RELATING TO THE POWERS OF ARTIFICIAL PERSONS.

SB2471

THE SENATE

S.B. NO.

2471

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

RELATING
TO THE POWERS OF ARTIFICIAL PERSONS
.

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

PART I

����
SECTION 1.
�

The legislature finds that all political power in the State of Hawaii is
inherent in the people, and that the creation of a corporation or other
artificial legal entity is a privilege granted by the State, not a natural
right.
�
Under article I, section 21, of
the Constitution of the State of Hawaii, no grant of special privileges or
immunities is irrevocable, and the legislature retains full authority to
redefine or withdraw any corporate or entity powers that the State has
conferred.

����
The legislature further finds that judicial
decisions of the United States Supreme Court recognize that the State possesses
plenary authority to determine the powers and capacities of the artificial
persons it creates.
�
This Act exercises
that authority to restate and limit the powers that the State grants to
corporations, limited liability companies, partnerships, associations, and
other artificial persons.

����
The legislature further finds that statutes
in the State and other jurisdictions have historically included broad grants of
corporate powers.
�
State law currently authorizes
a corporation to have "the same powers as an individual to do all things
necessary or convenient to carry out its business and affairs".
�
The United States Supreme Court has
interpreted these broad grants of powers to include powers to make expenditures
in connection with elections and ballot measures, and has recognized
constitutional rights attaching to the exercise of these powers.
�
The legislature declares that these political
spending powers were never intended to be among the powers granted to
corporations or other artificial persons by the State.
�
The aim of this Act is to make that intent
explicit and to define the lawful powers of artificial persons accordingly.

����
The legislature believes that the powers
conferred on an artificial person are separate and distinct from the rights
retained by natural persons.
�
This Act
therefore does not regulate any natural person's rights to speech, petition, or
association.
�
It simply defines and
limits the powers that the State confers upon the artificial entities that it
charters or authorizes to do business.

����
Accordingly, the purpose of this Act is to
reaffirm that artificial persons created under Hawaii law possess only those
powers that are necessary or convenient to carry out lawful business and
charitable or organizational purposes, and that those powers do not include the
power to spend money or contribute anything of value to influence elections or
ballot measures.
�
This Act revokes all
prior grants of corporate and entity powers and regrants only those powers that
the State determines to be necessary or convenient to conduct lawful business
under the constitution and laws of this State.

����
SECTION 2.
�

This Act applies to all entities organized under the laws of this State
unless expressly identified in statute as a public body corporate and
politic.
�
Nothing in this Act shall apply
to any agency or instrumentality of the State or its political subdivisions.

PART II

����
SECTION 3.
�

Chapter 412, Hawaii Revised Statutes, is amended by adding a new section
to part II of article 10, to be appropriately designated and to read as
follows:

����
"
�412:10-
��
��
Limitation on powers.
�
A credit union chartered under this part
is subject to section 414-42 with respect to the limitations on corporate
powers contained in that section.
"

PART III

����
SECTION 4.
�

Section 414-3, Hawaii Revised Statutes, is amended by adding four new
definitions to be appropriately inserted and to read as follows:

����
"
"Artificial-person powers"
means the same powers as an individual to do all things necessary or convenient
to carry out the corporation's lawful business and affairs, excluding any power
to directly or indirectly engage in election activity or ballot-issue
activity.
�
Powers related to election
activity or ballot-issue activity shall not be considered, under any
circumstances, to be necessary or convenient to the corporation's business or
affairs.

����
"Ballot-issue activity" means
paying, contributing, or expending money or anything of value to support or
oppose a constitutional amendment, county charter amendment, or other ballot question
after it has been formally certified or submitted to the electors of the State
or any county.
�
The term does not include
any bona fide news story, commentary, or editorial distributed through the
facilities of a broadcasting station or of any print, online, or digital
newspaper, magazine, blog, or other periodical publication, unless the broadcasting,
print, online, or digital facility is owned or controlled by a political party,
political committee, or candidate.

����
"Charter privilege" means any
benefit that exists only because the State confers it on a corporation or other
entity, including, without limitation, limited liability, perpetual duration,
succession in the corporate name, business or statutory trusts, and tax credits
or abatements.

