As Introduced
133rd General Assembly
Regular Session S. B. No. 276
2019-2020Senators Roegner, Manning
Cosponsors: Senators Brenner, Hackett, Eklund
A B I L L
To amend sections 111.16, 122.16, 122.173, 135.14,
135.142, 135.35, 150.05, 718.01, 1329.01,
1329.02, 1701.03, 1701.05, 1701.791, 1702.05,
1702.411, 1703.04, 1729.36, 1729.38, 1745.461,
1751.01, 1776.69, 1776.82, 1782.02, 1782.432,
1785.09, 3345.203, 3964.03, 3964.17, 4701.14,
4703.18, 4703.331, 4715.18, 4715.22, 4715.365,
4715.431, 4717.06, 4723.16, 4725.33, 4729.161,
4729.541, 4731.226, 4731.228, 4732.28, 4733.16,
4734.17, 4755.111, 4755.471, 4757.37, 5701.14,
5715.19, 5733.04, 5733.33, 5733.42, 5747.01, and
5751.01; to enact sections 1706.01, 1706.02,
1706.03, 1706.04, 1706.05, 1706.06, 1706.061,
1706.07, 1706.08, 1706.081, 1706.082, 1706.09,
1706.16, 1706.161, 1706.17, 1706.171, 1706.172,
1706.173, 1706.174, 1706.175, 1706.18, 1706.19,
1706.20, 1706.26, 1706.27, 1706.28, 1706.281,
1706.29, 1706.30, 1706.31, 1706.311, 1706.32,
1706.33, 1706.331, 1706.332, 1706.34, 1706.341,
1706.342, 1706.41, 1706.411, 1706.412, 1706.46,
1706.461, 1706.47, 1706.471, 1706.472, 1706.473,
1706.474, 1706.475, 1706.51, 1706.511, 1706.512,
1706.513, 1706.515, 1706.516, 1706.61, 1706.611,
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S. B. No. 276 Page 2As Introduced
1706.612, 1706.613, 1706.614, 1706.615,
1706.616, 1706.617, 1706.618, 1706.71, 1706.711,
1706.712, 1706.713, 1706.72, 1706.721, 1706.722,
1706.723, 1706.73, 1706.74, 1706.76, 1706.761,
1706.762, 1706.763, 1706.764, 1706.765,
1706.766, 1706.767, 1706.768, 1706.769,
1706.7610, 1706.7611, 1706.7612, 1706.7613,
1706.81, 1706.82, 1706.83, and 1706.84; and to
repeal sections 1705.01, 1705.02, 1705.03,
1705.031, 1705.04, 1705.05, 1705.06, 1705.07,
1705.08, 1705.081, 1705.09, 1705.10, 1705.11,
1705.12, 1705.13, 1705.14, 1705.15, 1705.16,
1705.161, 1705.17, 1705.18, 1705.19, 1705.20,
1705.21, 1705.22, 1705.23, 1705.24, 1705.25,
1705.26, 1705.27, 1705.28, 1705.281, 1705.282,
1705.29, 1705.291, 1705.292, 1705.30, 1705.31,
1705.32, 1705.33, 1705.34, 1705.35, 1705.36,
1705.361, 1705.37, 1705.371, 1705.38, 1705.381,
1705.39, 1705.391, 1705.40, 1705.41, 1705.42,
1705.43, 1705.44, 1705.45, 1705.46, 1705.47,
1705.48, 1705.49, 1705.50, 1705.51, 1705.52,
1705.53, 1705.54, 1705.55, 1705.56, 1705.57,
1705.58, and 1705.61 of the Revised Code to
enact the Ohio Revised Limited Liability Company
Act.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 111.16, 122.16, 122.173, 135.14,
135.142, 135.35, 150.05, 718.01, 1329.01, 1329.02, 1701.03,
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1701.05, 1701.791, 1702.05, 1702.411, 1703.04, 1729.36, 1729.38,
1745.461, 1751.01, 1776.69, 1776.82, 1782.02, 1782.432, 1785.09,
3345.203, 3964.03, 3964.17, 4701.14, 4703.18, 4703.331, 4715.18,
4715.22, 4715.365, 4715.431, 4717.06, 4723.16, 4725.33,
4729.161, 4729.541, 4731.226, 4731.228, 4732.28, 4733.16,
4734.17, 4755.111, 4755.471, 4757.37, 5701.14, 5715.19, 5733.04,
5733.33, 5733.42, 5747.01, and 5751.01 be amended and sections
1706.01, 1706.02, 1706.03, 1706.04, 1706.05, 1706.06, 1706.061,
1706.07, 1706.08, 1706.081, 1706.082, 1706.09, 1706.16,
1706.161, 1706.17, 1706.171, 1706.172, 1706.173, 1706.174,
1706.175, 1706.18, 1706.19, 1706.20, 1706.26, 1706.27, 1706.28,
1706.281, 1706.29, 1706.30, 1706.31, 1706.311, 1706.32, 1706.33,
1706.331, 1706.332, 1706.34, 1706.341, 1706.342, 1706.41,
1706.411, 1706.412, 1706.46, 1706.461, 1706.47, 1706.471,
1706.472, 1706.473, 1706.474, 1706.475, 1706.51, 1706.511,
1706.512, 1706.513, 1706.515, 1706.516, 1706.61, 1706.611,
1706.612, 1706.613, 1706.614, 1706.615, 1706.616, 1706.617,
1706.618, 1706.71, 1706.711, 1706.712, 1706.713, 1706.72,
1706.721, 1706.722, 1706.723, 1706.73, 1706.74, 1706.76,
1706.761, 1706.762, 1706.763, 1706.764, 1706.765, 1706.766,
1706.767, 1706.768, 1706.769, 1706.7610, 1706.7611, 1706.7612,
1706.7613, 1706.81, 1706.82, 1706.83, and 1706.84 of the Revised
Code be enacted to read as follows:
Sec. 111.16. Except as provided in section 1701.041 of the
Revised Code, the secretary of state shall charge and collect,
for the benefit of the state, the following fees:
(A) For filing and recording articles of incorporation of
a domestic corporation, including designation of agent:
(1) Wherein the corporation shall not be authorized to
issue any shares of capital stock, ninety-nine dollars;
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(2) Wherein the corporation shall be authorized to issue
shares of capital stock, with or without par value:
(a) Ten cents for each share authorized up to and
including one thousand shares;
(b) Five cents for each share authorized in excess of one
thousand shares up to and including ten thousand shares;
(c) Two cents for each share authorized in excess of ten
thousand shares up to and including fifty thousand shares;
(d) One cent for each share authorized in excess of fifty
thousand shares up to and including one hundred thousand shares;
(e) One-half cent for each share authorized in excess of
one hundred thousand shares up to and including five hundred
thousand shares;
(f) One-quarter cent for each share authorized in excess
of five hundred thousand shares; provided no fee shall be less
than ninety-nine dollars or greater than one hundred thousand
dollars.
(B) For filing and recording a certificate of amendment to
or amended articles of incorporation of a domestic corporation,
or for filing and recording a certificate of reorganization, a
certificate of dissolution, or an amendment to a foreign license
application:
(1) If the domestic corporation is not authorized to issue
any shares of capital stock, fifty dollars;
(2) If the domestic corporation is authorized to issue
shares of capital stock, fifty dollars, and in case of any
increase in the number of shares authorized to be issued, a
further sum computed in accordance with the schedule set forth
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in division (A)(2) of this section less a credit computed in the
same manner for the number of shares previously authorized to be
issued by the corporation; provided no fee under division (B)(2)
of this section shall be greater than one hundred thousand
dollars;
(3) If the foreign corporation is not authorized to issue
any shares of capital stock, fifty dollars;
(4) If the foreign corporation is authorized to issue
shares of capital stock, fifty dollars.
(C) For filing and recording articles of incorporation of
a savings and loan association, ninety-nine dollars; and for
filing and recording a certificate of amendment to or amended
articles of incorporation of a savings and loan association,
fifty dollars;
(D) For filing and recording a certificate of conversion,
including a designation of agent, a certificate of merger, or a
certificate of consolidation, ninety-nine dollars and, in the
case of any new corporation resulting from a consolidation or
any surviving corporation that has an increased number of shares
authorized to be issued resulting from a merger, an additional
sum computed in accordance with the schedule set forth in
division (A)(2) of this section less a credit computed in the
same manner for the number of shares previously authorized to be
issued or represented in this state by each of the corporations
for which a consolidation or merger is effected by the
certificate;
(E) For filing and recording articles of incorporation of
a credit union or the American credit union guaranty
association, ninety-nine dollars, and for filing and recording a
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certificate of increase in capital stock or any other amendment
of the articles of incorporation of a credit union or the
association, fifty dollars;
(F) For filing and recording articles of organization of a
limited liability company, for filing and recording an
application to become a registered foreign limited liability
company, for filing and recording a registration application to
become a domestic limited liability partnership, or for filing
and recording an application to become a registered foreign
limited liability partnership, ninety-nine dollars;
(G) For filing and recording a certificate of limited
partnership or an application for registration as a foreign
limited partnership, or for filing an initial statement of
partnership authority pursuant to section 1776.33 of the Revised
Code, ninety-nine dollars;
(H) For filing a copy of papers evidencing the
incorporation of a municipal corporation or of annexation of
territory by a municipal corporation, five dollars, to be paid
by the municipal corporation, the petitioners therefor, or their
agent;
(I) For filing and recording any of the following:
(1) A license to transact business in this state by a
foreign corporation for profit pursuant to section 1703.04 of
the Revised Code or a foreign nonprofit corporation pursuant to
section 1703.27 of the Revised Code, ninety-nine dollars;
(2) A biennial report or biennial statement pursuant to
section 1775.63, 1776.83, or 1785.06 of the Revised Code,
twenty-five dollars;
(3) Except as otherwise provided in this section or any
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other section of the Revised Code, any other certificate or
paper that is required to be filed and recorded or is permitted
to be filed and recorded by any provision of the Revised Code
with the secretary of state, twenty-five dollars.
(J) For filing any certificate or paper not required to be
recorded, five dollars;
(K)(1) For making copies of any certificate or other paper
filed in the office of the secretary of state, a fee not to
exceed one dollar per page, except as otherwise provided in the
Revised Code, and for creating and affixing the seal of the
office of the secretary of state to any good standing or other
certificate, five dollars. For copies of certificates or papers
required by state officers for official purpose, no charge shall
be made.
(2) For creating and affixing the seal of the office of
the secretary of state to the certificates described in division
(E) of section 1701.81, division (E) of section 1701.811,
division (E) of section 1705.38, division (E) of section
1705.381, division (D) of section 1702.43, division (E) of
section 1775.47, division (E) of section 1775.55, division (E)
of section 1776.70, division (E) of section 1776.74, division
(E) of section 1782.433, or division (E) of section 1782.4310 of
the Revised Code, twenty-five dollars.
(L) For a minister's license to solemnize marriages, ten
dollars;
(M) For examining documents to be filed at a later date
for the purpose of advising as to the acceptability of the
proposed filing, fifty dollars;
(N) Fifty dollars for filing and recording any of the
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following:
(1) A certificate of dissolution and accompanying
documents, or a certificate of cancellation, under section
1701.86, 1702.47, 1705.43, 1706.471, 1776.65, or 1782.10 of the
Revised Code;
(2) A notice of dissolution of a foreign licensed
corporation or a certificate of surrender of license by a
foreign licensed corporation under section 1703.17 of the
Revised Code;
(3) The withdrawal of registration of a foreign or
domestic limited liability partnership under section 1775.61,
1775.64, 1776.81, or 1776.86 of the Revised Code, or the
certificate of cancellation of registration of a foreign limited
liability company under section 1705.57 or 1706.515 of the
Revised Code;
(4) The filing of a statement of denial under section
1776.34 of the Revised Code, a statement of dissociation under
section 1776.57 of the Revised Code, a statement of disclaimer
of general partner status under Chapter 1782. of the Revised
Code, or a cancellation of disclaimer of general partner status
under Chapter 1782. of the Revised Code.
(O) For filing a statement of continued existence by a
nonprofit corporation, twenty-five dollars;
(P) For filing a restatement under section 1705.08,
1706.161, or 1782.09 of the Revised Code, an amendment to a
certificate of cancellation under section 1782.10 of the Revised
Code, an amendment under section 1705.08, 1706.161, or 1782.09
of the Revised Code, or a correction under section 1705.55,
1706.173, 1706.511, 1706.513, 1775.61, 1775.64, 1776.12, or
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1782.52 of the Revised Code, fifty dollars;
(Q) For filing for reinstatement of an entity cancelled by
operation of law, by the secretary of state, by order of the
department of taxation, or by order of a court, twenty-five
dollars;
(R) For filing and recording any of the following:
(1) A change of agent, resignation of agent, or change of
agent's address under section 1701.07, 1702.06, 1703.041,
1703.27, 1705.06, 1705.55, 1706.09, 1746.04, 1747.03, 1776.07,
or 1782.04 of the Revised Code, twenty-five dollars;
(2) A multiple change of agent name or address,
standardization of agent address, or resignation of agent under
section 1701.07, 1702.06, 1703.041, 1703.27, 1705.06, 1705.55,
1706.09, 1746.04, 1747.03, 1776.07, or 1782.04 of the Revised
Code, one hundred twenty-five dollars, plus three dollars per
entity record being changed, by the multiple agent update.
(S) For filing and recording any of the following:
(1) An application for the exclusive right to use a name
or an application to reserve a name for future use under section
1701.05, 1702.05, 1703.31, 1705.05, 1706.07, or 1746.06 of the
Revised Code, thirty-nine dollars;
(2) A trade name or fictitious name registration or
report, thirty-nine dollars;
(3) An application to renew any item covered by division
(S)(1) or (2) of this section that is permitted to be renewed,
twenty-five dollars;
(4) An assignment of rights for use of a name covered by
division (S)(1), (2), or (3) of this section, the cancellation
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of a name registration or name reservation that is so covered,
or notice of a change of address of the registrant of a name
that is so covered, twenty-five dollars.
(T) For filing and recording a report to operate a
business trust or a real estate investment trust, either foreign
or domestic, ninety-nine dollars; and for filing and recording
an amendment to a report or associated trust instrument, or a
surrender of authority, to operate a business trust or real
estate investment trust, fifty dollars;
(U)(1) For filing and recording the registration of a
trademark, service mark, or mark of ownership, one hundred
twenty-five dollars;
(2) For filing and recording the change of address of a
registrant, the assignment of rights to a registration, a
renewal of a registration, or the cancellation of a registration
associated with a trademark, service mark, or mark of ownership,
twenty-five dollars.
(V) For filing a service of process with the secretary of
state, five thirty-five dollars, except as otherwise provided in
any section of the Revised Code;
(W) For making, recording, and forwarding a commission
under section 107.06 of the Revised Code, the applicable fee
specified in that section.
Fees specified in this section may be paid by cash, check,
or money order, by credit card in accordance with section 113.40
of the Revised Code, or by an alternative payment program in
accordance with division (B) of section 111.18 of the Revised
Code. Any credit card number or the expiration date of any
credit card is not subject to disclosure under Chapter 149. of
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the Revised Code.
Sec. 122.16. (A) As used in this section:
(1) "Distressed area" means either a municipal corporation
that has a population of at least fifty thousand or a county,
that meets two of the following criteria:
(a) Its average rate of unemployment, during the most
recent five-year period for which data are available, is equal
to at least one hundred twenty-five per cent of the average rate
of unemployment for the United States for the same period.
(b) It has a per capita income equal to or below eighty
per cent of the median county per capita income of the United
States as determined by the most recently available figures from
the United States census bureau.
(c)(i) In the case of a municipal corporation, at least
twenty per cent of the residents have a total income for the
most recent census year that is below the official poverty line.
(ii) In the case of a county, in intercensal years, the
county has a ratio of transfer payment income to total county
income equal to or greater than twenty-five per cent.
(2) "Eligible area" means a distressed area, a labor
surplus area, an inner city area, or a situational distress
area.
(3) "Eligible costs associated with a voluntary action"
means costs incurred during the qualifying period in performing
a remedy or remedial activities, as defined in section 3746.01
of the Revised Code, and any costs incurred during the
qualifying period in performing both a phase I and phase II
property assessment, as defined in the rules adopted under
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section 3746.04 of the Revised Code, provided that the
performance of the phase I and phase II property assessment
resulted in the implementation of the remedy or remedial
activities.
(4) "Inner city area" means, in a municipal corporation
that has a population of at least one hundred thousand and does
not meet the criteria of a labor surplus area or a distressed
area, targeted investment areas established by the municipal
corporation within its boundaries that are comprised of the most
recent census block tracts that individually have at least
twenty per cent of their population at or below the state
poverty level or other census block tracts contiguous to such
census block tracts.
(5) "Labor surplus area" means an area designated as a
labor surplus area by the United States department of labor.
(6) "Official poverty line" has the same meaning as in
division (A) of section 3923.51 of the Revised Code.
(7) "Partner" includes a member of a limited liability
company formed under Chapter 1705. or 1706. of the Revised Code
or under the laws of any other state if the limited liability
company is not treated as a corporation for purposes of Chapter
5733. of the Revised Code and is not classified as an
association taxable as a corporation for federal income tax
purposes.
(8) "Partnership" includes a limited liability company
formed under Chapter 1705. or 1706. of the Revised Code or under
the laws of any other state if the limited liability company is
not treated as a corporation for purposes of Chapter 5733. of
the Revised Code and is not classified as an association taxable
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as a corporation for federal income tax purposes.
(9) "Qualifying period" means the period that begins July
1, 1996, and ends June 30, 1999.
(10) "S corporation" means a corporation that has made an
election under subchapter S of chapter one of subtitle A of the
Internal Revenue Code for its taxable year under the Internal
Revenue Code;
(11) "Situational distress area" means a county or a
municipal corporation that has experienced or is experiencing a
closing or downsizing of a major employer that will adversely
affect the economy of the county or municipal corporation. In
order for a county or municipal corporation to be designated as
a situational distress area, the governing body of the county or
municipal corporation shall submit a petition to the director of
development in the form prescribed by the director. A county or
municipal corporation may be designated as a situational
distress area for a period not exceeding thirty-six months.
The petition shall include written documentation that
demonstrates all of the following:
(a) The number of jobs lost by the closing or downsizing;
(b) The impact that the job loss has on the unemployment
rate of the county or municipal corporation as measured by the
director of job and family services;
(c) The annual payroll associated with the job loss;
(d) The amount of state and local taxes associated with
the job loss;
(e) The impact that the closing or downsizing has on the
suppliers located in the county or municipal corporation.
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(12) "Voluntary action" has the same meaning as in section
3746.01 of the Revised Code.
(13) "Taxpayer" means a corporation subject to the tax
imposed by section 5733.06 of the Revised Code or any person
subject to the tax imposed by section 5747.02 of the Revised
Code.
(14) "Governing body" means the board of county
commissioners of a county, the board of township trustees of a
township, or the legislative authority of a municipal
corporation.
(15) "Eligible site" means property for which a covenant
not to sue has been issued under section 3746.12 of the Revised
Code.
(B)(1) A taxpayer, partnership, or S corporation that has
been issued, under section 3746.12 of the Revised Code, a
covenant not to sue for a site by the director of environmental
protection during the qualifying period may apply to the
director of development, in the manner prescribed by the
director, to enter into an agreement under which the applicant
agrees to economically redevelop the site in a manner that will
create employment opportunities and a credit will be granted to
the applicant against the tax imposed by section 5733.06 or
5747.02 of the Revised Code. The application shall state the
eligible costs associated with a voluntary action incurred by
the applicant. The application shall be accompanied by proof, in
a form prescribed by the director of development, that the
covenant not to sue has been issued.
The applicant shall request the certified professional
that submitted the no further action letter for the eligible
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site under section 3746.11 of the Revised Code to submit an
affidavit to the director of development verifying the eligible
costs associated with the voluntary action at that site.
The director shall review the applications in the order
they are received. If the director determines that the applicant
meets the requirements of this section, the director may enter
into an agreement granting a credit against the tax imposed by
section 5733.06 or 5747.02 of the Revised Code. In making the
determination, the director may consider the extent to which
political subdivisions and other units of government will
cooperate with the applicant to redevelop the eligible site. The
agreement shall state the amount of the tax credit and the
reporting requirements described in division (F) of this
section.
(2) The maximum annual amount of credits the director of
development may grant under such agreements shall be as follows:
1996 $5,000,000
1997 $10,000,000
1998 $10,000,000
1999 $5,000,000
For any year in which the director of development does not
grant tax credits under this section equal to the maximum annual
amount, the amount not granted for that year shall be added to
the maximum annual amount that may be granted for the following
year. However, the director shall not grant any tax credits
under this section after June 30, 1999.
(C)(1) If the covenant not to sue was issued in connection
with a site that is not located in an eligible area, the credit
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amount is equal to the lesser of five hundred thousand dollars
or ten per cent of the eligible costs associated with a
voluntary action incurred by the taxpayer, partnership, or S
corporation.
(2) If a covenant not to sue was issued in connection with
a site that is located in an eligible area, the credit amount is
equal to the lesser of seven hundred fifty thousand dollars or
fifteen per cent of the eligible costs associated with a
voluntary action incurred by the taxpayer, partnership, or S
corporation.
(3) A taxpayer, partnership, or S corporation that has
been issued covenants not to sue under section 3746.12 of the
Revised Code for more than one site may apply to the director of
development to enter into more than one agreement granting a
credit against the tax imposed by section 5733.06 or 5747.02 of
the Revised Code.
(4) For each year for which a taxpayer, partnership, or S
corporation has been granted a credit under an agreement entered
into under this section, the director of development shall issue
a certificate to the taxpayer, partnership, or S corporation
indicating the amount of the credit the taxpayer, the partners
of the partnership, or the shareholders of the S corporation may
claim for that year, not including any amount that may be
carried forward from previous years under section 5733.34 of the
Revised Code.
(D)(1) Each agreement entered into under this section
shall incorporate a commitment by the taxpayer, partnership, or
S corporation not to permit the use of an eligible site to cause
the relocation of employment positions to that site from
elsewhere in this state, except as otherwise provided in
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division (D)(2) of this section. The commitment shall be binding
on the taxpayer, partnership, or S corporation for the lesser of
five years from the date the agreement is entered into or the
number of years the taxpayer, partnership, or S corporation is
entitled to claim the tax credit under the agreement.
(2) An eligible site may be the site of employment
positions relocated from elsewhere in this state if the director
of development determines both of the following:
(a) That the site from which the employment positions
would be relocated is inadequate to meet market and industry
conditions, expansion plans, consolidation plans, or other
business considerations affecting the relocating employer;
(b) That the governing body of the county, township, or
municipal corporation from which the employment positions would
be relocated has been notified of the possible relocation.
For purposes of this section, the movement of an
employment position from one political subdivision to another
political subdivision shall be considered a relocation of an
employment position, but the transfer of an individual employee
from one political subdivision to another political subdivision
shall not be considered a relocation of an employment position
as long as the individual's employment position in the first
political subdivision is refilled.
(E) A taxpayer, partnership, or S corporation that has
entered into an agreement granting a credit against the tax
imposed by section 5733.06 or 5747.02 of the Revised Code that
subsequently recovers in a lawsuit or settlement of a lawsuit at
least seventy-five per cent of the eligible costs associated
with a voluntary action shall not claim any credit amount
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remaining, including any amounts carried forward from prior
years, beginning with the taxable year in which the judgment in
the lawsuit is entered or the settlement is finally agreed to.
Any amount of credit that a taxpayer, partnership, or S
corporation may not claim by reason of this division shall not
be considered to have been granted for the purpose of
determining the total amount of credits that may be issued under
division (B)(2) of this section.
(F) Each year for which a taxpayer, partnership, or S
corporation claims a credit under section 5733.34 of the Revised
Code, the taxpayer, partnership, or S corporation shall report
the following to the director of development:
(1) The status of all cost recovery litigation described
in division (E) of this section to which it was a party during
the previous year;
(2) Confirmation that the covenant not to sue has not been
revoked or has not been voided;
(3) Confirmation that the taxpayer, partnership, or S
corporation has not permitted the eligible site to be used in
such a manner as to cause the relocation of employment positions
from elsewhere in this state in violation of the commitment
required under division (D) of this section;
(4) Any other information the director of development
requires to perform the director's duties under this section.
(G) The director of development shall annually certify, by
the first day of January of each year during the qualifying
period, the eligible areas for the calendar year that includes
that first day of January.
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(H) The director of development, in accordance with
Chapter 119. of the Revised Code, shall adopt rules necessary to
implement this section, including rules prescribing forms
required for administering this section.
Sec. 122.173. (A) As used in this section:
(1) "Manufacturing machinery and equipment" means engines
and machinery, and tools and implements, of every kind used, or
designed to be used, in refining and manufacturing.
"Manufacturing machinery and equipment" does not include
property acquired after December 31, 1999, that is used:
(a) For the transmission and distribution of electricity;
(b) For the generation of electricity, if fifty per cent
or more of the electricity that the property generates is
consumed, during the one-hundred-twenty-month period commencing
with the date the property is placed in service, by persons that
are not related members to the person who generates the
electricity.
(2) "New manufacturing machinery and equipment" means
manufacturing machinery and equipment, the original use in this
state of which commences with the taxpayer or with a partnership
of which the taxpayer is a partner. "New manufacturing machinery
and equipment" does not include property acquired after December
31, 1999, that is used:
(a) For the transmission and distribution of electricity;
(b) For the generation of electricity, if fifty per cent
or more of the electricity that the property generates is
consumed, during the one-hundred-twenty-month period commencing
with the date the property is placed in service, by persons that
are not related members to the person who generates the
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electricity.
(3)(a) "Purchase" has the same meaning as in section
179(d)(2) of the Internal Revenue Code.
(b) For purposes of this section, any property that is not
manufactured or assembled primarily by the taxpayer is
considered purchased at the time the agreement to acquire the
property becomes binding. Any property that is manufactured or
assembled primarily by the taxpayer is considered purchased at
the time the taxpayer places the property in service in the
county for which the taxpayer will calculate the county excess
amount.
(c) Notwithstanding section 179(d) of the Internal Revenue
Code, a taxpayer's direct or indirect acquisition of new
manufacturing machinery and equipment is not purchased on or
after July 1, 1995, if the taxpayer, or a person whose
relationship to the taxpayer is described in subparagraphs (A),
(B), or (C) of section 179(d)(2) of the Internal Revenue Code,
had directly or indirectly entered into a binding agreement to
acquire the property at any time prior to July 1, 1995.
(4) "Qualifying period" means the period that begins July
1, 1995, and ends June 30, 2005.
(5) "County average new manufacturing machinery and
equipment investment" means either of the following:
(a) The average annual cost of new manufacturing machinery
and equipment purchased for use in the county during baseline
years, in the case of a taxpayer that was in existence for more
than one year during baseline years.
(b) Zero, in the case of a taxpayer that was not in
existence for more than one year during baseline years.
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(6) "Partnership" includes a limited liability company
formed under Chapter 1705. or 1706. of the Revised Code or under
the laws of any other state, provided that the company is not
classified for federal income tax purposes as an association
taxable as a corporation.
(7) "Partner" includes a member of a limited liability
company formed under Chapter 1705. or 1706. of the Revised Code
or under the laws of any other state, provided that the company
is not classified for federal income tax purposes as an
association taxable as a corporation.
(8) "Distressed area" means either a municipal corporation
that has a population of at least fifty thousand or a county
that meets two of the following criteria of economic distress,
or a municipal corporation the majority of the population of
which is situated in such a county:
(a) Its average rate of unemployment, during the most
recent five-year period for which data are available, is equal
to at least one hundred twenty-five per cent of the average rate
of unemployment for the United States for the same period;
(b) It has a per capita income equal to or below eighty
per cent of the median county per capita income of the United
States as determined by the most recently available figures from
the United States census bureau;
(c)(i) In the case of a municipal corporation, at least
twenty per cent of the residents have a total income for the
most recent census year that is below the official poverty line;
(ii) In the case of a county, in intercensal years, the
county has a ratio of transfer payment income to total county
income equal to or greater than twenty-five per cent.
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(9) "Eligible area" means a distressed area, a labor
surplus area, an inner city area, or a situational distress
area.
(10) "Inner city area" means, in a municipal corporation
that has a population of at least one hundred thousand and does
not meet the criteria of a labor surplus area or a distressed
area, targeted investment areas established by the municipal
corporation within its boundaries that are comprised of the most
recent census block tracts that individually have at least
twenty per cent of their population at or below the state
poverty level or other census block tracts contiguous to such
census block tracts.
(11) "Labor surplus area" means an area designated as a
labor surplus area by the United States department of labor.
(12) "Official poverty line" has the same meaning as in
division (A) of section 3923.51 of the Revised Code.
(13) "Situational distress area" means a county or a
municipal corporation that has experienced or is experiencing a
closing or downsizing of a major employer that will adversely
affect the county's or municipal corporation's economy. In order
to be designated as a situational distress area, for a period
not to exceed thirty-six months, the county or municipal
corporation may petition the director of development. The
petition shall include written documentation that demonstrates
all of the following adverse effects on the local economy:
(a) The number of jobs lost by the closing or downsizing;
(b) The impact that the job loss has on the county's or
municipal corporation's unemployment rate as measured by the
state director of job and family services;
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(c) The annual payroll associated with the job loss;
(d) The amount of state and local taxes associated with
the job loss;
(e) The impact that the closing or downsizing has on
suppliers located in the county or municipal corporation.
(14) "Cost" has the same meaning and limitation as in
section 179(d)(3) of the Internal Revenue Code.
(15) "Baseline years" means:
(a) Calendar years 1992, 1993, and 1994, with regard to a
grant claimed for the purchase during calendar year 1995, 1996,
1997, or 1998 of new manufacturing machinery and equipment;
(b) Calendar years 1993, 1994, and 1995, with regard to a
grant claimed for the purchase during calendar year 1999 of new
manufacturing machinery and equipment;
(c) Calendar years 1994, 1995, and 1996, with regard to a
grant claimed for the purchase during calendar year 2000 of new
manufacturing machinery and equipment;
(d) Calendar years 1995, 1996, and 1997, with regard to a
grant claimed for the purchase during calendar year 2001 of new
manufacturing machinery and equipment;
(e) Calendar years 1996, 1997, and 1998, with regard to a
grant claimed for the purchase during calendar year 2002 of new
manufacturing machinery and equipment;
(f) Calendar years 1997, 1998, and 1999, with regard to a
grant claimed for the purchase during calendar year 2003 of new
manufacturing machinery and equipment;
(g) Calendar years 1998, 1999, and 2000, with regard to a
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grant claimed for the purchase during calendar year 2004 of new
manufacturing machinery and equipment;
(h) Calendar years 1999, 2000, and 2001, with regard to a
grant claimed for the purchase on or after January 1, 2005, and
on or before June 30, 2005, of new manufacturing machinery and
equipment.
(16) "Related member" has the same meaning as in section
5733.042 of the Revised Code.
(17) "Qualifying controlled group" has the same meaning as
in section 5733.04 of the Revised Code.
(18) "Tax liability" has the same meaning as in section
122.172 of the Revised Code.
(B)(1) Subject to divisions (I) and (J) of this section, a
grant is allowed against the tax imposed by section 5733.06 or
5747.02 of the Revised Code for a taxpayer that purchases new
manufacturing machinery and equipment during the qualifying
period, provided that the new manufacturing machinery and
equipment are installed in this state not later than June 30,
2006.
(2)(a) Except as otherwise provided in division (B)(2)(b)
of this section, a grant may be claimed under this section in
excess of one million dollars only if the cost of all
manufacturing machinery and equipment owned in this state by the
taxpayer claiming the grant on the last day of the calendar year
exceeds the cost of all manufacturing machinery and equipment
owned in this state by the taxpayer on the first day of that
calendar year.
As used in division (B)(2)(a) of this section, "calendar
year" means the calendar year in which the machinery and
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equipment for which the grant is claimed was purchased.
(b) Division (B)(2)(a) of this section does not apply if
the taxpayer claiming the grant applies for and is issued a
waiver of the requirement of that division. A taxpayer may apply
to the director of development for such a waiver in the manner
prescribed by the director, and the director may issue such a
waiver if the director determines that granting the grant is
necessary to increase or retain employees in this state, and
that the grant has not caused relocation of manufacturing
machinery and equipment among counties within this state for the
primary purpose of qualifying for the grant.
(C)(1) Except as otherwise provided in division (C)(2) and
division (I) of this section, the grant amount is equal to seven
and one-half per cent of the excess of the cost of the new
manufacturing machinery and equipment purchased during the
calendar year for use in a county over the county average new
manufacturing machinery and equipment investment for that
county.
(2) Subject to division (I) of this section, as used in
division (C)(2) of this section, "county excess" means the
taxpayer's excess cost for a county as computed under division
(C)(1) of this section.
Subject to division (I) of this section, a taxpayer with a
county excess, whose purchases included purchases for use in any
eligible area in the county, the grant amount is equal to
thirteen and one-half per cent of the cost of the new
manufacturing machinery and equipment purchased during the
calendar year for use in the eligible areas in the county,
provided that the cost subject to the thirteen and one-half per
cent rate shall not exceed the county excess. If the county
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excess is greater than the cost of the new manufacturing
machinery and equipment purchased during the calendar year for
use in eligible areas in the county, the grant amount also shall
include an amount equal to seven and one-half per cent of the
amount of the difference.
(3) If a taxpayer is allowed a grant for purchases of new
manufacturing machinery and equipment in more than one county or
eligible area, it shall aggregate the amount of those grants
each year.
(4) Except as provided in division (J) of this section,
the taxpayer shall claim one-seventh of the grant amount for the
taxable year ending in the calendar year in which the new
manufacturing machinery and equipment is purchased for use in
the county by the taxpayer or partnership. One-seventh of the
taxpayer grant amount is allowed for each of the six ensuing
taxable years. Except for carried-forward amounts, the taxpayer
is not allowed any grant amount remaining if the new
manufacturing machinery and equipment is sold by the taxpayer or
partnership or is transferred by the taxpayer or partnership out
of the county before the end of the seven-year period unless, at
the time of the sale or transfer, the new manufacturing
machinery and equipment has been fully depreciated for federal
income tax purposes.
(5)(a) A taxpayer that acquires manufacturing machinery
and equipment as a result of a merger with the taxpayer with
whom commenced the original use in this state of the
manufacturing machinery and equipment, or with a taxpayer that
was a partner in a partnership with whom commenced the original
use in this state of the manufacturing machinery and equipment,
is entitled to any remaining or carried-forward grant amounts to
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which the taxpayer was entitled.
(b) A taxpayer that enters into an agreement under
division (C)(3) of section 5709.62 of the Revised Code and that
acquires manufacturing machinery or equipment as a result of
purchasing a large manufacturing facility, as defined in section
5709.61 of the Revised Code, from another taxpayer with whom
commenced the original use in this state of the manufacturing
machinery or equipment, and that operates the large
manufacturing facility so purchased, is entitled to any
remaining or carried-forward grant amounts to which the other
taxpayer who sold the facility would have been entitled under
this section had the other taxpayer not sold the manufacturing
facility or equipment.
(c) New manufacturing machinery and equipment is not
considered sold if a pass-through entity transfers to another
pass-through entity substantially all of its assets as part of a
plan of reorganization under which substantially all gain and
loss is not recognized by the pass-through entity that is
transferring the new manufacturing machinery and equipment to
the transferee and under which the transferee's basis in the new
manufacturing machinery and equipment is determined, in whole or
in part, by reference to the basis of the pass-through entity
that transferred the new manufacturing machinery and equipment
to the transferee.
(d) Division (C)(5) of this section applies only if the
acquiring taxpayer or transferee does not sell the new
manufacturing machinery and equipment or transfer the new
manufacturing machinery and equipment out of the county before
the end of the seven-year period to which division (C)(4) of
this section refers.
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(e) Division (C)(5)(b) of this section applies only to the
extent that the taxpayer that sold the manufacturing machinery
or equipment, upon request, timely provides to the tax
commissioner any information that the tax commissioner considers
to be necessary to ascertain any remaining or carried-forward
amounts to which the taxpayer that sold the facility would have
been entitled under this section had the taxpayer not sold the
manufacturing machinery or equipment. Nothing in division (C)(5)
(b) or (e) of this section shall be construed to allow a
taxpayer to claim any grant amount with respect to the acquired
manufacturing machinery or equipment that is greater than the
amount that would have been available to the other taxpayer that
sold the manufacturing machinery or equipment had the other
taxpayer not sold the manufacturing machinery or equipment.
(D) The taxpayer shall claim the grant allowed by this
section in the manner provided by section 122.172 of the Revised
Code. Any portion of the grant in excess of the taxpayer's tax
liability for the taxable year shall not be refundable but may
be carried forward for the next three consecutive taxable years.
(E) A taxpayer purchasing new manufacturing machinery and
equipment and intending to claim the grant shall file, with the
director of development, a notice of intent to claim the grant
on a form prescribed by the director of development. The
director of development shall inform the tax commissioner of the
notice of intent to claim the grant. No grant may be claimed
under this section for any manufacturing machinery and equipment
with respect to which a notice was not filed by the date of a
timely filed return, including extensions, for the taxable year
that includes September 30, 2005, but a notice filed on or
before such date under division (E) of section 5733.33 of the
Revised Code of the intent to claim the credit under that
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section also shall be considered a notice of the intent to claim
a grant under this section.
(F) The director of development shall annually certify, by
the first day of January of each year during the qualifying
period, the eligible areas for the tax grant for the calendar
year that includes that first day of January. The director shall
send a copy of the certification to the tax commissioner.
(G) New manufacturing machinery and equipment for which a
taxpayer claims the credit under section 5733.31 or 5733.311 of
the Revised Code shall not be considered new manufacturing
machinery and equipment for purposes of the grant under this
section.
(H)(1) Notwithstanding sections 5733.11 and 5747.13 of the
Revised Code, but subject to division (H)(2) of this section,
the tax commissioner may issue an assessment against a person
with respect to a grant claimed under this section for new
manufacturing machinery and equipment described in division (A)
(1)(b) or (2)(b) of this section, if the machinery or equipment
subsequently does not qualify for the grant.
(2) Division (H)(1) of this section shall not apply after
the twenty-fourth month following the last day of the period
described in divisions (A)(1)(b) and (2)(b) of this section.
(I) Notwithstanding any other provision of this section to
the contrary, in the case of a qualifying controlled group, the
grant available under this section to a taxpayer or taxpayers in
the qualifying controlled group shall be computed as if all
corporations in the group were a single corporation. The grant
shall be allocated to such a taxpayer or taxpayers in the group
in any amount elected for the taxable year by the group. The
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election shall be revocable and amendable during the period
described in division (B) of section 5733.12 of the Revised
Code.
This division applies to all purchases of new
manufacturing machinery and equipment made on or after January
1, 2001, and to all baseline years used to compute any grant
attributable to such purchases; provided, that this division may
be applied solely at the election of the qualifying controlled
group with respect to all purchases of new manufacturing
machinery and equipment made before that date, and to all
baseline years used to compute any grant attributable to such
purchases. The qualifying controlled group at any time may elect
to apply this division to purchases made prior to January 1,
2001, subject to the following:
(1) The election is irrevocable;
(2) The election need not accompany a timely filed report,
but the election may accompany a subsequently filed but timely
application for refund, a subsequently filed but timely amended
report, or a subsequently filed but timely petition for
reassessment.
(J) Except as provided in division (B) of section 122.172
of the Revised Code, no grant under this section may be claimed
for any taxable year for which a credit is allowed under section
5733.33 of the Revised Code. If the tax imposed by section
5733.06 of the Revised Code for which a grant is allowed under
this section has been prorated under division (G)(2) of section
5733.01 of the Revised Code, the grant shall be prorated by the
same percentage as the tax.
Sec. 135.14. (A) As used in this section:
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(1) "Treasurer" does not include the treasurer of state,
and "governing board" does not include the state board of
deposit.
(2) "Other obligations" includes notes whether or not
issued in anticipation of the issuance of bonds.
(B) The treasurer or governing board may invest or deposit
any part or all of the interim moneys. The following
classifications of obligations shall be eligible for such
investment or deposit:
(1) United States treasury bills, notes, bonds, or any
other obligation or security issued by the United States
treasury or any other obligation guaranteed as to principal and
interest by the United States.
Nothing in the classification of eligible obligations set
forth in division (B)(1) of this section or in the
classifications of eligible obligations set forth in divisions
(B)(2) to (7) of this section shall be construed to authorize
any investment in stripped principal or interest obligations of
such eligible obligations.
(2) Bonds, notes, debentures, or any other obligations or
securities issued by any federal government agency or
instrumentality, including but not limited to, the federal
national mortgage association, federal home loan bank, federal
farm credit bank, federal home loan mortgage corporation, and
government national mortgage association. All federal agency
securities shall be direct issuances of federal government
agencies or instrumentalities.
(3) Interim deposits in the eligible institutions applying
for interim moneys as provided in section 135.08 of the Revised
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Code. The award of interim deposits shall be made in accordance
with section 135.09 of the Revised Code and the treasurer or the
governing board shall determine the periods for which such
interim deposits are to be made and shall award such interim
deposits for such periods, provided that any eligible
institution receiving an interim deposit award may, upon
notification that the award has been made, decline to accept the
interim deposit in which event the award shall be made as though
the institution had not applied for such interim deposit.
(4) Bonds and other obligations of this state, or the
political subdivisions of this state, provided that, with
respect to bonds or other obligations of political subdivisions,
all of the following apply:
(a) The bonds or other obligations are payable from
general revenues of the political subdivision and backed by the
full faith and credit of the political subdivision.
(b) The bonds or other obligations are rated at the time
of purchase in the three highest classifications established by
at least one nationally recognized standard rating service and
purchased through a registered securities broker or dealer.
(c) The aggregate value of the bonds or other obligations
does not exceed twenty per cent of interim moneys available for
investment at the time of purchase.
(d) The treasurer or governing board is not the sole
purchaser of the bonds or other obligations at original
issuance.
(e) The bonds or other obligations mature within ten years
from the date of settlement.
No investment shall be made under division (B)(4) of this
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section unless the treasurer or governing board has completed
additional training for making the investments authorized by
division (B)(4) of this section. The type and amount of
additional training shall be approved by the treasurer of state
and may be conducted by or provided under the supervision of the
treasurer of state.
(5) No-load money market mutual funds consisting
exclusively of obligations described in division (B)(1) or (2)
of this section and repurchase agreements secured by such
obligations, provided that investments in securities described
in this division are made only through eligible institutions
mentioned in section 135.03 of the Revised Code;
(6) The Ohio subdivision's fund as provided in section
135.45 of the Revised Code;
(7) Up to forty per cent of interim moneys available for
investment in either of the following:
(a) Commercial paper notes issued by an entity that is
defined in division (D) of section 1705.01 or division (E) of
section 1706.01 of the Revised Code and that has assets
exceeding five hundred million dollars, to which notes all of
the following apply:
(i) The notes are rated at the time of purchase in the
highest classification established by at least two nationally
recognized standard rating services.
(ii) The aggregate value of the notes does not exceed ten
per cent of the aggregate value of the outstanding commercial
paper of the issuing corporation.
(iii) The notes mature not later than two hundred seventy
days after purchase.
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(iv) The investment in commercial paper notes of a single
issuer shall not exceed in the aggregate five per cent of
interim moneys available for investment at the time of purchase.
(b) Bankers acceptances of banks that are insured by the
federal deposit insurance corporation and that mature not later
than one hundred eighty days after purchase.
No investment shall be made pursuant to division (B)(7) of
this section unless the treasurer or governing board has
completed additional training for making the investments
authorized by division (B)(7) of this section. The type and
amount of additional training shall be approved by the treasurer
of state and may be conducted by or provided under the
supervision of the treasurer of state.
(C) Nothing in the classifications of eligible obligations
set forth in divisions (B)(1) to (7) of this section shall be
construed to authorize any investment in a derivative, and no
treasurer or governing board shall invest in a derivative. For
purposes of this division, "derivative" means a financial
instrument or contract or obligation whose value or return is
based upon or linked to another asset or index, or both,
separate from the financial instrument, contract, or obligation
itself. Any security, obligation, trust account, or other
instrument that is created from an issue of the United States
treasury or is created from an obligation of a federal agency or
instrumentality or is created from both is considered a
derivative instrument. An eligible investment described in this
section with a variable interest rate payment, based upon a
single interest payment or single index comprised of other
eligible investments provided for in division (B)(1) or (2) of
this section, is not a derivative, provided that such variable
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rate investment has a maximum maturity of two years.
(D) Except as provided in division (B)(4) or (E) of this
section, any investment made pursuant to this section must
mature within five years from the date of settlement, unless the
investment is matched to a specific obligation or debt of the
subdivision.
(E) The treasurer or governing board may also enter into a
written repurchase agreement with any eligible institution
mentioned in section 135.03 of the Revised Code or any eligible
dealer pursuant to division (M) of this section, under the terms
of which agreement the treasurer or governing board purchases,
and such institution or dealer agrees unconditionally to
repurchase any of the securities listed in divisions (D)(1) to
(5), except letters of credit described in division (D)(2), of
section 135.18 of the Revised Code. The market value of
securities subject to an overnight written repurchase agreement
must exceed the principal value of the overnight written
repurchase agreement by at least two per cent. A written
repurchase agreement shall not exceed thirty days and the market
value of securities subject to a written repurchase agreement
must exceed the principal value of the written repurchase
agreement by at least two per cent and be marked to market
daily. All securities purchased pursuant to this division shall
be delivered into the custody of the treasurer or governing
board or an agent designated by the treasurer or governing
board. A written repurchase agreement with an eligible
securities dealer shall be transacted on a delivery versus
payment basis. The agreement shall contain the requirement that
for each transaction pursuant to the agreement the participating
institution or dealer shall provide all of the following
information:
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(1) The par value of the securities;
(2) The type, rate, and maturity date of the securities;
(3) A numerical identifier generally accepted in the
securities industry that designates the securities.
No treasurer or governing board shall enter into a written
repurchase agreement under the terms of which the treasurer or
governing board agrees to sell securities owned by the
subdivision to a purchaser and agrees with that purchaser to
unconditionally repurchase those securities.
(F) No treasurer or governing board shall make an
investment under this section, unless the treasurer or governing
board, at the time of making the investment, reasonably expects
that the investment can be held until its maturity.
(G) No treasurer or governing board shall pay interim
moneys into a fund established by another subdivision,
treasurer, governing board, or investing authority, if that fund
was established for the purpose of investing the public moneys
of other subdivisions. This division does not apply to the
payment of public moneys into either of the following:
(1) The Ohio subdivision's fund pursuant to division (B)
(6) of this section;
(2) A fund created solely for the purpose of acquiring,
constructing, owning, leasing, or operating municipal utilities
pursuant to the authority provided under section 715.02 of the
Revised Code or Section 4 of Article XVIII, Ohio Constitution.
For purposes of division (G) of this section,
"subdivision" includes a county.
(H) The use of leverage, in which the treasurer or
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governing board uses its current investment assets as collateral
for the purpose of purchasing other assets, is prohibited. The
issuance of taxable notes for the purpose of arbitrage is
prohibited. Contracting to sell securities that have not yet
been acquired by the treasurer or governing board, for the
purpose of purchasing such securities on the speculation that
bond prices will decline, is prohibited.
(I) Whenever, during a period of designation, the
treasurer classifies public moneys as interim moneys, the
treasurer shall notify the governing board of such action. The
notification shall be given within thirty days after such
classification and in the event the governing board does not
concur in such classification or in the investments or deposits
made under this section, the governing board may order the
treasurer to sell or liquidate any of such investments or
deposits, and any such order shall specifically describe the
investments or deposits and fix the date upon which they are to
be sold or liquidated. Investments or deposits so ordered to be
sold or liquidated shall be sold or liquidated for cash by the
treasurer on the date fixed in such order at the then current
market price. Neither the treasurer nor the members of the board
shall be held accountable for any loss occasioned by sales or
liquidations of investments or deposits at prices lower than
their cost. Any loss or expense incurred in making such sales or
liquidations is payable as other expenses of the treasurer's
office.
(J) If any investments or deposits purchased under the
authority of this section are issuable to a designated payee or
to the order of a designated payee, the name of the treasurer
and the title of the treasurer's office shall be so designated.
If any such securities are registrable either as to principal or
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interest, or both, then such securities shall be registered in
the name of the treasurer as such.
(K) The treasurer is responsible for the safekeeping of
all documents evidencing a deposit or investment acquired by the
treasurer under this section. Any securities may be deposited
for safekeeping with a qualified trustee as provided in section
135.18 of the Revised Code, except the delivery of securities
acquired under any repurchase agreement under this section shall
be made to a qualified trustee, provided, however, that the
qualified trustee shall be required to report to the treasurer,
governing board, auditor of state, or an authorized outside
auditor at any time upon request as to the identity, market
value, and location of the document evidencing each security,
and that if the participating institution is a designated
depository of the subdivision for the current period of
designation, the securities that are the subject of the
repurchase agreement may be delivered to the treasurer or held
in trust by the participating institution on behalf of the
subdivision. Interest earned on any investments or deposits
authorized by this section shall be collected by the treasurer
and credited by the treasurer to the proper fund of the
subdivision.
Upon the expiration of the term of office of a treasurer
or in the event of a vacancy in the office of treasurer by
reason of death, resignation, removal from office, or otherwise,
the treasurer or the treasurer's legal representative shall
transfer and deliver to the treasurer's successor all documents
evidencing a deposit or investment held by the treasurer. For
the investments and deposits so transferred and delivered, such
treasurer shall be credited with and the treasurer's successor
shall be charged with the amount of money held in such
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investments and deposits.
(L) Whenever investments or deposits acquired under this
section mature and become due and payable, the treasurer shall
present them for payment according to their tenor, and shall
collect the moneys payable thereon. The moneys so collected
shall be treated as public moneys subject to sections 135.01 to
135.21 of the Revised Code.
(M)(1) All investments, except for investments in
securities described in divisions (B)(5) and (6) of this section
and for investments by a municipal corporation in the issues of
such municipal corporation, shall be made only through a member
of the financial industry regulatory authority (FINRA), through
a bank, savings bank, or savings and loan association regulated
by the superintendent of financial institutions, or through an
institution regulated by the comptroller of the currency,
federal deposit insurance corporation, or board of governors of
the federal reserve system.
(2) Payment for investments shall be made only upon the
delivery of securities representing such investments to the
treasurer, governing board, or qualified trustee. If the
securities transferred are not represented by a certificate,
payment shall be made only upon receipt of confirmation of
transfer from the custodian by the treasurer, governing board,
or qualified trustee.
(N) In making investments authorized by this section, a
treasurer or governing board may retain the services of an
investment advisor, provided the advisor is licensed by the
division of securities under section 1707.141 of the Revised
Code or is registered with the securities and exchange
commission, and possesses experience in public funds investment
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management, specifically in the area of state and local
government investment portfolios, or the advisor is an eligible
institution mentioned in section 135.03 of the Revised Code.
(O)(1) Except as otherwise provided in divisions (O)(2)
and (3) of this section, no treasurer or governing board shall
make an investment or deposit under this section, unless there
is on file with the auditor of state a written investment policy
approved by the treasurer or governing board. The policy shall
require that all entities conducting investment business with
the treasurer or governing board shall sign the investment
policy of that subdivision. All brokers, dealers, and financial
institutions, described in division (M)(1) of this section,
initiating transactions with the treasurer or governing board by
giving advice or making investment recommendations shall sign
the treasurer's or governing board's investment policy thereby
acknowledging their agreement to abide by the policy's contents.
All brokers, dealers, and financial institutions, described in
division (M)(1) of this section, executing transactions
initiated by the treasurer or governing board, having read the
policy's contents, shall sign the investment policy thereby
acknowledging their comprehension and receipt.
(2) If a written investment policy described in division
(O)(1) of this section is not filed on behalf of the subdivision
with the auditor of state, the treasurer or governing board of
that subdivision shall invest the subdivision's interim moneys
only in interim deposits pursuant to division (B)(3) of this
section or interim deposits pursuant to section 135.145 of the
Revised Code and approved by the treasurer of state, no-load
money market mutual funds pursuant to division (B)(5) of this
section, or the Ohio subdivision's fund pursuant to division (B)
(6) of this section.
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(3) Divisions (O)(1) and (2) of this section do not apply
to a treasurer or governing board of a subdivision whose average
annual portfolio of investments held pursuant to this section is
one hundred thousand dollars or less, provided that the
treasurer or governing board certifies, on a form prescribed by
the auditor of state, that the treasurer or governing board will
comply and is in compliance with the provisions of sections
135.01 to 135.21 of the Revised Code.
(P) A treasurer or governing board may enter into a
written investment or deposit agreement that includes a
provision under which the parties agree to submit to nonbinding
arbitration to settle any controversy that may arise out of the
agreement, including any controversy pertaining to losses of
public moneys resulting from investment or deposit. The
arbitration provision shall be set forth entirely in the
agreement, and the agreement shall include a conspicuous notice
to the parties that any party to the arbitration may apply to
the court of common pleas of the county in which the arbitration
was held for an order to vacate, modify, or correct the award.
Any such party may also apply to the court for an order to
change venue to a court of common pleas located more than one
hundred miles from the county in which the treasurer or
governing board is located.
For purposes of this division, "investment or deposit
agreement" means any agreement between a treasurer or governing
board and a person, under which agreement the person agrees to
invest, deposit, or otherwise manage a subdivision's interim
moneys on behalf of the treasurer or governing board, or agrees
to provide investment advice to the treasurer or governing
board.
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(Q) An investment made by the treasurer or governing board
pursuant to this section prior to September 27, 1996, that was a
legal investment under the law as it existed before September
27, 1996, may be held until maturity.
Sec. 135.142. (A) In addition to the investments
authorized by section 135.14 of the Revised Code, any board of
education, by a two-thirds vote of its members, may authorize
the treasurer of the board of education to invest up to forty
per cent of the interim moneys of the board, available for
investment at any one time, in either of the following:
(1) Commercial paper notes issued by any entity that is
defined in division (D) of section 1705.01 or division (E) of
section 1706.01 of the Revised Code and has assets exceeding
five hundred million dollars, and to which notes all of the
following apply:
(a) The notes are rated at the time of purchase in the
highest classification established by at least two nationally
recognized standard rating services.
(b) The aggregate value of the notes does not exceed ten
per cent of the aggregate value of the outstanding commercial
paper of the issuing corporation.
(c) The notes mature no later than two hundred seventy
days after purchase.
(d) The investment in commercial paper notes of a single
issuer shall not exceed in the aggregate five per cent of
interim moneys of the board available for investment at the time
of purchase.
(2) Bankers' acceptances of banks that are insured by the
federal deposit insurance corporation and that mature no later
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than one hundred eighty days after purchase.
(B) No investment authorized pursuant to division (A) of
this section shall be made, whether or not authorized by a board
of education, unless the treasurer of the board of education has
completed additional training for making the types of
investments authorized pursuant to division (A) of this section.
The type and amount of such training shall be approved and may
be conducted by or provided under the supervision of the
treasurer of state.
(C) The treasurer of the board of education shall prepare
annually and submit to the board of education, the
superintendent of public instruction, and the auditor of state,
on or before the thirty-first day of August, a report listing
each investment made pursuant to division (A) of this section
during the preceding fiscal year, income earned from such
investments, fees and commissions paid pursuant to division (D)
of this section, and any other information required by the
board, the superintendent, and the auditor of state.
(D) A board of education may make appropriations and
expenditures for fees and commissions in connection with
investments made pursuant to division (A) of this section.
(E)(1) In addition to the investments authorized by
section 135.14 of the Revised Code and division (A) of this
section, any board of education that is a party to an agreement
with the treasurer of state pursuant to division (G) of section
135.143 of the Revised Code and that has outstanding obligations
issued under authority of section 133.10 or 133.301 of the
Revised Code may authorize the treasurer of the board of
education to invest interim moneys of the board in debt
interests rated in either of the two highest rating
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classifications by at least two nationally recognized standard
rating services and issued by entities that are defined in
division (D) of section 1705.01 or division (E) of section
1706.01 of the Revised Code. The debt interests purchased under
authority of division (E) of this section shall mature not later
than the latest maturity date of the outstanding obligations
issued under authority of section 133.10 or 133.301 of the
Revised Code.
(2) If any of the debt interests acquired under division
(E)(1) of this section ceases to be rated as there required, its
issuer shall notify the treasurer of state of this fact within
twenty-four hours. At any time thereafter the treasurer of state
may require collateralization at the rate of one hundred two per
cent of any remaining obligation of the entity, with securities
authorized for investment under section 135.143 of the Revised
Code. The collateral shall be delivered to and held by a
custodian acceptable to the treasurer of state, marked to market
daily, and any default to be cured within twelve hours.
Unlimited substitution shall be allowed of comparable
securities.
Sec. 135.35. (A) The investing authority shall deposit or
invest any part or all of the county's inactive moneys and shall
invest all of the money in the county public library fund when
required by section 135.352 of the Revised Code. The following
classifications of securities and obligations are eligible for
such deposit or investment:
(1) United States treasury bills, notes, bonds, or any
other obligation or security issued by the United States
treasury, any other obligation guaranteed as to principal or
interest by the United States, or any book entry, zero-coupon
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United States treasury security that is a direct obligation of
the United States.
Nothing in the classification of eligible securities and
obligations set forth in divisions (A)(2) to (10) of this
section shall be construed to authorize any investment in
stripped principal or interest obligations of such eligible
securities and obligations.
(2) Bonds, notes, debentures, or any other obligations or
securities issued by any federal government agency or
instrumentality, including, but not limited to, the federal
national mortgage association, federal home loan bank, federal
farm credit bank, federal home loan mortgage corporation, and
government national mortgage association. All federal agency
securities shall be direct issuances of federal government
agencies or instrumentalities.
(3) Time certificates of deposit or savings or deposit
accounts, including, but not limited to, passbook accounts, in
any eligible institution mentioned in section 135.32 of the
Revised Code;
(4) Bonds and other obligations of this state or the
political subdivisions of this state, provided the bonds or
other obligations of political subdivisions mature within ten
years from the date of settlement;
(5) No-load money market mutual funds rated in the highest
category at the time of purchase by at least one nationally
recognized standard rating service or consisting exclusively of
obligations described in division (A)(1), (2), or (6) of section
135.143 of the Revised Code and repurchase agreements secured by
such obligations, provided that investments in securities
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described in this division are made only through eligible
institutions mentioned in section 135.32 of the Revised Code;
(6) The Ohio subdivision's fund as provided in section
135.45 of the Revised Code;
(7) Securities lending agreements with any eligible
institution mentioned in section 135.32 of the Revised Code that
is a member of the federal reserve system or federal home loan
bank or with any recognized United States government securities
dealer meeting the description in division (J)(1) of this
section, under the terms of which agreements the investing
authority lends securities and the eligible institution or
dealer agrees to simultaneously exchange similar securities or
cash, equal value for equal value.
Securities and cash received as collateral for a
securities lending agreement are not inactive moneys of the
county or moneys of a county public library fund. The investment
of cash collateral received pursuant to a securities lending
agreement may be invested only in instruments specified by the
investing authority in the written investment policy described
in division (K) of this section.
(8) Up to forty per cent of the county's total average
portfolio in either of the following investments:
(a) Commercial paper notes issued by an entity that is
defined in division (D) of section 1705.01 or division (E) of
section 1706.01 of the Revised Code and that has assets
exceeding five hundred million dollars, to which notes all of
the following apply:
(i) The notes are rated at the time of purchase in the
highest classification established by at least two nationally
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recognized standard rating services.
(ii) The aggregate value of the notes does not exceed ten
per cent of the aggregate value of the outstanding commercial
paper of the issuing corporation.
(iii) The notes mature not later than two hundred seventy
days after purchase.
(iv) The investment in commercial paper notes of a single
issuer shall not exceed in the aggregate five per cent of
interim moneys available for investment at the time of purchase.
(b) Bankers acceptances of banks that are insured by the
federal deposit insurance corporation and that mature not later
than one hundred eighty days after purchase.
No investment shall be made pursuant to division (A)(8) of
this section unless the investing authority has completed
additional training for making the investments authorized by
division (A)(8) of this section. The type and amount of
additional training shall be approved by the treasurer of state
and may be conducted by or provided under the supervision of the
treasurer of state.
(9) Up to fifteen per cent of the county's total average
portfolio in notes issued by corporations that are incorporated
under the laws of the United States and that are operating
within the United States, or by depository institutions that are
doing business under authority granted by the United States or
any state and that are operating within the United States,
provided both of the following apply:
(a) The notes are rated in the three highest categories by
at least two nationally recognized standard rating services at
the time of purchase.
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(b) The notes mature not later than three years after
purchase.
(10) Debt interests rated at the time of purchase in the
three highest categories by two nationally recognized standard
rating services and issued by foreign nations diplomatically
recognized by the United States government. All interest and
principal shall be denominated and payable in United States
funds. The investments made under division (A)(10) of this
section shall not exceed in the aggregate two per cent of a
county's total average portfolio.
The investing authority shall invest under division (A)
(10) of this section in a debt interest issued by a foreign
nation only if the debt interest is backed by the full faith and
credit of that foreign nation, there is no prior history of
default, and the debt interest matures not later than five years
after purchase. For purposes of division (A)(10) of this
section, a debt interest is rated in the three highest
categories by two nationally recognized standard rating services
if either the debt interest itself or the issuer of the debt
interest is rated, or is implicitly rated, at the time of
purchase in the three highest categories by two nationally
recognized standard rating services.
(11) A current unpaid or delinquent tax line of credit
authorized under division (G) of section 135.341 of the Revised
Code, provided that all of the conditions for entering into such
a line of credit under that division are satisfied, or bonds and
other obligations of a county land reutilization corporation
organized under Chapter 1724. of the Revised Code, if the county
land reutilization corporation is located wholly or partly
within the same county as the investing authority.
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(B) Nothing in the classifications of eligible obligations
and securities set forth in divisions (A)(1) to (10) of this
section shall be construed to authorize investment in a
derivative, and no investing authority shall invest any county
inactive moneys or any moneys in a county public library fund in
a derivative. For purposes of this division, "derivative" means
a financial instrument or contract or obligation whose value or
return is based upon or linked to another asset or index, or
both, separate from the financial instrument, contract, or
obligation itself. Any security, obligation, trust account, or
other instrument that is created from an issue of the United
States treasury or is created from an obligation of a federal
agency or instrumentality or is created from both is considered
a derivative instrument. An eligible investment described in
this section with a variable interest rate payment, based upon a
single interest payment or single index comprised of other
eligible investments provided for in division (A)(1) or (2) of
this section, is not a derivative, provided that such variable
rate investment has a maximum maturity of two years. A treasury
inflation-protected security shall not be considered a
derivative, provided the security matures not later than five
years after purchase.
(C) Except as provided in division (A)(4) or (D) of this
section, any investment made pursuant to this section must
mature within five years from the date of settlement, unless the
investment is matched to a specific obligation or debt of the
county or to a specific obligation or debt of a political
subdivision of this state, and the investment is specifically
approved by the investment advisory committee.
(D) The investing authority may also enter into a written
repurchase agreement with any eligible institution mentioned in
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section 135.32 of the Revised Code or any eligible securities
dealer pursuant to division (J) of this section, under the terms
of which agreement the investing authority purchases and the
eligible institution or dealer agrees unconditionally to
repurchase any of the securities listed in divisions (D)(1) to
(5), except letters of credit described in division (D)(2), of
section 135.18 of the Revised Code. The market value of
securities subject to an overnight written repurchase agreement
must exceed the principal value of the overnight written
repurchase agreement by at least two per cent. A written
repurchase agreement must exceed the principal value of the
overnight written repurchase agreement, by at least two per
cent. A written repurchase agreement shall not exceed thirty
days, and the market value of securities subject to a written
repurchase agreement must exceed the principal value of the
written repurchase agreement by at least two per cent and be
marked to market daily. All securities purchased pursuant to
this division shall be delivered into the custody of the
investing authority or the qualified custodian of the investing
authority or an agent designated by the investing authority. A
written repurchase agreement with an eligible securities dealer
shall be transacted on a delivery versus payment basis. The
agreement shall contain the requirement that for each
transaction pursuant to the agreement the participating
institution shall provide all of the following information:
(1) The par value of the securities;
(2) The type, rate, and maturity date of the securities;
(3) A numerical identifier generally accepted in the
securities industry that designates the securities.
No investing authority shall enter into a written
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repurchase agreement under the terms of which the investing
authority agrees to sell securities owned by the county to a
purchaser and agrees with that purchaser to unconditionally
repurchase those securities.
(E) No investing authority shall make an investment under
this section, unless the investing authority, at the time of
making the investment, reasonably expects that the investment
can be held until its maturity. The investing authority's
written investment policy shall specify the conditions under
which an investment may be redeemed or sold prior to maturity.
(F) No investing authority shall pay a county's inactive
moneys or moneys of a county public library fund into a fund
established by another subdivision, treasurer, governing board,
or investing authority, if that fund was established by the
subdivision, treasurer, governing board, or investing authority
for the purpose of investing or depositing the public moneys of
other subdivisions. This division does not apply to the payment
of public moneys into either of the following:
(1) The Ohio subdivision's fund pursuant to division (A)
(6) of this section;
(2) A fund created solely for the purpose of acquiring,
constructing, owning, leasing, or operating municipal utilities
pursuant to the authority provided under section 715.02 of the
Revised Code or Section 4 of Article XVIII, Ohio Constitution.
For purposes of division (F) of this section,
"subdivision" includes a county.
(G) The use of leverage, in which the county uses its
current investment assets as collateral for the purpose of
purchasing other assets, is prohibited. The issuance of taxable
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notes for the purpose of arbitrage is prohibited. Contracting to
sell securities not owned by the county, for the purpose of
purchasing such securities on the speculation that bond prices
will decline, is prohibited.
(H) Any securities, certificates of deposit, deposit
accounts, or any other documents evidencing deposits or
investments made under authority of this section shall be issued
in the name of the county with the county treasurer or investing
authority as the designated payee. If any such deposits or
investments are registrable either as to principal or interest,
or both, they shall be registered in the name of the treasurer.
(I) The investing authority shall be responsible for the
safekeeping of all documents evidencing a deposit or investment
acquired under this section, including, but not limited to,
safekeeping receipts evidencing securities deposited with a
qualified trustee, as provided in section 135.37 of the Revised
Code, and documents confirming the purchase of securities under
any repurchase agreement under this section shall be deposited
with a qualified trustee, provided, however, that the qualified
trustee shall be required to report to the investing authority,
auditor of state, or an authorized outside auditor at any time
upon request as to the identity, market value, and location of
the document evidencing each security, and that if the
participating institution is a designated depository of the
county for the current period of designation, the securities
that are the subject of the repurchase agreement may be
delivered to the treasurer or held in trust by the participating
institution on behalf of the investing authority.
Upon the expiration of the term of office of an investing
authority or in the event of a vacancy in the office for any
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reason, the officer or the officer's legal representative shall
transfer and deliver to the officer's successor all documents
mentioned in this division for which the officer has been
responsible for safekeeping. For all such documents transferred
and delivered, the officer shall be credited with, and the
officer's successor shall be charged with, the amount of moneys
evidenced by such documents.
(J)(1) All investments, except for investments in
securities described in divisions (A)(5), (6), and (11) of this
section, shall be made only through a member of the financial
industry regulatory authority (FINRA), through a bank, savings
bank, or savings and loan association regulated by the
superintendent of financial institutions, or through an
institution regulated by the comptroller of the currency,
federal deposit insurance corporation, or board of governors of
the federal reserve system.
(2) Payment for investments shall be made only upon the
delivery of securities representing such investments to the
treasurer, investing authority, or qualified trustee. If the
securities transferred are not represented by a certificate,
payment shall be made only upon receipt of confirmation of
transfer from the custodian by the treasurer, governing board,
or qualified trustee.
(K)(1) Except as otherwise provided in division (K)(2) of
this section, no investing authority shall make an investment or
deposit under this section, unless there is on file with the
auditor of state a written investment policy approved by the
investing authority. The policy shall require that all entities
conducting investment business with the investing authority
shall sign the investment policy of that investing authority.
