6-851 Definitions
A. In this chapter, unless the context otherwise requires:
1. "Trust business" means the holding out by a person to the public at large by
advertising, solicitation or other means that such person is available to act as a
fiduciary in this state and accepting and undertaking to perform the duties as such
fiduciary in the regular course of his business.
2. "Trust company" means a corporation holding a certificate issued under this
article.
B. In this article, unless the context otherwise requires:
1. "Agent" means a person who receives compensation to regularly perform services
specifically related to the conduct of the trust business.
2. "Asset" means any property or property right held by a licensee for the benefit
of another.
3. "Capital" means the total of outstanding common stock, preferred stock and
surplus and undivided profits.
4. "Certificate" means a certificate of authority issued under the provisions of
this chapter to engage in trust business.
5. "Contingency plan" means a document stating a trust company's means of
conducting business and preserving records in the event of any power outage, flood or
other physical emergency.
6. "Discretionary assets" means those assets in which the trust company has the
unilateral authority to determine investment strategies and execute investment
transactions without seeking the concurrence, approval or authority from the customer or
any other external party.
7. "Fiduciary" means a personal representative, administrator, guardian,
conservator, trustee, agent or other person who acts in a fiduciary capacity and who is
not exempt by section 6-852.
8. "Impaired" or "insolvent" means the trust company does not possess assets that
are at least equal to liabilities, required reserves and total issued and outstanding
capital.
9. "Liquid capital" means capital in the form of certificates of deposit issued by
banks, savings banks or savings and loan associations doing business in this state and
insured by the federal deposit insurance corporation or any successor institution or
direct obligations of the United States government with maturity of not more than five
years.
10. "Nondiscretionary assets" means those assets for which the trust company must
obtain from the customer, broker or investment advisor specific direction and
instructions regarding both investment strategies and investment executions.
11. "Surplus" means the total amount paid by shareholders in excess of the par or
stated value of the shares of capital stock of a trust business in consideration for the
shares.
6-852 Exemptions and permittedactivities
A. For the purposes of this article, a person does not engage in the trust business
by:
1. Rendering services as an attorney-at-law in the performance of his duties as
such.
2. Acting as trustee under a deed of trust made only as security for the payment of
money or for the performance of another act.
3. Acting as a trustee in bankruptcy or as a receiver.
4. Holding trusts of real estate for the primary purpose of subdivision,
development or sale, or to facilitate any business transaction with respect to such real
estate, provided such person is not regularly engaged in the business of acting as a
trustee for such trusts.
5. Engaging in the business of a debt management company to the extent of the
activities for which it is licensed under chapter 6 of this title.
6. Engaging in the business of an escrow agent to the extent of the activities for
which it is licensed under chapter 7 of this title.
7. Holding assets as trustee of trusts created for charitable purposes.
8. Receiving rents and proceeds of sale as a licensed real estate broker on behalf
of a principal.
9. Engaging in securities transactions as a dealer or salesman registered under
title 44, chapter 12.
10. Acting as a guardian, conservator, special conservator, trustee or personal
representative pursuant to a court order under title 14 or 36.
B. Insurance companies licensed to write life insurance policies and annuity or
endowment contracts in the state of ARIZONA and subject to regulation and control of the
director of insurance are excluded from the provisions of this chapter, except the
provisions of section 6-860.
C. A bank, savings and loan association or credit union not exercising trust powers
may act as a trustee or custodian of individual retirement accounts established pursuant
to the employees retirement income security act of 1974 or self-employed retirement plans
established pursuant to the self-employed individuals tax retirement act of 1962 without
the prior written consent of the superintendent if both:
1. The duties of the bank, savings and loan association or credit union as trustee
or custodian are essentially custodial or ministerial in nature.
2. The bank, savings and loan association or credit union is required to invest the
funds from such plans only in its own time or savings deposits or shares.
6-853 Certificate required; exceptions
A. A person shall not engage in the trust business without first obtaining a
certificate from the superintendent except as provided by subsection B or C of this
section, or by section 6-852, subsection C.
