Fryar Law Firm, P.C. -- 1001 Texas Ave. -- 14th Floor -- Houston, Texas 77002-3194
Tel. 888-481-9995   281-715-6396   Fax 281-715-6397  Skype: fryarlawfirm
©2010 -- Copyright Fryar Law Firm, P.C. --  All Rights Reserved --
Disclaimer/Terms of Use
Fryar Law Firm, P.C. --Houston, Texas Business Litigation Attorneys.
Fryar Law Firm, P.C. -- Houston, Texas Shareholder Oppression Lawyers
Protecting the Rights of Business Owners
Site Map | Shareholder Resources | Contact | Home
Subscribe to Shareholder Oppression by Email
Subscribe in a reader
Subscribe to Shareholder
Oppression Blog
Subscribe to the
Shareholder Oppression
Ohio Shareholder Law Resources
Resources >> State Law >>Ohio
I. Right to Inspect Books and Records

Ohio shareholders have the right to examine and copy the articles of incorporation, regulations, books and records, minutes,
records of shareholders and voting trust agreements. Ohio Rev. Code Ann. § 1701.37(C) (West 2010).

To exercise this right of inspection, the shareholder must make a written demand that states the “specific purpose” for the
inspection. § 1701.37(C). The shareholder will not be allowed to inspect and copy records if the shareholder does not state
the reason he wishes to exercise his privilege. Or the reason is “unreasonable or improper.” § 1701.37, comment 1.

II. Shareholder Oppression

Ohio does not provide for judicial dissolution for shareholders in cases of fraud or illegality. See § 1701.91.

Ohio case law states that in a close corporation, controlling shareholders have a fiduciary duty to prevent oppression of
minority shareholders.
Crosby v. Beam, 548 N.E.2d 217 (Oh. 1989); Frank Lerner & Assoc. Inc. v. Vassy, 599 N.E. 2d 734,
738 (Ohio App. 3d 1991). Shareholders in Ohio close corporations owe one another the same fiduciary duties imposed on
Estate of Schroer v. Stamco Supply, Inc., 482 N.E.2d 975, 981 (Ohio App.3d 1989). The shareholders must deal
with each other in the “utmost good faith.” Id. They must not misuse their power by promoting their personal interests at the
expense of corporate interests. Tinter v. Lucik, 876 N.E.2d 1026, 1031 (2007).

A shareholder may only bring a direct action when the shareholder is harmed in a “separate and distinct” way from the
Boedeker v. Rogers, 746 N.E.2d 625, 629 (Oh. App. 8 Dist. 2000).

“Where majority or controlling shareholders in a close corporation breach their heightened fiduciary duty to minority
shareholders by utilizing their majority control of the corporation to their own advantage, without providing minority
shareholders with an equally opportunity to benefit, such breach, … is actionable. When such harm can be construed to be
individual in nature, then a suit by a minority shareholder against the offending majority or controlling shareholders may
proceed as a direct action.”
Crosby v. Beam, 548 N.E.2d 217, 221 (Oh. 1989).

III. Derivative Suits

A derivative action is brought by the shareholder on behalf of the corporation to enforce a right belonging to the corporation.
Oh. R. Civ. Proc. 23.1; Crosby, 548 N.E.2d at 219.

To have standing to file a derivative suit, the shareholder must be a “legal or equitable owner of shares” in the corporation.
Oh. R. Civ. Proc. 23.1. The shareholder must also “fairly and adequately” represent the interests of the shareholders in
enforcing the corporation’s rights.

The complaint must be verified and state the efforts made by the shareholder to obtain the desired action from the directors
before filing suit.
Once a derivative suit has been commenced, it may not be dismissed or settled without prior court approval. Oh. R. Civ. Proc.