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As Passed by the Senate
122nd General Assembly
Regular Session
1997-1998 | Am. Sub. H. B. No. 170 |
REPRESENTATIVES WOMER BENJAMIN-BATCHELDER-TIBERI-HARRIS-MYERS-
MASON-SCHULER-LEWIS-BRITTON-SALERNO-TAYLOR-REID-CATES-HAINES-
MOTTLEY-JONES-TERWILLEGER-MILLER-COLONNA-THOMPSON-CALLENDER-
GARCIA-GRENDELL-VERICH-HOUSEHOLDER-O'BRIEN-OPFER-LOGAN-
SENATORS RAY-OELSLAGER-WATTS-DRAKE-LATTA-LATELL-HOWARD
A BILL
To amend sections 1301.05, 1301.12, 1303.02, 1304.01, 1304.02,
1305.10, 1305.13, 1308.03, 1308.04, 1308.08, 1308.09,
1308.10, 1308.11,
1308.12, 1308.13, 1308.14, 1308.15, 1308.16, 1308.17, 1308.22, 1308.31,
1308.37, 1308.38, 1308.41, 1308.42, 1309.01,
1309.03, 1309.14, 1309.20,
1309.21, 1309.22, 1309.23, 1309.24, 1309.25, 1309.28,
1309.31, 1701.01, 1701.24,
1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 1701.832, 1705.01, 1705.04,
1705.16, 1705.43, 1782.33, and 3901.51;
to enact new sections
1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 1308.18,
1308.19, 1308.20,
1308.21, 1308.23, 1308.24, 1308.25,
1308.26, 1308.27, 1308.32, 1308.33,
1308.39, and 1308.40 and sections 1308.51, 1308.52,
1308.53, 1308.54, 1308.55,
1308.56, 1308.57, 1308.58, 1308.59, 1308.60, 1308.61, 1309.112, and 1309.113;
and to repeal sections 1308.01, 1308.02,
1308.05, 1308.06, 1308.07, 1308.18,
1308.19, 1308.20, 1308.21, 1308.23, 1308.24,
1308.25, 1308.26, 1308.27,
1308.28, 1308.32, 1308.33, 1308.34, 1308.35, 1308.36, 1308.39, 1308.40,
1308.43, and 1308.44 of
the Revised Code to adopt the Revised Article 8 of
the Uniform Commercial Code--Investment
Securities, to adopt modifications to the General Corporation Law regarding
control share acquisitions, and to make changes in certain organizational
provisions of the Limited Liability Companies Law and the Limited Partnerships
Law.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1301.05, 1301.12, 1303.02, 1304.01, 1304.02,
1305.10, 1305.13, 1308.03, 1308.04, 1308.08, 1308.09, 1308.10, 1308.11,
1308.12, 1308.13, 1308.14, 1308.15, 1308.16, 1308.17, 1308.22, 1308.31,
1308.37, 1308.38, 1308.41, 1308.42, 1309.01, 1309.03, 1309.14, 1309.20,
1309.21, 1309.22, 1309.23, 1309.24, 1309.25, 1309.28, 1309.31, 1701.01,
1701.24,
1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 1701.832, 1705.01, 1705.04,
1705.16, 1705.43, 1782.33, and 3901.51 be amended and new sections
1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 1308.18, 1308.19, 1308.20,
1308.21, 1308.23, 1308.24, 1308.25, 1308.26, 1308.27, 1308.32, 1308.33,
1308.39, and 1308.40 and sections 1308.51, 1308.52, 1308.53, 1308.54, 1308.55,
1308.56, 1308.57, 1308.58, 1308.59, 1308.60, 1308.61, 1309.112, and 1309.113
of the Revised Code be enacted to read as follows:
Sec. 1301.05. (A) Except as otherwise provided in this
section, when a transaction bears a reasonable relation to this
state and also to another state or nation, the parties may agree
that the law either of this state or of the other state or nation
shall govern their rights and duties. Failing such an agreement
Chapters 1301., 1302., 1303., 1304., 1305., 1307., 1308.,
1309., and 1310. of the Revised Code apply to transactions
bearing an appropriate relation to this state.
(B) Where one of the following provisions of Chapters
1301., 1302., 1303., 1304., 1305., 1307., 1308., 1309.,
and 1310. of the Revised Code specifies the applicable law, that
provision governs and a contrary agreement is effective only to
the extent permitted by the law, including the conflict of laws
rules, so specified:
(1) Rights of creditors against sold goods, as provided in
section 1302.43 of the Revised Code;
(2) Applicability of sections 1304.01 to 1304.40 of the
Revised Code, as provided in section 1304.02 of the Revised Code;
(3) Fund transfers under sections 1304.51 to 1304.85 of
the Revised Code, as provided in section 1304.85 of the Revised
Code;
(4) Applicability of sections 1308.01 to 1308.36
CHAPTER 1308. of the
Revised Code, as provided in section 1308.05 of the Revised Code;
(5) Perfection provisions of section 1309.03 of the
Revised Code;
(6) Applicability of sections 1310.01 to 1310.78 of the
Revised Code, as provided in sections 1310.03 and 1310.04 of the
Revised Code.
Sec. 1301.12. (A) Except in the cases described in division (B) of this
section a contract for the sale of personal property is not enforceable by way
of action or defense beyond five thousand dollars in amount or value of
remedy unless there is some writing which indicates that a contract for sale
has been made between the parties at a defined or stated price, reasonably
identifies the subject matter, and is signed by the party against whom
enforcement is sought or by his THAT PARTY'S authorized agent.
(B) Division (A) of this section does not apply to contracts for the sale of
goods, section 1302.04 of the Revised Code, nor of securities, section
1308.30 1308.07 of the Revised Code, nor to security
agreements, section 1309.14 of the Revised Code.
Sec. 1303.02. (A) This chapter applies to negotiable
instruments. It does not apply to money, to payment orders
governed by sections 1304.51 to 1304.85 of the Revised Code, or
to securities governed by sections 1308.01 to 1308.44
CHAPTER 1308. of the Revised Code.
(B) If there is a conflict between this chapter and either
sections 1304.01 to 1304.40 or sections 1309.01 to 1309.50 of the
Revised Code, the provisions of sections 1304.01 to 1304.40 or
sections 1309.01 to 1309.50 of the Revised Code govern.
(C) If any provision of this chapter is inconsistent with
any regulation of the board of governors of the federal reserve
system or any operating circular of the federal reserve banks,
the regulation or the operating circular supersedes the provision
of this chapter to the extent of the inconsistency.
Sec. 1304.01. (A) As used in sections 1304.01 to 1304.40 of the Revised
Code, unless the context requires otherwise:
(1) "Account" means any deposit or credit account with a bank, including a
demand, time, savings, passbook, share draft, or similar account, other than
an account evidenced by a certificate of deposit.
(2) "Afternoon" means the period of day between noon and
midnight.
(3) "Banking day" means the part of a day on which a
bank is open to the public for carrying on substantially all of
its banking functions.
(4) "Clearing house" means an association of banks or
other payors regularly clearing items.
(5) "Customer" means a person having an account with a
bank or for whom a bank has agreed to collect items, including a bank that
maintains an account at another bank.
(6) "Documentary draft" means a draft to be presented for acceptance or
payment if specified documents, certified securities or instructions for
uncertificated securities AS DEFINED IN SECTION 1308.01 of the Revised Code, or
other certificates, statements, or similar documents are to be received by the
drawee or other payor before acceptance or payment of the draft.
(7) "Draft" means a draft as defined in section 1303.03 of the Revised Code
or an item, other than an instrument, that is an order.
(8) "Drawee" means a person ordered in a draft to make payment.
(9) "Item" means an instrument or a promise or order to pay money handled by
a bank for collection or payment. "Item" does not include a payment order
governed by sections 1304.51 to 1304.85 of the Revised Code, a credit slip, or
a debit card slip.
(10) "Midnight deadline," with respect to a bank, is midnight
on its next banking day following the banking day on which it
recevies RECEIVES the relevant item or notice or from which the
time
for
taking action commences to run, whichever is later.
(11) "Settle" means to pay in cash, by clearing house
settlement, in a charge or credit or by remittance, or otherwise
as agreed. A settlement may be either provisional or final.
(12) "Suspends payments" with respect to a bank means that
it has been closed by order of the supervisory authorities, that
a public officer has been appointed to take it over, or that it
ceases or refuses to make payments in the ordinary course of
business.
(B) As used in sections 1304.01 to 1304.40 of the Revised Code:
(1) "Bank" means a person engaged in the business of banking, including a
savings bank, a savings and loan association, a credit union, or a trust
company.
(2) "Depositary bank" means the first bank to take an
item even though it is also the payor bank, unless the item is presented for
immediate payment over the counter.
(3) "Payor bank" means a bank that is a drawee of a draft.
(4) "Intermediary bank" means a bank to which an item
is transferred in course of collection except the depositary or
payor bank.
(5) "Collecting bank" means a bank handling an item
for collection except the payor bank.
(6) "Presenting bank" means a bank presenting an item
except a payor bank.
(C) As used in sections 1304.01 to 1304.40 of
the Revised Code:
(1) "Acceptance" and "certified check" have the same meanings as in
section 1303.46 of the Revised Code.
(2) "Alteration" has the same meaning as in section 1303.50 of the Revised
Code.
(3) "Cashier's check," "certificate of deposit," "check," "instrument," and
"teller's check" have the same meanings as in section 1303.03 of the Revised
Code.
(4) "Good faith," "order," "ordinary care," "promise," and "prove" have the
same meanings as in section 1303.01 of the Revised Code.
(5) "Holder in due course" has the same meaning as in section 1303.32 of the
Revised Code.
(6) "Notice of dishonor" has the same meaning as in section 1303.63 of the
Revised Code.
(7) "Person entitled to enforce" has the same meaning as in section 1303.31
of the Revised Code.
(8) "Presentment" has the same meaning as in section 1303.61 of the Revised
Code.
(9) "Unauthorized signature" has the same meaning as in
section 1303.43 of the Revised Code.
(D) The terms and principles of construction and interpretation in sections
1301.01 to 1301.14 of the Revised Code are applicable to sections 1304.01 to
1303.40 1304.40 of the Revised Code.
Sec. 1304.02. (A) To the extent that items within sections 1304.01 to
1304.40 of the Revised Code are also within the scope of Chapter 1303. and
sections 1308.01 to 1308.36 CHAPTER 1308. of
the Revised Code, they are subject to that
chapter and those sections CHAPTERS. In the event of
conflict, the provisions of
sections 1304.01 to 1304.40 of the Revised Code govern those of Chapter 1303.,
but the provisions of sections 1308.01 to 1308.36
CHAPTER 1308. of the Revised Code govern those of
sections 1304.01 to 1304.40 of the Revised Code.
(B) The liability of a bank for action or non-action with respect to any item
handled by it for purposes of presentment, payment, or collection is governed
by the law of the place where the bank is located. In the case of action or
non-action by or at a branch or separate office of a bank, its liability is
governed by the law of the place where the branch or separate office is
located.
Sec. 1305.10. (A) Unless otherwise agreed, the beneficiary by transferring
or presenting a documentary draft or demand for payment warrants to all
interested parties that the necessary conditions of the credit have been
complied with. This is in addition to any warranties arising under Chapters
1303., 1304., and 1308. of the Revised Code.
(B) Unless otherwise agreed, a negotiating, advising, confirming, collecting,
or issuing bank presenting or transferring a draft or demand for payment under
a credit warrants only the matters warranted by a collecting bank under
sections 1304.01 to 1304.40 of the Revised Code, and any such bank
transferring a document warrants only the matters warranted by an A
SECURITIES intermediary under sections 1307.01 to 1307.40 and 1308.01
to 1308.36 CHAPTER 1308. of the Revised Code.
Sec. 1305.13. (A) An issuer must honor a draft or demand
for payment that complies with the terms of the relevant credit
regardless of whether the goods or documents conform to the
underlying contract for sale or other contract between the
customer and the beneficiary. The issuer is not excused from
honor of such a draft or demand by reason of an additional
general term that all documents must be satisfactory to the
issuer, but an issuer may require that specified documents must
be satisfactory to it.
(B) Unless otherwise agreed when documents appear on their
face to comply with the terms of a credit but a required document
does not in fact conform to the warranties made on negotiation or
transfer of a document of title, pursuant to section 1307.35 of
the Revised Code, or of a certificated security pursuant to
section 1308.21 1308.20 of the Revised Code, or is forged or
fraudulent
or there is fraud in the transaction:
(1) The issuer must honor the draft or demand for payment
if honor is demanded by a negotiating bank or other holder of the
draft or demand which has taken the draft or demand under the
credit and under circumstances which would make it a holder in
due course as provided in section 1303.32 of the Revised Code and
in an appropriate case would make it a person to whom a document
of title has been duly negotiated, as provided in section 1307.30
of the Revised Code, or a bona fide PROTECTED purchaser of a
certificated
security, as provided in section 1308.17 of the Revised Code; and
(2) In all other cases as against its customer, an issuer
acting in good faith may honor the draft or demand for payment
despite notification from the customer of fraud, forgery, or
other defect not apparent on the face of the documents but a
court of appropriate jurisdiction may enjoin such honor.
(C) Unless otherwise agreed, an issuer which has duly
honored a draft or demand for payment is entitled to immediate
reimbursement of any payment made under the credit and to be put
in effectively available funds not later than the day before
maturity of any acceptance made under the credit.
(D) When a credit provides for payment by the issuer on
receipt of notice that the required documents are in the
possession of a correspondent or other agent of the issuer:
(1) Any payment made on receipt of such notice is
conditional; and
(2) The issuer may reject documents which do not comply
with the credit if it does so within three banking days following
its receipt of the documents; and
(3) In the event of such rejection, the issuer is entitled
by chargeback or otherwise to return of the payment made.
(E) In the case covered by division (D) of this section,
failure to reject documents within the time specified in division
(D)(2) of this section constitutes acceptance of the documents
and makes the payment final in favor of the beneficiary.
Sec. 1308.01. (A) IN THIS CHAPTER:
(1) "ADVERSE CLAIM" MEANS A CLAIM THAT A CLAIMANT HAS A PROPERTY INTEREST
IN A FINANCIAL ASSET AND THAT IT IS A VIOLATION OF THE RIGHTS OF THE CLAIMANT
FOR ANOTHER PERSON TO HOLD, TRANSFER, OR DEAL WITH THE FINANCIAL ASSET.
(2) "BEARER FORM," AS APPLIED TO A CERTIFICATED SECURITY, MEANS A FORM IN
WHICH THE SECURITY IS PAYABLE TO THE BEARER OF THE SECURITY CERTIFICATE
ACCORDING TO ITS TERMS BUT NOT BY REASON OF AN INDORSEMENT.
(3) "BROKER" MEANS A PERSON DEFINED AS A BROKER OR DEALER UNDER THE
FEDERAL SECURITIES LAWS, BUT WITHOUT EXCLUDING A BANK ACTING IN THAT CAPACITY.
(4) "CERTIFICATED SECURITY" MEANS A SECURITY THAT IS REPRESENTED BY A
CERTIFICATE.
(5) "CLEARING CORPORATION" MEANS:
(a) A PERSON THAT IS REGISTERED AS A "CLEARING AGENCY" UNDER THE
FEDERAL SECURITIES LAWS;
(b) A FEDERAL RESERVE BANK; OR
(c) ANY OTHER PERSON THAT PROVIDES CLEARANCE OR SETTLEMENT
SERVICES WITH RESPECT TO FINANCIAL ASSETS THAT WOULD REQUIRE IT TO REGISTER AS
A CLEARING AGENCY UNDER THE FEDERAL SECURITIES LAWS BUT FOR AN EXCLUSION OR
EXEMPTION FROM THE REGISTRATION REQUIREMENT, IF ITS ACTIVITIES AS A CLEARING
CORPORATION, INCLUDING PROMULGATION OF RULES, ARE SUBJECT TO REGULATION BY A
FEDERAL OR STATE GOVERNMENTAL AUTHORITY.
(6) "COMMUNICATE" MEANS TO:
(a) SEND A SIGNED WRITING; OR
(b) TRANSMIT INFORMATION BY ANY MECHANISM AGREED UPON BY THE
PERSONS TRANSMITTING AND RECEIVING THE INFORMATION.
(7) "ENTITLEMENT HOLDER" MEANS A PERSON IDENTIFIED IN THE RECORDS OF A
SECURITIES INTERMEDIARY AS THE PERSON HAVING A SECURITY ENTITLEMENT AGAINST
THE SECURITIES INTERMEDIARY. IF A PERSON ACQUIRES A SECURITY ENTITLEMENT BY
VIRTUE OF DIVISION (B)(2) OR (3) OF SECTION 1308.51 of the Revised Code, THAT PERSON
IS THE ENTITLEMENT HOLDER.
(8) "ENTITLEMENT ORDER" MEANS A NOTIFICATION COMMUNICATED TO A SECURITIES
INTERMEDIARY DIRECTING TRANSFER OR REDEMPTION OF A FINANCIAL ASSET TO WHICH
THE ENTITLEMENT HOLDER HAS A SECURITY ENTITLEMENT.
(9) "FINANCIAL ASSET," EXCEPT AS OTHERWISE PROVIDED IN SECTION 1308.02
of the Revised Code, MEANS:
(a) A SECURITY;
(b) AN OBLIGATION OF A PERSON OR A SHARE, PARTICIPATION, OR OTHER
INTEREST IN A PERSON OR IN PROPERTY OR AN ENTERPRISE OF A PERSON, WHICH IS, OR
IS OF A TYPE, DEALT IN OR TRADED ON FINANCIAL MARKETS, OR WHICH IS RECOGNIZED
IN ANY AREA IN WHICH IT IS ISSUED OR DEALT IN AS A MEDIUM FOR INVESTMENT; OR
(c) ANY PROPERTY THAT IS HELD BY A SECURITIES INTERMEDIARY FOR
ANOTHER PERSON IN A SECURITIES ACCOUNT IF THE SECURITIES INTERMEDIARY HAS
EXPRESSLY AGREED WITH THE OTHER PERSON THAT THE PROPERTY IS TO BE TREATED AS A
FINANCIAL ASSET UNDER THIS CHAPTER.
AS CONTEXT REQUIRES, THE TERM MEANS EITHER THE INTEREST ITSELF OR THE MEANS
BY WHICH A PERSON'S CLAIM TO IT IS EVIDENCED, INCLUDING A CERTIFICATED OR
UNCERTIFICATED SECURITY, A SECURITY CERTIFICATE, OR A SECURITY ENTITLEMENT.
(10) "GOOD FAITH," FOR PURPOSES OF THE OBLIGATION OF GOOD FAITH IN THE
PERFORMANCE OR ENFORCEMENT OF CONTRACTS OR DUTIES WITHIN THIS CHAPTER, MEANS
HONESTY IN FACT AND THE OBSERVANCE OF REASONABLE COMMERCIAL STANDARDS OF FAIR
DEALING.
(11) "INDORSEMENT" MEANS A SIGNATURE THAT ALONE OR ACCOMPANIED BY OTHER
WORDS IS MADE ON A SECURITY CERTIFICATE IN REGISTERED FORM OR ON A SEPARATE
DOCUMENT FOR THE PURPOSE OF ASSIGNING, TRANSFERRING, OR REDEEMING THE SECURITY
OR GRANTING A POWER TO ASSIGN, TRANSFER, OR REDEEM IT.
(12) "INSTRUCTION" MEANS A NOTIFICATION COMMUNICATED TO THE ISSUER OF AN
UNCERTIFICATED SECURITY WHICH DIRECTS THAT THE TRANSFER OF THE SECURITY BE
REGISTERED OR THAT THE SECURITY BE REDEEMED.
(13) "REGISTERED FORM," AS APPLIED TO A CERTIFICATED SECURITY, MEANS A
FORM IN WHICH:
(a) THE SECURITY CERTIFICATE SPECIFIES A PERSON ENTITLED TO THE
SECURITY; AND
(b) A TRANSFER OF THE SECURITY MAY BE REGISTERED UPON BOOKS
MAINTAINED FOR THAT PURPOSE BY OR ON BEHALF OF THE ISSUER, OR THE SECURITY
CERTIFICATE SO STATES.
(14) "SECURITIES INTERMEDIARY" MEANS:
(a) A CLEARING CORPORATION; OR
(b) A PERSON, INCLUDING A BANK OR BROKER, THAT IN THE ORDINARY
COURSE OF ITS BUSINESS MAINTAINS SECURITIES ACCOUNTS FOR OTHERS AND IS ACTING
IN THAT CAPACITY.
(15) "SECURITY," EXCEPT AS OTHERWISE PROVIDED IN SECTION 1308.02 of the Revised Code,
MEANS AN OBLIGATION OF AN ISSUER OR A SHARE, PARTICIPATION, OR OTHER INTEREST
IN AN ISSUER OR IN PROPERTY OR AN ENTERPRISE OF AN ISSUER:
(a) WHICH IS REPRESENTED BY A SECURITY CERTIFICATE IN BEARER OR
REGISTERED FORM, OR THE TRANSFER OF WHICH MAY BE REGISTERED UPON BOOKS
MAINTAINED FOR THAT PURPOSE BY OR ON BEHALF OF THE ISSUER;
(b) WHICH IS ONE OF A CLASS OR SERIES OR BY ITS TERMS IS
DIVISIBLE INTO A CLASS OR SERIES OF SHARES, PARTICIPATIONS, INTERESTS, OR
OBLIGATIONS; AND
(c) WHICH:
(i) IS, OR IS OF A TYPE, DEALT IN OR TRADED ON SECURITIES
EXCHANGES OR SECURITIES MARKETS; OR
(ii) IS A MEDIUM FOR INVESTMENT AND BY ITS TERMS EXPRESSLY
PROVIDES THAT IT IS A SECURITY GOVERNED BY THIS CHAPTER.
(16) "SECURITY CERTIFICATE" MEANS A CERTIFICATE REPRESENTING A SECURITY.
(17) "SECURITY ENTITLEMENT" MEANS THE RIGHTS AND PROPERTY INTEREST OF AN
ENTITLEMENT HOLDER WITH RESPECT TO A FINANCIAL ASSET SPECIFIED IN SECTIONS
1308.51 TO 1308.61 of the Revised Code.
(18) "UNCERTIFICATED SECURITY" MEANS A SECURITY THAT IS NOT REPRESENTED BY
A CERTIFICATE.
(B) OTHER DEFINITIONS APPLYING TO THIS CHAPTER AND THE SECTIONS
IN WHICH THEY APPEAR ARE:
(1) "APPROPRIATE PERSON," AS DEFINED IN SECTION 1308.23 of the Revised Code.
(2) "CONTROL," AS DEFINED IN SECTION 1308.24 of the Revised Code.
(3) "DELIVERY," AS DEFINED IN SECTION 1308.27 of the Revised Code.
(4) "INVESTMENT COMPANY SECURITY," AS DEFINED IN SECTION 1308.02 of the Revised Code.
(5) "ISSUER," AS DEFINED IN SECTION 1308.08 of the Revised Code.
(6) "OVERISSUE," AS DEFINED IN SECTION 1308.03 of the Revised Code.
(7) "PROTECTED PURCHASER," AS DEFINED IN SECTION 1308.17 of the Revised Code.
(8) "SECURITIES ACCOUNT," AS DEFINED IN SECTION 1308.51 of the Revised Code.
(C) IN ADDITION, CHAPTER 1301. of the Revised Code CONTAINS GENERAL
DEFINITIONS AND PRINCIPLES OF CONSTRUCTION AND INTERPRETATION APPLICABLE
THROUGHOUT THIS CHAPTER.
(D) THE CHARACTERIZATION OF A PERSON, BUSINESS, OR TRANSACTION
FOR PURPOSES OF THIS CHAPTER DOES NOT DETERMINE THE CHARACTERIZATION OF THE
PERSON, BUSINESS, OR TRANSACTION FOR PURPOSES OF ANY OTHER LAW, REGULATION, OR
RULE.
Sec. 1308.02. (A) A SHARE OR SIMILAR EQUITY INTEREST ISSUED BY A
CORPORATION, BUSINESS TRUST, JOINT STOCK COMPANY, OR SIMILAR ENTITY IS A
SECURITY.
(B) AN "INVESTMENT COMPANY SECURITY" IS A SECURITY. "INVESTMENT
COMPANY SECURITY" MEANS A SHARE OR SIMILAR EQUITY INTEREST ISSUED BY AN ENTITY
THAT IS REGISTERED AS AN INVESTMENT COMPANY UNDER THE FEDERAL INVESTMENT
COMPANY LAWS, AN INTEREST IN A UNIT INVESTMENT TRUST THAT IS SO REGISTERED, OR
A FACE-AMOUNT CERTIFICATE ISSUED BY A FACE-AMOUNT CERTIFICATE COMPANY THAT IS
SO REGISTERED. INVESTMENT COMPANY SECURITY DOES NOT INCLUDE AN INSURANCE
POLICY OR ENDOWMENT POLICY OR ANNUITY CONTRACT ISSUED BY AN INSURANCE COMPANY.
(C) AN INTEREST IN A PARTNERSHIP OR LIMITED LIABILITY COMPANY IS
NOT A SECURITY UNLESS IT IS DEALT IN OR TRADED ON SECURITIES EXCHANGES OR IN
SECURITIES MARKETS, ITS TERMS EXPRESSLY PROVIDE THAT IT IS A SECURITY GOVERNED
BY THIS CHAPTER, OR IT IS AN INVESTMENT COMPANY SECURITY. HOWEVER, AN
INTEREST IN A PARTNERSHIP OR LIMITED LIABILITY COMPANY IS A FINANCIAL ASSET IF
IT IS HELD IN A SECURITIES ACCOUNT.
(D) A WRITING THAT IS A SECURITY CERTIFICATE IS GOVERNED BY THIS
CHAPTER AND NOT BY CHAPTER 1303. of the Revised Code, EVEN THOUGH IT ALSO MEETS THE
REQUIREMENTS OF THAT CHAPTER. HOWEVER, A NEGOTIABLE INSTRUMENT GOVERNED BY
CHAPTER 1303. of the Revised Code IS A FINANCIAL ASSET IF IT IS HELD IN A SECURITIES
ACCOUNT.
(E) AN OPTION OR SIMILAR OBLIGATION ISSUED BY A CLEARING
CORPORATION TO ITS PARTICIPANTS IS NOT A SECURITY, BUT IS A FINANCIAL ASSET.
(F) A COMMODITY CONTRACT, AS DEFINED IN SECTION 1309.112 of the Revised Code, IS
NOT A SECURITY OR A FINANCIAL ASSET.
Sec. 1308.03. (A) The EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS
(A)(1) AND (2) OF THIS SECTION, THE provisions of sections
1308.01 to 1308.44 of the Revised Code THIS CHAPTER which validate
a security or compel
its issue or reissue do not apply to the extent that validation,
issue, or reissue would result in overissue; but if.
(1) An IF AN identical security which does not constitute an
overissue is reasonably available for purchase, the person
entitled to issue or validation may compel the issuer to purchase
the security for him and either to deliver a IT IF
certificated security or to register the ITS
transfer of an IF uncertificated security to him, against
surrender of any certificated security he CERTIFICATE THE
PERSON holds; or.
(2) A IF A security is not so available for purchase,
the A person entitled to issue or validation may recover from
the
issuer the price he THE PERSON or the last purchaser for value
paid for it with interest from the date of his THE PERSON'S
demand.
(B) "Overissue" means the issue of securities in excess of
the amount the issuer has corporate power to issue, BUT AN OVERISSUE
DOES NOT OCCUR IF APPROPRIATE ACTION HAS CURED THE OVERISSUE.
Sec. 1308.04. (A) Certificated securities governed by
sections 1308.01 to 1308.44 of the Revised Code, are negotiable
instruments.
(B) Statements as provided in section 1308.44 of the
Revised Code, notices, or the like, sent by the issuer of
uncertificated securities and instructions as provided in section
1308.23 of the Revised Code are neither negotiable instruments
nor certificated securities.
(C) In any THE FOLLOWING RULES APPLY IN AN action on a
CERTIFICATED security AGAINST THE ISSUER:
(1)(A) Unless specifically denied in the pleadings, each
signature on a certificated security, CERTIFICATE OR in a
necessary indorsement, or an initial transaction statement, or on an
instruction, is admitted;
(2)(B) If the effectiveness of a signature is put in issue,
the burden of establishing it EFFECTIVENESS is on the party
claiming under the signature, but the signature is presumed to be
genuine or authorized;
(3)(C) If signatures on a certificated security
CERTIFICATE are admitted or established, production of the
security CERTIFICATE entitles a holder to
recover on it unless the defendant establishes a defense or a
defect going to the validity of the security;
(4)(D) If signatures on an initial transaction statement
are
admitted or established, the facts stated in the statement are
presumed to be true as of the time of its issuance; and
(5) After it is shown that a defense or defect exists, the
plaintiff has the burden of establishing that he THE PLAINTIFF
or some person under whom he THE PLAINTIFF claims is a person
against whom the defense or defect is ineffective, as provided in section
1308.44 of the Revised Code CANNOT BE ASSERTED.