B. A bank, if a member of the federal deposit insurance corporation and otherwise
authorized under the laws of the United States, this state or any other state to engage
in the trust business in this state, may engage in that business as a bank without
obtaining a certificate under this chapter, and shall not be subject to this article,
except for section 6-859, subsection A and section 6-860.
C. If a savings and loan association or savings bank is a member of the federal
deposit insurance corporation and is authorized under the laws of the United States, this
state or any other state to engage in the trust business in this state, the savings and
loan association or savings bank may engage in that business as a savings and loan
association or savings bank without obtaining a certificate under this chapter and is not
subject to this article, except for section 6-859, subsection A and section 6-860.
6-854.01 Articles of incorporation; approval;changes
A. Notwithstanding title 10, chapter 2, the articles of incorporation shall
include:
1. The name of the proposed trust company.
2. A description of the general nature of the business to be transacted and a
statement authorizing the company to engage in any activity or business permitted by law.
3. The amount of authorized capital stock, the maximum number of shares of par
value common stock and preferred stock, and the kind, class, series, distinguishing
characteristics and par value of all shares.
4. The amount of capital, which is at least the amount required by section 6-856,
the applicant will use to begin the trust company.
5. A statement that the company will have perpetual existence unless the company is
terminated pursuant to this article.
6. The initial street address of the main office of the trust company.
7. The number of directors and the directors' names and addresses.
8. If applicable, a statement allowing preemptive rights.
9. A statement authorizing the board of directors to appoint additional directors
when necessary.
B. Within thirty days after receiving the executed articles of incorporation, the
superintendent shall approve or disapprove the articles. If the superintendent
disapproves the articles, the superintendent shall notify the applicant of the articles'
deficiencies. After addressing the deficiencies, the applicant shall file the revised
articles of incorporation with the corporation commission.
C. The corporate existence of a trust company begins on the date the trust company
files the approved or revised articles of incorporation with the corporation
commission. After the trust company files the articles with the corporation commission,
the company may perform all acts necessary to perfect the organization and obtain and
equip a place of business.
D. Within seven days after proposing a change to the articles of incorporation at a
meeting of the board of directors, a trust company shall report the proposed changes to
the superintendent for approval. The superintendent shall approve the proposed changes
as long as the proposed changes are consistent with this chapter. The superintendent
shall notify the trust company of any inconsistencies within thirty days after receiving
the proposed changes. The trust company shall have thirty days, after receiving the
superintendent's notice, to correct any inconsistencies and submit revised proposed
changes to the superintendent.
6-854.02 Board of directors; number;bylaws
A. A trust company shall have at least three directors. The shareholders of the
company shall elect all of the directors.
B. Unless the articles of incorporation provide otherwise, the board of directors
may adopt or amend the bylaws as long as the bylaws adopted or amended by the board do
not conflict with the bylaws adopted by the shareholders. The board of directors shall
file a current copy of the bylaws with the superintendent.
6-854 Application for certificate
A. An application for a certificate shall be in writing, in such form as the
superintendent shall prescribe, verified under oath and supported by such information,
data and records as the superintendent may require.
B. An application for a certificate shall include the applicant's executed articles
of incorporation and the fee prescribed in section 6-126.
6-855 Fees
A. Each application to establish a trust company or branch or to renew the license
of a trust company or branch shall be accompanied by the fee prescribed in section 6-126.
B. The annual renewal fee is payable on or before January 1 of each year the
certificate is outstanding. A penalty payment of one hundred dollars shall be assessed
for each day after January 15 that such fee is not received by the department.
6-856 Minimum capital; dividends; otherrequirements
A. In order to obtain a certificate, a trust company shall have not less than five
hundred thousand dollars of liquid capital. The trust company shall have additional
capital in the following amounts:
1. For each seven hundred fifty million dollars of nondiscretionary assets, an
additional two hundred fifty thousand dollars of capital.
2. For each two hundred fifty million dollars of discretionary assets, an
additional two hundred fifty thousand dollars of capital.
3. For a trust company whose most recent composite rating from the superintendent
was four as defined in the revised uniform interagency trust rating system as published
in the federal register volume 63, number 197, October 13, 1998, pages 54704 through
54711, an additional two hundred fifty thousand dollars of capital.
