Bill Text: OH SB202 | 2013-2014 | 130th General Assembly | Comm Sub

Ohio Senate Bill 202 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: To provide exceptions to the applicability of the Control Share Acquisition Act, to require board approval for Act opt-out amendments of a corporation's regulations or articles of incorporation, and to apply a three-year look-back period to ownership of shares for purposes of determining applicability of certain shareholder transaction laws.

Spectrum: Slight Partisan Bill (Republican 18-8)

Status: (Passed) 2014-07-10 - Effective Date [SB202 Detail]

Download: Ohio-2013-SB202-Comm_Sub.html

As Reported by the Senate Civil Justice Committee

130th General Assembly

Regular Session

2013-2014

Am. S. B. No. 202

Senators Obhof, Kearney

Cosponsors: Senators Seitz, Coley

A BILL

To amend sections 1701.01, 1701.11, 1701.71, 1704.01,

and 1704.05 of the Revised Code to provide

exceptions to the applicability of the Control

Share Acquisition Act, to require board approval

for Act opt-out amendments of a corporation's

regulations or articles of incorporation, and to

apply a three-year look-back period to ownership

of shares for purposes of determining

applicability of certain shareholder transaction

laws.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That sections 1701.01, 1701.11, 1701.71, 1704.01,	11
and 1704.05 of the Revised Code be amended to read as follows:	12

Sec. 1701.01. As used in sections 1701.01 to 1701.98 of the	13
Revised Code, unless the context otherwise requires:	14

(A) "Corporation" or "domestic corporation" means a	15
corporation for profit formed under the laws of this state.	16

(B) "Foreign corporation" means a corporation for profit	17
formed under the laws of another state, and "foreign entity" means	18
an entity formed under the laws of another state.	19

(C) "State" means the United States; any state, territory,	20
insular possession, or other political subdivision of the United	21
States, including the District of Columbia; any foreign country or	22
nation; and any province, territory, or other political	23
subdivision of such foreign country or nation.	24

(D) "Articles" includes original articles of incorporation,	25
certificates of reorganization, amended articles, and amendments	26
to any of these, and, in the case of a corporation created before	27
September 1, 1851, the special charter and any amendments to it	28
made by special act of the general assembly or pursuant to general	29
law.	30

(E) "Incorporator" means a person who signed the original	31
articles of incorporation.	32

(F) "Shareholder" means a person whose name appears on the	33
books of the corporation as the owner of shares of the	34
corporation. Unless the articles, the regulations adopted by the	35
shareholders, the regulations adopted by the directors pursuant to	36
division (A)(1) of section 1701.10 of the Revised Code, or the	37
contract of subscription otherwise provides, "shareholder"	38
includes a subscriber to shares, whether the subscription is	39
received by the incorporators or pursuant to authorization by the	40
directors, and such shares shall be deemed to be outstanding	41
shares.	42

(G) "Person" includes, without limitation, a natural person,	43
a corporation, whether nonprofit or for profit, a partnership, a	44
limited liability company, an unincorporated society or	45
association, and two or more persons having a joint or common	46
interest.	47

(H) The location of the "principal office" of a corporation	48
is the place named as the principal office in its articles.	49

(I) The "express terms" of shares of a class are the	50
statements expressed in the articles with respect to such shares.	51

(J) Shares of a class are "junior" to shares of another class	52
when any of their dividend or distribution rights are subordinate	53
to, or dependent or contingent upon, any right of, or dividend on,	54
or distribution to, shares of such other class.	55

(K) "Treasury shares" means shares belonging to the	56
corporation and not retired that have been either issued and	57
thereafter acquired by the corporation or paid as a dividend or	58
distribution in shares of the corporation on treasury shares of	59
the same class; such shares shall be deemed to be issued, but they	60
shall not be considered as an asset or a liability of the	61
corporation, or as outstanding for dividend or distribution,	62
quorum, voting, or other purposes, except, when authorized by the	63
directors, for dividends or distributions in authorized but	64
unissued shares of the corporation of the same class.	65

(L) To "retire" a share means to restore it to the status of	66
an authorized but unissued share.	67

(M) "Redemption price of shares" means the amount required by	68
the articles to be paid on redemption of shares.	69

(N) "Liquidation price" means the amount or portion of assets	70
required by the articles to be distributed to the holders of	71
shares of any class upon dissolution, liquidation, merger, or	72
consolidation of the corporation, or upon sale of all or	73
substantially all of its assets.	74

(O) "Insolvent" means that the corporation is unable to pay	75
its obligations as they become due in the usual course of its	76
affairs.	77

(P) "Parent corporation" or "parent" means a domestic or	78
foreign corporation that owns and holds of record shares of	79
another corporation, domestic or foreign, entitling the holder of	80
the shares at the time to exercise a majority of the voting power	81
in the election of the directors of the other corporation without	82
regard to voting power that may thereafter exist upon a default,	83
failure, or other contingency; "subsidiary corporation" or	84
"subsidiary" means a domestic or foreign corporation of which	85
another corporation, domestic or foreign, is the parent.	86

(Q) "Combination" means a transaction, other than a merger or	87
consolidation, wherein either of the following applies:	88

(1) Voting shares of a domestic corporation are issued or	89
transferred in consideration in whole or in part for the transfer	90
to itself or to one or more of its subsidiaries, domestic or	91
foreign, of all or substantially all the assets of one or more	92
corporations, domestic or foreign, with or without good will or	93
the assumption of liabilities;	94

(2) Voting shares of a foreign parent corporation are issued	95
or transferred in consideration in whole or in part for the	96
transfer of such assets to one or more of its domestic	97
subsidiaries.	98

"Transferee corporation" in a combination means the	99
corporation, domestic or foreign, to which the assets are	100
transferred, and "transferor corporation" in a combination means	101
the corporation, domestic or foreign, transferring such assets and	102
to which, or to the shareholders of which, the voting shares of	103
the domestic or foreign corporation are issued or transferred.	104

(R) "Majority share acquisition" means the acquisition of	105
shares of a corporation, domestic or foreign, entitling the holder	106
of the shares to exercise a majority of the voting power in the	107
election of directors of such corporation without regard to voting	108
power that may thereafter exist upon a default, failure, or other	109
contingency, by either of the following:	110

(1) A domestic corporation in consideration in whole or in	111
part, for the issuance or transfer of its voting shares;	112

(2) A domestic or foreign subsidiary in consideration in	113
whole or in part for the issuance or transfer of voting shares of	114
its domestic parent.	115

(S) "Acquiring corporation" in a combination means the	116
domestic corporation whose voting shares are issued or transferred	117
by it or its subsidiary or subsidiaries to the transferor	118
corporation or corporations or the shareholders of the transferor	119
corporation or corporations; and "acquiring corporation" in a	120
majority share acquisition means the domestic corporation whose	121
voting shares are issued or transferred by it or its subsidiary in	122
consideration for shares of a domestic or foreign corporation	123
entitling the holder of the shares to exercise a majority of the	124
voting power in the election of directors of such corporation.	125

(T) When used in connection with a combination or a majority	126
share acquisition, "voting shares" means shares of a corporation,	127
domestic or foreign, entitling the holder of the shares to vote at	128
the time in the election of directors of such corporation without	129
regard to voting power which may thereafter exist upon a default,	130
failure, or other contingency.	131

(U) "An emergency" exists when the governor, or any other	132
person lawfully exercising the power and discharging the duties of	133
the office of governor, proclaims that an attack on the United	134
States or any nuclear, atomic, or other disaster has caused an	135
emergency for corporations, and such an emergency shall continue	136
until terminated by proclamation of the governor or any other	137
person lawfully exercising the powers and discharging the duties	138
of the office of governor.	139

(V) "Constituent corporation" means an existing corporation	140
merging into or into which is being merged one or more other	141
entities in a merger or an existing corporation being consolidated	142
with one or more other entities into a new entity in a	143
consolidation, whether any of the entities is domestic or foreign,	144
and "constituent entity" means any entity merging into or into	145
which is being merged one or more other entities in a merger, or	146
an existing entity being consolidated with one or more other	147
entities into a new entity in a consolidation, whether any of the	148
entities is domestic or foreign.	149

(W) "Surviving corporation" means the constituent domestic or	150
foreign corporation that is specified as the corporation into	151
which one or more other constituent entities are to be or have	152
been merged, and "surviving entity" means the constituent domestic	153
or foreign entity that is specified as the entity into which one	154
or more other constituent entities are to be or have been merged.	155

(X) "Close corporation agreement" means an agreement that	156
satisfies the three requirements of division (A) of section	157
1701.591 of the Revised Code.	158

(Y) "Issuing public corporation" means a domestic corporation	159
with fifty or more shareholders that has its principal place of	160
business, its principal executive offices, assets having	161
substantial value, or a substantial percentage of its assets	162
within this state, and as to which no valid close corporation	163
agreement exists under division (H) of section 1701.591 of the	164
Revised Code.	165

(Z)(1) "Control share acquisition" means the acquisition,	166
directly or indirectly, by any person of shares of an issuing	167
public corporation that, when added to all other shares of the	168
issuing public corporation in respect of which the person may	169
exercise or direct the exercise of voting power as provided in	170
this division, would entitle the person, immediately after the	171
acquisition, directly or indirectly, alone or with others, to	172
exercise or direct the exercise of the voting power of the issuing	173
public corporation in the election of directors within any of the	174
following ranges of such voting power:	175

(a) One-fifth or more but less than one-third of such voting	176
power;	177

(b) One-third or more but less than a majority of such voting	178
power;	179

180

A bank, broker, nominee, trustee, or other person that	181
acquires shares in the ordinary course of business for the benefit	182
of others in good faith and not for the purpose of circumventing	183
section 1701.831 of the Revised Code shall, however, be deemed to	184
have voting power only of shares in respect of which such person	185
would be able, without further instructions from others, to	186
exercise or direct the exercise of votes on a proposed control	187
share acquisition at a meeting of shareholders called under	188
section 1701.831 of the Revised Code.	189

(2) The acquisition by any person of any shares of an issuing	190
public corporation does not constitute a control share acquisition	191
for the purpose of section 1701.831 of the Revised Code if the	192
acquisition was or is consummated in, results from, or is the	193
consequence of any of the following circumstances:	194

(a) Prior to November 19, 1982;

195

(b) Pursuant to a contract existing prior to November 19,	196
1982;	197

(c) By bequest or inheritance, by operation of law upon the	198
death of an individual, or by any other transfer without valuable	199
consideration, including a gift, that is made in good faith and	200
not for the purpose of circumventing section 1701.831 of the	201
Revised Code;	202

(d) Pursuant to the satisfaction of a pledge or other	203
security interest created in good faith and not for the purpose of	204
circumventing section 1701.831 of the Revised Code;	205

(e) Pursuant to a merger or consolidation adopted, or a	206
combination or majority share acquisition authorized, by vote of	207
the shareholders of the issuing public corporation in compliance	208
with section 1701.78, 1701.781, 1701.79, 1701.791, or 1701.83 of	209
the Revised Code, or pursuant to a merger adopted in compliance	210
with section 1701.802 of the Revised Code;	211

(f) The person's being entitled, immediately thereafter, to	212
exercise or direct the exercise of voting power of the issuing	213
public corporation in the election of directors within the same	214
range theretofore attained by that person either in compliance	215
with the provisions of section 1701.831 of the Revised Code or as	216
a result solely of the issuing public corporation's purchase of	217
shares issued by it;	218

(g) The person's being engaged in business as an underwriter	219
of securities who acquires the shares directly from the issuing	220
public corporation or an affiliate or associate of the issuing	221
public corporation through its participation in good faith in a	222
firm commitment underwriting registered under the "Securities Act	223
of 1933," 15 U.S.C. 77a et seq., and not for the purpose of	224
circumventing section 1701.831 of the Revised Code.	225

The acquisition by any person of shares of an issuing public	226
corporation in a manner described under division (Z)(2) of this	227
section shall be deemed a control share acquisition authorized	228
pursuant to section 1701.831 of the Revised Code within the range	229
of voting power under division (Z)(1)(a), (b), or (c) of this	230
section that such person is entitled to exercise after the	231
acquisition, provided, in the case of an acquisition in a manner	232
described under division (Z)(2)(c) or (d) of this section, the	233
transferor of shares to such person had previously obtained any	234
authorization of shareholders required under section 1701.831 of	235
the Revised Code in connection with the transferor's acquisition	236
of shares of the issuing public corporation.	237