����
"Election activity" means
paying, contributing, or expending money or anything of value to support or
oppose a candidate, political party, or political committee.
�
The term does not include any bona fide news
story, commentary, or editorial distributed through the facilities of a
broadcasting station or of any print, online, or digital newspaper, magazine,
blog, or other periodical publication, unless the broadcasting, print, online,
or digital facility is owned or controlled by a political party, political
committee, or candidate.
"

����
SECTION
5
.
�
Section 414-41, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

����
"(a)
�

Every corporation incorporated under this chapter has the purpose of
engaging in any lawful business
, not including election activity or
ballot-issue activity,
unless a more limited purpose is set forth in the
articles of incorporation.
�
Under no
circumstances shall any power or activity related to election activity or
ballot-issue activity be deemed necessary or convenient for a lawful business
purpose.
"

����
SECTION
6
.
�
Section 414-42, Hawaii Revised Statutes, is
amended to read as follows:

����
"
[
[
]�414-42[
]
]
�
General powers.
�
(a)
�

The creation and continued existence of a corporation is not a right but
a conditional grant of legal status by the State and remains subject to
complete withdrawal at any time.
�
All powers
previously granted to corporations under the laws of this State are revoked in
their entirety.
�
A corporation operating
under the jurisdiction of this State shall possess no power unless specifically
granted by this section.

����
(b)
�

Unless its articles of incorporation provide otherwise, every
corporation has perpetual duration and succession in its corporate name and [
has
the same powers as an individual to do all things necessary or convenient to
carry out its business and affairs,
]
is hereby granted artificial-person
powers,
including without limitation, the power:

����
(1)
�
To
sue and be sued, complain and defend in its corporate name;

����
(2)
�
To
have a corporate seal, which may be altered at will, and to use it, or a
facsimile of it, by impressing or affixing it or in any other manner
reproducing it;

����
(3)
�
To
make and amend bylaws, not inconsistent with its articles of incorporation or
with the laws of this State, for managing the business and regulating the
affairs of the corporation;

����
(4)
�
To
purchase, receive, lease, or otherwise acquire, and own, hold, improve, use,
and otherwise deal with, real or personal property, or any legal or equitable
interest in property, wherever located;

����
(5)
�
To
sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all
or any part of its property;

����
(6)
�
To
purchase, receive, subscribe for, or otherwise acquire; own, hold, vote, use,
sell, mortgage, lend, pledge, or otherwise dispose of; and deal in and with
shares or other interests in, or obligations of, any other entity;

����
(7)
�
To
make contracts and guarantees, incur liabilities, borrow money, issue its
notes, bonds, and other obligations (which may be convertible into or include
the option to purchase other securities of the corporation), and secure any of
its obligations by mortgage or pledge of any of its property, franchises, or
income;

����
(8)
�
To
lend money, invest and reinvest its funds, and receive and hold real and
personal property as security for repayment;

����
(9)
�
To
be a promoter, partner, member, associate, or manager of any partnership, joint
venture, trust, or other entity;

���
(10)
�
To
conduct its business, locate offices, and exercise the powers granted by this
chapter within or without this State;

���
(11)
�
To
elect directors and appoint officers, employees, and agents of the corporation,
define their duties, fix their compensation, and lend them money and credit;

���
(12)
�
To
pay pensions and establish pension plans, pension trusts, profit sharing plans,
share bonus plans, share option plans, and benefit or incentive plans for any
or all of its current or former directors, officers, employees, and agents;

���
(13)
�
To
make donations for the public welfare or for charitable, scientific, or
educational purposes;

���
(14)
�
To
transact any lawful business that will aid governmental policy; and

���
(15)
�
To
make payments or donations, or do any other act, not inconsistent with law,
that furthers the business and affairs of the corporation.

����
(c)
�

Any provision of the articles of incorporation, bylaws, or other
organizational documents purporting to grant or confer any power to directly or
indirectly engage in election activity or ballot-issue activity is void.

����
(d)
�

Any act undertaken by a corporation that constitutes an election
activity or ballot-issue activity is ultra vires and void.
�
A corporation that exercises any power not
granted under subsection (b) forfeits all charter privileges, including limited
liability and perpetual duration, as a matter of law.
�
The director of commerce and consumer affairs
shall adopt rules for administrative forfeiture, reinstatement upon
disgorgement and certification of compliance, and related civil enforcement of
this section.

����
(e)
�

A foreign corporation that is authorized to transact business, is
otherwise transacting business, or holds property in this State is subject to
this section.
�
A foreign corporation that
directly or indirectly undertakes, finances, or directs election activity or
ballot-issue activity in the State shall be conclusively deemed to be
transacting business in this State.

