Chapter 174

2003 -- S 0403

07/10/03

AN ACT

RELATING TO TRUST POWERS

Introduced By: Senator David E. Bates

Date Introduced: February 12, 2003

It is enacted by the General Assembly as follows:

     SECTION 1. Section 19-1-1 of the General Laws in Chapter 19-1 entitled "Definitions

and Establishment of Financial Institutions" is hereby amended to read as follows:

19-1-1. Definitions. -- Unless otherwise specified, the following terms shall have the

following meanings throughout this title:

      (1) "Agreement to form" means the agreement to form a financial institution or the

agreement to form a credit union, as applicable, pursuant to this title, and includes, for financial

institutions organized before December 31, 1995, the articles of incorporation or the agreement of

association of the financial institution, where applicable.

      (2) "Board of bank incorporation" means the board of bank incorporation as constituted

under this title or the predecessor of the board of bank incorporation.

      (3) "Branch" means any office or place of business, other than the main office or

customer-bank-communication-terminal outlets as provided for in this title, at which deposits are

received, or checks paid or money lent., or at which any trust powers are exercised. Any financial

institution which had, on or before June 30, 2003, established an office or place of business, other

than its main office, at which trust powers are exercised, shall not be required to obtain the

approval of the director or the director’s designee pursuant to section 19-2-11 of the general laws

in chapter 19-2 for any such offices established as of said date.

      (4) "Credit union" means a credit union duly organized under the laws of this state.

      (5) "Director" means the director of the department of business regulation.

      (6) "Division of banking" means the division within the department of business

regulation responsible for the supervision and examination of regulated institutions and/or

licensees under chapter 14 of this title.

      (7) "Federal credit union" means a credit union duly organized under the laws of the

United States.

      (8) "Financial institution" means any entity, other than a credit union, duly organized

under the laws of this state which has the statutory authority to accept money on deposit pursuant

to title 19, including an entity which is prohibited from accepting deposits by its own by-laws or

agreement to form; the term includes, but is not limited to banks, trust companies, savings banks,

loan and investment banks and savings and loan associations.

      (9) "Main office" means, in the case of financial institutions or credit unions, the location

stated in the agreement to form, as amended, and, otherwise, the location recognized by the

institution's primary banking regulator as its main office.

      (10) "Person" means individuals, partnerships, corporations, limited liability companies

or any other entity however organized.

      (11) "Regulated institution" means any financial institution, credit union or other

insured-deposit-taking institution which is authorized to do business in this state including one

authorized by operation of an interstate banking statute which allowed its original entry.

      (12) "Retail installment contract" means any security agreement negotiated or executed

in this state or under the laws of this state including, but not limited to, any agreement in the

nature of a mortgage, conditional sale contract, or any other agreement whether or not evidenced

by any written instrument to pay the retail purchase price of goods, or any part thereof, in

installments over any period of time and pursuant to which any security interest is retained or

taken by the retail seller for the payment of the purchase price, or any part thereof, of the retail

installment contract.

      (13) "Retail seller" means any person who sells or contracts to sell any goods under a

retail installment contract to a retail buyer.

      (14) "Superintendent" means the associate director and superintendent of banking in the

department of business regulation.

      (15) "Unimpaired capital" means the sum of all capital and allowance accounts minus

estimated losses on assets, calculated in accordance with generally accepted accounting

principles.

     SECTION 2. Sections 19-3.1-1 and 19-3.1-6 of the General Laws in Chapter 19-3.1

entitled "Trust Powers" are hereby amended to read as follows:

19-3.1-1. Scope. -- The provisions of this chapter shall apply to any financial institution:

      (1) Authorized by its agreement to form to exercise trust powers; or

      (2) Permitted to exercise such powers by laws of this state applicable to that financial

institution on or before December 31, 1994. ; and

(3) To any bank or trust company duly organized under the laws of and carrying on

business in another state that has established a trust branch office in this state subject to the

provisions of section 19-3.1-6 of this chapter.