(3) The acquisition of shares of an issuing public	238
corporation in good faith and not for the purpose of circumventing	239
section 1701.831 of the Revised Code from any person whose control	240
share acquisition previously had been authorized by shareholders	241
in compliance with section 1701.831 of the Revised Code, or from	242
any person whose previous acquisition of shares of an issuing	243
public corporation would have constituted a control share	244
acquisition but for division (Z)(2) or (3) of this section, does	245
not constitute a control share acquisition for the purpose of	246
section 1701.831 of the Revised Code unless such acquisition	247
entitles the person making the acquisition, directly or	248
indirectly, alone or with others, to exercise or direct the	249
exercise of voting power of the corporation in the election of	250
directors in excess of the range of voting power authorized	251
pursuant to section 1701.831 of the Revised Code, or deemed to be	252
so authorized under division (Z)(2) of this section.	253

(AA) "Acquiring person" means any person who has delivered an	254
acquiring person statement to an issuing public corporation	255
pursuant to section 1701.831 of the Revised Code.	256

(BB) "Acquiring person statement" means a written statement	257
that complies with division (B) of section 1701.831 of the Revised	258
Code.	259

(CC)(1) "Interested shares" means the shares of an issuing	260
public corporation in respect of which any of the following	261
persons may exercise or direct the exercise of the voting power of	262
the corporation in the election of directors:	263

(a) An acquiring person;

264

(b) Any officer of the issuing public corporation elected or	265
appointed by the directors of the issuing public corporation;	266

(c) Any employee of the issuing public corporation who is	267
also a director of such corporation;	268

(d) Any person that acquires such shares for valuable	269
consideration during the period beginning with the date of the	270
first public disclosure of a proposal for, or expression of	271
interest in, a control share acquisition of the issuing public	272
corporation; a transaction pursuant to section 1701.76, 1701.78,	273
1701.781, 1701.79, 1701.791, 1701.83, or 1701.86 of the Revised	274
Code that involves the issuing public corporation or its assets;	275
or any action that would directly or indirectly result in a change	276
in control of the issuing public corporation or its assets, and	277
ending on the record date established by the directors pursuant to	278
section 1701.45 and division (D) of section 1701.831 of the	279
Revised Code, if either of the following applies:	280

(i) The aggregate consideration paid or given by the person	281
who acquired the shares, and any other persons acting in concert	282
with the person, for all such shares exceeds two hundred fifty	283
thousand dollars;	284

(ii) The number of shares acquired by the person who acquired	285
the shares, and any other persons acting in concert with the	286
person, exceeds one-half of one per cent of the outstanding shares	287
of the corporation entitled to vote in the election of directors.	288

(e) Any person that transfers such shares for valuable	289
consideration after the record date described in division	290
(CC)(1)(d) of this section as to shares so transferred, if	291
accompanied by the voting power in the form of a blank proxy, an	292
agreement to vote as instructed by the transferee, or otherwise.	293

(2) If any part of this division is held to be illegal or	294
invalid in application, the illegality or invalidity does not	295
affect any legal and valid application thereof or any other	296
provision or application of this division or section 1701.831 of	297
the Revised Code that can be given effect without the invalid or	298
illegal provision, and the parts and applications of this division	299
are severable.	300

(DD) "Certificated security" and "uncertificated security"	301
have the same meanings as in section 1308.01 of the Revised Code.	302

(EE) "Entity" means any of the following:

303

(1) A for profit corporation existing under the laws of this	304
state or any other state;	305

(2) Any of the following organizations existing under the	306
laws of this state, the United States, or any other state:	307

(a) A business trust or association;

308

(b) A real estate investment trust;

309

310

(d) An unincorporated business or for profit organization,	311
including a general or limited partnership;	312

(e) A limited liability company;

313

(f) A nonprofit corporation.

314

Sec. 1701.11. (A)(1) Regulations for the government of a	315
corporation, the conduct of its affairs, and the management of its	316
property, consistent with law and the articles, may be adopted,	317
amended, or repealed in any of the following ways:	318

(a) Within ninety days after the corporation is formed, by	319
the directors in accordance with division (A)(1) of section	320
1701.10 of the Revised Code;	321

(b) By the shareholders at a meeting held for that purpose,	322
by the affirmative vote of the holders of shares entitling them to	323
exercise a majority of the voting power of the corporation on the	324
proposal, or if the articles or regulations that have been adopted	325
so provide, by the affirmative vote of the holders entitling them	326
to exercise a greater proportion than a majority of the voting	327
power of the corporation on the proposal;	328

(c) Without a meeting, by the written consent of the holders	329
of shares entitling them to exercise two-thirds of the voting	330
power of the corporation on the proposal, or if the articles or	331
regulations that have been adopted so provide or permit, by the	332
written consent of the holders of shares entitling them to	333
exercise a greater or lesser proportion but not less than a	334
majority of the voting power of the corporation on the proposal;	335

(d) If and to the extent that the articles or regulations so	336
provide or permit and unless a provision of the Revised Code	337
reserves such authority to shareholders, by the directors,	338
provided that no provision or permission in the articles or	339
regulations may divest shareholders of the power, or limit the	340
shareholders' power, to adopt, amend, or repeal regulations.	341

(2) Any amendment of regulations and any amended or new	342
regulations adopted by shareholders of an issuing public	343
corporation whose directors are classified pursuant to section	344
1701.57 of the Revised Code that would change or eliminate the	345
classification of directors shall be adopted only by the	346
shareholders at a meeting held for that purpose, by the	347
affirmative vote of holders of shares entitling them to exercise	348
the voting power of the corporation that is required for	349
shareholders at a meeting under division (A)(1)(b) of this	350
section, and also by the affirmative vote of the holders of a	351
majority of disinterested shares voted on the proposal determined	352
as specified in division (C)(9) of section 1704.01 of the Revised	353
Code.	354

(3) Any amendment of regulations and any amended or new	355
regulations adopted by shareholders of an issuing public	356
corporation that would provide that section 1701.831 of the	357
Revised Code does not apply to control share acquisitions of	358
shares of the issuing public corporation shall be adopted:	359

(a) Upon the recommendation by the affirmative vote of a	360
majority of the authorized number of directors of the issuing	361
public corporation in favor of such amendment or new regulation;	362
and	363

(b) By the shareholders at a meeting held for that purpose,	364
by the affirmative vote of holders of shares entitling them to	365
exercise the voting power of the corporation that is required for	366
shareholders at a meeting under division (A)(1)(b) of this	367
section.	368

(B) Without limiting the generality of the authority	369
described in division (A) of this section, the regulations may	370
include provisions with respect to all of the following:	371

