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Report of the Corporation Law Committee

To the Council of Delegates:

The Corporation Law Committee respectfully requests your favorable consideration of the following six legislative proposals, marked as Exhibits A, B, C, D, E and F.

A. A proposed amendment to ORC §1701.17 to clarify the delegation of option grant authority to officers.

B. A proposed amendment to ORC §1701.63 to clarify the use of board subcommittees.

C. A proposed amendment to ORC §1701.76 to permit the spin-off of a subsidiary without shareholder approval.

D. A proposal to enact ORC §1701.802 and amend ORC §§1701.81, 1704.02 and 1704.03 to permit holding company reorganizations without shareholder approval.

E. A proposal to add new Divisions (D) and (E) to ORC §1701.92 to establish legal reliance on certificates of good standing.

F. A proposed amendment to ORC §1701.70 changing notice provisions.

Respectfully submitted,
Gary P. Kreider, Cincinnati
Chair

David P. Porter, Cleveland
Chair
Legislative Review Subcommittee

Exhibit A
Proposed Amendment to ORC §1701.17 to permit delegation of option grant authority to officers

Rationale for Amendment: Delaware General Corporation Law section 157(c) allows the board of directors of Delaware corporations to delegate to one or more officers the authority to grant employee stock options. It is not clear that this authority exists under the corresponding Ohio provision. The proposed language clarifies that this authority exists.

Text of Proposed Amendment:
ORC §1701.17 Plans for sale of shares to employees.
(A) A corporation by its directors, upon such terms as it may impose, may provide and carry out plans for the issuance, offering or sale, or the grant of options, to employees of the corporation or of subsidiary corporations, or to a trustee on their behalf, during the period of their employment or other period, of, or with respect to, any unissued shares, treasury shares, or shares to be purchased, which plans may provide for the payment for such shares at one time or in installments, or for the establishment of special funds in which employees may participate. Shares otherwise subject to pre-emptive rights may be offered or sold under such plans only when released from pre-emptive rights.

(B) The directors, or a committee thereof, may delegate the authority provided in division (A) to one or more officers if the resolution authorizing such delegation specifies the total number of shares or options that such officer or officers may so award and the terms on which any shares may be issued, offered or sold, or the terms of any options.

(C) The directors may not authorize any officer to designate himself or herself as a recipient of any shares or options with respect to shares.

COMMITTEE COMMENT (2003)
The amendments clarify that directors have the authority to delegate their authority with respect to plans for the issuance, offering or sale of shares (such as restricted shares) and grant of options to employees, so long as the directors fix the number of shares or options and the material terms of the award.


Exhibit B
Proposed Amendment to ORC §1701.63 to clarify use of Board subcommittees

Rationale for Amendment: This proposal tracks DGCL section 157(c), adopted this year in response to recent proposals to amend the listing requirements of public companies in the wake of the enactment of the Sarbanes-Oxley Act. The listing changes will require many Boards of Directors to subdivide their members according to independence criteria that will make operation of existing committees more difficult and time-consuming. One answer is to allow committees to themselves subdivide into smaller subcommittees, thereby creating the requisite independent committee for listing purposes. This statutory amendment is to clarify that this approach is permissible under Ohio law.

ORC §1701.63 Executive and other committees.
(A) The regulations may provide for the creation by the directors of an executive committee or any other committee of the directors, to consist of one or more directors, and may authorize the delegation to any such committee of any of the authority of the directors, however conferred, other than the authority of filling vacancies among the directors or in any committee of the directors.

(B) The directors may appoint one or more directors as alternate members of any committee described in division (A) of this section, who may take the place of any absent member or members at any meeting of the particular committee.

(C) Each committee described in division (A) of this section shall serve at the pleasure of the directors, shall act only in the intervals between meetings of the directors, and shall be subject to the control and direction of the directors.

(D) Unless otherwise provided in the regulations or ordered by the directors, any committee described in division (A) of this section may act by a majority of its members at a meeting or by a writing or writings signed by all of its members.

