LLC Reimbursement, Indemnification, Advancement, and Insurance Requirements in Hawaii

Short answer Hawaii requires an LLC to reimburse member or manager payments and indemnify their liabilities incurred in the ordinary course of company business or to preserve its business or property. A member's advance beyond the agreed contribution must also be reimbursed, and a qualifying member payment or advance becomes an interest-bearing company loan. The surveyed LLC provision does not separately prescribe defense-expense advancement or indemnity-insurance terms.

State

Hawaii

Statute checked

October 2, 2026

Sources

13 statutes

Survey

Compare all 49 jurisdictions covered

Pending legislation could change this.

HI SB 2471 (2026), Act 11 (Enacted May 14, 2026; effective July 1, 2027): Amends § 428-111's general LLC powers and bars election or ballot-issue activity; the quoted § 428-403 reimbursement and indemnity conditions are unchanged by the act. track it Status checked October 9, 2026.

At a glance

Governing LLC law and scope	HRS §§ 428-403, -103, -111 govern domestic LLC payment/liability, agreement and general powers; Act 11 (2026) changes § 428-111 on July 1, 2027
Covered people and capacities	Member or manager for ordinary-course/preservation payment and liability; member for excess contribution advance; § 428-403 does not specify former status
Company-payment reimbursement	Must reimburse member/manager ordinary-course or preservation payment and member advance beyond agreed contribution; qualifying member sums accrue interest (§ 428-403(a)–(c))
Indemnification and conduct limits	Must indemnify member/manager liability incurred in ordinary course or preserving business/property; § 428-403(a) states no separate defense-success or conduct test
Expense advancement and repayment	§ 428-403(b) covers a member's advance to the company, not interim defense expenses; no defense-expense undertaking specified there
Insurance purchase authority	General business, property and contract powers in § 428-111(b); surveyed ordinary-LLC provisions state no special indemnity-insurance or nonindemnifiable-conduct rule
Approval and court procedure	§ 428-403 states no special indemnity vote or court application; ordinary decisions follow member or manager management (§ 428-404(a)–(b))
Agreement control and survival	All members may govern relations by agreement; chapter fills gaps, subject to § 428-103(b) duty/good-faith limits; § 428-403 does not expressly address former status
What the statute does not decide	Actual role, business or preservation nexus, liability, agreement terms and any insurance policy require case-specific review

Requirements one by one

Qualifying payments, liabilities and member advances

HRS § 428-403(a) uses “shall” for reimbursement of a member's or manager's payment and indemnity for that person's liability incurred in the ordinary course of company business or to preserve its business or property. Under § 428-403(b), the LLC must reimburse a member's advance beyond the agreed contribution. § 428-403(c) makes a qualifying member payment or advance an interest-bearing company loan from its payment date.

Agreement and company powers

Section 428-103(a) allows all members to make an operating agreement governing company affairs and relations; “To the extent the operating agreement does not otherwise provide, this chapter governs relations among the members, managers, and company.” § 428-103(b)(2) protects loyalty, § 428-103(b)(3) limits reductions in care, and § 428-103(b)(4) protects good faith and fair dealing, subject to their stated qualifications. Section 428-111(b) grants general necessary-or-convenient business powers, including contract powers under § 428-111(b)(5). Ordinary company decisions follow § 428-404(a)(2) or § 428-404(b)(2), depending on its management form.

What trips people up

The “advance to the company” in § 428-403(b) is a member's contribution-related advance, not an interim defense-cost advance. Section 428-403(a)–(c) does not specify a defense-expense undertaking, special indemnity approval or court route, former-status protection, or a rule for insurance against nonindemnifiable conduct. General contracting authority does not establish what a policy covers.

Future change: 2026 Haw. Sess. Laws Act 11 (SB 2471 CD2), § 20 changes the general LLC powers provision, § 428-111, with the rule: “Beginning July 1, 2027, a limited liability company operating under the jurisdiction of this State shall not have the power to expend moneys on or participate in any election activity or ballot-issue activity.” 2026 Haw. Sess. Laws Act 11 (SB 2471 CD2), § 27 sets that effective date. The current reimbursement and indemnity text quoted above remains the rule on this page's verification date.

Common questions

Does a manager's payment automatically become an interest-bearing loan? Section 428-403(a) covers managers in the reimbursement rule, but subsection (c)'s automatic loan language describes a payment or advance made by a member.

Must a liability already be in litigation? Section 428-403(a) speaks of “liabilities incurred” and does not make filing a lawsuit an express condition.

Statutes and sources

HRS § 428-103(a), (b)(2)–(4): “To the extent the operating agreement does not otherwise provide, this chapter governs relations among the members, managers, and company.” Official current statute, accessed 2026-10-02.
HRS § 428-111(b): an LLC has “the same powers as an individual to do all things necessary or convenient to carry on its business or affairs,” subject to its articles. Official current statute, accessed 2026-10-02.
HRS § 428-403(a)–(c): “A limited liability company shall reimburse a member or manager for payments made and indemnify a member or manager for liabilities incurred” within the stated scope. Official current statute, accessed 2026-10-02.
HRS § 428-404(a)(2), (b)(2): ordinary member or manager decision rules. Official current statute, accessed 2026-10-02.
Act 11 (2026), §§ 20, 27: “This Act shall take effect on July 1, 2027.” Official final bill text, accessed 2026-10-02; official enacted status, checked 2026-10-02.

Source links

Every statute quoted above, linked, with the date we checked it.

Haw. Rev. Stat. § 428-103(a) · accessed 2026-10-02

Haw. Rev. Stat. § 428-103(b)(2) · accessed 2026-10-02

Haw. Rev. Stat. § 428-103(b)(3) · accessed 2026-10-02

Haw. Rev. Stat. § 428-103(b)(4) · accessed 2026-10-02

Haw. Rev. Stat. § 428-111(b) · accessed 2026-10-02

Haw. Rev. Stat. § 428-111(b)(5) · accessed 2026-10-02

Haw. Rev. Stat. § 428-403(a) · accessed 2026-10-02

Haw. Rev. Stat. § 428-403(b) · accessed 2026-10-02

Haw. Rev. Stat. § 428-403(c) · accessed 2026-10-02

Haw. Rev. Stat. § 428-404(a)(2) · accessed 2026-10-02

Haw. Rev. Stat. § 428-404(b)(2) · accessed 2026-10-02

2026 Haw. Sess. Laws Act 11 (SB 2471 CD2), § 20 · accessed 2026-10-09

2026 Haw. Sess. Laws Act 11 (SB 2471 CD2), § 27 · accessed 2026-10-09

This page is general legal information about state LLC reimbursement, indemnification, expense advancement, and insurance statutes, not legal advice or a determination that any person is entitled to payment or coverage. An operating agreement, company records, the person's capacity and conduct, the nature and timing of a claim, and an insurance policy may change the answer. The table does not decide expense reasonableness, insolvency, tax treatment, policy terms, disputed facts, or a litigation outcome. Check the current statute and governing documents and seek licensed advice for a particular matter.

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