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Sub. H. B. No. 48 As Reported by the House Financial Institutions, Housing and Urban Development CommitteeAs Reported by the House Financial Institutions, Housing and Urban Development Committee
129th General Assembly | Regular Session | 2011-2012 |
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Representatives Mecklenborg, Carney
Cosponsors:
Representatives Beck, Combs, DeGeeter, Dovilla, Garland, McGregor, Pillich, Stautberg, Stebelton, Stinziano, Coley, Adams, R., Brenner, Duffey
A BILL
To amend sections 1701.13, 1701.59, 1701.66, 1701.74,
1701.76, 1701.84, 1701.85, 1701.86, 1701.87,
1701.88, 1701.89, 1701.90, 1701.91, 1701.911,
1702.12, 1702.30, and 1705.61 and to enact
sections 1701.881, 1701.882, and 1701.883 of the
Revised Code to make changes to the law governing
corporations including dissenting shareholders,
the dissolution of a corporation, rights to
indemnification or advancement of expenses,
directors' fiduciary duties, and recording of
corporate mortgages.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 1701.13, 1701.59, 1701.66, 1701.74,
1701.76, 1701.84, 1701.85, 1701.86, 1701.87, 1701.88, 1701.89,
1701.90, 1701.91, 1701.911, 1702.12, 1702.30, and 1705.61 be
amended and sections 1701.881, 1701.882, and 1701.883 of the
Revised Code be enacted to read as follows:
Sec. 1701.13. (A) A corporation may sue and be sued.
(B) A corporation may adopt and alter a corporate seal and
use the same or a facsimile of the corporate seal, but failure to
affix the corporate seal shall not affect the validity of any
instrument.
(C) At the request or direction of the United States
government or any agency of the United States government, a
corporation may transact any lawful business in aid of national
defense or in the prosecution of any war in which the nation is
engaged.
(D) Unless otherwise provided in the articles, a corporation
may take property of any description, or any interest in property,
by gift, devise, or bequest, and may make donations for the public
welfare or for charitable, scientific, or educational purposes.
(E)(1) A corporation may indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a party,
to any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of the
corporation, by reason of the fact that he the person is or was a
director, officer, employee, or agent of the corporation, or is or
was serving at the request of the corporation as a director,
trustee, officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a partnership, joint venture, trust,
or other enterprise, against expenses, including attorney's fees,
judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him the person in connection with such
action, suit, or proceeding, if he the person acted in good faith
and in a manner he the person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, if he the person had
no reasonable cause to believe his the person's conduct was
unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner he the person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any
criminal action or proceeding, he the person had reasonable cause
to believe that his the person's conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a party,
to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor,
by reason of the fact that he the person is or was a director,
officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, trustee,
officer, employee, member, manager, or agent of another
corporation, domestic or foreign, nonprofit or for profit, a
limited liability company, or a partnership, joint venture, trust,
or other enterprise, against expenses, including attorney's fees,
actually and reasonably incurred by him the person in connection
with the defense or settlement of such action or suit, if he the
person acted in good faith and in a manner he the person
reasonably believed to be in or not opposed to the best interests
of the corporation, except that no indemnification shall be made
in respect of any of the following:
(a) Any claim, issue, or matter as to which such person is
adjudged to be liable for negligence or misconduct in the
performance of his the person's duty to the corporation unless,
and only to the extent that, the court of common pleas or the
court in which such action or suit was brought determines, upon
application, that, despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses as the
court of common pleas or such other court shall deem proper;
(b) Any action or suit in which the only liability asserted
against a director is pursuant to section 1701.95 of the Revised
Code.
(3) To the extent that a director, trustee, officer,
employee, member, manager, or agent has been successful on the
merits or otherwise in defense of any action, suit, or proceeding
referred to in division (E)(1) or (2) of this section, or in
defense of any claim, issue, or matter therein in the action,
suit, or proceeding, he the person shall be indemnified against
expenses, including attorney's fees, actually and reasonably
incurred by him the person in connection with the action, suit, or
proceeding.
(4) Any indemnification under division (E)(1) or (2) of this
section, unless ordered by a court, shall be made by the
corporation only as authorized in the specific case, upon a
determination that indemnification of the director, trustee,
officer, employee, member, manager, or agent is proper in the
circumstances because he the person has met the applicable
standard of conduct set forth in division (E)(1) or (2) of this
section. Such determination shall be made as follows:
(a) By a majority vote of a quorum consisting of directors of
the indemnifying corporation who were not and are not parties to
or threatened with the action, suit, or proceeding referred to in
division (E)(1) or (2) of this section;
(b) If the quorum described in division (E)(4)(a) of this
section is not obtainable or if a majority vote of a quorum of
disinterested directors so directs, in a written opinion by
independent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who
has performed services for the corporation or any person to be
indemnified within the past five years;
(d) By the court of common pleas or the court in which the
action, suit, or proceeding referred to in division (E)(1) or (2)
of this section was brought.
Any determination made by the disinterested directors under
division (E)(4)(a) or by independent legal counsel under division
(E)(4)(b) of this section shall be promptly communicated to the
person who threatened or brought the action or suit by or in the
right of the corporation under division (E)(2) of this section,
and, within ten days after receipt of such that notification, such
the person shall have the right to petition the court of common
pleas or the court in which such the action or suit was brought to
review the reasonableness of such that determination.
(5)(a) Unless at the time of a director's act or omission
that is the subject of an action, suit, or proceeding referred to
in division (E)(1) or (2) of this section, the articles or the
regulations of a corporation state, by specific reference to this
division, that the provisions of this division do not apply to the
corporation and unless the only liability asserted against a
director in an action, suit, or proceeding referred to in division
(E)(1) or (2) of this section is pursuant to section 1701.95 of
the Revised Code, expenses, including attorney's fees, incurred by
a director in defending the action, suit, or proceeding shall be
paid by the corporation as they are incurred, in advance of the
final disposition of the action, suit, or proceeding, upon receipt
of an undertaking by or on behalf of the director in which he the
director agrees to do both of the following:
(i) Repay such that amount if it is proved by clear and
convincing evidence in a court of competent jurisdiction that his
the director's action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to the
corporation or undertaken with reckless disregard for the best
interests of the corporation;
(ii) Reasonably cooperate with the corporation concerning the
action, suit, or proceeding.
(b) Expenses, including attorney's fees, incurred by a
director, trustee, officer, employee, member, manager, or agent in
defending any action, suit, or proceeding referred to in division
(E)(1) or (2) of this section, may be paid by the corporation as
they are incurred, in advance of the final disposition of the
action, suit, or proceeding, as authorized by the directors in the
specific case, upon receipt of an undertaking by or on behalf of
the director, trustee, officer, employee, member, manager, or
agent to repay
such that amount, if it ultimately is determined
that he the person is not entitled to be indemnified by the
corporation.
(6) The indemnification or advancement of expenses authorized
by this section shall not be exclusive of, and shall be in
addition to, any other rights granted to those seeking
indemnification or advancement of expenses under the articles, the
regulations, any agreement, a vote of shareholders or
disinterested directors, or otherwise, both as to action in their
official capacities and as to action in another capacity while
holding their offices or positions, and shall continue as to a
person who has ceased to be a director, trustee, officer,
employee, member, manager, or agent and shall inure to the benefit
of the heirs, executors, and administrators of such a that person.
A right to indemnification or to advancement of expenses arising
under a provision of the articles or the regulations shall not be
eliminated or impaired by an amendment to that provision after the
occurrence of the act or omission that becomes the subject of the
civil, criminal, administrative, or investigative action, suit, or
proceeding for which the indemnification or advancement of
expenses is sought, unless the provision in effect at the time of
that act or omission explicitly authorizes that elimination or
impairment after the act or omission has occurred.
(7) A corporation may purchase and maintain insurance or
furnish similar protection, including, but not limited to, trust
funds, letters of credit, or self-insurance, on behalf of or for
any person who is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the
corporation as a director, trustee, officer, employee, member,
manager, or agent of another corporation, domestic or foreign,
nonprofit or for profit, a limited liability company, or a
partnership, joint venture, trust, or other enterprise, against
any liability asserted against him the person and incurred by him
the person in any such capacity, or arising out of his the
person's status as such, whether or not the corporation would have
the power to indemnify him the person against such that liability
under this section. Insurance may be purchased from or maintained
with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons
pursuant to division (E)(1) or (2) of this section does not limit
the payment of expenses as they are incurred, indemnification,
insurance, or other protection that may be provided pursuant to
divisions (E)(5), (6), and (7) of this section. Divisions (E)(1)
and (2) of this section do not create any obligation to repay or
return payments made by the corporation pursuant to division
(E)(5), (6), or (7).
(9) As used in division (E) of this section, "corporation"
includes all constituent entities in a consolidation or merger and
the new or surviving corporation, so that any person who is or was
a director, officer, employee, trustee, member, manager, or agent
of such a constituent entity, or is or was serving at the request
of such constituent entity as a director, trustee, officer,
employee, member, manager, or agent of another corporation,
domestic or foreign, nonprofit or for profit, a limited liability
company, or a partnership, joint venture, trust, or other
enterprise, shall stand in the same position under this section
with respect to the new or surviving corporation as he the person
would if he the person had served the new or surviving corporation
in the same capacity.
(F) In carrying out the purposes stated in its articles and
subject to limitations prescribed by law or in its articles, a
corporation may:
(1) Purchase or otherwise acquire, lease as lessee, invest
in, hold, use, lease as lessor, encumber, sell, exchange,
transfer, and dispose of property of any description or any
interest in such property;
(3) Form or acquire the control of other corporations,
domestic or foreign, whether nonprofit or for profit;
(4) Be a partner, member, associate, or participant in other
enterprises or ventures, whether profit or nonprofit;
(5) Conduct its affairs in this state and elsewhere;
(6) Borrow money, and issue, sell, and pledge its notes,
bonds, and other evidences of indebtedness, and secure any of its
obligations by mortgage, pledge, or deed of trust of all or any of
its property, and guarantee or secure obligations of any person;
(7) Resist a change or potential change in control of the
corporation if the directors by a majority vote of a quorum
determine that the change or potential change is opposed to or not
in the best interests of the corporation:
(a) Upon consideration of the interests of the corporation's
shareholders and any of the matters set forth in division (E)(F)
of section 1701.59 of the Revised Code; or
(b) Because the amount or nature of the indebtedness and
other obligations to which the corporation or any successor or the
property of either may become subject in connection with the
change or potential change in control provides reasonable grounds
to believe that, within a reasonable period of time, any of the
following would apply:
(i) The assets of the corporation or any successor would be
or become less than its liabilities plus its stated capital, if
any;
(ii) The corporation or any successor would be or become
insolvent;
(iii) Any voluntary or involuntary proceeding under the
federal bankruptcy laws concerning the corporation or any
successor would be commenced by any person.
