CHAPTER 349
SB 421 – FINAL VERSION
03/24/10 1121s
05May2010… 1537h
2010 SESSION
08/05
SENATE BILL 421
AN ACT relative to the laws regulating trusts and trust companies in New Hampshire.
SPONSORS: Sen. D'Allesandro, Dist 20; Rep. Hunt, Ches 7
COMMITTEE: Commerce, Labor and Consumer Protection
This bill defines and regulates family trust companies.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
03/24/10 1121s
05May2010… 1537h
10-2790
08/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Ten
AN ACT relative to the laws regulating trusts and trust companies in New Hampshire.
Be it Enacted by the Senate and House of Representatives in General Court convened:
349:1 Purpose. The general court finds:
I. The market for trusts and fiduciary services across the nation is a rapidly growing sector of the nation’s economy.
II. New Hampshire is uniquely positioned to provide the most attractive legal and financial environment for individuals and families seeking to establish and locate their trusts and investment assets.
III. This act will serve to continue New Hampshire’s firm commitment to be the best and most attractive legal environment in the nation for trusts and fiduciary services, an environment that will continue to attract to our state good-paying jobs for trust and investment management, legal and accounting professionals, and other professionals to provide the support and infrastructure required to service this growing sector of the nation’s economy.
349:2 New Chapter; Family Trust Companies. Amend RSA by inserting after chapter 392-A the following new chapter:
CHAPTER 392-B
INCORPORATION AND MANAGEMENT OF FAMILY TRUST COMPANIES
392-B:1 Definitions.
I. “Confidential information,” with respect to a family trust company, includes the names of stockholders, members, or other owners; ownership information; capital contributions; addresses; business affiliations; findings of the bank commissioner through any examination or investigation of the bank commissioner; the pledge or bond amount required by RSA 392-B:20, II; any information required to be reported or filed with the bank commissioner, any information that qualifies as any person’s “nonpublic personal financial information” under Chapter V of the Gramm-Leach-Bliley Act of 1999 and the regulations implementing it; any information or agreement relating to any merger, consolidation, or transfer; any agreements or information relating to any relationship with a contracting trustee; and any other nonpublic information that, in the judgment of the bank commissioner, could be useful in connection with an act of bribery, extortion, identity theft, or terrorism.
II. “Designated relative” means the individual whose relationship to other individuals determines whether the individuals are family members under RSA 392-B:1, IV, or who is designated in the petition under RSA 392-B:5, I, or pursuant to RSA 392-B:23. The designated relative must be living and 18 years of age or older at the time the said petition or application for change in designated relative is filed with the bank commissioner.
III. “Family trust company” means a nondepository trust company that is organized under this chapter to engage in business with one or more family members, does not transact business with the general public, and is prohibited by its charter from making loans and accepting deposits.
IV.(a) “Family member” means the designated relative and:
(1) Any individual within the fifth degree of lineal kinship to the designated relative;
(2) Any individual within the ninth degree of collateral kinship to the designated relative;
(3) The spouse or former spouse of the designated relative and of any individual qualifying as a family member;
(4) A company controlled by one or more family members who shall possess, directly or indirectly, the power to direct or cause the direction of the management and policies of such company, whether through the ownership of voting securities, by contract, or otherwise;
(5) A trust established by a family member or by an individual who is not a family member if non-charitable beneficiaries who are family members represent a majority of interest in the trust;
(6) The estate of a family member; or
(7) A charitable foundation or other charitable entity created by a family member.
(b) For purposes of this paragraph, a legally adopted individual shall be treated as a natural child of the adoptive parents.
(c) For purposes of this paragraph, “lineal kinship” shall mean a family member who is in the direct line of ascent or descent from the designated relative. “Collateral kinship” shall mean a relationship that is not lineal, but stems from a common ancestor. Degrees are calculated by adding the number of steps from the designated relative through each person to the family member either directly in the case of lineal kinship or through the common ancestor in the case of collateral kinship.
(d) For purposes of this paragraph, no company, trust, charitable foundation, or other charitable entity shall qualify as a family member if the bank commissioner determines such entity was organized or operated for the purpose of evading the limitations of this chapter.
V. “Indirect owner” means, with respect to direct owners and other indirect owners in a multilayered organization:
(a) In the case of an owner that is a corporation, each of its shareholders that beneficially owns, has the right to vote, or has the power to sell or direct the sale of, 25 percent or more of that corporation.
(b) In the case of an owner that is a partnership, all general partners and those limited and special partners that have the right to receive upon dissolution, or have contributed, 25 percent or more of the partnership’s capital.
(c) In the case of an owner that is a trust, the trust, each trustee and each beneficiary of 25 percent or more of the trust.
(d) In the case of an owner that is a limited liability company:
(1) Those members that have the right to receive upon dissolution, or have contributed, 25 percent or more of the company’s capital; and
(2) If managed by elected managers, all elected managers.
(e) In the case of an indirect owner, the parent owners of 25 percent or more of their subsidiary.
VI. “Organizational instrument’’ means the articles of agreement for a corporation or the certificate of formation for a limited liability company.
VII. “Transact business with the general public” means engaging in any sales, solicitations, arrangements, agreements, or transactions to provide trust business services, whether or not for a fee, to more than 15 natural persons that are not family members. In order for a person to be eligible to receive such trust business services, the person shall be:
(a) An employee of the family trust company or of a trust or company that is a family member; and
(b) Engaged principally in providing services to the family trust company or its fiduciary accounts.
