On June 27, 2008, Ohio Governor Strickland signed Ohio House Bill 374; legislation designed to make Ohio more "user-friendly" for new or existing corporations. The bill will go into effect 90 days after the June 27 signing date.
Below you will find some general information about the most significant aspects of the bill.
H.B. 374 makes two changes to Ohio corporation law pertaining to cumulative voting in the election of corporate directors. The first change permits the original articles of incorporation to set forth a provision eliminating the right of shareholders to vote cumulatively in the election of directors. Previously, a new corporation could not eliminate cumulative voting in its original articles. Cumulative voting is the right of a shareholder to increase voting power in the election of directors by multiplying the number of seats that are open by the number of shares owned. The total number of the shareholder's votes can then be allocated to one or more candidates rather than among all candidates for open seats, thus increasing the potential for minority representation.
A second related change will eliminate the current 90-day waiting period for a new corporation to opt out of cumulative voting through amendment to its articles.
The second major change found in H.B. 374 pertains to the disposition of corporate assets. Under the previous law, shareholder approval was required for transfers of all or substantially all of the assets of a corporation. This created an additional hurdle for Ohio corporations and slowed the process of transferring assets.
Under the new legislation, asset transfers to a wholly owned subsidiary do not require shareholder approval. Furthermore, the assets of wholly owned subsidiaries are assets of the parent company for the purposes of the statute.
Existing law permits Ohio corporations by a resolution of directors to provide that some or all of any class or series of shares shall be uncertificated. The new provision under H.B. 374 will also allow such provision to be set forth in the articles or regulations. Note, however, that a corporation that has in effect a "close corporation" agreement under Section 1701.591 cannot issue uncertificated shares.
There are other minor or technical changes implemented by H.B. 374.