4. For a trust company whose most recent composite rating from the superintendent
was five as defined in the revised uniform interagency trust rating system as published
in the federal register volume 63, number 197, October 13, 1998, pages 54704 through
54711, an additional five hundred thousand dollars of capital.
B. A minimum of one-half of the additional capital required under subsection A,
paragraphs 1 and 2 of this section shall consist of liquid capital. All of the
additional capital required under subsection A, paragraph 3 or 4 of this section shall
consist of liquid capital.
C. The trust company shall notify the superintendent of the form in which and
location where the liquid capital is held and its date of maturity.
D. A trust company that has a certificate issued before June 30, 2001 has until
December 31, 2002 to comply with the additional capital requirements prescribed in
subsection A of this section.
E. The superintendent may reduce the amount of the additional capital requirement
prescribed in subsection A of this section if the superintendent determines that the
trust company is a subsidiary of a financial institution or financial holding company
that is capable of providing sufficient support.
F. A trust company that has been issued a certificate by the superintendent shall
maintain capital in the amount required under subsection A of this section.
G. A trust company may declare a dividend to be paid from net profits. A dividend
shall not be declared, credited or paid if there is an impairment of the liquid
capital. A trust company that proposes dividends in a calendar year that are more than
the net profit for the same calendar year shall obtain the superintendent's approval
before declaring the dividends.
H. Notwithstanding subsection A of this section, a trust company that accepts
monies to be held in a savings account or time deposit prescribed in section 6-882 shall
comply with all of the rules and requirements necessary to obtain and maintain insurance
issued by the federal deposit insurance corporation or its successor.
6-857 Issuance of certificate; hearing
A. Upon the filing of an application for a certificate the superintendent shall
make or cause to be made an investigation and examination of the facts concerning the
truth of the statements and the background of the management, controlling shareholder or
shareholders, directors and executive officers and shall issue a certificate if the
superintendent finds:
1. The applicant is a corporation having powers and purposes to engage in the trust
business organized under the laws of this state or authorized to do business in this
state as a foreign corporation.
2. The applicant has complied with all of the applicable provisions of this
article.
3. The general character, reputation, financial standing, business qualifications,
ability and integrity of the persons involved in the management of the applicant's
business are such as to demonstrate that the trust company will be operated in a safe,
sound and lawful manner.
4. The proposed capital meets the requirements of section 6-856.
5. The applicant has submitted a business plan demonstrating a knowledge of
potential markets and the ability to generate business.
6. The applicant has procured a fidelity bond as prescribed in section 6-868.
7. The applicant has procured insurance as prescribed in section 6-859, subsections
E and F.
B. The superintendent may conditionally accept the application upon specific
requirements being met, but a certificate shall not be issued until such conditions have
been met.
C. The certificate may be granted or denied without a hearing, but the
superintendent may, and shall at the request of the applicant, fix a date for a hearing
on the application. At the hearing any person may be heard with reference to the facts
to be investigated.
6-859 Records; audits; preservation of records;protection; insurance; bond; contingency plan
A. A bank, savings and loan association or trust company shall keep and use in its
business any books, accounts and records which will enable the superintendent to
determine whether the bank, savings and loan association or trust company is complying
with the provisions of this article and the rules of the superintendent. The
superintendent by rule may provide the periods of time and the manner in which such
books, accounts and records shall be preserved.
B. A certified public accountant shall audit the corporate records and trust
business of each trust company at least once each fiscal year. The trust company shall
file a copy of the audit report with the superintendent not more than one hundred twenty
days after the end of the trust company's fiscal year. The audit requirement may be
satisfied by filing a copy of the audit report of the parent of the trust company if the
audit report is prepared by a certified public accountant and includes a detailed
examination of the trust company's assets and liabilities and trust business. If the
trust company shows good cause the superintendent may extend the time to file the audit
report by not more than ninety days.
C. The audit shall include an examination of the trust company's internal control
structure over the financial reporting and accounting of the trust business plus any
reportable conditions of the trust company's internal control structure. For purposes of
this subsection, "reportable conditions" means significant deficiencies in the design or
operation of the internal control structure that would adversely affect the trust
company's ability to perform its business activities and carry out its fiduciary duties
and responsibilities consistent with the safe, sound and lawful operation of the trust
business.
