51A-6A-19. Determining capital--Minimum--Purpose of capital--Fidelity bond and liability insurance policy.

For purposes of this section, the capital of a trust company is the total of the aggregate par value of its outstanding shares of capital stock or ownership units, its surplus, and its undivided profits. The minimum capital of a trust company is two hundred thousand dollars. The director may require that the trust company have more capital than the amount specified if the director determines that the amount and character of the anticipated business of the trust company and the safety of the customers so require. This chapter recognizes that capital for a trust company serves a different purpose than does capital for a bank. It is not intended that capital requirements for trust companies be judged by the same standards as banks. Basic protection for fiduciary clients of a trust company shall be provided by the purchase of a fidelity bond and a director's and officer's liability insurance policy. The bond and insurance shall be in an amount of not less than one million dollars each. The trust company shall give notice of cancellation or nonrenewal of the bond or insurance policy to the director within ten days of the receipt of cancellation or nonrenewal. Except as may be provided elsewhere in this chapter, no trust company may reduce voluntarily its capital stock or ownership units or surplus below the amount required in this section.

Source: SL 1995, ch 268, § 17; SL 2002, ch 220, § 2; SL 2006, ch 243, § 2; SL 2008, ch 258, § 8; SL 2013, ch 239, § 3.

51A-6A-19.1. Additional capital requirements--Safety and soundness factors to be considered--Effective date of order--Hearing.

The director may require additional capital for an existing trust company if the director finds the condition and operations of an existing trust company requires additional capital consistent with the safety and soundness of the trust company. The safety and soundness factors to be considered by the director in the exercise of such discretion include:

(1)    The nature and type of business conducted;

(2)    The nature and degree of liquidity in assets held in a corporate capacity;

(3)    The amount of fiduciary assets under management or administration;

(4)    The type of fiduciary assets held and the depository of such assets;

(5)    The complexity of fiduciary duties and degree of discretion undertaken;

(6)    The competence and experience of management;

(7)    The extent and adequacy of internal controls;

(8)    The presence or absence of annual unqualified audits by an independent certified public accountant;

(9)    The reasonableness of business plans for retaining or acquiring additional capital;

(10)    The existence and adequacy of insurance obtained or held by the trust company for the purpose of protecting its clients, beneficiaries, and grantors; and

(11)    Any other factor deemed relevant by the director.

The proposed effective date of an order requiring an existing trust company to increase its capital must be stated in the order as on or after the thirty-first day after the date of the proposed order. Unless the trust company requests a hearing before the commission in writing before the effective date of the proposed order, the order becomes effective and is final. Any hearing before the commission shall be held pursuant to chapter 1-26.

Source: SL 2010, ch 232, § 20.

51A-6A-19.2. Investments pledged to division for security of trust creditors of trust company--Amount--Income from investments--Pledge increase--Hearing.

Before any trust company authorized by this title transacts any trust company business, the trust company shall pledge to the division, and maintain at all times, investments for the security of the trust creditors of the trust company, including as a priority claim costs incurred by the division in a receivership or liquidation of the trust company if the trust company should fail. The director shall determine the amount of the pledge in an amount deemed appropriate to defray the costs incurred by the division in a receivership or liquidation of the trust company, but the amount of the pledge may not be less than a market value of one hundred thousand dollars, nor exceed five hundred thousand dollars for a private trust company or one million dollars for a public trust company. Notwithstanding the maximum pledge amount allowed under this section, the director may require a public trust company to maintain a pledge of greater than one million dollars if the director finds that an increased pledge amount is required based upon consideration of the factors in § 51A-6A-19.1. The director may authorize a reduction of any previously established pledge, provided that no pledge may be less than a market value of one hundred thousand dollars. All investments pledged to the division shall be held at a depository institution in this state and all costs associated with pledging and holding the investments are the responsibility of the trust company.

The investments pledged to the division shall be of the same nature and quality as those required for public funds under §§ 4-5-6, 4-5-6.1, and 4-5-6.2.

The commission may promulgate rules, pursuant to chapter 1-26, to establish additional investment guidelines or investment options for purposes of the pledge required by this section.

In the event of a receivership of a trust company, the director may, without regard to priorities, preferences, or adverse claims, reduce the pledged investments to cash and, as soon as practicable, utilize the cash to defray the costs associated with the receivership.

Income from the investments pledged shall belong to and be paid to the trust company so long as the trust company continues to conduct its business in the ordinary course and so long as authorized by the director.

