Nonprofit Director Conflict Transaction Approval Rules in Hawaii
At a glance
| Governing act and covered transactions | Hawaii Nonprofit Corporations Act; corporation transaction involving a director (§ 414D-150(a)) |
|---|---|
| Interest and related-person trigger | Direct/indirect director interest; material-interest/general-partner or director/officer/trustee role in another party (§ 414D-150(a), (c)) |
| Disclosure and knowledge | Transaction and director-interest material facts disclosed or known to board/committee or members (§ 414D-150(b)(2)–(3)) |
| Board or committee approval | Majority of board/committee directors without direct/indirect interest; single director cannot approve (§ 414D-150(d)) |
| Member approval and vote | Informed members; majority of countable votes; interested-director and specified entity-controlled votes excluded (§ 414D-150(b)(3), (e)) |
| Fairness route and time | Independent protection if fair to corporation when entered into (§ 414D-150(a)) |
| Interested participation and quorum | Disinterested board majority supplies conflict-action quorum; interested presence/vote does not defeat compliant board action (§ 414D-150(d)) |
| Burden, effect, and separate authorization | Not voidable or basis for director liability; excluded member votes still count under other chapter sections (§ 414D-150(a), (e)) |
| Special coverage and later changes | Public benefit corporation may obtain attorney general approval before/after transaction; documents or board resolution may add requirements (§ 414D-150(b)(1), (f)) |
Requirements one by one
Covered interest and approval
Section 414D-150(c) includes another party entity in which the director has a material interest or is a general partner, and an entity of which the director is a director, officer, or trustee. The board or committee route requires disclosure or knowledge of material transaction and director-interest facts, then an affirmative majority of disinterested directors; subsection (d) bars approval by one director alone.
Fairness and public benefit route
Section 414D-150(a) independently protects a transaction that was fair to the corporation when entered into. For a public benefit corporation, subsection (b)(1) also permits attorney general approval before or after consummation. Articles, bylaws, or a board resolution may impose further requirements under subsection (f).
What trips people up
For the member route, § 414D-150(e) excludes votes cast by or controlled by an interested director or a specified entity in which the director has a material interest or is a general partner. Those votes nevertheless count toward approvals under other sections of the chapter. The same subsection sets the conflict-vote quorum at a majority of voting power entitled to be counted, whether present or not.
Common questions
May an interested director attend the approval meeting?
Yes. Under § 414D-150(d), the director's presence or vote does not affect a board action otherwise approved under the section's board route.
Can the board ratify a deal after it is made?
Section 414D-150(b)(2) includes authorization, approval, and ratification after the required material facts are disclosed or known. The independent fairness route is tested when the transaction was entered into.
Statutes and sources
- Haw. Rev. Stat. § 414D-150(a)–(f): director interests, approval, votes, fairness, and effect. Official section, accessed 2026-10-02.
Source links
Every statute quoted above, linked, with the date we checked it.
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