OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 301 Final Analysis
135th General Assembly
Click here for H.B. 301’s Fiscal Note
Primary Sponsor: Rep. Swearingen
Effective Date: October 24, 2024
Effective Date:
Logan Briggs, Attorney
SUMMARY
Nonprofit corporation changes
▪ Requires nonprofit corporation directors to be natural persons (i.e., individuals rather
than business entities).
▪ Authorizes a committee consisting of one or more directors of a nonprofit corporation to
create a subcommittee, unless otherwise provided in the articles, the regulations, or the
resolution of the original committee.
▪ Specifies the fiduciary duty required of an officer of a nonprofit corporation.
▪ Expands the circumstances in which provisional directors may be appointed.
▪ Revises the standards for determining liability of directors when nonprofit corporations
make loans and the interest rate relating to that liability.
▪ Establishes that a loan made in violation of the law governing nonprofit corporation does
not affect the borrower’s liability on the loan.
▪ Authorizes a majority of the incorporators of a nonprofit corporation to amend the
articles of incorporation if (1) the articles do not name initial directors, (2) a meeting of
voting members has not yet occurred, and (3) the incorporators have not yet elected
directors.
▪ Establishes that a certificate issued by the Secretary of State confirming that a nonprofit
corporation is in good standing is conclusive evidence of certain facts.
▪ Limits the liability of those who provide goods to, or perform services for, nonprofit
corporations or their members to only the person or entity to whom the goods or services
were provided.
August 8, 2024
Office of Research and Drafting LSC Legislative Budget Office
▪ Provides an exception to religious organizations excluded from the definition of an
unincorporated nonprofit association in the Unincorporated Nonprofit Association Law.
▪ Allows a dissolving corporation to provide certain tax-related information as an
alternative to securing a certificate from the Department of Taxation confirming that all
state taxes have been paid.
▪ Classifies an order that restrains or restricts enforcement of a state statute or regulation
as a final appealable order.
Final appealable orders
▪ Classifies the following as a final order that may be reviewed on appeal: an order that
restrains or restricts enforcement of a state statute or regulation, whether on a
temporary, preliminary, or permanent basis, in whole or in part, facially or as applied
Conciliation for custody disputes between unmarried parents
▪ Allows a court to order unmarried parents who are in a custody dispute to undergo
conciliation with a magistrate.
▪ Requires a magistrate to resolve disputes through conciliation procedures and, upon
resolution, to issue an order regarding the allocation of parental rights and
responsibilities, parenting time, or companionship or visitation.
▪ Specifies that conciliation procedures may include the use of family counselors and
service agencies, community health services, physicians, licensed psychologist, and
clergy.
Ashtabula County County Court
▪ Replaces the two part-time judgeships of the Ashtabula County County Court with one full-
time judge and provides that those part-time judgeships cease to exist on January 1, 2031.
▪ Provides that the part-time judge of the Ashtabula County County Court to be elected in
2028, must be elected for a two-year term commencing January 1, 2029, and ending
December 31, 2030, and that one full-time judge must be elected in 2030, for a six-year
term to commence January 1, 2031.
Conneaut Municipal Court
▪ Beginning January 1, 2025, expands the territorial jurisdiction of the Conneaut Municipal
Court to include the municipal corporation of North Kingsville, and Kingsville, Monroe,
and Sheffield townships, in Ashtabula County.
▪ Requires that all cases arising in the municipal corporation of North Kingsville and in
Kingsville, Monroe, and Sheffield townships that are pending in the Eastern County Court
in Ashtabula County on January 1, 2025, be adjudicated by the Ashtabula County County
Court.
P a g e |2 H.B. 301
Final Analysis
Office of Research and Drafting LSC Legislative Budget Office
▪ Requires that all cases arising in the municipal corporation of North Kingsville and in
Kingsville, Monroe, and Sheffield townships on or after January 1, 2025, be brought
before the Conneaut Municipal Court.
