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Sponsor tells Judiciary Committee bill would codify ‘piercing the corporate veil’ rules
Summary
Senate Bill 146 would codify elements of common‑law piercing‑the‑corporate‑veil doctrine into statute; sponsor said the measure is intended to limit suits that impose personal liability on employees and investors absent recognized veil‑piercing factors.
The Senate Judiciary Committee held the first hearing on Senate Bill 146, sponsor Senator Timken told the committee, and the bill would "codify the elements of the common law cause of action action for piercing the corporate veil." Senator Timken said the measure aims to set statutory standards for when the corporate form may be disregarded.
Senator Timken told the committee that corporations, limited liability companies and similar entities provide limited liability protections recognized in Ohio law, but that common law and Ohio Supreme Court decisions set exceptions where individual owners may be held liable. He cited examples the court has recognized, saying the tests include whether shareholders' control was "so complete that the corporation has no separate mind, will, or existence of its own," whether control facilitated fraud or illegal acts, and whether the plaintiff sustained injury as a result.
Senator Timken said the bill responds to litigation using "participation theory," where plaintiffs seek personal liability for employees or decision‑makers in the chain of authority. "Senate Bill 146 seeks to remedy this by enacting in statute the common law rule of piercing the corporate veil," Timken said, and he warned that failing to codify the rule could "have a chilling effect on investment and economic growth in Ohio." He asked the committee for its support and invited questions.
No committee vote was taken; the committee recorded the item as its first hearing on Senate Bill 146. Senator Timken noted a joint sponsor, Senator Gavron, and referenced prior Ohio Supreme Court decisions (Belvedere Condo Unit Owners Association v. Ari Roark Companies Inc. and Dobronsky v. WellPoint) and a citation to Ohio statutory law referenced in testimony.