D. The board of directors of a trust company shall require protection and indemnity
for the trust company, pursuant to section 6-868, against dishonesty, fraud, defalcation,
forgery, theft, embezzlement, and other similar insurable losses, with corporate
insurance or surety companies authorized to do business in this state. Coverage against
such losses shall include all agents who do not otherwise provide protection and
indemnity for the trust company, directors, officers and employees of the trust
company acting independently or in collusion or combination with any person or persons
whether or not they draw salary or compensation.
E. The board of directors shall require suitable insurance to protect the trust
company against burglary, robbery, theft and other insurable hazards to which it may be
exposed in the operation of the business.
F. The board of directors shall procure errors and omissions insurance of at least
five hundred thousand dollars.
G. At least once each year the board of directors shall review the fidelity bond
and the errors and omissions insurance to determine the adequacy of coverage in relation
to the exposure. The minimum amount of insurance required in this chapter does not
automatically represent adequate bond and insurance coverage in relation to the
exposure. The actions by the board of directors shall be recorded in the minutes of the
board. Immediately after procuring the bonds, the board of directors shall file them
with the superintendent.
H. The board of directors and senior management shall:
1. Establish policies, procedures and responsibilities for comprehensive
contingency planning.
2. Annually review and approve the trust company's contingency plans and record the
actions in the minutes of the board of directors.
I. If the trust company receives information processing from a service bureau the
board of directors and senior management shall:
1. Evaluate the adequacy of contingency plans for its service bureau.
2. Ensure that the trust company's contingency plan is compatible with its service
bureau's plan.
6-860 Duty of trustee, escrow officer or agentto produce trust or escrow records for inspection; violation;classification
A. Any trustee, escrow officer or agent shall produce for inspection any trust or
escrow records concerning the assets, existence, condition, management and administration
and the names of the parties, including any or all beneficiaries, of any trust or escrow
of which he or she is the trustee, escrow officer or agent, to any peace officer or
local, state or federal law enforcement agency, provided such person requesting
information signs and submits a sworn statement to the trustee, escrow officer or agent
that the request is made in the lawful performance of such person's duties. The peace
officer or local, state or federal law enforcement agency shall be prohibited from using
or releasing said information except in the proper performance of his or her duties.
B. Any trustee, escrow officer or agent shall produce for inspection required by
law any trust or escrow records of any trust or escrow of which he or she is the trustee,
escrow officer or agent to the superintendent or to any state or federal administrative
agency lawfully requiring such disclosure. The superintendent or any state or federal
administrative agency shall be prohibited from using or releasing said information except
in the proper performance of his or her duties.
C. Any person who knowingly fails to produce records pursuant to this section or
who obtains information under subsection A or B and is prohibited from releasing such
information but does release such information is guilty of a class 2 misdemeanor.
6-861 Reports
A. The superintendent may require reports of financial condition and relevant
information concerning the business operations of each trust company, shall fix and
extend the time for the filing of such reports and shall assess a penalty of fifty
dollars for each day the trust company is delinquent.
B. The president, chief executive officer or chief operating officer shall examine
the books and accounts of the trust company for the purpose of making the report and
shall verify the report by providing an affidavit stating that the information contained
in the report is accurate to the best of the president's or officer's knowledge or
belief.
C. The report shall contain statements and information regarding the affairs,
business conditions, resources and implementation of internal controls as safeguards for
the protection of fiduciary beneficiaries, creditors, shareholders and the public.
D. Excluding weekends and holidays, within forty-eight hours after the date of
discovery, a trust company that is the victim of a robbery, the shortage of funds of more
than five thousand dollars or the apparent misapplication of trust funds by an officer,
director, agent or employee shall issue a written report to the superintendent explaining
the loss.
E. Within thirty days after the service of the complaint, the trust company shall
issue a written report to the superintendent stating any adverse legal actions involving
allegations of fraud, breach of fiduciary duty, breach of contract or misapplication or
commingling of trust funds, including complaints that are dismissed within thirty days of
service.
