STAND. COM. REP. NO. 635-24

Honolulu, Hawaii

, 2024

RE: H.B. No. 2318

H.D. 1

Honorable Scott K. Saiki

Speaker, House of Representatives

Thirty-Second State Legislature

Regular Session of 2024

State of Hawaii

Sir:

Your Committees on Consumer Protection & Commerce and Judiciary & Hawaiian Affairs, to which was referred H.B. No. 2318 entitled:

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

beg leave to report as follows:

The purpose of this measure is to exempt planned community associations and condominium associations from the quorum and voting provisions applicable to boards of directors under the Hawaii Nonprofit Corporations Act.

Your Committees received testimony in support of this measure from the Hawaiʻi State Association of Parliamentarians Legislative Committee and one individual. Your Committees received comments on this measure from the Community Associations Institute, Legislative Action Committee, Hawaii Chapter.

Your Committees find that, under the Hawaii Nonprofit Corporations Act, the quorum and voting provisions do not take into account directors who abstain from taking actions based on actual or perceived conflicts of interest. In such cases, the abstention is equivalent to a no vote.

Your Committees further find that, as applied to planned community associations and condominium associations, equating abstentions to no votes would hamper boards of limited size. Boards of directors of planned community associations and condominium associations range in size, with some boards consisting of as little as three members to others consisting of as many as twelve members. This measure would allow planned community associations and condominium associations to have more flexibility in taking actions in the event of any abstentions.

Your Committees have amended this measure by:

(1) Changing the effective date to July 1, 3000, to encourage further discussion; and

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

As affirmed by the records of votes of the members of your Committees on Consumer Protection & Commerce and Judiciary & Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2318, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2318, H.D. 1, and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committees on Consumer Protection & Commerce and Judiciary & Hawaiian Affairs,

____________________________ DAVID A. TARNAS, Chair

____________________________ MARK M. NAKASHIMA, Chair