred to in 951
division (E)(1) or (2) of this section is pursuant to section 952
1701.95 of the Revised Code, expenses, including attorney's fees, 953
incurred by a director in defending the action, suit, or 954
proceeding shall be paid by the corporation as they are incurred, 955
in advance of the final disposition of the action, suit, or 956
proceeding, upon receipt of an undertaking by or on behalf of the 957
director in which he THE DIRECTOR agrees to do both of the 958
following: 959
(i) Repay such THE amount if it is proved by clear and 961
convincing evidence in a court of competent jurisdiction that his 962
THE DIRECTOR'S action or failure to act involved an act or 963
omission undertaken with deliberate intent to cause injury to the 965
corporation or undertaken with reckless disregard for the best 966
interests of the corporation; 967
(ii) Reasonably cooperate with the corporation concerning 969
the action, suit, or proceeding. 970
(b) Expenses, including attorney's fees, incurred by a 972
director, trustee, officer, employee, member, manager, or agent 973
in defending any action, suit, or proceeding referred to in 975
division (E)(1) or (2) of this section, may be paid by the 976
corporation as they are incurred, in advance of the final 977
disposition of the action, suit, or proceeding, as authorized by 978
the directors in the specific case, upon receipt of an 979
undertaking by or on behalf of the director, trustee, officer, 980
employee, member, manager, or agent to repay such amount, if it 982
ultimately is determined that he THE PERSON is not entitled to be 984
indemnified by the corporation.
(6) The indemnification authorized by this section shall 986
23
not be exclusive of, and shall be in addition to, any other 987
rights granted to those seeking indemnification under the 988
articles, the regulations, any agreement, a vote of shareholders 990
or disinterested directors, or otherwise, both as to action in 991
their official capacities and as to action in another capacity 992
while holding their offices or positions, and shall continue as
to a person who has ceased to be a director, trustee, officer, 993
employee, member, manager, or agent and shall inure to the 994
benefit of the heirs, executors, and administrators of such a 996
person.
(7) A corporation may purchase and maintain insurance or 998
furnish similar protection, including, but not limited to, trust 999
funds, letters of credit, or self-insurance, on behalf of or for 1,000
any person who is or was a director, officer, employee, or agent 1,001
of the corporation, or is or was serving at the request of the 1,002
corporation as a director, trustee, officer, employee, member, 1,003
manager, or agent of another corporation, domestic or foreign, 1,005
nonprofit or for profit, a limited liability company, or a 1,006
partnership, joint venture, trust, or other enterprise, against 1,008
any liability asserted against him THE PERSON and incurred by him 1,009
THE PERSON in any such capacity OF THOSE CAPACITIES, or arising 1,010
out of his THE PERSON'S status as such, whether or not the 1,013
corporation would have the power to indemnify him THE PERSON 1,014
against such liability under this section. Insurance may be
purchased from or maintained with a person in which the 1,015
corporation has a financial interest. 1,016
(8) The authority of a corporation to indemnify persons 1,018
pursuant to division (E)(1) or (2) of this section does not limit 1,020
the payment of expenses as they are incurred, indemnification, 1,021
insurance, or other protection that may be provided pursuant to 1,022
divisions (E)(5), (6), and (7) of this section. Divisions (E)(1) 1,023
and (2) of this section do not create any obligation to repay or 1,024
return payments made by the corporation pursuant to division 1,025
(E)(5), (6), or (7).
24
(9) As used in division (E) of this section, "corporation" 1,027
includes all constituent entities in a consolidation or merger 1,029
and the new or surviving corporation, so that any person who is 1,030
or was a director, officer, employee, trustee, member, manager,
or agent of such a constituent entity, or is or was serving at 1,032
the request of such constituent entity as a director, trustee, 1,033
officer, employee, member, manager, or agent of another 1,034
corporation, domestic or foreign, nonprofit or for profit, a 1,036
limited liability company, or a partnership, joint venture, 1,037
trust, or other enterprise, shall stand in the same position 1,038
under this section with respect to the new or surviving 1,039
corporation as he THE PERSON would if he THE PERSON had served 1,041
the new or surviving corporation in the same capacity. 1,042
(F) In carrying out the purposes stated in its articles 1,044
and subject to limitations prescribed by law or in its articles, 1,045
a corporation may DO ANY OF THE FOLLOWING: 1,046
(1) Purchase or otherwise acquire, lease as lessee, invest 1,048
in, hold, use, lease as lessor, encumber, sell, exchange, 1,049
transfer, and dispose of property of any description or any 1,050
interest in such property OF ANY DESCRIPTION; 1,051
(2) Make contracts; 1,053
(3) Form or acquire the control of other corporations, 1,055
domestic or foreign, whether nonprofit or for profit; 1,056
(4) Be a partner, member, associate, or participant in 1,058
other enterprises or ventures, whether FOR profit or nonprofit; 1,059
(5) Conduct its affairs in this state and elsewhere; 1,061
(6) Borrow money, and issue, sell, and pledge its notes, 1,063
bonds, and other evidences of indebtedness, and secure any of its 1,064
obligations by mortgage, pledge, or deed of trust of all or any 1,065
of its property, and guarantee or secure obligations of any 1,066
person; 1,067
(7) Resist a change or potential change in control of the 1,069
corporation if the directors by a majority vote of a quorum 1,070
determine that the change or potential change is opposed to or 1,071
25
not in the best interests of the corporation IN EITHER OF THE 1,072
FOLLOWING MANNERS: 1,073
(a) Upon consideration of the interests of the 1,075
corporation's shareholders and any of the matters set forth in 1,076
division (E) of section 1701.59 of the Revised Code; or 1,077
(b) Because the amount or nature of the indebtedness and 1,079
other obligations to which the corporation or any successor or 1,080
the property of either may become subject in connection with the 1,081
change or potential change in control provides reasonable grounds 1,082
to believe that, within a reasonable period of time, any of the 1,083
following would apply: 1,084
(i) The assets of the corporation or any successor would 1,086
be or become less than its liabilities plus its stated capital, 1,087
if any; 1,088
(ii) The corporation or any successor would be or become 1,090
insolvent; 1,091
(iii) Any voluntary or involuntary proceeding under the 1,093
federal bankruptcy laws concerning the corporation or any 1,094
successor would be commenced by any person. 1,095
(8) Do all things permitted by law and exercise all 1,097
authority within the purposes stated in its articles or 1,098
incidental to its articles. 1,099
(G) Irrespective of the purposes stated in its articles, 1,101
but subject to limitations stated in its articles, a corporation, 1,102
in addition to the authority conferred by division (F) of this 1,103
section, may invest its funds not currently needed in its 1,104
business in any shares or other securities, to such extent that 1,105
as a result of the investment the corporation shall not acquire 1,106
control of another corporation, business, or undertaking the 1,107
activities and operations of which are not incidental to the 1,108
purposes stated in its articles. 1,109
(H)(1) No lack of, or limitation upon, the authority of a 1,111
corporation shall be asserted in any action except (1) by AS 1,112
FOLLOWS: 1,113
26
(a) BY the state in an action by it against the 1,116
corporation, (2) by;
(b) BY or on behalf of the corporation against a director, 1,119
an officer, or any shareholder as such, (3) by A DIRECTOR, 1,120
OFFICER, OR SHAREHOLDER;
(c) BY a shareholder as such or by or on behalf of the 1,123
holders of shares of any class against the corporation, OR a 1,124
director, an officer, or any shareholder as such, or (4) in A 1,125
DIRECTOR, OFFICER, OR SHAREHOLDER;
(d) IN an action involving an alleged overissue of shares. 1,127
This division 1,128
(2) DIVISION (H)(1) OF THIS SECTION shall apply to any 1,131
action brought in this state upon any contract made in this state 1,132
by a foreign corporation.
