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H0389aa......................................................by MR. SPEAKER
Requested by: Department of Finance
IDAHO TRUST INSTITUTIONS ACT - Amends and repeals existing law to enact the
Idaho Trust Institutions Act.
01/17 House intro - 1st rdg - to printing
Rpt prt - to Bus
02/08 Rpt out - to Gen Ord
02/15 Rpt out amen - to engros
02/16 Rpt engros - 1st rdg - to 2nd rdg as amen
02/17 2nd rdg - to 3rd rdg as amen
02/22 3rd rdg as amen - PASSED - 66-1-3
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
Bruneel, Callister, Chase, Cheirrett, Clark, Crow, Cuddy, Deal,
Denney, Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould,
Hadley, Hammond, Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet,
Jones, Judd, Kellogg, Kempton, Kendell, Kunz, Lake, Linford,
Loertscher, Mader, Marley, McKague, Montgomery, Mortensen, Moss,
Moyle, Pearce, Pischner, Pomeroy, Reynolds, Ridinger, Ringo, Robison,
Sali, Schaefer, Sellman, Shepherd, Smylie, Stevenson, Stoicheff,
Stone, Tilman, Trail(Miller), Wheeler, Wood, Zimmermann, Mr Speaker
NAYS -- Meyer
Absent and excused -- Campbell, Smith, Taylor
Floor Sponsor - Alltus
Title apvd - to Senate
02/23 Senate intro - 1st rdg as amen - to Com/HuRes
03/10 Rpt out - rec d/p - to 2nd rdg as amen
03/13 2nd rdg - to 3rd rdg as amen
03/30 3rd rdg as amen - PASSED - 32-0-3
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Hawkins,
Ingram, Keough, King-Barrutia, Lee, McLaughlin, Noh, Parry,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Stennett, Thorne, Wheeler, Whitworth, Williams
NAYS--None
Absent and excused--Crow, Geddes, Ipsen
Floor Sponsor - Davis
Title apvd - to House
03/31 To enrol
04/03 Rpt enrol - Sp signed
04/04 Pres signed - to Governor
04/14 Governor signed
Session Law Chapter 288
Effective: 07/01/00
H0389|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fifth Legislature Second Regular Session - 2000IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 389, As Amended BY MR. SPEAKER Requested by: Department of Finance 1 AN ACT 2 RELATING TO THE IDAHO BANK ACT; AMENDING SECTIONS 26-101 AND 26-1111, IDAHO 3 CODE, TO ADD CODE REFERENCES; AMENDING SECTION 26-1203, IDAHO CODE, TO 4 MAKE THE SECTION APPLICABLE TO TRUST COMPANIES AND TO MAKE A TECHNICAL 5 CORRECTION; AMENDING CHAPTER 12, TITLE 26, IDAHO CODE, BY THE ADDITION OF 6 A NEW SECTION 26-1204, IDAHO CODE, TO PROVIDE CIVIL REMEDIES FOR FALSE 7 STATEMENTS REGARDING BANKS AND TRUST COMPANIES; REPEALING CHAPTER 13, 8 TITLE 26, IDAHO CODE; AMENDING SECTION 26-1401, IDAHO CODE, TO ADD CODE 9 REFERENCES AND TO MAKE TECHNICAL CORRECTIONS; AMENDING SECTION 26-1808, 10 IDAHO CODE, TO PROVIDE THAT SAVINGS BANKS WHICH HAVE RECEIVED A CHARTER 11 AUTHORIZING THE OPERATION OF A TRUST DEPARTMENT MAY ENGAGE IN THE TRUST 12 BUSINESS IN ACCORDANCE WITH CHAPTERS 32 THROUGH 36, IDAHO CODE; AMENDING 13 TITLE 26, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 32, TITLE 26, IDAHO 14 CODE, TO PROVIDE A TITLE, TO PROVIDE THE PURPOSES OF THE ACT, TO PROVIDE 15 DEFINITIONS, TO IDENTIFY PERSONS AUTHORIZED TO ACT AS A FIDUCIARY, TO PRO- 16 VIDE ACTIVITIES NOT REQUIRING A CHARTER, TO PROVIDE FOR TRUST BUSINESS OF 17 A STATE TRUST INSTITUTION, TO PROVIDE FOR TRUST BUSINESS OF AN OUT-OF- 18 STATE TRUST INSTITUTION AND TO PROVIDE FOR THE NAME OF A TRUST INSTITU- 19 TION; AMENDING TITLE 26, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 33, 20 TITLE 26, IDAHO CODE, TO PROVIDE THE AUTHORITY OF A STATE TRUST COMPANY OR 21 A STATE BANK TO ACT AS A FIDUCIARY AND ENGAGE IN TRUST BUSINESS, TO PRO- 22 VIDE THE AUTHORIZED BUSINESS AT BRANCHES AND OFFICES OF STATE TRUST INSTI- 23 TUTIONS, TO REQUIRE A STATE TRUST COMPANY PRINCIPAL OFFICE, TO PROVIDE FOR 24 TRUST OFFICES AND REPRESENTATIVE TRUST OFFICES AND TO PROVIDE FOR OUT-OF- 25 STATE OFFICES; AMENDING TITLE 26, IDAHO CODE, BY THE ADDITION OF A NEW 26 CHAPTER 34, TITLE 26, IDAHO CODE, TO PROVIDE FOR TRUST BUSINESS AT A 27 BRANCH OR TRUST OFFICE OR REPRESENTATIVE TRUST OFFICE, TO PROVIDE FOR THE 28 ESTABLISHMENT OR ACQUISITION OF AN INTERSTATE TRUST OFFICE OR REPRESENTA- 29 TIVE OFFICE, TO REQUIRE AN OUT-OF-STATE TRUST INSTITUTION DESIRING TO 30 ESTABLISH AND MAINTAIN A TRUST OFFICE IN THIS STATE TO GIVE WRITTEN NOTICE 31 TO THE DIRECTOR, TO PROVIDE CONDITIONS FOR ESTABLISHMENT OF A TRUST OFFICE 32 IN THIS STATE BY AN OUT-OF-STATE TRUST INSTITUTION, TO PROVIDE FOR ESTAB- 33 LISHMENT AND REGISTRATION OF A REPRESENTATIVE TRUST OFFICE IN THIS STATE 34 BY AN OUT-OF-STATE TRUST INSTITUTION, TO PROVIDE FOR ADDITIONAL TRUST 35 OFFICES OF AN OUT-OF-STATE TRUST INSTITUTION AND TO REQUIRE NOTICE OF A 36 SUBSEQUENT MERGER, TRANSFER OR CLOSING AFFECTING AN OUT-OF-STATE TRUST 37 INSTITUTION MAINTAINING AN OFFICE IN THIS STATE; AMENDING TITLE 26, IDAHO 38 CODE, BY THE ADDITION OF A NEW CHAPTER 35, TITLE 26, IDAHO CODE, TO PRO- 39 VIDE PREREQUISITES FOR A STATE TRUST COMPANY TO ENGAGE IN TRUST BUSINESS, 40 TO PROVIDE FOR A CHARTER APPLICATION AND APPLICATION FEE, TO PROVIDE THE 41 MINIMUM CAPITAL FOR ISSUANCE OF A CHARTER, TO PROVIDE FOR ISSUANCE OF A 42 CHARTER, TO PROVIDE FOR RECORDS AND PRESERVATION OF RECORDS, TO PROVIDE 43 FOR