Adds new section relating to members' rights; 2 new definitions for "director" and "proxy". Amends rules of governance by association board of director. Amends rights and responsibilities of the association and its members.

A BILL FOR AN ACT

SECTION 1. Chapter 421J, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§421J- Members' rights. (a) Association rules shall apply equally to all members and shall be uniformly enforced. Members and their tenants and guests shall be treated courteously by all association officials and personnel.

(b) When censure, corrective, or punitive action against a member or resident is to be discussed at any meeting, that individual shall be given timely notice to that effect, including the details of the case, and shall have the right to be represented, to submit testimony, and to question the association's representatives. If the action is based on a complaint by another member or resident, the identity of the complainant may be kept confidential; provided that the case is made entirely on the basis of evidence derived from other sources.

(c) Members shall not be denied access to their property or to common areas or deprived of any their rights under this chapter without speedy due process, including adequate notification and opportunity to respond.

(d) Any foreclosure of a member's property brought by the association shall be brought pursuant to section 667-1.

(e) The various provisions of this chapter shall be liberally interpreted to protect the rights of members to be treated fairly, to have access to association documents and information, and to participate in the affairs of the association."

SECTION 2. Section 421J-2, Hawaii Revised Statutes, is amended as follows:

1. By adding two new definitions to be appropriately inserted and to read as follows:

""Director" means a member of the board of directors.

"Proxy" means the written and signed authorization for a designated person to act on behalf of the signatory."

2. By amending the definition of "member" to read as follows:

""Member" means the person or persons owning a unit or having the right of occupancy of a unit under a recorded lease having a term of twenty or more years from its commencement date; or anyone included in the definition of a member under the association documents[, including the developer, whether or not the developer owns a unit]."

SECTION 3. Section 421J-3, Hawaii Revised Statutes, is amended to read as follows:

"[[]§421J-3[]] Board of directors. (a) Every member of the board of directors shall be a member of the association[.]; provided that, with respect to a member that is a company, trust, or other organization or entity, the member's authorized representative shall be eligible to serve on the board, if not disqualified for another reason. However, a developer may appoint or elect directors pursuant to any special voting rights or power of appointment reserved to the [master] developer[.] by the association documents.

(b) The board of directors shall be composed of the number and group of persons specified in the association documents. There shall not be more than one representative on the board of directors from any one unit that is owned by any person [other than the master developer or declarant.] except pursuant to any special rights reserved to the developer or declarant by the association."

SECTION 4. Section 421J-4, Hawaii Revised Statutes, is amended to read as follows:

"§421J-4 Proxies. (a) A proxy shall be in writing and shall be valid for only a specified meeting of the association and any adjournments of that meeting.

(b) A member of the association may give a proxy to any person [or the board of directors as an entity,] and the proxy may be limited as indicated by the member. [No proxy shall be irrevocable unless:

(c) To be valid, a proxy shall:

(d) Any board of directors that uses association funds to distribute [proxies] proxy forms that include the election of directors shall first post notice of its intent to distribute proxies in prominent locations within the project at least thirty days prior to its distribution of [proxies;] proxy forms; provided that if the board receives within seven days of the posted notice a request by any owner for nomination to the board accompanied by a statement, the board shall mail [to all owners either:

The statement shall not exceed one hundred words, indicating the owner's qualifications to serve on the board and reasons for wanting to receive proxies.] a proxy form to each owner, along with a list of all candidates and their statements. The candidate information may be included on the proxy form or separate from it. The board may limit the length of the candidate statements; provided that the limit shall not be less than one hundred words.

(e) Nothing in this section shall affect the holder of any proxy under a first mortgage of record encumbering [an apartment] a unit or under an agreement of sale affecting [an apartment.] a unit.

(f) Nothing in this section shall prohibit the use of proxies for filling vacancies that occur after the notice of the annual meeting has been distributed.

(g) Proxies may be submitted in the form of photocopies, facsimiles, or other appropriate method of conveying true copies."

SECTION 5. Section 421J-5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§421J-5[]] Meetings of the board of directors. (a) Whenever practicable, all meetings of the board of directors, other than executive sessions, shall be open to all members. Members who are not on the board of directors may participate in any deliberation or discussion, other than executive sessions, unless a majority of [a quorum of the board of] the directors present votes otherwise.

(b) The board of directors shall meet at least once each year.

(c) Minutes of the meetings of the board of directors shall include the recorded vote of each board member on all motions [except motions voted upon in executive session.], shall be available within seven calendar days after approval, and unapproved final drafts of the minutes of a meeting shall be available within sixty days after the meeting; provided that the minutes of any executive meeting may be withheld if the publication of the minutes would defeat the lawful purpose of the executive session.

(d) The board of directors, [with the approval of a majority of a quorum of its members,] by a vote of a majority of the directors present, may adjourn any meeting and reconvene in executive session to discuss and vote upon matters concerning [personnel, litigation in which the association is or may become involved, or as may be necessary to protect the attorney-client privilege of the association.]:

The general nature of any business to be considered in executive session shall be first announced in the regular session.

(e) No board member shall vote by proxy at board meetings.

(f) [A director who has a conflict of interest on any issue before the board shall disclose the nature of the conflict of interest prior to a vote on that issue at the board meeting, and the minutes of the meeting shall record the fact that a disclosure was made.] When a director has a conflict of interest with respect to any issue before the board, that director shall reveal the conflict and shall not speak or vote in furtherance of that interest. If the conflict appears trivial, borderline, or otherwise unclear, the board, by a vote equal to two-thirds of the entire membership of the board, may declare that the director in question does not have a conflict of interest sufficient to curtail the director's right to speak and vote on the issue. The minutes of the meeting shall record the facts of any discussions and resolutions that take place pursuant to this section.