If the director requires a trust company to increase its pledge, the director shall provide the trust company with notice and an order setting forth the amount of the pledge. The proposed effective date of the order setting forth the amount of the pledge shall be stated in the order as on or after the thirty-first day after the date of the order. Unless the trust company requests a hearing before the commission in writing before the proposed effective date of the order, the order is effective and final on the proposed effective date. Any hearing before the commission shall be held pursuant to chapter 1-26.

Source: SL 2010, ch 232, § 21; SL 2012, ch 233, § 1; SL 2015, ch 240, § 5; SL 2019, ch 205, § 2.

51A-6A-19.3. Pledge available to satisfy claims upon liquidation, abandonment of trust powers, or resignation.

Upon liquidation, abandonment of trust powers, or resignation from all duties exercised pursuant to § 51A-6A-29, the pledge required by § 51A-6A-19. 2 shall be made available for the reasonable satisfaction of claims involving trust company accounts. Any surplus remaining after the satisfaction of all such claims and costs incurred by the division shall be returned to the trust company. Unless the division has reason to believe that claims are forthcoming, the division shall release any pledge no later than twelve months from the date all affected accounts are moved to a successor trustee, custodian, or administrator.

Source: SL 2013, ch 239, § 2.

51A-6A-20. Payment of subscriptions--Reduction of common stock.

All subscriptions to the stock or ownership units shall be paid in cash. If a trust company in corporate form reduces its common stock and issues preferred stock in lieu of the reduction, it may reduce the par value of the common stock in the proportion that the total amount of capital stock is reduced, but when the preferred stock is retired the par value of the common shares shall be restored.

Source: SL 1995, ch 268, § 18; SL 2012, ch 252, § 17.

51A-6A-21. Transferring stock and ownership units.

The shares of stock and ownership units of any trust company are personal property and shall be transferred on the books of the trust company in such manner as the bylaws or operating regulations of the trust company may direct. No stock or ownership units may be transferred on the books of the trust company when the trust company is in a failing condition, or when its capital is impaired, except upon approval of the director. If a transfer of shares of stock of any trust company, or holding company that owns a majority of the outstanding shares of a trust company, occurs which results through direct or indirect ownership by a stockholder or an affiliated group of stockholders of ten percent or more of the outstanding stock of the trust company, or holding company that owns a majority of the outstanding shares of a trust company, and if additional shares of stock of the trust company are transferred to such stockholders, affiliated group of stockholders, or holding company, the president or other chief executive officer of the trust company shall report the transfer to the director within ten days after transfer of the shares of stock on the books of the trust company.

Source: SL 1995, ch 268, § 19; SL 2013, ch 239, § 4.

51A-6A-22. Increasing capital stock or ownership units.

The capital stock or ownership units of any trust company may be increased. The president and cashier shall forward a verified statement to the director showing the amount of the increase, the names and addresses of the subscribers, the amount subscribed by each, and that the same had been paid in full to the trust company. The date and amount of the increase also shall be certified to the secretary of state.

Source: SL 1995, ch 268, § 20.

51A-6A-23. Registration of capital stock or ownership units.

If the director determines that the capital stock of any trust company is impaired, the director shall notify the trust company to restore the capital stock or ownership units within ninety days of receipt of the notice. Within fifteen days of receipt of the notice, the governing board of the trust company shall levy an assessment on the owners sufficient to restore the capital stock or ownership units. The trust company, with its governing board's approval, may reduce its capital stock or ownership units to the extent of the impairment, if such reduction will not reduce the capital below the amount required by this chapter.

Source: SL 1995, ch 268, § 21.

51A-6A-24. Issuance and retirement of preferred stock.

Any trust company in corporate form may issue preferred stock of one or more classes in amounts approved by the director. The holders of two-thirds of the common stock of the trust company shall approve the issuance at a meeting held for that purpose. Notice shall be given by registered mail to each stockholder at least five days before the date of the meeting under this section. An issuance of preferred stock is not valid until the par value of all stock so issued is paid in. Preferred stock may be retired only if the trust company is in compliance with the capital requirements under § 51A-6A-19 following retirement of the preferred stock and if two-thirds of the holders of common stock of the trust company and the director approve the retirement.

Source: SL 1995, ch 268, § 22; SL 2012, ch 252, § 18; SL 2019, ch 205, § 3.

51A-6A-25. Rights and liability of preferred stockholders--Dividends.

The holders of preferred stock are not liable for assessments to restore any impairment in the capital stock of a trust company. The holders of preferred stock are entitled to receive cumulative dividends, have voting and conversion rights, and have control of management, as may be provided in the articles of incorporation and upon the written approval of the director. The preferred stock shall be retired as provided in the articles of incorporation.

No dividends may be declared or paid on common stock until all cumulative dividends, if any, on the preferred stock have been paid, and if the trust company is dissolved or placed in liquidation, no payments may be made to the holders of common stock until the holders of the preferred stock first have been paid in full for any sums due upon the preferred stock.

