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The Legislative Service Commission staff updates the Revised Code on an ongoing basis, as it completes its act review of enacted legislation. Updates may be slower during some times of the year, depending on the volume of enacted legislation.

Chapter 1105 | Banks - Board Of Directors

 
 
 
Section
Section 1105.01 | Authority, number, terms and classes of directors.
 

(A) Except where the Revised Code, the articles of incorporation, or the code of regulations require action to be authorized or taken by shareholders or members, all of the authority of a state bank shall be exercised by or under the direction of the bank's board of directors. The board of directors shall consist of not less than five directors.

(B) Unless the articles of incorporation or the code of regulations provide for a different term, which may not exceed three years from the date of the director's election and until the director's successor is elected and qualified, each director shall hold office until the next annual meeting of the shareholders or members and until the director's successor is elected and qualified, or until the director's earlier resignation, removal from office, or death.

(C) The articles of incorporation or the code of regulations may provide for the classification of directors into either two or three classes consisting of not less than two directors each. The terms of office of the several classes need not be uniform, except that no term shall exceed the maximum time specified in division (B) of this section.

Section 1105.02 | Qualifications of board members.
 

(A)(1) Of the directors on the board of directors of a state bank:

(a) A majority of the directors shall be outside directors. However, in the case of a stock state bank, if eighty per cent or more of any class of the bank's voting shares are owned by a company, a majority of the directors may be officers or directors of one or more affiliates of the bank.

(b) For purposes of this section, anyone who is not an employee of the state bank or the bank holding company shall be considered an outside director.

(2)(a) If during a term of office a director causes the total membership of the board to be out of compliance with division (A)(1)(a) of this section, the director forfeits the directorship, and the director's office is then vacant.

(b) No new director, or former director who is elected or appointed to the board after an interruption in service, shall be elected or appointed if it causes the total membership of the board to be out of compliance with division (A)(1)(a) of this section.

(B)(1) No person who has been convicted of, or has pleaded guilty to, a felony or any crime involving an act of fraud, dishonesty, breach of trust, theft, or money laundering shall serve as a director of a bank or a subsidiary or affiliate of a bank. The superintendent of financial institutions may waive this restriction if the crime the person was convicted of or pleaded guilty to was a misdemeanor or minor misdemeanor or the equivalent thereof.

(2) If during a term of office any director is convicted of, or pleads guilty to, a crime described under division (B)(1) of this section, the director forfeits the directorship, and the director's office is then vacant.

Section 1105.03 | Director oath.
 

(A) To qualify as a director, each person elected or appointed to the board of directors shall, within sixty days after election or appointment, take and subscribe an oath to diligently and honestly perform the duties of a director and to not knowingly violate or permit to be violated any federal banking law or any provision of Chapters 1101. to 1127. of the Revised Code.

(B) Promptly upon execution, and within sixty days of the person's election or appointment, the oath shall be filed with the secretary of the state bank.

Section 1105.04 | Individual, schedule, or blanket fidelity bonds.
 

Each officer and employee of a state bank, prior to the discharge of the officer's or employee's duties, shall be covered by an individual, schedule, or blanket fidelity bond in favor of the bank, with terms and issuing insurer approved by the board of directors. The amount of the bond shall be set by the board of directors, and shall be reasonable given the size of the bank and nature of its business. The board of directors are not required to provide a bond covering their duties as directors.

Section 1105.07 | Bylaws.
 

For its own governance, the board of directors may adopt bylaws not inconsistent with the law of this state, the articles of incorporation, or the code of regulations. Without limiting their generality, the bylaws may include provisions with respect to:

(A) The time and place of holding, the manner of and authority for calling, giving notice of, and conducting meetings of the board of directors;

(B) The appointment of committees of the board of directors, their authority, and the time, place, and manner of calling, giving notice of, and conducting their meetings.

Section 1105.08 | Board and committee meetings.
 

(A)(1) A state bank's board of directors shall meet monthly unless the bank's code of regulations provides for a different frequency of meetings, which shall not be less than quarterly.

