(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.
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Terms Used In Hawaii Revised Statutes 414-262

  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
  • Entity: includes domestic and foreign corporations, domestic professional corporations, domestic and foreign limited liability companies, domestic and foreign nonprofit corporations, domestic and foreign business trusts, estates, domestic and foreign partnerships, domestic and foreign limited partnerships, domestic and foreign limited liability partnerships, trusts, two or more persons having a joint or common economic interest, associations and cooperative associations, and state, federal, and foreign governments. See Hawaii Revised Statutes 414-3
  • Person: includes individual and entity. See Hawaii Revised Statutes 414-3
  • Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Hawaii Revised Statutes 414-3
  • Shareholder: means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. See Hawaii Revised Statutes 414-3
(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.
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