(E) Unless participation by members of any committee described in division (A) of this section at a meeting by means of communications equipment is prohibited by the articles, the regulations, or an order of the directors, meetings of the particular committee may be held through any communications equipment if all persons participating can hear each other. Participation in a meeting pursuant to this division constitutes presence at the meeting.

(F) An act or authorization of an act by any committee described in division (A) of this section within the authority delegated to it shall be as effective for all purposes as the act or authorization of the directors.

(G) Unless otherwise provided in the articles, the regulations or the resolution of the directors creating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and may delegate to a subcommittee any or all of the powers and authority of the committee.

COMMITTEE COMMENT (2003)
The addition of division (G) clarifies that committees of directors may delegate their duties to subcommittees.


Exhibit C

Proposed amendment to ORC §1701.76 to permit spin-off of subsidiary without shareholder approval

Rationale for Amendment: In recent years, spin-offs of unrelated businesses to public company shareholders has been a popular capital markets transaction, as Wall Street is believed to more highly value a more narrowly-focused company. For Delaware corporations, no shareholder approval is required to complete a spin-off. However, Ohio’s provisions requiring shareholder approval of transactions involving a "sale of all or substantially" of a corporation’s assets are written very broadly, and may capture some larger corporate spin-offs. This situation is exacerbated by the dearth of judicial interpretations of what precisely constitutes "all or substantially all" of a corporation’s assets, creating uncertainty as to whether shareholder approval is or is not required. The distinction between Ohio law and Delaware law on this point makes a spin-off potentially more costly and time-consuming to the Ohio corporation, creating a disadvantage to Ohio as a state of incorporation for public companies. The proposed amendment removes spin-offs from the "sale of all or substantially all" provisions unless they are a step toward another transaction that would otherwise require shareholder approval.

This amendment as drafted is limited to "issuing public corporations" as defined in section 1701.01 on the theory that shareholder approvals in the context of private companies may be more appropriate than in public companies.

Text of Proposed Amendment:
ORC §1701.76 Sale or other disposition of entire assets.
(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 such terms and conditions and for such consideration, which 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, as 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 such purpose, 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 so provide or permit, by the affirmative vote of a greater or lesser proportion, but 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.

(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 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 such transaction, subject to the contract rights of other persons, if the power of abandonment is conferred upon the directors either by the terms of the transaction or by the same vote of shareholders and at the same meeting of shareholders as that referred to in division (A)(1)(b) of this section or at any subsequent meeting.

(C) Dissenting holders of shares of any class, whether or not entitled to vote, shall be entitled to relief under section 1701.85 of the Revised Code.

(D) An action to set aside a conveyance by a corporation, on the ground that any section of the Revised Code applicable to the lease, sale, exchange, transfer, or other disposition of all, or substantially all, of the assets of such corporation has not been complied with, shall be brought within ninety days after such transaction, or such 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) This section does not apply to the distribution, pursuant to section 1701.33 of this chapter, 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

(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, or

(2) immediately prior to the time at which the distribution becomes effective, the issuing public corporation has more than one class of shares outstanding.

COMMITTEE COMMENT (2003)
Division (F) allows an issuing public corporation to spin-off one or more of its subsidiaries to its shareholders without shareholder approval. However, the provisions of section 1701.76 will continue to apply to any spin-off otherwise subject to that section that is a step in a plan that, if engaged in after the spin-off, would otherwise require shareholder approval by the shareholders of the spun-off entity. Further, because of the risk of disparate treatment to holders of different classes of shares, section 1701.76 will also continue to apply to any spin-off otherwise subject to that section if the issuing public corporation has more than one class of shares outstanding.