Sec. 1308.05. (A) THE LOCAL LAW OF THE ISSUER'S JURISDICTION, AS
SPECIFIED IN DIVISION (D) OF THIS SECTION, GOVERNS:
(1) THE VALIDITY OF A SECURITY;
(2) THE RIGHTS AND DUTIES OF THE ISSUER WITH RESPECT TO REGISTRATION OF
TRANSFER;
(3) THE EFFECTIVENESS OF REGISTRATION OF TRANSFER BY THE ISSUER;
(4) WHETHER THE ISSUER OWES ANY DUTIES TO AN ADVERSE CLAIMANT TO A
SECURITY; AND
(5) WHETHER AN ADVERSE CLAIM CAN BE ASSERTED AGAINST A PERSON TO WHOM
TRANSFER OF A CERTIFICATED OR UNCERTIFICATED SECURITY IS REGISTERED OR A
PERSON WHO OBTAINS CONTROL OF AN UNCERTIFICATED SECURITY.
(B) THE LOCAL LAW OF THE SECURITIES INTERMEDIARY'S JURISDICTION,
AS SPECIFIED IN DIVISION (E) OF THIS SECTION, GOVERNS:
(1) ACQUISITION OF A SECURITY ENTITLEMENT FROM THE SECURITIES
INTERMEDIARY;
(2) THE RIGHTS AND DUTIES OF THE SECURITIES INTERMEDIARY AND ENTITLEMENT
HOLDER ARISING OUT OF A SECURITY ENTITLEMENT;
(3) WHETHER THE SECURITIES INTERMEDIARY OWES ANY DUTIES TO AN ADVERSE
CLAIMANT TO A SECURITY ENTITLEMENT; AND
(4) WHETHER AN ADVERSE CLAIM CAN BE ASSERTED AGAINST A PERSON WHO ACQUIRES
A SECURITY ENTITLEMENT FROM THE SECURITIES INTERMEDIARY OR A PERSON WHO
PURCHASES A SECURITY ENTITLEMENT OR INTEREST THEREIN FROM AN ENTITLEMENT
HOLDER.
(C) THE LOCAL LAW OF THE JURISDICTION IN WHICH A SECURITY
CERTIFICATE IS LOCATED AT THE TIME OF DELIVERY GOVERNS WHETHER AN ADVERSE
CLAIM CAN BE ASSERTED AGAINST A PERSON TO WHOM THE SECURITY CERTIFICATE IS
DELIVERED.
(D) "ISSUER'S JURISDICTION" MEANS THE JURISDICTION UNDER WHICH
THE ISSUER OF THE SECURITY IS ORGANIZED OR, IF PERMITTED BY THE LAW OF THAT
JURISDICTION, THE LAW OF ANOTHER JURISDICTION SPECIFIED BY THE ISSUER. AN
ISSUER ORGANIZED UNDER THE LAW OF THIS STATE MAY SPECIFY THE LAW OF ANOTHER
JURISDICTION AS THE LAW GOVERNING THE MATTERS SPECIFIED IN DIVISIONS
(A)(2) TO (5) OF THIS SECTION.
(E) THE FOLLOWING RULES DETERMINE A "SECURITIES INTERMEDIARY'S
JURISDICTION" FOR PURPOSES OF THIS SECTION:
(1) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY AND ITS
ENTITLEMENT HOLDER SPECIFIES THAT IT IS GOVERNED BY THE LAW OF A PARTICULAR
JURISDICTION, THAT JURISDICTION IS THE SECURITIES INTERMEDIARY'S JURISDICTION.
(2) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY AND ITS
ENTITLEMENT HOLDER DOES NOT SPECIFY THE GOVERNING LAW AS PROVIDED IN DIVISION
(E)(1) OF THIS SECTION, BUT EXPRESSLY SPECIFIES THAT THE SECURITIES
ACCOUNT IS MAINTAINED AT AN OFFICE IN A PARTICULAR JURISDICTION, THAT
JURISDICTION IS THE SECURITIES INTERMEDIARY'S JURISDICTION.
(3) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY AND ITS
ENTITLEMENT HOLDER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN DIVISION
(E)(1) OR (2) OF THIS SECTION, THE SECURITIES INTERMEDIARY'S
JURISDICTION IS THE JURISDICTION IN WHICH IS LOCATED THE OFFICE IDENTIFIED IN
AN ACCOUNT STATEMENT AS THE OFFICE SERVING THE ENTITLEMENT HOLDER'S ACCOUNT.
(4) IF AN AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY AND ITS
ENTITLEMENT HOLDER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN DIVISION
(E)(1) OR (2) OF THIS SECTION AND AN ACCOUNT STATEMENT DOES NOT
IDENTIFY AN OFFICE SERVING THE ENTITLEMENT HOLDER'S ACCOUNT AS PROVIDED IN
DIVISION (E)(3) OF THIS SECTION, THE SECURITIES INTERMEDIARY'S
JURISDICTION IS THE JURISDICTION IN WHICH IS LOCATED THE CHIEF EXECUTIVE
OFFICE OF THE SECURITIES INTERMEDIARY.
(F) A SECURITIES INTERMEDIARY'S JURISDICTION IS NOT DETERMINED BY
THE PHYSICAL LOCATION OF CERTIFICATES REPRESENTING FINANCIAL ASSETS, OR BY THE
JURISDICTION IN WHICH IS ORGANIZED THE ISSUER OF THE FINANCIAL ASSET WITH
RESPECT TO WHICH AN ENTITLEMENT HOLDER HAS A SECURITY ENTITLEMENT, OR BY THE
LOCATION OF FACILITIES FOR DATA PROCESSING OR OTHER RECORD KEEPING CONCERNING
THE ACCOUNT.
Sec. 1308.06. A RULE ADOPTED BY A CLEARING CORPORATION GOVERNING RIGHTS
AND OBLIGATIONS AMONG THE CLEARING CORPORATION AND ITS PARTICIPANTS IN THE
CLEARING CORPORATION IS EFFECTIVE EVEN IF THE RULE CONFLICTS WITH THIS CHAPTER
AND AFFECTS ANOTHER PARTY WHO DOES NOT CONSENT TO THE RULE.
Sec. 1308.07. A CONTRACT OR MODIFICATION OF A CONTRACT FOR THE SALE OR
PURCHASE OF A SECURITY IS ENFORCEABLE WHETHER OR NOT THERE IS A WRITING SIGNED
OR RECORD AUTHENTICATED BY A PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT, EVEN IF
THE CONTRACT OR MODIFICATION IS NOT CAPABLE OF PERFORMANCE WITHIN ONE YEAR OF
ITS MAKING.
Sec. 1308.08. (A) With respect to obligations on or
defenses to a security, "issuer" includes a person who:
(1) Places or authorizes the placing of his ITS name on a
certificated security CERTIFICATE, otherwise than as
authenticating trustee, registrar,
transfer agent, or the like, to evidence that it
represents a share, participation, or other interest in his
ITS
property or in an enterprise, or to evidence his ITS duty to
perform an obligation represented by the certificated security
CERTIFICATE;
(2) Creates shares, participations, or other interests in
his ITS property or in an enterprise, or undertakes
obligations, which shares, participations, interests, or obligations
THAT are uncertificated securities;
(3) Directly or indirectly creates fractional interests in
his ITS rights or property, which IF THE
fractional interests are
represented by certificated securities SECURITY CERTIFICATES; or
(4) Becomes responsible for, or in place of, any other
person described as an issuer in this section.
(B) With respect to obligations on or defenses to a
security, a guarantor is an issuer to the extent of his ITS
guaranty, whether or not his ITS obligation is noted on a
certificated security or on statements of uncertificated securities
sent pursuant to
section 1308.44 of the Revised Code CERTIFICATE.
(C) With respect to registration of transfer, pledge, or
release as provided in sections 1308.37 to 1308.44 of the Revised
Code, "issuer" means a person on whose behalf transfer books are
maintained.
Sec. 1308.09. (A) Even against a purchaser for value and
without notice, the terms of a CERTIFICATED security include:
(1) If the security is certificated, those TERMS stated on the
security;
(2) If the security is uncertificated, those contained in
the initial transaction statement sent to such purchaser or, if
his interest is transferred to him other than by registration of transfer,
pledge, or release, the
initial transaction statement sent to the registered owner or registered
pledgee; and
(3) Those CERTIFICATE AND TERMS made part of the security by
reference, on the certificated security or in the initial
transaction statement, CERTIFICATE to another instrument,
indenture, or document or to a constitution,
statute, ordinance, rule, regulation, order, or the like, to the extent
that the terms referred to do not conflict with the terms
stated on the certificated security or contained in the
statement CERTIFICATE. A reference under division (A)(3) of
this section
does not of itself charge a purchaser for value with notice of a
defect going to the validity of the security, even though IF the
certificated security or statement CERTIFICATE expressly states
that a person accepting it admits notice.
THE TERMS OF AN UNCERTIFICATED SECURITY INCLUDE THOSE STATED IN ANY
INSTRUMENT, INDENTURE, OR DOCUMENT, OR IN A CONSTITUTION, STATUTE, ORDINANCE,
RULE, REGULATION, ORDER, OR THE LIKE, PURSUANT TO WHICH THE SECURITY IS ISSUED.
(B)(1) THE FOLLOWING RULES APPLY IF AN ISSUER ASSERTS THAT A
SECURITY IS NOT VALID:
(1) A certificated security in the hands of a purchaser
for value or an uncertificated security as to which an initial
transaction statement has been sent to a purchaser for value,
other than a security ONE issued by a government or governmental
SUBDIVISION, agency, or unit
INSTRUMENTALITY, even though issued with a defect going to its
validity, is valid with respect to the IN THE HANDS OF A
purchaser if he is FOR VALUE AND without notice of the
particular defect unless the defect involves a violation of A
constitutional provisions, in which PROVISION. IN THAT
case, the security is valid with respect to IN THE HANDS
OF a subsequent purchaser for
value and without notice of the defect, OTHER THAN ONE WHO TAKES BY
ORIGINAL ISSUE.
(2) The provisions of division (B)(1) of this section
apply to an issuer that is a government or governmental
SUBDIVISION, agency, or unit
INSTRUMENTALITY only if either there has been substantial
compliance with
the legal requirements governing the issue or the issuer has
received a substantial consideration for the issue as a whole or
for the particular security and a stated purpose of the issue is
one for which the issuer has power to borrow money or issue the
security.
(C) Except as OTHERWISE provided in the case of certain
unauthorized
signatures on issue under section 1308.12 of the Revised Code,
lack of genuineness of a certificated security or an initial
transaction statement is a complete defense, even against a
purchaser for value and without notice.
(D) All other defenses of the issuer of a certificated or
uncertificated security, including nondelivery and conditional
delivery of a certificated security, are ineffective against a
purchaser for value who has taken THE CERTIFICATED SECURITY without
notice of the particular defense.
(E) Nothing in this THIS section shall be construed to
DOES NOT affect the right of a party to CANCEL a CONTRACT FOR
A SECURITY "when, as and if issued" or a "when
distributed" contract to cancel the contract in the event of a
material change in the character of the security that is the subject of the
contract or in the plan or arrangement pursuant to
which the security is to be issued or distributed.
(F) IF A SECURITY IS HELD BY A SECURITIES INTERMEDIARY AGAINST
WHOM AN ENTITLEMENT HOLDER HAS A SECURITY ENTITLEMENT WITH RESPECT TO THE
SECURITY, THE ISSUER MAY NOT ASSERT ANY DEFENSE THAT THE ISSUER COULD NOT
ASSERT IF THE ENTITLEMENT HOLDER HELD THE SECURITY DIRECTLY.
Sec. 1308.10. (A) After an act or event, OTHER THAN A CALL
THAT HAS BEEN REVOKED, creating a right
to immediate performance of the principal obligation represented
by a certificated security or that sets a date on or after which
the security is to be presented or surrendered for redemption or
exchange, a purchaser is charged with notice of any defect in its
issue or defense of the issuer if THE ACT OR EVENT:
(1) The act or event is one requiring (A) REQUIRES
the payment of money, the delivery of A certificated securities
SECURITY, the registration
of transfer of AN uncertificated securities SECURITY, or
any of these THEM on presentation or surrender of the
certificated security CERTIFICATE, the funds MONEY
or securities are SECURITY IS available on the date set for
payment or
exchange, and he THE PURCHASER takes the security more than one
year after that date; and OR
(2) The act or event is (B) IS not covered by
division (A)(1) of this section and he THE PURCHASER
takes the security more than
two years after the date set for surrender or presentation or the date on
which performance became due.
(B) A call that has been revoked is not within division
(A) of this section.
Sec. 1308.11. (A) A restriction on transfer of a security
imposed by the issuer, even though IF otherwise lawful, is
ineffective against any A person without actual knowledge of it
unless:
(A)(1) The security is certificated and the restriction is
noted conspicuously thereon ON THE SECURITY CERTIFICATE; or
(B)(2) The security is uncertificated and a notation
of the restriction is contained in the initial transaction statement
sent to the person or, if his interest is
transferred to him other than by registration of
transfer, pledge, or release, the initial transaction statement sent to
the
registered owner or the registered pledgee HAS BEEN NOTIFIED OF THE
RESTRICTION.
(B) A LIEN IN FAVOR OF AN ISSUER UPON A CERTIFICATED SECURITY IS
VALID AGAINST A PURCHASER ONLY IF THE RIGHT OF THE ISSUER TO THE LIEN IS NOTED
CONSPICUOUSLY ON THE SECURITY CERTIFICATE.
Sec. 1308.12. An unauthorized signature placed on a
certificated security prior to CERTIFICATE BEFORE or in
the course of issue or placed on an initial transaction statement is
ineffective, but
the signature is effective in favor of a purchaser for value of
the certificated security or a purchaser for value of an
uncertified security to whom the initial
transaction statement has been sent, if the purchaser is without
notice of the lack of authority and if the signing has been done
by:
(A) An authenticating trustee, registrar, transfer agent,
or other person entrusted by the issuer with the signing of the
security, CERTIFICATE OR of similar securities
SECURITY CERTIFICATES, or of initial transaction statements or
the immediate preparation for signing of any of
them; or
(B) An employee of the issuer, or of any of the foregoing PERSONS
LISTED IN DIVISION (A) OF THIS SECTION, entrusted with
responsible handling of the security or initial transaction statement
CERTIFICATE.
Sec. 1308.13. (A) If a certificated security CERTIFICATE
contains the
signatures necessary to its issue or transfer but is incomplete
in any other respect:
(1) Any person may complete it by filling in the blanks as
authorized; and
(2) Even though IF the blanks are incorrectly filled in, the
security as completed is enforceable by a purchaser who took it
for value and without notice of the incorrectness.
(B) A complete certificated security CERTIFICATE that has been
improperly altered, even though IF fraudulently, remains
enforceable, but only according to its original terms.
(C) If an initial transaction statement contains the
signatures necessary to its validity, but is incomplete in any
other respect:
(1) Any person may complete it by filling in the blanks as
authorized; and
(2) Even though the blanks are incorrectly filled in, the
statement as completed is effective in favor of the person to
whom it is sent if he purchased the security referred
to therein for value and without notice of the incorrectness.
(D) A complete initial transaction statement that has been
improperly altered, even though fraudulently, is effective in
favor of a purchaser to whom it has been sent, but only according
to its original terms.
Sec. 1308.14. (A) Prior to BEFORE due presentment for
registration of transfer of a certificated security in registered
form OR OF AN INSTRUCTION REQUESTING REGISTRATION OF TRANSFER OF AN
UNCERTIFICATED SECURITY, the issuer or indenture trustee may treat the
registered owner as the person exclusively entitled to vote, to receive
notifications, and otherwise to exercise all the rights and
powers of an owner.
(B) Subject to the provisions of divisions (C), (D), and
(F) of this section, the issuer or indenture trustee may treat
the registered owner of an uncertificated security as the person
exclusively entitled to vote, to receive notifications, and
otherwise to exercise all the rights and powers of an owner.
(C) The registered owner of an uncertificated security
that is subject to a registered pledge is not entitled to
registration of transfer prior to the due presentment to the
issuer of a release instruction. The exercise of conversion
rights with respect to a convertible uncertificated security is a
transfer within the meaning of this section.
(D) Upon due presentment of a transfer instruction from
the registered pledgee of an uncertificated security, the issuer
shall:
(1) Register the transfer of the security to the new owner
free of pledge, if the instruction specifies a new owner, who may
be the registered pledgee, and does not specify a pledgee;
(2) Register the transfer of the security to the new owner
subject to the interest of the existing pledgee, if the
instruction specifies a new owner and the existing pledgee; or
(3) Register the release of the security from the existing
pledge and register the pledge of the security to the other
pledgee, if the instruction specifies the existing owner and
another pledgee.
(E) Continuity of perfection of a security interest is not
broken by registration of transfer under division (D)(2) of this
section or by registration of release and pledge under division
(D)(3) of this section, if the security interest is assigned.
(F) If an uncertificated security is subject to a
registered pledge:
(1) Any uncertificated securities issued in exchange for
or distributed with respect to the pledged security shall be
registered subject to the pledge;
(2) Any certificated securities issued in exchange for or
distributed with respect to the pledged security shall be
delivered to the registered pledgee; and
(3) Any money paid in exchange for or in redemption of
part or all of the security shall be paid to the registered
pledgee.
(G) Nothing in sections 1308.01 to 1308.44 of the Revised
Code shall be construed to THIS CHAPTER DOES NOT affect the
liability of the registered owner of a security for calls, assessments, or the
like.
Sec. 1308.15. (A) A person placing his signature upon SIGNING
a certificated security or an initial transaction statement
CERTIFICATE as authenticating trustee, registrar, transfer agent, or
the like, warrants to a purchaser for value of the certificated
security or
a purchaser for value of an uncertificated security to whom the
initial transaction statement has been sent, if the purchaser is
without notice of the particular defect, that:
(1) The certificated security or initial transaction
CERTIFICATE is genuine;
(2) His THE PERSON'S own participation in the issue or
registration of the transfer, pledge, or release of the security is
within his THE PERSON'S capacity and within the scope of the
authority received by him THE PERSON from the issuer; and
(3) He THE PERSON has reasonable grounds to believe the
CERTIFICATED security is in the form and within the amount the issuer
is authorized to
issue.
(B) Unless otherwise agreed, a person by so placing his
signature SIGNING UNDER DIVISION (A) OF THIS SECTION does
not assume responsibility for the validity of the security in other respects.
Sec. 1308.16. (A) Upon transfer EXCEPT AS OTHERWISE PROVIDED IN
DIVISIONS (B) AND (C) OF THIS SECTION, UPON DELIVERY of
a CERTIFICATED OR UNCERTIFICATED security to a purchaser as provided
in section 1308.28 of the Revised Code, the
purchaser acquires the ALL rights in the security which
his THAT THE
transferor had or had actual authority POWER to convey unless
the purchaser's rights are limited by division (D) of section 1308.17 of the
Revised Code TRANSFER.
(B) A transferee PURCHASER of a limited interest acquires
rights only
to the extent of the interest transferred PURCHASED. The
creation or release of a security interest in a security is the transfer of a
limited interest in that security.
(C) A PURCHASER OF A CERTIFICATED SECURITY WHO AS A PREVIOUS
HOLDER HAD NOTICE OF AN ADVERSE CLAIM DOES NOT IMPROVE ITS POSITION BY TAKING
FROM A PROTECTED PURCHASER.
Sec. 1308.17. (A) A "bona fide PROTECTED purchaser" is
MEANS a purchaser for value in good faith and without OF A
CERTIFICATED OR UNCERTIFICATED SECURITY, OR OF AN INTEREST THEREIN, WHO:
(1) GIVES VALUE;
(2) DOES NOT HAVE notice of any adverse claim:
(1) Who takes delivery TO THE SECURITY; AND
(3) OBTAINS CONTROL of a THE certificated OR
UNCERTIFICATED security in bearer form or in registered form, issued or
indorsed to him or in blank;
(2) To whom the transfer, pledge, or release of an
uncertificated security is registered on the books of the issuer;
or
(3) To whom a security is transferred under the provisions
of division (A)(3), (4)(a), or (7) of section 1308.28 of the
Revised Code.
(B) "Adverse claim" includes a claim that a transfer was
or would be wrongful or that a particular adverse person is the
owner of or has an interest in the security.
(C) A bona fide purchaser in IN addition to acquiring the
rights of a purchaser, as provided in section 1308.16 of the
Revised Code, A PROTECTED PURCHASER also acquires his
ITS interest in the security
free of any adverse claim.
(D) Notwithstanding division (A) of section 1308.16 of the
Revised Code, the transferee of a particular certificated
security who has been a party to any fraud or illegality
affecting the security, or who as a prior holder of that
certificated security had notice of an adverse claim, cannot
improve his position by taking from a bona fide purchaser.
Sec. 1308.18. (A) A PERSON ACQUIRES A SECURITY OR AN INTEREST
THEREIN, UNDER THIS CHAPTER, IF:
(1) THE PERSON IS A PURCHASER TO WHOM A SECURITY IS DELIVERED PURSUANT TO
SECTION 1308.27 of the Revised Code; OR
(2) THE PERSON ACQUIRES A SECURITY ENTITLEMENT TO THE SECURITY PURSUANT TO
SECTION 1308.51 of the Revised Code.
(B) A PERSON ACQUIRES A FINANCIAL ASSET, OTHER THAN A SECURITY,
OR AN INTEREST THEREIN, UNDER THIS CHAPTER, IF THE PERSON ACQUIRES A SECURITY
ENTITLEMENT TO THE FINANCIAL ASSET.
(C) A PERSON WHO ACQUIRES A SECURITY ENTITLEMENT TO A SECURITY OR
OTHER FINANCIAL ASSET HAS THE RIGHTS SPECIFIED IN SECTIONS 1308.51 TO 1308.61
of the Revised Code, BUT IS A PURCHASER OF ANY SECURITY, SECURITY ENTITLEMENT, OR OTHER
FINANCIAL ASSET HELD BY THE SECURITIES INTERMEDIARY ONLY TO THE EXTENT
PROVIDED IN SECTION 1308.53 of the Revised Code.
(D) UNLESS THE CONTEXT SHOWS THAT A DIFFERENT MEANING IS
INTENDED, A PERSON WHO IS REQUIRED BY OTHER LAW, REGULATION, RULE, OR
AGREEMENT TO TRANSFER, DELIVER, PRESENT, SURRENDER, EXCHANGE, OR OTHERWISE PUT
IN THE POSSESSION OF ANOTHER PERSON A SECURITY OR FINANCIAL ASSET SATISFIES
THAT REQUIREMENT BY CAUSING THE OTHER PERSON TO ACQUIRE AN INTEREST IN THE
SECURITY OR FINANCIAL ASSET PURSUANT TO DIVISION (A) OR (B)
OF THIS SECTION.
Sec. 1308.19. (A) A PERSON HAS NOTICE OF AN ADVERSE CLAIM IF:
(1) THE PERSON KNOWS OF THE ADVERSE CLAIM;
(2) THE PERSON IS AWARE OF FACTS SUFFICIENT TO INDICATE THAT THERE IS A
SIGNIFICANT PROBABILITY THAT THE ADVERSE CLAIM EXISTS AND DELIBERATELY AVOIDS
INFORMATION THAT WOULD ESTABLISH THE EXISTENCE OF THE ADVERSE CLAIM; OR
(3) THE PERSON HAS A DUTY, IMPOSED BY STATUTE OR RULE, TO INVESTIGATE
WHETHER AN ADVERSE CLAIM EXISTS, AND THE INVESTIGATION SO REQUIRED WOULD
ESTABLISH THE EXISTENCE OF THE ADVERSE CLAIM.
(B) HAVING KNOWLEDGE THAT A FINANCIAL ASSET OR INTEREST THEREIN
IS OR HAS BEEN TRANSFERRED BY A REPRESENTATIVE IMPOSES NO DUTY OF INQUIRY INTO
THE RIGHTFULNESS OF A TRANSACTION AND IS NOT NOTICE OF AN ADVERSE CLAIM.
HOWEVER, A PERSON WHO KNOWS THAT A REPRESENTATIVE HAS TRANSFERRED A FINANCIAL
ASSET OR INTEREST THEREIN IN A TRANSACTION THAT IS, OR WHOSE PROCEEDS ARE
BEING USED, FOR THE INDIVIDUAL BENEFIT OF THE REPRESENTATIVE OR OTHERWISE IN
BREACH OF DUTY HAS NOTICE OF AN ADVERSE CLAIM.
(C) AN ACT OR EVENT THAT CREATES A RIGHT TO IMMEDIATE PERFORMANCE
OF THE PRINCIPAL OBLIGATION REPRESENTED BY A SECURITY CERTIFICATE OR SETS A
DATE ON OR AFTER WHICH THE CERTIFICATE IS TO BE PRESENTED OR SURRENDERED FOR
REDEMPTION OR EXCHANGE DOES NOT ITSELF CONSTITUTE NOTICE OF AN ADVERSE CLAIM
EXCEPT IN THE CASE OF A TRANSFER MORE THAN:
(1) ONE YEAR AFTER A DATE SET FOR PRESENTMENT OR SURRENDER FOR REDEMPTION
OR EXCHANGE; OR
(2) SIX MONTHS AFTER A DATE SET FOR PAYMENT OF MONEY AGAINST PRESENTATION
OR SURRENDER OF THE CERTIFICATE, IF MONEY WAS AVAILABLE FOR PAYMENT ON THAT
DATE.
(D) A PURCHASER OF A CERTIFICATED SECURITY HAS NOTICE OF AN
ADVERSE CLAIM IF THE SECURITY CERTIFICATE:
(1) WHETHER IN BEARER OR REGISTERED FORM, HAS BEEN INDORSED "FOR
COLLECTION" OR "FOR SURRENDER" OR FOR SOME OTHER PURPOSE NOT INVOLVING
TRANSFER; OR
(2) IS IN BEARER FORM AND HAS ON IT AN UNAMBIGUOUS STATEMENT THAT IT IS
THE PROPERTY OF A PERSON OTHER THAN THE TRANSFEROR, BUT THE MERE WRITING OF A
NAME ON THE CERTIFICATE IS NOT SUCH A STATEMENT.
(E) FILING OF A FINANCING STATEMENT UNDER CHAPTER 1309.
of the Revised Code IS NOT NOTICE OF AN ADVERSE CLAIM TO A FINANCIAL ASSET.
Sec. 1308.20. (A) A PERSON WHO TRANSFERS A CERTIFICATED SECURITY
TO A PURCHASER FOR VALUE WARRANTS TO THE PURCHASER, AND AN INDORSER, IF THE
TRANSFER IS BY INDORSEMENT, WARRANTS TO ANY SUBSEQUENT PURCHASER, THAT:
(1) THE CERTIFICATE IS GENUINE AND HAS NOT BEEN MATERIALLY ALTERED;
(2) THE TRANSFEROR OR INDORSER DOES NOT KNOW OF ANY FACT THAT MIGHT IMPAIR
THE VALIDITY OF THE SECURITY;
(3) THERE IS NO ADVERSE CLAIM TO THE SECURITY;
(4) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON TRANSFER;
(5) IF THE TRANSFER IS BY INDORSEMENT, THE INDORSEMENT IS MADE BY AN
APPROPRIATE PERSON, OR IF THE INDORSEMENT IS BY AN AGENT, THE AGENT HAS ACTUAL
AUTHORITY TO ACT ON BEHALF OF THE APPROPRIATE PERSON; AND
(6) THE TRANSFER IS OTHERWISE EFFECTIVE AND RIGHTFUL.
(B) A PERSON WHO ORIGINATES AN INSTRUCTION FOR REGISTRATION OF
TRANSFER OF AN UNCERTIFICATED SECURITY TO A PURCHASER FOR VALUE WARRANTS TO
THE PURCHASER THAT:
(1) THE INSTRUCTION IS MADE BY AN APPROPRIATE PERSON, OR IF THE
INSTRUCTION IS BY AN AGENT, THE AGENT HAS ACTUAL AUTHORITY TO ACT ON BEHALF
OF THE APPROPRIATE PERSON;
(2) THE SECURITY IS VALID;
(3) THERE IS NO ADVERSE CLAIM TO THE SECURITY; AND
(4) AT THE TIME THE INSTRUCTION IS PRESENTED TO THE ISSUER:
(a) THE PURCHASER WILL BE ENTITLED TO THE REGISTRATION OF
TRANSFER;
(b) THE TRANSFER WILL BE REGISTERED BY THE ISSUER FREE FROM ALL
LIENS, SECURITY INTERESTS, RESTRICTIONS, AND CLAIMS OTHER THAN THOSE SPECIFIED
IN THE INSTRUCTION;
(c) THE TRANSFER WILL NOT VIOLATE ANY RESTRICTION ON TRANSFER;
AND
(d) THE REQUESTED TRANSFER WILL OTHERWISE BE EFFECTIVE AND
RIGHTFUL.