(1) The place, if any, and time for holding, the manner of	372
and authority for calling, giving notice of, and conducting, and	373
the requirements of a quorum for, meetings of shareholders;	374

(2) The taking of a record of shareholders or the temporary	375
closing of books against transfers of shares;	376

(3) The number, classification, manner of fixing or changing	377
the number, qualifications, term of office, and compensation or	378
manner of fixing compensation, of directors;	379

(4) The place, if any, and time for holding, the manner of	380
and authority for calling, giving notice of, and conducting, and	381
the requirements of a quorum for, meetings of the directors;	382

(5) The appointment of an executive and other committees of	383
the directors, and their authority;	384

(6) The titles, qualifications, duties, term of office,	385
compensation or manner of fixing compensation, and the removal, of	386
officers;	387

(7) The terms on which new certificates for shares may be	388
issued in the place of lost, stolen, or destroyed certificates;	389

(8) The manner in which and conditions upon which a	390
certificated security, and the conditions upon which an	391
uncertificated security, and the shares represented by a	392
certificated or uncertificated security, may be transferred,	393
restrictions on the right to transfer the shares, and reservations	394
of liens on the shares;	395

(9)(a) Restrictions on the transfer and the right to transfer	396
shares of either of the following:	397

(i) An issuing public corporation to any person in a control	398
share acquisition;	399

(ii) A corporation with fifty or more shareholders to any	400
person in an acquisition that would be a control share acquisition	401
if the corporation were an issuing public corporation.	402

(b) The restrictions on the transfer and the right to	403
transfer shares described in division (B)(9)(a)(i) and (ii) of	404
this section may include requirements and procedures for consent	405
to an acquisition of the shares by directors based on a	406
determination by the directors of the best interests of the	407
corporation and its shareholders, consent to an acquisition of the	408
shares by shareholders, and reasonable sanctions for a violation	409
of those requirements, including the right of the corporation to	410
refuse to transfer, to redeem, or to deny voting or other	411
shareholder rights appurtenant to shares acquired in an	412
acquisition of the shares.	413

(10) Defining, limiting, or regulating the exercise of the	414
authority of the corporation, the directors, or the officers;	415

(11) Defining, limiting, or regulating the exercise of the	416
authority of the shareholders; provided, that any amendment of the	417
regulations that would change or eliminate any such provision	418
shall be adopted only by the shareholders.	419

(C) The shareholders of a corporation may adopt and may	420
authorize the directors to adopt, either before or during an	421
emergency, as that term is defined in division (U) of section	422
1701.01 of the Revised Code, emergency regulations that shall be	423
operative only during an emergency. The emergency regulations may	424
include any provisions that are authorized to be included in	425
regulations by divisions (A) and (B) of this section. In addition,	426
unless expressly prohibited by the articles or the regulations,	427
the emergency regulations may make any provision, notwithstanding	428
any different provisions in this chapter and notwithstanding any	429
different provisions in the articles or the regulations that are	430
not expressly stated to be operative during an emergency, that may	431
be practical or necessary with respect to the following:	432

(1) The place, if any, and time for holding, the manner of	433
and authority for calling, giving notice of, and conducting, and	434
the requirements of a quorum for, meetings of the directors;	435

(2) The creation and appointment of an executive and other	436
committees of the directors and the delegation of authority to the	437
committees by the board;	438

(3) The creation, existence, and filling of vacancies,	439
including temporary vacancies, in the office of director;	440

(4) The selection, by appointment, election, or otherwise, of	441
officers and other persons to serve as directors for a meeting of	442
the board in the absence from the meeting of one or more of the	443
directors;	444

(5) The creation, existence, and filling of vacancies,	445
including temporary vacancies, in any office;	446

(6) The order of rank and the succession to the duties and	447
authority of officers.	448

(D)(1) Unless the corporation complies with division (D)(2)	449
of this section, if the regulations are amended or new regulations	450
are adopted other than by the shareholders at a meeting held for	451
that purpose, the secretary of the corporation shall send a copy	452
of the amendment or the new regulations by mail, overnight	453
delivery service, or any other means of communication authorized	454
by the shareholder to whom a copy of the amendment or new	455
regulations is sent, to each shareholder of record as of the date	456
of the adoption of the amendment or the new regulations.	457

(2) Any corporation that files periodic reports with the	458
United States securities and exchange commission pursuant to	459
section 13 of the "Securities Exchange Act of 1934," 48 Stat. 881,	460
15 U.S.C. 78m, as amended, or section 15(d) of the "Securities	461
Exchange Act of 1934," 48 Stat. 881, 15 U.S.C. 78o(d), as amended,	462
may satisfy the notice to shareholders of record requirement of	463
division (D)(1) of this section by including a copy of the	464
amendment or the new regulations in a report filed in accordance	465
with those sections within twenty days after the adoption of the	466
amendment or the new regulations.	467

(E) No person dealing with the corporation shall be charged	468
with constructive notice of the regulations.	469

(F) Unless expressly prohibited by the articles or the	470
regulations or unless otherwise provided by the emergency	471
regulations, the following special rules shall be applicable	472
during an emergency notwithstanding any different provision	473
elsewhere in this chapter:	474

(1) Meetings of the directors may be called by any officer or	475
director.	476

(2) Notice of the time and place of each meeting of the	477
directors shall be given to such of the directors as it may be	478
feasible to reach at the time and by the means of communication,	479
written or oral, personal or mass, as may be practicable at the	480
time.	481

(3) The director or directors present at any meeting of the	482
directors that has been duly called and notice of which has been	483
duly given shall constitute a quorum for the meeting, and, in the	484
absence of one or more of the directors, the director or directors	485
present may appoint one or more of the officers of the corporation	486
directors for the meeting.	487

(4) If none of the directors attends a meeting of the	488
directors that has been duly called and notice of which has been	489
duly given, the officers of the corporation who are present, not	490
exceeding three, in order of rank, shall be directors for the	491
meeting, shall constitute a quorum for the meeting, and may	492
appoint one or more of the other officers of the corporation	493
directors for the meeting.	494

(5) If the chief executive officer dies, is missing, or for	495
any other reason is temporarily or permanently incapable of	496
discharging the duties of the office, the next ranking officer who	497
is available shall assume the duties and authority of the office	498
of the deceased, missing, or incapacitated chief executive officer	499
until such time as the directors otherwise order.	500

