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Legislative updates

Senate Bill 21, effective March 18, 2021, amends the Ohio corporation law to authorize benefit corporations. A benefit corporation is defined as a corporation that sets forth in its articles of incorporation one or more beneficial purposes among the purposes for which the corporation is formed. "Beneficial purpose" means seeking to have a bona fide positive effect or to reduce one or more bona fide negative effects of an artistic, charitable, cultural, economic, educational, environmental, literary, medical, religious, scientific, or technological nature for the benefit of persons, entities, communities, or interests other than shareholders in their capacity as shareholders.

An existing corporation can become a benefit corporation by amending its articles of incorporation. However a corporation that has issued and has outstanding shares listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national or affiliated securities association cannot amend its articles to add a beneficial purpose.


Case summaries

Suit by LLC Member
Blank v. Bluemile, Inc., 2021 Ohio 2002, decided June 15, 2021. The Ohio Court of Appeals held that the Ohio Supreme Court’s decision in Crosby v. Beam, in which the court held that a minority shareholder in a close corporation could bring a direct action against the directors for breach of fiduciary duty did not apply to a case in which an LLC member sought to bring a direct action for unjust enrichment against majority members. Therefore, the LLC member lacked to standing to bring a direct action.


Extension of Voluntarily Dissolved Corporation’s Existence
Cuyahoga County Case Management v. Clark Industrial Insulation Co., 2021 Ohio 1405, decided April 22, 2021. The Ohio Court of Appeals held that the trial court located in the county in which a voluntarily dissolved corporation’s principal office was located as set forth in its articles of incorporation lacked the authority to extend the period of time in which the corporation could continue for winding up purposes. Instead, it was the county listed in the corporation’s certificate of dissolution filed with the Secretary of State that had the authority to extend the period.


Business Judgment Rule
Reister v. Gardner, 2020 Ohio 5484, decided December 3, 2020. The Ohio Supreme Court ruled that the Court of Appeals erred when it held the litigation privilege shielded the business decisions made by directors regarding corporate litigation. The court distinguished the litigation privilege - which protects participants in litigation from suits over statements made during litigation, with the business judgment rule - which provides deference to decisions by the board while managing the corporation, including decisions regarding litigation.


Fictitious Name
Red Foot Racing Stables v. Brewer, 2020 Ohio 5201, decided November 5, 2020. The Ohio Court of Appeals upheld the dismissal of a lawsuit filed by a horse racing stable based on the Ohio statute stating that no person doing business under a fictitious name shall commence or maintain an action in the fictitious name or on account of any contracts made or transactions had in the fictitious name until it has registered the fictitious name with the Secretary of State. The court rejected the plaintiff’s argument that the registration requirement does not apply to horse racing stables.


Effect of Becoming Limited Liability Partnerships
810 Properties VIII LLP v. Sukenik, No. 108922, decided April 23, 2020. The Ohio Court of Appeals held that two limited liability partnerships had standing to enforce partnership agreements entered into before filing their statements of qualification to become limited liability partnerships. The filing of the statements of qualification did not create new partnerships. The partnerships continued to be the same entities as before the filings.


Other notices

There are no new notices at this time.