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(127th General Assembly)
(Substitute House Bill Number 374)
AN ACT
To amend sections 1701.04, 1701.24, 1701.55, 1701.58,
1701.591, 1701.69, 1701.70,
and 1701.76 of the
Revised Code to allow the
original articles of
incorporation to eliminate
cumulative voting in
the election of directors, to
remove restrictions
for certain corporations
regarding the
elimination of cumulative voting,
to exclude from
the existing procedures for
the sale of all or
substantially all of the assets
of a corporation
the sale of those assets to the
corporation's
wholly owned subsidiaries, to
permit the articles
or certain regulations of a corporation to
provide for uncertificated shares, and to
authorize the directors
to amend the articles
with respect to series of shares.
Be it enacted by the General Assembly of the State of Ohio:
SECTION 1. That sections 1701.04, 1701.24, 1701.55, 1701.58,
1701.591, 1701.69, 1701.70,
and 1701.76 of the Revised Code be
amended to read as follows:
Sec. 1701.04. (A) Any person, singly or jointly with
others,
and without regard to residence, domicile, or state of
incorporation, may form a corporation by signing and filing with
the secretary of state articles of incorporation
that shall
set
forth all of the following:
(1) The name of the corporation, which shall be in
compliance
with division (A) of section 1701.05
of the Revised
Code;
(2) The place in this state where the principal office of
the
corporation is to be located;
(3) The authorized number and the par value per share of
shares with par value, and the authorized number of shares
without
par value, except that the articles of a banking, safe
deposit,
trust, or insurance corporation shall not authorize
shares without
par value; the express terms, if any, of the
shares; and, if the
shares are classified, the designation of
each class, the
authorized number and par value per share, if
any, of the shares
of each class, and the express terms of the
shares of each class;
(4) If the corporation is to have an initial stated
capital,
the amount of that stated capital.
(B) The articles also may set forth any of the following:
(1) The names of the individuals who are to serve as initial
directors;
(2) The purpose or purposes for which the corporation
is
formed, but in the absence of a statement of the purpose or
purposes or
except as
expressly set forth in such statement, the
purpose for which any
corporation is formed is to engage in any
lawful act or activity
for which a corporation may be formed under
this chapter, and
all lawful acts and activities of the
corporation are within the
purposes of the corporation;
(3) Any lawful provision for the purpose of defining,
limiting, or regulating the exercise of the authority of the
corporation, the incorporators, the directors, the officers, the
shareholders, or the holders of any class of shares;
(4) Any provision that may be set forth in the
regulations;
(5) A provision specifying the period of existence of the
corporation if it is to be otherwise than perpetual;
(6) Subject to division (C) of this section, any A provision
eliminating the right of every shareholder to vote cumulatively in
the election of directors;
(7) Any
additional
provision permitted by this chapter.
(C) Original articles of a corporation may not set forth
any
provision that eliminates the rights of shareholders under
this
chapter to cumulate the voting power that they possess in
the
election of directors.
(D) A written appointment of a statutory agent for the
purposes set forth in section 1701.07 of the Revised Code shall
be
filed with the articles, unless the corporation belongs to one
of
the classes mentioned in division (O) of that section.
(E)(D) The legal existence of the corporation
begins upon the
filing of the articles
or on a later date
specified in
the
articles that is not more than ninety days after
filing, and,
unless the articles
otherwise provide, its period of
existence
shall be perpetual.
Sec. 1701.24. (A) The shares of a corporation are
personal
property.
(B) Each Unless the articles, the regulations adopted by the
shareholders, or the regulations adopted by the directors pursuant
to division (A)(1) of section 1701.10 of the Revised Code provide
otherwise, a holder of shares is entitled to one or more
certificates, signed by the 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 that shall certify the number and class of
shares
held by the holder in the corporation, but no certificate
for shares shall be executed or delivered until such those shares
are fully paid.