(8) Do all things permitted by law and exercise all authority
within the purposes stated in its articles or incidental to its
articles.
(G) Irrespective of the purposes stated in its articles, but
subject to limitations stated in its articles, a corporation, in
addition to the authority conferred by division (F) of this
section, may invest its funds not currently needed in its business
in any shares or other securities, to such extent that as a result
of the investment the corporation shall not acquire control of
another corporation, business, or undertaking the activities and
operations of which are not incidental to the purposes stated in
its articles.
(H) No lack of, or limitation upon, the authority of a
corporation shall be asserted in any action except (1) by the
state in an action by it against the corporation, (2) by or on
behalf of the corporation against a director, an officer, or any
shareholder as such, (3) by a shareholder as such or by or on
behalf of the holders of shares of any class against the
corporation, a director, an officer, or any shareholder as such,
or (4) in an action involving an alleged overissue of shares. This
division shall apply to any action brought in this state upon any
contract made in this state by a foreign corporation.
Sec. 1701.59. (A) Except where the law, the articles, or the
regulations require action to be authorized or taken by
shareholders, all of the authority of a corporation shall be
exercised by or under the direction of its directors. For their
own government, the directors may adopt bylaws that are not
inconsistent with the articles or the regulations. The selection
of a time frame for the achievement of corporate goals shall be
the responsibility of the directors.
(B) A director shall perform the director's duties as a
director, including the duties as a member of any committee of the
directors upon which the director may serve, in good faith, in a
manner the director reasonably believes to be in or not opposed to
the best interests of the corporation, and with the care that an
ordinarily prudent person in a like position would use under
similar circumstances.
In A director serving on a committee of
directors is acting as a director.
(C) In performing a director's duties, a director is entitled
to rely on information, opinions, reports, or statements,
including financial statements and other financial data, that are
prepared or presented by any of the following:
(1) One or more directors, officers, or employees of the
corporation who the director reasonably believes are reliable and
competent in the matters prepared or presented;
(2) Counsel, public accountants, or other persons as to
matters that the director reasonably believes are within the
person's professional or expert competence;
(3) A committee of the directors upon which the director does
not serve, duly established in accordance with a provision of the
articles or the regulations, as to matters within its designated
authority, which committee the director reasonably believes to
merit confidence.
(C)(D) For purposes of division (B) of this section, the
following apply:
(1) A director shall not be found to have violated the
director's duties under division (B) of this section unless it is
proved by clear and convincing evidence that the director has not
acted in good faith, in a manner the director reasonably believes
to be in or not opposed to the best interests of the corporation,
or with the care that an ordinarily prudent person in a like
position would use under similar circumstances, in any action
brought against a director, including actions involving or
affecting any of the following:
(a) A change or potential change in control of the
corporation, including a determination to resist a change or
potential change in control made pursuant to division (F)(7) of
section 1701.13 of the Revised Code;
(b) A termination or potential termination of the director's
service to the corporation as a director;
(c) The director's service in any other position or
relationship with the corporation.
(2) A director shall not be considered to be acting in good
faith if the director has knowledge concerning the matter in
question that would cause reliance on information, opinions,
reports, or statements that are prepared or presented by the
persons described in divisions (B)(C)(1) to (3) of this section to
be unwarranted.
(3) Nothing contained in this division limits relief
available under section 1701.60 of the Revised Code.
(D)(E) A director shall be liable in damages for any action
that the director takes or fails to take as a director only if it
is proved by clear and convincing evidence in a court of competent
jurisdiction that the director's action or failure to act involved
an act or omission undertaken with deliberate intent to cause
injury to the corporation or undertaken with reckless disregard
for the best interests of the corporation. Nothing contained in
this division affects the liability of directors under section
1701.95 of the Revised Code or limits relief available under
section 1701.60 of the Revised Code. This division does not apply
if, and only to the extent that, at the time of a director's act
or omission that is the subject of complaint, the articles or the
regulations of the corporation state by specific reference to this
division that the provisions of this division do not apply to the
corporation.
(E)(F) For purposes of this section, a director, in
determining what the director reasonably believes to be in the
best interests of the corporation, shall consider the interests of
the corporation's shareholders and, in the director's discretion,
may consider any of the following:
(1) The interests of the corporation's employees, suppliers,
creditors, and customers;
(2) The economy of the state and nation;
(3) Community and societal considerations;
(4) The long-term as well as short-term interests of the
corporation and its shareholders, including the possibility that
these interests may be best served by the continued independence
of the corporation.
(F)(G) Nothing contained in division (C)(D) or (D)(E) of this
section affects the duties of either of the following:
(1) A director who acts in any capacity other than the
director's capacity as a director;
(2) A director of a corporation that 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, who votes for or assents to any action taken by the
directors of the corporation that, in connection with a change in
control of the corporation, directly results in the holder or
holders of a majority of the outstanding shares of the corporation
receiving a greater consideration for their shares than other
shareholders.
Sec. 1701.66. (A) A mortgage of property of any description,
or any interest therein in the property, made (1) by a corporation
which that is a railroad or a public utility as defined by
sections 4907.02, 4905.02, and 4905.03 of the Revised Code; or (2)
by a corporation, domestic or foreign, organized for the purpose
of constructing, acquiring, owning, or operating a railroad or
public utility, as so defined, or any part thereof of a railroad
or public utility, or, as a common carrier, a trolley bus system,
in whole or in part in this state;
or (3) by a municipal
corporation pursuant to Section 12 of Article XVIII, Ohio
Constitution; or (4) by the state, a county, or a municipal
corporation, pursuant to Chapter 165. of the Revised Code, or a
port authority pursuant to section 4582.06 or 4582.31 of the
Revised Code; or (5) by an electric cooperative as defined by
section 4928.01 of the Revised Code, shall be recorded in the
office of the county recorder of each county in this state in
which any of
said that property is situated or employed; but.
However, a mortgage by such mortgagor which that includes rolling
stock or movable equipment such as cars, locomotives, or trolley
buses, motor buses, or other vehicles, or machines for aerial
transportation, may be filed in the office of the secretary of
state, and when so filed shall have the same effect, as to the
lien created thereby by the mortgage on such that rolling stock,
movable equipment, or machines, as though filed in the office of
the recorder of each such county in which such
the rolling stock,
movable equipment, or machines are situated or employed. In lieu
of filing an original of said the mortgage described in this
division, a true copy
thereof of the mortgage, with an affidavit
by the mortgagor, the mortgagee, or an agent of either that it is
a true copy, may be filed.
(B) Any such mortgage described in division (A) of this
section shall be a lien on the property
therein described in the
mortgage from the respective times of the filing of such the
mortgage for record with the recorders of said the appropriate
counties; but any such mortgage covering such rolling stock,
movable equipment, or machines described in division (A) of this
section shall be a lien thereon on that stock or equipment or
those machines from the time of the filing of
such the mortgage,
or a true copy thereof of the mortgage, with the secretary of
state.
(C) If any mortgage by its terms creates a lien upon any
property, which that may thereafter be acquired by the mortgagor,
it shall be a lien upon all the interest of the mortgagor in such
that after-acquired property from the date of its acquisition, if
such the mortgage was or is recorded or filed as provided in this
section.
(D) The secretary of state shall charge and collect, for
every such mortgage or true copy thereof of the mortgage filed in
the secretary of state's office under this section, a fee of ten
dollars and, for each page in excess of twenty-five pages an
additional fee of one dollar. The secretary of state shall endorse
on the mortgage or true copy the time of its filing and shall keep
a record of the filing in a book to be kept for said that purpose,
giving the names of all parties to the mortgage, alphabetically
arranged, the date of the mortgage, and the time of its filing.
The mortgage or true copy and the record of its filing shall be
open to public inspection. When the mortgage is canceled, the date
of cancellation shall be entered on the margin of the record
thereof of the mortgage.
(E) Mortgages of the character described in this section need
not be otherwise filed or refiled as security interests under
Chapter 1309. of the Revised Code.
(F) Nothing contained in this section shall make inapplicable
the provisions of Chapters 4505. to 4519. of the Revised Code,
relating to motor vehicles.
Sec. 1701.74. (A) If an amendment does any of the following,
then shareholders are entitled to relief to the extent provided in
division (B) of this section:
(1) Changes issued shares of a particular class that have
preference in dividends or distributions or on liquidation over
shares of any other class into shares of any other class, or
changes any of the express terms of issued shares of such
particular class, and the holders of the shares of such particular
class are substantially prejudiced thereby and the articles do not
expressly or by implication provide for or permit such amendment;
(2) Changes the express terms of issued shares of a
particular class that have preference in dividends or
distributions or on liquidation over shares of any other class, in
such manner as to discharge without payment of, or to adjust or
eliminate rights to, accrued undeclared cumulative dividends or
distributions on the shares of any such class;
(3) Changes substantially the purposes of the corporation or
provides that thereafter an amendment to change substantially the
purposes of the corporation may be adopted;
(4) Changes the corporation into a nonprofit corporation.
(B) In the cases provided for in divisions (A)(1) and (2) of
this section, dissenting holders of shares of such particular
class, and, in the cases provided for in divisions (A)(3) and (4)
of this section, dissenting holders of shares of any class, shall
be entitled to relief under section 1701.85 of the Revised Code,
subject to the following exceptions:
(1) If the articles of the corporation in effect at the time
of the adoption of an amendment that changes substantially the
purposes of the corporation expressly provide that such an
amendment may be adopted, then dissenting shareholders shall not
be entitled to relief under section 1701.85 of the Revised Code
with respect to the adoption of such amendment;.
(2) Division (A)(3) of this section does not apply to any
corporation incorporated after December 31, 1970.
(3) No amendment that eliminates or creates cumulative voting
rights as permitted by division (B)(10) of section 1701.69 of the
Revised Code, entitles any dissenting shareholder to relief under
section 1701.85 of the Revised Code with respect to the adoption
of such amendment.
(4) No relief as a dissenting shareholder shall be available
if the shares of the corporation for which the dissenting
shareholder would otherwise be entitled to relief are listed on a
national securities exchange as of the day immediately preceding
the date of the vote and no proceedings have been commenced to
delist the shares from the national securities exchange as of the
time of the vote or, if division (A)(1) of this section applies
and the shares to be received are listed on a national securities
exchange and no proceedings are pending to delist the shares, as
of the effective time of the amendment.