����
(f)
�

Nothing in this section shall be construed to invalidate, impair, or
modify any existing contract, debt instrument, security, or other legal
obligation validly entered into before the effective date of this section;
provided that nothing herein authorizes any election activity or ballot-issue
activity after that date.

����
(g)
�

If any provision of this section, or its application to any person or
circumstance, is held invalid or unconstitutional, the remaining provisions and
applications that are severable shall remain in effect, and no prior grant of
corporate powers shall be revived, reinstated, or implied by operation of law
or judicial construction.
"

����
SECTION
7
.
�
Section 414-44, Hawaii Revised Statutes, is
amended to read as follows:

����
"
[
[
]�414-44[
]
]
�
Ultra vires.
�
(a)
�

Except as provided in subsection (b), the validity of corporate action
may not be challenged on the ground that the corporation lacks or lacked power
to act.

����
(b)
�

A corporation's power to act may be challenged:

����
(1)
�
In
a proceeding by a shareholder against the corporation to enjoin the act;

����
(2)
�
In
a proceeding by the corporation, directly, derivatively, or through a receiver,
trustee, or other legal representative, against an incumbent or former
director, officer, employee, or agent of the corporation; or

����
(3)
�
In
a proceeding by the attorney general under section 414-411.

����
(c)
�

In a shareholder's proceeding under subsection (b)(1) to enjoin an
unauthorized corporate act, the court may enjoin or set aside the act, if
equitable and if all affected persons are parties to the proceeding, and may
award damages for loss (other than anticipated profits) suffered by the
corporation or another party because of enjoining the unauthorized act.

����
(d)
�

This section shall not apply to acts that constitute election activities
or ballot-issue activities.
�
These acts
are ultra vires and void under section 414-42(d) and may be addressed in
proceedings authorized by that section or by the attorney general under section
414-411.
"

PART IV

����
SECTION 8.
�

Section 414D-14, Hawaii Revised Statutes, is amended by adding four new
definitions to be appropriately inserted and to read as follows:

����
"
"Artificial-person powers"
means the same powers as an individual to do all things necessary or convenient
to carry out the nonprofit corporation's lawful charitable or public-benefit
purposes and activities, excluding any power to directly or indirectly engage
in election activity or ballot-issue activity.
�

Powers related to election activity or ballot-issue activity shall not
be considered, under any circumstances, to be necessary or convenient to the
nonprofit corporation's purposes or activities.

����
"Ballot-issue activity" means
paying, contributing, or expending money or anything of value to support or
oppose a constitutional amendment, county charter amendment, or other ballot question
after it has been formally certified or submitted to the electors of the State
or any county.
�
The term does not include
any bona fide news story, commentary, or editorial distributed through the
facilities of a broadcasting station or of any print, online, or digital
newspaper, magazine, blog, or other periodical publication, unless the
broadcasting, print, online, or digital facility is owned or controlled by a
political party, political committee, or candidate.

����
"Charter privilege" means any
benefit that exists only because the State confers it on a nonprofit
corporation or other entity, including, without limitation, limited liability,
perpetual duration, succession in its name, business or statutory trusts, and
tax credits or abatements.

����
"Election activity" means
paying, contributing, or expending money or anything of value to support or
oppose a candidate, political party, or political committee.
�
The term does not include any bona fide news
story, commentary, or editorial distributed through the facilities of a
broadcasting station or of any print, online, or digital newspaper, magazine,
blog, or other periodical publication, unless the broadcasting, print, online,
or digital facility is owned or controlled by a political party, political
committee, or candidate.
"

����
SECTION
9
.
�
Section 414D-51, Hawaii Revised Statutes, is
amended by amending subsection (a) to read as follows:

����
"
(a)
�
Every corporation incorporated under this
chapter has the purpose of engaging in any lawful
charitable or public‑benefit

activity
, not including election activity or ballot-issue activity,

unless a more limited purpose is set forth in the articles of incorporation."

����
SECTION
10.
�
Section 414D-52, Hawaii Revised Statutes, is
amended to read as follows:

����
"
[
[
]�414D-52[
]
]
�
General powers.
�
(a)
�
The creation and continued existence of a
nonprofit corporation is not a right but a conditional grant of legal status by
the State and remains subject to complete withdrawal at any time.
�
All powers previously granted to nonprofit
corporations under the laws of this State are revoked in their entirety.
�
A nonprofit corporation operating under the
jurisdiction of this State shall possess no power unless specifically granted
by this section.

