Bill Text: HI SB2609 | 2010 | Regular Session | Introduced

Hawaii Senate Bill 2609 (Prior Session Legislation)

Introduced

Bill Title: Distributions by Nonprofit Corporations

Spectrum: Partisan Bill (Democrat 8-0)

Status: (Introduced - Dead) 2010-01-27 - (S) Referred to CPN. [SB2609 Detail]

Download: Hawaii-2010-SB2609-Introduced.html

THE SENATE	S.B. NO.	2609
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII

A BILL FOR AN ACT

relating to DISTRIBUTIONS BY nonprofit corporations.

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

SECTION 1. The Hawaii Nonprofit Corporations Act currently prohibits any distributions from nonprofit corporations except upon dissolution. For example, this prohibition bars nonprofit corporations organized and operated as supporting organizations from making current distributions to their supported organizations. The adoption of the Hawaii Nonprofit Corporations Act was not intended to prohibit such current distributions. Federal law already permits such distributions.

Therefore, the purpose of this Act is to permit current distributions by nonprofit corporations to its nonprofit members and affiliates; provided that the distributions are in accordance with the distributing nonprofit corporations' purposes and will not jeopardize their liquidity.

SECTION 2. Section 414D-232, Hawaii Revised Statutes, is amended to read as follows:

"§414D-232 Authorized distributions. (a) A corporation may purchase its memberships if, after the purchase is completed:

(1) The corporation would be able to pay its debts as they become due in the usual course of its activities; and

(2) The corporation's total assets would at least equal the sum of its total liabilities.

(b) Corporations may make distributions upon dissolution in conformity with part XIII.

(c) The corporation, in conformity with its purposes, may make distributions to and confer benefits on a member or an affiliate that is another domestic or foreign nonprofit corporation if, after any distribution is completed:

(1) The corporation would be able to pay its debts as they become due in the usual course of its activities; and

(2) The corporation's total assets would be at least equal to the sum of its total liabilities.

For the purposes of this section, "an affiliate" is an entity that directly or indirectly controls, is controlled by, or is under common control with the corporation. Control includes the power to select the corporation's board of directors."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

Report Title:

Distributions by Nonprofit Corporations

Description:

Permits current distributions by nonprofit corporations to its nonprofit members and affiliates, provided that the distributions are in accordance with the distributing nonprofit corporations' purposes and will not jeopardize their liquidity.

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