Corporate Interested-Director Transaction Requirements in Hawaii

At a glance

Requirements one by one

The conflict definition uses financial influence at commitment

Haw. Rev. Stat. § 414-261 includes an interest in or closely linked to the transaction whose financial significance would reasonably be expected to influence the director’s judgment. A separate branch covers board-considered transactions involving the specified entities, controlling or commonly controlled entities, and a director’s principal or employer.

Related persons include certain beneficiaries and fiduciary relationships

Section 414-261 includes the listed family and household members, a trust or estate of which one is a substantial beneficiary, and a trust, estate, incompetent, conservatee, or minor for whom the director is a fiduciary. The qualification rule in § 414-263(d) separately addresses familial, financial, professional, or employment relationships that could influence another director’s vote.

Required disclosure uses an ordinarily prudent person’s perspective

The director must disclose the conflict’s existence and nature and all known transaction facts an ordinarily prudent person would reasonably believe material to deciding whether to proceed. Qualified directors and voting shareholders need this disclosure to the extent they do not already know the information (§§ 414-261, 414-263(a), 414-264(a)).

Qualified board approval and quorum have separate denominators

Section 414-263(a), (c) requires a majority of the qualified directors who vote for approval and a majority of all qualified directors on the body for quorum, each with a two-director floor. If five are qualified, three form quorum; two affirmative votes suffice if those three vote. A committee must be duly empowered and entirely qualified, with the statutory selection process.

Fairness is measured at the time of commitment

Section 414-262(b)(3) requires established fairness at the time defined by § 414-261: consummation, or a contractual obligation from which unilateral withdrawal would entail significant loss, liability, or other damage. The subpart does not define fairness elements or name a party bearing a general fairness burden.

Ordinary consent permits written and electronic forms

Unless the articles or bylaws provide otherwise, § 414-212 requires all directors to act through consents describing the action. Electronic consent must contain or accompany information establishing that the sending director authorized it. Consents are included in minutes or filed with corporate records.

Compensation is a separate grant of authority

Section 414-201 permits board-set director compensation unless the articles or bylaws provide otherwise. It does not expressly exempt compensation from the director-conflict procedure.

The remedy rule is broader than voidability language but remains limited

Section 414-262 addresses injunction, setting aside, damages, and other sanctions on the specified director-or-associate-interest ground in shareholder or corporate proceedings. It also addresses transactions outside the defined conflicting-interest category. Section 414-470 requires accurate accounts and minutes showing meeting time and place, notice details, directors present, shares present or represented, and proceedings.

What trips people up

Section 414-264 uses all qualified voting power for approval, not merely votes cast. The director must inform the tabulator before voting about the number of known excluded shares and persons holding or controlling them. The section does not expressly require that report to be written.

Nonqualified directors’ presence or votes generally do not affect otherwise compliant qualified action. But the modified-disclosure route in § 414-263(b) requires the conflicted director to play no direct or indirect part in the deliberations or vote. That route also requires the stated nondisclosure duty and that neither the director nor a paragraph-(2) fiduciary related person be a transaction party; its wording should not be broadened to every conflict.

Common questions

Can written consents be signed after the intended effective date?

Section 414-212(a) expressly permits written signatures before or after the intended effective date, subject to the section’s unanimity and record rules. That timing provision does not by itself establish conflict protection.

Can a court address a missing share report?

Section 414-264(e) allows discretion when that is the sole defect and the director establishes the failure did not determine and was not intended to influence the result. The court may act with or without further fairness proceedings under § 414-262(b)(3).

Must the corporation convert stored records for an entitled inspector?

Section 414-470(a) requires the corporation to convert requested stored books and records at its own expense for a person entitled to inspect them.

Statutes and sources

All official texts below were accessed September 4, 2026.