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All brokers, dealers, and financial institutions, described in
division (J)(1) of this section, initiating transactions with
the investing authority by giving advice or making investment
recommendations shall sign the investing authority's investment
policy thereby acknowledging their agreement to abide by the
policy's contents. All brokers, dealers, and financial
institutions, described in division (J)(1) of this section,
executing transactions initiated by the investing authority,
having read the policy's contents, shall sign the investment
policy thereby acknowledging their comprehension and receipt.
(2) If a written investment policy described in division
(K)(1) of this section is not filed on behalf of the county with
the auditor of state, the investing authority of that county
shall invest the county's inactive moneys and moneys of the
county public library fund only in time certificates of deposits
or savings or deposit accounts pursuant to division (A)(3) of
this section, no-load money market mutual funds pursuant to
division (A)(5) of this section, or the Ohio subdivision's fund
pursuant to division (A)(6) of this section.
(L)(1) The investing authority shall establish and
maintain an inventory of all obligations and securities acquired
by the investing authority pursuant to this section. The
inventory shall include a description of each obligation or
security, including type, cost, par value, maturity date,
settlement date, and any coupon rate.
(2) The investing authority shall also keep a complete
record of all purchases and sales of the obligations and
securities made pursuant to this section.
(3) The investing authority shall maintain a monthly
portfolio report and issue a copy of the monthly portfolio
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report describing such investments to the county investment
advisory committee, detailing the current inventory of all
obligations and securities, all transactions during the month
that affected the inventory, any income received from the
obligations and securities, and any investment expenses paid,
and stating the names of any persons effecting transactions on
behalf of the investing authority.
(4) The monthly portfolio report shall be a public record
and available for inspection under section 149.43 of the Revised
Code.
(5) The inventory and the monthly portfolio report shall
be filed with the board of county commissioners. The monthly
portfolio report also shall be filed with the treasurer of
state.
(M) An investing authority may enter into a written
investment or deposit agreement that includes a provision under
which the parties agree to submit to nonbinding arbitration to
settle any controversy that may arise out of the agreement,
including any controversy pertaining to losses of public moneys
resulting from investment or deposit. The arbitration provision
shall be set forth entirely in the agreement, and the agreement
shall include a conspicuous notice to the parties that any party
to the arbitration may apply to the court of common pleas of the
county in which the arbitration was held for an order to vacate,
modify, or correct the award. Any such party may also apply to
the court for an order to change venue to a court of common
pleas located more than one hundred miles from the county in
which the investing authority is located.
For purposes of this division, "investment or deposit
agreement" means any agreement between an investing authority
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and a person, under which agreement the person agrees to invest,
deposit, or otherwise manage, on behalf of the investing
authority, a county's inactive moneys or moneys in a county
public library fund, or agrees to provide investment advice to
the investing authority.
(N)(1) An investment held in the county portfolio on
September 27, 1996, that was a legal investment under the law as
it existed before September 27, 1996, may be held until
maturity.
(2) An investment held in the county portfolio on
September 10, 2012, that was a legal investment under the law as
it existed before September 10, 2012, may be held until
maturity.
Sec. 150.05. (A) The authority shall select, as program
administrators, not more than two private, for-profit investment
funds to acquire loans for the program fund and to invest money
in the program fund as prescribed in the investment policy
established or modified by the authority in accordance with
sections 150.03 and 150.04 of the Revised Code. The authority
shall give equal consideration, in selecting these program
administrators, to minority owned and controlled investment
funds, to funds owned and controlled by women, to ventures
involving minority owned and controlled funds, and to ventures
involving funds owned and controlled by women that otherwise
meet the policies and criteria established by the authority. To
be eligible for selection, an investment fund must be
incorporated or organized under Chapter 1701., 1705., 1706.,
1775., 1776., 1782., or 1783. of the Revised Code, must have an
established business presence in this state, and must be
capitalized in accordance with any state and federal laws
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applicable to the issuance or sale of securities.
The authority shall select program administrators only
after soliciting and evaluating requests for proposals as
prescribed in this section. The authority shall publish a notice
of a request for proposals in newspapers of general circulation
in this state once each week for two consecutive weeks before a
date specified by the authority as the date on which it will
begin accepting proposals. The notices shall contain a general
description of the subject of the proposed agreement and the
location where the request for proposals may be obtained. The
request for proposals shall include all the following:
(1) Instructions and information to respondents concerning
the submission of proposals, including the name and address of
the office where proposals are to be submitted;
(2) Instructions regarding the manner in which respondents
may communicate with the authority, including the names, titles,
and telephone numbers of the individuals to whom such
communications shall be directed;
(3) Description of the performance criteria that will be
used to evaluate whether a respondent selected by the authority
is satisfying the authority's investment policy;
(4) Description of the factors and criteria to be
considered in evaluating respondents' proposals, the relative
importance of each factor or criterion, and description of the
authority's evaluation procedure;
(5) Description of any documents that may be incorporated
by reference into the request for proposals, provided that the
request specifies where such documents may be obtained and such
documents are readily available to all interested parties.
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After the date specified for receiving proposals, the
authority shall evaluate submitted proposals. The authority may
discuss a respondent's proposal with that respondent to clarify
or revise a proposal or the terms of the agreement.
The authority shall choose for review proposals from at
least three respondents the authority considers qualified to
operate the program in the best interests of the investment
policy adopted by the authority. If three or fewer proposals are
submitted, the authority shall review each proposal. The
authority may cancel a request for proposals at any time before
entering into an agreement with a respondent. The authority
shall provide respondents fair and equal opportunity for such
discussions. The authority may terminate discussions with any
respondent upon written notice to the respondent.
(B) After reviewing the chosen proposals, the authority
may select not more than two such respondents and enter into a
written agreement with each of the selected respondents,
provided that at no time shall there be agreements with more
than two persons.
The agreement shall do all of the following:
(1) Specify that borrowing and investing by the program
administrator will be budgeted to guarantee that no tax credits
will be granted during the first four years of the Ohio venture
capital program, and will be structured to ensure that payments
of principal, interest, or interest equivalent due in any fiscal
year, when added to such payments due from any other program
administrator, does not exceed twenty million dollars;
(2) Require investment by the program administrator or the
fund manager employed by the program administrator to be in
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compliance with the investment policy established or modified in
accordance with sections 150.03 and 150.04 of the Revised Code
that is in effect at the time the investment is made, and
prohibit the program administrator or fund manager from engaging
in any investment activities other than activities to carry out
that policy;
(3) Require periodic financial reporting by the program
administrator to the authority, which reporting shall include an
annual audit by an independent auditor and such other financial
reporting as is specified in the agreement or otherwise required
by the authority for the purpose of ensuring that the program
administrator is carrying out the investment policy;
(4) Specify any like standards or general limitations in
addition to or in furtherance of investment standards or
limitations that apply pursuant to division (H) of section
150.03 of the Revised Code;
(5) Require the program administrator to apply program
fund revenue first to the payment of principal borrowed by the
program administrator for investment under the program, then to
interest related to that principal, and then to amounts
necessary to cover the program administrator's pro rata share
required under division (B)(9) of this section; and require the
program administrator to pay the authority not less than ninety
per cent of the amount by which program fund revenue
attributable to investments under the program administrator's
investment authority exceeds amounts so applied;
(6) Specify the procedures by which the program
administrator shall certify immediately to the authority the
necessity for the authority to issue tax credit certificates
pursuant to contracts entered into under section 150.07 of the
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Revised Code;
(7) Specify any general limitations regarding the
employment of a fund manager by the program administrator, in
addition to an express limitation that the fund manager be a
person with demonstrated, substantial, successful experience in
the design and management of seed and venture capital investment
programs and in capital formation. The fund manager may be, but
need not be, an equity owner or affiliate of the program
administrator.
(8) Specify the terms and conditions under which the
authority or the program administrator may terminate the
agreement, including in the circumstance that the program
administrator or fund manager violates the investment policy;
(9) Require the program administrator or fund manager
employed by the program administrator to provide capital in the
form of a loan equal to one per cent of the amount of
outstanding loans by lenders to the program fund. The loan from
the program administrator or fund manager shall be on the same
terms and conditions as loans from other lenders, except that
the loan from the program administrator or fund manager shall
not be secured by the Ohio venture capital fund or tax credits
available to other lenders under division (B) of section 150.04
of the Revised Code. Such capital shall be placed at the same
risk as the proceeds from such loans. The program administrator
shall receive a pro rata share of the net income, including net
loss, from the investment of money from the program fund, but is
not entitled to the security against losses provided under
section 150.04 of the Revised Code.
Sec. 718.01. Any term used in this chapter that is not
otherwise defined in this chapter has the same meaning as when
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used in a comparable context in laws of the United States
relating to federal income taxation or in Title LVII of the
Revised Code, unless a different meaning is clearly required.
Except as provided in section 718.81 of the Revised Code, if a
term used in this chapter that is not otherwise defined in this
chapter is used in a comparable context in both the laws of the
United States relating to federal income tax and in Title LVII
of the Revised Code and the use is not consistent, then the use
of the term in the laws of the United States relating to federal
income tax shall control over the use of the term in Title LVII
of the Revised Code.
Except as otherwise provided in section 718.81 of the
Revised Code, as used in this chapter:
(A)(1) "Municipal taxable income" means the following:
(a) For a person other than an individual, income
apportioned or sitused to the municipal corporation under
section 718.02 of the Revised Code, as applicable, reduced by
any pre-2017 net operating loss carryforward available to the
person for the municipal corporation.
(b)(i) For an individual who is a resident of a municipal
corporation other than a qualified municipal corporation, income
reduced by exempt income to the extent otherwise included in
income, then reduced as provided in division (A)(2) of this
section, and further reduced by any pre-2017 net operating loss
carryforward available to the individual for the municipal
corporation.
(ii) For an individual who is a resident of a qualified
municipal corporation, Ohio adjusted gross income reduced by
income exempted, and increased by deductions excluded, by the
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qualified municipal corporation from the qualified municipal
corporation's tax. If a qualified municipal corporation, on or
before December 31, 2013, exempts income earned by individuals
who are not residents of the qualified municipal corporation and
net profit of persons that are not wholly located within the
qualified municipal corporation, such individual or person shall
have no municipal taxable income for the purposes of the tax
levied by the qualified municipal corporation and may be
exempted by the qualified municipal corporation from the
requirements of section 718.03 of the Revised Code.
(c) For an individual who is a nonresident of a municipal
corporation, income reduced by exempt income to the extent
otherwise included in income and then, as applicable,
apportioned or sitused to the municipal corporation under
section 718.02 of the Revised Code, then reduced as provided in
division (A)(2) of this section, and further reduced by any pre-
2017 net operating loss carryforward available to the individual
for the municipal corporation.
(2) In computing the municipal taxable income of a
taxpayer who is an individual, the taxpayer may subtract, as
provided in division (A)(1)(b)(i) or (c) of this section, the
amount of the individual's employee business expenses reported
on the individual's form 2106 that the individual deducted for
federal income tax purposes for the taxable year, subject to the
limitation imposed by section 67 of the Internal Revenue Code.
For the municipal corporation in which the taxpayer is a
resident, the taxpayer may deduct all such expenses allowed for
federal income tax purposes. For a municipal corporation in
which the taxpayer is not a resident, the taxpayer may deduct
such expenses only to the extent the expenses are related to the
taxpayer's performance of personal services in that nonresident
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municipal corporation.
(B) "Income" means the following:
(1)(a) For residents, all income, salaries, qualifying
wages, commissions, and other compensation from whatever source
earned or received by the resident, including the resident's
distributive share of the net profit of pass-through entities
owned directly or indirectly by the resident and any net profit
of the resident, except as provided in division (D)(5) of this
section.
(b) For the purposes of division (B)(1)(a) of this
section:
(i) Any net operating loss of the resident incurred in the
taxable year and the resident's distributive share of any net
operating loss generated in the same taxable year and
attributable to the resident's ownership interest in a pass-
through entity shall be allowed as a deduction, for that taxable
year and the following five taxable years, against any other net
profit of the resident or the resident's distributive share of
any net profit attributable to the resident's ownership interest
in a pass-through entity until fully utilized, subject to
division (B)(1)(d) of this section;
(ii) The resident's distributive share of the net profit
of each pass-through entity owned directly or indirectly by the
resident shall be calculated without regard to any net operating
loss that is carried forward by that entity from a prior taxable
year and applied to reduce the entity's net profit for the
current taxable year.
(c) Division (B)(1)(b) of this section does not apply with
respect to any net profit or net operating loss attributable to
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an ownership interest in an S corporation unless shareholders'
distributive shares of net profits from S corporations are
subject to tax in the municipal corporation as provided in
division (C)(14)(b) or (c) of this section.
(d) Any amount of a net operating loss used to reduce a
taxpayer's net profit for a taxable year shall reduce the amount
of net operating loss that may be carried forward to any
subsequent year for use by that taxpayer. In no event shall the
cumulative deductions for all taxable years with respect to a
taxpayer's net operating loss exceed the original amount of that
net operating loss available to that taxpayer.
(2) In the case of nonresidents, all income, salaries,
qualifying wages, commissions, and other compensation from
whatever source earned or received by the nonresident for work
done, services performed or rendered, or activities conducted in
the municipal corporation, including any net profit of the
nonresident, but excluding the nonresident's distributive share
of the net profit or loss of only pass-through entities owned
directly or indirectly by the nonresident.
(3) For taxpayers that are not individuals, net profit of
the taxpayer;
(4) Lottery, sweepstakes, gambling and sports winnings,
winnings from games of chance, and prizes and awards. If the
taxpayer is a professional gambler for federal income tax
purposes, the taxpayer may deduct related wagering losses and
expenses to the extent authorized under the Internal Revenue
Code and claimed against such winnings.
(C) "Exempt income" means all of the following:
(1) The military pay or allowances of members of the armed
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forces of the United States or members of their reserve
components, including the national guard of any state;
(2)(a) Except as provided in division (C)(2)(b) of this
section, intangible income;
(b) A municipal corporation that taxed any type of
intangible income on March 29, 1988, pursuant to Section 3 of
S.B. 238 of the 116th general assembly, may continue to tax that
type of income if a majority of the electors of the municipal
corporation voting on the question of whether to permit the
taxation of that type of intangible income after 1988 voted in
favor thereof at an election held on November 8, 1988.
(3) Social security benefits, railroad retirement
benefits, unemployment compensation, pensions, retirement
benefit payments, payments from annuities, and similar payments
made to an employee or to the beneficiary of an employee under a
retirement program or plan, disability payments received from
private industry or local, state, or federal governments or from
charitable, religious or educational organizations, and the
proceeds of sickness, accident, or liability insurance policies.
As used in division (C)(3) of this section, "unemployment
compensation" does not include supplemental unemployment
compensation described in section 3402(o)(2) of the Internal
Revenue Code.
(4) The income of religious, fraternal, charitable,
scientific, literary, or educational institutions to the extent
such income is derived from tax-exempt real estate, tax-exempt
tangible or intangible property, or tax-exempt activities.
(5) Compensation paid under section 3501.28 or 3501.36 of
the Revised Code to a person serving as a precinct election
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official to the extent that such compensation does not exceed
one thousand dollars for the taxable year. Such compensation in
excess of one thousand dollars for the taxable year may be
subject to taxation by a municipal corporation. A municipal
corporation shall not require the payer of such compensation to
withhold any tax from that compensation.
(6) Dues, contributions, and similar payments received by
charitable, religious, educational, or literary organizations or
labor unions, lodges, and similar organizations;
(7) Alimony and child support received;
(8) Compensation for personal injuries or for damages to
property from insurance proceeds or otherwise, excluding
compensation paid for lost salaries or wages or compensation
from punitive damages;
(9) Income of a public utility when that public utility is
subject to the tax levied under section 5727.24 or 5727.30 of
the Revised Code. Division (C)(9) of this section does not apply
for purposes of Chapter 5745. of the Revised Code.
(10) Gains from involuntary conversions, interest on
federal obligations, items of income subject to a tax levied by
the state and that a municipal corporation is specifically
prohibited by law from taxing, and income of a decedent's estate
during the period of administration except such income from the
operation of a trade or business;
(11) Compensation or allowances excluded from federal
gross income under section 107 of the Internal Revenue Code;
(12) Employee compensation that is not qualifying wages as
defined in division (R) of this section;
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(13) Compensation paid to a person employed within the
boundaries of a United States air force base under the
jurisdiction of the United States air force that is used for the
housing of members of the United States air force and is a
center for air force operations, unless the person is subject to
taxation because of residence or domicile. If the compensation
is subject to taxation because of residence or domicile, tax on
such income shall be payable only to the municipal corporation
of residence or domicile.
(14)(a) Except as provided in division (C)(14)(b) or (c)
of this section, an S corporation shareholder's distributive
share of net profits of the S corporation, other than any part
of the distributive share of net profits that represents wages
as defined in section 3121(a) of the Internal Revenue Code or
net earnings from self-employment as defined in section 1402(a)
of the Internal Revenue Code.
(b) If, pursuant to division (H) of former section 718.01
of the Revised Code as it existed before March 11, 2004, a
majority of the electors of a municipal corporation voted in
favor of the question at an election held on November 4, 2003,
the municipal corporation may continue after 2002 to tax an S
corporation shareholder's distributive share of net profits of
an S corporation.
(c) If, on December 6, 2002, a municipal corporation was
imposing, assessing, and collecting a tax on an S corporation
shareholder's distributive share of net profits of the S
corporation to the extent the distributive share would be
allocated or apportioned to this state under divisions (B)(1)
and (2) of section 5733.05 of the Revised Code if the S
corporation were a corporation subject to taxes imposed under
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Chapter 5733. of the Revised Code, the municipal corporation may
continue to impose the tax on such distributive shares to the
extent such shares would be so allocated or apportioned to this
state only until December 31, 2004, unless a majority of the
electors of the municipal corporation voting on the question of
continuing to tax such shares after that date voted in favor of
that question at an election held November 2, 2004. If a
majority of those electors voted in favor of the question, the
municipal corporation may continue after December 31, 2004, to
impose the tax on such distributive shares only to the extent
such shares would be so allocated or apportioned to this state.
(d) A municipal corporation shall be deemed to have
elected to tax S corporation shareholders' distributive shares
of net profits of the S corporation in the hands of the
shareholders if a majority of the electors of a municipal
corporation voted in favor of a question at an election held
under division (C)(14)(b) or (c) of this section. The municipal
corporation shall specify by resolution or ordinance that the
tax applies to the distributive share of a shareholder of an S
corporation in the hands of the shareholder of the S
corporation.
(15) To the extent authorized under a resolution or
ordinance adopted by a municipal corporation before January 1,
2016, all or a portion of the income of individuals or a class
of individuals under eighteen years of age.
(16)(a) Except as provided in divisions (C)(16)(b), (c),
and (d) of this section, qualifying wages described in division
(B)(1) or (E) of section 718.011 of the Revised Code to the
extent the qualifying wages are not subject to withholding for
the municipal corporation under either of those divisions.
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(b) The exemption provided in division (C)(16)(a) of this
section does not apply with respect to the municipal corporation
in which the employee resided at the time the employee earned
the qualifying wages.
(c) The exemption provided in division (C)(16)(a) of this
section does not apply to qualifying wages that an employer
elects to withhold under division (D)(2) of section 718.011 of
the Revised Code.
(d) The exemption provided in division (C)(16)(a) of this
section does not apply to qualifying wages if both of the
following conditions apply:
(i) For qualifying wages described in division (B)(1) of
section 718.011 of the Revised Code, the employee's employer
withholds and remits tax on the qualifying wages to the
municipal corporation in which the employee's principal place of
work is situated, or, for qualifying wages described in division
(E) of section 718.011 of the Revised Code, the employee's
employer withholds and remits tax on the qualifying wages to the
municipal corporation in which the employer's fixed location is
located;
(ii) The employee receives a refund of the tax described
in division (C)(16)(d)(i) of this section on the basis of the
employee not performing services in that municipal corporation.
(17)(a) Except as provided in division (C)(17)(b) or (c)
of this section, compensation that is not qualifying wages paid
to a nonresident individual for personal services performed in
the municipal corporation on not more than twenty days in a
taxable year.
(b) The exemption provided in division (C)(17)(a) of this
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S. B. No. 276 Page 70As Introduced
section does not apply under either of the following
circumstances:
(i) The individual's base of operation is located in the
municipal corporation.
(ii) The individual is a professional athlete,
professional entertainer, or public figure, and the compensation
is paid for the performance of services in the individual's
capacity as a professional athlete, professional entertainer, or
public figure. For purposes of division (C)(17)(b)(ii) of this
section, "professional athlete," "professional entertainer," and
"public figure" have the same meanings as in section 718.011 of
the Revised Code.
(c) Compensation to which division (C)(17) of this section
applies shall be treated as earned or received at the
individual's base of operation. If the individual does not have
a base of operation, the compensation shall be treated as earned
or received where the individual is domiciled.
(d) For purposes of division (C)(17) of this section,
"base of operation" means the location where an individual owns
or rents an office, storefront, or similar facility to which the
individual regularly reports and at which the individual
regularly performs personal services for compensation.
(18) Compensation paid to a person for personal services
performed for a political subdivision on property owned by the
political subdivision, regardless of whether the compensation is
received by an employee of the subdivision or another person
performing services for the subdivision under a contract with
the subdivision, if the property on which services are performed
is annexed to a municipal corporation pursuant to section
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709.023 of the Revised Code on or after March 27, 2013, unless
the person is subject to such taxation because of residence. If
the compensation is subject to taxation because of residence,
municipal income tax shall be payable only to the municipal
corporation of residence.
(19) In the case of a tax administered, collected, and
enforced by a municipal corporation pursuant to an agreement
with the board of directors of a joint economic development
district under section 715.72 of the Revised Code, the net
profits of a business, and the income of the employees of that
business, exempted from the tax under division (Q) of that
section.
(20) All of the following:
(a) Income derived from disaster work conducted in this
state by an out-of-state disaster business during a disaster
response period pursuant to a qualifying solicitation received
by the business;
(b) Income of a qualifying employee described in division
(A)(14)(a) of section 5703.94 of the Revised Code, to the extent
such income is derived from disaster work conducted in this
state by the employee during a disaster response period pursuant
to a qualifying solicitation received by the employee's
employer;
(c) Income of a qualifying employee described in division
(A)(14)(b) of section 5703.94 of the Revised Code, to the extent
such income is derived from disaster work conducted in this
state by the employee during a disaster response period on
critical infrastructure owned or used by the employee's
employer.
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(21) Income the taxation of which is prohibited by the
constitution or laws of the United States.
Any item of income that is exempt income of a pass-through
entity under division (C) of this section is exempt income of
each owner of the pass-through entity to the extent of that
owner's distributive or proportionate share of that item of the
entity's income.
(D)(1) "Net profit" for a person who is an individual
means the individual's net profit required to be reported on
schedule C, schedule E, or schedule F reduced by any net
operating loss carried forward. For the purposes of division (D)
(1) of this section, the net operating loss carried forward
shall be calculated and deducted in the same manner as provided
in division (D)(3) of this section.
(2) "Net profit" for a person other than an individual
means adjusted federal taxable income reduced by any net
operating loss incurred by the person in a taxable year
beginning on or after January 1, 2017, subject to the
limitations of division (D)(3) of this section.
(3)(a) The amount of such net operating loss shall be
deducted from net profit to the extent necessary to reduce
municipal taxable income to zero, with any remaining unused
portion of the net operating loss carried forward to not more
than five consecutive taxable years following the taxable year
in which the loss was incurred, but in no case for more years
than necessary for the deduction to be fully utilized.
(b) No person shall use the deduction allowed by division
(D)(3) of this section to offset qualifying wages.
(c)(i) For taxable years beginning in 2018, 2019, 2020,
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S. B. No. 276 Page 73As Introduced
2021, or 2022, a person may not deduct, for purposes of an
income tax levied by a municipal corporation that levies an
income tax before January 1, 2016, more than fifty per cent of
the amount of the deduction otherwise allowed by division (D)(3)
of this section.
(ii) For taxable years beginning in 2023 or thereafter, a
person may deduct, for purposes of an income tax levied by a
municipal corporation that levies an income tax before January
1, 2016, the full amount allowed by division (D)(3) of this
section without regard to the limitation of division (D)(3)(b)
(i) of this section.
(d) Any pre-2017 net operating loss carryforward deduction
that is available may be utilized before a taxpayer may deduct
any amount pursuant to division (D)(3) of this section.
(e) Nothing in division (D)(3)(c)(i) of this section
precludes a person from carrying forward, for use with respect
to any return filed for a taxable year beginning after 2018, any
amount of net operating loss that was not fully utilized by
operation of division (D)(3)(c)(i) of this section. To the
extent that an amount of net operating loss that was not fully
utilized in one or more taxable years by operation of division
(D)(3)(c)(i) of this section is carried forward for use with
respect to a return filed for a taxable year beginning in 2019,
2020, 2021, or 2022, the limitation described in division (D)(3)
(c)(i) of this section shall apply to the amount carried
forward.
(4) For the purposes of this chapter, and notwithstanding
division (D)(2) of this section, net profit of a disregarded
entity shall not be taxable as against that disregarded entity,
but shall instead be included in the net profit of the owner of
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the disregarded entity.
(5) For the purposes of this chapter, and notwithstanding
any other provision of this chapter, the net profit of a
publicly traded partnership that makes the election described in
division (D)(5) of this section shall be taxed as if the
partnership were a C corporation, and shall not be treated as
the net profit or income of any owner of the partnership.
A publicly traded partnership that is treated as a
partnership for federal income tax purposes and that is subject
to tax on its net profits in one or more municipal corporations
in this state may elect to be treated as a C corporation for
municipal income tax purposes. The publicly traded partnership
shall make the election in every municipal corporation in which
the partnership is subject to taxation on its net profits. The
election shall be made on the annual tax return filed in each
such municipal corporation. The publicly traded partnership
shall not be required to file the election with any municipal
corporation in which the partnership is not subject to taxation
on its net profits, but division (D)(5) of this section applies
to all municipal corporations in which an individual owner of
the partnership resides.
(E) "Adjusted federal taxable income," for a person
required to file as a C corporation, or for a person that has
elected to be taxed as a C corporation under division (D)(5) of
this section, means a C corporation's federal taxable income
before net operating losses and special deductions as determined
under the Internal Revenue Code, adjusted as follows:
(1) Deduct intangible income to the extent included in
federal taxable income. The deduction shall be allowed
regardless of whether the intangible income relates to assets
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used in a trade or business or assets held for the production of
income.
(2) Add an amount equal to five per cent of intangible
income deducted under division (E)(1) of this section, but
excluding that portion of intangible income directly related to
the sale, exchange, or other disposition of property described
in section 1221 of the Internal Revenue Code;
(3) Add any losses allowed as a deduction in the
computation of federal taxable income if the losses directly
relate to the sale, exchange, or other disposition of an asset
described in section 1221 or 1231 of the Internal Revenue Code;
(4)(a) Except as provided in division (E)(4)(b) of this
section, deduct income and gain included in federal taxable
income to the extent the income and gain directly relate to the
sale, exchange, or other disposition of an asset described in
section 1221 or 1231 of the Internal Revenue Code;
(b) Division (E)(4)(a) of this section does not apply to
the extent the income or gain is income or gain described in
section 1245 or 1250 of the Internal Revenue Code.
(5) Add taxes on or measured by net income allowed as a
deduction in the computation of federal taxable income;
(6) In the case of a real estate investment trust or
regulated investment company, add all amounts with respect to
dividends to, distributions to, or amounts set aside for or
credited to the benefit of investors and allowed as a deduction
in the computation of federal taxable income;
(7) Deduct, to the extent not otherwise deducted or
excluded in computing federal taxable income, any income derived
from a transfer agreement or from the enterprise transferred
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under that agreement under section 4313.02 of the Revised Code;
(8) Deduct exempt income to the extent not otherwise
deducted or excluded in computing adjusted federal taxable
income.
(9) Deduct any net profit of a pass-through entity owned
directly or indirectly by the taxpayer and included in the
taxpayer's federal taxable income unless an affiliated group of
corporations includes that net profit in the group's federal
taxable income in accordance with division (E)(3)(b) of section
718.06 of the Revised Code.
(10) Add any loss incurred by a pass-through entity owned
directly or indirectly by the taxpayer and included in the
taxpayer's federal taxable income unless an affiliated group of
corporations includes that loss in the group's federal taxable
income in accordance with division (E)(3)(b) of section 718.06
of the Revised Code.
If the taxpayer is not a C corporation, is not a
disregarded entity that has made the election described in
division (L)(2) of this section, is not a publicly traded
partnership that has made the election described in division (D)
(5) of this section, and is not an individual, the taxpayer
shall compute adjusted federal taxable income under this section
as if the taxpayer were a C corporation, except guaranteed
payments and other similar amounts paid or accrued to a partner,
former partner, shareholder, former shareholder, member, or
former member shall not be allowed as a deductible expense
unless such payments are in consideration for the use of capital
and treated as payment of interest under section 469 of the
Internal Revenue Code or United States treasury regulations.
Amounts paid or accrued to a qualified self-employed retirement
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plan with respect to a partner, former partner, shareholder,
former shareholder, member, or former member of the taxpayer,
amounts paid or accrued to or for health insurance for a
partner, former partner, shareholder, former shareholder,
member, or former member, and amounts paid or accrued to or for
life insurance for a partner, former partner, shareholder,
former shareholder, member, or former member shall not be
allowed as a deduction.
Nothing in division (E) of this section shall be construed
as allowing the taxpayer to add or deduct any amount more than
once or shall be construed as allowing any taxpayer to deduct
any amount paid to or accrued for purposes of federal self-
employment tax.
(F) "Schedule C" means internal revenue service schedule C
(form 1040) filed by a taxpayer pursuant to the Internal Revenue
Code.
(G) "Schedule E" means internal revenue service schedule E
(form 1040) filed by a taxpayer pursuant to the Internal Revenue
Code.
(H) "Schedule F" means internal revenue service schedule F
(form 1040) filed by a taxpayer pursuant to the Internal Revenue
Code.
(I) "Internal Revenue Code" has the same meaning as in
section 5747.01 of the Revised Code.
(J) "Resident" means an individual who is domiciled in the
municipal corporation as determined under section 718.012 of the
Revised Code.
(K) "Nonresident" means an individual that is not a
resident.
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(L)(1) "Taxpayer" means a person subject to a tax levied
on income by a municipal corporation in accordance with this
chapter. "Taxpayer" does not include a grantor trust or, except
as provided in division (L)(2)(a) of this section, a disregarded
entity.
(2)(a) A single member limited liability company that is a
disregarded entity for federal tax purposes may be a separate
taxpayer from its single member in all Ohio municipal
corporations in which it either filed as a separate taxpayer or
did not file for its taxable year ending in 2003, if all of the
following conditions are met:
(i) The limited liability company's single member is also
a limited liability company.
(ii) The limited liability company and its single member
were formed and doing business in one or more Ohio municipal
corporations for at least five years before January 1, 2004.
(iii) Not later than December 31, 2004, the limited
liability company and its single member each made an election to
be treated as a separate taxpayer under division (L) of this
section as this section existed on December 31, 2004.
(iv) The limited liability company was not formed for the
purpose of evading or reducing Ohio municipal corporation income
tax liability of the limited liability company or its single
member.
(v) The Ohio municipal corporation that was the primary
place of business of the sole member of the limited liability
company consented to the election.
(b) For purposes of division (L)(2)(a)(v) of this section,
a municipal corporation was the primary place of business of a
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limited liability company if, for the limited liability
company's taxable year ending in 2003, its income tax liability
was greater in that municipal corporation than in any other
municipal corporation in Ohio, and that tax liability to that
municipal corporation for its taxable year ending in 2003 was at
least four hundred thousand dollars.
(M) "Person" includes individuals, firms, companies, joint
stock companies, business trusts, estates, trusts, partnerships,
limited liability partnerships, limited liability companies,
associations, C corporations, S corporations, governmental
entities, and any other entity.
(N) "Pass-through entity" means a partnership not treated
as an association taxable as a C corporation for federal income
tax purposes, a limited liability company not treated as an
association taxable as a C corporation for federal income tax
purposes, an S corporation, or any other class of entity from
which the income or profits of the entity are given pass-through
treatment for federal income tax purposes. "Pass-through entity"
does not include a trust, estate, grantor of a grantor trust, or
disregarded entity.
(O) "S corporation" means a person that has made an
election under subchapter S of Chapter 1 of Subtitle A of the
Internal Revenue Code for its taxable year.
(P) "Single member limited liability company" means a
limited liability company that has one direct member.
(Q) "Limited liability company" means a limited liability
company formed under Chapter 1705. or 1706. of the Revised Code
or under the laws of another state.
(R) "Qualifying wages" means wages, as defined in section
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3121(a) of the Internal Revenue Code, without regard to any wage
limitations, adjusted as follows:
(1) Deduct the following amounts:
(a) Any amount included in wages if the amount constitutes
compensation attributable to a plan or program described in
section 125 of the Internal Revenue Code.
(b) Any amount included in wages if the amount constitutes
payment on account of a disability related to sickness or an
accident paid by a party unrelated to the employer, agent of an
employer, or other payer.
(c) Any amount attributable to a nonqualified deferred
compensation plan or program described in section 3121(v)(2)(C)
of the Internal Revenue Code if the compensation is included in
wages and the municipal corporation has, by resolution or
ordinance adopted before January 1, 2016, exempted the amount
from withholding and tax.
(d) Any amount included in wages if the amount arises from
the sale, exchange, or other disposition of a stock option, the
exercise of a stock option, or the sale, exchange, or other
disposition of stock purchased under a stock option and the
municipal corporation has, by resolution or ordinance adopted
before January 1, 2016, exempted the amount from withholding and
tax.
(e) Any amount included in wages that is exempt income.
(2) Add the following amounts:
(a) Any amount not included in wages solely because the
employee was employed by the employer before April 1, 1986.
(b) Any amount not included in wages because the amount
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arises from the sale, exchange, or other disposition of a stock
option, the exercise of a stock option, or the sale, exchange,
or other disposition of stock purchased under a stock option and
the municipal corporation has not, by resolution or ordinance,
exempted the amount from withholding and tax adopted before
January 1, 2016. Division (R)(2)(b) of this section applies only
to those amounts constituting ordinary income.
(c) Any amount not included in wages if the amount is an
amount described in section 401(k), 403(b), or 457 of the
Internal Revenue Code. Division (R)(2)(c) of this section
applies only to employee contributions and employee deferrals.
(d) Any amount that is supplemental unemployment
compensation benefits described in section 3402(o)(2) of the
Internal Revenue Code and not included in wages.
(e) Any amount received that is treated as self-employment
income for federal tax purposes in accordance with section
1402(a)(8) of the Internal Revenue Code.
(f) Any amount not included in wages if all of the
following apply:
(i) For the taxable year the amount is employee
compensation that is earned outside of the United States and
that either is included in the taxpayer's gross income for
federal income tax purposes or would have been included in the
taxpayer's gross income for such purposes if the taxpayer did
not elect to exclude the income under section 911 of the
Internal Revenue Code;
(ii) For no preceding taxable year did the amount
constitute wages as defined in section 3121(a) of the Internal
Revenue Code;
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(iii) For no succeeding taxable year will the amount
constitute wages; and
(iv) For any taxable year the amount has not otherwise
been added to wages pursuant to either division (R)(2) of this
section or section 718.03 of the Revised Code, as that section
existed before the effective date of H.B. 5 of the 130th general
assembly, March 23, 2015.
(S) "Intangible income" means income of any of the
following types: income yield, interest, capital gains,
dividends, or other income arising from the ownership, sale,
exchange, or other disposition of intangible property including,
but not limited to, investments, deposits, money, or credits as
those terms are defined in Chapter 5701. of the Revised Code,
and patents, copyrights, trademarks, tradenames, investments in
real estate investment trusts, investments in regulated
investment companies, and appreciation on deferred compensation.
"Intangible income" does not include prizes, awards, or other
income associated with any lottery winnings, gambling winnings,
or other similar games of chance.
(T) "Taxable year" means the corresponding tax reporting
period as prescribed for the taxpayer under the Internal Revenue
Code.
(U) "Tax administrator" means the individual charged with
direct responsibility for administration of an income tax levied
by a municipal corporation in accordance with this chapter, and
also includes the following:
(1) A municipal corporation acting as the agent of another
municipal corporation;
(2) A person retained by a municipal corporation to
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administer a tax levied by the municipal corporation, but only
if the municipal corporation does not compensate the person in
whole or in part on a contingency basis;
(3) The central collection agency or the regional income
tax agency or their successors in interest, or another entity
organized to perform functions similar to those performed by the
central collection agency and the regional income tax agency.
"Tax administrator" does not include the tax commissioner.
(V) "Employer" means a person that is an employer for
federal income tax purposes.
(W) "Employee" means an individual who is an employee for
federal income tax purposes.
(X) "Other payer" means any person, other than an
individual's employer or the employer's agent, that pays an
individual any amount included in the federal gross income of
the individual. "Other payer" includes casino operators and
video lottery terminal sales agents.
(Y) "Calendar quarter" means the three-month period ending
on the last day of March, June, September, or December.
(Z) "Form 2106" means internal revenue service form 2106
filed by a taxpayer pursuant to the Internal Revenue Code.
(AA) "Municipal corporation" includes a joint economic
development district or joint economic development zone that
levies an income tax under section 715.691, 715.70, 715.71, or
715.72 of the Revised Code.
(BB) "Disregarded entity" means a single member limited
liability company, a qualifying subchapter S subsidiary, or
another entity if the company, subsidiary, or entity is a
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disregarded entity for federal income tax purposes.
(CC) "Generic form" means an electronic or paper form that
is not prescribed by a particular municipal corporation and that
is designed for reporting taxes withheld by an employer, agent
of an employer, or other payer, estimated municipal income
taxes, or annual municipal income tax liability or for filing a
refund claim.
(DD) "Tax return preparer" means any individual described
in section 7701(a)(36) of the Internal Revenue Code and 26
C.F.R. 301.7701-15.
(EE) "Ohio business gateway" means the online computer
network system, created under section 125.30 of the Revised
Code, that allows persons to electronically file business reply
forms with state agencies and includes any successor electronic
filing and payment system.
(FF) "Local board of tax review" and "board of tax review"
mean the entity created under section 718.11 of the Revised
Code.
(GG) "Net operating loss" means a loss incurred by a
person in the operation of a trade or business. "Net operating
loss" does not include unutilized losses resulting from basis
limitations, at-risk limitations, or passive activity loss
limitations.
(HH) "Casino operator" and "casino facility" have the same
meanings as in section 3772.01 of the Revised Code.
(II) "Video lottery terminal" has the same meaning as in
section 3770.21 of the Revised Code.
(JJ) "Video lottery terminal sales agent" means a lottery
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S. B. No. 276 Page 85As Introduced
sales agent licensed under Chapter 3770. of the Revised Code to
conduct video lottery terminals on behalf of the state pursuant
to section 3770.21 of the Revised Code.
(KK) "Postal service" means the United States postal
service.
(LL) "Certified mail," "express mail," "United States
mail," "postal service," and similar terms include any delivery
service authorized pursuant to section 5703.056 of the Revised
Code.
(MM) "Postmark date," "date of postmark," and similar
terms include the date recorded and marked in the manner
described in division (B)(3) of section 5703.056 of the Revised
Code.
(NN) "Related member" means a person that, with respect to
the taxpayer during all or any portion of the taxable year, is
either a related entity, a component member as defined in
section 1563(b) of the Internal Revenue Code, or a person to or
from whom there is attribution of stock ownership in accordance
with section 1563(e) of the Internal Revenue Code except, for
purposes of determining whether a person is a related member
under this division, "twenty per cent" shall be substituted for
"5 percent" wherever "5 percent" appears in section 1563(e) of
the Internal Revenue Code.
(OO) "Related entity" means any of the following:
(1) An individual stockholder, or a member of the
stockholder's family enumerated in section 318 of the Internal
Revenue Code, if the stockholder and the members of the
stockholder's family own directly, indirectly, beneficially, or
constructively, in the aggregate, at least fifty per cent of the
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S. B. No. 276 Page 86As Introduced
value of the taxpayer's outstanding stock;
(2) A stockholder, or a stockholder's partnership, estate,
trust, or corporation, if the stockholder and the stockholder's
partnerships, estates, trusts, or corporations own directly,
indirectly, beneficially, or constructively, in the aggregate,
at least fifty per cent of the value of the taxpayer's
outstanding stock;
(3) A corporation, or a party related to the corporation
in a manner that would require an attribution of stock from the
corporation to the party or from the party to the corporation
under division (OO)(4) of this section, provided the taxpayer
owns directly, indirectly, beneficially, or constructively, at
least fifty per cent of the value of the corporation's
outstanding stock;
(4) The attribution rules described in section 318 of the
Internal Revenue Code apply for the purpose of determining
whether the ownership requirements in divisions (OO)(1) to (3)
of this section have been met.
(PP)(1) "Assessment" means a written finding by the tax
administrator that a person has underpaid municipal income tax,
or owes penalty and interest, or any combination of tax,
penalty, or interest, to the municipal corporation that
commences the person's time limitation for making an appeal to
the local board of tax review pursuant to section 718.11 of the
Revised Code, and has "ASSESSMENT" written in all capital
letters at the top of such finding.
(2) "Assessment" does not include an informal notice
denying a request for refund issued under division (B)(3) of
section 718.19 of the Revised Code, a billing statement
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S. B. No. 276 Page 87As Introduced
notifying a taxpayer of current or past-due balances owed to the
municipal corporation, a tax administrator's request for
additional information, a notification to the taxpayer of
mathematical errors, or a tax administrator's other written
correspondence to a person or taxpayer that does meet the
criteria prescribed by division (PP)(1) of this section.
(QQ) "Taxpayers' rights and responsibilities" means the
rights provided to taxpayers in sections 718.11, 718.12, 718.19,
718.23, 718.36, 718.37, 718.38, 5717.011, and 5717.03 of the
Revised Code and the responsibilities of taxpayers to file,
report, withhold, remit, and pay municipal income tax and
otherwise comply with Chapter 718. of the Revised Code and
resolutions, ordinances, and rules adopted by a municipal
corporation for the imposition and administration of a municipal
income tax.
(RR) "Qualified municipal corporation" means a municipal
corporation that, by resolution or ordinance adopted on or
before December 31, 2011, adopted Ohio adjusted gross income, as
defined by section 5747.01 of the Revised Code, as the income
subject to tax for the purposes of imposing a municipal income
tax.
(SS)(1) "Pre-2017 net operating loss carryforward" means
any net operating loss incurred in a taxable year beginning
before January 1, 2017, to the extent such loss was permitted,
by a resolution or ordinance of the municipal corporation that
was adopted by the municipal corporation before January 1, 2016,
to be carried forward and utilized to offset income or net
profit generated in such municipal corporation in future taxable
years.
(2) For the purpose of calculating municipal taxable
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S. B. No. 276 Page 88As Introduced
income, any pre-2017 net operating loss carryforward may be
carried forward to any taxable year, including taxable years
beginning in 2017 or thereafter, for the number of taxable years
provided in the resolution or ordinance or until fully utilized,
whichever is earlier.
(TT) "Small employer" means any employer that had total
revenue of less than five hundred thousand dollars during the
preceding taxable year. For purposes of this division, "total
revenue" means receipts of any type or kind, including, but not
limited to, sales receipts; payments; rents; profits; gains,
dividends, and other investment income; compensation;
commissions; premiums; money; property; grants; contributions;
donations; gifts; program service revenue; patient service
revenue; premiums; fees, including premium fees and service
fees; tuition payments; unrelated business revenue;
reimbursements; any type of payment from a governmental unit,
including grants and other allocations; and any other similar
receipts reported for federal income tax purposes or under
generally accepted accounting principles. "Small employer" does
not include the federal government; any state government,
including any state agency or instrumentality; any political
subdivision; or any entity treated as a government for financial
accounting and reporting purposes.
(UU) "Audit" means the examination of a person or the
inspection of the books, records, memoranda, or accounts of a
person for the purpose of determining liability for a municipal
income tax.
(VV) "Publicly traded partnership" means any partnership,
an interest in which is regularly traded on an established
securities market. A "publicly traded partnership" may have any
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S. B. No. 276 Page 89As Introduced
number of partners.
(WW) "Tax commissioner" means the tax commissioner
appointed under section 121.03 of the Revised Code.
(XX) "Out-of-state disaster business," "qualifying
solicitation," "qualifying employee," "disaster work," "critical
infrastructure," and "disaster response period" have the same
meanings as in section 5703.94 of the Revised Code.
(YY) "Pension" means a retirement benefit plan, regardless
of whether the plan satisfies the qualifications described under
section 401(a) of the Internal Revenue Code, including amounts
that are taxable under the "Federal Insurance Contributions
Act," Chapter 21 of the Internal Revenue Code, excluding
employee contributions and elective deferrals, and regardless of
whether such amounts are paid in the same taxable year in which
the amounts are included in the employee's wages, as defined by
section 3121(a) of the Internal Revenue Code.
(ZZ) "Retirement benefit plan" means an arrangement
whereby an entity provides benefits to individuals either on or
after their termination of service because of retirement or
disability. "Retirement benefit plan" does not include wage
continuation payments, severance payments, or payments made for
accrued personal or vacation time.
Sec. 1329.01. (A) As used in sections 1329.01 to 1329.10
of the Revised Code:
(1) "Trade name" means a name used in business or trade to
designate the business of the user and to which the user asserts
a right to exclusive use.
(2) "Fictitious name" means a name used in business or
trade that is fictitious and that the user has not registered or
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S. B. No. 276 Page 90As Introduced
is not entitled to register as a trade name. It does not include
the name of record of any domestic corporation that is formed
under Chapter 1701. or 1702. of the Revised Code, any foreign
corporation that is registered pursuant to Chapter 1703. of the
Revised Code, any domestic or foreign limited liability company
that is formed under or registered pursuant to Chapter 1705. or
1706. of the Revised Code, any domestic or foreign limited
partnership that is formed under or registered pursuant to
Chapter 1782. of the Revised Code, or any domestic or foreign
limited liability partnership that is formed under or registered
pursuant to Chapter 1775. or 1776. of the Revised Code.
(3) "Person" includes any individual, general partnership,
limited partnership, limited liability partnership, corporation,
association, professional association, limited liability
company, society, foundation, federation, or organization formed
under the laws of this state or any other state.
(B) Except as provided in section 1701.041 of the Revised
Code and subject to sections 1329.01 to 1329.10 of the Revised
Code, any person may register with the secretary of state, on a
form prescribed by the secretary of state, any trade name under
which the person is operating, setting forth all of the
following:
(1) The name and business address of the applicant for
registration and any of the following that is applicable:
(a) If the applicant is a general partnership, the name
and address of at least one partner or the identifying number
the secretary of state assigns to the partnership pursuant to
section 1776.05 of the Revised Code;
(b) If the applicant is a limited partnership, a
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corporation, professional association, limited liability
company, or other entity, the form of the entity and the state
under the laws of which it was formed.
(2) The trade name to be registered;
(3) The general nature of the business conducted by the
applicant;
(4) The length of time during which the trade name has
been used by the applicant in business operations in this state.
(C) The trade name application shall be signed by the
applicant or by any authorized representative of the applicant.
A single trade name may be registered upon each trade name
application submitted under sections 1329.01 to 1329.10 of the
Revised Code.
The trade name application shall be accompanied by a
filing fee of thirty-nine dollars, payable to the secretary of
state.
(D) Any person who does business under a fictitious name
and who has not registered and does not wish to register the
fictitious name as a trade name or who cannot do so because the
name is not available for registration shall report the use of
the fictitious name to the secretary of state, on a form
prescribed by the secretary of state, setting forth all of the
following:
(1) The name and business address of the user and any of
the following that is applicable:
(a) If the user is a general partnership, the name and
address of at least one partner or the identifying number the
secretary of state assigns to the partnership pursuant to
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section 1775.105 of the Revised Code;
(b) If the user is a limited partnership, a corporation,
professional association, limited liability company, or other
entity, the form of the entity and the state under whose laws it
was formed.
(2) The fictitious name being used;
(3) The general nature of the business conducted by the
user.
(E) The report of use of a fictitious name shall be signed
by the user or by any authorized representative of the user.
A single fictitious name may be registered upon each
fictitious name report submitted under sections 1329.01 to
1329.10 of the Revised Code.
The fictitious name report shall be accompanied by a
filing fee of thirty-nine dollars, payable to the secretary of
state.
A report under this division shall be made within thirty
days after the date of the first use of the fictitious name.
Sec. 1329.02. (A) The secretary of state shall not file an
application for the registration of any trade name if the
application indicates or implies that the trade name is
connected with a government agency of this state, another state,
or the United States and the trade name is not so connected or
if the application indicates or implies that the applicant is
incorporated and the application is not incorporated.
Additionally, the secretary of state shall not file an
application for the registration of any trade name if it is not
distinguishable upon the records in the office of the secretary
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of state from any other trade name previously registered under
sections 1329.01 to 1329.03 of the Revised Code, any corporate
name, whether nonprofit or for profit and whether that of a
domestic corporation or of a foreign corporation authorized to
do business in this state, the name of any limited liability
company registered in the office of the secretary of state
pursuant to Chapter 1705. or 1706. of the Revised Code, whether
domestic or foreign, the name of any limited liability
partnership registered in the office of the secretary of state
pursuant to Chapter 1775. or 1776. of the Revised Code, whether
domestic or foreign, the name of any limited partnership
registered in the office of the secretary of state pursuant to
Chapter 1782. of the Revised Code, whether domestic or foreign,
or any trademark, or service mark previously filed and recorded
in the office of the secretary of state and not abandoned,
unless the written consent of the corporation, limited liability
company, limited liability partnership, or limited partnership,
or the person to whom is registered the exclusive right to use
the trade name is filed in accordance with division (C) of
section 1701.05 of the Revised Code with the application or the
written consent of the former registrant of the trademark or
service mark is filed with the application. The application for
the registration of a trade name and the consent form shall be
on a form prescribed by the secretary of state.
(B) The secretary of state shall determine for purposes of
this section whether a name is distinguishable from another name
in a manner consistent with the provisions of division (B) of
section 1701.05 of the Revised Code.
Sec. 1701.03. (A) A corporation may be formed under this
chapter for any purpose or combination of purposes for which
individuals lawfully may associate themselves, except that, if
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the Revised Code contains special provisions pertaining to the
formation of any designated type of corporation other than a
professional association, as defined in section 1785.01 of the
Revised Code, a corporation of that type shall be formed in
accordance with the special provisions.
(B) On and after July 1, 1994, a corporation may be formed
under this chapter for the purpose of carrying on the practice
of any profession, including, but not limited to, a corporation
for the purpose of providing public accounting or certified
public accounting services, a corporation for the erection,
owning, and conducting of a sanitarium for receiving and caring
for patients, medical and hygienic treatment of patients, and
instruction of nurses in the treatment of disease and in
hygiene, a corporation for the purpose of providing
architectural, landscape architectural, professional
engineering, or surveying services or any combination of those
types of services, and a corporation for the purpose of
providing a combination of the professional services, as defined
in section 1785.01 of the Revised Code, of optometrists
authorized under Chapter 4725. of the Revised Code,
chiropractors authorized under Chapter 4734. of the Revised Code
to practice chiropractic or acupuncture, psychologists
authorized under Chapter 4732. of the Revised Code, registered
or licensed practical nurses authorized under Chapter 4723. of
the Revised Code, pharmacists authorized under Chapter 4729. of
the Revised Code, physical therapists authorized under sections
4755.40 to 4755.56 of the Revised Code, occupational therapists
authorized under sections 4755.04 to 4755.13 of the Revised
Code, mechanotherapists authorized under section 4731.151 of the
Revised Code, doctors of medicine and surgery, osteopathic
medicine and surgery, or podiatric medicine and surgery
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authorized under Chapter 4731. of the Revised Code, and licensed
professional clinical counselors, licensed professional
counselors, independent social workers, social workers,
independent marriage and family therapists, or marriage and
family therapists authorized under Chapter 4757. of the Revised
Code.
This chapter does not restrict, limit, or otherwise affect
the authority or responsibilities of any agency, board,
commission, department, office, or other entity to license,
register, and otherwise regulate the professional conduct of
individuals or organizations of any kind rendering professional
services, as defined in section 1785.01 of the Revised Code, in
this state or to regulate the practice of any profession that is
within the jurisdiction of the agency, board, commission,
department, office, or other entity, notwithstanding that an
individual is a director, officer, employee, or other agent of a
corporation formed under this chapter and is rendering
professional services or engaging in the practice of a
profession through a corporation formed under this chapter or
that the organization is a corporation formed under this
chapter.
(C) Nothing in division (A) or (B) of this section
precludes the organization of a professional association in
accordance with this chapter and Chapter 1785. of the Revised
Code or the formation of a limited liability company under
Chapter 1705. or 1706. of the Revised Code with respect to a
business, as defined in section 1705.01 of the Revised
Codetrade, occupation, or profession.
(D) No corporation formed for the purpose of providing a
combination of the professional services, as defined in section
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1785.01 of the Revised Code, of optometrists authorized under
Chapter 4725. of the Revised Code, chiropractors authorized
under Chapter 4734. of the Revised Code to practice chiropractic
or acupuncture, psychologists authorized under Chapter 4732. of
the Revised Code, registered or licensed practical nurses
authorized under Chapter 4723. of the Revised Code, pharmacists
authorized under Chapter 4729. of the Revised Code, physical
therapists authorized under sections 4755.40 to 4755.56 of the
Revised Code, occupational therapists authorized under sections
4755.04 to 4755.13 of the Revised Code, mechanotherapists
authorized under section 4731.151 of the Revised Code, doctors
of medicine and surgery, osteopathic medicine and surgery, or
podiatric medicine and surgery authorized under Chapter 4731. of
the Revised Code, and licensed professional clinical counselors,
licensed professional counselors, independent social workers,
social workers, independent marriage and family therapists, or
marriage and family therapists authorized under Chapter 4757. of
the Revised Code shall control the professional clinical
judgment exercised within accepted and prevailing standards of
practice of a licensed, certificated, or otherwise legally
authorized optometrist, chiropractor, chiropractor practicing
acupuncture through the state chiropractic board, psychologist,
nurse, pharmacist, physical therapist, occupational therapist,
mechanotherapist, doctor of medicine and surgery, osteopathic
medicine and surgery, or podiatric medicine and surgery,
licensed professional clinical counselor, licensed professional
counselor, independent social worker, social worker, independent
marriage and family therapist, or marriage and family therapist
in rendering care, treatment, or professional advice to an
individual patient.
This division does not prevent a hospital, as defined in
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section 3727.01 of the Revised Code, insurer, as defined in
section 3999.36 of the Revised Code, or intermediary
organization, as defined in section 1751.01 of the Revised Code,
from entering into a contract with a corporation described in
this division that includes a provision requiring utilization
review, quality assurance, peer review, or other performance or
quality standards. Those activities shall not be construed as
controlling the professional clinical judgment of an individual
practitioner listed in this division.
Sec. 1701.05. (A) Except as provided in this section, and
in sections 1701.75, 1701.78, and 1701.82 of the Revised Code,
which sections relate to the reorganization, merger, and
consolidation of corporations, the corporate name of a domestic
corporation shall comply with all of the following:
(1) It shall end with or include the word or abbreviation
"company," "co.," "corporation," "corp.," "incorporated," or
"inc."
(2) It shall be distinguishable upon the records in the
office of the secretary of state from all of the following:
(a) The name of any other corporation, whether nonprofit
or for profit and whether that of a domestic or of a foreign
corporation authorized to do business in this state;
(b) The name of any limited liability company registered
in the office of the secretary of state pursuant to Chapter
1705. or 1706. of the Revised Code, whether domestic or foreign;
(c) The name of any limited liability partnership
registered in the office of the secretary of state pursuant to
Chapter 1775. or 1776. of the Revised Code, whether domestic or
foreign;
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S. B. No. 276 Page 98As Introduced
(d) The name of any limited partnership registered in the
office of the secretary of state pursuant to Chapter 1782. of
the Revised Code, whether domestic or foreign;
(e) Any trade name the exclusive right to which is at the
time in question registered in the office of the secretary of
state pursuant to Chapter 1329. of the Revised Code.
(3) It shall not contain any language that indicates or
implies that the corporation is connected with a government
agency of this state, another state, or the United States.
(B) The secretary of state shall determine for purposes of
this section whether a name is "distinguishable" from another
name upon the secretary of state's records. Without excluding
other names that may not constitute distinguishable names in
this state, a name is not considered distinguishable from
another name for purposes of this section solely because it
differs from the other name in only one or more of the following
manners:
(1) The use of the word "corporation," "company,"
"incorporated," "limited," or any abbreviation of any of those
words;
(2) The use of any article, conjunction, contraction,
abbreviation, or punctuation;
(3) The use of a different tense or number of the same
word.
(C) A corporation may apply to the secretary of state for
authorization to use a name that is not distinguishable upon the
secretary of state's records from the name of any other
corporation, limited liability company, limited liability
partnership, or limited partnership, or from a registered trade
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S. B. No. 276 Page 99As Introduced
name, if there also is filed in the office of the secretary of
state, on a form prescribed by the secretary of state, the
consent of the other entity or, in the case of a registered
trade name, the person in whose name is registered the exclusive
right to use the name, which consent is evidenced in a writing
signed by any authorized officer or any authorized
representative of the other entity or person.
(D) In case of judicial sale or judicial transfer, by sale
or transfer of good will or otherwise, of the right to use the
name of a corporation, whether nonprofit or for profit, and
whether that of a domestic corporation or of a foreign
corporation authorized to exercise its corporate privileges in
this state or to do business in this state, the secretary of
state, at the instance of the purchaser or transferee of such
right, shall accept for filing articles of a corporation with a
name the same as or similar to the name of such other
corporation, if there also is filed in the office of the
secretary of state a certified copy of the decree or order of
court confirming or otherwise evidencing the purchase or
transfer.
(E) Any person who wishes to reserve a name for a proposed
new corporation, or any corporation intending to change its
name, may submit to the secretary of state a written
application, on a form prescribed by the secretary of state, for
the exclusive right to use a specified name as the name of a
corporation. If the secretary of state finds that, under this
section, the specified name is available for such use, the
secretary of state shall file the application and, from the date
of the filing, the applicant shall have the exclusive right for
one hundred eighty days to use the specified name as the name of
a corporation, counting the date of such filing as the first of
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S. B. No. 276 Page 100As Introduced
one hundred eighty days. The right so obtained may be
transferred by the applicant or other holder thereof by the
filing in the office of the secretary of state of a written
transfer, on a form prescribed by the secretary of state,
stating the name and address of the transferee.
Sec. 1701.791. (A) If the constituent entities in a merger
or consolidation include entities that are not corporations, the
constituent entities may be merged or consolidated into a
surviving or new entity that is not a domestic corporation, as
provided in this section. Pursuant to an agreement of merger or
consolidation between the constituent entities as provided in
this section, a domestic corporation and, if so provided, one or
more additional domestic or foreign entities, may be merged into
a surviving entity other than a domestic corporation, or a
domestic corporation together with one or more additional
domestic or foreign entities may be consolidated into a new
entity other than a domestic corporation, to be formed by such
consolidation. The merger or consolidation must be permitted by
the chapter of the Revised Code under which each domestic
constituent entity exists and by the laws under which each
foreign constituent entity exists.
(B) The agreement of merger or consolidation shall set
forth all of the following:
(1) The name and the form of entity of each constituent
entity and the state under the laws of which each constituent
entity exists;
(2) In the case of a merger, that one or more specified
constituent entities will be merged into a specified surviving
foreign entity or surviving domestic entity other than a
domestic corporation or, in the case of a consolidation, that
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S. B. No. 276 Page 101As Introduced
the constituent entities will be consolidated into a new foreign
entity or domestic entity other than a corporation. The name of
such a surviving or new entity may be the same as or similar to
that of any constituent corporation or constituent limited
liability company.
(3) The terms of the merger or consolidation, the mode of
carrying them into effect, and the manner and basis of
converting the shares or interests of the constituent entities
into, or substituting the shares or interests of the constituent
entities for, shares, interests, evidences of indebtedness,
other securities, cash, rights, or any other property or any
combination of shares, interests, evidences of indebtedness,
securities, cash, rights, or any other property of the surviving
entity, of the new entity, or of any other entity, including the
parent of any constituent entity, or any other person. No
conversion or substitution shall be effected if there are
reasonable grounds to believe that the surviving or new entity
would be rendered insolvent by the conversion or substitution.
(4) If the surviving or new entity is a foreign
corporation, all additional statements and matters, other than
the name and address of the statutory agent, that would be
required by section 1701.78 of the Revised Code if the surviving
or new corporation were a domestic corporation;
(5) The name and the form of entity of the surviving or
new entity, the state under the laws of which the surviving
entity exists or the new entity is to exist, and the location of
the principal office of the surviving or new entity in that
state;
(6) All statements and matters required to be set forth in
an agreement of merger or consolidation by the laws under which
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S. B. No. 276 Page 102As Introduced
each constituent entity exists and, in the case of a
consolidation, the new entity is to exist;
(7) The consent of the surviving or the new entity to be
sued and served with process in this state and the irrevocable
appointment of the secretary of state as its agent to accept
service of process in any proceeding in this state to enforce
against the surviving or new entity any obligation of any
domestic constituent corporation, or to enforce the rights of a
dissenting shareholder of any domestic constituent corporation;
(8) If the surviving or new entity is a foreign
corporation that desires to transact business in this state as a
foreign corporation, a statement to that effect, together with a
statement regarding the appointment of a statutory agent and
service of any process, notice, or demand upon that statutory
agent or the secretary of state, as required when a foreign
corporation applies for a license to transact business in this
state;
(9) If the surviving or new entity is a foreign limited
partnership that desires to transact business in this state as a
foreign limited partnership, a statement to that effect,
together with all of the information required under section
1782.49 of the Revised Code when a foreign limited partnership
registers to transact business in this state;
(10) If the surviving or new entity is a foreign limited
liability company that desires to transact business in this
state as a foreign limited liability company, a statement to
that effect, together with all of the information required under
section 1705.54 or 1706.511 of the Revised Code when a foreign
limited liability company registers to transact business in this
state.
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S. B. No. 276 Page 103As Introduced
(C) The agreement of merger or consolidation also may set
forth any additional provision permitted by the laws of any
state under the laws of which any constituent entity exists,
consistent with the laws under which the surviving entity exists
or the new entity is to exist.
(D) To effect the merger or consolidation, the agreement
of merger or consolidation shall be approved by the directors of
each domestic constituent corporation, and adopted by the
shareholders of each domestic constituent corporation, in the
same manner and with the same notice to and vote of shareholders
or of holders of a particular class of shares as is required by
section 1701.78 of the Revised Code. The agreement also shall be
approved or otherwise authorized by or on behalf of each other
constituent entity in accordance with the laws under which it
exists.
(E) At any time before the filing of the certificate of
merger or consolidation under section 1701.81 of the Revised
Code, the merger or consolidation may be abandoned by the
directors of any constituent corporation, the general partners
of any constituent partnership, or the comparable
representatives of any other constituent entity if the
directors, general partners, or comparable representatives are
authorized to do so by the agreement of merger or consolidation.
The agreement of merger or consolidation may contain a
provision authorizing the directors of any constituent
corporation, the general partners of any constituent
partnership, or the comparable representatives of any other
constituent entity to amend the agreement of merger or
consolidation at any time before the filing of the certificate
of merger or consolidation, except that, after the adoption of
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S. B. No. 276 Page 104As Introduced
the agreement by the shareholders of any domestic constituent
corporation, the directors shall not be authorized to amend the
agreement to do any of the following:
(1) Alter or change the amount or kind of shares,
interests, evidences of indebtedness, other securities, cash,
rights, or any other property to be received by shareholders of
the domestic constituent corporation in conversion of, or in
substitution for, their shares;
(2) If the surviving or new entity is a foreign
corporation, alter or change any term of the articles of the
surviving or new foreign corporation, except for alterations or
changes that could otherwise be adopted by the directors of the
surviving or new foreign corporation;
(3) If the surviving or new entity is a partnership or
other entity other than a corporation, alter or change any term
of the partnership agreement or comparable instrument of the
surviving or new partnership or other entity, except for
alterations or changes that otherwise could be adopted by the
general partners or comparable representatives of the surviving
or new partnership or other entity;
(4) Alter or change any other terms and conditions of the
agreement of merger or consolidation if any of the alterations
or changes, alone or in the aggregate, would materially
adversely affect the holders of any class or series of shares of
the domestic constituent corporation.
Sec. 1702.05. (A) Except as provided in this section and
in sections 1702.41 and 1702.411 of the Revised Code, the
secretary of state shall not accept for filing in the secretary
of state's office any articles if the corporate name set forth
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S. B. No. 276 Page 105As Introduced
in the articles is not distinguishable upon the secretary of
state's records from any of the following:
(1) The name of any other corporation, whether a nonprofit
corporation or a business corporation and whether that of a
domestic or of a foreign corporation authorized to do business
in this state;
(2) The name of any limited liability company registered
in the office of the secretary of state pursuant to Chapter
1705. or 1706. of the Revised Code, whether domestic or foreign;
(3) The name of any limited liability partnership
registered in the office of the secretary of state pursuant to
Chapter 1775. or 1776. of the Revised Code, whether domestic or
foreign;
(4) The name of any limited partnership registered in the
office of the secretary of state pursuant to Chapter 1782. of
the Revised Code, whether domestic or foreign;
(5) Any trade name, the exclusive right to which is at the
time in question registered in the office of the secretary of
state pursuant to Chapter 1329. of the Revised Code.
(B) The secretary of state shall determine for purposes of
this section whether a name is "distinguishable" from another
name upon the secretary of state's records. Without excluding
other names that may not constitute distinguishable names in
this state, a name is not considered distinguishable from
another name for purposes of this section solely because it
differs from the other name in only one or more of the following
manners:
(1) The use of the word "corporation," "company,"
"incorporated," "limited," or any abbreviation of any of those
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words;
(2) The use of any article, conjunction, contraction,
abbreviation, or punctuation;
(3) The use of a different tense or number of the same
word.
(C) A corporation may apply to the secretary of state for
authorization to use a name that is not distinguishable upon the
secretary of state's records from the name of any other
corporation, any limited liability company, limited liability
partnership, or limited partnership, or from a registered trade
name, if there also is filed in the office of the secretary of
state, on a form prescribed by the secretary of state, the
consent of the other entity, or, in the case of a registered
trade name, the person in whose name is registered the exclusive
right to use the name, which consent is evidenced in a writing
signed by any authorized officer or authorized representative of
the other entity or person.
(D) In case of judicial sale or judicial transfer, by sale
or transfer of good will or otherwise, of the right to use the
name of a nonprofit corporation or business corporation, whether
that of a domestic corporation or of a foreign corporation
authorized to exercise its corporate privileges in this state or
to do business in this state, the secretary of state, at the
instance of the purchaser or transferee of such right, shall
accept for filing articles of a corporation with a name the same
as or similar to the name of such other corporation, if there
also is filed in the office of the secretary of state a
certified copy of the decree or order of court confirming or
otherwise evidencing the purchase or transfer.
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S. B. No. 276 Page 107As Introduced
(E) Any person who wishes to reserve a name for a proposed
new corporation, or any corporation intending to change its
name, may submit to the secretary of state a written
application, on a form prescribed by the secretary of state, for
the exclusive right to use a specified name as the name of a
corporation. If the secretary of state finds that, under this
section, the specified name is available for such use, the
secretary of state shall file such application, and, from the
date of such filing, such applicant shall have the exclusive
right for one hundred eighty days to use the specified name as
the name of a corporation, counting the date of such filing as
the first of the one hundred eighty days. The right so obtained
may be transferred by the applicant or other holder of the right
by the filing in the office of the secretary of state of a
written transfer, on a form prescribed by the secretary of
state, stating the name and address of the transferee.
Sec. 1702.411. (A)(1) Pursuant to an agreement of merger
between the constituent entities as provided in this section, a
domestic corporation and, if so provided, one or more additional
domestic or foreign entities, may be merged into a surviving
entity other than a domestic corporation. Pursuant to an
agreement of consolidation, a domestic corporation together with
one or more additional domestic or foreign entities may be
consolidated into a new entity other than a domestic
corporation, to be formed by that consolidation. The merger or
consolidation must be permitted by the chapter of the Revised
Code under which each domestic constituent entity exists and by
the laws under which each foreign constituent entity exists. The
name of the surviving or new entity may be the same as or
similar to that of any constituent entity.