Source: SL 1995, ch 268, § 23.

51A-6A-26. Issuance of convertible or nonconvertible capital notes or debentures.

In accordance with normal business considerations and upon approval of owners owning two-thirds of the voting stock or ownership units of the trust company, the trust company may issue convertible or nonconvertible capital notes or debentures in such amounts pursuant to terms and conditions as approved by the director. However, the principal amount of capital notes or debentures outstanding at any time may not exceed an amount equal to one hundred percent of the trust company's paid-in capital stock or ownership units plus fifty percent of the amount of its unimpaired surplus fund. Capital notes or debentures that are by their terms expressly subordinated to the prior payment in full of all liabilities of the trust company are part of the unimpaired capital funds of the trust company.

Source: SL 1995, ch 268, § 24; SL 2015, ch 239, § 6.

51A-6A-27. Dividends not permitted from required capital.

A trust company may not permit to be withdrawn, in the form of dividends, any portion of its capital required under §§ 51A-6A-19 and 51A-6A-19.1.

Source: SL 1995, ch 268, § 25; SL 2015, ch 240, § 6; SL 2019, ch 205, § 4.

51A-6A-28. Dividends from undivided profits or surplus.

The governing board of any trust company may declare dividends from undivided profits or surplus, if the trust company is in compliance with the capital requirements of §§ 51A-6A-19 and 51A-6A-19.1 following payment of the dividend and if the director approves any dividend to be paid from surplus.

Source: SL 1995, ch 268, § 26; SL 2019, ch 205, § 5.

51A-6A-29. Powers of trust company.

A trust company may exercise the following powers necessary or incidental to carrying on a trust company business, including:

(1)    Act as agent, custodian, or attorney-in-fact for any person, and, in such capacity, take and hold property on deposit for safekeeping and act as general or special agent or attorney-in-fact in the acquisition, management, sale, assignment, transfer, encumbrance, conveyance, or other disposition of property, in the collection or disbursement of income from or principal of property, and generally in any matter incidental to any of the foregoing;

(2)    Act as registrar or transfer agent for any corporation, partnership, association, limited liability company, municipality, state, or public authority, and in such capacity, receive and disburse money, transfer, register, and countersign certificates of stock, bonds, or other evidences of indebtedness or securities, and perform any acts which may be incidental thereto;

(3)    Act as trustee or fiduciary under any mortgage or bond issued by a person;

(4)    Act as trustee or fiduciary under any trust established by a person;

(5)    Act as fiduciary, assignee for the benefit of creditors, receiver, or trustee under or pursuant to the order or direction of any court or public official of competent jurisdiction;

(6)    Act as fiduciary, guardian, conservator, assignee, or receiver of the estate of any person and as executor of the last will and testament or administrator, fiduciary, or personal representative of the estate of any deceased person when appointed by a court or public official of competent jurisdiction;

(7)    Establish and maintain common trust funds or collective investment funds pursuant to the provisions of chapter 55-6; or

(8)    Act in any fiduciary capacity and perform any act as a fiduciary which a South Dakota bank with trust powers may perform in the exercise of those trust powers.

Source: SL 1995, ch 268, § 27; SL 2011, ch 212, § 21; SL 2014, ch 226, § 1.

51A-6A-29.1. Permissible business of trust companies.

A trust company may only carry on a trust company business, as provided in § 51A-6A-29, and such business as is incidental thereto.

Source: SL 2021, ch 203, § 30.

51A-6A-30. Retention of records--Promulgation of rules--Reproduction of records--Duty of confidentiality.

A trust company shall retain its business records in accordance with the provisions of this section. Each trust company shall retain permanently the minute books of meetings of its owners and governing board, its capital stock and ownership unit ledger and capital stock or ownership unit certificate ledger or stubs, its general ledger or the record kept in lieu of a general ledger, its daily statements of condition, and all records which the director shall, in accordance with the provisions of this section, require to be retained permanently. All other records of a trust company shall be retained for such periods as the commission prescribes. The commission shall promulgate rules pursuant to chapter 1-26 classifying all records kept by trust companies, prescribing the period for which records of each class shall be retained, and requiring a record of destruction of records as the commission deems advisable. The periods may be permanent or for a term of years. Before adoption, amendment, or revocation of the rules the commission shall consider:

(1)    Actions and administrative proceedings in which the production of trust company records might be necessary or desirable;

(2)    State and federal statutes of limitation applicable to such actions or proceedings;

(3)    The availability of information contained in trust company records from other sources; and

(4)    Any other matters as the commission considers pertinent to the interest of customers and owners of trust companies and of the people of this state having the records available.

