Report Title:

Nonprofit Corporations; Sunshine Law; Information Practices

Description:

Requires certain nonprofit corporations in which the majority of board members are appointed by the State, or whose assets are payable to the State upon dissolution, or whose majority of funds are public funds, to comply with the state Sunshine laws (chapter 92) and the Uniform Information Practices Act (chapter 92F). (SD1)

THE SENATE

S.B. NO.

1229

TWENTY-SECOND LEGISLATURE, 2003

S.D. 1

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. 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 bylaw 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 to 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, Hawaii Revised Statutes.

The purpose of this Act is to require nonprofit corporations that have provisions in their bylaws that allow government officials to appoint a majority of their board, or whose assets are payable to the State upon dissolution, or whose majority of funds are public funds, to abide by the State's open records and proceedings laws, in addition to the nonprofit corporation laws, and to 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 whose:

(1) Bylaws 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;

(2) Assets are payable to the State upon dissolution; or

(3) Majority of funds are public funds;

shall be required to comply with the provisions of chapter 92 and 92F.

(b) The auditor may 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.