Sec. 1701.15. (A) Unless otherwise provided in THE 1,141
SHAREHOLDERS OF A CORPORATION DO NOT HAVE A PRE-EMPTIVE RIGHT TO 1,142
ACQUIRE THE CORPORATION'S UNISSUED SHARES EXCEPT TO THE EXTENT 1,143
THE ARTICLES SO PROVIDE. IF the articles, PROVIDE THAT the 1,144
holders of the shares of any class, other than shares which THAT 1,146
are limited as to dividend or distribution rate and liquidation 1,148
price, shall HAVE PRE-EMPTIVE RIGHTS, THOSE HOLDERS, upon the 1,150
offering or sale for cash of shares of the same class, SHALL have 1,152
the right, during a reasonable time and on reasonable terms fixed 1,153
by the directors, to purchase such THE shares in proportion to 1,154
their respective holdings of shares of such class, at a price 1,156
fixed as provided in sections 1701.01 to 1701.98 of the Revised 1,157
Code THIS CHAPTER, unless the shares offered or sold are IN ANY 1,158
OF THE FOLLOWING CATEGORIES:
(1) Treasury shares; 1,160
(2) Issued as a share dividend or distribution; 1,162
(3) Issued or agreed to be issued for considerations other 1,164
than money; 1,165
(4) Issued or agreed to be issued upon exercise of options 1,167
granted and authorized in accordance with section 1701.16 of the 1,168
27
Revised Code; 1,169
(5) Issued or agreed to be issued upon conversion of 1,171
convertible shares authorized in the articles, or upon exercise 1,172
of conversion rights conferred and authorized in accordance with 1,173
section 1701.22 of the Revised Code; 1,174
(6) Offered to shareholders in satisfaction of their 1,176
pre-emptive rights and not purchased by such shareholders, and 1,178
thereupon issued or agreed to be issued for a consideration not 1,179
less than that at which such THE shares were so offered to such 1,180
shareholders, less reasonable expenses, compensation, or discount 1,181
paid or allowed for the sale, underwriting, or purchase of such 1,182
THE shares, unless by the affirmative vote or written order of 1,184
the holders of two-thirds of the shares otherwise entitled to 1,185
such THE pre-emptive rights, the pre-emptive rights are restored 1,186
as to any of such THE shares not theretofore PREVIOUSLY issued or 1,188
agreed to be issued;
(7) Released from pre-emptive rights by the affirmative 1,190
vote or written consent of the holders of two-thirds of the 1,191
shares entitled to such THE pre-emptive rights. Any such vote or 1,193
consent shall be entered in the records of the corporation and
shall be binding on all shareholders and their transferees for 1,194
the time specified in such THE vote or consent up to but not 1,195
exceeding one year, and shall protect all persons who within such 1,196
THAT time acquire the shares or options on or conversion or other 1,197
rights with respect to the shares so released; 1,198
(8) Released from pre-emptive rights by the affirmative 1,200
vote or written consent of the holders of a majority of the 1,201
shares entitled to such THE pre-emptive rights, for offering and 1,202
sale, or the grant of options with respect thereto, to any or all 1,203
employees of the corporation or of subsidiary corporations or to 1,204
a trustee on their behalf, under a plan adopted or to be adopted 1,205
by the directors for that purpose. 1,206
(B) No action shall be brought upon any cause of action 1,208
arising under division (A) of this section at any time after two 1,209
28
years from the day on which a written notice or other 1,210
communication is given or mailed to each shareholder having such 1,211
a THE cause of action informing the shareholder of the 1,212
transaction giving rise thereto TO THE CAUSE OF ACTION, and no 1,213
action shall in any event be brought upon any such cause of 1,215
action OF THAT NATURE at any time after four years from the day 1,217
on which such THE cause of action arose, or from the effective 1,218
date of this provision, whichever is the later.
(C) THE PROVISIONS OF DIVISION (A) OF THIS SECTION AS THEY 1,221
EXISTED PRIOR TO THE EFFECTIVE DATE OF THIS AMENDMENT, SHALL 1,222
CONTINUE TO APPLY TO ANY CORPORATION INCORPORATED PRIOR TO THE 1,224
EFFECTIVE DATE OF THIS AMENDMENT, UNTIL THE SHAREHOLDERS OF THE
CORPORATION ADOPT AN AMENDMENT TO ITS ARTICLES EXPRESSLY 1,225
PROVIDING THAT THE PROVISIONS OF DIVISION (A) OF THIS SECTION 1,227
THAT TAKE EFFECT ON THE EFFECTIVE DATE OF THIS AMENDMENT APPLY TO 1,229
THE CORPORATION OR AMENDED ARTICLES OF INCORPORATION.
Sec. 1701.18. (A) Except as provided in the case of 1,238
change of shares, share dividends or distributions, 1,239
reorganization, merger, consolidation, combination, or conversion 1,240
of shares or obligations into shares, THE FOLLOWING APPLY: 1,241
(1) Payment for shares shall be made with money or other 1,243
property of any description, or any interest therein IN PROPERTY, 1,245
actually transferred to the corporation, or labor or services 1,246
actually rendered to the corporation. 1,247
(2) In the case of shares with par value, other than 1,249
treasury shares, said THE consideration shall be not less than 1,250
the par value of the shares, provided that such THE shares may be 1,252
sold and paid for at such a discount from the par value of the 1,254
shares as THAT would amount to or not exceed reasonable 1,255
compensation for the sale, underwriting, or purchase of such THE 1,257
shares, and, regardless of such THE discount such, THE shares 1,259
shall be deemed to be fully paid. 1,260
(3) In the case of treasury shares with par value, the 1,262
consideration may be less than the par value of the shares. 1,263
29
(B) Promissory notes, drafts, or other obligations of a 1,265
subscriber or purchaser do not constitute payment for shares. 1,266
(C) An agreement by a person to perform services as the 1,268
consideration for shares does not, of itself, constitute such THE 1,270
person a shareholder or AND DOES NOT, OF ITSELF, CONSTITUTE 1,271
payment for such shares prior to the performance of such THE 1,272
services.
