Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 1594, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to authorize and establish procedures for the termination of memberships or cancellation of membership classes of a nonprofit corporation, and to allow a nonprofit corporation to authorize the indemnification of its directors in advance of the establishment of any liability.

Your Committee received testimony in support of this measure from Unity House, Inc.

This measure provides more protection for members in the termination of memberships should the nonprofit corporation consider converting to a nonmembership type of nonprofit corporation. These procedures also provide members who oppose the proposed conversion with an opportunity to be heard.

This measure further allows a nonprofit corporation to obligate itself (by a provision in its bylaws, resolution adopted, or approved contract) to provide indemnification in advance or to advance funds to pay for or reimburse expenses.

Your Committee has amended this measure by:

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1594, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1594, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.