When the certificate is countersigned by an
incorporated
transfer agent or registrar, the signature of any of
those
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 the certificate
ceases
to
be such officer before the certificate is delivered, the
certificate nevertheless shall be effective in all respects when
delivered.
(C) A corporation is not obligated to but may issue
fractional shares. The holder of a fractional share is entitled to
exercise
the rights of a shareholder, including the right to vote,
to
receive dividends, and to participate in the assets of the
corporation upon liquidation. In the case of uncertificated
securities, the
corporation 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 do
any of
the following:
(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
of the fraction of a share in the articles, a
resolution of the
directors,
or other agreement or instrument pursuant to which such
that fraction
of a share otherwise would be issued, or, if not so
specified,
then the amount determined for that purpose by the
directors of the issuing corporation, or the amount realized upon
sale of
the
fraction of a share;
(2) Provide reasonable means to afford to the person the
opportunity, on specified terms and conditions, to purchase or
sell fractional interests in shares, to the exclusion of all
rights the person otherwise might 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
provided in the
scrip for full shares, but such scrip
shall not
entitle the holder
to any rights as a shareholder except as
provided in the scrip.
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 otherwise would
have been issuable as provided in
the scrip 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 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
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 that purpose within a reasonable time to be fixed
by the
corporation. The order may provide that, until
compliance
with the
order, 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 by the
certificate. Not less
than
ten days before the order is to become effective, the
corporation shall give notice of the order by mail to
each
shareholder affected by the order at
the shareholder's
address as
it appears on the records
of the corporation.
(F) The articles of a corporation, the regulations adopted by
the shareholders of a corporation, or the regulations adopted by
the directors of a corporation pursuant to division (A)(1) of
section 1701.10 of the Revised Code may provide that some or all
of any or all classes and series of shares of that corporation
shall be uncertificated shares. 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 the
resolution
shall not apply to shares represented by a certificate
until
the
certificate is surrendered to the corporation and that
the resolution shall not apply to a certificated security
issued
in exchange for an uncertificated security. Within a
reasonable
time after the issuance or transfer of uncertificated
shares, the
corporation shall send to the registered owner
of the shares 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. 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. 1701.55. (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) 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 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 the meeting
time, that the
shareholder desires that the voting at such
election shall be
cumulative, provided that an announcement of the giving of such
that
notice is made upon the convening of the meeting by the
chairperson
or secretary or by or on behalf of the shareholder
giving such the
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 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 the shareholder possesses and to
give
one candidate
as many votes as the number of directors to be
elected multiplied
by the number of the shareholder's votes
equals, or to
distribute the shareholder's votes on
the same
principle among two or more candidates, as the
shareholder sees
fit.
Sec. 1701.58. (A) The office of a director becomes vacant
if
the director dies or resigns. A resignation shall take
effect
immediately or at such other time as the director may
specify.
(B) The directors may remove any director and thereby
create
a vacancy in the board:
(1) If by order of court
the director has been found to
be
of
unsound mind, or if
the director is adjudicated a
bankrupt;
(2) If within sixty days, or within any other period of
time
as is prescribed in the articles or the regulations, from
the
date
of
the director's election
the
director does not
qualify by
accepting in
writing
the director's election to
that office or by
acting
at a meeting of
the directors, and by
acquiring the
qualifications specified in
the articles or the
regulations; or
if, for such period as is
prescribed in the
articles or the
regulations,
the director
ceases to hold
the
required
qualifications.
(C)
Except as otherwise provided in this division, if the
shareholders have a the right to vote cumulatively
in the election
of
directors, then, unless the articles, the
regulations adopted
by the shareholders, or the regulations adopted by the directors
pursuant to division (A)(1) of section 1701.10 of the Revised Code
expressly
provide that no director may be removed
from office or
that
removal of directors requires a greater vote
than that
specified
in this division, all the directors, all the
directors
of a
particular class, or any individual director may
be removed
from
office, without assigning any cause, by the vote
of the
holders of
a majority of the voting power entitling them
to elect
directors
in place of those to be removed, except that,
unless all
the
directors, or all the directors of a particular
class, are
removed, no individual director shall be removed if
the votes of a
sufficient number of shares are cast against
the
director's
removal that, if cumulatively voted at an election of all the
directors, or all the directors of a particular class, as the
case
may be, would be sufficient to elect at least one director.
