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(127th General Assembly)
(House Bill Number 134)
AN ACT
To amend sections 1701.55, 1701.782, 1701.792,
1705.21, and 1775.14 of the Revised Code to modify
corporation law relating to the election of
directors and to conform conversion provisions of
Chapter 1701. of the Revised Code with parallel
provisions in Chapters 1705., 1775., and 1782. of
the Revised Code.
Be it enacted by the General Assembly of the State of Ohio:
SECTION 1. That sections 1701.55, 1701.782, 1701.792,
1705.21, and 1775.14 of the Revised Code be amended to read as
follows:
Sec. 1701.55. (A) At a meeting of shareholders at which
directors are to be elected, only persons nominated as candidates
shall be eligible for election as directors.
(B) At Unless the articles set forth alternative election
standards, at all elections of directors, the candidates
receiving
the greatest number of votes shall be elected.
(C) Unless the articles are amended as permitted by
division
(B)(10) of section 1701.69 of the Revised Code to
provide that no
shareholder of a corporation may cumulate his the
shareholder's
voting power, each shareholder has the right to vote cumulatively
if notice in writing is given by any shareholder to the
president,
a vice-president, or the secretary of a corporation,
not less than
forty-eight hours before the time fixed for holding
a meeting of
the shareholders for the purpose of electing
directors if notice
of the meeting has been given at least ten
days before the
meeting, and, if the ten days' notice has not
been given, not less
than twenty-four hours before such meeting
time, that he the
shareholder desires that the voting at such
election shall be
cumulative, provided that an announcement of the giving of such
notice is made upon the convening of the meeting by the chairman
chairperson
or secretary or by or on behalf of the shareholder
giving such
notice.
(D) Unless the articles are amended as permitted by
division
(B)(10) of section 1701.69 of the Revised Code to
provide that no
shareholder of a corporation may cumulate his the
shareholder's
voting power, each shareholder has the right, subject to the
notice requirements contained in division (C) of this section, to
cumulate the voting power he the shareholder possesses and to
give
one candidate
as many votes as the number of directors to be
elected multiplied
by the number of his the shareholder's votes
equals, or to
distribute his the shareholder's votes on
the same
principle among two or more candidates, as he the
shareholder sees
fit.
Sec. 1701.782. (A) Subject to division (B)(2) of this
section, pursuant to a written declaration of conversion as
provided in this section, a domestic or foreign entity that is not
a domestic corporation and is not a nonprofit corporation may be
converted into a domestic corporation. The conversion also must be
permitted by the chapter of the Revised Code or by the laws under
which the converting entity will exist.
(B)(1) The written declaration of conversion shall set forth
all of the following:
(a) The name and form of entity that is being converted, the
name of the entity into which the entity will be converted, and
the jurisdiction of formation of the converting entity;
(b) The articles of the converted corporation;
(c) All statements and matters required to be set forth in an
instrument of conversion by the laws under which the converting
entity exists;
(d) The terms of the conversion; the mode of carrying them
into effect; and the manner and basis of converting the interests
or shares of the converting entity into, or substituting the
interests or shares in the converting entity for, interests,
evidences of indebtedness, other securities, cash, rights, or any
other property or any combination of interests, evidences of
indebtedness, other securities, cash, rights, or any other
property of the converted corporation.
(2) No conversion or substitution described in this section
shall be effected if there are reasonable grounds to believe that
the conversion or substitution would render the converted
corporation unable to pay its obligations as they become due in
the usual course of its affairs.
(C) The written declaration of conversion may set forth any
of the following:
(1) The effective date of the conversion, which date may be
on or after the date of the filing of the certificate of
conversion pursuant to section 1701.811 of the Revised Code;
(2) A provision authorizing the converting entity to abandon
the proposed conversion by action of authorized representatives of
the converting entity taken prior to the filing of the certificate
of conversion pursuant to section 1701.811 of the Revised Code;
(3) A statement of, or a statement of the method to be used
to determine, the fair value of the assets owned by the converting
entity at the time of the conversion;
(4) The regulations of the converted corporation;
(5) The identity of the directors of the converted
corporation;
(6) The parties to the declaration of conversion in addition
to the converting entity;
(7) The stated capital, if any, of each class of shares of
the converted corporation to be outstanding at the time that the
conversion becomes effective;
(8) Any additional provision necessary or desirable with
respect to the proposed conversion or the converted entity.