Exhibit D

Proposed adoption of ORC §1701.802 and amendment of ORC §§1701.81, 1704.02 and 1704.03 to permit holding company reorganizations without shareholder approval

Rationale for Proposed Amendment: In recent years, creation of new holding companies have been popular corporate transactions, as the new parent company facilitates restructuring of the consolidated group’s various assets. A holding company restructuring may facilitate dispositions, including spin-offs, may better align ownership of the assets with their management, and may facilitate appropriate use of corporate veils to limit liabilities among the corporation’s subsidiaries. For Delaware corporations, since 1999 no shareholder approval has been required to complete a holding company reorganization. However, Ohio’s merger provisions require shareholder approval and expose the company to dissenters rights. The distinction between Ohio law and Delaware law on this point makes a holding company restructuring more costly and time-consuming to the Ohio corporation, creating a disadvantage to Ohio as a state of incorporation for public companies. The proposed amendment adds a new section to Ohio’s merger provisions to permit a holding company reorganization without shareholder approval. Dissenters rights are avoided by the absence of a reference to the new section in section 1701.84, which creates dissenters rights.

Related conforming changes are necessary to ORC §§1701.81, 1704.02 and 1704.03.

Text of Proposed Amendment
ORC §1701.802 Holding Company Reorganization.

(A) A holding company is a corporation that, from its formation until consummation of a merger governed by this section, was at all times a direct or indirect wholly owned subsidiary of the parent corporation and whose shares are issued in that merger solely to the shareholders of the parent corporation. Pursuant to an agreement of merger between the constituent corporations as provided in this section and provided that the provisions of Chapter 1704 of the Revised Code do not prevent the merger from being effected, a direct or indirect wholly owned domestic subsidiary may be merged with or into a domestic parent corporation, if: (1) the parent company and the direct or indirect wholly-owned subsidiary are the only constituent entities to the merger; (2) each share or fraction of a share of the outstanding shares of the parent corporation outstanding immediately prior to the time at which the merger becomes effective is converted in the merger into a share or fraction of a share of a holding company having express terms identical in all material respects to those that were converted in the merger; (3) the articles and regulations of the holding company immediately following the time at which the merger becomes effective contain provisions identical in all material respects to those contained in the articles and regulations of the parent corporation immediately prior to the time at which the merger becomes effective, (4) as a result of the merger the parent corporation becomes a direct or indirect wholly owned subsidiary of the holding company; and (5) the directors of the parent corporation become or remain the directors of the holding company immediately following the time at which the merger becomes effective.

(B) From and after the effective time of a merger adopted by a parent corporation by action of its board of directors and without any vote of shareholders pursuant to this subsection:

(1) to the extent the restrictions of chapter 1704 of this title applied to the constituent corporation and its shareholders at the effective time of the merger, such restrictions shall apply to the holding company and its shareholders immediately after the effective time of the merger as though it were the constituent corporation, and all shares of stock of the holding company acquired in the merger shall for purposes of chapter 1704 of this title be deemed to have been acquired at the time that the shares of stock of the constituent corporation converted in the merger were acquired, and provided further that any shareholder who immediately prior to the effective time of the merger was not an interested shareholder within the meaning of chapter 1704 of this title shall not solely by reason of the merger become an interested shareholder of the holding company,

(2) if the corporate name of the holding company immediately following the effective time of the merger is the same as the corporate name of the parent corporation immediately prior to the effective time of the merger, the shares of capital stock of the holding company into which the shares of capital stock of the parent corporation are converted in the merger shall be represented by the stock certificates that previously represented shares of capital stock of the parent corporation; and

(3) to the extent a shareholder of the parent corporation immediately prior to the time at which the merger became effective had standing to institute or maintain litigation by or in the right of the parent corporation, nothing in this section shall be deemed to limit or extinguish such standing.

(C) If an agreement of merger is adopted by a parent corporation pursuant to this subsection by action of its directors and without any vote of shareholders, the secretary or assistant secretary of the parent corporation shall certify on the agreement that the agreement has been adopted pursuant to this subsection and that the conditions specified in the first sentence of this subsection have been satisfied.

(D) The agreement of merger shall set forth the designation and the number of the outstanding shares of each class of the subsidiary constituent corporation and the number of shares of each such class owned by the surviving corporation. It shall also set forth any statements and matters that are required, and may set forth any provision that is permitted, in a merger under section 1701.78 of the Revised Code.

(E)(1) To effect the merger, the agreement shall be approved by the directors of each domestic constituent corporation, but it need not be adopted by the shareholders of any domestic constituent corporation.