392-B:2 Organizers. Except as provided in this section, 3 persons may subscribe to an organizational instrument in writing for the purpose of forming a family trust company and may, upon compliance with the provisions of this chapter, become a family trust company with all the powers and privileges and subject to all the duties, restrictions, and liabilities of a family trust company, as set forth in the general laws now or hereafter in force relating to such family trust companies. If a family trust company is being organized by a holding company that will directly or indirectly hold all of the shares or interests of the family trust company, or in connection with a reorganization of a family trust company into a holding company structure, then only the holding company or, if applicable, the subsidiary of the holding company that will hold all of the shares or interests of the family trust company, is required to subscribe to the organizational instrument.
392-B:3 Limited Liability Company. Notwithstanding RSA 304-C:7, I, or any other provision of law to the contrary, a family trust company subject to the regulation of the bank commissioner may be organized as a limited liability company with all the powers and privileges and subject to all the duties, restrictions, and liabilities of a corporate family trust company. A family trust company organized as a limited liability company shall have all the powers and privileges and, except as otherwise provided in this section, be subject to all the duties, restrictions, and liabilities of state laws applicable to a limited liability company. A family trust company organized as a limited liability company shall be subject to all of the same laws and regulations that relate to a family trust company organized as a corporation. All managers and employees of a family trust company organized as a limited liability company shall be subject to the same duties and liabilities as pertain to directors, trustees, and employees of a family trust company organized as a corporation. Any reference to corporations, directors, officers, stockholders, or other like terms used to describe corporations in the statutes governing family trust company shall be construed to apply in the same manner to limited liability companies, managers, employees, members, or other like terms used to describe limited liability companies unless the context otherwise requires. The organizational instrument of a family trust company chartered as a limited liability company shall provide that its existence shall be perpetual, that the company shall be managed by managers, that no member of the company shall be individually liable for the debts of the company, other than to the extent of the member's investment therein and that any limitation on transferability of ownership interests shall exclude any transfer required by lawful order of the bank commissioner.
392-B:4 Organizational Instrument. Said organizational instrument shall set forth that the organizers thereto associate themselves with the intention of forming a family trust company, and shall specifically state:
I. The name by which the family trust company shall be known.
II. The purpose for which it is formed, including an exclusion from taking deposits and making loans.
III. The name of the registered agent and the address of the registered office.
IV. Any other provisions consistent with the requirements of RSA 293-A if the family trust company is in corporate form or RSA 304-C if the family trust company is in limited liability form.
392-B:5 Petition.
I. Said organizers may file a petition requesting that the bank commissioner grant a charter for a family trust company. Such petition shall be made in the form prescribed by the bank commissioner, together with all other information required by the bank commissioner to be submitted with the petition, and shall be signed by the organizer or organizers, as the case may be. The petition shall state that the family trust company or proposed family trust company will not transact business with the general public without the approval of the bank commissioner and shall state the name of the designated representative whose relationship to other individuals determines whether the individuals are family members under RSA 392-B:1, IV. An examination fee of $10,000 shall be paid when the petition is filed. Sums collected under this section shall be payable to the state treasurer as restricted revenue and credited to the appropriation for the bank commissioner.
II.(a) Except as otherwise provided in this chapter, a family trust company shall be subject to the provisions of Title 35 in the same manner and to the same extent as a nondepository trust company, unless expressly exempted by the bank commissioner pursuant to this paragraph.
(b) A family trust company or proposed family trust company may request in writing, in the form required by the bank commissioner, that it be exempted from any provision of Title 35. The bank commissioner may grant or deny the exemption request in whole or in part. The bank commissioner also may issue rules, orders, or declaratory rulings granting exemptions to all family trust companies, or to family trust companies that meet specified conditions.
(c) The bank commissioner may examine or investigate the family trust company or proposed family trust company in connection with the request for exemption. Unless the application presents novel or unusual questions, the bank commissioner shall approve or deny the application for exemption no later than the 61st day after the date the bank commissioner considers the petition complete and accepted for filing. The bank commissioner may require the submission of additional information in order to make an informed decision to approve or reject the proposed exemption.
(d) Any exemption granted under the provisions of this section may be made subject to conditions or limitations imposed by the bank commissioner consistent with this chapter, and those conditions or limitations shall be included in an order.
(e) Rules, orders, or declaratory rulings of the bank commissioner may provide for other circumstances that justify exemption from any of the specified provisions of Title 35, specifying the provisions that are subject to the exemption request, and establishing procedures and requirements for obtaining, maintaining, or revoking exemptions.
III.(a) The bank commissioner may complete a background investigation and criminal history records check on the person or group of persons acting in concert who propose to acquire or hold directly or indirectly 10 percent or more of the beneficial ownership or control of the family trust company, new officers and directors and any person in a similar position or performing similar functions. If any such person is a subsidiary of another company, the banking department may complete a background investigation and criminal history records check on the individuals who are the indirect owners.
(b) If required by the bank commissioner, the persons described in subparagraph (a) shall submit to the banking department a notarized criminal history records release form, as provided by the New Hampshire division of state police, which authorizes the release of the person’s criminal records, if any. The person shall submit with the release form a complete set of fingerprints taken by a qualified law enforcement agency or an authorized employee of the banking department. In the event that the first set of fingerprints is invalid due to insufficient pattern, a second set of fingerprints shall be necessary in order to complete the criminal history records check. If, after 2 attempts, a set of fingerprints is invalid due to insufficient pattern, the banking department may, in lieu of the criminal history records check, accept police clearances from every city, town, or county where the person has lived during the past 5 years.
(c) The bank commissioner shall submit the criminal history records release form to the New Hampshire division of state police which shall conduct a criminal history records check through its records and through the Federal Bureau of Investigation. Upon completion of the background investigation, the division of state police shall release copies of the criminal conviction records to the banking department. The banking department shall maintain the confidentiality of all criminal history records information received pursuant to this paragraph.
(d) The bank commissioner may require the incorporators to pay the actual costs of each background investigation and criminal history records check.
(e) The bank commissioner may make further inquiry and investigation as the bank commissioner deems appropriate.
IV. Upon receipt of a petition deemed to be complete by the bank commissioner, the bank commissioner shall promptly conduct an examination of all relevant facts connected with the formation of the proposed family trust company. The bank commissioner may examine the following factors:
(a) Whether the proposed organizational and capital structure and the amount of initial capital appear adequate.
(b) Whether the proposed officers and directors or managers, as a group, have sufficient experience, ability, standing, competence, trustworthiness, and integrity to justify a belief that the proposed family trust company will be free from improper or unlawful influence and otherwise will operate in compliance with law, and that success of the proposed family trust company is reasonably probable.
(c) Whether the proposed name of the proposed family trust company is likely to mislead the public as to its character or purpose or is the same as a name already adopted by an existing bank, savings association, or trust institution in this state, or so similar thereto as to be likely to mislead the public.
(d) Any other factor, as the bank commissioner may deem appropriate.
V. The bank commissioner may make further inquiry and investigation as the bank commissioner deems appropriate. Notwithstanding any other law to the contrary, information bearing on actual or proposed accounts of the family trust company or proposed family trust company applying for the exemption or the identity or residence address of the designated relative or any other family member shall be confidential and not subject to public disclosure.
VI. The failure of a petitioner to furnish required information, data, other material, or the required fee within 30 days after a request may be considered an abandonment of the petition.
VII. Any application not deemed complete may be rejected by the bank commissioner. A rejected application may be refiled with the bank commissioner upon such form and in such manner as prescribed by the bank commissioner and a refiling fee of $10,000 shall be paid.
392-B:6 Investigation. For the purpose of any investigation under this chapter, the bank commissioner shall have the power to subpoena witnesses and administer oaths in any adjudicative proceedings, and to compel, by subpoena duces tecum, the production of all books, records, files, and other documents and materials relevant to its investigation.
392-B:7 Decision.
I. In deciding whether or not to grant the petition, the bank commissioner shall consider the information set forth in RSA 392-B:5, IV. Upon reaching his or her decision, the bank commissioner shall make a record thereof. If the petition is denied, it shall be dismissed and no new petition concerning the same company shall be filed within one year thereafter.
II. If the bank commissioner determines that the petition does not meet the requirements of RSA 392-B:5, IV by the exercise proposed by the family trust company of all the powers and privileges which are included in the petition, but that the same would be satisfied by the exercise of a part thereof, he or she shall notify the petitioners; and in such case, the petitioners may have leave to withdraw, and may at once file another petition setting forth new organizational documents, upon which the same procedure shall be conducted as upon the original petition.
III. A petition of the organizers for a charter for the proposed family trust company shall be exempt from any notice, objection, or hearing requirements otherwise applicable to nondepository trust companies.
392-B:8 Confidentiality.
I. All confidential information received in connection with any filing by or concerning a family trust company shall be confidential communications, shall not be subject to subpoena, and shall not be made public unless, in the judgment of the bank commissioner, the ends of justice and the public advantage will be served by the publication of the information.
II. The bank commissioner shall give to the affected family trust company 10 days prior written notice of intent to disclose confidential information directly or indirectly to the public. Any family trust company which receives a notice may object to the disclosure of the confidential information and shall be afforded the right to a hearing in accordance with the provisions of RSA 383. If a family trust company requests a hearing, the bank commissioner may not reveal confidential information prior to the conclusion of the hearing and a ruling. Prior to dissemination of any confidential information, the bank commissioner shall require a written agreement not to reveal the confidential information by the party receiving the confidential information. In no event shall the bank commissioner disclose confidential information to the general public, any competitor, or any potential competitor of a family trust company.
III. Nothing in this chapter shall be construed to preclude a law enforcement officer from gaining access to otherwise confidential records by subpoena, court order, search warrant, or other lawful means. The bank commissioner may share information with other out of state or federal regulators with whom the department has an information sharing agreement. Nothing in this chapter shall be construed to preclude any agency of the state of New Hampshire from gaining access to otherwise confidential records in accordance with any applicable law, including in connection with an investigation or review of the secretary of state conducted in accordance with RSA 421-B.
IV. Notwithstanding any other law to the contrary, information bearing on actual or proposed accounts of the family trust company or proposed family trust company applying for a charter or the identity or residence address of the designated relative or any other family member shall be confidential and not subject to public disclosure.
392:B:9 Organizers’ Powers. The organizer or organizers of a family trust company in organization shall hold the franchise until the organization has been completed.