(6) The offices of secretary and treasurer shall be deemed to	501
be of equal rank, and, within the same office and as between the	502
offices of secretary and treasurer, rank shall be determined by	503
priority in time of the first election to the office or, if two or	504
more persons have been first elected to the office at the same	505
time, by seniority in age.	506

Sec. 1701.71. (A)(1)(a) Except as otherwise provided in ~~this~~	507
~~division~~divisions (A)(1)(b), (c), and (d) of this section or	508
division (A)(2) of this section, the shareholders, at a meeting	509
held for that purpose, may adopt an amendment, including any	510
amendment that could be adopted by the directors, by the	511
affirmative vote of the holders of shares entitling them to	512
exercise two-thirds of the voting power of the corporation on the	513
proposal or, if the articles provide or permit, by the affirmative	514
vote of a greater or lesser proportion, but not less than a	515
majority, of such voting power, and by the affirmative vote of the	516
holders of shares of any particular class that is required by the	517
articles. ~~Any~~	518

(b) Any amendment that would change or eliminate the	519
classification of directors of an issuing public corporation whose	520
directors are classified pursuant to section 1701.57 of the	521
Revised Code shall be adopted by the shareholders only at a	522
meeting expressly held for that purpose, by the affirmative votes	523
required under ~~this~~ division (A)(1)(a) of this section, and also	524
by the affirmative vote of the holders of at least a majority of	525
disinterested shares voted on the proposal determined as specified	526
in division (C)(9) of section 1704.01 of the Revised Code. If	527

(c) Any amendment that would provide that section 1701.831 of	528
the Revised Code does not apply to control share acquisitions of	529
shares of an issuing public corporation shall be adopted:	530

(i) Upon the recommendation by the affirmative vote of a	531
majority of the authorized number of directors of the issuing	532
public corporation in favor of such amendment; and	533

(ii) By the shareholders only at a meeting expressly held for	534
the purpose, by the affirmative votes required under division	535
(A)(1)(a) of this section.	536

(d) If, at the time an amendment to eliminate cumulative	537
voting rights permitted by division (B)(10) of section 1701.69 of	538
the Revised Code is acted upon by the shareholders, a corporation	539
does not have issued and outstanding shares that are listed on a	540
national securities exchange or are regularly quoted in an	541
over-the-counter market by one or more members of a national or	542
affiliated securities association, that amendment shall not be	543
adopted if the votes of a sufficient number of shares are cast	544
against the amendment that, if cumulatively voted at an election	545
of all the directors, or all the directors of a particular class,	546
as the case may be, would at the time the amendment is acted upon	547
by the shareholders be sufficient to elect at least one director.	548

(2) Whenever under division (B) of this section the holders	549
of shares of any particular class are entitled to vote as a class	550
on the adoption of an amendment, the amendment, in order to be	551
adopted, must receive the affirmative vote of the holders of at	552
least two-thirds of the shares of that class or, if the articles	553
provide or permit, a greater or lesser proportion, but not less	554
than a majority, of the shares of that class. If the proposed	555
amendment would authorize any particular corporate action that,	556
under any applicable provision of law or under the existing	557
articles, could be authorized only by or pursuant to a specified	558
vote of shareholders, the amendment, in order to be adopted, must	559
receive the affirmative vote so specified.	560

(B) Regardless of limitations or restrictions in the articles	561
on the voting rights of the shares of any class, the holders of	562
shares of a particular class, and in the cases specified in	563
divisions (B)(6), (7), and (8) of this section the holders of	564
shares of every class, shall be entitled to vote as a class on the	565
adoption of an amendment that does any of the following:	566

(1) Increases or decreases the par value of the issued shares	567
of the particular class, except in the case of an amendment to the	568
articles adopted by the directors pursuant to division (B)(10) of	569
section 1701.70 of the Revised Code;	570

(2) Changes issued shares of the particular class, whether	571
with or without par value, into a lesser number of shares of the	572
same class or into the same or a different number of shares of any	573
other class, with or without par value, previously or then	574
authorized;	575

(3) Changes the express terms, or adds express terms, of the	576
shares of the particular class in any manner substantially	577
prejudicial to the holders of the shares;	578

(4) Changes the express terms of issued shares of any class	579
senior to the particular class in any manner substantially	580
prejudicial to the holders of shares of the particular class;	581

(5) Authorizes shares of another class that are convertible	582
into, or authorizes the conversion of shares of another class	583
into, shares of the particular class, or authorizes the directors	584
to fix or alter conversion rights of shares of another class that	585
are convertible into shares of the particular class; provided,	586
however, both of the following apply:	587

(a) The failure to obtain the shareholders' approval only	588
prevents the conversion of the shares until the shareholders'	589
approval is obtained and does not otherwise affect the	590
authorization or any other express terms of the shares;	591

(b) The articles may provide that no vote of the holders of	592
common shares, as a class, is required in connection with the	593
authorization of shares of any class that are convertible into	594
common shares.	595

(6) Provides, in the case of an amendment described in	596
division (B)(1) or (2) of this section, that the stated capital of	597
the corporation shall be reduced or eliminated as a result of the	598
amendment, or provides, in the case of an amendment described in	599
division (B)(5) of this section, that the stated capital of the	600
corporation shall be reduced or eliminated upon the exercise of	601
such conversion rights, provided that any reduction or elimination	602
is consistent with section 1701.30 of the Revised Code;	603

(7) Changes substantially the purposes of the corporation, or	604
provides that a subsequent amendment to the articles may be	605
adopted that changes substantially the purposes of the	606
corporation;	607

(8) Changes a corporation into a nonprofit corporation.

