Dissolution

HRS div. 2, tit. 23, ch. 414D, pt. XIII

in effect

HRS §414D-241 Dissolution by incorporators, initial directors, and third persons

414D-241. Dissolution by incorporators, initial directors, and third persons A majority of the incorporators or initial directors of a corporation that has no members and has not commenced business, subject to any approval required by the articles or bylaws, may dissolve the corporation by delivering to the department director articles of dissolution that set forth: (1) The name of the corporation; (2) The date of its incorporation; (3) That the corporation has no members and that the corporation has not commenced business; (4) That a plan of dissolution, indicating to whom the assets owned or held by the corporation shall be distributed after all creditors have been paid, has been adopted; and (5) That a majority of the incorporators or initial directors authorized the dissolution. [L 2001, c 105, pt of §1; am L 2006, c 235, §7]

HRS §414D-242 Dissolution by directors, members, and third persons

414D-242. Dissolution by directors, members, and third persons (a) Unless this chapter, any other state law, the articles, the bylaws, or the board of directors or members (acting pursuant to subsection (c)) require a greater vote or voting by class, dissolution is authorized if it is approved: (1) By the board; (2) By the members, if any, by two-thirds of the votes cast or a majority of the voting power, whichever is less; and (3) In writing by any person or persons whose approval is required by a provision of the articles authorized by section 414D-188 for an amendment to the articles or bylaws. (b) If the corporation does not have members, dissolution must be approved by a vote of a majority of the directors in office at the time the transaction is approved. In addition, the corporation shall provide notice of any directors' meeting at which the approval is to be obtained in accordance with section 414D-145(c). The notice must also state that the purpose, or one of the purposes, of the meeting is to consider dissolution of the corporation and contain or be accompanied by a copy or summary of the plan of dissolution. (c) The board may condition its submission of the proposed dissolution, and the members may condition their approval of the dissolution on receipt of a higher percentage of affirmative votes or on any other basis. (d) If the board seeks to have dissolution approved by the members at a membership meeting, the corporation shall give notice to its members of the proposed membership meeting in accordance with section 414D-105. The notice shall also state that the purpose, or one of the purposes, of the meeting is to consider dissolving the corporation and contain or be accompanied by a copy or summary of the plan of dissolution. (e) If the board seeks to have dissolution approved by the members by written consent or ballot, the material soliciting the approval shall contain or be accompanied by a copy or summary of the plan of dissolution. (f) The plan of dissolution shall indicate to whom the assets owned or held by the corporation will be distributed after all creditors have been paid. [L 2001, c 105, pt of §1; am L 2011, c 37, §16]

HRS §414D-243 Articles of dissolution

414D-243. Articles of dissolution (a) At any time after dissolution is authorized, the corporation may dissolve by delivering to the department director articles of dissolution setting forth: (1) The name of the corporation; (2) The date dissolution was authorized; (3) A statement that dissolution was approved by a sufficient vote of the board; (4) If approval of members was not required, a statement to that effect and a statement that dissolution was approved by a sufficient vote of the board of directors or incorporators; (5) If approval by members was required: (A) The designation, number of memberships outstanding, number of votes entitled to be cast by each class entitled to vote separately on dissolution, and number of votes of each class indisputably voting on dissolution; and (B) Either the total number of votes cast for and against dissolution by each class entitled to vote separately on dissolution or the total number of undisputed votes cast for dissolution by each class and a statement that the number cast for dissolution by each class was sufficient for approval by that class; (6) If approval of dissolution by some person or persons other than the members, the board, or the incorporators is required pursuant to section 414D‑242(a)(3), a statement that the approval was obtained. (b) A corporation is dissolved upon the effective date of its articles of dissolution. The articles of dissolution may specify a delayed effective time and date, and if it does so, the document becomes effective at the time and date specified. If a delayed effective date but no time is specified, the document is effective at the close of business on that date. A delayed effective date for a document may not be later than the thirtieth day after the date it is filed. [L 2001, c 105, pt of §1]