(2) To effect a merger or consolidation under this
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section, the directors of each constituent domestic corporation
shall approve an agreement of merger or consolidation to be
signed by the chairperson of the board of directors, the
president, or a vice-president and by the secretary or an
assistant secretary. The agreement of merger or consolidation
shall be approved or otherwise authorized by or on behalf of
each other constituent entity in accordance with the laws under
which it exists.
(3) The agreement of merger or consolidation shall set
forth all of the following:
(a) The name and the form of entity of each constituent
entity and the state under the laws of which each constituent
entity exists;
(b) In the case of a merger, that one or more specified
constituent entities will be merged into a specified surviving
foreign entity or surviving domestic entity other than a
domestic corporation or, in the case of a consolidation, that
the constituent entities will be consolidated into a new foreign
entity or domestic entity other than a domestic corporation.
(c) The terms of the merger or consolidation and the mode
of carrying those terms into effect;
(d) If the surviving or new entity is a foreign
corporation, all additional statements and matters, other than
the name and address of the statutory agent, that would be
required by section 1702.41 of the Revised Code if the surviving
or new corporation were a domestic corporation;
(e) The name and the form of entity of the surviving or
new entity, the state under the laws of which the surviving
entity exists or the new entity is to exist, and the location of
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S. B. No. 276 Page 109As Introduced
the principal office of the surviving or new entity in that
state;
(f) All statements and matters required to be set forth in
an agreement of merger or consolidation by the laws under which
each constituent entity exists and, in the case of a
consolidation, the new entity is to exist;
(g) The consent of the surviving or the new entity to be
sued and served with process in this state and the irrevocable
appointment of the secretary of state as its agent to accept
service of process in any proceeding in this state to enforce
against the surviving or new entity any obligation of any
domestic constituent corporation;
(h) If the surviving or new entity is a foreign
corporation that desires to transact business in this state as a
foreign corporation, a statement to that effect, together with a
statement regarding the appointment of a statutory agent and
service of any process, notice, or demand upon that statutory
agent or the secretary of state, as required when a foreign
corporation applies for a license to transact business in this
state;
(i) If the surviving or new entity is a foreign limited
partnership that desires to transact business in this state as a
foreign limited partnership, a statement to that effect,
together with all of the information required under section
1782.49 of the Revised Code when a foreign limited partnership
registers to transact business in this state;
(j) If the surviving or new entity is a foreign limited
liability company that desires to transact business in this
state as a foreign limited liability company, a statement to
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that effect, together with all of the information required under
section 1705.54 or 1706.511 of the Revised Code when a foreign
limited liability company registers to transact business in this
state;
(k) If the surviving or new entity is a foreign
unincorporated association that desires to transact business in
this state as a foreign unincorporated association, a statement
to that effect, together with all of the information required
under section 1745.461 of the Revised Code when a foreign
unincorporated association registers to transact business in
this state.
(4) The agreement of merger or consolidation also may set
forth any additional provision permitted by the laws of any
state under the laws of which any constituent entity exists,
consistent with the laws under which the surviving entity exists
or the new entity is to exist.
(B)(1) A merger or consolidation in which a domestic
public benefit corporation is one of the constituent entities
shall be approved by the court of common pleas of the county in
this state in which the principal office of the domestic public
benefit 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. No approval by the court under division
(B)(1) of this section is required if either of the following
applies:
(a) A public benefit entity is the surviving entity in the
case of a merger and continues to be a public benefit entity or
is the new entity in the case of a consolidation and continues
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to be a public benefit entity.
(b) A public benefit entity is not the surviving entity in
the case of a merger or is not the new entity in the case of a
consolidation, and all of the following apply:
(i) On or prior to the effective date of the merger or
consolidation, assets with a value equal to the greater of the
fair market value of the net tangible and intangible assets,
including goodwill, of the domestic public benefit corporation
or the fair market value of the domestic public benefit
corporation if it is to be operated as a business concern are
transferred or conveyed to one or more persons that would have
received its assets under section 1702.49 of the Revised Code
had it voluntarily dissolved.
(ii) The domestic public benefit corporation returns,
transfers, or conveys any assets held by it upon a condition
requiring return, transfer, or conveyance, which condition
occurs by reason of the merger or consolidation, in accordance
with that condition.
(iii) The merger or consolidation is approved by a
majority of directors of the domestic public benefit corporation
who will not receive any financial or other benefit, directly or
indirectly, as a result of the merger or consolidation or by
agreement, and who are not and will not as a result of the
merger or consolidation become members, partners, or other
owners, however denominated, of, shareholders in, directors,
officers, managers, employees, agents, or other representatives
of, or consultants to, the surviving or new entity.
(2) At least twenty days before consummation of any merger
or consolidation of a domestic public benefit corporation
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pursuant to division (B)(1)(b) of this section, written notice,
including a copy of the proposed plan of merger or
consolidation, shall be delivered to the attorney general's
charitable law section. The attorney general's charitable law
section may review a proposed merger or consolidation of a
domestic public benefit corporation under division (B)(1)(b) of
this section. 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 merger or
consolidation under division (B)(1)(b) of this section. The
attorney general may retain at the expense of the domestic
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 merger or consolidation under division (B)(1)(b) of
this section. The attorney general may extend the date of any
merger or consolidation of a domestic public benefit corporation
under division (B)(1)(b) of this section for a period not to
exceed sixty days and shall provide notice of that extension to
the domestic public benefit corporation. The notice shall set
forth the reasons necessitating the extension.
(3) No member, other than a member that is a public
benefit entity, or director of a domestic public benefit
corporation in that person's capacity as a member or director
may receive or keep anything as a result of a merger or
consolidation other than membership or directorship in the
surviving or new public benefit entity without the prior written
consent of the attorney general or of the court of common pleas
of the county in this state in which the principal office of the
domestic public benefit corporation is located that is obtained
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in a proceeding in 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. The
court shall approve the transaction if it is in the public
interest.
(4) The attorney general may institute a civil action to
enforce the requirements of divisions (B)(1), (2), and (3) of
this section in the court of common pleas of the county in this
state in which the principal office of the domestic public
benefit 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.
Sec. 1703.04. (A) To procure a license to transact
business in this state, a foreign corporation for profit shall
file with the secretary of state a certificate of good standing
or subsistence, dated not earlier than ninety days prior to the
filing of the application, under the seal of the secretary of
state, or other proper official, of the state under the laws of
which said corporation was incorporated, setting forth the exact
corporate title and the fact that the corporation is in good
standing or is a subsisting corporation.
(B) To procure such a license, such corporation also shall
file with the secretary of state an application in such form as
the secretary of state prescribes, verified by the oath of any
authorized officer of such corporation, setting forth, but not
limited to:
(1) The name of the corporation and, if its corporate name
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is not available, the trade name under which it will do business
in this state;
(2) The name of the state under the laws of which it was
incorporated;
(3) The location and complete address of its principal
office;
(4) The name of the county and the municipal corporation
or township in which its principal office within this state, if
any, is to be located;
(5) The appointment of a designated agent and the complete
address of such agent;
(6) The irrevocable consent of such corporation to service
of process on such agent so long as the authority of such agent
continues and to service of process upon the secretary of state
in the events provided for in section 1703.19 of the Revised
Code;
(7) A brief summary of the corporate purposes to be
exercised within this state.
(C)(1) No such application for a license shall be accepted
for filing if it appears that the name of the foreign
corporation is prohibited by law or is not distinguishable upon
the records in the office of the secretary of state from the
name of any other corporation, whether nonprofit or for profit
and whether that of a domestic corporation or of a foreign
corporation authorized to transact business in this state, the
name of a limited liability company registered in the office of
the secretary of state pursuant to Chapter 1705. or 1706. of the
Revised Code, whether domestic or foreign, the name of any
limited liability partnership registered in the office of the
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secretary of state pursuant to Chapter 1775. or 1776. of the
Revised Code, whether domestic or foreign, the name of any
limited partnership registered in the office of the secretary of
state pursuant to Chapter 1782. of the Revised Code, whether
domestic or foreign, or a trade name to which the exclusive
right at the time in question is registered in the manner
provided in Chapter 1329. of the Revised Code, unless there also
is filed with the secretary of state, on a form prescribed by
the secretary of state, the consent of the other entity or
person to the use of the name, evidenced in a writing signed by
any authorized officer of the other entity or authorized
representative of the other person owning the exclusive right to
the registered trade name.
(2) Notwithstanding division (C)(1) of this section, if an
application for a license is not acceptable for filing solely
because the name of the foreign corporation is not
distinguishable from the name of another entity or registered
trade name, the foreign corporation may be authorized to
transact business in this state by filing with the secretary of
state, in addition to those items otherwise prescribed by this
section, a statement signed by an authorized officer directing
the foreign corporation to make application for a license to
transact business in this state under an assumed business name
or names that comply with the requirements of this division and
stating that the foreign corporation will transact business in
this state only under the assumed name or names. The application
for a license shall be on a form prescribed by the secretary of
state.
Sec. 1706.01. As used in this chapter:
(A) "Articles of organization" means the articles of
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organization described in section 1706.16 of the Revised Code,
and those articles of organization as amended or restated.
(B) "Assignment" means a transfer, conveyance, deed, bill
of sale, lease, mortgage, security interest, encumbrance, gift,
or transfer by operation of law.
(C) "Constituent limited liability company" means a
constituent entity that is a limited liability company.
(D) "Constituent entity" means an entity that is party to
a merger.
(E) "Contribution" means anything of value including cash,
property, or services rendered, or a promissory note or other
binding obligation to contribute cash or property or to perform
services, that a person contributes to a limited liability
company, or a series thereof, in the person's capacity as a
member.
(F) "Converted entity" means the entity into which a
converting entity converts pursuant to sections 1706.72 to
1706.723 of the Revised Code.
(G) "Converting limited liability company" means a
converting entity that is a limited liability company.
(H) "Converting entity" means an entity that converts into
a converted entity pursuant to sections 1706.72 to 1706.723 of
the Revised Code.
(I) "Debtor in bankruptcy" means a person who is the
subject of an order for relief under Title 11 of the United
States Code, a comparable order under a successor statute of
general application, or a comparable order under any federal,
state, or foreign law governing insolvency.
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(J) "Distribution" means a transfer of money or other
property from a limited liability company, or a series thereof,
to another person on account of a membership interest.
(K) "Entity" means a general partnership, limited
partnership, limited liability partnership, limited liability
company, association, corporation, professional corporation,
professional association, nonprofit corporation, business trust,
real estate investment trust, common law trust, statutory trust,
cooperative association, or any similar organization that has a
governing statute, in each case, whether foreign or domestic.
(L) "Foreign limited liability company" means an entity
that is all of the following:
(1) An unincorporated association;
(2) Organized under the laws of a state other than this
state or under the laws of a foreign country;
(3) Organized under a statute pursuant to which an
association may be formed that affords to each of its members
limited liability with respect to the liabilities of the entity;
(4) Not required to be registered, qualified, or organized
under any statute of this state other than this chapter.
(M) "Governing statute" means the law that governs an
entity's internal affairs.
(N) "Limited liability company," except in the phrase
"foreign limited liability company," means an entity formed or
existing under this chapter.
(O) "Manager" means any person designated by the limited
liability company or its members with the authority to manage
all or part of the activities or affairs of the limited
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liability company on behalf of the limited liability company,
which person has agreed to serve in such capacity, whether such
person is designated as a manager, director, officer, or
otherwise.
(P) "Member" means a person that has been admitted as a
member of a limited liability company under section 1706.27 of
the Revised Code and that has not dissociated as a member.
(Q) "Membership interest" means a member's right to
receive distributions from a limited liability company or series
thereof.
(R) "Operating agreement" means any valid agreement,
written or oral, of the members, or any written declaration of
the sole member, as to the affairs and activities of a limited
liability company and any series thereof. "Operating agreement"
includes any amendments to the operating agreement.
(S) "Organizational documents" means any of the following:
(1) For a general partnership or foreign general
partnership, its partnership agreement;
(2) For a limited partnership or foreign limited
partnership, its certificate of limited partnership and
partnership agreement;
(3) For a limited liability limited partnership or foreign
limited liability limited partnership, its certificate of
limited partnership and partnership agreement;
(4) For a limited liability company or foreign limited
liability company, its articles of organization and operating
agreement, or comparable records as provided in its governing
statute;
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(5) For a business or statutory trust or foreign business
or statutory trust, its trust instrument, or comparable records
as provided in its governing statute;
(6) For a for-profit corporation or foreign for-profit
corporation, its articles of incorporation, regulations, and
other agreements among its shareholders that are authorized by
its governing statute, or comparable records as provided in its
governing statute;
(7) For a nonprofit corporation or foreign nonprofit
corporation, its articles of incorporation, regulations, and
other agreements that are authorized by its governing statute or
comparable records as provided in its governing statute;
(8) For a professional association, its articles of
incorporation, regulations, and other agreements among its
shareholders that are authorized by its governing statute, or
comparable records as provided in its governing statute;
(9) For any other entity, the basic records that create
the entity, determine its internal governance, and determine the
relations among the persons that own it, are members of it, or
govern it.
(T) "Organizer" means a person executing the initial
articles of organization filed by the secretary of state in
accordance with section 1706.16 of the Revised Code.
(U) "Person" means an individual, entity, trust, estate,
government, custodian, nominee, trustee, personal
representative, fiduciary, or any other individual, entity, or
series thereof in its own or any representative capacity, in
each case, whether foreign or domestic. As used in this
division, "government" includes a country, state, county, or
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S. B. No. 276 Page 120As Introduced
other political subdivision, agency, or instrumentality.
(V) "Principal office" means the location specified by a
limited liability company, foreign limited liability company, or
other entity as its principal office in the last filed record in
which the limited liability company, foreign limited liability
company, or other entity specified its principal office on the
records of the secretary of state. If no such location has
previously been specified, then "principal office" means the
location reasonably apparent to an unaffiliated person as the
principal executive office of the limited liability company,
foreign limited liability company, or other entity.
(W) "Record" means information that is inscribed on a
tangible medium or that is stored in an electronic or other
medium and is retrievable in written or paper form through an
automated process.
(X) "Sign" means, with the present intent to authenticate
or adopt a record, either of the following:
(1) To execute or adopt a tangible symbol;
(2) To attach to or logically associate with the record an
electronic symbol, sound, or process.
(Y) "State" means a state of the United States, the
District of Columbia, Puerto Rico, the United States Virgin
Islands, or any territory or insular possession subject to the
jurisdiction of the United States.
(Z) "Surviving entity" means an entity into which one or
more other entities are merged, whether the entity pre-existed
the merger or was created pursuant to the merger.
(AA) "Tribunal" means a court or, if provided in the
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operating agreement or otherwise agreed, an arbitrator,
arbitration panel, or other tribunal.
Sec. 1706.02. This chapter may be cited as the "Ohio
Revised Limited Liability Company Act."
Sec. 1706.03. (A) A person knows a fact when either of the
following is met:
(1) The person has actual knowledge of the fact.
(2) The person is deemed to know the fact under law other
than this chapter.
(B) A person has notice of a fact when any of the
following is met:
(1) The person knows of the fact.
(2) The person receives notification of the fact.
(3) The person has reason to know the fact from all the
facts known to the person at the time.
(4) The person is deemed to have notice of the fact under
division (D) of this section.
(C) A person notifies another of a fact by taking steps
reasonably required to inform the other person in ordinary
course, whether or not the other person knows the fact.
(D) A person is deemed to have notice of the following:
(1) The matters included in a limited liability company's
articles of organization under divisions (A)(1) to (3) of
section 1706.16 of the Revised Code, upon the filing of the
articles;
(2) A limited liability company's dissolution, ninety days
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after a certificate of dissolution under section 1706.471 of the
Revised Code becomes effective;
(3) A limited liability company's merger or conversion,
ninety days after a certificate of merger under section 1706.712
of the Revised Code or certificate of conversion under section
1706.722 of the Revised Code becomes effective.
(E) A member's knowledge, notice, or receipt of a
notification of a fact relating to the limited liability company
is not knowledge, notice, or receipt of a notification of a fact
by the limited liability company solely by reason of the
member's capacity as a member.
Sec. 1706.04. (A) A limited liability company is a
separate legal entity. A limited liability company's status for
tax purposes shall not affect its status as a separate legal
entity formed under this chapter.
(B) A limited liability company has perpetual duration.
Sec. 1706.05. (A) A limited liability company may carry on
any lawful activity, whether or not for profit.
(B) A limited liability company shall possess and may
exercise all the powers and privileges granted by this chapter
or by any other law or by its operating agreement, together with
any powers incidental thereto, including those powers and
privileges necessary or convenient to the conduct, promotion, or
attainment of the business, purposes, or activities of the
limited liability company.
(C) Without limiting the general powers enumerated in
division (B) of this section, a limited liability company shall
have the power and authority to make contracts of guaranty and
suretyship and enter into interest rate, basis, currency, hedge,
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or other swap agreements, or cap, floor, put, call, option,
exchange, or collar agreements, derivative agreements, or other
agreements similar to any of the foregoing.
(D) A series established under this chapter has the power
and capacity, in the series' own name, to do all of the
following:
(1) Sue and be sued;
(2) Contract;
(3) Hold and convey title to assets of the series,
including real property, personal property, and intangible
property;
(4) Grant liens and security interests in assets of the
series.
Sec. 1706.06. (A) This chapter shall be construed to give
maximum effect to the principles of freedom of contract and to
the enforceability of operating agreements.
(B) Unless displaced by particular provisions of this
chapter, principles of law and equity supplement this chapter.
(C) Rules that statutes in derogation of the common law
are to be strictly construed shall have no application to this
chapter.
(D) Sections 1309.406 and 1309.408 of the Revised Code do
not apply to any interest in a limited liability company,
including all rights, powers, and interests arising under an
operating agreement or this chapter. This division prevails over
those sections, and is expressly intended to permit the
enforcement of the provisions of an operating agreement that
would otherwise be ineffective under those sections.
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(E) This chapter applies to all limited liability
companies equally regardless of whether the limited liability
company has one or more members or whether it is formed by a
filing under section 1706.16 of the Revised Code or by merger,
consolidation, conversion, or otherwise.
Sec. 1706.061. The law of this state governs all of the
following:
(A) The organization and internal affairs of a limited
liability company;
(B) The liability of a member as a member for the debts,
obligations, or other liabilities of a limited liability
company;
(C) The authority of the members and agents of a limited
liability company;
(D) The availability of the assets of a limited liability
company or series thereof for the obligations of the limited
liability company or another series thereof.
Sec. 1706.07. (A) The name of a limited liability company
shall contain the words "limited liability company" or the
abbreviation "L.L.C.," "LLC," "limited," "ltd.," or "ltd."
(B) Except as provided in this section and in sections
1701.75, 1701.78, 1701.82, 1705.36, and 1705.37 of the Revised
Code, the secretary of state shall not accept for filing in the
secretary of state's office the articles of organization of a
limited liability company if the company name set forth in the
articles is not distinguishable on the records of the secretary
of state from the name of any of the following:
(1) Any other limited liability company, whether the name
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is of a domestic limited liability company or of a foreign
limited liability company registered as a foreign limited
liability company under this chapter;
(2) Any corporation, whether the name is of a domestic
corporation or of a foreign corporation holding a license as a
foreign corporation under the laws of this state pursuant to
Chapter 1701., 1702., or 1703. of the Revised Code;
(3) Any limited liability partnership, whether the name is
of a domestic limited liability partnership or a foreign limited
liability partnership registered pursuant to Chapter 1775. or
1776. of the Revised Code;
(4) Any limited partnership, whether the name is of a
domestic limited partnership or a foreign limited partnership
registered pursuant to Chapter 1782. of the Revised Code;
(5) Any trade name to which the exclusive right, at the
time in question, is registered in the office of the secretary
of state pursuant to Chapter 1329. of the Revised Code.
(C) A limited liability company may apply to the secretary
of state for authorization to use a name that is not
distinguishable from the names identified in division (B) of of
this section if there also is filed in the office of the
secretary of state, on a form prescribed by the secretary of
state, the consent of the other person or, in the case of a
registered trade name, the person in whose name is registered
the exclusive right to use the name, which consent is evidenced
in a writing signed by any authorized officer or any authorized
representative of the other person.
(D) If a judicial sale or other transfer by order of a
tribunal involves the right to use the name of a limited
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liability company or of a foreign limited liability company,
then division (B) of this section shall not be applicable with
respect to any person that is subject to the order.
(E) Any person that wishes to reserve a name for a
proposed new limited liability company, a limited liability
company that intends to change its name, or an assumed name for
a foreign limited liability company whose name is not available
may submit to the secretary of state, on a form prescribed by
the secretary of state, a written application for the exclusive
right to use a specified name as the name of the company. If the
secretary of state finds, consistent with this section, that the
specified name is available for use, the secretary of state
shall file the application. From the date of the filing, the
applicant has the exclusive right for one hundred eighty days to
use the specified name as the name of the limited liability
company, counting the date of the filing as the first of the one
hundred eighty days. The right so obtained may be transferred by
the applicant or other holder of the right by filing in the
office of the secretary of state a written transfer, on a form
prescribed by the secretary of state, that states the name and
address of the transferee.
Sec. 1706.08. (A) Except as otherwise provided in
divisions (B) and (C) of this section, both of the following
apply:
(1) An operating agreement governs relations among the
members as members and between the members and the limited
liability company.
(2) To the extent that an operating agreement does not
otherwise provide for a matter described in division (A)(1) of
this section, this chapter governs the matter.
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(B)(1) To the extent that, at law or in equity, a member,
manager, or other person has duties, including fiduciary duties,
to the limited liability company, or to another member or to
another person that is a party to or is otherwise bound by an
operating agreement, those duties may be expanded or restricted
or eliminated by a written operating agreement. However, an
operating agreement may not eliminate the implied covenant of
good faith and fair dealing.
(2) A written operating agreement may provide for the
limitation or elimination of any and all liabilities for breach
of contract and breach of duties, including breach of fiduciary
duties, of a member, manager, or other person to a limited
liability company or to another member or to another person that
is a party to or is otherwise bound by an operating agreement.
However, an operating agreement may not limit or eliminate
liability for any act or omission that constitutes a bad faith
violation of the implied covenant of good faith and fair
dealing.
(3) A member, manager, or other person shall not be liable
to a limited liability company or to another member or to
another person that is a party to or is otherwise bound by an
operating agreement for breach of fiduciary duty for the
member's or other person's good faith reliance on the operating
agreement.
(4) An operating agreement may provide either or both of
the following:
(a) That, a member or assignee who fails to perform in
accordance with, or to comply with the terms and conditions of,
the operating agreement shall be subject to specified penalties
or specified consequences;
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(b) That at the time or upon the happening of events
specified in the operating agreement, a member or assignee may
be subject to specified penalties or consequences.
(5) A penalty or consequence that may be specified under
division (B)(4) of this section may include any of the
following:
(a) Reducing or eliminating the defaulting member's or
assignee's proportionate interest in a limited liability
company;
(b) Subordinating the member's or assignee's membership
interest to that of nondefaulting members or assignees;
(c) Forcing a sale of the member's or assignee's
membership interest;
(d) Forfeiting the defaulting member's or assignee's
membership interest;
(e) The lending by other members or assignees of the
amount necessary to meet the defaulting member's or assignee's
commitment;
(f) A fixing of the value of the defaulting member's or
assignee's membership interest by appraisal or by formula and
redemption or sale of the membership interest at that value;
(g) Any other penalty or consequence.
(C) An operating agreement shall not do any of the
following:
(1) Vary the nature of the limited liability company as a
separate legal entity under division (A) of section 1706.04 of
the Revised Code;
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S. B. No. 276 Page 129As Introduced
(2) Except as otherwise provided in division (B) of
section 1706.082 of the Revised Code, restrict the rights under
this chapter of a person other than a member, dissociated
member, or assignee;
(3) Vary the power of a court under section 1706.171 of
the Revised Code;
(4) Eliminate the implied covenant of good faith and fair
dealing;
(5) Eliminate or limit the liability of a member or other
person for any act or omission that constitutes a bad faith
violation of the implied covenant of good faith and fair
dealing;
(6) Waive the requirements of division (A) of section
1706.281 of the Revised Code;
(7) Waive the prohibition on issuance of a certificate of
a membership interest in bearer form under division (D) of
section 1706.341 of the Revised Code;
(8) Waive the requirements of division (B) of section
1706.761 of the Revised Code.
Sec. 1706.081. (A) A limited liability company is bound by
and may enforce its operating agreement, whether or not the
limited liability company has itself manifested assent to its
operating agreement.
(B) A person that is admitted as a member of a limited
liability company becomes a party to and assents to the
operating agreement subject to division (A) of section 1706.281
of the Revised Code.
(C) Two or more persons intending to be the initial
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S. B. No. 276 Page 130As Introduced
members of a limited liability company may make an agreement
providing that upon the formation of the limited liability
company the agreement will become its operating agreement. One
person intending to be the initial member of a limited liability
company may assent to terms providing that upon the formation of
the limited liability company the terms will become the
operating agreement.
(D) The operating agreement of a limited liability company
having only one member shall not be unenforceable by reason of
there being only one person who is a party to the operating
agreement.
Sec. 1706.082. (A) An operating agreement may be amended
upon the consent of all the members of a limited liability
company or in such other manner authorized by the operating
agreement. If an operating agreement provides for the manner in
which it may be amended, including by requiring the approval of
a person who is not a party to the operating agreement or the
satisfaction of conditions, it may be amended only in that
manner or as otherwise permitted by law; except that the
approval of any person may be waived by that person and any
conditions may be waived by all persons for whose benefit those
conditions were intended.
(B) An operating agreement may provide rights to any
person, including a person who is not a party to the operating
agreement, to the extent set forth in the operating agreement.
(C) The obligations of a limited liability company and its
members to a person in the person's capacity as an assignee or
dissociated member are governed by the operating agreement. An
assignee and dissociated member are bound by the operating
agreement.
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Sec. 1706.09. (A) Each limited liability company and
foreign limited liability company that has an effective
registration as a foreign limited liability company under
section 1706.511 of the Revised Code shall maintain continuously
in this state an agent for service of process on the company.
The agent shall be one of the following:
(1) A natural person who is a resident of this state;
(2) A domestic or foreign corporation, nonprofit
corporation, limited liability company, partnership, limited
partnership, limited liability partnership, limited partnership
association, professional association, business trust, or
unincorporated nonprofit association that has a business address
in this state. If the agent is an entity other than a domestic
corporation, the agent shall meet the requirements of Title XVII
of the Revised Code for an entity of the agent's type to
transact business or exercise privileges in this state.
(B)(1) The secretary of state shall not accept original
articles of organization of a limited liability company or an
original registration of a foreign limited liability company for
filing unless both of the following accompany the articles or
registration:
(a) A written appointment of an agent as described in
division (A) of this section that is signed by an authorized
representative of the limited liability company or foreign
limited liability company;
(b) A written acceptance of the appointment that is signed
by the designated agent on a form prescribed by the secretary of
state.
(2) In cases not covered by division (B)(1) of this
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S. B. No. 276 Page 132As Introduced
section, the company shall appoint the agent described in
division (A) of this section and shall file with the secretary
of state, on a form prescribed by the secretary of state, a
written appointment of that agent that is signed by an
authorized representative of the company and a written
acceptance of the appointment that is signed by the designated
agent.
(C) The written appointment of an agent shall set forth
the name and address in this state of the agent, including the
street and number or other particular description, and shall
otherwise be in such form as the secretary of state prescribes.
The secretary of state shall keep a record of the names of
limited liability companies and foreign limited liability
companies, and the names and addresses of their respective
agents.
(D) If any agent described in division (A) of this section
dies, resigns, or moves outside of this state, the limited
liability company or foreign limited liability company shall
appoint forthwith another agent and file with the secretary of
state, on a form prescribed by the secretary of state, a written
appointment of the agent and acceptance of appointment as
described in division (B)(2) of this section.
(E) If the agent described in division (A) of this section
changes the agent's address from the address stated in the
records of the secretary of state, the agent or the limited
liability company or foreign limited liability company shall
file forthwith with the secretary of state, on a form prescribed
by the secretary of state, a written statement setting forth the
new address.
(F) An agent described in division (A) of this section may
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S. B. No. 276 Page 133As Introduced
resign by filing with the secretary of state, on a form
prescribed by the secretary of state, a written notice of
resignation that is signed by the agent and by mailing a copy of
that notice to the limited liability company or foreign limited
liability company at the current or last known address of its
principal office. The notice shall be mailed to the company on
or prior to the date that the notice is filed with the secretary
of state and shall set forth the name of the company, the name
and current address of the agent, the current or last known
address, including the street and number or other particular
description, of the company's principal office, a statement of
the resignation of the agent, and a statement that a copy of the
notice has been sent to the company within the time and in the
manner specified in this division. The authority of the
resigning agent terminates thirty days after the filing of the
notice with the secretary of state.
(G) A limited liability company or foreign limited
liability company may revoke the appointment of its agent
described in division (A) of this section by filing with the
secretary of state, on a form prescribed by the secretary of
state, a written appointment of another agent and an acceptance
of appointment in the manner described in division (B)(2) of
this section and a statement indicating that the appointment of
the former agent is revoked.
(H)(1) Any legal process, notice, or demand required or
permitted by law to be served upon a limited liability company
may be served upon the company as follows:
(a) By delivering a copy of the process, notice, or demand
to the address of the agent in this state as contained in the
records of the secretary of state;
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S. B. No. 276 Page 134As Introduced
(b) If the agent described in division (A) of this section
is a natural person, by delivering a copy of the process,
notice, or demand to the agent.
(2) If the agent described in division (A) of this section
cannot be found or no longer has the address that is stated in
the records of the secretary of state or the limited liability
company or foreign limited liability company has failed to
maintain an agent as required by this section and if the party
or the agent or representative of the party that desires service
of the process, notice, or demand files with the secretary of
state an affidavit that states that one of those circumstances
exists and states the most recent address of the company that
the party who desires service has been able to ascertain after a
diligent search, then the service of the process, notice, or
demand upon the secretary of state as the agent of the company
may be initiated by delivering to the secretary of state four
copies of the process, notice, or demand accompanied by a fee of
five dollars. The secretary of state shall give forthwith notice
of that delivery to the company at either its principal office
as shown upon the secretary of state's records or at any
different address specified in the affidavit of the party
desiring service and shall forward to the company at either
address by certified mail, return receipt requested, a copy of
the process, notice, or demand. Service upon the company is made
when the secretary of state gives the notice and forwards the
process, notice, or demand as set forth in division (H)(2) of
this section.
(I) The secretary of state shall keep a record of each
process, notice, and demand that pertains to a limited liability
company or foreign limited liability company and that is
delivered to the secretary of state's office under this section
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S. B. No. 276 Page 135As Introduced
or another law of this state that authorizes service upon the
secretary of state in connection with a limited liability
company or foreign limited liability company. In that record,
the secretary of state shall record the time of each delivery of
that type and the secretary of state's subsequent action with
respect to the process, notice, or demand.
(J) This section does not limit or affect the right to
serve any process, notice, or demand upon a limited liability
company or foreign limited liability company in any other manner
permitted by law.
(K) A written appointment of an agent or a written
statement filed by a limited liability company or foreign
limited liability company with the secretary of state shall be
signed by an authorized representative of the company.
(L) Upon the failure of a limited liability company or
foreign limited liability company to continuously maintain a
statutory agent or file a change of name or address of a
statutory agent, the secretary of state shall give notice
thereof by ordinary or electronic mail to the company at the
electronic mail address provided to the secretary of state, or
at the address set forth in the notice of resignation. Unless
the default is cured within thirty days after the mailing by the
secretary of state of the notice or within any further period of
time that the secretary of state grants, upon the expiration of
that period of time from the date of the mailing, the articles
of the limited liability company or the registration of the
foreign limited liability company shall be canceled without
further notice or action by the secretary of state. The
secretary of state shall make a notation of the cancellation on
the secretary of state's records.
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S. B. No. 276 Page 136As Introduced
A limited liability company or foreign limited liability
company whose articles or registration has been canceled may be
reinstated by filing, on a form prescribed by the secretary of
state, an application for reinstatement and the required
appointment of agent or required statement, and by paying the
filing fee specified in division (Q) of section 111.16 of the
Revised Code. The rights and privileges of a limited liability
company or foreign limited liability company whose articles or
registration has been reinstated are subject to section 1706.46
of the Revised Code. The secretary of state shall furnish the
tax commissioner a monthly list of all limited liability
companies and foreign limited liability companies canceled and
reinstated under this division.
Sec. 1706.16. (A) In order to form a limited liability
company, one or more persons shall execute articles of
organization and deliver the articles to the secretary of state
for filing. The articles of organization shall set forth all of
the following:
(1) The name of the limited liability company;
(2) The name and street address of the limited liability
company's statutory agent and a written acceptance of the
appointment that is signed by the agent ;
(3) If applicable, a statement as provided in division (B)
(3) of section 1706.761 of the Revised Code;
(4) Any other matters the organizers or the members
determine to include in the articles of organization.
(B) A limited liability company is formed when the
articles of organization are filed by the secretary of state or
at any later date or time specified in the articles of
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S. B. No. 276 Page 137As Introduced
organization.
(C) The fact that articles of organization are on file in
the office of the secretary of state is notice of the matters
required to be included by divisions (A)(1) to (3) of this
section, but is not notice of any other fact.
(D) An operating agreement may be entered into before, at
the time of, or after the filing of the articles of
organization. Regardless of when the operating agreement is
entered into, it may be made effective as of the filing of the
articles of organization or any other time provided in the
operating agreement.
Sec. 1706.161. (A) The articles of organization may be
amended at any time.
(B) The articles of organization may be restated with or
without amendment at any time.
(C) To amend its articles of organization, a limited
liability company shall deliver to the secretary of state for
filing, on a form prescribed by the secretary of state, a
certificate of amendment containing both of the following
information:
(1) The name and registration number of the limited
liability company;
(2) The changes the amendment makes to the articles of
organization as most recently amended or restated.
(D) Restated articles of organization shall be delivered
to the secretary of state for filing in the same manner as an
amendment. Restated articles of organization shall be designated
as such in the heading and state in the heading or in an
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S. B. No. 276 Page 138As Introduced
introductory paragraph the limited liability company's name and
the date of the filing of its articles of organization. Any
amendment or change effected in connection with the restatement
of the articles of organization shall be subject to any other
provision of this chapter, not inconsistent with this section,
which would apply if a separate certificate of amendment were
filed to effect the amendment or change.
(E) The original articles of organization, as amended or
supplemented, shall be superseded by the restated articles of
organization. Thereafter, the articles of organization,
including any further amendment or changes made thereby, shall
be the articles of organization of the limited liability
company, but the original effective date of formation shall
remain unchanged.
Sec. 1706.17. (A) A record delivered to the secretary of
state for filing pursuant to this chapter shall be signed as
provided by this section.
(1) A limited liability company's initial articles of
organization shall be signed by at least one person.
(2) A record signed on behalf of a limited liability
company shall be signed by a person authorized by the limited
liability company.
(3) A record filed on behalf of a dissolved limited
liability company that has no members shall be signed by the
person winding up the limited liability company's activities
under division (A) of section 1706.472 of the Revised Code or a
person appointed under division (B) of section 1706.472 of the
Revised Code to wind up those activities.
(4) A statement of denial by a person under section
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S. B. No. 276 Page 139As Introduced
1706.20 of the Revised Code shall be signed by that person.
(5) Any other record shall be signed by the person on
whose behalf the record is delivered to the secretary of state.
(B) Any record to be filed under this chapter may be
signed by an agent, including an attorney-in-fact. Powers of
attorney relating to the signing of the record need not be
delivered to the secretary of state.
Sec. 1706.171. (A) If a person required by this chapter to
sign a record or deliver a record to the secretary of state for
filing under this chapter does not do so, any other person that
is aggrieved by that failure to sign may petition the
appropriate court to order any of the following:
(1) The person to sign the record;
(2) The person to deliver the record to the secretary of
state for filing;
(3) The secretary of state to file the record unsigned.
(B) If a petitioner under division (A) of this section is
not the limited liability company or foreign limited liability
company to whom the record pertains, the petitioner shall make
the limited liability company or foreign limited liability
company a party to the action. A person aggrieved under division
(A) of this section may seek the remedies provided in that
division in a separate action against the person required to
sign the record or as a part of any other action concerning the
limited liability company in which the person required to sign
the record is made a party.
(C) A record filed unsigned pursuant to this section is
effective without being signed.
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(D) A court may award reasonable expenses, including
reasonable attorney's fees, to the prevailing party, in whole or
in part, with respect to any claim made under division (A) of
this section.
Sec. 1706.172. (A) Each record authorized or required to
be delivered to the secretary of state for filing under this
chapter shall meet all of the following requirements:
(1) The record shall contain all information required by
the law of this state to be contained in the record but, unless
otherwise provided by law, shall not be required to contain
other information.
(2) The record shall be on or in a medium and in such form
acceptable to the secretary of state and from which the
secretary of state may create a record that contains all of the
information stated in the record. The secretary of state may
require that the record be delivered by any one or more means or
on or in any one or more media acceptable to the secretary of
state. The secretary of state is not required to file a record
that is not delivered by a means and in a medium that complies
with the requirements then established by the secretary of state
for the delivery and filing of records. If the secretary of
state permits a record to be delivered on paper, the record
shall be typewritten or machine printed, and the secretary of
state may impose reasonable requirements upon the dimensions,
legibility, quality, and color of the paper and typewriting or
printing and upon the format and other attributes of any record
that is delivered electronically. The secretary of state shall,
at the earliest practicable time, allow for the delivery of a
record for filing to be accomplished electronically, without the
necessity for the delivery of a physical original record or the
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image thereof, if all required information is delivered and is
readily retrievable from the data delivered. If the delivery of
a record for filing is required to be accomplished
electronically, that record shall not be accompanied by any
physical record unless the secretary of state permits that
accompaniment.
(3) The record shall be in English. A person's name set
forth in the record need not be in English if expressed in
English letters or Arabic or Roman numerals. Records of a
foreign person need not be in English if accompanied by a
reasonably authenticated English translation.
(B) Unless the secretary of state determines that a record
does not comply with the filing requirements of this chapter,
the secretary of state shall file the record and send a
certificate and a receipt for the fees to the person who
submitted the record.
(C) Upon request and payment of the requisite fee, the
secretary of state shall furnish to the requester a certified
copy of a requested record.
(D) Except as otherwise provided in division (F) of
section 1706.09 and section 1706.173 of the Revised Code, a
record delivered to the secretary of state for filing under this
chapter may specify an effective time and a delayed effective
date of not more than ninety days following the date of receipt
by the secretary of state. Subject to division (F) of section
1706.09 and section 1706.173 of the Revised Code, a record filed
by the secretary of state is effective as follows:
(1) If the record does not specify an effective time and
does not specify a delayed effective date, on the date the
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record is filed as evidenced by the secretary of state's
endorsement of the date on the record;
(2) If the record specifies an effective time but not a
delayed effective date, on the date the record is filed at the
time specified in the record;
(3) If the record specifies a delayed effective date but
not an effective time, at 12:01 a.m. on the earlier of the
following:
(a) The specified date;
(b) The ninetieth day after the record is filed.
(4) If the record specifies an effective time and a
delayed effective date, at the specified time on the earlier of
the following:
(a) The specified date;
(b) The ninetieth day after the record is filed.
Sec. 1706.173. (A) A limited liability company or foreign
limited liability company may deliver to the secretary of state
for filing a certificate of correction to correct a record
previously delivered by the limited liability company or foreign
limited liability company to the secretary of state and filed by
the secretary of state if at the time of filing the record
contained incorrect or inaccurate information or was defectively
signed.
(B) A certificate of correction under division (A) of this
section shall not state a delayed effective date and shall do
all of the following:
(1) Describe the record to be corrected, including its
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filing date, or attach a copy of the record as filed;
(2) Specify the inaccurate information or the defect in
the signing;
(3) Correct the incorrect or inaccurate information or
defective signature.
(C) When filed by the secretary of state, a certificate of
correction is effective retroactively as of the effective date
of the record the statement corrects, but the statement is
effective when filed as to persons that previously relied on the
uncorrected record and would be adversely affected by the
correction.
Sec. 1706.174. (A) A person who signs a record authorized
or required to be filed under this chapter thereby affirms under
the penalties of perjury that the facts stated in the record are
true in all material respects.
(B) If a record delivered to the secretary of state for
filing under this chapter and filed by the secretary of state
contains incorrect or inaccurate information, a person that
suffers a loss by reasonable reliance on the information may
recover damages for the loss from a person that signed the
record, or caused another to sign it on the person's behalf, and
knew the information to be incorrect or inaccurate at the time
the record was signed.
Sec. 1706.175. (A) The secretary of state, upon request
and payment of the requisite fee, shall furnish to any person a
certificate of full force and effect for a limited liability
company if the records filed in the office of the secretary of
state show that the limited liability company has been formed
under the laws of this state. A certificate of full force and
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effect shall state all of the following:
(1) The limited liability company's name;
(2) The limited liability company's date of formation;
(3) That the limited liability company is in full force
and effect on the records of the secretary of state.
(B) The secretary of state, upon request and payment of
the requisite fee, shall furnish to any person a certificate of
registration for a foreign limited liability company if the
records filed in the office of the secretary of state show that
the secretary of state has filed a certificate of registration
for the foreign limited liability company, has not canceled the
certificate of registration for the foreign limited liability
company, and has not filed a statement of cancellation of the
certificate of registration for the foreign limited liability
company. A certificate of registration shall state both of the
following:
(1) The foreign limited liability company's name;
(2) That the foreign limited liability company is
authorized to transact business in this state .
(C) Subject to any qualification stated in the
certificate, a certificate of existence or certificate of
registration issued by the secretary of state is, for a period
of thirty days after the date of such certificate, conclusive
evidence that the limited liability company is in existence or
the foreign limited liability company is authorized to transact
business in this state.
Sec. 1706.18. No person shall have the power to bind the
limited liability company, or a series thereof, except:
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(A) To the extent the person is authorized to act as the
agent of the limited liability company or a series thereof under
or pursuant to the operating agreement;
(B) To the extent the person is authorized to act as the
agent of the limited liability company or a series thereof
pursuant to division (A) of section 1706.30 of the Revised Code;
(C) To the extent provided in section 1706.19 of the
Revised Code;
(D) To the extent provided by law other than this chapter.
Sec. 1706.19. (A) A limited liability company, on behalf
of itself or a series thereof, may deliver to the secretary of
state for filing on a form prescribed by the secretary of state
a statement of authority. Such a statement:
(1) Shall include the name and registration number of the
limited liability company;
(2) May state the authority of a specific person, or, with
respect to any position that exists in or with respect to the
limited liability company or series thereof, of all persons
holding the position, to enter into transactions on behalf of
the limited liability company or series thereof.
(B) To amend or cancel a statement of authority filed by
the secretary of state, a limited liability company shall, on
behalf of itself or a series thereof, deliver to the secretary
of state for filing an amendment or cancellation on a form
prescribed by the secretary of state stating all of the
following:
(1) The name and registration number of the limited
liability company;
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(2) The date of filing of the statement of authority to
which the amendment or cancellation statement pertains ;
(3) The contents of the amendment or a declaration that
the statement to which it pertains is canceled.
(C) An effective statement of authority is conclusive in
favor of a person that gives value in reliance on the statement,
except to the extent that when the person gives value the person
has knowledge to the contrary.
(D) Upon filing, a certificate of dissolution filed
pursuant to division (B)(1) of section 1706.471 of the Revised
Code operates as a cancellation, under division (B) of this
section, of each statement of authority.
(E) After a certificate of dissolution becomes effective,
a limited liability company may, on behalf of itself or a series
thereof, deliver to the secretary of state for filing a
statement of authority that is designated as a post-dissolution
or post-cancellation statement of authority.
(F) Upon filing, a statement of denial filed pursuant to
section 1706.20 of the Revised Code operates as an amendment,
under division (B) of this section, of the statement of
authority to which the statement of denial pertains.
Sec. 1706.20. A person named in a filed statement of
authority may deliver to the secretary of state for filing on a
form prescribed by the secretary of state a statement of denial
that does both of the following:
(A) States the name and registration number of the limited
liability company and the date of filing of the statement of
authority to which the statement of denial pertains;
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(B) Denies the person's authority.
Sec. 1706.26. A person who is a member of a limited
liability company is not liable, solely by reason of being a
member, for a debt, obligation, or liability of the limited
liability company or a series thereof, whether arising in
contract, tort, or otherwise; or for the acts or omissions of
any other member, agent, or employee of the limited liability
company or a series thereof. The failure of a limited liability
company or any of its members to observe any formalities
relating to the exercise of the limited liability company's
powers or the management of its activities is not a factor to
consider in, or a ground for, imposing liability on the members
for the debts, obligations, or liability of the limited
liability company.
Sec. 1706.27. (A) In connection with the formation of a
limited liability company, a person is admitted as a member of
the limited liability company upon the occurrence of either of
the following:
(1) If the organizer was authorized by one or more persons
intending to be members of the limited liability company to file
the articles of organization on their behalf, the formation of
the limited liability company;
(2) If the organizer was not authorized by any other
person intending to be members of the limited liability company,
each organizer shall have the authority of a member of the
limited liability company upon the formation of the limited
liability company until the admission of the initial member of
the limited liability company.
(B) After formation of a limited liability company, a
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person may be admitted as a member of the limited liability
company in any of the following manners:
(1) As provided in the operating agreement;
(2) As the result of a transaction effective under
sections 1706.71 to 1706.74 of the Revised Code;
(3) With the consent of all the members or in the case of
a limited liability company having only one member, the consent
of the member;
(4) If, within ninety consecutive days after the
occurrence of the dissociation of the last remaining member,
both of the following occur:
(a) All holders of the membership interest last assigned
by the last person to have been a member consent to the
designation of a person to be admitted as a member;
(b) The designated person consents to be admitted as a
member effective as of the date the last person to have been a
member ceased to be a member.
(C) A person may be admitted as a member without acquiring
a membership interest and without making or being obligated to
make a contribution to the limited liability company. A person
may be admitted as the sole member without acquiring a
membership interest and without making or being obligated to
make a contribution to the limited liability company.
Sec. 1706.28. A contribution of a member to a limited
liability company, or a series thereof, may consist of cash,
property, services rendered, or a promissory note or other
binding obligation to contribute cash or property or to perform
services.
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Sec. 1706.281. (A) A promise by a member to make a
contribution to a limited liability company, or a series
thereof, is not enforceable unless set forth in a writing signed
by the member.
(B) A member's obligation to make a contribution to a
limited liability company, or a series thereof, is not excused
by the member's death, disability, or other inability to perform
personally. If a member does not make a contribution required by
an enforceable promise, the member or the member's estate is
obligated, at the election of the limited liability company, or
a series thereof, to contribute money equal to the value of the
portion of the contribution that has not been made. The election
shall be in addition to, and not in lieu of, any other rights,
including the right to specific performance, that the limited
liability company, or a series thereof, may have under the
operating agreement or applicable law.
(C)(1) The obligation of a member to make a contribution
to a limited liability company may be compromised only by
consent of all the members. A conditional obligation of a member
to make a contribution to a limited liability company may not be
enforced unless the conditions of the obligation have been
satisfied or waived as to or by that member. Conditional
obligations include contributions payable upon a discretionary
call of a limited liability company before the time the call
occurs.
(2) The obligation of a member associated with a series to
make a contribution to the series may be compromised only by
consent of all the members associated with that series. A
conditional obligation of a member to make a contribution to a
series may not be enforced unless the conditions of the
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obligation have been satisfied or waived as to or by that
member. Conditional obligations include contributions payable
upon a discretionary call of that series before the time the
call occurs.
(3) Division (C)(1) of this section shall not apply to a
member's obligation to make a contribution to a series of a
limited liability company.
Sec. 1706.29. (A)(1) All members shall share equally in
any distributions made by a limited liability company before its
dissolution and winding up.
(2) A member has a right to a distribution before the
dissolution and winding up of a limited liability company as
provided in the operating agreement. A decision to make a
distribution before the dissolution and winding up of the
limited liability company is a decision in the ordinary course
of activities of the limited liability company. A member's
dissociation does not entitle the dissociated member to a
distribution.
(3) A member does not have a right to demand and receive a
distribution from a limited liability company in any form other
than money. Except as otherwise provided in division (C) of
section 1706.475 of the Revised Code, a limited liability
company may distribute an asset in kind if each member receives
a percentage of the asset in proportion to the member's share of
contributions.
(4) If a member becomes entitled to receive a
distribution, the member has the status of, and is entitled to
all remedies available to, a creditor of the limited liability
company with respect to the distribution.
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(B)(1) All members associated with a series shall share
equally in any distributions made by the series before its
dissolution and winding up.
(2) A member associated with a series has a right to a
distribution before the dissolution and winding up of the series
as provided in the operating agreement. A decision of the series
to make a distribution before the dissolution and winding up of
the series is a decision in the ordinary course of activities of
the series. A member's dissociation from a series with which the
member is associated does not entitle the dissociated member to
a distribution from the series.
(3) A member associated with a series does not have a
right to demand and receive a distribution from the series in
any form other than money. Except as otherwise provided in
division (C) of section 1706.7613 of the Revised Code, a series
may distribute an asset in kind if each member associated with
the series receives a percentage of the asset in proportion to
the member's share of distributions from the series.
(4) If a member associated with a series becomes entitled
to receive a distribution from the series, the member has the
status of, and is entitled to all remedies available to, a
creditor of the series with respect to the distribution.
(C) Division (A) of this section does not apply to a
distribution made by a series.
Sec. 1706.30. (A)(1) The activities and affairs of the
limited liability company shall be under the direction, and
subject to the oversight, of its members.
(2) The activities and affairs of a series shall be under
the direction, and subject to the oversight, of the members
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associated with the series.
(3) Division (A)(1) of this section shall not apply to the
activities and affairs of a series.
(B)(1) Except as provided in division (C) of this section,
a matter in the ordinary course of activities of the limited
liability company may be decided by a majority of the members.
(2) Except as provided in division (C) of this section, a
matter in the ordinary course of activities of a series may be
decided by a majority of the members associated with the series.
(3) Division (B)(1) of this section shall not apply to
matters of a series.
(C)(1) The consent of all members is required to do any of
the following:
(a) Amend the operating agreement;
(b) File a petition of the limited liability company for
relief under Title 11 of the United States Code, or a successor
statute of general application, or a comparable federal, state,
or foreign law governing insolvency;
(c) Undertake any act outside the ordinary course of the
limited liability company's activities;
(d) Undertake, authorize, or approve any other act or
matter for which this chapter requires the consent of all
members.
(2) The consent of all members associated with a series is
required to do either of the following:
(a) Undertake any act outside the ordinary course of the
series' activities;
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(b) Undertake, authorize, or approve any other act or
matter for which this chapter requires the consent of all the
members associated with a series.
(D) Any matter requiring the consent of members may be
decided without a meeting, and a member may appoint a proxy or
other agent to consent or otherwise act for the member by
signing an appointing record, personally or by the member's
agent.
(E) This chapter does not entitle a member to remuneration
for services performed for a limited liability company.
Sec. 1706.31. (A) Unless either a written operating
agreement for the limited liability company or a written
agreement with a member establishes additional fiduciary duties,
in the event that there have been designated one or more
managers to supervise or manage the activities or affairs of the
limited liability company, the only obligation a member owes, in
the member's capacity as a member, to the limited liability
company and the other members is to discharge the member's
duties and obligations under this chapter and the operating
agreement in accordance with division (E) of this section.
Divisions (C) and (D) of this section shall not apply to such a
member.
(B) Unless either a written operating agreement for the
limited liability company or a written agreement with a member
establishes additional fiduciary duties or the duties of the
member have been modified, waived, or eliminated as contemplated
by section 1706.08 of the Revised Code, in the event that there
have not been designated one or more managers to supervise or
manage the activities of the limited liability company, the only
fiduciary duties a member owes to the limited liability company
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and the other members is the duty of loyalty and the duty of
care set forth in divisions (C) and (D) of this section.
(C) A member's duty of loyalty to the limited liability
company and the other members is limited to the following:
(1) To account to the limited liability company and hold
for it any property, profit, or benefit derived by the member in
the conduct and winding up of the limited liability company
business or derived from a use by the member of limited
liability company property or from the appropriation of a
limited liability company opportunity;
(2) To refrain from dealing with the limited liability
company in the conduct or winding up of the limited liability
company business as or on behalf of a party having an interest
adverse to the limited liability company.
(D) A member's duty of care to the limited liability
company and the other members in the conduct and winding up of
the limited liability company business is limited to refraining
from engaging in grossly negligent or reckless conduct,
intentional misconduct, or a knowing violation of law.
(E) A member shall discharge the member's duties to the
limited liability company and the other members under this
chapter and under the operating agreement and exercise any
rights consistent with the implied covenant of good faith and
fair dealing.
(F) A member does not violate a duty or obligation under
this chapter or under the operating agreement merely because the
member's conduct furthers the member's own interest.
(G) All the members of a limited liability company may
authorize or ratify, after full disclosure of all material
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facts, a specific act or transaction that otherwise would
violate the duty of loyalty. It is a defense to a claim under
division (C)(2) of this section and any comparable claim in
equity or at common law that the transaction was fair to the
limited liability company. If, as permitted, by this division or
the limited liability company's operating agreement, a member
enters into a transaction with a limited liability company that
otherwise would be prohibited by division (C)(2) of this
section, the member's rights and obligations arising from the
transaction are the same as those of a person that is not a
member.
(H) This section applies to a person winding up the
limited liability company business as the personal or legal
representative of the last surviving member as if the person
were a member.
Sec. 1706.311. (A) Unless either a written operating
agreement for the limited liability company or a written
agreement with a manager establishes additional fiduciary duties
or the duties of the manager have been modified, waived, or
eliminated as contemplated by section 1706.08 of the Revised
Code, the only fiduciary duties of a manager to the limited
liability company or its members are the duty of loyalty and the
duty of care set forth in divisions (B) and (C) of this section.
(B) A manager's duty of loyalty to the limited liability
company and its members is limited to the following:
(1) To account to the limited liability company and hold
for it any property, profit, or benefit derived by the manager
in the conduct and winding up of the limited liability company
business or derived from a use by the manager of limited
liability company property or from the appropriation of a
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limited liability company opportunity;
(2) To refrain from dealing with the limited liability
company in the conduct or winding up of the limited liability
company business as or on behalf of a party having an interest
adverse to the limited liability company.
(C) A manager's duty of care to the limited liability
company in the conduct and winding up of the limited liability
company activities is limited to acting in good faith, in a
manner the manager reasonably believes to be in or not opposed
to the best interests of the limited liability company.
(D) For purposes of division (C) of this section, both of
the following apply:
(1) A manager of a limited liability company shall not be
determined to have violated the manager's duties under division
(C) of this section unless it is proved that the manager has not
acted in good faith, in a manner the manager reasonably believes
to be in or not opposed to the best interests of the limited
liability company.
(2) A manager shall not be considered to be acting in good
faith if the manager has knowledge concerning the matter in
question that would cause reliance on information, opinions,
reports, or statements that are prepared or presented by any of
the persons described in section 1706.331 of the Revised Code to
be unwarranted.
(E) A manager shall be liable for monetary relief for a
violation of the manager's duties under division (C) of this
section only if it is proved that the manager's action or
failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the limited liability
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company or undertaken with reckless disregard for the best
interests of the company. This division does not apply if, and
only to the extent that, at the time of a manager's act or
omission that is the subject of complaint, either of the
following is true:
(1) The articles or the operating agreement of the limited
liability company state by specific reference to division (E) of
this section that the provisions of this division do not apply
to the limited liability company.
(2) A written agreement between the manager and the
limited liability company states by specific reference to
division (E) of this section that the provisions of this
division do not apply to the manager.
(F) All the members of a limited liability company may
authorize or ratify, after full disclosure of all material
facts, a specific act or transaction that would otherwise
violate the duty of loyalty. It is a defense to a claim under
division (B)(2) of this section and any comparable claim in
equity or at common law that the transaction was fair to the
limited liability company. If, as permitted by this division or
the operating agreement, a manager enters into a transaction
with the limited liability company that otherwise would be
prohibited by division (B)(2) of this section, the manager's
rights and obligations arising from the transaction are the same
as those of a person that is not a manager.
(G) A manager shall discharge the duties to the limited
liability company and the members under this chapter and under
the operating agreement and exercise any rights consistently
with the implied covenant of good faith and fair dealing.
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(H) Nothing in this section affects the duties of a
manager who acts in any capacity other than the manager's
capacity as a manager. If a manager of a limited liability
company also is a member of the limited liability company, the
actions taken in the capacity as a member of the limited
liability company shall be subject to section 1706.31 of the
Revised Code. Nothing in this section affects any contractual
obligations of a manager to the limited liability company.
Sec. 1706.32. A limited liability company, or a series
thereof, may indemnify and hold harmless a member or other
person, pay in advance or reimburse expenses incurred by a
member or other person, and purchase and maintain insurance on
behalf of a member or other person.
Sec. 1706.33. (A) Upon reasonable notice provided to the
limited liability company, a member may inspect and copy during
regular business hours, at a reasonable location specified by
the limited liability company, any record maintained by the
limited liability company, to the extent the information is
material to the member's rights and duties under the operating
agreement or this chapter.
(B) A limited liability company may charge a person that
makes a demand under this section the reasonable costs of labor
and materials for copying.
(C) A member or dissociated member may exercise rights
under this section through an agent or, in the case of an
individual under legal disability, a legal representative. Any
restriction or condition imposed by the operating agreement or
under division (E) of this section applies both to the agent or
legal representative and the member or dissociated member.
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(D) The rights under this section do not extend to an
assignee who is not admitted as a member.
(E) In addition to any restriction or condition stated in
its operating agreement, a limited liability company, as a
matter within the ordinary course of its activities, may do
either of the following:
(1) Impose reasonable restrictions and conditions on
access to and use of information to be furnished under this
section, including designating information confidential and
imposing nondisclosure and safeguarding obligations on the
recipient;
(2) Keep confidential from the members and any other
persons, for such period of time as the limited liability
company deems reasonable, any information that the limited
liability company reasonably believes to be in the nature of
trade secrets or other information the disclosure of which the
limited liability company in good faith believes is not in the
best interest of the limited liability company or could damage
the limited liability company or its activities, or that the
limited liability company is required by law or by agreement
with a third party to keep confidential.
Sec. 1706.331. Each member and agent of a limited
liability company shall be fully protected in relying in good
faith upon the records of the limited liability company and upon
information, opinions, reports, or statements presented by
another member or agent of the limited liability company, or by
any other person as to matters the member or the agent
reasonably believes are within that other person's professional
or expert competence, including information, opinions, reports,
or statements as to any of the following:
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(A) The value and amount of the assets, liabilities,
profits, or losses of the limited liability company, or a series
thereof;
(B) The value and amount of assets or reserves or
contracts, agreements, or other undertakings that would be
sufficient to pay claims and obligations of the limited
liability company, or series thereof, or to make reasonable
provision to pay those claims and obligations;
(C) Any other facts pertinent to the existence and amount
of assets from which distributions to members or creditors might
properly be paid.
Sec. 1706.332. If a member dies, the deceased member's
personal representative or other legal representative may, for
purposes of settling the estate, exercise the rights of a
current member under section 1706.33 of the Revised Code.
Sec. 1706.34. The only interest of a member that is
assignable is the member's membership interest. A membership
interest is personal property.
Sec. 1706.341. (A) An assignment, in whole or in part, of
a membership interest:
(1) Is permissible;
(2)(a) Does not by itself cause a member to cease to be a
member of the limited liability company;
(b) Does not by itself cause a member to cease to be
associated with a series of the limited liability company.
(3) Does not by itself cause a dissolution and winding up
of the limited liability company, or a series thereof;
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(4) Subject to section 1706.332 of the Revised Code, does
not entitle the assignee to do either of the following:
(a) Participate in the management or conduct of the
activities of the limited liability company, or a series
thereof;
(b) Have access to records or other information concerning
the activities of the limited liability company, or a series
thereof.
(B) An assignee has the right to receive, in accordance
with the assignment, distributions to which the assignor would
otherwise be entitled.
(C) A membership interest may be evidenced by a
certificate of membership interest issued by the limited
liability company, or a series thereof. An operating agreement
may provide for the assignment of the membership interest
represented by the certificate and make other provisions with
respect to the certificate.
(D) A limited liability company, or a series thereof,
shall not issue a certificate of membership interest in bearer
form.
(E) A limited liability company, or a series thereof, need
not give effect to an assignee's rights under this section until
the limited liability company, or a series thereof, has notice
of the assignment.
(F) Except as otherwise provided in division (J) of
section 1706.411 of the Revised Code, when a member assigns a
membership interest, the assignor retains the rights of a member
other than the right to distributions assigned and retains all
duties and obligations of a member.
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(G) When a member assigns a membership interest to a
person that is admitted as a member with respect to the assigned
interest, the assignee is only liable for the member's
obligations under section 1706.281 of the Revised Code to the
extent that the obligations are known to the assignee when the
assignee voluntarily accepts admission as a member.
Sec. 1706.342. (A) On application to a court of competent
jurisdiction by any judgment creditor of a member or assignee,
the court may charge the membership interest of the judgment
debtor with payment of the unsatisfied amount of the judgment
with interest. To the extent so charged and after the limited
liability company has been served with the charging order, the
judgment creditor has only the right to receive any distribution
or distributions to which the judgment debtor would otherwise be
entitled in respect of the membership interest.
(B) After the limited liability company is served with a
charging order, the limited liability company or any member
shall be entitled to pay to or deposit with the clerk of the
court so issuing the charging order any distribution or
distributions to which the judgment debtor would otherwise be
entitled in respect of the charged membership interest, and the
payment or deposit shall discharge the limited liability company
and the judgment debtor from liability for the amount so paid or
deposited and any interest that might accrue thereon. Upon
receipt of the payment or deposit, the clerk of the court shall
notify the judgment creditor of the receipt of the payment or
deposit. The judgment creditor shall, after any payment or
deposit into the court, petition the court for payment of so
much of the amount paid or deposited as may be necessary to pay
the judgment creditor's judgment. To the extent the court has
excess amounts paid or deposited on hand after the payment to
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the judgment creditor, the excess amounts paid or deposited
shall be distributed to the judgment debtor, and the charging
order shall be extinguished. The court may, in its discretion,
order the clerk to deposit, pending the judgment creditor's
petition, any money paid or deposited with the clerk, in an
interest bearing account at a bank authorized to receive
deposits of public funds.
(C) A charging order constitutes a lien on the judgment
debtor's membership interest.
(D) Subject to division (C) of this section, both of the
following apply:
(1) A judgment debtor that is a member retains the rights
of a member and remains subject to all duties and obligations of
a member.
(2) A judgment debtor that is an assignee retains the
rights of an assignee and remains subject to all duties and
obligations of an assignee.
(E) This chapter does not deprive any member or assignee
of the benefit of any exemption laws applicable to the member's
or assignee's membership interest.
(F) This section provides the sole and exclusive remedy by
which a judgment creditor of a member or assignee may satisfy a
judgment out of the judgment debtor's membership interest, and
the judgment creditor shall have no right to foreclose, under
this chapter or any other law, upon the charging order, the
charging order lien, or the judgment debtor's membership
interest. A judgment creditor of a member or assignee has no
right to obtain possession of, or otherwise exercise legal or
equitable remedies with respect to, the judgment debtor's
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membership interest or the property of a limited liability
company. Court orders for actions or requests for accounts and
inquiries that the judgment debtor might have made to the
limited liability company are not available to a judgment
creditor attempting to satisfy the judgment out of the judgment
debtor's membership interest and may not be ordered by a court.
Sec. 1706.41. (A) A person shall not voluntarily
dissociate from a limited liability company.
(B) A person's dissociation from a limited liability
company is wrongful only if one of the following applies:
(1) The dissociation is in breach of an express provision
of the operating agreement.
(2) The person is expelled as a member by a determination
of a tribunal under division (D) of section 1706.411 of the
Revised Code.
(3) The person is dissociated by becoming a debtor in
bankruptcy or making a general assignment for the benefit of
creditors.
(C) A person that wrongfully dissociates as a member is
liable to the limited liability company and, subject to section
1706.61 of the Revised Code, to the other members for damages
caused by the dissociation. The liability is in addition to any
other debt, obligation, or liability of the member to the
limited liability company or the other members.
Sec. 1706.411. A person is dissociated as a member from a
limited liability company in any of the following circumstances:
(A) An event stated in the operating agreement as causing
the person's dissociation occurs.
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(B) The person is expelled as a member pursuant to the
operating agreement.
(C) The person is expelled as a member by the unanimous
consent of the other members if any of the following apply:
(1) It is unlawful to carry on the limited liability
company's activities with the person as a member.
(2) The person is an entity and, within ninety days after
the limited liability company notifies the person that it will
be expelled as a member because the person has filed a statement
of dissolution or the equivalent, or its right to transact
business has been suspended by its jurisdiction of formation,
the statement of dissolution or the equivalent has not been
revoked or its right to transact business has not been
reinstated.
(3) The person is an entity and, within ninety days after
the limited liability company notifies the person that it will
be expelled as a member because the person has been dissolved
and its activities are being wound up, the entity has not been
reinstated or the dissolution and winding up have not been
revoked or canceled.
(D) On application by the limited liability company, the
person is expelled as a member by tribunal order for any of the
following reasons:
(1) The person has engaged, or is engaging, in wrongful
conduct that has adversely and materially affected, or will
adversely and materially affect, the limited liability company's
activities.
(2) The person has willfully or persistently committed, or
is willfully or persistently committing, a material breach of
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the operating agreement or the person's duties or obligations
under this chapter or other applicable law.
(3) The person has engaged, or is engaging, in conduct
relating to the limited liability company's activities that
makes it not reasonably practicable to carry on the activities
with the person as a member.
(E) In the case of a person who is an individual, the
person dies, a guardian or general conservator is appointed for
the person, or a tribunal determines that the person has
otherwise become incapable of performing the person's duties as
a member under this chapter or the operating agreement.
(F) The person becomes a debtor in bankruptcy, executes an
assignment for the benefit of creditors, or seeks, consents, or
acquiesces to the appointment of a trustee, receiver, or
liquidator of the person or of all or substantially all of the
person's property. This division shall not apply to a person who
is the sole remaining member of a limited liability company.
(G) In the case of a person that is a trust or is acting
as a member by virtue of being a trustee of a trust, the trust's
entire membership interest in the limited liability company is
distributed, but not solely by reason of the substitution of a
successor trustee.
(H) In the case of a person that is an estate or is acting
as a member by virtue of being a personal representative of an
estate, the estate's entire membership interest in the limited
liability company is distributed, but not solely by reason of
the substitution of a successor personal representative.
(I) In the case of a member that is not an individual, the
legal existence of the person otherwise terminates.
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(J) There has been an assignment of all of the person's
membership interest other than an assignment for security
purposes.
Sec. 1706.412. (A) A person who has dissociated as a
member shall have no right to participate as a member in the
activities and affairs of the limited liability company and is
entitled only to receive the distributions to which that member
would have been entitled if the member had not dissociated.
(B) Upon a person's dissociation, the member's duty of
loyalty and duty of care under divisions (C) and (D) of section
1706.31 of the Revised Code continue only with regard to matters
arising and events occurring before the member's dissociation,
unless the member participates in winding up the limited
liability company's business pursuant to section 1706.472 of the
Revised Code.
(C) A person's dissociation as a member does not of itself
discharge the person from any debt, obligation, or liability to
a limited liability company or the other members that the person
incurred while a member.
Sec. 1706.46. (A) Except as otherwise provided in this
division, upon reinstatement of a limited liability company's
articles or a foreign limited liability company's registration
in accordance with section 1706.09 of the Revised Code, the
rights and privileges, including all real or personal property
rights and credits and all contract and other rights, of the
company existing at the time its articles or registration were
canceled shall be fully vested in the company as if its articles
or registration had not been canceled, and the company shall
again be entitled to exercise the rights and privileges
authorized by its articles. The name of a company whose articles
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have been canceled shall be reserved for a period of one year
after the date of cancellation. If the reinstatement is not made
within one year after the date of the cancellation of its
articles and it appears that a corporate name, limited liability
company name, limited liability partnership name, limited
partnership name, trade name, or assumed name has been filed,
the name of which is not distinguishable upon the record as
provided in section 1706.07 of the Revised Code, the secretary
of state shall require the applicant for reinstatement, as a
condition prerequisite to such reinstatement, to amend its
articles or registration by changing its name.
