Ohio State Statute Code

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1701.06

Express terms of shares.

1. The express terms of shares may include statements specifying any of the following:
   1. Dividend or distribution rights, which may be cumulative or noncumulative; at a specified rate, amount, or proportion; with or without further participation rights; and in preference to, junior to, or on a parity in whole or in part with dividend or distribution rights of shares of any other class;
   2. Liquidation rights, preferences, and price;
   3. Redemption rights and price;
   4. Sinking fund requirements, which may require the corporation to provide a sinking fund out of earnings or otherwise for the purchase or redemption of the shares or for dividends or distributions on them;
   5. Voting rights, which may be full, limited, or denied, except as otherwise required by law;
   6. Pre-emptive rights, or the denial or limitation of them;
   7. Conversion rights;
   8. Restrictions on the issuance of shares;
   9. Rights of alteration of express terms;
   10. The division of any class of shares into series;
   11. The designation and authorized number of shares of each series;
   12. The right of the directors, subject to any limitations that may be stated, to adopt amendments to the articles determining, in whole or in part, the express terms, within the limits set forth in this chapter, of any class of shares before the issuance of any shares of that class, or of one or more series within a class before the issuance of any shares of that series;
   13. Any other relative, participating, optional, or other special rights and privileges of, and qualifications or restrictions on, the rights of holders of shares of any class or series.
2. Each series of a class shall be given a distinguishing designation. All shares of a series shall have express terms identical with those of other shares of the same series. Any of the express terms of any class or series of shares may be made dependent upon facts ascertainable outside the articles or any amendment to those articles, provided that the manner in which the facts operate upon the express terms is set forth in the articles or any amendment to those articles.

1701.18

Payment for shares and liability of shareholders to corporation.

1. Except as provided in the case of change of shares, share dividends or distributions, reorganization, merger, consolidation, combination, or conversion of shares or obligations into shares, the following apply:
   1. Consideration for shares may include cash, property, services rendered, a promissory note, or any other binding obligation to contribute cash or property or to perform services; the provision of any other benefit to the corporation; or any combination of these.
   2. In the case of shares with par value, other than treasury shares, the consideration shall be not less than the par value of the shares, provided that the shares may be paid for at such a discount from the par value of the shares that would amount to or not exceed reasonable compensation for the sale, underwriting, or purchase of the shares, and, regardless of the discount, the shares shall be deemed to be fully paid.
   3. In the case of treasury shares with par value, the consideration may be less than the par value of the shares.
2. Promissory notes, drafts, or other obligations of a subscriber or purchaser do not constitute payment for shares.
3. An agreement by a person to perform services as the consideration for shares does not, of itself, constitute payment for such shares prior to the performance of the services.
4. Except in the case of convertible shares or obligations, shares with par value shall not be issued or disposed of upon change of shares, share dividends or distributions, reorganization, merger, consolidation, exchange of shares for other shares or securities, or otherwise, if as a result the aggregate liabilities of the corporation plus its stated capital would exceed its aggregate assets or any existing excess would be increased.
5. When shares have been issued as provided in this chapter, in the case of change of shares, share dividends or distributions, reorganization, merger, consolidation, or conversion of shares or obligations into shares, or when shares have been paid for in conformity with this section, such shares shall be deemed fully paid and nonassessable.
6. Every person who subscribes for or purchases shares of a corporation is liable to the corporation to pay or deliver to the corporation the consideration agreed upon, and, except as provided in division (A) of this section, if the shares are with par value, the person is obligated to pay to the corporation consideration not less than the par value of the shares. The person is not liable to the corporation or its creditors in any other amount.
7. Every holder, whether the original or a transferee, of shares not paid for as provided in this section, who has acquired them with actual knowledge of that fact, is personally liable to the corporation for the amount unpaid on the shares, and the holder's liability shall continue notwithstanding any transfer of the shares, until the shares are paid in full; but no holder who has acquired the shares without actual knowledge of the fact that the shares are not paid for is under any liability in respect of the shares.
8. No pledgee or other holder of shares as collateral security is personally liable as a shareholder.
9. No person who in fact, whether disclosed on the records of the corporation or otherwise, holds shares as executor, administrator, guardian, trustee, trustee of a voting trust, receiver, or in any other fiduciary capacity is personally liable as a shareholder, but the estate or property in the hands of such fiduciary is liable or the real or beneficial owner is liable under this section as equity may require. This section does not relieve a fiduciary from liability for a breach of trust.
10. Except as set forth in any provision in Title LVII of the Revised Code, neither a shareholder of a corporation nor a subscriber to its shares is personally liable for any debts, obligations, or liabilities of the corporation in the absence of a written, enforceable agreement that is signed by the shareholder or subscriber and that specifically undertakes liability for such debts, obligations, or liabilities.

