Report Title:

Hawaii Business; Investment

Description:

Authorizes fiduciaries to make limited venture capital investments in privately-held Hawaii companies.

THE SENATE

S.B. NO.

1696

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to investments.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. A prudent investor or person rule is embodied in several laws of this State pertaining to the investment of funds by fiduciaries. The legislature finds that the people of this State would benefit by a limited relaxation of the prudent investor or person rule to the extent that fiduciaries should be allowed to invest a small portion of their assets in Hawaii venture capital investments.

The purpose of this Act is to allow fiduciaries to invest in Hawaii venture capital investments up to two and one half per cent of their funds available for investment, but not more than ten per cent of their capital, without incurring liability for violation of the prudent investor or person rule.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

INVEST IN HAWAII

§  -1 Definitions. As used in this chapter:

"Agency" means each state or county board, commission, department, or officer authorized by law to make rules, except those in the legislative or judicial branches.

"Fiduciaries" shall mean pension funds, corporations, limited liability companies, partnerships, banks, savings institutions, trust companies, and fiduciaries of the state employees' retirement system, including the fiduciaries, officers, directors, trustees, partners, managers, advisors, employees, and representatives thereof.

"Hawaii venture capital investments" means any of the following investments in a business:

(1) Direct debt and equity investments in privately-held Hawaii companies; and

(2) Investment in limited partnerships, limited liability companies, or other entities that make private debt and equity investments in privately-held Hawaii companies, whether directly or through investments in limited partnerships, limited liability companies, or other entities, including but not limited to investments consisting of shares of capital stock, convertible notes and other debt instruments, securities, warrants, options, or other rights to acquire such securities from privately-held Hawaii companies.

"Privately-held Hawaii companies" shall mean any privately-held corporation, limited liability company, partnership, or other entity that is headquartered, or has substantial operations in Hawaii.

§   -2 Limited investment in privately-held Hawaii companies authorized. (a) Unless prohibited by federal law or regulations promulgated thereunder, and notwithstanding any law to the contrary, or rules adopted pursuant thereto, fiduciaries may invest in Hawaii venture capital investments up to two and one-half per cent of their funds eligible for investment; provided that their total outlay in Hawaii venture capital investments shall not be more than ten per cent of their capital, which includes common capital stock, certified surplus, capital notes, and undivided profits. Fiduciaries acting in accordance with this section shall not be in violation of any prudent person or prudent investor rule; provided that if any venture capital investments in privately-held Hawaii companies are in violation of this chapter by virtue of a reduction in the amount of funds eligible for investment, the fiduciary shall not be in violation of any prudent person or prudent investor rule.

(b) The director of any agency whose duties and powers include regulating the activities of any fiduciaries governed by this chapter may adopt rules for the implementation of this chapter in accordance with chapter 91."

SECTION 3. This Act shall take effect on July 1, 2005.

INTRODUCED BY:

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