����
(b)
�

Unless its articles of incorporation provide otherwise, every
corporation has perpetual duration and succession in its corporate name and [
has
the same powers as an individual to do all things necessary or convenient to
carry out its affairs
]
is hereby granted artificial-person powers,

including, without limitation, the power:

����
(1)
�
To sue and be sued, complain, and defend in
its corporate name;

����
(2)
�
To
have a corporate seal, which may be altered at will, and to use it, or a
facsimile of it, by impressing or affixing or in any other manner reproducing
it;

����
(3)
�
To
make and amend bylaws, not inconsistent with its articles of incorporation or
with the laws of the State, for regulating and managing the affairs of the
corporation;

����
(4)
�
To
purchase, receive, lease, or otherwise acquire, and own, hold, improve, use,
and otherwise deal with, real or personal property, or any legal or equitable
interest in property, wherever located;

����
(5)
�
To
sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of all
or any part of its property;

����
(6)
�
To
purchase, receive, subscribe for, or otherwise acquire, own, hold, vote, use,
sell, mortgage, lend, pledge, or otherwise dispose of, and deal in and with,
shares or other interests in, or obligations of any entity;

����
(7)
�
To
make contracts and guaranties, incur liabilities, borrow money, issue notes,
bonds, and other obligations, and secure any of its obligations by mortgage or
pledge of any of its property, franchises, or income;

����
(8)
�
To
lend money, invest and reinvest its funds, and receive and hold real and
personal property as security for repayment, except as limited by section
414D-151
;

����
(9)
�
To
be a promoter, partner, member, associate, or manager of any partnership, joint
venture, trust, or other entity;

���
(10)
�
To
conduct its activities, locate offices, and exercise the powers granted by this
chapter within or without this State;

���
(11)
�
To
elect or appoint directors, officers, employees, and agents of the corporation,
define their duties, and fix their compensation;

���
(12)
�
To
pay pensions and establish pension plans, pension trusts, and other benefit and
incentive plans for any or all of its current or former directors, officers,
employees, and agents;

���
(13)
�
To
make donations not inconsistent with law for the public welfare or for
charitable, religious,
scientific
, or
educational purposes, and for other purposes that further the corporate
interest;

���
(14)
�
To
impose dues, assessments, admission, and transfer
fees

upon its members;

���
(15)
�
To
establish conditions for admission of members,
admit

members, and issue memberships;

���
(16)
�
To
carry on a business;

���
(17)
�
To
do all things necessary or convenient, not inconsistent with law, to further
the activities and affairs of the corporation.

����
(c)
�

Any provision of the articles, bylaws, or other organizational documents
purporting to grant or confer any power to directly or indirectly engage in election
activity or ballot‑issue activity is void.

����
(d)
�

Any act undertaken by a nonprofit corporation that constitutes an election
activity or ballot-issue activity is ultra vires and void.
�
A nonprofit corporation that exercises any
power not granted under subsection (b) forfeits all charter privileges,
including limited liability and perpetual duration, as a matter of law.
�
The director of commerce and consumer affairs
shall adopt rules for administrative forfeiture, reinstatement upon
disgorgement and certification of compliance, and related civil enforcement of
this section.

����
(e)
�

A foreign nonprofit corporation that is authorized to transact business,
is otherwise transacting business, or holds property in this State is subject
to this section.
�
A foreign nonprofit corporation
that directly or indirectly undertakes, finances, or directs election activity
or ballot-issue activity in the State shall be conclusively deemed to be
transacting business in this State.

����
(f)
�

Notwithstanding any other provision of this section or chapter,
candidate committees and noncandidate committees, as defined in section 11-302,
or similar committees created pursuant under federal law, are entities created
for the purpose of engaging in election activity and ballot-issue activity.
�
Those committees are hereby granted the power
to engage in those activities, provided they exist solely for those purposes
and claim no charter privilege other than limited liability.
�
No other nonprofit corporation organized
under this chapter may be granted or exercise any power to engage in election
activity or ballot-issue activity.

����
(g)
�

Nothing in this section shall be construed to invalidate, impair, or
modify any existing contract, debt instrument, security, or other legal
obligation validly entered into before the effective date of this section;
provided that nothing herein authorizes any election activity or ballot-issue
activity after that date.

����
(h)
�

If any provision of this section, or its application to any person or
circumstance, is held invalid or unconstitutional, the remaining provisions and
applications that are severable shall remain in effect, and no prior grant of
nonprofit corporate powers shall be revived, reinstated, or implied by
operation of law or judicial construction.
"

����
SECTION
11
.
�
Section 414D-54, Hawaii Revised Statutes, is
amended to read as follows:

����
"
�414D-54
�
Ultra vires.
�
(a)
�

Except as provided in subsection (b), the validity of corporate action
may not be challenged on the ground that the corporation lacks or lacked power
to act.