HRS §414D-244 Revocation of dissolution

414D-244. Revocation of dissolution (a) A corporation may revoke its dissolution within one hundred twenty days of its effective date. (b) Revocation of dissolution shall be authorized in the same manner as the dissolution was authorized unless that authorization permitted revocation by action of the board of directors alone, in which event the board of directors may revoke the dissolution without action by the members or any other person. (c) After the revocation of dissolution is authorized, the corporation may revoke the dissolution by delivering to the department director for filing articles of revocation of dissolution, together with a copy of its articles of dissolution, that set forth: (1) The name of the corporation; (2) The effective date of the dissolution that was revoked; (3) The date that the revocation of dissolution was authorized; (4) If the corporation's board of directors (or incorporators) revoked the dissolution, a statement to that effect; (5) If the corporation's board of directors revoked a dissolution authorized by the members alone or in conjunction with another person or persons, a statement that revocation was permitted by action by the board of directors alone pursuant to that authorization; and (6) If member or third person action was required to revoke the dissolution, the information required by section 414D-243(a)(5) or (6). (d) Within the applicable revocation of dissolution period, should the name of the corporation, or a name substantially identical thereto, be registered or reserved by another corporation, partnership, limited partnership, limited liability company, or limited liability partnership, or should the name or a name substantially identical thereto be registered as a trade name, trademark, or service mark, then revocation of dissolution shall be allowed only upon the registration of a new name by the dissolved corporation pursuant to the amendment provisions of this chapter. (e) Revocation of dissolution is effective upon the effective date of the articles of revocation of dissolution. (f) When the revocation of dissolution is effective, it relates back to and takes effect as of the effective date of the dissolution and the corporation resumes carrying on its activities as if dissolution had never occurred. [L 2001, c 105, pt of §1; am L 2002, c 130, §59; am L 2004, c 121, §19]

HRS §414D-245 Effect of dissolution

414D-245. Effect of dissolution (a) A dissolved corporation continues its corporate existence but shall not carry on any activities except those appropriate to wind up and liquidate its affairs, including: (1) Preserving and protecting its assets and minimizing its liabilities; (2) Discharging or making provision for discharging its liabilities and obligations; (3) Disposing of its properties that will not be distributed in kind; (4) Returning, transferring, or conveying assets held by the corporation upon a condition requiring return, transfer, or conveyance, which occurs by reason of the dissolution in accordance with that condition; (5) Transferring, subject to any contractual or legal requirements, its assets as provided in or authorized by its articles of incorporation or bylaws; (6) If the corporation is a public benefit corporation and no provision has been made in its articles or bylaws for distribution of assets on dissolution, transferring, subject to any contractual or legal requirement, its assets to one or more persons described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or if the dissolved corporation is not described in Section 501(c)(3) of the Internal Revenue Code, to one or more public benefit corporations; (7) If the corporation is not a public benefit corporation and no provision has been made in its articles or bylaws for distribution of assets on dissolution, transferring its assets to its members or, if it has no members, to those persons whom the corporation holds itself out as benefiting or serving; and (8) Doing every other act necessary to wind up and liquidate its assets and affairs. (b) Dissolution of a corporation does not: (1) Transfer title to the corporation's property; (2) Subject its directors or officers to standards of conduct different from those prescribed in part VIII; (3) Change quorum or voting requirements for its board or members; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws; (4) Prevent commencement of a proceeding by or against the corporation in its corporate name; (5) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution; or (6) Terminate the authority of the registered agent. [L 2001, c 105, pt of §1; am L 2004, c 171, §10; am L 2010, c 43, §4]

HRS §414D-245.5 Trustees or receivers for dissolved corporations; appointment; powers; duties

414D-245.5. Trustees or receivers for dissolved corporations; appointment; powers; duties (a) When any corporation organized under the laws of this State shall be or shall have been dissolved or shall cease or shall have ceased to exist, the circuit court, upon application of any creditor, member, or director of the corporation, or any other person who shows good cause therefor, and upon a finding that the persons responsible for settling the unfinished business and winding up the affairs of the corporation either are not diligently pursuing such obligations, or cannot be found or otherwise are not available, may either appoint one or more of the directors of the corporation to be trustees or appoint one or more persons to be receivers of and for the corporation, to do all acts that are necessary for the final settlement of the unfinished business of the corporation. The powers of the trustees or receivers shall be effective for the time period determined by the circuit court. (b) The relief provided in this section shall be in addition to, and shall not limit or diminish, any remedies otherwise available under the common law or other state or federal statutes or rules. In the event of a conflict between this section and any common law, statute, or rule on the subject, the more beneficial provisions favoring the applicant shall prevail. [L 2004, c 121, §2]