In the
case of an issuing public corporation whose directors are
classified pursuant to section 1701.57 of the Revised Code, the
shareholders may effect a removal under this division only for
cause.
(D) If the shareholders do not have the right to vote
cumulatively as a result of an amendment to the articles
permitted
by division (B)(10) of section 1701.69 of the Revised
Code in the
election of directors, then,
unless the articles, the regulations
adopted by the shareholders, or the regulations adopted by the
directors pursuant to division (A)(1) of section 1701.10 of the
Revised Code expressly
provide that no
director may be removed
from office or that
removal of directors
requires a greater vote
than that specified
in this division, all
the directors, all the
directors of a
particular class, or any
individual director may be
removed from
office, without assigning
any cause, by the vote of
the holders
of a majority of the voting
power entitling them to
elect
directors in place of those to be
removed; except that in
the case of an issuing public corporation
whose directors are
classified pursuant to section 1701.57 of the
Revised Code, the
shareholders may effect that removal only for
cause.
(E) In case of any removal pursuant to division (C) or (D)
of
this section, a new director may be elected at the same
meeting
for the unexpired term of each director removed. Failure
to elect
a director to fill the unexpired term of any director
removed is
deemed to create a vacancy in the board.
(F) Unless the articles or the regulations otherwise
provide,
the remaining directors, though less than a majority of
the whole
authorized number of directors, may, by the vote of a
majority of
their number, fill any vacancy in the board for the
unexpired
term. Under this section, a vacancy exists if the
shareholders
increase the authorized number of directors but fail
at the
meeting at which such increase is authorized, or an
adjournment of
that meeting, to elect the additional directors
provided for, or
if the shareholders fail at any time to elect
the
whole authorized
number of directors.
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
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 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 provision of the articles or regulations or 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.
(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. 1701.69. (A) The articles may be amended from time
to
time in any respect if the articles as amended set forth all
such
provisions as are required in, and, except for amendments an
amendment to
the
articles as described in divisions division
(B)(10) and (11) of this
section, only such provisions as may
properly be in, original
articles filed at the time of adopting
the amendment, and, if a
change in issued shares is to be made, or
if as the result of any
amendment the stated capital of any class
of shares is to be
created, increased, reduced, or eliminated,
then such provisions,
not inconsistent with section 1701.30 of the
Revised Code, as are
necessary to effect such change, or to effect
such creation,
increase, reduction, or elimination of stated
capital.