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, unless both of the following apply:
(1) The shares of the corporation for which the dissenting
shareholder would otherwise be entitled to relief are listed on a
national securities exchange as of the day immediately preceding
the date of the vote described in division (A)(1)(b) of this
section.
(2) The consideration to be received by the shareholders
consists of shares or shares and cash in lieu of fractional shares
that, immediately following the time of the vote described in
division (A)(1)(b) of this section, are listed on a national
securities exchange, and no proceedings are pending to delist the
shares from the national securities exchange as of the time of the
vote.
(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.
Sec. 1701.84. The (A) Except as provided in division (B) of
this section, the following are entitled to relief as dissenting
shareholders under section 1701.85 of the Revised Code:
(A)(1) Shareholders of a domestic corporation that is being
merged or consolidated into a surviving or new entity, domestic or
foreign, pursuant to section 1701.78, 1701.781, 1701.79, 1701.791,
or 1701.801 of the Revised Code;
(B)(2) In the case of a merger into a domestic corporation,
shareholders of the surviving corporation who under section
1701.78 or 1701.781 of the Revised Code are entitled to vote on
the adoption of an agreement of merger, but only as to the shares
so entitling them to vote;
(C)(3) Shareholders, other than the parent corporation, of a
domestic subsidiary corporation that is being merged into the
domestic or foreign parent corporation pursuant to section 1701.80
of the Revised Code;
(D)(4) In the case of a combination or a majority share
acquisition, shareholders of the acquiring corporation who under
section 1701.83 of the Revised Code are entitled to vote on such
transaction, but only as to the shares so entitling them to vote;
(E)(5) Shareholders of a domestic subsidiary corporation into
which one or more domestic or foreign corporations are being
merged pursuant to section 1701.801 of the Revised Code;
(F)(6) Shareholders of a domestic corporation that is being
converted pursuant to section 1701.792 of the Revised Code.
(B) All of the following shareholders shall not be entitled
to relief as dissenting shareholders under section 1701.85 of the
Revised Code:
(1) Shareholders described in division (A)(1) or (6) of this
section, if both of the following apply:
(a) The shares of the corporation for which the dissenting
shareholder would otherwise be entitled to relief under division
(A)(1) or (6) of this section are listed on a national securities
exchange as of the day immediately preceding the date on which the
vote on the proposal is taken at the meeting of the shareholders.
(b) The consideration to be received by the shareholders
consists of shares or shares and cash in lieu of fractional shares
that, immediately following the effective time of a merger,
consolidation, or conversion, as applicable, are listed on a
national securities exchange and for which no proceedings are
pending to delist the shares from the national securities exchange
as of the effective time of the merger, consolidation, or
conversion.
(2) Shareholders described in division (A)(2) of this
section, if the shares so entitling them to vote are listed on a
national securities exchange both as of the day immediately
preceding the date on which the vote on the proposal is taken at
the meeting of the shareholders and immediately following the
effective time of the merger and there are no proceedings pending
to delist the shares from the national securities exchange as of
the effective time of the merger;
(3) The shareholders described in division (A)(4) of this
section, if the shares so entitling them to vote are listed on a
national securities exchange both as of the day immediately
preceding the date on which the vote on the proposal is taken at
the meeting of the shareholders and immediately following the
effective time of the combination or majority share acquisition,
and there are no proceedings pending to delist the shares from the
national securities exchange as of the effective time of the
combination or majority share acquisition.
Sec. 1701.85. (A)(1) A shareholder of a domestic corporation
is entitled to relief as a dissenting shareholder in respect of
the proposals described in sections 1701.74, 1701.76, and 1701.84
of the Revised Code, only in compliance with this section.
(2) If the proposal must be submitted to the shareholders of
the corporation involved, the dissenting shareholder shall be a
record holder of the shares of the corporation as to which the
dissenting shareholder seeks relief as of the date fixed for the
determination of shareholders entitled to notice of a meeting of
the shareholders at which the proposal is to be submitted, and
such shares shall not have been voted in favor of the proposal.
Not
(3) Not later than twenty days before the date of the meeting
at which the proposal will be submitted to the shareholders, the
corporation may notify the corporation's shareholders that relief
under this section is available. The notice shall include or be
accompanied by all of the following:
(a) A copy of this section;
(b) A statement that the proposal can give rise to rights
under this section if the proposal is approved by the required
vote of the shareholders;
(c) A statement that the shareholder will be eligible as a
dissenting shareholder under this section only if the shareholder
delivers to the corporation a written demand with the information
provided for in division (A)(4) of this section before the vote on
the proposal will be taken at the meeting of the shareholders and
the shareholder does not vote in favor of the proposal.
(4) If the corporation delivers notice to its shareholders as
provided in division (A)(3) of this section, a shareholder
electing to be eligible as a dissenting shareholder under this
section shall deliver to the corporation before the vote on the
proposal is taken a written demand for payment of the fair cash
value of the shares as to which the shareholder seeks relief. The
demand for payment shall include the shareholder's address, the
number and class of such shares, and the amount claimed by the
shareholder as the fair cash value of the shares.
(5) If the corporation does not notify the corporation's
shareholders pursuant to division (A)(3) of this section, not
later than ten days after the date on which the vote on the
proposal was taken at the meeting of the shareholders, the
dissenting shareholder shall deliver to the corporation a written
demand for payment to the dissenting shareholder of the fair cash
value of the shares as to which the dissenting shareholder seeks
relief, which demand shall state the dissenting shareholder's
address, the number and class of such shares, and the amount
claimed by the dissenting shareholder as the fair cash value of
the shares.
(3)(6) If a signatory, designated and approved by the
dissenting shareholder, executes the demand, then at any time
after receiving the demand, the corporation may make a written
request that the dissenting shareholder provide evidence of the
signatory's authority. The shareholder shall provide the evidence
within a reasonable time but not sooner than twenty days after the
dissenting shareholder has received the corporation's written
request for evidence.
(7) The dissenting shareholder entitled to relief under
division (C)(A)(3) of section 1701.84 of the Revised Code in the
case of a merger pursuant to section 1701.80 of the Revised Code
and a dissenting shareholder entitled to relief under division
(E)(A)(5) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 of the Revised Code shall be a
record holder of the shares of the corporation as to which the
dissenting shareholder seeks relief as of the date on which the
agreement of merger was adopted by the directors of that
corporation. Within twenty days after the dissenting shareholder
has been sent the notice provided in section 1701.80 or 1701.801
of the Revised Code, the dissenting shareholder shall deliver to
the corporation a written demand for payment with the same
information as that provided for in division (A)(2)(4) of this
section.
(4)(8) In the case of a merger or consolidation, a demand
served on the constituent corporation involved constitutes service
on the surviving or the new entity, whether the demand is served
before, on, or after the effective date of the merger or
consolidation. In the case of a conversion, a demand served on the
converting corporation constitutes service on the converted
entity, whether the demand is served before, on, or after the
effective date of the conversion.
(5)(9) If the corporation sends to the dissenting
shareholder, at the address specified in the dissenting
shareholder's demand, a request for the certificates representing
the shares as to which the dissenting shareholder seeks relief,
the dissenting shareholder, within fifteen days from the date of
the sending of such request, shall deliver to the corporation the
certificates requested so that the corporation may endorse on them
a legend to the effect that demand for the fair cash value of such
shares has been made. The corporation promptly shall return the
endorsed certificates to the dissenting shareholder. A dissenting
shareholder's failure to deliver the certificates terminates the
dissenting shareholder's rights as a dissenting shareholder, at
the option of the corporation, exercised by written notice sent to
the dissenting shareholder within twenty days after the lapse of
the fifteen-day period, unless a court for good cause shown
otherwise directs. If shares represented by a certificate on which
such a legend has been endorsed are transferred, each new
certificate issued for them shall bear a similar legend, together
with the name of the original dissenting holder of the shares.
Upon receiving a demand for payment from a dissenting shareholder
who is the record holder of uncertificated securities, the
corporation shall make an appropriate notation of the demand for
payment in its shareholder records. If uncertificated shares for
which payment has been demanded are to be transferred, any new
certificate issued for the shares shall bear the legend required
for certificated securities as provided in this paragraph. A
transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only the
rights in the corporation as the original dissenting holder of
such shares had immediately after the service of a demand for
payment of the fair cash value of the shares. A request under this
paragraph by the corporation is not an admission by the
corporation that the shareholder is entitled to relief under this
section.
(B) Unless the corporation and the dissenting shareholder
have come to an agreement on the fair cash value per share of the
shares as to which the dissenting shareholder seeks relief, the
dissenting shareholder or the corporation, which in case of a
merger or consolidation may be the surviving or new entity, or in
the case of a conversion may be the converted entity, within three
months after the service of the demand by the dissenting
shareholder, may file a complaint in the court of common pleas of
the county in which the principal office of the corporation that
issued the shares is located or was located when the proposal was
adopted by the shareholders of the corporation, or, if the
proposal was not required to be submitted to the shareholders, was
approved by the directors. Other dissenting shareholders, within
that three-month period, may join as plaintiffs or may be joined
as defendants in any such proceeding, and any two or more such
proceedings may be consolidated. The complaint shall contain a
brief statement of the facts, including the vote and the facts
entitling the dissenting shareholder to the relief demanded. No
answer to a complaint is required. Upon the filing of a complaint,
the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a
copy of the complaint and a notice of the filing and of the date
for hearing be given to the respondent or defendant in the manner
in which summons is required to be served or substituted service
is required to be made in other cases. On the day fixed for the
hearing on the complaint or any adjournment of it, the court shall
determine from the complaint and from evidence submitted by either
party whether the dissenting shareholder is entitled to be paid
the fair cash value of any shares and, if so, the number and class
of such shares. If the court finds that the dissenting shareholder
is so entitled, the court may appoint one or more persons as
appraisers to receive evidence and to recommend a decision on the
amount of the fair cash value. The appraisers have power and
authority specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a
share and shall render judgment against the corporation for the
payment of it, with interest at a rate and from a date as the
court considers equitable. The costs of the proceeding, including
reasonable compensation to the appraisers to be fixed by the
court, shall be assessed or apportioned as the court considers
equitable. The proceeding is a special proceeding and final orders
in it may be vacated, modified, or reversed on appeal pursuant to
the Rules of Appellate Procedure and, to the extent not in
conflict with those rules, Chapter 2505. of the Revised Code. If,
during the pendency of any proceeding instituted under this
section, a suit or proceeding is or has been instituted to enjoin
or otherwise to prevent the carrying out of the action as to which
the shareholder has dissented, the proceeding instituted under
this section shall be stayed until the final determination of the
other suit or proceeding. Unless any provision in division (D) of
this section is applicable, the fair cash value of the shares that
is agreed upon by the parties or fixed under this section shall be
paid within thirty days after the date of final determination of
such value under this division, the effective date of the
amendment to the articles, or the consummation of the other action
involved, whichever occurs last. Upon the occurrence of the last
such event, payment shall be made immediately to a holder of
uncertificated securities entitled to payment. In the case of
holders of shares represented by certificates, payment shall be
made only upon and simultaneously with the surrender to the
corporation of the certificates representing the shares for which
the payment is made.