6-862 Trust funds
All monies received by a trust company as fiduciary on trust business within this
state shall be deposited in a bank or savings and loan association in this state in a
specially designated account or accounts, shall not be commingled with any funds of the
trust company and shall remain on deposit until disbursed or invested in accordance with
powers and duties of the trust company in its capacity as such fiduciary.
6-863 Suspension or revocation ofcertificate
A. The superintendent may suspend or revoke the certificate of a trust company
pursuant to title 41, chapter 6, article 10 if the superintendent determines that:
1. The trust company has failed or refused to comply with any order issued pursuant
to section 6-137.
2. The application for a certificate or for renewal of a certificate or any report
submitted to the superintendent contained a false representation or omission of a
material fact.
3. Any officer or agent of the trust company, in connection with the submission of
any report or information to the superintendent or an application for a certificate or
for renewal of a certificate, knowingly made a false representation of a material fact or
failed to disclose a material fact to the superintendent or the duly authorized agent of
the superintendent.
4. The trust company has violated any applicable law, rule or order.
5. The trust company is impaired or insolvent and the trust company is unable to
pay debts as they become due in the regular course of its business.
6. The trust company refuses to permit an examination or investigation by the
superintendent of its books and affairs or has failed or refused to furnish within thirty
days any information or to make any report that may be required by the superintendent.
7. The trust company is unable to maintain the amount of capital required by law.
8. The trust company failed to conduct business in a safe, sound and lawful manner.
9. Any officer, director, employee or agent of the trust company has been convicted
in any state of a felony or a crime of moral turpitude, breach of trust, fraud, theft or
dishonesty.
10. Any officer, director, employee or agent of the trust company is not honest or
truthful and does not demonstrate good character.
11. The trust company's certificate or authorization to engage in trust business in
any state or country has been revoked, suspended or denied.
12. A final judgment has been entered in a civil action against any officer,
director, employee or agent of the trust company involving fraud, deceit or
misrepresentation and the conduct is contrary to the interest of the public to permit the
person to engage in a trust business, to control or manage a trust company or to work for
a trust company handling trust funds.
13. An order by an administrative agency of this state, another state, the federal
government, a territory of the United States or another country has been entered against
any officer, director, employee or agent of the trust company involving fraud, deceit or
misrepresentation and the conduct is contrary to the interest of the public to permit the
person to engage in a trust business, to control or manage a trust company or to work for
a trust company handling trust funds.
B. The superintendent may suspend the certificate if an indictment or information
is issued against any officer, director, employee or agent of the trust company for
forgery, embezzlement, retaining monies under false pretenses, extortion, criminal
conspiracy to defraud or a like offense and a certified copy of the indictment or
information or other proper evidence of the indictment or information is filed with the
superintendent.
C. Pursuant to subsection A of this section, the superintendent may suspend or
revoke the certificate for the acts and omissions of:
1. Any officer, director, employee or agent of the trust company while acting in
the course of the trust business.
2. A person entitled to vote more than fifteen per cent of the outstanding voting
shares of the trust company.
6-864 Continuing jurisdiction
If the certificate of a trust company is surrendered, suspended or revoked, the
company shall nevertheless continue to be subject to the provisions of this chapter for
so long as it acts as a fiduciary with respect to any trust business previously
undertaken.
6-865 Unsafe condition; receivership
If the deficiency in capital has not been made good or the trust company is in an
unsafe or unsound condition that is not remedied within the time prescribed under an
order of the superintendent issued pursuant to section 6-137, the superintendent may
apply to the superior court to be appointed receiver for the liquidation or
rehabilitation of the company. The expense of such receivership shall be paid out of the
assets of the trust company.
6-866 Limit of legal action
This article does not limit any statutory or common law right of a person to bring
an action in a court for any act involved in the transaction of the trust business or the
right of the state to bring an action against any person for a violation of law based on
such act.
6-867 Trust company name
A. It is unlawful for a person to make use of the words "trust" or "trust company"
or any other words in a manner reasonably calculated to convey the impression that the
person is engaged in the trust business unless the act is done by or on behalf of a
person having authority under this chapter or conducting subdivision trust activity
pursuant to chapter 7 of this title.