(C) A PERSON WHO TRANSFERS AN UNCERTIFICATED SECURITY TO A
PURCHASER FOR VALUE AND DOES NOT ORIGINATE AN INSTRUCTION IN CONNECTION WITH
THE TRANSFER WARRANTS THAT:
(1) THE UNCERTIFICATED SECURITY IS VALID;
(2) THERE IS NO ADVERSE CLAIM TO THE SECURITY;
(3) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON TRANSFER; AND
(4) THE TRANSFER IS OTHERWISE EFFECTIVE AND RIGHTFUL.
(D) A PERSON WHO INDORSES A SECURITY CERTIFICATE WARRANTS TO THE
ISSUER THAT:
(1) THERE IS NO ADVERSE CLAIM TO THE SECURITY; AND
(2) THE INDORSEMENT IS EFFECTIVE.
(E) A PERSON WHO ORIGINATES AN INSTRUCTION FOR REGISTRATION OF
TRANSFER OF AN UNCERTIFICATED SECURITY WARRANTS TO THE ISSUER THAT:
(1) THE INSTRUCTION IS EFFECTIVE; AND
(2) AT THE TIME THE INSTRUCTION IS PRESENTED TO THE ISSUER THE PURCHASER
WILL BE ENTITLED TO THE REGISTRATION OF TRANSFER.
(F) A PERSON WHO PRESENTS A CERTIFICATED SECURITY FOR
REGISTRATION OF TRANSFER OR FOR PAYMENT OR EXCHANGE WARRANTS TO THE ISSUER
THAT THE PERSON IS ENTITLED TO THE REGISTRATION, PAYMENT, OR EXCHANGE, BUT A
PURCHASER FOR VALUE AND WITHOUT NOTICE OF ADVERSE CLAIMS TO WHOM TRANSFER IS
REGISTERED WARRANTS ONLY THAT THE PERSON HAS NO KNOWLEDGE OF ANY UNAUTHORIZED
SIGNATURE IN A NECESSARY INDORSEMENT.
(G) IF A PERSON ACTS AS AGENT OF ANOTHER IN DELIVERING A
CERTIFICATED SECURITY TO A PURCHASER, THE IDENTITY OF THE PRINCIPAL WAS KNOWN
TO THE PERSON TO WHOM THE CERTIFICATE WAS DELIVERED, AND THE CERTIFICATE
DELIVERED BY THE AGENT WAS RECEIVED BY THE AGENT FROM THE PRINCIPAL OR
RECEIVED BY THE AGENT FROM ANOTHER PERSON AT THE DIRECTION OF THE PRINCIPAL,
THE PERSON DELIVERING THE SECURITY CERTIFICATE WARRANTS ONLY THAT THE
DELIVERING PERSON HAS AUTHORITY TO ACT FOR THE PRINCIPAL AND DOES NOT KNOW OF
ANY ADVERSE CLAIM TO THE CERTIFICATED SECURITY.
(H) A SECURED PARTY WHO REDELIVERS A SECURITY CERTIFICATE
RECEIVED, OR AFTER PAYMENT AND ON ORDER OF THE DEBTOR DELIVERS THE SECURITY
CERTIFICATE TO ANOTHER PERSON, MAKES ONLY THE WARRANTIES OF AN AGENT UNDER
DIVISION (G) OF THIS SECTION.
(I) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (G) OF THIS
SECTION, A BROKER ACTING FOR A CUSTOMER MAKES TO THE ISSUER AND A PURCHASER
THE WARRANTIES PROVIDED IN DIVISIONS (A) TO (F) OF THIS
SECTION. A BROKER THAT DELIVERS A SECURITY CERTIFICATE TO ITS CUSTOMER, OR
CAUSES ITS CUSTOMER TO BE REGISTERED AS THE OWNER OF AN UNCERTIFICATED
SECURITY, MAKES TO THE CUSTOMER THE WARRANTIES PROVIDED IN DIVISION
(A) OR (B) OF THIS SECTION, AND HAS THE RIGHTS AND
PRIVILEGES OF A PURCHASER UNDER THIS SECTION. THE WARRANTIES OF AND IN FAVOR
OF THE BROKER ACTING AS AN AGENT ARE IN ADDITION TO APPLICABLE WARRANTIES
GIVEN BY AND IN FAVOR OF THE CUSTOMER.
Sec. 1308.21. (A) A PERSON WHO ORIGINATES AN ENTITLEMENT ORDER
TO A SECURITIES INTERMEDIARY WARRANTS TO THE SECURITIES INTERMEDIARY THAT:
(1) THE ENTITLEMENT ORDER IS MADE BY AN APPROPRIATE PERSON, OR IF THE
ENTITLEMENT ORDER IS BY AN AGENT, THE AGENT HAS ACTUAL AUTHORITY TO ACT ON
BEHALF OF THE APPROPRIATE PERSON; AND
(2) THERE IS NO ADVERSE CLAIM TO THE SECURITY ENTITLEMENT.
(B) A PERSON WHO DELIVERS A SECURITY CERTIFICATE TO A SECURITIES
INTERMEDIARY FOR CREDIT TO A SECURITIES ACCOUNT OR ORIGINATES AN INSTRUCTION
WITH RESPECT TO AN UNCERTIFICATED SECURITY DIRECTING THAT THE UNCERTIFICATED
SECURITY BE CREDITED TO A SECURITIES ACCOUNT MAKES TO THE SECURITIES
INTERMEDIARY THE WARRANTIES SPECIFIED IN DIVISION (A) OR (B)
OF SECTION 1308.20 of the Revised Code.
(C) IF A SECURITIES INTERMEDIARY DELIVERS A SECURITY CERTIFICATE
TO ITS ENTITLEMENT HOLDER OR CAUSES ITS ENTITLEMENT HOLDER TO BE REGISTERED AS
THE OWNER OF AN UNCERTIFICATED SECURITY, THE SECURITIES INTERMEDIARY MAKES TO
THE ENTITLEMENT HOLDER THE WARRANTIES SPECIFIED IN DIVISION (A) OR
(B) OF SECTION 1308.20 of the Revised Code.
Sec. 1308.22. (A) AN INDORSEMENT MAY BE IN BLANK OR SPECIAL. AN
INDORSEMENT IN
BLANK INCLUDES AN INDORSEMENT TO BEARER. A SPECIAL INDORSEMENT SPECIFIES TO
WHOM A SECURITY IS TO BE TRANSFERRED OR WHO HAS POWER TO TRANSFER IT. A
HOLDER
MAY CONVERT A BLANK INDORSEMENT TO A SPECIAL INDORSEMENT.
(B) AN INDORSEMENT PURPORTING TO BE ONLY OF PART OF A SECURITY
CERTIFICATE REPRESENTING UNITS INTENDED BY THE ISSUER TO BE SEPARATELY
TRANSFERABLE IS EFFECTIVE TO THE EXTENT OF THE INDORSEMENT.
(C) AN INDORSEMENT, WHETHER SPECIAL OR IN BLANK, DOES NOT
CONSTITUTE A TRANSFER UNTIL DELIVERY OF THE CERTIFICATE ON WHICH IT APPEARS
OR,
IF THE INDORSEMENT IS ON A SEPARATE DOCUMENT, UNTIL DELIVERY OF BOTH THE
DOCUMENT AND THE CERTIFICATE.
(D) If a certificated security CERTIFICATE in
registered form has been
delivered to a purchaser without a necessary indorsement he,
THE PURCHASER may become a bona fide PROTECTED purchaser
only as of the time WHEN the indorsement is supplied;
but. HOWEVER, against the A
transferor, the A transfer is complete
upon delivery and the purchaser has a specifically enforceable right to have
any necessary indorsement supplied.
(E) AN INDORSEMENT OF A SECURITY CERTIFICATE IN BEARER FORM MAY
GIVE NOTICE OF AN ADVERSE CLAIM TO THE CERTIFICATE, BUT IT DOES NOT OTHERWISE
AFFECT A RIGHT TO REGISTRATION THAT THE HOLDER POSSESSES.
(F) UNLESS OTHERWISE AGREED, A PERSON MAKING AN INDORSEMENT
ASSUMES ONLY THE OBLIGATIONS PROVIDED IN SECTION 1308.20 of the Revised Code AND NOT AN
OBLIGATION THAT THE SECURITY WILL BE HONORED BY THE ISSUER.
Sec. 1308.23. (A) "APPROPRIATE PERSON" MEANS:
(1) WITH RESPECT TO AN INDORSEMENT, THE PERSON SPECIFIED BY A SECURITY
CERTIFICATE OR BY AN EFFECTIVE SPECIAL INDORSEMENT TO BE ENTITLED TO THE
SECURITY;
(2) WITH RESPECT TO AN INSTRUCTION, THE REGISTERED OWNER OF AN
UNCERTIFICATED SECURITY;
(3) WITH RESPECT TO AN ENTITLEMENT ORDER, THE ENTITLEMENT HOLDER;
(4) IF THE PERSON DESIGNATED IN DIVISION (A)(1), (2), OR (3) OF
THIS SECTION IS DECEASED, THE DESIGNATED PERSON'S SUCCESSOR TAKING UNDER OTHER
LAW OR THE DESIGNATED PERSON'S PERSONAL REPRESENTATIVE ACTING FOR THE ESTATE
OF THE DECEDENT; OR
(5) IF THE PERSON DESIGNATED IN DIVISION (A)(1), (2), OR (3) OF
THIS SECTION LACKS CAPACITY, THE DESIGNATED PERSON'S GUARDIAN, CONSERVATOR, OR
OTHER SIMILAR REPRESENTATIVE WHO HAS POWER UNDER OTHER LAW TO TRANSFER THE
SECURITY OR FINANCIAL ASSET.
(B) AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT ORDER IS
EFFECTIVE IF:
(1) IT IS MADE BY THE APPROPRIATE PERSON;
(2) IT IS MADE BY A PERSON WHO HAS POWER UNDER THE LAW OF AGENCY TO
TRANSFER THE SECURITY OR FINANCIAL ASSET ON BEHALF OF THE APPROPRIATE PERSON,
INCLUDING, IN THE CASE OF AN INSTRUCTION OR ENTITLEMENT ORDER, A PERSON WHO
HAS CONTROL UNDER DIVISION (C)(2) OR (D)(2) OF SECTION
1308.24 of the Revised Code; OR
(3) THE APPROPRIATE PERSON HAS RATIFIED IT OR IS OTHERWISE PRECLUDED FROM
ASSERTING ITS INEFFECTIVENESS.
(C) AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT ORDER MADE BY A
REPRESENTATIVE IS EFFECTIVE EVEN IF:
(1) THE REPRESENTATIVE HAS FAILED TO COMPLY WITH A CONTROLLING INSTRUMENT
OR WITH THE LAW OF THE STATE HAVING JURISDICTION OF THE REPRESENTATIVE
RELATIONSHIP, INCLUDING ANY LAW REQUIRING THE REPRESENTATIVE TO OBTAIN COURT
APPROVAL OF THE TRANSACTION; OR
(2) THE REPRESENTATIVE'S ACTION IN MAKING THE INDORSEMENT, INSTRUCTION, OR
ENTITLEMENT ORDER OR USING THE PROCEEDS OF THE TRANSACTION IS OTHERWISE A
BREACH OF DUTY.
(D) IF A SECURITY IS REGISTERED IN THE NAME OF OR SPECIALLY
INDORSED TO A PERSON DESCRIBED AS A REPRESENTATIVE, OR IF A SECURITIES ACCOUNT
IS MAINTAINED IN THE NAME OF A PERSON DESCRIBED AS A REPRESENTATIVE, AN
INDORSEMENT, INSTRUCTION, OR ENTITLEMENT ORDER MADE BY THE PERSON IS EFFECTIVE
EVEN THOUGH THE PERSON IS NO LONGER SERVING IN THE DESCRIBED CAPACITY.
(E) EFFECTIVENESS OF AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT
ORDER IS DETERMINED AS OF THE DATE THE INDORSEMENT, INSTRUCTION, OR
ENTITLEMENT ORDER IS MADE, AND AN INDORSEMENT, INSTRUCTION, OR ENTITLEMENT
ORDER DOES NOT BECOME INEFFECTIVE BY REASON OF ANY LATER CHANGE OF
CIRCUMSTANCES.
Sec. 1308.24. (A) A PURCHASER HAS "CONTROL" OF A CERTIFICATED
SECURITY IN BEARER FORM IF THE CERTIFICATED SECURITY IS DELIVERED TO THE
PURCHASER.
(B) A PURCHASER HAS "CONTROL" OF A CERTIFICATED SECURITY IN
REGISTERED FORM IF THE CERTIFICATED SECURITY IS DELIVERED TO THE PURCHASER,
AND:
(1) THE CERTIFICATE IS INDORSED TO THE PURCHASER OR IN BLANK BY AN
EFFECTIVE INDORSEMENT; OR
(2) THE CERTIFICATE IS REGISTERED IN THE NAME OF THE PURCHASER, UPON
ORIGINAL ISSUE OR REGISTRATION OF TRANSFER BY THE ISSUER.
(C) A PURCHASER HAS "CONTROL" OF AN UNCERTIFICATED SECURITY IF:
(1) THE UNCERTIFICATED SECURITY IS DELIVERED TO THE PURCHASER; OR
(2) THE ISSUER HAS AGREED THAT IT WILL COMPLY WITH INSTRUCTIONS ORIGINATED
BY THE PURCHASER WITHOUT FURTHER CONSENT BY THE REGISTERED OWNER.
(D) A PURCHASER HAS "CONTROL" OF A SECURITY ENTITLEMENT IF:
(1) THE PURCHASER BECOMES THE ENTITLEMENT HOLDER; OR
(2) THE SECURITIES INTERMEDIARY HAS AGREED THAT IT WILL COMPLY WITH
ENTITLEMENT ORDERS ORIGINATED BY THE PURCHASER WITHOUT FURTHER CONSENT BY THE
ENTITLEMENT HOLDER.
(E) IF AN INTEREST IN A SECURITY ENTITLEMENT IS GRANTED BY THE
ENTITLEMENT HOLDER TO THE ENTITLEMENT HOLDER'S OWN SECURITIES INTERMEDIARY,
THE SECURITIES INTERMEDIARY HAS CONTROL.
(F) A PURCHASER WHO HAS SATISFIED THE REQUIREMENTS OF DIVISION
(C)(2) OR (D)(2) OF THIS SECTION HAS CONTROL EVEN IF THE
REGISTERED OWNER IN THE CASE OF DIVISION (C)(2) OF THIS SECTION OR
THE ENTITLEMENT HOLDER IN THE CASE OF DIVISION (D)(2) OF THIS SECTION
RETAINS THE RIGHT TO MAKE SUBSTITUTIONS FOR THE UNCERTIFICATED SECURITY OR
SECURITY ENTITLEMENT, TO ORIGINATE INSTRUCTIONS OR ENTITLEMENT ORDERS TO THE
ISSUER OR SECURITIES INTERMEDIARY, OR OTHERWISE TO DEAL WITH THE
UNCERTIFICATED
SECURITY OR SECURITY ENTITLEMENT.
(G) AN ISSUER OR A SECURITIES INTERMEDIARY MAY NOT ENTER INTO AN
AGREEMENT OF THE KIND DESCRIBED IN DIVISION (C)(2) OR (D)(2)
OF THIS SECTION WITHOUT THE CONSENT OF THE REGISTERED OWNER OR ENTITLEMENT
HOLDER, BUT AN ISSUER OR A SECURITIES INTERMEDIARY IS NOT REQUIRED TO ENTER
INTO SUCH AN AGREEMENT EVEN THOUGH THE REGISTERED OWNER OR ENTITLEMENT HOLDER
SO DIRECTS. AN ISSUER OR SECURITIES INTERMEDIARY THAT HAS ENTERED INTO SUCH
AN AGREEMENT IS NOT REQUIRED TO CONFIRM THE EXISTENCE OF THE AGREEMENT TO
ANOTHER PARTY UNLESS REQUESTED TO DO SO BY THE REGISTERED OWNER OR ENTITLEMENT
HOLDER.
Sec. 1308.25. (A) IF AN INSTRUCTION HAS BEEN ORIGINATED BY AN
APPROPRIATE PERSON BUT IS INCOMPLETE IN ANY OTHER RESPECT, ANY PERSON MAY
COMPLETE IT AS AUTHORIZED AND THE ISSUER MAY RELY ON IT AS COMPLETED, EVEN
THOUGH IT HAS BEEN COMPLETED INCORRECTLY.
(B) UNLESS OTHERWISE AGREED, A PERSON INITIATING AN INSTRUCTION
ASSUMES ONLY THE OBLIGATIONS IMPOSED BY SECTION 1308.20 of the Revised Code AND NOT AN
OBLIGATION THAT THE SECURITY WILL BE HONORED BY THE ISSUER.
Sec. 1308.26. (A) A PERSON WHO GUARANTEES A SIGNATURE OF AN
INDORSER OF A SECURITY CERTIFICATE WARRANTS THAT AT THE TIME OF SIGNING:
(1) THE SIGNATURE WAS GENUINE;
(2) THE SIGNER WAS AN APPROPRIATE PERSON TO INDORSE, OR IF THE SIGNATURE
IS BY AN AGENT, THE AGENT HAD ACTUAL AUTHORITY TO ACT ON BEHALF OF THE
APPROPRIATE PERSON; AND
(3) THE SIGNER HAD LEGAL CAPACITY TO SIGN.
(B) A PERSON WHO GUARANTEES A SIGNATURE OF THE ORIGINATOR OF AN
INSTRUCTION WARRANTS THAT AT THE TIME OF SIGNING:
(1) THE SIGNATURE WAS GENUINE;
(2) THE SIGNER WAS AN APPROPRIATE PERSON TO ORIGINATE THE INSTRUCTION, OR
IF THE SIGNATURE IS BY AN AGENT, THE AGENT HAD ACTUAL AUTHORITY TO ACT ON
BEHALF OF THE APPROPRIATE PERSON, IF THE PERSON SPECIFIED IN THE INSTRUCTION
AS THE REGISTERED OWNER WAS, IN FACT, THE REGISTERED OWNER, AS TO WHICH FACT
THE SIGNATURE GUARANTOR DOES NOT MAKE A WARRANTY; AND
(3) THE SIGNER HAD LEGAL CAPACITY TO SIGN.
(C) A PERSON WHO SPECIALLY GUARANTEES THE SIGNATURE OF AN
ORIGINATOR OF AN INSTRUCTION MAKES THE WARRANTIES OF A SIGNATURE GUARANTOR
UNDER DIVISION (B) OF THIS SECTION AND ALSO WARRANTS THAT AT THE TIME
THE INSTRUCTION IS PRESENTED TO THE ISSUER:
(1) THE PERSON SPECIFIED IN THE INSTRUCTION AS THE REGISTERED OWNER OF THE
UNCERTIFICATED SECURITY WILL BE THE REGISTERED OWNER; AND
(2) THE TRANSFER OF THE UNCERTIFICATED SECURITY REQUESTED IN THE
INSTRUCTION WILL BE REGISTERED BY THE ISSUER FREE FROM ALL LIENS, SECURITY
INTERESTS, RESTRICTIONS, AND CLAIMS OTHER THAN THOSE SPECIFIED IN THE
INSTRUCTION.
(D) A GUARANTOR UNDER DIVISIONS (A) AND (B) OF
THIS SECTION OR A SPECIAL GUARANTOR UNDER DIVISION (C) OF THIS
SECTION DOES NOT OTHERWISE WARRANT THE RIGHTFULNESS OF THE TRANSFER.
(E) A PERSON WHO GUARANTEES AN INDORSEMENT OF A SECURITY
CERTIFICATE MAKES THE WARRANTIES OF A SIGNATURE GUARANTOR UNDER DIVISION
(A) OF THIS SECTION AND ALSO WARRANTS THE RIGHTFULNESS OF THE
TRANSFER IN ALL RESPECTS.
(F) A PERSON WHO GUARANTEES AN INSTRUCTION REQUESTING THE
TRANSFER OF AN UNCERTIFICATED SECURITY MAKES THE WARRANTIES OF A SPECIAL
SIGNATURE GUARANTOR UNDER DIVISION (C) OF THIS SECTION AND ALSO
WARRANTS THE RIGHTFULNESS OF THE TRANSFER IN ALL RESPECTS.
(G) AN ISSUER MAY NOT REQUIRE A SPECIAL GUARANTY OF SIGNATURE, A
GUARANTY OF INDORSEMENT, OR A GUARANTY OF INSTRUCTION AS A CONDITION TO
REGISTRATION OF TRANSFER.
(H) THE WARRANTIES UNDER THIS SECTION ARE MADE TO A PERSON TAKING
OR DEALING WITH THE SECURITY IN RELIANCE ON THE GUARANTY, AND THE GUARANTOR IS
LIABLE TO THE PERSON FOR LOSS RESULTING FROM THEIR BREACH. AN INDORSER OR
ORIGINATOR OF AN INSTRUCTION WHOSE SIGNATURE, INDORSEMENT, OR INSTRUCTION HAS
BEEN GUARANTEED IS LIABLE TO A GUARANTOR FOR ANY LOSS SUFFERED BY THE
GUARANTOR AS A RESULT OF BREACH OF THE WARRANTIES OF THE GUARANTOR.
Sec. 1308.27. (A) DELIVERY OF A CERTIFICATED SECURITY TO A
PURCHASER OCCURS WHEN:
(1) THE PURCHASER ACQUIRES POSSESSION OF THE SECURITY CERTIFICATE;
(2) ANOTHER PERSON, OTHER THAN A SECURITIES INTERMEDIARY, EITHER ACQUIRES
POSSESSION OF THE SECURITY CERTIFICATE ON BEHALF OF THE PURCHASER OR, HAVING
PREVIOUSLY ACQUIRED POSSESSION OF THE CERTIFICATE, ACKNOWLEDGES THAT IT HOLDS
FOR THE PURCHASER; OR
(3) A SECURITIES INTERMEDIARY ACTING ON BEHALF OF THE PURCHASER ACQUIRES
POSSESSION OF THE SECURITY CERTIFICATE, ONLY IF THE CERTIFICATE IS IN
REGISTERED FORM AND HAS BEEN SPECIALLY INDORSED TO THE PURCHASER BY AN
EFFECTIVE INDORSEMENT.
(B) DELIVERY OF AN UNCERTIFICATED SECURITY TO A PURCHASER OCCURS
WHEN:
(1) THE ISSUER REGISTERS THE PURCHASER AS THE REGISTERED OWNER, UPON
ORIGINAL ISSUE OR REGISTRATION OF TRANSFER; OR
(2) ANOTHER PERSON, OTHER THAN A SECURITIES INTERMEDIARY, EITHER BECOMES
THE REGISTERED OWNER OF THE UNCERTIFICATED SECURITY ON BEHALF OF THE PURCHASER
OR, HAVING PREVIOUSLY BECOME THE REGISTERED OWNER, ACKNOWLEDGES THAT IT HOLDS
FOR THE PURCHASER.
Sec. 1308.31. Unless otherwise agreed, the transferor of a
certificated
security or the transferor, pledgor, or pledgee of an uncertificated
security on due demand must SHALL supply his
THE purchaser with any proof of
his authority to transfer, pledge, or release or with any other
requisite necessary to obtain registration of the transfer, pledge, or
release
of the security, but if the
transfer, pledge, or release is not for value, a transferor,
pledgor, or pledgee need not do so COMPLY unless the
purchaser furnishes PAYS the necessary expenses. Failure
IF THE TRANSFEROR FAILS within a reasonable time to comply with
a THE demand made gives, the purchaser the
right to MAY reject or rescind the transfer, pledge, or
release.
Sec. 1308.32. (A) THE INTEREST OF A DEBTOR IN A CERTIFICATED
SECURITY MAY BE REACHED BY A CREDITOR ONLY BY ACTUAL SEIZURE OF THE SECURITY
CERTIFICATE BY THE OFFICER MAKING THE ATTACHMENT OR LEVY, EXCEPT AS OTHERWISE
PROVIDED IN DIVISION (D) OF THIS SECTION. HOWEVER, A CERTIFICATED
SECURITY FOR WHICH THE CERTIFICATE HAS BEEN SURRENDERED TO THE ISSUER MAY BE
REACHED BY A CREDITOR BY LEGAL PROCESS UPON THE ISSUER.
(B) THE INTEREST OF A DEBTOR IN AN UNCERTIFICATED SECURITY MAY BE
REACHED BY A CREDITOR ONLY BY LEGAL PROCESS UPON THE ISSUER AT ITS CHIEF
EXECUTIVE OFFICE IN THE UNITED STATES, EXCEPT AS OTHERWISE
PROVIDED IN DIVISION (D) OF THIS SECTION.
(C) THE INTEREST OF A DEBTOR IN A SECURITY ENTITLEMENT MAY BE
REACHED BY A CREDITOR ONLY BY LEGAL PROCESS UPON THE SECURITIES INTERMEDIARY
WITH WHOM THE DEBTOR'S SECURITIES ACCOUNT IS MAINTAINED, EXCEPT AS OTHERWISE
PROVIDED IN DIVISION (D) OF THIS SECTION.
(D) THE INTEREST OF A DEBTOR IN A CERTIFICATED SECURITY FOR WHICH
THE CERTIFICATE IS IN THE POSSESSION OF A SECURED PARTY, OR IN AN
UNCERTIFICATED SECURITY REGISTERED IN THE NAME OF A SECURED PARTY, OR A
SECURITY ENTITLEMENT MAINTAINED IN THE NAME OF A SECURED PARTY, MAY BE REACHED
BY A CREDITOR BY LEGAL PROCESS UPON THE SECURED PARTY.
(E) A CREDITOR WHOSE DEBTOR IS THE OWNER OF A CERTIFICATED
SECURITY, UNCERTIFICATED SECURITY, OR SECURITY ENTITLEMENT IS ENTITLED TO AID
FROM A COURT OF COMPETENT JURISDICTION, BY INJUNCTION OR OTHERWISE, IN
REACHING THE CERTIFICATED SECURITY, UNCERTIFICATED SECURITY, OR SECURITY
ENTITLEMENT OR IN SATISFYING THE CLAIM BY MEANS ALLOWED AT LAW OR IN EQUITY IN
REGARD TO PROPERTY THAT CANNOT READILY BE REACHED BY OTHER LEGAL PROCESS.
Sec. 1308.33. (A) A SECURITIES INTERMEDIARY THAT HAS TRANSFERRED
A FINANCIAL ASSET PURSUANT TO AN EFFECTIVE ENTITLEMENT ORDER, OR A BROKER OR
OTHER AGENT OR BAILEE THAT HAS DEALT WITH A FINANCIAL ASSET AT THE DIRECTION
OF ITS CUSTOMER OR PRINCIPAL, IS NOT LIABLE TO A PERSON HAVING AN ADVERSE
CLAIM TO THE FINANCIAL ASSET, UNLESS THE SECURITIES INTERMEDIARY, OR BROKER OR
OTHER AGENT OR BAILEE:
(1) TOOK THE ACTION AFTER IT HAD BEEN SERVED WITH AN INJUNCTION,
RESTRAINING ORDER, OR OTHER LEGAL PROCESS ENJOINING IT FROM DOING SO, ISSUED
BY A COURT OF COMPETENT JURISDICTION, AND HAD A REASONABLE OPPORTUNITY TO ACT
ON THE INJUNCTION, RESTRAINING ORDER, OR OTHER LEGAL PROCESS; OR
(2) ACTED IN COLLUSION WITH THE WRONGDOER IN VIOLATING THE RIGHTS OF THE
ADVERSE CLAIMANT; OR
(3) IN THE CASE OF A SECURITY CERTIFICATE THAT HAS BEEN STOLEN, ACTED WITH
NOTICE OF THE ADVERSE CLAIM.
(B) A SECURITIES INTERMEDIARY THAT RECEIVES A FINANCIAL ASSET AND
ESTABLISHES A SECURITY ENTITLEMENT TO THE FINANCIAL ASSET IN FAVOR OF AN
ENTITLEMENT HOLDER IS A PURCHASER FOR VALUE OF THE FINANCIAL ASSET. A
SECURITIES INTERMEDIARY THAT ACQUIRES A SECURITY ENTITLEMENT TO A FINANCIAL
ASSET FROM ANOTHER SECURITIES INTERMEDIARY ACQUIRES THE SECURITY ENTITLEMENT
FOR VALUE IF THE SECURITIES INTERMEDIARY ACQUIRING THE SECURITY ENTITLEMENT
ESTABLISHES A SECURITY ENTITLEMENT TO THE FINANCIAL ASSET IN FAVOR
OF AN ENTITLEMENT HOLDER.
