Hawaii Redefines Corporate Powers to Exclude Election Spending

Hawaii has enacted one of the most significant state-level laws concerning corporate election activity since the U.S. Supreme Court’s landmark decision in Citizens United v. Federal Election Commission. Senate Bill 2471, signed into law by Governor Josh Green, redefines the scope of corporate powers for entities organized or transacting business in Hawaii by explicitly excluding election-related spending. The law is set to take effect on July 1, 2027, though legal challenges are anticipated before that date.

Understanding what the law allows, which entities it covers, and what penalties apply is essential for any organization with a presence in the state.

What Hawaii’s SB 2471 Changes for Corporate Election Activity

At its core, SB 2471 removes election and ballot-issue activity from the scope of powers available to corporations and other artificial legal entities in Hawaii. This means that covered entities will be effectively prevented from paying, contributing, or expending money or anything of value, whether directly or indirectly, to support or oppose a candidate, political committee, or political party.

The law applies beyond candidate elections. Covered entities are also prevented from spending to support or oppose constitutional amendments, county charter amendments, or other ballot questions once those measures have been formally certified or submitted to voters. Additionally, the law removes the authority for covered entities to make donations of any kind, except  charitable donations.

There is an exception for bona fide news stories, commentaries, and editorials. However, even that exception does not apply if the broadcasting, print, online, or digital distribution facility is owned or controlled by a candidate, political committee, or political party.

Which Entities Are Covered Under the New Hawaii Election Spending Law

SB 2471 applies broadly across entity types. The law covers domestic and foreign corporations, professional corporations, credit unions, agricultural cooperative associations, consumer cooperative associations, limited-equity housing cooperatives, limited liability partnerships, limited partnerships, limited liability companies, nonprofit associations, and nonprofit corporations other than committees.

A critical provision of the bill conditions its applicability on ongoing enforcement against foreign entities transacting business in Hawaii. 

Candidate committees, noncandidate committees, and similar committees created under federal law are explicitly granted the power to engage in election and ballot-issue activity.  These carve-outs preserve the ability of political committees to operate within established campaign finance frameworks 

Penalties for Violations of  Hawaii’s Corporate Powers Limits

Any election or ballot-issue activity by a covered entity will be deemed void. Beyond that, the consequences for violations can include suspension of the entity’s authority to operate or transact business in Hawaii, ineligibility for state contracts, designation as a non-compliant entity, revocation of the entity’s operating instrument, involuntary dissolution, and revocation of tax-exempt status where applicable.

Enforcement authority is limited to two state officials: the attorney general and the director of commerce and consumer affairs. This centralized enforcement structure means that private parties and local officials cannot independently pursue violations, Hawaii’s Law in the Context of the Post-Citizens United Landscape

Hawaii is not acting in isolation. The state is one of several jurisdictions that have introduced measures this year addressing the role of corporate powers in elections. These efforts represent an ongoing legislative response to the 2010 Citizens United decision, which held that the federal government’s restriction on independent political expenditures by corporations, associations, and labor unions violated the First Amendment.

While the Citizens United ruling remains the law of the land at the federal level and as applied throughout the states,  Hawaii is approaching the issue in a novel way. SB 2471 received overwhelming bipartisan support in both chambers of the Hawaii legislature, signaling broad political backing for the measure. However, the law is expected to face legal challenges before its effective date of July 1, 2027.

Organizations operating in Hawaii or monitoring state-level campaign finance developments should track the progress of any litigation closely, as court rulings could shape the future  of similar measures in other states.

Steps for Businesses and Organizations to Prepare

Even though the law does not take effect until July 2027, companies and organizations with operations in Hawaii should begin evaluating their existing election and ballot-issue spending activity. Assess whether your entity type is covered under the law. Identify any planned contributions, expenditures, or ballot-measure spending that would need to be curtailed before the effective date.

For organizations operating across multiple states, Hawaii’s new law adds another layer to an already complex patchwork of state-level campaign finance and corporate governance requirements. State and Federal Communications provides compliance consulting services to help government affairs professionals and corporate counsel navigate these evolving obligations.