DISCLOSURE OF INFORMATION, TO PROVIDE FOR TRUST FUNDS, TO PROHIBIT 44 LOANS TO DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES OR SUBSIDIARIES AND TO 45 AUTHORIZE THE DIRECTOR TO SEEK A COURT ORDER REQUIRING A STATE TRUST 46 INSTITUTION TO CLOSE A TRUST IF THE CLOSING HAS BEEN UNREASONABLY DELAYED; 2 1 AMENDING TITLE 26, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 36, TITLE 2 26, IDAHO CODE, TO PROVIDE THE RULEMAKING AUTHORITY OF THE DIRECTOR, TO 3 PROVIDE FOR EXAMINATIONS, PERIODIC REPORTS, COOPERATIVE AGREEMENTS AND 4 ASSESSMENT OF FEES, TO PROVIDE FOR ADMINISTRATIVE ORDERS, TO PROVIDE FOR 5 NOTICE AND OPPORTUNITY FOR HEARING, TO AUTHORIZE THE DIRECTOR TO ISSUE 6 SUBPOENAS AND EXAMINE WITNESSES UNDER OATH, TO AUTHORIZE THE DIRECTOR TO 7 REQUIRE REMOVAL OF DIRECTORS, OFFICERS AND EMPLOYEES UNDER CERTAIN CIRCUM- 8 STANCES, TO PROVIDE THE AUTHORITY OF THE DIRECTOR IF THE CAPITAL OF A 9 STATE TRUST COMPANY IS IMPAIRED OR THE AFFAIRS OF THE COMPANY ARE IN AN 10 UNSOUND CONDITION, TO PROVIDE FOR LEGAL ACTION BY THE DIRECTOR AND OTHER 11 PERSONS AND TO AUTHORIZE CONTINUED OPERATION OF BANKS CHARTERED TO OPERATE 12 A TRUST DEPARTMENT ON JULY 1, 2000, UPON CONFORMITY WITH THE PROVISIONS 13 OF THE ACT; AND PROVIDING AN EFFECTIVE DATE. 14 Be It Enacted by the Legislature of the State of Idaho: 15 SECTION 1. That Section 26-101, Idaho Code, be, and the same is hereby 16 amended to read as follows: 17 26-101. TITLE. This act, comprising chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 18 10, 11, 12,13,14, 15, 16, 17, 18,and26, 32, 33, 34, 35 and 36, title 26, 19 Idaho Code, as such chapters may be hereafter amended, shall be known as the 20 "Idaho Bank Act" and shall be applicable to all corporations, copartnerships, 21 cooperative associations and persons engaged in the business of banking in the 22 state of Idaho. 23 SECTION 2. That Section 26-1111, Idaho Code, be, and the same is hereby 24 amended to read as follows: 25 26-1111. RECORDS NOT PUBLIC. (1) The department of finance shall keep 26 proper books and records of all regulatory acts, matters and things done by it 27 under the provisions of chapters 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12,13,28 18,19,21,and26, 32, 33, 34, 35 and 36, title 26, Idaho Code, as records of 29 its office, but the same shall be subject to disclosure according to chapter 30 3, title 9, Idaho Code, except as otherwise provided in this section and in 31 sections 26-1112 and 67-2743E, Idaho Code. 32 (2) All written communications and copies thereof, between the depart- 33 ment, the director, department employees and any bank, bank holding company, 34 trust company, savings and loan association and credit union which relate in 35 any manner to the examination or condition of the financial institution, are 36 the property of the department of finance and, if acquired by any person, 37 shall be returned to the department upon written demand. 38 (3) (a) The director of the department of finance, any federal bank or 39 other financial institution regulatory or supervisory agency, and any 40 bank, bank holding company, trust company, savings and loan association, 41 or credit union incorporated or chartered under title 26, Idaho Code, or 42 under federal law or the law of any state and doing business in the state 43 of Idaho, shall each have a privilege to refuse to disclose and to prevent 44 any other person from disclosing confidential communications, and the con- 45 tents of any documents relating to any confidential communications, 46 between the financial institution and the department of finance or federal 47 bank or financial institution regulatory or supervisory agency made during 48 the regulatory relationship. 49 (b) A communication is confidential if it is made during the regulatory 50 relationship between the department of finance or the federal bank or 3 1 other financial institution regulatory or supervisory agency and any such 2 bank, bank holding company, trust company, savings and loan association or 3 credit union, and if the communication is not designed or intended for 4 disclosure to any other parties. 5 (c) The privilege may be claimed by the financial institution or by the 6 department of finance or the federal bank or other financial institution 7 regulatory or supervisory agency, or by the lawyer for either. The privi- 8 lege may be waived only in accordance with this section and sections 9 26-1112 and 67-2743E, Idaho Code. 10 (d) The director of the department of finance or the appropriate officer 11 or employee of the federal bank or other financial institution regulatory 12 or supervisory agency may disclose confidential communications between the 13 department or agency and financial institutions to the court, in camera, 14 in a civil action. Such disclosure shall also be a privileged communica- 15 tion and the privilege may be claimed by the director, officer or employee 16 or his lawyer. 17 (e) No sanction may be imposed upon any financial institution as a result 18 of the claim of a privilege by the financial institution or the director 19 of the department of finance or the officer or employee of the federal 20 supervisory agency under this section. 