Report Title:

Consumer Cooperatives



Requires consumer cooperatives to establish their membership prior to the commencement of business in the State. Requires the board to seek approval by members of major undertakings.


S.B. NO.












SECTION 1. Chapter 421C, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"421C- Commencement of business operations, requirement. No consumer cooperative association shall commence business before it has established its membership and has members other than its directors and incorporators."

SECTION 2. Section 421C-11.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Articles shall be certified and executed by each of the incorporators, if natural persons, and by the president and secretary of associations, before any officer authorized to take acknowledgments, and shall contain the following particulars:

(1) The name of the association which shall contain the term "cooperative" or some abbreviation thereof notwithstanding section 421-5;

(2) The street address and zip code of its principal office, which shall be in the State;

(3) The purposes and powers of the association;

(4) The duration of the association;

(5) The number, names, titles, and residence addresses of the initial officers and directors, or similar officers;

(6) The names and addresses of the incorporators, and if organized with stock, a statement of the number of shares subscribed by each, which shall not be less than one, and the class of shares for which each subscribed;

(7) If organized with stock, the total authorized number of shares and the par value of each share, if any; and if more than one class of stock is authorized, a description of the classes of shares, the number of shares in each class, the relative rights, preferences, and restrictions granted to or imposed upon the shares of each class, and the interest-dividends to which each class shall be entitled;

(8) If organized without stock, whether the property rights and interest of each member are equal or unequal, if unequal, the rule by which the rights and interest shall be determined[.]; and

(9) The requirements to become a member."

SECTION 3. Section 421C-12, Hawaii Revised Statutes, is amended to read as follows:

"421C-12 Bylaws; contents. The bylaws shall contain:

(1) The maximum amount or percentage of capital which may be owned or controlled by one member.

(2) A provision that in all decisions to amend the articles or bylaws, as the case may be, the members shall be informed of those decisions at least thirty days in advance through a mailing or a prominent notice at all association locations.

(3) The method and terms of admission to membership and the disposal of members' interests on termination of membership for any reason.

(4) A provision that a majority of directors, or five per cent of the, or two hundred fifty, members, whichever is less, may submit a petition in writing and demand a special membership meeting, which shall be called by the secretary within thirty days of that demand.

(5) A provision that notice for all meetings shall be made through posting prominent signs at all association locations or by mailing to the last known address of each member or director. Notices for special meetings shall specify the purpose of the meeting.

(6) A provision that associations shall not discriminate on their acceptance of members on a basis of race, gender, religion, income, marital status, or nationality.

(7) A provision that within a specified period of time any major action taken by the directors [must] shall be referred to the members for approval or disapproval; and that any other action shall be referred to the members for approval or disapproval if demanded by petition of at least five per cent of the, or two hundred fifty, members, whichever is less, or by vote of at least a majority of the directors; provided that rights of third parties which have vested between the time of action by the directors and approval or disapproval by the members shall not be impaired."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.