Thanks to the active participation of Indivisible Hawaiʻi, the League of Women Voters, Hawaiʻi Coalition for Civil Rights, the ACLU, and others, SB2471 passed the final vote of the legislature 25-0 in the Senate and 49-1 in the House on May 8. With more emails this week and sign waving on May 12 the Governor signed the bill and it is enrolled as Act 11 for 2026.
How Does It Relate to Citizens United?
This bill is an attempt to answer the terrible Supreme Court decision in the Citizen’s United case in 2010, which opened our political system to unlimited funds from corporations and billionaire donors. Even worse, by donating to a political non-profit corporation (IRS designation §501( c) (4)) they were able to keep the identity and amount of contributions by the original donor secret. (This is “dark money”.) This has led to corporate and business contributions to political campaigns far outstripping the donations of individuals, ramping up spending until there was over $1 billion spent on the last presidential campaign, with the source of most of the funds completely anonymous.
Do Artificial Persons Have a Right of Free Speech?
So how does this bill answer the First Amendment “political speech” rationale of the Supreme Court? By changing the fundamental nature of corporate powers. Since 1819 U.S. law has been clear that the “artificial entities” allowed to conduct business separate from their individual owners are created under state law. They have only the powers granted to them by the state corporations code. The argument here is that if the states have mistakenly given corporations the political rights of a natural person they can revoke that part of their powers.
What Powers Does a Corporation Have under Hawaiʻi Law?
In Hawaiʻi, Section 414-42 of the Hawaiʻi Revised Statutes (HRS) defines the general powers granted to a corporation by the state. That section has read:
“Unless its articles of incorporation provide otherwise, every corporation has ... the same powers as an individual to do all things necessary or convenient to carry out its business and affairs, including...: (15) To make payments or donations, or do any other act, not inconsistent with law, that furthers the business and affairs of the corporation.”
The Citizen’s United court decision follows from giving the corporation all the powers of a natural person (including free speech) and they can therefore donate to political campaigns.
How Does Act 11 ( SB 2471) Change Hawaiʻi Law to Limit These Powers?
SB2471 changes the definition of powers, amending §414-42 to say:
“(a) The creation and continued existence of a corporation shall not be deemed a right but shall be a conditional grant of legal status by this State and shall remain subject to complete withdrawal at any time.
(b) Beginning July 1, 2027, a corporation 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. Under no circumstances shall any election activity or ballot-issue activity be deemed necessary or convenient for a corporation's lawful purpose or affairs.”
With similar changes concerning other business forms (non-profits etc.) the bill ostensibly removes political rights from all businesses operating in Hawaiʻi, whether formed here or doing business under Hawaiʻi law.
Who Is Opposed to Act 11 ( SB 2471) and Why?
There has been some pushback from labor unions and legitimate non-profits about the new limitations this change places on their political activity. But they will be able to go back to the rules as they existed before Citizen’s United, when business and labor had a much more level playing field, with everyone constrained by campaign finance law.
Will Act 11 ( SB 2471) Be Challenged in Court?
There is no doubt this change will be challenged in the courts. Because the limitation on corporate powers is a well-recognized part of American law there is a strong argument in favor of upholding SB2471. Excellent lawyers are going to gather on both sides, from business groups, government, and civil liberty advocates, and we should hope for a favorable ruling at the district court level that can energize a reform movement across the country.
[Nothing in this article should be taken as legal advice. This is merely an attempt to summarize the intent and potential effect of SB2471.]