(B) Without limiting the generality of the authority to
amend
the articles, the articles may be amended to do any of the
following:
(1) Change the name of the corporation;
(2) Change the place in this state where its principal
office
is to be located;
(3) Change, enlarge, or diminish its purpose or purposes;
(4) Increase or decrease the authorized number of shares
of
any class;
(5) Authorize shares of a new class or classes;
(6) Increase or decrease the par value of issued or
unissued
shares with par value;
(7) Change issued or unissued shares of any class, whether
with or without par value, into the same or a different number of
shares of any class with or without par value, theretofore or
then
authorized;
(8) Provide that, as a result of an amendment described in
division (B)(6), (7), or (11) of this section, the stated capital
of any class of shares shall be created, increased, reduced, or
eliminated, consistent with section 1701.30 of the Revised Code,
except that, in the case of any amendment to change the
corporation into a nonprofit corporation, the stated capital of
the corporation may be reduced or eliminated;
(9) Change any of the express terms of issued or unissued
shares of any class or series, which change may include the
discharge, adjustment, or elimination of rights to accrued
undeclared cumulative dividends or distributions on the shares of
such class or series;
(10) Eliminate the right of every shareholder to vote
cumulatively in the election of directors or to delete a
provision
that eliminates that right, except that, if a
corporation is
formed after
the effective date of this amendment or if a
corporation that exists on
the effective date of this
amendment
does not have issued and outstanding shares that are
listed on a
national securities exchange or are regularly quoted
in an
over-the-counter market by one or more members of a
national or
affiliated securities association, the articles may
be amended to
eliminate the right of every shareholder to vote
cumulatively in
the election of directors only upon compliance
with both of the
following:
(a) Except as otherwise provided in this division in
connection with surviving corporations in mergers and new
corporations resulting from consolidations, the shareholder
action
on the amendment to the articles shall not occur earlier
than
ninety days after
the effective date of this amendment or
ninety
days after the date that the corporation was formed,
whichever
date is later;
(b) A
notice shall have been
sent to the
shareholders
by
mail, overnight delivery service, or any other
means of
communication authorized by the shareholder to whom the
notice is
sent that states, in solid capital letters, that an
effect of the
amendment to the articles will be to do both of the
following:
(i) To permit a majority of a quorum of the voting power
in
the election or removal of directors to elect or remove every
director;
(ii) To preclude a minority of a quorum of the voting
power
in the election or removal of directors from electing or
preventing the removal of any director.
In the case of a surviving corporation as a result of a
merger or of a new corporation resulting from a consolidation, if
immediately prior to the merger or consolidation at least one of
the constituent corporations had issued and outstanding shares
listed on a national securities exchange or regularly quoted in
an
over-the-counter market by one or more members of a national
or
affiliated securities association, then the ninety-day
limitation
prescribed in division (B)(10)(a) of this section does
not apply
and the agreement of merger or consolidation, as
adopted pursuant
to section 1701.78 or 1701.80 of the Revised
Code, may eliminate,
subject to division (B)(10)(b) of this
section, the right of every
shareholder to vote cumulatively in
the election of directors.
An
agreement of merger or
consolidation that is so adopted and
that
eliminates the right of
every shareholder to vote
cumulatively in
the election of
directors shall be considered an
amendment
permitted by this
division.;
(11) Change a corporation into a nonprofit corporation;
(12) Change any provision of the articles or add any
provision that may properly be included in the articles.
Sec. 1701.70. (A) If initial directors are not named in the
articles,
before
subscriptions to shares have
been received
and
before the incorporators have elected directors, the incorporators
may adopt an amendment to the articles by a writing
signed by
them. If initial directors are named in the articles, or if the
incorporators have elected directors and have not received
subscriptions, then
before subscriptions to shares have been
received, the directors may adopt an
amendment to the articles.
(B) The directors may adopt an amendment to the articles
in
the following cases:
(1) When and to the extent authorized by the articles, the
directors may adopt an amendment determining, in whole or in part,
the
express terms, within the limits set forth in this chapter, of
any class of
shares before the issuance of any shares of that
class, or of one or more
series within a class before the issuance
of shares of that series. When no shares of a series created by an
amendment to the articles under division (B)(1) of this section
have been issued and no option or right to acquire any share of
that series is outstanding, the directors may adopt an amendment
to reduce the number of shares in that series or to eliminate from
the articles all references to the series and to make other
appropriate changes that are required by the elimination of the
series.
(2) When the corporation has issued shares or
obligations
convertible into shares of the corporation or has granted
options
to purchase any shares, and
the conversion
or option rights are
set forth in the articles or have been
approved by the same vote
of shareholders as, at the time of
the
approval, would have been
required to amend the articles to
authorize the shares required
for that purpose, and the
corporation does not have sufficient
authorized but unissued
shares to satisfy those conversion or
option rights, the
directors
may adopt an amendment to authorize
the
shares.
