Ohio Code § 1701.32

§ 1701.32.

(A) The surplus of a corporation is the excess of its assets over its liabilities plus

stated capital, if any.  The earned surplus of a corporation is the net balance of its net profits, income,

gains, and losses from the date of incorporation, except as otherwise provided in

this section, or from the latest date on which a deficit in earned surplus was eliminated

by application of capital surplus or otherwise, after deducting distributions to shareholders

and transfers to stated capital and capital surplus to the extent that such distributions

and transfers are made out of earned surplus.  Surplus other than earned surplus is capital surplus. Determinations under this section may be based upon financial statements prepared

on the basis of accounting practices and principles that are reasonable in the circumstances,

and may make use of the equity method of accounting. (B) Capital surplus shall be classified according to its derivation and so shown on the

books of the corporation, and each balance sheet shall show separately any capital

surplus arising from unrealized appreciation of assets, other capital surplus, and

earned surplus. (C) If a corporation accepts a voluntary contribution of property other than its own

issued shares, the directors may order all or a part of the fair value of such property

to the corporation, as determined by the directors, to be entered on its books, and

thereby create or add to capital surplus. (D) In addition to any determination permitted under division (A) of this section, if

the directors of a corporation determine that tangible or intangible assets of the

corporation have a fair value to it in excess of the amount at which they are carried

on its books, they may order all or a part of such excess so determined to be entered

on its books, and thereby create or add to capital surplus. (E) In addition to any determination permitted under division (A) of this section, the

directors of a corporation that owns shares in another domestic or foreign corporation

may, if they believe in good faith that the books of the issuing corporation are kept

according to generally accepted accounting principles, order such shares to be carried

on the books of the corporation owning them at the value shown on the books of the

issuing corporation, and thereby create or add to the capital surplus of the corporation

owning such shares.  When shares are carried on such basis, the balance sheets of the corporation owning

them shall contain a statement to that effect. (F) The directors may order transfers from any surplus however created to stated capital

of shares with or without par value, and from earned surplus to capital surplus. (G) Pursuant to a resolution adopted by the affirmative vote of the holders of two-thirds

of the shares of each class, regardless of limitations or restrictions in the articles

on the voting rights of the shares of any such class or, if the articles so provide

or permit, a greater or lesser proportion, but not less than a majority, of the shares

of any class, a corporation may apply all or any part of capital surplus to the reduction

or writing off of any deficit in earned surplus, or to the creation of a reserve for

any proper purpose, and thereby make available for dividends or distributions, without

notice to the shareholders as to the source of such dividends or distributions, any

earned surplus remaining, or thereafter arising, but in case such action is taken,

a record of it shall be made on the books of the corporation and shall appear on each

balance sheet of the corporation for a period of not less than five years thereafter. (H)(1) In the case of a merger of one or more domestic or foreign corporations into a domestic

surviving corporation, the directors of the surviving corporation may order entered

on its books all or part of the earned surplus of the other constituent corporations,

diminished by any deficit in earned surplus of any constituent corporation, and thereby

create, add to, or diminish the earned surplus of the surviving corporation. (2) In the case of a consolidation of a domestic corporation with one or more domestic

or foreign corporations into a new domestic corporation, the directors of the new

corporation may order entered on its books all or part of the earned surplus of each

of the constituent corporations, diminished by any deficit in earned surplus of any

constituent corporation, and thereby create earned surplus of the new corporation. (3) In the case of a combination, the directors of the acquiring corporation may order

entered on its books all or part of the earned surplus of the transferor corporations,

diminished by any deficit in earned surplus of any such corporation, and thereby create,

add to, or diminish the earned surplus of the acquiring corporation. (4) In the case of a dissolution of a domestic or foreign subsidiary corporation, all

shares of which are owned by a domestic corporation, the directors of the parent corporation

may order entered on its books all or part of the earned surplus of the subsidiary

and thereby create or add to the earned surplus of the parent. (5) The action of the directors of a corporation in creating or adding to earned surplus,

as provided in this division, must be taken, if at all, not later than ninety days

after the end of the fiscal year of such corporation in which the merger, consolidation,

combination, or dissolution becomes effective.