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HB835
HOUSE OF REPRESENTATIVES
H.B. NO.
835
THIRTY-THIRD LEGISLATURE, 2025
STATE OF HAWAII
A BILL FOR AN ACT
relating
to condominiums
.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
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SECTION
1
.
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Section
414D-155, Hawaii Revised Statutes, is amended to read as follows:
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�414D-155
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Standards of conduct
for officers.
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(a)
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An officer with discretionary authority shall
discharge the officer's duties under that authority:
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(1)
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In good faith;
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(2)
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In a manner that
is consistent with the officer's duty of loyalty to the corporation;
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(3)
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With the care an
ordinarily prudent person in a like position would exercise under similar
circumstances; and
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(4)
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In a manner the officer
reasonably believes to be in the best interests of the corporation and its
members, if any.
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(b)
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In discharging an officer's duties, an officer is entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by:
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(1)
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One or more
officers or employees of the corporation who the officer reasonably believes to
be reliable and competent in the matters presented; or
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(2)
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Legal counsel,
public accountants, or other persons as to matters the officer reasonably
believes are within the person's professional or expert competence.
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(c)
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An officer is not acting in good faith if the officer has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (b) unwarranted.
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(d)
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An officer is not liable to the corporation, any member, or other person
for any action taken or not taken as an officer, if the officer acted in
compliance with this section.
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(e)
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Any person who serves as an officer to the corporation without
remuneration or expectation of remuneration shall not be liable for damage,
injury, or loss caused by or resulting from the person's performance of or
failure to perform duties of the position to which the person was appointed,
unless the person was grossly negligent in the performance of or failure to
perform the duties.
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For purposes of this
section, remuneration does not include payment of reasonable expenses and
indemnification or insurance for actions as an officer as allowed by sections
414D-159 to 414D-167.
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(f)
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Notwithstanding this section, any person who
serves as an officer to a corporation subject to chapter 514B, shall be held to
the standard of negligence outlined in paragraph (a), but not entitled to the
heightened protections of paragraphs (b), (c), (d), or (e).
"
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SECTION
2
.
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Section
414D-149, Hawaii Revised Statutes, is amended to read as follows:
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�414D-149
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General standards for
directors.
�
(a)
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A director shall
discharge the director's duties as a director, including the director's duties
as a member of a committee:
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(1)
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In good faith;
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(2)
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In a manner that
is consistent with the director's duty of loyalty to the corporation;
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(3)
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With the care an
ordinarily prudent person in a like position would exercise under similar circumstances;
and
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(4)
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In a manner the
director reasonably believes to be in the best interests of the corporation.
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(b)
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In discharging the director's duties, a director is entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by:
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(1)
�
One or more officers
or employees of the corporation whom the director reasonably believes to be
reliable and competent in the matters presented;
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(2)
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Legal counsel,
public accountants, or other persons as to matters the director reasonably
believes are within the person's professional or expert competence; or
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(3)
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A committee of the
board of which the director is not a member, as to matters within its
jurisdiction, if the director reasonably believes the committee merits
confidence.
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(c)
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A director is not acting in good faith if the director has knowledge
concerning the matter in question that makes reliance otherwise permitted by
subsection (b) unwarranted.
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(d)
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A director is not liable to the corporation, any member, or any other
person for any action taken or not taken as a director, if the director acted
in compliance with this section.
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(e)
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A director shall not be deemed to be a trustee with respect to the
corporation or with respect to any property held or administered by the
corporation, including without limit, property that may be subject to restrictions
imposed by the donor or transferor of the property.
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(f)
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Any person who serves as a director to the corporation without
remuneration or expectation of remuneration shall not be liable for damage,
injury, or loss caused by or resulting from the person's performance of, or
failure to perform duties of, the position to which the person was elected or
appointed, unless the person was grossly negligent in the performance of, or
failure to perform, such duties.
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For
purposes of this section, remuneration does not include payment of reasonable
expenses and indemnification or insurance for actions as a director as allowed
by sections 414D-159 to 414D-167.
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(g)
�
Notwithstanding this section, any person who
serves as a director to a corporation subject to chapter 514B, shall be held to
the standard of negligence outlined in paragraph (a), but not entitled to the
heightened protections of paragraphs (b), (c), (d), (e), or (f).
"
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SECTION
3.
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New statutory material is
underscored.
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SECTION 4.
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This Act does not affect rights and duties
that matured, penalties that were incurred, and proceedings that were begun
before its effective date.
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SECTION 5.
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This Act shall take effect on July 1, 2025.
INTRODUCED BY:
_____________________________
Report Title:
Non-profits;
Condominium Associations; Negligence; Standards
Description:
Imposes a
less deferential standard of negligence on officers and directors of
condominium associations incorporated under HRS 414D.
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Ensures that officers and directors of
condominium associations are held accountable by imposing a reasonable person
standard of negligence.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
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