State of the Nonprofit Regulatory Environment in HAWAII

1 Bifurcation of charitable regulatory body

Bifurcated Regulatory Structure

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

HI Code § 467B

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: No - Hawaii Revised Statutes § 467B

Registration Office

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

BIFURCD-REGIOF-NS

REGULATORY BODY: Not Specific

NOTES: Hawaii Department of the Attorney General - Tax and Charities Division http://ag.hawaii.gov/tax/

2 Notice, Filing or Review of Transactions

Sale of Assets

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 414D-222

REGULATORY BODY: Attorney General

STATUTE TEXT: ss414D-222 Sale of assets other than in regular course of activities. (a) A corporation may sell, lease, exchange, or otherwise dispose of all, or substantially all, of its property (with or without the goodwill) other than in the usual and regular course of its activities on the terms and conditions and for the consideration determined by the corporation’s board if the proposed transaction is authorized by subsection (b). (b) Unless this chapter, the articles, the bylaws, or the board of directors or members (acting pursuant to subsection (d)) require a greater vote or voting by class, the proposed transaction to be authorized must be approved: (1) By the board; (2) By the members by two-thirds of the votes cast or a majority of the voting power, whichever is less; and (3) In writing by any person or persons whose approval is required by a provision of the articles authorized by section 414D-188 for an amendment to the articles or bylaws. (c) If the corporation does not have members, the transaction must be approved by a vote of a majority of the directors in office at the time the transaction is approved. In addition, the corporation shall provide notice of any directors’ meeting at which the approval is to be obtained in accordance with section 414D-145(c). The notice must also state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property or assets of the corporation and contain or be accompanied by a copy or summary of a description of the transaction. (d) The board may condition its submission of the proposed transaction, and the members may condition their approval of the transaction, on receipt of a higher percentage of affirmative votes or on any other basis. (e) If the corporation seeks to have the transaction approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in accordance with section 414D-105. The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider the sale, lease, exchange, or other disposition of all, or substantially all, of the property or assets of the corporation and contain or be accompanied by a copy or summary of a description of the transaction. (f) If the board needs to have the transaction approved by the members by written consent or ballot, the material soliciting the approval shall contain or be accompanied by a copy or summary of a description of the transaction. (g) After a sale, lease, exchange, or other disposition of property is authorized, the transaction may be abandoned (subject to any contractual rights), without further action by the members or any other person who approved the transaction in accordance with the procedure set forth in the resolution proposing the transaction or, if none is set forth, in the manner determined by the board of directors. (h) A sale, lease, exchange, or other disposition of the property of a corporation shall not be deemed to be the sale, lease, exchange, or other disposition of all or substantially all the property of the corporation if the corporation is retaining sufficient property to continue one or more significant business segments or lines of the corporation after the sale, lease, exchange, or other disposition. Furthermore, the business segments or lines retained must not be only temporary operations or merely a pretext to avoid members’ rights which might otherwise arise under this chapter. (i) A public benefit corporation shall give written notice to the attorney general twenty business days before it sells, leases, exchanges, or otherwise disposes of all, or substantially all, of its property if the transaction is not in the regular course of its activities, unless the attorney general has given the corporation a written waiver of this subsection. [L 2001, c 105, pt of ss1; am L 2004, c 171, ss9; am L 2011, c 37, ss15; am L 2019, c 65, ss6]