Sec. 1308.37. (A) If a certificated security in
registered form is presented to the issuer with a request to
register transfer or an instruction is presented to the issuer
with a request to register transfer, pledge, or release OF AN
UNCERTIFICATED SECURITY, the issuer shall register the transfer,
pledge, or release as requested if:
(1) UNDER THE TERMS OF THE SECURITY THE PERSON SEEKING REGISTRATION OF
TRANSFER IS ELIGIBLE TO HAVE THE SECURITY REGISTERED IN ITS NAME;
(2) The security is indorsed INDORSEMENT or the
instruction was originated IS MADE by the appropriate person or
persons, as provided in
section 1308.23 of the Revised Code BY AN AGENT WHO HAS ACTUAL
AUTHORITY TO ACT ON BEHALF OF THE APPROPRIATE PERSON;
(2)(3) Reasonable assurance is given that those
indorsements THE INDORSEMENT or instructions are
INSTRUCTION IS genuine and effective AUTHORIZED, as
provided in section
1308.38 of the Revised Code;
(3) The issuer has no duty as to adverse claims or has
discharged the duty as provided in section 1308.39 of the Revised
Code;
(4) Any applicable law relating to the collection of taxes
has been complied with;
(5) THE TRANSFER DOES NOT VIOLATE ANY RESTRICTION ON TRANSFER
IMPOSED BY THE ISSUER IN ACCORDANCE WITH SECTION 1308.11 of the Revised Code;
(6) A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER HAS NOT BECOME
EFFECTIVE
UNDER SECTION 1308.39 of the Revised Code, OR THE ISSUER HAS COMPLIED WITH DIVISION
(B) OF THAT SECTION BUT NO LEGAL PROCESS OR INDEMNITY BOND IS
OBTAINED
AS PROVIDED IN DIVISION (D) OF THAT SECTION; and
(5)(7) The transfer, pledge, or release is in fact
rightful
or is to a bona fide PROTECTED purchaser;.
(B) If an issuer is under a duty to register a transfer,
pledge, or release of a security, the issuer is also liable to
the person presenting a certificated security or an instruction
for registration or his THE PERSON'S principal for loss
resulting from any unreasonable delay in registration or from failure
or refusal to register the transfer, pledge, or release.
Sec. 1308.38. (A) The AN issuer may require the following
assurance that each necessary indorsement of a certificated
security or each instruction, as provided in section 1308.23 of
the Revised Code, is genuine and effective AUTHORIZED:
(1) In all cases, a guarantee GUARANTY of the signature, as
provided in division (A) or (B) of section 1308.27 of the Revised
Code, of the person indorsing a certificated security MAKING AN
INDORSEMENT or originating an instruction including, in the case of an
instruction, a warranty of the taxpayer identification number or,
in the absence thereof, other reasonable assurance of identity; and
(2) If the indorsement is made or the instruction is
originated by an agent, appropriate assurance of ACTUAL authority to
sign;
(3) If the indorsement is made or the instruction is
originated by a fiduciary PURSUANT TO DIVISION (A)(4) OR (5) OF
SECTION 1308.23 of the Revised Code, appropriate evidence of appointment,
or incumbency;
(4) If there is more than one fiduciary, reasonable
assurance that all who are required to sign have done so; and
(5) If the indorsement is made or the instruction is
originated by a person not covered by any of the foregoing ANOTHER
PROVISION OF DIVISION (A) OF THIS SECTION, assurance appropriate
to the case corresponding as nearly as may
be to the foregoing SUCH PROVISIONS.
(B) A AN ISSUER MAY ELECT TO REQUIRE REASONABLE ASSURANCE BEYOND
THAT SPECIFIED IN THIS SECTION.
(C) IN THIS SECTION:
(1) "guarantee GUARANTY of the signature" in
division (A) of this section means a guarantee GUARANTY
signed by or on behalf of a person
reasonably believed by the issuer to be responsible. The issuer
may adopt standards with respect to responsibility if they are
not manifestly unreasonable.
(C)(2) "Appropriate evidence of appointment or incumbency"
in division (A) of this section means:
(1)(a) In the case of a fiduciary appointed or qualified by a
court, a certificate issued by or under the direction or
supervision of that court or an officer thereof and dated within
sixty days before the date of presentation for transfer, pledge,
or release; or
(2)(b) In any other case, a copy of a document showing the
appointment or a certificate issued by or on behalf of a person
reasonably believed by the issuer to be responsible or, in the
absence of that document or certificate, other evidence
reasonably deemed by the issuer to be REASONABLY
CONSIDERED appropriate. The issuer may adopt standards with respect to
the evidence if they are not
manifestly unreasonable. The issuer is not charged with notice
of the contents of any document obtained pursuant to division
(C)(2) of this section except to the extent that the contents
relate directly to the appointment or incumbency.
(D) The issuer may elect to require reasonable assurance
beyond that specified in this section, but if it does so and, for
a purpose other than that specified in division (C)(2) of this
section, both requires and obtains a copy of a will, trust,
indenture, articles of co-partnership, by-laws, or other
controlling instrument, it is charged with notice of all matters
contained therein affecting the transfer, pledge, or release.
Sec. 1308.39. (A) A PERSON WHO IS AN APPROPRIATE PERSON TO MAKE
AN INDORSEMENT OR ORIGINATE AN INSTRUCTION MAY DEMAND THAT THE ISSUER NOT
REGISTER TRANSFER OF A SECURITY BY COMMUNICATING TO THE ISSUER A NOTIFICATION
THAT IDENTIFIES THE REGISTERED OWNER AND THE ISSUE OF WHICH THE SECURITY IS A
PART AND PROVIDES AN ADDRESS FOR COMMUNICATIONS DIRECTED TO THE PERSON MAKING
THE DEMAND. THE DEMAND IS EFFECTIVE ONLY IF IT IS RECEIVED BY THE ISSUER AT A
TIME AND IN A MANNER AFFORDING THE ISSUER REASONABLE OPPORTUNITY TO ACT ON IT.
(B) IF A CERTIFICATED SECURITY IN REGISTERED FORM IS PRESENTED TO
AN ISSUER WITH A REQUEST TO REGISTER TRANSFER OR AN INSTRUCTION IS PRESENTED
TO AN ISSUER WITH A REQUEST TO REGISTER TRANSFER OF AN UNCERTIFICATED SECURITY
AFTER A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER HAS BECOME EFFECTIVE, THE
ISSUER SHALL PROMPTLY COMMUNICATE TO THE PERSON WHO INITIATED THE DEMAND AT
THE ADDRESS PROVIDED IN THE DEMAND AND THE PERSON WHO PRESENTED THE SECURITY
FOR REGISTRATION OF TRANSFER OR INITIATED THE INSTRUCTION REQUESTING
REGISTRATION OF TRANSFER A NOTIFICATION STATING THAT:
(1) THE CERTIFICATED SECURITY HAS BEEN PRESENTED FOR REGISTRATION OF
TRANSFER OR THE INSTRUCTION FOR REGISTRATION OF TRANSFER OF THE UNCERTIFICATED
SECURITY HAS BEEN RECEIVED;
(2) A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER HAD PREVIOUSLY BEEN
RECEIVED; AND
(3) THE ISSUER WILL WITHHOLD REGISTRATION OF TRANSFER FOR A PERIOD OF TIME
STATED IN THE NOTIFICATION IN ORDER TO PROVIDE THE PERSON WHO INITIATED THE
DEMAND AN OPPORTUNITY TO OBTAIN LEGAL PROCESS OR AN INDEMNITY BOND.
(C) THE PERIOD DESCRIBED IN DIVISION (B)(3) OF THIS
SECTION MAY NOT EXCEED THIRTY DAYS AFTER THE DATE OF COMMUNICATION OF THE
NOTIFICATION. A SHORTER PERIOD MAY BE SPECIFIED BY THE ISSUER IF IT IS NOT
MANIFESTLY UNREASONABLE.
(D) AN ISSUER IS NOT LIABLE TO A PERSON WHO INITIATED A DEMAND
THAT THE ISSUER NOT REGISTER TRANSFER FOR ANY LOSS THE PERSON SUFFERS AS A
RESULT OF REGISTRATION OF A TRANSFER PURSUANT TO AN EFFECTIVE INDORSEMENT OR
INSTRUCTION IF THE PERSON WHO INITIATED THE DEMAND DOES NOT, WITHIN THE TIME
STATED IN THE ISSUER'S COMMUNICATION, EITHER:
(1) OBTAIN AN APPROPRIATE RESTRAINING ORDER, INJUNCTION, OR OTHER PROCESS
FROM A COURT OF COMPETENT JURISDICTION ENJOINING THE ISSUER FROM REGISTERING
THE TRANSFER; OR
(2) FILE WITH THE ISSUER AN INDEMNITY BOND, SUFFICIENT IN THE ISSUER'S
JUDGMENT TO PROTECT THE ISSUER AND ANY TRANSFER AGENT, REGISTRAR, OR OTHER
AGENT OF THE ISSUER INVOLVED FROM ANY LOSS IT OR THEY MAY SUFFER BY REFUSING
TO REGISTER THE TRANSFER.
(E) THIS SECTION DOES NOT RELIEVE AN ISSUER FROM LIABILITY FOR
REGISTERING TRANSFER PURSUANT TO AN INDORSEMENT OR INSTRUCTION THAT WAS NOT
EFFECTIVE.
Sec. 1308.40. (A) EXCEPT AS OTHERWISE PROVIDED IN SECTION
1308.41 of the Revised Code, AN ISSUER IS LIABLE FOR WRONGFUL REGISTRATION OF TRANSFER IF THE
ISSUER HAS REGISTERED A TRANSFER OF A SECURITY TO A PERSON NOT ENTITLED TO IT,
AND THE TRANSFER WAS REGISTERED:
(1) PURSUANT TO AN INEFFECTIVE INDORSEMENT OR INSTRUCTION;
(2) AFTER A DEMAND THAT THE ISSUER NOT REGISTER TRANSFER BECAME EFFECTIVE
UNDER DIVISION (A) OF SECTION 1308.39 of the Revised Code AND THE ISSUER DID NOT
COMPLY WITH DIVISION (B) OF THAT SECTION;
(3) AFTER THE ISSUER HAD BEEN SERVED WITH AN INJUNCTION, RESTRAINING
ORDER, OR OTHER LEGAL PROCESS ENJOINING IT FROM REGISTERING THE TRANSFER,
ISSUED BY A COURT OF COMPETENT JURISDICTION, AND THE ISSUER HAD A REASONABLE
OPPORTUNITY TO ACT ON THE INJUNCTION, RESTRAINING ORDER, OR OTHER LEGAL
PROCESS; OR
(4) BY AN ISSUER ACTING IN COLLUSION WITH THE WRONGDOER.
(B) AN ISSUER THAT IS LIABLE FOR WRONGFUL REGISTRATION OF
TRANSFER UNDER DIVISION (A) OF THIS SECTION ON DEMAND SHALL PROVIDE
THE PERSON ENTITLED TO THE SECURITY WITH A LIKE CERTIFICATED OR UNCERTIFICATED
SECURITY, AND ANY PAYMENTS OR DISTRIBUTIONS THAT THE PERSON DID NOT RECEIVE AS
A RESULT OF THE WRONGFUL REGISTRATION. IF AN OVERISSUE WOULD RESULT, THE
ISSUER'S LIABILITY TO PROVIDE THE PERSON WITH A LIKE SECURITY IS GOVERNED BY
SECTION 1308.03 of the Revised Code.
(C) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (A) OF THIS
SECTION OR IN A LAW RELATING TO THE COLLECTION OF TAXES, AN ISSUER IS NOT
LIABLE TO AN OWNER OR OTHER PERSON SUFFERING LOSS AS A RESULT OF THE
REGISTRATION OF A TRANSFER OF A SECURITY IF REGISTRATION WAS MADE PURSUANT TO
AN EFFECTIVE INDORSEMENT OR INSTRUCTION.
Sec. 1308.41. (A) If a certificated security CERTIFICATE has
been
lost, apparently destroyed, or wrongfully taken and the owner
fails to notify the issuer of that fact within a reasonable time
after he THE OWNER has notice of it and the issuer registers a
transfer of the security before receiving notification, the owner is
precluded from asserting MAY NOT ASSERT against the issuer
any A claim for
registering the transfer under section 1308.40 of the Revised
Code or any claim to a new security under this section.
(B) If the owner of a certificated security, WHETHER IN REGISTERED
OR BEARER FORM, claims that
the security has been lost, destroyed, or wrongfully taken, the
issuer shall issue a new certificated security or, at the option
of the issuer, an equivalent uncertificated security in place of
the original security CERTIFICATE if the owner:
(1) So requests before the issuer has notice that the
security has been acquired by a bona fide PROTECTED purchaser;
(2) Files with the issuer any A SUFFICIENT indemnity bond,
the issuer
reasonably requires; and
(3) Satisfies any other reasonable requirements imposed by
the issuer.
(C) If, after the issue of a new certificated or
uncertificated security CERTIFICATE, a bona fide
PROTECTED purchaser of the original
security presents it for registration of transfer, the issuer
shall register the transfer unless registration AN OVERISSUE
would result in
overissue, in which event. IN THAT CASE, the
issuer's liability is governed by
section 1308.03 of the Revised Code. In addition to any rights
on the indemnity bond, the issuer may recover the new
certificated security CERTIFICATE from the person to whom it was
issued or
any person taking under him THAT PERSON, except a bona
fide PROTECTED purchaser or may cancel the uncertificated
security unless a bona fide
purchaser or any person taking under a bona fide purchaser is then the
registered owner or registered pledgee thereof.
Sec. 1308.42. (A) If a A person acts ACTING as
authenticating
trustee, transfer agent, registrar, or other agent for an issuer
in the registration of transfers A TRANSFER of its
certificated securities
or in the registration of transfers, pledges, and releases of its
uncertificated securities, in the issue of new SECURITY CERTIFICATES OR
UNCERTIFICATED securities, or in
the cancellation of surrendered securities:
(1) He is under a duty to the issuer to exercise
good faith and due diligence in performing his functions;
and
(2) With regard to the particular functions he performs,
he SECURITY CERTIFICATES, has the same obligation to the
holder or owner of a certificated OR UNCERTIFICATED security or to
the owner or pledgee of an
uncertificated security and has the same rights and privileges WITH
REGARD TO THE PARTICULAR FUNCTIONS PERFORMED as
the issuer has in regard to those functions.
(B) Notice to an authenticating trustee, transfer agent,
registrar or other agent is notice to the issuer with respect to
the functions performed by the agent.
Sec. 1308.51. (A) "SECURITIES ACCOUNT" MEANS AN ACCOUNT TO WHICH
A FINANCIAL ASSET IS OR MAY BE CREDITED IN ACCORDANCE WITH AN AGREEMENT UNDER
WHICH THE PERSON MAINTAINING THE ACCOUNT UNDERTAKES TO TREAT THE PERSON FOR
WHOM THE ACCOUNT IS MAINTAINED AS ENTITLED TO EXERCISE THE RIGHTS THAT
COMPRISE THE FINANCIAL ASSET.
(B) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (D) AND
(E) OF THIS SECTION, A PERSON ACQUIRES A SECURITY ENTITLEMENT IF A
SECURITIES INTERMEDIARY:
(1) INDICATES BY BOOK ENTRY THAT A FINANCIAL ASSET HAS BEEN CREDITED TO
THE PERSON'S SECURITIES ACCOUNT;
(2) RECEIVES A FINANCIAL ASSET FROM THE PERSON OR ACQUIRES A FINANCIAL
ASSET FOR THE PERSON AND, IN EITHER CASE, ACCEPTS IT FOR CREDIT TO THE
PERSON'S SECURITIES ACCOUNT; OR
(3) BECOMES OBLIGATED UNDER OTHER LAW, REGULATION, OR RULE TO CREDIT A
FINANCIAL ASSET TO THE PERSON'S SECURITIES ACCOUNT.
(C) IF A CONDITION OF DIVISION (B) OF THIS SECTION HAS
BEEN MET, A PERSON HAS A SECURITY ENTITLEMENT EVEN THOUGH THE SECURITIES
INTERMEDIARY DOES NOT ITSELF HOLD THE FINANCIAL ASSET.
(D) IF A SECURITIES INTERMEDIARY HOLDS A FINANCIAL ASSET FOR
ANOTHER PERSON, AND THE FINANCIAL ASSET IS REGISTERED IN THE NAME OF, PAYABLE
TO THE ORDER OF, OR SPECIALLY INDORSED TO THE OTHER PERSON, AND HAS NOT BEEN
INDORSED TO THE SECURITIES INTERMEDIARY OR IN BLANK, THE OTHER PERSON IS
TREATED AS HOLDING THE FINANCIAL ASSET DIRECTLY RATHER THAN AS HAVING A
SECURITY ENTITLEMENT WITH RESPECT TO THE FINANCIAL ASSET.
(E) ISSUANCE OF A SECURITY IS NOT ESTABLISHMENT OF A SECURITY
ENTITLEMENT.
Sec. 1308.52. AN ACTION BASED ON AN ADVERSE CLAIM TO A FINANCIAL ASSET,
WHETHER FRAMED IN CONVERSION, REPLEVIN, CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR
OTHER THEORY, MAY NOT BE ASSERTED AGAINST A PERSON WHO ACQUIRES A SECURITY
ENTITLEMENT UNDER SECTION 1308.51 of the Revised Code FOR VALUE AND WITHOUT NOTICE OF THE
ADVERSE CLAIM.
Sec. 1308.53. (A) TO THE EXTENT NECESSARY FOR A SECURITIES
INTERMEDIARY TO SATISFY ALL SECURITY ENTITLEMENTS WITH RESPECT TO A PARTICULAR
FINANCIAL ASSET, ALL INTERESTS IN THAT FINANCIAL ASSET HELD BY THE SECURITIES
INTERMEDIARY ARE HELD BY
THE SECURITIES INTERMEDIARY FOR THE ENTITLEMENT HOLDERS, ARE NOT PROPERTY OF
THE SECURITIES INTERMEDIARY, AND ARE NOT SUBJECT TO CLAIMS OF CREDITORS OF THE
SECURITIES INTERMEDIARY, EXCEPT AS OTHERWISE PROVIDED IN SECTION 1308.61 of the Revised Code.
(B) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT TO A
PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS SECTION IS A
PRO RATA PROPERTY INTEREST IN ALL INTERESTS IN THAT FINANCIAL ASSET HELD BY
THE SECURITIES INTERMEDIARY, WITHOUT REGARD TO THE TIME THE ENTITLEMENT HOLDER
ACQUIRED THE SECURITY ENTITLEMENT OR THE TIME THE SECURITIES INTERMEDIARY
ACQUIRED THE INTEREST IN THAT FINANCIAL ASSET.
(C) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT TO A
PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS SECTION MAY BE
ENFORCED AGAINST THE SECURITIES INTERMEDIARY ONLY BY EXERCISE OF THE
ENTITLEMENT HOLDER'S RIGHTS UNDER SECTIONS 1308.55 TO 1308.58 of the Revised Code.
(D) AN ENTITLEMENT HOLDER'S PROPERTY INTEREST WITH RESPECT TO A
PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF THIS SECTION MAY BE
ENFORCED AGAINST A PURCHASER OF THE FINANCIAL ASSET OR INTEREST THEREIN ONLY
IF:
(1) INSOLVENCY PROCEEDINGS HAVE BEEN INITIATED BY OR AGAINST THE
SECURITIES INTERMEDIARY;
(2) THE SECURITIES INTERMEDIARY DOES NOT HAVE SUFFICIENT INTERESTS IN THE
FINANCIAL ASSET TO SATISFY THE SECURITY ENTITLEMENTS OF ALL OF ITS ENTITLEMENT
HOLDERS TO THAT FINANCIAL ASSET;
(3) THE SECURITIES INTERMEDIARY VIOLATED ITS OBLIGATIONS UNDER SECTION
1308.54 of the Revised Code BY TRANSFERRING THE FINANCIAL ASSET OR INTEREST THEREIN TO THE
PURCHASER; AND
(4) THE PURCHASER IS NOT PROTECTED UNDER DIVISION (E) OF THIS
SECTION. THE TRUSTEE OR OTHER LIQUIDATOR, ACTING ON BEHALF OF ALL ENTITLEMENT
HOLDERS HAVING SECURITY ENTITLEMENTS WITH RESPECT TO A PARTICULAR FINANCIAL
ASSET, MAY RECOVER THE FINANCIAL ASSET, OR INTEREST THEREIN, FROM THE
PURCHASER. IF THE TRUSTEE OR OTHER LIQUIDATOR ELECTS NOT TO PURSUE THAT
RIGHT, AN ENTITLEMENT HOLDER WHOSE SECURITY ENTITLEMENT REMAINS UNSATISFIED
HAS THE RIGHT TO RECOVER ITS INTEREST IN THE FINANCIAL ASSET FROM THE
PURCHASER.
(E) AN ACTION BASED ON THE ENTITLEMENT HOLDER'S PROPERTY INTEREST
WITH RESPECT TO A PARTICULAR FINANCIAL ASSET UNDER DIVISION (A) OF
THIS SECTION, WHETHER FRAMED IN CONVERSION, REPLEVIN, CONSTRUCTIVE TRUST,
EQUITABLE LIEN, OR OTHER THEORY, MAY NOT BE ASSERTED AGAINST ANY PURCHASER OF
A FINANCIAL ASSET OR INTEREST THEREIN WHO GIVES VALUE, OBTAINS CONTROL, AND
DOES NOT ACT IN COLLUSION WITH THE SECURITIES INTERMEDIARY IN VIOLATING THE
SECURITIES INTERMEDIARY'S
OBLIGATIONS UNDER SECTION 1308.54 of the Revised Code.
Sec. 1308.54. (A) A SECURITIES INTERMEDIARY SHALL PROMPTLY
OBTAIN AND THEREAFTER MAINTAIN A FINANCIAL ASSET IN A QUANTITY CORRESPONDING
TO THE AGGREGATE OF ALL SECURITY ENTITLEMENTS IT HAS ESTABLISHED IN FAVOR OF
ITS ENTITLEMENT HOLDERS WITH RESPECT TO THAT FINANCIAL ASSET. THE SECURITIES
INTERMEDIARY MAY MAINTAIN THOSE FINANCIAL ASSETS DIRECTLY OR THROUGH ONE OR
MORE OTHER SECURITIES INTERMEDIARIES.
(B) EXCEPT TO THE EXTENT OTHERWISE AGREED BY ITS ENTITLEMENT
HOLDER, A SECURITIES INTERMEDIARY MAY NOT GRANT ANY SECURITY INTERESTS IN A
FINANCIAL ASSET IT IS OBLIGATED TO MAINTAIN PURSUANT TO DIVISION (A)
OF THIS SECTION.
(C) A SECURITIES INTERMEDIARY SATISFIES THE DUTY IN DIVISION
(A) OF THIS SECTION IF:
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE DUTY AS AGREED
UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES INTERMEDIARY EXERCISES DUE
CARE IN ACCORDANCE WITH REASONABLE COMMERCIAL STANDARDS TO OBTAIN AND MAINTAIN
THE FINANCIAL ASSET.
(D) THIS SECTION DOES NOT APPLY TO A CLEARING CORPORATION THAT IS
ITSELF THE OBLIGOR OF AN OPTION OR SIMILAR OBLIGATION TO WHICH ITS ENTITLEMENT
HOLDERS HAVE SECURITY ENTITLEMENTS.
Sec. 1308.55. (A) A SECURITIES INTERMEDIARY SHALL TAKE ACTION TO
OBTAIN A PAYMENT OR DISTRIBUTION MADE BY THE ISSUER OF A FINANCIAL ASSET. A
SECURITIES INTERMEDIARY SATISFIES THE DUTY IF:
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE DUTY AS AGREED
UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES INTERMEDIARY EXERCISES DUE
CARE IN ACCORDANCE WITH REASONABLE COMMERCIAL STANDARDS TO ATTEMPT TO OBTAIN
THE PAYMENT OR DISTRIBUTION.
(B) A SECURITIES INTERMEDIARY IS OBLIGATED TO ITS ENTITLEMENT
HOLDER FOR A PAYMENT OR DISTRIBUTION MADE BY THE ISSUER OF A FINANCIAL ASSET
IF THE PAYMENT OR DISTRIBUTION IS RECEIVED BY THE SECURITIES INTERMEDIARY.
Sec. 1308.56. A SECURITIES INTERMEDIARY SHALL EXERCISE RIGHTS WITH RESPECT
TO A FINANCIAL ASSET IF DIRECTED TO DO SO BY AN ENTITLEMENT HOLDER. A
SECURITIES INTERMEDIARY SATISFIES THE DUTY IF:
(A) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE DUTY AS
AGREED UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES INTERMEDIARY; OR
(B) IN THE ABSENCE OF AGREEMENT, THE SECURITIES INTERMEDIARY
EITHER PLACES THE ENTITLEMENT HOLDER IN A POSITION TO EXERCISE THE RIGHTS
DIRECTLY OR EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE COMMERCIAL
STANDARDS TO FOLLOW THE DIRECTION OF THE ENTITLEMENT HOLDER.
Sec. 1308.57. (A) A SECURITIES INTERMEDIARY SHALL COMPLY WITH AN
ENTITLEMENT ORDER IF THE ENTITLEMENT ORDER IS ORIGINATED BY THE APPROPRIATE
PERSON, THE SECURITIES INTERMEDIARY HAS HAD REASONABLE OPPORTUNITY TO ASSURE
ITSELF THAT THE ENTITLEMENT ORDER IS GENUINE AND AUTHORIZED, AND THE
SECURITIES INTERMEDIARY HAS HAD REASONABLE OPPORTUNITY TO COMPLY WITH THE
ENTITLEMENT ORDER. A SECURITIES INTERMEDIARY SATISFIES THE DUTY IF:
(1) THE SECURITIES INTERMEDIARY ACTS WITH RESPECT TO THE DUTY AS AGREED
UPON BY THE ENTITLEMENT HOLDER AND THE SECURITIES INTERMEDIARY; OR
(2) IN THE ABSENCE OF AGREEMENT, THE SECURITIES INTERMEDIARY EXERCISES DUE
CARE IN ACCORDANCE WITH REASONABLE COMMERCIAL STANDARDS TO COMPLY WITH THE
ENTITLEMENT ORDER.
(B) IF A SECURITIES INTERMEDIARY TRANSFERS A FINANCIAL ASSET
PURSUANT TO AN INEFFECTIVE ENTITLEMENT ORDER, THE SECURITIES INTERMEDIARY
SHALL REESTABLISH A SECURITY ENTITLEMENT IN FAVOR OF THE PERSON ENTITLED TO
IT, AND PAY OR CREDIT ANY PAYMENTS OR DISTRIBUTIONS THAT THE PERSON DID NOT
RECEIVE AS A RESULT OF THE WRONGFUL TRANSFER. IF THE SECURITIES INTERMEDIARY
DOES NOT REESTABLISH A SECURITY ENTITLEMENT, THE SECURITIES INTERMEDIARY IS
LIABLE TO THE ENTITLEMENT HOLDER FOR DAMAGES.
Sec. 1308.58. A SECURITIES INTERMEDIARY SHALL ACT AT THE DIRECTION OF AN
ENTITLEMENT HOLDER TO CHANGE A SECURITY ENTITLEMENT INTO ANOTHER AVAILABLE
FORM OF HOLDING FOR WHICH THE ENTITLEMENT HOLDER IS ELIGIBLE, OR TO CAUSE THE
FINANCIAL ASSET TO BE TRANSFERRED TO A SECURITIES ACCOUNT OF THE ENTITLEMENT
HOLDER WITH ANOTHER SECURITIES INTERMEDIARY. A SECURITIES INTERMEDIARY
SATISFIES THE DUTY IF:
(A) THE SECURITIES INTERMEDIARY ACTS AS AGREED UPON BY THE
ENTITLEMENT HOLDER AND THE SECURITIES INTERMEDIARY; OR
(B) IN THE ABSENCE OF AGREEMENT, THE SECURITIES INTERMEDIARY
EXERCISES DUE CARE IN ACCORDANCE WITH REASONABLE COMMERCIAL STANDARDS TO
FOLLOW THE DIRECTION OF THE ENTITLEMENT HOLDER.
Sec. 1308.59. (A) IF THE SUBSTANCE OF A DUTY IMPOSED UPON A
SECURITIES INTERMEDIARY BY SECTIONS 1308.54 TO 1308.58 of the Revised Code IS THE SUBJECT OF
OTHER STATUTE, REGULATION, OR RULE, COMPLIANCE WITH THAT STATUTE, REGULATION,
OR RULE SATISFIES THE DUTY.