1701.56

Number and qualifications of directors - provisional director.

1. Except as provided in division (B) of this section and section 1701.911 of the Revised Code:
   1. The number of directors as fixed by the articles or the regulations shall be not less than three or, if not so fixed, shall be three, provided that where all shares of a corporation are owned of record by one or two shareholders, the number of directors may be less than three but not less than the number of shareholders.
   2. Unless the articles or the regulations fix the number of directors or provide the manner in which such number may be fixed or changed by the shareholders, the number may be fixed or changed at a meeting of the shareholders called for the purpose of electing directors at which a quorum is present, by the affirmative vote of the holders of a majority of the shares which are represented at the meeting and entitled to vote on the proposal. In addition to the authority of the shareholders to fix or change the number of directors and the manner in which such number may be fixed or changed, the articles or the regulations may authorize the directors to change the number of directors, may specify the manner in which the directors are to change the number of directors and limitations upon the directors [directors'] use of this authority, and may authorize the directors who are in office to fill any director's office that is created by an increase in the number of directors. No reduction in the number of directors shall of itself have the effect of shortening the term of any incumbent director.
   3. The directors shall have such qualifications, if any, as are stated in the articles or the regulations.
2. The court of common pleas of the county in which a corporation maintains its principal office may, pursuant to division (A) of section 1701.911 of the Revised Code, order the appointment of a provisional director for the corporation without regard to the number or qualifications of directors stated in the articles or regulations of the corporation.

1701.59

Authority of directors - bylaws.

1. 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.
2. 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 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.
3. 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:
      1. 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;
      2. A termination or potential termination of the director's service to the corporation as a director;
      3. 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)(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.
4. 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.
5. 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.
6. Nothing contained in division (C) or (D) 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.

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LLC

1705.24

Vesting of management authority.

Unless otherwise provided in writing in the operating agreement, the management of a limited liability company shall be vested in its members in proportion to their contributions to the capital of the company, as adjusted from time to time to properly reflect any additional contributions or withdrawals by the members.

1705.27

Adoption of bylaws.

The members of a limited liability company or, if and to the extent authorized by its members, the managers of a limited liability company may adopt bylaws that are not inconsistent with the articles of organization or the operating agreement and that are for the regulation of the members, the managers, or any other matter affecting the management of the company, including, but not limited to, books and records of account, minutes of proceedings, meetings, requirements for notices of meetings, computation of time for notice, method of giving notice, quorum requirements, written action in lieu of a meeting, waiver of notice, proxies, and officers.

1705.48

Personal liability.

Except as otherwise provided by this chapter or any other provision of the Revised Code, including, but not limited to, sections 3734.908 , 5739.33, 5743.57, 5747.07, and 5753.09 of the Revised Code, all of the following apply:

1. The debts, obligations, and liabilities of a limited liability company, whether arising in contract, tort, or otherwise, are solely the debts, obligations, and liabilities of the limited liability company.
2. Neither the members of the limited liability company nor any managers of the limited liability company are personally liable to satisfy any judgment, decree, or order of a court for, or are personally liable to satisfy in any other manner, a debt, obligation, or liability of the company solely by reason of being a member or manager of the limited liability company.
3. Nothing in this chapter affects any personal liability of a member of a limited liability company or any manager of a limited liability company for the member's or manager's own actions or omissions.
4. This chapter does not affect any statutory or common law of this or another state that pertains to the relationship between an individual who renders a professional service and a recipient of that service, including, but not limited to, any contract or tort liability arising out of acts or omissions committed or omitted during the course of rendering the professional service.