(2) Within twenty days after the approval of the agreement of merger by the directors of each domestic constituent corporation, the surviving corporation shall deliver or send notice of such approval and copy or summary of the agreement to each shareholder of each domestic constituent corporation, other than the surviving corporation, of record as of the date on which the directors of the surviving corporation approved the agreement by mail, overnight delivery service, or any other means of communication authorized by the shareholder to whom the notice and copy or summary are sent.

(F) The approval of the agreement of merger by the directors of a domestic constituent corporation under this section constitutes adoption by that corporation.

COMMITTEE COMMENT (2003)
ORC §1701.802 is new and provides simplified procedures for creation of a new parent holding company for an existing corporation. As in the case of ORC §§1701.80 and 1701.801, new section 1701.802 eliminates the requirement for a vote by the shareholders of the existing corporation if the five criteria established by the new section are met. No dissenters’ rights would be available as the rights of the ownership interests of the shareholders should not be materially affected by the holding company reorganization.

ORC §1701.81 Certificate of merger or consolidation.
(A) Upon adoption by each constituent entity of an agreement of merger or consolidation pursuant to section 1701.78, 1701.781, 1701.79, 1701.791, 1701.80, or 1701.801 or 1701.802 of the Revised Code, a certificate of merger or consolidation shall be filed with the secretary of state that is signed by any authorized representative of each constituent corporation, partnership, or other entity. The certificate shall be on a form prescribed by the secretary of state and shall set forth only the information required by this section.

(B)(1) The certificate of merger or consolidation shall set forth all of the following:

(a) The name and the form of entity of each constituent entity and the state under the laws of which each constituent entity exists;

(b) A statement that each constituent entity has complied with all of the laws under which it exists and that the laws permit the merger or consolidation;

(c) The name and mailing address of the person or entity that is to provide, in response to any written request made by a shareholder, partner, or other equity holder of a constituent entity, a copy of the agreement of merger or consolidation;

(d) The effective date of the merger or consolidation, which date may be on or after the date of the filing of the certificate;

(e) The signature of each representative authorized to sign the certificate on behalf of each constituent entity and the office held or the capacity in which the representative is acting;

(f) A statement that the agreement of merger or consolidation is authorized on behalf of each constituent entity and that each person who signed the certificate on behalf of each entity is authorized to do so;

(g) In the case of a merger, a statement that one or more specified constituent entities will be merged into a specified surviving entity or, in the case of a consolidation, a statement that the constituent entities will be consolidated into a new entity;

(h) In the case of a merger, if the surviving entity is a foreign entity not licensed to transact business in this state, the name and address of the statutory agent upon whom any process, notice, or demand against any constituent entity may be served;

(i) In the case of a consolidation, the name and address of the statutory agent upon whom any process, notice, or demand against any constituent entity or the new entity may be served.

(2) In the case of a consolidation into a new domestic corporation, limited liability company, or limited partnership, the articles of incorporation, the articles of organization, or the certificate of limited partnership of the new domestic entity shall be filed with the certificate of merger or consolidation.

(3) In the case of a merger into a domestic corporation, limited liability company, or limited partnership, any amendments to the articles of incorporation, articles of organization, or certificate of limited partnership of the surviving domestic entity shall be filed with the certificate of merger or consolidation.

(4) If the surviving or new entity is a foreign entity that desires to transact business in this state as a foreign corporation, limited liability company, or limited partnership, the certificate of merger or consolidation shall be accompanied by the information required by division (B)(8), (9), or (10) of section 1701.791 of the Revised Code.

(5) If a foreign or domestic corporation licensed to transact business in this state is a constituent entity and the surviving or new entity resulting from the merger or consolidation is not a foreign or domestic corporation that is to be licensed to transact business in this state, the certificate of merger or consolidation shall be accompanied by the affidavits, receipts, certificates, or other evidence required by division (H) of section 1701.86 of the Revised Code, with respect to each domestic constituent corporation, and by the affidavits, receipts, certificates, or other evidence required by division (C) or (D) of section 1703.17 of the Revised Code, with respect to each foreign constituent corporation licensed to transact business in this state.