Ohio Criminal Sentencing Commission
▪ Requires the Ohio Criminal Sentencing Commission to re-establish a standing juvenile
committee.
▪ Re-establishes requirements for the Commission to review and develop a juvenile justice
policy for the state, as well as assisting policymakers with legislation related to juvenile
justice issues.
Political subdivision soldiers’ memorial
▪ Expands the authority of a board of trustees of a political subdivision soldiers’ memorial.
Public depositories
▪ Eliminates the prohibition against financial institutions that are subject to a
cease-and desist order from serving as a public depository.
▪ Requires public depositories to notify the governing board if the depository becomes
party to an active prompt corrective action directive.
▪ Specifies that institutions are ineligible to serve as public depositories while under a
prompt corrective action directive unless authorized by a governing board.
▪ Relieves certain public officials from liability for loss of public moneys deposited in a failed
public depository.
Cemeteries
▪ Modifies the laws governing the repair or replacement of a mausoleum or columbarium.
▪ Allows the disinterment of the cremated remains of a decedent who died of a contagious
or infectious disease, without a permit issued by the local board of health.
Judicial release and transitional control
▪ Reiterates that amendments to the judicial release and transitional control processes
made in S.B. 288 of the 134th General Assembly apply only to prisoners serving prison
terms on or after April 4, 2023, the effective date of S.B. 288.
TABLE OF CONTENTS
Nonprofit Corporation Law ............................................................................................................. 4
Director qualifications ................................................................................................................. 4
Director duties ................................................................................................................................ 5
Evaluating duties .................................................................................................................... 5
Committees and subcommittees ........................................................................................... 5
P a g e |3 H.B. 301
Final Analysis
Office of Research and Drafting LSC Legislative Budget Office
Provisional directors .................................................................................................................... 5
Corporate officers ....................................................................................................................... 6
Fiduciary duties....................................................................................................................... 6
Liability for failure to fulfill fiduciary duties ........................................................................... 6
Limitation of fiduciary duty provisions ................................................................................... 7
Director and officer liability ........................................................................................................ 7
Amendment of articles ................................................................................................................ 7
Certificate of good standing ........................................................................................................ 8
Dissolution ................................................................................................................................... 8
Providers of goods and services .................................................................................................. 9
Nonsubstantive changes ............................................................................................................. 9
Unincorporated nonprofit associations ...................................................................................... 9
Final appealable order .................................................................................................................... 9
Conciliation for custody disputes between unmarried parents ..................................................... 9
Ashtabula County County Court ................................................................................................... 10
Conneaut Municipal Court ............................................................................................................ 10
Standing juvenile committee .................................................................................................... 11
Commission responsibilities regarding juvenile justice ............................................................ 12
Public depositories ........................................................................................................................ 13
Cemeteries .................................................................................................................................... 13
Repairing or replacing a mausoleum or columbarium.............................................................. 13
Miscellaneous ............................................................................................................................ 15
DETAILED ANALYSIS
Nonprofit Corporation Law
The act makes numerous changes to the Nonprofit Corporation Law, including changes
related to director qualifications and appointment, director and officer liability, and certificates
of good standing from the Secretary of State. It also makes changes to the Unincorporated
Nonprofit Association Law and the General Corporation Law.
Director qualifications
The act requires nonprofit corporation directors to be natural persons (i.e., not business
entities). Prior law simply required directors to have the qualifications, if any, stated in the
nonprofit corporation’s articles of incorporation or regulations.1
1 R.C. 1702.27(A)(3).
P a g e |4 H.B. 301
Final Analysis
Office of Research and Drafting LSC Legislative Budget Office
Director duties
Evaluating duties
Continuing law requires a nonprofit corporation director to perform their duties (1) in
good faith, (2) in a manner the director reasonably believes to be in, or not opposed to, the best
interests of the corporation, and (3) with care that an ordinarily prudent person in a like position
would use under similar circumstances. In determining what is in the best interests of the
corporation, or what is not opposed to those interests, prior law, retained in part by the act,
required the director to consider the purposes of the corporation and allowed the director to
consider the following:
▪ The interests of the corporation’s employees, suppliers, creditors, and customers;
▪ The economy of the state and nation;
▪ Community and societal considerations;
▪ The long- and short-term interests of the corporation, including the possibility that the
interests may be best served by the corporation’s continued independence.