608

(C) An amendment that changes a corporation into a nonprofit	609
corporation shall contain a statement of purposes proper in the	610
case of a nonprofit corporation and a statement that, after the	611
effective date of the amendment, the corporation shall be subject	612
to the provisions of the Revised Code relating to nonprofit	613
corporations. In the case of a corporation formed on or after June	614
9, 1927, the amendment also shall provide for the cancellation of	615
all outstanding shares and the terms and considerations, if any,	616
for the cancellation. In the case of a corporation formed prior to	617
June 9, 1927, the amendment may provide for the cancellation of	618
outstanding shares, but if it does not so provide, the amendment	619
shall contain a provision forbidding the payment of dividends or	620
distributions on any shares after the effective date of the	621
amendment.	622

Sec. 1704.01. As used in this chapter, unless the context	623
otherwise requires:	624

(A) "Corporation," "domestic corporation," "foreign	625
corporation," "state," "articles," "shareholder," "person,"	626
"principal office," "express terms," "treasury shares," "parent	627
corporation," "parent," "subsidiary corporation," "subsidiary,"	628
"combination," "transferee corporation," "majority share	629
acquisition," "acquiring corporation," "voting shares" when used	630
in connection with a combination or majority share acquisition,	631
"constituent corporation," "surviving corporation," "close	632
corporation agreement," and "issuing public corporation" have the	633
same meanings as in section 1701.01 of the Revised Code.	634

(B) "Chapter 1704. transaction" means any of the following:

635

(1) A merger, consolidation, combination, or majority share	636
acquisition between or involving an issuing public corporation or	637
any subsidiary of an issuing public corporation and any of the	638
following:	639

(a) An interested shareholder;

640

(b) A person, partnership, corporation, or other entity,	641
however organized, whether or not it is an interested shareholder,	642
that is, or after the merger, consolidation, combination, or	643
majority share acquisition would be, an affiliate or associate of	644
an interested shareholder.	645

(2)(a) Subject to the exception in division (B)(2)(b) of this	646
section, a purchase, lease, sale, distribution, dividend,	647
exchange, mortgage, pledge, transfer, or other disposition of	648
assets, directly or indirectly owned or controlled by the issuing	649
public corporation, by, to, with, or for the benefit of an	650
interested shareholder or an affiliate or associate of an	651
interested shareholder in one or more transactions, if, in any of	652
those transactions, the assets meet any of the following	653
conditions:	654

(i) The assets have an aggregate fair market value equal to	655
at least five per cent of the aggregate fair market value of all	656
the assets, determined on a consolidated basis, of the issuing	657
public corporation;	658

(ii) The assets have an aggregate fair market value equal to	659
at least five per cent of the aggregate fair market value of all	660
the outstanding shares of the issuing public corporation;	661

(iii) The assets represent at least ten per cent of the	662
earning power or income of the issuing public corporation,	663
determined on a consolidated after-tax basis and after excluding	664
any transaction other than in the ordinary course of business.	665

(b) One or more transactions in the ordinary course of	666
business of an issuing public corporation on terms no more	667
favorable to the interested shareholder than those acceptable to	668
third parties, as shown by contemporaneous transactions, is not a	669
Chapter 1704. transaction under division (B)(2)(a) of this	670
section.	671

(3)(a) Subject to the exception in division (B)(3)(b) of this	672
section, a purchase, lease, sale, exchange, transfer, or other	673
disposition of assets directly or indirectly owned or controlled	674
by the interested shareholder or an affiliate or associate of the	675
interested shareholder, by, to, with, or for the benefit of the	676
issuing public corporation in one or more transactions, if, in any	677
of those transactions, the assets meet any of the conditions set	678
forth in division (B)(2)(a)(i), (ii), or (iii) of this section.	679

(b) One or more transactions in the ordinary course of	680
business of an issuing public corporation on terms no more	681
favorable to the interested shareholder than those acceptable to	682
third parties, as shown by contemporaneous transactions, is not a	683
Chapter 1704. transaction under division (B)(3)(a) of this	684
section.	685

(4) The issuance or transfer to an interested shareholder or	686
an associate or affiliate of an interested shareholder of any	687
shares, or of any rights to acquire shares, of the issuing public	688
corporation or a subsidiary of the issuing public corporation by	689
the issuing public corporation or a subsidiary of the issuing	690
public corporation, in one or more transactions, if the shares, or	691
the rights, have an aggregate fair market value equal to at least	692
five per cent of the aggregate fair market value of all the	693
outstanding shares of the issuing public corporation and if the	694
shares, or the rights, are not issued or transferred pursuant to	695
the exercise of warrants, rights, or options to purchase that have	696
been issued, or pursuant to a dividend paid or a distribution	697
made, proportionately to all shareholders of the issuing public	698
corporation.	699

(5) The adoption of a plan or proposal for the dissolution,	700
winding up of the affairs, or liquidation of the issuing public	701
corporation that is proposed by, on behalf of, or pursuant to a	702
written or unwritten agreement, arrangement, or understanding with	703
an interested shareholder or an affiliate or associate of an	704
interested shareholder.	705

(6) Any of the following, if the direct or indirect effect is	706
to increase the proportionate share of the outstanding shares of	707
the issuing public corporation or a subsidiary of the issuing	708
public corporation beneficially owned by an interested shareholder	709
or an affiliate or associate of an interested shareholder, unless	710
the increase is the result of immaterial changes due to fractional	711
share adjustments:	712

(a) A reclassification of securities, including a share	713
split, a share dividend or other distribution of shares, or a	714
reverse share split;	715

(b) A recapitalization of the issuing public corporation;

716

(c) A merger, consolidation, combination, or majority share	717
acquisition between or involving the issuing public corporation	718
and a subsidiary of the issuing public corporation;	719

(d) Any other transaction, whether or not with, into, or	720
involving the interested shareholder, that is proposed by, on	721
behalf of, or pursuant to a written or unwritten agreement,	722
arrangement, or understanding with the interested shareholder or	723
an affiliate or associate of the interested shareholder.	724

(7) Receipt by an interested shareholder or an affiliate or	725
associate of an interested shareholder of the direct or indirect	726
benefit of a loan, advance, pension or any other employee benefit	727
plan termination, guarantee, pledge, mortgage, security agreement,	728
financing statement, deed of trust, or other financial assistance,	729
or a tax credit or other tax advantage, provided by or through the	730
issuing public corporation or any subsidiary of the issuing public	731
corporation unless the interested shareholder receives the benefit	732
proportionately as a holder of shares of the issuing public	733
corporation.	734

735

(1) "Affiliate" means a person that directly, or indirectly	736
through one or more intermediaries, controls, is controlled by, is	737
under common control with, or acts in concert with, a specified	738
person.	739

(2) "Announcement date" means the date of the first public	740
announcement of a definitive proposal for a Chapter 1704.	741
transaction.	742

(3) "Associate" of a person means any of the following:

743

(a) A corporation, partnership, or other entity, however	744
organized, of which the person is an officer, director, or partner	745
or is the beneficial owner of shares entitling that person to	746
exercise at least ten per cent of the voting power in the election	747
of the directors or other governing body of that corporation,	748
partnership, or other entity;	749

