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As Passed by the Senate
136th
General Assembly
Regular
Session
Sub. S. B. No. 146
2025-2026
Senators Gavarone, Timken
Cosponsors: Senators Manning,
Chavez, Cirino, Cutrona, Ingram, O'Brien, Reineke, Roegner,
Romanchuk, Schaffer, Wilson
To
enact section 2307.36 of the Revised Code
to
codify the elements of the common law cause of action for "piercing
the corporate veil."
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section
1.
That
section 2307.36 of the Revised Code be enacted to read as follows:
Sec.
2307.36.
(A)
As used in this section:
(1)
"Affiliate" means a person that directly, or indirectly
through one or more intermediaries, controls, is controlled by, is
under common control with, or acts in concert with, a specified
person.
(2)
"Covered entity" means a corporation, limited liability
company, limited partnership, or any other entity organized under the
laws of any jurisdiction, domestic or foreign, of which the covered
persons are generally not responsible for the debts and obligations
of the covered entity.
(3)
"Covered person" means any of the following:
(a)
A person who is the holder, owner, or subscriber of shares or any
other ownership interest of a covered entity;
(b)
A member, officer, or director of a covered entity;
(c)
An affiliate of any person who is described in division (A)(3)(a) or
(b) of this section.
(4)
"Damages or other penalties" means damages of any kind or
civil or administrative penalties for which liability may exist under
the laws of this state resulting from, arising out of, or related to
an obligation or liability of a covered entity.
(5)
"Governmental entity" means every organized body, office,
political subdivision or agency of a political subdivision, or agency
established by the Ohio Constitution or the laws of this state for
the exercise of any function of state government.
(B)
A covered person has no obligation to, and has no liability to, any
governmental entity for damages or other penalties, unless either of
the following applies:
(1)
The obligation or liability of the covered person to the governmental
entity for damages or other penalties is expressly provided for in
the Revised Code.
(2)
The governmental entity seeks to pierce the corporate veil by
demonstrating all of the following:
(a)
The covered person exerted such control over the covered entity that
the covered entity had no separate mind, will, or existence of its
own.
(b)
The covered person exercised control over the covered entity in such
a manner as to commit a fraud, an illegal act, or a similarly
unlawful act against the governmental entity seeking to pierce the
corporate veil.
(c)
The governmental entity seeking to pierce the corporate veil
sustained an injury or unjust loss as a result of the conduct
described in divisions (B)(2)(a) and (b) of this section.
(C)
A court shall not find the covered person to have engaged in the
conduct described in division (B)(2) of this section solely as a
result of any of the following actions, events, or relationships:
(1)
The covered person provides legal, accounting, consulting, treasury,
cash management, human resources, administrative, or other similar
services to the covered entity, leases assets to the covered entity,
or makes its employees available to the covered entity.
(2)
The covered person acted or failed to act within the scope of the
covered person's authority or employment.
(3)
The covered person loans funds to the covered entity or guarantees
the obligations of the covered entity.
(4)
The officers, directors, owners, and members of the covered person
are also the officers, directors, owners, and members of the covered
entity.
(5)
The covered entity makes payments of dividends or other distributions
to the covered person or repays loans owed to the covered person.
(6)
In the case of a covered entity that is a limited liability company,
the covered person or its employees or agents serves as the manager
of the covered entity.
(D)
The governmental entity making a claim for damages or other penalties
against a covered person has the burden of proof on each and every
element of the governmental entity's claim to pierce the corporate
veil.
(E)
This section applies to all claims for damages or other penalties
brought against a covered person commenced on or after the effective
date of this section or commenced prior to and pending on the
effective date of this section that has not had a final appealable
order issued on the merits.
(F)
Nothing in this section shall be construed as creating a right or
cause of action that did not exist under the common law as it existed
on the effective date of this section.
(G)
Nothing in this section limits or otherwise affects the liabilities
imposed on a general partner of a limited partnership.