Any trust company may destroy any record which has been retained for the period prescribed, in accordance with the terms of this section for retention of records of its class, and is, after it has destroyed a record, under no duty to produce the record.

Instead of retention of the original records, any trust company may cause any of its records in its custody, including those held by it as a fiduciary, to be photographed or otherwise reproduced to permanent form. Any photograph or reproduction has the same force and effect as the original and may be admitted in evidence equally with the original.

Any trust company may cause any transactions, information, and data occurring in the regular course of its operations to be recorded and maintained by electronic means. When the electronic records of the transactions, information, and data are converted to writing, the writings shall constitute the original records of the transactions, information, and data and have the force and effect of the original records.

Nothing in this section may be construed to affect any duty of a trust company to preserve the confidentiality of its records.

Source: SL 1995, ch 268, § 28.

51A-6A-31. Periodic examination of trust company--Report of examination--Cooperative, coordinating and information-sharing agreements among agencies.

The director shall examine each trust company at least once every thirty-six months or more frequently if the director considers it necessary to make a full and careful examination and inquiry into the condition of the affairs of the trust company. For purposes of the examination, the director may administer oaths and examine under oath the board members, officers, employees, and agents of any trust company. The examination shall be reduced to writing by the person making it, and the person's reports shall contain a full, true, and careful statement of the condition of the trust company. The director, in lieu of making a direct examination and inquiry at the trust company office, may examine the trust company in whole or in part by examining the trust company records or documents off-site. For an examination conducted wholly or partially off-site, the director may require production of any records or documents of the trust company at the director's office. The director shall provide a copy of the written examination report to the governing board of the trust company. Neither the director nor any employee of the Division of Banking may have any ownership interest in a trust company.

The director may examine an out-of-state trust institution's trust service offices either on- or off-site to determine whether such offices are being operated in compliance with the laws of this state and in accordance with safe and sound practices.

The director may enter into cooperative, coordinating, and information-sharing agreements with any other supervisory agency or any organization affiliated with or representing one or more supervisory agencies with respect to the periodic examination or other supervision of any trust company or out-of-state trust institution, and the director may accept such agency's or organization's report of examination or investigation in lieu of conducting an examination or investigation.

Source: SL 1995, ch 268, § 29; SL 2006, ch 243, § 1.

51A-6A-32. Examination of fiduciary affairs of officers or employees--Examination of affiliated companies or corporations.

If upon the examination of any trust company, the director considers it necessary, the director may examine the fiduciary affairs of any officer or employee of any trust company; and upon similar determination, the director may examine any investment company or holding company or corporation that is affiliated with any trust company as to matters relevant to the safety and soundness of the trust company. Determinations by the director pursuant to this section are subject to review by the commission pursuant to chapter 1-26.

Source: SL 1995, ch 268, § 30; SL 2014, ch 226, § 3.

51A-6A-33. Examination expenses paid by trust companies--Fees.

The expense of every examination, together with the expense of administering the applicable laws, including salaries, travel expenses, supplies, and equipment, shall be paid by the trust companies of the state. A fee shall be imposed upon a trust company consistent with § 51A-2-36.

Source: SL 1995, ch 268, § 31.

51A-6A-34. Annual report of trust company to director--Form of report--Request for additional reports.

Each trust company shall make at least one report to the director during each year, at a time determined by the director. The director may require additional reports from each trust company if the director considers it advisable. The form of all the reports shall be prescribed by the director. If the director considers it necessary, the director may call upon any trust company for a report of its condition upon any given day. A copy of each request made by the director for a statement from all trust companies doing business under this chapter shall be mailed to each trust company. The copy of the request shall be considered to be legal notice to a trust company.

Source: SL 1995, ch 268, § 32.

51A-6A-35. Authority of trust company revoked upon obstruction or interference with, or refusal to submit to, examination of director.

If any officer of any trust company refuses to submit the books, records, papers, and instruments of the trust company to the examination and inspection of the director or in any manner obstruct or interfere with the examination and investigation of the trust company or refuse to be examined on oath concerning any of the affairs of the trust company, the director may revoke the authority of the trust company to transact business, and with the concurrence of the attorney general, may institute proceedings for the appointment of a receiver for the trust company.

Source: SL 1995, ch 268, § 33.

51A-6A-36. Service of notice of charges--Contents of notice--Temporary cease and desist order.