21 SECTION 3. That Section 26-1203, Idaho Code, be, and the same is hereby 22 amended to read as follows: 23 26-1203. FALSE STATEMENTS REGARDING BANKS AND TRUST COMPANIES -- PENALTY. 24 Any person who shallwilfullywillfully and maliciously make, circulate or 25 transmit to another or others any false statement, rumor, or suggestion, writ- 26 ten, printed or by word of mouth, which is directly or by inference derogatory 27 to the financial condition or affects the solvency or financial standing of 28 any bank or trust company doing business in this state, or who shall counsel, 29 aid, procure or induce another to start, transmit or circulate any such state- 30 ment or rumor, shall be guilty of a felony. 31 SECTION 4. That Chapter 12, Title 26, Idaho Code, be, and the same is 32 hereby amended by the addition thereto of a NEW SECTION, to be known and des- 33 ignated as Section 26-1204, Idaho Code, and to read as follows: 34 26-1204. FALSE STATEMENTS REGARDING BANKS AND TRUST COMPANIES -- CIVIL 35 REMEDIES. (1) It is unlawful for any person to make, circulate or transmit to 36 another or others any false statement, rumor, or suggestion, written, printed 37 or by word of mouth, which is directly or by inference derogatory to the 38 financial condition or affects the solvency or financial standing of any bank 39 or trust company doing business in this state, or who shall counsel, aid, pro- 40 cure or induce another to start, transmit or circulate any such statement or 41 rumor. 42 (2) Whenever it appears to the director that any person has engaged in 43 any act constituting a violation of this section, he may in his discretion 44 bring an action in any court of competent jurisdiction to enjoin any such act 45 and to enforce compliance with this section. Upon a showing that a person has 46 engaged or is about to engage in an act constituting a violation of this sec- 47 tion, a permanent or temporary injunction, restraining order or writ of manda- 48 mus shall be granted. The director shall not be required to furnish a bond. In 49 addition to the foregoing, the director may be granted the following remedies: 50 (a) An order that the person violating this section pay a civil penalty 51 to the general fund in an amount not to exceed ten thousand dollars 4 1 ($10,000) for each violation; 2 (b) An order that the person violating this section pay costs to the 3 department, which may include an amount representing reasonable attorney's 4 fees and reimbursements for investigative efforts; 5 (c) An order granting other appropriate remedies upon a proper showing. 6 SECTION 5. That Chapter 13, Title 26, Idaho Code, be, and the same is 7 hereby repealed. 8 SECTION 6. That Section 26-1401, Idaho Code, be, and the same is hereby 9 amended to read as follows: 10 26-1401. DEFINITIONS. In this chapter: 11 (1) "Affiliated bank," with respect to a trust company or another bank, 12 means any bank: 13 (a) That owns, directly or indirectly, eightyper centpercent (80%) or 14 more of the voting stock of such trust company or other bank; or 15 (b) Eightyper centpercent (80%) or more of the voting stock of which is 16 owned, directly or indirectly, by the same bank holding company that owns, 17 directly or indirectly, eightyper centpercent (80%) or more of the vot- 18 ing stock of such trust company or other bank. 19 (2) "Affiliated trust company" means a trust company with a principal 20 place of business located within the state of Idaho, and eightyper centper- 21 cent (80%) or more of the voting stock of which is owned, directly or indi- 22 rectly, by the same bank or bank holding company that owns, directly or indi- 23 rectly, eightyper centpercent (80%) or more of the voting stock of a trust 24 company or a bank with respect to which the affiliated trust company is par- 25 ticipating in a transfer of fiduciary capacities as provided in this chapter. 26 (3) "Bank" means any state bank or national bank whose operations are 27 principally conducted in this state and which is authorized to engage in trust 28 business. 29 (4) "Bank holding company" means a bank holding company as defined in the 30 United States bank holding company act of 1956, as amended. 31 (5) "Director" means the director of the department of finance. 32 (6) "Fiduciary account," with respect to an affiliated bank, affiliated 33 trust company, or trust company, means an estate, trust, or other fiduciary 34 relationship, and includes all rights, privileges, duties, obligations, and 35 undertakings thereof, that have been established or provided for by a written 36 instrument or in any other lawful manner with such affiliated bank, affiliated 37 trust company or trust company. 38 (7) "Fiduciary capacity" means a capacity resulting from the undertaking 39 to act alone or jointly with others as a personal representative of a 40 decedent's estate, a guardian or conservator of an estate, a receiver, a 41 trustee under appointment of any court or under authority of any law, or a 42 trustee for any other purpose permitted by law. 43 (8) "Principal place of business," with respect to any affiliated bank, 44 affiliated trust company, or trust company means such entity's principal place 45 of business within the state of Idaho. 