Current through Reg. 49, No. 38; September 20, 2024
(a) Definitions. Definitions in Finance Code,
§
RSA
182.011(a - 1), are incorporated herein by
reference except for the term "family member." As used in this section and in
Finance Code, Title 3, Subtitle F (the Trust Company Act), the following words
and terms shall have the following meanings, unless the context clearly
indicates otherwise:
(1) "Family" means
individuals who are related within the seventh degree of affinity or
consanguinity to a shared common ancestor.
(2) "Family member" means each individual
included in the definition of "family," provided that a foster child is
considered the child of the foster parent and a person for whom a guardian was
appointed before the person's 18th birthday is considered the child of the
guardian. The term "family member" also includes the shared common
ancestor.
(3) "Key employee" means
the president of the trust company, any of its officers in charge of a
principal business unit, division or function (such as administration or
finance), an officer who performs a policymaking function for the trust
company, or another person who performs similar policymaking functions for the
trust company.
(b)
Application for exemption.
(1) Pursuant to
Finance Code, §
RSA
182.011 and §
RSA
182.012, a trust company may request in
writing that it be exempted from specified provisions of the Trust Company Act,
if it has only family clients, transacts business solely on behalf of family
clients and their related interests, is wholly owned, directly or indirectly,
legally or beneficially, by one or more family members, and does not hold
itself out to the general public as a corporate fiduciary for hire.
(2) The application must:
(A) be accompanied by the appropriate filing
fee required by §
RSA
21.2 of this title (relating to Filing and
Investigation Fees);
(B) specify
the specific exemptions requested and the reasons or justification for
requesting the exemptions; and
(C)
include a copy of the trust company's certificate of formation containing, or a
proposed amendment to the certificate of formation that would cause it to
contain, the following statement in its purposes clause: "The sole purpose for
which the trust company is organized is to act as a corporate fiduciary for
accounts in which all beneficiaries are descendants of and related within the
seventh degree of affinity or consanguinity to _____________ (name of common
ancestor), and their related interests to the extent permitted by the Texas
Finance Code or applicable rules and regulations."
(c) Exemption. Subject to
conditions or limitations being imposed by the banking commissioner, a family
trust company may request exemption from the following provisions of the Trust
Company Act:
(1) the requirement of Finance
Code, §
RSA
183.103(a), that five is the
minimum number of directors, managers, or managing participants that can be
specified in the certificate of formation, provided that the certificate of
formation must specify the number of directors, managers, or managing
participants, consistent with paragraph (2) of this subsection;
(2) the requirement of Finance Code, §
RSA
183.103(a), that the number
of directors, managers, or managing participants of a trust company cannot be
less than five or more than 25, the majority of whom must be residents of this
state, provided that the board of a trust company seeking exemption under this
section must consist of not fewer than three or more than 25 directors,
managers, or managing participants, at least one of whom must be a resident of
this state;
(3) the restrictions of
Finance Code, §
RSA
183.109(a) - (c), regarding
transactions with management and affiliates;
(4) the limitations of Finance Code, §
RSA
184.002, on investment in trust company
facilities;
(5) the limitations of
Finance Code, §
RSA 184.101, on
securities investments, provided that the exemption request must address each
limitation and the reasons for exemption separately;
(6) the restrictions of Finance Code, §
RSA
184.102, regarding transactions in state
trust company shares or participation shares;
(7) the limitations of Finance Code, §
RSA 184.003,
on other real estate investments; and
(8) the limitations of Finance Code,
§§
RSA 184.201 -
RSA
184.203, regarding lending limit and lease
financing transaction restrictions, provided that no loans may be made from a
trust company's minimum restricted capital amount.
(d) Notice to applicant. The banking
commissioner shall issue a written notice as required by §
RSA
21.4 of this title (relating to Required
Information and Abandoned Filings) informing the applicant either that all
filing fees have been paid and the application is complete and accepted for
filing, or that the application is deficient and specific additional
information is required.
(e) Notice
to clients . A family trust company which has been granted an exemption under
subsection (c) of this section must provide each family client with a copy of
the exemption granted by the banking commissioner. The trust company must
maintain an acknowledged receipt of such notice in its files.
(f) Transition period for certain former
family clients. Pursuant to Finance Code, §
RSA
182.011(a - 1)(1)(C) and (I), a family trust
company may continue providing services to a former key employee or a formerly
revocable trust that is no longer an eligible family client for a period of one
year after the date of the disqualifying event. The banking commissioner may
grant an extension of up to one year in response to a written request if the
commissioner determines that:
(1) the trust
company has acted diligently and in good faith in its efforts to terminate the
disqualified relationship in a manner consistent with its fiduciary duties;
and
(2) additional time is needed
to avoid harm to the affected beneficiaries and appropriately discharge the
trust company's fiduciary duties with respect to the disqualified
relationship.
(g) Effect
on existing family trust company. A family trust company with exemptions
granted prior to September 1, 2015, under Finance Code, §
RSA
182.011 and §
RSA
182.012, is not required to take any action
to preserve its exemption as a result of changes in law made by Acts 2015, 84th
Leg., R.S., Ch. 250, §5. However, unless and until any such family trust
company amends its certificate of formation to name a new shared common
ancestor, the control person named in its certificate of formation is
considered to be the shared common ancestor for purposes of determining
eligibility of family members under Finance Code, §
RSA
182.011, and this section.