(B) Upon reinstatement in accordance with section 1706.09
of the Revised Code, both of the following apply to the exercise
of or an attempt to exercise any rights or privileges, including
entering into or performing any contracts, on behalf of the
company by an officer, agent, or employee of the company, after
cancellation and prior to reinstatement of the articles or
registration:
(1) The exercise of or an attempt to exercise any rights
or privileges on behalf of the company by the officer, agent, or
employee of the company has the same force and effect that the
exercise of or an attempt to exercise the right or privilege
would have had if the company's articles or registration had not
been canceled, if both of the following apply:
(a) The exercise of or an attempt to exercise the right or
privilege was within the scope of the company's articles that
existed prior to cancellation;
(b) The officer, agent, or employee had no knowledge that
the company's articles or registration had been canceled.
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(2) The company is liable exclusively for the exercise of
or an attempt to exercise any rights or privileges on behalf of
the company by an officer, agent, or employee of the company, if
the conditions set forth in divisions (B)(1)(a) and (b) of this
section are met.
(C) Upon reinstatement of a company's articles or
registration in accordance with section 1706.09 of the Revised
Code, the exercise of or an attempt to exercise any rights or
privileges on behalf of the company by an officer, agent, or
employee of the company, after cancellation and prior to
reinstatement of the articles or registration, does not
constitute a violation of section 1706.09 of the Revised Code,
if the conditions set forth in divisions (B)(1)(a) and (b) of
this section are met.
(D) This section is remedial in nature and is to be
construed liberally to accomplish the purpose of providing full
reinstatement of a limited liability company's articles of
organization or a foreign limited liability company's
registration, in accordance with this section, to the time of
the cancellation of the articles or registration.
Sec. 1706.461. (A)(1) A limited liability company or
foreign limited liability company may appeal a cancellation
under division (L) of section 1706.09 of the Revised Code within
thirty days after the effective date of the cancellation. The
appeal shall be made to one of the following:
(a) The court of common pleas of the county in which the
street address of the limited liability company or foreign
limited liability company's principal office is located;
(b) If the limited liability company or foreign limited
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liability company has no principal office in this state, to the
court of common pleas of the county in which the street address
of its statutory agent is located;
(c) If the limited liability company or foreign limited
liability company has no statutory agent, to the Franklin county
court of common pleas.
(2) The limited liability company or foreign limited
liability company shall commence its appeal by petitioning the
appropriate court to set aside the cancellation or to determine
that the limited liability company or foreign limited liability
company has cured the grounds for cancellation and attaching to
the petition copies of those records of the secretary of state
as may be relevant.
(B) The appropriate court may take, or may summarily order
the secretary of state to take, whatever action the court
considers appropriate.
(C) The appropriate court's order or decision may be
appealed as in any other civil proceeding.
Sec. 1706.47. A limited liability company is dissolved,
and its activities shall be wound up, upon the occurrence of any
of the following:
(A) An event or circumstance that the operating agreement
states causes dissolution;
(B) The consent of all the members;
(C) A limited liability company with canceled articles has
failed to cure the grounds for cancellation for three years or
more and any member or person authorized pursuant to section
1706.18 of the Revised Code consents to the dissolution;
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(D) The passage of ninety consecutive days after the
occurrence of the dissociation of the last remaining member;
provided that upon dissociation of the last remaining member
pursuant to division (E) of section 1706.411 of the Revised
Code, the limited liability company shall not be dissolved if
either of the following applies:
(1) The operating agreement provides for the admission of
a substitute member effective prior to the passage of such time
period;
(2) A substitute member has been admitted, as evidenced by
a written record, prior to the passage of such time period,
which admission is to be effective as of the date of such
dissociation.
(E) On application by a member, the entry by the
appropriate court of an order dissolving the limited liability
company on the grounds that it is not reasonably practicable to
carry on the limited liability company's activities in
conformity with the operating agreement.
Sec. 1706.471. (A) A dissolved limited liability company
continues its existence as a limited liability company but may
not carry on any activities except as is appropriate to wind up
and liquidate its activities and affairs. Appropriate activities
include all of the following:
(1) Collecting its assets;
(2) Disposing of its properties that will not be
distributed in kind to persons owning membership interests;
(3) Discharging or making provisions for discharging its
liabilities;
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(4) Distributing its remaining property in accordance with
section 1706.475 of the Revised Code;
(5) Doing every other act necessary to wind up and
liquidate its activities and affairs.
(B) In winding up its activities, a limited liability
company may do any of the following:
(1) Deliver to the secretary of state for filing, on a
form prescribed by the secretary of state, a certificate of
dissolution setting forth all of the following:
(a) The name and registration number of the limited
liability company;
(b) That the limited liability company has dissolved;
(c) The effective date of the certificate of dissolution
if it is not to be effective upon the filing. Such an effective
date shall be a date certain and shall not be a date prior to
the date of filing.
(d) A copy of the notice it will publish pursuant to
division (A) of section 1706.474 of the Revised Code.
(e) Any other information the limited liability company
considers proper.
(2) Preserve the limited liability company's activities
and property as a going concern for a reasonable time;
(3) Prosecute, defend, or settle actions or proceedings
whether civil, criminal, or administrative;
(4) Make an assignment of the limited liability company's
property;
(5) Resolve disputes by mediation or arbitration;
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(6) Merge or convert in accordance with sections 1706.71
to 1706.74 of the Revised Code.
(C) A limited liability company's dissolution, in itself:
(1) Is not an assignment of the limited liability
company's property;
(2) Does not prevent the commencement of a proceeding by
or against the limited liability company in its limited
liability company name;
(3) Does not abate or suspend a proceeding pending by or
against the limited liability company on the effective date of
dissolution;
(4) Does not terminate the authority of its statutory
agent;
(5) Does not abate, suspend, or otherwise alter the
application of section 1706.26 of the Revised Code.
Sec. 1706.472. (A) Subject to division (C)(5) of section
1706.471 of the Revised Code, after dissolution, the remaining
members, if any, and if none, a person appointed by all holders
of the membership interest last assigned by the last person to
have been a member, may wind up the limited liability company's
activities.
(B) The appropriate tribunal may order supervision of the
winding up of a dissolved limited liability company, including
the appointment of a person to wind up the limited liability
company's activities as follows:
(1) On application of a member, if the applicant
establishes good cause;
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(2) On application of an assignee, if both of the
following apply:
(a) The limited liability company does not have any
members;
(b) Within a reasonable time following the dissolution, a
person has not been appointed pursuant to division (A) of this
section.
(3) In connection with a proceeding under division (E) of
section 1706.47 of the Revised Code.
Sec. 1706.473. (A) A dissolved limited liability company
may dispose of any known claims against it by following the
procedures described in division (B) of this section at any time
after the effective date of the dissolution of the limited
liability company.
(B) A dissolved limited liability company may give notice
of its dissolution in a record to the holder of any known claim.
The notice shall do all of the following:
(1) Identify the dissolved limited liability company;
(2) Describe the information required to be included in a
claim;
(3) Provide a mailing address to which the claim is to be
sent;
(4) State the deadline, by which the dissolved limited
liability company must receive the claim. The deadline shall not
be sooner than ninety days from the effective date of the
notice.
(5) State that if not sooner barred, the claim will be
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barred if not received by the deadline.
(C) Unless sooner barred by any other statute limiting
actions, a claim against a dissolved limited liability company
is barred in either of the following circumstances:
(1) A claimant who was given notice under division (B) of
this section does not deliver the claim to the dissolved limited
liability company by the deadline.
(2) A claimant whose claim was rejected by the dissolved
limited liability company does not commence a proceeding to
enforce the claim within ninety days from the effective date of
the rejected notice.
(D) For purposes of this section, "claim" includes an
unliquidated claim, but does not include either of the
following:
(1) A contingent liability that has not matured so that
there is no immediate right to bring suit;
(2) A claim based on an event occurring after the
effective date of dissolution.
(E) Nothing in this section shall be construed to extend
any otherwise applicable statute or period of limitations.
Sec. 1706.474. (A) A dissolved limited liability company
may publish notice of its dissolution and request that persons
with claims against the dissolved limited liability company
present them in accordance with the notice.
(B) The notice described in division (A) of this section
shall meet all of the following requirements:
(1) It shall be posted prominently on the principal web
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S. B. No. 276 Page 176As Introduced
site then maintained by the limited liability company, if any,
and provided to the secretary of state to be posted on the web
site maintained by the secretary of state in accordance with
division (J) of this section. The notice shall be considered
published when posted on both web sites or, if the limited
liability company does not then maintain a web site, when posted
on the web site maintained by the secretary of state.
(2) It shall describe the information that must be
included in a claim and provide a mailing address to which the
claim must be sent.
(3) It shall state that if not sooner barred, a claim
against the dissolved limited liability company will be barred
unless a proceeding to enforce the claim is commenced within two
years after the publication of the notice.
(C) If a dissolved limited liability company publishes a
notice in accordance with division (B) of this section, unless
sooner barred by any other statute limiting actions, the claim
of each of the following claimants is barred unless the claimant
commences a proceeding to enforce the claim against the
dissolved limited liability company within two years after the
publication of the notice:
(1) A claimant who was not given notice under division (B)
of section 1706.473 of the Revised Code;
(2) A claimant whose claim was timely sent to the
dissolved limited liability company but not acted on by the
dissolved limited liability company;
(3) A claimant whose claim is contingent at the effective
date of the dissolution of the limited liability company, or is
based on an event occurring after the effective date of the
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dissolution of the limited liability company.
(D) A claim that is not barred under this section, any
other statute limiting actions, or section 1706.473 of the
Revised Code may be enforced as follows:
(1) Against a dissolved limited liability company, to the
extent of its undistributed assets;
(2) Except as provided in division (H) of this section, if
the assets of a dissolved limited liability company have been
distributed after dissolution, against a member or assignee to
the extent of that person's proportionate share of the claim or
of the assets distributed to the member or assignee after
dissolution, whichever is less. A person's total liability for
all claims under division (D) of this section may not exceed the
total amount of assets distributed to the person after
dissolution of the limited liability company.
(E) A dissolved limited liability company that published a
notice under this section may file an application with the
appropriate court in the county in which the dissolved limited
liability company's principal office is located or, if it has
none in this state, in the county in which the dissolved limited
liability company's statutory agent is or was last located, for
a determination of the amount and form of security to be
provided for payment of the following claims:
(1) Claims that are contingent;
(2) Claims that have not been made known to the dissolved
limited liability company;
(3) Claims that are based on an event occurring after the
effective date of the dissolution of the limited liability
company but that, based on the facts known to the dissolved
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S. B. No. 276 Page 178As Introduced
limited liability company, are reasonably estimated to arise
after the effective date of the dissolution of the limited
liability company.
Provision need not be made for any claim that is or is
reasonably anticipated to be barred under division (C) of this
section.
(F) Within ten days after the filing of the application
provided for in division (E) of this section, notice of the
proceeding shall be given by the dissolved limited liability
company to each potential claimant as described in division (E)
of this section.
(G) The appropriate court may appoint a guardian ad litem
to represent all claimants whose identities are unknown in any
proceeding brought under this section. The reasonable fees and
expenses of the guardian, including all reasonable expert
witness fees, shall be paid by the dissolved limited liability
company.
(H) Provision by the dissolved limited liability company
for security in the amount and the form ordered by the
appropriate court under division (E) of this section shall
satisfy the dissolved limited liability company's obligation
with respect to claims that are contingent, have not been made
known to the dissolved limited liability company, or are based
on an event occurring after the effective date of the
dissolution of the limited liability company. Such claims shall
not be enforced against a person owning a membership interest to
whom assets have been distributed by the dissolved limited
liability company after the effective date of the dissolution of
the limited liability company.
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(I) Nothing in this section shall be construed to extend
any otherwise applicable statute of limitations.
(J)(1) Except as provided in division (J)(2) of this
section, the secretary of state shall make both of the following
available to the public in a format that is searchable,
viewable, and accessible through the internet:
(a) A list of each limited liability companies that have
filed certificates of dissolution;
(b) For each dissolved limited liability company on the
list described in division (J)(1)(a) of this section, a copy of
both the certificate of dissolution and the notice delivered
under division (B) of this section.
(2) After the materials relating to any dissolved limited
liability company have been posted for five years, the secretary
of state may remove from the web site the information that the
secretary posted pursuant to division (J)(1) of this section
that relates to that dissolved company.
Sec. 1706.475. (A) Upon the winding up of a limited
liability company, payment or adequate provision for payment,
shall be made to creditors, including members who are creditors,
in satisfaction of liabilities of the limited liability company.
(B) After a limited liability company complies with
division (A) of this section, any surplus shall be distributed
as follows:
(1) First, to each person owning a membership interest
that reflects contributions made on account of the membership
interest and not previously returned, an amount equal to the
value of the person's unreturned contributions;
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S. B. No. 276 Page 180As Introduced
(2) Then to each person owning a membership interest in
the proportions in which the owners of membership interests
share in distributions before dissolution.
(C) If the limited liability company does not have
sufficient surplus to comply with division (B)(1) of this
section, any surplus shall be distributed among the owners of
membership interests in proportion to the value of their
respective unreturned contributions.
Sec. 1706.51. (A) The law of the state or other
jurisdiction under which a foreign limited liability company is
formed governs all of the following:
(1) The organization and internal affairs of the foreign
limited liability company;
(2) The liability of a member as a member for the debts,
obligations, or other liabilities of the foreign limited
liability company or a series thereof;
(3) The authority of the members and agents of a foreign
limited liability company or a series thereof;
(4) The liability of the following for the obligations of
another series or the foreign limited liability company:
(a) The assets of the foreign limited liability company;
(b) The assets of a series thereof.
(B) A foreign limited liability company's application for
registration as a foreign limited liability company may not be
denied by reason of any difference between the laws of the
jurisdiction under which the limited liability company is formed
and the laws of this state.
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S. B. No. 276 Page 181As Introduced
(C) A foreign limited liability company, including a
foreign limited liability company that has filed a registration
as a foreign limited liability company, may not engage in any
activities in this state that a limited liability company is
forbidden to engage in by the laws of this state.
(D) A foreign limited liability company that has filed a
registration as a foreign limited liability company shall in
this state:
(1) Have the same but no greater rights than a limited
liability company;
(2) Have the same but no greater privileges than a limited
liability company;
(3) Except as otherwise provided by this chapter, be
subject to the same duties, restrictions, penalties, and
liabilities now or later imposed on a limited liability company.
Sec. 1706.511. (A) In order for a foreign limited
liability company or any one or more of its series to transact
business in this state, the foreign limited liability company
shall register with the secretary of state. Neither a foreign
limited liability company nor any one or more of its series may
transact business in this state until the registration has been
approved by the secretary of state and the foreign limited
liability company or series is otherwise in compliance with
sections 1706.51 to 1706.516 of the Revised Code.
(B) The registration as a foreign limited liability
company shall state all of the following:
(1) The name of the foreign limited liability company and,
if the name does not comply with section 1706.07 of the Revised
Code, the assumed name adopted pursuant to division (A) of
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S. B. No. 276 Page 182As Introduced
section 1706.513 of the Revised Code;
(2) The foreign limited liability company's jurisdiction
of formation;
(3) The name and street address of the foreign limited
liability company's statutory agent and a written acceptance of
the appointment that is signed by the agent ;
(4) That the foreign limited liability company is a
foreign limited liability company;
(5) The information required by division (C) of this
section, if applicable.
(C) If a foreign limited liability company establishes or
provides for the establishment of one or more series of assets,
it shall state all of the following in the registration as a
foreign limited liability company:
(1) The fact that it provides for the establishment of one
or more series of assets;
(2) Whether the debts, liabilities, and obligations
incurred, contracted for, or otherwise existing with respect to
a particular series, if any, shall be enforceable against the
assets of that series only, and not against the assets of the
foreign limited liability company generally or any other series
thereof;
(3) Whether any of the debts, liabilities, obligations,
and expenses incurred, contracted for, or otherwise existing
with respect to the foreign limited liability company generally
or any other series thereof shall be enforceable against the
assets of that series.
(D) Upon any change in circumstances that makes any
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S. B. No. 276 Page 183As Introduced
statement contained in its filed registration as a foreign
limited liability company no longer true, a foreign limited
liability company authorized to transact business in this state
shall deliver to the secretary of state for filing an
appropriate certificate of correction, on a form as prescribed
by the secretary of state, so that its statement of foreign
qualification is in all respects true.
(E) A foreign limited liability company is authorized to
transact business in this state from the effective date of its
registration as a foreign limited liability company until the
earlier of the effective date of its cancellation of foreign
limited liability company or the effective date of the secretary
of state's cancellation of the registration as a foreign limited
liability company in accordance with section 1706.09 of the
Revised Code.
Sec. 1706.512. (A) A foreign limited liability company
shall not be considered to be transacting business in this state
within the meaning of sections 1706.51 to 1706.516 of the
Revised Code by reason of its or any one or more of its series'
carrying on in this state any of the following actions:
(1) Maintaining, defending, or settling in its own behalf
any proceeding or dispute;
(2) Holding meetings or carrying on any other activities
concerning its internal affairs;
(3) Maintaining accounts in financial institutions;
(4) Maintaining offices or agencies for the assignment,
exchange, and registration of the foreign limited liability
company's or its series' own securities or interests or
maintaining trustees or depositories with respect to those
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S. B. No. 276 Page 184As Introduced
securities or interests;
(5) Selling through independent contractors;
(6) Soliciting or obtaining orders, whether by mail or
electronic means or through employees or agents or otherwise, if
the orders require acceptance outside this state before they
become contracts;
(7) Creating, as borrower or lender, or acquiring
indebtedness, mortgages, or security interests in real or
personal property;
(8) Securing or collecting debts in its own behalf or
enforcing mortgages or other security interests in real or
personal property securing those debts, and holding, protecting,
and maintaining property so acquired;
(9) Owning real or personal property;
(10) Conducting an isolated transaction that is not one in
the course of repeated transactions of a like nature;
(11) Transacting business in interstate commerce.
(B) A foreign limited liability company shall not be
considered to be transacting business in this state solely
because it or any one or more of its series:
(1) Owns a controlling interest in an entity that is
transacting business in this state;
(2) Is a limited partner of a limited partnership or
foreign limited partnership that is transacting business in this
state;
(3) Is a member of a limited liability company or foreign
limited liability company that is transacting business in this
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S. B. No. 276 Page 185As Introduced
state.
(C) This section does not apply in determining the
contacts or activities that may subject a foreign limited
liability company, or a series thereof, to service of process,
taxation, or regulation under laws of this state other than this
chapter.
(D) Nothing in this section shall limit or affect the
right to subject a foreign limited liability company, or a
series thereof, to the jurisdiction of the courts of this state
or to serve upon any foreign limited liability company, or
series thereof, any process, notice, or demand required or
permitted by law to be served upon a foreign limited liability
company, or series thereof, pursuant to any other provision of
law or pursuant to the applicable rules of civil procedure.
Sec. 1706.513. (A) A foreign limited liability company
whose name does not comply with section 1706.07 of the Revised
Code may not file a registration as a foreign limited liability
company until it adopts, for the purpose of transacting business
in this state, an assumed name that complies with section
1706.07 of the Revised Code. A foreign limited liability company
that adopts an assumed name under this division and then files a
registration as a foreign limited liability company under that
assumed name need not file a name registration when transacting
business under that assumed name. After filing the registration
as a foreign limited liability company under an assumed name, a
foreign limited liability company shall transact business in
this state under the assumed name unless the foreign limited
liability company has filed a name registration under another
name and is authorized to transact business in this state under
such name.
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S. B. No. 276 Page 186As Introduced
(B) If a foreign limited liability company to which a
registration as a foreign limited liability company has been
filed changes its name to one that does not comply with section
1706.07 of the Revised Code, it may not thereafter transact
business in this state until it complies with division (A) of
this section by filing a certificate of correction.
Sec. 1706.515. (A) A foreign limited liability company
that has a registration as a foreign limited liability company
in the records of the secretary of state may cancel its
registration as a limited liability company by delivering for
filing a certificate of cancellation of registration of a
foreign limited liability company to the secretary of state.
(B) A certificate of cancellation of registration of a
foreign limited liability company shall set forth all of the
following:
(1) The name and registration number of the foreign
limited liability company, any assumed name adopted for use in
this state, and the name of the jurisdiction under whose law it
is organized;
(2) The name and street address of the statutory agent, or
if a statutory agent is no longer to be maintained, a statement
that the foreign limited liability company will not maintain a
statutory agent, and the street address to which service of
process may be mailed pursuant to section 1706.09 of the Revised
Code;
(3) That the foreign limited liability company, and all
series thereof, will no longer transact business in this state
and that it relinquishes its authority to transact business in
this state;
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S. B. No. 276 Page 187As Introduced
(4) That the foreign limited liability company is
canceling its registration as a foreign limited liability
company;
(5) That any statement of assumed name it has on file in
the records of the secretary of state and any assumed name with
respect to the foreign limited liability company, are withdrawn
upon the effective date of the cancellation of registration of a
foreign limited liability company.
(C) The cancellation of registration of a foreign limited
liability company shall be effective upon filing by the
secretary of state, whereupon the registration as a foreign
limited liability company shall be canceled and the foreign
limited liability company, and all series thereof, shall be
without authority to transact business in this state.
(D) Cancellation of a registration as a foreign limited
liability company shall not terminate the authority of any
statutory agent appointed by the foreign limited liability
company.
Sec. 1706.516. (A) No foreign limited liability company,
or a series thereof, transacting business in this state, nor
anyone on its behalf, shall be permitted to maintain a
proceeding in any court in this state for the collection of its
debts unless an effective registration as a limited liability
company for the foreign limited liability company is on file in
the records of the secretary of state.
(B) A court may stay a proceeding commenced by a foreign
limited liability company, or series thereof, until it
determines whether the foreign limited liability company should
have a registration as a limited liability company on file in
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S. B. No. 276 Page 188As Introduced
the records of the secretary of state. If the court determines
that the foreign limited liability company should have a
registration as a limited liability company on file in the
records of the secretary of state, the court may further stay
the proceeding until there is an effective registration as a
limited liability company on file in the records of the
secretary of state with respect to the foreign limited liability
company. If a court determines that a foreign limited liability
company should have a registration as a limited liability
company on file in the records of the secretary of state, and
the foreign limited liability company subsequently delivers for
filing to the secretary of state a registration as a limited
liability company, no proceeding in any court in this state to
which the foreign limited liability company, or a series
thereof, is a party shall, after the effective date of the
registration as a foreign limited liability company, be
dismissed by reason of the foreign limited liability company's
prior noncompliance with section 1706.511 of the Revised Code.
(C) If a foreign limited liability company, or a series
thereof, conducts activities in this state without having on
file in the records of the secretary of state a registration as
a foreign limited liability company, the foreign limited
liability company shall be liable to this state for an amount
equal to the fee as prescribed by the secretary of state from
time to time.
No registration as a foreign limited liability company
shall be filed until payment of the amounts due under this
division is made.
(D) The amounts due to this state under division (C) of
this section may be recovered in an action brought by the
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S. B. No. 276 Page 189As Introduced
attorney general. Upon a finding by the court that a foreign
limited liability company, or series thereof, has conducted
activities in this state in violation of sections 1706.51 to
1706.516 of the Revised Code, the court may issue, in addition
to or in lieu of the imposition of a civil penalty, an
injunction restraining the further conducting of activities by
the foreign limited liability company and all of its series, and
the further exercise of any rights and privileges of a foreign
limited liability company in this state until all amounts plus
any interest and court costs that the court may assess have been
paid, and until the foreign limited liability company has
otherwise complied with sections 1706.51 to 1706.516 of the
Revised Code.
(E) Notwithstanding divisions (A) and (B) of this section,
the conducting of activities in this state by a foreign limited
liability company, or a series thereof, without having a
registration as a foreign limited liability company on file in
the records of the secretary of state does not impair the
validity of the acts of the foreign limited liability company,
or a series thereof, or prevent the foreign limited liability
company, or a series thereof, from defending any proceeding in
this state.
(F) Neither a member nor agent of a foreign limited
liability company nor a member associated with a series or agent
of a series, is liable for the debts, obligations, or other
liabilities of the foreign limited liability company, or a
series thereof, solely because the foreign limited liability
company, or a series thereof, conducted activities in this state
without a registration as a foreign limited liability company
being on file in the records of the secretary of state.
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Sec. 1706.61. (A) A member may commence or maintain a
derivative action in the right of a limited liability company to
recover a judgment in favor of the limited liability company by
complying with sections 1706.61 to 1706.618 of the Revised Code.
(B) A member associated with a series of a limited
liability company may commence or maintain a derivative action
in the right of the series to recover a judgment in favor of the
series by complying with sections 1706.61 to 1706.618 of the
Revised Code.
Sec. 1706.611. (A) A member may commence or maintain a
derivative action in the right of the limited liability company
only if the member meets both of the following conditions:
(1) The member fairly and adequately represents the
interests of the limited liability company in enforcing the
right of the limited liability company.
(2) The member either:
(a) Was a member of the limited liability company at the
time of the act or omission of which the member complains;
(b) Acquired a membership interest through assignment by
operation of law from a person who was a member at the time of
the act or omission of which the member complains.
(B) A member associated with a series of a limited
liability company may commence or maintain a derivative action
in the right of the series only if the member meets both of the
following conditions:
(1) The member fairly and adequately represents the
interests of the series in enforcing the right of the series.
(2) The member either:
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S. B. No. 276 Page 191As Introduced
(a) Was associated with the series at the time of the act
or omission of which the member complains;
(b) Acquired a membership interest through assignment by
operation of law from a person who was a member associated with
the series at the time of the act or omission of which the
member complains.
Sec. 1706.612. A member may not commence a derivative
action in the right of the limited liability company, or a
series thereof, until both of the following occur:
(A) A written demand has been made upon the limited
liability company or the series to take suitable action.
(B) Ninety days have expired from the date the demand was
made unless either of the following applies:
(1) The member has earlier been notified that the demand
has been rejected by the limited liability company or the
series;
(2) Irreparable injury to the limited liability company or
the series would result by waiting for the expiration of the
ninety-day period.
Sec. 1706.613. For the purpose of allowing the limited
liability company or the series thereof time to undertake an
inquiry into the allegations made in the demand or complaint
commenced pursuant to sections 1706.61 to 1706.618 of the
Revised Code, the court may stay any derivative action for the
period the court deems appropriate.
Sec. 1706.614. (A)(1) A derivative action in the right of
a limited liability company shall be dismissed by the court on
motion by the limited liability company if one of the groups
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specified in division (A)(2) of this section has determined in
good faith, after conducting a reasonable inquiry upon which its
conclusions are based, that the maintenance of the derivative
action is not in the best interests of the limited liability
company.
(2) Subject to the requirements of division (A)(3) of this
section, the determination of whether the maintenance of a
derivative action in the right of a limited liability company is
in the best interests of the limited liability company shall be
made by a majority vote of either of the following:
(a) The independent members of the limited liability
company;
(b) The committee members of a committee consisting of
independent members appointed by a majority of the independent
members.
(3) If the determination is not made pursuant to division
(A)(1) of this section, the determination shall be made by the
person, or, in the case of more than one person, by a majority
of the persons, sitting upon a panel of one or more persons
appointed by a court upon motion filed with the court by the
limited liability company for those purposes.
(B)(1) A derivative action in the right of a series of a
limited liability company shall be dismissed on motion by the
series if one of the groups specified in division (B)(2) of this
section has determined in good faith, after conducting a
reasonable inquiry upon which its conclusions are based that the
maintenance of the derivative action is not in the best
interests of the series.
(2) Subject to the requirements of division (B)(3) of this
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section, the determination whether the maintenance of a
derivative action on behalf of a series of a limited liability
company is in the best interests of the series shall be made by
a majority vote of either of the following:
(a) The independent members associated with the series;
(b) The committee members of a committee consisting of
independent members associated with the series appointed by a
majority of the independent members associated with the series.
(3) If the determination is not made pursuant to division
(B)(1) of this section, the determination shall be made by the
person, or, in the case of more than one person, by a majority
of the persons, sitting upon a panel of one or more persons
appointed by a court upon motion filed with the court by the
series for those purposes.
(C) The court shall appoint only independent persons to
the panel described in divisions (A)(3) and (B)(3) of this
section.
(D) The presence of one or more of the following
circumstances, without more, shall not prevent a person from
being considered independent for purposes of this section:
(1) The naming of the person as a defendant in the
derivative action or as a person against whom action is
demanded;
(2) The approval by that person of the act being
challenged in the derivative action or demand where the act did
not result in personal benefit to that person;
(3) The making of the demand pursuant to section 1706.612
of the Revised Code or the commencement of the derivative action
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S. B. No. 276 Page 194As Introduced
pursuant to sections 1706.61 to 1706.618 of the Revised Code.
(E) Subject to section 1706.615 of the Revised Code, a
panel appointed by the court pursuant to division (A)(3) or (B)
(3) of this section shall have the authority to continue,
settle, or discontinue the derivative proceeding as the court
may confer upon the panel.
(F) The plaintiff in the derivative action shall have the
burden of proving that any of the requirements of division (A)
or (B) of this section have not been met.
Sec. 1706.615. A derivative action may not be discontinued
or settled without the court's approval. If the court determines
that a proposed discontinuance or settlement will substantially
affect the interests of members of the limited liability
company, or the interests of members associated with a series of
the limited liability company, the court shall direct that
notice be given to the members affected.
Sec. 1706.616. On termination of the derivative action the
court may do any of the following:
(A) Order the limited liability company to pay the
plaintiff's reasonable expenses, including attorney fees,
incurred by the plaintiff in the derivative action if the court
finds that the derivative action has resulted in a substantial
benefit to the limited liability company;
(B) Order a series to pay the plaintiff's reasonable
expenses, including attorney fees, incurred by the plaintiff in
the derivative action if the court finds that the derivative
action has resulted in a substantial benefit to the series;
(C) Order the plaintiff to pay any defendant's reasonable
expenses, including attorney fees, incurred by the defendant in
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S. B. No. 276 Page 195As Introduced
defending the derivative action if it finds that the derivative
action was commenced or maintained without reasonable cause or
for an improper purpose;
(D) Order a party to pay an opposing party's expenses
incurred because of the filing of a pleading, motion, or other
paper, if it finds both of the following:
(1) That the pleading, motion, or other paper was not well
grounded in fact, after reasonable inquiry, or not warranted by
existing law or a good faith argument for the extension,
modification, or reversal of existing law.
(2) That the pleading, motion, or other paper was
interposed for an improper purpose, such as to harass or cause
unnecessary delay or needless increase in the cost of
litigation.
Sec. 1706.617. In any derivative action in the right of a
foreign limited liability company, or a series thereof, the
right of a person to commence or maintain a derivative action in
the right of a foreign limited liability company, or a series
thereof, and any matters raised in the action covered by
sections 1706.61 to 1706.616 of the Revised Code shall be
governed by the law of the jurisdiction under which the foreign
limited liability company was formed; except that any matters
raised in the action covered by sections 1706.613, 1706.615, and
1706.616 of the Revised Code shall be governed by the law of
this state.
Sec. 1706.618. (A) Subject to division (B) of this
section, a member may maintain a direct action against another
member or members or the limited liability company, or a series
thereof, to enforce the member's rights and otherwise protect
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S. B. No. 276 Page 196As Introduced
the member's interests, including rights and interests under the
operating agreement or this chapter or arising independently of
the membership relationship.
(B) A member maintaining a direct action under division
(A) of this section must plead and prove an actual or threatened
injury that is not solely the result of an injury suffered or
threatened to be suffered by the limited liability company, or
series thereof.
(C)(1) A member may maintain a direct action to enforce a
right of a limited liability company if all members at the time
of suit are parties to the action.
(2) A member associated with a series may maintain a
direct action to enforce a right of the series if all members
associated with the series at the time of suit are parties to
the action.
Sec. 1706.71. (A) A limited liability company may merge
with one or more other constituent entities pursuant to sections
1706.71 to 1706.713 of the Revised Code and to an agreement of
merger if all of the following conditions are met:
(1) The governing statute of each of the other entities
authorizes the merger.
(2) The merger is not prohibited by the law of a
jurisdiction that enacted any of the governing statutes.
(3) Each of the other entities complies with its governing
statute in effecting the merger.
(B) An agreement of merger shall be in a record and shall
include all of the following:
(1) The name and form of each constituent entity;
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S. B. No. 276 Page 197As Introduced
(2) The name and form of the surviving entity and, if the
surviving entity is to be created pursuant to the merger, a
statement to that effect;
(3) The terms and conditions of the merger, including the
manner and basis for converting the interests in each
constituent entity into any combination of money, interests in
the surviving entity, and other consideration as permitted under
division (C) of this section;
(4) If the surviving entity is to be created pursuant to
the merger, the surviving entity's organizational documents that
are proposed to be in a record;
(5) If the surviving entity is not to be created pursuant
to the merger, any amendments to be made by the merger to the
surviving entity's organizational documents that are, or are
proposed to be, in a record.
(C) In connection with a merger, rights or securities of
or interests in the constituent entity may be any of the
following:
(1) Exchanged for or converted into cash, property, or
rights or securities of or interests in the surviving entity;
(2) In addition to or in lieu of division (C)(1) of this
section, exchanged for or converted into cash, property, or
rights or securities of or interests in another entity;
(3) Canceled.
Sec. 1706.711. (A) To be effective, an agreement of merger
shall be consented to by all the members of a constituent
limited liability company.
(B) After the agreement of merger is approved, and at any
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S. B. No. 276 Page 198As Introduced
time before a certificate of merger is delivered to the
secretary of state for filing under section 1706.712 of the
Revised Code, a constituent limited liability company may amend
the agreement or abandon the merger:
(1) As provided in the agreement; or
(2) Except as otherwise prohibited in the agreement, with
the same consent as was required to approve the agreement.
Sec. 1706.712. (A) After each constituent entity has
approved the agreement of merger, a certificate of merger shall
be signed on behalf of both of the following:
(1) Each constituent limited liability company, as
provided in division (A) of section 1706.17 of the Revised Code;
(2) Each other constituent entity, as provided in its
governing statute.
(B) A certificate of merger under this section shall
include all of the following:
(1) The name and form of each constituent entity, the
jurisdiction of its governing statute, and its registration
number, if any, as it appears on the records of the secretary of
state;
(2) The name and form of the surviving entity, the
jurisdiction of its governing statute, and, if the surviving
entity is created pursuant to the merger, a statement to that
effect;
(3) The date the merger is effective under the governing
statute of the surviving entity;
(4) If the surviving entity is to be created pursuant to
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S. B. No. 276 Page 199As Introduced
the merger:
(a) If it will be a limited liability company, the limited
liability company's articles of organization;
(b) If it will be an entity other than a limited liability
company, any organizational document that creates the entity
that is required to be in a public record.
(5) If the surviving entity exists before the merger, any
amendments provided for in the agreement of merger for the
organizational document that created the entity that are in a
public record;
(6) A statement as to each constituent entity that the
merger was approved as required by the entity's governing
statute;
(7) If the surviving entity is a foreign entity not
authorized to transact business in this state, the street
address of its statutory agent;
(8) Any additional information required by the governing
statute of any constituent entity.
(C) Each constituent limited liability company shall
deliver the certificate of merger for filing in the office of
the secretary of state.
(D) A merger becomes effective under sections 1706.71 to
1706.74 of the Revised Code as follows:
(1) If the surviving entity is a limited liability
company, upon the later of the following:
(a) Compliance with division (C) of this section;
(b) As specified in the certificate of merger.
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S. B. No. 276 Page 200As Introduced
(2) If the surviving entity is not a limited liability
company, as provided by the governing statute of the surviving
entity.
Sec. 1706.713. (A) When a merger becomes effective, all of
the following apply:
(1) The surviving entity continues or comes into
existence.
(2) Each constituent entity that merges into the surviving
entity ceases to exist as a separate entity.
(3) All property owned by each constituent entity, or
series thereof, that ceases to exist vests in the surviving
entity without reservation or impairment.
(4) All debts, obligations, or other liabilities of each
constituent entity, or series thereof, that ceases to exist
continue as debts, obligations, or other liabilities of the
surviving entity.
(5) An action or proceeding pending by or against any
constituent entity, or series thereof, that ceases to exist
continues as if the merger had not occurred.
(6) Except as prohibited by other law, all of the rights,
privileges, immunities, powers, and purposes of each constituent
entity, or series thereof, that ceases to exist vest in the
surviving entity.
(7) Except as otherwise provided in the agreement of
merger, the terms and conditions of the agreement of merger take
effect.
(8) Except as otherwise agreed, if a constituent limited
liability company ceases to exist, the merger does not dissolve
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S. B. No. 276 Page 201As Introduced
the limited liability company for the purposes of sections
1706.47 to 1706.475 of the Revised Code and does not dissolve a
series for purposes of sections 1706.76 to 1706.7613 of the
Revised Code.
(9) If the surviving entity is created pursuant to the
merger:
(a) If it is a limited liability company, the articles of
organization become effective;
(b) If it is an entity other than a limited liability
company, the organizational document that creates the entity
becomes effective.
(10) If the surviving entity existed before the merger,
any amendments provided for in the certificate of merger for the
organizational document that created the entity become
effective.
(B) A surviving entity that is a foreign entity consents
to the jurisdiction of the courts of this state to enforce any
debt, obligation, or other liability owed by a constituent
entity, if before the merger the constituent entity was subject
to suit in this state on the debt, obligation, or other
liability. Service of process on a surviving entity that is a
foreign entity and not authorized to transact business in this
state for the purposes of enforcing a debt, obligation, or other
liability may be made in the same manner and has the same
consequences as provided in section 1706.09 of the Revised Code
as if the surviving entity was a foreign limited liability
company.
Sec. 1706.72. (A) An entity other than a limited liability
company may convert to a limited liability company, and a
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S. B. No. 276 Page 202As Introduced
limited liability company may convert to an entity other than a
limited liability company pursuant to sections 1706.72 to
1706.723 of the Revised Code and a written declaration of
conversion if all of the following apply:
(1) The governing statute of the entity that is not a
limited liability company authorizes the conversion;
(2) The law of the jurisdiction governing the converting
entity and the converted entity does not prohibit the
conversion;
(3) The converting entity and the converted entity comply
with their respective governing statutes and organizational
documents in effecting the conversion.
(B) A written declaration of conversion shall be in a
record and include all of the following:
(1) The name and form of the converting entity before
conversion;
(2) The name and form of the converted entity after
conversion;
(3) The terms and conditions of the conversion, including
the manner and basis for converting interests in the converting
entity into any combination of money, interests in the converted
entity, and other consideration allowed under division (C) of
this section.
(4) The organizational documents of the converted entity
that are, or are proposed to be, in a record.
(C) In connection with a conversion, rights or securities
of or interests in the converting entity may be any of the
following:
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S. B. No. 276 Page 203As Introduced
(1) Exchanged for or converted into cash, property, or
rights or securities of or interests in the converted entity;
(2) In addition to or in lieu of division (C)(1) of this
section, exchanged for or converted into cash, property, or
rights or securities of or interests in another entity;
(3) Canceled.
Sec. 1706.721. (A) A declaration of conversion must be
consented to by all the members of a converting limited
liability company.
(B) After a conversion is approved, and at any time before
the certificate of conversion is delivered to the secretary of
state for filing under section 1706.722 of the Revised Code, a
converting limited liability company may amend the declaration
or abandon the conversion:
(1) As provided in the declaration; or
(2) Except as otherwise prohibited in the declaration, by
the same consent as was required to approve the declaration.
Sec. 1706.722. (A) After a declaration of conversion is
approved, both of the following apply:
(1) A converting limited liability company shall deliver
to the secretary of state for filing a certificate of
conversion. The certificate of conversion shall be signed as
provided in division (A) of section 1706.17 of the Revised Code
and shall include all of the following:
(a) A statement that the converting limited liability
company has been converted into the converted entity;
(b) The name and form of the converted entity and the
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S. B. No. 276 Page 204As Introduced
jurisdiction of its governing statute;
(c) The date the conversion is effective under the
governing statute of the converted entity;
(d) A statement that the conversion was approved as
required by this chapter;
(e) A statement that the conversion was approved as
required by the governing statute of the converted entity;
(f) If the converted entity is a foreign entity not
authorized to transact business in this state, the street
address of its statutory agent for the purposes of division (B)
of section 1706.723 of the Revised Code.
(2) If the converted entity is a limited liability
company, the converting entity shall deliver to the secretary of
state for filing articles of organization which shall include,
in addition to the information required by division (A) of
section 1706.16 of the Revised Code, all of the following:
(a) A statement that the converted entity was converted
from the converting entity;
(b) The name and form of the converting entity and the
jurisdiction of the converting entity's governing statute;
(c) A statement that the conversion was approved as
required by the governing statute of the converting entity.
(B) A conversion shall become effective as follows:
(1) If the converted entity is a limited liability
company, when the articles of organization take effect;
(2) If the converted entity is not a limited liability
company, as provided by the governing statute of the converted
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entity.
Sec. 1706.723. (A) When a conversion takes effect, all of
the following apply:
(1) All property owned by the converting entity, or series
thereof, remains vested in the converted entity.
(2) All debts, obligations, or other liabilities of the
converting entity, or series thereof, continue as debts,
obligations, or other liabilities of the converted entity.
(3) An action or proceeding pending by or against the
converting entity, or series thereof, continues as if the
conversion had not occurred.
(4) Except as prohibited by law other than this chapter,
all of the rights, privileges, immunities, powers, and purposes
of the converting entity, or series thereof, remain vested in
the converted entity.
(5) Except as otherwise provided in the plan of
conversion, the terms and conditions of the declaration of
conversion take effect.
(6) Except as otherwise agreed, for all purposes of the
laws of this state, the converting entity, and any series
thereof, shall not be required to wind up its affairs or pay its
liabilities and distribute its assets, and the conversion shall
not be deemed to constitute a dissolution of the converting
entity, or series thereof.
(7) For all purposes of the laws of this state, the
rights, privileges, powers, and interests in property of the
converting entity, and all series thereof, as well as the debts,
liabilities, and duties of the converting entity, and all series
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S. B. No. 276 Page 206As Introduced
thereof, shall not be deemed to have been assigned to the
converted entity as a consequence of the conversion.
(8) If the converted entity is a limited liability
company, for all purposes of the laws of this state, the limited
liability company shall be deemed to be the same entity as the
converting entity, and the conversion shall constitute a
continuation of the existence of the converting entity in the
form of a limited liability company.
(9) If the converted entity is a limited liability
company, the existence of the limited liability company shall be
deemed to have commenced on the date the converting entity
commenced its existence in the jurisdiction in which the
converting entity was first created, formed, organized,
incorporated, or otherwise came into being.
(B) A converted entity that is a foreign entity consents
to the jurisdiction of the courts of this state to enforce any
debt, obligation, or other liability for which the converting
limited liability company, or series thereof, is liable if,
before the conversion, the converting limited liability company,
or series thereof, was subject to suit in this state on the
debt, obligation, or other liability. Service of process on a
converted entity that is a foreign entity and not authorized to
transact business in this state for purposes of enforcing a
debt, obligation, or other liability under this division may be
made in the same manner and has the same consequences as
provided in section 1706.09 of the Revised Code, as if the
converted entity were a foreign limited liability company.
Sec. 1706.73. (A) If a member of a constituent or
converting limited liability company will have personal
liability with respect to a surviving or converted entity,
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S. B. No. 276 Page 207As Introduced
approval or amendment of a plan of merger or a declaration of
conversion are ineffective without the consent of the member,
unless both of the following conditions are met:
(1) The limited liability company's operating agreement
provides for approval of a merger or conversion with the consent
of fewer than all the members.
(2) The member has consented to the provision of the
operating agreement described in division (A)(1) of this
section.
(B) A member does not give the consent required by
division (A) of this section merely by consenting to a provision
of the operating agreement that permits the operating agreement
to be amended with the consent of fewer than all the members.
Sec. 1706.74. Sections 1706.71 to 1706.74 of the Revised
Code do not preclude an entity from being merged or converted
under law other than this chapter.
Sec. 1706.76. (A) An operating agreement may establish or
provide for the establishment of one or more designated series
of assets that has both of the following:
(1) Either or both of the following:
(a) Separate rights, powers, or duties with respect to
specified property or obligations of the limited liability
company or profits and losses associated with specified property
or obligations;
(b) A separate purpose or investment objective.
(2) At least one member associated with each series.
(B) A series established in accordance with division (A)
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S. B. No. 276 Page 208As Introduced
of this section may carry on any activity, whether or not for
profit.
Sec. 1706.761. (A) Subject to division (B) of this
section, both of the following apply:
(1) The debts, liabilities, obligations, and expenses
incurred, contracted for, or otherwise existing with respect to
a series shall be enforceable against the assets of that series
only, and shall not be enforceable against the assets of the
limited liability company generally or any other series thereof.
(2) None of the debts, liabilities, obligations, and
expenses incurred, contracted for, or otherwise existing with
respect to the limited liability company generally or any other
series thereof shall be enforceable against the assets of a
series.
(B) Division (A) of this section applies only if all of
the following conditions are met:
(1) The records maintained for that series account for the
assets of that series separately from the other assets of the
company or any other series.
(2) The operating agreement contains a statement to the
effect of the limitations provided in division (A) of this
section.
(3) The limited liability company's articles of
organization contains a statement that the limited liability
company may have one or more series of assets subject to the
limitations provided in division (A) of this section.
Sec. 1706.762. (A) Assets of a series may be held directly
or indirectly, including being held in the name of the series,
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in the name of the limited liability company, through a nominee,
or otherwise.
(B) If the records of a series are maintained in a manner
so that the assets of the series can be reasonably identified by
specific listing, category, type, quantity, or computational or
allocational formula or procedure, including a percentage or
share of any assets, or by any other method in which the
identity of the assets can be objectively determined, the
records are considered to satisfy the requirement of division
(B)(1) of section 1706.761 of the Revised Code.
Sec. 1706.763. The statement of limitation on liabilities
of a series required by division (B)(3) of section 1706.761 of
the Revised Code is sufficient regardless of whether either of
the following applies:
(A) The limited liability company has established any
series under this chapter when the statement of limitations is
contained in the articles of organization;
(B) The statement of limitations makes reference to a
specific series of the limited liability company.
Sec. 1706.764. (A) A person may not voluntarily dissociate
as a member associated with a series.
(B) A person's dissociation from a series is wrongful only
if one of the following applies:
(1) The person's dissociation is in breach of an express
provision of the operating agreement.
(2) The person is expelled as a member associated with the
series by determination of a tribunal under division (E) of
section 1706.765 of the Revised Code.
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(3) The person is dissociated as a member associated with
a series by becoming a debtor in bankruptcy or making a general
assignment for the benefit of creditors.
(C) A person that wrongfully dissociates as a member
associated with a series is liable to the series and, subject to
section 1706.61 of the Revised Code, to the other members
associated with that series for damages caused by the
dissociation. The liability is in addition to any other debt,
obligation, or liability of the member associated with a series
to the series or the other members associated with that series.
Sec. 1706.765. A person is dissociated as a member
associated with a series when any of the following occurs:
(A) An event stated in the operating agreement as causing
the person's dissociation from the series occurs.
(B) The person is dissociated as a member of the limited
liability company pursuant to section 1706.411 of the Revised
Code.
(C) The person is expelled as a member associated with
that series pursuant to the operating agreement.
(D) The person is expelled as a member associated with the
series by the unanimous consent of the other members associated
with that series and if any of the following applies:
(1) It is unlawful to carry on the series' activities with
the person as a member associated with that series.
(2) The person is an entity and, within ninety days after
the series notifies the person that it will be expelled as a
member associated with that series because the person has filed
a certificate of dissolution or the equivalent, or its right to
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transact business has been suspended by its jurisdiction of
formation, the certificate of dissolution or the equivalent has
not been revoked or its right to transact business has not been
reinstated.
(3) The person is an entity and, within ninety days after
the series notifies the person that it will be expelled as a
member associated with that series because the person has been
dissolved and its activities are being wound up, the entity has
not been reinstated or the dissolution and winding up have not
been revoked or canceled.
(E) On application by the series, the person is expelled
as a member associated with that series by tribunal order for
any of the following reasons:
(1) The person has engaged, or is engaging, in wrongful
conduct that has adversely and materially affected, or will
adversely and materially affect, that series' activities.
(2) The person has willfully or persistently committed, or
is willfully or persistently committing, a material breach of
the operating agreement or the person's duties or obligations
under this chapter or other applicable law.
(3) The person has engaged, or is engaging, in conduct
relating to that series' activities that makes it not reasonably
practicable to carry on the activities with the person as a
member associated with that series.
(F) In the case of a person who is an individual, the
person dies, a guardian or general conservator is appointed for
the person, or a tribunal determines that the person has
otherwise become incapable of performing the person's duties as
a member associated with a series under this chapter or the
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operating agreement.
(G) The person becomes a debtor in bankruptcy, executes an
assignment for the benefit of creditors, or seeks, consents, or
acquiesces to the appointment of a trustee, receiver, or
liquidator of the person or of all or substantially all of the
person's property. This division shall not apply to a person who
is the sole remaining member associated with a series.
(H) In the case of a person that is a trust or is acting
as a member associated with a series by virtue of being a
trustee of a trust, the trust's entire membership interest
associated with the series is distributed, but not solely by
reason of the substitution of a successor trustee.
(I) In the case of a person that is an estate or is acting
as a member associated with a series by virtue of being a
personal representative of an estate, the estate's entire
membership interest associated with the series is distributed,
but not solely by reason of the substitution of a successor
personal representative.
(J) In the case of a member associated with a series that
is not an individual, the legal existence of the person
otherwise terminates.
Sec. 1706.766. (A) A person who has dissociated as a
member associated with a series shall have no right to
participate in the activities and affairs of that series and is
entitled only to receive the distributions to which that member
would have been entitled if the member had not dissociated from
that series.
(B) A person's dissociation as a member associated with a
series does not of itself discharge the person from any debt,
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obligation, or liability to that series, the limited liability
company, or the other members that the person incurred while a
member associated with that series.
(C) A member's dissociation from a series does not, in
itself, cause the member to dissociate from any other series or
require the winding up of the series.
(D) A member's dissociation from a series does not, in
itself, cause the member to dissociate from the limited
liability company.
Sec. 1706.767. A series may be dissolved and its
activities and affairs may be wound up without causing the
dissolution of the limited liability company. The dissolution
and winding up of a series does not abate, suspend, or otherwise
affect the limitation on liabilities of the series provided by
section 1706.761 of the Revised Code.
Sec. 1706.768. A series is dissolved and its activities
and affairs shall be wound up upon the first to occur of the
following:
(A) The dissolution of the limited liability company under
section 1706.47 of the Revised Code;
(B) An event or circumstance that the operating agreement
states causes dissolution of the series;
(C) The consent of all of the members associated with the
series;
(D) The passage of ninety days after the occurrence of the
dissociation of the last remaining member associated with the
series;
(E) On application by a member associated with the series,
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the entry by the appropriate court of an order dissolving the
series on the grounds that it is not reasonably practicable to
carry on the series' activities in conformity with the operating
agreement.
Sec. 1706.769. (A) A dissolved series continues its
existence as a series but may not carry on any activities except
as is appropriate to wind up and liquidate its activities and
affairs. Appropriate activities include all of the following:
(1) Collecting the assets of the series;
(2) Disposing of the properties of the series that will
not be distributed in kind to persons owning membership
interests associated with the series;
(3) Discharging or making provisions for discharging the
liabilities of the series;
(4) Distributing the remaining property of the series in
accordance with section 1706.7613 of the Revised Code;
(5) Doing any other act necessary to wind up and liquidate
the series' activities and affairs.
(B) In winding up a series' activities, a series may do
any of the following:
(1) Preserve the series' activities and property as a
going concern for a reasonable time;
(2) Prosecute, defend, or settle actions or proceedings
whether civil, criminal, or administrative;
(3) Make an assignment of the series' property;
(4) Resolve disputes by mediation or arbitration.
(C) A series' dissolution, in itself:
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(1) Is not an assignment of the series' property;
(2) Does not prevent the commencement of a proceeding by
or against the series in the series' name;
(3) Does not abate or suspend a proceeding pending by or
against the series on the effective date of dissolution;
(4) Does not abate, suspend, or otherwise alter the
application of section 1706.7613 of the Revised Code.
Sec. 1706.7610. (A) Subject to division (C) of section
1706.769 of the Revised Code, after dissolution of a series, the
remaining members associated with the series, if any, and if
none, a person appointed by all holders of the membership
interest last assigned by the last person to have been a member
associated with the series, may wind up the series' activities.
(B) The appropriate tribunal may order supervision of the
winding up of a dissolved series, including the appointment of a
person to wind up the series' activities for any of the
following reasons:
(1) On application of a member associated with the series,
if the applicant establishes good cause;
(2) On application of an assignee associated with a
series, if both of the following apply:
(a) There are no members associated with the series.
(b) Within a reasonable time following the dissolution a
person has not been appointed pursuant to division (A) of this
section.
(3) In connection with a proceeding under division (E) of
section 1706.768 of the Revised Code.
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Sec. 1706.7611. (A) A dissolved series may dispose of any
known claims against it by following the procedures described in
division (B) of this section, at any time after the effective
date of the dissolution of the series.
(B) A dissolved series may give notice of the dissolution
in a record to the holder of any known claim. The notice shall
do all of the following:
(1) Identify the limited liability company and the
dissolved series;
(2) Describe the information required to be included in a
claim;
(3) Provide a mailing address to which the claim is to be
sent;
(4) State the deadline by which the dissolved series must
receive the claim. The deadline shall not be sooner than one
hundred twenty days from the effective date of the notice.
(5) State that if not sooner barred, the claim will be
barred if not received by the deadline.
(C) Unless sooner barred by any other statute limiting
actions, a claim against a dissolved series is barred in either
of the following circumstances:
(1) If a claimant who was given notice under division (B)
of this section does not deliver the claim to the dissolved
series by the deadline;
(2) If a claimant whose claim was rejected by the
dissolved series does not commence a proceeding to enforce the
claim within ninety days from the effective date of the rejected
notice.
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(D) For purposes of this section, "claim" includes an
unliquidated claim, but does not include a contingent liability
that has not matured so that there is no immediate right to
bring suit or a claim based on an event occurring after the
effective date of dissolution.
(E) Nothing in this section shall be construed to extend
any otherwise applicable statute of limitations.
Sec. 1706.7612. (A) A dissolved series may publish notice
of its dissolution and request that persons with claims against
the dissolved series present them in accordance with the notice.
(B) The notice authorized by division (A) of this section
shall meet all of the following criteria:
(1) It shall be posted prominently on the principal web
site then maintained by the limited liability company, if any,
and provided to the secretary of state to be posted on the web
site maintained by the secretary of state in accordance with
division (J) of section 1706.474 of the Revised Code. The notice
shall be considered published when posted on the secretary of
state's web site.
(2) It shall describe the information that must be
included in a claim and provide a mailing address to which the
claim must be sent.
(3) It shall state that if not sooner barred, a claim
against the dissolved series will be barred unless a proceeding
to enforce the claim is commenced within two years following the
publication of the notice.
(C) If a dissolved series publishes a notice in accordance
with division (B) of this section, unless sooner barred by any
other statute limiting actions, the claim of each of the
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following claimants is barred unless the claimant commences a
proceeding to enforce the claim against the dissolved series
within two years after the publication date of the notice:
(1) A claimant who was not given notice under division (B)
of section 1706.7611 of the Revised Code;
(2) A claimant whose claim was timely sent to the
dissolved series but not acted on by the dissolved series;
(3) A claimant whose claim is contingent at the effective
date of the dissolution of the series, or is based on an event
occurring after the effective date of the dissolution of the
series.
(D) A claim that is not barred under this section, any
other statute limiting actions, or section 1706.7611 of the
Revised Code may be enforced against either of the following:
(1) A dissolved series, to the extent of its undistributed
assets associated with the series;
(2) A member or assignee associated with the series to the
extent of that person's proportionate share of the claim or of
the assets of the series distributed to the member or assignee
after dissolution, whichever is less, except as provided in
division (H) of this section and only if the assets of a
dissolved series have been distributed after dissolution. A
person's total liability for all claims under division (D) of
this section shall not exceed the total amount of assets of the
series distributed to the person after dissolution of the
series.
(E) A dissolved series that published a notice under this
section may file an application with the appropriate court in
the county in which the limited liability company's principal
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S. B. No. 276 Page 219As Introduced
office is located or, if it has none in this state, in the
county in which the limited liability company's statutory agent
is or was last located. The application shall be for a
determination of the amount and form of security to be provided
for payment of claims that are contingent or have not been made
known to the dissolved series or that are based on an event
occurring after the effective date of the dissolution of the
series but that, based on the facts known to the dissolved
series, are reasonably estimated to arise after the effective
date of the dissolution of the series. Provision need not be
made for any claim that is or is reasonably anticipated to be
barred under division (C) of this section.
(F) Within ten days after the filing of the application
provided for in division (E) of this section, notice of the
proceeding shall be given by the dissolved series to each
potential claimant as described in that division.
(G) The appropriate court may appoint a guardian ad litem
to represent all claimants whose identities are unknown in any
proceeding brought under this section. The reasonable fees and
expenses of the guardian, including all reasonable expert
witness fees, shall be paid by the dissolved series.
(H) Provision by the dissolved series for security in the
amount and the form ordered by the appropriate court under
division (E) of this section shall satisfy the dissolved series'
obligation with respect to claims that are contingent, have not
been made known to the dissolved series, or are based on an
event occurring after the effective date of the dissolution of
the series. Those claims may not be enforced against a person
owning a membership interest to whom assets have been
distributed by the dissolved series after the effective date of
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the dissolution of the series.
(I) Nothing in this section shall be construed to extend
any otherwise applicable statute of limitations.
Sec. 1706.7613. (A) Upon the winding up of a series,
payment or adequate provision for payment shall be made to
creditors of the series, including, to the extent permitted by
law, members who are associated with the series and who are also
creditors of the series, in satisfaction of liabilities of the
series.
(B) After a series complies with division (A) of this
section, any surplus shall be distributed as follows:
(1) First, to each person owning a membership interest
associated with the series that reflects contributions made on
account of that membership interest and not previously returned,
an amount equal to the value of the person's unreturned
contributions;
(2) Then to each person owning a membership interest
associated with the series in the proportions in which the
owners of membership interests associated with the series share
in distributions prior to dissolution of the series.
(C) If the series does not have sufficient surplus to
comply with division (B)(1) of this section, any surplus shall
be distributed among the owners of membership interests
associated with the series in proportion to the value of their
respective unreturned contributions.
Sec. 1706.81. This chapter modifies, limits, and
supersedes the federal "Electronic Signatures in Global and
National Commerce Act," 15 U.S.C. 7001 et seq., but does not
modify, limit, or supersede 15 U.S.C. 7001(c) or authorize
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electronic delivery of any of the notices described in 15 U.S.C.
7003(b).
Sec. 1706.82. A limited liability company formed and
existing under this chapter may conduct its activities and
affairs, carry on its operations, and have and exercise the
powers granted by this chapter in any state, foreign country, or
other jurisdiction.
Sec. 1706.83. (A) Prior to January 1, 2022, this chapter
shall govern the following limited liability companies:
(1) A limited liability company formed on or after January
1, 2021, except a limited liability company that is continuing
the business of a dissolved limited liability company under
section 1705.44 of the Revised Code;
(2) A limited liability company formed before January 1,
2021, that elects, pursuant to division (C) of this section, to
be governed by this chapter.
(B) On and after January 1, 2022, this chapter shall
govern all limited liability companies, including every foreign
limited liability company that files an application for
registration as a foreign limited liability company on or after
January 1, 2022, every foreign limited liability company that
registers a name in this state on or after January 1, 2022,
every foreign limited liability company that has registered a
name in this state prior to January 1, 2022, and every foreign
limited liability company that has filed an application for
registration as a foreign limited liability company prior to
January 1, 2022, pursuant to Chapter 1705. of the Revised Code.
(C) On and after January 1, 2021, but prior to January 1,
2022, a limited liability company may elect, in the manner
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provided in its operating agreement or by law for amending the
operating agreement, to be subject to this chapter.
Sec. 1706.84. Unless expressly stated to the contrary in
this chapter, all amendments of this chapter shall apply to
limited liability companies and members and agents whether or
not existing as such at the time of the enactment of any such
amendment.
Sec. 1729.36. (A) An association may merge or consolidate
with one or more entities, if such merger or consolidation is
permitted by the laws under which each constituent entity exists
and the association complies with this section.
(B) Each constituent association shall comply with section
1729.35 of the Revised Code with respect to form and approval of
an agreement of merger or consolidation, and each constituent
entity shall comply with the applicable provisions of the laws
under which it exists, except that the agreement of merger or
consolidation, by whatever name designated, shall comply with
divisions (C) and (D) of this section.
(C) The agreement of merger or consolidation shall set
forth all of the following:
(1) The names of the states and the laws under which each
constituent entity exists;
(2) All statements and matters required to be set forth in
agreements of merger or consolidation by the laws under which
any constituent entity exists;
(3) A statement that the surviving or new entity is to be
an association, a foreign association, a corporation other than
a cooperative, or a limited liability company;
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(4) If the surviving or new entity is to be a foreign
entity:
(a) The place where the principal office of the surviving
or new entity is to be located in the state in which the
surviving or new entity is to exist;
(b) The consent by the surviving or new entity that it may
be sued and served with process in this state in any proceeding
for the enforcement of any obligation of any constituent
association or domestic entity;
(c) The consent by the surviving or new entity that it
shall be subject to the applicable provisions of Chapter 1703.
of the Revised Code, if it is a foreign corporation or foreign
association, or to sections 1705.53 to 1705.58 or 1706.51 to
1706.516 of the Revised Code, if it is a foreign limited
liability company;
(d) If it is desired that the surviving or new entity
exercise its corporate privileges in this state as a foreign
entity.
(D) The agreement also may set forth other provisions
permitted by the laws of any state in which any constituent
entity exists.
(E) If the surviving or new entity is an association, the
merger or consolidation shall take effect in accordance with
sections 1729.37 and 1729.38 of the Revised Code.
(F) If the surviving or new entity is an entity other than
an association, the merger or consolidation shall take effect in
accordance with the applicable provisions of the laws under
which it exists.
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Sec. 1729.38. (A)(1) Upon adoption of an agreement of
merger or consolidation under section 1729.35 or 1729.36 of the
Revised Code, a certificate, signed by any authorized officer or
representative of each constituent association or entity, shall
be filed with the secretary of state on a form prescribed by the
secretary of state that sets forth the following:
(a) The name and form of each constituent association or
entity and the state law under which each constituent entity
exists;
(b) A statement that each constituent association or
entity has adopted the agreement of merger or consolidation, the
manner of adoption, and that the agreement was adopted in
compliance with the laws applicable to each constituent
association or entity;
(c) The effective date of the merger or consolidation,
which date may be on or after the date of filing of the
certificate;
(d) In the case of a merger, a statement that one or more
specified constituent associations or entities will be merged
into a specified surviving association or entity or, in the case
of a consolidation, a statement that the constituent
associations or entities will be consolidated into a new
association or entity;
(e) The name and address of the statutory agent upon whom
any process, notice, or demand against any constituent
association or entity, or the surviving or new association or
entity, may be served.
(2) In the case of a merger into an association or
domestic entity, any amendments to the articles of incorporation
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or the articles of organization of the surviving association or
entity shall be filed with the certificate.
(3) In the case of a consolidation to form a new domestic
association or entity, the articles of incorporation or the
articles of organization of the new association or entity shall
be filed with the certificate.
(4) If the surviving or new entity is a foreign entity
that desires to transact business in this state as a foreign
entity, the certificate shall be accompanied by the information
required for qualification of a foreign entity in this state by
Chapter 1703. of the Revised Code, in the case of a foreign
corporation or foreign cooperative, or by sections 1705.53 and
1705.54 or 1706.511 of the Revised Code, in the case of a
foreign limited liability company.
(B) A copy of the certificate of merger or consolidation,
certified by the secretary of state, may be filed for record in
the office of the county recorder of any county in this state.
For such recording, the county recorder shall charge and collect
the same fee as in the case of deeds. The certified copy of the
certificate of merger or consolidation shall be recorded in the
official records of the county recorder.
(C) For purposes of this section, "domestic entity" means
a corporation other than an association or a limited liability
company organized under the laws of this state.
Sec. 1745.461. (A)(1) Pursuant to an agreement of merger
between the constituent entities as provided in this section, a
domestic unincorporated nonprofit association and, if so
provided, one or more additional domestic or foreign entities
may be merged into a surviving entity other than a domestic
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S. B. No. 276 Page 226As Introduced
unincorporated nonprofit association. Pursuant to an agreement
of consolidation, a domestic unincorporated nonprofit
association together with one or more additional domestic or
foreign entities may be consolidated into a new entity other
than a domestic unincorporated nonprofit association to be
formed by that consolidation. The merger or consolidation must
be permitted by the chapter of the Revised Code under which each
domestic constituent entity exists and by the laws under which
each foreign constituent entity exists.
(2) To effect a merger or consolidation under this
section, the manager or managers of each constituent
unincorporated nonprofit association shall approve an agreement
of merger or consolidation to be signed by the manager, the
chairperson, the president, or a vice-president and by the
secretary or an assistant secretary or, if there are no
officers, by an authorized manager. The agreement of merger or
consolidation shall be approved or otherwise authorized by or on
behalf of each other constituent entity in accordance with the
laws under which it exists.
(3) The agreement of merger or consolidation shall set
forth all of the following:
(a) The name and the form of entity of each constituent
entity and the state under the laws of which each constituent
entity exists;
(b) In the case of a merger, that one or more specified
constituent entities will be merged into a specified surviving
foreign entity or surviving domestic entity other than a
domestic unincorporated nonprofit association or, in the case of
a consolidation, that the constituent entities will be
consolidated into a new foreign entity or domestic entity other
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S. B. No. 276 Page 227As Introduced
than a domestic unincorporated nonprofit association. The name
of the surviving or new entity may be the same as or similar to
that of any constituent entity.
(c) The terms of the merger or consolidation and the mode
of carrying those terms into effect;
(d) If the surviving or new entity is a foreign
unincorporated nonprofit association, all additional statements
and matters, other than the name and address of the statutory
agent, that would be required by section 1745.46 of the Revised
Code if the surviving or new unincorporated nonprofit
association were a domestic unincorporated nonprofit
association;
(e) The name and the form of entity of the surviving or
new entity, the state under the laws of which the surviving
entity exists or the new entity is to exist, and the location of
the principal office of the surviving or new entity in that
state;
(f) All statements and matters required to be set forth in
an agreement of merger or consolidation by the laws under which
each constituent entity exists and, in the case of a
consolidation, the new entity is to exist;
(g) The consent of the surviving or the new entity to be
sued and served with process in this state and the irrevocable
appointment of the secretary of state as its agent to accept
service of process in any proceeding in this state to enforce
against the surviving or new entity any obligation of any
domestic constituent unincorporated nonprofit association. Such
service shall be made upon the secretary of state by leaving
duplicate copies of such process, together with an affidavit of
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S. B. No. 276 Page 228As Introduced
the plaintiff or one of the plaintiff's attorneys, showing the
last known address of such association, and a fee of up to five
dollars that shall be included as taxable costs in the case of
judicial proceedings. Upon receipt of such process, affidavit,
and fee, the secretary of state shall immediately give notice to
the association at the address specified in the affidavit and
forward to such address by certified mail, with a request for
return receipt, a copy of such process.
(h) If the surviving or new entity is a foreign
unincorporated nonprofit association that desires to transact
business in this state as a foreign unincorporated nonprofit
association, a statement to that effect, together with a
statement regarding the appointment of a statutory agent and
service of any process, notice, or demand upon that statutory
agent or the secretary of state;
(i) If the surviving or new entity is a foreign limited
partnership that desires to transact business in this state as a
foreign limited partnership, a statement to that effect,
together with all of the information required under section
1782.49 of the Revised Code when a foreign limited partnership
registers to transact business in this state;
(j) If the surviving or new entity is a foreign limited
liability company that desires to transact business in this
state as a foreign limited liability company, a statement to
that effect, together with all of the information required under
section 1705.54 or 1706.511 of the Revised Code when a foreign
limited liability company registers to transact business in this
state;
(k) If the surviving or new entity is a foreign
unincorporated association that desires to transact business in
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S. B. No. 276 Page 229As Introduced
this state as a foreign unincorporated association, a statement
to that effect, together with all of the information, if any,
required by the secretary of state when a foreign unincorporated
association registers to transact business in this state.