(B) TO THE EXTENT THAT SPECIFIC STANDARDS FOR THE PERFORMANCE OF
THE DUTIES OF A SECURITIES INTERMEDIARY OR THE EXERCISE OF THE RIGHTS OF AN
ENTITLEMENT HOLDER ARE NOT SPECIFIED BY OTHER STATUTE, REGULATION, OR RULE OR
BY AGREEMENT BETWEEN THE SECURITIES INTERMEDIARY AND ENTITLEMENT HOLDER, THE
SECURITIES INTERMEDIARY SHALL PERFORM ITS DUTIES AND THE ENTITLEMENT HOLDER
SHALL EXERCISE ITS RIGHTS IN A COMMERCIALLY REASONABLE MANNER.
(C) THE OBLIGATION OF A SECURITIES INTERMEDIARY TO PERFORM THE
DUTIES IMPOSED BY SECTIONS 1308.54 TO 1308.58 of the Revised Code IS SUBJECT TO:
(1) RIGHTS OF THE SECURITIES INTERMEDIARY ARISING OUT OF A SECURITY
INTEREST UNDER A SECURITY AGREEMENT WITH THE ENTITLEMENT HOLDER OR OTHERWISE;
AND
(2) RIGHTS OF THE SECURITIES INTERMEDIARY UNDER OTHER LAW, REGULATION,
RULE, OR AGREEMENT TO WITHHOLD PERFORMANCE OF ITS DUTIES AS A RESULT OF
UNFULFILLED OBLIGATIONS OF THE ENTITLEMENT HOLDER TO THE SECURITIES
INTERMEDIARY.
(D) SECTIONS 1308.54 TO 1308.58 of the Revised Code DO NOT REQUIRE A SECURITIES
INTERMEDIARY TO TAKE ANY ACTION THAT IS PROHIBITED BY OTHER STATUTE,
REGULATION, OR RULE.
Sec. 1308.60. (A) AN ACTION BASED ON AN ADVERSE CLAIM TO A
FINANCIAL ASSET OR SECURITY ENTITLEMENT, WHETHER FRAMED IN CONVERSION,
REPLEVIN, CONSTRUCTIVE TRUST, EQUITABLE LIEN, OR OTHER THEORY, MAY NOT BE
ASSERTED AGAINST A PERSON WHO PURCHASES A SECURITY ENTITLEMENT, OR AN INTEREST
THEREIN, FROM AN ENTITLEMENT HOLDER IF THE PURCHASER GIVES VALUE, DOES NOT
HAVE NOTICE OF THE ADVERSE CLAIM, AND OBTAINS CONTROL.
(B) IF AN ADVERSE CLAIM COULD NOT HAVE BEEN ASSERTED AGAINST AN
ENTITLEMENT HOLDER UNDER SECTION 1308.52 of the Revised Code, THE ADVERSE CLAIM CANNOT BE
ASSERTED AGAINST A PERSON WHO PURCHASES A SECURITY ENTITLEMENT, OR AN INTEREST
THEREIN, FROM THE ENTITLEMENT HOLDER.
(C) IN A CASE NOT COVERED BY THE PRIORITY RULES IN
CHAPTER 1309. of the Revised Code, A PURCHASER FOR VALUE OF A SECURITY ENTITLEMENT,
OR AN INTEREST THEREIN, WHO OBTAINS CONTROL HAS PRIORITY OVER A PURCHASER OF A
SECURITY ENTITLEMENT, OR AN INTEREST THEREIN, WHO DOES NOT OBTAIN CONTROL.
PURCHASERS WHO HAVE CONTROL RANK EQUALLY, EXCEPT THAT A SECURITIES
INTERMEDIARY AS PURCHASER HAS PRIORITY OVER A CONFLICTING PURCHASER WHO HAS
CONTROL UNLESS OTHERWISE AGREED BY THE SECURITIES INTERMEDIARY.
Sec. 1308.61. (A) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS
(B) AND (C) OF THIS SECTION, IF A SECURITIES INTERMEDIARY
DOES NOT HAVE SUFFICIENT INTERESTS IN A PARTICULAR FINANCIAL ASSET TO SATISFY
BOTH ITS OBLIGATIONS TO ENTITLEMENT HOLDERS WHO HAVE SECURITY ENTITLEMENTS TO
THAT FINANCIAL ASSET AND ITS OBLIGATION TO A CREDITOR OF THE SECURITIES
INTERMEDIARY WHO HAS A SECURITY INTEREST IN THAT FINANCIAL ASSET, THE CLAIMS
OF ENTITLEMENT HOLDERS, OTHER THAN THE CREDITOR, HAVE PRIORITY OVER THE CLAIM
OF THE CREDITOR.
(B) A CLAIM OF A CREDITOR OF A SECURITIES INTERMEDIARY WHO HAS A
SECURITY INTEREST IN A FINANCIAL ASSET HELD BY A SECURITIES INTERMEDIARY HAS
PRIORITY OVER CLAIMS OF THE SECURITIES INTERMEDIARY'S ENTITLEMENT HOLDERS WHO
HAVE SECURITY ENTITLEMENTS WITH RESPECT TO THAT FINANCIAL ASSET IF THE
CREDITOR HAS CONTROL OVER THE FINANCIAL ASSET.
(C) IF A CLEARING CORPORATION DOES NOT HAVE SUFFICIENT FINANCIAL
ASSETS TO SATISFY BOTH ITS OBLIGATIONS TO ENTITLEMENT HOLDERS WHO HAVE
SECURITY ENTITLEMENTS WITH RESPECT TO A FINANCIAL ASSET AND ITS OBLIGATION TO
A CREDITOR OF THE CLEARING CORPORATION WHO HAS A SECURITY INTEREST IN THAT
FINANCIAL ASSET, THE CLAIM OF THE CREDITOR HAS PRIORITY OVER THE CLAIMS OF
ENTITLEMENT HOLDERS.
Sec. 1309.01. (A) As used in sections 1309.01 to 1309.50
of the Revised Code, unless the context otherwise requires:
(1) "Account debtor" means the person who is obligated on
an account, chattel paper, or general intangible.
(2) "Chattel paper" means a writing or writings which
evidence both a monetary obligation and a security interest in or
a lease of specific goods, but a charter or other contract
involving the use or hire of a vessel is not chattel paper. When
a transaction is evidenced both by such a security agreement or a
lease and by an instrument or a series of instruments, the group
of writings taken together constitutes chattel paper.
(3) "Collateral" means the property subject to a security
interest, and includes accounts and chattel paper which have been
sold.
(4) "Debtor" means the person who owes payment or other
performance of the obligations secured, whether or not he THE
PERSON owns or has rights in the collateral, and includes the seller of
accounts or chattel paper. Where the debtor and the owner of the
collateral are not the same person, the term "debtor" means the
owner of the collateral in any provision of sections 1309.01 to
1309.50 of the Revised Code dealing with the collateral, the
obligor in any provision dealing with the obligation and may
include both where the context so requires.
(5) "Deposit account" means a demand, time, savings,
passbook or like account maintained with a bank, savings and loan
association, credit union, or like organization, other than an
account evidenced by a certificate of deposit.
(6) "Document" means document of title as defined in
division (O) of section 1301.01 of the Revised Code, and a
receipt of the kind described in division (B) of section 1307.06
of the Revised Code.
(7) "Encumbrance" includes real estate mortgages and other
liens on real estate and all other rights in real estate that are
not ownership interests.
(8) "Goods" includes all things which are movable at the
time the security interest attaches or which are fixtures under
section 1309.32 of the Revised Code, but does not include money,
documents, instruments, INVESTMENT PROPERTY, COMMODITY
CONTRACTS, accounts, chattel paper, general
intangibles, or minerals or the like, including oil and gas,
before extraction. "Goods" also include standing timber which is
to be cut and removed under a conveyance or contract for sale,
the unborn young of animals, and growing crops.
(9) "Instrument" means a negotiable instrument as defined
in section 1303.03 of the Revised Code, or a certificated
security as defined in section 1308.01 of the Revised Code, or
any other writing which evidences a right to the payment of money
and is not itself a security agreement or lease and is of a type
which is in ordinary course of business transferred by delivery
with any necessary indorsement or assignment. "INSTRUMENT" DOES NOT
INCLUDE
INVESTMENT PROPERTY.
(10) "Mortgage" means a consensual interest created by a
real estate mortgage, a trust deed on real estate, or the like.
(11) An advance is made "pursuant to commitment" if the
secured party has bound himself ITSELF to make it, whether or
not a subsequent event of default or other event not within his THE
SECURED PARTY'S control has relieved or may relieve him THE
SECURED PARTY from his THE SECURED PARTY'S obligation.
(12) "Security agreement" means an agreement which creates
or provides for a security interest.
(13) "Secured party" means a lender, seller, or other
person in whose favor there is a security interest, including a
person to whom accounts or chattel paper have been sold. When
the holders of obligations issued under an indenture of trust,
equipment trust agreement, or the like are represented by a
trustee or other person, the representative is the secured party.
(14) "Transmitting utility" means any person primarily
engaged in the railroad, street railway, or trolley bus business,
the electric or electronic communications business, the
transmission of goods by pipeline, or the transmission or the
production and transmission of electricity, steam, gas, or water,
or the provision of sewer service.
(15) "Account" means any right to payment for goods sold
or leased or for services rendered which is not evidenced by an
instrument or chattel paper, whether or not it has been earned by
performance.
(16) "General intangible INTANGIBLES" means any personal
property,
including things in action, other than goods, accounts, chattel
paper, documents, instruments, INVESTMENT PROPERTY, and money.
All rights to payment
earned or unearned under a charter or other contract involving
the use or hire of a vessel and all rights incident to the
charter or contract are accounts.
(B) Other definitions applying to sections 1309.01 to
1309.50 of the Revised Code are:
(1) "Attach," as defined in section 1309.14 of the Revised
Code;
(2) "Construction mortgage," as defined in section 1309.32
of the Revised Code;
(3) "Consumer goods," as defined in section 1309.07 of the
Revised Code;
(4) "Equipment," as defined in section 1309.07 of the
Revised Code;
(5) "Farm products," as defined in section 1309.07 of the
Revised Code;
(6) "Fixture," as defined in section 1309.32 of the
Revised Code;
(7) "Fixture filing," as defined in section 1309.32 of the
Revised Code;
(8) "Inventory," as defined in section 1309.07 of the
Revised Code;
(9) "Lien creditor," as defined in section 1309.20 of the
Revised Code;
(10) "Proceeds," as defined in section 1309.25 of the
Revised Code;
(11) "Purchase money security interest," as defined in
section 1309.05 of the Revised Code;
(12) "COMMODITY CONTRACT," "COMMODITY CUSTOMER," "COMMODITY
INTERMEDIARY," "CONTROL," AND "INVESTMENT PROPERTY," AS DEFINED IN SECTION
1309.112 of the Revised Code;
(13) "United States," as defined in section 1309.03 of the
Revised Code.
(C) As used in sections 1309.01 to 1309.50 of the Revised
Code, "check" and "note" have the meaning set forth in section
1303.03 of the Revised Code; "contract for sale" and "sale" have
the meaning set forth in section 1302.01 of the Revised Code; and
"holder in due course" has the meaning set forth in section
1303.31 of the Revised Code.
(D) The terms and principles of construction and
interpretation set forth in sections 1301.01 to 1301.14 of the
Revised Code are applicable to sections 1309.01 to 1309.50 of the
Revised Code.
Sec. 1309.03. (A) Documents, instruments, and ordinary
goods:
(1) This division applies to documents and instruments and
to goods other than those covered by a certificate of title
described in division (B) of this section, mobile goods described
in division (C) of this section, and minerals described in
division (E) of this section.
(2) Except as otherwise provided in this division,
perfection and the effect of perfection or nonperfection of a
security interest in collateral are governed by the law of the
jurisdiction where the collateral is when the last event occurs
on which is based the assertion that the security interest is
perfected or unperfected.
(3) If the parties to a transaction creating a purchase
money security interest in goods in one jurisdiction understand
at the time that the security interest attaches that the goods
will be kept in another jurisdiction, then the law of the other
jurisdiction governs the perfection and the effect of perfection
or nonperfection of the security interest from the time it
attaches until thirty days after the debtor receives possession
of the goods and thereafter if the goods are taken to the other
jurisdiction before the end of the thirty-day period.
(4) When collateral is brought into and kept in this state
while subject to a security interest perfected under the law of
the jurisdiction from which the collateral was removed, the
security interest remains perfected, but if action is required by
sections 1309.20 to 1309.37 of the Revised Code to perfect the
security interest:
(a) If the action is not taken before the expiration of
the period of perfection in the other jurisdiction or the end of
four months after the collateral is brought into this state,
whichever period first expires, the security interest becomes
unperfected at the end of that period and is thereafter deemed to
have been unperfected as against a person who became a purchaser
after removal;
(b) If the action is taken before the expiration of the
period specified in division (A)(4)(a) of this section, the
security interest continues perfected thereafter;
(c) For the purpose of priority over a buyer of consumer
goods, division (B) of section 1309.26 of the Revised Code, the
period of the effectiveness of a filing in the jurisdiction from
which the collateral is removed is governed by the rules with
respect to perfection in divisions (A)(4)(a) and (b) of this
section.
(B) Certificate of title.
(1) This division applies to goods covered by a
certificate of title issued under a statute of this state or of
another jurisdiction under the law of which indication of a
security interest on the certificate is required as a condition
of perfection.
(2) Except as otherwise provided in this division,
perfection and the effect of perfection or nonperfection of the
security interest are governed by the law, including the conflict
of laws rules, of the jurisdiction issuing the certificate until
four months after the goods are removed from that jurisdiction
and thereafter until the goods are registered in another
jurisdiction, but in any event not beyond surrender of the
certificate. After the expiration of that period, the goods are
not covered by the certificate of title within the meaning of
this section.
(3) Except with respect to the rights of a buyer described
in division (B)(4) of this section a security interest, perfected
in another jurisdiction otherwise than by notation on a
certificate of title, in goods brought into this state and
thereafter covered by a certificate of title issued by this state
is subject to the rules stated in division (A)(4) of this
section.
(4) If goods are brought into this state while a security
interest therein is perfected in any manner under the law of the
jurisdiction from which the goods are removed and a certificate
of title is issued by this state and the certificate does not
show that the goods are subject to the security interest or that
they may be subject to security interests not shown on the
certificate, the security interest is subordinate to the rights
of a buyer of the goods who is not in the business of selling
goods of that kind to the extent that he THE BUYER gives value
and receives delivery of the goods after issuance of the certificate and
without knowledge of the security interest.
(C) Accounts, general intangibles, and mobile goods.
(1) This division applies to accounts, other than an
account described in division (E) of this section on minerals,
and general intangibles, other than uncertificated securities,
and to goods which are mobile and which are of a type normally
used in more than one jurisdiction, such as motor vehicles,
trailers, rolling stock, airplanes, shipping containers, road
building and construction machinery, and commercial harvesting
machinery and the like, if the goods are equipment or are
inventory leased or held for lease by the debtor to others, and
are not covered by a certificate of title described in division
(B) of this section.
(2) The law, including the conflict of laws rules, of the
jurisdiction in which the debtor is located governs the
perfection and the effect of perfection or nonperfection of the
security interest.
(3) If, however, the debtor is located in a jurisdiction
which is not a part of the United States, and which does not
provide for perfection of the security interest by filing or
recording in that jurisdiction, the law of the jurisdiction in
the United States in which the debtor has its major executive
office in the United States governs the perfection and the effect
of perfection or nonperfection of the security interest through
filing. In the alternative, if the debtor is located in a
jurisdiction which is not a part of the United States or Canada
and the collateral is accounts or general intangibles for money
due or to become due, the security interest may be perfected by
notification to the account debtor. As used in this division,
"United States" includes its territories and possessions and the
Commonwealth of Puerto Rico.
(4) A debtor shall be deemed located at his THE DEBTOR'S place
of business if he THE DEBTOR has one, at his THE
DEBTOR'S chief executive office if he DEBTOR has more than
one place of business; otherwise at his THE DEBTOR'S residence.
If, however, the debtor is a foreign air carrier under the "Federal Aviation
Act of 1958," as amended, it shall be deemed located at
the designated office of the agent upon whom service of process
may be made on behalf of the foreign air carrier.
(5) A security interest perfected under the law of the
jurisdiction of the location of the debtor is perfected until the
expiration of four months after a change of the debtor's location
to another jurisdiction, or until perfection would have ceased by
the law of the first jurisdiction, whichever period first
expires. Unless perfected in the new jurisdiction before the end
of that period, it becomes unperfected thereafter and is deemed
to have been unperfected as against a person who became a
purchaser after the change.
(D) Chattel Paper.
The rules stated for goods in division (A) of this section apply
to a possessory security interest in chattel paper. The rule
stated for accounts in division (C) of this section applies to a
nonpossessory security in chattel paper, but the security
interest may not be perfected by notification to the account
debtor.
(E) Minerals.
Perfection and the effect of perfection or nonperfection of
a security interest which is created by a debtor who has an
interest in minerals or the like, including oil and gas, before
extraction and which attaches thereto as extracted, or which
attaches to an account resulting from the sale thereof at the
wellhead or minehead are governed by the law, including the
conflict of laws rules, of the jurisdiction wherein the wellhead
or minehead is located.
(F) Uncertificated securities INVESTMENT PROPERTY.
The law, including the conflict of laws rules, of the
jurisdiction of organization of the issuer governs the perfection
and the effect of perfection or non-perfection of a
security interest in uncertificated securities.
(1) THIS DIVISION APPLIES TO INVESTMENT PROPERTY.
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF THIS
SECTION, DURING THE TIME THAT A SECURITY CERTIFICATE IS LOCATED IN A
JURISDICTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF PERFECTION OR
NONPERFECTION, AND THE PRIORITY OF A SECURITY INTEREST IN THE CERTIFICATED
SECURITY REPRESENTED THEREBY ARE GOVERNED BY THE LOCAL LAW OF THAT
JURISDICTION.
(3) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF THIS
SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF PERFECTION OR
NONPERFECTION, AND THE PRIORITY OF A SECURITY INTEREST IN AN UNCERTIFICATED
SECURITY ARE GOVERNED BY THE LOCAL LAW OF THE ISSUER'S JURISDICTION AS
SPECIFIED IN DIVISION (D) OF SECTION 1308.05 of the Revised Code.
(4) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF THIS
SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF PERFECTION OR
NONPERFECTION, AND THE PRIORITY OF A SECURITY INTEREST IN A SECURITY
ENTITLEMENT OR SECURITIES ACCOUNT ARE GOVERNED BY THE LOCAL LAW OF THE
SECURITIES INTERMEDIARY'S JURISDICTION AS SPECIFIED IN DIVISION (E)
OF SECTION 1308.05 of the Revised Code.
(5) EXCEPT AS OTHERWISE PROVIDED IN DIVISION (F)(6) OF THIS
SECTION, PERFECTION OF A SECURITY INTEREST, THE EFFECT OF PERFECTION OR
NONPERFECTION, AND THE PRIORITY OF A SECURITY INTEREST IN A COMMODITY CONTRACT
OR COMMODITY ACCOUNT ARE GOVERNED BY THE LOCAL LAW OF THE COMMODITY
INTERMEDIARY'S JURISDICTION. THE FOLLOWING RULES DETERMINE A "COMMODITY
INTERMEDIARY'S JURISDICTION" FOR PURPOSES OF THIS DIVISION:
(a) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND
COMMODITY CUSTOMER SPECIFIES THAT IT IS GOVERNED BY THE LAW OF A PARTICULAR
JURISDICTION, THAT JURISDICTION IS THE COMMODITY INTERMEDIARY'S JURISDICTION.
(b) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND
COMMODITY CUSTOMER DOES NOT SPECIFY THE GOVERNING LAW AS PROVIDED IN DIVISION
(F)(5)(a) OF THIS SECTION, BUT EXPRESSLY SPECIFIES
THAT THE COMMODITY ACCOUNT IS MAINTAINED AT AN OFFICE IN A PARTICULAR
JURISDICTION, THAT JURISDICTION IS THE COMMODITY INTERMEDIARY'S JURISDICTION.
(c) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND
COMMODITY CUSTOMER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN DIVISION
(F)(5)(a) OR (b) OF THIS SECTION, THE
COMMODITY INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN WHICH IS LOCATED
THE OFFICE IDENTIFIED IN AN ACCOUNT STATEMENT AS THE OFFICE SERVING THE
COMMODITY CUSTOMER'S ACCOUNT.
(d) IF AN AGREEMENT BETWEEN THE COMMODITY INTERMEDIARY AND
COMMODITY CUSTOMER DOES NOT SPECIFY A JURISDICTION AS PROVIDED IN DIVISION
(F)(5)(a) OR (b) OF THIS SECTION AND AN
ACCOUNT STATEMENT DOES NOT IDENTIFY AN OFFICE SERVING THE COMMODITY CUSTOMER'S
ACCOUNT AS PROVIDED IN DIVISION (F)(5)(c) OF THIS
SECTION, THE COMMODITY INTERMEDIARY'S JURISDICTION IS THE JURISDICTION IN
WHICH IS LOCATED THE CHIEF EXECUTIVE OFFICE OF THE COMMODITY INTERMEDIARY.
(6) PERFECTION OF A SECURITY INTEREST BY FILING, AUTOMATIC PERFECTION OF A
SECURITY INTEREST IN INVESTMENT PROPERTY GRANTED BY A BROKER OR SECURITIES
INTERMEDIARY, AND AUTOMATIC PERFECTION OF A SECURITY INTEREST IN A COMMODITY
CONTRACT OR COMMODITY ACCOUNT GRANTED BY A COMMODITY INTERMEDIARY ARE GOVERNED
BY THE LOCAL LAW OF THE JURISDICTION IN WHICH THE DEBTOR IS LOCATED.
Sec. 1309.112. (A) IN THIS CHAPTER:
(1) "COMMODITY ACCOUNT" MEANS AN ACCOUNT MAINTAINED BY A COMMODITY
INTERMEDIARY IN WHICH A COMMODITY CONTRACT IS CARRIED FOR A COMMODITY
CUSTOMER.
(2) "COMMODITY CONTRACT" MEANS A COMMODITY FUTURES CONTRACT, AN OPTION ON
A COMMODITY FUTURES CONTRACT, A COMMODITY OPTION, OR OTHER CONTRACT THAT, IN
EACH CASE, IS:
(a) TRADED ON OR SUBJECT TO THE RULES OF A BOARD OF TRADE THAT
HAS BEEN DESIGNATED AS A CONTRACT MARKET FOR SUCH A CONTRACT PURSUANT TO THE
FEDERAL COMMODITIES LAWS; OR
(b) TRADED ON A FOREIGN COMMODITY BOARD OF TRADE, EXCHANGE, OR
MARKET, AND IS CARRIED ON THE BOOKS OF A COMMODITY INTERMEDIARY FOR A
COMMODITY CUSTOMER.
(3) "COMMODITY CUSTOMER" MEANS A PERSON FOR WHOM A COMMODITY INTERMEDIARY
CARRIES A COMMODITY CONTRACT ON ITS BOOKS.
(4) "COMMODITY INTERMEDIARY" MEANS:
(a) A PERSON WHO IS REGISTERED AS A FUTURES COMMISSION MERCHANT
UNDER THE FEDERAL COMMODITIES LAWS; OR
(b) A PERSON WHO IN THE ORDINARY COURSE OF ITS BUSINESS PROVIDES
CLEARANCE OR SETTLEMENT SERVICES FOR A BOARD OF TRADE THAT HAS BEEN DESIGNATED
AS A CONTRACT MARKET PURSUANT TO THE FEDERAL COMMODITIES LAWS.
(5) "CONTROL" WITH RESPECT TO A CERTIFICATED SECURITY, UNCERTIFICATED
SECURITY, OR SECURITY ENTITLEMENT HAS THE MEANING SPECIFIED IN SECTION 1308.24
of the Revised Code. A SECURED PARTY HAS CONTROL OVER A COMMODITY CONTRACT IF BY AGREEMENT
AMONG THE COMMODITY CUSTOMER, THE COMMODITY INTERMEDIARY, AND THE SECURED
PARTY, THE COMMODITY INTERMEDIARY HAS AGREED THAT IT WILL APPLY ANY VALUE
DISTRIBUTED ON ACCOUNT OF THE COMMODITY CONTRACT AS DIRECTED BY THE SECURED
PARTY WITHOUT FURTHER CONSENT BY THE COMMODITY CUSTOMER. IF A COMMODITY
CUSTOMER GRANTS A SECURITY INTEREST IN A COMMODITY CONTRACT TO ITS OWN
COMMODITY INTERMEDIARY, THE COMMODITY INTERMEDIARY AS SECURED PARTY HAS
CONTROL. A SECURED PARTY HAS CONTROL OVER A SECURITIES ACCOUNT OR COMMODITY
ACCOUNT IF THE SECURED PARTY HAS CONTROL OVER ALL SECURITY ENTITLEMENTS OR
COMMODITY CONTRACTS CARRIED IN THE SECURITIES ACCOUNT OR COMMODITY ACCOUNT.
(6) "INVESTMENT PROPERTY" MEANS:
(a) A SECURITY, WHETHER CERTIFICATED OR UNCERTIFICATED;
(b) A SECURITY ENTITLEMENT;
(c) A SECURITIES ACCOUNT;
(d) A COMMODITY CONTRACT; OR
(e) A COMMODITY ACCOUNT.
(B) ATTACHMENT OR PERFECTION OF A SECURITY INTEREST IN A
SECURITIES ACCOUNT IS ALSO ATTACHMENT OR PERFECTION OF A SECURITY INTEREST IN
ALL SECURITY ENTITLEMENTS CARRIED IN THE SECURITIES ACCOUNT. ATTACHMENT OR
PERFECTION OF A SECURITY INTEREST IN A COMMODITY ACCOUNT IS ALSO ATTACHMENT OR
PERFECTION OF A SECURITY INTEREST IN ALL COMMODITY CONTRACTS CARRIED IN THE
COMMODITY ACCOUNT.
(C) A DESCRIPTION OF COLLATERAL IN A SECURITY AGREEMENT OR
FINANCING STATEMENT IS SUFFICIENT TO CREATE OR PERFECT A SECURITY INTEREST IN
A CERTIFICATED SECURITY, UNCERTIFICATED SECURITY, SECURITY ENTITLEMENT,
SECURITIES ACCOUNT, COMMODITY CONTRACT, OR COMMODITY ACCOUNT WHETHER IT
DESCRIBES THE COLLATERAL BY THOSE TERMS, OR AS INVESTMENT PROPERTY, OR BY
DESCRIPTION OF THE UNDERLYING SECURITY, FINANCIAL ASSET, OR COMMODITY
CONTRACT. A DESCRIPTION OF INVESTMENT PROPERTY COLLATERAL IN A SECURITY
AGREEMENT OR FINANCING STATEMENT IS SUFFICIENT IF IT IDENTIFIES THE COLLATERAL
BY SPECIFIC LISTING, BY CATEGORY, BY QUANTITY, BY A COMPUTATIONAL OR
ALLOCATIONAL FORMULA OR PROCEDURE, OR BY ANY OTHER METHOD, IF THE IDENTITY OF
THE COLLATERAL IS OBJECTIVELY DETERMINABLE.
(D) PERFECTION OF A SECURITY INTEREST IN INVESTMENT PROPERTY IS
GOVERNED BY THE FOLLOWING RULES:
(1) A SECURITY INTEREST IN INVESTMENT PROPERTY MAY BE PERFECTED BY
CONTROL.
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (D)(3) AND (4) OF
THIS SECTION, A SECURITY INTEREST IN INVESTMENT PROPERTY MAY BE PERFECTED BY
FILING.
(3) IF THE DEBTOR IS A BROKER OR SECURITIES INTERMEDIARY, A SECURITY
INTEREST IN INVESTMENT PROPERTY IS PERFECTED WHEN IT ATTACHES. THE FILING OF
A FINANCING STATEMENT WITH RESPECT TO A SECURITY INTEREST IN INVESTMENT
PROPERTY GRANTED BY A BROKER OR SECURITIES INTERMEDIARY HAS NO EFFECT FOR
PURPOSES OF PERFECTION OR PRIORITY WITH RESPECT TO THAT SECURITY INTEREST.
(4) IF A DEBTOR IS A COMMODITY INTERMEDIARY, A SECURITY INTEREST IN A
COMMODITY CONTRACT OR A COMMODITY ACCOUNT IS PERFECTED WHEN IT ATTACHES. THE
FILING OF A FINANCING STATEMENT WITH RESPECT TO A SECURITY INTEREST IN A
COMMODITY CONTRACT OR A COMMODITY ACCOUNT GRANTED BY A COMMODITY INTERMEDIARY
HAS NO EFFECT FOR PURPOSES OF PERFECTION OR PRIORITY WITH RESPECT TO THAT
SECURITY INTEREST.
