This requirement that directors live near or in

This chapter reorganizes the existing statutory law
governing the corporate governance of state banks by recodifying the existing law
in Ohio Revised Code Chapter 1113. 

The chapter also updates certain restrictions regarding
the use of the terms “bank” “banking,” “savings,” “loan,” “savings and loan,” “building
and loan,” or “thrift” in order to prevent misleading use of the terms.  The new law requires that the name of a
banking organization must include one of these terms.  The new law also prohibits the use without
permission of the name of a state bank in advertising or promotional material
in a way that may mislead a person into believing that the user of the name is
associated or affiliated with the state bank.  The chapter also creates a new civil money
penalty for violations of the new law up to $10,000 a day.

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The chapter also updates signature requirements:  if two authorized signatories are required by
a document, one must be the chairperson, the president, or a VP, as determined
by the board of directors, and the other must be the secretary or assistant
secretary, as determined by the board of directors.

I.                  
Chapter 1105:  Banks – Board of Directors

This chapter applies only to state banks as
opposed to other kinds of Ohio business entities and makes a number of changes
regarding board organizational matters. 
The chapter makes the following changes:

Reduces minimum number
of directors to two.
Eliminates requirement
that directors live near or in Ohio.
Eases the requirements
to be an outside director. 
Essentially, a person qualifies so long as he or she is not an
employee of the state bank or holding company.
Disqualifies from
directorship anyone is quality of felony involving dishonesty or theft,
breach of trust, theft or money laundering.

The chapter modernizes communications requirements by
providing that board meetings can be held through any communications equipment if all of the participants can
communicate with each other.

Directors can be removed if the director has been
removed in accordance with federal law, or for any reason stated in the bank’s
code of regulations or by a majority of the directors if the board determines
the director has a conflict of interest.

Prior law stated that vacancies occur when a director
dies or resigns and the new law provides that a vacancy also exists when a director
is removed.  Vacancies are only required
to be filled if the number of directors falls below the number fixed by the
articles or code of regulations and the new law provides that a vacancy does
not have to be filled until an appropriate candidate is duly appointed or
elected.

The chapter provides that quorum requirements under the
Ohio general corporation law (Ohio Revised Code Chapter 1701) apply to state
banks.

The new law changes existing law by providing  that bank directors, officers, employees or
other party affiliated with the state bank are not individually liable for
direct or indirect damages unless it can be shown the person knowingly violated
banking law or knowingly permitted another person to violate banking law.  The new law also makes it clear that in Ohio
bank directors can assert the defenses provided for all directors in the Ohio general
corporation law.