B. Nothing in this section shall prohibit any existing corporation that does not
have authority under this chapter from using in its name the words "trust" or "trust
company" if that corporation was originally organized under the laws of the territory of
ARIZONA and has not since the date of its original organization amended or restated its
articles of incorporation to delete from its name the words "trust" or "trust company".
6-868 Fidelity bond; requirements
A. A trust company doing business under this chapter shall obtain and maintain a
fidelity bond, naming the trust company as obligee, in the following amounts:
Trust Assets Fidelity
(market value) Bond Amounts
less than $3,000,000 $500,000
$3,000,000 to $4,999,999 $525,000
$5,000,000 to $7,499,999 $550,000
$7,500,000 to $9,999,999 $575,000
$10,000,000 to $14,999,999 $600,000
$15,000,000 to $19,999,999 $650,000
$20,000,000 to $24,999,999 $700,000
$25,000,000 to $34,999,999 $750,000
$35,000,000 to $49,999,999 $850,000
$50,000,000 to $74,999,999 $950,000
$75,000,000 to $99,999,999 $1,000,000
$100,000,000 to $149,999,999 $1,250,000
$150,000,000 to $249,999,999 $1,600,000
$250,000,000 to $499,999,999 $2,100,000
$500,000,000 to $999,999,999 $2,400,000
$1,000,000,000 to $2,000,000,000 $4,400,000
$2,000,000,001
to $3,000,000,000 $6,000,000
for every $1,000,000,000 over
$3,000,000,000 $1,000,000
B. The trust company shall file a signed copy of its bond with the superintendent,
and the bond remains a part of the department's records. The bond company shall not
cancel the bond for failure to pay the premium unless the bond company files a written
notice with the department at least thirty days before canceling the bond. The bond
company shall not cancel the bond for any other reason unless the bond company files a
written notice with the department at least forty-five days before canceling the bond.
C. The bond may contain a deductible clause not to exceed fifteen per cent of the
face amount of the bond. If the deductible exceeds fifteen per cent of the face amount of
the bond, the deductible clause must be approved by the superintendent.
6-869 Meetings; reports; report of examination;response; penalties
A. The board of directors of a trust company shall meet at least once every three
months. The superintendent or any director may call a special meeting. A majority of
the board constitutes a quorum. The board shall keep minutes of each meeting, including
a record of attendance and a record of all votes pertaining to the trust business, any
officer or any shareholder.
B. At least once every three months the board of directors of a trust company shall
review written reports prepared by the president, other officers of the trust company or
the trust committee as prescribed in section 6-870. The reports shall include the
accounts that have been opened or closed during the calendar quarter before the meeting
and the trust accounts subject to annual review during the calendar quarter before the
meeting.
C. Within thirty days after the trust company receives a report of examination from
the superintendent, the directors shall meet to consider the contents of the
report. Within ten days after the meeting, the chairman or the president of the board of
directors shall notify the superintendent of the meeting and shall acknowledge, on the
declaration of each director attending the meeting, that each director reviewed the
report and the chairman or the president shall file a response to the report that
describes the board's responses to the examiners' recommendations, including any remedies
for violations of this title.
D. Unless the superintendent excuses a trust company from filing a response, the
trust company shall file a response to the report of examination within forty days after
the trust company receives the report. A trust company that fails to file a timely
response or that is not excused from filing a timely response shall pay a penalty to the
department. The department shall assess a penalty of one hundred dollars or less for
each day of the delinquency.
6-870.01 Acceptance of other examinations; cooperative agreements
A. Instead of an examination prescribed by section 6-122, the superintendent may
accept the examination report of a federal or state agency that has regulatory or
supervisory authority over the trust company. The superintendent's acceptance of the
examination report does not constitute a waiver of the licensing fees and assessments
provided by law. An accepted examination report becomes an official report of the
department.
B. The superintendent may enter into cooperative agreements and take joint action
with other regulatory or supervisory authorities that have concurrent jurisdiction over a
trust company.