If the director determines that any trust company is engaging or has engaged, or the director has reasonable cause to believe that the trust company is about to engage, in an unsafe or unsound practice in conducting the business of the trust company, or if the director determines that any trust company is violating or has violated, or the director has reasonable cause to believe that the trust company is about to violate a law, rule, or order of the director or the commission, the director may issue and serve upon the trust company a notice of charges. The notice shall contain a statement of the facts constituting any alleged unsafe or unsound practice or any alleged violation and shall state the time and place at which a hearing will be held by the commission to determine whether an order to cease and desist should be issued by the commission against the trust company. The hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of the notice. The hearing shall be conducted pursuant to chapter 1-26. Any determination by the director or the commission under this section is subject to review under chapter 1-26.

Unless the trust company appears at the hearing, the trust company is considered to have consented to the issuance of the cease and desist order. In the event of such consent, or if upon the record made at the hearing, the commission finds that any unsafe or unsound practice or violation specified in the notice of charges has been established, the commission may issue and serve upon the trust company an order to cease and desist from any such practice or violation. The order may, by provisions which may be mandatory or otherwise, require the trust company and its board members, officers, employees, and agents to cease and desist from the practice or violation and to take affirmative action to correct the conditions resulting from the practice or violation. A cease and desist order becomes effective at the time specified in the order, and remains effective and enforceable as provided in the order, except to such extent as it is stayed, modified, terminated, or set aside by action of the commission.

If the director determines that any unsafe or unsound practice or violation specified in the notice of charges served upon the trust company, or the continuation of the practice or violation, is likely to cause insolvency or substantial dissipation of assets or earnings of the trust company, or is likely to otherwise seriously prejudice the interests of its customers, the director may issue a temporary order requiring the trust company to cease and desist from the practice or violation. The order is effective upon service upon the trust company and shall remain effective and enforceable pending the completion of the proceedings pursuant to the notice and until the commission dismisses the charges specified in the notice, or if a cease and desist order is issued against the trust company, until the effective date of the order.

Source: SL 1995, ch 268, § 34.

51A-6A-37. Revocation of franchise for failure to comply with lawful requirements.

Any trust company which refuses or neglects to comply with any requirement lawfully made upon it by the director for a period of ninety days after demand in writing is made forfeits its franchise, and the director shall thereupon revoke its authority to transact business. The director shall give notice of the revocation to the president or other managing officer of the trust company. The attorney general, upon the request of the director, then shall begin action for the appointment of a receiver for the trust company and to dissolve the trust company.

Source: SL 1995, ch 268, § 35.

51A-6A-38. Hearing on revocation of trust authority.

A trust company subject to revocation of trust authority shall be afforded the right to a hearing in accordance with the provisions of chapter 1-26. Any revocation of authority to transact trust business is subject to review in accordance with chapter 1-26.

Source: SL 1995, ch 268, § 36.

51A-6A-39. Confidentiality of information generated by examination--Disclosure--Hearing.

All information the director generates in making an investigation or examination of a state trust company is confidential. All confidential information shall remain the property of the division and shall be furnished to the trust company for its confidential use. Under no circumstances may a trust company disclose a report or any supporting documentation to anyone, other than directors and officers of the trust company or anyone acting in a fiduciary capacity for the trust company, without written permission from the director.

The director shall give ten days' prior written notice of intent to disclose confidential information to the affected trust company. Any 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 chapter 1-26. If a trust company requests a hearing, the director may not reveal confidential information prior to the conclusion of the hearing and a ruling. Disclosure of confidential information shall be made only to formal regulatory bodies which clearly have a need for the confidential information. Prior to dissemination of any confidential information, the director shall require a written agreement not to reveal the confidential information by the party receiving the confidential information. In no event may the director disclose confidential information to the general public, any competitor, or any potential competitor of a trust company.

The submission of any information to the division in the course of any investigation or examination may not be construed as waiving, destroying, or otherwise affecting any privilege any person may claim with respect to the information under South Dakota law or federal law.

Source: SL 1995, ch 268, § 37; SL 2008, ch 258, § 9; SL 2012, ch 233, § 3.

51A-6A-40. Correction of unsafe or unsound condition or operation--Appointment of special assistant--Appeal of appointment.

If the director determines that the business of any trust company is being conducted in an unsafe or unsound manner, the director may appoint a special assistant who shall immediately take charge of the operation of the trust company for the purpose of correcting any unsafe or unsound condition or operation. After appointment, the special assistant shall continue to serve under the direction of the director for a period of time as the director determines is reasonable and necessary or until relieved by order of the commission or of a court of competent jurisdiction. The special assistant's salary, which shall be determined by the director, and expenses shall be borne by the trust company under supervision. After an appointment of a special assistant, a trust company may, within thirty days from the date of the notice of the appointment, appeal in writing to the commission. If a trust company appeals, the commission shall fix a date for a hearing which shall be within thirty days from the date of the appeal. The hearing shall be conducted in accordance with the provisions of chapter 1-26. The commission shall render an order as to the correctness or incorrectness of the director's decision to take over the conduct of the trust company, and the order of such commission is subject to review under chapter 1-26.