392-B:10 Organization. The organizer or organizers shall meet in person or by written consent to organize the family trust company, to adopt bylaws if the company is a corporation or an operating agreement if the company is a limited liability company and to elect, or cause to be elected, such directors or managers and officers as may be required by the organizational instrument, bylaws or operating agreement. All directors, managers, and officers so elected shall be sworn to the faithful performance of their duties. A temporary secretary shall make and attest a record of the proceedings until the secretary has been chosen and sworn, including a record of such choice and qualification.
392-B:11 Certificate. A majority of the directors or managers shall sign and make oath to a certificate setting forth:
I. A true copy of the organizational instrument, the names and business post office address of the organizer or organizers thereof, and the name and business post office address of the directors, managers, and officers of the family trust company.
II. The date on which such action was taken.
III. A copy of the records.
392-B:12 Approval. Such certificate shall be submitted to the bank commissioner, who shall examine the same, and who may require such amendment thereof or such additional information as he or she may consider necessary. If he or she finds that the certificate is consistent with the decision pursuant to RSA 392-B:7 and that the proceedings in other respects conform to the provisions of this chapter, he or she shall so certify and indorse his or her approval upon said certificate and the organizational instrument.
392-B:13 Record of Organizational Instrument. Within 90 days after a favorable decision pursuant to RSA 392-B:7, the articles of agreement or certificate of formation of the family trust company shall be filed with the secretary of state. The secretary of state, upon payment of a fee equal to the fee charged by the secretary of state to business corporations under RSA 293-A if the family trust company is a corporation, or the fee charged to limited liability companies under RSA 304-C if the family trust company is a limited liability company, shall cause the same, with the indorsement thereon, to be recorded.
392-B:14 Certificate of Organization. The secretary shall thereupon issue a certificate of organization in the following form:
STATE OF NEW HAMPSHIRE
Be it known, that whereas (the names of the organizers of the family trust company) have associated themselves with the intention of forming a family trust company under the name of (the name of the family trust company), for the purpose (the purpose declared in the organizational instrument), and have complied with the provisions of the statutes of this state as duly approved by the bank commissioner and recorded in this office: Now, therefore, I (the name of the secretary), secretary of state, do hereby certify that said (the names of the organizers of the family trust company), and their successors, are legally organized and established as, and are hereby made, an existing family trust company under the name of (name of family trust company), with the powers, rights, and privileges, and subject to the limitations, duties, and restrictions, which by law appertain thereto.
Witness my official signature hereunto subscribed, and the seal of the state hereunto affixed, this ____ day of _______________ in the year _______ (the date of the filing of the organizational instrument).
The secretary of state shall sign the certificate of organization and cause the seal of the state to be affixed thereto, and such certificate shall have the force and effect of a special charter.
392-B:15 Certificate or Record as Evidence. The secretary of state shall also cause a record of the certificate of organization to be made, and such certificate, or such record or a certified copy thereof, shall be conclusive evidence of the existence of such family trust company.
392-B:16 When Organized; Beginning Business. The existence of such family trust company shall begin upon the filing of the organizational instrument with the secretary of state. Any family trust company organized under this chapter shall begin business within 2 years from the date of its organization; otherwise its charter shall be void, unless the bank commissioner, for good cause shown, shall grant one extension for not more than one year.
392-B:17 List of Owners. When all of the initial investment in the capital of the family trust company has been paid, a complete list of the investors, with the name and post office address of each, and the number of shares or interests held by each, shall be filed with the bank commissioner, which list shall be verified by one or more officers of the family trust company. If there is any change in the information contained in the list, the family trust company shall file with the bank commissioner a revised list within 60 days of the change.
392-B:18 Authorizing Business. Upon receipt of such list, the bank commissioner shall cause an examination to be made; and if, upon such examination, it appears that the required capital has been paid to the family trust company in cash, and that all requirements of law have been complied with, the bank commissioner shall issue a certificate authorizing such family trust company to begin the transaction of business. The cost of such examination shall be paid by the family trust company and shall be limited to a per diem charge for overall compensation costs, including the benefits portion thereof, and expenses as determined by the bank commissioner, provided, however, that no such family trust company shall be charged or pay for less than one full day. Sums collected under this section shall be payable and credited in accordance with the procedure established under RSA 383:11.
392-B:19 Unauthorized Acts. The transaction of business by such family trust company prior to the issuance of a certificate of authority to engage in business issued by the bank commissioner as required by RSA 392-B:18 shall make the organization void, and in such case the organizers shall be liable as partners for the contracts, debts, and engagements of the company.
392-B:20 Minimum Capital Requirements; Investment of Capital.
I. The initial capital required to organize a family trust company shall be not less than $250,000. The bank commissioner may require, in the exercise of his or her discretion based on safety and soundness factors, as set forth in paragraph IV, additional capital at such levels as he or she determines is necessary to protect against the risks inherent in the business of the family trust company. Once organized, a family trust company shall maintain a minimum level of capital required by the bank commissioner to operate in a safe and sound manner based upon his or her examination of the company, provided that the level of capital shall not be less than $250,000. The bank commissioner may, by rule, order, or declaratory ruling set liquidity requirements for such capital. The bank commissioner may require any family trust company to increase its capital funds from time to time as may be necessary to comply with reasonable trust standards, as applicable, not inconsistent with law.
II. A family trust company shall pledge to the bank commissioner securities or a surety bond for the benefit of the bank commissioner to defray the costs of a liquidation of the family trust company by the bank commissioner in the event it should fail. The amount of the securities or the surety bond shall be determined by the bank commissioner in an amount that he or she deems appropriate to defray such costs, but in no event shall such amount exceed $1,250,000 initially or if the family trust company has a rating from the bank commissioner of a one or 2. If a family trust company has a rating from the bank commissioner of 3 or lower, then the amount of the securities or the surety bond shall be increased to $3,000,000 and the family trust company shall satisfy such increase within 14 calendar days of receipt of written notice from the bank commissioner. In the event of a receivership of a family trust company, the bank commissioner may, without regard to any priorities, preferences, or adverse claims, reduce the pledged securities or the surety bond to cash and, as soon as practicable, utilize the cash to defray the costs associated with the receivership. If the family trust company chooses to pledge securities to satisfy this provision, the securities shall be held at a depository institution or a Federal Reserve Bank approved by the bank commissioner. The bank commissioner may specify the types of securities that may be pledged. Any fees associated with holding such securities shall be the responsibility of the family trust company. If the family trust company chooses to purchase a surety bond to satisfy this provision, the surety bond shall be issued by a bonding company, approved by the bank commissioner, that is authorized to do business in this state and that has a rating in one of the 3 highest grades as determined by a national rating service. The surety bond shall be in a form approved by the bank commissioner. The family trust company may not obtain a surety bond from any entity in which the family trust company has a financial interest.
III. The safety and soundness factors to be considered by the bank commissioner in the exercise of his or her discretion include:
(a) The nature and type of business proposed to be conducted.
(b) The nature and liquidity of assets proposed to be held in its own account.
(c) The amount of fiduciary assets projected to be under management.
(d) The type of fiduciary assets proposed to be held and the proposed depository of the assets.
(e) The complexity of fiduciary duties and degree of discretion proposed to be undertaken.
(f) The competence and experience of proposed management.
(g) The extent and adequacy of proposed internal controls.
(h) The proposed presence or absence of annual unqualified audits by an independent certified public accountant.
(i) The reasonableness of business plans for retaining or acquiring additional equity capital.
(j) The existence and adequacy of insurance proposed to be obtained by the family trust company for the purpose of protecting its clients, beneficiaries, and grantors.
IV. Based on the factors in paragraph III, the bank commissioner may require any family trust company to increase its capital funds from time to time as may be necessary for its safe and sound operation.
V. Notwithstanding any other provisions of law to the contrary, a family trust company may invest its funds for its own account in any type or character of equity securities or debt securities subject to the limitations provided by this section, which investments shall otherwise comply with the prudent investor standard described in RSA 564-B:9-902.
VI. Subject to paragraphs VII and VIII, the total investment in equity and investment securities of any one issuer, obligor, or maker held by a family trust company for its own account shall not exceed an amount equal to 15 percent of the family trust company’s equity capital. The bank commissioner may authorize investments in excess of this limitation if the bank commissioner concludes that the safe and sound operation of a family trust company would not be adversely affected by a proposed investment exceeding this limitation.
VII. In calculating compliance with the investment limits set forth in paragraph VI, a family trust company shall not be required to combine:
(a) The family trust company’s pro rata share of the securities of an issuer in the portfolio of a collective investment vehicle with the family trust company’s pro rata share of the securities of that issuer held by another collective investment vehicle in which the family trust company has invested; or
(b) The family trust company’s own direct investment in the securities of an issuer with the family trust company’s pro rata share of the securities of that issuer held by collective investment vehicles in which the family trust company has invested under the provisions of this section.
VIII. Notwithstanding paragraph VI, a family trust company may purchase for its own account, without limitation and subject only to the exercise of prudent judgment:
(a) Bonds and other general obligations of a state, an agency, or political subdivision of a state, the United States, or an agency or instrumentality of the United States.
(b) A debt security that this state, an agency or political subdivision of this state, the United States, or an agency or instrumentality of the United States has unconditionally agreed to purchase, insure, or guarantee.
(c) Securities that are offered and sold under 15 U.S.C. section 77d(5).
(d) Mortgage-related securities as defined in 15 U.S.C. section 78c(a).
(e) Investment securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, Fannie Mae, the Government National Mortgage Association, the Federal Agricultural Mortgage Association, or the Federal Farm Credit Banks Funding Corporation; and
(f) Investment securities issued or guaranteed by the North American Development Bank.
IX. The bank commissioner may allow a family trust company to make other investments of its corporate funds not specified in this chapter by rules, orders, or declaratory rulings.
392-B:21 Management.
I. A family trust company shall have a board of not less than 3 directors, trustees, or managers who need not be residents of New Hampshire or the United States, unless the bank commissioner shall issue an order requiring directors, trustees, or managers to be residents or citizens of the United States, based on a finding that the safety and soundness of such family trust company is likely to be impaired, but in no event shall the bank commissioner require more than one director or manager to be a resident.
II. The board of directors, trustees, or managers of a family trust company shall meet on a regular basis as often as necessary but not less than 4 times per year, unless the bank commissioner shall issue an order requiring directors, trustees, or managers to meet more frequently, based on a finding that the safety and soundness of such family trust company is likely to be impaired.
III. Unless otherwise provided in its organizational instrument or other agreements, a board of directors, trustees, or managers of a family trust company in the exercise of its sound discretion may permit any or all directors, trustees, or managers to participate in a regular or special meeting by, or conduct the meeting through the use of, any means of communication by which all of the directors, trustees, or managers participating may simultaneously hear each other during the meeting. A director, trustee, or manager participating in a meeting by this means is deemed to be present in person at the meeting.
IV. The board of directors, trustees, or managers of a family trust company shall have the power to establish such committees and such officers with such titles as may be necessary for transaction of the business of the family trust company and as may be permitted under the laws of this state.
392-B:22 Annual Certification. To maintain its status as a family trust company and to maintain any exemptions from the provisions of this title granted by the bank commissioner, a family trust company shall file with the bank commissioner an annual certification that it is in compliance with the provisions of this chapter and the conditions and limitations of all granted exemptions. This annual certification shall be filed in the form required by the bank commissioner and accompanied by a fee of $100. The annual certification shall be filed on or before December 31 of each year. The bank commissioner may examine or investigate the family trust company periodically as necessary to verify the certification.
392-B:23 New Designated Relative. No more than once every 10 years after its organization, the family trust company may designate, in any annual certification, a new designated relative meeting the requirements of RSA 392-B:5, I to be effective on January 1 of the following year, provided that the family trust company, in addition to the certification required in RSA 392-B:21, certifies: (a) that such individual designated as the new designated relative qualified as a family member as of the date of the certification, and (b) that as of the effective date of the new designation, the family trust company will be in compliance with the provisions of this chapter and the conditions and limitations of all exemptions granted. A designation of a new designated relative in accordance with this paragraph shall be accompanied by a fee of $1,000. No former family member who is rendered ineligible to receive services as a family member as a result of the designation of the new designated relative shall continue to receive services as a family member from the family trust company on or after the effective date of the new designation.
392-B:24 Termination of Exemption.
I. If any transaction involving a family trust company requires an application to the bank commissioner for approval under this chapter, and such approval is not obtained prior to consummation of such a transaction, any exemption from the provisions of Title 35 granted to the family trust company shall automatically terminate upon the consummation of the unapproved transaction unless the bank commissioner approves the continuation of the exemption.
II. The bank commissioner may revoke any exemption from the provisions of Title 35 granted to a family trust company in the following circumstances:
(a) An officer or director of the family trust company makes a false statement under oath on any document required to be filed by this chapter or by any rules or orders of the bank commissioner;
(b) The family trust company fails to submit to an examination by the bank commissioner as required by law;
(c) An officer or director of the family trust company withholds requested information from the bank commissioner;
(d) The family trust company violates any provision of this chapter or fails to meet any condition on which the exemption is based; or
(e) The family trust company refuses to comply with any rule or order of the bank commissioner.
III. If the bank commissioner determines from examination or other credible evidence that a family trust company has violated any of the requirements of Title 35 or fails to meet any condition or limitation on which an exemption from the provisions of Title 35 is based, the bank commissioner may, by personal delivery or registered or certified mail, return receipt requested, notify the family trust company that the family trust company’s exemptions from the provisions of Title 35 will be revoked unless the family trust company corrects the violation or failure or shows cause why any exemptions should not be revoked. The notification shall state grounds for the revocation with reasonable certainty and shall advise of an opportunity for a hearing. The notice shall state the date upon which the revocation shall become effective absent a correction or showing of cause why the exemption should not be revoked, which shall not be before the 30th day after the date the notification is mailed or delivered, except as provided in paragraph IV. The revocation shall take effect for the family trust company on the date stated in the notice if the family trust company does not request a hearing in writing before the effective date. After the revocation takes effect, the family trust company shall be subject to all of the requirements and provisions of Title 35 applicable to a nondepository trust company.
IV. If the bank commissioner determines from examination or other credible evidence that a family trust company appears to be engaging or attempting to engage in acts intended, designed, or likely to deceive or defraud the public, the bank commissioner may shorten or eliminate the 30-day notice period specified in paragraph III, but shall promptly afford a subsequent hearing upon request to rescind the action taken.
V. If the family trust company does not comply with all of the provisions of this chapter or correct any failure to meet any condition or limitation on which an exemption is based within the notice period specified in paragraphs III or IV, the bank commissioner may institute any action or remedy prescribed by this chapter or any applicable rule.
392-B:25 Amendment of Organizational Instrument or Exemptions. Any family trust company organized under this chapter or chartered prior to the passage thereof may file with the bank commissioner a petition, together with a filing fee of $1,500, setting forth an amendment to its organizational instrument or its exemptions, and requesting approval of the amended organizational instrument or further exemptions based on the considerations set forth in RSA 392-B:5. Any petition by a family trust company under this paragraph shall be decided by the bank commissioner.
392-B:26 Procedure; Effect. If the petition is granted, a copy of the amended organizational instrument, certified by the clerk or secretary of the family trust company, with the approval of the bank commissioner indorsed thereon, shall be filed in the office of the secretary of state, accompanied by a fee equal to the fee charged by the secretary of state to business corporations under RSA 293-A if the family trust company is a corporation, or the fee charged to limited liability companies under RSA 304-C if the family trust company is a limited liability company, and thereupon the secretary of state shall cause the same, with the endorsement thereon, to be recorded as provided in RSA 392-B:13, and shall issue a certificate of such amended organizational instrument, which shall conform as nearly as may be to the form prescribed in RSA 392-B:14 and shall have the same force and effect, and thereafter such family trust company shall have all the powers and privileges provided for by such amended certificate or charter and shall be subject to all the provisions of this chapter.
392-B:27 Conversion to Nondepository Trust Company Transacting Business With the General Public.
I. A family trust company may file a notice on a form prescribed by the bank commissioner stating its intent to convert into a nondepository trust company subject to RSA 392, which shall set forth its new proposed name and acknowledge that any exemption granted or otherwise applicable to the family trust company pursuant to this chapter shall cease to apply once the bank commissioner terminates family trust company status. The family trust company shall furnish a copy of the resolution adopted by its board of directors authorizing it to convert into a nondepository trust company, and shall pay the filing fee, if any, prescribed by rule of the bank commissioner.
II. The nondepository trust company may commence transacting business with the general public on the 31st day after the date the bank commissioner receives the notice, unless the bank commissioner:
(a) Establishes an earlier or later date;
(b) Notifies the family trust company that the notice raises issues that require additional information or additional time for analysis; or
(c) Disapproves the termination of family trust company status.
III. If the bank commissioner gives a notification described in subparagraph II(b), the family trust company status may be terminated only on approval by the bank commissioner.
IV. The bank commissioner may deny approval of the proposed termination of family trust company status if the bank commissioner finds that the family trust company lacks sufficient resources to undertake the proposed conversion without adversely affecting its safety or soundness or if the bank commissioner determines that the family trust company could not within a reasonable period be in compliance with any provision of Title 35 from which it previously had been exempted pursuant to this chapter. Such determination shall be based on the factors set forth in RSA 392-B:5, VI to the extent applicable.
392-B:28 Voluntary Dissolution of Family Trust Company. A family trust company may voluntarily dissolve in the manner provided in this chapter. Such dissolution may be accomplished by the liquidation of the family trust company or by reorganizing the family trust company into a domestic or foreign corporation, limited liability company, limited partnership, or limited liability partnership that does not have banking or trust powers, and in both instances surrendering its family trust company charter to the bank commissioner. A family trust company that reorganizes into any other entity pursuant to this section shall not engage in any activity that is authorized only for a bank or a family trust company.
392-B:29 Voluntary Dissolution by Liquidation. A family trust company which voluntarily dissolves by means of liquidation, shall do so by complying with the procedures for a voluntary dissolution set forth in the provisions of state law applicable to domestic business corporations, if organized as a banking corporation, or by complying with the procedures for a voluntary dissolution of a domestic limited liability company, limited partnership, or limited liability partnership, as applicable, if the dissolving family trust company was organized as such other type of banking entity, provided, however, that any filing required to be made with the secretary of state shall be made instead with the bank commissioner.
392-B:30 Voluntary Dissolution by Reorganization. A family trust company which voluntarily dissolves by means of a reorganization into a domestic or foreign corporation, limited liability company, limited partnership, or limited liability partnership which is not authorized to engage in banking or trust activities shall do so by compliance with the procedures for a reorganization into such type of business entity as set forth in the provisions of domestic and foreign law applicable to such business entities, provided, however, that any filing required to be made with the secretary of state shall be made instead with the bank commissioner.
392-B:31 Approval of Voluntary Dissolution; Filing Fee.
I. A family trust company seeking to dissolve its charter shall file an application for dissolution with bank commissioner accompanied by a filing fee of $1,500 payable to the bank commissioner. The bank commissioner shall examine the application for completeness and compliance with the requirements of this section, the domestic business entity laws applicable to the requested type of liquidation or reorganization, and its rules. The application shall include a comprehensive plan of dissolution setting forth the disposition of all assets and liabilities, in reasonable detail to effect the liquidation or reorganization. Among other things, the plan of dissolution shall provide for the discharge or assumption of all of the family trust company’s known or unknown claims and liabilities and the transfer of all of its responsibilities as a trustee to a successor trustee or trustees. Additionally, the filing shall include such other certifications, affidavits, documents, or information with respect to the dissolution as the bank commissioner may require to understand how such assets and liabilities will be disposed of, the timetable for effecting disposition of such assets and liabilities, and the applicant’s proposal for dealing with any claims that are asserted after the dissolution has been completed. The bank commissioner may conduct a special examination of the applicant for purposes of evaluating the application. Cost of the special examination shall be paid by the applicant.
II. If the bank commissioner finds that the application for dissolution is incomplete, the bank commissioner shall return it for completion not later than 60 days after it is filed. If the application is found to be complete by the bank commissioner, not later than 30 days thereafter, the bank commissioner shall hold a hearing for the purpose of determining whether the plan of dissolution disposes of the assets and liabilities in a lawful manner, is fair and equitable to all interested persons, has no adverse effect on the business of banking in the state, and in general carries out the purposes and intentions of RSA 392-B:28, 29 and 30. Not later than 30 days thereafter, the bank commissioner shall either approve or not approve the application. If the bank commissioner approves the application, then the applicant may proceed with the dissolution under the plan, subject to such conditions that the bank commissioner may prescribe. If the applicant subsequently determines that the plan of dissolution must be amended to complete the dissolution, it shall file an amended plan with the bank commissioner and obtain his or her approval to proceed under the amended plan. If the bank commissioner does not approve the application or amended plan, if any, the applicant may appeal the decision pursuant to RSA 541.