(D) Except in the case of convertible shares or 1,274
obligations, shares with par value shall not be issued or 1,275
disposed of upon change of shares, share dividends or 1,276
distributions, reorganization, merger, consolidation, exchange of 1,277
shares for other shares or securities, or otherwise, if as a 1,278
result thereof the aggregate liabilities of the corporation plus 1,280
its stated capital would exceed its aggregate assets or any such 1,281
existing excess would be increased. 1,282
(E) When shares have been issued as provided in sections 1,284
1701.01 to 1701.98 of the Revised Code THIS CHAPTER, in the case 1,285
of change of shares, share dividends or distributions, 1,287
reorganization, merger, consolidation, or conversion of shares or 1,288
obligations into shares, or when shares have been paid for in 1,289
conformity with this section, such shares shall be deemed fully 1,290
paid and nonassessable. 1,291
(F) Every person who subscribes for or purchases shares of 1,293
a corporation is liable to the corporation to pay or deliver to 1,294
the corporation the consideration agreed upon, and, except as 1,295
provided in division (A) of this section, if such THE shares are 1,296
with par value, such THE person is obligated to pay to the 1,297
corporation therefor FOR THE SHARES in money or other property or 1,299
services the full par value of the shares. THE PERSON IS NOT 1,301
LIABLE TO THE CORPORATION OR ITS CREDITORS IN ANY OTHER AMOUNT. 1,302
(G) Every holder, whether the original or a transferee, of 1,304
shares not paid for as provided in this section, who has acquired 1,305
them with actual knowledge of that fact, is personally liable to 1,306
the corporation for the amount unpaid on the shares, and his THE 1,307
30
HOLDER'S liability shall continue notwithstanding any transfer of 1,309
such THE shares, until such THE shares are paid in full; but no 1,311
holder who has acquired such THE shares without actual knowledge 1,313
of the fact that the shares are not paid for is under any 1,315
liability in respect of the shares. 1,316
(H) No pledgee or other holder of shares as collateral 1,318
security is personally liable as a shareholder. 1,319
(I) No person who in fact, whether disclosed on the 1,321
records of the corporation or otherwise, holds shares as 1,322
executor, administrator, guardian, trustee, trustee of a voting 1,323
trust, receiver, or in any other fiduciary capacity is personally 1,324
liable as a shareholder, but the estate or property in the hands 1,325
of such fiduciary is liable or the real or beneficial owner is 1,326
liable under this section as equity may require. This section 1,327
does not relieve a fiduciary from liability for a breach of 1,328
trust. 1,329
(J) EXCEPT AS SET FORTH IN ANY PROVISION IN TITLE LVII OF 1,332
THE REVISED CODE, NEITHER A SHAREHOLDER OF A CORPORATION NOR A
SUBSCRIBER TO ITS SHARES IS PERSONALLY LIABLE FOR ANY DEBTS, 1,333
OBLIGATIONS, OR LIABILITIES OF THE CORPORATION IN THE ABSENCE OF 1,334
A WRITTEN, ENFORCEABLE AGREEMENT THAT IS SIGNED BY THE 1,335
SHAREHOLDER OR SUBSCRIBER AND THAT SPECIFICALLY UNDERTAKES 1,336
LIABILITY FOR SUCH DEBTS, OBLIGATIONS, OR LIABILITIES. 1,337
Sec. 1701.24. (A) The shares of a corporation are 1,346
personal property. 1,347
(B) Each holder of shares is entitled to one or more 1,349
certificates, signed by the chairperson of the board or the 1,351
president or a vice-president and by the secretary, an assistant
secretary, the treasurer, or an assistant treasurer of the 1,352
corporation, which shall certify the number and class of shares 1,353
held by the holder in such THE corporation, but no certificate 1,354
for shares shall be executed or delivered until such shares are 1,355
fully paid. When such a THE certificate is countersigned by an 1,356
incorporated transfer agent or registrar, the signature of any of 1,357
31
such THOSE officers of the corporation may be facsimile, 1,358
engraved, stamped, or printed. Although any officer of the 1,359
corporation whose manual or facsimile signature is affixed to 1,360
such a THE certificate ceases to be such officer before the 1,362
certificate is delivered, such THE certificate nevertheless shall 1,363
be effective in all respects when delivered. 1,364
(C) A corporation is not obligated to but may issue 1,366
fractional shares. THE HOLDER OF A FRACTIONAL SHARE IS ENTITLED 1,367
TO EXERCISE THE RIGHTS OF A SHAREHOLDER, INCLUDING THE RIGHT TO 1,369
VOTE, TO RECEIVE DIVIDENDS, AND TO PARTICIPATE IN THE ASSETS OF 1,370
THE CORPORATION UPON LIQUIDATION. In the case of uncertificated 1,371
securities, the corporation may proceed as provided in divisions 1,373
(C)(1) and (2) of this section. In the case of certificated 1,374
securities, the corporation may execute and deliver a certificate 1,375
for or including a fraction of a share; or, in lieu thereof, may 1,376
DO ANY OF THE FOLLOWING: 1,377
(1) Pay to the person otherwise entitled to become a 1,379
holder of a fraction of a share an amount in cash specified as 1,380
the value thereof OF THE FRACTION OF A SHARE in the articles, a 1,381
resolution of the directors, or other agreement or instrument 1,383
pursuant to which such fraction of a share OTHERWISE would 1,384
otherwise be issued, or, if not so specified, then the amount 1,386
determined for such THAT purpose by the directors of the issuing 1,387
corporation, or the amount realized upon sale of such THE 1,388
fraction of a share; 1,389
(2) Provide reasonable means to afford to such THE person 1,391
the opportunity, on specified terms and conditions, to purchase 1,392
or sell fractional interests in shares, to the exclusion of all 1,393
rights he THE PERSON OTHERWISE might otherwise have; 1,394
(3) Execute and deliver registered or bearer scrip over 1,396
the manual or facsimile signature of an officer of the 1,397
corporation or of its agent for that purpose, exchangeable as 1,398
therein provided IN THE SCRIP for full shares, but such scrip 1,399
shall not entitle the holder to any rights as a shareholder 1,401
32
except as therein provided IN THE SCRIP. The scrip may provide 1,402
that it shall become void unless the rights of the holders are 1,404
exercised within a specified period and may contain any other 1,405
provisions that the corporation deems advisable. Whenever any 1,406
such scrip ceases to be exchangeable for full shares, the shares 1,407
that OTHERWISE would otherwise have been issuable as therein 1,409
provided IN THE SCRIP shall be deemed to be treasury shares 1,411
unless the scrip contains other provision for their disposition. 1,412
(D) A joint estate with the incidents of a joint estate as 1,414
at common law, including the right of survivorship, may be 1,415
created in shares by registering the same in the case of 1,416
uncertificated securities, or by executing and delivering a 1,417
certificate therefor in the case of certificated securities to 1,418
two or more persons with the words "as joint tenants" or "as 1,419
joint tenants with right of survivorship and not as tenants in 1,420
common" following their names. Upon receipt by the corporation 1,421
of proof satisfactory to it of the death of one or more of such 1,422
joint tenants, it may register the transfer to, or execute and 1,423
deliver a new certificate to, the survivor or survivors. 1,424
(E) Whenever a corporation has determined that any 1,426
outstanding certificates for shares should be canceled and 1,427
exchanged for other certificates, the corporation may order and 1,428
require the holders of the outstanding certificates to surrender 1,429
them for such THAT purpose within a reasonable time to be fixed 1,430
by the corporation. Such THE order may provide that, until 1,431
compliance therewith WITH THE ORDER, any or all rights as a 1,433
shareholder of the holder of any certificate so required to be 1,435
surrendered shall be suspended with respect to the shares 1,436
represented thereby BY THE CERTIFICATE. Not less than ten days 1,438
before any such THE order is to become effective, the corporation 1,439
shall give notice thereof OF THE ORDER by mail to each 1,440
shareholder affected thereby BY THE ORDER at his THE 1,441
SHAREHOLDER'S address as it appears on the records of the 1,443
corporation.