(D) At any time before the filing of the certificate of
conversion pursuant to section 1701.811 of the Revised Code, the
conversion may be abandoned by any representatives authorized to
do so by the declaration of conversion, or by the same vote as was
required to adopt the declaration of conversion.
Sec. 1701.792. (A) Subject to division (B)(2) of this
section, pursuant to a written declaration of conversion as
provided in this section, a domestic corporation may be converted
into a domestic or foreign entity other than a nonprofit
corporation or a domestic corporation. The conversion also must be
permitted by the chapter of the Revised Code or by the laws under
which the converted entity will exist.
(B)(1) The written declaration of conversion shall set forth
all of the following:
(a) The name and form of entity that is being converted, the
name of the entity into which the entity will be converted, the
form of the converted entity, and the jurisdiction of formation of
the converted entity;
(b) If the converted entity is a domestic entity, the
complete terms of all documents required under the applicable
chapter of the Revised Code to form the converted entity;
(c) If the converted entity is a foreign entity, all of the
following:
(i) The complete terms of all documents required under the
law of its formation to form the converted entity;
(ii) The consent of the converted entity to be sued and
served with process in this state, and the irrevocable appointment
of the secretary of state as the agent of the converted entity to
accept service of process in this state to enforce against the
converted entity any obligation of the converting corporation or
to enforce the rights of a dissenting shareholder of the
converting corporation;
(iii) If the converted entity desires to transact business in
this state, the information required to qualify or to be licensed
under the applicable chapter of the Revised Code.
(d) All other statements and matters required to be set forth
in the declaration of conversion by the applicable chapter of the
Revised Code, if the converted entity is a domestic entity, or by
the laws under which the converted entity will be formed, if the
converted entity is a foreign entity;
(e) The terms of the conversion; the mode of carrying them
into effect; and the manner and basis of converting the interests
or shares of the converting corporation into, or substituting the
interests or shares in the converting corporation for, interests,
evidences of indebtedness, other securities, cash, rights, or any
other property or any combination of interests, evidences of
indebtedness, other securities, cash, rights, or any other
property of the converted entity.
(2) No conversion or substitution described in this section
shall be effected if there are reasonable grounds to believe that
the conversion or substitution would render the converted entity
unable to pay its obligations as they become due in the usual
course of its affairs.
(C) The written declaration of conversion may set forth any
of the following:
(1) The effective date of the conversion, which date may be
on or after the date of the filing of the certificate of
conversion;
(2) A provision authorizing, prior to the filing of the
certificate of conversion pursuant to section 1701.811 of the
Revised Code, the converting corporation to abandon the proposed
conversion by action of the directors of the converting
corporation or by the same vote as was required to adopt the
declaration of conversion;
(3) A statement of, or a statement of the method to be used
to determine, the fair value of the assets owned by the converting
corporation at the time of the conversion;
(4) The parties to the declaration of conversion in addition
to the converting entity;
(5) Any additional provision necessary or desirable with
respect to the proposed conversion or the converted entity.
(D) The directors of the domestic converting corporation must
approve the declaration of conversion to effect the conversion,
and the declaration of conversion must be adopted by the
shareholders of the domestic converting corporation, at a meeting
held for the purpose.
(E) Notice of each meeting of shareholders of a domestic
converting corporation at which a declaration of conversion is to
be submitted shall be given to all shareholders of that
corporation, whether or not they are entitled to vote, and shall
be accompanied by a copy or a summary of the material provisions
of the declaration of conversion.