NOTES: Pub. Benefit Corp, H.R.S. § 414D-222

REPORTS-ASSETS-OT

REGULATORY BODY: Other

NOTES: No

Mergers

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 414D-211

REGULATORY BODY: Attorney General

STATUTE TEXT: ss414D-211 Limitations on merger by public benefit corporations. (a) Without the prior approval of the circuit court for the first circuit in a proceeding in which the attorney general has been given written notice, a public benefit corporation may merge only with: (1) A public benefit corporation; (2) A foreign corporation that would qualify under this chapter as a public benefit corporation; (3) A wholly owned corporation, if the public benefit corporation is the surviving corporation and continues to be a public benefit corporation after the merger; (4) A corporation; provided that: (A) On or prior to the effective date of the merger, assets with an equal value to the greater of the fair market value of the net tangible and intangible assets (including goodwill) of the public benefit corporation, or the fair market value of the public benefit corporation if it were to be operated as a business concern, are transferred to one or more persons who would have received its assets under section 414D-245(a)(5) and (6) had it dissolved; (B) The public benefit corporation shall return, transfer, or convey an asset held by it upon condition requiring return, transfer, or conveyance, which condition occurs by reason of the merger, in accordance with such condition; and (C) The merger is approved by a majority of directors of the public benefit corporation who are not and will not become members or shareholders in or officers, employees, agents, or consultants of the surviving corporation. (b) At least twenty days before the consummation of any merger of a public benefit corporation pursuant to subsection (a)(4), notice, including a copy of the proposed plan of merger, shall be delivered to the attorney general. (c) Without the prior written approval of the attorney general or the circuit court for the first circuit, in a proceeding in which the attorney general has been given written notice, no member of a public benefit corporation may receive or keep anything as a result of a merger other than a membership in the surviving public benefit corporation. The court shall approve the transaction if it is in the public interest. [L 2004, c 171, ss2]

NOTES: Pub. Benefit Corp, H.R.S. § 414D-211

HI Code § 414D-211

REGULATORY BODY: Other

NOTES: Must file articles of merger with the director of the department of commerce and consumer affairs, HRS 414D-203; Court Approval - Pub. Benefit Corp HRS § 414D-211

Certificate of Amendments

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

REPORTS-AMMEND-AG

REGULATORY BODY: Attorney General

NOTES: No

HI Code § 414D-183

REGULATORY BODY: Other

STATUTE TEXT: ss414D-183 Articles of amendment. A corporation amending its articles shall deliver to the department director articles of amendment setting forth: (1) The name of the corporation; (2) The text of each amendment adopted; (3) The date of each amendment’s adoption; (4) If approval of members was not required, a statement to that effect and a statement that the amendment was approved by a sufficient vote of the board of directors or incorporators; (5) If approval by members was required: (A) The designation, number of memberships outstanding, number of votes entitled to be cast by each class entitled to vote separately on the amendment, and number of votes of each class indisputably voting on the amendment; and (B) Either the total number of votes cast for and against the amendment by each class entitled to vote separately on the amendment or the total number of undisputed votes cast for the amendment by each class and a statement that the number cast for the amendment by each class was sufficient for approval by that class; (6) If approval of the amendment by some person or persons other than the members, the board, or the incorporators is required pursuant to section 414D-188, a statement that the approval was obtained. [L 2001, c 105, pt of ss1]

NOTES: File with the director of the department of commerce and consumer affairs HI ST § 414D-183; if amended purusant to judicial reorganization HI ST § 414D-185

HI Code § 414D-185

REGULATORY BODY: Other

STATUTE TEXT: ss414D-185 Amendment pursuant to judicial reorganization. (a) A corporation’s articles may be amended without board approval or approval by the members or approval required pursuant to section 414D-188 to carry out a plan of reorganization ordered or decreed by a court of competent jurisdiction under federal statute if the articles after amendment contain only provisions required or permitted by section 414D-32. (b) The individual or individuals designated by the court shall deliver to the department director articles of amendment setting forth: (1) The name of the corporation; (2) The text of each amendment approved by the court; (3) The date of the court’s order or decree approving the articles of amendment; (4) The title of the reorganization proceeding in which the order or decree was entered; and (5) A statement that the court had jurisdiction of the proceeding under federal statute. (c) This section shall not apply after entry of a final decree in the reorganization proceeding even though the court retains jurisdiction of the proceeding for limited purposes unrelated to consummation of the reorganization plan. [L 2001, c 105, pt of ss1]

NOTES: File with the director of the department of commerce and consumer affairs HI ST § 414D-183; if amended purusant to judicial reorganization HI ST § 414D-185

Does the state require annual financial reporting by charitable organizations in addition to filing a copy of the 990 with the regulator (if filing 990 is required)?