����
(b)
�

A corporation's power to act may be challenged in a proceeding against
the corporation to enjoin an act where a third party has not acquired
rights.
�
The proceeding may be brought by
the attorney general, a director, or by a member or members in a derivative
proceeding.

����
(c)
�

A corporation's power to act may be challenged in a proceeding against
an incumbent or former director, officer, employee, or agent of the
corporation.
�
The proceeding may be
brought by a director, the corporation, directly, derivatively, or through a
receiver, a trustee, or other legal representative, or in the case of a public
benefit corporation, by the attorney general.

����
(d)
�

This section shall not apply to acts that constitute election activities
or ballot-issue activities as defined in section 414D-14.
�
Those acts are ultra vires and void under
section 414D-52(d) and may be addressed in proceedings authorized by that
section or by the attorney general under section 414D-252.
"

PART V

����
SECTION 12.
�

Chapter 415A, Hawaii Revised Statutes, is amended by adding a new
section to be appropriately designated and to read as follows:

����
"
�415A-
��
��
Limitation on powers.
�
A professional corporation organized under
this chapter is subject to section 414-42, including all limitations on
corporate powers contained in that section.
"

PART VI

����
SECTION 13.
�

Chapter 421, Hawaii Revised Statutes, is amended by adding a new section
to be appropriately designated and to read as follows:

����
"
�421-
��
��
Limitations on powers.
�
A cooperative association
organized under this chapter is subject to section 414-42, including all
limitations on corporate powers contained in that section.
"

PART VII

����
SECTION 14.
�

Chapter 421C, Hawaii Revised Statutes, is amended by adding a new
section to part I to be appropriately designated and to read as follows:

����
"
�421C-
��
��
Limitations on powers.
�
A cooperative association
organized under this chapter is subject to section 414-42, including all
limitations on corporate powers contained in that section.
"

PART VIII

����
SECTION 15.
�

Chapter 421H, Hawaii Revised Statutes, is amended by adding a new
section to be appropriately designated and to read as follows:

����
"
�421H-
��
��
Limitations on powers.
�
A limited-equity housing
cooperative organized under this chapter is subject to section 414-42,
including all limitations on corporate powers contained in that section.
"

PART IX

����
SECTION 16.
�

Chapter 425, Hawaii Revised Statutes, is amended by adding a new section
to the "Limited Liability Partnerships" subpart of part IV and to be
appropriately designated and to read as follows:

����
"
�425-
��
��
Election and ballot-issue activity; limitation on limited-liability
privilege.
�
(a)
�

This section applies only to partnerships registered as limited
liability partnerships under this subpart.

����
(b)
�
A partnership registered as a limited
liability partnership under this subpart shall not directly or indirectly
engage in election activity or ballot-issue activity.

����
(c)
�

Any act undertaken by a limited liability partnership that constitutes an
election activity or ballot-issue activity is ultra vires and void.
�
A partnership that engages in either activity
forfeits all charter privileges conferred by its statement of qualification,
including limited liability, as a matter of law.
�
The director of commerce and consumer affairs
shall adopt rules for administrative forfeiture, reinstatement upon
disgorgement and certification of compliance, and related civil enforcement of
this section.

����
(d)
�

A foreign limited liability partnership that directly or indirectly
undertakes, finances, or directs election activity or ballot-issue activity in
that State shall be conclusively deemed to be transacting business in this
State.

����
(e)
�

If any provision of this section, or its application to any person or
circumstance, is held invalid or unconstitutional, the remaining provisions and
applications that are severable shall remain in effect, and no prior grant of
limited-liability privileges shall be revived, reinstated, or implied by
operation of law or judicial construction.

����
(f)
�

For the purposes of this section, the terms "ballot‑issue
activity" and "election activity" shall have the same meaning as
in section 414-3.
"

PART X

����
SECTION 17.
�

Chapter 425E-102, Hawaii Revised Statutes, is amended by adding four new
definitions to be appropriately designated and to read as follows:

����
"
"Artificial-person powers"
means the same powers as an individual to do all things necessary or convenient
to carry out the limited partnership's lawful business and affairs, excluding
any power to directly or indirectly engage in election activity or ballot-issue
activity.
�
Powers related to election
activity or ballot-issue activity shall not be considered, under any
circumstances, to be necessary or convenient to the limited partnership's
business or affairs.

