STAND. COM. REP. NO.887-02

Honolulu, Hawaii

, 2002

RE: S.B. No. 2732

S.D. 1

H.D. 1




Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred S.B. No. 2732, S.D. 1, entitled:


beg leave to report as follows:

The purpose of this measure is to encourage the retention and formation of business entities in Hawaii, by updating and clarifying Hawaii's business registration laws to reflect modern business practices.

Your Committees received testimony in support of this measure from the Department of Commerce and Consumer Affairs (DCCA) and Unity House, Inc.

This measure incorporates changes to the business registration laws proposed by the Business Registration Division of DCCA, and the Business Law and Real Estate Sections of the Hawaii Bar Association. Among other things, this measure:

(1) Allows for the appointment of a trustee or receiver to dispose of a dissolved corporation's property;

(2) Permits corporations to use electronic means of communication as an alternative to in-person shareholder meetings;

(3) Clarifies that the board of directors of a Hawaii corporation may issue rights and options to adopt a plan denying shareholders the right to amass stock for the purpose of a hostile takeover;

(4) Increases clarity of the new nonprofit corporations law, addresses concerns of the Real Estate Section, and relieves timeshare associations from members list requirements related to membership meetings;

(5) Requires all registered business entities to appoint a registered agent;

(6) Establishes an annual filing requirement that is based upon the date of an entity's original registration;

(7) Makes uniform the standard for the administrative dissolution of registered entities;

(8) Clarifies that general partnerships and limited liability partnerships are not separate entities;

(9) Reconciles inconsistencies between state law and federal law regarding a nonprofit corporation member's right to inspect and receive copies of a membership list;

(10) Allows a voting proxy to be valid for more than three years if provided for in a nonprofit corporation's bylaws;

(11) Gives individual trade name holders the right to file a petition for an administrative order of abatement of trade name infringement; and

(11) Corrects ambiguities and errors and makes technical changes for purposes of clarification, consistency, and style.

Your Committees find that the amendments contained in this measure strike an appropriate balance by easing some of the unnecessary burdens on business entities in Hawaii, while at the same time ensuring that shareholders and members are protected.



In addition, your Committees note that sections 414D-88 and 414D-108 of the new nonprofit corporation law, relating to member registration and action by written ballot, respectively, are being repealed to maintain consistency with the outgoing nonprofit corporation law.

Your Committees have amended this bill by making numerous, nonsubstantive, technical amendments for clarity, consistency, and style.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2732, S.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2732, S.D. 1, H.D. 1, and be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs,