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The Vermont Statutes Online
Title
08
:
Banking and Insurance
Chapter
202
:
ORGANIZATION AND MANAGEMENT OF INVESTOR-OWNED FINANCIAL INSTITUTIONS
Subchapter
006
:
SPECIAL PURPOSE FINANCIAL INSTITUTIONS
§
12602. Nondepository trust companies
(a) A
nondepository trust company has all the powers, duties, and obligations of a
financial institution under this title, except as provided in this section. In
the exercise of its powers and the conduct of its business, the nondepository
trust company shall be subject to all the same fiduciary duties and obligations
as a financial institution operating a trust department under subchapter 4 of
chapter 204 of this title.
(b) A
nondepository trust company shall not have the power to solicit, receive, or
accept money or its equivalent on deposit as a regular business within the
meaning of subdivision 11101(11) of this title; shall not be required to obtain
federal deposit insurance; shall not have the power to lend money, except in
transactions reasonably related to and deriving from its service as fiduciary
or its conduct of trust business; and shall not conduct any other business
except that which is incidental to its trust business and which is otherwise
consistent with the exercise of its fiduciary duties.
(c) No
nondepository trust company, other than a national trust company authorized to
engage in a trust business in this State, shall engage in a trust business in
this State without first obtaining a certificate of authority from the
Commissioner pursuant to this section and sections 11703, 12103, and 14403 of
this title.
(d)
Notwithstanding section 15101 of this title, without the prior approval of the
Commissioner, a nondepository trust company that is authorized to do business
in this State may open and occupy a trust office at any one or more locations
in this State at which its financial institution holding company parent or any
affiliate financial institution has an office, whether a main office or a branch
office.
(e) Any other
trust office of a nondepository trust company organized as a Vermont financial
institution shall be established in this State only with the prior approval of
the Commissioner as provided in subsection 11701(c) of this title.
(f) The establishment
of trust offices by a nondepository trust company organized as a national trust
company shall be governed by applicable federal law.
(g) The
organizational documents of a nondepository trust company organized as a
Vermont financial institution that are filed with the Secretary of State shall
contain the following statement: "This organization is subject to the
Vermont law on nondepository trust companies, section 12602 of this title, and
does not have the power to solicit, receive, or accept money or its equivalent
on deposit or to lend money except for lending reasonably related to and
deriving from its service as fiduciary or its conduct of trust business."
This statement in the organizational documents of a nondepository trust company
may not be amended.
(h) All of the
outstanding equity interests of a nondepository trust company shall be owned
directly, or indirectly through one or more subsidiaries, by a financial
institution holding company.
(i) A
nondepository trust company organized as a Vermont financial institution shall
maintain minimum capital in accordance with this chapter and section 14104 of
this title, except the Commissioner may by order or rule apply standards for
the minimum capital required for a nondepository trust company that are
different from those requirements for a universal financial institution
organized under this title, based on the nature of the business.
(j) Funds
received or held by a nondepository trust company organized as a Vermont
financial institution while awaiting investment or distribution shall not be
used by the nondepository trust company or any affiliate financial institution
in the conduct of its business or deposited in such financial institution,
except to the same extent, and subject to the same conditions and limitations,
as would be otherwise permitted under this title if the nondepository trust
company and affiliated financial institution were one and the same corporate
entity. The account shall be held either in the name of the trust to which the
cash belongs or in the name of the nondepository trust company and shall be
composed entirely of cash belonging to trust accounts, the respective
contributions of which are reflected in the books and records of the
nondepository trust company.
(k) A nondepository
trust company organized as a Vermont financial institution shall include as a
part of its name the word "trust" unless otherwise approved by the
Commissioner for good cause shown.
( l ) A
nondepository trust company organized as a Vermont financial institution shall
be subject to regular examination and supervision by the Commissioner to the
same extent as any other financial institution chartered under Vermont law.
(m) A
nondepository trust company organized as a Vermont financial institution may
convert to any other type of investor-owned financial institution pursuant to
chapter 206 of this title.
(n)(1) At any
time or times following the grant to a nondepository trust company of
permission to engage in the trust business by the Commissioner, or in the case
of a national trust company by its federal supervisory agency, the
nondepository trust company may file a petition in the Probate Division of the
Superior Court of the Probate District in which its main office is located
requesting that it be substituted, except as may be specifically excluded in
such petition, in every fiduciary capacity for any one or more of its affiliate
financial institutions specified in the petition. The petition may be made ex
parte and need not list the fiduciary capacities in which substitution is made.
A copy of the petition shall be furnished to the Commissioner prior to filing
with the Probate Division of the Superior Court and the Commissioner shall have
standing to appear and object to the petition. Upon a finding that (A) the
nondepository trust company has been granted permission to engage in the trust
business by the Commissioner, or the federal supervisory agency if the
nondepository trust company is a national trust company, and (B) each of the
affiliate financial institutions for which the nondepository trust company
seeks to be substituted as fiduciary has complied with the notification
requirements in subdivision (2) of this subsection, the Court shall enter an
order substituting the nondepository trust company in every fiduciary capacity
for each of its specified affiliate financial institutions, except as otherwise
specified in the nondepository trust company's petition. If the Court
determines that the Commissioner's objection has merit, the Court shall issue
an appropriate order to address the Commissioner's objection. The petition made
pursuant to this section shall be considered in a summary fashion by the Court,
and the Court shall act on the petition within 30 days of filing. Upon entry of
the Court's substitution order, the nondepository trust company shall, without
further act, be deemed substituted by operation of law in every such fiduciary
capacity, except as may be specifically excluded in such petition. The
substitution shall be evidenced by filing a copy of the order with the Clerk of
the Vermont Probate Division of the Superior Court in each Probate District in
which the affiliate financial institutions served in a fiduciary capacity prior
to the entry of the order. The order shall be accompanied by written
notification to the Court of each fiduciary appointment previously made by the
Court that is affected by the substitution order, and evidence of compliance
with subdivision (5) of this subsection. The order of substitution shall be
indexed in the records of the Courts in the manner in which substitutions of
fiduciaries are indexed.
(2) At least 30
days before the filing of the petition referred to in subdivision (1) of this
subsection, but after regulatory approval under subsection (c) of this section
has been granted, each of the affiliate financial institutions for which the
nondepository trust company seeks to be substituted shall mail written notice
of the proposed substitution to the principals of each trust account affected.
The form of notice required by this subdivision shall be approved by the
Commissioner and shall include a statement that the nondepository trust company
is affiliated with its affiliate financial institutions, but is not a part of
them, and shall include the name, mailing address, and telephone number of one
or more officers, employees, or agents of the affiliate financial institution
available during regular business hours to answer customer questions regarding
the proposed substitution. The affiliate financial institution shall furnish an
affidavit of the mailing of the notice to the Probate Division of the Superior
Court in conjunction with the filing of the nondepository trust company's
petition referred to in subdivision (1) of this subsection, and the affidavit
shall constitute the affiliate financial institution's compliance with this
subdivision. Following the mailing of the notice and prior to the effective
date of the substitution order, each of the affiliate financial institutions
shall furnish a copy of the notice to each prospective trust customer of the
financial institution before the customer and the financial institution enter
into a trust account relationship.
(3) Within 30
days after the entry of the substitution order referred to in subdivision (1)
of this subsection, the nondepository trust company shall mail written notice
of the substitution to the principals of each trust account affected. The
notice shall specify that the nondepository trust company is affiliated with
its affiliate financial institutions, but is not a part of them, and shall
include the name, mailing address, and telephone number of one or more officers
or employees of the nondepository trust company available during regular
business hours to answer customer questions regarding the substitution.
(4) Each
designation in a will, trust, or other instrument executed before or after the
entry of an order of substitution, naming an affiliate financial institution as
fiduciary, shall be deemed by operation of law to be a designation of the nondepository
trust company, substituted pursuant to this section, without further act or
amendment of the will, trust, or other instrument, unless the will, trust, or
other instrument is executed after the date of entry of the order of
substitution and specifically negates application of this section.
(5) If any
affiliate financial institution for which the nondepository trust company has
been substituted pursuant to this section has given bond in any fiduciary
capacity, the nondepository trust company shall be required to furnish to the
Court or authority making the appointment a substitute bond in like amount and
terms before the affiliate financial institution shall be released from
liability on its bond.
(6) Any
affiliate financial institution for which the nondepository trust company has
been substituted pursuant to this section shall account jointly with the
nondepository trust company for the accounting period during which the
effective date of the substitution occurs. Upon substitution pursuant to this
section, the affiliate financial institution shall deliver to the nondepository
trust company all assets addressed in the substitution order held by the
affiliate financial institution as fiduciary and upon the substitution all the
assets shall become the property of the nondepository trust company as
fiduciary without the necessity of any instrument of transfer or conveyance.
(7) Upon
substitution of the nondepository trust company pursuant to subdivision (1) of
this subsection, the nondepository trust company shall pay fair consideration
to each affiliate financial institution for which it has been substituted as
fiduciary for the trust business it has acquired from the affiliate as a result
of the substitution.
( o ) To the
extent not inconsistent with this section or with the limited scope of the
banking powers of a nondepository trust company as contemplated in subsection
(b) of this section, a nondepository trust company organized as a Vermont
financial institution shall be subject to the laws of this State generally
applicable to investor-owned financial institutions organized pursuant to
chapter 202 of this title; provided, however, that the provisions of this
chapter governing substitution of the nondepository trust company as fiduciary
shall be exclusive and chapters 206, 207, and 208 of this title shall not apply
to the substitution.
(p) A depository
institution organized either as a Vermont financial institution or a national
financial institution if authorized by its supervisory agency to exercise trust
powers may be substituted as a fiduciary for any of its affiliate financial
institutions under the same procedures, and the substitution shall be subject
to the same conditions specified in this section, other than the prohibition
against deposit-taking and the provisions of subsection (k) of this section,
with respect to the substitution as fiduciary of a nondepository trust company
for any of its affiliate financial institutions. The substitution procedures
shall be exclusive and chapters 206, 207, and 208 of this title shall not apply
to the substitution. (Added 1999, No. 153 (Adj. Sess.), § 2, eff. Jan. 1, 2001;
amended 2001, No. 73 (Adj. Sess.), § 4, eff. Feb. 2, 2002; 2009, No. 154 (Adj.
Sess.), § 238a, eff. Feb. 1, 2011.)