Source: SL 1995, ch 268, § 38.

51A-6A-41. Insolvency defined.

A trust company is insolvent if:

(1)    The actual cash market value of its assets is insufficient to pay its creditor liabilities except that for this purpose unconditional evidence of indebtedness of the United States of America may be valued, at the discretion of the director, at par, cost or fair market value, whichever is the lesser; or

(2)    It is unable to meet the demands of its creditors in the usual and customary manner.

Source: SL 1995, ch 268, § 39.

51A-6A-42. Director to take charge of insolvent trust company--Appointment of special assistant.

If it appears upon the examination of any trust company or from any report made to the director that any trust company is insolvent, the director shall take charge of the trust company and all of its property and assets. In so doing the director may appoint a special assistant to take charge temporarily of the affairs of the insolvent trust company until a receiver is appointed. The assistant shall qualify, give bond, and receive compensation the same as the regular examiner, but the compensation shall be paid by the insolvent trust company, or in case of the appointment of a receiver, allowed by the court as costs in the case. No trust company may continue in the charge of a special assistant for a longer period than six months.

Source: SL 1995, ch 268, § 40; SL 2012, ch 252, § 19.

51A-6A-43. Plan for reorganization of insolvent trust company.

The owners of any insolvent trust company and its creditors may formulate a plan for the reorganization of the trust company while the trust company is in the charge of the director or a special assistant or a receiver at any time before a dividend has been paid. The creditors of the insolvent trust company may formulate a plan for the reorganization of the trust company. If the plan is subscribed to in writing by creditors having not less than eighty percent of the known claims against the trust company, a copy of the plan is filed with the director, and the director approves the plan, the plan is legal, valid, and binding upon all creditors of the insolvent trust company to the same extent and with the same effect as if all of the creditors had joined in the execution of the plan.

Source: SL 1995, ch 268, § 41; SL 2015, ch 239, § 7.

51A-6A-44. Appointment of receiver--Bond--Qualifications--Report--Removal.

When the director takes charge of any trust company, the director shall ascertain its actual condition as soon as possible by making a thorough investigation into its affairs and condition. If the director is satisfied that the trust company cannot resume business or liquidate its indebtedness to the satisfaction of its creditors, the director shall appoint a receiver and require the receiver to give such bond as the director considers proper. The director also shall fix reasonable compensation for the receiver, but the compensation for the receiver is subject to the approval of the circuit court of the county in which the trust company is located upon the application of any party in interest.

Any receiver shall have had at least five years of experience with financial institutions. However, upon written application made within thirty days after the findings of insolvency, the director shall appoint as receiver any person whom the holders of more than sixty percent of the claims against the trust company agree upon in writing. The creditors may also agree upon the compensation and charges to be paid the receiver. Any receiver so appointed shall make a complete report to the director covering the receiver's acts and proceedings as a receiver. The director may remove for cause any receiver and appoint the receiver's successor.

Source: SL 1995, ch 268, § 42; SL 2005, ch 260, § 10.

51A-6A-45. Powers and duties of receiver--Order of payment of liabilities.

The receiver, under the direction of the director, shall take charge of any insolvent trust company and all of its assets and property and liquidate the affairs and business for the benefit of clients, creditors, and owners. The receiver may sell or compound all bad and doubtful debts and sell all the property of the trust company upon such terms as the circuit court of the county in which the trust company is located approves. The receiver shall pay over all moneys received to the creditors of the trust company as ordered by the director. In distributing assets of an insolvent trust company in payment of its liabilities, the order of payment, if its assets are insufficient to pay in full all of its liabilities, shall be by category as follows:

(1)    The costs and expenses of the receivership and real and personal property taxes assessed against the trust company pursuant to applicable law;

(2)    Claims which are secured or given priority by applicable law;

(3)    Claims of unsecured creditors;

(4)    All other claims exclusive of claims on capital notes and debentures; and

(5)    Claims on capital notes and debentures.

If the assets are insufficient for the payment in full of all claims within a category, the claims shall be paid in the order provided by other applicable law or, in the absence of such applicable law, pro rata.

Source: SL 1995, ch 268, § 43.

51A-6A-45.1. Liability of receiver.

No receiver, appointed pursuant to § 51A-6A-44, is liable to any person for good faith compliance with any law, statute, rule, or judgment, decree, or order of a court. Nor is any receiver liable to any person for any action taken or omitted unless a court finds that the receiver acted or failed to act as a result of misfeasance, bad faith, gross negligence, or reckless disregard of duty.