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

REPORTS-FINANC-NS

REGULATORY BODY: Not Specific

NOTES: Financial Statement or 990

3 Notice or Action for Dissolutions

Voluntary Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 414D-233

REGULATORY BODY: Attorney General

STATUTE TEXT: ss414D-233 Notice to the attorney general of intention to dissolve. (a) A public benefit corporation shall give the attorney general written notice that it intends to dissolve before the time it delivers the articles of dissolution to the department director. The notice shall include a copy or summary of the plan of dissolution. (b) No assets shall be transferred or conveyed by a public benefit corporation as part of the dissolution process until twenty business days after it has given the written notice required by subsection (a) to the attorney general or until the attorney general has consented in writing to the dissolution, or indicated in writing that the attorney general will take no action in respect to, the transfer or conveyance, whichever is earlier. (c) When all or substantially all of the assets of a public benefit corporation have been transferred or conveyed following approval of dissolution, the board shall deliver to the attorney general a list showing those (other than creditors) to whom the assets were transferred or conveyed. The list shall indicate the addresses of each person (other than creditors) who received assets and indicate what assets each received. [L 2004, c 171, ss3; am L 2005, c 22, ss24; am L 2017, c 87, ss4]

NOTES: Public Benefit Corp. HRS § 414D-233

HI Code § 414D-243

REGULATORY BODY: Other

STATUTE TEXT: ss414D-243 Articles of dissolution. (a) At any time after dissolution is authorized, the corporation may dissolve by delivering to the department director articles of dissolution setting forth: (1) The name of the corporation; (2) The date dissolution was authorized; (3) A statement that dissolution was approved by a sufficient vote of the board; (4) If approval of members was not required, a statement to that effect and a statement that dissolution was approved by a sufficient vote of the board of directors or incorporators; (5) If approval by members was required: (A) The designation, number of memberships outstanding, number of votes entitled to be cast by each class entitled to vote separately on dissolution, and number of votes of each class indisputably voting on dissolution; and (B) Either the total number of votes cast for and against dissolution by each class entitled to vote separately on dissolution or the total number of undisputed votes cast for dissolution by each class and a statement that the number cast for dissolution by each class was sufficient for approval by that class; (6) If approval of dissolution by some person or persons other than the members, the board, or the incorporators is required pursuant to section 414D-242(a)(3), a statement that the approval was obtained. (b) A corporation is dissolved upon the effective date of its articles of dissolution. The articles of dissolution may specify a delayed effective time and date, and if it does so, the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document is effective at the close of business on that date. A delayed effective date for a document may not be later than the thirtieth day after the date it is filed. [L 2001, c 105, pt of ss1]

NOTES: HRS § 414D-243

Judicial Dissolutions

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 414D-252

REGULATORY BODY: Attorney General

STATUTE TEXT: ss414D-252 Grounds for judicial dissolution. (a) The court may dissolve a corporation in a proceeding by the attorney general if it is established that: (1) The corporation obtained its articles of incorporation through fraud; (2) The corporation has continued to exceed or abuse the authority conferred upon it by law; (3) The corporation is a public benefit corporation and the corporate assets are being misapplied or wasted; or (4) The corporation is a public benefit corporation and is no longer able to carry out its activities. (b) In a proceeding by fifty members or members holding five per cent of the voting power, whichever is less, or by a director or any person specified in the articles, the court may dissolve a corporation if it is established that: (1) The directors are deadlocked in the management of the corporate affairs, and the members, if any, are unable to breach the deadlock; (2) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent; (3) The members are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have, or would otherwise have, expired; or (4) The corporate assets are being misapplied or wasted. (c) The court may dissolve a corporation in a proceeding by a creditor if it is established that: (1) The creditor’s claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or (2) The corporation has admitted in writing that the creditor’s claim is due and owing and the corporation is insolvent. (d) The court may dissolve a corporation in a proceeding by the corporation to have its voluntary dissolution continued under court supervision. (e) Prior to dissolving a corporation, the court shall consider whether there are reasonable alternatives to dissolution, whether dissolution is in the public interest, provided the corporation serves a public purpose, and whether dissolution is the best way of protecting the interests of members. [L 2001, c 105, pt of ss1; am L 2004, c 171, ss11]