(4) The agreement of merger or consolidation also may set
forth any additional provision permitted by the laws of any
state under the laws of which any constituent entity exists,
consistent with the laws under which the surviving entity exists
or the new entity is to exist.
(B) A merger or consolidation pursuant to this section in
which a public benefit association is one of the constituent
entities shall be subject to, and shall comply with, the
provisions of divisions (B)(1)(b), (2), (3), and (4) of section
1745.46 of the Revised Code.
Sec. 1751.01. As used in this chapter:
(A)(1) "Basic health care services" means the following
services when medically necessary:
(a) Physician's services, except when such services are
supplemental under division (B) of this section;
(b) Inpatient hospital services;
(c) Outpatient medical services;
(d) Emergency health services;
(e) Urgent care services;
(f) Diagnostic laboratory services and diagnostic and
therapeutic radiologic services;
(g) Diagnostic and treatment services, other than
prescription drug services, for biologically based mental
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S. B. No. 276 Page 230As Introduced
illnesses;
(h) Preventive health care services, including, but not
limited to, voluntary family planning services, infertility
services, periodic physical examinations, prenatal obstetrical
care, and well-child care;
(i) Routine patient care for patients enrolled in an
eligible cancer clinical trial pursuant to section 3923.80 of
the Revised Code.
"Basic health care services" does not include experimental
procedures.
Except as provided by divisions (A)(2) and (3) of this
section in connection with the offering of coverage for
diagnostic and treatment services for biologically based mental
illnesses, a health insuring corporation shall not offer
coverage for a health care service, defined as a basic health
care service by this division, unless it offers coverage for all
listed basic health care services. However, this requirement
does not apply to the coverage of beneficiaries enrolled in
medicare pursuant to a medicare contract, or to the coverage of
beneficiaries enrolled in the federal employee health benefits
program pursuant to 5 U.S.C.A. 8905, or to the coverage of
medicaid recipients, or to the coverage of beneficiaries under
any federal health care program regulated by a federal
regulatory body, or to the coverage of beneficiaries under any
contract covering officers or employees of the state that has
been entered into by the department of administrative services.
(2) A health insuring corporation may offer coverage for
diagnostic and treatment services for biologically based mental
illnesses without offering coverage for all other basic health
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S. B. No. 276 Page 231As Introduced
care services. A health insuring corporation may offer coverage
for diagnostic and treatment services for biologically based
mental illnesses alone or in combination with one or more
supplemental health care services. However, a health insuring
corporation that offers coverage for any other basic health care
service shall offer coverage for diagnostic and treatment
services for biologically based mental illnesses in combination
with the offer of coverage for all other listed basic health
care services.
(3) A health insuring corporation that offers coverage for
basic health care services is not required to offer coverage for
diagnostic and treatment services for biologically based mental
illnesses in combination with the offer of coverage for all
other listed basic health care services if all of the following
apply:
(a) The health insuring corporation submits documentation
certified by an independent member of the American academy of
actuaries to the superintendent of insurance showing that
incurred claims for diagnostic and treatment services for
biologically based mental illnesses for a period of at least six
months independently caused the health insuring corporation's
costs for claims and administrative expenses for the coverage of
basic health care services to increase by more than one per cent
per year.
(b) The health insuring corporation submits a signed
letter from an independent member of the American academy of
actuaries to the superintendent of insurance opining that the
increase in costs described in division (A)(3)(a) of this
section could reasonably justify an increase of more than one
per cent in the annual premiums or rates charged by the health
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S. B. No. 276 Page 232As Introduced
insuring corporation for the coverage of basic health care
services.
(c) The superintendent of insurance makes the following
determinations from the documentation and opinion submitted
pursuant to divisions (A)(3)(a) and (b) of this section:
(i) Incurred claims for diagnostic and treatment services
for biologically based mental illnesses for a period of at least
six months independently caused the health insuring
corporation's costs for claims and administrative expenses for
the coverage of basic health care services to increase by more
than one per cent per year.
(ii) The increase in costs reasonably justifies an
increase of more than one per cent in the annual premiums or
rates charged by the health insuring corporation for the
coverage of basic health care services.
Any determination made by the superintendent under this
division is subject to Chapter 119. of the Revised Code.
(B)(1) "Supplemental health care services" means any
health care services other than basic health care services that
a health insuring corporation may offer, alone or in combination
with either basic health care services or other supplemental
health care services, and includes:
(a) Services of facilities for intermediate or long-term
care, or both;
(b) Dental care services;
(c) Vision care and optometric services including lenses
and frames;
(d) Podiatric care or foot care services;
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S. B. No. 276 Page 233As Introduced
(e) Mental health services, excluding diagnostic and
treatment services for biologically based mental illnesses;
(f) Short-term outpatient evaluative and crisis-
intervention mental health services;
(g) Medical or psychological treatment and referral
services for alcohol and drug abuse or addiction;
(h) Home health services;
(i) Prescription drug services;
(j) Nursing services;
(k) Services of a dietitian licensed under Chapter 4759.
of the Revised Code;
(l) Physical therapy services;
(m) Chiropractic services;
(n) Any other category of services approved by the
superintendent of insurance.
(2) If a health insuring corporation offers prescription
drug services under this division, the coverage shall include
prescription drug services for the treatment of biologically
based mental illnesses on the same terms and conditions as other
physical diseases and disorders.
(C) "Specialty health care services" means one of the
supplemental health care services listed in division (B) of this
section, when provided by a health insuring corporation on an
outpatient-only basis and not in combination with other
supplemental health care services.
(D) "Biologically based mental illnesses" means
schizophrenia, schizoaffective disorder, major depressive
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S. B. No. 276 Page 234As Introduced
disorder, bipolar disorder, paranoia and other psychotic
disorders, obsessive-compulsive disorder, and panic disorder, as
these terms are defined in the most recent edition of the
diagnostic and statistical manual of mental disorders published
by the American psychiatric association.
(E) "Closed panel plan" means a health care plan that
requires enrollees to use participating providers.
(F) "Compensation" means remuneration for the provision of
health care services, determined on other than a fee-for-service
or discounted-fee-for-service basis.
(G) "Contractual periodic prepayment" means the formula
for determining the premium rate for all subscribers of a health
insuring corporation.
(H) "Corporation" means a corporation formed under Chapter
1701. or 1702. of the Revised Code or the similar laws of
another state.
(I) "Emergency health services" means those health care
services that must be available on a seven-days-per-week,
twenty-four-hours-per-day basis in order to prevent jeopardy to
an enrollee's health status that would occur if such services
were not received as soon as possible, and includes, where
appropriate, provisions for transportation and indemnity
payments or service agreements for out-of-area coverage.
(J) "Enrollee" means any natural person who is entitled to
receive health care benefits provided by a health insuring
corporation.
(K) "Evidence of coverage" means any certificate,
agreement, policy, or contract issued to a subscriber that sets
out the coverage and other rights to which such person is
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S. B. No. 276 Page 235As Introduced
entitled under a health care plan.
(L) "Health care facility" means any facility, except a
health care practitioner's office, that provides preventive,
diagnostic, therapeutic, acute convalescent, rehabilitation,
mental health, intellectual disability, intermediate care, or
skilled nursing services.
(M) "Health care services" means basic, supplemental, and
specialty health care services.
(N) "Health delivery network" means any group of providers
or health care facilities, or both, or any representative
thereof, that have entered into an agreement to offer health
care services in a panel rather than on an individual basis.
(O) "Health insuring corporation" means a corporation, as
defined in division (H) of this section, that, pursuant to a
policy, contract, certificate, or agreement, pays for,
reimburses, or provides, delivers, arranges for, or otherwise
makes available, basic health care services, supplemental health
care services, or specialty health care services, or a
combination of basic health care services and either
supplemental health care services or specialty health care
services, through either an open panel plan or a closed panel
plan.
"Health insuring corporation" does not include a limited
liability company formed pursuant to Chapter 1705. or 1706. of
the Revised Code, an insurer licensed under Title XXXIX of the
Revised Code if that insurer offers only open panel plans under
which all providers and health care facilities participating
receive their compensation directly from the insurer, a
corporation formed by or on behalf of a political subdivision or
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S. B. No. 276 Page 236As Introduced
a department, office, or institution of the state, or a public
entity formed by or on behalf of a board of county
commissioners, a county board of developmental disabilities, an
alcohol and drug addiction services board, a board of alcohol,
drug addiction, and mental health services, or a community
mental health board, as those terms are used in Chapters 340.
and 5126. of the Revised Code. Except as provided by division
(D) of section 1751.02 of the Revised Code, or as otherwise
provided by law, no board, commission, agency, or other entity
under the control of a political subdivision may accept
insurance risk in providing for health care services. However,
nothing in this division shall be construed as prohibiting such
entities from purchasing the services of a health insuring
corporation or a third-party administrator licensed under
Chapter 3959. of the Revised Code.
(P) "Intermediary organization" means a health delivery
network or other entity that contracts with licensed health
insuring corporations or self-insured employers, or both, to
provide health care services, and that enters into contractual
arrangements with other entities for the provision of health
care services for the purpose of fulfilling the terms of its
contracts with the health insuring corporations and self-insured
employers.
(Q) "Intermediate care" means residential care above the
level of room and board for patients who require personal
assistance and health-related services, but who do not require
skilled nursing care.
(R) "Medical record" means the personal information that
relates to an individual's physical or mental condition, medical
history, or medical treatment.
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S. B. No. 276 Page 237As Introduced
(S)(1) "Open panel plan" means a health care plan that
provides incentives for enrollees to use participating providers
and that also allows enrollees to use providers that are not
participating providers.
(2) No health insuring corporation may offer an open panel
plan, unless the health insuring corporation is also licensed as
an insurer under Title XXXIX of the Revised Code, the health
insuring corporation, on June 4, 1997, holds a certificate of
authority or license to operate under Chapter 1736. or 1740. of
the Revised Code, or an insurer licensed under Title XXXIX of
the Revised Code is responsible for the out-of-network risk as
evidenced by both an evidence of coverage filing under section
1751.11 of the Revised Code and a policy and certificate filing
under section 3923.02 of the Revised Code.
(T) "Osteopathic hospital" means a hospital registered
under section 3701.07 of the Revised Code that advocates
osteopathic principles and the practice and perpetuation of
osteopathic medicine by doing any of the following:
(1) Maintaining a department or service of osteopathic
medicine or a committee on the utilization of osteopathic
principles and methods, under the supervision of an osteopathic
physician;
(2) Maintaining an active medical staff, the majority of
which is comprised of osteopathic physicians;
(3) Maintaining a medical staff executive committee that
has osteopathic physicians as a majority of its members.
(U) "Panel" means a group of providers or health care
facilities that have joined together to deliver health care
services through a contractual arrangement with a health
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insuring corporation, employer group, or other payor.
(V) "Person" has the same meaning as in section 1.59 of
the Revised Code, and, unless the context otherwise requires,
includes any insurance company holding a certificate of
authority under Title XXXIX of the Revised Code, any subsidiary
and affiliate of an insurance company, and any government
agency.
(W) "Premium rate" means any set fee regularly paid by a
subscriber to a health insuring corporation. A "premium rate"
does not include a one-time membership fee, an annual
administrative fee, or a nominal access fee, paid to a managed
health care system under which the recipient of health care
services remains solely responsible for any charges accessed for
those services by the provider or health care facility.
(X) "Primary care provider" means a provider that is
designated by a health insuring corporation to supervise,
coordinate, or provide initial care or continuing care to an
enrollee, and that may be required by the health insuring
corporation to initiate a referral for specialty care and to
maintain supervision of the health care services rendered to the
enrollee.
(Y) "Provider" means any natural person or partnership of
natural persons who are licensed, certified, accredited, or
otherwise authorized in this state to furnish health care
services, or any professional association organized under
Chapter 1785. of the Revised Code, provided that nothing in this
chapter or other provisions of law shall be construed to
preclude a health insuring corporation, health care
practitioner, or organized health care group associated with a
health insuring corporation from employing certified nurse
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practitioners, certified nurse anesthetists, clinical nurse
specialists, certified nurse-midwives, pharmacists, dietitians,
physician assistants, dental assistants, dental hygienists,
optometric technicians, or other allied health personnel who are
licensed, certified, accredited, or otherwise authorized in this
state to furnish health care services.
(Z) "Provider sponsored organization" means a corporation,
as defined in division (H) of this section, that is at least
eighty per cent owned or controlled by one or more hospitals, as
defined in section 3727.01 of the Revised Code, or one or more
physicians licensed to practice medicine or surgery or
osteopathic medicine and surgery under Chapter 4731. of the
Revised Code, or any combination of such physicians and
hospitals. Such control is presumed to exist if at least eighty
per cent of the voting rights or governance rights of a provider
sponsored organization are directly or indirectly owned,
controlled, or otherwise held by any combination of the
physicians and hospitals described in this division.
(AA) "Solicitation document" means the written materials
provided to prospective subscribers or enrollees, or both, and
used for advertising and marketing to induce enrollment in the
health care plans of a health insuring corporation.
(BB) "Subscriber" means a person who is responsible for
making payments to a health insuring corporation for
participation in a health care plan, or an enrollee whose
employment or other status is the basis of eligibility for
enrollment in a health insuring corporation.
(CC) "Urgent care services" means those health care
services that are appropriately provided for an unforeseen
condition of a kind that usually requires medical attention
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without delay but that does not pose a threat to the life, limb,
or permanent health of the injured or ill person, and may
include such health care services provided out of the health
insuring corporation's approved service area pursuant to
indemnity payments or service agreements.
Sec. 1776.69. (A) Pursuant to a written agreement of
merger or consolidation between the constituent entities as this
section provides, a domestic partnership and one or more
additional domestic or foreign entities may merge into a
surviving entity other than a domestic partnership, or a
domestic partnership together with one or more additional
domestic or foreign entities may consolidate into a new entity,
other than a domestic partnership, that is formed by the
consolidation. No merger or consolidation may be carried out
pursuant to this section unless it is permitted by the Revised
Code chapter under which each domestic constituent entity exists
and by the laws under which each foreign constituent entity
exists.
(B) Any written agreement of any merger or consolidation
shall set forth all of the following:
(1) The name and the form of entity of each constituent
entity and the state under the laws of which each constituent
entity exists;
(2) In the case of a merger, that one or more specified
constituent domestic partnerships and other specified
constituent entities will be merged into a specified surviving
foreign entity or surviving domestic entity other than a
domestic partnership, or, in the case of a consolidation, that
the constituent entities will be consolidated into a new foreign
entity or a new domestic entity other than a domestic
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partnership;
(3) If the surviving or new entity is a foreign
partnership, all statements and matters that section 1776.68 of
the Revised Code would require if the surviving or new entity
were a domestic partnership;
(4) The name and the form of entity of the surviving or
new entity, the state under the laws of which the surviving
entity exists or the new entity is to exist, and the location of
the principal office of the surviving or new entity;
(5) Any additional statements and matters required to be
set forth in an agreement of merger or consolidation by the laws
under which each constituent entity exists and, in the case of a
consolidation, the new entity is to exist;
(6) If the surviving or new entity is a foreign entity,
the consent of the surviving or new foreign entity to be sued
and served with process in this state and the irrevocable
appointment of the secretary of state as its agent to accept
service of process in any proceeding in this state to enforce
against the surviving or new foreign entity any obligation of
any constituent domestic partnership or to enforce the rights of
a dissenting partner of any constituent domestic partnership;
(7) If the surviving or new entity is a foreign
corporation that desires to transact business in this state as a
foreign corporation, a statement to that effect, together with a
statement regarding the appointment of a statutory agent and
service of any process, notice, or demand upon that statutory
agent or the secretary of state, as required when a foreign
corporation applies for a license to transact business in this
state;
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(8) If the surviving or new entity is a foreign limited
partnership that desires to transact business in this state as a
foreign limited partnership, a statement to that effect,
together with all of the information required under section
1782.49 of the Revised Code when a foreign limited partnership
registers to transact business in this state;
(9) If the surviving or new entity is a foreign limited
liability company that desires to transact business in this
state as a foreign limited liability company, a statement to
that effect, together with all of the information required under
section 1705.54 or 1706.511 of the Revised Code when a foreign
limited liability company registers to transact business in this
state;
(10) If the surviving or new entity is a foreign limited
liability partnership that desires to transact business in this
state as a foreign limited liability partnership, a statement to
that effect, together with all of the information required under
section 1776.86 of the Revised Code when a foreign limited
liability partnership registers to transact business in this
state.
(C) The written agreement of merger or consolidation also
may set forth any additional provision permitted by the laws of
any state under the laws of which any constituent entity exists,
consistent with the laws under which the surviving entity exists
or the new entity is to exist.
(D) To effect the merger or consolidation, the partners of
each constituent domestic partnership shall adopt an agreement
of merger or consolidation in the same manner and with the same
notice to and vote or action of partners or of a particular
class or group of partners as section 1776.68 of the Revised
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S. B. No. 276 Page 243As Introduced
Code requires. The agreement of merger or consolidation also
shall be approved or otherwise authorized by or on behalf of
each constituent entity in accordance with the laws under which
it exists. An agreement of merger or consolidation is not
effective against a person who would continue to be or who would
become a general partner of an entity that is the surviving or
new entity in a merger or consolidation unless that person
specifically agrees in writing either to continue or to become,
as the case may be, a general partner of the surviving or new
entity.
(E)(1) At any time before filing the certificate of merger
or consolidation pursuant to section 1776.70 of the Revised
Code, if the agreement of merger or consolidation permits, the
partners of any constituent partnership, the directors of any
constituent corporation, or the comparable representatives of
any other constituent entity may abandon the merger or
consolidation.
(2) The agreement of merger or consolidation may authorize
less than all of the partners of any constituent partnership,
the directors of any constituent corporation, or the comparable
representatives of any other constituent entity to amend the
agreement of merger or consolidation at any time before the
filing of the certificate of merger or consolidation, except
that, after the adoption of the agreement of merger or
consolidation by the partners of any constituent domestic
partnership, only with the approval of all the partners may any
agreement of merger or consolidation be amended to do any of the
following:
(a) Alter or change the amount or kind of interests,
shares, evidences of indebtedness, other securities, cash,
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S. B. No. 276 Page 244As Introduced
rights, or any other property to be received by partners of the
constituent domestic partnership in conversion of or in exchange
for their interests;
(b) If the surviving or new entity is a partnership, alter
or change any term of the partnership agreement of the surviving
or new partnership, except for alterations or changes that could
be adopted by those partners by the terms of the partnership
agreement of the surviving or new partnership as would be in
effect after the merger or consolidation;
(c) If the surviving or new entity is a corporation or any
other entity other than a partnership, alter or change any term
of the articles or comparable instrument of the surviving or new
corporation or entity, except for alterations or changes that
otherwise could be adopted by the directors or comparable
representatives of the surviving or new corporation or entity;
(d) Alter or change any other terms and conditions of the
agreement of merger or consolidation if any of the alterations
or changes, alone or in the aggregate, would materially
adversely affect the partners or any class or group of partners
of the constituent domestic partnership.
Sec. 1776.82. (A) The name of a limited liability
partnership shall contain "registered limited liability
partnership," "registered partnership having limited liability,"
"limited liability partnership," "R.L.L.P.," "P.L.L.," "L.L.P.,"
"RLLP," "PLL," or "LLP."
(B) The name of a domestic registered limited liability
partnership or foreign limited liability partnership shall be
distinguishable upon the records in the office of the secretary
of state from all of the following:
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(1) The name of any other limited liability partnership
registered in the office of the secretary of state pursuant to
this chapter or Chapter 1775. of the Revised Code, whether
domestic or foreign;
(2) The name of any domestic corporation that is formed
under Chapter 1701. or 1702. of the Revised Code or any foreign
corporation that is registered pursuant to Chapter 1703. of the
Revised Code;
(3) The name of any limited liability company registered
in the office of the secretary of state pursuant to Chapter
1705. or 1706. of the Revised Code, whether domestic or foreign;
(4) The name of any limited partnership registered in the
office of the secretary of state pursuant to Chapter 1782. of
the Revised Code, whether domestic or foreign;
(5) Any trade name the exclusive right to which is at the
time in question registered in the office of the secretary of
state pursuant to Chapter 1329. of the Revised Code.
Sec. 1782.02. (A) The name of any limited partnership, as
set forth in its certificate of limited partnership, shall
include "Limited Partnership," "L.P.," "Limited," or "Ltd." and
shall not contain the name of a limited partner unless either of
the following are true:
(1) It is also the name of a general partner;
(2) The business of the limited partnership had been
carried on under that name before the admission of that limited
partner.
(B) The name of a limited partnership shall be
distinguishable upon the records in the office of the secretary
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S. B. No. 276 Page 246As Introduced
of state from all of the following:
(1) The name of any other limited partnership registered
in the office of the secretary of state pursuant to this
chapter, whether domestic or foreign;
(2) The name of any domestic corporation that is formed
under Chapter 1701. or 1702. of the Revised Code or any foreign
corporation that is registered pursuant to Chapter 1703. of the
Revised Code;
(3) The name of any limited liability company registered
in the office of the secretary of state pursuant to Chapter
1705. or 1706. of the Revised Code, whether domestic or foreign;
(4) The name of any limited liability partnership
registered in the office of the secretary of state pursuant to
Chapter 1775. or 1776. of the Revised Code, whether domestic or
foreign;
(5) Any trade name the exclusive right to which is at the
time in question registered in the office of the secretary of
state pursuant to Chapter 1329. of the Revised Code.
Sec. 1782.432. (A) Pursuant to an agreement of merger or
consolidation between the constituent entities as provided in
this section, a domestic limited partnership and one or more
additional domestic or foreign entities may be merged into a
surviving entity other than a domestic limited partnership, or a
domestic limited partnership together with one or more
additional domestic or foreign entities may be consolidated into
a new entity other than a domestic limited partnership to be
formed by such consolidation. The merger or consolidation must
be permitted by the chapter of the Revised Code under which each
domestic constituent entity exists and by the laws under which
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S. B. No. 276 Page 247As Introduced
each foreign constituent entity exists.
(B) The agreement of merger or consolidation shall set
forth all of the following:
(1) The name and the form of entity of each constituent
entity and the state under the laws of which each constituent
entity exists;
(2) In the case of a merger, that one or more specified
constituent domestic limited partnerships and other specified
constituent entities will be merged into a specified surviving
foreign entity or surviving domestic entity other than a
domestic limited partnership, or, in the case of a
consolidation, that the constituent entities will be
consolidated into a new foreign entity or a new domestic entity
other than a domestic limited partnership;
(3) If the surviving or new entity is a foreign limited
partnership, all additional statements and matters, other than
the name and address of the statutory agent, that would be
required by section 1782.431 of the Revised Code if the
surviving or new entity were a domestic limited partnership;
(4) The name and the form of entity of the surviving or
new entity, the state under the laws of which the surviving
entity exists or the new entity is to exist, and the location of
the principal office of the surviving or new entity;
(5) All additional statements and matters required to be
set forth in such an agreement of merger or consolidation by the
laws under which each constituent entity exists and, in the case
of a consolidation, the new entity is to exist;
(6) The consent of the surviving or new entity to be sued
and served with process in this state and the irrevocable
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S. B. No. 276 Page 248As Introduced
appointment of the secretary of state as its agent to accept
service of process in any proceeding in this state to enforce
against the surviving or new entity any obligation of any
constituent domestic limited partnership or to enforce the
rights of a dissenting partner of any constituent domestic
limited partnership;
(7) If the surviving or new entity is a foreign
corporation that desires to transact business in this state as a
foreign corporation, a statement to that effect, together with a
statement regarding the appointment of a statutory agent and
service of any process, notice, or demand upon that statutory
agent or the secretary of state, as required when a foreign
corporation applies for a license to transact business in this
state;
(8) If the surviving or new entity is a foreign limited
partnership that desires to transact business in this state as a
foreign limited partnership, a statement to that effect,
together with all of the information required under section
1782.49 of the Revised Code when a foreign limited partnership
registers to transact business in this state;
(9) If the surviving or new entity is a foreign limited
liability company that desires to transact business in this
state as a foreign limited liability company, a statement to
that effect, together with all of the information required under
section 1705.54 or 1706.511 of the Revised Code when a foreign
limited liability company registers to transact business in this
state.
(C) The agreement of merger or consolidation also may set
forth any additional provision permitted by the laws of any
state under the laws of which any constituent entity exists,
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S. B. No. 276 Page 249As Introduced
consistent with the laws under which the surviving entity exists
or the new entity is to exist.
(D) To effect the merger or consolidation, the agreement
of merger or consolidation shall be adopted by the general
partners of each constituent domestic limited partnership, in
the same manner and with the same notice to and vote or action
of partners or of a particular class or group of partners as is
required by section 1782.431 of the Revised Code. The agreement
of merger or consolidation also shall be approved or otherwise
authorized by or on behalf of each constituent entity in
accordance with the laws under which it exists. Each person who
will continue to be or who will become a general partner of a
partnership that is the surviving or new entity in a merger or
consolidation shall specifically agree to continue or to become,
as the case may be, a general partner of the surviving or new
entity.
(E) At any time before the filing of the certificate of
merger or consolidation pursuant to section 1782.433 of the
Revised Code, the merger or consolidation may be abandoned by
the general partners of any constituent partnership, the
directors of any constituent corporation, or the comparable
representatives of any other constituent entity if the general
partners, directors, or comparable representatives are
authorized to do so by the agreement of merger or consolidation.
The agreement of merger or consolidation may contain a provision
authorizing the general partners of any constituent partnership,
the directors of any constituent corporation, or the comparable
representatives of any other constituent entity to amend the
agreement of merger or consolidation at any time before the
filing of the certificate of merger or consolidation, except
that after the adoption of the agreement of merger or
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S. B. No. 276 Page 250As Introduced
consolidation by the limited partners of any constituent
domestic limited partnership, the general partners shall not be
authorized to amend the agreement of merger or consolidation to
do any of the following:
(1) Alter or change the amount or kind of interests,
shares, evidences of indebtedness, other securities, cash,
rights, or any other property to be received by limited partners
of the constituent domestic limited partnership in conversion of
or in substitution for their interests;
(2) If the surviving or new entity is a partnership, alter
or change any term of the partnership agreement of the surviving
or new partnership, except for alterations or changes that
otherwise could be adopted by the general partners of the
surviving or new partnership;
(3) If the surviving or new entity is a corporation or any
other entity other than a partnership, alter or change any term
of the articles or comparable instrument of the surviving or new
corporation or entity, except for alterations or changes that
otherwise could be adopted by the directors or comparable
representatives of the surviving or new corporation or entity;
(4) Alter or change any other terms and conditions of the
agreement of merger or consolidation if any of the alterations
or changes, alone or in the aggregate, would materially
adversely affect the limited partners or any class or group of
limited partners of the constituent domestic limited
partnership.
Sec. 1785.09. This chapter does not preclude the rendering
of a professional service within this state by a corporation
formed under division (B) of section 1701.03 of the Revised
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S. B. No. 276 Page 251As Introduced
Code, a limited liability company formed under Chapter 1705. or
1706. of the Revised Code, or a foreign limited liability
company registered with the secretary of state and transacting
business in this state in accordance with sections 1705.53 to
1705.58 or 1706.51 to 1706.516 of the Revised Code.
Sec. 3345.203. (A) As used in this section:
(1) "Claims expenses" means payment of judgments,
settlement of claims, expense, loss, and damage.
(2) "State university or college" has the same meaning as
in section 3345.12 of the Revised Code.
(B) Regardless of whether a state university or college
secures insurance coverages under division (B)(1), (2), or (3)
of section 3345.202 of the Revised Code, the board of trustees
of the state university or college may join with other state
universities or colleges in establishing and maintaining a joint
self-insurance pool to do both of the following:
(1) Provide for payment of claims expenses that arise, or
are claimed to have arisen, from an act or omission of the state
university or college or any of its employees or other persons
authorized by the board while doing either of the following:
(a) Acting in the scope of their employment or official
responsibilities;
(b) Being engaged in activities undertaken at the request
or direction, or for the benefit, of the state university or
college.
(2) Indemnify or hold harmless the state university's or
college's employees against such loss or damage.
The joint self-insurance pool shall be pursuant to a
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S. B. No. 276 Page 252As Introduced
written agreement and to the extent that the board considers the
pool to be necessary.
(C) All of the following apply to a joint self-insurance
pool under this section:
(1) The funds shall be reserved as are necessary, in the
exercise of sound and prudent actuarial judgment, to cover
potential state university or college and employee liabilities,
loss, and damage. A report of aggregate amounts so reserved and
aggregate disbursements made from such funds shall be prepared
and maintained in the office of the pool administrator described
in division (C)(2) of this section. The report shall be prepared
and maintained not later than ninety days after the close of the
pool's fiscal year.
The report required by this division shall include, but
not be limited to, the aggregate of disbursements made for the
administration of the pool, including claims paid, costs of the
legal representation of state universities or colleges and
employees, and fees paid to consultants. The report also shall
be accompanied by a written report of a member of the American
academy of actuaries certifying whether the amounts reserved
conform to the requirements of this division, are computed in
accordance with accepted loss reserving standards, and are
fairly stated in accordance with sound loss reserving
principles.
The pool administrator described in division (C)(2) of
this section shall make the report required by this division
available for inspection by any person at all reasonable times
during regular business hours. Upon the request of such person,
the pool administrator shall make copies of the report available
at cost within a reasonable period of time. The pool
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S. B. No. 276 Page 253As Introduced
administrator also shall submit a copy of the report to the
auditor of state. The report required by this division is in
lieu of the records required by division (A) of section 149.431
of the Revised Code.
(2) The board of trustees establishing a joint self-
insurance pool may award a contract, without the necessity of
competitive bidding, to a pool administrator for purposes of
administration of the joint self-insurance pool. A "pool
administrator" may be any person, political subdivision, limited
liability company organized under Chapter 1705. or 1706. of the
Revised Code, nonprofit corporation organized under Chapter
1702. of the Revised Code, or regional council of governments
created under Chapter 167. of the Revised Code. The board shall
not enter into such a contract without full, prior, public
disclosure of all terms and conditions. The disclosure shall
include, at a minimum, a statement listing all representations
made in connection with any possible savings and losses
resulting from the contract, and potential liability of any
state university or college or employee. The proposed contract
and statement shall be disclosed and presented at a meeting of
the board of trustees of the state university or college prior
to the meeting at which the board of trustees of the state
university or college authorizes the contract.
(3) A joint self-insurance pool shall include a contract
with a member of the American academy of actuaries for the
preparation of the written evaluation of the reserve funds
required under division (C)(1) of this section.
(4) A joint self-insurance pool may allocate the costs of
funding the pool among the funds or accounts in the treasuries
of the state universities or colleges on the basis of their
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S. B. No. 276 Page 254As Introduced
relative exposure and loss experience. A joint self-insurance
program may require any deductible under the program to be paid
from funds or accounts in the treasury of the state university
or college from which a loss was directly attributable.
(D) Two or more state universities or colleges may also
authorize the establishment and maintenance of a joint risk-
management program, including but not limited to the employment
of risk managers and consultants, for the purpose of preventing
and reducing the risks covered by insurance, self-insurance, or
joint self-insurance programs. A joint risk-management program
shall not include fidelity, surety, or guarantee bonding.
(E) A state university or college is not liable under a
joint self-insurance pool for any amount in excess of amounts
payable pursuant to the written agreement for the participation
of the state university or college in the joint self-insurance
pool. Under a joint self-insurance pool agreement a state
university or college may, to the extent permitted under the
written agreement, assume the risks of any other state
university or college, including the indemnification of its
employees. A joint self-insurance pool, established under this
section, is deemed a separate legal entity for the public
purpose of enabling the members of the joint self-insurance pool
to obtain insurance or to provide for a formalized, jointly
administered self-insurance fund for its members. An entity
created pursuant to this section is exempt from all state and
local taxes.
(F)(1) In the manner provided by and subject to the
applicable provisions of section 3345.12 of the Revised Code,
any state university or college may issue obligations and may
also issue notes in anticipation of such obligations, pursuant
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S. B. No. 276 Page 255As Introduced
to a resolution of its board of trustees or other governing body
for the purpose of providing funds to do both of the following:
(a) Pay claims expenses, whether by way of a reserve or
otherwise;
(b) Pay the state university or college's portion of the
cost of establishing and maintaining a joint self-insurance pool
or to provide for the reserve in a special fund authorized by
division (C)(1) of this section.
(2) Sections 9.98 to 9.983 of the Revised Code apply to
bonds or notes authorized under this section.
(G)(1) A joint self-insurance pool, in addition to its
powers to provide self-insurance against any and all liabilities
under this chapter, may also include any one or more of the
following forms of property or casualty self-insurance for the
purpose of covering any other liabilities or risks of the
members of the pool:
(a) Public general liability, professional liability, or
employee liability;
(b) Individual or fleet motor vehicle or automobile
liability and protection against other liability and loss
associated with the ownership, maintenance, and use of motor
vehicles;
(c) Aircraft liability and protection against other
liability and loss associated with the ownership, maintenance,
and use of aircraft;
(d) Loss or damage to property and loss of use and
occupancy of property by fire, lightning, hail, tempest, flood,
earthquake, or snow, explosion, accident, or other risk;
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S. B. No. 276 Page 256As Introduced
(e) Marine, inland transportation and navigation, boiler,
containers, pipes, engines, flywheels, elevators, and machinery;
(f) Environmental impairment;
(g) Loss or damage by any hazard upon any other risk to
which state universities or colleges are subject, which is not
prohibited by statute or at common law from being the subject of
casualty or property insurance.
(2) A joint self-insurance pool is not an insurance
company. Its operation does not constitute doing an insurance
business and is not subject to the insurance laws of this state.
(H) A public official or employee of a state university or
college who is or becomes a member of the governing body of a
joint self-insurance pool in which the state university or
college participates is not in violation of any of the following
as a result of the state university or college entering into the
written agreement to participate in the pool or into any
contract with the pool:
(1) Division (D) or (E) of section 102.03 of the Revised
Code;
(2) Division (C) of section 102.04 of the Revised Code;
(3) Section 2921.42 of the Revised Code.
(I) This section shall not be construed to affect the
ability of any state university or college to self-insure under
the authority conferred by any other section of the Revised
Code.
(J) The establishment or participation in a joint self-
insurance pool under this section shall not constitute a waiver
of any immunity or defense available to the member state
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S. B. No. 276 Page 257As Introduced
university or college or to any covered entity.
(K)(1) Both of the following shall be determined in the
court of claims pursuant to section 2743.02 of the Revised Code:
(a) Any claims or litigation relating to the
administration of a joint self-insurance pool created pursuant
to this section, including any immunities or defenses;
(b) Any claims relating to the scope of or denial of
coverage under that pool or its administration.
(2) The pool administrator described in division (C)(2) of
this section and its employees, while in the course of
administering a joint self-insurance pool under this section,
shall:
(a) Be deemed to be an instrumentality of the state for
the purposes of Chapter 2743. of the Revised Code;
(b) Be deemed to be performing a public duty, as defined
in section 2743.01 of the Revised Code; and
(c) Have the defenses to, and immunities from, civil
liability provided in section 2743.02 of the Revised Code.
Sec. 3964.03. (A) A captive insurance company shall be
organized under Chapter 1701., 1702., or 1705., or 1706. of the
Revised Code.
(B) A captive insurance company shall not operate in this
state unless all of the following are met:
(1) The captive insurance company obtains from the
superintendent a license to do the business of captive insurance
in this state.
(2) The captive insurance company's board of directors
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holds at least one meeting each year in this state.
(3) The captive insurance company maintains its principal
place of business in this state.
(4) The person managing the captive insurance company is a
resident of this state.
(5) The captive insurance company appoints a registered
agent to accept service of process and act on its behalf in this
state.
(C) Whenever an agent required under division (B)(5) of
this section cannot, with reasonable diligence, be found at the
registered office of the captive insurance company, the
superintendent shall be an agent of such a captive insurance
company upon whom any process, notice, or demand may be served.
(D) A captive insurance company seeking a license to be a
captive insurance company in this state shall file an
application with the superintendent and shall submit all of the
following along with the application:
(1) A certified copy of its articles of incorporation,
bylaws, or other organizational document and code of
regulations;
(2) A statement, made under oath by the president and
secretary, in a form prescribed by the superintendent, showing
the captive insurance company's financial condition;
(3) A statement of the captive insurance company's assets
relative to its risks, detailing the amount of assets and their
liquidity;
(4) An account of the adequacy of the expertise,
experience, and character of the person or persons who will
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S. B. No. 276 Page 259As Introduced
manage the captive insurance company;
(5) An account of the loss prevention programs of the
persons that the captive insurance company insures;
(6) Actuarial assumptions and methodologies that will be
utilized in calculating reserves;
(7) Any other information considered necessary by the
superintendent to determine whether the proposed captive
insurance company will be able to meet its obligations.
(E)(1) A special purpose financial captive insurance
company shall follow the national association of insurance
commissioner's accounting practices and procedures manual.
(2)(a) Upon request, the superintendent may allow a
special purpose financial captive insurance company to use a
reserve basis other than that found in the national association
of insurance commissioner's accounting practices and procedures
manual.
(b) The superintendent, in accordance with Chapter 119. of
the Revised Code, shall adopt rules that define acceptable
alternative reserve bases.
(c) Such rules shall be adopted prior to availability for
use of any such alternative reserve basis and shall ensure that
the resulting reserves meet all of the following conditions:
(i) Quantify the benefits and guarantees, and the funding,
associated with the contracts and their risks at a level of
conservatism that reflects conditions that include unfavorable
events that have a reasonable probability of occurring during
the lifetime of the contracts. For policies or contracts with
significant tail risk, reflects conditions appropriately adverse
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to quantify the tail risk.
(ii) Incorporate assumptions, risk analysis methods, and
financial models and management techniques that are consistent
with, but not necessarily identical to, those utilized within
the company's overall risk assessment process, while recognizing
potential differences in financial reporting structures and any
prescribed assumptions or methods;
(iii) Provide margins for uncertainty including adverse
deviation and estimation error, such that the greater the
uncertainty the larger the margin and resulting reserve.
(d) An alternative basis for calculating a reserve
approved by the superintendent shall be treated as a public
document after the date the alternative basis for calculating
the reserve has been approved, regardless of the application of
the uniform trade secrets act set forth in sections 1333.61 to
1333.69 of the Revised Code.
(3) The special purpose financial captive insurance
company shall submit a request for an alternative reserve basis
in writing, and affirmed by the company's appointed actuary,
that includes, at a minimum, the following information for the
superintendent to consider in evaluating the request:
(a) The reserves based on the national association of
insurance commissioner's accounting practices and procedures
manual and the reserves based on the proposed alternative method
for calculation and the difference between these two
calculations;
(b) A detailed analysis of the proposed alternative method
explaining why the use of an alternative basis for calculating
the reserve is appropriate;
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S. B. No. 276 Page 261As Introduced
(c) All assumptions utilized within the proposed
alternative method, together with the source of the assumptions,
as well as information, satisfactory to the superintendent,
supporting the appropriateness of the assumptions and analysis
and identifying the assumptions that result in the greatest
variability in the reserve and how that analysis was used in
setting those assumptions;
(d) A detailed overview of the corporate governance and
oversight of the actuarial valuation function;
(e) Any other information the superintendent may require
to assess the proposed alternative method for approval or
disapproval.
(4) At the expense of the special purpose financial
captive insurance company, the superintendent may require the
company to secure the affirmation of an independent qualified
actuary in support of any alternative basis for calculating the
reserve that is requested pursuant to this section or to assist
the superintendent in the review of said request.
(5) If the superintendent approves the use of an
alternative basis for calculating a reserve, the special purpose
financial captive insurance company, and the ceding insurer
shall each include a note in its financial statements disclosing
the use of a basis other than the national association of
insurance commissioner's accounting practices and procedures
manual and the difference between the reserve amount determined
under the alternative basis and the reserve amount that would
have been determined had the company utilized the national
association of insurance commissioner's accounting practices and
procedures manual.
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(6)(a) The superintendent shall establish an acceptable
total capital and surplus requirement for each insurance company
that will cede risks and obligations to a special purpose
financial captive insurance company. The total capital and
surplus requirement must be met at the time the special purpose
financial captive insurance company applies for a license to do
the business of captive insurance. The total capital and surplus
requirement shall be determined in accordance with a minimum
required total capital and surplus methodology that meets both
of the following requirements:
(i) Is consistent with current risk-based capital
principles;
(ii) Takes into account all material risks and
obligations, as well as the assets, of the insurance company.
(b) An insurance company ceding risks and obligations to a
special purpose financial captive insurance company shall fully
disclose all material risks and obligations, as well as its
assets and all affiliated captive insurance company risks. The
ceding insurance company shall advise the superintendent
whenever there is a material change to such risks, obligations,
or assets.
(F) In determining whether to approve an application for a
license, the superintendent shall consider all of the following:
(1) The character, reputation, financial standing, and
purposes of the incorporators, or other founders, of the captive
insurance company;
(2) The character, reputation, financial responsibility,
experience relating to insurance, and business qualifications of
the officers and directors of the captive insurance company;
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S. B. No. 276 Page 263As Introduced
(3) The amount of liquidity and assets of the captive
insurance company relative to the risks to be assumed;
(4) The adequacy of the expertise, experience, and
character of the person or persons who will manage the captive
insurance company;
(5) The overall soundness of the plan of operation;
(6) The adequacy of the loss prevention programs of the
persons that the captive insurance company insures.
(G)(1) Each captive insurance company that offers direct
insurance to its parent shall submit to the superintendent for
approval a detailed description of the coverages, deductibles,
coverage limits, proposed rates or rating plans, documentation
from a qualified actuary that demonstrates the actuarial
soundness of the proposed rates or rating plans, and other such
additional information as the superintendent may require.
(2)(a) Any captive insurance company licensed under the
provisions of this chapter that seeks to make any material
change to any item described in division (G)(1) of this section
shall submit to the superintendent for approval a detailed
description of the revision, documentation from a qualified
actuary that demonstrates the actuarial soundness of the revised
rates or rating plans, and other such additional information as
the superintendent may require.
(b) Each filing under division (G)(2)(a) of this section
is deemed approved thirty days after the filing is received by
the superintendent of insurance, unless the filing is
disapproved by the superintendent during that thirty-day period.
(c) If at any time subsequent to the thirty-day review
period the superintendent finds that a filing does not
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S. B. No. 276 Page 264As Introduced
demonstrate actuarial soundness, the superintendent shall hold a
hearing requiring the captive insurance company to show cause
why an order should not be made by the superintendent to
disapprove the revised rates or rating plans.
(d) If, upon such a hearing, the superintendent finds that
the captive insurance company failed to demonstrate the
actuarial soundness of the rates or rating plans, the
superintendent shall issue an order directing the captive
insurance company to cease and desist from using the revised
rates or rating plans and to use rates or rating plans as
determined appropriate by the superintendent.
(H) Except as otherwise provided in this division,
documents and information submitted by a captive insurance
company pursuant to this section are not subject to section
149.43 of the Revised Code, and are confidential, and may not be
disclosed by the superintendent or any employee of the
department of insurance without the written consent of the
company.
(1) Such documents and information may be discoverable in
a civil action in which the captive insurance company filing the
material is a party upon a finding by a court of competent
jurisdiction that the information sought is relevant and
necessary to the case and the information sought is unavailable
from other, nonconfidential sources.
(2) The superintendent may, at the superintendent's sole
discretion, share documents required under this section with the
chief deputy rehabilitator, the chief deputy liquidator, other
deputy rehabilitators and liquidators, and any other person
employed by, or acting on behalf of the superintendent pursuant
to Chapter 3901. or 3903. of the Revised Code, with other local,
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S. B. No. 276 Page 265As Introduced
state, federal, and international regulatory and law enforcement
agencies, with local, state, and federal prosecutors, and with
the national association of insurance commissioners and its
affiliates and subsidiaries provided that the recipient agrees
to maintain the confidential or privileged status of the
documents and has authority to do so.
(I)(1) Each applicant for a license to do the business of
a captive insurance company in this state shall pay to the
superintendent a nonrefundable fee of five hundred dollars for
processing its application for a license. The superintendent is
authorized to retain legal, financial, and examination services
from outside the department, at the expense of the applicant.
Each captive insurance company shall annually pay a license
renewal fee of five hundred dollars.
(2) The fees collected pursuant to division (I)(1) of this
section shall be deposited into the state treasury to the credit
of the captive insurance regulation and supervision fund created
under section 3964.15 of the Revised Code.
Sec. 3964.17. (A) As used in sections 3964.17 to 3964.1710
of the Revised Code:
(1) "Protected cell" means an incorporated cell that is
organized pursuant to Chapter 1701., 1702., or 1705., or 1706.
of the Revised Code and that has a separate legal identity from
the protected cell captive insurance company of which it is a
part.
(2) "Protected cell captive insurance company" means a
captive insurance company that meets all of the following
requirements:
(a) Is formed and licensed under the provisions of this
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S. B. No. 276 Page 266As Introduced
chapter;
(b) Insures or reinsures the risks of separate
participants through a participant contract;
(c) Segregates each participant's liability into a
protected cell.
(3) "Participant" means an individual, company,
corporation, partnership, limited liability company, and their
affiliated entities that insure or reinsure with a protected
cell. "Participant" includes an insurance agent licensed in this
state that accepts a stated percentage of risk on a pro rata
basis within a defined category of business underwritten by a
licensed insurance company that is domiciled in this state and
that is affiliated with a protected cell captive insurance
company.
(4) "Participant contract" means a contract by which a
protected cell insures or reinsures the risks of a participant.
(a) A participant that is not an insurance agent licensed
in this state shall insure or reinsure only its own risks
through a protected cell.
(b) If the participant is an insurance agent licensed in
this state, the participant contract must define each risk
covered by the contract with fixed and certain terms.
(B) A captive insurance company may be organized as a
protected cell captive insurance company and shall be permitted
to form one or more protected cells under this section to insure
or reinsure risks of one or more participants.
(C) The assets and liabilities of each protected cell
shall be held separately from the assets and liabilities of all
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S. B. No. 276 Page 267As Introduced
other protected cells.
(D) A protected cell of a protected cell captive insurance
company shall be organized pursuant to Chapter 1701., 1702., or
1705., or 1706. of the Revised Code.
(E) A protected cell captive insurance company shall, at
the time of paying the annual fee required under section 3964.13
of the Revised Code, pay an additional annual fee for each
protected cell in an amount to be established by the
superintendent.
(F) Each protected cell of a protected cell captive
insurance company shall be treated as a captive insurance
company for purposes of this chapter.
(G) Unless otherwise permitted by the articles of
incorporation, bylaws, code of regulations, or other
organizational document of a protected cell captive insurance
company, each protected cell of the protected cell captive
insurance company shall have the same directors, secretary, and
registered office as the protected cell captive insurance
company.
(H) A protected cell captive insurance company may provide
in its articles of incorporation, bylaws, code of regulations,
or other organizational documents that a protected cell it
creates shall be wound up and dissolved upon any of the
following:
(1) The bankruptcy, death, expulsion, insanity,
resignation, or retirement of any participant of the protected
cell;
(2) The happening of some event that is not the expiration
of a fixed period of time;
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S. B. No. 276 Page 268As Introduced
(3) The expiration of a fixed period of time.
(I)(1) The articles of incorporation, bylaws, code of
regulations, or other organizational documents, of a protected
cell captive insurance company shall provide that a protected
cell shall not own shares or membership interests in the
protected cell captive insurance company of which it is a part.
(2) Such a document may provide that a protected cell may
own shares or membership interests in any other protected cell
of the protected cell captive insurance company of which it is a
part.
(J) The name of a protected cell captive insurance company
shall include the words "protected cell captive" or the
abbreviation "PCC."
(K) A protected cell captive insurance company shall
assign a distinctive name to each of its protected cells that
meets all of the following:
(1) The name identifies the protected cell as being part
of the protected cell captive insurance company.
(2) The name distinguishes the protected cell from any
other protected cell of the protected cell captive insurance
company.
(3) The name includes the words "protected cell" or the
abbreviation "PC."
(L) A protected cell may enter into an agreement with its
protected cell captive insurance company or with another
protected cell of the same protected cell captive insurance
company.
(M)(1) The assets of a protected cell captive insurance
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S. B. No. 276 Page 269As Introduced
company shall be either cell assets or general assets.
(2) The cell assets comprise the assets of the protected
cell captive insurance company that are held within or on behalf
of its protected cells.
(3) The general assets of a protected cell captive
insurance company comprise the assets of the protected cell
captive insurance company that are not cell assets.
(N)(1) The liabilities of a protected cell captive
insurance company shall be either cell liabilities or general
liabilities.
(2) The cell liabilities comprise the obligations of the
protected cell captive insurance company attributable to its
protected cells.
(3) The general liabilities of a protected cell captive
insurance company comprise the obligations of the protected cell
captive insurance company that are not cell liabilities.
(O) Each protected cell insurance company shall account
separately on its books and records for each of its protected
cells to reflect the financial condition and results of
operations of the protected cell, including net income or loss,
dividends or other distributions to participants, and such other
factors as may be provided by participant contracts or required
by the superintendent.
(P) Each protected cell captive insurance company shall
annually file with the superintendent such financial reports as
the superintendent requires, which shall include financial
statements detailing the financial experience of each protected
cell and a statement regarding the adequacy of reserves kept to
make full provision for the liabilities insured by each
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S. B. No. 276 Page 270As Introduced
protected cell.
(Q) An officer or manager of a protected cell captive
insurance company shall immediately notify the superintendent if
any protected cell of the protected cell captive insurance
company or the protected cell captive insurance company itself
is trending toward reserves that are inadequate, or if a
protected cell or the protected cell captive insurance company
becomes insolvent or is otherwise unable to meet its claims or
other obligations.
(R) The duties of a director of a protected cell captive
insurance company under this chapter shall be in addition to,
and not in lieu of, those under other applicable law.
Sec. 4701.14. (A) Except as permitted by rules adopted by
the accountancy board, no individual shall assume or use the
title or designation "certified public accountant," "certified
accountant," "chartered accountant," "enrolled accountant,"
"licensed accountant," or "registered accountant," or any other
title or designation likely to be confused with "certified
public accountant," or any of the abbreviations "CPA," "PA,"
"CA," "EA," "LA," or "RA," or similar abbreviations likely to be
confused with "CPA," or any other title, designation, words,
letters, abbreviation, sign, card, or device tending to indicate
that the individual is a certified public accountant, unless the
individual holds a CPA certificate and holds an Ohio permit.
However, an individual who possesses a foreign certificate, has
registered under section 4701.09 of the Revised Code, and holds
an Ohio permit may use the title permitted under the laws of the
individual's other licensing jurisdiction, followed by the name
of the jurisdiction.
(B) Except as permitted by rules adopted by the board, no
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individual shall assume or use the title or designation "public
accountant," "certified public accountant," "certified
accountant," "chartered accountant," "enrolled accountant,"
"registered accountant," or "licensed accountant," or any other
title or designation likely to be confused with "public
accountant," or any of the abbreviations "PA," "CPA," "CA,"
"EA," "LA," or "RA," or similar abbreviations likely to be
confused with "PA," or any other title, designation, words,
letters, abbreviation, sign, card, or device tending to indicate
that the individual is a public accountant, unless the
individual holds a PA registration and holds an Ohio permit, or
unless the individual holds a CPA certificate. An individual who
holds a PA registration and an Ohio permit may hold self out to
the public as an "accountant" or "auditor."
(C) Except as provided in divisions (C)(1), (2), (3), and
(4) of this section, no partnership, professional association,
corporation-for-profit, limited liability company, or other
business organization not addressed in this section that is
practicing public accounting in this state shall assume or use
the title or designation "certified public accountant," "public
accountant," "certified accountant," "chartered accountant,"
"enrolled accountant," "licensed accountant," "registered
accountant," or any other title or designation likely to be
confused with "certified public accountant" or "public
accountant," or any of the abbreviations "CPA," "PA," "CA,"
"EA," "RA," or "LA," or similar abbreviations likely to be
confused with "CPA" or "PA," or any other title, designation,
words, letters, abbreviation, sign, card, or device tending to
indicate that the business organization is a public accounting
firm.
(1)(a) A partnership may assume or use the title or
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S. B. No. 276 Page 272As Introduced
designation "certified public accountant," the abbreviation
"CPA," or any other title, designation, words, letters,
abbreviation, sign, card, or device tending to indicate that the
partnership is composed of certified public accountants if it is
a registered firm, if a majority of its partners who are
individuals hold a CPA certificate or a foreign certificate, and
if a majority of the owners of any qualified firm that is a
partner hold a CPA certificate or a foreign certificate.
(b) A partnership may assume or use the title or
designation "public accountant," the abbreviation "PA," or any
other title, designation, words, letters, abbreviation, sign,
card, or device tending to indicate that the partnership is
composed of public accountants if it is a registered firm, if a
majority of its partners who are individuals hold a PA
registration, a CPA certificate, or a foreign certificate, and
if a majority of the owners of any qualified firm that is a
partner hold a PA registration, a CPA certificate, or a foreign
certificate.
(2)(a) A professional association incorporated under
Chapter 1785. of the Revised Code may assume or use the title or
designation "certified public accountant," the abbreviation
"CPA," or any other title, designation, words, letters,
abbreviation, sign, card, or device tending to indicate that the
professional association is composed of certified public
accountants if it is a registered firm, if a majority of its
shareholders who are individuals hold a CPA certificate or a
foreign certificate, and if a majority of the owners of any
qualified firm that is a shareholder hold a CPA certificate or a
foreign certificate.
(b) A professional association incorporated under Chapter
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S. B. No. 276 Page 273As Introduced
1785. of the Revised Code may assume or use the title or
designation "public accountant," the abbreviation "PA," or any
other title, designation, words, letters, abbreviation, sign,
card, or device tending to indicate that the professional
association is composed of public accountants if it is a
registered firm, if a majority of its shareholders who are
individuals hold a PA registration, a CPA certificate, or a
foreign certificate, and if a majority of the owners of any
qualified firm that is a shareholder hold a PA registration, a
CPA certificate, or a foreign certificate.
(3)(a) A corporation-for-profit incorporated under Chapter
1701. of the Revised Code may assume or use the title or
designation "certified public accountant," the abbreviation
"CPA," or any other title, designation, words, letters,
abbreviation, sign, card, or device tending to indicate that the
corporation is composed of certified public accountants if it is
a registered firm, if a majority of its shareholders who are
individuals hold a CPA certificate or a foreign certificate, and
if a majority of the owners of any qualified firm that is a
shareholder hold a CPA certificate or a foreign certificate.
(b) A corporation incorporated under Chapter 1701. of the
Revised Code may assume or use the title or designation "public
accountant," the abbreviation "PA," or any other title,
designation, words, letters, abbreviation, sign, card, or device
tending to indicate that the corporation is composed of public
accountants if it is a registered firm, if a majority of the
shareholders who are individuals hold a PA registration, a CPA
certificate, or a foreign certificate, and if a majority of the
owners of any qualified firm that is a shareholder hold a PA
registration, a CPA certificate, or a foreign certificate.
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S. B. No. 276 Page 274As Introduced
(4)(a) A limited liability company organized under Chapter
1705. or 1706. of the Revised Code may assume or use the title
or designation "certified public accountant," the abbreviation
"CPA," or any other title, designation, words, letters,
abbreviation, sign, card, or device tending to indicate that the
limited liability company is composed of certified public
accountants if it is a registered firm, if a majority of its
members who are individuals hold a CPA certificate or a foreign
certificate, and if a majority of the owners of any qualified
firm that is a member hold a CPA certificate or a foreign
certificate.
(b) A limited liability company organized under Chapter
1705. or 1706. of the Revised Code may assume or use the title
or designation "public accountant," the abbreviation "PA," or
any other title, designation, words, letters, abbreviation,
sign, card, or device tending to indicate that the limited
liability company is composed of public accountants if it is a
registered firm, if a majority of the members who are
individuals hold a PA registration, CPA certificate, or a
foreign certificate, and if a majority of the owners of any
qualified firm that is a member hold a PA registration, a CPA
certificate, or a foreign certificate.
(D) No individual shall sign, affix, or associate the
individual's name or any trade or assumed name used by the
individual in the individual's profession or business to any
attest report with any wording indicating that the individual is
an accountant or auditor, or with any wording accompanying or
contained in the attest report that indicates that the
individual has expert knowledge in accounting or auditing or
expert knowledge regarding compliance with conditions
established by law or contract, including, but not limited to,
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S. B. No. 276 Page 275As Introduced
statutes, ordinances, regulations, grants, loans, and
appropriations, unless the individual holds an Ohio permit.
However, this division does not prohibit any officer, employee,
partner, or principal of any organization from affixing the
officer's, employee's, partner's, or principal's signature to
any statement or report in reference to the financial affairs of
that organization with any wording designating the position,
title, or office that the individual holds in that organization.
This division also does not prohibit any act of a public
official or public employee in the performance of the public
official's or public employee's duties.
(E) No person shall sign, affix, or associate the name of
a partnership, limited liability company, professional
association, corporation-for-profit, or other business
organization not addressed in this section to any attest report
with any wording accompanying or contained in the attest report
that indicates that the partnership, limited liability company,
professional association, corporation-for-profit, or other
business organization is composed of or employs accountants or
auditors or persons having expert knowledge in accounting or
auditing or expert knowledge regarding compliance with
conditions established by law or contract, including, but not
limited to, statutes, ordinances, regulations, grants, loans,
and appropriations, unless the partnership, limited liability
company, professional association, corporation-for-profit, or
other business organization is a registered firm.
(F) No individual who does not hold an Ohio permit shall
hold self out to the public as an "accountant" or "auditor" by
use of either or both of those words on any sign, card, or
letterhead, in any advertisement or directory, or otherwise,
without indicating on the sign, card, or letterhead, in the
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S. B. No. 276 Page 276As Introduced
advertisement or directory, or in the other manner of holding
out that the person does not hold an Ohio permit. An individual
who holds a CPA certificate and an Ohio permit may hold self out
to the public as an "accountant" or "auditor." However, this
division does not prohibit any officer, employee, partner, or
principal of any organization from describing self by the
position, title, or office the person holds in that
organization. This division also does not prohibit any act of a
public official or public employee in the performance of the
public official's or public employee's duties.
(G) No partnership, professional association, corporation-
for-profit, limited liability company, or other business
organization not addressed in this section that is not entitled
to assume or use the title "certified public accountant" or
"public accountant" under division (C) of this section shall
hold itself out to the public as a partnership, professional
association, corporation-for-profit, limited liability company,
or other business organization not addressed in this section as
being composed of or employing "accountants" or "auditors" by
use of either or both of those words on any sign, card, or
letterhead, in any advertisement or directory, or otherwise,
without indicating on the sign, card, or letterhead, in the
advertisement or directory, or in the other manner of holding
out that the partnership, professional association, corporation-
for-profit, limited liability company, or other business
organization is not a registered firm and is not permitted by
law to practice as a public accounting firm.
(H) No person shall assume or use the title or designation
"certified public accountant" or "public accountant" in
conjunction with names indicating or implying that there is a
partnership or in conjunction with the designation "and Company"
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S. B. No. 276 Page 277As Introduced
or "and Co." or a similar designation if, in any of those cases,
there is in fact no bona fide partnership entitled to designate
itself as a partnership of certified public accountants under
division (C)(1)(a) of this section or as a partnership of public
accountants under division (C)(1)(b) of this section. However, a
sole proprietor or partnership that was on October 22, 1959, or
a corporation that on or after September 30, 1974, has been,
lawfully using a title or designation of those types in
conjunction with names or designations of those types, may
continue to do so if the sole proprietor, partnership, or
corporation otherwise complies with this section.
(I)(1) Notwithstanding any other provision of this
chapter, an individual whose principal place of business is not
in this state and who holds a valid foreign certificate as a
certified public accountant shall be presumed to have
qualifications substantially equivalent to this state's CPA
requirements and shall have all of the privileges of a holder of
a CPA certificate and an Ohio permit without the need to obtain
a CPA certificate and an Ohio permit if the accountancy board
has found and has specified in its rules adopted pursuant to
division (A) of section 4701.03 of the Revised Code that the CPA
requirements of the state that issued the individual's foreign
certificate are substantially equivalent to this state's CPA
requirements.
(2) Any individual exercising the privilege afforded under
division (I)(1) of this section hereby consents and is subject,
as a condition of the grant of the privilege, to all of the
following:
(a) The personal and subject matter jurisdiction of the
accountancy board;
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S. B. No. 276 Page 278As Introduced
(b) All practice and disciplinary provisions of this
chapter and the accountancy board's rules;
(c) The appointment of the board that issued the
individual's foreign certificate as the individual's agent upon
whom process may be served in any action or proceeding by the
accountancy board against the individual.
(3) The holder of a CPA certificate and an Ohio permit who
offers or renders attest services or uses the holder's CPA title
in another state shall be subject to disciplinary action in this
state for an act committed in the other state for which the
holder of a foreign certificate issued by the other state would
be subject to discipline in the other state.
(4) The holder of a foreign certificate who offers or
renders attest services or uses a CPA title or designation in
this state pursuant to the privilege afforded by division (I)(1)
of this section shall be subject to disciplinary action in this
state for any act that would subject the holder of a CPA
certificate and an Ohio permit to disciplinary action in this
state.
Sec. 4703.18. (A) No person shall enter upon the practice
of architecture or hold forth as an architect or registered
architect, unless the person has complied with sections 4703.01
to 4703.19 of the Revised Code and is the holder of a
certificate of qualification to practice architecture issued or
renewed and registered under those sections.
(B) Sections 4703.01 to 4703.19 of the Revised Code do not
prevent persons other than architects from filing applications
for building permits or obtaining those permits.
(C) Sections 4703.01 to 4703.19 of the Revised Code do not
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S. B. No. 276 Page 279As Introduced
prevent persons other than architects from preparing plans,
drawings, specifications, or data, filing applications for
building permits, or obtaining those permits for residential
buildings, as defined by section 3781.06 of the Revised Code, or
buildings erected as industrialized one-, two-, or three-family
units or structures within the meaning of the term
"industrialized unit" as provided in section 3781.06 of the
Revised Code.
(D) Sections 4703.01 to 4703.19 of the Revised Code do not
prevent persons other than architects from preparing drawings or
data, from filing applications for building permits, or from
obtaining those permits for the installation of replacement
equipment or systems that are similar in type or capacity to the
equipment or systems being replaced, and for any improvement,
alteration, repair, painting, decorating, or other modification
of any buildings or structures subject to sections 3781.06 to
3781.18 and 3791.04 of the Revised Code where the building
official determines that no plans or specifications are required
for approval.
(E) Sections 4703.01 to 4703.19 of the Revised Code do not
exclude a registered professional engineer from architectural
practice that may be incident to the practice of engineering or
exclude a registered architect from engineering practice that
may be incident to the practice of architecture.
(F) Sections 4703.01 to 4703.19 of the Revised Code do not
prevent a firm, partnership, association, limited liability
company, or corporation of architects registered under those
sections from providing architectural services and do not
prevent an individual registered as a landscape architect under
sections 4703.30 to 4703.49 of the Revised Code or as a
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S. B. No. 276 Page 280As Introduced
professional engineer under Chapter 4733. of the Revised Code
from being a member or trustee of a firm, partnership,
association, limited liability company, or corporation of that
type, but a member or trustee of that type shall not engage in
the practice of architecture or hold forth as an architect
contrary to sections 4703.01 to 4703.19 of the Revised Code and
shall not practice a profession in which the person is not
licensed.
(G) A firm, partnership, association, limited liability
company, or corporation may provide architectural services in
this state as long as the services are provided only through
natural persons registered to provide those services in this
state, subject to the exemptions in section 4703.17 of the
Revised Code and subject otherwise to the requirements of
sections 4703.01 to 4703.19 of the Revised Code.
(H) No firm, partnership, association, limited liability
company, or corporation shall provide architectural services,
hold itself out to the public as providing architectural
services, or use a name including the word "architect" or any
modification or derivation of the word, unless the firm,
partnership, association, limited liability company, or
corporation files all information required to be filed under
this section with the architects board and otherwise complies
with all requirements of sections 4703.01 to 4703.19 of the
Revised Code. A nonprofit membership corporation may use a name
including the word "architect" or any modification or derivation
of the word without complying with this section.
(I) A corporation may be organized under Chapter 1701. of
the Revised Code, a professional association may be organized
under Chapter 1785. of the Revised Code, or a limited liability
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S. B. No. 276 Page 281As Introduced
company may be formed under Chapter 1705. or 1706. of the
Revised Code for the purpose of providing professional
engineering, surveying, architectural, or landscape
architectural services, or any combination of those services. A
corporation organized under Chapter 1701. of the Revised Code
for the purpose of providing those services also may be
organized for any other purpose in accordance with that chapter.
(J) No firm, partnership, association, limited liability
company, or corporation shall provide or offer to provide
architectural services in this state unless more than fifty per
cent of the partners, members, or shareholders, more than fifty
per cent of the directors in the case of a corporation or
professional association, more than fifty per cent of the
managers in the case of a limited liability company the
management of which is not reserved to its members, and more
than fifty per cent of the trustees in the case of an employee
stock ownership plan, are professional engineers, surveyors,
architects, or landscape architects or a combination of those
professions, who are registered in this or any other state and
who own more than fifty per cent of the interests in the firm,
partnership, association, limited liability company, or
corporation; unless the requirements of this division and of
section 1785.02 of the Revised Code are satisfied with respect
to any professional association organized under Chapter 1785. of
the Revised Code; or unless the requirements of this division
and of Chapter 1705. or 1706. of the Revised Code are satisfied
with respect to a limited liability company formed under that
chapter.
A corporation is exempt from the requirements of division
(J) of this section if the corporation was granted a charter
prior to August 7, 1943, to engage in providing architectural
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S. B. No. 276 Page 282As Introduced
services or was otherwise lawfully providing architectural
services prior to November 15, 1982, in this state.
(K) Each firm, partnership, association, limited liability
company, or corporation through which architectural services are
offered or provided in this state shall designate one or more
trustees, partners, managers, members, officers, or directors as
being in responsible charge of the professional architectural
activities and decisions, and those designated persons shall be
registered in this state. In the case of a corporation holding a
certificate of authorization provided for in division (L) of
this section, at least one of the persons so designated shall be
a director of the corporation. Each firm, partnership,
association, limited liability company, or corporation of that
type shall annually file with the architects board the name and
address of each trustee, partner, manager, officer, director,
member, or shareholder, and each firm, partnership, association,
limited liability company, or corporation of that type shall
annually file with the board the name and address of all persons
designated as being in responsible charge of the professional
architectural activities and decisions and any other information
the board may require. If there is a change in any such person
in the interval between filings, the change shall be filed with
the board in the manner and within the time that the board
determines.
(L) No corporation organized under Chapter 1701. of the
Revised Code shall engage in providing architectural services in
this state without obtaining a certificate of authorization from
the architects board. A corporation desiring a certificate of
authorization shall file with the board a copy of its articles
of incorporation and a listing on the form that the board
directs of the names and addresses of all trustees, officers,
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S. B. No. 276 Page 283As Introduced
directors, and shareholders of the corporation, the names and
addresses of any individuals providing professional services on
behalf of the corporation who are registered to practice
architecture in this state, and any other information the board
requires. If all requirements of sections 4703.01 to 4703.19 of
the Revised Code are met, the board may issue a certificate of
authorization to the corporation. Except for a corporation that
was granted a charter prior to August 7, 1943, to engage in
providing architectural services or that was otherwise lawfully
providing architectural services prior to November 15, 1982, no
certificate of authorization shall be issued unless persons
owning more than fifty per cent of the corporation's shares and
more than fifty per cent of the interests in the corporation are
professional engineers, surveyors, architects, or landscape
architects, or a combination of those professions, who are
registered in this or any other state. Any corporation that
holds a certificate of authorization under this section and
otherwise meets the requirements of sections 4703.01 to 4703.19
of the Revised Code may be organized for any purposes for which
corporations may be organized under Chapter 1701. of the Revised
Code and shall not be limited to the purposes of providing
professional engineering, surveying, architectural, or landscape
architectural services or any combination of those professions.
