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Senate codifies common‑law test for piercing corporate veil in governmental actions
Summary
Senate Bill 146, which codifies elements of the common‑law doctrine for piercing the corporate veil in governmental enforcement actions, passed unanimously. Sponsors said the measure protects individuals from personal civil liability for corporate acts except in narrowly defined circumstances.
The Ohio Senate unanimously passed Senate Bill 146 to codify the elements of the common‑law doctrine permitting courts to pierce the corporate veil in limited circumstances when a governmental plaintiff seeks to hold individuals personally liable.
Senator Timken, a sponsor, said the bill “enacts in statute the common law rule of piercing the corporate veil as to governmental actions against individuals,” explaining that courts may disregard a corporation’s separate existence when shareholders’ or individuals’ control is so complete that the corporation has “no separate mind, will, or existence of its own” and the control is used to commit fraud or unlawful acts that cause unjust loss.
Senator Gavarone, co‑sponsor, said the State had at times attempted to hold individual corporate employees personally liable for corporate failures and that codifying the limited common‑law test would protect investment and economic growth from chilling effects. The clerk recorded 32 yeas and 0 nays; the bill was passed and entitled.
