Management of Stock Financial Institutions

HRS div. 2, tit. 22, ch. 412, art. 3, pt. IV

in effect

HRS §412:3-400 Applicability of part

412:3-400. Applicability of part This part shall govern the management of all Hawaii financial institutions that are stock financial institutions. L 1993, c 350, pt of §1

HRS §412:3-401 Applicability of Hawaii Business Corporation Act

412:3-401. Applicability of Hawaii Business Corporation Act (a) Except to the extent that the provisions of this chapter are inconsistent, all provisions of chapter 414 shall apply to a corporation engaging in business as a Hawaii financial institution under this chapter. In case of any inconsistencies, the provisions of this chapter shall control. (b) A copy of each document delivered to the director of commerce and consumer affairs for filing pursuant to chapter 414 shall be simultaneously delivered to the commissioner. [L 1993, c 350, pt of §1; am L 2002, c 40, §17]

HRS §412:3-402 Capital stock

412:3-402. Capital stock The following provisions shall apply to all shares of capital stock of a Hawaii stock financial institution: (1) Subject to any restrictions in chapter 414 or the articles of incorporation, the consideration to be paid for the issuance of authorized capital stock of a Hawaii stock financial institution shall be authorized by the board of directors of the financial institution and shall be paid only in money or such other consideration as may be authorized by chapter 414 or this chapter, but not in labor or services actually performed for the financial institution; provided that upon authorization by the board of directors, the financial institution may issue its own authorized shares of capital stock in exchange for or in conversion of its outstanding shares, or distribute its own shares pro rata to its shareholders or the shareholders of one or more classes or series, to effectuate stock dividends or splits, and any such transaction shall not require consideration; provided further that no such issuance of shares of any class or series shall be made to the holders of shares of any other class or series unless it is either expressly provided for in the articles of incorporation, or is authorized by the affirmative vote or the written consent of the holders of at least a majority of the outstanding shares of the class or series in which a distribution is to be made. (2) No Hawaii financial institution shall issue any share of its capital stock unless and until the full amount of any consideration therefor as authorized by the board of directors shall have been paid into or received by the financial institution. (3) No Hawaii stock financial institution other than a nondepository financial services loan company shall issue preferred stock without first obtaining the written approval of the commissioner as to the amount and terms thereof. While any preferred stock of a financial institution is held as owner or pledgee by any federal agency or entity established by law for the purpose of providing financial assistance to financial institutions, such preferred stock and any dividends paid thereon shall be exempt from taxation by this State. (4) No Hawaii stock financial institution other than a nondepository financial services loan company shall decrease its authorized capital stock or the par value of capital stock having par value, or decrease its outstanding capital stock by the acquisition of its own shares, without first receiving the written approval of the commissioner. [L 1993, c 350, pt of §1; am L 2002, c 40, §18]

HRS §412:3-403 Dividends and other capital distributions

412:3-403. Dividends and other capital distributions (a) No Hawaii stock financial institution shall declare or pay any dividends or make any other capital distribution to its shareholders except pursuant to its articles of incorporation, this section, and section 414-111; provided that if section 414-111 is inconsistent with this section, the provisions of this section shall control. (b) In this section, "capital distribution" means: (1) A distribution of cash or other property by any Hawaii stock financial institution to its owners made on account of that ownership, but excluding any dividends consisting only of shares of the capital stock of the financial institution or rights to purchase such shares; (2) A payment by any stock financial institution to repurchase, redeem, retire, or otherwise acquire any of its shares or other ownership interest, including any extensions of credit to finance an affiliated company's acquisition of those shares or interests; or (3) A transaction that the commissioner determines, by order or rule, to be in substance a distribution of capital to the owners of the financial institution. (c) A Hawaii stock financial institution shall not make any capital distribution in an amount greater than its retained earnings then on hand or if after such capital distribution the financial institution shall not have the minimum paid-in capital and surplus required by this chapter. For purposes of this section the amount of retained earnings on hand, capital and surplus shall be determined in accordance with generally accepted accounting principles, except that: (1) All loans and extensions of credit on which interest has been delinquent for one year or more, or upon which a final judgment has been unsatisfied for more than one year and interest has been delinquent for one year or more, unless and to the extent the same are well secured or in the process of collection shall have been charged down; (2) All assets which the commissioner may have required to be charged down pursuant to section 412:3-109, shall have been charged down; and (3) Any loss sustained or charge made by a Hawaii financial institution as provided in this subsection shall be netted first against any reserve established therefor, then charged to retained earnings, then to surplus, and then to capital. (d) Before making any capital distribution, each Hawaii stock financial institution, except for a nondepository financial services loan company, shall, until its capital and surplus equal at least one hundred thirty-three per cent of its initial minimum capital and surplus required under section 412:3-209, transfer to surplus from its retained earnings at least twenty-five per cent of its net profits from the preceding fiscal year. [L 1993, c 350, pt of §1; am L 2002, c 40, §19]

Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: https://www.capitol.hawaii.gov/hrscurrent/Vol08_Ch0401-0429/HRS0412/HRS_0412-.htmFetched: 11/10/2026