Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 830
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 830 entitled: 


begs leave to report as follows:

     The purpose of this bill is to provide Hawaii businesses
with the capital needed to start-up and grow, through the
adoption of the Small Corporate Offerings Registration (SCOR)
program that:

     (1)  Provides access to new sources of capital; and

     (2)  Simplifies the process of obtaining capital through the
          use of uniform registration requirements and forms.

     The Department of Commerce and Consumer Affairs (DCCA) and
Department of Business, Economic Development, and Tourism (DBEDT)
submitted testimony supporting this measure and suggesting
amendments.  The Hawaii Congress on Small Business (HCSB) offered
testimony in support of the bill.

     HCSB testified that Hawaii is a capital-poor State, and that
lack of available capital is one of the most frequent reasons for
small business failures in Hawaii.  Your Committee finds that a
SCOR program would make it possible for businesses to obtain
capital in a more efficient and less costly manner, through a
uniform registration system that allows companies to sell common
stock directly to the public and that greatly reduces the level

                                 STAND. COM. REP. NO. 956
                                 Page 2

of support services required from consultants and attorneys.  To
date, 48 states have adopted SCOR programs.  According to HCSB,
small business owners and operators attending the HCSB Conference
on September 25, 1998, included the establishment of SCOR program
in their ten most crucial recommendations for improving Hawaii's
small business climate.

     DCCA testified that the bill allows the use of Form U-7, a
uniform question and answer document developed by the North
American Securities Administrators Association (NASAA), which
substitutes for the prospectus currently required under section
485-10(b)(3), Hawaii Revised Statutes (HRS).  DCCA requested that
the definition of SCOR in section 210-1, HRS, be removed from the
bill because the term is already defined under NASAA guidelines.

     DBEDT stated that a SCOR program could provide an additional
benefit, because the Small Business Administration will allow
Hawaii to use SCOR documents to establish an Angel Capital
Electronic Network (ACE-Net), a nationwide directory of "angels"
or high net worth individual investors seeking investments in
high growth companies.

     DBEDT recommended the addition of an Accredited Investor
Exemption to section 485-6, HRS, to provide an additional means
to attract new capital.  The exemption would authorize
registration and other filing exemptions for sales of securities
to "accredited investors," which as defined by the Securities
Exchange Commission includes banks, insurance companies, pension
funds, and other organizations and trusts with assets over
$5,000,000, as well as individuals whose net worth exceeds
$1,000,000 or whose annual income exceeds $2,000,000.

     Upon consideration of the testimony submitted, your
Committee has amended this measure as requested by DCCA and

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 830, as amended herein, and recommends that
it pass Third Reading in the form attached hereto as H.B. No.
830, H.D. 1.

                                 STAND. COM. REP. NO. 956
                                 Page 3

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,

                                   RON MENOR, Chair