Report Title:

Business Corporations Act; Terms of Directors

Description:

Provides for up to four groups of directors, each group with different staggered terms.

THE SENATE

S.B. NO.

3215

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO THE BUSINESS CORPORATION ACT.

 

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

SECTION 1. Section 414-196, Hawaii Revised Statutes, is amended to read as follows:

"[[]§414-196[]] Staggered terms for directors. (a) If there are nine or more directors, the articles of incorporation may provide for staggering their terms by dividing the total number of directors into two, [or] three, or four groups[, with each group containing one-half or one-third of the total, as near as may be]. In that event, the terms of directors in the first group expire at the first annual shareholders' meeting after their election, the terms of the second group expire at the second annual shareholders' meeting after their election, [and] the terms of the third group[, if any,] expire at the third annual shareholders' meeting after their election[.], and the terms of the fourth group, if any, expire at the fourth annual shareholders' meeting after their election. At each annual shareholders' meeting held thereafter, directors shall be chosen for a term of two years, [or] three years, or four years, as the case may be, to succeed those whose terms expire. In the case of a corporation that, at the time of adoption of this section, had articles of incorporation or bylaws that provided for a board of directors with terms staggered into two or three groups, the board of directors, by a duly adopted resolution or resolutions, may reclassify the board of directors into three or four groups of directors and allocate each of its existing directors among the three or four groups in such manner as the board shall determine by resolution without regard to any existing classification. Upon the adoption of such a resolution setting forth the reclassification and allocation, the terms of directors in the first group expire at the first annual shareholders' meeting after the reclassification and allocation, the terms of the second group expire at the second annual shareholders' meeting after the reclassification and allocation, the terms of the third group expire at the third annual shareholders' meeting after the reclassification and allocation, and the terms of the fourth group, if any, expire at the fourth annual shareholders' meeting after the reclassification and allocation. At each annual meeting, and at each annual shareholders' meeting, held thereafter, directors shall be elected for a term of two, three, or four years, as the case may be, to succeed those whose terms expire.

(b) Any resolution adopted by the board of directors in reliance on this section shall supersede:

(1) Any requirement in the corporation's articles of incorporation or bylaws that the board be divided into two or three groups with staggered terms; and

(2) Any requirement in the corporation's articles of incorporation or bylaws that the groups into which the board of directors is divided be as nearly equal as possible;

and any such resolution shall not be changed, modified, rescinded, or made to be ineffective by any action of the shareholders."

Section 2. Statutory material to be repealed is bracketed. New material is underscored.

Section 3. This Act shall take effect upon its approval.

INTRODUCED BY:

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