(C)(1) If the proposal was required to be submitted to the
shareholders of the corporation, fair cash value as to those
shareholders shall be determined as of the day prior to the day on
which the vote by the shareholders was taken and, in the case of a
merger pursuant to section 1701.80 or 1701.801 of the Revised
Code, fair cash value as to shareholders of a constituent
subsidiary corporation shall be determined as of the day before
the adoption of the agreement of merger by the directors of the
particular subsidiary corporation. The fair cash value of a share
for the purposes of this section is the amount that a willing
seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to
purchase would be willing to pay, but in no event shall the fair
cash value of a share exceed the amount specified in the demand of
the particular shareholder. In computing fair cash value, any both
of the following shall be excluded:
(a) Any appreciation or depreciation in market value
resulting from the proposal submitted to the directors or to the
shareholders shall be excluded;
(b) Any premium associated with control of the corporation,
or any discount for lack of marketability or minority status.
(2) For the purposes of this section, the fair cash value of
a share that was listed on a national securities exchange at any
of the following times shall be the closing sale price on the
national securities exchange as of the applicable date provided in
division (C)(1) of this section:
(a) Immediately before the effective time of a merger or
consolidation;
(b) Immediately before the filing of an amendment to the
articles of incorporation as described in division (A) of section
1701.74 of the Revised Code;
(c) Immediately before the time of the vote described in
division (A)(1)(b) of section 1701.76 of the Revised Code.
(D)(1) The right and obligation of a dissenting shareholder
to receive fair cash value and to sell such shares as to which the
dissenting shareholder seeks relief, and the right and obligation
of the corporation to purchase such shares and to pay the fair
cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this
section, unless the corporation by its directors waives such
failure;
(b) The corporation abandons the action involved or is
finally enjoined or prevented from carrying it out, or the
shareholders rescind their adoption of the action involved;
(c) The dissenting shareholder withdraws the dissenting
shareholder's demand, with the consent of the corporation by its
directors;
(d) The corporation and the dissenting shareholder have not
come to an agreement as to the fair cash value per share, and
neither the shareholder nor the corporation has filed or joined in
a complaint under division (B) of this section within the period
provided in that division.
(2) For purposes of division (D)(1) of this section, if the
merger, consolidation, or conversion has become effective and the
surviving, new, or converted entity is not a corporation, action
required to be taken by the directors of the corporation shall be
taken by the partners of a surviving, new, or converted
partnership or the comparable representatives of any other
surviving, new, or converted entity.
(E) From the time of the dissenting shareholder's giving of
the demand until either the termination of the rights and
obligations arising from it or the purchase of the shares by the
corporation, all other rights accruing from such shares, including
voting and dividend or distribution rights, are suspended. If
during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or
interest is paid in money upon any securities issued in
extinguishment of or in substitution for such shares, an amount
equal to the dividend, distribution, or interest which, except for
the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon
the fair cash value of the shares. If the right to receive fair
cash value is terminated other than by the purchase of the shares
by the corporation, all rights of the holder shall be restored and
all distributions which, except for the suspension, would have
been made shall be made to the holder of record of the shares at
the time of termination.
Sec. 1701.86. (A) A corporation may be dissolved voluntarily
in the manner provided in this section, provided the provisions of
Chapter 1704. of the Revised Code do not prevent the dissolution
from being effected.
(B) A resolution of dissolution for a corporation shall set
forth:
(1) That that the corporation elects to be dissolved;
(2). The resolution also may include any of the following:
(1) The date on which the certificate of dissolution is to be
filed or the conditions or events that will result in the filing
of the certificate;
(2) Authorization for the officers or directors to abandon
the proposed dissolution before the filing of the certificate of
dissolution;
(3) Any additional provision considered necessary with
respect to the proposed dissolution and winding up.
(C) If an initial stated capital is not set forth in the
articles then before the corporation begins business, or if an
initial stated capital is set forth in the articles then before
subscriptions to shares shall have been received in the amount of
that initial stated capital, the incorporators or a majority of
them may adopt, by a writing signed by each of them, a resolution
of dissolution.
(D) The directors may adopt a resolution of dissolution in
any of the following cases:
(1) When the corporation has been adjudged bankrupt or has
made a general assignment for the benefit of creditors;
(2) By leave of the court, when a receiver has been appointed
in a general creditors' suit or in any suit in which the affairs
of the corporation are to be wound up;
(3) When substantially all of the assets have been sold at
judicial sale or otherwise;
(4) When the articles have been canceled for failure to file
annual franchise or excise tax returns or for failure to pay
franchise or excise taxes and the corporation has not been
reinstated or does not desire to be reinstated;
(5) When the period of existence of the corporation specified
in its articles has expired.
(E) The shareholders at a meeting held for such purpose may
adopt a resolution of dissolution by the affirmative vote of the
holders of shares entitling them to exercise two-thirds of the
voting power of the corporation on such proposal or, if the
articles provide or permit, by the affirmative vote of a greater
or lesser proportion, though not less than a majority, of such
voting power, and by such affirmative vote of the holders of
shares of any particular class as is required by the articles.
Notice of the meeting of the shareholders shall be given to all
the shareholders whether or not entitled to vote at it.
(F) Upon the adoption of a resolution of dissolution, a
certificate shall be prepared, on a form prescribed by the
secretary of state, setting forth all of the following:
(1) The name of the corporation;
(2) A statement that a resolution of dissolution has been
adopted;
(3) A statement of the manner of adoption of such resolution,
and, in the case of its adoption by the incorporators or
directors, a statement of the basis for such adoption;
(4) The place in this state where its principal office is or
is to be located;
(5) The names and addresses of its directors and officers,
unless the resolution of dissolution is adopted by the
incorporators, in which event the names and addresses of the
incorporators shall be set forth in the certificate internet
address of each domain name held or maintained by or on behalf of
the corporation;
(6) The name and address of its statutory agent;
(7) The date of dissolution, if other than the filing date.
The date of dissolution shall not be more than ninety days after
the filing of the certificate of dissolution.
(G) Such certificate shall be signed as follows:
(1) When the resolution of dissolution is adopted by the
incorporators or a majority of them, the certificate shall be
signed by not less than a majority of them;
(2) When the resolution is adopted by the directors or by the
shareholders. In all other cases, the certificate shall be signed
by any authorized officer, unless the officer fails to execute and
file such certificate within thirty days after the adoption of the
resolution or upon any date specified in the resolution as the
date upon which such certificate is to be filed
or upon the
expiration of any period specified in the resolution as the period
within which such certificate is to be filed, whichever is latest,
in which. In that latter event, the certificate of dissolution may
be signed by any three shareholders or, if there are less than
three shareholders, all of the shareholders and shall set forth a
statement that the persons signing the certificate are
shareholders and are filing the certificate because of the failure
of the officers to do so.
(H) A Except as otherwise provided in division (I) of this
section, a certificate of dissolution, filed with the secretary of
state, shall be accompanied by all of the following:
(1) An affidavit of one or more of the persons executing the
certificate of dissolution or of an officer of the corporation
containing a statement of the counties, if any, in this state in
which the corporation has personal property or a statement that
the corporation is of a type required to pay personal property
taxes to state authorities only;
(2) A receipt, certificate, or other evidence from the
department of taxation showing the payment of all franchise,
sales, use, and highway use taxes accruing up to the date of such
filing or, if applicable, to the later date specified in the
certificate of dissolution in accordance with division (F) of this
section, or showing that such payment has been adequately
guaranteed, or an affidavit of one or more of the persons
executing the certificate of dissolution or of an officer of the
corporation containing a statement that the corporation is not
required to pay any tax for which such a certificate or other
evidence is not provided;
(3) A receipt, certificate, or other evidence showing the
payment of all personal property and commercial activity taxes
accruing up to the date of such filing or, if applicable, to the
later date specified in the certificate of dissolution in
accordance with division (F) of this section, or showing that such
payment has been adequately guaranteed, or an affidavit of one or
more of the persons executing the certificate of dissolution or of
an officer of the corporation containing a statement that the
corporation is not required to pay any tax for which such a
certificate or other evidence is not provided;
(4) A receipt, certificate, or other evidence from the
director of job and family services showing that all contributions
due from the corporation as an employer have been paid, or that
such payment has been adequately guaranteed, or that the
corporation is not subject to such contributions;
(5) A receipt, certificate, or other evidence from the bureau
of workers' compensation showing that all premiums due from the
corporation as an employer have been paid, or that such payment
has been adequately guaranteed, or that the corporation is not
subject to such premium payments;.
(6)(I) In lieu of the receipt, certificate, or other evidence
described in division (H)(2), (3), (4), or (5) of this section, an
affidavit of one or more persons executing the certificate of
dissolution or of an officer of the corporation containing a
statement of the date upon which the particular department,
agency, or authority was advised in writing of the scheduled
effective date of the dissolution and was advised in writing of
the acknowledgment by the corporation of the applicability of the
provisions of section 1701.95 of the Revised Code.
(I)(J) Upon the filing of a certificate of dissolution and
such accompanying documents or on a later date specified in the
certificate that is not more than ninety days after the filing,
the corporation shall be dissolved.
Sec. 1701.87. Following the filing of the certificate of
dissolution, the directors or the incorporators, as the case may
be, shall forthwith cause a notice of voluntary dissolution to be
published (A) A corporation shall give notice of a dissolution by
certified or registered mail, return receipt requested, to each
known creditor and to each person that has a claim against the
corporation, including claims that are conditional, unmatured, or
contingent upon the occurrence or nonoccurrence of future events.
(B) The notice shall state all of the following:
(1) That all claims shall be presented in writing and shall
identify the claimant and contain sufficient information to
reasonably inform the corporation of the substance of the claim;
(2) The mailing address to which the person must send the
claim;
(3) The deadline, which shall be not less than sixty days
after the date the notice is given, by which the corporation must
receive the claim;
(4) That the claim will be barred if the corporation does not
receive the claim by the deadline;
(5) That the corporation may make distributions to other
creditors or claimants, including distributions to shareholders of
the corporation, without further notice to the claimant.
(C) Giving any notice or making any offer under this chapter
shall not revive any claim then barred or constitute
acknowledgment by the corporation that any person to whom the
corporation sent notice under this section is a proper claimant
and shall not operate as a waiver of any defense or counterclaim.
(D) A claim is barred if a claimant that was given written
notice under division (A) of this section does not deliver the
claim to the dissolved corporation by the deadline stated in the
notice.
(E) The corporation shall post the notice described in
division (B) of this section on any web site the corporation
maintains in the corporation's name and shall provide a copy of
the notice to the secretary of state to be posted on the web site
maintained by the secretary of state in accordance with division
(F) of this section.
(F)(1) Except as provided in division (F)(2) of this section,
the secretary of state shall make both of the following available
to the public in a format that is searchable, viewable, and
accessible through the internet:
(a) A list of all domestic corporations that have filed a
certificate of dissolution or have had their articles canceled;
(b) For each dissolved corporation on the list described in
division (F)(1)(a) of this section, a copy of both the certificate
of dissolution and the notice delivered under division (B) of this
section.
(2) After the materials relating to any dissolved or canceled
corporation have been posted for five years, the secretary of
state may remove from the web site the information that the
secretary posted pursuant to division (F)(1) of this section that
relates to that corporation.
(G) If the certificate of dissolution is filed five years or
less after the effective date of this amendment, the corporation
shall publish the notice described in division (B) of this section
at least once a week on the same day of each week for two
successive weeks, in a newspaper published and of general
circulation in the county in which the principal office of the
corporation was to be or is located, and shall forthwith cause
written notice of dissolution to be given either personally or by
mail to all known creditors of, and to all known claimants
against, the dissolved corporation.
Sec. 1701.88. (A) When a corporation is dissolved
voluntarily, when the articles of a corporation have been
canceled, or when the period of existence of the corporation
specified in its articles has expired, the corporation shall cease
to carry on business and shall do only such acts as are required
to wind up its affairs, or to obtain reinstatement of the articles
in accordance with section 1701.07, 1701.921, 1785.06, or 5733.22
of the Revised Code, or are permitted upon reinstatement by
division (C) of section 1701.922 of the Revised Code, and for such
purposes it shall continue as a corporation for a period of five
years from the dissolution, expiration, or cancellation. A court
acting pursuant to section 1701.89 of the Revised Code may extend
the five-year period allowed under this division.
(B) The voluntary dissolution of a corporation, cancellation
of the articles of a corporation, expiration of the period of
existence of a corporation, appointment of a receiver to wind up
the affairs of the corporation, or other action to dissolve a
corporation under this chapter shall not eliminate or impair any
remedy available to or against the corporation or its directors,
officers, or shareholders for any right or claim existing, or
liability incurred, prior to the dissolution, if either of the
following brings such an action:
(1) The corporation within the time limits otherwise
permitted by law;
(2) Any other person before five years after the date of the
dissolution or within the time limits otherwise required by
section 1701.881 of the Revised Code or any other provision of
law, whichever is less.
(C) Any claim existing or action or proceeding pending by or
against the corporation or which would have accrued against it may
be prosecuted to judgment, with right of appeal as in other cases,
but any proceeding, execution, or process, or the satisfaction or
performance of any order, judgment, or decree, may be stayed as
provided in section 1701.89 of the Revised Code. Any action, suit,
or proceeding begun by or against the corporation within the time
limits established in division (B) of this section shall not
abate, and the corporation shall, solely for the purpose of such
action, suit, or proceeding, be continued as a body corporate
beyond the five-year period and until any judgments, orders, or
decrees are fully executed, without the necessity for any court
order required under division (A) of this section.
(C) Any process, notice, or demand against the corporation
may be served by delivering a copy to an officer, director,
liquidator, or person having charge of its assets or, if no such
person can be found, to the statutory agent.
(D) The directors of the corporation and their survivors or
successors shall act as a board of directors in accordance with
the articles and regulations and bylaws until the affairs of the
corporation are completely wound up. Subject to the orders of
courts of this state having jurisdiction over the corporation
acting pursuant to section 1701.89 of the Revised Code, the
directors shall proceed as speedily as is practicable to a
complete winding up of the affairs of the corporation and, to the
extent necessary or expedient to that end, shall. For that
purpose, the directors may exercise all the authority of the
corporation. Without limiting the generality of such authority,
they may fill do all of the following:
(1) Fill vacancies, elect;
(2) Elect officers, carry;
(3) Appoint agents, liquidators, or other entities or persons
to carry out the winding up of the corporation's business;
(4) Carry out contracts of the corporation, make;
(5) Make new contracts, borrow;
(6) Borrow money, mortgage;
(7) Mortgage or pledge the property of the corporation as
security, sell;
(8) Sell its assets at public or private sale, make;
(9) Make conveyances in the corporate name, lease;
(10) Lease real estate for any term, including ninety-nine
years renewable forever, settle;
(11) Settle or compromise claims in favor of or against the
corporation, employ;
(12) Employ one or more persons as liquidators to wind up the
affairs of the corporation with such authority as the directors
see fit to grant, cause;
(13) Cause the title to any of the assets of the corporation
to be conveyed to such liquidators for that purpose, apply;
(14) Apply assets to the payment of obligations, and, after
paying or adequately providing for the payment of all known
obligations of the corporation, distribute;
(15) Distribute the remainder of the assets either in cash or
in kind among the shareholders according to their respective
rights and interests. In addition, they may perform after paying
or adequately providing for the payment of all known obligations
of the corporation under section 1701.882 of the Revised Code and
for claims that have not been made known to the corporation or
that have not arisen but that, based on facts known to the
corporation, are likely to arise or to become known to the
corporation within five years after the date of dissolution or
such longer period of time as the directors or a court acting
under section 1701.89 of the Revised Code may determine, not to
exceed ten years after the date of dissolution;
(16) Perform all other acts necessary or expedient to the
winding up of the affairs of the corporation.
Division (E) of section 1701.76 of the Revised Code applies
to the disposition of a voluntarily dissolved corporation's assets
by its directors.
(E) Without limiting the authority of the directors and
subject to division (E) of section 1701.76 of the Revised Code,
any action within the purview of this section which is authorized
or approved at a meeting held for such purpose by the holders of
shares entitling them to receive two-thirds of the value of the
remaining assets shall be conclusive for all purposes upon all
shareholders of the corporation.
(F) All deeds and other instruments of the corporation shall
be in the name of the corporation and shall be executed,
acknowledged, and delivered by the officers appointed by the
directors.
(G) At any time during the winding up of its affairs, the
corporation by its directors may make application to the court of
common pleas of the county in this state in which the principal
office of the corporation is located to have the winding up
continued under supervision of the court, as provided in section
1701.89 of the Revised Code.
(F) If any property right of a corporation is discovered
after the winding up of the corporation, any member or members of
the board of directors that wound up the affairs of the
corporation, or a receiver appointed by the court, may enforce the
property right, collect and divide the assets discovered among the
persons entitled to those assets, and prosecute actions or
proceedings in the corporate name of the corporation. Any assets
collected under this division shall be distributed and disposed of
in accordance with any applicable court order or, in the absence
of a court order, in accordance with this section.
(G) In the event a receiver is appointed to wind up the
affairs of the corporation, or an action is commenced under
section 1701.91 of the Revised Code to dissolve the corporation,
the five-year period specified in divisions (A) and (B)(2) of this
section shall not commence until:
(1) The effective date of dissolution under division (J) of
section 1701.86 of the Revised Code, if a certificate of
dissolution is filed under that section; or
(2) The date of filing of a certified copy of an order of
dissolution in the office of the secretary of state under division
(D) of section 1701.91 of the Revised Code.
Sec. 1701.881. (A) A corporation that has given notice under
division (A) of section 1701.87 of the Revised Code may reject, in
whole or in part, any matured claim made by a claimant by sending
notice of the rejection by certified or registered mail, return
receipt requested, to the claimant within ninety days after
receipt of the claim and at least thirty days before the
expiration of the five-year period specified in division (A) of
section 1701.88 of the Revised Code. A notice sent pursuant to
this section shall include or be accompanied by a copy of this
division and of section 1701.89 of the Revised Code. A claim
against a corporation is barred if a claimant whose claim is
rejected by the corporation does not commence an action to enforce
the claim within thirty days after the corporation mails the
rejection notice.
(B) A corporation that has given notice under division (A) of
section 1701.87 of the Revised Code may offer security to any
claimant whose claim is contingent, conditional, or unmatured as
the corporation determines is sufficient to provide compensation
to the claimant if the claim matures. The corporation shall send
the corporation's offer to the claimant by certified or registered
mail, return receipt requested, within ninety days after receipt
of the claim and at least thirty days before the expiration of the
five-year period specified in division (A) of section 1701.88 of
the Revised Code. A notice sent pursuant to this section shall
include or be accompanied by a copy of this division and of
section 1701.89 of the Revised Code. If the claimant offered the
security does not deliver to the corporation a written notice
rejecting the offer within thirty days after the corporation mails
the offer for security, the claimant shall be deemed to have
accepted the security as the sole source from which to satisfy
claimant's claim against the corporation.
(C) A corporation that has given notice under division (A) of
section 1701.87 of the Revised Code may file an application with
the court having jurisdiction under section 1701.89 of the Revised
Code for a determination of the amount and form of insurance or
other security that satisfies both of the following requirements:
(1) The insurance or other security will be sufficient to
provide compensation to any claimant who has rejected the offer
for security made pursuant to this section.
(2) The insurance or other security will be reasonably likely
to be sufficient to provide compensation for claims that have not
been made known to the corporation or that have not arisen but
that, based on the facts known to the corporation, are likely to
arise or to become known to the corporation within five years
after the date of dissolution or such longer period of time as the
directors or a court acting under section 1701.89 of the Revised
Code may determine, not to exceed ten years after the date of
dissolution.
Sec. 1701.882. (A) A dissolved corporation shall do all of
the following:
(1) Pay the claims made and not rejected under division (A)
of section 1701.881 of the Revised Code;
(2) Post the security offered and not rejected under division
(B) of section 1701.881 of the Revised Code;
(3) Post security ordered by the court in any proceeding
under division (C) of section 1701.881 of the Revised Code;
(4) Make any payment required by a court acting under section
1701.89 of the Revised Code;
(5) Pay or make provision by insurance or otherwise for all
other claims that are mature, known, and uncontested or that have
been finally determined to be owing by the corporation and any
other claims described in division (C)(2) of section 1701.881 of
the Revised Code.
