STAND. COM. REP. NO. 1190-04
Honolulu, Hawaii
, 2004
RE: S.B. No. 2908
S.D. 1
H.D. 1
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-Second State Legislature
Regular Session of 2004
State of Hawaii
Sir:
Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 2908, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO BUSINESS REGISTRATION,"
begs leave to report as follows:
The purpose of this bill is to update and improve Hawaii's business registration law by, among other things:
(1) Clarifying ambiguities and correcting errors that exist due to drafting errors, changes in division policies and procedures, and changes in federal and common law;
(2) Promoting uniformity throughout the business registration chapters by adding or amending definitions and other language;
(3) Clarifying that Hawaii corporations have an alternative way for internal decisions to be made by way of shareholder agreements that will help the corporations avoid the expense and inflexibility associated with shareholder meetings;
(4) Providing for the appointment of a trustee or receiver for dissolved nonprofit corporations;
(5) Repealing the requirement that operating agreements for limited liability companies be in writing;
(6) Conforming the Uniform Limited Partnership Act to current state business registration practices; and
(7) Requiring limited and foreign limited partnerships to provide the names and addresses of each general partner in their annual statement filed with the Department of Commerce and Consumer Affairs (DCCA).
DCCA and four private attorneys, one of whom was also a corporate officer, submitted testimony in support of this measure. Two of the private attorneys, however, qualified their support by opposing one small part of the bill.
The isolated controversy arose from the bill's proposed replacement of the current law's requirement that the existence of certain kinds of stockholder agreements which effect a substantial departure from standard corporate governance must be noted on the stock certificate, with the requirement that these agreements be included in the articles of incorporation.
Your Committee deleted the controversial amendments to section 414-163 (c), Hawaii Revised Statutes. Absent those amendments, the prospect for enactment of the balance of this bill is greatly enhanced.
The deletion of the controversial and esoteric provisions changing the form of notice required for certain shareholder agreements and making related adjustments to shareholder remedies, does not represent an adverse policy decision. This is an issue on which reasonable corporate attorneys can, and do, disagree. In fact, the deletion is a testament to the substance of the issue which warrants the attention that it will undoubtedly receive when it is reintroduced as a separate bill in 2005. There is no urgency and, while the proposed changes would have produced some benefits, they would also have produced substantial risks for investors who did not read the articles of incorporation before investing.
As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2908, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2908, S.D. 1, H.D. 1.
Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,
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____________________________ KENNETH T. HIRAKI, Chair |
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