Report Title:

Nonprofit Corporations

Description:

Requires nonprofit corporations in which the majority of board members are appointed by the State to comply with the state Sunshine laws (chapter 92) and the Uniform Information Practices Act (chapter 92F).

HOUSE OF REPRESENTATIVES

H.B. NO.

931

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO NONPROFIT CORPORATIONS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Findings and purpose. The legislature finds that the Hawaii Nonprofit Corporations Act governs nonprofit corporations registered in the State and provides for certain rights and responsibilities under the law. Among the nonprofit corporations are several that have by-law provisions allowing government officials to appoint a majority of their board of directors.

The legislature believes that when a state or county government official has the power to appoint or remove a majority of members of a corporate board of directors, the corporation is not independent of the State. For such a corporation, the State has a responsibility to ensure it conducts its business according to the open records and meetings laws followed by government agencies, and also conduct audits of the corporation should it become necessary.

Cable television access organizations, established through chapter 440G, Hawaii Revised Statutes, fall within the category of government-dominated corporations described above. The office of information practices issued an opinion last September stating that the director of commerce and consumer affairs had considerable control over access organizations through the ability to appoint and remove a majority of members of their boards. The opinion also ruled that access organizations fall within the statutory definition of boards that are governed by the open records law of chapter 92F.

The purpose of this Act is to require nonprofit corporations that have provisions in their by-laws that allow government officials to appoint a majority of their board to abide by the State's open records and proceedings laws, in addition to nonprofit corporation laws, and allow the auditor to conduct audits of the corporation.

SECTION 2. Chapter 414D, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"414D- Certain nonprofits required to comply with additional state laws. (a) Any corporation, the bylaws of which provide that a government official or agency shall appoint, in the official's or agency's official capacity, a majority of the corporation's board of directors, shall be required to comply with the provisions of chapter 92 and 92F.

(b) The auditor shall have the power to subpoena the records of and audit any corporation required to comply with subsection (a)."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2003.

INTRODUCED BY:

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