(B) A corporation shall pay in full any claims and
liabilities or provide for those payments in full by insurance or
otherwise if the corporation has sufficient assets. If the
corporation does not have sufficient assets, a corporation shall
pay claims and liabilities or provide for those payments by
insurance or otherwise in order of their priority. Among claims of
equal priority, the corporation shall apportion those payments to
the extent of funds legally available for the payment of those
claims. Any remaining assets shall be distributed to the
shareholders of the corporation according to their respective
rights and preferences.
(C) In the absence of fraud, the judgment of the board of
directors of the dissolved corporation as to the provision the
corporation made for the payment of all claims under division
(A)(5) of this section shall be conclusive.
Sec. 1701.883. (A) The dissolution of a corporation shall not
affect the limited liability of a shareholder with respect to
transactions occurring or acts or omissions done or omitted in the
name of or by the corporation.
(B) A shareholder who receives a distribution of assets from
a dissolved corporation shall not be liable for any claim against
the corporation in an amount in excess of the amount of
shareholder's pro rata share of the claim or the amount
distributed to the shareholder, whichever is less. The aggregate
liability of any shareholder for claims against a dissolved
corporation shall not exceed the amount distributed to that
stockholder after the dissolution.
(C) A shareholder of a dissolved corporation, the assets of
which were distributed pursuant to this chapter, may be liable for
a claim against the corporation only if an action on that claim is
commenced before expiration of the period specified in division
(B)(2) of section 1701.88 of the Revised Code.
Sec. 1701.89. (A) Without limiting the generality of its
authority, the court of common pleas of the county in this state
in which is located the principal office of a voluntarily
dissolved corporation or is located, in which the principal office
was to be located, or in which the principal office of a
corporation whose articles have been canceled or whose period of
existence has expired is located, upon the complaint of the
corporation, a majority of the directors, or a creditor or
shareholder claimant, and upon such notice to all the directors
and such other persons interested as the court considers proper,
at any time may order and adjudge in respect of all of the
following matters:
(1) Any proceedings or actions under division (C) of section
1701.881 of the Revised Code;
(2) The presentation and proof of all claims and demands
against the corporation and of all rights, interests, or liens in
or on any of its property including property described in division
(F) of section 1701.88 of the Revised Code; the fixing of the time
within which and the manner in which such proof shall be made and
the person to whom such presentation shall be made; and the
barring from participation in any distribution of assets of all
persons failing to make and present proofs as required by the
order of the court;
(2)(3) The stay of the prosecution of any proceeding against
the corporation or involving any of its property, and the
requirement that the parties to it present and prove their claims,
demands, rights, interests, or liens at the time and in the manner
required of creditors or others; or the grant to of leave to bring
or maintain an independent proceeding to enforce liens;
(3)(4) The settlement or determination of all claims of every
nature against the corporation or any of its property; the
determination of the assets required to be retained or insurance
to be obtained to pay or provide for the payment of such claims or
any claim; the determination of the assets available for
distribution among shareholders; and the making of new parties to
the proceeding so far as the court considers proper for the
determination of all matters;
(4)(5) The determination of the rights of holders of shares
of all classes in and to the assets of the corporation;
(5)(6) The presentation and filing of intermediate and final
accounts of the directors or of the liquidators and hearings on
them; the allowance, disallowance, or settlement of such accounts;
and the discharge of the directors, the liquidators, or any of
them from their duties and liabilities;
(6)(7) The appointment of a special master commissioner or
guardian ad litem to hear and determine any such matters with such
authority as the court considers proper;. The applicant in the
proceeding shall pay the reasonable fees and expenses of the
special master commissioner or guardian ad litem, including all
reasonable expert witness fees, unless otherwise ordered by the
court.
(7)(8) The filling of any vacancies in the number of
directors or liquidators when the directors are unable to act on
the vacancies for want of a quorum or for any other reason;
(8)(9) The appointment of a receiver, in accordance with the
usages of a court in equitable matters, to wind up the affairs of
the corporation, to take custody of any of its property, or for
any other purpose;
(9)(10) The issuance or entry of any injunction or any other
order which the court considers proper in the administration of
the trust involved in the winding up of the affairs of the
corporation and the giving of notice of it;
(10)(11) The allowance and payment of compensation to the
directors or any of them, to liquidators, to a receiver, to the
attorney for the complainant, or to any person properly rendering
services beneficial to the corporation or to those interested in
it;
(11)(12) The entry of a judgment or decree which, if it so
provides, may operate as the deed or other instrument ordered to
be executed, or the appointment of a master or guardian ad litem
to execute such deed or instrument in the name of the corporation
with the same effect as if executed by an authorized officer
pursuant to authority conferred by the directors or the
shareholders of the corporation, whenever there is no officer or
agent competent to execute such deed or instrument, whenever the
corporation or its officers do not perform or comply with a
judgment or decree of court, or whenever the court considers it
proper.
(B) A judicial proceeding under this section concerning the
winding up of the affairs of a corporation is a special
proceeding, and final orders in the proceeding may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate
Procedure and, to the extent not in conflict with those rules,
Chapter 2505. of the Revised Code.
Sec. 1701.90. (A) Whenever, after a corporation is dissolved
voluntarily or the articles of a corporation have been cancelled
or the period of existence of a corporation has expired, a
receiver is appointed to wind up the affairs of the corporation,
all the claims, demands, rights, interests, or liens of creditors,
claimants, and shareholders shall be determined as of the day on
which the receiver was appointed unless those claims, demands,
rights, interests, or liens have already been determined under
section 1701.881 of the Revised Code. Unless it is otherwise
ordered, such appointment vests in the receiver and his the
receiver's successors the right to the immediate possession of all
the property of the corporation, which shall, if so ordered,
execute and deliver conveyances of such property to the receiver
or his the receiver's nominee.
(B) Any officer, director, shareholder, or other person,
whether a resident of the state or a non-resident and however
interested, may be appointed as receiver.
(C) The Unless otherwise ordered, the receiver shall have all
the authority vested in the directors and officers of the
corporation, shall exercise such authority subject to such orders
as are made by the court, and may be required to qualify by giving
bond to the state in such amount as the court fixes, with surety
to the satisfaction of the clerk of the court, conditioned for the
faithful discharge of his the receiver's duties and for a due
accounting for all money or property received by him the receiver.
Sec. 1701.91. (A) A corporation may be dissolved judicially
and its affairs wound up:
(1) By an order of the supreme court or of a court of appeals
in an action in quo warranto brought as provided by sections
2733.02 to 2733.39 of the Revised Code, in which event the court
may order the affairs of the corporation to be wound up by its
directors as in the case of voluntary dissolution, or by
proceedings in, and under the order of, the court of common pleas
of the county in this state in which the corporation has its
principal office;
(2) By an order of the court of common pleas of the county in
this state in which such corporation has its principal office, in
an action brought by holders of shares entitled to dissolve the
corporation voluntarily, when it is established that any of the
following are true:
(a) That its articles have been canceled or its period of
existence has expired and that it is necessary in order to protect
the shareholders that the corporation be judicially dissolved;
(b) That the corporation is insolvent or is unable to afford
reasonable security to those who may deal with it and that it is
necessary in order to protect the creditors of the corporation
that the corporation be judicially dissolved;
(c) That the objects of the corporation have wholly failed or
are entirely abandoned or that their accomplishment is
impracticable;
(3) By an order of the court of common pleas of the county in
this state in which the corporation has its principal office, in
an action brought by the holders of shares entitling them to
exercise a majority at least two-thirds of the voting power of the
corporation on such proposal, or the holders of such lesser
proportion as are entitled by the articles to dissolve the
corporation voluntarily, when it is established that it is
beneficial to the shareholders that the corporation be judicially
dissolved, or the holders of such lesser proportion as are
entitled by the articles to dissolve the corporation voluntarily;
(4) By an order of the court of common pleas of the county in
this state in which the corporation has its principal office, in
an action brought by one-half of the directors when there is an
even number of directors or by the holders of shares entitling
them to exercise one-half at least two-thirds of the voting power,
when it is established that the corporation has an even number of
directors who are deadlocked in the management of the corporate
affairs and the shareholders are unable to break the deadlock, or
when it is established that the corporation has an uneven number
of directors and that the shareholders are deadlocked in voting
power and unable to agree upon or vote for the election of
directors as successors to directors whose terms normally would
expire upon the election of their successors. Under these
circumstances, dissolution of the corporation shall not be denied
on the ground that the corporation is solvent or on the ground
that the business of the corporation has been or could be
conducted at a profit.
(5) By an order of the court of common pleas of the county in
which the corporation, whether for profit or nonprofit, has its
principal office, in an action brought by the prosecuting attorney
of the county, when it is found that the corporation was organized
or systematically used to further criminal purposes, or as a
subterfuge to engage in prostitution, gambling, loan sharking,
drug abuse, illegal drug distribution, counterfeiting, obscenity,
extortion, corruption of law enforcement officers or other public
officers, officials, or any employees, or any other criminal
activity.
(B) A complaint for judicial dissolution shall be verified by
any of the complainants and shall set forth facts showing that the
case is one of those specified in this section. Unless the
complainants set forth in the complaint that they are unable to
annex a list of shareholders, a schedule shall be annexed to the
complaint setting forth the name of each shareholder, his address
if it is known or the fact that it is not known, the number of
shares owned by him, and any balance unpaid on his shares.
(C) Upon the filing of a complaint for judicial dissolution,
the court with which it is filed shall have power to issue
injunctions, to appoint a receiver with such authority and duties
as the court from time to time may direct, to take such other
proceedings as may be necessary to protect the property or the
rights of the complainants or of the persons interested, and to
carry on the business of the corporation until a full hearing can
be had. Upon or after the filing of a complaint for judicial
dissolution, the court, by injunction or order, may stay the
prosecution of any proceeding against the corporation or involving
any of its property and require the parties to the proceeding to
present and prove their claims, demands, rights, interests, or
liens, at the time and in the manner required of creditors or
others. The court may refer the complaint to a special master
commissioner.