6-870.02 Prohibited acts
A. A trust company shall not permit a person, other than a director, officer, agent
or employee of the trust company or the legal or beneficial owner of the trust funds or
the authorized representative of the owner, to access, examine or inspect the fiduciary
records of the trust company.
B. A trust company shall not make a loan to or make other use of monies from a
fiduciary account to or for the benefit of another fiduciary account unless the
transaction is authorized by a court order or a governing instrument of the fiduciary
account or its amendments from which the loan or use of monies is made.
C. A director, officer, agent or employee of a trust company shall not:
1. Knowingly make or publish, or concur in making or publishing, a written report,
exhibit or statement of the trust company's affairs or financial condition containing any
material statement that is false.
2. Wilfully refuse or neglect to make a proper entry in the trust company's books,
wilfully refuse or neglect to exhibit the trust company's books to the department or
allow the department to inspect or extract the trust company's books.
3. Knowingly make a material false promise or statement or a material
misrepresentation to the department or to a legal or beneficial owner of trust funds or
an authorized representative of the owner in the course of the trust business.
4. Knowingly conceal an essential or material fact from the department or a legal
or beneficial owner of the trust funds or an authorized representative of the owner in
the course of the trust business.
D. A trust company shall not directly or indirectly use funds from a fiduciary
account for the benefit of any officer, director or employee of the trust company or any
individual with whom there exists a connection, or organization in which there exists an
interest, as might affect the exercise of the best judgment of the trust company in
performing its fiduciary duties, unless the transaction is authorized by a court order or
a governing instrument of the fiduciary account.
E. A trust company shall not charge a fee except in accordance with a governing
instrument or its amendments, a court order or a written communication.
F. A trust company shall not refuse to disclose to the public a general statement
of the trust company's financial condition and its assets and liabilities or the last
report of financial condition submitted to the superintendent pursuant to section 6-861.
G. A person shall not receive compensation for engaging in the trust business if
the person is not licensed or exempt from licensing pursuant to this article.
H. A director, officer, agent or employee of the trust company who knowingly
violates this article is liable for the damages the trust company or the legal or
beneficial owners of the trust funds sustain because of the violation. A director,
officer, agent or employee is individually liable for the amount of a loss of trust funds
if the director, officer, agent or employee knowingly participates in an illegal activity
which results in a loss of trust funds. A director or officer of a trust company who
meets the standards of conduct prescribed by section 10-830 or 10-842 shall not be liable
for any loss to the company or to the legal or beneficial owners of the trust funds and
shall be entitled to indemnification to the extent permitted by sections 10-850 through
10-858.
6-870 Trust committee
A. The board of directors may appoint a trust committee. The trust committee shall
be comprised solely of directors, officers, employees or any combination thereof. The
committee may be authorized to act for the company in matters dealing with the initial
and annual reviews of accounts, account acceptance and investment strategies. The trust
committee shall keep a record of its actions and shall report in writing to the board on
all actions since the previous board meeting. The board shall ratify or rescind each
action.
B. The trust committee shall meet at least once a month to review existing accounts
and to consider acceptance of new accounts. The trust committee shall not accept a new
account unless it is approved by a majority of the members of the trust committee present
at the meeting in which the new account is considered.
6-871 Establishment of common trustfunds
A. Any bank, savings and loan association or trust company qualified to act as a
fiduciary in this state may establish and administer common trust funds composed of
property permitted by law for the investment of trust funds for the purpose of furnishing
investments to any one or more of the following:
1. Itself as fiduciary.
2. Itself and others, as cofiduciaries.
3. Any affiliated bank, savings and loan association or trust company, including
any foreign affiliated bank, savings and loan association or trust company, as fiduciary.
4. Any affiliated bank, savings and loan association or trust company, including
any foreign affiliated bank, savings and loan association or trust company, and others,
as cofiduciaries. Any bank, savings and loan association or trust company may as such
fiduciary or cofiduciary invest funds which it lawfully holds for investment in interests
in such common trust funds administered by itself or by any affiliated bank, savings and
loan association or trust company, including any foreign affiliated bank, savings and
loan association or trust company, if such investment is not prohibited by the
instrument, judgment, decree, order or statute creating and governing such fiduciary
relationship, and if, in the case of cofiduciaries, the bank, savings and loan
association or trust company procures the consent of its cofiduciaries for such
investment.
