USA – HAWAII Law and Practice Contributed by: Jon Pang, Lisa Broulik and Matthew Cohen, Case Lombardi, A Law Corporation
5.3 REITs REITs are used by individuals and business entities to invest in real estate. This form of ownership is avail - able in Hawaiʻi in both public and private forms, and may be purchased by out-of-state investors. REITs are typically tax advantaged, with REITs paying tax - able income as dividends. The state legislature has proposed legislation (S.B. No. 2656) that attempts to repeal deductions for REIT dividends. 5.4 Minimum Capital Requirement Minimum capitalisation is not required for an entity used to invest in real estate in Hawaiʻi. 5.5 Applicable Governance Requirements Hawaiʻi law does not impose special governance requirements for entities that invest in real estate. The governance and structural requirements for enti - ties, generally, are primarily dictated by the Hawaiʻi Business Corporation Act, the Hawaiʻi Limited Liability Company Act, the Uniform Limited Partnership Act and the Hawaiʻi Partnership Act. These statutes estab - lish the default rules for management and fiduciary duties, though they may be modified by an entity’s specific governing documents to the extent permit - ted by law. The Corporate Transparency Act (CTA) currently applies solely to foreign reporting companies – enti - ties formed under the laws of a foreign country and registered to do business in the United States – pur - suant to the 26 March 2025 interim final rule. Con - sequently, domestic “reporting companies”, such as LLCs or corporations formed within any US state, are currently exempt from submitting beneficial owner - ship information to the Financial Crimes Enforcement Network (FinCEN). This means that US contributors utilising these domestic vehicles do not currently face the same disclosure implications as those associated with foreign entities (entities that are formed under the law of a foreign country and that have registered to do business in any US state), which remain the only category required to disclose their beneficial owner - ship in accordance with the CTA.
other than Hawaiʻi must file a registration statement within 30 days of commencing business in Hawaiʻi. Limited liability partnerships must also file a registra - tion statement either prior to or simultaneously with its statement of qualification with the DCCA. Limited partnerships are formed by filing a certificate of limited partnership with the DCCA. General partners are jointly and severally liable for the debts and obligations of the partnership. In limited liability partnerships, the obligations of a partnership are solely the obligation of the partnership: partners are not individually liable. Limited partnerships are governed by the Uniform Limited Partnership Act and are composed of two or more persons, one or more of whom is a general partner with the remaining being limited partners. Partnerships may also take the form of a limited liability limited partnership wherein only the limited partnership is liable. Each partner is taxed individually, but partnerships may elect to pay Hawaiʻi income tax at the entity level. Partnerships are subject to fewer corporate formalities than other registered entities. Limited Liability Companies Limited liability companies (LLCs) are created by filing articles of organisation with the DCCA. They are gov - erned by the Hawaiʻi Limited Liability Company Act and may be managed by either a member or manag - ers. An LLC combines the pass-through tax treatment of a partnership (unless it elects to be treated as a corporation for tax purposes) with the limited liability of a corporation. An LLC is subject to greater corpo - rate formalities than a partnership but fewer formali - ties than a corporation. Corporations Corporations are legal entities created by filing arti - cles of incorporation with the state of Hawaiʻi. Cor - porations are independent entities with powers and liabilities distinct from their directors and sharehold - ers. S-Corporations may elect to pay Hawaiʻi income tax at the entity level. The Hawaiʻi Business Corpora - tion Act controls the formation, operation, governance and dissolution of Hawaiʻi corporations. Corporations are subject to greater formalities than limited liability companies and partnerships.
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