19-3.1-6. Foreign banks and trust companies -- Agent to receive process. – (a) No

person shall exercise any of the powers conferred exclusively upon financial institutions, except

that a trust company duly organized under the laws of and carrying on business in another state,

or a national banking association located in another state, may act as trustee under any written

instrument in which it is named as trustee or may be appointed as trustee of any trust by any court

of competent jurisdiction of this state or may be appointed by any probate court of this state as

administrator, administrator de bonis non, administrator with the will annexed, guardian of

estates, or conservator, or as executor of any will in which it is named as executor, if financial

institutions or national banking associations located in this state are permitted to act as trustee,

administrator, administrator de bonis non, administrator with the will annexed, guardian of

estates, conservator, or executor under similar conditions in the state where the trust company is

located. The trust company or national banking association located in another state, as the case

may be, shall execute and file in the office of the director or the director's designee a written

instrument appointing the director or the director's designee in his or her name of office its true

and lawful attorney upon whom all writs and other legal process may be served in any legal

proceeding relating to its conduct as trustee, administrator, administrator de bonis non,

administrator with the will annexed, guardian, conservator, or executor or affecting any property

held by it under the trusts or the will or the appointment, with the same effect as if it were located

in this state and had been lawfully served with process.

(b) Upon obtaining the consent of the director, or the director’s designee, a bank or trust

company duly organized under the laws of, and carrying on business in another state, may

establish a trust branch or branches within this state if the law of the other state authorizes the

bank or trust company to exercise trust powers; provided that, in the case of an out-of-state bank

or trust company, the law of the state in which it is principally located authorizes under

conditions not substantially more restrictive than those imposed by the laws of this state, as

determined by the director or the director’s designee, a financial institution to establish a trust

branch in that state. The director or the director’s designee shall approve an application for a trust

branch if the applicant has satisfied the standards and followed the procedures set forth in this

title for the establishment of branches for financial institutions in addition to the requirements of

this subsection. The bank or trust company located in another state shall execute and file in the

office of the director or the director’s designee a written instrument appointing the director or the

director’s designee in his or her name of office its true and lawful attorney upon whom all writs

and other legal process may be served in any legal proceeding relating to trust activities

conducted in this state.

     SECTION 3. Section 19-4-17 of the General Laws in Chapter 19-4 entitled "Regulatory

Oversight" is hereby amended to read as follows:

19-4-17. Unauthorized banking business. -- (a) No person, except regulated

institutions, including any bank or trust company that has established a trust branch office in this

state pursuant to the provisions of section 19-3.1-6(b) of this title, or other insured-deposit-taking

institutions organized under the laws of the United States, shall use any sign at the place where its

business is transacted, having on it any name containing the word or words "bank", "savings

bank", "loan and investment bank", "trust company", "credit union", or other word or words,

indicating, in the opinion of the director or the director's designee, that the place or office is the

place or office of a regulated institution or other insured-deposit-taking institution duly organized

under the laws of the United States. The secretary of state shall not accept for filing any articles

of association or incorporation, or amendment thereof, containing the word or words without the

approval of the director or the director's designee.

      (b) No person, except regulated institutions, including any bank or trust company that

has established a trust branch office in this state pursuant to the provisions of section 19-3.1-6(b)

of this title, or other insured-deposit-taking institutions duly organized under the laws of the

United States, shall use or circulate any written or printed or partly written and partly printed

paper whatsoever, having on it any name or other word or words indicating that its business is the

business of a regulated institution or other insured-deposit-taking institution duly organized under

the laws of the United States, nor shall any person receive deposits and transact business in the

way or manner of a regulated institution or other insured-deposit-taking institution duly organized

under the laws of the United States, or in any way or manner as to lead the public to believe, or

as, in the opinion of the director or the director's designee might lead the public to believe, that its

business is that of a regulated institution or other insured-deposit-taking institution duly organized

under the laws of the United States.

SECTION 4. This act shall take effect upon passage.     

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LC02140

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