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.