Weekly Legislative Report: The "Lazarus" Amendment

Feb. 22, 2018

During a Wednesday hearing of the Senate Government Oversight & Reform Committee, Chairman Bill Coley (R-Liberty Township) publicly thanked the OSBA Corporation Law Committee, saying legislators "benefit greatly" from the work they do. The latest example: Russ Rosler, a Corporation Law Committee member and corporate attorney at Vorys, Sater, Seymour and Pease had just testified on Senate Bill 179 and outlined a constructive amendment that will ensure limited liability companies (LLCs) can stay in business and in compliance with state filing requirements. 

SB 179, sponsored by Senator Frank LaRose (R-Hudson) would allow for the automatic dissolution of an LLC if the company fails to maintain an updated statutory agent for service of process with the Ohio Secretary of State's office following notice of noncompliance by the Secretary of State. Current law already provides for a similar provision for corporations, and as Senator LaRose has indicated, is designed to guard against fraudulent business filings and provide the Secretary of State a tool to better maintain a legitimate roster of Ohio companies. However, as Rosler pointed out to Senators, current law also has a "Lazarus" provision, allowing the corporation that has been dissolved to be reinstated if and when the corporation comes back into compliance with the statutory agent requirements as if it had never been dissolved. This is important as it allows legitimate corporations to remedy what are likely administrative oversights and avoid any question as to the validity of actions taken by the company during the time they were not in compliance.

The as-introduced version of SB 179, though allowing for the automatic dissolution of an LLC, does not provide for its automatic reinstatement. The Corporation Law Committee caught this oversight in the bill draft and has provided an LLC "Lazarus" amendment to Senator LaRose, tracking practically verbatim with the reinstatement language appearing in the corporation statute. Without this language, SB 179 would create a substantial risk for persons forming LLCs in Ohio and could discourage entrepreneurs from forming LLCs in Ohio when compared to Delaware or other jurisdictions that have automatic reinstatement provisions. The OSBA proposed amendment would provide the appropriate balance between ensuring the Secretary of State can guard against fraudulent filings while not creating havoc for Ohio business owners.

Senator LaRose is supportive of the OSBA amendment and based upon comments and questions during the hearing, committee members on both sides of the aisle appear willing to adopt it at a future hearing. Many thanks to Russ Rosler and the members of the Corporation Law Committee for their eagle eyes in reviewing proposed legislation and on this suggestion which will make the bill better. Ohio legislators do indeed benefit greatly from the experience and dedication of OSBA practicing attorneys!

Senate Passes Dating Violence Bill

Every minute an average of 24 people are subject to dating violence across the country. In an effort to better protect Ohioans subject to such violence, the Ohio Senate unanimously passed House Bill 1 on Tuesday. Sponsored by State Representatives Emilia Sykes (D-Akron) and Nathan Manning (R-North Ridgeville), the bill would allow victims of dating violence to petition the court for a civil protection order. Ohio is one of only two states (Georgia is the other) in the nation that does not apply this protection to those in committed relationships in which the individuals do not reside in the same home or share a child in common. In an effort to ensure clarity for Ohio judges, Senators amended the bill to clarify the definition of dating relationship. The bill now goes back to the Ohio House for concurrence before heading to Governor Kasich's desk.   

Centralized Local Tax Collection to Move Forward

A Wed. ruling by Franklin County Judge David Cain will allow the State Department of Taxation to move forward with the centralized collection of local taxes. A longtime wish of Ohio business owners (and those who do their taxes), this means taxpayers have the option to file a single return with the state for municipal taxes levied on business income, rather than having to file in each individual community in which they did business. Municipalities across Ohio had challenged the provision, which was adopted as part of the state budget bill, as well as an earlier law designed to reform municipal tax collections. Judge Cain rejected their argument that the new laws run afoul of home rule protections in the Ohio Constitution for cities and villages, which grants "authority to exercise all powers of local self-government...as are not in conflict with general laws." He affirmed that under separate constitutional language, the state has the authority to limit the power of municipalities to levy taxes. The municipalities are expected to appeal, but in the meantime, those wishing to take advantage of the new provision for tax year 2018 must register through the Ohio Business Gateway no later than March 1. You can find more information via the Ohio ​Department of Taxation.

Signature Shortage Disqualifies Four Democratic Candidates from Statewide Ballot

As reported here a couple of weeks back, eight candidates and their running mates filed in the Democratic primary election for Governor. This week, when Secretary of State Husted certified the candidates, Cleveland Clinic doctor Jonathan Heavey and his running mate Adam Hudak did not make the cut due to a lack of valid signatures. Major party candidates are required to file with 1,000 valid signatures. This leaves six tickets for Ohio Democrats to choose from following Connie Pillich's decision to back out of the race and support Richard Cordray last week.

In addition to Heavey and Hudak, Democrats Kelli Prather who had filed for Auditor of State and Neil Patel who had filed for Treasurer of State also did not meet the signature requirement. This means Auditor candidate Zach Space and Treasurer candidate Rob Richardson, both of whom did qualify for the ballot, will not face primary opposition. For a complete list of certified candidates, visit the Ohio Secretary of State's website.

Ohio's primary election is May 8, 2018. In addition to nominating candidates for federal, statewide and local races, Ohio voters will weigh in on a bipartisan redistricting reform initiative proposed by the Ohio General Assembly. This week, the Ohio Ballot Board approved the ballot language and official explanation for the initiative, which will be State Issue 1. You can read more about it in our previous report.

Week Ahead  

Both the Ohio House and Senate will be in session on Wednesday, Feb. 28. In addition, the Ohio House has an "if needed" day scheduled for Thurs. March 1. Senate President Larry Obhoff has also indicated that the state capital bill, which funds the state's bricks and mortar projects, will likely be introduced next week. Expect that this will be the major focus on Capitol Square for the month of March, especially as the bill is expected to have about 10 percent less funding available than in the previous biennium.

Tracking OSBA Legislation  

As always, you can track OSBA priority bills and bills we are watching via the Legislative section at www.OhioBar.org




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