Hawaii LLC governance: an older uniform act that lets members customize the duties they owe

Hawaii governs LLCs under a version of the uniform act that dates to 1996, older than the modern acts most states now use, and it takes a more contractarian posture than the floor states. Its default fiduciary duties are limited ones of loyalty and care, and it gives members contractual freedom to customize the duties they owe each other, which sits closer to Delaware’s freedom-of-contract approach than to Connecticut’s mandatory floor, though the older act draws the limits less sharply than Delaware does. Hawaii also uses its own vocabulary, calling a member’s economic stake a distributional interest. Those features are worth understanding before the general mechanics on the site’s default rules and freedom of contract guides.

Customizing the duties

Start with the latitude the act gives the agreement.

Hawaii’s default fiduciary duties are limited, and members have contractual freedom to customize the duties they owe.

Under HRS Section 428-409, the default rule is that members in a member-managed LLC, and managers in a manager-managed one, owe limited fiduciary duties of loyalty and care, and the act lets members customize those duties by agreement. That makes Hawaii more contractarian than a floor state: a Hawaii operating agreement can reshape the loyalty and care obligations to fit a real estate operation with affiliated dealings, rather than being held to a fixed statutory standard. The practical value is real for a venture with related-party transactions, because the agreement can define what is permitted rather than leaving each dealing exposed to an unmodifiable duty. The trade-off is the familiar one in a contractarian state: the protection a member gets from a manager is only as strong as the agreement, because the statute supplies only limited default duties and lets the agreement narrow them further.

The older act’s edges

Here is where Hawaii’s 1996 vintage matters.

Because Hawaii’s act is the older uniform version, how far the customization of duties can go is less clearly drawn than in a modern act.

Delaware’s freedom-of-contract statute is explicit that duties can be modified up to elimination, with only the good-faith covenant preserved, and it has decades of case law mapping the limits. Hawaii’s 1996 act grants the freedom to customize in more general terms and has far less case law behind it, so the outer boundary, whether a Hawaii agreement can nearly eliminate the loyalty duty the way a Delaware one can, or only modify it within limits, is not sharply defined. A drafter customizing the duties heavily in Hawaii is relying on a latitude the older act grants in general language that Hawaii courts have not fully tested. On the structural defaults, Hawaii follows the uniform pattern: a Hawaii LLC has an at-will, perpetual duration under Section 428-203 unless its articles set a term, and distributions default to equal shares among the members.

When a Hawaii operating agreement is silent, distributions are shared equally among the members, not by contribution.

Hawaii’s default is to share distributions equally per member rather than in proportion to contributions, so a member who contributed most of the capital receives the same share as one who contributed little unless the agreement provides otherwise, which for a real estate deal with unequal contributions rarely matches the intent. So even in a contractarian state, the distribution provision has to be written, and given how much Hawaii lets the agreement customize, the agreement is where nearly everything of consequence in a Hawaii LLC is actually set.

The bottom line

Hawaii’s LLC act dates to 1996 and gives members contractual freedom to customize the limited default duties of loyalty and care under Section 428-409.

That makes Hawaii more contractarian than a floor state, so a member’s protection depends heavily on what the agreement preserves.

Because the act is the older uniform version with little case law, how far the customization can go is less clearly drawn than in Delaware.

A Hawaii LLC is perpetual by default under Section 428-203, and distributions default to equal shares regardless of contribution.

The operating agreement is where nearly everything of consequence is set, so it should define the duties and the split deliberately.

What this page does not cover

This page is about the rules that run your company from the inside. How creditors reach a member’s interest, the tiny homestead, and the strong entireties shield are on the protection page. The general excise tax on gross rents, the highest income tax in the country, and the lack of a series LLC are on the structure and cost page. The $50 formation fee and the general excise tax license that matters more than it are on the filing page.

Last verified August 2026.