46 (9) "Trust company" means a corporation holding a charter to engage in 47 the trust business in this state, issued pursuant to chapters1332 through 48 36, title 26, Idaho Code, with a principal place of business located within 49 the state of Idaho. 50 SECTION 7. That Section 26-1808, Idaho Code, be, and the same is hereby 51 amended to read as follows: 5 1 26-1808. TRUST POWERS. Savings banks which have received a charter from 2 the director authorizing the operation of a trust department mayexercise3trust powers subject to the prior written authorization by the director to4establish a trust department in the savings bankengage in the trust business 5 in accordance with chapters1332 through 36, title 26, Idaho Code. 6 SECTION 8. That Title 26, Idaho Code, be, and the same is hereby amended 7 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 8 ter 32, Title 26, Idaho Code, and to read as follows: 9 CHAPTER 32 10 TRUST INSTITUTIONS -- GENERAL PROVISIONS 11 26-3201. TITLE. Chapters 32 through 36, title 26, Idaho Code, shall be 12 known and may be cited as the "Idaho Trust Institutions Act." 13 26-3202. PURPOSES OF THE ACT. The purposes of this act are to permit: 14 (1) State banks and state trust companies to engage in the trust business 15 in this state; and 16 (2) Banks and other depository institutions, foreign banks and trust com- 17 panies to engage in the trust business on a multistate and international basis 18 to the extent consistent with the safety and soundness of the trust institu- 19 tions engaged in a trust business in this state and the protection of con- 20 sumers, clients and other customers of such trust institutions. 21 26-3203. DEFINITIONS. The following definitions shall be liberally con- 22 strued to accomplish the purposes of this act. In this act, unless the context 23 otherwise requires: 24 (1) "Account" means the client relationship established with a trust 25 institution involving the transfer of funds or property to the trust institu- 26 tion, including a relationship in which the trust company acts as trustee, 27 executor, administrator, guardian, custodian, conservator, bailee, receiver, 28 registrar, or agent, but excluding a relationship in which the trust institu- 29 tion acts solely in an advisory capacity. 30 (2) "Act as a fiduciary" or "acting as a fiduciary" means to: 31 (a) Accept or execute trusts, including to: 32 (i) Act as trustee under a written agreement; 33 (ii) Receive money or other property in its capacity as trustee for 34 investment in real or personal property; 35 (iii) Act as trustee and perform the fiduciary duties committed or 36 transferred to it by order of a court of competent jurisdiction; 37 (iv) Act as trustee of the estate of a deceased person; or 38 (v) Act as trustee for a minor or incapacitated person; 39 (b) Administer in any other fiduciary capacity real or tangible personal 40 property; or 41 (c) Act pursuant to order of court of competent jurisdiction as executor 42 or administrator of the estate of a deceased person or as a guardian or 43 conservator for a minor or incapacitated person. 44 (3) "Authorized trust institution" means any state trust company, trust 45 office or representative trust office. 46 (4) "Bank" has the meaning set forth in 12 U.S.C. 1813(h); provided that 47 the term "bank" shall not include any "foreign bank" as defined in 12 U.S.C. 48 3101(7), except for any such foreign bank organized under the laws of a terri- 49 tory of the United States, Puerto Rico, Guam, American Samoa or the Virgin 6 1 Islands, the deposits of which are insured by the federal deposit insurance 2 corporation. 3 (5) "Bank supervisory agency" means: 4 (a) Any agency of another state with primary responsibility for charter- 5 ing and supervising a trust institution; and 6 (b) The office of the comptroller of the currency, the federal deposit 7 insurance corporation, the board of governors of the federal reserve sys- 8 tem, the office of thrift supervision and any successor to these agencies. 9 (6) "Branch" with respect to a depository institution has the meaning set 10 forth in section 26-106, Idaho Code. 11 (7) "Charter" means the authority issued by the director or a bank super- 12 visory agency authorizing a trust institution to act as a fiduciary in its 13 home state. 14 (8) "Client" means a person to whom a trust institution owes a duty or 15 obligation under a trust or other account administered by the trust institu- 16 tion or as an advisor or agent, regardless of whether the trust institution 17 owes a fiduciary duty to the person. The term includes the noncontingent bene- 18 ficiaries of an account. 19 (9) "Company" includes a bank, trust company, corporation, limited lia- 20 bility company, partnership, association, business trust or another trust. 21 (10) "Department" means the Idaho department of finance. 22 (11) "Depository institution" means any company chartered to act as a 23 fiduciary and included for any purpose within any of the definitions of 24 "insured depository institution" as set forth in 12 U.S.C. 1813(c)(2) and (3). 