33
(F) Unless otherwise provided by the articles or 1,445
regulations, the directors may provide by resolution that some or 1,446
all of any or all classes and series of shares of a corporation 1,447
shall be uncertificated shares, provided that such THE resolution 1,449
shall not apply to shares represented by a certificate until such 1,450
THE certificate is surrendered to the corporation and that such 1,453
THE resolution shall not apply to a certificated security issued 1,454
in exchange for an uncertificated security. Within a reasonable 1,456
time after the issuance or transfer of uncertificated shares, the 1,457
corporation shall send to the registered owner thereof OF THE 1,458
SHARES a written notice containing the information required to be 1,459
set forth or stated on certificates pursuant to division (A) of 1,461
section 1701.25 of the Revised Code. Except as otherwise
expressly provided by law, the rights and obligations of the 1,463
holders of uncertificated shares and the rights and obligations 1,464
of the holders of certificates representing shares of the same 1,465
class and series shall be identical. 1,466
Sec. 1701.33. The directors may declare dividends and 1,475
distributions on outstanding shares of the corporation, subject 1,476
to the following provisions: 1,477
(A) A dividend or distribution may be paid in cash, 1,479
property, or shares of the corporation. The dividend or 1,480
distribution shall not exceed the combination of the surplus of 1,481
the corporation and the difference between the following: 1,482
(1) The reduction in surplus that results from the 1,484
immediate recognition of the transition obligation under 1,485
statement of financial accounting standards no. 106 (SFAS no. 1,486
106), issued by the financial accounting standards board; 1,487
(2) The aggregate amount of the transition obligation that 1,489
would have been recognized as of the date of the declaration of a 1,490
dividend or distribution if the corporation had elected to 1,491
amortize its recognition of the transition obligation under 1,492
statement of financial accounting standards no. 106. 1,493
(B) A dividend or distribution may be paid in treasury 1,495
34
shares or in authorized but unissued shares. If paid in shares 1,496
with par value, there shall be transferred from any surplus, 1,497
however created, to stated capital, such THE amount, if any, as 1,499
THAT is necessary in order that the stated capital represented by 1,500
the outstanding shares with par value, after giving effect to 1,501
such THE dividend or distribution, will be equal to the aggregate 1,502
par value of such THE shares, or, if the directors so determine, 1,503
a greater amount shall be so transferred. If paid in shares 1,504
without par value, there shall be transferred from any surplus, 1,505
however created, to stated capital, only such THE amount, if any, 1,507
as THAT the directors determine. 1,508
(C) No dividend or distribution shall be paid to the 1,510
holders of shares of any class in violation of the rights of the 1,511
holders of shares of any other class, or when the corporation is 1,512
insolvent or there is reasonable ground to believe that by such 1,513
payment it would be rendered insolvent;. 1,514
(D) No dividend or distribution on shares of any class 1,516
shall be paid in shares of another class if any of the authorized 1,517
shares of such THE latter class are already outstanding, unless 1,518
either the articles so provide or such THE payment is authorized 1,519
by the affirmative vote of the holders of at least two-thirds of 1,521
the shares of the class in which payment is to be made;. 1,522
(E) If the articles of a corporation engaged in whole or 1,524
in part in the exploitation of mines, timber, oil wells, gas 1,525
wells, quarries, or other natural resources so provide, the 1,526
corporation may compute its surplus for the purpose of paying 1,527
dividends and distributions without making any deduction or 1,528
allowance for the depletion of such assets incidental to the 1,529
exploitation and sale of them;. 1,530
(F) When any portion of a dividend or distribution is paid 1,532
out of capital surplus, the corporation, at the time of paying 1,533
the same DIVIDEND OR DISTRIBUTION, shall notify the shareholders 1,534
receiving the same DIVIDEND OR DISTRIBUTION as to the kind of 1,535
surplus out of which the dividend OR DISTRIBUTION is paid. 1,536
35
(G) When a dividend or distribution is to be paid in 1,538
authorized but unissued shares of the corporation, the directors 1,539
may provide that such THE dividend or distribution shall also be 1,540
paid on treasury shares of the same class. 1,542
(H) THE EFFECT OF A DIVIDEND OR DISTRIBUTION IS MEASURED 1,545
AS OF THE DATE THE DIVIDEND OR DISTRIBUTION IS AUTHORIZED IF THE 1,546
PAYMENT OCCURS ONE HUNDRED TWENTY DAYS OR LESS AFTER THE DATE OF 1,547
AUTHORIZATION OR AS OF THE DATE THE PAYMENT IS MADE IF IT OCCURS 1,548
MORE THAN ONE HUNDRED TWENTY DAYS AFTER THE DATE OF 1,549
AUTHORIZATION. IF A CORPORATION PAYS A DIVIDEND OR DISTRIBUTION 1,550
BY DELIVERING AN OBLIGATION OR OTHER EVIDENCE OF INDEBTEDNESS, 1,551
THE DATE OF THE DELIVERY IS THE DATE UPON WHICH THE EFFECT OF THE 1,552
DIVIDEND OR DISTRIBUTION IS MEASURED. 1,553
(I) A CORPORATION'S INDEBTEDNESS TO A SHAREHOLDER INCURRED 1,556
BY REASON OF A DIVIDEND OR DISTRIBUTION MADE IN ACCORDANCE WITH 1,557
THIS SECTION IS AT PARITY WITH THE CORPORATION'S INDEBTEDNESS TO 1,558
ITS GENERAL, UNSECURED CREDITORS, EXCEPT TO THE EXTENT 1,559
SUBORDINATED BY AGREEMENT. 1,560
Sec. 1701.45. (A) For any lawful purpose, including, 1,569
without limitation, the determination of the shareholders who are 1,570
entitled to: (1) TO receive notice of or to vote at a meeting of 1,572
shareholders; (2) TO receive payment of any dividend or 1,574
distribution; (3) TO receive or exercise rights of purchase of or
subscription for, or exchange or conversion of, shares or other 1,575
securities, subject to contract rights with respect thereto TO 1,576
THE SHARES OR SECURITIES; or (4) TO participate in the execution 1,578
of written consents, waivers, or releases; the directors may fix
a record date which shall not be a date earlier than the date on 1,579
which the record date is fixed and, in the cases provided for in 1,580
clauses (1), (2) and (3) above, shall not be more than sixty 1,581
days, unless the articles or the regulations specify a shorter or 1,582
a longer period for such THAT purpose, preceding the date of the 1,584
meeting of the shareholders, or the date fixed for the payment of 1,585
any dividend or distribution, or the date fixed for the receipt
36
or the exercise of rights, as the case may be. 1,586
(B) If a meeting of the shareholders is called by persons 1,588
entitled to call the same, MEETING or action is taken by 1,589
shareholders without a meeting, and if the directors fail or 1,591
refuse, within such THE time as THAT the persons calling such THE 1,593
meeting or initiating such other action may request, to fix a 1,594
record date for the purpose of clause (1) or (4) of division (A) 1,596
of this section, then the persons calling such THE meeting or 1,597
initiating such other action may fix a record date for such 1,599
purpose EITHER OF THOSE PURPOSES, subject to the limitations set 1,601
forth in division (A) of this section.
