§281-41 Transfer of licenses; notice of change in officers, directors, and stockholders of corporate licenses, partners of a partnership license, and members or managers of a limited liability company license; penalty. (a) No license issued under this chapter to an original applicant or to any transferee shall be transferable or be transferred within one year of the issuance or transfer, except for good cause shown to the satisfaction of the liquor commission. A transfer of license shall be for the same class, kind, and category of license. No license issued under this chapter shall be transferable or be transferred except upon written application to the commission by the proposed transferee, and after prior inspection of the premises, reference to, and report by an inspector, and a public hearing held by the commission not less than fourteen days after one publication of notice thereof, but without sending notice of the hearing by mail to persons being the owners or lessees of real estate situated within the vicinity of the premises and without the right to the owners or lessees to protest the transfer of a license. Exceptions are class 5 and 11 licensees who shall comply with the requirements as set forth in sections 281-57 to 281-60. Notwithstanding any provision of this chapter to the contrary, a class 2 license shall be transferrable; provided that the transferee certifies that the transferee intends to and shall derive no less than thirty per cent of the establishment's gross revenue from the sale of foods.

(b) A county may increase the requirements for transfers of class 5, category (1)(B) and (D), and class 11 licenses by ordinance designating one or more areas within the county as special liquor districts and specifying the requirements applicable to transfers of any of these licenses within each district.

(c) For the purpose of this section, "special liquor district" means an area designated by a county for restoration, reservation, historic preservation, redevelopment, rejuvenation, or residential protection, in which development is guided to protect or enhance the physical and visual aspects of the area for the benefit of the community as a whole.

(d) Where a license is held by a partnership, the commission may, notwithstanding any other provision of this section, approve the transfer of the partnership interest, without publication of notice at a public hearing, to any remaining partner or partners, upon the death or withdrawal of a partner of the partnership, or to a trust of which the partner is the trustee.

(e) Where a license is held by a partnership, limited partnership, limited liability partnership, or a limited liability company, the admission or withdrawal of a partner, limited partner, partner of a limited liability partnership, member of a member-managed limited liability company, or manager of a manager-managed limited liability company shall not be deemed a transfer of the license; provided that the licensee shall, within thirty days from the date of the admission or withdrawal, so notify the commission in writing, stating the name of the partner, member, or manager, who has been admitted or withdrawn, and any other information as may be required by the commission.

(f) Except as otherwise provided in this section, the same procedure shall be followed in regard to the transfer of a license as is prescribed by this chapter for obtaining a license. Sections 281-51 to 281-60, except where inconsistent with this section, are applicable to the transfers. The word "applicant", as used in sections 281-51 to 281-60, shall include each proposed transferee, and the words, "application for a license or for the renewal of a license", as used in those sections, shall include an application for the transfer of a license.

(g) Upon the hearing, the commission shall consider the application and any objections to the granting thereof and hear the parties in interest. It shall inquire into the propriety of each transfer and determine whether the proposed transferee is a fit person to hold the license. It may approve a transfer or refuse to approve a transfer and the refusal by the commission to approve a transfer shall be final and conclusive, unless an appeal is taken as provided in chapter 91.

(h) If any licensee without prior approval transfers to any other person the licensee's business for which the licensee's license was issued, either openly or under any undisclosed arrangement, whereby any person, other than the licensee, comes into exclusive possession or control of the business or takes in any partner or associate who would be unfit or improper to hold a license pursuant to section 281-45, the commission may in its discretion suspend or cancel the license.

(i) If the licensee is a corporation, a change in ownership of any outstanding capital stock shall not be deemed a transfer of a license; provided that in the case of a change in ownership of twenty-five per cent or more of the voting capital stock or in the case of change in ownership of any number of shares of the stock that results in the transferee thereof becoming the owner of twenty-five per cent or more of the outstanding voting capital stock, the corporate licensee shall, within thirty days of the date of the transfer, apply for the approval of the transfer from the commission in writing. If the commission finds that the transferee is an unfit or improper person to hold a license in the transferee's own right pursuant to section 281-45, it shall not approve the transfer. If any transfer is made without the approval of the commission, the commission may in its discretion revoke or suspend the license until it determines that the transferee is a fit and proper person, and if the commission finds that the transferee is not a fit and proper person, until a retransfer or new transfer of the capital stock is made to a fit and proper person pursuant to section 281-45. In addition, the corporate licensee, if not a publicly-traded company, or an entity ultimately solely owned by a publicly-traded company, shall, within thirty days from the date of election of any officer or director, notify the commission in writing of the name, age, and place of residence of the officer or director. A publicly-traded company, or an entity ultimately solely owned by a publicly-traded company, shall, within thirty days from the date of election of any replacement of an officer designated as a primary decision-maker regarding the purchase and sale of liquor, notify the commission in writing of the name, age, and place of residence of the officer. If the commission finds that the transferee, officer, or director, for whom notification is required to be given as specified in this subsection, is an unfit or improper person to hold a license in the transferee's, officer's, or director's own right pursuant to section 281-45, it may in its discretion revoke the license or suspend the license until a retransfer or new transfer of the capital stock is effected to a fit or proper person pursuant to section 281-45 or until the unfit or improper transferee, officer, or director is removed or replaced by a fit and proper person pursuant to section 281-45.

(j) If a licensee closes out the business for which the license is held, during the term for which the license was issued, the licensee shall, within five days from the date of closing the same, give the commission written notice thereof and surrender the licensee's license for cancellation, unless the licensee obtains prior approval from the commission to place its license with the commission for safekeeping. For the purposes of this subsection, "safekeeping" means the holding of a liquor license at the commission office while the licensee is not operating.

(k) The conversion of an entity into any other form of entity or the merger of any entity with any other entity shall not be deemed a transfer of the license; provided that the licensee, prior to the date of the conversion or merger, shall apply for and secure the approval of the commission without any requirement for publication of notice. The foregoing shall not preclude compliance with subsection (e) upon a change in any of the partners or members, or with subsection (i) upon change of any shareholders, officers, or directors of any entity occurring concurrently with a conversion or merger.

As used in this subsection, "entity" means a corporation, partnership, limited partnership, limited liability partnership, or limited liability company.

(l) Any officer or director not designated as a primary decision-maker shall be prohibited from coercing, pressuring, or otherwise unduly influencing the decision of a designated primary decision-maker to engage in any unlawful activity relating to the purchase and sale of liquor. If the commission finds that coercion, pressure, or other undue influence has been placed on a primary decision-maker by any officer or director who is not a designated primary decision-maker, the commission may in its discretion suspend or cancel the license. [L Sp 1933, c 40, §23; RL 1945, §7244; am L 1949, c 301, §1(c); am L 1951, c 223, §1(4); RL 1955, §159-41; am L 1957, c 321, §1(d); am L 1965, c 96, §97; am L 1967, c 119, §1; HRS §281-41; am L 1969, c 207, §1; am L 1971, c 76, §1; am L 1972, c 96, §1; am L 1980, c 256, §2; gen ch 1985; am L 1995, c 142, §1; am L 1998, c 90, §3; am L 2001, c 257, §4; am L 2002, c 120, §2; am L 2006, c 44, §2; am L 2009, c 184, §7; am L 2016, c 12, §1; am L 2017, c 184, §2; am L 2018, c 90, §2]