25 (12) "Director" means the director of the department of finance. 26 (13) "Foreign bank" means a foreign bank, as defined in section 1(b)(7) of 27 the international banking act of 1978, chartered to act as a fiduciary in a 28 state other than this state. 29 (14) "Home state" means: 30 (a) With respect to a federally chartered trust institution and a foreign 31 bank, the state in which such institution maintains its principal office; 32 and 33 (b) With respect to any other trust institution, the state which char- 34 tered such institution. 35 (15) "Home state regulator" means the bank supervisory agency with primary 36 responsibility for chartering and supervising an out-of-state trust institu- 37 tion. 38 (16) "Host state" means a state, other than the home state of a trust 39 institution, or a foreign country in which the trust institution maintains or 40 seeks to acquire or establish an office. 41 (17) "New trust office" means a trust office located in a host state 42 which: 43 (a) Is originally established by the trust institution as a trust office; 44 and 45 (b) Does not become a trust office of the trust institution as a result 46 of: 47 (i) The acquisition of another trust institution or trust office of 48 another trust institution; or 49 (ii) A merger, consolidation, or conversion involving any such trust 50 institution or trust office. 51 (18) "Office" with respect to a trust institution means the principal 52 office, a trust office or a representative trust office, but not a branch. 53 (19) "Out-of-state bank" means a bank chartered to act as a fiduciary in 54 any state or states other than this state. 55 (20) "Out-of-state trust company" means either a trust company that is not 7 1 a state trust company or a savings association whose principal office is not 2 located in this state. 3 (21) "Out-of-state trust institution" means a trust institution that is 4 not a state trust institution. 5 (22) "Person" means an individual, a company or any other legal entity. 6 (23) "Principal office" with respect to: 7 (a) A state trust company, means a location registered with the director 8 as the state trust company's home office at which: 9 (i) The state trust company does business; 10 (ii) The state trust company keeps its corporate books and a set of 11 its material records, including material fiduciary records; and 12 (iii) At least one (1) executive officer of the state trust company 13 maintains an office. 14 (b) A trust institution other than a state trust company, means its prin- 15 cipal place of business in the United States. 16 (24) "Representative trust office" means an office at which a trust insti- 17 tution has been authorized by the director to engage in a trust business other 18 than acting as a fiduciary. 19 (25) "Savings association" means a depository institution that is neither 20 a bank nor a foreign bank. 21 (26) "State" means any state of the United States, the District of Colum- 22 bia, any territory of the United States, Puerto Rico, Guam, American Samoa, 23 the Trust Territory of the Pacific Islands, the Virgin Islands and the North- 24 ern Mariana Islands. 25 (27) "State bank" means: 26 (a) A bank which has received a charter from the director authorizing it 27 to operate a trust department; or 28 (b) A foreign bank as defined in section 1(b)(7) of the international 29 banking act of 1978 chartered to act as a fiduciary in this state. 30 (28) "State trust company" means a corporation organized under this act 31 and chartered to act as a fiduciary by the state, including a trust company 32 organized under the laws of this state before the effective date of this act. 33 (29) "State trust institution" means a trust institution having its prin- 34 cipal office in this state. 35 (30) "Trust business" means the holding out by a person to the public by 36 advertising, solicitation or other means that the person is available to per- 37 form any service of a fiduciary in this or another state including, but not 38 limited to: 39 (a) Acting as a fiduciary; or 40 (b) To the extent not acting as a fiduciary, any of the following: 41 (i) Receiving for safekeeping personal property of every descrip- 42 tion; 43 (ii) Acting as assignee, bailee, conservator, custodian, escrow 44 agent, registrar, receiver or transfer agent; or 45 (iii) Acting as financial advisor, investment advisor or manager, 46 agent or attorney-in-fact in any agreed upon capacity. 47 (31) "Trust company" means a state trust company or any other company 48 chartered to act as a fiduciary that is neither a depository institution nor a 49 foreign bank. 50 (32) "Trust institution" means a depository institution, foreign bank, 51 state bank or trust company. 52 (33) "Trust office" means an office, other than the principal office, at 53 which a trust institution is licensed by the director to act as a fiduciary. 