(E) PRIORITY BETWEEN CONFLICTING SECURITY INTERESTS IN THE SAME
INVESTMENT PROPERTY IS GOVERNED BY THE FOLLOWING RULES:
(1) A SECURITY INTEREST OF A SECURED PARTY WHO HAS CONTROL OVER INVESTMENT
PROPERTY HAS PRIORITY OVER A SECURITY INTEREST OF A SECURED PARTY WHO DOES NOT
HAVE CONTROL OVER THE INVESTMENT PROPERTY.
(2) EXCEPT AS OTHERWISE PROVIDED IN DIVISIONS (E)(3) AND (4) OF
THIS SECTION, CONFLICTING SECURITY INTERESTS OF SECURED PARTIES EACH OF WHOM
HAS CONTROL RANK EQUALLY.
(3) EXCEPT AS OTHERWISE AGREED BY THE SECURITIES INTERMEDIARY, A SECURITY
INTEREST IN A SECURITY ENTITLEMENT OR A SECURITIES ACCOUNT GRANTED TO THE
DEBTOR'S OWN SECURITIES INTERMEDIARY HAS PRIORITY OVER ANY SECURITY INTEREST
GRANTED BY THE DEBTOR TO ANOTHER SECURED PARTY.
(4) EXCEPT AS OTHERWISE AGREED BY THE COMMODITY INTERMEDIARY, A SECURITY
INTEREST IN A COMMODITY CONTRACT OR A COMMODITY ACCOUNT GRANTED TO THE
DEBTOR'S OWN COMMODITY INTERMEDIARY HAS PRIORITY OVER ANY SECURITY INTEREST
GRANTED BY THE DEBTOR TO ANOTHER SECURED PARTY.
(5) CONFLICTING SECURITY INTERESTS GRANTED BY A BROKER, A SECURITIES
INTERMEDIARY, OR A COMMODITY INTERMEDIARY WHICH ARE PERFECTED WITHOUT CONTROL
RANK EQUALLY.
(6) IN ALL OTHER CASES, PRIORITY BETWEEN CONFLICTING SECURITY INTERESTS IN
INVESTMENT PROPERTY IS GOVERNED BY DIVISIONS (E), (F), AND
(G) OF SECTION 1309.31 of the Revised Code. DIVISION (D) OF SECTION
1309.31 of the Revised Code DOES NOT APPLY TO INVESTMENT PROPERTY.
(F) IF A SECURITY CERTIFICATE IN REGISTERED FORM IS DELIVERED TO
A SECURED PARTY PURSUANT TO AGREEMENT, A WRITTEN SECURITY AGREEMENT IS NOT
REQUIRED FOR ATTACHMENT OR ENFORCEABILITY OF THE SECURITY INTEREST, DELIVERY
SUFFICES FOR PERFECTION OF THE SECURITY INTEREST, AND THE SECURITY INTEREST
HAS PRIORITY OVER A CONFLICTING SECURITY INTEREST PERFECTED BY MEANS OTHER
THAN CONTROL, EVEN IF A NECESSARY INDORSEMENT IS LACKING.
Sec. 1309.113. (A) IF A PERSON BUYS A FINANCIAL ASSET THROUGH A
SECURITIES INTERMEDIARY IN A TRANSACTION IN WHICH THE BUYER IS OBLIGATED TO
PAY THE PURCHASE PRICE TO THE SECURITIES INTERMEDIARY AT THE TIME OF THE
PURCHASE, AND THE SECURITIES INTERMEDIARY CREDITS THE FINANCIAL ASSET TO THE
BUYER'S SECURITIES ACCOUNT BEFORE THE BUYER PAYS THE SECURITIES INTERMEDIARY,
THE SECURITIES INTERMEDIARY HAS A SECURITY INTEREST IN THE BUYER'S SECURITY
ENTITLEMENT SECURING THE BUYER'S OBLIGATION TO PAY. A SECURITY AGREEMENT IS
NOT REQUIRED FOR ATTACHMENT OR ENFORCEABILITY OF THE SECURITY INTEREST, AND
THE SECURITY INTEREST IS AUTOMATICALLY PERFECTED.
(B) IF A CERTIFICATED SECURITY, OR OTHER FINANCIAL ASSET
REPRESENTED BY A WRITING WHICH IN THE ORDINARY COURSE OF BUSINESS IS
TRANSFERRED BY DELIVERY WITH ANY NECESSARY INDORSEMENT OR ASSIGNMENT IS
DELIVERED PURSUANT TO AN AGREEMENT BETWEEN PERSONS IN THE BUSINESS OF DEALING
WITH SUCH SECURITIES OR FINANCIAL ASSETS AND THE AGREEMENT CALLS FOR DELIVERY
VERSUS PAYMENT, THE PERSON DELIVERING THE CERTIFICATE OR OTHER FINANCIAL ASSET
HAS A SECURITY INTEREST IN THE CERTIFICATED SECURITY OR OTHER FINANCIAL ASSET
SECURING THE SELLER'S RIGHT TO RECEIVE PAYMENT. A SECURITY AGREEMENT IS NOT
REQUIRED FOR ATTACHMENT OR ENFORCEABILITY OF THE SECURITY INTEREST, AND THE
SECURITY INTEREST IS AUTOMATICALLY PERFECTED.
Sec. 1309.14. (A) Subject to the provisions of section
1304.20 of the Revised Code on the security interest of a
collecting bank, section 1308.36 SECTIONS 1309.112 AND
1309.113 of the Revised Code on security
interests in securities INVESTMENT PROPERTY, and section 1309.11
of the Revised Code
on a security interest arising under sections 1302.01 to 1302.98
of the Revised Code, a security interest is not enforceable
against the debtor or third parties with respect to the
collateral and does not attach unless:
(1) The collateral is in the possession of the secured
party pursuant to agreement, THE COLLATERAL IS INVESTMENT PROPERTY AND THE
SECURED PARTY HAS CONTROL PURSUANT TO AGREEMENT, or the debtor has
signed a security
agreement which contains a description of the collateral and in
addition, when the security interest covers crops growing or to
be grown or timber to be cut, a description of the land
concerned; and
(2) Value has been given; and
(3) The debtor has rights in the collateral.
(B) A security interest attaches when it becomes
enforceable against the debtor with respect to the collateral.
Attachment occurs as soon as all of the events specified in
division (A) of this section have taken place unless explicit
agreement postpones the time of attaching.
(C) Unless otherwise agreed, a security agreement gives
the secured party the rights to proceeds provided by section
1309.25 of the Revised Code.
(D) A transaction although subject to sections 1309.01 to
1309.50 of the Revised Code, is also subject to sections 1317.01
to 1317.99 and 1321.01 to 1321.33 of the Revised Code, and
divisions (A), (B), and (C) of section 1321.99 of the Revised
Code and in the event of conflict between the provisions of
sections 1309.01 to 1309.50, and 1317.01 to 1317.99, 1321.01 to
1321.33 of the Revised Code, and divisions (A), (B), and (C) of
section 1321.99 of the Revised Code, the provisions of sections
1317.01 to 1317.99, 1321.01 to 1321.33 of the Revised Code, and
divisions (A), (B), and (C) of section 1321.99 of the Revised
Code shall prevail. Failure to comply with such provisions has
only the effect provided therein.
Sec. 1309.20. (A) Except as otherwise provided in
division (B) of this section, an unperfected security interest is
subordinate to the rights of:
(1) Persons entitled to priority under section 1309.31 of
the Revised Code;
(2) A person who becomes a lien creditor before the
security interest is perfected;
(3) In the case of goods, instruments, documents, and
chattel paper, a person who is not a secured party and who is a
transferee in bulk or other buyer not in ordinary course of
business, or is a buyer of farm products in ordinary course of
business, to the extent that he THE PERSON gives value and
receives delivery of the collateral without knowledge of the security interest
and
before it is perfected;
(4) In the case of accounts and, general intangibles, AND
INVESTMENT PROPERTY, a
person who is not a secured party and who is a transferee to the
extent that he THE PERSON gives value without knowledge of the
security interest and before it is perfected.
(B) If the secured party files with respect to a purchase
money security interest before or within twenty days after the
debtor receives possession of the collateral he THE SECURED
PARTY takes priority over the rights of a transferee in bulk or of a lien
creditor which arise between the time the security interest attaches and
the time of filing.
(C) A "lien creditor" means a creditor who has acquired a
lien on the property involved by attachment, levy or the like and
includes an assignee for benefit of creditors from the time of
assignment, and a trustee in bankruptcy from the date of the
filing of the petition or a receiver in equity from the time of
appointment.
(D) A person who becomes a lien creditor while a security
interest is perfected takes subject to the security interest only
to the extent that it secures advances made before he THE PERSON
becomes a lien creditor or within forty-five days thereafter or made without
knowledge of the lien or pursuant to a commitment entered
into without knowledge of the lien.
Sec. 1309.21. (A) A financing statement must be filed to
perfect all security interests except the following:
(1) A security interest in collateral in possession of the
secured party under section 1309.24 of the Revised Code;
(2) A security interest temporarily perfected in
instruments, CERTIFICATED SECURITIES, or documents
without delivery under section 1309.23
of the Revised Code or in proceeds for a ten-day period under
section 1309.25 of the Revised Code;
(3) A security interest created by an assignment of a
beneficial interest in a trust or a decedent's estate;
(4) A purchase money security interest in consumer goods;
but fixture filing is required for a priority over conflicting
interests in fixtures to the extent provided in section 1309.32
of the Revised Code;
(5) An assignment of accounts which does not alone or in
conjunction with other assignments to the same assignee transfer
a significant part of the outstanding accounts of the assignor;
(6) A security interest of a collecting bank as provided
in section 1304.20 of the Revised Code, or in securities as
provided in section 1308.36 of the Revised Code, or arising under
sections 1302.01 to 1302.98 of the Revised Code, or covered in
division (C) of this section;
(7) An assignment for the benefit of all the creditors of
the transferor, and subsequent transfers by the assignee
thereunder;
(8) A SECURITY INTEREST IN INVESTMENT PROPERTY WHICH IS PERFECTED WITHOUT
FILING UNDER SECTION 1309.112 OR 1309.113 of the Revised Code.
(B) If a secured party assigns a perfected security
interest, no filing under sections 1309.01 to 1309.50 of the
Revised Code is required in order to continue the perfected
status of the security interest against creditors of and
transferees from the original debtor.
(C) The filing of a financing statement otherwise required
by sections 1309.01 to 1309.50 of the Revised Code is not
necessary or effective to perfect a security interest in property
subject to:
(1) A statute or treaty of the United States which
provides for a national or international registration or a
national or international certificate of title or which specifies
a place of filing different from that specified in sections
1309.01 to 1309.50 of the Revised Code for filing of the security
interest; or
(2) The following statutes of this state: sections
1548.20, 1701.66, 4505.13 except to the extent provided in
division (A) of such section, and 4969.05 of the Revised Code; or
(3) A certificate of title statute of another jurisdiction
under the law of which indication of a security interest on the
certificate is required as a condition of perfection, division
(B) of section 1309.03 of the Revised Code.
(D) Compliance with a statute or treaty described in
division (C) of this section is equivalent to the filing of a
financing statement under sections 1309.01 to 1309.50 of the
Revised Code, and a security interest in property subject to the
statute or treaty can be perfected only by compliance therewith
except as provided in section 1309.03 of the Revised Code on
multiple state transactions. Duration and renewal of perfection
of a security interest perfected by compliance with the statute
or treaty are governed by the provisions of the statute or
treaty; in other respects the security interest is subject to
sections 1309.01 to 1309.50 of the Revised Code.
Sec. 1309.22. (A) A security interest is perfected when it has attached and
when all of the applicable steps required for perfection have been taken, as
provided in sections 1309.112, 1309.21, 1309.23, 1309.24, and 1309.25
of the Revised
Code. If such steps are taken before the security interest attaches, it is
perfected at the time when it attaches.
(B) If a security interest is originally perfected in any way permitted under
sections 1309.01 to 1309.50, inclusive, of the Revised Code, and is
subsequently perfected in some other way under sections 1309.01 to 1309.50,
inclusive, of the Revised Code, without an intermediate period when it was
unperfected, the security interest shall be deemed to be perfected
continuously for the purposes of such sections.
(C) A security interest by whatever name designated by any law in effect
prior to July 1, 1962, which was perfected prior to such date and in
connection with which any statement, instrument, document, or notice was
filed, refiled, or recorded pursuant to such law, shall, if such law required
a further filing, refiling, or recording to continue the perfection of such
security interest, continue to be perfected without any further filing,
refiling, or recording of any statement, instrument, document, or notice until
the date provided by such law or July 1, 1964, whichever date is later and
will thereupon lapse, unless a continuation statement has been filed after
July 1, 1962, and prior to the lapse of such statement, instrument, document,
or notice pursuant to this section. Section 1309.38 of the Revised Code
determines the proper place to file such continuation statement and succeeding
continuation statements and, except as otherwise provided in this section,
division (C) of section 1309.40 of the Revised Code applies to and governs the
period of effectiveness and the requirements respecting such continuation
statements.
Sec. 1309.23. (A) A security interest in chattel paper or
negotiable documents may be perfected by filing. A security
interest in money or instruments, other than certificated
securities or instruments which constitute part of chattel paper,
can be perfected only by the secured party's taking possession,
except as provided in divisions (D) and (E) of this section and
divisions (B) and (C) of section 1309.25 of the Revised Code on
proceeds.
(B) During the period that goods are in the possession of
the issuer of a negotiable document therefor, a security interest
in the goods is perfected by perfecting a security interest in
the document, and any security interest in the goods otherwise
perfected during such period is subject thereto.
(C) A security interest in goods in the possession of a
bailee other than one who has issued a negotiable document
therefor is perfected by issuance of a document in the name of
the secured party or by the bailee's receipt of notification of
the secured party's interest or by filing as to the goods.
(D) A security interest in instruments, other than
certificated securities, or negotiable documents is perfected
without filing or the taking of possession for a period of
twenty-one days from the time it attaches to the extent that it
arises for new value given under a written security agreement.
(E) A security interest remains perfected for a period of
twenty-one days without filing where a secured party having a
perfected security interest in an instrument, other than a
certificated security, a negotiable document, or goods in
possession of a bailee other than one who has issued a negotiable
document therefor:
(1) Makes available to the debtor the goods or documents
representing the goods for the purpose of ultimate sale or
exchange or for the purpose of loading, unloading, storing,
shipping, trans-shipping, manufacturing, processing, or otherwise
dealing with them in a manner preliminary to their sale or
exchange, but priority between conflicting security interests in
the goods is subject to division (C) of section 1309.31 of the
Revised Code; or
(2) Delivers the instrument OR CERTIFICATED SECURITY to the debtor for
the purpose
of ultimate sale or exchange or of presentation, collection,
renewal, or registration of transfer.
(F) After the twenty-one day period set forth in divisions
(D) and (E) of this section, perfection depends upon compliance
with applicable provisions of sections 1309.01 to 1309.50 of the
Revised Code.
Sec. 1309.24. A security interest in letters of credit and
advices of credit, as provided in division (B)(1) of section
1305.15 of the Revised Code, goods, instruments, other than
certificated securities, negotiable documents, money, or chattel
paper may be perfected by the secured party's taking possession
of the collateral. If such collateral other than goods covered
by a negotiable document is held by a bailee, the secured party
is deemed to have possession from the time the bailee receives
notification of the secured party's interest. A security
interest is perfected by possession from the time possession is
taken without relation back and continues only so long as
possession is retained, unless otherwise specified in sections
1309.01 to 1309.50 of the Revised Code. The security interest
may be otherwise perfected as provided in sections 1309.01 to
1309.50 of the Revised Code, before or after the period of
possession by the secured party.
Sec. 1309.25. (A) "Proceeds" includes whatever is
received upon the sale, exchange, collection, or other
disposition of collateral or proceeds. Insurance payable by
reason of loss or damage to the collateral is proceeds, except to
the extent that it is payable to a person other than a party to
the security agreement. Moneys ANY PAYMENTS OR DISTRIBUTIONS MADE
WITH RESPECT TO INVESTMENT PROPERTY COLLATERAL ARE PROCEEDS. MONEY,
checks, deposit accounts,
and the like are "cash proceeds." All other proceeds are
"non-cash proceeds."
(B) Except where sections 1309.01 to 1309.50 of the
Revised Code otherwise provide, a security interest continues in
collateral notwithstanding sale, exchange, or other disposition
thereof unless the disposition was authorized by the secured
party in the security agreement or otherwise, and also continues
in any identifiable proceeds including collections received by
the debtor.
(C) The security interest in proceeds is a continuously
perfected security interest if the interest in the original
collateral was perfected but it ceases to be a perfected security
interest and becomes unperfected ten days after receipt of the
proceeds by the debtor unless:
(1) a A filed financing statement covers the original
collateral and the proceeds are collateral in which a security
interest may be perfected by filing in the office or offices
where the financing statement has been filed and, if the proceeds
are acquired with cash proceeds, the description of the
collateral in the financing statement indicates the types of
property constituting the proceeds; or
(2) a A filed financing statement covers the original
collateral and the proceeds are identifiable cash proceeds; or
(3) the THE ORIGINAL COLLATERAL WAS INVESTMENT PROPERTY AND THE
PROCEEDS ARE IDENTIFIABLE CASH PROCEEDS; OR
(4) THE security interest in the proceeds is perfected
before the expiration of the ten day period. Except as provided
in this section, a security interest in proceeds can be perfected
only by the methods or under the circumstances permitted in
sections 1309.01 to 1309.50 of the Revised Code for original
collateral of the same type.
(D) In the event of insolvency proceedings instituted by
or against a debtor, a secured party with a perfected security
interest in proceeds has a perfected security interest only in
the following proceeds:
(1) in IN identifiable non-cash proceeds and in separate
deposit accounts containing only proceeds;
(2) in IN identifiable cash proceeds in the form of money
which is neither commingled with other money nor deposited in a
deposit account prior to the insolvency proceedings;
(3) in IN identifiable cash proceeds in the form of checks
and the like which are not deposited in a deposit account prior
to the insolvency proceedings; and
(4) in IN all cash and deposit accounts of the debtor in
which proceeds have been commingled with other funds, but the
perfected security interest under this division is:
(a) subject SUBJECT to any right of set-off; and
(b) limited LIMITED to an amount not greater than the amount of
any cash proceeds received by the debtor within ten days before
the institution of the insolvency proceedings, less the sum of
(i) the payments to the secured party on account of cash proceeds
received by the debtor; and (ii) the cash proceeds received by
the debtor during such period to which the secured party is
entitled under divisions (D)(1) to (3) of this section.
(E) If a sale of goods results in an account or chattel
paper which is transferred by the seller to a secured party, and
if the goods are returned to or are repossessed by the seller or
the secured party, the following rules determine priorities:
(1) If the goods were collateral at the time of sale for
an indebtedness of the seller which is still unpaid, the original
security interest attaches again to the goods and continues as a
perfected security interest if it was perfected at the time when
the goods were sold. If the security interest was originally
perfected by a filing which is still effective, nothing further
is required to continue the perfected status; in any other case,
the secured party must take possession of the returned or
repossessed goods or must file.
(2) An unpaid transferee of the chattel paper has a
security interest in the goods against the transferor. Such
security interest is prior to a security interest asserted under
division (E)(1) of this section to the extent that the transferee
of the chattel paper was entitled to priority under section
1309.27 of the Revised Code.
(3) An unpaid transferee of the account has a security
interest in the goods against the transferor. Such security
interest is subordinate to a security interest asserted under
division (E)(1) of this section.
(4) A security interest of an unpaid transferee asserted
under division (E)(2) or (3) of this section must be perfected
for protection against creditors of the transferor and purchasers
of the returned or repossessed goods.
Sec. 1309.28. Nothing in sections 1309.01 to 1309.50 of
the Revised Code, limit LIMITS the rights of a holder in due
course of a
negotiable instrument, as defined in section 1303.32 of the
Revised Code, or a holder to whom a negotiable document of title
has been duly negotiated under section 1307.29 of the Revised
Code, or a bona fide PROTECTED purchaser of a security under
section
1308.17 of the Revised Code, and such holders or purchasers take
priority over an earlier security interest even though perfected.
Filing under sections 1309.01 to 1309.50 of the Revised Code,
does not constitute notice of the security interest to such
holders or purchasers.
Sec. 1309.31. (A) The rules of priority stated in
sections 1309.20 to 1309.27 of the Revised Code and in the
following sections shall govern where applicable: section
1304.20 of the Revised Code with respect to the security
interests of collecting banks in items being collected,
accompanying documents, and proceeds; section 1309.03 of the
Revised Code on security interests related to other
jurisdictions; section 1309.111 of the Revised Code on
consignments; SECTION 1309.112 of the Revised Code ON SECURITY INTERESTS IN
INVESTMENT PROPERTY.
(B) A perfected security interest in crops for new value
given to enable the debtor to produce the crops during the
production season and given not more than three months before the
crops become growing crops by planting or otherwise takes
priority over an earlier perfected security interest to the
extent that such earlier interest secures obligations due more
than six months before the crops become growing crops by planting
or otherwise, even though the person giving new value had
knowledge of the earlier security interest.
(C) A perfected purchase money security interest in
inventory has priority over a conflicting security interest in
the same inventory and also has priority in identifiable cash
proceeds received on or before the delivery of the inventory to a
buyer if:
(1) The purchase money security interest is perfected at
the time the debtor receives possession of the inventory; and
(2) The purchase money secured party gives notification in
writing to the holder of the conflicting security interest if the
holder had filed a financing statement covering the same types of
inventory:
(a) Before the date of the filing made by the purchase
money secured party; or
(b) Before the beginning of the twenty-one-day period
where the purchase money security interest is temporarily
perfected without filing or possession pursuant to division (E)
of section 1309.23 of the Revised Code; and
(3) The holder of the conflicting security interest
receives the notification within five years before the debtor
receives possession of the inventory; and
(4) The notification states that the person giving the
notice has or expects to acquire a purchase money security
interest in inventory of the debtor, describing such inventory by
item or type.
(D) A purchase money security interest in collateral other
than inventory has priority over a conflicting security interest
in the same collateral or its proceeds if the purchase money
security interest is perfected at the time the debtor receives
possession of the collateral or within twenty days thereafter.
(E) In all cases not governed by other rules stated in
this section, including cases of purchase money security
interests which do not qualify for the special priorities set
forth in divisions (C) and (D) of this section, priority between
conflicting security interests in the same collateral shall be
determined according to the following rules:
(1) Conflicting security interests rank according to
priority in time of filing or perfection. Priority dates from
the time a filing is first made covering the collateral or the
time the security interest is first perfected, whichever is
earlier, provided that there is no period thereafter when there
is neither filing nor perfection.
(2) So long as conflicting security interests are
unperfected, the first to attach has priority.
(F) For the purpose of division (E) of this section, a
date of filing or perfection as to collateral is also a date of
filing or perfection as to proceeds.
(G) If future advances are made while a security interest
is perfected by filing, the taking of possession, or under
section 1308.36 1309.112 OR 1309.113 of the
Revised Code on securities INVESTMENT PROPERTY, the security
interest has the same priority for the purposes of division (E)
of this section OR DIVISION (E) OF SECTION 1309.112 of the Revised Code with
respect to the future advances as it does
with respect to the first advance. If a commitment is made
before or while the security interest is so perfected, the
security interest has the same priority with respect to advances
made pursuant thereto. In other cases a perfected security
interest has priority from the date the advance is made.
Sec. 1701.01. As used in sections 1701.01 to 1701.98 of
the Revised Code, unless the context otherwise requires:
(A) "Corporation" or "domestic corporation" means a
corporation for profit formed under the laws of this state.
(B) "Foreign corporation" means a corporation for profit
formed under the laws of another state, and "foreign entity" means an entity
formed under the laws of another state.
(C) "State" means the United States; any state, territory,
insular possession, or other political subdivision of the United
States, including the District of Columbia; any foreign country
or nation; and any province, territory, or other political
subdivision of such foreign country or nation.
(D) "Articles" includes original articles of
incorporation,
certificates of reorganization, amended articles, and amendments
to any of these, and, in the case of a corporation created before
September 1, 1851, the special charter and any amendments to it
made by special act of the general assembly or pursuant to
general law.
(E) "Incorporator" means a person who signed the original
articles of incorporation.
(F) "Shareholder" means a person whose name appears on the
books of the corporation as the owner of shares of such
corporation. Unless the articles, the regulations, or the
contract of subscription otherwise provides, "shareholder"
includes a subscriber to shares, whether the subscription is
received by the incorporators or pursuant to authorization by the
directors, and such shares shall be deemed to be outstanding
shares.
(G) "Person" includes, without limitation, A NATURAL PERSON, a
corporation, whether nonprofit or for profit, a partnership, a limited
liability company, an unincorporated society or association, and two or more
persons having a joint or
common interest.
(H) The location of the "principal office" of a
corporation is the place named as the principal office in its articles.
(I) The "express terms" of shares of a class are the
statements expressed in the articles with respect to such shares.
(J) Shares of a class are "junior" to shares of another
class when any of their dividend or distribution rights are
subordinate to, or dependent or contingent upon, any right of, or
dividend on, or distribution to, shares of such other class.
(K) "Treasury shares" means shares belonging to the
corporation and not retired that have been either issued and
thereafter acquired by the corporation or paid as a dividend or
distribution in shares of the corporation on treasury shares of
the same class; such shares shall be deemed to be issued, but
they shall not be considered as an asset or a liability of the
corporation, or as outstanding for dividend or distribution,
quorum, voting, or other purposes, except, when authorized by the
directors, for dividends or distributions in authorized but
unissued shares of the corporation of the same class.
(L) To "retire" a share means to restore it to the status
of an authorized but unissued share.
(M) "Redemption price of shares" means the amount required
by the articles to be paid on redemption of shares.
(N) "Liquidation price" means the amount or portion of
assets required by the articles to be distributed to the holders
of shares of any class upon dissolution, liquidation, merger, or
consolidation of the corporation, or upon sale of all or
substantially all of its assets.
(O) "Insolvent" means that the corporation is unable to
pay its obligations as they become due in the usual course of its
affairs.
(P) "Parent corporation" or "parent" means a domestic or
foreign corporation that owns and holds of record shares
of
another corporation, domestic or foreign, entitling the holder of
the shares at the time to exercise a majority of the voting power
in the election of the directors of the other corporation without
regard to voting power that may thereafter exist upon a
default,
failure, or other contingency; "subsidiary corporation" or
"subsidiary" means a domestic or foreign corporation of which
another corporation, domestic or foreign, is the parent.
(Q) "Combination" means a transaction, other than a merger
or consolidation, wherein either of the following applies:
(1) Voting shares of a domestic corporation are issued or
transferred in consideration in whole or in part for the transfer
to itself or to one or more of its subsidiaries, domestic or
foreign, of all or substantially all the assets of one or more
corporations, domestic or foreign, with or without good will or
the assumption of liabilities;
(2) Voting shares of a foreign parent corporation are
issued or transferred in consideration in whole or in part for
the transfer of such assets to one or more of its domestic
subsidiaries.
"Transferee corporation" in a combination means the
corporation, domestic or foreign, to which the assets are
transferred, and "transferor corporation" in a combination means
the corporation, domestic or foreign, transferring such assets
and to which, or to the shareholders of which, the voting shares
of the domestic or foreign corporation are issued or transferred.
(R) "Majority share acquisition" means the acquisition of
shares of a corporation, domestic or foreign, entitling the
holder of the shares to exercise a majority of the voting power
in the election of directors of such corporation without regard
to voting power that may thereafter exist upon a default,
failure, or other contingency, by either of the following:
(1) A domestic corporation in consideration in whole or in
part, for the issuance or transfer of its voting shares;
(2) A domestic or foreign subsidiary in consideration in
whole or in part for the issuance or transfer of voting shares of
its domestic parent.
(S) "Acquiring corporation" in a combination means the
domestic corporation whose voting shares are issued or
transferred by it or its subsidiary or subsidiaries to the
transferor corporation or corporations or the shareholders of the
transferor corporation or corporations; and "acquiring
corporation" in a majority share acquisition means the domestic
corporation whose voting shares are issued or transferred by it
or its subsidiary in consideration for shares of a domestic or
foreign corporation entitling the holder of the shares to
exercise a majority of the voting power in the election of
directors of such corporation.
(T) When used in connection with a combination or a
majority share acquisition, "voting shares" means shares of a
corporation, domestic or foreign, entitling the holder of the
shares to vote at the time in the election of directors of such
corporation without regard to voting power which may thereafter
exist upon a default, failure, or other contingency.
(U) "An emergency" exists when the governor, or any other
person lawfully exercising the power and discharging the duties
of the office of governor, proclaims that an attack on the United
States or any nuclear, atomic, or other disaster has caused an
emergency for corporations, and such an emergency shall continue
until terminated by proclamation of the governor or any other
person lawfully exercising the powers and discharging the duties
of the office of governor.