����
"Ballot-issue activity" means
paying, contributing, or expending money or anything of value to support or
oppose a constitutional amendment, county charter amendment, or other ballot question
after it has been formally certified or submitted to the electors of the State
or any county.
�
The term does not include
any bona fide news story, commentary, or editorial distributed through the
facilities of a broadcasting station or of any print, online, or digital
newspaper, magazine, blog, or other periodical publication, unless the
broadcasting, print, online, or digital facility is owned or controlled by a
political party, political committee, or candidate.

����
"Charter privilege" means any
benefit that exists only because the State confers it on a limited partnership
or other entity, including, without limitation, limited liability, perpetual
duration, succession in its name, business or statutory trusts, and tax credits
or abatements.

����
"Election activity" means
paying, contributing, or expending money or anything of value to support or
oppose a candidate, political party, or political committee.
�
The term does not include any bona fide news
story, commentary, or editorial distributed through the facilities of a
broadcasting station or of any print, online, or digital newspaper, magazine,
blog, or other periodical publication, unless the broadcasting, print, online,
or digital facility is owned or controlled by a political party, political
committee, or candidate.
"

����
SECTION
18
.
�
Section 425E-105, Hawaii Revised Statutes, is
amended to read as follows:

����
"
[
[
]�425E-105[
]
]
�
Powers.
�

[
A limited partnership has the powers to do all things necessary or
convenient to carry on its activities, including the power to sue, be sued, and
defend in its own name and to maintain an action against a partner for harm
caused to the limited partnership by a breach of the partnership agreement or
violation of a duty to the partnership.
]
�

(a)
�
The creation and continued
existence of a limited partnership is not a right but a conditional grant of
legal status by the State and remains subject to complete withdrawal at any
time.
�
All powers previously granted to
limited partnerships under the laws of this State are revoked in their
entirety.
�
A limited partnership
operating under the jurisdiction of this State shall possess no power unless
specifically granted by this section.

����
(b)
�

A limited partnership has perpetual duration and succession in its name.

�
Unless its partnership agreement or
certificate of limited partnership provides otherwise, each limited partnership
is hereby granted artificial-person powers together with the powers enumerated
in this chapter.

����
(c)
�

Any provision of a partnership agreement, certificate of limited
partnership, or other organizational document purporting to grant or confer any
power to directly or indirectly engage in election activity or ballot-issue
activity is void.

����
(d)
�

Any act undertaken by a limited partnership that constitutes an election
activity or ballot-issue activity is ultra vires and void.
�
A limited partnership that exercises any
power not granted under subsection (b) forfeits all charter privileges,
including limited liability and perpetual duration, as a matter of law.
�
The director of commerce and consumer affairs
shall adopt rules for administrative forfeiture, reinstatement upon
disgorgement and certification of compliance, and related civil enforcement of
this section.

����
(e)
�

A foreign limited partnership that is authorized to transact business,
is otherwise transacting business, or holds property in this State is subject
to this section.
�
A foreign limited
partnership that directly or indirectly undertakes, finances, or directs
election activity or ballot-issue activity in the State shall be conclusively
deemed to be transacting business in this State.

����
(f)
�

Nothing in this section shall be construed to invalidate, impair, or
modify any existing contract, debt instrument, security, or other legal
obligation validly entered into before the effective date of this section;
provided that nothing herein authorizes any election activity or ballot-issue
activity after that date.

����
(g)
�

If any provision of this section, or its application to any person or
circumstance, is held invalid or unconstitutional, the remaining provisions and
applications that are severable shall remain in effect, and no prior grant of
powers to limited partnerships shall be revived, reinstated, or implied by
operation of law or judicial construction.
"

PART XI

����
SECTION 19.
�

Section 428-101, Hawaii Revised Statutes, is amended by adding four new
definitions to be appropriately inserted and to read as follows:

����
"
"Artificial-person powers"
means the same powers as an individual to do all things necessary or convenient
to carry out the limited liability company's lawful business and affairs,
excluding any power to directly or indirectly engage in election activity or
ballot-issue activity.
�
Powers related to
election activity or ballot-issue activity shall not be considered, under any
circumstances, to be necessary or convenient to the company's business or
affairs.

