Ohio General Corporation Law: Everything You Need to Know
The Ohio general corporation law outlines rules for corporations formed or operating in this state.3 min read
The Ohio general corporation law outlines rules for corporations formed or operating in this state. In addition to guidelines for forming a corporation, this law dictates how Ohio corporations can be run.
Basics of the Ohio General Corporation Law
Under the Ohio general corporation law, a corporation is a for-profit company that is formed based on the rules of the state.
The corporation law outlines a few basic rules for forming these entities:
- Corporations can be established for any lawful reason.
- Individuals and groups of people may establish corporations.
- Incorporators can be residents of Ohio but are not required to be residents.
When forming a corporation, incorporators can file formation documents, known as Articles of Incorporation, with the Ohio Secretary of State. Corporations in this state can have a limited purpose or can be formed for the purpose of conducting legal business.
All Ohio corporations must have both a registered agent and a registered office within the state. When it comes to transacting business, corporations have the same rights as natural people.
Naming a Corporation and Choosing a Purpose
The Ohio general corporation law has specific rules for naming a corporation. First and foremost, the corporation must contain one of the following words:
Abbreviations of these words are also acceptable.
In your Articles of Incorporation, you must list a purpose for your corporation. When naming your company, your corporate name cannot include any language that gives the impression that you formed your company for any other reason than its stated purpose. As soon you have filed your Articles of Incorporation, your corporation will come into existence.
Running Your Corporation
After you have completed the incorporation process, the rules of the Ohio general corporation law require that you hold an organizational meeting. Your corporation's initial directors should hold this meeting and the purpose of the meeting is to name corporate officers. You can also handle any other business raised during the course of the meeting. Although you formed your corporation in Ohio, you are not required to hold your organizational meeting in this state.
Directors of the company are generally responsible for exercising the corporation's authority. The only exception is circumstances where shareholders must, by law, act instead of directors. Your corporation's board of directors has the option of drafting bylaws that will dictate how to run the company.
Under the general corporation law, your Articles of Incorporation have to include information about the stock classes your corporation will use. You should list every class of stock, as well as the number of authorized shares of each class. Ohio corporations are also required to hold shareholders' meetings on an annual basis. During these meetings, shareholders will elect company directors and will receive company financial reports.
You can include the date of your annual shareholders' meeting in your Articles of Incorporation. If you neglect to include this date in your formation documents, you should hold your meeting in the fourth month after your fiscal year has ended. If you need to elect directors before or after your annual meeting, you can hold a special meeting for this purpose.
Dissenting Shareholder Rights and the General Corporation Law
One of the most recent changes of the general corporation law is an update in how corporate shareholders receive notification of their ability to dissent on certain corporation decision. The last update to this protocol was in 1970.
The new rules provide a much simpler process for informing shareholders of their dissension rights and how they can utilize these rights. These rules also make it easier for corporations to complete transactions since shareholders will be informed of their rights well before a vote takes place.
The Dissenting Shareholder Rights bill also updated the rules for how stocks sold on an exchange are valued. Now, a stock's fair value is the same as its market price, when sold on an exchange. These rules are in alignment with the precedent reached in Ohio Supreme Court cases. Under these rules, the Court is not required to appraise the value of a share from another exchange issued to a company shareholder.
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