(C) If any constituent entity in a merger or consolidation is organized or formed under the laws of a state other than this state or under any chapter of the Revised Code other than this chapter, there also shall be filed in the proper office all documents that are required to be filed in connection with the merger or consolidation by the laws of that state or by that chapter.

(D) Upon the filing of a certificate of merger or consolidation and other filings as described in division (C) of this section or at such later date as the certificate of merger or consolidation specifies, the merger or consolidation is effective.

(E) The secretary of state shall furnish, upon request and payment of the fee specified in division (D) of section 111.16 of the Revised Code, the secretary of state’s certificate setting forth the name and the form of entity of each constituent entity and the states under the laws of which each constituent entity existed prior to the merger or consolidation, the name and the form of entity of the surviving or new entity and the state under the laws of which the surviving entity exists or the new entity is to exist, the date of filing of the certificate of merger or consolidation with the secretary of state, and the effective date of the merger or consolidation. The certificate of the secretary of state, or a copy of the certificate of merger or consolidation certified by the secretary of state, may be filed for record in the office of the recorder of any county in this state and, if filed, shall be recorded in the records of deeds for that county. For that recording, the county recorder shall charge and collect the same fee as in the case of deeds.

COMMITTEE COMMENT (2003)
Division (A) is amended to reflect the adoption of section 1701.801.

ORC §1704.02 Three-year period when certain transactions prohibited; exceptions.
An issuing public corporation shall not engage in a Chapter 1704. transaction for three years after an interested shareholder’s share acquisition date unless either of the following applies:

(A) Prior to the interested shareholder’s share acquisition date, the directors of the issuing public corporation have approved, for the purposes of this chapter, the Chapter 1704. transaction or the purchase of shares by the interested shareholder on the interested shareholder’s share acquisition date;

(B) Any of the provisions of section 1704.05 of the Revised Code makes this chapter inapplicable, except that if the Chapter 1704. transaction is of a type described in section 1701.76, 1701.78, 1701.79, 1701.80, 1701.801, 1701.802, or 1701.86 of the Revised Code, there also must be compliance with the provisions of that section.

COMMITTEE COMMENT (2003)
Division (B) is amended to reflect the adoption of section 1701.801.

§ 1704.03 Conditions for corporation’s engaging in transaction.
(A) At any time after the three-year period described in section 1704.02 of the Revised Code, the issuing public corporation may engage in a Chapter 1704. transaction, provided that if the Chapter 1704. transaction is of a type described in section 1701.76, 1701.78, 1701.79, 1701.80, 1701.801, 1701.802, or 1701.86 of the Revised Code, there is compliance with the provisions of that section, and provided that at least one of the following is satisfied:

(1) Any of the provisions of section 1704.05 of the Revised Code makes this chapter inapplicable;

(2) Prior to the interested shareholder’s share acquisition date, the directors of the issuing public corporation had approved the purchase of shares by the interested shareholder on the interested shareholder’s share acquisition date;

(3) The Chapter 1704. transaction is approved, at a meeting held for that purpose, by the affirmative vote of the holders of shares of the issuing public corporation entitling them to exercise at least two-thirds of the voting power of the issuing public corporation in the election of directors, or of such different proportion as the articles may provide, provided the Chapter 1704. transaction is also approved by the affirmative vote of the holders of at least a majority of the disinterested shares;

(4) The Chapter 1704. transaction meets both of the following conditions:

(a) It results in the receipt per share by the holders of all outstanding shares of the issuing public corporation not beneficially owned by the interested shareholder of an amount of cash that, when added to the fair market value, as of the consummation date of the Chapter 1704. transaction, of noncash consideration, aggregates at least the higher of the following:

(i) The figure determined under division (B)(1) of this section;

(ii) The preferential amount per share, if any, to which holders of shares of that class or series of shares are entitled upon voluntary or involuntary dissolution of the issuing public corporation, plus the aggregate amount per share of dividends declared or due that those holders are entitled to receive before payment of dividends on another class or series of shares, unless the aggregate amount per share of those dividends is included in the preferential amount.