The board, by rules adopted in accordance with Chapter 119. of
the Revised Code, may require any firm, partnership,
association, or limited liability company not organized under
Chapter 1701. of the Revised Code that provides architectural
services to obtain a certificate of authorization. If the board
so requires, no firm, partnership, association, or limited
liability company shall engage in providing architectural
services without obtaining the certificate and complying with
the rules.
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(M) This section does not modify any law applicable to the
relationship between a person furnishing a professional service
and a person receiving that service, including liability arising
out of that service.
(N) Nothing in this section restricts or limits in any
manner the authority or duty of the architects board with
respect to natural persons providing professional services or
any law or rule pertaining to standards of professional conduct.
Sec. 4703.331. (A) A firm, partnership, association,
limited liability company, or corporation may provide landscape
architectural services in this state as long as the services are
provided only through natural persons registered to provide
those services in this state and subject to the requirements of
this chapter.
(B) No firm, partnership, association, limited liability
company, or corporation shall provide landscape architectural
services, hold itself out to the public as providing landscape
architectural services, or use a name including the word
"landscape architect," "professional landscape architect," or
"registered landscape architect" or any modification or
derivation of those words, unless the firm, partnership,
association, limited liability company, or corporation files all
information required to be filed under this section with the
Ohio landscape architects board and otherwise complies with all
requirements of this chapter. A nonprofit membership corporation
may use a name including the word "landscape architect,"
"professional landscape architect," or "registered landscape
architect" or any modification or derivation of those words
without complying with this section.
(C) A corporation may be organized under Chapter 1701. of
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S. B. No. 276 Page 285As Introduced
the Revised Code, a professional association may be organized
under Chapter 1785. of the Revised Code, or a limited liability
company may be formed under Chapter 1705. or 1706. of the
Revised Code for the purpose of providing professional
engineering, surveying, architectural, or landscape
architectural services, or any combination of those services. A
corporation organized under Chapter 1701. of the Revised Code
for the purpose of providing those services also may be
organized for any other purpose in accordance with that chapter.
(D) No firm, partnership, association, limited liability
company, or corporation shall provide or offer to provide
landscape architectural services in this state unless more than
fifty per cent of the partners, members, or shareholders, more
than fifty per cent of the directors in the case of a
corporation or professional association, more than fifty per
cent of the managers in the case of a limited liability company
the management of which is not reserved to its members, and more
than fifty per cent of the trustees in the case of an employee
stock ownership plan, are professional engineers, surveyors,
architects, or landscape architects or a combination of those
professions, who are registered in this or any other state and
who own more than fifty per cent of the interests in the firm,
partnership, association, limited liability company, or
corporation; unless the requirements of this division and of
section 1785.02 of the Revised Code are satisfied with respect
to any professional association organized under Chapter 1785. of
the Revised Code; or unless the requirements of this division
and of Chapter 1705. or 1706. of the Revised Code are satisfied
with respect to a limited liability company formed under that
chapter.
(E) Each firm, partnership, association, limited liability
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S. B. No. 276 Page 286As Introduced
company, or corporation through which landscape architectural
services are offered or provided in this state shall designate
one or more trustees, partners, managers, members, officers, or
directors as being in responsible charge of the professional
landscape architectural activities and decisions, and those
designated persons shall be registered in this state. Each firm,
partnership, association, limited liability company, or
corporation of that type shall annually file with the board the
name and address of each trustees, partner, manager, officer,
director, member, or shareholder, and each firm, partnership,
association, limited liability company, or corporation of that
type shall annually file with the board the name and address of
all persons designated as being in responsible charge of the
professional landscape architectural activities and decisions
and any other information the board may require. If there is a
change in any such person in the interval between filings, the
change shall be filed with the board in the manner and within
the time that the board determines.
(F) No corporation organized under Chapter 1701. of the
Revised Code shall engage in providing landscape architectural
services in this state without obtaining a certificate of
authorization from the board. A corporation desiring a
certificate of authorization shall file with the board a copy of
its articles of incorporation and a listing on the form that the
board directs of the names and addresses of all trustees,
officers, directors, and shareholders of the corporation, the
names and addresses of any individuals providing professional
services on behalf of the corporation who are registered to
practice landscape architecture in this state, and any other
information the board requires. If all requirements of this
chapter are met, the board may issue a certificate of
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S. B. No. 276 Page 287As Introduced
authorization to the corporation. No certificate of
authorization shall be issued unless persons owning more than
fifty per cent of the corporation's shares and more than fifty
per cent of the interests in the corporation are professional
engineers, surveyors, architects, or landscape architects, or a
combination of those professions, who are registered in this or
any other state. Any corporation that holds a certificate of
authorization under this section and otherwise meets the
requirements of this chapter may be organized for any purposes
for which corporations may be organized under Chapter 1701. of
the Revised Code and shall not be limited to the purposes of
providing professional engineering, surveying, architectural, or
landscape architectural services or any combination of those
services. The board, by rules adopted in accordance with Chapter
119. of the Revised Code, may require any firm, partnership,
association, or limited liability company not organized under
Chapter 1701. of the Revised Code that provides landscape
architectural services to obtain a certificate of authorization.
If the board so requires, no firm, partnership, association, or
limited liability company shall engage in providing landscape
architectural services without obtaining the certificate and
complying with the rules.
(G) This section does not modify any law applicable to the
relationship between a person furnishing a professional service
and a person receiving that service, including liability arising
out of that service.
(H) Nothing in this section shall restrict or limit in any
manner the authority or duty of the board with respect to
natural persons providing professional services or any law or
rule pertaining to standards of professional conduct.
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Sec. 4715.18. (A) No person shall practice or offer to
practice dentistry or dental surgery under the name of any
company, association, corporation, or other entity other than
one of the following:
(1) A corporation-for-profit formed under Chapter 1701. of
the Revised Code;
(2) A professional association established under Chapter
1785. of the Revised Code;
(3) A limited liability company formed under Chapter 1705.
or 1706. of the Revised Code;
(4) A federally qualified health center, federally
qualified health center look-alike, free clinic, nonprofit
shelter or health care facility, or nonprofit clinic that
provides health care services or dental services to indigent and
uninsured persons.
(B) Any person practicing or offering to practice
dentistry or dental surgery shall do so under the person's name,
the name of a professional association, professional
partnership, corporation-for-profit, or limited liability
company that includes the person's name, or the name of an
organization specified in division (A)(4) of this section.
(C) As used in this section:
(1) "Federally qualified health center" and "federally
qualified health center look-alike" have the same meanings as in
section 3701.047 of the Revised Code.
(2) "Free clinic" and "nonprofit shelter or health care
facility" have the same meanings as in section 3701.071 of the
Revised Code.
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(3) "Nonprofit clinic" has the same meaning as in section
3715.87 of the Revised Code.
(4) "Indigent and uninsured person" has the same meaning
as in section 2305.234 of the Revised Code.
Sec. 4715.22. (A)(1) This section applies only when a
licensed dental hygienist is not practicing in accordance with
either of the following:
(a) A permit issued pursuant to section 4715.363 of the
Revised Code authorizing practice under the oral health access
supervision of a dentist;
(b) Section 4715.431 of the Revised Code.
(2) As used in this section, "health care facility" means
either of the following:
(a) A hospital registered under section 3701.07 of the
Revised Code;
(b) A home, as defined in section 3721.01 of the Revised
Code.
(B) A licensed dental hygienist shall practice under the
supervision, order, control, and full responsibility of a
dentist licensed under this chapter. A dental hygienist may
practice in a dental office, public or private school, health
care facility, dispensary, or public institution. Except as
provided in divisions (C) to (E) of this section, a dental
hygienist may not provide dental hygiene services to a patient
when the supervising dentist is not physically present at the
location where the dental hygienist is practicing.
(C) A dental hygienist may provide, for not more than
fifteen consecutive business days, dental hygiene services to a
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patient when the supervising dentist is not physically present
at the location where the services are provided if all of the
following requirements are met:
(1) The dental hygienist has at least one year and a
minimum of one thousand five hundred hours of experience in the
practice of dental hygiene.
(2) The dental hygienist has successfully completed a
course approved by the state dental board in the identification
and prevention of potential medical emergencies.
(3) The dental hygienist does not perform, while the
supervising dentist is absent from the location, procedures
while the patient is anesthetized, definitive root planing,
definitive subgingival curettage, or other procedures identified
in rules the state dental board adopts.
(4) The supervising dentist has evaluated the dental
hygienist's skills.
(5) The supervising dentist examined the patient not more
than one year prior to the date the dental hygienist provides
the dental hygiene services to the patient.
(6) The dental hygienist complies with written protocols
or written standing orders that the supervising dentist
establishes, including those established for emergencies.
(7) The supervising dentist completed and evaluated a
medical and dental history of the patient not more than one year
prior to the date the dental hygienist provides dental hygiene
services to the patient and, except when the dental hygiene
services are provided in a health care facility, the supervising
dentist determines that the patient is in a medically stable
condition.
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(8) If the dental hygiene services are provided in a
health care facility, a doctor of medicine and surgery or
osteopathic medicine and surgery licensed under Chapter 4731. of
the Revised Code or a registered nurse licensed under Chapter
4723. of the Revised Code is present in the health care facility
when the services are provided.
(9) In advance of the appointment for dental hygiene
services, the patient is notified that the supervising dentist
will be absent from the location and that the dental hygienist
cannot diagnose the patient's dental health care status.
(10) The dental hygienist is employed by, or under
contract with, one of the following:
(a) The supervising dentist;
(b) A dentist licensed under this chapter who is one of
the following:
(i) The employer of the supervising dentist;
(ii) A shareholder in a professional association formed
under Chapter 1785. of the Revised Code of which the supervising
dentist is a shareholder;
(iii) A member or manager of a limited liability company
formed under Chapter 1705. or 1706. of the Revised Code of which
the supervising dentist is a member or manager;
(iv) A shareholder in a corporation formed under division
(B) of section 1701.03 of the Revised Code of which the
supervising dentist is a shareholder;
(v) A partner or employee of a partnership or a limited
liability partnership formed under Chapter 1775. or 1776. of the
Revised Code of which the supervising dentist is a partner or
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S. B. No. 276 Page 292As Introduced
employee.
(c) A government entity that employs the dental hygienist
to provide dental hygiene services in a public school or in
connection with other programs the government entity
administers.
(D) A dental hygienist may provide dental hygiene services
to a patient when the supervising dentist is not physically
present at the location where the services are provided if the
services are provided as part of a dental hygiene program that
is approved by the state dental board and all of the following
requirements are met:
(1) The program is operated through a school district
board of education or the governing board of an educational
service center; the board of health of a city or general health
district or the authority having the duties of a board of health
under section 3709.05 of the Revised Code; a national, state,
district, or local dental association; or any other public or
private entity recognized by the state dental board.
(2) The supervising dentist is employed by or a volunteer
for, and the patients are referred by, the entity through which
the program is operated.
(3)(a) Except as provided in division (D)(3)(b) of this
section, the services are performed after examination and
diagnosis by the dentist and in accordance with the dentist's
written treatment plan.
(b) The requirement in division (D)(3)(a) of this section
does not apply when the only services to be provided by the
dental hygienist are the placement of pit and fissure sealants
and the application of fluoride varnish.
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(E) A dental hygienist may do any of the following when
the supervising dentist is not physically present at the
location where the services are provided, regardless of whether
the dentist has examined the patient, if the dental hygienist is
employed by, or under contract with, the supervising dentist or
another person or government entity specified in division (C)
(10)(b) or (c) of this section:
(1) Apply fluoride varnish;
(2) Apply desensitizing agents, excluding silver diamine
fluoride;
(3) Apply disclosing solutions;
(4) Apply pit and fissure sealants;
(5) Recement temporary crowns or recement crowns with
temporary cement;
(6) Conduct caries susceptibility testing;
(7) Provide instruction on oral hygiene home care,
including the use of toothbrushes and dental floss;
(8) Discuss general nonmedical nutrition information for
the purpose of maintaining good oral health.
As used in division (E)(8) of this section, "general
nonmedical nutrition information" means information on the
following: principles of good nutrition and food preparation,
food to be included in the normal daily diet, the essential
nutrients needed by the body, recommended amounts of the
essential nutrients, the actions of nutrients on the body, the
effects of deficiencies or excesses of nutrients, or food and
supplements that are good sources of essential nutrients.
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(F) No person shall do either of the following:
(1) Practice dental hygiene in a manner that is separate
or otherwise independent from the dental practice of a
supervising dentist;
(2) Establish or maintain an office or practice that is
primarily devoted to the provision of dental hygiene services.
(G) The state dental board shall adopt rules under
division (C) of section 4715.03 of the Revised Code identifying
procedures a dental hygienist may not perform when practicing in
the absence of the supervising dentist pursuant to division (C)
or (D) of this section.
Sec. 4715.365. (A) A dentist who holds a current, valid
oral health access supervision permit issued under section
4715.362 of the Revised Code may authorize a dental hygienist
who holds a current, valid permit issued under section 4715.363
of the Revised Code to perform dental hygiene services at a
facility when no dentist is physically present if all of the
following conditions are met:
(1) The authorizing dentist's authorization is in writing
and includes, at a minimum, all of the following:
(a) The authorizing dentist's name and permit number;
(b) The dental hygienist's name and permit number;
(c) The patient's name;
(d) The name and address of the location where the dental
hygiene services are to be provided;
(e) The date of authorization;
(f) A statement, signed by the dental hygienist, that the
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S. B. No. 276 Page 295As Introduced
hygienist agrees to comply with section 4715.366 of the Revised
Code.
(2) The authorizing dentist has personally evaluated the
dental hygienist's skills prior to authorizing the dental
hygienist to provide the dental hygiene services.
(3) Prior to authorizing the dental hygienist to perform
the dental hygiene services, the patient's medical and dental
history is made available to the authorizing dentist and the
authorizing dentist reviews and evaluates the history and
determines that the patient may safely receive dental hygiene
services.
(4) Immediately prior to the provision of dental hygiene
services, the patient or patient's representative verifies, by
the signature or mark of the patient or representative, that no
medically significant changes to the patient's medical or dental
history have occurred since the authorizing dentist most
recently reviewed and evaluated the history and determined that
the patient could safely receive dental hygiene services. The
signature or mark may be provided through reasonable
accommodation, including the use of assistive technology or
augmentative devices.
(5) Prior to receiving dental hygiene services, the
patient and the operator of the facility where the dental
hygiene services are to be provided are notified that no dentist
will be present at the location and that the dental hygienist is
prohibited from doing either of the following:
(a) Diagnosing the patient's oral health care status;
(b) Providing dental hygiene services to the same patient
on a subsequent occasion until the patient has received a
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S. B. No. 276 Page 296As Introduced
clinical evaluation performed by a dentist, except in instances
described in division (D)(2) of this section.
(6) The dental hygienist is employed by, or under contract
with, one of the following:
(a) The authorizing dentist;
(b) A dentist who is any of the following:
(i) The authorizing dentist's employer;
(ii) A shareholder in a professional association, formed
under Chapter 1785. of the Revised Code, of which the
authorizing dentist is a shareholder;
(iii) A member or manager of a limited liability company,
formed under Chapter 1705. or 1706. of the Revised Code, of
which the authorizing dentist is a member or manager;
(iv) A shareholder in a corporation, formed under division
(B) of section 1701.03 of the Revised Code, of which the
authorizing dentist is a shareholder;
(v) A partner or employee of a partnership, formed under
Chapter 1775. of the Revised Code, of which the authorizing
dentist is a partner or employee;
(vi) A partner or employee of a limited liability
partnership, formed under Chapter 1775. of the Revised Code, of
which the authorizing dentist is a partner or employee.
(c) A government entity that employs the dental hygienist
to provide dental hygiene services;
(d) An entity that employs the authorizing dentist so long
as the dentist's practice is not in violation of section 4715.18
of the Revised Code.
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S. B. No. 276 Page 297As Introduced
(7) If the patient to whom the services are to be provided
previously received dental hygiene services under this section,
there is written evidence that the patient received a clinical
evaluation after the most recent provision of those services.
(B) No dentist shall authorize a dental hygienist to
perform, and no dental hygienist shall perform, dental hygiene
services on a patient under this section unless all of the
conditions in division (A) of this section are met.
(C) If a patient or patient's representative indicates,
under division (A)(4) of this section, that a medically
significant change has occurred in the patient's medical or
dental history since the authorizing dentist's most recent
review and evaluation of the medical and dental history required
by division (A)(3) of this section, no dental hygiene services
shall be provided under this section until the authorizing
dentist completes another review and evaluation of the patient's
medical and dental history. The authorizing dentist may complete
the subsequent review and evaluation of the patient's medical
and dental history by telephone, facsimile, electronic mail,
video, or any other means of electronic communication.
(D)(1) Except as provided in division (D)(2) of this
section, no dentist shall authorize a dental hygienist to
provide, and no dental hygienist shall provide, dental hygiene
services under this section to the same patient on a subsequent
occasion until the patient has received a clinical evaluation
performed by a dentist.
(2) Division (D)(1) of this section does not apply if the
patient requires multiple visits to complete one or more
procedures that could not be completed during the visit in which
dental hygiene services were commenced. If the patient requires
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S. B. No. 276 Page 298As Introduced
multiple visits to complete the one or more procedures that
could not be completed during the visit in which dental hygiene
services were commenced, the one or more procedures shall be
completed not later than eight weeks after the visit in which
the dental hygiene services were commenced.
(E) No authorizing dentist shall authorize a dental
hygienist to diagnose a patient's oral health care status. No
dental hygienist practicing under a permit issued under section
4715.363 of the Revised Code to practice under the oral health
access supervision of a dentist shall diagnose a patient's oral
health care status.
Sec. 4715.431. (A) If all of the conditions in division
(B) of this section are met, an authorizing dentist may do
either of the following under a teledentistry permit without
examining a patient in person:
(1) Authorize a dental hygienist or expanded function
dental auxiliary to perform services as set forth in division
(E) or (F) of this section, as applicable, at a location where
no dentist is physically present;
(2) Prescribe a drug that is not a controlled substance
for a patient who is at a location where no dentist is
physically present.
(B) The conditions that must be met under division (A) of
this section are the following:
(1) The authorizing dentist must prepare a written
authorization that includes all of the following:
(a) The authorizing dentist's name and permit number;
(b) The name of the dental hygienist or expanded function
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S. B. No. 276 Page 299As Introduced
dental auxiliary;
(c) The patient's name;
(d) The name and address of the location where the
services are to be provided;
(e) The date of the authorization;
(f) A statement signed by the dental hygienist or expanded
function dental auxiliary agreeing to comply with the written
protocols or written standing orders the authorizing dentist
establishes, including those for dealing with emergencies;
(g) Any other information the dentist considers
appropriate.
(2) Before any dental services are provided all of the
following must occur:
(a) The patient is notified that an authorizing dentist
will perform a clinical evaluation through teledentistry.
(b) The patient is given an explanation of alternatives
to, and the capabilities and limitations of, teledentistry.
(c)(i) Subject to division (B)(2)(c)(ii) of this section,
the patient consents to the provision of services through
teledentistry and the consent is documented in the patient's
record.
(ii) If the services to be provided are the placement of
interim therapeutic restorations or the application of silver
diamine fluoride, the requirements for informed consent in rules
adopted under division (C) of section 4715.436 of the Revised
Code have been met.
(3) The authorizing dentist establishes the patient's
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S. B. No. 276 Page 300As Introduced
identity and physical location through synchronous, real-time
communication.
(4) The authorizing dentist provides dental services
through teledentistry only as is appropriate for the patient and
in accordance with appropriate standards of care.
(5) The authorizing dentist establishes a diagnosis and
treatment plan and documents it in the patient's record.
(6) The authorizing dentist specifies the services the
dental hygienist or expanded function dental auxiliary is
authorized to provide to the patient.
(7) The dental hygienist or expanded function dental
auxiliary is employed by, or under contract with, one of the
following:
(a) The authorizing dentist;
(b) A dentist who is any of the following:
(i) The authorizing dentist's employer;
(ii) A shareholder in a professional association formed
under Chapter 1785. of the Revised Code of which the authorizing
dentist is a shareholder;
(iii) A member or manager of a limited liability company
formed under Chapter 1705. or 1706. of the Revised Code of which
the authorizing dentist is a member or manager;
(iv) A shareholder in a corporation formed under division
(B) of section 1701.03 of the Revised Code of which the
authorizing dentist is a shareholder;
(v) A partner or employee of a partnership, formed under
Chapter 1775. of the Revised Code, of which the authorizing
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S. B. No. 276 Page 301As Introduced
dentist is a partner or employee;
(vi) A partner or employee of a limited liability
partnership, formed under Chapter 1775. of the Revised Code, of
which the authorizing dentist is a partner or employee.
(C) A dentist retains responsibility for ensuring the
safety and quality of services provided to patients through
teledentistry. Services delivered through teledentistry must be
consistent with in-person services. Persons involved with
providing services through teledentistry must abide by laws
addressing the privacy and security of the patient's dental and
medical information.
(D) An authorizing dentist may not have more than a total
of three dental hygienists and expanded dental function dental
auxiliaries working under the dentist's authorization pursuant
to this section at any time.
(E)(1) If authorized to do so by an authorizing dentist in
accordance with this section, a dental hygienist may provide
dental hygiene services at a location where no dentist is
physically present if all of the following requirements are met:
(a) The dental hygienist has at least one year and a
minimum of one thousand five hundred hours of experience in the
practice of dental hygiene.
(b) The dental hygienist has completed a course described
in division (C)(2) of section 4715.22 of the Revised Code on the
identification and prevention of potential medical emergencies.
(c) The authorizing dentist has evaluated the dental
hygienist's skills.
(d) The dental hygienist complies with written protocols
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or written standing orders established by the authorizing
dentist, including written protocols established for
emergencies.
(2) If authorized to do so by an authorizing dentist in
accordance with this section, a dental hygienist may place
interim therapeutic restorations when a dentist is not
physically present at the location where the dental hygienist is
practicing if the requirements of division (E)(1) of this
section are met and the dental hygienist has successfully
completed a state dental board-approved course in the proper
placement of interim therapeutic restorations.
(3) If authorized to do so by an authorizing dentist in
accordance with this section, a dental hygienist may apply
silver diamine fluoride when a dentist is not physically present
at the location where the dental hygienist is practicing if the
requirements of division (E)(1) of this section are met and the
dental hygienist has successfully completed a state dental
board-approved course in the application of silver diamine
fluoride.
(F)(1) If authorized to do so by an authorizing dentist in
accordance with this section, an expanded function dental
auxiliary may provide the services listed in divisions (A)(2) to
(10) of section 4715.64 of the Revised Code, and any additional
procedures authorized pursuant to division (A)(11) of that
section, when a dentist is not physically present at the
location where the expanded function dental auxiliary is
practicing if all of the following requirements are met:
(a) The expanded function dental auxiliary has at least
one year and a minimum of one thousand five hundred hours of
experience practicing as an expanded function dental auxiliary.
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(b) The expanded function dental auxiliary has completed a
course described in division (C)(2) of section 4715.64 of the
Revised Code on the identification and prevention of potential
medical emergencies.
(c) The authorizing dentist has evaluated the expanded
function dental auxiliary's skills.
(d) The expanded function dental auxiliary complies with
written protocols or written standing orders established by the
authorizing dentist, including written protocols for
emergencies.
(2) If authorized to do so by an authorizing dentist in
accordance with this section, an expanded function dental
auxiliary who meets the requirements of division (F)(1) of this
section and has successfully completed a state dental board-
approved course in the proper placement of interim therapeutic
restorations may place interim therapeutic restorations when a
dentist is not physically present at the location where the
expanded function dental auxiliary is practicing.
(3) If authorized to do so by an authorizing dentist in
accordance with this section, an expanded function dental
auxiliary who meets the requirements of division (F)(1) of this
section and has successfully completed a state dental board-
approved course in the application of silver diamine fluoride
may apply silver diamine fluoride when a dentist is not
physically present at the location where the expanded function
dental auxiliary is practicing.
(4) If authorized to do so by an authorizing dentist in
accordance with this section, an expanded function dental
auxiliary who meets the requirements of division (F)(1) of this
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section and holds a current, valid dental x-ray machine operator
certificate issued by the board pursuant to section 4715.53 of
the Revised Code may perform, for the purpose of contributing to
the provision of dental care to a dental patient, standard,
diagnostic radiologic procedures when a dentist is not
physically present at the location where the expanded function
dental auxiliary is practicing.
Sec. 4717.06. (A)(1) A licensed funeral director who
desires to obtain a license to operate a funeral home, a
licensed embalmer who desires to obtain a license to operate an
embalming facility, or a holder of a crematory operator permit
who desires to obtain a license to operate a crematory facility
shall apply to the board of embalmers and funeral directors on a
form prescribed by the board. The application shall include the
initial license application fee set forth in section 4717.07 of
the Revised Code and proof satisfactory to the board that the
funeral home, embalming facility, or crematory facility is in
compliance with rules adopted by the board under section 4717.04
of the Revised Code, rules adopted by the board of building
standards under Chapter 3781. of the Revised Code, and all other
federal, state, and local requirements relating to the safety of
the premises.
(2) If the funeral home, embalming facility, or crematory
facility to which the license application pertains is owned by a
corporation or limited liability company, the application shall
include the name and address of the corporation's or limited
liability company's statutory agent appointed under section
1701.07 or, 1705.06, or 1706.09 of the Revised Code or, in the
case of a foreign corporation, the corporation's designated
agent appointed under section 1703.041 of the Revised Code. If
the funeral home, embalming facility, or crematory facility to
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which the application pertains is owned by a partnership, the
application shall include the name and address of each of the
partners. If, at any time after the submission of a license
application or issuance of a license, the statutory or
designated agent of a corporation or limited liability company
owning a funeral home, embalming facility, or crematory facility
or the address of the statutory or designated agent changes or,
in the case of a partnership, any of the partners of the funeral
home, embalming facility, or crematory facility or the address
of any of the partners changes, the applicant for or holder of
the license to operate the funeral home, embalming facility, or
crematory facility shall submit written notice to the board,
within thirty days after the change, informing the board of the
change and of any name or address of a statutory or designated
agent or partner that has changed from that contained in the
application for the license or the most recent notice submitted
under division (A)(2) of this section.
(B)(1) The board of embalmers and funeral directors shall
issue a license to operate a funeral home only to a licensed
funeral director who is named in the application as the funeral
director actually in charge and ultimately responsible for the
funeral home. The board shall issue the license only for the
address at which the funeral home is physically located and
operated. The funeral home license and licenses of the embalmers
and funeral directors employed by the funeral home shall be
displayed in a conspicuous place within the funeral home. The
name of the funeral director to whom the funeral home license
has been issued shall be conspicuously displayed immediately on
the outside or the inside of the primary entrance to the funeral
home that is used by the public.
(2) The funeral home shall have on the premises one of the
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following:
(a) If embalming will take place at the funeral home, an
embalming room that is adequately equipped and maintained. The
embalming room shall be kept in a clean and sanitary manner and
used only for the embalming, preparation, or holding of dead
human bodies. The embalming room shall contain only the
articles, facilities, and instruments necessary for those
purposes.
(b) If embalming will not take place at the funeral home,
a holding room that is adequately equipped and maintained. The
holding room shall be kept in a clean and sanitary manner and
used only for the preparation, other than embalming, and holding
of dead human bodies. The holding room shall contain only the
articles and facilities necessary for those purposes.
(3) Each funeral home shall be directly supervised by a
funeral director licensed under this chapter, who may supervise
more than one funeral home.
(C)(1) The board shall issue a license to operate an
embalming facility only to a licensed embalmer who is actually
in charge of and ultimately responsible for the embalming
facility. The board shall issue the license only for the address
at which the embalming facility is physically located and
operated. The license shall be displayed in a conspicuous place
within the facility. The name of the embalmer to whom the
embalming facility license has been issued shall be
conspicuously displayed on the outside or inside of the primary
entrance to the embalming facility.
(2) The embalming facility shall be adequately equipped
and maintained in a sanitary manner. The embalming room at such
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a facility shall contain only the articles, facilities, and
instruments necessary for its stated purpose. The embalming room
shall be kept in a clean and sanitary condition and used only
for the care and preparation of dead human bodies.
(D)(1) The board shall issue a license to operate a
crematory facility only to a crematory operator who is actually
in charge and ultimately responsible for the crematory facility.
The board shall issue the license only for the address at which
the crematory facility is physically located and operated. The
license shall be displayed in a conspicuous place within the
crematory facility. The name of the crematory operator to whom
the crematory facility license has been issued shall be
conspicuously displayed on the outside or inside of the primary
entrance to the crematory facility.
(2) The crematory facility shall be adequately equipped
and maintained in a clean and sanitary manner. The crematory
facility may be located in a funeral home, embalming facility,
cemetery building, or other building in which the crematory
facility may lawfully operate. If a crematory facility engages
in the cremation of animals, the crematory facility shall
cremate animals in a cremation chamber that also is not used to
cremate dead human bodies or human body parts and shall not
cremate animals in a cremation chamber used for the cremation of
dead human bodies and human body parts. Cremation chambers that
are used for the cremation of dead human bodies or human body
parts and cremation chambers used for the cremation of animals
may be located in the same area. Cremation chambers used for the
cremation of animals shall have conspicuously displayed on the
unit a notice that the unit is to be used for animals only.
(3) A license to operate a crematory facility shall be
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issued to the person actually in charge of the crematory
facility. This section does not require the individual who is
actually in charge of the crematory facility to be an embalmer
or funeral director licensed under this chapter.
(4) Nothing in this section or rules adopted under section
4717.04 of the Revised Code precludes the establishment and
operation of a crematory facility on or adjacent to the property
on which a cemetery, funeral home, or embalming facility is
located.
Sec. 4723.16. (A) An individual whom the board of nursing
licenses or otherwise legally authorizes to engage in the
practice of nursing as a registered nurse, advanced practice
registered nurse, or licensed practical nurse may render the
professional services of a registered, advanced practice
registered, or licensed practical nurse within this state
through a corporation formed under division (B) of section
1701.03 of the Revised Code, a limited liability company formed
under Chapter 1705. or 1706. of the Revised Code, a partnership,
or a professional association formed under Chapter 1785. of the
Revised Code. This division does not preclude an individual of
that nature from rendering professional services as a
registered, advanced practice registered, or licensed practical
nurse through another form of business entity, including, but
not limited to, a nonprofit corporation or foundation, or in
another manner that is authorized by or in accordance with this
chapter, another chapter of the Revised Code, or rules of the
board of nursing adopted pursuant to this chapter.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
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of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
(4) Registered, advanced practice registered, or licensed
practical nurses who are authorized to practice nursing as
registered nurses, advanced practice registered nurses, or
licensed practical nurses under this chapter;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are licensed to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are licensed,
certificated, or otherwise legally authorized for their
respective practices under Chapter 4731. of the Revised Code;
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(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
practices under Chapter 4757. of the Revised Code.
This division shall apply notwithstanding a provision of a
code of ethics applicable to a nurse that prohibits a
registered, advanced practice registered, or licensed practical
nurse from engaging in the practice of nursing as a registered
nurse, advanced practice registered nurse, or licensed practical
nurse in combination with a person who is licensed,
certificated, or otherwise legally authorized to practice
optometry, chiropractic, acupuncture through the state
chiropractic board, psychology, pharmacy, physical therapy,
occupational therapy, mechanotherapy, medicine and surgery,
osteopathic medicine and surgery, podiatric medicine and
surgery, professional counseling, social work, or marriage and
family therapy, but who is not also licensed, certificated, or
otherwise legally authorized to engage in the practice of
nursing as a registered nurse, advanced practice registered
nurse, or licensed practical nurse.
Sec. 4725.33. (A) An individual whom the state vision
professionals board licenses to engage in the practice of
optometry may render the professional services of an optometrist
within this state through a corporation formed under division
(B) of section 1701.03 of the Revised Code, a limited liability
company formed under Chapter 1705. or 1706. of the Revised Code,
a partnership, or a professional association formed under
Chapter 1785. of the Revised Code. This division does not
preclude an optometrist from rendering professional services as
an optometrist through another form of business entity,
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S. B. No. 276 Page 311As Introduced
including, but not limited to, a nonprofit corporation or
foundation, or in another manner that is authorized by or in
accordance with this chapter, another chapter of the Revised
Code, or rules of the state vision professionals board adopted
pursuant to this chapter.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
(4) Registered or licensed practical nurses who are
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
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S. B. No. 276 Page 312As Introduced
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under Chapter 4731. of
the Revised Code;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
practices under Chapter 4757. of the Revised Code.
This division shall apply notwithstanding a provision of a
code of ethics applicable to an optometrist that prohibits an
optometrist from engaging in the practice of optometry in
combination with a person who is licensed, certificated, or
otherwise legally authorized to practice chiropractic,
acupuncture through the state chiropractic board, psychology,
nursing, pharmacy, physical therapy, occupational therapy,
mechanotherapy, medicine and surgery, osteopathic medicine and
surgery, podiatric medicine and surgery, professional
counseling, social work, or marriage and family therapy, but who
is not also licensed, certificated, or otherwise legally
authorized to engage in the practice of optometry.
Sec. 4729.161. (A) An individual registered with the state
board of pharmacy to engage in the practice of pharmacy may
render the professional services of a pharmacist within this
state through a corporation formed under division (B) of section
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S. B. No. 276 Page 313As Introduced
1701.03 of the Revised Code, a limited liability company formed
under Chapter 1705. or 1706. of the Revised Code, a partnership,
or a professional association formed under Chapter 1785. of the
Revised Code. This division does not preclude an individual of
that nature from rendering professional services as a pharmacist
through another form of business entity, including, but not
limited to, a nonprofit corporation or foundation, or in another
manner that is authorized by or in accordance with this chapter,
another chapter of the Revised Code, or rules of the state board
of pharmacy adopted pursuant to this chapter.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
(4) Registered or licensed practical nurses who are
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
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(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under Chapter 4731. of
the Revised Code;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
practices under Chapter 4757. of the Revised Code.
This division shall apply notwithstanding a provision of a
code of ethics applicable to a pharmacist that prohibits a
pharmacist from engaging in the practice of pharmacy in
combination with a person who is licensed, certificated, or
otherwise legally authorized to practice optometry,
chiropractic, acupuncture through the state chiropractic board,
psychology, nursing, physical therapy, occupational therapy,
mechanotherapy, medicine and surgery, osteopathic medicine and
surgery, podiatric medicine and surgery, professional
counseling, social work, or marriage and family therapy, but who
is not also licensed, certificated, or otherwise legally
authorized to engage in the practice of pharmacy.
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Sec. 4729.541. (A) Except as provided in divisions (B) to
(D) of this section, all of the following are exempt from
licensure as a terminal distributor of dangerous drugs:
(1) A licensed health professional authorized to prescribe
drugs;
(2) A business entity that is a corporation formed under
division (B) of section 1701.03 of the Revised Code, a limited
liability company formed under Chapter 1705. or 1706. of the
Revised Code, or a professional association formed under Chapter
1785. of the Revised Code if the entity has a sole shareholder
who is a prescriber and is authorized to provide the
professional services being offered by the entity;
(3) A business entity that is a corporation formed under
division (B) of section 1701.03 of the Revised Code, a limited
liability company formed under Chapter 1705. or 1706. of the
Revised Code, a partnership or a limited liability partnership
formed under Chapter 1775. of the Revised Code, or a
professional association formed under Chapter 1785. of the
Revised Code, if, to be a shareholder, member, or partner, an
individual is required to be licensed, certified, or otherwise
legally authorized under Title XLVII of the Revised Code to
perform the professional service provided by the entity and each
such individual is a prescriber;
(4) An individual who holds a current license,
certificate, or registration issued under Title XLVII of the
Revised Code and has been certified to conduct diabetes
education by a national certifying body specified in rules
adopted by the state board of pharmacy under section 4729.68 of
the Revised Code, but only with respect to insulin that will be
used for the purpose of diabetes education and only if diabetes
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education is within the individual's scope of practice under
statutes and rules regulating the individual's profession;
(5) An individual who holds a valid certificate issued by
a nationally recognized S.C.U.B.A. diving certifying
organization approved by the state board of pharmacy under rules
adopted by the board, but only with respect to medical oxygen
that will be used for the purpose of emergency care or treatment
at the scene of a diving emergency;
(6) With respect to epinephrine autoinjectors that may be
possessed under section 3313.7110, 3313.7111, 3314.143, 3326.28,
or 3328.29 of the Revised Code, any of the following: the board
of education of a city, local, exempted village, or joint
vocational school district; a chartered or nonchartered
nonpublic school; a community school established under Chapter
3314. of the Revised Code; a STEM school established under
Chapter 3326. of the Revised Code; or a college-preparatory
boarding school established under Chapter 3328. of the Revised
Code;
(7) With respect to epinephrine autoinjectors that may be
possessed under section 5101.76 of the Revised Code, any of the
following: a residential camp, as defined in section 2151.011 of
the Revised Code; a child day camp, as defined in section
5104.01 of the Revised Code; or a child day camp operated by any
county, township, municipal corporation, township park district
created under section 511.18 of the Revised Code, park district
created under section 1545.04 of the Revised Code, or joint
recreation district established under section 755.14 of the
Revised Code;
(8) With respect to epinephrine autoinjectors that may be
possessed under Chapter 3728. of the Revised Code, a qualified
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entity, as defined in section 3728.01 of the Revised Code;
(9) With respect to inhalers that may be possessed under
section 3313.7113, 3313.7114, 3314.144, 3326.30, or 3328.30 of
the Revised Code, any of the following: the board of education
of a city, local, exempted village, or joint vocational school
district; a chartered or nonchartered nonpublic school; a
community school established under Chapter 3314. of the Revised
Code; a STEM school established under Chapter 3326. of the
Revised Code; or a college-preparatory boarding school
established under Chapter 3328. of the Revised Code;
(10) With respect to inhalers that may be possessed under
section 5101.77 of the Revised Code, any of the following: a
residential camp, as defined in section 2151.011 of the Revised
Code; a child day camp, as defined in section 5104.01 of the
Revised Code; or a child day camp operated by any county,
township, municipal corporation, township park district created
under section 511.18 of the Revised Code, park district created
under section 1545.04 of the Revised Code, or joint recreation
district established under section 755.14 of the Revised Code;
(11) With respect to naloxone that may be possessed under
section 2925.61 of the Revised Code, a law enforcement agency
and its peace officers;
(12) With respect to naloxone that may be possessed under
section 4729.514 of the Revised Code, a service entity, as
defined in that section;
(13) A facility that is owned and operated by the United
States department of defense, the United States department of
veterans affairs, or any other federal agency.
(B) If a person described in division (A) of this section
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is a pain management clinic or is operating a pain management
clinic, the person shall hold a license as a terminal
distributor of dangerous drugs with a pain management clinic
classification issued under section 4729.552 of the Revised
Code.
(C) If a person described in division (A) of this section
is operating a facility, clinic, or other location described in
division (B) of section 4729.553 of the Revised Code that must
hold a category III terminal distributor of dangerous drugs
license with an office-based opioid treatment classification,
the person shall hold a license with that classification.
(D) Any of the persons described in divisions (A)(1) to
(12) of this section shall hold a license as a terminal
distributor of dangerous drugs in order to possess, have custody
or control of, and distribute any of the following:
(1) Dangerous drugs that are compounded or used for the
purpose of compounding;
(2) A schedule I, II, III, IV, or V controlled substance,
as defined in section 3719.01 of the Revised Code.
Sec. 4731.226. (A)(1) An individual whom the state medical
board licenses, certificates, or otherwise legally authorizes to
engage in the practice of medicine and surgery, osteopathic
medicine and surgery, or podiatric medicine and surgery may
render the professional services of a doctor of medicine and
surgery, osteopathic medicine and surgery, or podiatric medicine
and surgery within this state through a corporation formed under
division (B) of section 1701.03 of the Revised Code, a limited
liability company formed under Chapter 1705. or 1706. of the
Revised Code, a partnership, or a professional association
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formed under Chapter 1785. of the Revised Code. Division (A)(1)
of this section does not preclude an individual of that nature
from rendering professional services as a doctor of medicine and
surgery, osteopathic medicine and surgery, or podiatric medicine
and surgery through another form of business entity, including,
but not limited to, a nonprofit corporation or foundation, or in
another manner that is authorized by or in accordance with this
chapter, another chapter of the Revised Code, or rules of the
state medical board adopted pursuant to this chapter.
(2) An individual whom the state medical board authorizes
to engage in the practice of mechanotherapy may render the
professional services of a mechanotherapist within this state
through a corporation formed under division (B) of section
1701.03 of the Revised Code, a limited liability company formed
under Chapter 1705. or 1706. of the Revised Code, a partnership,
or a professional association formed under Chapter 1785. of the
Revised Code. Division (A)(2) of this section does not preclude
an individual of that nature from rendering professional
services as a mechanotherapist through another form of business
entity, including, but not limited to, a nonprofit corporation
or foundation, or in another manner that is authorized by or in
accordance with this chapter, another chapter of the Revised
Code, or rules of the state medical board adopted pursuant to
this chapter.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
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(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
(4) Registered or licensed practical nurses who are
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under this chapter;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
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S. B. No. 276 Page 321As Introduced
practices under Chapter 4757. of the Revised Code.
(C) Division (B) of this section shall apply
notwithstanding a provision of a code of ethics described in
division (B)(18) of section 4731.22 of the Revised Code that
prohibits either of the following:
(1) A doctor of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery from engaging in
the doctor's authorized practice in combination with a person
who is licensed, certificated, or otherwise legally authorized
to engage in the practice of optometry, chiropractic,
acupuncture through the state chiropractic board, psychology,
nursing, pharmacy, physical therapy, occupational therapy,
mechanotherapy, professional counseling, social work, or
marriage and family therapy, but who is not also licensed,
certificated, or otherwise legally authorized to practice
medicine and surgery, osteopathic medicine and surgery, or
podiatric medicine and surgery.
(2) A mechanotherapist from engaging in the practice of
mechanotherapy in combination with a person who is licensed,
certificated, or otherwise legally authorized to engage in the
practice of optometry, chiropractic, acupuncture through the
state chiropractic board, psychology, nursing, pharmacy,
physical therapy, occupational therapy, medicine and surgery,
osteopathic medicine and surgery, podiatric medicine and
surgery, professional counseling, social work, or marriage and
family therapy, but who is not also licensed, certificated, or
otherwise legally authorized to engage in the practice of
mechanotherapy.
Sec. 4731.228. (A) As used in this section:
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(1) "Federally qualified health center" has the same
meaning as in section 3701.047 of the Revised Code.
(2) "Federally qualified health center look-alike" has the
same meaning as in section 3701.047 of the Revised Code.
(3) "Health care entity" means any of the following that
employs a physician to provide physician services:
(a) A hospital registered with the department of health
under section 3701.07 of the Revised Code;
(b) A corporation formed under division (B) of section
1701.03 of the Revised Code;
(c) A corporation formed under Chapter 1702. of the
Revised Code;
(d) A limited liability company formed under Chapter 1705.
or 1706. of the Revised Code;
(e) A health insuring corporation holding a certificate of
authority under Chapter 1751. of the Revised Code;
(f) A partnership;
(g) A professional association formed under Chapter 1785.
of the Revised Code.
(4) "Physician" means an individual authorized under this
chapter to practice medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery.
(5) "Physician services" means direct patient care
services provided by a physician.
(6) "Termination" means the end of a physician's
employment with a health care entity for any reason.
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(B) This section applies when a physician's employment
with a health care entity to provide physician services is
terminated for any reason, unless the physician continues to
provide medical services for patients of the health care entity
on an independent contractor basis.
(C)(1) Except as provided in division (C)(2) of this
section, a health care entity shall send notice of the
termination of a physician's employment to each patient who
received physician services from the physician in the two-year
period immediately preceding the date of employment termination.
Only patients of the health care entity who received services
from the physician are to receive the notice.
(2) If the health care entity provides to the physician a
list of patients treated and patient contact information, the
health care entity may require the physician to send the notice
required by this section.
(D) The notice provided under division (C) of this section
shall be provided not later than the date of termination or
thirty days after the health care entity has actual knowledge of
termination or resignation of the physician, whichever is later.
The notice shall be provided in accordance with rules adopted by
the state medical board under section 4731.05 of the Revised
Code. The notice shall include at least all of the following:
(1) A notice to the patient that the physician will no
longer be practicing medicine as an employee of the health care
entity;
(2) Except in situations in which the health care entity
has a good faith concern that the physician's conduct or the
medical care provided by the physician would jeopardize the
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S. B. No. 276 Page 324As Introduced
health and safety of patients, the physician's name and, if
known by the health care entity, information provided by the
physician that the patient may use to contact the physician;
(3) The date on which the physician ceased or will cease
to practice as an employee of the health care entity;
(4) Contact information for an alternative physician or
physicians employed by the health care entity or contact
information for a group practice that can provide care for the
patient;
(5) Contact information that enables the patient to obtain
information on the patient's medical records.
(E) The requirements of this section do not apply to any
of the following:
(1) A physician rendering services to a patient on an
episodic basis or in an emergency department or urgent care
center, when it should not be reasonably expected that related
medical services will be rendered by the physician to the
patient in the future;
(2) A medical director or other physician providing
services in a similar capacity to a medical director to patients
through a hospice care program licensed pursuant to section
3712.04 of the Revised Code.
(3) Medical residents, interns, and fellows who work in
hospitals, health systems, federally qualified health centers,
and federally qualified health center look-alikes as part of
their medical education and training.
(4) A physician providing services to a patient through a
community mental health services provider certified by the
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S. B. No. 276 Page 325As Introduced
director of mental health and addiction services under section
5119.36 of the Revised Code or a community addiction services
provider certified by the director under that section.
(5) A physician providing services to a patient through a
federally qualified health center or a federally qualified
health center look-alike.
Sec. 4732.28. (A) An individual whom the state board of
psychology licenses, certificates, or otherwise legally
authorizes to engage in the practice of psychology may render
the professional services of a psychologist within this state
through a corporation formed under division (B) of section
1701.03 of the Revised Code, a limited liability company formed
under Chapter 1705. or 1706. of the Revised Code, a partnership,
or a professional association formed under Chapter 1785. of the
Revised Code. This division does not preclude an individual of
that nature from rendering professional services as a
psychologist through another form of business entity, including,
but not limited to, a nonprofit corporation or foundation, or in
another manner that is authorized by or in accordance with this
chapter, another chapter of the Revised Code, or rules of the
state board of psychology adopted pursuant to this chapter.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
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S. B. No. 276 Page 326As Introduced
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under this chapter;
(4) Registered or licensed practical nurses who are
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under Chapter 4731. of
the Revised Code;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
practices under Chapter 4757. of the Revised Code.
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S. B. No. 276 Page 327As Introduced
This division shall apply notwithstanding a provision of a
code of ethics applicable to a psychologist that prohibits a
psychologist from engaging in the practice of psychology in
combination with a person who is licensed, certificated, or
otherwise legally authorized to practice optometry,
chiropractic, acupuncture through the state chiropractic board,
nursing, pharmacy, physical therapy, occupational therapy,
mechanotherapy, medicine and surgery, osteopathic medicine and
surgery, podiatric medicine and surgery, professional
counseling, social work, or marriage and family therapy, but who
is not also licensed, certificated, or otherwise legally
authorized to engage in the practice of psychology.
Sec. 4733.16. (A) A firm, partnership, association,
limited liability company, or corporation may provide
professional engineering or professional surveying services in
this state as long as the services are provided only through
natural persons registered to provide those services in the
state, subject to the exemptions in sections 4733.17 and 4733.18
of the Revised Code and subject otherwise to the requirements of
this chapter.
(B) No firm, partnership, association, limited liability
company, or corporation, except a corporation that was granted a
charter prior to August 7, 1943, to engage in providing
professional engineering or professional surveying services in
this state or that was otherwise lawfully providing engineering
services in this state prior to November 15, 1982, shall engage
in providing professional engineering or professional surveying
services, hold itself out to the public as being engaged in
providing professional engineering or professional surveying
services, or use a name including one or more of the words
"engineer," "engineering," "surveyor," or "surveying" or any
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S. B. No. 276 Page 328As Introduced
modification or derivation of those words, unless the firm,
partnership, association, limited liability company, or
corporation obtains a certificate of authorization from the
state board of registration for professional engineers and
surveyors and files all information required to be filed under
this section with the state board of registration for
professional engineers and surveyors and otherwise complies with
all requirements of this chapter. A nonprofit membership
corporation may use a name including one or more of the words
"engineer," "engineering," "surveyor," or "surveying" or any
modification or derivation of those words without complying with
this section.
(C) A corporation may be organized under Chapter 1701. of
the Revised Code, a professional association may be organized
under Chapter 1785. of the Revised Code, or a limited liability
company may be formed under Chapter 1705. or 1706. of the
Revised Code for the purpose of providing professional
engineering, professional surveying, architectural, or landscape
architectural services or any combination of those services. A
corporation organized under Chapter 1701. of the Revised Code
for the purpose of providing those services also may be
organized for any other purpose in accordance with that chapter.
(D) Each firm, partnership, association, limited liability
company, or corporation through which professional engineering
or professional surveying services are offered or provided in
this state shall designate one or more full-time partners,
managers, members, officers, or directors as being responsible
for and in responsible charge of the professional engineering or
professional surveying activities and decisions, and those
designated persons shall be registered in this state. Each firm,
partnership, association, limited liability company, or
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S. B. No. 276 Page 329As Introduced
corporation shall annually file with the state board of
registration for professional engineers and surveyors the name
and address of all owners and all persons designated as being in
responsible charge of the professional engineering or
professional surveying activities and decisions and any other
information the board may require.
(E) The state board of registration for professional
engineers and surveyors shall issue a certificate of
authorization to each firm, partnership, association, limited
liability company, or corporation that satisfies the
requirements of this chapter, including providing information
that the board may require pursuant to division (D) of this
section.
(F) This section does not modify any law applicable to the
relationship between a person furnishing a professional service
and a person receiving that service, including liability arising
out of that service.
(G) Nothing in this section shall restrict or limit in any
manner the authority or duty of the state board of registration
for professional engineers and surveyors with respect to natural
persons providing professional services or any law or rule
pertaining to standards of professional conduct.
(H) Corporations, partnerships, associations, limited
liability companies, or firms organized under the laws of
another state or country wishing to provide professional
engineering or professional surveying services shall obtain a
certificate of authorization and meet the applicable
requirements of this section.
Sec. 4734.17. (A) An individual whom the state
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S. B. No. 276 Page 330As Introduced
chiropractic board licenses to engage in the practice of
chiropractic or certifies to practice acupuncture may render the
professional services of a chiropractor or chiropractor
certified to practice acupuncture within this state through a
corporation formed under division (B) of section 1701.03 of the
Revised Code, a limited liability company formed under Chapter
1705. or 1706. of the Revised Code, a partnership, or a
professional association formed under Chapter 1785. of the
Revised Code. This division does not preclude a chiropractor
from rendering professional services as a chiropractor or
chiropractor certified to practice acupuncture through another
form of business entity, including, but not limited to, a
nonprofit corporation or foundation, or in another manner that
is authorized by or in accordance with this chapter, another
chapter of the Revised Code, or rules of the state chiropractic
board adopted pursuant to this chapter.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
(1) Optometrists who are authorized to practice optometry,
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under this chapter;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
(4) Registered or licensed practical nurses who are
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S. B. No. 276 Page 331As Introduced
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under Chapter 4731. of
the Revised Code;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
practices under Chapter 4757. of the Revised Code.
This division shall apply notwithstanding a provision of
any code of ethics established or adopted under section 4734.16
of the Revised Code that prohibits an individual from engaging
in the practice of chiropractic or acupuncture in combination
with an individual who is licensed, certificated, or otherwise
authorized for the practice of optometry, psychology, nursing,
pharmacy, physical therapy, occupational therapy,
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S. B. No. 276 Page 332As Introduced
mechanotherapy, medicine and surgery, osteopathic medicine and
surgery, podiatric medicine and surgery, professional
counseling, social work, or marriage and family therapy, but who
is not also licensed under this chapter to engage in the
practice of chiropractic.
Sec. 4755.111. (A) An individual whom the occupational
therapy section of the Ohio occupational therapy, physical
therapy, and athletic trainers board licenses, certificates, or
otherwise legally authorizes to engage in the practice of
occupational therapy may render the professional services of an
occupational therapist within this state through a corporation
formed under division (B) of section 1701.03 of the Revised
Code, a limited liability company formed under Chapter 1705. or
1706. of the Revised Code, a partnership, or a professional
association formed under Chapter 1785. of the Revised Code. This
division does not preclude an individual of that nature from
rendering professional services as an occupational therapist
through another form of business entity, including, but not
limited to, a nonprofit corporation or foundation, or in another
manner that is authorized by or in accordance with sections
4755.04 to 4755.13 of the Revised Code, another chapter of the
Revised Code, or rules of the Ohio occupational therapy,
physical therapy, and athletic trainers board adopted pursuant
to sections 4755.04 to 4755.13 of the Revised Code.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
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S. B. No. 276 Page 333As Introduced
(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
(4) Registered or licensed practical nurses who are
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under Chapter 4731. of
the Revised Code;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
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S. B. No. 276 Page 334As Introduced
and family therapists who are authorized for their respective
practices under Chapter 4757. of the Revised Code.
This division shall apply notwithstanding a provision of a
code of ethics applicable to an occupational therapist that
prohibits an occupational therapist from engaging in the
practice of occupational therapy in combination with a person
who is licensed, certificated, or otherwise legally authorized
to practice optometry, chiropractic, acupuncture through the
state chiropractic board, psychology, nursing, pharmacy,
physical therapy, mechanotherapy, medicine and surgery,
osteopathic medicine and surgery, podiatric medicine and
surgery, professional counseling, social work, or marriage and
family therapy but who is not also licensed, certificated, or
otherwise legally authorized to engage in the practice of
occupational therapy.
Sec. 4755.471. (A) An individual whom the physical therapy
section of the Ohio occupational therapy, physical therapy, and
athletic trainers board licenses, certificates, or otherwise
legally authorizes to engage in the practice of physical therapy
may render the professional services of a physical therapist
within this state through a corporation formed under division
(B) of section 1701.03 of the Revised Code, a limited liability
company formed under Chapter 1705. or 1706. of the Revised Code,
a partnership, or a professional association formed under
Chapter 1785. of the Revised Code. This division does not
preclude an individual of that nature from rendering
professional services as a physical therapist through another
form of business entity, including, but not limited to, a
nonprofit corporation or foundation, or in another manner that
is authorized by or in accordance with sections 4755.40 to
4755.53 of the Revised Code, another chapter of the Revised
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S. B. No. 276 Page 335As Introduced
Code, or rules of the Ohio occupational therapy, physical
therapy, and athletic trainers board adopted pursuant to
sections 4755.40 to 4755.53 of the Revised Code.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
(4) Registered or licensed practical nurses who are
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
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(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under Chapter 4731. of
the Revised Code;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
practices under Chapter 4757. of the Revised Code.
This division shall apply notwithstanding a provision of a
code of ethics applicable to a physical therapist that prohibits
a physical therapist from engaging in the practice of physical
therapy in combination with a person who is licensed,
certificated, or otherwise legally authorized to practice
optometry, chiropractic, acupuncture through the state
chiropractic board, psychology, nursing, pharmacy, occupational
therapy, mechanotherapy, medicine and surgery, osteopathic
medicine and surgery, podiatric medicine and surgery,
professional counseling, social work, or marriage and family
therapy, but who is not also licensed, certificated, or
otherwise legally authorized to engage in the practice of
physical therapy.
Sec. 4757.37. (A) An individual whom the counselor, social
worker, and marriage and family therapist board licenses,
certificates, or otherwise legally authorizes to engage in the
practice of professional counseling, social work, or marriage
and family therapy may render the professional services of a
licensed professional clinical counselor, licensed professional
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counselor, independent social worker, social worker, independent
marriage and family therapist, or marriage and family therapist
within this state through a corporation formed under division
(B) of section 1701.03 of the Revised Code, a limited liability
company formed under Chapter 1705. or 1706. of the Revised Code,
a partnership, or a professional association formed under
Chapter 1785. of the Revised Code. This division does not
preclude such an individual from rendering professional services
as a licensed professional clinical counselor, licensed
professional counselor, independent social worker, social
worker, independent marriage and family therapist, or marriage
and family therapist through another form of business entity,
including, but not limited to, a nonprofit corporation or
foundation, or in another manner that is authorized by or in
accordance with this chapter, another chapter of the Revised
Code, or rules of the counselor, social worker, and marriage and
family therapist board adopted pursuant to this chapter.
(B) A corporation, limited liability company, partnership,
or professional association described in division (A) of this
section may be formed for the purpose of providing a combination
of the professional services of the following individuals who
are licensed, certificated, or otherwise legally authorized to
practice their respective professions:
(1) Optometrists who are authorized to practice optometry
under Chapter 4725. of the Revised Code;
(2) Chiropractors who are authorized to practice
chiropractic or acupuncture under Chapter 4734. of the Revised
Code;
(3) Psychologists who are authorized to practice
psychology under Chapter 4732. of the Revised Code;
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(4) Registered or licensed practical nurses who are
authorized to practice nursing as registered nurses or as
licensed practical nurses under Chapter 4723. of the Revised
Code;
(5) Pharmacists who are authorized to practice pharmacy
under Chapter 4729. of the Revised Code;
(6) Physical therapists who are authorized to practice
physical therapy under sections 4755.40 to 4755.56 of the
Revised Code;
(7) Occupational therapists who are authorized to practice
occupational therapy under sections 4755.04 to 4755.13 of the
Revised Code;
(8) Mechanotherapists who are authorized to practice
mechanotherapy under section 4731.151 of the Revised Code;
(9) Doctors of medicine and surgery, osteopathic medicine
and surgery, or podiatric medicine and surgery who are
authorized for their respective practices under Chapter 4731. of
the Revised Code;
(10) Licensed professional clinical counselors, licensed
professional counselors, independent social workers, social
workers, independent marriage and family therapists, or marriage
and family therapists who are authorized for their respective
practices under this chapter.
This division applies notwithstanding a provision of a
code of ethics applicable to an individual who is a licensed
professional clinical counselor, licensed professional
counselor, independent social worker, social worker, independent
marriage and family therapist, or marriage and family therapist
that prohibits the individual from engaging in the individual's
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practice in combination with a person who is licensed,
certificated, or otherwise legally authorized to practice
optometry, chiropractic, acupuncture through the state
chiropractic board, psychology, nursing, pharmacy, physical
therapy, occupational therapy, mechanotherapy, medicine and
surgery, osteopathic medicine and surgery, or podiatric medicine
and surgery, but who is not also licensed, certificated, or
otherwise legally authorized to engage in the practice of
professional counseling, social work, or marriage and family
therapy.
Sec. 5701.14. For purposes of Title LVII of the Revised
Code:
(A) In order to determine a limited liability company's
nonprofit status, an entity is operating with a nonprofit
purpose under section 1705.02 of the Revised Code or carrying on
any nonprofit activity under section 1706.05 of the Revised Code
if that entity is organized other than for the pecuniary gain or
profit of, and its net earnings or any part of its net earnings
are not distributable to, its members, its directors, its
officers, or other private persons, except that the payment of
reasonable compensation for services rendered, payments and
distributions in furtherance of its nonprofit purpose, and the
distribution of assets on dissolution permitted by section
1702.49 of the Revised Code are not pecuniary gain or profit or
distribution of net earnings. In no event shall payments and
distributions in furtherance of an entity's nonprofit purpose
deprive the entity of its nonprofit status as long as all of the
members of that entity are operating with a nonprofit purpose.
(B) A single member limited liability company that
operates with a nonprofit purpose, as described in division (A)
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of this section, shall be treated as part of the same legal
entity as its nonprofit member, and all assets and liabilities
of that single member limited liability company shall be
considered to be that of the nonprofit member. Filings or
applications for exemptions or other tax purposes may be made
either by the single member limited liability company or its
nonprofit member.
Sec. 5715.19. (A) As used in this section, "member" has
the same meaning as in section 1705.01 or 1706.01 of the Revised
Code,as applicable, and "internet identifier of record" has the
same meaning as in section 9.312 of the Revised Code.
(1) Subject to division (A)(2) of this section, a
complaint against any of the following determinations for the
current tax year shall be filed with the county auditor on or
before the thirty-first day of March of the ensuing tax year or
the date of closing of the collection for the first half of real
and public utility property taxes for the current tax year,
whichever is later:
(a) Any classification made under section 5713.041 of the
Revised Code;
(b) Any determination made under section 5713.32 or
5713.35 of the Revised Code;
(c) Any recoupment charge levied under section 5713.35 of
the Revised Code;
(d) The determination of the total valuation or assessment
of any parcel that appears on the tax list, except parcels
assessed by the tax commissioner pursuant to section 5727.06 of
the Revised Code;
(e) The determination of the total valuation of any parcel
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that appears on the agricultural land tax list, except parcels
assessed by the tax commissioner pursuant to section 5727.06 of
the Revised Code;
(f) Any determination made under division (A) of section
319.302 of the Revised Code.
If such a complaint is filed by mail or certified mail,
the date of the United States postmark placed on the envelope or
sender's receipt by the postal service shall be treated as the
date of filing. A private meter postmark on an envelope is not a
valid postmark for purposes of establishing the filing date.
Any person owning taxable real property in the county or
in a taxing district with territory in the county; such a
person's spouse; an individual who is retained by such a person
and who holds a designation from a professional assessment
organization, such as the institute for professionals in
taxation, the national council of property taxation, or the
international association of assessing officers; a public
accountant who holds a permit under section 4701.10 of the
Revised Code, a general or residential real estate appraiser
licensed or certified under Chapter 4763. of the Revised Code,
or a real estate broker licensed under Chapter 4735. of the
Revised Code, who is retained by such a person; if the person is
a firm, company, association, partnership, limited liability
company, or corporation, an officer, a salaried employee, a
partner, or a member of that person; if the person is a trust, a
trustee of the trust; the board of county commissioners; the
prosecuting attorney or treasurer of the county; the board of
township trustees of any township with territory within the
county; the board of education of any school district with any
territory in the county; or the mayor or legislative authority
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of any municipal corporation with any territory in the county
may file such a complaint regarding any such determination
affecting any real property in the county, except that a person
owning taxable real property in another county may file such a
complaint only with regard to any such determination affecting
real property in the county that is located in the same taxing
district as that person's real property is located. The county
auditor shall present to the county board of revision all
complaints filed with the auditor.
(2) As used in division (A)(2) of this section, "interim
period" means, for each county, the tax year to which section
5715.24 of the Revised Code applies and each subsequent tax year
until the tax year in which that section applies again.
No person, board, or officer shall file a complaint
against the valuation or assessment of any parcel that appears
on the tax list if it filed a complaint against the valuation or
assessment of that parcel for any prior tax year in the same
interim period, unless the person, board, or officer alleges
that the valuation or assessment should be changed due to one or
more of the following circumstances that occurred after the tax
lien date for the tax year for which the prior complaint was
filed and that the circumstances were not taken into
consideration with respect to the prior complaint:
(a) The property was sold in an arm's length transaction,
as described in section 5713.03 of the Revised Code;
(b) The property lost value due to some casualty;
(c) Substantial improvement was added to the property;
(d) An increase or decrease of at least fifteen per cent
in the property's occupancy has had a substantial economic
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impact on the property.
(3) If a county board of revision, the board of tax
appeals, or any court dismisses a complaint filed under this
section or section 5715.13 of the Revised Code for the reason
that the act of filing the complaint was the unauthorized
practice of law or the person filing the complaint was engaged
in the unauthorized practice of law, the party affected by a
decrease in valuation or the party's agent, or the person owning
taxable real property in the county or in a taxing district with
territory in the county, may refile the complaint,
notwithstanding division (A)(2) of this section.
(4)(a) No complaint filed under this section or section
5715.13 of the Revised Code shall be dismissed for the reason
that the complaint fails to accurately identify the owner of the
property that is the subject of the complaint.
(b) If a complaint fails to accurately identify the owner
of the property that is the subject of the complaint, the board
of revision shall exercise due diligence to ensure the correct
property owner is notified as required by divisions (B) and (C)
of this section.
(5) Notwithstanding division (A)(2) of this section, a
person, board, or officer may file a complaint against the
valuation or assessment of any parcel that appears on the tax
list if it filed a complaint against the valuation or assessment
of that parcel for any prior tax year in the same interim period
if the person, board, or officer withdrew the complaint before
the complaint was heard by the board.
(B) Within thirty days after the last date such complaints
may be filed, the auditor shall give notice of each complaint in
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which the stated amount of overvaluation, undervaluation,
discriminatory valuation, illegal valuation, or incorrect
determination is at least seventeen thousand five hundred
dollars to each property owner whose property is the subject of
the complaint, if the complaint was not filed by the owner or
the owner's spouse, and to each board of education whose school
district may be affected by the complaint. Within thirty days
after receiving such notice, a board of education; a property
owner; the owner's spouse; an individual who is retained by such
an owner and who holds a designation from a professional
assessment organization, such as the institute for professionals
in taxation, the national council of property taxation, or the
international association of assessing officers; a public
accountant who holds a permit under section 4701.10 of the
Revised Code, a general or residential real estate appraiser
licensed or certified under Chapter 4763. of the Revised Code,
or a real estate broker licensed under Chapter 4735. of the
Revised Code, who is retained by such a person; or, if the
property owner is a firm, company, association, partnership,
limited liability company, corporation, or trust, an officer, a
salaried employee, a partner, a member, or trustee of that
property owner, may file a complaint in support of or objecting
to the amount of alleged overvaluation, undervaluation,
discriminatory valuation, illegal valuation, or incorrect
determination stated in a previously filed complaint or
objecting to the current valuation. Upon the filing of a
complaint under this division, the board of education or the
property owner shall be made a party to the action.
(C) Each board of revision shall notify any complainant
and also the property owner, if the property owner's address is
known, when a complaint is filed by one other than the property
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owner, not less than ten days prior to the hearing, either by
certified mail or, if the board has record of an internet
identifier of record associated with the owner, by ordinary mail
and by that internet identifier of record of the time and place
the same will be heard. The board of revision shall hear and
render its decision on a complaint within ninety days after the
filing thereof with the board, except that if a complaint is
filed within thirty days after receiving notice from the auditor
as provided in division (B) of this section, the board shall
hear and render its decision within ninety days after such
filing.
(D) The determination of any such complaint shall relate
back to the date when the lien for taxes or recoupment charges
for the current year attached or the date as of which liability
for such year was determined. Liability for taxes and recoupment
charges for such year and each succeeding year until the
complaint is finally determined and for any penalty and interest
for nonpayment thereof within the time required by law shall be
based upon the determination, valuation, or assessment as
finally determined. Each complaint shall state the amount of
overvaluation, undervaluation, discriminatory valuation, illegal
valuation, or incorrect classification or determination upon
which the complaint is based. The treasurer shall accept any
amount tendered as taxes or recoupment charge upon property
concerning which a complaint is then pending, computed upon the
claimed valuation as set forth in the complaint. If a complaint
filed under this section for the current year is not determined
by the board within the time prescribed for such determination,
the complaint and any proceedings in relation thereto shall be
continued by the board as a valid complaint for any ensuing year
until such complaint is finally determined by the board or upon
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any appeal from a decision of the board. In such case, the
original complaint shall continue in effect without further
filing by the original taxpayer, the original taxpayer's
assignee, or any other person or entity authorized to file a
complaint under this section.
(E) If a taxpayer files a complaint as to the
classification, valuation, assessment, or any determination
affecting the taxpayer's own property and tenders less than the
full amount of taxes or recoupment charges as finally
determined, an interest charge shall accrue as follows:
(1) If the amount finally determined is less than the
amount billed but more than the amount tendered, the taxpayer
shall pay interest at the rate per annum prescribed by section
5703.47 of the Revised Code, computed from the date that the
taxes were due on the difference between the amount finally
determined and the amount tendered. This interest charge shall
be in lieu of any penalty or interest charge under section
323.121 of the Revised Code unless the taxpayer failed to file a
complaint and tender an amount as taxes or recoupment charges
within the time required by this section, in which case section
323.121 of the Revised Code applies.
