STAND. COM. REP. NO. 2653

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2205
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 2205 entitled: 

     "A BILL FOR AN ACT RELATING TO NONPROFIT CORPORATIONS,"

begs leave to report as follows:

     The purpose of this measure is to clarify the Hawaii
Nonprofit Corporation Act to allow copies and facsimiles or other
reliable reproductions of proxies to be used in lieu of the
original writing or transmission for all purposes which the
original could be used.

     Your Committee received testimony from the Department of
Commerce and Consumer Affairs and Cades Schutte Fleming & Wright.

     Your Committee has amended this measure by deleting the
current provisions and inserting provisions to:

     (1)  Prohibit a nonprofit corporation (nonprofit) that is a
          private foundation, as defined in the Internal Revenue
          Code, from:

          (A)  Engaging in any act of self-dealing;

          (B)  Retaining any excess business holdings;

          (C)  Making any investments that would subject it to a
               federal income tax; and


 
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          (D)  Making any taxable expenditures; and

     (2)  Require the nonprofit to distribute, as permitted in
          its charter of incorporation, amounts necessary to
          avoid a federal income tax.
 
     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 2205, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as
S.B. No. 2205, S.D. 1, and be placed on the calendar for Third
Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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