54 (34) "Unauthorized trust activity" means: 55 (a) A person, other than one identified in section 26-3204(1), Idaho 8 1 Code, acting as a fiduciary within this state; 2 (b) A person engaging in a trust business in this state at any office of 3 such person that is not its principal office, if it is a state trust 4 institution, or that is not a trust office or a representative trust 5 office of such person, unless the person has been authorized by the direc- 6 tor, in his discretion, to engage in a trust business in this state in 7 another manner and upon such conditions as he may require; or 8 (c) An out-of-state trust institution engaging in a trust business in 9 this state at any time an order issued by the director pursuant to section 10 26-3603(2), Idaho Code, is in effect. 11 26-3204. PERSONS AUTHORIZED TO ACT AS A FIDUCIARY. (1) No person shall 12 act as a fiduciary in this state except: 13 (a) A state trust company; 14 (b) A state bank; 15 (c) A savings bank organized under the laws of this state and authorized 16 to act as a fiduciary pursuant to the savings bank act, chapter 18, title 17 26, Idaho Code; 18 (d) A national bank authorized by the comptroller of the currency to act 19 as a fiduciary pursuant to 12 U.S.C. 92a; 20 (e) A federally chartered savings association having its principal office 21 in this state and authorized by its federal chartering authority to act as 22 a fiduciary; 23 (f) An out-of-state bank with a branch in this state established or main- 24 tained pursuant to the interstate banking act, chapter 26, title 26, Idaho 25 Code, or the interstate branching act, chapter 16, title 26, Idaho Code, 26 or a trust office licensed by the director pursuant to this act; 27 (g) An out-of-state trust company with a trust office licensed by the 28 director pursuant to this act; 29 (h) A foreign bank with a trust office licensed by the director pursuant 30 to this act; or 31 (i) Such other person as may be authorized by the director, in his dis- 32 cretion, and upon such conditions as he may require. 33 (2) No person shall engage in an unauthorized trust activity. 34 26-3205. ACTIVITIES NOT REQUIRING A CHARTER. Notwithstanding any other 35 provision of this act, a person does not engage in the trust business or in 36 any other business in a manner requiring a charter under this act, or in an 37 unauthorized trust activity by: 38 (1) Acting in a manner authorized by law and in the scope of authority as 39 an agent of a trust institution with respect to an activity which is not an 40 unauthorized trust activity; 41 (2) Obtaining trust business as a result of an existing attorney-client 42 relationship or certified public accountant-client relationship; 43 (3) Acting as trustee under a deed of trust delivered only as security 44 for the payment of money or for the performance of another act; 45 (4) Receiving and distributing rents and proceeds of sale as a licensed 46 real estate broker on behalf of a principal in a manner authorized by the 47 Idaho real estate commission; 48 (5) Engaging in a securities transaction or providing an investment advi- 49 sory service as a licensed and registered broker-dealer, investment advisor or 50 registered representative thereof, provided the activity is regulated by the 51 Idaho department of finance or the securities and exchange commission; 52 (6) Engaging in the sale and administration of an insurance product by an 53 insurance company or agent licensed by the Idaho department of insurance to 9 1 the extent that the activity is regulated by the Idaho department of insur- 2 ance; 3 (7) Engaging in the lawful sale of prepaid funeral contracts under a per- 4 mit issued by the Idaho board of morticians or engaging in the lawful business 5 of a perpetual care cemetery under the Idaho endowment care cemetery act; 6 (8) Acting as trustee under a voting trust as provided by the Idaho busi- 7 ness corporation act; 8 (9) Acting as trustee by a public, private, or independent institution of 9 higher education or a university system, including its affiliated foundations 10 or corporations, with respect to endowment funds or other funds owned, con- 11 trolled, provided to or otherwise made available to such institution with 12 respect to its educational or research purposes; 13 (10) Engaging in other activities expressly excluded from the application 14 of this act, by rule of the director; 15 (11) Acting as a fiduciary for relatives; 16 (12) Provided the company is a trust institution and is not barred by 17 order of the director from engaging in a trust business in this state pursuant 18 to section 26-3603(2), Idaho Code: 19 (a) Marketing or soliciting in this state through the mails, telephone, 20 any electronic means or in person with respect to acting or proposing to 21 act as a fiduciary outside of this state; 22 (b) Delivering money or other intangible assets and receiving the same 23 from a client or other person in this state; or 24 (c) Accepting or executing outside of this state a trust of any client or 25 otherwise acting as a fiduciary outside of this state for any client; 26 (13) Acting pursuant to court appointment as: 27 (a) A personal representative of a decedent's estate; or 28 (b) A guardian or conservator of an estate. 29 26-3206. TRUST BUSINESS OF STATE TRUST INSTITUTION. (1) A state trust 30 institution may act as a fiduciary or otherwise engage in a trust business in 31 this or any other state or foreign country, subject to complying with applica- 32 ble laws of such state or foreign country, at an office established and main- 33 tained pursuant to this act, at a branch or at any location other than an 34 office or branch. 