(F) The vote required to adopt a declaration of conversion at
a meeting of the shareholders of a domestic converting corporation
is the affirmative vote of the holders of shares of that
corporation entitling them to exercise at least two-thirds of the
voting power of the corporation on the proposal or a different
proportion as provided in the articles, but not less than a
majority, or, if the conversion is to a foreign corporation, a
different proportion as the articles provide for a merger or
consolidation, and the affirmative vote of the holders of shares
of any particular class as required by the articles of the
converting corporation.
If the declaration of conversion would have an effect that,
if accomplished through an amendment to the articles, would
entitle the holders of shares of any particular class of a
domestic converting corporation to vote as a class on the adoption
of an amendment as provided in division (B) of section 1701.71 of
the Revised Code, the declaration of conversion also must be
adopted by the affirmative vote of the holders of at least
two-thirds of the shares of such class, or a different proportion
as the articles provide, but not less than a majority. However, if
the declaration of conversion would have an effect that, if
accomplished through an amendment to the articles, would entitle
the holders of shares of any particular class of a domestic
converting corporation to vote as a class on the adoption of an
amendment pursuant to division (B)(2) or (4) of section 1701.71 of
the Revised Code solely because those shares are to be converted
into or substituted for the same number of shares of a class of a
different corporation having express terms identical in all
material respects to those of the class of shares so converted or
substituted, the declaration of conversion does not need to be
adopted by the affirmative vote of the holders of shares of that
particular class voting as a class.
If the declaration of conversion would authorize any
particular corporate action that under any applicable provision of
law or the articles could be authorized only by or pursuant to a
specified vote of shareholders, the declaration of conversion also
must be adopted by the same affirmative vote as required for such
action.
(G)(1) At any time before the filing of the certificate of
conversion pursuant to section 1701.811 of the Revised Code, the
conversion may be abandoned by the directors of the converting
corporation, if the directors are authorized to do so by the
declaration of conversion, or by the same vote of the shareholders
as was required to adopt the declaration of conversion.
(2) The declaration of conversion may contain a provision
authorizing the directors of the converting corporation to amend
the declaration of conversion at any time before the filing of the
certificate of conversion pursuant to section 1701.811 of the
Revised Code, except that, after the adoption of the declaration
of conversion by the stockholders of the converting corporation,
the directors may not amend the declaration of conversion to do
any of the following:
(a) Alter or change the amount or kind of interests, shares,
evidences of indebtedness, other securities, cash, rights, or any
other property to be received by the shareholders of the
converting corporation in conversion of, or substitution for,
their shares;
(b) Alter or change any term of the organizational documents
of the converted entity except for alterations or changes that are
adopted with the vote or action of the persons, the vote or action
of which would be required for the alteration or change after the
conversion;
(c) Alter or change any other terms and conditions of the
declaration of conversion if any of the alterations or changes,
alone or in the aggregate, materially and adversely would affect
the holders of any class or series of shares of the converting
corporation.
Sec. 1705.21. (A) If Except as otherwise provided in the
operating agreement or articles of organization, if a member who
is an individual dies or is adjudged an
incompetent, his the
member's executor, administrator,
guardian, or other legal
representative may exercise all of his the member's
rights as a
member for the purpose of
settling his the member's estate or
administering
his the member's property, including any authority
that he the member had to give an assignee the right to
become a
member.
(B) If a member is a corporation, trust, general or limited
partnership, or
other entity and is dissolved or terminated, the
powers of the member may be
exercised by its legal representative
or successor.
Sec. 1775.14. (A) Subject to section 5815.35 of the Revised
Code and except as provided in division (B) of this section,
all
partners are liable as follows:
(1) Jointly and severally for everything chargeable to the
partnership under sections 1775.12 and 1775.13 of the Revised
Code. This joint and several liability is not subject to
section
2307.22 or 2315.36 of
the
Revised Code with respect
to a
tort
claim
that otherwise is subject to
either of those sections.
(2) Jointly for all other debts and obligations of the
partnership, but any partner may enter into a separate obligation
to perform a partnership contract.
