Ohio Code 1702.39 – Mutual benefit corporation – disposition of assets
(A)(1) Unless the articles or the regulations, or the terms of any trust on which the corporation holds any particular property, otherwise provide, a lease, sale, exchange, transfer, or other disposition of any assets of a mutual benefit corporation may be made without the necessity of procuring authorization from the court under section 1715.39 of the Revised Code, upon the terms and for the consideration, which may consist, in whole or in part, of money or other property, including shares or other securities or promissory obligations of any business corporation, domestic or foreign, that may be authorized by the directors, except that a lease, sale, exchange, transfer, or other disposition of all, or substantially all, the assets may be made only when that transaction is also authorized (either before or after authorization by the directors) by the voting members present in person, by the use of authorized communications equipment, by mail, or, if permitted, by proxy at a meeting held for that purpose, by the affirmative vote of a majority of the voting members present as described in this division, if a quorum is present, or, if the articles or the regulations provide or permit, by the affirmative vote of a greater or lesser proportion or number of the voting members, and by the affirmative vote of the voting members of any particular class that is required by the articles or the regulations. Notice of the meeting of the members shall be given to all members entitled to vote at the meeting. Such notice shall be accompanied by a copy or summary of the terms of that transaction.
Terms Used In Ohio Code 1702.39
- Articles: includes original articles of incorporation, agreements of merger or consolidation if and only to the extent that articles of incorporation are adopted or amended in the agreements, amended articles, and amendments to any of these, and, in the case of a corporation created before September 1, 1851, the special charter and any amendments to it made by special act of the general assembly or pursuant to general law. See Ohio Code 1702.01
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Authorized communications equipment: means any communications equipment that provides a transmission, including, but not limited to, by telephone, telecopy, or any electronic means, from which it can be determined that the transmission was authorized by, and accurately reflects the intention of, the member or director involved and, with respect to meetings, allows all persons participating in the meeting to contemporaneously communicate with each other. See Ohio Code 1702.01
- Business corporation: means any entity that is organized pursuant to Chapter 1701 of the Revised Code other than a public benefit entity. See Ohio Code 1702.01
- Common law: The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
- Contract: A legal written agreement that becomes binding when signed.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Directors: means the persons vested with the authority to conduct the affairs of the corporation irrespective of the name, such as trustees, by which they are designated. See Ohio Code 1702.01
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Foreign corporation: means a nonprofit corporation formed under the laws of another state. See Ohio Code 1702.01
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- Member: means one having membership rights and privileges in a corporation in accordance with its articles or regulations. See Ohio Code 1702.01
- Mutual benefit corporation: means any corporation organized under this chapter other than a public benefit corporation. See Ohio Code 1702.01
- Person: includes , but is not limited to, a nonprofit corporation, a business corporation, a partnership, an unincorporated society or association, and two or more persons having a joint or common interest. See Ohio Code 1702.01
- Property: means real and personal property. See Ohio Code 1.59
- Public benefit corporation: means a corporation that is recognized as exempt from federal income taxation under section 501(c)(3) of the "Internal Revenue Code of 1986" 100 Stat. See Ohio Code 1702.01
- Quorum: The number of legislators that must be present to do business.
- State: means the United States; any state, territory, insular possession, or other political subdivision of the United States, including the District of Columbia; any foreign country or nation; and any province, territory, or other political subdivision of a foreign country or nation. See Ohio Code 1702.01
- Voting member: means a member possessing voting rights, either generally or in respect of the particular question involved, as the case may be. See Ohio Code 1702.01
(2) For purposes of division (A)(1) of this section, participation by a voting member at a meeting through the use of any of the means of communication described in that division constitutes presence in person of that voting member at the meeting for purposes of determining a quorum.
(B)(1) A public benefit corporation may not dispose of its assets with value equal to more than fifty per cent of the fair market value of the net tangible and intangible assets, including goodwill, of the corporation over a period of thirty-six consecutive months in a transaction or series of transactions, including the lease, sale, exchange, transfer, or other disposition of those assets, that are outside the ordinary course of its business or that are not in accordance with the purpose or purposes for which the corporation was organized, as set forth in its articles or the terms of any trust on which the corporation holds such assets, unless one or more of the following apply:
(a) The transaction has received the prior approval of the court of common pleas of the county in this state in which the principal office of the corporation is located, in a proceeding of which the attorney general’s charitable law section has been given written notice by certified mail within three days of the initiation of the proceeding, and in which proceeding the attorney general may intervene as of right.
(b)(i) The corporation has provided written notice of the proposed transaction, including a copy or summary of the terms of such transaction, at least twenty days before consummation of the lease, sale, exchange, transfer, or other disposition of the assets, to the attorney general’s charitable law section and to the members of the corporation, and the proposed transaction has been approved by the voting members present in person, by the use of authorized communications equipment, by mail, or, if permitted, by proxy at a meeting held for that purpose, by the affirmative vote of a majority of the voting members present as described in this division, if a quorum is present, or, if the articles or regulations provide or permit, by the affirmative vote of a greater or lesser proportion or number of the voting members, and if the articles or regulations require, by the affirmative vote of the voting members of any particular class.
(ii) For purposes of division (B)(1)(b)(i) of this section, participation by a voting member at a meeting through the use of any of the means of communication described in that division constitutes presence in person of that voting member at the meeting for purposes of determining a quorum.
(c) The transaction is in accordance with the purpose or purposes for which the corporation was organized, as set forth in its articles or the terms of any trust on which the corporation holds the assets, and the lessee, purchaser, or transferee of the assets is also a public benefit corporation or a foreign corporation that would qualify under the Revised Code as a public benefit corporation.
(2) The attorney general may require, pursuant to section 109.24 of the Revised Code, the production of the documents necessary for review of a proposed transaction under division (B)(1) of this section. The attorney general may retain, at the expense of the public benefit corporation, one or more experts, including an investment banker, actuary, appraiser, certified public accountant, or other expert, that the attorney general considers reasonably necessary to provide assistance in reviewing a proposed transaction under division (B)(1) of this section.
(C) The attorney general may institute a civil action to enforce the requirements of division (B)(1) of this section in the court of common pleas of the county in this state in which the principal office of the corporation is located or in the Franklin county court of common pleas. In addition to any civil remedies that may exist under common law or the Revised Code, a court may rescind the transaction or grant injunctive relief or impose any combination of these remedies.
(D) The corporation by its directors may abandon the proposed lease, sale, exchange, transfer, or other disposition of the assets of the corporation pursuant to division (A) or (B) of this section, subject to the contract rights of other persons, if that power of abandonment is conferred upon the directors either by the terms of the transaction or by the same vote of voting members and at the same meeting of members as that referred to in division (A) or (B) of this section, as applicable, or at any subsequent meeting.
(E) 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 the assets of such corporation has not been complied with, shall be brought within one year after that transaction, or the action shall be forever barred.