(b) A trust or other estate, including any employee stock	750
ownership or benefit plan, however designated, in which the person	751
has a substantial beneficial interest or as to which the person	752
serves as trustee or in a similar fiduciary capacity;	753

(c) A relative or spouse of the person, or a relative of the	754
spouse of the person, who has the same principal residence as the	755
person.	756

(4) "Beneficial owner" of shares means a person who, with	757
respect to particular shares, meets any of the following	758
conditions:	759

(a) The person directly or indirectly, alone or with others,	760
including affiliates or associates of that person, beneficially	761
owns the shares;	762

(b) The person directly or indirectly, alone or with others,	763
including affiliates or associates of that person, has the right,	764
whether exercisable immediately or only after the passage of time,	765
conditionally, unconditionally, or otherwise, to acquire the	766
shares pursuant to a written or unwritten agreement, arrangement,	767
or understanding or upon the exercise of conversion rights,	768
exchange rights, warrants, calls, options, or otherwise;	769

(c) The person directly or indirectly, alone or with others,	770
including affiliates or associates of that person, has the right	771
to vote or direct the voting of the shares pursuant to a written	772
or unwritten agreement, arrangement, or understanding;	773

(d) The person has a written or unwritten agreement,	774
arrangement, or understanding with another person who is directly	775
or indirectly a beneficial owner, or whose affiliates or	776
associates are direct or indirect beneficial owners, of the	777
shares, if the agreement, arrangement, or understanding is for the	778
purpose of the first person's or the other person's acquiring,	779
holding, disposing of, voting, or directing the voting of the	780
shares to or for the benefit of the first person. A bank, broker,	781
nominee, trustee, or other person who acquires shares for the	782
benefit of others in the ordinary course of business in good faith	783
and not for the purpose of circumventing the provisions of this	784
chapter shall, however, be deemed to be the beneficial owner only	785
of shares in respect of which that person, without further	786
instruction from others, holds voting power.	787

(5) "Consummation date" means the date on which consummation	788
of a Chapter 1704. transaction occurs.	789

(6) "Control," "controlled by," or "under common control	790
with" refers to the possession, directly or indirectly, of the	791
power to direct or cause the direction of the management and	792
policies of a person, whether through the exercise of or the	793
ability to exercise voting power, by contract, or otherwise,	794
except that "control" of a corporation is not established for	795
purposes of this division if a person, in good faith and not for	796
the purpose of circumventing the provisions of this chapter, holds	797
voting power as an agent, custodian, bank, broker, nominee, or	798
trustee for one or more beneficial owners who do not individually	799
or as a group have control of the corporation.	800

(7) "Exchange Act" means the "Securities Exchange Act of	801
1934," 48 Stat. 881, 15 U.S.C.A. 78a-78jj, as amended, and any	802
successor or replacement legislation and amendments to the	803
successor or replacement legislation.	804

(8) "Interested shareholder," with respect to an issuing	805
public corporation, means a person other than the issuing public	806
corporation, a subsidiary of that issuing public corporation, any	807
employee stock ownership or benefit plan of the issuing public	808
corporation or a subsidiary of that issuing public corporation, or	809
any trustee or fiduciary with respect to any such plan acting in	810
such capacity who ismeets either of the following criteria:	811

(a) Is the beneficial owner of a sufficient number of shares	812
of the issuing public corporation that, when added to all other	813
shares of the issuing public corporation in respect of which that	814
person may exercise or direct the exercise of voting power, would	815
entitle that person, directly or indirectly, alone or with others,	816
including affiliates and associates of that person, to exercise or	817
direct the exercise of ten per cent of the voting power of the	818
issuing public corporation in the election of directors after	819
taking into account all of that person's beneficially owned shares	820
that are not currently outstanding;	821

(b) At any time within the three-year period immediately	822
prior to the date on which it is sought to be determined whether	823
the person is an interested shareholder, was the beneficial owner	824
of a sufficient number of shares of the issuing public corporation	825
that, when added to all other shares of the issuing public	826
corporation in respect of which that person may have exercised or	827
directed the exercise of voting power at the time it beneficially	828
owned such shares, entitled that person, directly or indirectly,	829
alone or with others, including affiliates and associates of that	830
person, to exercise or direct the exercise of ten per cent of the	831
voting power of the issuing public corporation in election of	832
directors after taking into account all of the person's	833
beneficially owned shares that were not, at the time it	834
beneficially owned such shares, currently outstanding.	835

(9) "Disinterested shares" means voting shares beneficially	836
owned by any person not an interested shareholder or an affiliate	837
or associate of an interested shareholder.	838

(10) "Share acquisition date," with respect to any person,	839
means the date on which that person first becomes an interested	840
shareholder of an issuing public corporation.	841

(11) "Voting shares" means shares of a domestic or foreign	842
corporation, entitling the holder of the shares to vote at the	843
time in the election of directors of the corporation without	844
regard to the voting power represented by shares that thereafter	845
may exist upon a default, failure, or other contingency.	846

Sec. 1704.05. This chapter does not apply to any of the	847
following:	848

(A) A Chapter 1704. transaction if on the interested	849
shareholder's share acquisition date, the issuing public	850
corporation, other than a bank as defined in section 1101.01 of	851
the Revised Code, did not have a class of voting shares registered	852
or traded on a national securities exchange or registered under	853
section 12(g) of the Exchange Act or was not required to file	854
periodic reports and information pursuant to section 15(d) of the	855
Exchange Act.	856

(B)(1) A Chapter 1704. transaction if the interested	857
shareholder was an interested shareholder on the date immediately	858
preceding the effective date of this section; except that this	859
chapter shall apply, and the share acquisition date shall be the	860
date, when the interested shareholder increases its beneficial	861
ownership of voting power of the issuing public corporation to a	862
proportion in excess of the proportion of voting power that the	863
interested shareholder beneficially owned on the date immediately	864
preceding the effective date of this section unless the interested	865
shareholder's subsequent increase in beneficial ownership results	866
from or is the consequence of any of the following circumstances:	867

(a) The increase is by bequest or inheritance, by operation	868
of law upon the death of any individual, or by any other transfer	869
without valuable consideration, including a gift, that is made in	870
good faith and not for the purpose of circumventing the provisions	871
of this chapter;	872

(b) The increase is pursuant to the satisfaction of a pledge	873
or other security interest created in good faith and not for the	874
purpose of circumventing the provisions of this chapter;	875

(c) The increase is the result solely of the purchase by the	876
issuing public corporation of shares issued by it;	877