(2) If the amount of taxes finally determined is equal to
or greater than the amount billed and more than the amount
tendered, the taxpayer shall pay interest at the rate prescribed
by section 5703.47 of the Revised Code from the date the taxes
were due on the difference between the amount finally determined
and the amount tendered, such interest to be in lieu of any
interest charge but in addition to any penalty prescribed by
section 323.121 of the Revised Code.
(F) Upon request of a complainant, the tax commissioner
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shall determine the common level of assessment of real property
in the county for the year stated in the request that is not
valued under section 5713.31 of the Revised Code, which common
level of assessment shall be expressed as a percentage of true
value and the common level of assessment of lands valued under
such section, which common level of assessment shall also be
expressed as a percentage of the current agricultural use value
of such lands. Such determination shall be made on the basis of
the most recent available sales ratio studies of the
commissioner and such other factual data as the commissioner
deems pertinent.
(G) A complainant shall provide to the board of revision
all information or evidence within the complainant's knowledge
or possession that affects the real property that is the subject
of the complaint. A complainant who fails to provide such
information or evidence is precluded from introducing it on
appeal to the board of tax appeals or the court of common pleas,
except that the board of tax appeals or court may admit and
consider the evidence if the complainant shows good cause for
the complainant's failure to provide the information or evidence
to the board of revision.
(H) In case of the pendency of any proceeding in court
based upon an alleged excessive, discriminatory, or illegal
valuation or incorrect classification or determination, the
taxpayer may tender to the treasurer an amount as taxes upon
property computed upon the claimed valuation as set forth in the
complaint to the court. The treasurer may accept the tender. If
the tender is not accepted, no penalty shall be assessed because
of the nonpayment of the full taxes assessed.
Sec. 5733.04. As used in this chapter:
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(A) "Issued and outstanding shares of stock" applies to
nonprofit corporations, as provided in section 5733.01 of the
Revised Code, and includes, but is not limited to, membership
certificates and other instruments evidencing ownership of an
interest in such nonprofit corporations, and with respect to a
financial institution that does not have capital stock, "issued
and outstanding shares of stock" includes, but is not limited
to, ownership interests of depositors in the capital employed in
such an institution.
(B) "Taxpayer" means a corporation subject to the tax
imposed by section 5733.06 of the Revised Code.
(C) "Resident" means a corporation organized under the
laws of this state.
(D) "Commercial domicile" means the principal place from
which the trade or business of the taxpayer is directed or
managed.
(E) "Taxable year" means the period prescribed by division
(A) of section 5733.031 of the Revised Code upon the net income
of which the value of the taxpayer's issued and outstanding
shares of stock is determined under division (B) of section
5733.05 of the Revised Code or the period prescribed by division
(A) of section 5733.031 of the Revised Code that immediately
precedes the date as of which the total value of the corporation
is determined under division (A) or (C) of section 5733.05 of
the Revised Code.
(F) "Tax year" means the calendar year in and for which
the tax imposed by section 5733.06 of the Revised Code is
required to be paid.
(G) "Internal Revenue Code" means the "Internal Revenue
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Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.
(H) "Federal income tax" means the income tax imposed by
the Internal Revenue Code.
(I) Except as provided in section 5733.058 of the Revised
Code, "net income" means the taxpayer's taxable income before
operating loss deduction and special deductions, as required to
be reported for the taxpayer's taxable year under the Internal
Revenue Code, subject to the following adjustments:
(1)(a) Deduct any net operating loss incurred in any
taxable years ending in 1971 or thereafter, but exclusive of any
net operating loss incurred in taxable years ending prior to
January 1, 1971. This deduction shall not be allowed in any tax
year commencing before December 31, 1973, but shall be carried
over and allowed in tax years commencing after December 31,
1973, until fully utilized in the next succeeding taxable year
or years in which the taxpayer has net income, but in no case
for more than the designated carryover period as described in
division (I)(1)(b) of this section. The amount of such net
operating loss, as determined under the allocation and
apportionment provisions of section 5733.051 and division (B) of
section 5733.05 of the Revised Code for the year in which the
net operating loss occurs, shall be deducted from net income, as
determined under the allocation and apportionment provisions of
section 5733.051 and division (B) of section 5733.05 of the
Revised Code, to the extent necessary to reduce net income to
zero with the remaining unused portion of the deduction, if any,
carried forward to the remaining years of the designated
carryover period as described in division (I)(1)(b) of this
section, or until fully utilized, whichever occurs first.
(b) For losses incurred in taxable years ending on or
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before December 31, 1981, the designated carryover period shall
be the five consecutive taxable years after the taxable year in
which the net operating loss occurred. For losses incurred in
taxable years ending on or after January 1, 1982, and beginning
before August 6, 1997, the designated carryover period shall be
the fifteen consecutive taxable years after the taxable year in
which the net operating loss occurs. For losses incurred in
taxable years beginning on or after August 6, 1997, the
designated carryover period shall be the twenty consecutive
taxable years after the taxable year in which the net operating
loss occurs.
(c) The tax commissioner may require a taxpayer to furnish
any information necessary to support a claim for deduction under
division (I)(1)(a) of this section and no deduction shall be
allowed unless the information is furnished.
(2) Deduct any amount included in net income by
application of section 78 or 951 of the Internal Revenue Code,
amounts received for royalties, technical or other services
derived from sources outside the United States, and dividends
received from a subsidiary, associate, or affiliated corporation
that neither transacts any substantial portion of its business
nor regularly maintains any substantial portion of its assets
within the United States. For purposes of determining net
foreign source income deductible under division (I)(2) of this
section, the amount of gross income from all such sources other
than dividend income and income derived by application of
section 78 or 951 of the Internal Revenue Code shall be reduced
by:
(a) The amount of any reimbursed expenses for personal
services performed by employees of the taxpayer for the
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subsidiary, associate, or affiliated corporation;
(b) Ten per cent of the amount of royalty income and
technical assistance fees;
(c) Fifteen per cent of the amount of all other income.
The amounts described in divisions (I)(2)(a) to (c) of
this section are deemed to be the expenses attributable to the
production of deductible foreign source income unless the
taxpayer shows, by clear and convincing evidence, less actual
expenses, or the tax commissioner shows, by clear and convincing
evidence, more actual expenses.
(3) Add any loss or deduct any gain resulting from the
sale, exchange, or other disposition of a capital asset, or an
asset described in section 1231 of the Internal Revenue Code, to
the extent that such loss or gain occurred prior to the first
taxable year on which the tax provided for in section 5733.06 of
the Revised Code is computed on the corporation's net income.
For purposes of division (I)(3) of this section, the amount of
the prior loss or gain shall be measured by the difference
between the original cost or other basis of the asset and the
fair market value as of the beginning of the first taxable year
on which the tax provided for in section 5733.06 of the Revised
Code is computed on the corporation's net income. At the option
of the taxpayer, the amount of the prior loss or gain may be a
percentage of the gain or loss, which percentage shall be
determined by multiplying the gain or loss by a fraction, the
numerator of which is the number of months from the acquisition
of the asset to the beginning of the first taxable year on which
the fee provided in section 5733.06 of the Revised Code is
computed on the corporation's net income, and the denominator of
which is the number of months from the acquisition of the asset
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to the sale, exchange, or other disposition of the asset. The
adjustments described in this division do not apply to any gain
or loss where the gain or loss is recognized by a qualifying
taxpayer, as defined in section 5733.0510 of the Revised Code,
with respect to a qualifying taxable event, as defined in that
section.
(4) Deduct the dividend received deduction provided by
section 243 of the Internal Revenue Code.
(5) Deduct any interest or interest equivalent on public
obligations and purchase obligations to the extent included in
federal taxable income. As used in divisions (I)(5) and (6) of
this section, "public obligations," "purchase obligations," and
"interest or interest equivalent" have the same meanings as in
section 5709.76 of the Revised Code.
(6) Add any loss or deduct any gain resulting from the
sale, exchange, or other disposition of public obligations to
the extent included in federal taxable income.
(7) To the extent not otherwise allowed, deduct any
dividends or distributions received by a taxpayer from a public
utility, excluding an electric company and a combined company,
and, for tax years 2005 and thereafter, a telephone company, if
the taxpayer owns at least eighty per cent of the issued and
outstanding common stock of the public utility. As used in
division (I)(7) of this section, "public utility" means a public
utility as defined in Chapter 5727. of the Revised Code, whether
or not the public utility is doing business in the state.
(8) To the extent not otherwise allowed, deduct any
dividends received by a taxpayer from an insurance company, if
the taxpayer owns at least eighty per cent of the issued and
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S. B. No. 276 Page 353As Introduced
outstanding common stock of the insurance company. As used in
division (I)(8) of this section, "insurance company" means an
insurance company that is taxable under Chapter 5725. or 5729.
of the Revised Code.
(9) Deduct expenditures for modifying existing buildings
or structures to meet American national standards institute
standard A-117.1-1961 (R-1971), as amended; provided, that no
deduction shall be allowed to the extent that such deduction is
not permitted under federal law or under rules of the tax
commissioner. Those deductions as are allowed may be taken over
a period of five years. The tax commissioner shall adopt rules
under Chapter 119. of the Revised Code establishing reasonable
limitations on the extent that expenditures for modifying
existing buildings or structures are attributable to the purpose
of making the buildings or structures accessible to and usable
by physically handicapped persons.
(10) Deduct the amount of wages and salaries, if any, not
otherwise allowable as a deduction but that would have been
allowable as a deduction in computing federal taxable income
before operating loss deduction and special deductions for the
taxable year, had the targeted jobs credit allowed and
determined under sections 38, 51, and 52 of the Internal Revenue
Code not been in effect.
(11) Deduct net interest income on obligations of the
United States and its territories and possessions or of any
authority, commission, or instrumentality of the United States
to the extent the laws of the United States prohibit inclusion
of the net interest for purposes of determining the value of the
taxpayer's issued and outstanding shares of stock under division
(B) of section 5733.05 of the Revised Code. As used in division
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S. B. No. 276 Page 354As Introduced
(I)(11) of this section, "net interest" means interest net of
any expenses taken on the federal income tax return that would
not have been allowed under section 265 of the Internal Revenue
Code if the interest were exempt from federal income tax.
(12)(a) Except as set forth in division (I)(12)(d) of this
section, to the extent not included in computing the taxpayer's
federal taxable income before operating loss deduction and
special deductions, add gains and deduct losses from direct or
indirect sales, exchanges, or other dispositions, made by a
related entity who is not a taxpayer, of the taxpayer's
indirect, beneficial, or constructive investment in the stock or
debt of another entity, unless the gain or loss has been
included in computing the federal taxable income before
operating loss deduction and special deductions of another
taxpayer with a more closely related investment in the stock or
debt of the other entity. The amount of gain added or loss
deducted shall not exceed the product obtained by multiplying
such gain or loss by the taxpayer's proportionate share,
directly, indirectly, beneficially, or constructively, of the
outstanding stock of the related entity immediately prior to the
direct or indirect sale, exchange, or other disposition.
(b) Except as set forth in division (I)(12)(e) of this
section, to the extent not included in computing the taxpayer's
federal taxable income before operating loss deduction and
special deductions, add gains and deduct losses from direct or
indirect sales, exchanges, or other dispositions made by a
related entity who is not a taxpayer, of intangible property
other than stock, securities, and debt, if such property was
owned, or used in whole or in part, at any time prior to or at
the time of the sale, exchange, or disposition by either the
taxpayer or by a related entity that was a taxpayer at any time
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S. B. No. 276 Page 355As Introduced
during the related entity's ownership or use of such property,
unless the gain or loss has been included in computing the
federal taxable income before operating loss deduction and
special deductions of another taxpayer with a more closely
related ownership or use of such intangible property. The amount
of gain added or loss deducted shall not exceed the product
obtained by multiplying such gain or loss by the taxpayer's
proportionate share, directly, indirectly, beneficially, or
constructively, of the outstanding stock of the related entity
immediately prior to the direct or indirect sale, exchange, or
other disposition.
(c) As used in division (I)(12) of this section, "related
entity" means those entities described in divisions (I)(12)(c)
(i) to (iii) of this section:
(i) An individual stockholder, or a member of the
stockholder's family enumerated in section 318 of the Internal
Revenue Code, if the stockholder and the members of the
stockholder's family own, directly, indirectly, beneficially, or
constructively, in the aggregate, at least fifty per cent of the
value of the taxpayer's outstanding stock;
(ii) A stockholder, or a stockholder's partnership,
estate, trust, or corporation, if the stockholder and the
stockholder's partnerships, estates, trusts, and corporations
own directly, indirectly, beneficially, or constructively, in
the aggregate, at least fifty per cent of the value of the
taxpayer's outstanding stock;
(iii) A corporation, or a party related to the corporation
in a manner that would require an attribution of stock from the
corporation to the party or from the party to the corporation
under division (I)(12)(c)(iv) of this section, if the taxpayer
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S. B. No. 276 Page 356As Introduced
owns, directly, indirectly, beneficially, or constructively, at
least fifty per cent of the value of the corporation's
outstanding stock.
(iv) The attribution rules of section 318 of the Internal
Revenue Code apply for purposes of determining whether the
ownership requirements in divisions (I)(12)(c)(i) to (iii) of
this section have been met.
(d) For purposes of the adjustments required by division
(I)(12)(a) of this section, the term "investment in the stock or
debt of another entity" means only those investments where the
taxpayer and the taxpayer's related entities directly,
indirectly, beneficially, or constructively own, in the
aggregate, at any time during the twenty-four month period
commencing one year prior to the direct or indirect sale,
exchange, or other disposition of such investment at least fifty
per cent or more of the value of either the outstanding stock or
such debt of such other entity.
(e) For purposes of the adjustments required by division
(I)(12)(b) of this section, the term "related entity" excludes
all of the following:
(i) Foreign corporations as defined in section 7701 of the
Internal Revenue Code;
(ii) Foreign partnerships as defined in section 7701 of
the Internal Revenue Code;
(iii) Corporations, partnerships, estates, and trusts
created or organized in or under the laws of the Commonwealth of
Puerto Rico or any possession of the United States;
(iv) Foreign estates and foreign trusts as defined in
section 7701 of the Internal Revenue Code.
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S. B. No. 276 Page 357As Introduced
The exclusions described in divisions (I)(12)(e)(i) to
(iv) of this section do not apply if the corporation,
partnership, estate, or trust is described in any one of
divisions (C)(1) to (5) of section 5733.042 of the Revised Code.
(f) Nothing in division (I)(12) of this section shall
require or permit a taxpayer to add any gains or deduct any
losses described in divisions (I)(12)(f)(i) and (ii) of this
section:
(i) Gains or losses recognized for federal income tax
purposes by an individual, estate, or trust without regard to
the attribution rules described in division (I)(12)(c) of this
section;
(ii) A related entity's gains or losses described in
division (I)(12)(b) of this section if the taxpayer's ownership
of or use of such intangible property was limited to a period
not exceeding nine months and was attributable to a transaction
or a series of transactions executed in accordance with the
election or elections made by the taxpayer or a related entity
pursuant to section 338 of the Internal Revenue Code.
(13) Any adjustment required by section 5733.042 of the
Revised Code.
(14) Add any amount claimed as a credit under section
5733.0611 of the Revised Code to the extent that such amount
satisfies either of the following:
(a) It was deducted or excluded from the computation of
the corporation's taxable income before operating loss deduction
and special deductions as required to be reported for the
corporation's taxable year under the Internal Revenue Code;
(b) It resulted in a reduction of the corporation's
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S. B. No. 276 Page 358As Introduced
taxable income before operating loss deduction and special
deductions as required to be reported for any of the
corporation's taxable years under the Internal Revenue Code.
(15) Deduct the amount contributed by the taxpayer to an
individual development account program established by a county
department of job and family services pursuant to sections
329.11 to 329.14 of the Revised Code for the purpose of matching
funds deposited by program participants. On request of the tax
commissioner, the taxpayer shall provide any information that,
in the tax commissioner's opinion, is necessary to establish the
amount deducted under division (I)(15) of this section.
(16) Any adjustment required by section 5733.0510 or
5733.0511 of the Revised Code.
(17)(a)(i) Add five-sixths of the amount of depreciation
expense allowed under subsection (k) of section 168 of the
Internal Revenue Code, including a person's proportionate or
distributive share of the amount of depreciation expense allowed
by that subsection to any pass-through entity in which the
person has direct or indirect ownership.
(ii) Add five-sixths of the amount of qualifying section
179 depreciation expense, including a person's proportionate or
distributive share of the amount of qualifying section 179
depreciation expense allowed to any pass-through entity in which
the person has a direct or indirect ownership. For the purposes
of this division, "qualifying section 179 depreciation expense"
means the difference between (I) the amount of depreciation
expense directly or indirectly allowed to the taxpayer under
section 179 of the Internal Revenue Code, and (II) the amount of
depreciation expense directly or indirectly allowed to the
taxpayer under section 179 of the Internal Revenue Code as that
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10389
10390
10391
10392
10393
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10395
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10402
10403
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S. B. No. 276 Page 359As Introduced
section existed on December 31, 2002.
The tax commissioner, under procedures established by the
commissioner, may waive the add-backs related to a pass-through
entity if the person owns, directly or indirectly, less than
five per cent of the pass-through entity.
(b) Nothing in division (I)(17) of this section shall be
construed to adjust or modify the adjusted basis of any asset.
(c) To the extent the add-back is attributable to property
generating income or loss allocable under section 5733.051 of
the Revised Code, the add-back shall be allocated to the same
location as the income or loss generated by that property.
Otherwise, the add-back shall be apportioned, subject to
division (B)(2)(d) of section 5733.05 of the Revised Code.
(18)(a) If a person is required to make the add-back under
division (I)(17)(a) of this section for a tax year, the person
shall deduct one-fifth of the amount added back for each of the
succeeding five tax years.
(b) If the amount deducted under division (I)(18)(a) of
this section is attributable to an add-back allocated under
division (I)(17)(c) of this section, the amount deducted shall
be allocated to the same location. Otherwise, the amount shall
be apportioned using the apportionment factors for the taxable
year in which the deduction is taken, subject to division (B)(2)
(d) of section 5733.05 of the Revised Code.
(J) Except as otherwise expressly provided or clearly
appearing from the context, any term used in this chapter has
the same meaning as when used in a comparable context in the
laws of the United States relating to federal income taxes. Any
reference in this chapter to the Internal Revenue Code includes
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S. B. No. 276 Page 360As Introduced
other laws of the United States relating to federal income
taxes.
(K) "Financial institution" has the meaning given by
section 5725.01 of the Revised Code but does not include a
production credit association as described in 85 Stat. 597, 12
U.S.C.A. 2091.
(L)(1) A "qualifying holding company" is any corporation
satisfying all of the following requirements:
(a) Subject to divisions (L)(2) and (3) of this section,
the net book value of the corporation's intangible assets is
greater than or equal to ninety per cent of the net book value
of all of its assets and at least fifty per cent of the net book
value of all of its assets represents direct or indirect
investments in the equity of, loans and advances to, and
accounts receivable due from related members;
(b) At least ninety per cent of the corporation's gross
income for the taxable year is attributable to the following:
(i) The maintenance, management, ownership, acquisition,
use, and disposition of its intangible property, its aircraft
the use of which is not subject to regulation under 14 C.F.R.
part 121 or part 135, and any real property described in
division (L)(2)(c) of this section;
(ii) The collection and distribution of income from such
property.
(c) The corporation is not a financial institution on the
last day of the taxable year ending prior to the first day of
the tax year;
(d) The corporation's related members make a good faith
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S. B. No. 276 Page 361As Introduced
and reasonable effort to make timely and fully the adjustments
required by division (D) of section 5733.05 of the Revised Code
and to pay timely and fully all uncontested taxes, interest,
penalties, and other fees and charges imposed under this
chapter;
(e) Subject to division (L)(4) of this section, the
corporation elects to be treated as a qualifying holding company
for the tax year.
A corporation otherwise satisfying divisions (L)(1)(a) to
(e) of this section that does not elect to be a qualifying
holding company is not a qualifying holding company for the
purposes of this chapter.
(2)(a)(i) For purposes of making the ninety per cent
computation under division (L)(1)(a) of this section, the net
book value of the corporation's assets shall not include the net
book value of aircraft or real property described in division
(L)(1)(b)(i) of this section.
(ii) For purposes of making the fifty per cent computation
under division (L)(1)(a) of this section, the net book value of
assets shall include the net book value of aircraft or real
property described in division (L)(1)(b)(i) of this section.
(b)(i) As used in division (L) of this section,
"intangible asset" includes, but is not limited to, the
corporation's direct interest in each pass-through entity only
if at all times during the corporation's taxable year ending
prior to the first day of the tax year the corporation's and the
corporation's related members' combined direct and indirect
interests in the capital or profits of such pass-through entity
do not exceed fifty per cent. If the corporation's interest in
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10479
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S. B. No. 276 Page 362As Introduced
the pass-through entity is an intangible asset for that taxable
year, then the distributive share of any income from the pass-
through entity shall be income from an intangible asset for that
taxable year.
(ii) If a corporation's and the corporation's related
members' combined direct and indirect interests in the capital
or profits of a pass-through entity exceed fifty per cent at any
time during the corporation's taxable year ending prior to the
first day of the tax year, "intangible asset" does not include
the corporation's direct interest in the pass-through entity,
and the corporation shall include in its assets its
proportionate share of the assets of any such pass-through
entity and shall include in its gross income its distributive
share of the gross income of such pass-through entity in the
same form as was earned by the pass-through entity.
(iii) A pass-through entity's direct or indirect
proportionate share of any other pass-through entity's assets
shall be included for the purpose of computing the corporation's
proportionate share of the pass-through entity's assets under
division (L)(2)(b)(ii) of this section, and such pass-through
entity's distributive share of any other pass-through entity's
gross income shall be included for purposes of computing the
corporation's distributive share of the pass-through entity's
gross income under division (L)(2)(b)(ii) of this section.
(c) For the purposes of divisions (L)(1)(b)(i), (1)(b)
(ii), (2)(a)(i), and (2)(a)(ii) of this section, real property
is described in division (L)(2)(c) of this section only if all
of the following conditions are present at all times during the
taxable year ending prior to the first day of the tax year:
(i) The real property serves as the headquarters of the
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S. B. No. 276 Page 363As Introduced
corporation's trade or business, or is the place from which the
corporation's trade or business is principally managed or
directed;
(ii) Not more than ten per cent of the value of the real
property and not more than ten per cent of the square footage of
the building or buildings that are part of the real property is
used, made available, or occupied for the purpose of providing,
acquiring, transferring, selling, or disposing of tangible
property or services in the normal course of business to persons
other than related members, the corporation's employees and
their families, and such related members' employees and their
families.
(d) As used in division (L) of this section, "related
member" has the same meaning as in division (A)(6) of section
5733.042 of the Revised Code without regard to division (B) of
that section.
(3) The percentages described in division (L)(1)(a) of
this section shall be equal to the quarterly average of those
percentages as calculated during the corporation's taxable year
ending prior to the first day of the tax year.
(4) With respect to the election described in division (L)
(1)(e) of this section:
(a) The election need not accompany a timely filed report;
(b) The election need not accompany the report; rather,
the election may accompany a subsequently filed but timely
application for refund and timely amended report, or a
subsequently filed but timely petition for reassessment;
(c) The election is not irrevocable;
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S. B. No. 276 Page 364As Introduced
(d) The election applies only to the tax year specified by
the corporation;
(e) The corporation's related members comply with division
(L)(1)(d) of this section.
Nothing in division (L)(4) of this section shall be
construed to extend any statute of limitations set forth in this
chapter.
(M) "Qualifying controlled group" means two or more
corporations that satisfy the ownership and control requirements
of division (A) of section 5733.052 of the Revised Code.
(N) "Limited liability company" means any limited
liability company formed under Chapter 1705. or 1706. of the
Revised Code or under the laws of any other state.
(O) "Pass-through entity" means a corporation that has
made an election under subchapter S of Chapter 1 of Subtitle A
of the Internal Revenue Code for its taxable year under that
code, or a partnership, limited liability company, or any other
person, other than an individual, trust, or estate, if the
partnership, limited liability company, or other person is not
classified for federal income tax purposes as an association
taxed as a corporation.
(P) "Electric company," "combined company," and "telephone
company" have the same meanings as in section 5727.01 of the
Revised Code.
(Q) "Business income" means income arising from
transactions, activities, and sources in the regular course of a
trade or business and includes income from real property,
tangible personal property, and intangible personal property if
the acquisition, rental, management, and disposition of the
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S. B. No. 276 Page 365As Introduced
property constitute integral parts of the regular course of a
trade or business operation. "Business income" includes income,
including gain or loss, from a partial or complete liquidation
of a business, including, but not limited to, gain or loss from
the sale or other disposition of goodwill.
(R) "Nonbusiness income" means all income other than
business income.
Sec. 5733.33. (A) As used in this section:
(1) "Manufacturing machinery and equipment" means engines
and machinery, and tools and implements, of every kind used, or
designed to be used, in refining and manufacturing.
"Manufacturing machinery and equipment" does not include
property acquired after December 31, 1999, that is used:
(a) For the transmission and distribution of electricity;
(b) For the generation of electricity, if fifty per cent
or more of the electricity that the property generates is
consumed, during the one-hundred-twenty-month period commencing
with the date the property is placed in service, by persons that
are not related members to the person who generates the
electricity.
(2) "New manufacturing machinery and equipment" means
manufacturing machinery and equipment, the original use in this
state of which commences with the taxpayer or with a partnership
of which the taxpayer is a partner. "New manufacturing machinery
and equipment" does not include property acquired after December
31, 1999, that is used:
(a) For the transmission and distribution of electricity;
(b) For the generation of electricity, if fifty per cent
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S. B. No. 276 Page 366As Introduced
or more of the electricity that the property generates is
consumed, during the one-hundred-twenty-month period commencing
with the date the property is placed in service, by persons that
are not related members to the person who generates the
electricity.
(3)(a) "Purchase" has the same meaning as in section
179(d)(2) of the Internal Revenue Code.
(b) For purposes of this section, any property that is not
manufactured or assembled primarily by the taxpayer is
considered purchased at the time the agreement to acquire the
property becomes binding. Any property that is manufactured or
assembled primarily by the taxpayer is considered purchased at
the time the taxpayer places the property in service in the
county for which the taxpayer will calculate the county excess
amount.
(c) Notwithstanding section 179(d) of the Internal Revenue
Code, a taxpayer's direct or indirect acquisition of new
manufacturing machinery and equipment is not purchased on or
after July 1, 1995, if the taxpayer, or a person whose
relationship to the taxpayer is described in subparagraphs (A),
(B), or (C) of section 179(d)(2) of the Internal Revenue Code,
had directly or indirectly entered into a binding agreement to
acquire the property at any time prior to July 1, 1995.
(4) "Qualifying period" means the period that begins July
1, 1995, and ends June 30, 2005.
(5) "County average new manufacturing machinery and
equipment investment" means either of the following:
(a) The average annual cost of new manufacturing machinery
and equipment purchased for use in the county during baseline
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S. B. No. 276 Page 367As Introduced
years, in the case of a taxpayer that was in existence for more
than one year during baseline years.
(b) Zero, in the case of a taxpayer that was not in
existence for more than one year during baseline years.
(6) "Partnership" includes a limited liability company
formed under Chapter 1705. or 1706. of the Revised Code or under
the laws of any other state, provided that the company is not
classified for federal income tax purposes as an association
taxable as a corporation.
(7) "Partner" includes a member of a limited liability
company formed under Chapter 1705. or 1706. of the Revised Code
or under the laws of any other state, provided that the company
is not classified for federal income tax purposes as an
association taxable as a corporation.
(8) "Distressed area" means either a municipal corporation
that has a population of at least fifty thousand or a county
that meets two of the following criteria of economic distress,
or a municipal corporation the majority of the population of
which is situated in such a county:
(a) Its average rate of unemployment, during the most
recent five-year period for which data are available, is equal
to at least one hundred twenty-five per cent of the average rate
of unemployment for the United States for the same period;
(b) It has a per capita income equal to or below eighty
per cent of the median county per capita income of the United
States as determined by the most recently available figures from
the United States census bureau;
(c)(i) In the case of a municipal corporation, at least
twenty per cent of the residents have a total income for the
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most recent census year that is below the official poverty line;
(ii) In the case of a county, in intercensal years, the
county has a ratio of transfer payment income to total county
income equal to or greater than twenty-five per cent.
(9) "Eligible area" means a distressed area, a labor
surplus area, an inner city area, or a situational distress
area.
(10) "Inner city area" means, in a municipal corporation
that has a population of at least one hundred thousand and does
not meet the criteria of a labor surplus area or a distressed
area, targeted investment areas established by the municipal
corporation within its boundaries that are comprised of the most
recent census block tracts that individually have at least
twenty per cent of their population at or below the state
poverty level or other census block tracts contiguous to such
census block tracts.
(11) "Labor surplus area" means an area designated as a
labor surplus area by the United States department of labor.
(12) "Official poverty line" has the same meaning as in
division (A) of section 3923.51 of the Revised Code.
(13) "Situational distress area" means a county or a
municipal corporation that has experienced or is experiencing a
closing or downsizing of a major employer, that will adversely
affect the county's or municipal corporation's economy. In order
to be designated as a situational distress area for a period not
to exceed thirty-six months, the county or municipal corporation
may petition the director of development. The petition shall
include written documentation that demonstrates all of the
following adverse effects on the local economy:
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(a) The number of jobs lost by the closing or downsizing;
(b) The impact that the job loss has on the county's or
municipal corporation's unemployment rate as measured by the
state director of job and family services;
(c) The annual payroll associated with the job loss;
(d) The amount of state and local taxes associated with
the job loss;
(e) The impact that the closing or downsizing has on the
suppliers located in the county or municipal corporation.
(14) "Cost" has the same meaning and limitation as in
section 179(d)(3) of the Internal Revenue Code.
(15) "Baseline years" means:
(a) Calendar years 1992, 1993, and 1994, with regard to a
credit claimed for the purchase during calendar year 1995, 1996,
1997, or 1998 of new manufacturing machinery and equipment;
(b) Calendar years 1993, 1994, and 1995, with regard to a
credit claimed for the purchase during calendar year 1999 of new
manufacturing machinery and equipment;
(c) Calendar years 1994, 1995, and 1996, with regard to a
credit claimed for the purchase during calendar year 2000 of new
manufacturing machinery and equipment;
(d) Calendar years 1995, 1996, and 1997, with regard to a
credit claimed for the purchase during calendar year 2001 of new
manufacturing machinery and equipment;
(e) Calendar years 1996, 1997, and 1998, with regard to a
credit claimed for the purchase during calendar year 2002 of new
manufacturing machinery and equipment;
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(f) Calendar years 1997, 1998, and 1999, with regard to a
credit claimed for the purchase during calendar year 2003 of new
manufacturing machinery and equipment;
(g) Calendar years 1998, 1999, and 2000, with regard to a
credit claimed for the purchase during calendar year 2004 of new
manufacturing machinery and equipment;
(h) Calendar years 1999, 2000, and 2001, with regard to a
credit claimed for the purchase on or after January 1, 2005, and
on or before June 30, 2005, of new manufacturing machinery and
equipment.
(16) "Related member" has the same meaning as in section
5733.042 of the Revised Code.
(B)(1) Subject to division (I) of this section, a
nonrefundable credit is allowed against the tax imposed by
section 5733.06 of the Revised Code for a taxpayer that
purchases new manufacturing machinery and equipment during the
qualifying period, provided that the new manufacturing machinery
and equipment are installed in this state no later than June 30,
2006. No credit shall be allowed under this section for taxable
years ending on or after July 1, 2005. The elimination of the
credit for those taxable years includes the elimination of any
remaining one-sevenths of credit amounts for which a portion was
allowed for prior taxable years and the elimination of any
credit carry-forward, but the purchases on which the credits
were based remain subject to grants under section 122.173 of the
Revised Code for those remaining one-seventh amounts or carry-
forward amounts.
(2)(a) Except as otherwise provided in division (B)(2)(b)
of this section, a credit may be claimed under this section in
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S. B. No. 276 Page 371As Introduced
excess of one million dollars only if the cost of all
manufacturing machinery and equipment owned in this state by the
taxpayer claiming the credit on the last day of the calendar
year exceeds the cost of all manufacturing machinery and
equipment owned in this state by the taxpayer on the first day
of that calendar year.
As used in division (B)(2)(a) of this section, "calendar
year" means the calendar year in which the machinery and
equipment for which the credit is claimed was purchased.
(b) Division (B)(2)(a) of this section does not apply if
the taxpayer claiming the credit applies for and is issued a
waiver of the requirement of that division. A taxpayer may apply
to the director of development for such a waiver in the manner
prescribed by the director, and the director may issue such a
waiver if the director determines that granting the credit is
necessary to increase or retain employees in this state, and
that the credit has not caused relocation of manufacturing
machinery and equipment among counties within this state for the
primary purpose of qualifying for the credit.
(C)(1) Except as otherwise provided in division (C)(2) and
division (I) of this section, the credit amount is equal to
seven and one-half per cent of the excess of the cost of the new
manufacturing machinery and equipment purchased during the
calendar year for use in a county over the county average new
manufacturing machinery and equipment investment for that
county.
(2) Subject to division (I) of this section, as used in
division (C)(2) of this section "county excess" means the
taxpayer's excess cost for a county as computed under division
(C)(1) of this section.
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S. B. No. 276 Page 372As Introduced
Subject to division (I) of this section, a taxpayer with a
county excess, whose purchases included purchases for use in any
eligible area in the county, the credit amount is equal to
thirteen and one-half per cent of the cost of the new
manufacturing machinery and equipment purchased during the
calendar year for use in the eligible areas in the county,
provided that the cost subject to the thirteen and one-half per
cent rate shall not exceed the county excess. If the county
excess is greater than the cost of the new manufacturing
machinery and equipment purchased during the calendar year for
use in eligible areas in the county, the credit amount also
shall include an amount equal to seven and one-half per cent of
the amount of the difference.
(3) If a taxpayer is allowed a credit for purchases of new
manufacturing machinery and equipment in more than one county or
eligible area, it shall aggregate the amount of those credits
each year.
(4) The taxpayer shall claim one-seventh of the credit
amount for the tax year immediately following the calendar year
in which the new manufacturing machinery and equipment is
purchased for use in the county by the taxpayer or partnership.
One-seventh of the taxpayer credit amount is allowed for each of
the six ensuing tax years. Except for carried-forward amounts,
the taxpayer is not allowed any credit amount remaining if the
new manufacturing machinery and equipment is sold by the
taxpayer or partnership or is transferred by the taxpayer or
partnership out of the county before the end of the seven-year
period unless, at the time of the sale or transfer, the new
manufacturing machinery and equipment has been fully depreciated
for federal income tax purposes.
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(5)(a) A taxpayer that acquires manufacturing machinery
and equipment as a result of a merger with the taxpayer with
whom commenced the original use in this state of the
manufacturing machinery and equipment, or with a taxpayer that
was a partner in a partnership with whom commenced the original
use in this state of the manufacturing machinery and equipment,
is entitled to any remaining or carried-forward credit amounts
to which the taxpayer was entitled.
(b) A taxpayer that enters into an agreement under
division (C)(3) of section 5709.62 of the Revised Code and that
acquires manufacturing machinery or equipment as a result of
purchasing a large manufacturing facility, as defined in section
5709.61 of the Revised Code, from another taxpayer with whom
commenced the original use in this state of the manufacturing
machinery or equipment, and that operates the large
manufacturing facility so purchased, is entitled to any
remaining or carried-forward credit amounts to which the other
taxpayer who sold the facility would have been entitled under
this section had the other taxpayer not sold the manufacturing
facility or equipment.
(c) New manufacturing machinery and equipment is not
considered sold if a pass-through entity transfers to another
pass-through entity substantially all of its assets as part of a
plan of reorganization under which substantially all gain and
loss is not recognized by the pass-through entity that is
transferring the new manufacturing machinery and equipment to
the transferee and under which the transferee's basis in the new
manufacturing machinery and equipment is determined, in whole or
in part, by reference to the basis of the pass-through entity
which transferred the new manufacturing machinery and equipment
to the transferee.
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S. B. No. 276 Page 374As Introduced
(d) Division (C)(5) of this section shall apply only if
the acquiring taxpayer or transferee does not sell the new
manufacturing machinery and equipment or transfer the new
manufacturing machinery and equipment out of the county before
the end of the seven-year period to which division (C)(4) of
this section refers.
(e) Division (C)(5)(b) of this section applies only to the
extent that the taxpayer that sold the manufacturing machinery
or equipment, upon request, timely provides to the tax
commissioner any information that the tax commissioner considers
to be necessary to ascertain any remaining or carried-forward
amounts to which the taxpayer that sold the facility would have
been entitled under this section had the taxpayer not sold the
manufacturing machinery or equipment. Nothing in division (C)(5)
(b) or (e) of this section shall be construed to allow a
taxpayer to claim any credit amount with respect to the acquired
manufacturing machinery or equipment that is greater than the
amount that would have been available to the other taxpayer that
sold the manufacturing machinery or equipment had the other
taxpayer not sold the manufacturing machinery or equipment.
(D) The taxpayer shall claim the credit in the order
required under section 5733.98 of the Revised Code. Each year,
any credit amount in excess of the tax due under section 5733.06
of the Revised Code after allowing for any other credits that
precede the credit under this section in that order may be
carried forward for three tax years.
(E) A taxpayer purchasing new manufacturing machinery and
equipment and intending to claim the credit shall file, with the
department of development, a notice of intent to claim the
credit on a form prescribed by the department of development.
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S. B. No. 276 Page 375As Introduced
The department of development shall inform the tax commissioner
of the notice of intent to claim the credit. No credit may be
claimed under this section for any manufacturing machinery and
equipment with respect to which a notice was not filed by the
date of a timely filed return, including extensions, for the
taxable year that includes September 30, 2005.
(F) The director of development shall annually certify, by
the first day of January of each year during the qualifying
period, the eligible areas for the tax credit for the calendar
year that includes that first day of January. The director shall
send a copy of the certification to the tax commissioner.
(G) New manufacturing machinery and equipment for which a
taxpayer claims the credit under section 5733.31 or 5733.311 of
the Revised Code shall not be considered new manufacturing
machinery and equipment for purposes of the credit under this
section.
(H)(1) Notwithstanding sections 5733.11 and 5747.13 of the
Revised Code, but subject to division (H)(2) of this section,
the tax commissioner may issue an assessment against a person
with respect to a credit claimed under this section for new
manufacturing machinery and equipment described in division (A)
(1)(b) or (2)(b) of this section, if the machinery or equipment
subsequently does not qualify for the credit.
(2) Division (H)(1) of this section shall not apply after
the twenty-fourth month following the last day of the period
described in divisions (A)(1)(b) and (2)(b) of this section.
(I) Notwithstanding any other provision of this section to
the contrary, in the case of a qualifying controlled group, the
credit available under this section to a taxpayer or taxpayers
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S. B. No. 276 Page 376As Introduced
in the qualifying controlled group shall be computed as if all
corporations in the group were a single corporation. The credit
shall be allocated to such a taxpayer or taxpayers in the group
in any amount elected for the taxable year by the group. Such
election shall be revocable and amendable during the period
described in division (B) of section 5733.12 of the Revised
Code.
This division applies to all purchases of new
manufacturing machinery and equipment made on or after January
1, 2001, and to all baseline years used to compute any credit
attributable to such purchases; provided, that this division may
be applied solely at the election of the qualifying controlled
group with respect to all purchases of new manufacturing
machinery and equipment made before that date, and to all
baseline years used to compute any credit attributable to such
purchases. The qualifying controlled group at any time may elect
to apply this division to purchases made prior to January 1,
2001, subject to the following:
(1) The election is irrevocable;
(2) The election need not accompany a timely filed report,
but the election may accompany a subsequently filed but timely
application for refund, a subsequently filed but timely amended
report, or a subsequently filed but timely petition for
reassessment.
Sec. 5733.42. (A) As used in this section:
(1) "Eligible training program" means a program to provide
job skills to eligible employees who are unable effectively to
function on the job due to skill deficiencies or who would
otherwise be displaced because of their skill deficiencies or
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S. B. No. 276 Page 377As Introduced
inability to use new technology, or to provide job skills to
eligible employees that enable them to perform other job duties
for the taxpayer. Eligible training programs do not include
executive, management, or personal enrichment training programs,
or training programs intended exclusively for personal career
development.
(2) "Eligible employee" means an individual who is
employed in this state by a taxpayer and has been so employed by
the same taxpayer for at least one hundred eighty consecutive
days before the day an application for the credit is filed under
this section. "Eligible employee" does not include any employee
for which a credit is claimed pursuant to division (A)(5) of
section 5709.65 of the Revised Code for all or any part of the
same year, an employee who is not a full-time employee, or
executive or managerial personnel, except for the immediate
supervisors of nonexecutive, nonmanagerial personnel.
(3) "Eligible training costs" means:
(a) Direct instructional costs, such as instructor
salaries, materials and supplies, textbooks and manuals,
videotapes, and other instructional media and training equipment
used exclusively for the purpose of training eligible employees;
(b) Wages paid to eligible employees for time devoted
exclusively to an eligible training program during normal paid
working hours.
(4) "Full-time employee" means an individual who is
employed for consideration for at least thirty-five hours per
week, or who renders any other standard of service generally
accepted by custom or specified by contract as full-time
employment.
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(5) "Partnership" includes a limited liability company
formed under Chapter 1705. or 1706. of the Revised Code or under
the laws of another state, provided that the company is not
classified for federal income tax purposes as an association
taxable as a corporation.
(B) There is hereby allowed a nonrefundable credit against
the tax imposed by section 5733.06 of the Revised Code for
taxpayers for which a tax credit certificate is issued under
division (C) of this section. The credit may be claimed for tax
years 2004, 2005, 2006, 2007, and 2008. The amount of the credit
for tax year 2004 shall equal one-half of the average of the
eligible training costs paid or incurred by the taxpayer during
calendar years 1999, 2000, and 2001, not to exceed one thousand
dollars for each eligible employee on account of whom eligible
training costs were paid or incurred by the taxpayer during
those calendar years. The amount of the credit for tax year 2005
shall equal one-half of the average of the eligible training
costs paid or incurred by the taxpayer during calendar years
2002, 2003, and 2004, not to exceed one thousand dollars for
each eligible employee on account of whom eligible training
costs were paid or incurred by the taxpayer during those
calendar years. The amount of the credit for tax year 2006 shall
equal one-half of the average of the eligible training costs
paid or incurred by the taxpayer during calendar years 2003,
2004, and 2005, not to exceed one thousand dollars for each
eligible employee on account of whom eligible training costs
were paid or incurred by the taxpayer during those calendar
years. The amount of the credit for tax year 2007 shall equal
one-half of the average of the eligible training costs paid or
incurred by the taxpayer during calendar years 2004, 2005, and
2006, not to exceed one thousand dollars for each eligible
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S. B. No. 276 Page 379As Introduced
employee on account of whom eligible training costs were paid or
incurred by the taxpayer during those calendar years. The amount
of the credit for tax year 2008 shall equal one-half of the
average of the eligible training costs paid or incurred by the
taxpayer during calendar years 2005, 2006, and 2007, not to
exceed one thousand dollars for each eligible employee on
account of whom eligible training costs were paid or incurred by
the taxpayer during those calendar years.
The credit claimed by a taxpayer each tax year shall not
exceed one hundred thousand dollars.
(C) A taxpayer who proposes to conduct an eligible
training program may apply to the director of job and family
services for a tax credit certificate under this section. The
taxpayer may apply for such a certificate for tax years 2004,
2005, 2006, 2007, and 2008 subject to division (L) of this
section. The director shall prescribe the form of the
application, which shall require a detailed description of the
proposed training program. The director may require applicants
to remit an application fee with each application filed with the
director. The fee shall not exceed the reasonable and necessary
expenses incurred by the director in receiving, reviewing, and
approving such applications and issuing tax credit certificates.
Proceeds from fees shall be used solely for the purpose of
receiving, reviewing, and approving such applications and
issuing such certificates.
After receipt of an application, the director shall
authorize a credit under this section by issuing a tax credit
certificate, in the form prescribed by the director, if the
director determines all of the following:
(1) The proposed training program is an eligible training
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program under this section;
(2) The proposed training program is economically sound
and will benefit the people of this state by improving workforce
skills and strengthening the economy of this state;
(3) Receiving the tax credit is a major factor in the
taxpayer's decision to go forward with the training program;
(4) Authorization of the credit is consistent with
division (H) of this section.
The credit also is allowed for a taxpayer that is a
partner in a partnership that pays or incurs eligible training
costs. Such a taxpayer shall determine the taxpayer's credit
amount in the manner prescribed by division (K) of this section.
(D) If the director of job and family services denies an
application for a tax credit certificate, the director shall
send notice of the denial and the reason for denial to the
applicant by certified mail, return receipt requested. If the
director determines that an authorized training program, as
actually conducted, fails to meet the requirements of this
section or to comply with any condition set forth in the
authorization, the director may reduce the amount of the tax
credit previously granted. If the director reduces a tax credit,
the director shall send notice of the reduction and the reason
for the reduction to the taxpayer by certified mail, return
receipt requested, and shall certify the reduction to the tax
commissioner or, in the case of the reduction of a credit
claimed by an insurance company, the superintendent of
insurance. The tax commissioner or superintendent of insurance
shall reduce the credit that may be claimed by the taxpayer
accordingly. Within sixty days after receiving a notice of
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denial or notice of reduction of the tax credit, an applicant or
taxpayer may request, in writing, a hearing before the director
to review the denial or reduction. Within sixty days after
receiving a request that is filed within the prescribed time,
the director shall hold such a hearing at a location to be
determined by the director. Within thirty days after the hearing
is adjourned, the director shall issue a redetermination
affirming, reversing, or modifying the denial or reduction of
the tax credit and send notice of the redetermination to the
applicant or taxpayer by certified mail, return receipt
requested, and shall issue a notice of the redetermination to
the tax commissioner or superintendent of insurance. If an
applicant or taxpayer is aggrieved by the director's
redetermination, the applicant or taxpayer may appeal the
redetermination to the board of tax appeals in the manner
prescribed by section 5717.02 of the Revised Code.
(E) A taxpayer to which a tax credit certificate is issued
shall retain records indicating the eligible training costs it
pays or incurs for the eligible training program for which the
certificate is issued for four years following the end of the
tax year for which the credit is claimed. Such records shall be
open to inspection by the director of job and family services
upon the director's request during business hours.
Financial statements and other information submitted by an
applicant to the director of job and family services for a tax
credit under this section, and any information taken for any
purpose from such statements or information, are not public
records subject to section 149.43 of the Revised Code. However,
the director of job and family services, the tax commissioner,
or superintendent of insurance may make use of the statements
and other information for purposes of issuing public reports or
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in connection with court proceedings concerning tax credits
allowed under this section and sections 5725.31 and 5729.07 of
the Revised Code.
(F) The director of job and family services, in accordance
with Chapter 119. of the Revised Code, shall adopt rules
necessary to implement this section and sections 5725.31 and
5729.07 of the Revised Code. The rules shall be adopted after
consultation with the tax commissioner and the superintendent of
insurance. The rules shall require that if a taxpayer to which a
tax credit certificate is issued under any of those sections
permanently relocates or transfers employees trained under the
tax credit certificate to another state or country within two
years of receiving the certificate, the taxpayer shall repay the
total amount of the tax credit received by the taxpayer for any
employees permanently relocated or transferred. At the time the
director gives public notice under division (A) of section
119.03 of the Revised Code of the adoption of the rules, the
director shall submit copies of the proposed rules to the
chairpersons and ranking minority members of the standing
committees in the senate and the house of representatives to
which legislation on economic development matters are
customarily referred.
(G) On or before the thirtieth day of September of 2001,
2003, 2004, 2005, 2006, 2007, and 2008 the director of job and
family services shall submit a report to the governor, the
president of the senate, and the speaker of the house of
representatives on the tax credit program under this section and
sections 5725.31 and 5729.07 of the Revised Code. The report
shall include information on the number of training programs
that were authorized under those sections during the preceding
calendar year, a description of each authorized training
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program, the dollar amounts of the credits granted, and an
estimate of the impact of the credits on the economy of this
state.
(H) The aggregate amount of credits authorized under this
section and sections 5725.31 and 5729.07 of the Revised Code
shall not exceed twenty million dollars per calendar year. No
more than ten million dollars in credits per calendar year shall
be authorized for persons engaged primarily in manufacturing. No
less than five million dollars in credits per calendar year
shall be set aside for persons engaged primarily in activities
other than manufacturing and having fewer than five hundred
employees. Subject to such limits, the director of job and
family services shall adopt a rule under division (F) of this
section that establishes criteria and procedures for
distribution of the credits.
(I) A nonrefundable credit allowed under this section
shall be claimed in the order required under section 5733.98 of
the Revised Code.
(J) The taxpayer may carry forward any credit amount in
excess of its tax due after allowing for any other credits that
precede the credit under this section in the order required
under section 5733.98 of the Revised Code. The excess credit may
be carried forward for three years following the tax year for
which it is first claimed under this section.
(K) A taxpayer that is a partner in a partnership on the
last day of the third calendar year of the three-year period
during which the partnership pays or incurs eligible training
costs may claim a credit under this section for the tax year
immediately following that calendar year. The amount of a
partner's credit equals the partner's interest in the
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partnership on the last day of such calendar year multiplied by
the credit available to the partnership as computed by the
partnership.
(L) The director of job and family services shall not
authorize any credits under this section and sections 5725.31
and 5729.07 of the Revised Code for eligible training costs paid
or incurred after December 31, 2007.
Sec. 5747.01. Except as otherwise expressly provided or
clearly appearing from the context, any term used in this
chapter that is not otherwise defined in this section has the
same meaning as when used in a comparable context in the laws of
the United States relating to federal income taxes or if not
used in a comparable context in those laws, has the same meaning
as in section 5733.40 of the Revised Code. Any reference in this
chapter to the Internal Revenue Code includes other laws of the
United States relating to federal income taxes.
As used in this chapter:
(A) "Adjusted gross income" or "Ohio adjusted gross
income" means federal adjusted gross income, as defined and used
in the Internal Revenue Code, adjusted as provided in this
section:
(1) Add interest or dividends on obligations or securities
of any state or of any political subdivision or authority of any
state, other than this state and its subdivisions and
authorities.
(2) Add interest or dividends on obligations of any
authority, commission, instrumentality, territory, or possession
of the United States to the extent that the interest or
dividends are exempt from federal income taxes but not from
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state income taxes.
(3) Deduct interest or dividends on obligations of the
United States and its territories and possessions or of any
authority, commission, or instrumentality of the United States
to the extent that the interest or dividends are included in
federal adjusted gross income but exempt from state income taxes
under the laws of the United States.
(4) Deduct disability and survivor's benefits to the
extent included in federal adjusted gross income.
(5) Deduct benefits under Title II of the Social Security
Act and tier 1 railroad retirement benefits to the extent
included in federal adjusted gross income under section 86 of
the Internal Revenue Code.
(6) In the case of a taxpayer who is a beneficiary of a
trust that makes an accumulation distribution as defined in
section 665 of the Internal Revenue Code, add, for the
beneficiary's taxable years beginning before 2002, the portion,
if any, of such distribution that does not exceed the
undistributed net income of the trust for the three taxable
years preceding the taxable year in which the distribution is
made to the extent that the portion was not included in the
trust's taxable income for any of the trust's taxable years
beginning in 2002 or thereafter. "Undistributed net income of a
trust" means the taxable income of the trust increased by (a)(i)
the additions to adjusted gross income required under division
(A) of this section and (ii) the personal exemptions allowed to
the trust pursuant to section 642(b) of the Internal Revenue
Code, and decreased by (b)(i) the deductions to adjusted gross
income required under division (A) of this section, (ii) the
amount of federal income taxes attributable to such income, and
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(iii) the amount of taxable income that has been included in the
adjusted gross income of a beneficiary by reason of a prior
accumulation distribution. Any undistributed net income included
in the adjusted gross income of a beneficiary shall reduce the
undistributed net income of the trust commencing with the
earliest years of the accumulation period.
(7) Deduct the amount of wages and salaries, if any, not
otherwise allowable as a deduction but that would have been
allowable as a deduction in computing federal adjusted gross
income for the taxable year, had the targeted jobs credit
allowed and determined under sections 38, 51, and 52 of the
Internal Revenue Code not been in effect.
(8) Deduct any interest or interest equivalent on public
obligations and purchase obligations to the extent that the
interest or interest equivalent is included in federal adjusted
gross income.
(9) Add any loss or deduct any gain resulting from the
sale, exchange, or other disposition of public obligations to
the extent that the loss has been deducted or the gain has been
included in computing federal adjusted gross income.
(10) Deduct or add amounts, as provided under section
5747.70 of the Revised Code, related to contributions to
variable college savings program accounts made or tuition units
purchased pursuant to Chapter 3334. of the Revised Code.
(11)(a) Deduct, to the extent not otherwise allowable as a
deduction or exclusion in computing federal or Ohio adjusted
gross income for the taxable year, the amount the taxpayer paid
during the taxable year for medical care insurance and qualified
long-term care insurance for the taxpayer, the taxpayer's
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spouse, and dependents. No deduction for medical care insurance
under division (A)(11)(a) of this section shall be allowed
either to any taxpayer who is eligible to participate in any
subsidized health plan maintained by any employer of the
taxpayer or of the taxpayer's spouse, or to any taxpayer who is
entitled to, or on application would be entitled to, benefits
under part A of Title XVIII of the "Social Security Act," 49
Stat. 620 (1935), 42 U.S.C. 301, as amended. For the purposes of
division (A)(11)(a) of this section, "subsidized health plan"
means a health plan for which the employer pays any portion of
the plan's cost. The deduction allowed under division (A)(11)(a)
of this section shall be the net of any related premium refunds,
related premium reimbursements, or related insurance premium
dividends received during the taxable year.
(b) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income
during the taxable year, the amount the taxpayer paid during the
taxable year, not compensated for by any insurance or otherwise,
for medical care of the taxpayer, the taxpayer's spouse, and
dependents, to the extent the expenses exceed seven and one-half
per cent of the taxpayer's federal adjusted gross income.
(c) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income, any
amount included in federal adjusted gross income under section
105 or not excluded under section 106 of the Internal Revenue
Code solely because it relates to an accident and health plan
for a person who otherwise would be a "qualifying relative" and
thus a "dependent" under section 152 of the Internal Revenue
Code but for the fact that the person fails to meet the income
and support limitations under section 152(d)(1)(B) and (C) of
the Internal Revenue Code.
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S. B. No. 276 Page 388As Introduced
(d) For purposes of division (A)(11) of this section,
"medical care" has the meaning given in section 213 of the
Internal Revenue Code, subject to the special rules,
limitations, and exclusions set forth therein, and "qualified
long-term care" has the same meaning given in section 7702B(c)
of the Internal Revenue Code. Solely for purposes of divisions
(A)(11)(a) and (c) of this section, "dependent" includes a
person who otherwise would be a "qualifying relative" and thus a
"dependent" under section 152 of the Internal Revenue Code but
for the fact that the person fails to meet the income and
support limitations under section 152(d)(1)(B) and (C) of the
Internal Revenue Code.
(12)(a) Deduct any amount included in federal adjusted
gross income solely because the amount represents a
reimbursement or refund of expenses that in any year the
taxpayer had deducted as an itemized deduction pursuant to
section 63 of the Internal Revenue Code and applicable United
States department of the treasury regulations. The deduction
otherwise allowed under division (A)(12)(a) of this section
shall be reduced to the extent the reimbursement is attributable
to an amount the taxpayer deducted under this section in any
taxable year.
(b) Add any amount not otherwise included in Ohio adjusted
gross income for any taxable year to the extent that the amount
is attributable to the recovery during the taxable year of any
amount deducted or excluded in computing federal or Ohio
adjusted gross income in any taxable year.
(13) Deduct any portion of the deduction described in
section 1341(a)(2) of the Internal Revenue Code, for repaying
previously reported income received under a claim of right, that
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meets both of the following requirements:
(a) It is allowable for repayment of an item that was
included in the taxpayer's adjusted gross income for a prior
taxable year and did not qualify for a credit under division (A)
or (B) of section 5747.05 of the Revised Code for that year;
(b) It does not otherwise reduce the taxpayer's adjusted
gross income for the current or any other taxable year.
(14) Deduct an amount equal to the deposits made to, and
net investment earnings of, a medical savings account during the
taxable year, in accordance with section 3924.66 of the Revised
Code. The deduction allowed by division (A)(14) of this section
does not apply to medical savings account deposits and earnings
otherwise deducted or excluded for the current or any other
taxable year from the taxpayer's federal adjusted gross income.
(15)(a) Add an amount equal to the funds withdrawn from a
medical savings account during the taxable year, and the net
investment earnings on those funds, when the funds withdrawn
were used for any purpose other than to reimburse an account
holder for, or to pay, eligible medical expenses, in accordance
with section 3924.66 of the Revised Code;
(b) Add the amounts distributed from a medical savings
account under division (A)(2) of section 3924.68 of the Revised
Code during the taxable year.
(16) Add any amount claimed as a credit under section
5747.059 of the Revised Code to the extent that such amount
satisfies either of the following:
(a) The amount was deducted or excluded from the
computation of the taxpayer's federal adjusted gross income as
required to be reported for the taxpayer's taxable year under
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S. B. No. 276 Page 390As Introduced
the Internal Revenue Code;
(b) The amount resulted in a reduction of the taxpayer's
federal adjusted gross income as required to be reported for any
of the taxpayer's taxable years under the Internal Revenue Code.
(17) Deduct the amount contributed by the taxpayer to an
individual development account program established by a county
department of job and family services pursuant to sections
329.11 to 329.14 of the Revised Code for the purpose of matching
funds deposited by program participants. On request of the tax
commissioner, the taxpayer shall provide any information that,
in the tax commissioner's opinion, is necessary to establish the
amount deducted under division (A)(17) of this section.
(18) Beginning in taxable year 2001 but not for any
taxable year beginning after December 31, 2005, if the taxpayer
is married and files a joint return and the combined federal
adjusted gross income of the taxpayer and the taxpayer's spouse
for the taxable year does not exceed one hundred thousand
dollars, or if the taxpayer is single and has a federal adjusted
gross income for the taxable year not exceeding fifty thousand
dollars, deduct amounts paid during the taxable year for
qualified tuition and fees paid to an eligible institution for
the taxpayer, the taxpayer's spouse, or any dependent of the
taxpayer, who is a resident of this state and is enrolled in or
attending a program that culminates in a degree or diploma at an
eligible institution. The deduction may be claimed only to the
extent that qualified tuition and fees are not otherwise
deducted or excluded for any taxable year from federal or Ohio
adjusted gross income. The deduction may not be claimed for
educational expenses for which the taxpayer claims a credit
under section 5747.27 of the Revised Code.
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S. B. No. 276 Page 391As Introduced
(19) Add any reimbursement received during the taxable
year of any amount the taxpayer deducted under division (A)(18)
of this section in any previous taxable year to the extent the
amount is not otherwise included in Ohio adjusted gross income.
(20)(a)(i) Subject to divisions (A)(20)(a)(iii), (iv), and
(v) of this section, add five-sixths of the amount of
depreciation expense allowed by subsection (k) of section 168 of
the Internal Revenue Code, including the taxpayer's
proportionate or distributive share of the amount of
depreciation expense allowed by that subsection to a pass-
through entity in which the taxpayer has a direct or indirect
ownership interest.
(ii) Subject to divisions (A)(20)(a)(iii), (iv), and (v)
of this section, add five-sixths of the amount of qualifying
section 179 depreciation expense, including the taxpayer's
proportionate or distributive share of the amount of qualifying
section 179 depreciation expense allowed to any pass-through
entity in which the taxpayer has a direct or indirect ownership
interest.
(iii) Subject to division (A)(20)(a)(v) of this section,
for taxable years beginning in 2012 or thereafter, if the
increase in income taxes withheld by the taxpayer is equal to or
greater than ten per cent of income taxes withheld by the
taxpayer during the taxpayer's immediately preceding taxable
year, "two-thirds" shall be substituted for "five-sixths" for
the purpose of divisions (A)(20)(a)(i) and (ii) of this section.
(iv) Subject to division (A)(20)(a)(v) of this section,
for taxable years beginning in 2012 or thereafter, a taxpayer is
not required to add an amount under division (A)(20) of this
section if the increase in income taxes withheld by the taxpayer
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S. B. No. 276 Page 392As Introduced
and by any pass-through entity in which the taxpayer has a
direct or indirect ownership interest is equal to or greater
than the sum of (I) the amount of qualifying section 179
depreciation expense and (II) the amount of depreciation expense
allowed to the taxpayer by subsection (k) of section 168 of the
Internal Revenue Code, and including the taxpayer's
proportionate or distributive shares of such amounts allowed to
any such pass-through entities.
(v) If a taxpayer directly or indirectly incurs a net
operating loss for the taxable year for federal income tax
purposes, to the extent such loss resulted from depreciation
expense allowed by subsection (k) of section 168 of the Internal
Revenue Code and by qualifying section 179 depreciation expense,
"the entire" shall be substituted for "five-sixths of the" for
the purpose of divisions (A)(20)(a)(i) and (ii) of this section.
The tax commissioner, under procedures established by the
commissioner, may waive the add-backs related to a pass-through
entity if the taxpayer owns, directly or indirectly, less than
five per cent of the pass-through entity.
(b) Nothing in division (A)(20) of this section shall be
construed to adjust or modify the adjusted basis of any asset.
(c) To the extent the add-back required under division (A)
(20)(a) of this section is attributable to property generating
nonbusiness income or loss allocated under section 5747.20 of
the Revised Code, the add-back shall be sitused to the same
location as the nonbusiness income or loss generated by the
property for the purpose of determining the credit under
division (A) of section 5747.05 of the Revised Code. Otherwise,
the add-back shall be apportioned, subject to one or more of the
four alternative methods of apportionment enumerated in section
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5747.21 of the Revised Code.
(d) For the purposes of division (A)(20)(a)(v) of this
section, net operating loss carryback and carryforward shall not
include the allowance of any net operating loss deduction
carryback or carryforward to the taxable year to the extent such
loss resulted from depreciation allowed by section 168(k) of the
Internal Revenue Code and by the qualifying section 179
depreciation expense amount.
(e) For the purposes of divisions (A)(20) and (21) of this
section:
(i) "Income taxes withheld" means the total amount
withheld and remitted under sections 5747.06 and 5747.07 of the
Revised Code by an employer during the employer's taxable year.
(ii) "Increase in income taxes withheld" means the amount
by which the amount of income taxes withheld by an employer
during the employer's current taxable year exceeds the amount of
income taxes withheld by that employer during the employer's
immediately preceding taxable year.
(iii) "Qualifying section 179 depreciation expense" means
the difference between (I) the amount of depreciation expense
directly or indirectly allowed to a taxpayer under section 179
of the Internal Revised Code, and (II) the amount of
depreciation expense directly or indirectly allowed to the
taxpayer under section 179 of the Internal Revenue Code as that
section existed on December 31, 2002.
(21)(a) If the taxpayer was required to add an amount
under division (A)(20)(a) of this section for a taxable year,
deduct one of the following:
(i) One-fifth of the amount so added for each of the five
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S. B. No. 276 Page 394As Introduced
succeeding taxable years if the amount so added was five-sixths
of qualifying section 179 depreciation expense or depreciation
expense allowed by subsection (k) of section 168 of the Internal
Revenue Code;
(ii) One-half of the amount so added for each of the two
succeeding taxable years if the amount so added was two-thirds
of such depreciation expense;
(iii) One-sixth of the amount so added for each of the six
succeeding taxable years if the entire amount of such
depreciation expense was so added.
(b) If the amount deducted under division (A)(21)(a) of
this section is attributable to an add-back allocated under
division (A)(20)(c) of this section, the amount deducted shall
be sitused to the same location. Otherwise, the add-back shall
be apportioned using the apportionment factors for the taxable
year in which the deduction is taken, subject to one or more of
the four alternative methods of apportionment enumerated in
section 5747.21 of the Revised Code.
(c) No deduction is available under division (A)(21)(a) of
this section with regard to any depreciation allowed by section
168(k) of the Internal Revenue Code and by the qualifying
section 179 depreciation expense amount to the extent that such
depreciation results in or increases a federal net operating
loss carryback or carryforward. If no such deduction is
available for a taxable year, the taxpayer may carry forward the
amount not deducted in such taxable year to the next taxable
year and add that amount to any deduction otherwise available
under division (A)(21)(a) of this section for that next taxable
year. The carryforward of amounts not so deducted shall continue
until the entire addition required by division (A)(20)(a) of
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this section has been deducted.
(d) No refund shall be allowed as a result of adjustments
made by division (A)(21) of this section.
(22) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received during the
taxable year as reimbursement for life insurance premiums under
section 5919.31 of the Revised Code.
(23) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received during the
taxable year as a death benefit paid by the adjutant general
under section 5919.33 of the Revised Code.
(24) Deduct, to the extent included in federal adjusted
gross income and not otherwise allowable as a deduction or
exclusion in computing federal or Ohio adjusted gross income for
the taxable year, military pay and allowances received by the
taxpayer during the taxable year for active duty service in the
United States army, air force, navy, marine corps, or coast
guard or reserve components thereof or the national guard. The
deduction may not be claimed for military pay and allowances
received by the taxpayer while the taxpayer is stationed in this
state.
(25) Deduct, to the extent not otherwise allowable as a
deduction or exclusion in computing federal or Ohio adjusted
gross income for the taxable year and not otherwise compensated
for by any other source, the amount of qualified organ donation
expenses incurred by the taxpayer during the taxable year, not
to exceed ten thousand dollars. A taxpayer may deduct qualified
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organ donation expenses only once for all taxable years
beginning with taxable years beginning in 2007.
For the purposes of division (A)(25) of this section:
(a) "Human organ" means all or any portion of a human
liver, pancreas, kidney, intestine, or lung, and any portion of
human bone marrow.
(b) "Qualified organ donation expenses" means travel
expenses, lodging expenses, and wages and salary forgone by a
taxpayer in connection with the taxpayer's donation, while
living, of one or more of the taxpayer's human organs to another
human being.
(26) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, amounts received by the taxpayer as retired
personnel pay for service in the uniformed services or reserve
components thereof, or the national guard, or received by the
surviving spouse or former spouse of such a taxpayer under the
survivor benefit plan on account of such a taxpayer's death. If
the taxpayer receives income on account of retirement paid under
the federal civil service retirement system or federal employees
retirement system, or under any successor retirement program
enacted by the congress of the United States that is established
and maintained for retired employees of the United States
government, and such retirement income is based, in whole or in
part, on credit for the taxpayer's uniformed service, the
deduction allowed under this division shall include only that
portion of such retirement income that is attributable to the
taxpayer's uniformed service, to the extent that portion of such
retirement income is otherwise included in federal adjusted
gross income and is not otherwise deducted under this section.
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Any amount deducted under division (A)(26) of this section is
not included in a taxpayer's adjusted gross income for the
purposes of section 5747.055 of the Revised Code. No amount may
be deducted under division (A)(26) of this section on the basis
of which a credit was claimed under section 5747.055 of the
Revised Code.
(27) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received during the
taxable year from the military injury relief fund created in
section 5902.05 of the Revised Code.
(28) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, the amount the taxpayer received as a veterans
bonus during the taxable year from the Ohio department of
veterans services as authorized by Section 2r of Article VIII,
Ohio Constitution.
(29) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, any income derived from a transfer agreement
or from the enterprise transferred under that agreement under
section 4313.02 of the Revised Code.
(30) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income for
the taxable year, Ohio college opportunity or federal Pell grant
amounts received by the taxpayer or the taxpayer's spouse or
dependent pursuant to section 3333.122 of the Revised Code or 20
U.S.C. 1070a, et seq., and used to pay room or board furnished
by the educational institution for which the grant was awarded
at the institution's facilities, including meal plans
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S. B. No. 276 Page 398As Introduced
administered by the institution. For the purposes of this
division, receipt of a grant includes the distribution of a
grant directly to an educational institution and the crediting
of the grant to the enrollee's account with the institution.