(2) Division (A)(1) of this section does not prohibit either of the following:

(a) A state bank's board of directors meeting more frequently than required by division (A)(1) of this section or the bank's code of regulations;

(b) The superintendent of financial institutions requiring a state bank's board of directors to meet more frequently than required by division (A)(1) of this section or the bank's code of regulations if the superintendent determines more frequent meetings are appropriate because of circumstances regarding the bank.

(B) Unless prohibited by the articles of incorporation, the code of regulations, or, in the case of a committee of the board of directors, an order of the board of directors, meetings of the board of directors or a committee of the board of directors may be held in any manner permitted by the laws of this state, including by communications equipment, if all persons participating can communicate with each of the others. Participation in a meeting in accordance with this division constitutes presence at the meeting.

(C) Minutes shall be kept of all meetings of a state bank's board of directors and of any committees of the board of directors, and shall be recorded in a readable and reproducible form and kept at the bank. The minutes shall show the action of the board of directors or any committee of the board of directors on loans, discounts, and investments made or authorized. The minutes of all committees of the board of directors shall be submitted to the board of directors for review at each meeting of the board of directors.

Section 1105.10 | Removing director; vacancy.
 

(A) Once elected or appointed, a director may be removed as follows:

(1) By the board of directors or the superintendent of financial institutions if any of the following applies:

(a) The director has filed for relief or is a debtor in a case filed under Title XI of the United States Code;

(b) A court has determined the director is incompetent;

(c) The director has been removed in accordance with federal law.

(2) By the board of directors for any of the grounds set forth in the state bank's code of regulations or bylaws;

(3) By a majority of the disinterested directors if they determine the director has a conflict of interest.

(B)(1)(a) Except as provided in division (B)(1)(b) of this section, unless the articles of incorporation or the code of regulations of the state bank expressly provide that removal of members of the board of directors shall require a greater vote, the shareholders or members may remove all the directors, all the directors of a particular class, or any individual director from office, without assigning any cause, by the vote of the holders of a majority of the voting power entitling them to elect directors in place of those to be removed.

(b) If the shareholders or members have the right to vote cumulatively in the election of directors of the bank, unless all the directors or all the directors of a particular class are removed, the vote of shareholders or members does not remove an individual director if the votes cast against the director's removal, if cumulatively voted at an election of all the directors or all the directors of a particular class, as the case may be, would be sufficient to elect at least one director.

(2) If one or more directors is removed pursuant to division (B)(1) of this section, the shareholders or members may elect a new director at the same meeting for the unexpired term of each director removed. Failure of the shareholders or members to elect a director to fill the unexpired term of any director removed is deemed to create a vacancy in the board.

(C) Unless the articles of incorporation or the code of regulations otherwise provide, the remaining directors, though less than a majority of the whole authorized number of directors, may, by the vote of a majority of their number, fill any vacancy in the board for the unexpired term.

(1) A vacancy exists if the shareholders or members increase the authorized number of directors but fail at the meeting at which the increase is authorized, or an adjournment of the meeting, to elect the additional directors provided for, or if the shareholders or members fail at any time to elect the whole authorized number of directors.

(2) The office of a member of the board of directors becomes vacant if the director dies, resigns, or is removed. A resignation takes effect immediately unless the director specifies another time.

(D) If a vacancy created on the board of directors causes the number of directors to be less than that fixed by the articles of incorporation or code of regulations, the vacancy shall not be required to be filled until such time as an appropriate candidate is identified and duly appointed or elected.

(E) Notwithstanding divisions (B) and (C) of this section, the requirement for a quorum set forth in section 1701.62 of the Revised Code applies to a state bank's board of directors.

Section 1105.11 | Personal liability.
 

(A) A director, officer, employee, or other institution-affiliated party of a bank shall not be personally and individually liable for direct or indirect damages the bank, its shareholders or members, or any other person sustains in consequence of a violation of or failure to comply with any provision of Chapters 1101. to 1127. of the Revised Code or the rules adopted under those chapters, including any civil money penalties, unless it can be shown that the director, officer, employee, or other institution-affiliated party knowingly violated or failed to comply with that provision of law or, with respect to a director's liability, that the director knowingly permitted any of the officers, employees, or other institution-affiliated parties to violate or fail to comply with any such provision.

(B) Nothing in this section shall be construed to deprive a director of the defenses set forth in section 1701.59 of the Revised Code.