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As Introduced
136th
General Assembly
Regular
Session
S. B. No. 353
2025-2026
Senator Lang
To
enact sections 1701.031, 1701.592, 1701.593, 1701.594, 1701.595,
1701.596, and 1701.597 of the Revised Code
regarding
the regulation of the internal affairs of domestic corporations and
corporate use of committees of independent and disinterested
directors.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section
1.
That
sections 1701.031, 1701.592, 1701.593, 1701.594, 1701.595, 1701.596,
and 1701.597 of the Revised Code be enacted to read as follows:
Sec.
1701.031.
The
internal affairs and activities of any corporation incorporated in
Ohio are governed under the law of this state.
Sec.
1701.592.
The
board of directors may adopt a resolution to authorize the formation
of a committee of independent and disinterested directors to review
and approve transactions, whether or not contemplated at the time of
the committee's formation. Such directors need not be incumbent
directors to serve on the committee of independent and disinterested
directors authorized under this section. Such transactions may
involve the corporation or any of its subsidiaries and a controlling
shareholder, director, or officer.
Sec.
1701.593.
(A)
If, upon the appointment of directors to a committee under section
1701.592 of the Revised Code, a shareholder, a subsidiary, or the
corporation has a genuine belief that one or more of the directors
appointed is not independent or disinterested with respect to any
transactions involving the corporation or any of its subsidiaries and
a controlling shareholder, director, or officer, the shareholder,
subsidiary, or corporation may, in good faith, petition a court in
accordance with division (B) of this section to hold an evidentiary
hearing to determine whether the directors appointed to the committee
are independent and disinterested.
(B)
A petition filed under this section shall be filed in the court of
common pleas in the county where the corporation's principal place of
business in this state is located.
(C)
In the petition, the corporation shall designate legal counsel to act
on behalf of the corporation and its shareholders, other than the
controlling shareholder, director, or officer involved in the
transaction.
(D)
Notice that the petition has been filed under this section shall be
provided to shareholders. The notice shall inform the corporation's
shareholders of all of the following:
(1)
That a petition has been filed under this section;
(2)
The court in which the petition has been filed;
(3)
The case number for the proceeding;
(4)
The identity of the legal counsel designated to act on behalf of the
corporation and its shareholders, other than the controlling
shareholder, director, or officer involved in the transaction.
(E)
Notice required under this section may occur electronically via the
corporation's web site or be otherwise delivered via electronic mail.
If the corporation has a class or series of voting shares listed on a
national securities exchange, such notice may also be provided
through filing of a current report with the United States securities
and exchange commission in accordance with the requirements of the
"Securities Exchange Act of 1934," 15 U.S.C. 78a, et seq.,
and any rules promulgated under that act.
Sec.
1701.594.
(A)
The shareholders, other than the controlling shareholder, director,
or officer involved in the transaction, have the right to participate
in the evidentiary proceeding under sections 1701.593 to 1701.595 of
the Revised Code in person or through counsel.
(B)
Not earlier than the tenth day after the date the notice required
under division (D) of section 1701.593 of the Revised Code is given,
the court shall hold a preliminary hearing to determine the
appropriate legal counsel to represent the corporation and its
shareholders, other than the controlling shareholder, director, or
officer involved in the transaction, in accordance with division (C)
of this section, whether or not the same as the legal counsel
identified in the petition.
(C)
Any other legal counsel representing a shareholder, other than the
controlling shareholder, director, or officer involved in the
transaction, may participate in the hearing to do either of the
following:
(1)
Object to counsel designated by the corporation in the petition on
the ground that the designated counsel is insufficiently independent
and disinterested;
(2)
Request designation by the court as the appropriate legal counsel.
Sec.
1701.595.
(A)
After the court determines the appropriate legal counsel under
section 1701.594 of the Revised Code, the court shall promptly hold
an evidentiary hearing as to whether the directors on the committee
are independent and disinterested with respect to transactions
involving the corporation or any of its subsidiaries and a
controlling shareholder, director, or officer.
(B)
The appropriate legal counsel determined under section 1701.594 of
the Revised Code and legal counsel for the corporation and its board
of directors may participate in the hearing.
(C)
After hearing and reviewing the evidence presented, the court shall
make its determination as to whether the directors on the committee
are independent and disinterested.
Sec.
1701.596.
(A)
The court's determination that the directors are independent and
disinterested under section 1701.595 of the Revised Code shall be
dispositive in the absence of facts, not presented to the court,
constituting evidence sufficient to prove that one or more of those
directors is not independent and disinterested with respect to a
particular transaction involving the corporation or any of its
subsidiaries and a controlling shareholder, director, or officer.
(B)
If a court of common pleas determines that the directors on the
committee are independent and disinterested with respect to
transactions involving the corporation or any of its subsidiaries and
a controlling shareholder, director, or officer, the decisions made
or recommendations issued by the committee are entitled to all
presumptions of independence and disinterestedness, including the
application of the business judgment rule and all entitlements under
section 1701.59 of the Revised Code.
Sec.
1701.597.
The
court of common pleas shall make all due effort to reach
determinations as promptly as possible to promote the use of
committees comprised of independent and disinterested directors.