(C) The record date for the purpose of clause (1) of 1,603
division (A) of this section shall continue to be the record date 1,604
for all adjournments of such meeting, unless the directors or the 1,605
persons who shall have fixed the original record date shall, 1,607
subject to the limitations set forth in division (A) of this 1,609
section, fix another RECORD date, and in case a new record date
is so fixed, notice thereof OF THE RECORD DATE and of the date to 1,611
which the meeting shall have HAS been adjourned shall be given to 1,613
shareholders of record as of said THAT date in accordance with 1,614
the same requirements as those applying to a meeting newly
called. 1,615
(D) The directors may close the share transfer books 1,617
against transfers of shares during the whole or any part of the 1,618
period provided for in division (A) above OF THIS SECTION, 1,619
including the date of the meeting of the shareholders and the 1,620
period ending with the date, if any, to which THE MEETING IS 1,621
adjourned.
(E) If no record date is fixed therefor, the record date 1,623
for determining the shareholders who are entitled to receive 1,625
notice of, or who are entitled to vote at, a meeting of 1,626
shareholders, shall be the date next preceding the day on which 1,628
notice is given, or the date next preceding the day on which the
meeting is held, as the case may be. 1,629
37
(F) The record date for a change of shares shall be the 1,631
time when the certificate of amendment or of amended articles 1,632
effecting such THE change is filed in the office of the secretary 1,634
of state.
(G) IF THE DIRECTORS DO NOT FIX A RECORD DATE FOR 1,637
DETERMINING SHAREHOLDERS ENTITLED TO PAYMENT OF ANY DIVIDEND OR 1,638
DISTRIBUTION, THE RECORD DATE IS THE DATE THAT THE DIRECTORS 1,639
AUTHORIZE THE DIVIDEND OR DISTRIBUTION.
Sec. 1701.59. (A) Except where the law, the articles, or 1,648
the regulations require action to be authorized or taken by 1,649
shareholders, all of the authority of a corporation shall be 1,650
exercised by or under the direction of its directors. For their 1,651
own government, the directors may adopt bylaws that are not 1,652
inconsistent with the articles or the regulations. The selection 1,653
of a time frame for the achievement of corporate goals shall be 1,654
the responsibility of the directors. 1,655
(B) A director shall perform his THE DIRECTOR'S duties as 1,657
a director, including his THE duties as a member of any committee 1,659
of the directors upon which he THE DIRECTOR may serve, in good 1,660
faith, in a manner he THE DIRECTOR reasonably believes to be in 1,662
or not opposed to the best interests of the corporation, and with 1,663
the care that an ordinarily prudent person in a like position 1,664
would use under similar circumstances. In performing his A 1,665
DIRECTOR'S duties, a director is entitled to rely on information, 1,667
opinions, reports, or statements, including financial statements 1,668
and other financial data, that are prepared or presented by ANY 1,669
OF THE FOLLOWING:
(1) One or more directors, officers, or employees of the 1,671
corporation who the director reasonably believes are reliable and 1,672
competent in the matters prepared or presented; 1,673
(2) Counsel, public accountants, or other persons as to 1,675
matters that the director reasonably believes are within the 1,676
person's professional or expert competence; 1,677
(3) A committee of the directors upon which he THE 1,679
38
DIRECTOR does not serve, duly established in accordance with a 1,681
provision of the articles or the regulations, as to matters 1,682
within its designated authority, which committee the director 1,683
reasonably believes to merit confidence. 1,684
(C) For purposes of division (B) of this section, THE 1,686
FOLLOWING APPLY: 1,687
(1) A director shall not be found to have violated his THE 1,689
DIRECTOR'S duties under division (B) of this section unless it is 1,691
proved by clear and convincing evidence that the director has not 1,692
acted in good faith, in a manner he THE DIRECTOR reasonably 1,693
believes to be in or not opposed to the best interests of the 1,695
corporation, or with the care that an ordinarily prudent person 1,696
in a like position would use under similar circumstances, in any 1,697
action brought against a director, including actions involving or 1,698
affecting any of the following: 1,699
(a) A change or potential change in control of the 1,701
corporation, including a determination to resist a change or 1,702
potential change in control made pursuant to division (F)(7) of 1,703
section 1701.13 of the Revised Code; 1,704
(b) A termination or potential termination of his THE 1,706
DIRECTOR'S service to the corporation as a director; 1,708
(c) His THE DIRECTOR'S service in any other position or 1,710
relationship with the corporation. 1,712
(2) A director shall not be considered to be acting in 1,714
good faith if he THE DIRECTOR has knowledge concerning the matter 1,716
in question that would cause reliance on information, opinions, 1,717
reports, or statements that are prepared or presented by the 1,718
persons described in divisions (B)(1) to (3) of this section to 1,719
be unwarranted. 1,720
(3) Nothing contained in this division limits relief 1,722
available under section 1701.60 of the Revised Code. 1,723
(D) A director shall be liable in damages for any action 1,725
he THAT THE DIRECTOR takes or fails to take as a director only if 1,727
it is proved by clear and convincing evidence in a court of 1,729
39
competent jurisdiction that his THE DIRECTOR'S action or failure 1,730
to act involved an act or omission undertaken with deliberate 1,732
intent to cause injury to the corporation or undertaken with 1,733
reckless disregard for the best interests of the corporation. 1,734
Nothing contained in this division affects the liability of 1,735
directors under section 1701.95 of the Revised Code or limits 1,736
relief available under section 1701.60 of the Revised Code. This 1,737
division does not apply if, and only to the extent that, at the 1,738
time of a director's act or omission that is the subject of 1,739
complaint, the articles or the regulations of the corporation 1,740
state by specific reference to this division that the provisions 1,741
of this division do not apply to the corporation.