(b) The form of consideration to be received by holders of each particular class or series of outstanding shares of the issuing public corporation in the Chapter 1704. transaction, apart from any portion that is interest, is in cash or, if the interested shareholder previously purchased shares of that class or series, is in the same form the interested shareholder previously paid to acquire the largest number of shares of that class or series, but in no event shall the fair market value of the consideration received by a holder of a share of a particular class or series of outstanding shares in the Chapter 1704. transaction be less than the current fair market value of a share of the issuing public corporation of the same class or series.

(B)(1) For purposes of making a determination under division (A)(4)(a) of this section, the figure to be used in division (A)(4)(a)(i) of this section shall be the highest, after taking into account interest to the extent provided in division (B)(2) of this section, of the following:

(a) The fair market value per share on the announcement date of the Chapter 1704. transaction;

(b) The fair market value per share on the interested shareholder’s share acquisition date;

(c) The highest price per share paid, including brokerage commissions, transfer taxes, and soliciting dealers’ fees, by the interested shareholder, or by an affiliate or associate of the interested shareholder, for shares of the same class or series within the three years immediately before and including the announcement date of the Chapter 1704. transaction;

(d) The highest price per share paid, including brokerage commissions, transfer taxes, and soliciting dealers’ fees, by the interested shareholder, or by an affiliate or associate of the interested shareholder, for shares of the same class or series within the three years immediately before and including the interested shareholder’s share acquisition date.

(2) Each determination under division (B)(1)(a), (b), (c), or (d) of this section shall include interest compounded annually from the earliest date as of which the per share fair market value was determined or on which that highest per share purchase price was paid through the consummation date of the Chapter 1704. transaction, at the rate of interest paid on one-year United States treasury obligations from time to time in effect, less the aggregate amount of any cash and the fair market value, as of the payment date, of any noncash dividends or other distributions paid per share since that date, up to the amount of the interest.

COMMITTEE COMMENT (2003)
Division (A) is amended to reflect the adoption of section 1701.801.


Exhibit E
Proposed Amendment to Section 1701.92 to define "good standing" and to allow reliance on a certificate issued by the Ohio Secretary of State:

Rationale for Amendment: Custom and practice in corporate business transactions require reliance by lawyers, title insurors and others on certificates of "good standing" issued by the Ohio secretary of state’s office to verify that the corporation is a de jure corporation with the power and authority of a corporation under chapter 1701 of the Ohio Revised Code or is a foreign corporation qualified to do business in Ohio. Because the status of a corporation may change from "in good standing" to "not in good standing" within a single day, under current law the reliance on a certificate may be unwarranted. The proposed amendment allows reliance for a period of 7 days.

Text of Proposed Amendment:
ORC §1701.92 Evidence of incorporation, articles and proceedings.

(A) A copy of the articles or amended articles filed in the office of the secretary of state, certified by the secretary of state, shall be conclusive evidence, except as against the state, that the corporation has been incorporated under the laws of this state; and a copy duly certified by the secretary of state of any certificate of amendment or other certificate filed in his office shall be prima-facie evidence of such amendment or of the facts stated in any such certificate, and of the observance and performance of all antecedent conditions necessary to the action which such certificate purports to evidence.

(B) A copy of amended articles filed in the office of the secretary of state, certified by the secretary of state, shall be accepted in this state and other jurisdictions in lieu of the original articles, amendments thereto, and prior amended articles.

(C) The original or a copy of the record of minutes of the proceedings of the incorporators of a corporation, or of the proceedings or meetings of the shareholders or any class of shareholders, or of the directors, or of any committee thereof, including any written consent, waiver, release, or agreement entered in such record or minutes, or the original or a copy of a statement that no specified proceeding was had or that no specified consent, waiver, release, or agreement exists, shall, when certified to be true by the secretary or an assistant secretary of a corporation, be received in the courts as prima-facie evidence of the facts stated therein. Every meeting referred to in such certified original or copy shall be deemed duly called and held, and all motions and resolutions adopted and proceedings had at such meeting shall be deemed duly adopted and had, and all elections of directors and all elections or appointments of officers chosen at such meeting shall be deemed valid, until the contrary is proved; and whenever a person who is not a shareholder of a corporation has acted in good faith in reliance upon any such certified original or copy, it is conclusive in his favor.

