STAND. COM. REP. NO. 699

Honolulu, Hawaii

RE:    S.B. No. 392

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 392 entitled:

"A BILL FOR AN ACT RELATING TO CONDOMINIUMS,"

begs leave to report as follows:

     The purpose and intent of this measure is to clarify that when a standard proxy form is returned with no boxes checked or more than one box checked, the proxy shall be deemed defective and shall be counted for quorum purposes only.

     Your Committee received testimony in support of this measure from Associa, Hawaii Council of Associations of Apartment Owners, Hui ‘Oia‘i‘o, and three individuals.  Your Committee received testimony in opposition to this measure from Hawaiian Properties, Ltd.; and two individuals.  Your Committee received comments on this measure from the Hawaii State Association of Parliamentarians and Hawaii Chapter of the Community Associations Institute Legislative Action Committee.

     Your Committee finds that existing law on voting pursuant to a proxy at a meeting of a condominium association specifies that a standard proxy form must contain boxes for a condominium owner to check and indicate how a proxy is given.  Proxy forms may sometimes be returned to an association's secretary or managing agent with more than one box checked, or with nothing marked on the proxy form, which may lead to confusion over how the proxy should be counted.  This measure attempts to clarify how proxies should be counted, when the proxies are returned with no boxes checked or more than one box checked.

     However, your Committee has heard testimony that existing statutory language on voting pursuant to a proxy also requires a standardized proxy form to contain a box indicating that an owner wishes to obtain a copy of an association's annual audit report.  According to testimony received by your Committee, this measure, as currently written, could be construed to deem a proxy defective any time an owner checks the audit box on a proxy form, in addition to a box that indicates how an owner would like the owner's proxy to be given.  Amendments to this measure are therefore needed to address these concerns.

     Your Committee has amended this measure by:

     (1)  Clarifying that when a standard proxy form is authorized by an association, and the proxy is returned with no box or more than one box checked that relates to how an owner may indicate a proxy is given, the proxy shall be counted for quorum purposes only; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 392, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 392, S.D. 1, and be placed on the calendar for Third Reading.

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

________________________________

ROSALYN H. BAKER, Chair