(B) Subject to divisions
(C)(1) and (2) of this section or
as
otherwise provided
in a written agreement between the partners
of
a, an obligation incurred while the partnership is a registered
limited liability
partnership, a whether arising in contract,
tort, or otherwise, is solely the obligation of the partnership. A
partner in a
registered limited liability partnership, solely by
reason of being a partner; acting or failing to act as a partner;
or participating as an employee, consultant, contractor, or
otherwise in the conduct of the business or activities of the
registered limited liability partnership while the partnership is
a registered limited liability partnership, is not
personally
liable, directly
or indirectly, by way of indemnification,
contribution,
assessment, or otherwise, for debts, obligations, or
other
liabilities of any
kind of, or chargeable to, the
partnership or
another partner or partners
arising from negligence
or from
wrongful
acts, errors, omissions, or misconduct, whether
or not
intentional
or
characterized as tort, contract, or
otherwise,
committed or occurring while
the
partnership is a
registered
limited liability partnership or committed or
occurring
in the
course of the partnership business by another partner or an
employee, agent, or representative of the partnership such an
obligation solely by reason of being or acting as a partner. This
division applies notwithstanding anything inconsistent in the
partnership agreement that existed immediately before the filing
of a registration application to become a domestic limited
liability partnership under division (A) of section 1775.61 of the
Revised Code.
(C)(1) Division
(B) of this section does not affect the
liability of a partner in a registered limited liability
partnership for that
partner's own negligence, wrongful acts,
errors, omissions, or misconduct,
including that partner's own
negligence, wrongful acts, errors, omissions, or
misconduct in
directly supervising any other partner or any employee, agent,
or
representative of the partnership.
(2) Division (B) of this section shall
not affect the
liability of a partner for liabilities imposed by
Chapters 5735.,
5739., 5743., and 5747. and
section 3734.908 of the Revised
Code.
(D) A partner in a registered limited
liability partnership
is not a proper party to an action or proceeding by or
against a
registered limited liability partnership with respect to any debt,
obligation, or other liability of any kind described in division
(B) of this section, unless the partner is
liable under divisions
(C)(1) and (2) of this section.
(E) A registered limited liability partnership is liable out
of partnership assets for partnership debts, obligations, and
liabilities.
(F)(1) The personal liability of a partner solely by reason
of being such a partner, or acting or omitting to act in such
capacity, of a registered limited liability partnership organized
and registered under the laws of this state shall be determined
only under the laws of this state.
(2) The only actions required of a registered limited
liability partnership or of individual partners in such a
partnership in order to avail themselves of the limited liability
provisions of this section are those required by this chapter.
SECTION 2. That existing sections 1701.55, 1701.782,
1701.792, 1705.21, and 1775.14 of the Revised Code are hereby
repealed.
SECTION 3. Any meeting conducted or vote held by a nonprofit
corporation on or after August 19, 2005, pursuant to section
1702.01, 1702.08, 1702.11, 1702.17, 1702.19, 1702.20, 1702.22,
1702.27, 1702.38, 1702.39, 1702.42, or 1702.58 of the Revised
Code, as amended by H.B. 42 of the 126th General Assembly, is
valid if the meeting or vote would have been valid under those
sections as amended by Am. Sub. H.B. 699 of the 126th General
Assembly if those sections as amended by Am. Sub. H.B. 699 of the
126th General Assembly had been in effect at the time of the
meeting or vote.
SECTION 4. Sections 1701.55, 1701.782, and 1701.792 of the
Revised Code take effect January 1, 2008.
SECTION 5. Section 1775.14 of the Revised Code is presented
in
this act as a composite of the section as amended by both Am.
Sub. H.B. 301 and Sub. H.B. 416 of
the 126th General Assembly. The
General Assembly, applying the
principle stated in division (B) of
section 1.52 of the Revised
Code that amendments are to be
harmonized if reasonably capable of
simultaneous operation, finds
that the composite is the resulting
version of the section in
effect prior to the effective date of
the section as presented in
this act.
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