(V) "Constituent corporation" means an existing
corporation merging into or into which is being merged one or
more other entities in a merger or an existing corporation
being consolidated with one or more other entities into a new
entity in a consolidation, whether any of the entities is
domestic or foreign, and "constituent entity" means any entity merging into or
into which is being merged one or more other entities in a merger, or an
existing entity being consolidated with one or more other entities into a new
entity in a consolidation, whether any of the entities is
domestic or foreign.
(W) "Surviving corporation" means the constituent
domestic or foreign corporation that is specified as the
corporation into which one or more other constituent entities
are to be or have been merged, and "surviving entity" means the constituent
domestic or foreign entity that is specified as the entity into which one or
more other constituent entities are to be or have been merged.
(X) "Close corporation agreement" means an agreement that
satisfies the three requirements of division (A) of section
1701.591 of the Revised Code.
(Y) "Issuing public corporation" means a domestic
corporation with fifty or more shareholders that has its
principal place of business, its principal executive offices,
assets having substantial value, or a substantial percentage of
its assets within this state, and as to which no valid close
corporation agreement exists under division (H) of section
1701.591 of the Revised Code.
(Z)(1) "Control share acquisition" means the acquisition,
directly or indirectly, by any person of shares of an issuing
public corporation that, when added to all other shares of the
issuing public corporation in respect of which such person may
exercise or direct the exercise of voting power as provided in
this division, would entitle such person, immediately after such
acquisition, directly or indirectly, alone or with others, to
exercise or direct the exercise of the voting power of the
issuing public corporation in the election of directors within
any of the following ranges of such voting power:
(a) One-fifth or more but less than one-third of such
voting power;
(b) One-third or more but less than a majority of such
voting power;
(c) A majority or more of such voting power.
A bank, broker, nominee, trustee, or other person who
acquires shares in the ordinary course of business for the
benefit of others in good faith and not for the purpose of
circumventing section 1701.831 of the Revised Code shall,
however, be deemed to have voting power only of shares in respect
of which such person would be able, without further instructions
from others, to exercise or direct the exercise of votes on a
proposed control share acquisition at a meeting of shareholders
called under section 1701.831 of the Revised Code.
(2) The acquisition by any person of any shares of an
issuing public corporation does not constitute a control share
acquisition for the purpose of section 1701.831 of the Revised
Code if the acquisition was or is consummated in, results from,
or is the consequence of any of the following circumstances:
(a) Prior to November 19, 1982;
(b) Pursuant to a contract existing prior to November 19,
1982;
(c) By bequest or inheritance, by operation of law upon
the death of an individual, or by any other transfer without
valuable consideration, including a gift, that is made in good
faith and not for the purpose of circumventing section 1701.831
of the Revised Code;
(d) Pursuant to the satisfaction of a pledge or other
security interest created in good faith and not for the purpose
of circumventing section 1701.831 of the Revised Code;
(e) Pursuant to a merger or consolidation adopted, or a
combination or majority share acquisition authorized, by
shareholder vote in compliance with section
1701.78, 1701.781, or 1701.83 of the Revised Code provided the issuing
public corporation is the surviving or new corporation in the
merger or consolidation or is the acquiring corporation in the
combination or majority share acquisition;
(f) The person's being entitled, immediately thereafter,
to exercise or direct the exercise of voting power of the issuing
public corporation in the election of directors within the same
range theretofore attained by that person either in compliance
with the provisions of section 1701.831 of the Revised Code or as
a result solely of the issuing public corporation's purchase of
shares issued by it.
The acquisition by any person of shares of an issuing
public corporation in a manner described under division (Z)(2) of
this section shall be deemed a control share acquisition
authorized pursuant to section 1701.831 of the Revised Code
within the range of voting power under division (Z)(1)(a), (b),
or (c) of this section that such person is entitled to exercise
after such acquisition, provided, in the case of an acquisition in
a manner described under division (Z)(2)(c) or (d) of this
section, the transferor of shares to such person had previously
obtained any authorization of shareholders required under section
1701.831 of the Revised Code in connection with such transferor's
acquisition of shares of the issuing public corporation.
(3) The acquisition of shares of an issuing public
corporation in good faith and not for the purpose of
circumventing section 1701.831 of the Revised Code from any
person whose control share acquisition previously had been
authorized by shareholders in compliance with section 1701.831 of
the Revised Code, or from any person whose previous acquisition
of shares of an issuing public corporation would have constituted
a control share acquisition but for division (Z)(2) or (3) of
this section, does not constitute a control share acquisition for
the purpose of section 1701.831 of the Revised Code unless such
acquisition entitles the person making the acquisition, directly
or indirectly, alone or with others, to exercise or direct the
exercise of voting power of the corporation in the election of
directors in excess of the range of such voting power authorized
pursuant to section 1701.831 of the Revised Code, or deemed to be
so authorized under division (Z)(2) of this section.
(AA) "Acquiring person" means any person who has delivered
an acquiring person statement to an issuing public corporation
pursuant to section 1701.831 of the Revised Code.
(BB) "Acquiring person statement" means a written
statement that complies with division (B) of section 1701.831 of
the Revised Code.
(CC)(1) "Interested shares" means the shares of an issuing
public corporation in respect of which any of the following
persons may exercise or direct the exercise of the voting power
of the corporation in the election of directors:
(a) An acquiring person;
(b) Any officer of the issuing public corporation elected
or appointed by the directors of the issuing public corporation;
(c) Any employee of the issuing public corporation who is
also a director of such corporation.;
(2) "Interested shares" also means any shares of an
issuing public corporation acquired, directly or indirectly, by
any (d) ANY person from the holder or holders
thereof for a THAT ACQUIRES SUCH SHARES FOR valuable consideration
during the period beginning with the date of the
first public disclosure of a proposed control share acquisition
of the issuing public corporation or any proposed merger,
consolidation, or other transaction that would result in a
change in control of the corporation or all or substantially all
of its assets, and ending on the RECORD date of any special meeting
of the corporation's shareholders held thereafter pursuant to
section 1701.831 of the Revised Code, for the purpose of voting
on a control share acquisition proposed by any acquiring person
ESTABLISHED BY THE DIRECTORS PURSUANT TO SECTION 1701.45 AND DIVISION
(D) OF SECTION 1701.831 of the Revised Code, if either of the following
applies:
(a)(i) The aggregate consideration paid or given by the
person who acquired the shares, and any other persons acting in
concert with the person, for all such shares exceeds two
hundred fifty thousand dollars;
(b)(ii) The number of shares acquired by the person who
acquired the shares, and any other persons acting in concert with
the person, exceeds one-half of one per cent of the
outstanding shares
of the corporation entitled to vote in the election of directors.
(e) ANY PERSON THAT TRANSFERS SUCH SHARES FOR VALUABLE
CONSIDERATION AFTER THE RECORD DATE DESCRIBED IN DIVISION
(CC)(1)(d)OF THIS SECTION AS TO SHARES SO
TRANSFERRED, IF ACCOMPANIED BY THE VOTING POWER IN THE FORM OF A BLANK PROXY,
AN AGREEMENT TO VOTE AS INSTRUCTED BY THE TRANSFEREE, OR OTHERWISE.
(3)(2) If any part of this division is held to be illegal or
invalid in application, the illegality or invalidity does not
affect any legal and valid application thereof or any other
provision or application of this division or section 1701.831 of
the Revised Code that can be given effect without the
invalid or
illegal provision, and the parts and applications of this
division are severable.
(DD) "Certificated security" and "uncertificated security"
have the same meanings as in section 1308.01 of the Revised Code.
(EE) "Entity" means any of the following:
(1) A for profit corporation existing under the laws of this state or any
other state;
(2) Any of the following organizations existing under the laws of this state,
the United States, or any other state:
(a) A business trust or association;
(b) A real estate investment trust;
(c) A common law trust;
(d) An unincorporated business or for profit organization, including a
general or limited partnership;
(e) A limited liability company.
Sec. 1701.24. (A) The shares of a corporation are
personal property.
(B) Each holder of shares is entitled to one or more
certificates, signed by the chairman CHAIRPERSON of the board or
the president or a vice-president and by the secretary, an assistant
secretary, the treasurer, or an assistant treasurer of the
corporation, which shall certify the number and class of shares
held by him THE HOLDER in such corporation, but no certificate
for shares shall be executed or delivered until such shares are fully paid.
When such a certificate is countersigned by an incorporated
transfer agent or registrar, the signature of any of said SUCH
officers of the corporation may be facsimile, engraved, stamped,
or printed. Although any officer of the corporation whose manual
or facsimile signature is affixed to such a certificate ceases to
be such officer before the certificate is delivered, such
certificate nevertheless shall be effective in all respects when
delivered.
(C) A corporation is not obligated to but may issue
fractional shares. In the case of uncertificated securities, the
corporation may treat the issuance of fractional shares in
accordance with the procedures set forth in section 1308.44 of
the Revised Code, or may proceed as provided in divisions (C)(1)
and (2) of this section. In the case of certificated securities
the corporation may execute and deliver a certificate for or
including a fraction of a share; or, in lieu thereof, may:
(1) Pay to the person otherwise entitled to become a
holder of a fraction of a share an amount in cash specified as
the value thereof in the articles, a resolution of the directors,
or other agreement or instrument pursuant to which such fraction
of a share would otherwise be issued, or, if not so specified,
then the amount determined for such purpose by the directors of
the issuing corporation, or the amount realized upon sale of such
fraction of a share;
(2) Provide reasonable means to afford to such person the
opportunity, on specified terms and conditions, to purchase or
sell fractional interests in shares, to the exclusion of all
rights he might otherwise have;
(3) Execute and deliver registered or bearer scrip over
the manual or facsimile signature of an officer of the
corporation or of its agent for that purpose, exchangeable as
therein provided for full shares, but such scrip shall not
entitle the holder to any rights as a shareholder except as
therein provided. The scrip may provide that it shall become
void unless the rights of the holders are exercised within a
specified period and may contain any other provisions that the
corporation deems advisable. Whenever any such scrip ceases to
be exchangeable for full shares, the shares that would otherwise
have been issuable as therein provided shall be deemed to be
treasury shares unless the scrip contains other provision for
their disposition.
(D) A joint estate with the incidents of a joint estate as
at common law, including the right of survivorship, may be
created in shares by registering the same in the case of
uncertificated securities, or by executing and delivering a
certificate therefor in the case of certificated securities to
two or more persons with the words "as joint tenants" or "as
joint tenants with right of survivorship and not as tenants in
common" following their names. Upon receipt by the corporation
of proof satisfactory to it of the death of one or more of such
joint tenants, it may register the transfer to, or execute and
deliver a new certificate to the survivor or survivors.
(E) Whenever a corporation has determined that any
outstanding certificates for shares should be canceled and
exchanged for other certificates, the corporation may order and
require the holders of the outstanding certificates to surrender
them for such purpose within a reasonable time to be fixed by the
corporation. Such order may provide that, until compliance
therewith, any or all rights as a shareholder of the holder of
any certificate so required to be surrendered shall be suspended
with respect to the shares represented thereby. Not less than
ten days before any such order is to become effective, the
corporation shall give notice thereof by mail to each shareholder
affected thereby at his address as it appears on the records of
the corporation.
(F) Unless otherwise provided by the articles or
regulations, the directors may provide by resolution that some or
all of any or all classes and series of shares of a corporation
shall be uncertificated shares, provided that such resolution
shall not apply to shares represented by a certificate until such
certificate is surrendered to the corporation as provided in
division (B) of section 1308.43 of the Revised Code, and that
such resolution shall not apply to a certificated security issued
in exchange for an uncertificated security as provided in
division (C) of section 1308.43 of the Revised Code. Within a
reasonable time after the issuance or transfer of uncertificated
shares, the corporation shall send to the registered owner
thereof a written notice containing the information required to
be set forth or stated on certificates pursuant to division (A)
of section 1701.25 of the Revised Code. Such notice may be
contained in the statement required by section 1308.44 of the
Revised Code. Except as otherwise expressly provided by law, the
rights and obligations of the holders of uncertificated shares
and the rights and obligations of the holders of certificates
representing shares of the same class and series shall be
identical.
Sec. 1701.25. (A) Each certificate for shares of a
corporation shall state:
(1) That the corporation is organized under the laws of
this state;
(2) The name of the person to whom the shares represented
by the certificate are issued;
(3) The number of shares represented by the certificate;
(4) If the shares of the corporation are classified, the
designation of the class, and the series, if any, of the shares
represented by the certificate;
(5) On the face or the back of the certificate:
(a) The express terms, if any, of the shares represented
by the certificate and of the other class or classes and series
of shares, if any, which the corporation is authorized to issue;
or
(b) A summary of such express terms; or
(c) That the corporation will mail to the shareholder a
copy of such express terms without charge within five days after
receipt of written request therefor; or
(d) That a copy of such express terms is attached to and
by reference made a part of such certificate and that the
corporation will mail to the shareholder a copy of such express
terms without charge within five days after receipt of written
request therefor if the copy has become detached from the
certificate.
(B) No restriction on the right to transfer shares and no
reservation of lien on shares shall be effective against a
transferee of such shares unless, as to uncertificated
securities, there is set forth in the initial transaction
statement required for liens by section 1308.02 of the Revised
Code, and for restrictions on transfer by THERE HAS BEEN COMPLIANCE
WITH section 1308.11 of the
Revised Code, and unless, as to certificated securities, there is
set forth on the face or the back of the certificate therefor:
(1) A statement of the terms of such restriction or
reservation; or
(2) A summary of the terms of such restriction or
reservation and a statement that the corporation will mail to the
shareholder a copy of such restriction or reservation without
charge within five days after receipt of written request
therefor; or
(3) If such restriction or reservation is contained in the
articles or regulations of the corporation, or in an instrument
in writing to which the corporation is a party, a statement to
that effect and a statement that the corporation will mail to the
shareholder a copy of such restriction or reservation without
charge within five days after receipt of written request
therefor; or
(4) If such restriction or reservation is contained in an
instrument in writing (other than the articles or regulations of
the corporation or an instrument in writing to which the
corporation is a party), a statement to that effect identifying
the instrument by title, date, and parties.
(C) A corporation shall mail to a shareholder without
charge within five days after receipt of written request therefor
the copy or copies referred to in paragraphs (5)(c) and (5)(d) of
division (A) and paragraphs (2) and (3) of division (B) of this
section.
Sec. 1701.27. (A) In case a certificate for shares is lost, stolen, or
destroyed, the court of common pleas or the probate court of the county in
which the principal office of the corporation is located shall have
jurisdiction to hear and determine all questions respecting such loss, theft,
or destruction, the person interested therein, the bond required to be given
to protect the corporation or any person injured by the execution and delivery
of a new certificate, the terms on which a new certificate shall be executed
and delivered, and the costs and counsel fees, if any, to be allowed to the
corporation.
(B) A corporation which voluntarily and in good faith executes and delivers a
new certificate in lieu of one believed to have been lost, stolen, or
destroyed, or which executes and delivers a new certificate in compliance with
an order of a court of competent jurisdiction, may recognize the person named
in the new certificate, or any certificate thereafter executed and delivered
in exchange or substitution for such new certificate, as the owner of the
shares described therein for all purposes, until the owner of the original
certificate, or a transferee thereof without notice and for value, enjoins the
corporation and the holder of any new certificate, or any certificate executed
and delivered in exchange or substitution for such new certificate, from so
acting.
(C) Special provisions in sections 1308.01 to 1308.36, inclusive, of the
Revised Code, (particularly section 1308.35 1308.41 of the
Revised Code) relating to
the replacement of lost, apparently destroyed, or wrongfully taken securities
shall govern to the exclusion of the provisions of this section on this
subject, except where it clearly appears that a special provision is
cumulative, in which case it and the provisions of this section on the same
subject shall apply.
Sec. 1701.49. (A) By written agreement certificates for
shares of a corporation may be deposited within or without this
state by any holder or holders thereof with one or more persons
as trustees, or with any depositary designated by or pursuant to
such agreement to act for such trustees, for the purpose and with
the effect of granting to such trustees or a majority of them, or
to such persons as may be designated by or pursuant to such
agreement, all the voting, consenting, or other rights in respect
of the shares represented by such certificates, or such of these
rights as may be specified in the agreement, or for such other
lawful purposes as may be specified in the agreement, for such
period and upon such terms as may be stated therein.
In the case of uncertificated securities, the deposit of
the shares may be accomplished by registration in the name of the
trustee or trustees as provided in division (F) of this section.
(B) No such agreement which grants the voting or
consenting rights in respect of shares shall be irrevocable for a
period of more than ten years, unless the voting or consenting
rights granted thereby are coupled with an interest in the shares
to which such rights relate, except that, if the agreement so
provides, such irrevocable grant may be extended for additional
periods of not more than ten years each, upon the affirmative
vote or assent of the beneficial owners of not less than a
majority of the shares deposited under the agreement. Such
rights shall be deemed coupled with an interest in the shares if
granted in connection with: an option, authority, or contract to
buy or sell the shares or a part thereof; a pledge of the shares
to secure the performance or nonperformance of any act; the
performance or nonperformance of any act, or agreement for an
act, by the corporation issuing the shares; or any other act or
thing constituting an interest sufficient in law to support a
power coupled therewith.
(C) The trustees under the agreement may issue, or cause
to be issued by their depositary or agent, voting trust
certificates registered in the name of the owners thereof. So
far as consistent with the agreement and the voting trust
certificates issued thereunder, the provisions of sections
1308.01 to 1308.44 CHAPTER 1308., and of sections
1701.01 to 1701.99 of the
Revised Code, with respect to the transfer of certificates for
shares shall apply to transfers of such voting trust
certificates.
Voting trust certificates must be in certificated form, and
interests in a voting trust shall not be eligible for treatment
as uncertificated securities.
(D) The agreement may include any terms not repugnant to
law, including provisions defining, limiting, or regulating the
exercise of the authority, and the liability of, the trustees, or
of such persons as are designated by or pursuant to any such
agreement to exercise the voting, consenting, or other rights in
respect of the deposited shares or to act as depositary
thereunder.
(E) An executed counterpart of the agreement may be filed
with the secretary of the corporation, and upon such filing shall
be open to inspection by any shareholder at the office of the
corporation at all reasonable times.
(F) The certificates for shares so deposited may be
surrendered to and canceled by the issuing corporation, and if
this is done new certificates therefor shall be issued by the
corporation in the names of the trustees or of such persons as
are designated by or pursuant to the agreement, as specified in a
writing signed by the trustees and delivered to the issuing
corporation. The new certificates shall be delivered to the
trustees, or to any depositary, as the trustees may direct. The
new certificates shall be issued in such manner that it shall
appear that they are issued pursuant to the agreement, and in the
entry of ownership in the proper books of the corporation that
fact shall also be noted.
If the corporation has elected to issue uncertificated
securities, shares in uncertificated form may be deposited, with
the effect provided by division (A) of this section, by
registration in the name of the trustee or trustees or of such
persons as are designated by or pursuant to the agreement, in
accordance with sections 1308.01 to 1308.44 CHAPTER
1308. of the Revised Code.
(G) Shares issued by a foreign corporation may be made the
subject of an agreement under this section.
(H) The rights conferred by this section are in addition
to rights at common law, and no limitation established by this
section shall limit rights at common law.
(I) Any such agreement shall be conclusively deemed to
have been made under the common law, and not under this section,
if the agreement so states.
Sec. 1701.591. (A) In order to qualify as a close
corporation agreement under this section, the agreement shall
meet the following requirements:
(1) Every person who is a shareholder of the corporation
at the time of the agreement's adoption, whether or not entitled
to vote, shall have assented to the agreement in writing;
(2) The agreement shall be set forth in the articles, the
regulations, or another written instrument;
(3) The agreement shall include a statement that it is to
be governed by this section.
(B) A close corporation agreement that is not set forth in
the articles or the regulations shall be entered in the record of
minutes of the proceedings of the shareholders of the corporation
and shall be subject to the provisions of division (C) of section
1701.92 of the Revised Code.
(C) Irrespective of any other provisions of this chapter,
but subject to division (D)(2) of this section, a close
corporation agreement may contain provisions, which shall be
binding on the corporation and all of its shareholders,
regulating any aspect of the internal affairs of the corporation
or the relations of the shareholders among themselves, including
the following:
(1) Regulation of the management of the business and
affairs of the corporation;
(2) The right of one or more shareholders to dissolve the
corporation at will or on the occurrence of a specified event or
contingency;
(3) The obligation to vote the shares of a person as
specified, or voting requirements, including the requirement of
the affirmative vote or approval of all shareholders or of all
directors, which voting requirements need not appear in the
articles unless the close corporation agreement is set forth in
the articles;
(4) The designation of the persons who shall be the
officers or directors of the corporation;
(5) The authority of any individual who holds more than
one office of the corporation to execute, acknowledge, or certify
in more than one capacity any instrument required to be executed,
acknowledged, or certified by the holders of two or more offices;
(6) The terms and conditions of employment of an officer
or employee of the corporation without regard to the period of
his employment;
(7) The declaration and payment of dividends or
distributions or the division of profits;
(8) Elimination of the board of directors, restrictions
upon the exercise by directors of their authority, or delegation
to one or more shareholders or other persons of all or part of
the authority of the directors;
(9) Conferring on any shareholder or his agent OF A SHAREHOLDER
the absolute right, without the necessity of stating any purpose, to examine
and copy during usual business hours any of the
corporation's records or documents to which reference is made in
section 1701.37 of the Revised Code;
(10) Prohibition of or limitation upon the issuance or
sale by the corporation of any of its shares, including treasury
shares, without the affirmative vote or approval of the holders
of all or a proportion of the outstanding shares or unless other
specified terms and conditions are met;
(11) Arbitration of issues on which the shareholders are
deadlocked in voting power or on which the directors or other
parties managing the corporation are deadlocked;
(12) Dispensing with the annual meeting of shareholders
unless a shareholder, by written notice to the president or
secretary either by personal delivery or by mail within thirty
days after the end of the most recent fiscal year of the
corporation, requests that the meeting be held.
(D) Except as may be necessary to give effect to divisions
(C)(3), (5), (8), (9), and (12) and division (I) of this section,
any provision of a close corporation agreement that does either
of the following shall be invalid:
(1) Eliminates the filing with the secretary of state of
any document required under this chapter or changes the required
form or content of the document;
(2) Waives or alters the effect of any of the provisions
of section 1701.03, 1701.18, 1701.24, 1701.25, 1701.30, 1701.31,
1701.32, 1701.33, 1701.35, 1701.37, 1701.38, 1701.39, 1701.591,
1701.91, 1701.93, 1701.94, 1701.95, or the first sentence of
section 1701.64 of the Revised Code.
Unless otherwise provided in the close corporation
agreement, the invalidity of a provision pursuant to this
division does not affect the validity of the remainder of the
agreement.
Any certificate that is required to be filed with the
secretary of state with respect to the authorization or taking of
any action pursuant to a close corporation agreement that would
not be permitted under this chapter in the absence of division
(C) of this section shall recite the existence of a close
corporation agreement that authorizes the action.
(E)(1) Except as provided in division (E)(2) of this
section, a close corporation agreement may be amended or
terminated by the affirmative vote or written consent of the
holders, then parties to the close corporation agreement, of all
of the outstanding shares of each class or, as may be provided by
the close corporation agreement, of the holders, then parties to
the close corporation agreement, of a proportion of not less than
four-fifths of the outstanding shares of each class. If a close
corporation agreement is amended or terminated by the written
consent of the holders of fewer than all of the shares, the
secretary of the corporation shall mail a copy of the amendment
or a notice of the termination to each shareholder who did not so
consent. If a close corporation agreement set forth in the
articles is amended, the amendment shall not be effective unless
it is filed as an amendment to the articles pursuant to section
1701.73 of the Revised Code. No corporation with respect to
which a close corporation agreement is in effect shall cause to
occur any of the actions described in division (I)(1)(a), (b), or
(c) of this section unless the action has been authorized by the
affirmative vote or written consent of the holders, then parties
to the close corporation agreement, of that proportion of shares
of each class that is required to terminate the close corporation
agreement.
(2) A close corporation agreement that was in existence on
December 31, 1993, and that did not specify on that date and that
has not specified since that date the proportion of shares
required to amend or terminate the close corporation agreement
may be amended or terminated by the affirmative vote or written
consent of the holders, then parties to the close corporation
agreement, of four-fifths of the outstanding shares of each
class.
(F) No close corporation agreement is invalid among the
parties or in respect of the corporation on any of the following
grounds:
(1) The agreement is an attempt to treat the corporation
as if it were a partnership or to arrange the relationship of the
parties in a manner that would be appropriate only among
partners;
(2) The agreement provides for the conduct of the affairs
of a corporation or relations among shareholders in any manner
that would be inappropriate or unlawful under provisions of this
chapter other than those set forth in division (D)(2) of this
section or under other applicable law;
(3) The agreement interferes with the authority or
discretion of the directors;
(4) The agreement has not been filed with the minutes as
required by division (B) of this section.
(G) If a close corporation agreement provides that there
shall be no board of directors, both of the following apply:
(1) The shareholders, for the purposes of any statute or
rule of law relating to corporations, are deemed to be the
directors and to have all of the liabilities, immunities,
defenses, and indemnifications of directors with respect to any
action or inaction of the corporation, except that any
shareholder who is not permitted by the articles, the
regulations, or the close corporation agreement to vote on or
assent to an action or assent to an inaction shall not be liable
as a director with respect to the action or inaction.
(2) Except to the extent that the voting rights of the
shares of a class are increased, limited, or denied by the
articles, the regulations, or the close corporation agreement,
each outstanding share regardless of class shall entitle its
holder to one vote on each matter, including any matter normally
voted on by directors, that is properly submitted to the
shareholders for their vote, consent, waiver, release, or other
action.
(H) The existence of a close corporation agreement shall
be noted conspicuously on the face or the back of every
certificate for shares of the corporation and a purchaser or
transferee of shares represented by a certificate on which such a
notation so appears shall be conclusively considered to have
taken delivery with notice of the close corporation agreement.
Any transferee of shares by gift, bequest, or inheritance and any
purchaser or transferee of shares with knowledge or notice of a
close corporation agreement is bound by the agreement and shall
be considered to be a party to the agreement.
(I)(1) A close corporation agreement becomes invalid under
any of the following circumstances:
(a) Shares of the corporation are listed on a national
securities exchange.
(b) Shares of the corporation are registered under section
12(g) of the "Securities Exchange Act of 1934," 48 Stat. 892, 15
U.S.C. 781, as amended.
(c) Shares of the corporation have been included in a
registration statement that has become effective pursuant to the
"Securities Act of 1933," 84 Stat. 74, 15 U.S.C. 77a-77aa, and
the corporation is required to file periodic reports and
information pursuant to section 15(d) of the "Securities Exchange
Act of 1934," 48 Stat. 892, 15 U.S.C. 77m, as amended.
(d) Shares of the corporation are transferred or issued to
a person who takes delivery of the certificate for the shares
other than by gift, bequest, or inheritance and without knowledge
or notice of the close corporation agreement; that person
delivers to the corporation a written rejection of the close
corporation agreement within ninety days after the date on which
that person first received notice of the existence of the close
corporation agreement or within three years of the date of
transfer or issuance, whichever is earlier; and the corporation
does not offer in writing, within thirty days after the date on
which the corporation received the written rejection, to purchase
the shares from that person for the full amount paid for the
shares, or, having made an offer to purchase the shares for that
amount, the corporation, upon that person's acceptance of the
offer, does not purchase the shares in accordance with division
(I)(3) of this section.
(2) A close corporation agreement does not become invalid
and the person to whom the shares are transferred or issued is
not entitled to any payment from the corporation pursuant to
division (I)(3) of this section if both of the following apply:
(a) Shares of the corporation are transferred or issued to
a person who takes delivery of the certificate for the shares
other than by gift, bequest, or inheritance and without knowledge
or notice of the close corporation agreement;
(b) That person does either of the following:
(i) Fails to deliver a written rejection of the close
corporation agreement to the corporation within ninety days after
the date on which that person first received notice of the
existence of the close corporation agreement or within three
years of the date of transfer or issuance, whichever is earlier;
(ii) Fails, within thirty days after the date on which
that person receives a written offer by the corporation to
purchase the shares from that person for the full amount paid for
the shares, to accept the offer.