����
"Ballot-issue activity" means
paying, contributing, or expending money or anything of value to support or
oppose a constitutional amendment, county charter amendment, or other ballot question
after it has been formally certified or submitted to the electors of the State
or any county.
�
The term does not include
any bona fide news story, commentary, or editorial distributed through the
facilities of a broadcasting station or of any print, online, or digital
newspaper, magazine, blog, or other periodical publication, unless the
broadcasting, print, online, or digital facility is owned or controlled by a
political party, political committee, or candidate.

����
"Charter privilege" means any
benefit that exists only because the State confers it on a limited liability
company or other entity, including, without limitation, limited liability,
perpetual duration, succession in its name, business or statutory trusts, and
tax credits or abatements.

����
"Election activity" means
paying, contributing, or expending money or anything of value to support or
oppose a candidate, political party, or political committee.
�
The term does not include any bona fide news
story, commentary, or editorial distributed through the facilities of a
broadcasting station or of any print, online, or digital newspaper, magazine,
blog, or other periodical publication, unless the broadcasting, print, online,
or digital facility is owned or controlled by a political party, political
committee, or candidate.
"

����
SECTION
20
.
�
Section 428-111, Hawaii Revised Statutes, is
amended to read as follows:

����
"
�428-111
�
Nature of business and powers.
�
(a)
�
[
A
limited liability company may be organized under this chapter for any lawful
purpose, subject to any law of this State governing or regulating business.
]
�
The creation and continued existence of a
limited liability company is not a right but a conditional grant of legal
status by the State and remains subject to complete withdrawal at any
time.
�
All powers previously granted to
limited liability companies under the laws of this State are revoked in their
entirety.
�
A limited liability company
operating under the jurisdiction of this State shall possess no power unless
specifically granted by this section.

����
(b)
�

Unless its articles of organization provide otherwise, a limited
liability company has [
the same powers as an individual to do all things
necessary or convenient to carry on its business or affairs,
]
perpetual
duration and succession in its company name and is hereby granted
artificial-person powers,
including
the
power to:

����
(1)
�
Sue
and be sued, and defend in its company name;

����
(2)
�
Purchase,
receive, lease, or otherwise acquire, and own, hold, improve, use, and
otherwise deal with real or personal property, or any legal or equitable
interest in property, wherever located;

����
(3)
�
Sell,
convey, mortgage, grant a security interest in, lease, exchange, and otherwise
encumber or dispose of all or any part of its property;

����
(4)
�
Purchase,
receive, subscribe for, or otherwise acquire, own, hold, vote, use, sell,
mortgage, lend, grant a security interest in, or otherwise dispose of and deal
in and with, shares or other interests in or obligations of any other entity;

����
(5)
�
Make
contracts and guarantees, incur liabilities, borrow money, issue notes, bonds,
and other obligations, which may be convertible into or include the option to
purchase other securities of the limited liability company, and secure any of
its obligations by a mortgage on or a security interest in any of its property,
franchises, or income;

����
(6)
�
Lend
money, invest and reinvest its funds, and receive and hold real and personal
property as security for repayment;

����
(7)
�
Be
a promoter, partner, member, associate, or manager of any partnership, joint
venture, trust, or other entity;

����
(8)
�
Conduct
its business, locate offices, and exercise the powers granted by this chapter
within or without this State;

����
(9)
�
Elect
managers and appoint officers, employees, and agents of the limited liability
company, define their duties, fix their compensation, and lend them money and
credit;

���
(10)
�
Pay
pensions and establish pension plans, pension trusts, profit sharing plans,
share bonus plans, share option plans, and benefit or incentive plans for any
or all of its current or former members, managers, officers, employees, and
agents;

���
(11)
�
Make
donations for the public welfare or for charitable, scientific, or educational
purposes; and

���
(12)
�
Make
payments or donations, or do any other act, not inconsistent with law, that
furthers the business of the limited liability company."

PART XII

����
SECTION 21.
�

Chapter 429, Hawaii Revised Statutes, is amended by adding a new section
to be appropriately designated and to read as follows:

����
"
�429-
��
��
Powers of an unincorporated nonprofit association.
�
(
a)
�
The creation and continued existence of an
unincorporated nonprofit association is not a right but a conditional grant of
legal status by the State and remains subject to complete withdrawal at any
time.
�
All powers previously granted to those
associations under the laws of this State are revoked in their entirety.
�
An unincorporated nonprofit association
operating under the jurisdiction of this State shall possess no power unless
specifically granted by this section.