(E) For purposes of this section, a director, in 1,743
determining what he THE DIRECTOR reasonably believes to be in the 1,745
best interests of the corporation, shall consider the interests 1,746
of the corporation's shareholders and, in his THE DIRECTOR'S 1,747
discretion, may consider any of the following: 1,749
(1) The interests of the corporation's employees, 1,751
suppliers, creditors, and customers; 1,752
(2) The economy of the state and nation; 1,754
(3) Community and societal considerations; 1,756
(4) The long-term as well as short-term interests of the 1,758
corporation and its shareholders, including the possibility that 1,759
these interests may be best served by the continued independence 1,760
of the corporation. 1,761
(F) Nothing contained in division (C) or (D) of this 1,763
section affects the duties of either of the following: 1,764
(1) A director who acts in any capacity other than his THE 1,767
DIRECTOR'S capacity as a director; 1,768
(2) A director of a corporation that does not have issued 1,770
and outstanding shares that are listed on a national securities 1,771
exchange or are regularly quoted in an over-the-counter market by 1,772
one or more members of a national or affiliated securities 1,773
association, who votes for or assents to any action taken by the 1,774
40
directors of the corporation that, in connection with a change in 1,775
control of the corporation, directly results in the holder or 1,776
holders of a majority of the outstanding shares of the 1,777
corporation receiving a greater consideration for their shares 1,778
than other shareholders. 1,779
Sec. 1701.63. (A) The regulations may provide for the 1,788
creation by the directors of an executive committee or any other 1,789
committee of the directors, to consist of one or more directors, 1,791
and may authorize the delegation to any such committee of any of 1,792
the authority of the directors, however conferred, other than the 1,793
authority of filling vacancies among the directors or in any 1,794
committee of the directors.
(B) The directors may appoint one or more directors as 1,796
alternate members of any such committee DESCRIBED IN DIVISION (A) 1,798
OF THIS SECTION, who may take the place of any absent member or 1,799
members at any meeting of the particular committee. 1,800
(C) Each such committee DESCRIBED IN DIVISION (A) OF THIS 1,802
SECTION shall serve at the pleasure of the directors, shall act 1,804
only in the intervals between meetings of the directors, and 1,805
shall be subject to the control and direction of the directors. 1,806
(D) Unless otherwise provided in the regulations or 1,808
ordered by the directors, any such committee DESCRIBED IN 1,809
DIVISION (A) OF THIS SECTION may act by a majority of its members 1,811
at a meeting or by a writing or writings signed by all of its 1,812
members.
(E) Unless participation by members of any such committee 1,814
DESCRIBED IN DIVISION (A) OF THIS SECTION at a meeting by means 1,816
of communications equipment is prohibited by the articles, the 1,817
regulations, or an order of the directors, meetings of the 1,818
particular committee may be held through any communications 1,819
equipment if all persons participating can hear each other. 1,820
Participation in a meeting pursuant to this division constitutes 1,821
presence at the meeting.
(F) An act or authorization of an act by any such 1,823
41
committee DESCRIBED IN DIVISION (A) OF THIS SECTION within the 1,824
authority delegated to it shall be as effective for all purposes 1,826
as the act or authorization of the directors. 1,827
Sec. 1701.70. (A) If an initial stated capital is not set 1,836
forth DIRECTORS ARE NOT NAMED in the articles, then before the 1,838
corporation begins business, or if an initial stated capital is 1,839
set forth in the articles, then before subscriptions to shares 1,840
have been received in the amount of that initial stated capital, 1,841
AND BEFORE THE INCORPORATORS HAVE ELECTED DIRECTORS the 1,842
incorporators may adopt an amendment to the articles by a writing 1,843
signed by them. IF INITIAL DIRECTORS ARE NAMED IN THE ARTICLES, 1,844
OR IF THE INCORPORATORS HAVE ELECTED DIRECTORS AND HAVE NOT 1,845
RECEIVED SUBSCRIPTIONS, THEN BEFORE SUBSCRIPTIONS TO SHARES HAVE 1,846
BEEN RECEIVED, THE DIRECTORS MAY ADOPT AN AMENDMENT TO THE 1,847
ARTICLES.
(B) The directors may adopt an amendment to the articles 1,849
in the following cases: 1,850
(1) When and to the extent authorized by the articles, the 1,852
directors may adopt an amendment in respect of any unissued or 1,853
treasury shares of any class; DETERMINING, IN WHOLE OR IN PART, 1,854
THE EXPRESS TERMS, WITHIN THE LIMITS SET FORTH IN THIS CHAPTER, 1,855
OF ANY CLASS OF SHARES BEFORE THE ISSUANCE OF ANY SHARES OF THAT 1,856
CLASS, OR OF ONE OR MORE SERIES WITHIN A CLASS BEFORE THE 1,857
ISSUANCE OF SHARES OF THAT SERIES.
(2) When the corporation shall have HAS issued shares or 1,859
obligations convertible into shares of the corporation, or shall 1,860
have HAS granted options to purchase any shares, and such THE 1,862
conversion or option rights are set forth in the articles or have 1,863
been approved by the same vote of shareholders as, at the time of 1,864
such THE approval, would have been required to amend the articles 1,866
to authorize the shares required for such THAT purpose, and the 1,867
corporation does not have sufficient authorized but unissued 1,868
shares to satisfy such THOSE conversion or option rights, the 1,869
directors may adopt an amendment to authorize such THE shares;. 1,872
42
(3) Whenever shares of any class have been redeemed, or 1,874
have been surrendered to or acquired by the corporation upon 1,875
conversion, exchange, purchase, or otherwise, the directors may 1,876
adopt an amendment to reduce the authorized number of shares of 1,877
such THE class by the number so redeemed, surrendered, or 1,878
acquired; and when all of the authorized shares of a class have 1,880
been redeemed, or surrendered to or acquired by the corporation, 1,881
the directors may adopt an amendment to eliminate from the 1,882
articles all references to the shares of such THE class and to 1,883
make such other appropriate changes as THAT are required by such 1,885
THE elimination;. 1,886
(4) When articles have been amended and any change of 1,888
issued or unissued shares provided for in the amendment or 1,889
amended articles shall have HAS become effective, the directors 1,890
may adopt an amendment to eliminate from the articles all 1,892
references to the change of shares and to make such ANY other 1,893
appropriate changes as THAT are required by such THE elimination; 1,895
however, such an amendment to articles THAT IS SO adopted by the 1,896
directors shall contain a statement with respect to the 1,898
authorized number and the par value, if any, of the shares of 1,899
each class.
