STAND. COM. REP. NO.2515

Honolulu, Hawaii

, 2002

RE: S.B. No. 2732

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Judiciary, to which was referred S.B. No. 2732, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO BUSINESS REGISTRATION,"

begs leave to report as follows:

The purpose of this measure is to update and clarify Hawaii's business registration laws to reflect modern business practices, and to amend the filing procedures for the Business Registration Division (BREG) to encourage existing Hawaii business entities to remain in the State and to facilitate the formation of new businesses in the State.

Your Committee received testimony in support of this measure from the Commissioner of Securities and from the President, Executive Director, Director of Programs, Government Affairs/Special Projects Director, and two members of Unity House, Inc.

This measure incorporates changes to the business registration laws proposed by BREG, the Business Law and Real Estate Sections of the Hawaii Bar Association, and Unity House.

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 conducting in-person shareholder meetings;

(3) Clarifies that the board of directors of a Hawaii corporation may utilize its powers to issue rights and options to adopt a plan that would deny shareholders the right to amass a defined percentage block of stock for the purpose of a hostile takeover;

(4) Repeals provisions of the new nonprofit corporation law relating to member resignation and action by written ballot, to maintain consistency with the outgoing nonprofit corporation law, and makes other changes to the new law;

(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; and

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

Your Committee finds 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.

As affirmed by the record of votes of the members of your Committee on Judiciary that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2732, S.D. 1, and recommends that it pass Third Reading.

Respectfully submitted on behalf of the members of the Committee on Judiciary,

____________________________

BRIAN KANNO, Chair