HRS §414D-246 Known claims against dissolved corporation

414D-246. Known claims against dissolved corporation (a) A dissolved corporation may dispose of the known claims against it by following the procedure described in this section. (b) The dissolved corporation shall notify its known claimants in writing of the dissolution at any time after its effective date. The written notice shall: (1) Describe information that must be included in a claim; (2) Provide a mailing address where a claim may be sent; (3) State the deadline, which may not be fewer than one hundred twenty days from the effective date of the written notice, by which the dissolved corporation must receive the claim; and (4) State that the claim will be barred if not received by the deadline. (c) A claim against the dissolved corporation is barred: (1) If a claimant who was given written notice under subsection (b) does not deliver the claim to the dissolved corporation by the deadline; or (2) If a claimant whose claim was rejected by the dissolved corporation does not commence a proceeding to enforce the claim within ninety days from the effective date of the rejection notice. (d) For purposes of this section, "claim" does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution. [L 2001, c 105, pt of §1]

HRS §414D-247 Unknown claims against dissolved corporation

414D-247. Unknown claims against dissolved corporation (a) A dissolved corporation may also publish notice of its dissolution and request that persons with claims against the corporation present them in accordance with the notice. (b) The notice must: (1) Be published one time in a newspaper of general circulation in the county where the dissolved corporation's principal office (or, if none in this State, in the city and county of Honolulu) is or was last located; (2) List the information that must be included in a claim and provide a mailing address where the claim may be sent; and (3) State that a claim against the corporation will be barred unless a proceeding to enforce the claim is commenced within five years after publication of the notice. (c) If the dissolved corporation publishes a newspaper notice in accordance with subsection (b), the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved corporation within five years after the publication date of the newspaper notice: (1) A claimant who did not receive written notice under section 414D‑246; (2) A claimant whose claim was timely sent to the dissolved corporation but not acted on; and (3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution. (d) A claim may be enforced under this section: (1) Against the dissolved corporation, to the extent of its undistributed assets; or (2) If the assets have been distributed in liquidation against any person other than a creditor of the corporation, to whom the corporation distributed the lesser of its property to the extent of the distributee's pro rata share of the claim or the corporate assets distributed to the person in liquidation; provided the distributee's total liability for all claims under this section may not exceed the total amount of assets distributed to the distributee. [L 2001, c 105, pt of §1; am L 2009, c 55, §21]

HRS §414D-248 Grounds for administrative dissolution

414D-248. Grounds for administrative dissolution The department director may commence a proceeding under section 414D-249 to administratively dissolve a corporation if the corporation fails to: (1) Pay any fees prescribed by law; (2) File its annual report for a period of two years; (3) Appoint and maintain an agent for service of process as required; or (4) File a statement of a change in the name or business address of the agent as required under chapter 425R. [L 2001, c 105, pt of §1; am L 2002, c 130, §60; am L 2003, c 124, §32; am L 2009, c 55, §22]

HRS §414D-249 Procedure for and effect of administrative dissolution and effect of expiration