• Haw. Rev. Stat. § 414-261 — Official text: “§414-261] Definitions. As used in this subpart: "Conflicting interest" with respect to a corporation means the interest a director of the corporation has respecting a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) if: (1) Whether or not the transaction is brought before the board of directors of the corporation for action, the director knows at the time of commitment that the director or a related person is a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the director or a related person that the interest would reasonably be expected to exert an influence on the director's judgment if the director were called upon to vote on the transaction; or (2) The transaction is brought (or is of such character and significance to the corporation that it would in the normal course be brought) before the board of directors of the corporation for action, and the director knows at the time of commitment that any of the following persons is either a party to the transaction or has a beneficial financial interest in or so closely linked to the transaction and of such financial significance to the person that the interest would reasonably be expected to exert an influence on the director's judgment if the director were called upon to vote on the transaction: (A) An entity (other than the corporation) of which the director is a director, general partner, agent, or employee; (B) A person that controls one or more of the entities specified in subparagraph (A) or an entity that is controlled by, or is under common control with, one or more of the entities specified in subparagraph (A); or (C) An individual who is a general partner, principal, or employer of the director. "Director's conflicting interest transaction" with respect to a corporation means a transaction effected or proposed to be effected by the corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) respecting which a director of the corporation has a conflicting interest. "Related person" of a director means: (1) The spouse (or a parent or sibling thereof) of the director, or a child, grandchild, sibling, parent (or spouse of any thereof) of the director, or an individual having the same home as the director, or a trust or estate of which an individual specified in this paragraph is a substantial beneficiary; or (2) A trust, estate, incompetent, conservatee, or minor of which the director is a fiduciary. "Required disclosure" means disclosure by the director who has a conflicting interest of: (1) The existence and nature of the director's conflicting interest; and (2) All facts known to the director respecting the subject matter of the transaction that an ordinarily prudent person would reasonably believe to be material to a judgment about whether or not to proceed with the transaction. "Time of commitment" respecting a transaction means the time when the transaction is consummated or, if made pursuant to contract, the time when the corporation (or its subsidiary or the entity in which it has a controlling interest) becomes contractually obligated so that its unilateral withdrawal from the transaction would entail significant loss, liability, or other damage.”

• Haw. Rev. Stat. § 414-262 — Official text: “§414-262] Judicial action. (a) A transaction effected or proposed to be effected by a corporation (or by a subsidiary of the corporation or any other entity in which the corporation has a controlling interest) that is not a director's conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because a director of the corporation, or any person with whom or which the director has a personal, economic, or other association, has an interest in the transaction. (b) A director's conflicting interest transaction may not be enjoined, set aside, or give rise to an award of damages or other sanctions, in a proceeding by a shareholder or by or in the right of the corporation, because the director, or any person with whom or which the director has a personal, economic, or other association, has an interest in the transaction, if: (1) Directors' action respecting the transaction was at any time taken in compliance with section 414-263; (2) Shareholders' action respecting the transaction was at any time taken in compliance with section 414-264; or (3) The transaction, judged according to the circumstances at the time of commitment, is established to have been fair to the corporation.”

• Haw. Rev. Stat. § 414-263 — Official text: “§414-263 Directors' action. (a) The action of directors respecting a transaction is effective for purposes of section 414-262(b)(1) if the transaction received the affirmative vote of a majority (but no fewer than two) of those qualified directors on the board of directors or on a duly empowered committee of the board who voted on the transaction after either required disclosure to them (to the extent the information was not known by them) or compliance with subsection (b); provided that action by a committee is so effective only if: (1) All its members are qualified directors; and (2) Its members are either all the qualified directors on the board or are appointed by the affirmative vote of a majority of the qualified directors on the board. (b) If a director has a conflicting interest respecting a transaction, but neither the director nor a related person of the director, as set forth in paragraph (2) of the definition of "related person" in section 414-261, is a party to the transaction, and if the director has a duty under law or professional canon, or a duty of confidentiality to another person, respecting information relating to the transaction such that the director may not make the required disclosure described in paragraph (2) of the definition of "required disclosure" in section 414-261, then disclosure is sufficient for purposes of subsection (a) if the director: (1) Discloses to the directors voting on the transaction the existence and nature of the director's conflicting interest and informs them of the character and limitations imposed by that duty before their vote on the transaction; and (2) Plays no part, directly or indirectly, in their deliberations or vote. (c) A majority (but no fewer than two) of all the qualified directors on the board of directors, or on the committee, constitutes a quorum for purposes of action that complies with this section. The action of directors that otherwise complies with this section is not affected by the presence or vote of a director who is not a qualified director. (d) For purposes of this section, "qualified director" means, with respect to a director's conflicting interest transaction, any director who does not have either: (1) A conflicting interest respecting the transaction; or (2) A familial, financial, professional, or employment relationship with a second director who does have a conflicting interest respecting the transaction, which relationship would, in the circumstances, reasonably be expected to exert an influence on the first director's judgment when voting on the transaction.”