(3) If shares of a corporation are transferred or issued
to a person who takes delivery of the certificate for the shares
other than by gift, bequest, or inheritance and without knowledge
or notice of the close corporation agreement and that person
accepts an offer by the corporation to purchase the shares, the
corporation shall pay to that person the full amount paid for the
shares within seven days after that person delivers to the
corporation the certificate for the shares and proof of payment
of the amount paid for the shares. If the amount paid for the
shares included property other than cash, the corporation, at its
option, may return the property to that person or may pay to that
person cash in an amount equal to the fair market value of the
property on the date of transfer or issuance of the shares, as
determined in good faith by the corporation. A shareholder who
transfers shares to a person who takes delivery of the
certificate for the shares other than by gift, bequest, or
inheritance and without knowledge or notice of the close
corporation agreement is liable to the corporation, upon the
corporation's written demand made upon the shareholder within
ninety days after the date on which the corporation made payment
for the shares, for the full amount that the corporation paid for
the shares. Upon receiving payment in that amount from the
shareholder, the corporation shall transfer the shares to the
shareholder.
(4) In the event of the invalidity of a close corporation
agreement and unless otherwise provided in the close corporation
agreement, any provision contained in the close corporation
agreement that would not be invalid under any other section of
this chapter or under other applicable law remains valid and
binding on the parties to the close corporation agreement.
Any officer of the corporation who learns of the occurrence
of any event causing the invalidity of the close corporation
agreement shall immediately give written notice of the invalidity
to all of the shareholders.
If a close corporation agreement set forth in the articles
of the corporation is terminated or becomes invalid, the officers
of the corporation shall promptly sign and file the certificate
of amendment prescribed by section 1701.73 of the Revised Code,
setting forth the reason for the termination or invalidity and
deleting the close corporation agreement from the articles. If
the officers fail to execute and file the certificate within
thirty days after the occurrence of the event giving rise to the
termination or invalidity, the certificate may be signed and
filed by any shareholder and shall set forth a statement that the
person signing the certificate is a shareholder and is filing the
certificate because of the failure of the officers to do so.
(J) A close corporation agreement, in the sound discretion
of a court exercising its equity powers, is enforceable by
injunction, specific performance, or other relief that the court
may determine to be fair and appropriate.
(K) This section shall not be construed as prohibiting any
other lawful agreement among two or more shareholders.
(L) No corporation with respect to which a close
corporation agreement is in effect, shall issue shares in
uncertificated form, and any resolution of the directors of such
a corporation, providing for the issuance of shares in
uncertificated form, shall be ineffective during any period in
which a close corporation agreement is in effect. The adoption
of a close corporation agreement shall act as a transfer
instruction to the corporation to replace uncertificated
securities with appropriate certificated securities in accordance
with division (C) of section 1308.43 of the Revised Code.
(M) If the annual meeting of the shareholders is dispensed
with in accordance with a provision in the close corporation
agreement authorized by division (C)(12) of this section, the
annual financial statements required by section 1701.38 of the
Revised Code shall be delivered to each shareholder on or before
the last date upon which the annual meeting otherwise could have
been held.
(N) The amendments to this section that are effective
April 4, 1985, are remedial in nature and apply to all close
corporation agreements created on or after November 17, 1981.
The amendments to this section that are effective December 31,
1993, are remedial in nature and, except as those amendments
otherwise provide, apply to all close corporation agreements
created on or after November 17, 1981.
Sec. 1701.831. (A) Unless the articles or the regulations
of the issuing public corporation provide that this section does
not apply to control share acquisitions of shares of such
corporation, any control share acquisition of an issuing public
corporation shall be made only with the prior authorization of
the shareholders of such corporation in accordance with this
section.
(B) Any person who proposes to make a control share
acquisition shall deliver an acquiring person statement to the
issuing public corporation at the issuing public corporation's
principal executive offices. Such acquiring person statement
shall set forth all of the following:
(1) The identity of the acquiring person;
(2) A statement that the acquiring person statement is
given pursuant to this section;
(3) The number of shares of the issuing public corporation
owned, directly or indirectly, by the acquiring person;
(4) The range of voting power, described in division
(Z)(1)(a), (b), or (c) of section 1701.01 of the Revised Code,
under which the proposed control share acquisition would, if
consummated, fall;
(5) A description in reasonable detail of the terms of the
proposed control share acquisition;
(6) Representations of the acquiring person, together with
a statement in reasonable detail of the facts upon which they are
based, that the proposed control share acquisition, if
consummated, will not be contrary to law, and that the acquiring
person has the financial capacity to make the proposed control
share acquisition.
(C) Within ten days after receipt of an acquiring person
statement that complies with division (B) of this section, the
directors of the issuing public corporation shall call a special
meeting of shareholders of the issuing public corporation for the
purpose of voting on the proposed control share acquisition.
Unless the acquiring person agrees in writing to another date,
such special meeting of shareholders shall be held within fifty
days after receipt by the issuing public corporation of the
acquiring person statement. If the acquiring person so requests
in writing at the time of delivery of the acquiring person
statement, such special meetings shall be held no sooner than
thirty days after receipt by the issuing public corporation of
the acquiring person statement. Such special meeting of
shareholders shall be held no later than any other special
meeting of shareholders that is called, after receipt by the
issuing public corporation of the acquiring person statement, in
compliance with section 1701.76, 1701.78, 1701.79, 1701.83, or
1701.831 of the Revised Code.
(D) Notice of the special meeting of shareholders shall be
given as promptly as reasonably practicable by the issuing public
corporation to all shareholders of record as of the record date
set for such meeting, whether or not entitled to vote thereat.
Such notice shall include or be accompanied by both of the
following:
(1) A copy of the acquiring person statement delivered to
the issuing public corporation pursuant to this section;
(2) A statement by the issuing public corporation,
authorized by its directors, of its position or recommendation,
or that it is taking no position or making no recommendation,
with respect to the proposed control share acquisition.
(E) The acquiring person may make the proposed control
share acquisition if both of the following occur:
(1) The shareholders of the issuing public corporation who
hold shares AS OF THE RECORD DATE of such corporation entitling them to
vote in the
election of directors authorize such THE acquisition at the
special
meeting held for that purpose at which a quorum is present by an
affirmative vote of a majority of the voting power of such
corporation in the election of directors represented at such THE
meeting in person or by proxy, and a majority of the portion of
such THE voting power excluding the voting power of interested
shares REPRESENTED AT THE MEETING IN PERSON OR BY PROXY. A quorum
shall be deemed to be present at such THE special
meeting if at least a majority of the voting power of the issuing
public corporation in the election of directors, and a majority
of the portion of such voting power excluding the voting power of
interested shares are IS represented at such THE
meeting in person or by proxy.
(2) Such THE acquisition is consummated, in accordance with
the terms so authorized, no later than three hundred sixty days
following shareholder authorization of the control share
acquisition.
(F) Except as expressly improved PROVIDED in this section, nothing
in this section shall be construed to affect or impair any right,
remedy, obligation, duty, power, or authority of any acquiring
person, any issuing public corporation, the directors of any
acquiring person or issuing public corporation, or any other
person under the laws of this or any other state or of the United
States.
(G) If any application of any provision of this section is
for any reason held to be illegal or invalid, the illegality or
invalidity shall not affect any legal and valid provision or
application of this section, and the parts and applications of
this section are severable.
Sec. 1701.832. (A) In enacting Amended Substitute House
Bill No. 822 of the 114th general assembly, which amended
sections 1701.01, 1701.11, 1701.37, 1701.48, 1707.01, 1707.23,
1707.26, 1707.29, and 1707.99 and enacted sections 1701.831 and
1707.042 of the Revised Code, the general assembly found and
continues to find that:
(1) Existing Ohio corporate law was designed to deal with
traditional methods of transfer of control of Ohio corporations.
The tender offer has evolved as an alternative device to acquire
control of a public corporation that has been in widespread use
in the past several decades. The acquisition of significant
blocks of the securities of a public company in the open market
or private transactions in connection with actual or apparent
efforts to acquire control has become more common in recent years
and has further complicated the impact of tender offers upon a
corporation and its shareholders. Numerous Ohio corporations
have been the subject of tender offers and accumulations of
significant blocks of securities.
(2) The accumulation of a large block of a corporation's
voting shares, or other securities convertible into voting
shares, through direct or indirect acquisition from one or more
existing shareholders of the corporation has not been subject to
the normal corporate approval mechanisms involved in other
typical types of acquisition transactions such as mergers,
consolidations, combinations, and majority share acquisitions.
Such accumulations, however, can result in shifts of effective
corporate control and hence, from a business and financial
perspective, directly or indirectly, can result in significant
changes in a variety of basic corporate circumstances identical
or substantially similar to those arising as a result of the
above-mentioned transactions. For instance, a change in
corporate control accompanying a large accumulation of shares
will very often result in a fundamental change in the ongoing
business of the corporation and a concomitant fundamental change
in the nature of the shareholders' investment in it. Thus the
potential that such changes in corporate circumstances will occur
gives rise to basic issues concerning the internal affairs of the
corporation typical of those arising in mergers, consolidations,
combinations, and majority share acquisitions. The form of the
transaction in which such issues arise should not alter the basic
corporate mechanisms by which such issues are presented and
resolved.
(3) Tender offers almost always involve a change in
corporate control and, therefore, give rise to these same basic
issues concerning internal corporate affairs. Although tender
offers in theory offer shareholders the opportunity to consider
such issues in deciding whether or not to tender their shares, in
practice they do not. Tender offers are coercive in the sense
that shareholders are normally concerned that a majority of their
fellow shareholders will tender their shares, leaving them in a
minority position with one controlling shareholder. Thus,
shareholders often feel compelled to tender their shares,
regardless of how they feel about the corporate control issues
inherent in any tender offer. The opportunity for reasoned
decision-making is further hindered by the short time periods in
which tender offers can be consummated, the structures of many
recent tender offers, which are designed to encourage prompt
tenders, and the fact that individual shareholders typically
receive or obtain tender offer materials much later than
institutional shareholders.
(4) It is in the public interest for shareholders to have
a reasonable opportunity to express their views by voting on a
proposed shift of control, an opportunity currently available
under Ohio GENERAL corporation law, CHAPTER 1701.
of the Revised Code, in transactions with similar effects. The general assembly
also believes that it is in the public
interest for Ohio securities laws, CHAPTER 1707.
of the Revised Code, to provide evenhanded
protection of offerors and shareholders from fraudulent and
manipulative transactions arising in connection with control
acquisitions.
(5) Initial state efforts to deal with tender offer
developments have been questioned by the federal courts. The
general assembly observes that responsibility for general
corporate laws is the function of state legislation and that no
federal law of corporations exists. The general assembly
observes that securities law protection of state residents has
long been recognized as an appropriate subject of state law
regulation under the federal system. The general assembly
acknowledges an in loco parentis responsibility to shareholders
who invest in corporations created under the laws of Ohio and to
shareholders generally who reside in Ohio.
(B) Sections 1701.01, 1701.11, 1701.37, 1701.48, 1707.01,
1707.23, 1707.26, 1707.29, and 1707.99, as amended by Amended
Substitute House Bill No. 822 of the 114th general assembly, and
sections 1701.831 and 1707.042, as enacted by that act, were a
recognition of the state's responsibility with respect to the
subject matter of the act. Nevertheless, with a view to avoiding
an undue burden on interstate commerce, as expressed in recent
court decisions, the amendments were designed to have the minimum
impact upon interstate commerce consistent with Ohio
responsibility in respect to the subject matter. Accordingly,
the security law amendments made by that act to sections 1707.23,
1707.26, 1707.29, and 1707.99 and in newly enacted section
1707.042 of the Revised Code were limited to application to Ohio
resident investors, and the corporate law amendments made by that
act to sections 1701.01, 1701.11, 1701.37, and 1701.48 and in
newly enacted section 1701.831 of the Revised Code were limited
to corporations created under the laws of Ohio with the strong
Ohio ties provided in the amendments. The corporate legislation
does not include a requirement for Ohio resident investors
because of the difficulty of ascertainment by potential acquirers
and others of the residence of shareholders. The general
assembly finds that corporations satisfying the jurisdictional
nexus provided by the amendments may be deemed to have a
substantial and significant shareholder base in the state.
(C) The general assembly confirms all of the findings of
this section as enacted by Amended Substitute House Bill No. 822
of the 114th general assembly, except that the general assembly
declares that, from the effective date of this amendment,
NOVEMBER 2, 1989, and the concurrent amendment of
section 1701.11 of the Revised Code by
the addition of division (B)(9)(a)(ii) to that section, the
standards of that division are permitted, as an alternative to
the ties with Ohio essential to the status of a control share
acquisition, to qualify for the authorized restrictions on
transfer of shares. The general assembly further finds that the
omission of a reference to "1701.01" immediately following the
phrase "the corporate law amendments in sections" in the
enactment of division (B) of this section was inadvertent.
(D) THE GENERAL
ASSEMBLY CONFIRMS ALL OF THE FINDINGS OF THIS SECTION AS ENACTED BY
AMENDED SUBSTITUTE HOUSE BILL NO.
822 OF THE 114thGENERAL ASSEMBLY, AND AS AMENDED BY
AMENDED SUBSTITUTE HOUSE BILL NO.
358 OF THE 118thGENERAL ASSEMBLY, AND FURTHER FINDS ALL OF
THE FOLLOWING:
(1) ALTHOUGH OHIO GENERAL CORPORATION LAW, CHAPTER
1701. OF THE REVISED
CODE, REQUIRES THAT A SPECIAL
MEETING BE HELD TO ENABLE SHAREHOLDERS OF AN ISSUING PUBLIC
CORPORATION TO VOTE ON ANY CONTROL SHARE ACQUISITION, IT
DESCRIBES MEETING PROCEDURES, LIKE OTHER STATES, PRIMARILY IN
GENERAL TERMS.
(2) WHERE THE LAW, OR THE ARTICLES OF INCORPORATION AND
CODE OF REGULATIONS OF THE ISSUING PUBLIC CORPORATION, DO NOT
MANDATE SPECIFIC MEETING PROCEDURES, THE DIRECTORS OF THE
CORPORATION MUST DEFINE APPROPRIATE PROCEDURES
CONSISTENT WITH THEIR FIDUCIARY DUTIES AS PROVIDED IN SECTION
1701.59 OF THE REVISED
CODE. IN CARRYING OUT THESE
DUTIES, PRACTICES AND PROCEDURES HAVE DEVELOPED FROM EXPERIENCE
IN THIS STATE AND ELSEWHERE TO ENSURE FAIR AND EFFICIENT
MEETINGS. THESE PRACTICES AND PROCEDURES INCLUDE THE USE OF A
VARIETY AND NUMBER OF PRESUMPTIONS AND FORMS OF PROXY.
(3) THE USE OF PRESUMPTIONS AND FORMS OF PROXY REFLECTS THE FACT
THAT, IN THIS STATE AND OTHER STATES WITH SIMILAR LAWS,
EFFICIENCY AND FINALITY ARE NECESSARY PRIORITIES OVER PRECISION
AND CERTITUDE IN THE CONDUCT OF A MEETING. IT IS THE
RESPONSIBILITY OF THE DIRECTORS TO UTILIZE PRACTICES AND
PROCEDURES, INCLUDING PRESUMPTIONS AND FORMS OF PROXY, THAT ARE
CONSISTENT WITH THEIR FIDUCIARY DUTIES.
Sec. 1705.01. As used in this chapter:
(A) "Business" means every trade, occupation, or
profession.
(B) "Contribution" means any cash, property, services
rendered, promissory note, or other binding obligation to
contribute cash or property or to perform services that a member
contributes to a limited liability company in his THE capacity
as a
member.
(C) "Conveyance" means every assignment, lease, mortgage,
or encumbrance.
(D) "Entity" means any of the following:
(1) A for profit corporation existing under the laws of
this state or any other state;
(2) Any of the following organizations existing under the
laws of this state, the United States, or any other state:
(a) A business trust or association;
(b) A real estate investment trust;
(c) A common law trust;
(d) An unincorporated business or for profit organization,
including a general or limited partnership;
(e) A limited liability company.
(E) "Incompetent" has the same meaning as in section
2111.01 of the Revised Code.
(F) "Knowledge," of a fact, means actual knowledge of that
fact and knowledge of other facts that under the circumstances
shows bad faith.
(G) "Member" means a person whose name appears on the
records of the limited liability company as the owner of a
membership interest in that company.
(H) "Membership interest" means a member's share of the
profits and losses of a limited liability company and the right
to receive distributions from that company.
(I) "Notice" means that the person who claims the benefit
of the notice has done one of the following:
(1) Stated the fact to the person entitled to notice;
(2) Delivered through the mail or by other means of
communication a written statement of the fact to the person
entitled to notice or to a proper person at the place of business
or residence of the person entitled to receive a notice.
(J) "Operating agreement" means all of the valid written
or oral agreements of the members OR, IN THE CASE OF A LIMITED LIABILITY
COMPANY CONSISTING OF ONE MEMBER, A WRITTEN DECLARATION OF THAT
MEMBER, as to the affairs of a limited
liability company and the conduct of its business.
(K) "Person" means any natural person; partnership,
limited partnership, trust, estate, association, limited
liability company, or corporation; any custodian, nominee,
trustee, executor, administrator, or other fiduciary; or any
other individual or entity in its own or any representative
capacity.
(L) "Professional association" and "professional service"
have the same meanings as in section 1785.01 of the Revised Code.
(M) "State" has the same meaning as in section 1.59 of the
Revised Code and additionally includes a foreign country and any
province, territory, or other political subdivision of a foreign
country.
Sec. 1705.04. (A) Two ONE or more persons, without regard to
residence, domicile, or state of organization, may form a limited
liability company. The entity is
formed when one or more persons or their authorized representative signs and
files with the secretary of
state articles of organization that set forth all of the
following:
(1) The name of the company;
(2) Except as provided in division (B) of this section,
the period of its duration, which may be perpetual;
(3) The address to which interested persons may direct
requests for copies of any operating agreement and any bylaws of
the company;
(4) Any other provisions that are from the operating
agreement or that are not inconsistent with applicable law and
that the members elect to set out in the articles for the
regulation of the affairs of the company.
(B) If the articles of organization OR OPERATING AGREEMENT do not set
forth the
period of the duration of the limited liability company, its
duration shall be perpetual.
(C) If a limited liability company is formed under this
chapter for the purpose of rendering a professional service or
the kinds of professional services authorized under Chapters
4703. and 4733. of the Revised Code, the following apply:
(1) Each member, employee, or other agent of the company
who renders a professional service in this state and, if the
management of the company is not reserved to its members, each
manager of the company who renders a professional service in this
state shall be licensed or otherwise legally authorized to render
in this state the same kind of professional service or, if
applicable, the kinds of professional services authorized under
Chapters 4703. and 4733. of the Revised Code.
(2) Each member, employee, or other agent of the company
who renders a professional service in another state and, if the
management of the company is not reserved to its members, each
manager of the company who renders a professional service in
another state shall be licensed or otherwise legally authorized
to render that professional service in the other state.
(D) Except for the provisions of this chapter pertaining
to the personal liability of members, employees, or other agents
of a limited liability company and, if the management of the
company is not reserved to its members, the personal liability of
managers of the company, this chapter does not restrict, limit,
or otherwise affect the authority or responsibilities of any
agency, board, commission, department, office, or other entity to
license, register, and otherwise regulate the professional
conduct of individuals or organizations of any kind rendering
professional services in this state or to regulate the practice
of any profession that is within the jurisdiction of the agency,
board, commission, department, office, or other entity,
notwithstanding that the individual is a member or manager of a
limited liability company and is rendering the professional
services or engaging in the practice of the profession through
the limited liability company or that the organization is a
limited liability company.
Sec. 1705.16. (A) If EXCEPT AS PROVIDED IN DIVISION (C)
OF THIS SECTION, IF the management of a limited
liability company is reserved to its members, a member may
withdraw from the company at any time by giving written notice to
the other members. If the withdrawal violates the operating
agreement, then, in addition to exercising any remedies otherwise
available under applicable law, the company may recover from the
withdrawing member damages for breach of the operating agreement
and may offset the damages against the amount otherwise
distributable to him THE WITHDRAWING MEMBER on account of
his THE WITHDRAWING MEMBER'S membership interest.
(B) If EXCEPT AS PROVIDED IN DIVISION (C) OF THIS SECTION,
IF the management of a limited liability company is
not reserved to its members, the operating agreement may prohibit
withdrawal or may specify the time at which or the events the
occurrence of which entitle a member to withdraw. If the
operating agreement does not prohibit withdrawal, does not
specify the time at which or the events upon the occurrence of
which a member may withdraw, and does not indicate a definite
time for the dissolution and the winding up of the company, a
member may withdraw after giving at least six-months written
notice of the proposed withdrawal to each nonwithdrawing member
at its address as set forth in the records of the company that
are required to be kept under section 1705.28 of the Revised
Code.
(C) IF THE LIMITED LIABILITY COMPANY WAS FORMED ON OR AFTER THE
EFFECTIVE DATE OF THIS AMENDMENT, OR THE COMPANY WAS FORMED PRIOR TO THE
EFFECTIVE DATE OF THIS AMENDMENT AND ITS ARTICLES OF ORGANIZATION OR OPERATING
AGREEMENT SPECIFICALLY STATE THAT THIS DIVISION APPLIES TO THE COMPANY, A
MEMBER MAY WITHDRAW FROM THE COMPANY ONLY AT THE TIME OR UPON THE OCCURRENCE
OF AN EVENT SPECIFIED IN WRITING IN THE ARTICLES OF ORGANIZATION OR THE
OPERATING AGREEMENT.
Sec. 1705.43. (A) A limited liability company organized
under this chapter shall be dissolved upon the occurrence of any
of the following events:
(1) The expiration of the period, if any, fixed by the
operating
agreement or articles of organization for the duration of the company;
(2) One or more events specified in writing in the
operating agreement as causing the dissolution of the company;
(3) The unanimous written agreement of all members to
dissolve the company;
(4) The withdrawal of a member of the company, unless the
business of the company is continued by the consent of all of the
remaining members or under a right to continue the company that
is stated in writing in the operating agreement;
(5) At any time when there are less than two members;
(6) Upon entry of a decree of judicial dissolution under
section 1705.47 of the Revised Code.
(B) Following the occurrence of any of the events
specified in division (A) of this section, the limited liability
company shall deliver to the secretary of state for filing a
certificate of dissolution on a form that is prescribed by the
secretary of state and that includes the name of the company and
the effective date of its dissolution.
Sec. 1782.33. A (A) EXCEPT AS PROVIDED IN DIVISION
(B) OF THIS SECTION, A limited partner may withdraw from a
limited partnership at
the time, or upon the happening of events, specified in writing in the
partnership agreement. If the partnership agreement does not specify in
writing the time or events upon the happening of which a limited partner may
withdraw or a definite time for the dissolution and winding up of the limited
partnership, a limited partner may withdraw upon not less than six months'
prior written notice to each general partner at his THE GENERAL
PARTNER'S address on the books of the limited partnership at its office in
this state.
(B) IF THE LIMITED PARTNERSHIP WAS FORMED ON OR AFTER THE
EFFECTIVE DATE OF THIS AMENDMENT, OR THE LIMITED PARTNERSHIP WAS FORMED PRIOR
TO THE EFFECTIVE DATE OF THIS AMENDMENT AND ITS CERTIFICATE OF LIMITED
PARTNERSHIP OR PARTNERSHIP AGREEMENT SPECIFICALLY STATES THAT THIS DIVISION
APPLIES TO THE LIMITED PARTNERSHIP, A LIMITED PARTNER MAY WITHDRAW FROM THE
LIMITED PARTNERSHIP ONLY AT THE TIME OR UPON THE OCCURRENCE OF AN EVENT
SPECIFIED IN WRITING IN THE PARTNERSHIP AGREEMENT.
Sec. 3901.51. As used in sections 3901.51 to 3901.55 of
the Revised Code:
(A) "Clearing corporation" has the same meaning as in
division (C) of section 1308.01 of the Revised Code, except that
with respect to securities issued by institutions organized or
existing under the laws of any foreign country or securities used
to meet the deposit requirements pursuant to the laws of a
foreign country as a condition of doing business in that country,
"clearing corporation" includes a corporation that is organized
or existing under the laws of any foreign country and is legally
qualified under those laws to effect transactions in securities
by computerized book-entry.
(B) "Direct participant" means a bank, trust company, or
other entity that maintains an account in its name in a clearing
corporation and through which an insurance company participates
in a clearing corporation.
(C) "Federal reserve book-entry system" means the
computerized systems sponsored by the United States department of
the treasury and agencies and instrumentalities of the United
States for holding and transferring securities of the United
States government and agencies and instrumentalities in federal
reserve banks through banks that are members of the federal
reserve system or that otherwise have access to these
computerized systems.
(D) "Member bank" means a national or state bank or a
trust company that is a member of the federal reserve system and
through which an insurance company participates in the federal
reserve book-entry system.
(E) "Provisions of the insurance laws of this state" means
provisions of Title XXXIX of the Revised Code related to the
deposit of securities for the benefit and security of
policyholders, and includes, but is not limited to, sections
3901.18, 3903.73, 3905.24, 3905.25, 3905.41, 3907.07, 3909.03,
3909.09, 3909.17, 3913.01, 3913.04, 3919.13, 3919.36, 3919.37,
3919.41, 3925.07, 3927.02, 3927.06, 3929.01, 3929.07, 3929.08,
3929.09, 3929.10, 3929.11, 3941.30, 3941.31, 3941.32, 3941.33,
3941.34, 3941.42, 3953.06, 3953.11, and 3957.03 of the Revised Code.
(F) "Securities" has the same meaning as in division
(A)(3) of section 1308.01 of the Revised Code.
Section 2. That existing sections 1301.05, 1301.12, 1303.02, 1304.01,
1304.02, 1305.10, 1305.13, 1308.03, 1308.04, 1308.08, 1308.09, 1308.10,
1308.11, 1308.12, 1308.13, 1308.14, 1308.15, 1308.16, 1308.17, 1308.22,
1308.31, 1308.37, 1308.38, 1308.41, 1308.42, 1309.01, 1309.03, 1309.14,
1309.20, 1309.21, 1309.22, 1309.23, 1309.24, 1309.25, 1309.28, 1309.31,
1701.01,
1701.24, 1701.25, 1701.27, 1701.49, 1701.591, 1701.831, 1701.832, 1705.01,
1705.04, 1705.16, 1705.43, 1782.33, and 3901.51
and sections
1308.01, 1308.02, 1308.05, 1308.06, 1308.07, 1308.18, 1308.19, 1308.20,
1308.21, 1308.23, 1308.24, 1308.25, 1308.26, 1308.27, 1308.28, 1308.32,
1308.33, 1308.34, 1308.35, 1308.36, 1308.39, 1308.40, 1308.43, and 1308.44 of
the Revised Code are hereby repealed.
Section 3. Sections 1 and 2 of this act, except for sections 1701.01,
1701.831, 1701.832, 1705.01, 1705.04, 1705.16, 1705.43, and 1782.33 of the
Revised Code, shall take effect on January 1, 1998. Sections 1701.01,
1701.831, 1701.832, 1705.01, 1705.04, 1705.16, 1705.43, and 1782.33 of the
Revised Code, as amended by this act, shall take effect at the earliest time
permitted by law.
Section 4. (A) Sections 1301.05, 1301.12, 1303.02, 1304.01, 1304.02, 1305.10,
1305.13, 1308.01, 1308.02, 1308.03, 1308.04, 1308.05, 1308.06, 1308.07,
1308.08, 1308.09, 1308.10, 1308.11, 1308.12, 1308.13, 1308.14, 1308.15,
1308.16, 1308.17, 1308.18, 1308.19, 1308.20, 1308.21, 1308.22, 1308.23,
1308.24, 1308.25, 1308.26, 1308.27, 1308.28, 1308.31, 1308.32, 1308.33,
1308.34, 1308.35, 1308.36, 1308.37, 1308.38, 1308.39, 1308.40, 1308.41,
1308.42, 1308.43, 1308.44, 1308.51, 1308.52, 1308.53, 1308.54, 1308.55,
1308.56, 1308.57, 1308.58, 1308.59, 1308.60, 1308.61, 1309.01, 1309.03,
1309.112, 1309.113, 1309.14, 1309.20, 1309.21, 1309.22, 1309.23, 1309.24,
1309.25, 1309.28, 1309.31, 1701.24, 1701.25, 1701.27, 1701.49, 1701.591, and
3901.51 of the Revised Code, as amended, enacted, or repealed by this act, do
not affect an action or proceeding commenced before January 1, 1998.
(B) If a security interest in a security is perfected at
January 1, 1998, and the action by which the security interest was perfected
would
suffice to perfect a security interest under this act, no further action is
required to continue perfection. If a security interest in a security is
perfected at January 1, 1998, but the action by which the
security interest was perfected would not suffice to perfect a security
interest under this act, the security interest remains perfected for the
period
ending April 30, 1998, and continues perfected thereafter if
appropriate action to perfect under this act is taken within that period. If
a security interest is perfected at January 1, 1998, and the
security interest can be perfected by filing under this act, a financing
statement signed by the secured party instead of the debtor may be filed
within that period to continue perfection or thereafter to perfect.
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