(d) The increase is in accordance with approval by the	878
directors of the issuing public corporation before the increase	879
occurred.	880

(2) If this chapter would have applied to the increase of	881
beneficial ownership described in division (B)(1) of this section	882
but for the application of an exception described in division	883
(B)(1)(a), (b), (c), or (d) of this section, this chapter shall	884
apply if the interested shareholder's subsequent increase in its	885
proportion of beneficial ownership is not the result or a	886
consequence of any of the circumstances described in division	887
(B)(1)(a), (b), (c), or (d) of this section.	888

(C) A Chapter 1704. transaction if the interested shareholder	889
was an interested shareholder on the date immediately preceding	890
the effective date of this section and inadvertently increases its	891
beneficial ownership of voting power of the issuing public	892
corporation to a proportion in excess of the proportion of voting	893
power that the interested shareholder beneficially owned on the	894
date immediately preceding the effective date of this section,	895
provided that, as soon as practicable, the interested shareholder	896
divests itself of beneficial ownership of a sufficient number of	897
voting shares of the issuing public corporation that the	898
interested shareholder is no longer the beneficial owner of a	899
proportion of voting power in excess of the proportion of voting	900
power that the interested shareholder beneficially owned on the	901
date immediately preceding the effective date of this section.	902

(D)(1) A Chapter 1704. transaction if a person becomes an	903
interested shareholder through an acquisition of voting shares	904
that resulted from or was the consequence of any of the	905
circumstances described in division (B)(1)(a), (b), (c), or (d) of	906
this section, except that this chapter shall apply, and the share	907
acquisition date shall be the date, when the interested	908
shareholder increases its beneficial ownership of voting power of	909
the issuing public corporation to a proportion in excess of the	910
proportion of voting power that the interested shareholder	911
beneficially owned on the date on which it became an interested	912
shareholder unless the interested shareholder's subsequent	913
increase in beneficial ownership results from or is a consequence	914
of any of the circumstances described in division (B)(1)(a), (b),	915
(c), or (d) of this section.	916

(2) If this chapter would have applied to the acquisition of	917
voting shares described in division (D)(1) of this section but for	918
the application of an exception described in division (B)(1)(a),	919
(b), (c), or (d) of this section, this chapter shall apply if the	920
interested shareholder's subsequent increase in its proportion of	921
beneficial ownership is not the result or a consequence of any of	922
the circumstances described in division (B)(1)(a), (b), (c), or	923
(d) of this section.	924

(E) A Chapter 1704. transaction if a person became an	925
interested shareholder inadvertently, provided that, as soon as	926
practicable, the person divests itself of beneficial ownership of	927
a sufficient number of voting shares of the issuing public	928
corporation that the person no longer is an interested	929
shareholder.	930

(F)(1) Subject to division (F)(2) of this section, a Chapter	931
1704. transaction if the original articles of the issuing public	932
corporation state, or if the articles of the issuing public	933
corporation have been amended in compliance with the provisions of	934
section 1701.70, 1701.71, or 1701.72 of the Revised Code to state,	935
by specific reference to this chapter, that this chapter does not	936
apply to the corporation and if any of the following applies:	937

(a) The corporation had fewer than fifty shareholders or was	938
not an issuing public corporation when the statement initially was	939
set forth in the articles.	940

(b) No shareholder of the corporation qualified as an	941
interested shareholder when the statement was initially set forth	942
in the articles.	943

(c) The statement was contained in an amendment to the	944
articles and the amendment was approved, upon the recommendation	945
by the affirmative vote of a majority of the authorized number of	946
directors of the corporation in favor of such amendment, by the	947
holders of two-thirds of all outstanding shares of the corporation	948
entitled to vote in the election of directors and by the holders	949
of two-thirds of all outstanding disinterested shares of the	950
acquiring public corporation entitled to vote in the election of	951
directors.	952

(2) If, however, a Chapter 1704. transaction would have been	953
prohibited but for the adoption of an amendment to the articles in	954
compliance with division (F)(1)(b) or (c) of this section, the	955
issuing public corporation shall not engage in a Chapter 1704.	956
transaction for twelve months following the adoption of the	957
amendment; in addition, if this chapter would have applied to a	958
person who became an interested shareholder prior to the adoption	959
of such an amendment, this chapter shall continue to apply to a	960
Chapter 1704. transaction between the issuing public corporation	961
and the interested shareholder as if the amendment had not been	962
adopted.	963

(G) A Chapter 1704. transaction between an acquiring public	964
corporation and any employee benefit plan, or any trust under any	965
employee benefit plan, established by the issuing public	966
corporation, and any distribution or payment made by the employee	967
benefit plan or trust to any beneficiary.	968

(H) A Chapter 1704. transaction that involves any acquisition	969
of securities of an issuing public corporation pursuant to an	970
employee stock option plan, an employee stock purchase plan, an	971
employee stock bonus plan, an employee stock ownership plan, or	972
any similar plan designed to benefit one or more employees	973
established by the issuing public corporation, provided the	974
acquisition of the securities and the establishment of, any	975
amendment to, and the administration of the plan are in good faith	976
and not for the purpose of circumventing the provisions of this	977
chapter.	978

(I) A Chapter 1704. transaction that involves compensation	979
directly or indirectly received by a director, officer, employee,	980
agent, or independent contractor of an issuing public corporation	981
in return for services rendered or to be rendered to the issuing	982
public corporation, provided the payment of the compensation and	983
the services rendered, or to be rendered, are in good faith and	984
not for the purpose of circumventing the provisions of this	985
chapter.	986

(J) A Chapter 1704. transaction that involves any loan of	987
money or property of an issuing public corporation to a director,	988
officer, employee, agent, or independent contractor of the issuing	989
public corporation, provided the loan is designed to encourage the	990
rendering of needed, valuable, and efficient services to the	991
issuing public corporation and provided the loan is made and the	992
services are rendered, or are to be rendered, in good faith and	993
not for the purpose of circumventing the provisions of this	994
chapter.	995

(K) A Chapter 1704. transaction in which an issuing public	996
corporation makes a loan of money or other property to, guarantees	997
any loan of money or other property to, or guarantees any	998
obligation of, an employee stock ownership plan, as defined in	999
Section 4975(e)(7) of the "Internal Revenue Code of 1986," 68A	1000
Stat. 3, 26 U.S.C.A. 1, as amended, of the issuing public	1001
corporation.	1002