(D) After a hearing had upon such notice as the court may
direct to be given to all parties to the proceeding and to any
other parties in interest designated by the court, a final order
based either upon the evidence, or upon the report of the special
master commissioner if one has been appointed, shall be made
dissolving the corporation or dismissing the complaint. An order
or judgment for the judicial dissolution of a corporation shall
contain a concise statement of the proceedings leading up to the
order or judgment; the name of the corporation; the place in this
state where its principal office is located; the names and
addresses of its directors and officers; the name and address of a
statutory agent; and, if desired, such other provisions with
respect to the judicial dissolution and winding up as are
considered necessary or desirable. A certified copy of such order
forthwith shall be filed in the office of the secretary of state,
whereupon the corporation shall be dissolved. To the extent
consistent with orders entered in such proceeding, the effect of
such judicial dissolution shall be the same as in the case of
voluntary dissolution, and the provisions of sections 1701.87,
1701.88, 1701.89, and 1701.90 of the Revised Code relating to the
authority and duties of directors during the winding up of the
affairs of a corporation dissolved voluntarily, with respect to
the jurisdiction of courts over the winding up of the affairs of a
corporation, and with respect to receivers for winding up the
affairs of a corporation shall be applicable to corporations
judicially dissolved.
(E) A judicial proceeding under this section concerning the
judicial dissolution of a corporation is a special proceeding, and
final orders in it may be vacated, modified, or reversed on appeal
pursuant to the Rules of Appellate Procedure or the Rules of
Practice of the Supreme Court, whichever are applicable, and, to
the extent not in conflict with those rules, Chapter 2505. of the
Revised Code.
Sec. 1701.911. (A) Upon the complaint of not less than
one-fourth of the directors of a corporation or upon the complaint
of the holders of shares entitling them to exercise not less than
one-fifth of the voting power of a corporation in the election of
directors, the court of common pleas of the county in which the
corporation maintains its principal office may order the
appointment of a provisional director for that corporation if the
articles or regulations of the corporation expressly provide for
such an appointment. No appointment shall be made until a hearing
is held by the court. Notice of the hearing shall be given to each
director and the secretary of the corporation in any manner that
the court may direct. If directed by the court, the notice also
shall be given to each of the shareholders. The complainants shall
establish at the hearing that, because of irreconcilable
differences among the existing directors or because there are no
directors and the shareholders are unable to elect any directors,
the continued operation of the corporation has been substantially
impeded or made impossible.
(B) A provisional director shall have the same rights and
duties as other directors and shall serve until removed by the
appointing court or by the holders of shares entitling them to
exercise a majority of the voting power of the corporation in the
election of directors, or until his the provisional director's
earlier resignation or death. If the provisional director dies or
resigns, the court, pursuant to divisions (A) and (C) of this
section, may appoint a replacement provisional director, upon its
own motion and without the filing of a complaint for the
appointment of a provisional director. If the appointing court
finds that the irreconcilable differences no longer exist, it
shall order the removal of the provisional director.
(C) No person shall be appointed as a provisional director
unless he the person is generally conversant with corporate
affairs, has no legal or equitable interest in the shares or
obligations of the corporation of which he the person is to be
appointed a director, and is not indebted to such corporation. The
compensation of a provisional director shall be determined by
agreement with the corporation for which he the provisional
director is serving, subject to the approval of the appointing
court, except that the appointing court may fix his the
provisional director's compensation in the absence of agreement or
in the event of disagreement between the provisional director and
the corporation.
(D) A proceeding concerning the appointment of a provisional
director of a corporation is a special proceeding, and final
orders issued in the proceeding may be vacated, modified, or
reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505.
of the Revised Code.
Sec. 1702.12. (A) A corporation may sue and be sued.
(B) A corporation may adopt and alter a corporate seal and
use it or a facsimile of it, but failure to affix the corporate
seal shall not affect the validity of any instrument.
(C) Unless otherwise provided in the articles, a corporation
may take property of any description, or any interest in property,
by gift, devise, or bequest.
(D) Subject to limitations prescribed by law or in its
articles, a corporation may make donations for the public welfare,
for religious, charitable, scientific, literary, or educational
purposes, or in furtherance of any of its purposes.
(E)(1) A corporation may indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a party,
to any threatened, pending, or completed civil, criminal,
administrative, or investigative action, suit, or proceeding,
other than an action by or in the right of the corporation, by
reason of the fact that the person is or was a director, officer,
employee, or agent of or a volunteer of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee, member, manager, or agent of or a volunteer of
another domestic or foreign nonprofit corporation or business
corporation, a limited liability company, or a partnership, joint
venture, trust, or other enterprise, against expenses, including
attorney's fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by the person in connection with
such action, suit, or proceeding, if the person acted in good
faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, if the person had no
reasonable cause to believe the person's conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or
its equivalent, shall not create, of itself, a presumption that
the person did not act in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, a presumption that the person had reasonable cause to
believe that the person's conduct was unlawful.
(2) A corporation may indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a party,
to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor,
by reason of the fact that the person is or was a director,
officer, employee, or agent of or a volunteer of the corporation,
or is or was serving at the request of the corporation as a
director, officer, employee, member, manager, or agent of or a
volunteer of another domestic or foreign nonprofit corporation or
business corporation, a limited liability company, or a
partnership, joint venture, trust, or other enterprise against
expenses, including attorney's fees, actually and reasonably
incurred by the person in connection with the defense or
settlement of such action or suit, if the person acted in good
faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation, except that
no indemnification shall be made in respect of any of the
following:
(a) Any claim, issue, or matter as to which the person is
adjudged to be liable for negligence or misconduct in the
performance of the person's duty to the corporation unless, and
only to the extent that, the court of common pleas or the court in
which the action or suit was brought determines, upon application,
that, despite the adjudication of liability but in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court of common
pleas or such other court considers proper;
(b) Any action or suit in which liability is asserted against
a director and that liability is asserted only pursuant to section
1702.55 of the Revised Code.
(3) To the extent that a director, officer, employee, member,
manager, agent, or volunteer has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred
to in division (E)(1) or (2) of this section, or in defense of any
claim, issue, or matter in such an action, suit, or proceeding,
the person shall be indemnified against expenses, including
attorney's fees, actually and reasonably incurred by the person in
connection with that action, suit, or proceeding.
(4) Unless ordered by a court and subject to division (E)(3)
of this section, any indemnification under division (E)(1) or (2)
of this section shall be made by the corporation only as
authorized in the specific case, upon a determination that
indemnification of the director, officer, employee, member,
manager, agent, or volunteer is proper in the circumstances
because the person has met the applicable standard of conduct set
forth in division (E)(1) or (2) of this section. Such
determination shall be made in any of the following manners:
(a) By a majority vote of a quorum consisting of directors of
the indemnifying corporation who were not and are not parties to
or threatened with the action, suit, or proceeding referred to in
division (E)(1) or (2) of this section;
(b) Whether or not a quorum as described in division
(E)(4)(a) of this section is obtainable, and if a majority of a
quorum of disinterested directors so directs, in a written opinion
by independent legal counsel other than an attorney, or a firm
having associated with it an attorney, who has been retained by or
who has performed services for the corporation or any person to be
indemnified within the past five years;
(d) By the court of common pleas or the court in which the
action, suit, or proceeding referred to in division (E)(1) or (2)
of this section was brought.
If an action or suit by or in the right of the corporation is
involved, any determination made by the disinterested directors
under division (E)(4)(a) of this section or by independent legal
counsel under division (E)(4)(b) of this section shall be
communicated promptly to the person who threatened or brought the
action or suit under division (E)(2) of this section, and, within
ten days after receipt of such that notification, such the person
shall have the right to petition the court of common pleas or the
court in which such the action or suit was brought to review the
reasonableness of such that determination.
(5)(a)(i) Unless, at the time of a director's or volunteer's
act or omission that is the subject of an action, suit, or
proceeding referred to in division (E)(1) or (2) of this section,
the articles or regulations of the corporation state, by specific
reference to this division, that its provisions do not apply to
the corporation, or unless the only liability asserted against a
director in an action, suit, or proceeding referred to in division
(E)(1) or (2) of this section is pursuant to section 1702.55 of
the Revised Code, or unless division (E)(5)(a)(ii) of this section
applies, the expenses incurred by the director or volunteer in
defending the action, suit, or proceeding, including attorney's
fees, shall be paid by the corporation. Upon the request of the
director or volunteer and in accordance with division (E)(5)(b) of
this section, those expenses shall be paid as they are incurred,
in advance of the final disposition of the action, suit, or
proceeding.
(ii) Notwithstanding division (E)(5)(a)(i) of this section,
the expenses incurred by a director or volunteer in defending an
action, suit, or proceeding referred to in division (E)(1) or (2)
of this section, including attorney's fees, shall not be paid by
the corporation upon the final disposition of the action, suit, or
proceeding, or, if paid in advance of the final disposition of the
action, suit, or proceeding, shall be repaid to the corporation by
the director or volunteer, if it is proved, by clear and
convincing evidence, in a court with jurisdiction that the act or
omission of the director or volunteer was one undertaken with a
deliberate intent to cause injury to the corporation or was one
undertaken with a reckless disregard for the best interests of the
corporation.
(b) Expenses, including attorney's fees, incurred by a
director, officer, employee, member, manager, agent, or volunteer
in defending any action, suit, or proceeding referred to in
division (E)(1) or (2) of this section may be paid by the
corporation as they are incurred, in advance of the final
disposition of the action, suit, or proceeding, as authorized by
the directors in the specific case, upon receipt of an undertaking
by or on behalf of the director, officer, employee, member,
manager, agent, or volunteer to repay the amount if it ultimately
is determined that the person is not entitled to be indemnified by
the corporation.
(6) The indemnification or advancement of expenses authorized
by this section is not exclusive of, and shall be in addition to,
any other rights granted to those seeking indemnification or
advancement of expenses, pursuant to the articles, the
regulations, any agreement, a vote of members or disinterested
directors, or otherwise, both as to action in their official
capacities and as to action in another capacity while holding
their offices or positions, and shall continue as to a person who
has ceased to be a director, officer, employee, member, manager,
agent, or volunteer and shall inure to the benefit of the heirs,
executors, and administrators of such a
that person. A right to
indemnification or to advancement of expenses arising under a
provision of the articles or the regulations shall not be
eliminated or impaired by an amendment to that provision after the
occurrence of the act or omission that becomes the subject of the
civil, criminal, administrative, or investigative action, suit, or
proceeding for which the indemnification or advancement of
expenses is sought, unless the provision in effect at the time of
that act or omission explicitly authorizes that elimination or
impairment after the act or omission has occurred.