(3) Whenever shares of any class or series have been
redeemed, or
have
been surrendered to or acquired by the
corporation upon
conversion, exchange, purchase, or otherwise, the
directors may
adopt an amendment to reduce the authorized number
of shares of
the that class or series by the number so redeemed,
surrendered, or
acquired;
and
when all of the authorized issued
shares of a class or series have been
redeemed or
surrendered to
or acquired by the corporation, the
directors may
adopt an
amendment to eliminate from the articles
all references
to the
shares of the that class or series and to make
other
appropriate
changes
that are required by
the elimination.
(4) When articles have been amended and any change of
issued
or unissued shares provided for in the amendment or
amended
articles has become effective, the directors
may
adopt an
amendment to eliminate from the articles all references
to the
change of shares and to make any other appropriate
changes that
are required by the
elimination; however,
an amendment to articles
that is so adopted by the
directors shall
contain a statement with
respect to the authorized number and the par
value, if any, of the
shares of each class.
(5) After a merger or consolidation, in which the
surviving
or new corporation is a domestic corporation, becomes
effective,
the directors may adopt an
amendment:
(a) To eliminate from the articles any statement or
provision
pertaining exclusively to the merger or consolidation,
or that was
required to be set forth in the agreement of
merger
or
consolidation and that would not be required in
original articles
or amendments to articles filed at the time
the statement or
provision was adopted;
(b) To make any other appropriate changes required by
that
elimination.
An amendment to articles adopted by the directors under
division
(B)(5) of this section need not contain or continue any
statement with respect to the amount of stated capital.
(6) Unless otherwise provided in the articles, the directors
may adopt an amendment changing the name of the corporation.
(7) The directors may adopt an amendment changing the place
in this state where the principal office of the corporation is to
be located.
(8) When the directors have declared a dividend or
distribution on any class of outstanding shares of the corporation
to be paid in shares of the same class, the directors may adopt an
amendment to proportionately increase the authorized number of
shares of the class, provided that the corporation has only one
class of shares outstanding or the dividend or distribution is not
substantially prejudicial to the holders of any other class of the
corporation's shares, and further provided that such an amendment
be adopted concurrently with the amendment described in division
(B)(10) of this section when the dividend or distribution is
declared on outstanding shares with par value.
(9) The directors may adopt an amendment to change each
issued and unissued authorized share of an outstanding class into
a greater number of shares of that class and to proportionately
increase the authorized number of shares of that class, provided
that the corporation has only one class of shares outstanding or
the change is not substantially prejudicial to the holders of any
other class of the corporation's shares, and further provided that
such an amendment be adopted concurrently with the amendment
described in division (B)(10) of this section when the change is
made to outstanding shares with par value.
(10) Concurrently with the adoption of an amendment under
division (B)(8) or (9) of this section, the directors may adopt an
amendment decreasing the par value of issued and unissued shares
of a particular class to the extent necessary to prevent an
increase in the aggregate par value of the outstanding shares of
the class as a result of the dividend or distribution described in
division (B)(8) of this section or the change described in
division (B)(9) of this section.
(C) If a vote on the adoption of an
amendment is required by
division (B)(4) of section 1701.71 of
the Revised Code, any
amendment to the
articles adopted pursuant to division (B) of this
section that
creates a class or series of shares the express terms
of which
provide for the convertibility of the shares into shares
of
another class shall also require the approval of the holders,
voting as a class, of any issued and outstanding shares into which
the shares
may be converted.
(D) Divisions (B)(6) to (10) of this section shall not apply
to a corporation with one hundred or fewer shareholders unless the
corporation was created on or after
the effective date of this
amendment
May 16, 2002, or the articles of the corporation have
been amended in
compliance with section 1701.71 or 1701.73 of the
Revised Code
specifically to make those divisions applicable.