• Haw. Rev. Stat. § 414-264 — Official text: “§414-264] Shareholders' action. (a) Shareholders' action respecting a transaction is effective for purposes of section 414-262(b)(2) if a majority of the votes entitled to be cast by the holders of all qualified shares were cast in favor of the transaction after: (1) Notice to shareholders describing the director's conflicting interest transaction; (2) Provision of the information referred to in subsection (d); and (3) Required disclosure to the shareholders who voted on the transaction (to the extent the information was not known by them). (b) For purposes of this section, "qualified shares" means any shares entitled to vote with respect to the director's conflicting interest transaction except shares that, to the knowledge, before the vote, of the secretary (or other officer or agent of the corporation authorized to tabulate votes), are beneficially owned (or the voting of which is controlled) by a director who has a conflicting interest respecting the transaction or by a related person of the director, or both. (c) A majority of the votes entitled to be cast by the holders of all qualified shares constitutes a quorum for purposes of action that complies with this section. Subject to subsections (d) and (e), shareholders' action that otherwise complies with this section is not affected by the presence of holders, or the voting, of shares that are not qualified shares. (d) For purposes of compliance with subsection (a), a director who has a conflicting interest respecting the transaction, before the shareholders' vote, shall inform the secretary (or other officer or agent of the corporation authorized to tabulate votes) of the number, and the identity of persons holding or controlling the vote, of all shares that the director knows are beneficially owned (or the voting of which is controlled) by the director or by a related person of the director, or both. (e) If a shareholders' vote does not comply with subsection (a) solely because of a failure of a director to comply with subsection (d), and if the director establishes that the director's failure did not determine and was not intended by the director to influence the outcome of the vote, the court, with or without further proceedings respecting section 414-262(b)(3), may take such action respecting the transaction and the director, and give such effect, if any, to the shareholders' vote, as it considers appropriate in the circumstances.”

• Haw. Rev. Stat. § 414-201 — Official text: “§414-201] Compensation of directors. Unless the articles of incorporation or bylaws provide otherwise, the board of directors may fix the compensation of directors.”

• Haw. Rev. Stat. § 414-212 — Official text: “§414-212 Action without meeting. (a) Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. The action shall be evidenced by one or more consents describing the action taken, given either in writing and signed before or after the intended effective date of the action by each director, or by electronic transmission, and included in the minutes or filed with the corporate records reflecting the action taken. In the case of a consent by electronic transmission, the electronic transmission shall set forth or be submitted with information from which it may be determined that the electronic transmission was authorized by the director who sent the electronic transmission. (b) Action taken under this section shall be effective when the last director signs the consent or gives a consent by electronic transmission, unless the consent specifies a different effective date. (c) A consent signed or given by electronic transmission under this section has the effect of a meeting vote and may be described as such in any document.”

• Haw. Rev. Stat. § 414-470 — Official text: “§414-470 Books and records. (a) Each corporation shall keep accurate and complete books and records of account and shall keep and maintain at its principal office, or other place as its board of directors may order, minutes of the proceedings of its shareholders and board of directors. The books and records of account shall include accounts of the corporation's assets, liabilities, receipts, disbursements, gains, and losses. The minutes of the proceedings of the shareholders and board of directors of the corporation shall show, as to each meeting of the shareholders or the board of directors, the time and place, if any, thereof, whether regular or special, whether notice thereof was given, and if so in what manner, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings, and the proceedings at each meeting. Any of the books and records described in this subsection may be kept on, or by means of, or be in the form of, any information storage device or method; provided that the books and records can be converted into clearly legible paper form within a reasonable time. Upon the request of any person entitled to inspect the books and records pursuant to any provision of this chapter, a corporation, at its own expense, shall convert the requested stored books and records. When books and records are kept pursuant to this subsection, a clearly legible paper form produced from or by means of the information storage device or method shall be admissible as evidence, and accepted for all other purposes, to the same extent as an original paper record of the same information would have been; provided that the paper form accurately portrays the record.”