35 (2) In addition, a state trust institution may conduct any activities at 36 any office outside this state that are permissible for a trust institution 37 chartered by the host state where the office is located, except to the extent 38 such activities are expressly prohibited by the laws of this state or by any 39 regulation or order of the director applicable to the state trust institution; 40 provided however, that the director may waive any such prohibition if the 41 director determines, by order or rule, that the involvement of out-of-state 42 offices of state trust institutions in particular activities would not 43 threaten the safety or soundness of such state trust institutions. 44 26-3207. TRUST BUSINESS OF OUT-OF-STATE TRUST INSTITUTION. An out-of- 45 state trust institution which establishes or maintains one (1) or more offices 46 in this state under this act, may conduct any activity at each such office 47 which would be authorized under the laws of this state for a state trust 48 institution to conduct at such an office. 49 26-3208. NAME OF TRUST INSTITUTION. A state trust company or out-of-state 50 trust institution may register any name with the director in connection with 51 establishing a principal office, trust office or representative trust office 52 in this state pursuant to this act, except that the director may determine 10 1 that a name proposed to be registered is potentially misleading to the public 2 and require the registrant to select a name which is not potentially mislead- 3 ing. 4 SECTION 9. That Title 26, Idaho Code, be, and the same is hereby amended 5 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 6 ter 33, Title 26, Idaho Code, and to read as follows: 7 CHAPTER 33 8 TRUST INSTITUTIONS -- STATE TRUST INSTITUTION OFFICES 9 26-3301. TRUST BUSINESS. A state trust company or a state bank may: 10 (1) Perform any act as a fiduciary; 11 (2) Engage in any trust business; 12 (3) Exercise any incidental power that is reasonably necessary to enable 13 it to fully exercise, according to commonly accepted fiduciary customs and 14 usages, a power conferred in this act. 15 26-3302. BRANCHES AND OFFICES OF STATE TRUST INSTITUTIONS. (1) A state 16 trust institution may act as a fiduciary and engage in a trust business at 17 each trust office as permitted by this act, and at a branch in this state. 18 (2) A state trust institution may not act as a fiduciary but may other- 19 wise engage in a trust business at a representative trust office as permitted 20 by this act. 21 (3) Notwithstanding subsections (1) and (2) of this section, a state 22 trust institution may not engage at an out-of-state office in any trust busi- 23 ness not permitted for such an office by the host state to trust institutions 24 chartered by such state. 25 26-3303. STATE TRUST COMPANY PRINCIPAL OFFICE. (1) Each state trust com- 26 pany must have and continuously maintain a principal office in this state. 27 (2) Each executive officer at the principal office is an agent of the 28 state trust company for service of process. 29 (3) A state trust company may change its principal office to any location 30 within this state by filing a written notice with the director setting forth 31 the name of the state trust company, the street address of its principal 32 office before the change, the street address to which the principal office is 33 to be changed, and a copy of the resolution adopted by the board authorizing 34 the change. 35 (4) The change of principal office shall take effect on the thirty-first 36 day after the date the director receives the notice pursuant to subsection (3) 37 of this section, unless the director establishes an earlier or later date or 38 unless prior to such day the director notifies the state trust company that it 39 must establish to the satisfaction of the director that the relocation is con- 40 sistent with the provisions of this act for the establishment of a state trust 41 company at that location, in which event the change of principal office shall 42 take effect when approved by the director. 43 26-3304. TRUST OFFICE -- REPRESENTATIVE TRUST OFFICE. (1) A state trust 44 institution may establish or acquire, and maintain, trust offices or represen- 45 tative trust offices anywhere in this state. A state trust institution desir- 46 ing to establish or acquire, and maintain, such an office shall file a written 47 notice with the director setting forth the name of the state trust institu- 48 tion, the location of the proposed additional office and whether the addi- 11 1 tional office will be a trust office or a representative trust office, furnish 2 a copy of the resolution adopted by the board authorizing the additional 3 office and pay the filing fee, if any, prescribed by the director. 