B. Each common trust fund established under this section is a separate and distinct
entity from the fiduciary relationships participating in the fund. A fiduciary in
administering a participating fiduciary relationship is not required to make any
apportionment or allocation between the principal and income of the relationship
different from that made for the common trust fund. A participating fiduciary
relationship, or person having an interest in the relationship, is not deemed to have any
ownership in particular property of the common trust fund, but each participating
fiduciary relationship has a proportionate undivided interest in the fund and its income
and the ownership of all property of the common trust fund is in the trustee of the fund.
C. This section applies to all fiduciary relationships, including those established
prior to April 21, 1980, whether the relationships are revocable or irrevocable. This
section and section 6-872 apply to common trust funds established under this section and
the banks, savings and loan associations and trust companies operating these common trust
funds.
D. For purposes of this section, two or more banks, savings and loan associations
or trust companies are affiliated if they are members of the same affiliated group,
within the meaning of section 1504 of the United States internal revenue code.
E. Nothing in this article shall exempt a common trust fund or any fiduciary
thereof from the requirements of title 20, if such common trust fund or fiduciary is used
for insurance purposes.
6-872 Court accountings
A. Unless ordered by a court of competent jurisdiction, a bank, savings and loan
association or trust company operating a common trust fund pursuant to section 6-871 is
not required to render a court accounting with regard to such funds. It may, by
application to the superior court, secure approval of such an accounting on conditions as
the court may establish.
B. When an accounting of a common trust fund is presented to a court for approval,
the court shall assign a time and place for hearing and order notice thereof by:
1. Publication once a week for three weeks, the first publication to be not less
than twenty days prior to the date of hearing, of a notice in a newspaper having a
circulation in the county in which the home office of the bank, savings and loan
association or trust company operating the common trust fund is located.
2. Mailing not less than fourteen days prior to the date of the hearing a copy of
the notice to all beneficiaries of the trusts participating in the common trust fund
whose names are known to the bank, savings and loan association or trust company from the
records kept by it in the regular course of business in the administration of such
trusts, directed to them at the addresses shown by the records.
3. Such further notice, if any, as the court may order.
6-873 Uniformity of interpretation
This article shall be so construed as to make uniform the law of those states which
enact it.
6-874 Short title
This article may be cited as the uniform common trust fund act.
6-881 Definitions
In this article, unless the context otherwise requires:
1. "Savings account" means monies received or held by the trust company in the
usual course of business and for which the trust company is obligated to give conditional
or unconditional credit.
2. "Time deposit" means a deposit that the depositor does not have a right to
withdraw for at least seven days after the date of deposit.
6-882 Savings accounts and time deposits;insurance; withdrawal; notice
A. If authorized by the articles of incorporation and bylaws and if approved by the
superintendent, a trust company may receive monies for the purpose of maintaining savings
accounts and time deposits. The trust company may pay interest on the savings accounts
and time deposits and may prescribe terms and conditions that are consistent with the
requirements of the federal deposit insurance corporation.
B. Before offering savings accounts and time deposits the board of directors shall
approve the action by a written resolution that specifies the written documents to be
issued representing the savings accounts and time deposits. The board shall submit:
1. A certified copy of the approving resolution to the superintendent.
2. Copies of the written documents to the superintendent for approval by the
superintendent.
C. The federal deposit insurance corporation or its successor shall insure all
savings accounts and time deposits held by a trust company. A trust company shall
immediately notify the superintendent when the trust company applies to the federal
deposit insurance corporation or its successor for deposit insurance. Until final
disposition of the application for deposit insurance, the trust company shall submit
monthly reports to the superintendent specifying the status of the application.
D. A trust company may require the holder of a savings account to give the trust
company written notice at least seven days before an intended withdrawal that is not
payable on a specified date or at the expiration of a specified time after the date of
deposit.
E. A trust company may issue a transferable, nontransferable, negotiable or
nonnegotiable certificate, instrument, passbook or statement representing a time deposit
or savings account.
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