STAND. COM. REP. 620

Honolulu, Hawaii

, 2003

RE: H.B. No. 1594

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

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

"A BILL FOR AN ACT RELATING TO NONPROFIT CORPORATIONS,"

begs leave to report as follows:

The purpose of this bill is to:

(1) Authorize nonprofit corporations to adopt amendments to their articles and bylaws to terminate, redeem, or cancel memberships;

(2) Authorize members of nonprofit corporations to resign at any time; and

(3) Authorize nonprofit corporations to indemnify officers and directors and to advance funds for reimbursement of expenses.

Testimony in support of this bill was submitted by Unity House, Inc.

Your Committee finds that currently, many nonprofit corporations face great difficulty in securing participation of its members in the governance of their operations. As a result, many nonprofit corporations expend a significant amount of their resources just to acquire the proxy votes needed to execute their business affairs. This bill proposes to remedy this problem by providing nonprofit corporations with the option of terminating, canceling, or redeeming memberships, while also providing for voluntary member resignation.

However, your Committee finds that allowing for voluntary membership resignation would negatively impact condominium and planned community associations (associations), of which many are organized as nonprofit corporations. Your Committee fears this provision would lead to litigation between associations and its members that do not wish to pay their fair share of incurred costs.

Accordingly, your Committee has amended this measure by:

(1) Deleting the provision allowing for voluntary member resignation;

(2) Changing the effective date to July 1, 2050, to facilitate further discussion of this matter; and

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

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 H.B. No. 1594, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1594, H.D. 1, and be placed on the calendar for Third Reading.

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

 

____________________________

KENNETH T. HIRAKI, Chair