(7) A corporation may purchase and maintain insurance, or
furnish similar protection, including, but not limited to, trust
funds, letters of credit, or self-insurance, for or on behalf of
any person who is or was a director, officer, employee, agent, or
volunteer of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee, member,
manager, agent, or volunteer of another domestic or foreign
nonprofit corporation or business corporation, a limited liability
company, or a partnership, joint venture, trust, or other
enterprise, against any liability asserted against the person and
incurred by the person in any such capacity, or arising out of the
person's status as such, whether or not the corporation would have
the power to indemnify the person against that liability under
this section. Insurance may be so purchased from or so maintained
with a person in which the corporation has a financial interest.
(8) The authority of a corporation to indemnify persons
pursuant to division (E)(1) or (2) of this section does not limit
the payment of expenses as they are incurred, in advance of the
final disposition of an action, suit, or proceeding, pursuant to
division (E)(5) of this section or the payment of indemnification,
insurance, or other protection that may be provided pursuant to
division (E)(6) or (7) of this section. Divisions (E)(1) and (2)
of this section do not create any obligation to repay or return
payments made by a corporation pursuant to division (E)(5), (6),
or (7) of this section.
(9) As used in division (E) of this section, "corporation"
includes all constituent corporations in a consolidation or
merger, and the new or surviving corporation, so that any person
who is or was a director, officer, employee, agent, or volunteer
of a constituent corporation or is or was serving at the request
of a constituent corporation as a director, officer, employee,
member, manager, agent, or volunteer of another domestic or
foreign nonprofit corporation or business corporation, a limited
liability company, or a partnership, joint venture, trust, or
other enterprise, shall stand in the same position under this
section with respect to the new or surviving corporation as the
person would if the person had served the new or surviving
corporation in the same capacity.
(F) In carrying out the purposes stated in its articles and
subject to limitations prescribed by law or in its articles, a
corporation may do the following:
(1) Purchase or otherwise acquire, lease as lessee, invest
in, hold, use, lease as lessor, encumber, sell, exchange,
transfer, and dispose of property of any description or any
interest in property of any description;
(3) Form or acquire the control of other domestic or foreign
nonprofit corporations or business corporations;
(4) Be a partner, member, associate, or participant in other
enterprises or ventures, whether profit or nonprofit;
(5) Borrow money, and issue, sell, and pledge its notes,
bonds, and other evidences of indebtedness, and secure any of its
obligations by mortgage, pledge, or deed of trust, of all or any
of its property, and guarantee or secure obligations of any
person;
(6) Become a member of another corporation;
(7) Conduct its affairs in this state and elsewhere;
(8) Resist a change or potential change in control of the
corporation, if the directors, by a majority vote of a quorum,
determine that the change or potential change is opposed to or not
in the best interests of the corporation, upon consideration of
any of the matters set forth in division (E)(F) of section 1702.30
of the Revised Code;
(9) Do all things permitted by law and exercise all authority
within the purposes stated in its articles or incidental to those
purposes.
(G) Irrespective of the purposes stated in its articles, but
subject to limitations or prohibitions stated in its articles, a
corporation, in addition to the authority conferred by division
(F) of this section, may invest its funds not currently needed in
carrying out its purposes in any shares or other securities of
another nonprofit corporation or business corporation, or another
business or undertaking.
(H)(1) Notwithstanding any other provision of this section to
the contrary, no corporation that is a "private foundation," as
defined in section 509 of the Internal Revenue Code, shall do the
following:
(a) Engage in any act of "self-dealing," as defined in
section 4941 (d) of the Internal Revenue Code, that would give
rise to any liability for any tax imposed by section 4941 of the
Internal Revenue Code;
(b) Retain any "excess business holdings," as defined in
section 4943 (c) of the Internal Revenue Code, that would give
rise to any liability for any tax imposed by section 4943 of the
Internal Revenue Code;
(c) Make any investment that would jeopardize the carrying
out of any of its exempt purposes, within the meaning of section
4944 of the Internal Revenue Code, so as to give rise to any
liability for any tax imposed by that section;
(d) Make any "taxable expenditures," as defined in section
4945 (d) of the Internal Revenue Code, that would give rise to any
liability for any tax imposed by section 4945 of the Internal
Revenue Code.
(2) Each corporation that is a "private foundation," as
defined in section 509 of the Internal Revenue Code, shall, for
the purposes specified in its articles, distribute at such time
and in such manner, for each taxable year, amounts at least
sufficient to avoid liability for any tax imposed by section 4942
of the Internal Revenue Code.
(3) Divisions (H)(1) and (2) of this section apply to all
corporations described in them, whether or not contrary to the
provisions of the articles or regulations of such a corporation,
except that divisions (H)(1) and (2) of this section do not apply
to a corporation in existence on September 17, 1971, to the extent
that such corporation provides to the contrary by amendment to its
articles adopted after that date.
(4) Violation of a provision of division (H)(1) or (2) of
this section by a corporation to which the provisions of those
divisions are applicable is not cause for cancellation of its
articles. No director or officer of a corporation to which the
provisions of division (H)(1) or (2) of this section are
applicable is personally liable for a violation of a prohibition
or requirement of those provisions, unless the director or officer
participated in such violation knowing that it was a violation,
and no director or officer is personally liable if such violation
was not willful and was due to reasonable cause, except that this
division does not exonerate a director or officer from any
responsibility or liability to which the director or officer is
subject under any other rule of law, whether or not duplicated in
division (H)(1) or (2) of this section.
(5) Except as provided in division (H)(4) of this section,
nothing in division (H) of this section impairs the rights and
powers of the courts or the attorney general of this state with
respect to any corporation.
(6) As used in division (H) of this section, "Internal
Revenue Code" means the "Internal Revenue Code of 1986," 100 Stat.
2085, 26 U.S.C. 1, as amended.
(I)(1) No lack of, or limitation upon, the authority of a
corporation shall be asserted in any action except as follows:
(a) By the state in an action by it against the corporation;
(b) By or on behalf of the corporation against a director, an
officer, or a member as such;
(c) By a member as such or by or on behalf of the members
against the corporation, a director, an officer, or a member as
such.
(2) Division (I)(1) of this section shall apply to any action
brought in this state upon any contract made in this state by a
foreign corporation.
Sec. 1702.30. (A) Except where the law, the articles, or the
regulations require that action be otherwise authorized or taken,
all of the authority of a corporation shall be exercised by or
under the direction of its directors. For their own government,
the directors may adopt bylaws that are not inconsistent with the
articles or the regulations.
(B) A director shall perform the duties of a director,
including the duties as a member of any committee of the directors
upon which the director may serve, in good faith, in a manner the
director reasonably believes to be in or not opposed to the best
interests of the corporation, and with the care that an ordinarily
prudent person in a like position would use under similar
circumstances. In A director serving on a committee of directors
is acting as a director.
(C) In performing the duties of a director, a director is
entitled to rely on information, opinions, reports, or statements,
including financial statements and other financial data, that are
prepared or presented by the following:
(1) One or more directors, officers, or employees of the
corporation who the director reasonably believes are reliable and
competent in the matters prepared or presented;
(2) Counsel, public accountants, or other persons as to
matters that the director reasonably believes are within the
person's professional or expert competence;
(3) A committee of the directors upon which the director does
not serve, duly established in accordance with a provision of the
articles or the regulations, as to matters within its designated
authority, which committee the director reasonably believes to
merit confidence.
(C)(D) For purposes of division (B) of this section:
(1) A director shall not be found to have failed to perform
the director's duties in accordance with that division, unless it
is proved, by clear and convincing evidence, in an action brought
against the director that the director has not acted in good
faith, in a manner the director reasonably believes to be in or
not opposed to the best interests of the corporation, or with the
care that an ordinarily prudent person in a like position would
use under similar circumstances. Such an action includes, but is
not limited to, an action that involves or affects any of the
following:
(a) A change or potential change in control of the
corporation;
(b) A termination or potential termination of the director's
service to the corporation as a director;
(c) The director's service in any other position or
relationship with the corporation.
(2) A director shall not be considered to be acting in good
faith if the director has knowledge concerning the matter in
question that would cause reliance on information, opinions,
reports, or statements that are prepared or presented by the
persons described in divisions (B)(C)(1) to (3) of this section,
to be unwarranted.
(3) The provisions of this division do not limit relief
available under section 1702.301 of the Revised Code.
(D)(E)(1) Subject to divisions (D)(E)(2) and (3) of this
section, a director is liable in damages for any act that the
director takes or fails to take as director only if it is proved,
by clear and convincing evidence, in a court with jurisdiction
that the act or omission of the director was one undertaken with a
deliberate intent to cause injury to the corporation or was one
undertaken with a reckless disregard for the best interests of the
corporation.
(2) Division (D)(E)(1) of this section does not affect the
liability of a director under section 1702.55 of the Revised Code.
(3) Subject to division (D)(E)(2) of this section, division
(D)(E)(1) of this section does not apply if, and only to the
extent that, at the time of an act or omission of a director that
is the subject of complaint, the articles or the regulations of
the corporation state, by specific reference to that division,
that its provisions do not apply to the corporation.
(E)(F) For purposes of this section, in determining what a
director reasonably believes to be in or not opposed to the best
interests of the corporation, a director shall consider the
purposes of the corporation and may consider any of the following:
(1) The interests of the employees, suppliers, creditors, and
customers of the corporation;
(2) The economy of this state and of the nation;
(3) Community and societal considerations;
(4) The long-term and short-term best interests of the
corporation, including, but not limited to, the possibility that
those interests may be best served by the continued independence
of the corporation.
(F)(G) Divisions (C)(D) and (D)(E) of this section do not
affect the duties of a director who acts in any capacity other
than in the capacity as a director.
Sec. 1705.61. (A) Absent an express agreement to the
contrary, a person providing goods to or performing services for a
limited liability company owes no duty to, incurs no liability or
obligation to, and is not in privity with the members or creditors
of the limited liability company by reason of providing goods to
or performing services for the limited liability company.
(B) Absent an express agreement to the contrary, a person
providing goods to or performing services for a member or group of
members of a limited liability company owes no duty to, incurs no
liability or obligation to, and is not in privity with the limited
liability company, any other members of the limited liability
company, or the creditors of the limited liability company by
reason of providing goods to or performing services for the member
or group of members of the limited liability company.
Section 2. That existing sections 1701.13, 1701.59, 1701.66,
1701.74, 1701.76, 1701.84, 1701.85, 1701.86, 1701.87, 1701.88,
1701.89, 1701.90, 1701.91, 1701.911, 1702.12, 1702.30, and 1705.61
of the Revised Code are hereby repealed.
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