III. Upon completion of all actions required under the plan of dissolution and conditions, if any, prescribed by the bank commissioner, necessary to liquidate the family trust company or to effect the reorganization, the applicant shall submit a written report of its actions to the bank commissioner and the applicant’s board of directors shall certify, under oath, that it is true and correct. Following receipt of the report, the bank commissioner may examine the family trust company to determine whether the bank commissioner is satisfied that all required actions have been taken to liquidate or reorganize the family trust company in accordance with the plan of dissolution and any conditions prescribed by the bank commissioner. The cost of the examination shall be paid by the applicant. Not later than 60 days after the filing of the report, the bank commissioner shall examine the report and the bank commissioner’s findings, and, if it is satisfied, shall so notify the applicant in writing that the dissolution has been completed and is final. Thereupon, the applicant shall surrender its charter to the bank commissioner, and the bank commissioner shall issue a certificate of dissolution to be filed with the secretary of state pursuant to RSA 392-B:32. If the bank commissioner is not satisfied that all required actions have been taken, it shall notify the applicant in writing what additional actions shall be taken to be eligible for a certificate of dissolution. The bank commissioner shall establish a deadline for the submission of evidence that the additional actions have been taken. The bank commissioner may extend the deadline for good cause shown. If the applicant fails to file a supplemental report showing that the additional actions have been taken before the deadline, or submits a report that is found not to be satisfactory by the bank commissioner, the bank commissioner shall notify the applicant in writing that its application is not approved, and the applicant may appeal the decision pursuant to RSA 541.
IV. The bank commissioner may adopt rules, pursuant to RSA 541-A, relative to the procedures and requirements for a dissolution pursuant to RSA 392-B:28-32.
392-B:32 Procedure; Effect; Recording Fee. When the bank commissioner approves a voluntary dissolution application, the applicant shall file the certificate of dissolution in the office of the secretary of state, accompanied by a fee of $35. In the case of a reorganization, the applicant shall also file the documents required by the secretary of state for domestic business entities to complete a statutory reorganization of the type approved by the bank commissioner, including the organizational instruments for the reorganized entity. The secretary of state shall record the certificate and other documents, if any, and issue a certificate evidencing such liquidation or reorganization, as applicable. When the secretary of state has issued a certificate evidencing the liquidation or reorganization, as applicable, the dissolving banking corporation, limited liability company, limited liability partnership or limited partnership shall be deemed to have been voluntarily dissolved or reorganized, as applicable, with the same effect as if such voluntary dissolution or reorganization had been effected by a domestic business corporation, limited liability company, limited partnership, or limited liability partnership, by making the filings required of such domestic business entities under the provisions of state law applicable to such domestic business entities.
349:3 Banks, Trust Companies; Affiliated Investments. Amend RSA 384:65, III to read as follows:
III. A bank, acting as a fiduciary pursuant to RSA 384:65, I, may:
(a) Invest in the securities of an investment company [or], investment trust, or other company to which such fiduciary or its affiliate provides services in a capacity other than as trustee, such as advisor, distributor, transfer agent, registrar, sponsor, manager, shareholder servicing agent, administrator, or custodian, and such investment is not presumed to be affected by a conflict between personal and fiduciary interests if the investment complies with the prudent investor standard pursuant to article 9 of RSA 564-B.
(b) Be compensated by the investment company [or], investment trust, or other company for providing services in a capacity other than as trustee, such as advisor, distributor, transfer agent, registrar, sponsor, manager, shareholder servicing agent, administrator, or custodian, if the fiduciary at least annually notifies each person to whom it is required to send account statements under RSA 564-B:8-813 of the rate and method by which the compensation was determined.
349:4 Trust Companies; Limitations. Amend RSA 384:5-a, II to read as follows:
II. The provisions of paragraph I shall not apply:
(a) [Repealed.]
(b) With respect to any person serving as trustee, director, or officer of more than one affiliate of a bank holding company as defined in RSA 384-B:1, IV and V;
(c) With respect to any person serving as a trustee, director, or officer of[:
(1) An institution which does not engage in a trust business; and
(2) A] a trust company which does not make loans and does not accept deposits; or
(d) With respect to any person who is serving in a capacity that is permitted under federal laws or regulations governing depository institution management interlocks.
349:5 Banks, Trust Companies; Confidential Information Conforming Amendment. Amend RSA 392:9-a, I to read as follows:
I. [All confidential information received in connection with any petition or application of or concerning a family fiduciary services company shall be confidential communications, shall not be subject to subpoena, and shall not be made public unless, in the judgment of the commissioner, the ends of justice and the public advantage will be served by the publication of the information.] The commissioner may, at his or her discretion on request or otherwise, determine that confidential information received in connection with any petition or application of or concerning a public trust company [other than a family fiduciary services company] should not be publicly available, in which case such information shall be confidential communications, shall not be subject to subpoena, and shall not be disclosed unless, in the judgment of the commissioner, the ends of justice and the public advantage will be served by the disclosure of the information.
349:6 Repeal. The following are repealed:
I. RSA 392:1-a, III, relative to the definition of “family fiduciary services company.”
II. RSA 392:40-a, relative to certain exemptions for family fiduciary services companies.
III. RSA 392:40-b, relative to requirements to apply for and maintain status as a family fiduciary services company.
IV. RSA 392:40-c, relative to the conversion of family fiduciary services companies to nondepository public trust companies transacting business with the general public.
349:7 Effective Date. This act shall take effect 60 days after its passage.
Approved: July 20, 2010
Effective Date: September 18, 2010