Source: SL 2005, ch 260, § 11.

51A-6A-46. Periodic examination of trust company in the hands of a receiver.

At least once each six months the director shall examine each trust company in the hands of a receiver and shall file a copy of the examination report with the clerk of the circuit court of the county in which the trust company is located. Each receiver shall submit the records and affairs of the trust company to an examination by the director.

Source: SL 1995, ch 268, § 44.

51A-6A-46.1. Suspension, liquidation, order against unsound practice, removal of director or officer, or injunction.

In addition to the powers granted to the director and the commission in §§ 51A-6A-35 to 51A-6A-46, inclusive, the powers granted to the director and commission pursuant to §§ 51A-15-11 to 51A-15-44, inclusive, 51A-2-22, and 51A-2-25 to 51A-2-27, inclusive, may be utilized by the director and the commission with regard to trust companies. The powers granted by §§ 51A-15-11 to 51A-15-44, inclusive, 51A-2-22, and 51A-2-25 to 51A-2-27, inclusive, may be used by the director and the commission in connection with a trust company as a supplement to or as an independent alternative to the powers granted in §§ 51A-6A-35 to 51A-6A-46, inclusive.

Source: SL 2004, ch 312, § 4; SL 2010, ch 232, § 22.

51A-6A-46.2. Disclosure of confidential information in certain actions.

The provisions of §§ 51A-6A-2 and 51A-6A-39 do not apply to the disclosure of information by the director or the commission in connection with the institution and prosecution of an action against an individual pursuant to the provisions of § 51A-2-22 or against a trust company pursuant to the provisions of §§ 51A-15-11 to 51A-15-44, inclusive, or 51A-2-25 to 51A-2-27, inclusive, or 51A-6A-35 to 51A-6A-46, inclusive. Disclosure of confidential information may be made only to formal governmental regulatory bodies which have a need for the confidential information.

Source: SL 2004, ch 312, § 5; SL 2015, ch 240, § 7.

51A-6A-47. Acquisition of trust company--Notice to director--Approval--Order of disapproval--Hearing.

A person acquiring control through direct or indirect ownership by an owner or an affiliated group of owners shall give the director at least sixty days prior written notice of any proposed trust company acquisition. If the director does not issue an order disapproving the proposed acquisition within that time or extend the period during which a disapproval may be issued, the proposed acquisition is approved. The period for disapproval shall be thirty days after notice is received by the director and may be further extended only if the director determines that any acquiring person has not furnished all the information required under § 51A-6A-48 or if in the director's judgment, any material information submitted is substantially inaccurate. An acquisition may be made prior to expiration of the disapproval period if the director issues written notice of the director's intent not to disapprove the action.

If the director disapproves an acquisition, the director shall serve the acquiring person with an order of disapproval. The order shall provide a statement of the basis for the disapproval. Within thirty days after service of an order of disapproval, the acquiring person may request a hearing on the proposed acquisition with the commission. Upon receipt of a timely request, the commission shall conduct a hearing in accordance with the provisions of chapter 1-26. Any disapproval by the commission of a proposed acquisition is subject to review in accordance with chapter 1-26.

Actual expenses incurred by the director or commission in carrying out any investigation that may be necessary or required by statute shall be paid by the person submitting the proposed acquisition.

Source: SL 1995, ch 268, § 45; SL 2013, ch 239, § 6.

51A-6A-48. Contents of notice of proposed acquisition.

A notice of a proposed trust company acquisition shall contain, in the form prescribed by the director, the following information:

(1)    The identity, personal history, business background, and experience of any person by whom or on whose behalf the acquisition is to be made, including the person's material business activities and affiliations during the past five years and a description of any material pending legal or administrative proceedings in which the person is a party and any criminal indictment or conviction of the person by a state or federal court;

(2)    A statement of the assets and liabilities of any person by whom or on whose behalf the acquisition is to be made, as of the end of the fiscal year for each of the five fiscal years immediately preceding the date of the notice, together with related statements of income and source and application of funds for each of the fiscal years then concluded and an interim statement of the assets and liabilities for any person, together with related statements of income and source and application of funds, as of a date not more than ninety days prior to the date of the notice;

(3)    The terms and conditions of the proposed acquisition and the manner in which the acquisition is to be made;

(4)    The identity, source, and amount of the funds or other considerations used or to be used in making the acquisition and, if any part of these funds or other considerations has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition, a description of the transaction, the names of the parties to the transaction, and any arrangements, agreements, or understandings with such persons;

(5)    Any plans or proposals which any acquiring person making the acquisition may have to liquidate the trust company, to sell its assets or merge it with any company, or to make any other major change in its business or corporate structure or management;

(6)    The identification of any person employed, retained, or to be compensated by the acquiring person or by any person on the acquiring person's behalf to make solicitations or recommendations to owners for the purpose of assisting in the acquisition and a brief description of the terms of the employment, retainer, or arrangement for compensation;

(7)    Copies of all invitations or tenders or advertisements making a tender offer to owners for purchase of their stock or ownership units to be used in connection with the proposed acquisition; and

(8)    Any additional relevant information in such forms as the directors may require by specific request in connection with any particular notice.