414D-249. Procedure for and effect of administrative dissolution and effect of expiration (a) If the department director determines that one or more grounds exist under section 414D-248 for dissolving a corporation, the department director shall give written notice of the department director's determination by mailing the notice to the corporation at its last known address appearing in the records of the department director. (b) If the corporation does not correct each ground for dissolution or demonstrate to the reasonable satisfaction of the department director that each ground determined by the department director does not exist within sixty days after the date of mailing of the department director's written notice, the department director may administratively dissolve the corporation by signing a decree of dissolution that recites any grounds for dissolution and its effective date. The decree shall be filed in the department director's office. (c) A corporation administratively dissolved continues its corporate existence but may not carry on any activities except those necessary to wind up and liquidate its affairs under section 414D-245 and notify its claimants under sections 414D-246 and 414D-247. (d) The administrative dissolution of a corporation does not terminate the authority of its registered agent. (e) If a corporation's period of duration specified in its articles of incorporation has expired, the corporation continues its corporate existence but may not carry on any activities except those necessary to wind up and liquidate its business and affairs under section 414D-245 and notify claimants under sections 414D-246 and 414D-247. (f) The corporation, at any time within two years of the expiration of its period of duration, may amend its articles of incorporation to extend its period of duration and, upon the amendment, the corporation may resume carrying on its activities as if the expiration had never occurred; provided that if the name of the corporation, or a name substantially identical is registered or reserved by another entity, or if that name or a name substantially identical is registered as a trade name, trademark, or service mark, the extension of its period of duration shall be allowed only upon the registration of a new name by the corporation pursuant to the amendment provisions of this chapter. [L 2001, c 105, pt of §1; am L 2003, c 124, §33; am L 2006, c 184, §12; am L 2008, c 54, §5; am L 2009, c 23, §5]

HRS §414D-250 Reinstatement following administrative dissolution

414D-250. Reinstatement following administrative dissolution (a) A corporation administratively dissolved under section 414D-249 may apply to the department director for reinstatement within two years after the effective date of dissolution. The application shall: (1) Recite the name of the corporation and the effective date of its administrative dissolution; (2) Contain all reports due and unfiled; (3) Contain the payment of all delinquent fees; and (4) Contain a certificate or other writing from the department of taxation indicating that all taxes owed by the corporation have been paid, a payment arrangement has been entered into, or the unpaid tax liabilities are being contested in an administrative or judicial appeal with the department of taxation. (b) Within the applicable reinstatement period, should the name of the corporation, or a name substantially identical thereto be registered or reserved by another corporation, partnership, limited partnership, limited liability company, or limited liability partnership, or should the name or a name substantially identical thereto be registered as a trade name, trademark, or service mark, then reinstatement shall be allowed only upon the registration of a new name by the administratively dissolved corporation pursuant to the amendment provisions of this chapter. (c) If the department director determines that the application contains the information required by subsection (a) and that the information is correct, the department director shall cancel the certificate of dissolution and prepare a certificate of reinstatement reciting that determination and the effective date of reinstatement, file the original of the certificate, and mail a copy to the corporation at its last known address appearing in the records of the department director. (d) When reinstatement is effective, it relates back to and takes effect as of the effective date of the administrative dissolution and the corporation shall resume carrying on its activities as if the administrative dissolution had never occurred. [L 2001, c 105, pt of §1; am L 2006, c 184, §13 and c 235, §8; am L 2009, c 23, §6; am L 2012, c 58, §10]

HRS §414D-251 Appeal from denial of reinstatement

414D-251. Appeal from denial of reinstatement (a) The department director, upon denying a corporation's application for reinstatement following administrative dissolution, shall mail a written notice to the corporation or its designated representative that explains the reason or reasons for denial. (b) The corporation may appeal the denial of reinstatement to the circuit court within thirty days after the notice of denial is mailed. The corporation shall appeal by petitioning the court to set aside the dissolution and attaching to the petition copies of the department director's certificate of dissolution, the corporation's application for reinstatement, and the department director's notice of denial. (c) The court may summarily order the department director to reinstate the dissolved corporation or may take other action the court considers appropriate. (d) The court's final decision may be appealed as in other civil proceedings. [L 2001, c 105, pt of §1; am L 2003, c 124, §34]