(5) After a merger or consolidation, in which the 1,901
surviving or new corporation is a domestic corporation, shall 1,902
have become BECOMES effective, the directors may adopt an 1,903
amendment: 1,904
(a) To eliminate from the articles any statement or 1,906
provision pertaining exclusively to the merger or consolidation, 1,907
or that was required to be set forth in the agreement of merger 1,909
or consolidation and that would not be required in original 1,911
articles or amendments to articles filed at the time the 1,912
statement or provision was adopted;
(b) To make such ANY other appropriate changes required by 1,914
that elimination. 1,915
An amendment to articles adopted by the directors under 1,917
43
division (B)(5) of this section need not contain or continue any 1,918
statement with respect to the amount of stated capital. 1,919
(C) IF A VOTE ON THE ADOPTION OF AN AMENDMENT IS REQUIRED 1,922
BY DIVISION (B)(4) OF SECTION 1701.71 OF THE REVISED CODE, ANY 1,923
AMENDMENT TO THE ARTICLES ADOPTED PURSUANT TO DIVISION (B) OF 1,924
THIS SECTION THAT CREATES A CLASS OR SERIES OF SHARES THE EXPRESS 1,925
TERMS OF WHICH PROVIDE FOR THE CONVERTIBILITY OF THE SHARES INTO 1,926
SHARES OF ANOTHER CLASS SHALL ALSO REQUIRE THE APPROVAL OF THE 1,927
HOLDERS, VOTING AS A CLASS, OF ANY ISSUED AND OUTSTANDING SHARES 1,928
INTO WHICH THE SHARES MAY BE CONVERTED. 1,929
Sec. 1701.71. (A)(1) Except as otherwise provided in this 1,938
division or division (A)(2) of this section, the shareholders, at 1,939
a meeting held for such THAT purpose, may adopt an amendment, 1,940
including any AMENDMENT that could be adopted by the directors, 1,941
by the affirmative vote of the holders of shares entitling them 1,942
to exercise two-thirds of the voting power of the corporation on 1,943
the proposal or, if the articles provide or permit, by the 1,944
affirmative vote of a greater or lesser proportion, but not less 1,945
than a majority, of such voting power, and by such THE 1,946
affirmative vote of the holders of shares of any particular class 1,948
as THAT is required by the articles. If, at the time an 1,949
amendment to eliminate cumulative voting rights permitted by 1,950
division (B)(10) of section 1701.69 of the Revised Code is acted 1,951
upon by the shareholders, a corporation does not have issued and 1,952
outstanding shares that are listed on a national securities 1,953
exchange or are regularly quoted in an over-the-counter market by 1,954
one or more members of a national or affiliated securities 1,955
association, that amendment shall not be adopted if the votes of 1,956
a sufficient number of shares are cast against the amendment 1,957
that, if cumulatively voted at an election of all the directors, 1,958
or all the directors of a particular class, as the case may be, 1,959
would at the time the amendment is acted upon by the shareholders 1,960
be sufficient to elect at least one director. 1,961
(2) Whenever under division (B) of this section the 1,963
44
holders of shares of any particular class are entitled to vote as 1,964
a class on the adoption of an amendment, such THE amendment, in 1,965
order to be adopted, must receive the affirmative vote of the 1,966
holders of at least two-thirds OF THE SHARES OF THAT CLASS or, if 1,967
the articles provide or permit, a greater or lesser proportion, 1,969
but not less than a majority, of the shares of such THAT class. 1,970
If the proposed amendment would authorize any particular 1,971
corporate action that, under any applicable provision of law or 1,972
under the existing articles, could be authorized only by or 1,973
pursuant to a specified vote of shareholders, such THE amendment, 1,974
in order to be adopted, must receive the affirmative vote so 1,975
specified.
(B) Regardless of limitations or restrictions in the 1,977
articles on the voting rights of the shares of any class, the 1,978
holders of shares of a particular class, and in the cases 1,979
specified in divisions (B)(6), (7), and (8) of this section the 1,980
holders of shares of every class, shall be entitled to vote as a 1,981
class on the adoption of an amendment that does any of the 1,982
following: 1,983
(1) Increases or decreases the par value of the issued 1,985
shares of the particular class; 1,986
(2) Changes issued shares of the particular class, whether 1,988
with or without par value, into a lesser number of shares of the 1,989
same class or into the same or a different number of shares of 1,990
any other class, with or without par value, theretofore 1,991
PREVIOUSLY or then authorized; 1,993
(3) Changes the express terms, or adds express terms, of 1,995
the shares of the particular class in any manner substantially 1,996
prejudicial to the holders of the shares; 1,997
(4) Changes the express terms of issued shares of any 1,999
class senior to the particular class in any manner substantially 2,000
prejudicial to the holders of shares of the particular class; 2,001
(5) Authorizes shares of another class that are 2,003
convertible into, or authorizes the conversion of shares of 2,004
45
another class into, shares of the particular class, or authorizes 2,005
the directors to fix or alter conversion rights of shares of 2,006
another class that are convertible into shares of the particular 2,007
class; PROVIDED, HOWEVER, BOTH OF THE FOLLOWING APPLY: 2,008
(a) THE FAILURE TO OBTAIN THE SHAREHOLDERS' APPROVAL ONLY 2,011
PREVENTS THE CONVERSION OF THE SHARES UNTIL THE SHAREHOLDERS'
APPROVAL IS OBTAINED AND DOES NOT OTHERWISE AFFECT THE 2,012
AUTHORIZATION OR ANY OTHER EXPRESS TERMS OF THE SHARES; 2,013
(b) THE ARTICLES MAY PROVIDE THAT NO VOTE OF THE HOLDERS 2,016
OF COMMON SHARES, AS A CLASS, IS REQUIRED IN CONNECTION WITH THE 2,017
AUTHORIZATION OF SHARES OF ANY CLASS THAT ARE CONVERTIBLE INTO 2,018
COMMON SHARES.