Source: SL 1995, ch 268, § 46.

51A-6A-49. Reason for disapproval of acquisition.

The director may disapprove any proposed acquisition if:

(1)    The proposed acquisition of control would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the trust business in any part of this state;

(2)    The financial condition of any acquiring person is such as might jeopardize the financial stability of the trust company or prejudice the interests of the clients of the trust company;

(3)    The competence, experience, or integrity of any acquiring person or of any of the proposed management personnel indicates that it would not be in the interest of the clients of the trust company or in the interest of the public to permit such person to control the trust company; or

(4)    Any acquiring person neglects, fails, or refuses to furnish the director all the information required by the director.

Source: SL 1995, ch 268, § 47.

51A-6A-50. Procedure for merger, consolidation, conversion, or transfer of assets and liabilities to another bank or trust company.

Before any trust company can merge, consolidate with, convert from a corporation to a limited liability company or from a limited liability company to a corporation under § 47-1A-950 or 47-1A-950.1, or transfer its assets and liabilities to another trust company or bank, it shall file with the director, certified copies of all proceedings of its governing board and owners relating to the merger, consolidation, conversion, or transfer. The owners' proceedings shall show that a majority of the owners voted in favor of the merger, consolidation, conversion, or transfer. The owners' proceedings shall contain a complete copy of the agreement made and entered into, with reference to the merger, consolidation, conversion, or transfer. Upon the filing of the owners' and governing board's proceedings, the director shall make an investigation to determine whether:

(1)    The interests of the clients, creditors, and owners of each are protected;

(2)    The merger, consolidation, conversion, or transfer is in the public interest; and

(3)    The merger, consolidation, conversion, or transfer is made for legitimate purposes.

The director's consent to or rejection of a merger, consolidation, conversion, or transfer shall be based upon the investigation. No merger, consolidation, conversion, or transfer may be made without the consent of the director. The expense of the investigation shall be paid by the persons filing the request.

Source: SL 1995, ch 268, § 48; SL 2012, ch 252, § 20.

51A-6A-50.1. Proceedings to legally dissolve charter of acquired, merged, or consolidated trust company.

If a trust company has been acquired, merged, or consolidated with another trust company or financial institution, or its assets have been purchased and its liabilities assumed by another trust company or financial institution, in any instance other than an emergency, within thirty days thereafter, the directors of the trust company shall institute proceedings to legally dissolve its charter in the same manner as provided for voluntary liquidation in chapter 51A-15. However, no notice need be given pursuant to § 51A-15-3.

Source: SL 2015, ch 240, § 8.

51A-6A-51. Necessity of execution or delivery of deed for merger or consolidation.

When a merger or consolidation of any trust company occurs, the successor consolidated trust company or bank becomes the owner of, and entitled to, the possession of all rights, franchises, and interests, real estate, and personal property as is covered by the merger or consolidation agreement without the necessity of the execution or delivery of a deed or other form of transfer.

Source: SL 1995, ch 268, § 49.

51A-6A-52. Fiduciary capacity of successor trust company.

Upon the merger or consolidation of any trust company, the successor trust company, upon acquiring trust authority, may be appointed to act as trustee, personal representative, conservator, or any other fiduciary capacity to the same extent and with the same authority as the trust company to which it succeeds.

Source: SL 1995, ch 268, § 50.

51A-6A-53. Name of trust company--Name change.

No trust company may take the name of any other trust company incorporated in the state or a name so similar to another as to be easily confused with it. No trust company may change its name until the name change has been submitted to and approved by the director. The director may refuse authority to any trust company violating this provision.

Source: SL 1995, ch 268, § 51.

51A-6A-54. Approval required for changing place of business--Examination and investigation by director.

No trust company incorporated under the laws of this state may change its place of business, from one city or town to another or from one location to another within the same city or town, without the prior approval of the director. Any trust company desiring to change its place of business shall file a written application with the director in the form and containing the information as the director requires. The director shall examine and investigate the application and approve or disapprove the application. The expenses of the examination and investigation shall be paid by the trust company.

Source: SL 1995, ch 268, § 52; SL 2008, ch 258, § 10.