NOTES: HRS § 414D-252

HI Code § 414D-255

REGULATORY BODY: Other

STATUTE TEXT: ss414D-255 Decree of dissolution. (a) If, after a hearing, the court determines that one or more grounds for judicial dissolution described in section 414D-252 exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the department director, who shall file it. (b) After entering the decree of dissolution, the court shall direct the winding up and liquidation of the corporation’s affairs in accordance with section 414D-245 and the notification of its claimants in accordance with sections 414D-246 and 414D-247. [L 2001, c 105, pt of ss1]

NOTES: Filing with Dept. of Commerce and Consumer Affairs HRS § 414D-255

Administrative Dissolutions

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

DISSOLV-ADMINI-AG

REGULATORY BODY: Attorney General

NOTES: No

HI Code § 414D-248

REGULATORY BODY: Other

STATUTE TEXT: ss414D-248 Grounds for administrative dissolution. The department director may commence a proceeding under section 414D-249 to administratively dissolve a corporation if the corporation fails to: (1) Pay any fees prescribed by law; (2) File its annual report for a period of two years; (3) Appoint and maintain an agent for service of process as required; or (4) File a statement of a change in the name or business address of the agent as required under chapter 425R. [L 2001, c 105, pt of ss1; am L 2002, c 130, ss60; am L 2003, c 124, ss32; am L 2009, c 55, ss22]

NOTES: Dept. of Commerce and Consumer Affairs HRS § 414D-248

4 Notice, Oversight or Filing of Hospital Conversions

Has Statute

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 432C

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 432C

Requires Notice or Oversight

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 28-5.2

REGULATORY BODY: Attorney General

STATUTE TEXT:

NOTES: H.R.S. § 28-5.2

HI Code § 432C-3

REGULATORY BODY: Other

STATUTE TEXT:

NOTES: Insurance commissioner, HRS § 432C-3

Requires Filing

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 432C-2

REGULATORY BODY: Other

STATUTE TEXT:

NOTES: Insurance commissioner, HRS § 432C-2

5 Audits

Requires Audit

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-6.5(b)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Haw. Rev. Stat. § 467B-6.5(b)

Audit Threshold

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

AUDITFI-THRESH-NS

REGULATORY BODY: Not Specific

NOTES: 500000

6 Registration Law

Registration Law

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-1 et seq.

7 Exemptions from Registering for Specific Organization Types

Religious Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-11.5(1)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-11.5(1)

Small organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-11.5(8)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-11.5(8) ($25k)

Educational Institutions

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-11.5(3)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-11.5(3), 467B-11.5(4)

Governmental Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-1 and HRS § 467B-11.5(7)

HI Code § 467B-11.5(7)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-1 and HRS § 467B-11.5(7)

Hospitals

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-11.5(5)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Nonprofit hospital: HRS § 467B-11.5(5)

Veterans organizations

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-VETERA-NS

REGULATORY BODY: Not Specific

NOTES: NO

Foundations

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-FNDYES-NS

REGULATORY BODY: Not Specific

NOTES: NO

Foundations that don’t solicit contributions

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-FNDNOS-NS

REGULATORY BODY: Not Specific

NOTES: NO

Charitable Trusts

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-CTRUST-NS

REGULATORY BODY: Not Specific

NOTES: NO

Parent-Teacher Organizations

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-11.5(2)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-11.5(2)

Reports to congress

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-11.5(6)

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-11.5(6)