(g) To help with the work of the association, the board may appoint committees comprised entirely of directors, entirely of non-directors, or a combination of the two; provided that any decision-making, contracting or spending authority be clearly specified, and association members be allowed to appeal any disputed committee actions to the board. Committee meetings shall be open to the membership. Rules regarding audience participation and the use of executive sessions shall be the same as for board meetings, and there shall be reasonable advance notice of the meetings to allow attendance by interest members.

(h) Announcements of board meetings, committee meetings, and membership meetings shall include a tentative agenda, and no important or controversial matters shall be finally decided at a meeting unless it was included in the meeting announcement.

(i) All decisions of the association shall be made in duly announced board or membership meetings or pursuant to specific powers granted in such meetings to other persons or groups or as authorized by the association documents.

(j) Two persons that are members of either the board or a committee may communicate or interact privately between themselves to gather information from each other about official association matters to enable them to perform their duties faithfully, as long as no commitment to vote a specific way, other than with respect to election of officers of the board or committee, is made or sought."

SECTION 6. Section 421J-7, Hawaii Revised Statutes, is amended to read as follows:

"[[]§421J-7[]] Documents of the association. (a) [Upon approval by the board, the] The most current board-approved financial statement of the association and the board-approved minutes of the most recent meeting of the board of directors (other than minutes of executive sessions) shall be made available for examination by any member at no cost, during reasonable hours, at a location designated by the board.

(b) The approved minutes of other meetings of the board, other than executive sessions, and the approved minutes of meetings of the association for the current and prior year, shall be made available for examination by members during reasonable hours at a location designated by the board. Copies of those meeting minutes shall be [provided] supplied to any member upon the member's request [if]; provided that the member [pays] may be required to pay a reasonable fee for duplication, postage, stationery, and other administrative costs associated with handling the request.

(c) Financial statements, general ledgers, accounts receivable ledgers, accounts payable ledgers, check ledgers, insurance policies, contracts, invoices of the association for the current and prior year, and any documents regarding delinquencies of ninety days or more, shall be made available for examination by members at reasonable hours at a location designated by the board; provided that members [shall pay] may be required to pay a reasonable fee for all costs associated with the examination of documents. The board may require members to furnish the association with an affidavit under self-subscribing oath stating that the foregoing information is requested in good faith for the protection of the interests of the association, its members, or both. Copies of these documents shall be [provided] supplied to any member upon the member's request [if]; provided that the member [pays] may be required to pay a reasonable fee for duplication, postage, stationery, and other administrative costs associated with handling the request.

(d) Members may view proxies, tally sheets, ballots, members' check-in lists, and the certificates of election, if any, for a period of [thirty] ninety days following any association meeting; provided that members [shall] may be required to pay for all costs associated with the examination of the documents. The board may require members to furnish to the association an affidavit under a self-subscribing oath stating that the foregoing information is requested in good faith for the protection of the interests of the association, its members, or both. Proxies and ballots may be destroyed following the [thirty-day] ninety-day period. Copies of tally sheets, members' check-in lists, and the certificates of election from the most recent association meeting shall be [provided] supplied to any member upon the member's request [if]; provided that the member [pays] may be required to pay a reasonable fee for duplication, postage, stationery, and other administrative costs associated with handling the request.

(e) Members may file a written request with the board to examine other documents of the association. The board shall give written authorization, or written refusal with an explanation of the refusal, for the examination within [sixty] thirty calendar days of receipt of the request. The board may condition its approval of any such request upon payment of reasonable fees. Without limitation, books and records kept by or on behalf of an association may be withheld from inspection and copying to the extent that they concern:

(f) Originals or copies of all association documents shall be kept within a ninety-minute drive of the planned community and when made available for inspection pursuant to this section shall be available within this radius.

(g) The association's managing agent shall make records available pursuant to this section without requiring further authorization from association representatives.

(h) The association's managing agent may dispose of the association's records that are more than five years old without liability if the managing agent first provides the board of directors with written notice, at least sixty days in advance, of the managing agent's intent to dispose of the records if not retrieved by the board of directors within sixty days. The notice shall include an itemized list of the records that the managing agent intends to dispose of.

(i) No person shall knowingly make any false certificate, entry, or memorandum upon any of the books or records of any managing agent or association. No person shall knowingly alter, destroy, mutilate, or conceal any books or records of a managing agent or the association."

SECTION 7. Section 421J-8, Hawaii Revised Statutes, is amended to read as follows:

"[[]§421J-8[]] Membership list. The association shall use good faith efforts to keep an accurate and current list of the names and addresses of association members. [If the list is not provided directly to members, the association shall develop a reasonable procedure by which owners may solicit votes or proxies or provide information to other owners with respect to association matters. The board may require members to furnish the association with an affidavit stating that the use of the list is requested in good faith for the protection of the association, its members, or both.] The list shall be supplied to members upon request; provided that the board of directors may require a member to submit an affidavit in the form of a self-subscribing oath stating that the list:

SECTION 8. Section 421J-11, Hawaii Revised Statutes, is amended to read as follows:

"[[]§421J-11[]] Applicability of other laws. Nothing in this chapter shall be construed to exempt any association or person from compliance with any applicable law, or subject any association or person to any other applicable law; provided that in the event of a conflict between any such law and this chapter, this chapter shall govern[.], except as provided in section 421J-12."

SECTION 9. This Act shall not affect any rights or causes of action that may have arisen prior to its effective date.

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect upon its approval.