HRS §414D-252 Grounds for judicial dissolution

414D-252. Grounds for judicial dissolution (a) The court may dissolve a corporation in a proceeding by the attorney general if it is established that: (1) The corporation obtained its articles of incorporation through fraud; (2) The corporation has continued to exceed or abuse the authority conferred upon it by law; (3) The corporation is a public benefit corporation and the corporate assets are being misapplied or wasted; or (4) The corporation is a public benefit corporation and is no longer able to carry out its activities. (b) In a proceeding by fifty members or members holding five per cent of the voting power, whichever is less, or by a director or any person specified in the articles, the court may dissolve a corporation if it is established that: (1) The directors are deadlocked in the management of the corporate affairs, and the members, if any, are unable to breach the deadlock; (2) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent; (3) The members are deadlocked in voting power and have failed, for a period that includes at least two consecutive annual meeting dates, to elect successors to directors whose terms have, or would otherwise have, expired; or (4) The corporate assets are being misapplied or wasted. (c) The court may dissolve a corporation in a proceeding by a creditor if it is established that: (1) The creditor's claim has been reduced to judgment, the execution on the judgment returned unsatisfied, and the corporation is insolvent; or (2) The corporation has admitted in writing that the creditor's claim is due and owing and the corporation is insolvent. (d) The court may dissolve a corporation in a proceeding by the corporation to have its voluntary dissolution continued under court supervision. (e) Prior to dissolving a corporation, the court shall consider whether there are reasonable alternatives to dissolution, whether dissolution is in the public interest, provided the corporation serves a public purpose, and whether dissolution is the best way of protecting the interests of members. [L 2001, c 105, pt of §1; am L 2004, c 171, §11]

HRS §414D-253 Procedure for judicial dissolution

414D-253. Procedure for judicial dissolution (a) Venue for a proceeding by the attorney general to dissolve a corporation shall be in the circuit court for the first circuit. Venue for a proceeding brought by any other party named in section 414D-252 shall be in the county where a corporation's principal office (or, if none in this State, its registered office) is or was last located. (b) Directors or members shall not be deemed necessary parties to a proceeding to dissolve a corporation unless relief is sought against them individually. (c) A court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the activities of the corporation until a full hearing can be held. (d) A person other than the attorney general who brings an involuntary dissolution proceeding for a public benefit corporation, within ten days of its commencement, shall give written notice of the proceeding to the attorney general. [L 2001, c 105, pt of §1; am L 2002, c 130, §61; am L 2004, c 171, §12]

HRS §414D-254 Receivership or custodianship

414D-254. Receivership or custodianship (a) A court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian shall have exclusive jurisdiction over the corporation and all of its property wherever located. (b) The court may appoint an individual, or a domestic or foreign business or nonprofit corporation (authorized to transact business in this State) as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs. (c) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. In addition to other powers: (1) The receiver may: (A) Dispose of all or any part of the assets of the corporation wherever located, at a public or private sale, if authorized by the court; provided the receiver's power to dispose of the assets of the corporation shall be subject to any trust and other restrictions that would be applicable to the corporation; and (B) Sue and defend in the receiver's or custodian's name as receiver or custodian of the corporation in all courts of this State. (2) The custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its members and creditors. (d) The court during a receivership may redesignate the receiver a custodian, and during a custodianship may redesignate the custodian a receiver, if doing so is in the best interests of the corporation, its members, and its creditors. (e) The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and the receiver's or custodian's counsel from the assets of the corporation or proceeds from the sale of the assets. [L 2001, c 105, pt of §1]

HRS §414D-255 Decree of dissolution

414D-255. Decree of dissolution (a) If, after a hearing, the court determines that one or more grounds for judicial dissolution described in section 414D‑252 exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the department director, who shall file it. (b) After entering the decree of dissolution, the court shall direct the winding up and liquidation of the corporation's affairs in accordance with section 414D‑245 and the notification of its claimants in accordance with sections 414D‑246 and 414D‑247. [L 2001, c 105, pt of §1]

HRS §414D-256 Deposit with director of finance

414D-256. Deposit with director of finance Assets of a dissolved corporation that should be transferred to a creditor, claimant, or member of the corporation who cannot be found or who is not competent to receive them, shall be reduced to cash subject to known trust restrictions and deposited with the director of finance for disposition in accordance with chapter 523A. [L 2001, c 105, pt of §1]

Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: http://www.capitol.hawaii.gov/hrscurrent/Vol08_Ch0401-0429/HRS0414D/HRS_0414D-.htmFetched: 11/10/2026