(31) Deduct from the portion of an individual's federal
adjusted gross income that is business income, to the extent not
otherwise deducted or excluded in computing federal adjusted
gross income for the taxable year, one hundred twenty-five
thousand dollars for each spouse if spouses file separate
returns under section 5747.08 of the Revised Code or two hundred
fifty thousand dollars for all other individuals.
(32) Deduct, as provided under section 5747.78 of the
Revised Code, contributions to ABLE savings accounts made in
accordance with sections 113.50 to 113.56 of the Revised Code.
(33)(a) Deduct, to the extent not otherwise deducted or
excluded in computing federal or Ohio adjusted gross income
during the taxable year, all of the following:
(i) Compensation paid to a qualifying employee described
in division (A)(14)(a) of section 5703.94 of the Revised Code to
the extent such compensation is for disaster work conducted in
this state during a disaster response period pursuant to a
qualifying solicitation received by the employee's employer;
(ii) Compensation paid to a qualifying employee described
in division (A)(14)(b) of section 5703.94 of the Revised Code to
the extent such compensation is for disaster work conducted in
this state by the employee during the disaster response period
on critical infrastructure owned or used by the employee's
employer;
(iii) Income received by an out-of-state disaster business
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11572
11573
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S. B. No. 276 Page 399As Introduced
for disaster work conducted in this state during a disaster
response period, or, if the out-of-state disaster business is a
pass-through entity, a taxpayer's distributive share of the
pass-through entity's income from the business conducting
disaster work in this state during a disaster response period,
if, in either case, the disaster work is conducted pursuant to a
qualifying solicitation received by the business.
(b) All terms used in division (A)(33) of this section
have the same meanings as in section 5703.94 of the Revised
Code.
(34) For a taxpayer who is a qualifying Ohio educator,
deduct, to the extent not otherwise deducted or excluded in
computing federal or Ohio adjusted gross income for the taxable
year, the lesser of two hundred fifty dollars or the amount of
expenses described in subsections (a)(2)(D)(i) and (ii) of
section 62 of the Internal Revenue Code paid or incurred by the
taxpayer during the taxpayer's taxable year in excess of the
amount the taxpayer is authorized to deduct for that taxable
year under subsection (a)(2)(D) of that section.
(B) "Business income" means income, including gain or
loss, arising from transactions, activities, and sources in the
regular course of a trade or business and includes income, gain,
or loss from real property, tangible property, and intangible
property if the acquisition, rental, management, and disposition
of the property constitute integral parts of the regular course
of a trade or business operation. "Business income" includes
income, including gain or loss, from a partial or complete
liquidation of a business, including, but not limited to, gain
or loss from the sale or other disposition of goodwill.
(C) "Nonbusiness income" means all income other than
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11604
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S. B. No. 276 Page 400As Introduced
business income and may include, but is not limited to,
compensation, rents and royalties from real or tangible personal
property, capital gains, interest, dividends and distributions,
patent or copyright royalties, or lottery winnings, prizes, and
awards.
(D) "Compensation" means any form of remuneration paid to
an employee for personal services.
(E) "Fiduciary" means a guardian, trustee, executor,
administrator, receiver, conservator, or any other person acting
in any fiduciary capacity for any individual, trust, or estate.
(F) "Fiscal year" means an accounting period of twelve
months ending on the last day of any month other than December.
(G) "Individual" means any natural person.
(H) "Internal Revenue Code" means the "Internal Revenue
Code of 1986," 100 Stat. 2085, 26 U.S.C.A. 1, as amended.
(I) "Resident" means any of the following, provided that
division (I)(3) of this section applies only to taxable years of
a trust beginning in 2002 or thereafter:
(1) An individual who is domiciled in this state, subject
to section 5747.24 of the Revised Code;
(2) The estate of a decedent who at the time of death was
domiciled in this state. The domicile tests of section 5747.24
of the Revised Code are not controlling for purposes of division
(I)(2) of this section.
(3) A trust that, in whole or part, resides in this state.
If only part of a trust resides in this state, the trust is a
resident only with respect to that part.
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S. B. No. 276 Page 401As Introduced
For the purposes of division (I)(3) of this section:
(a) A trust resides in this state for the trust's current
taxable year to the extent, as described in division (I)(3)(d)
of this section, that the trust consists directly or indirectly,
in whole or in part, of assets, net of any related liabilities,
that were transferred, or caused to be transferred, directly or
indirectly, to the trust by any of the following:
(i) A person, a court, or a governmental entity or
instrumentality on account of the death of a decedent, but only
if the trust is described in division (I)(3)(e)(i) or (ii) of
this section;
(ii) A person who was domiciled in this state for the
purposes of this chapter when the person directly or indirectly
transferred assets to an irrevocable trust, but only if at least
one of the trust's qualifying beneficiaries is domiciled in this
state for the purposes of this chapter during all or some
portion of the trust's current taxable year;
(iii) A person who was domiciled in this state for the
purposes of this chapter when the trust document or instrument
or part of the trust document or instrument became irrevocable,
but only if at least one of the trust's qualifying beneficiaries
is a resident domiciled in this state for the purposes of this
chapter during all or some portion of the trust's current
taxable year. If a trust document or instrument became
irrevocable upon the death of a person who at the time of death
was domiciled in this state for purposes of this chapter, that
person is a person described in division (I)(3)(a)(iii) of this
section.
(b) A trust is irrevocable to the extent that the
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S. B. No. 276 Page 402As Introduced
transferor is not considered to be the owner of the net assets
of the trust under sections 671 to 678 of the Internal Revenue
Code.
(c) With respect to a trust other than a charitable lead
trust, "qualifying beneficiary" has the same meaning as
"potential current beneficiary" as defined in section 1361(e)(2)
of the Internal Revenue Code, and with respect to a charitable
lead trust "qualifying beneficiary" is any current, future, or
contingent beneficiary, but with respect to any trust
"qualifying beneficiary" excludes a person or a governmental
entity or instrumentality to any of which a contribution would
qualify for the charitable deduction under section 170 of the
Internal Revenue Code.
(d) For the purposes of division (I)(3)(a) of this
section, the extent to which a trust consists directly or
indirectly, in whole or in part, of assets, net of any related
liabilities, that were transferred directly or indirectly, in
whole or part, to the trust by any of the sources enumerated in
that division shall be ascertained by multiplying the fair
market value of the trust's assets, net of related liabilities,
by the qualifying ratio, which shall be computed as follows:
(i) The first time the trust receives assets, the
numerator of the qualifying ratio is the fair market value of
those assets at that time, net of any related liabilities, from
sources enumerated in division (I)(3)(a) of this section. The
denominator of the qualifying ratio is the fair market value of
all the trust's assets at that time, net of any related
liabilities.
(ii) Each subsequent time the trust receives assets, a
revised qualifying ratio shall be computed. The numerator of the
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S. B. No. 276 Page 403As Introduced
revised qualifying ratio is the sum of (1) the fair market value
of the trust's assets immediately prior to the subsequent
transfer, net of any related liabilities, multiplied by the
qualifying ratio last computed without regard to the subsequent
transfer, and (2) the fair market value of the subsequently
transferred assets at the time transferred, net of any related
liabilities, from sources enumerated in division (I)(3)(a) of
this section. The denominator of the revised qualifying ratio is
the fair market value of all the trust's assets immediately
after the subsequent transfer, net of any related liabilities.
(iii) Whether a transfer to the trust is by or from any of
the sources enumerated in division (I)(3)(a) of this section
shall be ascertained without regard to the domicile of the
trust's beneficiaries.
(e) For the purposes of division (I)(3)(a)(i) of this
section:
(i) A trust is described in division (I)(3)(e)(i) of this
section if the trust is a testamentary trust and the testator of
that testamentary trust was domiciled in this state at the time
of the testator's death for purposes of the taxes levied under
Chapter 5731. of the Revised Code.
(ii) A trust is described in division (I)(3)(e)(ii) of
this section if the transfer is a qualifying transfer described
in any of divisions (I)(3)(f)(i) to (vi) of this section, the
trust is an irrevocable inter vivos trust, and at least one of
the trust's qualifying beneficiaries is domiciled in this state
for purposes of this chapter during all or some portion of the
trust's current taxable year.
(f) For the purposes of division (I)(3)(e)(ii) of this
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S. B. No. 276 Page 404As Introduced
section, a "qualifying transfer" is a transfer of assets, net of
any related liabilities, directly or indirectly to a trust, if
the transfer is described in any of the following:
(i) The transfer is made to a trust, created by the
decedent before the decedent's death and while the decedent was
domiciled in this state for the purposes of this chapter, and,
prior to the death of the decedent, the trust became irrevocable
while the decedent was domiciled in this state for the purposes
of this chapter.
(ii) The transfer is made to a trust to which the
decedent, prior to the decedent's death, had directly or
indirectly transferred assets, net of any related liabilities,
while the decedent was domiciled in this state for the purposes
of this chapter, and prior to the death of the decedent the
trust became irrevocable while the decedent was domiciled in
this state for the purposes of this chapter.
(iii) The transfer is made on account of a contractual
relationship existing directly or indirectly between the
transferor and either the decedent or the estate of the decedent
at any time prior to the date of the decedent's death, and the
decedent was domiciled in this state at the time of death for
purposes of the taxes levied under Chapter 5731. of the Revised
Code.
(iv) The transfer is made to a trust on account of a
contractual relationship existing directly or indirectly between
the transferor and another person who at the time of the
decedent's death was domiciled in this state for purposes of
this chapter.
(v) The transfer is made to a trust on account of the will
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S. B. No. 276 Page 405As Introduced
of a testator who was domiciled in this state at the time of the
testator's death for purposes of the taxes levied under Chapter
5731. of the Revised Code.
(vi) The transfer is made to a trust created by or caused
to be created by a court, and the trust was directly or
indirectly created in connection with or as a result of the
death of an individual who, for purposes of the taxes levied
under Chapter 5731. of the Revised Code, was domiciled in this
state at the time of the individual's death.
(g) The tax commissioner may adopt rules to ascertain the
part of a trust residing in this state.
(J) "Nonresident" means an individual or estate that is
not a resident. An individual who is a resident for only part of
a taxable year is a nonresident for the remainder of that
taxable year.
(K) "Pass-through entity" has the same meaning as in
section 5733.04 of the Revised Code.
(L) "Return" means the notifications and reports required
to be filed pursuant to this chapter for the purpose of
reporting the tax due and includes declarations of estimated tax
when so required.
(M) "Taxable year" means the calendar year or the
taxpayer's fiscal year ending during the calendar year, or
fractional part thereof, upon which the adjusted gross income is
calculated pursuant to this chapter.
(N) "Taxpayer" means any person subject to the tax imposed
by section 5747.02 of the Revised Code or any pass-through
entity that makes the election under division (D) of section
5747.08 of the Revised Code.
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S. B. No. 276 Page 406As Introduced
(O) "Dependents" means one of the following:
(1) For taxable years beginning on or after January 1,
2018, and before January 1, 2026, dependents as defined in the
Internal Revenue Code;
(2) For all other taxable years, dependents as defined in
the Internal Revenue Code and as claimed in the taxpayer's
federal income tax return for the taxable year or which the
taxpayer would have been permitted to claim had the taxpayer
filed a federal income tax return.
(P) "Principal county of employment" means, in the case of
a nonresident, the county within the state in which a taxpayer
performs services for an employer or, if those services are
performed in more than one county, the county in which the major
portion of the services are performed.
(Q) As used in sections 5747.50 to 5747.55 of the Revised
Code:
(1) "Subdivision" means any county, municipal corporation,
park district, or township.
(2) "Essential local government purposes" includes all
functions that any subdivision is required by general law to
exercise, including like functions that are exercised under a
charter adopted pursuant to the Ohio Constitution.
(R) "Overpayment" means any amount already paid that
exceeds the figure determined to be the correct amount of the
tax.
(S) "Taxable income" or "Ohio taxable income" applies only
to estates and trusts, and means federal taxable income, as
defined and used in the Internal Revenue Code, adjusted as
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11805
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S. B. No. 276 Page 407As Introduced
follows:
(1) Add interest or dividends, net of ordinary, necessary,
and reasonable expenses not deducted in computing federal
taxable income, on obligations or securities of any state or of
any political subdivision or authority of any state, other than
this state and its subdivisions and authorities, but only to the
extent that such net amount is not otherwise includible in Ohio
taxable income and is described in either division (S)(1)(a) or
(b) of this section:
(a) The net amount is not attributable to the S portion of
an electing small business trust and has not been distributed to
beneficiaries for the taxable year;
(b) The net amount is attributable to the S portion of an
electing small business trust for the taxable year.
(2) Add interest or dividends, net of ordinary, necessary,
and reasonable expenses not deducted in computing federal
taxable income, on obligations of any authority, commission,
instrumentality, territory, or possession of the United States
to the extent that the interest or dividends are exempt from
federal income taxes but not from state income taxes, but only
to the extent that such net amount is not otherwise includible
in Ohio taxable income and is described in either division (S)
(1)(a) or (b) of this section;
(3) Add the amount of personal exemption allowed to the
estate pursuant to section 642(b) of the Internal Revenue Code;
(4) Deduct interest or dividends, net of related expenses
deducted in computing federal taxable income, on obligations of
the United States and its territories and possessions or of any
authority, commission, or instrumentality of the United States
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S. B. No. 276 Page 408As Introduced
to the extent that the interest or dividends are exempt from
state taxes under the laws of the United States, but only to the
extent that such amount is included in federal taxable income
and is described in either division (S)(1)(a) or (b) of this
section;
(5) Deduct the amount of wages and salaries, if any, not
otherwise allowable as a deduction but that would have been
allowable as a deduction in computing federal taxable income for
the taxable year, had the targeted jobs credit allowed under
sections 38, 51, and 52 of the Internal Revenue Code not been in
effect, but only to the extent such amount relates either to
income included in federal taxable income for the taxable year
or to income of the S portion of an electing small business
trust for the taxable year;
(6) Deduct any interest or interest equivalent, net of
related expenses deducted in computing federal taxable income,
on public obligations and purchase obligations, but only to the
extent that such net amount relates either to income included in
federal taxable income for the taxable year or to income of the
S portion of an electing small business trust for the taxable
year;
(7) Add any loss or deduct any gain resulting from sale,
exchange, or other disposition of public obligations to the
extent that such loss has been deducted or such gain has been
included in computing either federal taxable income or income of
the S portion of an electing small business trust for the
taxable year;
(8) Except in the case of the final return of an estate,
add any amount deducted by the taxpayer on both its Ohio estate
tax return pursuant to section 5731.14 of the Revised Code, and
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S. B. No. 276 Page 409As Introduced
on its federal income tax return in determining federal taxable
income;
(9)(a) Deduct any amount included in federal taxable
income solely because the amount represents a reimbursement or
refund of expenses that in a previous year the decedent had
deducted as an itemized deduction pursuant to section 63 of the
Internal Revenue Code and applicable treasury regulations. The
deduction otherwise allowed under division (S)(9)(a) of this
section shall be reduced to the extent the reimbursement is
attributable to an amount the taxpayer or decedent deducted
under this section in any taxable year.
(b) Add any amount not otherwise included in Ohio taxable
income for any taxable year to the extent that the amount is
attributable to the recovery during the taxable year of any
amount deducted or excluded in computing federal or Ohio taxable
income in any taxable year, but only to the extent such amount
has not been distributed to beneficiaries for the taxable year.
(10) Deduct any portion of the deduction described in
section 1341(a)(2) of the Internal Revenue Code, for repaying
previously reported income received under a claim of right, that
meets both of the following requirements:
(a) It is allowable for repayment of an item that was
included in the taxpayer's taxable income or the decedent's
adjusted gross income for a prior taxable year and did not
qualify for a credit under division (A) or (B) of section
5747.05 of the Revised Code for that year.
(b) It does not otherwise reduce the taxpayer's taxable
income or the decedent's adjusted gross income for the current
or any other taxable year.
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S. B. No. 276 Page 410As Introduced
(11) Add any amount claimed as a credit under section
5747.059 of the Revised Code to the extent that the amount
satisfies either of the following:
(a) The amount was deducted or excluded from the
computation of the taxpayer's federal taxable income as required
to be reported for the taxpayer's taxable year under the
Internal Revenue Code;
(b) The amount resulted in a reduction in the taxpayer's
federal taxable income as required to be reported for any of the
taxpayer's taxable years under the Internal Revenue Code.
(12) Deduct any amount, net of related expenses deducted
in computing federal taxable income, that a trust is required to
report as farm income on its federal income tax return, but only
if the assets of the trust include at least ten acres of land
satisfying the definition of "land devoted exclusively to
agricultural use" under section 5713.30 of the Revised Code,
regardless of whether the land is valued for tax purposes as
such land under sections 5713.30 to 5713.38 of the Revised Code.
If the trust is a pass-through entity investor, section 5747.231
of the Revised Code applies in ascertaining if the trust is
eligible to claim the deduction provided by division (S)(12) of
this section in connection with the pass-through entity's farm
income.
Except for farm income attributable to the S portion of an
electing small business trust, the deduction provided by
division (S)(12) of this section is allowed only to the extent
that the trust has not distributed such farm income. Division
(S)(12) of this section applies only to taxable years of a trust
beginning in 2002 or thereafter.
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S. B. No. 276 Page 411As Introduced
(13) Add the net amount of income described in section
641(c) of the Internal Revenue Code to the extent that amount is
not included in federal taxable income.
(14) Add or deduct the amount the taxpayer would be
required to add or deduct under division (A)(20) or (21) of this
section if the taxpayer's Ohio taxable income were computed in
the same manner as an individual's Ohio adjusted gross income is
computed under this section. In the case of a trust, division
(S)(14) of this section applies only to any of the trust's
taxable years beginning in 2002 or thereafter.
(T) "School district income" and "school district income
tax" have the same meanings as in section 5748.01 of the Revised
Code.
(U) As used in divisions (A)(8), (A)(9), (S)(6), and (S)
(7) of this section, "public obligations," "purchase
obligations," and "interest or interest equivalent" have the
same meanings as in section 5709.76 of the Revised Code.
(V) "Limited liability company" means any limited
liability company formed under Chapter 1705. or 1706. of the
Revised Code or under the laws of any other state.
(W) "Pass-through entity investor" means any person who,
during any portion of a taxable year of a pass-through entity,
is a partner, member, shareholder, or equity investor in that
pass-through entity.
(X) "Banking day" has the same meaning as in section
1304.01 of the Revised Code.
(Y) "Month" means a calendar month.
(Z) "Quarter" means the first three months, the second
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S. B. No. 276 Page 412As Introduced
three months, the third three months, or the last three months
of the taxpayer's taxable year.
(AA)(1) "Eligible institution" means a state university or
state institution of higher education as defined in section
3345.011 of the Revised Code, or a private, nonprofit college,
university, or other post-secondary institution located in this
state that possesses a certificate of authorization issued by
the chancellor of higher education pursuant to Chapter 1713. of
the Revised Code or a certificate of registration issued by the
state board of career colleges and schools under Chapter 3332.
of the Revised Code.
(2) "Qualified tuition and fees" means tuition and fees
imposed by an eligible institution as a condition of enrollment
or attendance, not exceeding two thousand five hundred dollars
in each of the individual's first two years of post-secondary
education. If the individual is a part-time student, "qualified
tuition and fees" includes tuition and fees paid for the
academic equivalent of the first two years of post-secondary
education during a maximum of five taxable years, not exceeding
a total of five thousand dollars. "Qualified tuition and fees"
does not include:
(a) Expenses for any course or activity involving sports,
games, or hobbies unless the course or activity is part of the
individual's degree or diploma program;
(b) The cost of books, room and board, student activity
fees, athletic fees, insurance expenses, or other expenses
unrelated to the individual's academic course of instruction;
(c) Tuition, fees, or other expenses paid or reimbursed
through an employer, scholarship, grant in aid, or other
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educational benefit program.
(BB)(1) "Modified business income" means the business
income included in a trust's Ohio taxable income after such
taxable income is first reduced by the qualifying trust amount,
if any.
(2) "Qualifying trust amount" of a trust means capital
gains and losses from the sale, exchange, or other disposition
of equity or ownership interests in, or debt obligations of, a
qualifying investee to the extent included in the trust's Ohio
taxable income, but only if the following requirements are
satisfied:
(a) The book value of the qualifying investee's physical
assets in this state and everywhere, as of the last day of the
qualifying investee's fiscal or calendar year ending immediately
prior to the date on which the trust recognizes the gain or
loss, is available to the trust.
(b) The requirements of section 5747.011 of the Revised
Code are satisfied for the trust's taxable year in which the
trust recognizes the gain or loss.
Any gain or loss that is not a qualifying trust amount is
modified business income, qualifying investment income, or
modified nonbusiness income, as the case may be.
(3) "Modified nonbusiness income" means a trust's Ohio
taxable income other than modified business income, other than
the qualifying trust amount, and other than qualifying
investment income, as defined in section 5747.012 of the Revised
Code, to the extent such qualifying investment income is not
otherwise part of modified business income.
(4) "Modified Ohio taxable income" applies only to trusts,
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and means the sum of the amounts described in divisions (BB)(4)
(a) to (c) of this section:
(a) The fraction, calculated under section 5747.013, and
applying section 5747.231 of the Revised Code, multiplied by the
sum of the following amounts:
(i) The trust's modified business income;
(ii) The trust's qualifying investment income, as defined
in section 5747.012 of the Revised Code, but only to the extent
the qualifying investment income does not otherwise constitute
modified business income and does not otherwise constitute a
qualifying trust amount.
(b) The qualifying trust amount multiplied by a fraction,
the numerator of which is the sum of the book value of the
qualifying investee's physical assets in this state on the last
day of the qualifying investee's fiscal or calendar year ending
immediately prior to the day on which the trust recognizes the
qualifying trust amount, and the denominator of which is the sum
of the book value of the qualifying investee's total physical
assets everywhere on the last day of the qualifying investee's
fiscal or calendar year ending immediately prior to the day on
which the trust recognizes the qualifying trust amount. If, for
a taxable year, the trust recognizes a qualifying trust amount
with respect to more than one qualifying investee, the amount
described in division (BB)(4)(b) of this section shall equal the
sum of the products so computed for each such qualifying
investee.
(c)(i) With respect to a trust or portion of a trust that
is a resident as ascertained in accordance with division (I)(3)
(d) of this section, its modified nonbusiness income.
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S. B. No. 276 Page 415As Introduced
(ii) With respect to a trust or portion of a trust that is
not a resident as ascertained in accordance with division (I)(3)
(d) of this section, the amount of its modified nonbusiness
income satisfying the descriptions in divisions (B)(2) to (5) of
section 5747.20 of the Revised Code, except as otherwise
provided in division (BB)(4)(c)(ii) of this section. With
respect to a trust or portion of a trust that is not a resident
as ascertained in accordance with division (I)(3)(d) of this
section, the trust's portion of modified nonbusiness income
recognized from the sale, exchange, or other disposition of a
debt interest in or equity interest in a section 5747.212
entity, as defined in section 5747.212 of the Revised Code,
without regard to division (A) of that section, shall not be
allocated to this state in accordance with section 5747.20 of
the Revised Code but shall be apportioned to this state in
accordance with division (B) of section 5747.212 of the Revised
Code without regard to division (A) of that section.
If the allocation and apportionment of a trust's income
under divisions (BB)(4)(a) and (c) of this section do not fairly
represent the modified Ohio taxable income of the trust in this
state, the alternative methods described in division (C) of
section 5747.21 of the Revised Code may be applied in the manner
and to the same extent provided in that section.
(5)(a) Except as set forth in division (BB)(5)(b) of this
section, "qualifying investee" means a person in which a trust
has an equity or ownership interest, or a person or unit of
government the debt obligations of either of which are owned by
a trust. For the purposes of division (BB)(2)(a) of this section
and for the purpose of computing the fraction described in
division (BB)(4)(b) of this section, all of the following apply:
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S. B. No. 276 Page 416As Introduced
(i) If the qualifying investee is a member of a qualifying
controlled group on the last day of the qualifying investee's
fiscal or calendar year ending immediately prior to the date on
which the trust recognizes the gain or loss, then "qualifying
investee" includes all persons in the qualifying controlled
group on such last day.
(ii) If the qualifying investee, or if the qualifying
investee and any members of the qualifying controlled group of
which the qualifying investee is a member on the last day of the
qualifying investee's fiscal or calendar year ending immediately
prior to the date on which the trust recognizes the gain or
loss, separately or cumulatively own, directly or indirectly, on
the last day of the qualifying investee's fiscal or calendar
year ending immediately prior to the date on which the trust
recognizes the qualifying trust amount, more than fifty per cent
of the equity of a pass-through entity, then the qualifying
investee and the other members are deemed to own the
proportionate share of the pass-through entity's physical assets
which the pass-through entity directly or indirectly owns on the
last day of the pass-through entity's calendar or fiscal year
ending within or with the last day of the qualifying investee's
fiscal or calendar year ending immediately prior to the date on
which the trust recognizes the qualifying trust amount.
(iii) For the purposes of division (BB)(5)(a)(iii) of this
section, "upper level pass-through entity" means a pass-through
entity directly or indirectly owning any equity of another pass-
through entity, and "lower level pass-through entity" means that
other pass-through entity.
An upper level pass-through entity, whether or not it is
also a qualifying investee, is deemed to own, on the last day of
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S. B. No. 276 Page 417As Introduced
the upper level pass-through entity's calendar or fiscal year,
the proportionate share of the lower level pass-through entity's
physical assets that the lower level pass-through entity
directly or indirectly owns on the last day of the lower level
pass-through entity's calendar or fiscal year ending within or
with the last day of the upper level pass-through entity's
fiscal or calendar year. If the upper level pass-through entity
directly and indirectly owns less than fifty per cent of the
equity of the lower level pass-through entity on each day of the
upper level pass-through entity's calendar or fiscal year in
which or with which ends the calendar or fiscal year of the
lower level pass-through entity and if, based upon clear and
convincing evidence, complete information about the location and
cost of the physical assets of the lower pass-through entity is
not available to the upper level pass-through entity, then
solely for purposes of ascertaining if a gain or loss
constitutes a qualifying trust amount, the upper level pass-
through entity shall be deemed as owning no equity of the lower
level pass-through entity for each day during the upper level
pass-through entity's calendar or fiscal year in which or with
which ends the lower level pass-through entity's calendar or
fiscal year. Nothing in division (BB)(5)(a)(iii) of this section
shall be construed to provide for any deduction or exclusion in
computing any trust's Ohio taxable income.
(b) With respect to a trust that is not a resident for the
taxable year and with respect to a part of a trust that is not a
resident for the taxable year, "qualifying investee" for that
taxable year does not include a C corporation if both of the
following apply:
(i) During the taxable year the trust or part of the trust
recognizes a gain or loss from the sale, exchange, or other
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S. B. No. 276 Page 418As Introduced
disposition of equity or ownership interests in, or debt
obligations of, the C corporation.
(ii) Such gain or loss constitutes nonbusiness income.
(6) "Available" means information is such that a person is
able to learn of the information by the due date plus
extensions, if any, for filing the return for the taxable year
in which the trust recognizes the gain or loss.
(CC) "Qualifying controlled group" has the same meaning as
in section 5733.04 of the Revised Code.
(DD) "Related member" has the same meaning as in section
5733.042 of the Revised Code.
(EE)(1) For the purposes of division (EE) of this section:
(a) "Qualifying person" means any person other than a
qualifying corporation.
(b) "Qualifying corporation" means any person classified
for federal income tax purposes as an association taxable as a
corporation, except either of the following:
(i) A corporation that has made an election under
subchapter S, chapter one, subtitle A, of the Internal Revenue
Code for its taxable year ending within, or on the last day of,
the investor's taxable year;
(ii) A subsidiary that is wholly owned by any corporation
that has made an election under subchapter S, chapter one,
subtitle A of the Internal Revenue Code for its taxable year
ending within, or on the last day of, the investor's taxable
year.
(2) For the purposes of this chapter, unless expressly
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S. B. No. 276 Page 419As Introduced
stated otherwise, no qualifying person indirectly owns any asset
directly or indirectly owned by any qualifying corporation.
(FF) For purposes of this chapter and Chapter 5751. of the
Revised Code:
(1) "Trust" does not include a qualified pre-income tax
trust.
(2) A "qualified pre-income tax trust" is any pre-income
tax trust that makes a qualifying pre-income tax trust election
as described in division (FF)(3) of this section.
(3) A "qualifying pre-income tax trust election" is an
election by a pre-income tax trust to subject to the tax imposed
by section 5751.02 of the Revised Code the pre-income tax trust
and all pass-through entities of which the trust owns or
controls, directly, indirectly, or constructively through
related interests, five per cent or more of the ownership or
equity interests. The trustee shall notify the tax commissioner
in writing of the election on or before April 15, 2006. The
election, if timely made, shall be effective on and after
January 1, 2006, and shall apply for all tax periods and tax
years until revoked by the trustee of the trust.
(4) A "pre-income tax trust" is a trust that satisfies all
of the following requirements:
(a) The document or instrument creating the trust was
executed by the grantor before January 1, 1972;
(b) The trust became irrevocable upon the creation of the
trust; and
(c) The grantor was domiciled in this state at the time
the trust was created.
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S. B. No. 276 Page 420As Introduced
(GG) "Uniformed services" has the same meaning as in 10
U.S.C. 101.
(HH) "Taxable business income" means the amount by which
an individual's business income that is included in federal
adjusted gross income exceeds the amount of business income the
individual is authorized to deduct under division (A)(31) of
this section for the taxable year.
(II) "Employer" does not include a franchisor with respect
to the franchisor's relationship with a franchisee or an
employee of a franchisee, unless the franchisor agrees to assume
that role in writing or a court of competent jurisdiction
determines that the franchisor exercises a type or degree of
control over the franchisee or the franchisee's employees that
is not customarily exercised by a franchisor for the purpose of
protecting the franchisor's trademark, brand, or both. For
purposes of this division, "franchisor" and "franchisee" have
the same meanings as in 16 C.F.R. 436.1.
(JJ) "Modified adjusted gross income" means Ohio adjusted
gross income plus any amount deducted under division (A)(31) of
this section for the taxable year.
(KK) "Qualifying Ohio educator" means an individual who,
for a taxable year, qualifies as an eligible educator, as that
term is defined in section 62 of the Internal Revenue Code, and
who holds a certificate, license, or permit described in Chapter
3319. or section 3301.071 of the Revised Code.
Sec. 5751.01. As used in this chapter:
(A) "Person" means, but is not limited to, individuals,
combinations of individuals of any form, receivers, assignees,
trustees in bankruptcy, firms, companies, joint-stock companies,
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S. B. No. 276 Page 421As Introduced
business trusts, estates, partnerships, limited liability
partnerships, limited liability companies, associations, joint
ventures, clubs, societies, for-profit corporations, S
corporations, qualified subchapter S subsidiaries, qualified
subchapter S trusts, trusts, entities that are disregarded for
federal income tax purposes, and any other entities.
(B) "Consolidated elected taxpayer" means a group of two
or more persons treated as a single taxpayer for purposes of
this chapter as the result of an election made under section
5751.011 of the Revised Code.
(C) "Combined taxpayer" means a group of two or more
persons treated as a single taxpayer for purposes of this
chapter under section 5751.012 of the Revised Code.
(D) "Taxpayer" means any person, or any group of persons
in the case of a consolidated elected taxpayer or combined
taxpayer treated as one taxpayer, required to register or pay
tax under this chapter. "Taxpayer" does not include excluded
persons.
(E) "Excluded person" means any of the following:
(1) Any person with not more than one hundred fifty
thousand dollars of taxable gross receipts during the calendar
year. Division (E)(1) of this section does not apply to a person
that is a member of a consolidated elected taxpayer;
(2) A public utility that paid the excise tax imposed by
section 5727.24 or 5727.30 of the Revised Code based on one or
more measurement periods that include the entire tax period
under this chapter, except that a public utility that is a
combined company is a taxpayer with regard to the following
gross receipts:
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S. B. No. 276 Page 422As Introduced
(a) Taxable gross receipts directly attributed to a public
utility activity, but not directly attributed to an activity
that is subject to the excise tax imposed by section 5727.24 or
5727.30 of the Revised Code;
(b) Taxable gross receipts that cannot be directly
attributed to any activity, multiplied by a fraction whose
numerator is the taxable gross receipts described in division
(E)(2)(a) of this section and whose denominator is the total
taxable gross receipts that can be directly attributed to any
activity;
(c) Except for any differences resulting from the use of
an accrual basis method of accounting for purposes of
determining gross receipts under this chapter and the use of the
cash basis method of accounting for purposes of determining
gross receipts under section 5727.24 of the Revised Code, the
gross receipts directly attributed to the activity of a natural
gas company shall be determined in a manner consistent with
division (D) of section 5727.03 of the Revised Code.
As used in division (E)(2) of this section, "combined
company" and "public utility" have the same meanings as in
section 5727.01 of the Revised Code.
(3) A financial institution, as defined in section 5726.01
of the Revised Code, that paid the tax imposed by section
5726.02 of the Revised Code based on one or more taxable years
that include the entire tax period under this chapter;
(4) A person directly or indirectly owned by one or more
financial institutions, as defined in section 5726.01 of the
Revised Code, that paid the tax imposed by section 5726.02 of
the Revised Code based on one or more taxable years that include
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S. B. No. 276 Page 423As Introduced
the entire tax period under this chapter.
For the purposes of division (E)(4) of this section, a
person owns another person under the following circumstances:
(a) In the case of corporations issuing capital stock, one
corporation owns another corporation if it owns fifty per cent
or more of the other corporation's capital stock with current
voting rights;
(b) In the case of a limited liability company, one person
owns the company if that person's membership interest, as
defined in section 1705.01 or 1706.01 of the Revised Code as
applicable, is fifty per cent or more of the combined membership
interests of all persons owning such interests in the company;
(c) In the case of a partnership, trust, or other
unincorporated business organization other than a limited
liability company, one person owns the organization if, under
the articles of organization or other instrument governing the
affairs of the organization, that person has a beneficial
interest in the organization's profits, surpluses, losses, or
distributions of fifty per cent or more of the combined
beneficial interests of all persons having such an interest in
the organization.
(5) A domestic insurance company or foreign insurance
company, as defined in section 5725.01 of the Revised Code, that
paid the insurance company premiums tax imposed by section
5725.18 or Chapter 5729. of the Revised Code, or an unauthorized
insurance company whose gross premiums are subject to tax under
section 3905.36 of the Revised Code based on one or more
measurement periods that include the entire tax period under
this chapter;
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S. B. No. 276 Page 424As Introduced
(6) A person that solely facilitates or services one or
more securitizations of phase-in-recovery property pursuant to a
final financing order as those terms are defined in section
4928.23 of the Revised Code. For purposes of this division,
"securitization" means transferring one or more assets to one or
more persons and then issuing securities backed by the right to
receive payment from the asset or assets so transferred.
(7) Except as otherwise provided in this division, a pre-
income tax trust as defined in division (FF)(4) of section
5747.01 of the Revised Code and any pass-through entity of which
such pre-income tax trust owns or controls, directly,
indirectly, or constructively through related interests, more
than five per cent of the ownership or equity interests. If the
pre-income tax trust has made a qualifying pre-income tax trust
election under division (FF)(3) of section 5747.01 of the
Revised Code, then the trust and the pass-through entities of
which it owns or controls, directly, indirectly, or
constructively through related interests, more than five per
cent of the ownership or equity interests, shall not be excluded
persons for purposes of the tax imposed under section 5751.02 of
the Revised Code.
(8) Nonprofit organizations or the state and its agencies,
instrumentalities, or political subdivisions.
(F) Except as otherwise provided in divisions (F)(2), (3),
and (4) of this section, "gross receipts" means the total amount
realized by a person, without deduction for the cost of goods
sold or other expenses incurred, that contributes to the
production of gross income of the person, including the fair
market value of any property and any services received, and any
debt transferred or forgiven as consideration.
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S. B. No. 276 Page 425As Introduced
(1) The following are examples of gross receipts:
(a) Amounts realized from the sale, exchange, or other
disposition of the taxpayer's property to or with another;
(b) Amounts realized from the taxpayer's performance of
services for another;
(c) Amounts realized from another's use or possession of
the taxpayer's property or capital;
(d) Any combination of the foregoing amounts.
(2) "Gross receipts" excludes the following amounts:
(a) Interest income except interest on credit sales;
(b) Dividends and distributions from corporations, and
distributive or proportionate shares of receipts and income from
a pass-through entity as defined under section 5733.04 of the
Revised Code;
(c) Receipts from the sale, exchange, or other disposition
of an asset described in section 1221 or 1231 of the Internal
Revenue Code, without regard to the length of time the person
held the asset. Notwithstanding section 1221 of the Internal
Revenue Code, receipts from hedging transactions also are
excluded to the extent the transactions are entered into
primarily to protect a financial position, such as managing the
risk of exposure to (i) foreign currency fluctuations that
affect assets, liabilities, profits, losses, equity, or
investments in foreign operations; (ii) interest rate
fluctuations; or (iii) commodity price fluctuations. As used in
division (F)(2)(c) of this section, "hedging transaction" has
the same meaning as used in section 1221 of the Internal Revenue
Code and also includes transactions accorded hedge accounting
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S. B. No. 276 Page 426As Introduced
treatment under statement of financial accounting standards
number 133 of the financial accounting standards board. For the
purposes of division (F)(2)(c) of this section, the actual
transfer of title of real or tangible personal property to
another entity is not a hedging transaction.
(d) Proceeds received attributable to the repayment,
maturity, or redemption of the principal of a loan, bond, mutual
fund, certificate of deposit, or marketable instrument;
(e) The principal amount received under a repurchase
agreement or on account of any transaction properly
characterized as a loan to the person;
(f) Contributions received by a trust, plan, or other
arrangement, any of which is described in section 501(a) of the
Internal Revenue Code, or to which Title 26, Subtitle A, Chapter
1, Subchapter (D) of the Internal Revenue Code applies;
(g) Compensation, whether current or deferred, and whether
in cash or in kind, received or to be received by an employee,
former employee, or the employee's legal successor for services
rendered to or for an employer, including reimbursements
received by or for an individual for medical or education
expenses, health insurance premiums, or employee expenses, or on
account of a dependent care spending account, legal services
plan, any cafeteria plan described in section 125 of the
Internal Revenue Code, or any similar employee reimbursement;
(h) Proceeds received from the issuance of the taxpayer's
own stock, options, warrants, puts, or calls, or from the sale
of the taxpayer's treasury stock;
(i) Proceeds received on the account of payments from
insurance policies, except those proceeds received for the loss
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S. B. No. 276 Page 427As Introduced
of business revenue;
(j) Gifts or charitable contributions received; membership
dues received by trade, professional, homeowners', or
condominium associations; and payments received for educational
courses, meetings, meals, or similar payments to a trade,
professional, or other similar association; and fundraising
receipts received by any person when any excess receipts are
donated or used exclusively for charitable purposes;
(k) Damages received as the result of litigation in excess
of amounts that, if received without litigation, would be gross
receipts;
(l) Property, money, and other amounts received or
acquired by an agent on behalf of another in excess of the
agent's commission, fee, or other remuneration;
(m) Tax refunds, other tax benefit recoveries, and
reimbursements for the tax imposed under this chapter made by
entities that are part of the same combined taxpayer or
consolidated elected taxpayer group, and reimbursements made by
entities that are not members of a combined taxpayer or
consolidated elected taxpayer group that are required to be made
for economic parity among multiple owners of an entity whose tax
obligation under this chapter is required to be reported and
paid entirely by one owner, pursuant to the requirements of
sections 5751.011 and 5751.012 of the Revised Code;
(n) Pension reversions;
(o) Contributions to capital;
(p) Sales or use taxes collected as a vendor or an out-of-
state seller on behalf of the taxing jurisdiction from a
consumer or other taxes the taxpayer is required by law to
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S. B. No. 276 Page 428As Introduced
collect directly from a purchaser and remit to a local, state,
or federal tax authority;
(q) In the case of receipts from the sale of cigarettes,
tobacco products, or vapor products by a wholesale dealer,
retail dealer, distributor, manufacturer, vapor distributor, or
seller, all as defined in section 5743.01 of the Revised Code,
an amount equal to the federal and state excise taxes paid by
any person on or for such cigarettes, tobacco products, or vapor
products under subtitle E of the Internal Revenue Code or
Chapter 5743. of the Revised Code;
(r) In the case of receipts from the sale, transfer,
exchange, or other disposition of motor fuel as "motor fuel" is
defined in section 5736.01 of the Revised Code, an amount equal
to the value of the motor fuel, including federal and state
motor fuel excise taxes and receipts from billing or invoicing
the tax imposed under section 5736.02 of the Revised Code to
another person;
(s) In the case of receipts from the sale of beer or
intoxicating liquor, as defined in section 4301.01 of the
Revised Code, by a person holding a permit issued under Chapter
4301. or 4303. of the Revised Code, an amount equal to federal
and state excise taxes paid by any person on or for such beer or
intoxicating liquor under subtitle E of the Internal Revenue
Code or Chapter 4301. or 4305. of the Revised Code;
(t) Receipts realized by a new motor vehicle dealer or
used motor vehicle dealer, as defined in section 4517.01 of the
Revised Code, from the sale or other transfer of a motor
vehicle, as defined in that section, to another motor vehicle
dealer for the purpose of resale by the transferee motor vehicle
dealer, but only if the sale or other transfer was based upon
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the transferee's need to meet a specific customer's preference
for a motor vehicle;
(u) Receipts from a financial institution described in
division (E)(3) of this section for services provided to the
financial institution in connection with the issuance,
processing, servicing, and management of loans or credit
accounts, if such financial institution and the recipient of
such receipts have at least fifty per cent of their ownership
interests owned or controlled, directly or constructively
through related interests, by common owners;
(v) Receipts realized from administering anti-neoplastic
drugs and other cancer chemotherapy, biologicals, therapeutic
agents, and supportive drugs in a physician's office to patients
with cancer;
(w) Funds received or used by a mortgage broker that is
not a dealer in intangibles, other than fees or other
consideration, pursuant to a table-funding mortgage loan or
warehouse-lending mortgage loan. Terms used in division (F)(2)
(w) of this section have the same meanings as in section 1322.01
of the Revised Code, except "mortgage broker" means a person
assisting a buyer in obtaining a mortgage loan for a fee or
other consideration paid by the buyer or a lender, or a person
engaged in table-funding or warehouse-lending mortgage loans
that are first lien mortgage loans.
(x) Property, money, and other amounts received by a
professional employer organization, as defined in section
4125.01 of the Revised Code, from a client employer, as defined
in that section, in excess of the administrative fee charged by
the professional employer organization to the client employer;
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(y) In the case of amounts retained as commissions by a
permit holder under Chapter 3769. of the Revised Code, an amount
equal to the amounts specified under that chapter that must be
paid to or collected by the tax commissioner as a tax and the
amounts specified under that chapter to be used as purse money;
(z) Qualifying distribution center receipts.
(i) For purposes of division (F)(2)(z) of this section:
(I) "Qualifying distribution center receipts" means
receipts of a supplier from qualified property that is delivered
to a qualified distribution center, multiplied by a quantity
that equals one minus the Ohio delivery percentage. If the
qualified distribution center is a refining facility, "supplier"
includes all dealers, brokers, processors, sellers, vendors,
cosigners, and distributors of qualified property.
(II) "Qualified property" means tangible personal property
delivered to a qualified distribution center that is shipped to
that qualified distribution center solely for further shipping
by the qualified distribution center to another location in this
state or elsewhere or, in the case of gold, silver, platinum, or
palladium delivered to a refining facility solely for refining
to a grade and fineness acceptable for delivery to a registered
commodities exchange. "Further shipping" includes storing and
repackaging property into smaller or larger bundles, so long as
the property is not subject to further manufacturing or
processing. "Refining" is limited to extracting impurities from
gold, silver, platinum, or palladium through smelting or some
other process at a refining facility.
(III) "Qualified distribution center" means a warehouse, a
facility similar to a warehouse, or a refining facility in this
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S. B. No. 276 Page 431As Introduced
state that, for the qualifying year, is operated by a person
that is not part of a combined taxpayer group and that has a
qualifying certificate. All warehouses or facilities similar to
warehouses that are operated by persons in the same taxpayer
group and that are located within one mile of each other shall
be treated as one qualified distribution center. All refining
facilities that are operated by persons in the same taxpayer
group and that are located in the same or adjacent counties may
be treated as one qualified distribution center.
(IV) "Qualifying year" means the calendar year to which
the qualifying certificate applies.
(V) "Qualifying period" means the period of the first day
of July of the second year preceding the qualifying year through
the thirtieth day of June of the year preceding the qualifying
year.
(VI) "Qualifying certificate" means the certificate issued
by the tax commissioner after the operator of a distribution
center files an annual application with the commissioner. The
application and annual fee shall be filed and paid for each
qualified distribution center on or before the first day of
September before the qualifying year or within forty-five days
after the distribution center opens, whichever is later.
The applicant must substantiate to the commissioner's
satisfaction that, for the qualifying period, all persons
operating the distribution center have more than fifty per cent
of the cost of the qualified property shipped to a location such
that it would be sitused outside this state under the provisions
of division (E) of section 5751.033 of the Revised Code. The
applicant must also substantiate that the distribution center
cumulatively had costs from its suppliers equal to or exceeding
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five hundred million dollars during the qualifying period. (For
purposes of division (F)(2)(z)(i)(VI) of this section,
"supplier" excludes any person that is part of the consolidated
elected taxpayer group, if applicable, of the operator of the
qualified distribution center.) The commissioner may require the
applicant to have an independent certified public accountant
certify that the calculation of the minimum thresholds required
for a qualified distribution center by the operator of a
distribution center has been made in accordance with generally
accepted accounting principles. The commissioner shall issue or
deny the issuance of a certificate within sixty days after the
receipt of the application. A denial is subject to appeal under
section 5717.02 of the Revised Code. If the operator files a
timely appeal under section 5717.02 of the Revised Code, the
operator shall be granted a qualifying certificate effective for
the remainder of the qualifying year or until the appeal is
finalized, whichever is earlier. If the operator does not
prevail in the appeal, the operator shall pay the ineligible
operator's supplier tax liability.
(VII) "Ohio delivery percentage" means the proportion of
the total property delivered to a destination inside Ohio from
the qualified distribution center during the qualifying period
compared with total deliveries from such distribution center
everywhere during the qualifying period.
(VIII) "Refining facility" means one or more buildings
located in a county in the Appalachian region of this state as
defined by section 107.21 of the Revised Code and utilized for
refining or smelting gold, silver, platinum, or palladium to a
grade and fineness acceptable for delivery to a registered
commodities exchange.
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(IX) "Registered commodities exchange" means a board of
trade, such as New York mercantile exchange, inc. or commodity
exchange, inc., designated as a contract market by the commodity
futures trading commission under the "Commodity Exchange Act," 7
U.S.C. 1 et seq., as amended.
(X) "Ineligible operator's supplier tax liability" means
an amount equal to the tax liability of all suppliers of a
distribution center had the distribution center not been issued
a qualifying certificate for the qualifying year. Ineligible
operator's supplier tax liability shall not include interest or
penalties. The tax commissioner shall determine an ineligible
operator's supplier tax liability based on information that the
commissioner may request from the operator of the distribution
center. An operator shall provide a list of all suppliers of the
distribution center and the corresponding costs of qualified
property for the qualifying year at issue within sixty days of a
request by the commissioner under this division.
(ii)(I) If the distribution center is new and was not open
for the entire qualifying period, the operator of the
distribution center may request that the commissioner grant a
qualifying certificate. If the certificate is granted and it is
later determined that more than fifty per cent of the qualified
property during that year was not shipped to a location such
that it would be sitused outside of this state under the
provisions of division (E) of section 5751.033 of the Revised
Code or if it is later determined that the person that operates
the distribution center had average monthly costs from its
suppliers of less than forty million dollars during that year,
then the operator of the distribution center shall pay the
ineligible operator's supplier tax liability. (For purposes of
division (F)(2)(z)(ii) of this section, "supplier" excludes any
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S. B. No. 276 Page 434As Introduced
person that is part of the consolidated elected taxpayer group,
if applicable, of the operator of the qualified distribution
center.)
(II) The commissioner may grant a qualifying certificate
to a distribution center that does not qualify as a qualified
distribution center for an entire qualifying period if the
operator of the distribution center demonstrates that the
business operations of the distribution center have changed or
will change such that the distribution center will qualify as a
qualified distribution center within thirty-six months after the
date the operator first applies for a certificate. If, at the
end of that thirty-six-month period, the business operations of
the distribution center have not changed such that the
distribution center qualifies as a qualified distribution
center, the operator of the distribution center shall pay the
ineligible operator's supplier tax liability for each year that
the distribution center received a certificate but did not
qualify as a qualified distribution center. For each year the
distribution center receives a certificate under division (F)(2)
(z)(ii)(II) of this section, the distribution center shall pay
all applicable fees required under division (F)(2)(z) of this
section and shall submit an updated business plan showing the
progress the distribution center made toward qualifying as a
qualified distribution center during the preceding year.
(III) An operator may appeal a determination under
division (F)(2)(z)(ii)(I) or (II) of this section that the
ineligible operator is liable for the operator's supplier tax
liability as a result of not qualifying as a qualified
distribution center, as provided in section 5717.02 of the
Revised Code.
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(iii) When filing an application for a qualifying
certificate under division (F)(2)(z)(i)(VI) of this section, the
operator of a qualified distribution center also shall provide
documentation, as the commissioner requires, for the
commissioner to ascertain the Ohio delivery percentage. The
commissioner, upon issuing the qualifying certificate, also
shall certify the Ohio delivery percentage. The operator of the
qualified distribution center may appeal the commissioner's
certification of the Ohio delivery percentage in the same manner
as an appeal is taken from the denial of a qualifying
certificate under division (F)(2)(z)(i)(VI) of this section.
(iv)(I) In the case where the distribution center is new
and not open for the entire qualifying period, the operator
shall make a good faith estimate of an Ohio delivery percentage
for use by suppliers in their reports of taxable gross receipts
for the remainder of the qualifying period. The operator of the
facility shall disclose to the suppliers that such Ohio delivery
percentage is an estimate and is subject to recalculation. By
the due date of the next application for a qualifying
certificate, the operator shall determine the actual Ohio
delivery percentage for the estimated qualifying period and
proceed as provided in division (F)(2)(z)(iii) of this section
with respect to the calculation and recalculation of the Ohio
delivery percentage. The supplier is required to file, within
sixty days after receiving notice from the operator of the
qualified distribution center, amended reports for the impacted
calendar quarter or quarters or calendar year, whichever the
case may be. Any additional tax liability or tax overpayment
shall be subject to interest but shall not be subject to the
imposition of any penalty so long as the amended returns are
timely filed.
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(II) The operator of a distribution center that receives a
qualifying certificate under division (F)(2)(z)(ii)(II) of this
section shall make a good faith estimate of the Ohio delivery
percentage that the operator estimates will apply to the
distribution center at the end of the thirty-six-month period
after the operator first applied for a qualifying certificate
under that division. The result of the estimate shall be
multiplied by a factor of one and seventy-five one-hundredths.
The product of that calculation shall be the Ohio delivery
percentage used by suppliers in their reports of taxable gross
receipts for each qualifying year that the distribution center
receives a qualifying certificate under division (F)(2)(z)(ii)
(II) of this section, except that, if the product is less than
five per cent, the Ohio delivery percentage used shall be five
per cent and that, if the product exceeds forty-nine per cent,
the Ohio delivery percentage used shall be forty-nine per cent.
(v) Qualifying certificates and Ohio delivery percentages
issued by the commissioner shall be open to public inspection
and shall be timely published by the commissioner. A supplier
relying in good faith on a certificate issued under this
division shall not be subject to tax on the qualifying
distribution center receipts under division (F)(2)(z) of this
section. An operator receiving a qualifying certificate is
liable for the ineligible operator's supplier tax liability for
each year the operator received a certificate but did not
qualify as a qualified distribution center.
(vi) The annual fee for a qualifying certificate shall be
one hundred thousand dollars for each qualified distribution
center. If a qualifying certificate is not issued, the annual
fee is subject to refund after the exhaustion of all appeals
provided for in division (F)(2)(z)(i)(VI) of this section. The
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first one hundred thousand dollars of the annual application
fees collected each calendar year shall be credited to the
revenue enhancement fund. The remainder of the annual
application fees collected shall be distributed in the same
manner required under section 5751.20 of the Revised Code.
(vii) The tax commissioner may require that adequate
security be posted by the operator of the distribution center on
appeal when the commissioner disagrees that the applicant has
met the minimum thresholds for a qualified distribution center
as set forth in division (F)(2)(z) of this section.
(aa) Receipts of an employer from payroll deductions
relating to the reimbursement of the employer for advancing
moneys to an unrelated third party on an employee's behalf;
(bb) Cash discounts allowed and taken;
(cc) Returns and allowances;
(dd) Bad debts from receipts on the basis of which the tax
imposed by this chapter was paid in a prior quarterly tax
payment period. For the purpose of this division, "bad debts"
means any debts that have become worthless or uncollectible
between the preceding and current quarterly tax payment periods,
have been uncollected for at least six months, and that may be
claimed as a deduction under section 166 of the Internal Revenue
Code and the regulations adopted under that section, or that
could be claimed as such if the taxpayer kept its accounts on
the accrual basis. "Bad debts" does not include repossessed
property, uncollectible amounts on property that remains in the
possession of the taxpayer until the full purchase price is
paid, or expenses in attempting to collect any account
receivable or for any portion of the debt recovered;
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S. B. No. 276 Page 438As Introduced
(ee) Any amount realized from the sale of an account
receivable to the extent the receipts from the underlying
transaction giving rise to the account receivable were included
in the gross receipts of the taxpayer;
(ff) Any receipts directly attributed to a transfer
agreement or to the enterprise transferred under that agreement
under section 4313.02 of the Revised Code.
(gg)(i) As used in this division:
(I) "Qualified uranium receipts" means receipts from the
sale, exchange, lease, loan, production, processing, or other
disposition of uranium within a uranium enrichment zone
certified by the tax commissioner under division (F)(2)(gg)(ii)
of this section. "Qualified uranium receipts" does not include
any receipts with a situs in this state outside a uranium
enrichment zone certified by the tax commissioner under division
(F)(2)(gg)(ii) of this section.
(II) "Uranium enrichment zone" means all real property
that is part of a uranium enrichment facility licensed by the
United States nuclear regulatory commission and that was or is
owned or controlled by the United States department of energy or
its successor.
(ii) Any person that owns, leases, or operates real or
tangible personal property constituting or located within a
uranium enrichment zone may apply to the tax commissioner to
have the uranium enrichment zone certified for the purpose of
excluding qualified uranium receipts under division (F)(2)(gg)
of this section. The application shall include such information
that the tax commissioner prescribes. Within sixty days after
receiving the application, the tax commissioner shall certify
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the zone for that purpose if the commissioner determines that
the property qualifies as a uranium enrichment zone as defined
in division (F)(2)(gg) of this section, or, if the tax
commissioner determines that the property does not qualify, the
commissioner shall deny the application or request additional
information from the applicant. If the tax commissioner denies
an application, the commissioner shall state the reasons for the
denial. The applicant may appeal the denial of an application to
the board of tax appeals pursuant to section 5717.02 of the
Revised Code. If the applicant files a timely appeal, the tax
commissioner shall conditionally certify the applicant's
property. The conditional certification shall expire when all of
the applicant's appeals are exhausted. Until final resolution of
the appeal, the applicant shall retain the applicant's records
in accordance with section 5751.12 of the Revised Code,
notwithstanding any time limit on the preservation of records
under that section.
(hh) In the case of amounts collected by a licensed casino
operator from casino gaming, amounts in excess of the casino
operator's gross casino revenue. In this division, "casino
operator" and "casino gaming" have the meanings defined in
section 3772.01 of the Revised Code, and "gross casino revenue"
has the meaning defined in section 5753.01 of the Revised Code.
(ii) Receipts realized from the sale of agricultural
commodities by an agricultural commodity handler, both as
defined in section 926.01 of the Revised Code, that is licensed
by the director of agriculture to handle agricultural
commodities in this state.
(jj) Qualifying integrated supply chain receipts.
As used in division (F)(2)(jj) of this section:
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(i) "Qualifying integrated supply chain receipts" means
receipts of a qualified integrated supply chain vendor from the
sale of qualified property delivered to, or integrated supply
chain services provided to, another qualified integrated supply
chain vendor or to a retailer that is a member of the integrated
supply chain. "Qualifying integrated supply chain receipts" does
not include receipts of a person that is not a qualified
integrated supply chain vendor from the sale of raw materials to
a member of an integrated supply chain, or receipts of a member
of an integrated supply chain from the sale of qualified
property or integrated supply chain services to a person that is
not a member of the integrated supply chain.
(ii) "Qualified property" means any of the following:
(I) Component parts used to hold, contain, package, or
dispense qualified products, excluding equipment;
(II) Work-in-process inventory that will become, comprise,
or form a component part of a qualified product capable of being
sold at retail, excluding equipment, machinery, furniture, and
fixtures;
(III) Finished goods inventory that is a qualified product
capable of being sold at retail in the inventory's present form.
(iii) "Qualified integrated supply chain vendor" means a
person that is a member of an integrated supply chain and that
provides integrated supply chain services within a qualified
integrated supply chain district to a retailer that is a member
of the integrated supply chain or to another qualified
integrated supply chain vendor that is located within the same
such district as the person but does not share a common owner
with that person.
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(iv) "Qualified product" means a personal care, health, or
beauty product or an aromatic product, including a candle.
"Qualified product" does not include a drug that may be
dispensed only pursuant to a prescription, durable medical
equipment, mobility enhancing equipment, or a prosthetic device,
as those terms are defined in section 5739.01 of the Revised
Code.
(v) "Integrated supply chain" means two or more qualified
integrated supply chain vendors certified on the most recent
list certified to the tax commissioner under this division that
systematically collaborate and coordinate business operations
with a retailer on the flow of tangible personal property from
material sourcing through manufacturing, assembly, packaging,
and delivery to the retailer to improve long-term financial
performance of each vendor and the supply chain that includes
the retailer.
For the purpose of the certification required under this
division, the reporting person for each retailer, on or before
the first day of October of each year, shall certify to the tax
commissioner a list of the qualified integrated supply chain
vendors providing or receiving integrated supply chain services
within a qualified integrated supply chain district for the
ensuing calendar year. On or before the following first day of
November, the commissioner shall issue a certificate to the
retailer and to each vendor certified to the commissioner on
that list. The certificate shall include the names of the
retailer and of the qualified integrated supply chain vendors.
The retailer shall notify the commissioner of any changes
to the list, including additions to or subtractions from the
list or changes in the name or legal entity of vendors certified
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on the list, within sixty days after the date the retailer
becomes aware of the change. Within thirty days after receiving
that notification, the commissioner shall issue a revised
certificate to the retailer and to each vendor certified on the
list. The revised certificate shall include the effective date
of the change.
Each recipient of a certificate issued pursuant to this
division shall maintain a copy of the certificate for four years
from the date the certificate was received.
(vi) "Integrated supply chain services" means procuring
raw materials or manufacturing, processing, refining,
assembling, packaging, or repackaging tangible personal property
that will become finished goods inventory capable of being sold
at retail by a retailer that is a member of an integrated supply
chain.
(vii) "Retailer" means a person primarily engaged in
making retail sales and any member of that person's consolidated
elected taxpayer group or combined taxpayer group, whether or
not that member is primarily engaged in making retail sales.
(viii) "Qualified integrated supply chain district" means
the parcel or parcels of land from which a retailer's integrated
supply chain that existed on September 29, 2015, provides or
receives integrated supply chain services, and to which all of
the following apply:
(I) The parcel or parcels are located wholly in a county
having a population of greater than one hundred sixty-five
thousand but less than one hundred seventy thousand based on the
2010 federal decennial census.
(II) The parcel or parcels are located wholly in the
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corporate limits of a municipal corporation with a population
greater than seven thousand five hundred and less than eight
thousand based on the 2010 federal decennial census that is
partly located in the county described in division (F)(2)(jj)
(viii)(I) of this section, as those corporate limits existed on
September 29, 2015.
(III) The aggregate acreage of the parcel or parcels
equals or exceeds one hundred acres.
(kk) In the case of a railroad company described in
division (D)(9) of section 5727.01 of the Revised Code that
purchases dyed diesel fuel directly from a supplier as defined
by section 5736.01 of the Revised Code, an amount equal to the
product of the number of gallons of dyed diesel fuel purchased
directly from such a supplier multiplied by the average
wholesale price for a gallon of diesel fuel as determined under
section 5736.02 of the Revised Code for the period during which
the fuel was purchased multiplied by a fraction, the numerator
of which equals the rate of tax levied by section 5736.02 of the
Revised Code less the rate of tax computed in section 5751.03 of
the Revised Code, and the denominator of which equals the rate
of tax computed in section 5751.03 of the Revised Code.
(ll) Receipts realized by an out-of-state disaster
business from disaster work conducted in this state during a
disaster response period pursuant to a qualifying solicitation
received by the business. Terms used in division (F)(2)(ll) of
this section have the same meanings as in section 5703.94 of the
Revised Code.
(mm) Any receipts for which the tax imposed by this
chapter is prohibited by the constitution or laws of the United
States or the constitution of this state.
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S. B. No. 276 Page 444As Introduced
(3) In the case of a taxpayer when acting as a real estate
broker, "gross receipts" includes only the portion of any fee
for the service of a real estate broker, or service of a real
estate salesperson associated with that broker, that is retained
by the broker and not paid to an associated real estate
salesperson or another real estate broker. For the purposes of
this division, "real estate broker" and "real estate
salesperson" have the same meanings as in section 4735.01 of the
Revised Code.
(4) A taxpayer's method of accounting for gross receipts
for a tax period shall be the same as the taxpayer's method of
accounting for federal income tax purposes for the taxpayer's
federal taxable year that includes the tax period. If a
taxpayer's method of accounting for federal income tax purposes
changes, its method of accounting for gross receipts under this
chapter shall be changed accordingly.
(G) "Taxable gross receipts" means gross receipts sitused
to this state under section 5751.033 of the Revised Code.
(H) A person has "substantial nexus with this state" if
any of the following applies. The person:
(1) Owns or uses a part or all of its capital in this
state;
(2) Holds a certificate of compliance with the laws of
this state authorizing the person to do business in this state;
(3) Has bright-line presence in this state;
(4) Otherwise has nexus with this state to an extent that
the person can be required to remit the tax imposed under this
chapter under the Constitution of the United States.
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S. B. No. 276 Page 445As Introduced
(I) A person has "bright-line presence" in this state for
a reporting period and for the remaining portion of the calendar
year if any of the following applies. The person:
(1) Has at any time during the calendar year property in
this state with an aggregate value of at least fifty thousand
dollars. For the purpose of division (I)(1) of this section,
owned property is valued at original cost and rented property is
valued at eight times the net annual rental charge.
(2) Has during the calendar year payroll in this state of
at least fifty thousand dollars. Payroll in this state includes
all of the following:
(a) Any amount subject to withholding by the person under
section 5747.06 of the Revised Code;
(b) Any other amount the person pays as compensation to an
individual under the supervision or control of the person for
work done in this state; and
(c) Any amount the person pays for services performed in
this state on its behalf by another.
(3) Has during the calendar year taxable gross receipts of
at least five hundred thousand dollars.
(4) Has at any time during the calendar year within this
state at least twenty-five per cent of the person's total
property, total payroll, or total gross receipts.
(5) Is domiciled in this state as an individual or for
corporate, commercial, or other business purposes.
(J) "Tangible personal property" has the same meaning as
in section 5739.01 of the Revised Code.
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S. B. No. 276 Page 446As Introduced
(K) "Internal Revenue Code" means the Internal Revenue
Code of 1986, 100 Stat. 2085, 26 U.S.C. 1, as amended. Any term
used in this chapter that is not otherwise defined has the same
meaning as when used in a comparable context in the laws of the
United States relating to federal income taxes unless a
different meaning is clearly required. Any reference in this
chapter to the Internal Revenue Code includes other laws of the
United States relating to federal income taxes.
(L) "Calendar quarter" means a three-month period ending
on the thirty-first day of March, the thirtieth day of June, the
thirtieth day of September, or the thirty-first day of December.
(M) "Tax period" means the calendar quarter or calendar
year on the basis of which a taxpayer is required to pay the tax
imposed under this chapter.
(N) "Calendar year taxpayer" means a taxpayer for which
the tax period is a calendar year.
(O) "Calendar quarter taxpayer" means a taxpayer for which
the tax period is a calendar quarter.
(P) "Agent" means a person authorized by another person to
act on its behalf to undertake a transaction for the other,
including any of the following:
(1) A person receiving a fee to sell financial
instruments;
(2) A person retaining only a commission from a
transaction with the other proceeds from the transaction being
remitted to another person;
(3) A person issuing licenses and permits under section
1533.13 of the Revised Code;
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S. B. No. 276 Page 447As Introduced
(4) A lottery sales agent holding a valid license issued
under section 3770.05 of the Revised Code;
(5) A person acting as an agent of the division of liquor
control under section 4301.17 of the Revised Code.
(Q) "Received" includes amounts accrued under the accrual
method of accounting.
(R) "Reporting person" means a person in a consolidated
elected taxpayer or combined taxpayer group that is designated
by that group to legally bind the group for all filings and tax
liabilities and to receive all legal notices with respect to
matters under this chapter, or, for the purposes of section
5751.04 of the Revised Code, a separate taxpayer that is not a
member of such a group.
Section 2. That existing sections 111.16, 122.16, 122.173,
135.14, 135.142, 135.35, 150.05, 718.01, 1329.01, 1329.02,
1701.03, 1701.05, 1701.791, 1702.05, 1702.411, 1703.04, 1729.36,
1729.38, 1745.461, 1751.01, 1776.69, 1776.82, 1782.02, 1782.432,
1785.09, 3345.203, 3964.03, 3964.17, 4701.14, 4703.18, 4703.331,
4715.18, 4715.22, 4715.365, 4715.431, 4717.06, 4723.16, 4725.33,
4729.161, 4729.541, 4731.226, 4731.228, 4732.28, 4733.16,
4734.17, 4755.111, 4755.471, 4757.37, 5701.14, 5715.19, 5733.04,
5733.33, 5733.42, 5747.01, and 5751.01 of the Revised Code are
hereby repealed.
Section 3. That sections 1705.01, 1705.02, 1705.03,
1705.031, 1705.04, 1705.05, 1705.06, 1705.07, 1705.08, 1705.081,
1705.09, 1705.10, 1705.11, 1705.12, 1705.13, 1705.14, 1705.15,
1705.16, 1705.161, 1705.17, 1705.18, 1705.19, 1705.20, 1705.21,
1705.22, 1705.23, 1705.24, 1705.25, 1705.26, 1705.27, 1705.28,
1705.281, 1705.282, 1705.29, 1705.291, 1705.292, 1705.30,
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S. B. No. 276 Page 448As Introduced
1705.31, 1705.32, 1705.33, 1705.34, 1705.35, 1705.36, 1705.361,
1705.37, 1705.371, 1705.38, 1705.381, 1705.39, 1705.391,
1705.40, 1705.41, 1705.42, 1705.43, 1705.44, 1705.45, 1705.46,
1705.47, 1705.48, 1705.49, 1705.50, 1705.51, 1705.52, 1705.53,
1705.54, 1705.55, 1705.56, 1705.57, 1705.58, and 1705.61 of the
Revised Code are hereby repealed.
Section 4. Section 3 of this act shall take effect on
January 1, 2022.
Section 5. The repeal of a statute by this act shall not
affect an action commenced, proceeding brought, or right accrued
prior to January 1, 2022.
Section 6. The General Assembly, applying the principle
stated in division (B) of section 1.52 of the Revised Code that
amendments are to be harmonized if reasonably capable of
simultaneous operation, finds that the following sections,
presented in this act as composites of the sections as amended
by the acts indicated, are the resulting versions of the
sections in effect prior to the effective date of the sections
as presented in this act:
Section 111.16 of the Revised Code as amended by both Sub.
H.B. 31 and Sub. H.B. 133 of the 132nd General Assembly.
Section 135.35 of the Revised Code as amended by Am. Sub.
H.B. 49, Sub. H.B. 251, and S.B. 163, all of the 132 General
Assembly.
Section 3345.203 of the Revised Code as amended by both
Am. Sub. H.B. 384 and Sub. S.B. 3 of the 131st General Assembly.
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