Sec. 1701.76. (A)(1) Provided the provisions of Chapter
1704. of the Revised Code do not prevent the transaction from
being effected, a lease, sale, exchange, transfer, or other
disposition of all, or substantially all, of the assets, with or
without the good will, of a corporation, if not made in the usual
and regular course of its business, may be made upon the terms
and
conditions and for the consideration, that may consist, in
whole
or in part, of money or other property of any description,
including shares or other securities or promissory obligations of
any other corporation, domestic or foreign, that may be authorized
as follows:
(a) By the directors, either before or after authorization
by
the shareholders as required in this section; and
(b) At a meeting of the shareholders held for that
purpose,
by the affirmative vote of the holders of shares
entitling them to
exercise two-thirds of the voting power of the
corporation on the
proposal, or, if the articles so provide or
permit, by the
affirmative vote of a greater or lesser
proportion, but not less
than a majority, of the voting power,
and by the affirmative vote
of the holders of shares of any
particular class that is required
by the articles.
(2) At the shareholder meeting described in division
(A)(1)(b) of this section or at any subsequent shareholder
meeting, shareholders, by the same vote that is required to
authorize the lease, sale, exchange, transfer, or other
disposition of all, or substantially all, of the assets, with or
without the good will, of the corporation, may grant authority to
the directors to establish or amend any of the terms and
conditions of the transaction, except that the shareholders shall
not
authorize the directors to do any of the following:
(a) Alter or change the amount or kind of shares,
securities,
money, property, or rights to be received in exchange
for the
assets;
(b) Alter or change to any material extent the amount or
kind
of liabilities to be assumed in exchange for the assets;
(c) Alter or change any other terms and conditions of the
transaction if any of the alterations or changes, alone or in the
aggregate, would materially adversely affect the shareholders or
the corporation.
(3) Notice of the meeting of the shareholders described in
division (A)(1)(b) of this section shall be given to all
shareholders whether or not entitled to vote at the meeting and
shall be accompanied by a copy or summary of the terms of the
transaction.
(B) The corporation by its directors may abandon the
transaction under this section, subject to the contract rights of
other persons, if
the power of abandonment is conferred upon the
directors either
by the terms of the transaction or by the same
vote of
shareholders and at the same meeting of shareholders as
that
referred to in division (A)(1)(b) of this section or at any
subsequent meeting.
(C) Dissenting holders of shares of any class, whether or
not
entitled to vote, shall be entitled to relief under section
1701.85 of the Revised Code.
(D) An action to set aside a conveyance by a corporation,
on
the ground that any section of the Revised Code applicable to
the
lease, sale, exchange, transfer, or other disposition of all,
or
substantially all, of the assets of that corporation has not
been
complied with, shall be brought within ninety days after
that
transaction, or the action shall be forever barred.
(E) If a resolution of dissolution is adopted pursuant to
section 1701.86 of the Revised Code, the directors may dispose of
all, or substantially all, of the corporation's assets without
the
necessity of a shareholders' authorization under this
section.
(F) The terms and conditions of any transaction under this
section shall be subject to the limitations specified in section
2307.97 of the Revised Code.
(G) This section does not apply to the distribution, pursuant
to section 1701.33 of the Revised Code, to the shareholders of an
issuing public corporation of shares owned by the issuing public
corporation in one or more of its domestic or foreign subsidiary
corporations, unless either of the following applies:
(1) The former subsidiary is a party to one or more
agreements pursuant to which it is obligated to engage in an
additional transaction that, if the transaction were authorized
after the time at which the distribution becomes effective, would
require the approval of its shareholders.
(2) Immediately prior to the time at which the distribution
becomes effective, the issuing public corporation has more than
one class of shares outstanding.
(H) For purposes of this section only, the assets of a
corporation include the assets of any other entity that is wholly
owned, directly or indirectly, by the corporation. Unless
otherwise provided in the articles, this section does not apply to
any lease, sale, exchange, transfer, or other disposition of all,
or substantially all, of the assets of a corporation to any entity
that is wholly owned, directly or indirectly, by the corporation.
SECTION 2. That existing sections 1701.04, 1701.24, 1701.55,
1701.58, 1701.591, 1701.69, 1701.70, and 1701.76 of the Revised
Code are hereby repealed.
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