(6) Provides, in the case of an amendment described in 2,020
division (B)(1) or (2) of this section, that the stated capital 2,021
of the corporation shall be reduced or eliminated as a result of 2,022
the amendment, or provides, in the case of an amendment described 2,023
in division (B)(5) of this section, that the stated capital of 2,024
the corporation shall be reduced or eliminated upon the exercise 2,025
of such conversion rights, provided that any such reduction or 2,026
elimination is consistent with section 1701.30 of the Revised 2,027
Code; 2,028
(7) Changes substantially the purposes of the corporation, 2,030
or provides that thereafter an A SUBSEQUENT amendment to the 2,031
articles may be adopted that changes substantially the purposes 2,033
of the corporation; 2,034
(8) Changes a corporation into a nonprofit corporation. 2,036
(C) An amendment that changes a corporation into a 2,038
nonprofit corporation shall contain a statement of purposes 2,039
proper in the case of a nonprofit corporation, and a statement 2,040
that, after the effective date of the amendment, the corporation 2,041
shall be subject to the provisions of the Revised Code relating 2,042
to nonprofit corporations. In the case of a corporation formed 2,043
on or after June 9, 1927, the amendment also shall provide for 2,044
the cancellation of all outstanding shares and the terms and 2,045
46
considerations, if any, for such THE cancellation. In the case 2,046
of a corporation formed prior to June 9, 1927, the amendment may 2,047
provide for such THE cancellation of outstanding shares, but if 2,048
it does not so provide, the amendment shall contain a provision 2,049
forbidding the payment of dividends or distributions on any 2,050
shares after the effective date of the amendment. 2,051
Sec. 1701.95. (A)(1) In addition to any other liabilities 2,060
imposed by law upon directors of a corporation and except as 2,061
provided in division (B) of this section, directors shall be 2,062
jointly and severally liable to the corporation as provided in 2,063
division (A)(2) of this section if they vote for or assent to any 2,064
of the following: 2,065
(a) The payment of a dividend or distribution, the making 2,067
of a distribution of assets to shareholders, or the purchase or 2,068
redemption of the corporation's own shares, contrary to law or 2,069
the articles;
(b) A distribution of assets to shareholders during the 2,071
winding up of the affairs of the corporation, on dissolution or 2,072
otherwise, without the payment of all known obligations of the 2,073
corporation or without making adequate provision for their 2,074
payment; 2,075
(c) The making of a loan, other than in the usual course 2,077
of business, to an officer, director, or shareholder of the 2,078
corporation, other than in either of the following cases: 2,079
(i) In the case of a savings and loan association or of a 2,081
corporation engaged in banking or in the making of loans 2,082
generally; 2,083
(ii) At the time of the making of the loan, a majority of 2,085
the disinterested directors of the corporation voted for the loan 2,086
and, taking into account the terms and provisions of the loan and 2,087
other relevant factors, determined that the making of the loan 2,088
could reasonably be expected to benefit the corporation. 2,089
(2)(a) In cases under division (A)(1)(a) of this section, 2,091
directors shall be jointly and severally liable up to the amount 2,092
47
of the dividend, distribution, or other payment, in excess of the 2,093
amount that could have been paid or distributed without violation 2,094
of law or the articles but not in excess of the amount that would 2,095
inure to the benefit of the creditors of the corporation if it 2,096
was insolvent at the time of the payment or distribution or there 2,097
was reasonable ground to believe that by that action it would be 2,098
rendered insolvent, plus the amount that was paid or distributed 2,099
to holders of shares of any class in violation of the rights of 2,100
holders of shares of any other class. 2,101
(b) In cases under division (A)(1)(b) of this section, 2,103
directors shall be jointly and severally liable to the extent 2,104
that the obligations of the corporation that are not otherwise 2,105
barred by statute are not paid or for the payment of which 2,106
adequate provision has not been made. 2,107
(c) In cases under division (A)(1)(c) of this section, 2,109
directors shall be jointly and severally liable for the amount of 2,110
the loan with interest on it at the rate specified in division 2,112
(A) of section 1343.03 of the Revised Code until the amount has 2,113
been paid.
(B)(1) A director is not liable under division (A)(1)(a) 2,115
or (b) of this section if THE DIRECTOR WOULD NOT BE LIABLE UNDER 2,116
DIVISION (D) OF SECTION 1701.59 OF THE REVISED CODE OR IF, in 2,117
determining the amount available for any dividend, purchase, 2,119
redemption, or distribution to shareholders, the director in good 2,120
faith relied on a financial statement of the corporation prepared 2,122
by an officer or employee of the corporation in charge of its 2,123
accounts or certified by a public accountant or firm of public 2,124
accountants, the director in good faith considered the assets to 2,125
be of their book value, or the director followed what the 2,126
director believed to be sound accounting and business practice. 2,127
(2) A director is not liable under division (A)(1)(c) of 2,129
this section for making any loan to, or guaranteeing any loan to 2,130
or other obligation of, an employee stock ownership plan, as 2,131
defined in section 4975(e)(7) of the Internal Revenue Code. 2,132
48
(C) A director who is present at a meeting of the 2,134
directors or a committee of the directors at which action on any 2,135
matter is authorized or taken and who has not voted for or 2,136
against the action shall be presumed to have voted for the action 2,137
unless that director's written dissent from the action is filed, 2,138
either during the meeting or within a reasonable time after the 2,139
adjournment of the meeting, with the person acting as secretary 2,140
of the meeting or with the secretary of the corporation. 2,141
(D) A shareholder who knowingly receives any dividend, 2,143
distribution, or payment made contrary to law or the articles 2,144
shall be liable to the corporation for the amount received by 2,145
that shareholder that is in excess of the amount that could have 2,146
been paid or distributed without violation of law or the 2,147
articles.
(E) A director against whom a claim is asserted under or 2,149
pursuant to this section and who is held liable on the claim 2,150
shall be entitled to contribution, on equitable principles, from 2,151
other directors who also are liable. In addition, any director 2,152
against whom a claim is asserted under or pursuant to this 2,153
section or who is held liable shall have a right of contribution 2,154
from the shareholders who knowingly received any dividend, 2,155
distribution, or payment made contrary to law or the articles, 2,156
and those shareholders as among themselves also shall be entitled 2,158
to contribution in proportion to the amounts received by them 2,159
respectively. 2,160
(F) No action shall be brought by or on behalf of a 2,162
corporation upon a cause of action arising under division 2,164
(A)(1)(a) or (2)(b) of this section after two years from the day 2,166
on which the violation occurs.
(G) Nothing contained in this section shall preclude a 2,168
creditor whose claim is unpaid from exercising the rights that 2,170
that creditor otherwise would have by law to enforce that
creditor's claim against assets of the corporation paid or 2,171
distributed to shareholders.
49
(H) The failure of a corporation to observe corporate 2,173
formalities relating to meetings of directors or shareholders in 2,174
connection with the management of the corporation's affairs shall 2,175
not be considered a factor tending to establish that the 2,176
shareholders have personal liability for corporate obligations. 2,177
Section 2. That existing sections 1151.38, 1151.61, 2,179
1701.04, 1701.06, 1701.09, 1701.11, 1701.13, 1701.15, 1701.18, 2,180
1701.24, 1701.33, 1701.45, 1701.59, 1701.63, 1701.70, 1701.71, 2,181
and 1701.95 and section 1701.10 of the Revised Code are hereby 2,182
repealed. 2,183