The act modifies the application of these criteria in two ways: First, it clarifies that the
director’s consideration of the permissive criteria (the bulleted items above) is discretionary.
Second, it specifies that both the mandatory criterion (the purposes of the corporation) and the
permissive criteria apply only to determining what is in the best interests of the corporation. It
retains the requirement that the director act in a manner that is not opposed to the corporation’s
interests, but eliminates guidelines as to how the director may determine what is, or is not,
opposed to those interests.2
Committees and subcommittees
The act authorizes any committee consisting of one or more nonprofit corporation
directors to create subcommittees and delegate any or all of the committee’s power to the
subcommittee. This authority, however, may be withheld by the corporation’s regulations or the
resolution that created the original committee.
The act does not change provisions in continuing law that provide for the creation of
committees by nonprofit corporation boards of directors. It only establishes the new authority
for those committees to create subcommittees.3
Provisional directors
The act expands the circumstances in which a court may appoint provisional directors for
nonprofit corporations. Under continuing law, a provisional director may be appointed by a court
upon the complaint of at least one-fourth of the directors. In order to make an appointment, the
2 R.C. 1702.30(B) and (F).
3 R.C. 1702.33(G).
P a g e |5 H.B. 301
Final Analysis
Office of Research and Drafting LSC Legislative Budget Office
plaintiffs must establish that the continued operation of the corporation is substantially impeded
or impossible because of irreconcilable differences among the existing directors.
The act expands the field of eligible complainants to include at least one-fourth of a
nonprofit corporation’s voting members. It also expands the circumstances allowing
appointment to include situations where there are no directors and the voting members are
unable to elect directors, making the continued operation of the corporation substantially
impeded or impossible.4
Corporate officers
Fiduciary duties
The act establishes a default fiduciary duty that applies to a nonprofit corporation’s
officers (e.g., president, treasurer, etc.) unless the corporation’s articles or regulations, or a
written agreement with an officer, establishes additional fiduciary duties.
These new provisions largely mirror continuing law regarding fiduciary duties for
directors. Under the act, officers must perform their duties in good faith, in a manner reasonably
believed to be in or not opposed to the corporation’s best interests, and with the care an
ordinarily prudent person in a like situation would use. When performing their duties, officers
may rely on information, including financial statements and other data, prepared or presented
by either:
▪ The corporation’s directors, officers, or employees who the officer in question reasonably
believes to be reliable and competent;
▪ Counsel, accountants, and other professionals working in their scope of practice.5
Liability for failure to fulfill fiduciary duties
Under the act, in order for a court to find that a corporate officer failed to act in good
faith, in a manner reasonably believed to be in, or not opposed to, the corporation’s best
interests (i.e., to have violated the relevant fiduciary duty), the failure must be proved by clear
and convincing evidence. Clear and convincing evidence is evidence indicating something is highly
likely or reasonably certain. That is a higher standard than the normal evidentiary standard in
civil cases, which is a preponderance of the evidence – meaning that the evidence for a
proposition outweighs the evidence against, even if only slightly. The act further provides,
however, that an officer is not considered to be acting in good faith if the officer knows something
about the matter in question that would make reliance on information provided by other
corporate personnel or professional advisors unwarranted.6
4 R.C. 1702.521.
5 R.C. 1702.341(A) and (B).
6R.C. 1702.341(C), Black’s Law Dictionary (11th ed. 2019), and Ohio Trial Practice (Baldwin’s Ohio
Handbook Series) § 9:3 (2021 ed.).
P a g e |6