����
(b)
�

Unless its governing principles provide otherwise, each unincorporated
nonprofit association is hereby granted artificial-person powers, together with
the powers enumerated in this chapter

����
(c)
�

Any provision of the unincorporated nonprofit association's governing
principles, articles of association, bylaws, or similar documents purporting to
grant or confer any power to directly or indirectly engage in election activity
or ballot-issue activity is void.

����
(d)
�

Any act undertaken by an unincorporated nonprofit association that
constitutes an election activity or ballot‑issue activity is ultra vires
and void.
�
An unincorporated nonprofit association
that exercises any power not granted under subsection (b) forfeits all charter
privileges, including limited liability and perpetual duration, as a matter of
law.
�
The director of commerce and
consumer affairs shall adopt rules for administrative forfeiture, reinstatement
upon disgorgement and certification of compliance, and related civil
enforcement of this section.

����
(e)
�

A foreign unincorporated nonprofit association that is authorized to
transact business, is otherwise transacting business, or holds property in this
State is subject to this section.
�
A
foreign unincorporated nonprofit association that directly or indirectly
undertakes, finances, or directs election activity or ballot-issue activity in
the State shall be conclusively deemed to be transacting business in this
State.

����
(f)
�

Nothing in this section shall be construed to invalidate, impair, or
modify any existing contract, debt instrument, security, or other legal
obligation validly entered into before the effective date of this section;
provided that nothing herein authorizes any election activity or ballot-issue
activity after that date.

����
(g)
�

If any provision of this section, or its application to any person or
circumstance, is held invalid or unconstitutional, the remaining provisions and
applications that are severable shall remain in effect, and no prior grant of
powers to unincorporated nonprofit associations shall be revived, reinstated,
or implied by operation of law or judicial construction.
"

����
SECTION 22.
�

Section 429-1, Hawaii Revised Statutes, is amended by adding four new
definitions to be appropriately inserted and to read as follows:

����
"
"Artificial-person powers"
means the same powers as an individual to do all things necessary or convenient
to carry out the unincorporated nonprofit association's lawful purposes and
activities, excluding any power to directly or indirectly engage in election
activity or ballot-issue activity.
�

Powers related to election activity or ballot-issue activity shall not
be considered, under any circumstances, to be necessary or convenient to the unincorporated
nonprofit association's lawful purposes and activities.

����
"Ballot-issue activity" means
paying, contributing, or expending money or anything of value to support or
oppose a constitutional amendment, county charter amendment, or other ballot question
after it has been formally certified or submitted to the electors of the State
or any county.
�
The term does not include
any bona fide news story, commentary, or editorial distributed through the
facilities of a broadcasting station or of any print, online, or digital
newspaper, magazine, blog, or other periodical publication, unless the
broadcasting, print, online, or digital facility is owned or controlled by a
political party, political committee, or candidate.

����
"Charter privilege" means any
benefit that exists only because the State confers it on a limited partnership
or other entity, including, without limitation, limited liability, perpetual
duration, succession in its name, business or statutory trusts, and tax credits
or abatements.

����
"Election activity" means
paying, contributing, or expending money or anything of value to support or
oppose a candidate, political party, or political committee.
�
The term does not include any bona fide news
story, commentary, or editorial distributed through the facilities of a
broadcasting station or of any print, online, or digital newspaper, magazine,
blog, or other periodical publication, unless the broadcasting, print, online,
or digital facility is owned or controlled by a political party, political
committee, or candidate.
"

PART XIII

����
SECTION 23.
�

If any provision of this Act, or its application to any person or
circumstance, is held invalid or unconstitutional, the remaining provisions and
applications that are severable shall remain in effect.
�
Further, no prior grant of powers to entities
covered by this Act shall be revived, reinstated, or implied by operation of
law or judicial construction, and nothing in this Act shall be construed to
authorize broader powers than are expressly conferred herein.

����
SECTION 24.
�

Statutory material to be repealed is bracketed and stricken.
�
New statutory material is underscored.

����
SECTION 25.
�

This Act shall take effect on January 1, 2027.

INTRODUCED BY:

_____________________________

Report Title:

Business
Entities; Election Activities; Limitations

Description:

Reaffirms that artificial persons created under state law
possess only those powers that are necessary or convenient to carry out lawful
business and charitable or organizational purposes, and that those powers do
not include the power to spend money or contribute anything of value to
influence elections or ballot measures.
�
Revokes
all prior grants of corporate and entity powers and regrants only those powers
that the State determines to be necessary or convenient to conduct lawful business
under the constitution and laws of this State.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.