Bill Text: HI SB2505 | 2016 | Regular Session | Introduced
Bill Title: Low-Profit Limited Liability Company
Spectrum: Moderate Partisan Bill (Democrat 4-1)
Status: (Introduced - Dead) 2016-01-27 - Referred to CPH. [SB2505 Detail]
Download: Hawaii-2016-SB2505-Introduced.html
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THE SENATE |
S.B. NO. |
2505 |
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TWENTY-EIGHTH LEGISLATURE, 2016 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to low-profit limited liability companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that corporate entities are increasingly interested in becoming better corporate citizens. Similarly, non-profit corporations are considering quasi-business operations to provide beneficial goods and services that may not generate a return attractive enough for a for-profit corporation, yet will contribute to a non-profit revenue portfolio. In making these business decisions, for-profit companies may consider shareholder interests that may not be aligned with those of the general community. Non-profit corporations, in their deliberations in new ventures, may have to consider mission alignment and jeopardizing their tax-exempt status when earning revenue.
The purpose of this Act is to introduce a new corporate form that will allow an entity to generate revenue without a singular profit motive, while cementing the social outcome in the business model. This additional corporate format is meant to encourage entrepreneurship by socially-oriented business leaders and intrapreneurship in established corporations, both for- and non-profit, that may differ from the company's overall business strategy.
SECTION 2. Section 428-101, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:
""L3C" or "low-profit limited liability company" means a person organized under this chapter that is organized for a business purpose that satisfies and is at all times operated to satisfy each of the following requirements:
(1) The company:
(A) Significantly furthers the accomplishment of one or more charitable or educational purposes within the meaning of section 170(c)(2)(B) of the Internal Revenue Code of 1986, 26 United States Code section 170(c)(2)(B); and
(B) Would not have been formed but for the company's relationship to the accomplishment of charitable or educational purposes;
(2) No significant purpose of the company is the production of income or the appreciation of property; provided that the fact that a person produces significant income or capital appreciation, in the absence of other factors, shall not be conclusive evidence of a significant purpose involving the production of income or the appreciation of property;
(3) No purpose of the company is to accomplish one or more political or legislative purposes within the meaning of section 170(c)(2)(D) of the Internal Revenue Code of 1986, 26 United States Code section 170(c)(2)(D); and
(4) If a company that met the definition of "low-profit limited liability company" at its formation at any time ceases to satisfy any one of the requirements, it shall immediately cease to be a low-profit limited liability company, but by continuing to meet all the other requirements of this chapter, shall continue to exist as a limited liability company. The name of the company shall be changed to be in conformance with section 428-105."
SECTION 3. Section 428-105, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) [The] Except for
low-profit limited liability companies, the name of a limited liability
company [must] shall contain the words "limited
liability company" or the abbreviation "L.L.C." or
"LLC". "Limited" may be abbreviated as "Ltd.",
and "company" may be abbreviated as "Co.". The letters in
the name of a limited liability company must be letters of the English
alphabet. The name of a low-profit limited liability company shall contain
the abbreviation "L3C" or "l3c"."
SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 5. This Act shall take effect upon its approval.
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INTRODUCED BY: |
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Report Title:
Low-Profit Limited Liability Company
Description:
Provides for the creation of low-profit limited liability companies under the uniform limited liability company act.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