Non-soliciting

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-2.1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-2.1 (registered org may deactivate in registry if no longer soliciting)

Fraternal/ Membership

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-MEMFRA-NS

REGULATORY BODY: Not Specific

NOTES: NO

Political Orgs

Regulatory Action: EXEMPTION

YES: A regulation is defined in the state

HI Code § 467B-1

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: HRS § 467B-1

Other

Regulatory Action: EXEMPTION

A regulation is NOT defined in the state

ORGTYPE-OTHTYP-NS

REGULATORY BODY: Not Specific

8 Defined remedies

Dissolution

Regulatory Action: REMEDY

YES: A regulation is defined in the state

HI Code § 414D-252

REGULATORY BODY: Not Specific

NOTES: HRS § 414D-252

Removal of Board Members

Regulatory Action: REMEDY

YES: A regulation is defined in the state

HI Code § 414D-140

REGULATORY BODY: Not Specific

STATUTE TEXT: ss414D-140 Removal of directors by judicial proceeding. (a) The circuit court of the county where a corporation’s principal office is located may remove any director of the corporation from office in a proceeding commenced either by the corporation or its members holding at least ten per cent of the voting power of any class, or the attorney general in the case of a public benefit corporation, if the court finds that with respect to the corporation, the director’s removal is in the best interest of the corporation due to: (1) The director’s fraudulent or dishonest conduct; (2) The director’s gross abuse of authority or discretion; or (3) A final judgment finding that the director has violated a duty set forth in sections 414D-149 and 414D-152, and that removal is in the best interest of the corporation. (b) The court that removes a director may bar the director from serving on the board for a period prescribed by the court. (c) If members or the attorney general commence a proceeding under subsection (a), the corporation shall be made a party defendant. (d) If a public benefit corporation or its members commence a proceeding under subsection (a), within ten days of its commencement, they shall give the attorney general written notice of the proceeding. [L 2001, c 105, pt of ss1; am L 2004, c 171, ss7]

NOTES: Haw. Rev. Stat. § 414D-140

9 Oversight of professional fundraisers

Does the state require registration by commercial fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-12

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Haw. Rev. Stat. § 467B-12

Does the state require registration by fundraising counsel?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-12

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Haw. Rev. Stat. § 467B-12

Does the state oversee commercial-coventuring (e.g. by requiring that the co-venture be registered or by requiring that the charitable organization files the co-venture contract)?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-5.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: “The commercial co-venturer shall file a copy of the written consent with the department not less than ten days prior to the commencement of the charitable sales promotion within this State.” Haw. Rev. Stat. § 467B-5.5

Does the state require the fundraisers to provide notice to the regulator before any solicitation campaign (in addition to annual registration and/or filing the contract)?

Regulatory Action: REQUIREMENT

A regulation is NOT defined in the state

HI Code § 467B-12.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Must file each new contract 10 days before start of campaign: Haw. Rev. Stat. Ann. § 467B-12.5 (West)

Does the state require specified disclosures to donors?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-1.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Haw. Rev. Stat. § 467B-1.5 “Professional solicitors; required disclosures.”

Does the state require a copy of any contract between a charitable organization and a commercial fundraiser or fundraising counsel be filed with the regulator?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-12.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Haw. Rev. Stat. § 467B-12.5

Does the state require annual financial reporting by commercial fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-2.5

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: Paid solicitors must file financial reports 90 days after end of campaign, or one year after start of campaign (for campaigns lasting longer than one year): Haw. Rev. Stat. Ann. § 467B-2.5 (West)

Does the state require bonding of professional fundraisers?

Regulatory Action: REQUIREMENT

YES: A regulation is defined in the state

HI Code § 467B-12

REGULATORY BODY: Not Specific

STATUTE TEXT:

NOTES: At the time of filing a registration or renewal registration, a professional solicitor must file a bond for $25,000 issued with surety or sureties approved by the attorney general. Haw. Rev. Stat. § 467B-12