(D) A certificate issued by the secretary of state confirming a corporation is in good standing shall be, for a period of seven days after the date on the certificate, conclusive evidence that (1) a domestic corporation is in good standing as defined in division (E) of this section, if both of the following apply:

(a) The person relying on the certificate had no knowledge that the corporation’s articles had been canceled; and

(b) The certificate is not presented as evidence against the State of Ohio; or

(2) a foreign corporation is qualified to do business within the State of Ohio.

(E) For purposes of division (D), good standing means that the authority of the corporation to carry on business is not limited by section 1701.88.

COMMITTEE COMMENT (2003)
Since it is not customary to bring down good standing certificates at the exact moment of a closing, and since technology could allow a good standing certificate to be issued on a day when the articles were later cancelled, the amendment permits reliance for a limited period of time on a certificate issued by the secretary of state.


Exhibit F
Proposed Amendment to Sections 1701.73 to allow public companies to meet the notice provisions of that section through filings with the Securities and Exchange Commission

Rationale for Amendment: In 2002, section 1701.73 was amended to require that if a corporation’s articles of incorporation are amended by action only of the directors, the corporation must send a copy or summary of the amendments to the shareholders, within 20 days. This requirement may create a costly burden for corporations with large numbers of shareholders. The proposed amendment would allow companies that file public reports with the Securities Exchange Commission to satisfy the notice requirements of this law by timely filing of a report with the SEC that contains a copy or summary of the amendment.

Text of proposed Amendment:
ORC §1701.73 Filing and signing of amendment or amended articles.
(A) Upon the adoption of any amendment or amended articles, a certificate containing a copy of the resolution adopting the amendment or amended articles, a statement of the manner of its adoption, and, in the case of adoption of the resolution by the incorporators or directors, a statement of the basis for such adoption, shall be filed with the secretary of state, and thereupon the articles shall be amended accordingly, any change of shares provided for in the amendment or amended articles shall become effective, and the amended articles shall supersede the existing articles. When an amendment or amended articles are adopted by the directors pursuant to section 1701.70 of the Revised Code, the corporation shall send notice of the amendment or amended articles, and a copy or summary thereof, by mail, overnight delivery service, or any other means of communication authorized by the shareholder to whom the notice and copy or summary are sent, to each shareholder of the corporation of record as of the date on which the directors approved the amendment or amended articles. The notice shall be sent to the shareholders within twenty days after the filing of the certificate required by this division. Any corporation that files periodic reports with the United States Securities and Exchange Commission pursuant to section 13 of the Securities Exchange Act of 1934, 15 U.S.C.A. 78m, as amended, or section 15(d) of the Securities Exchange Act of 1934, 15 U.S.C.A. 78o(d), as amended, may satisfy the notice requirements of this division by including a copy or summary of the amendment or amended articles in a report filed in accordance with those provisions within twenty days after the filing of the certificate required by this division.

(B) When an amendment or amended articles are adopted by the incorporators, the certificate shall be signed by each of them.

(C) When an amendment or amended articles are adopted by the directors or by the shareholders, the certificate shall be signed by any authorized officer.

(D) A copy of an amendment or amended articles changing the name of a corporation or its principal office in this state, certified by the secretary of state, may be filed for record in the office of the county recorder of any county in this state, and for such recording the county recorder shall charge and collect the same fee as provided for in division (A) of section 317.32 of the Revised Code. Such copy shall be recorded in the records of deeds.

COMMITTEE COMMENT (2003)
Division A was changed to allow companies that file public reports with the Securities Exchange Commission to satisfy the notice requirements by timely filing of a report with the SEC that contains a copy or summary of the amendment.

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