4 (2) The state trust institution may commence business at the additional 5 office on the thirty-first day after the date the director receives the 6 notice, unless the director specifies an earlier or later date. 7 (3) The thirty (30) day period of review may be extended by the director 8 on a determination that the written notice raises issues that require addi- 9 tional information or additional time for analysis. If the period of review is 10 extended, the state trust institution may establish the additional office only 11 on prior written approval by the director. 12 (4) The director may deny approval of the additional office if the direc- 13 tor finds that the state trust institution lacks sufficient financial 14 resources to undertake the proposed expansion without adversely affecting its 15 safety or soundness or that the proposed office would be contrary to the pub- 16 lic interest. 17 26-3305. OUT-OF-STATE OFFICES. (1) A state bank, a state trust company or 18 a savings association chartered under the laws of this state may establish and 19 maintain a new trust office or a representative trust office or acquire and 20 maintain an office in a state other than this state. Such a trust institution 21 desiring to establish or acquire, and maintain, an office in another state 22 under this section shall file a notice with the director on a form prescribed 23 by the director, which shall set forth the name of the trust institution, the 24 location of the proposed office, whether the office will be a trust office or 25 a representative trust office, and whether the laws of the jurisdiction where 26 the office will be located permit the office to be maintained by the trust 27 institution, furnish a copy of the resolution adopted by the board authorizing 28 the out-of-state office, and pay the filing fee, if any, prescribed by the 29 director. 30 (2) The trust institution may commence business at the additional office 31 on the thirty-first day after the date the director receives the notice, 32 unless the director specifies an earlier or later date. 33 (3) The thirty (30) day period of review may be extended by the director 34 on a determination that the written notice raises issues that require addi- 35 tional information or additional time for analysis. If the period of review is 36 extended, the trust institution may establish the additional office only on 37 prior written approval by the director. 38 (4) The director may deny approval of the additional office if the direc- 39 tor finds that the trust institution lacks sufficient financial resources to 40 undertake the proposed expansion without adversely affecting its safety or 41 soundness or that the proposed office would be contrary to the public inter- 42 est. In acting on the notice, the director shall consider the views of the 43 appropriate bank supervisory agencies. 44 SECTION 10. That Title 26, Idaho Code, be, and the same is hereby amended 45 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 46 ter 34, Title 26, Idaho Code, and to read as follows: 47 CHAPTER 34 48 TRUST INSTITUTIONS -- OUT-OF-STATE TRUST INSTITUTION OFFICES 49 26-3401. TRUST BUSINESS AT A BRANCH OR TRUST OFFICE OR REPRESENTATIVE 50 TRUST OFFICE. (1) An out-of-state trust institution may act as a fiduciary in 51 this state or engage in a trust business in this state if it maintains a trust 12 1 office in this state as permitted by this chapter, or a branch in this state. 2 (2) An out-of-state trust institution may not act as a fiduciary, but may 3 otherwise engage in a trust business, at a representative trust office as per- 4 mitted by this chapter. 5 26-3402. ESTABLISHING OR ACQUIRING AN INTERSTATE TRUST OFFICE OR REPRE- 6 SENTATIVE OFFICE. (1) An out-of-state trust institution that does not operate 7 a trust office in this state and that meets the requirements of this chapter 8 may establish or acquire, and maintain, a trust office in this state. 9 (2) An out-of-state trust institution may establish or acquire, and main- 10 tain, a representative trust office in this state. 11 26-3403. REQUIREMENT OF NOTICE. An out-of-state trust institution desir- 12 ing to establish and maintain a new trust office or acquire and maintain a 13 trust office in this state pursuant to this chapter shall provide, or cause 14 its home state regulator to provide, written notice of the proposed transac- 15 tion to the director on or after the date on which the out-of-state trust 16 institution applies to the home state regulator for approval to establish or 17 acquire, and maintain, the trust office. The filing of such notice shall be 18 preceded or accompanied by a copy of the resolution adopted by the board 19 authorizing the additional office and the filing fee, if any, prescribed by 20 the director. 21 26-3404. CONDITIONS FOR APPROVAL. (1) No trust office of an out-of-state 22 trust institution may be acquired or established in this state under this 23 chapter unless: 24 (a) The out-of-state trust institution shall have confirmed in writing to 25 the director that for as long as it maintains a trust office in this 26 state, it will comply with all applicable laws of this state; 27 (b) The out-of-state trust institution shall have provided satisfactory 28 evidence to the director of compliance with: 29 (i) Any applicable requirements of part 15, chapter 1, title 30, 30 Idaho Code, and 31 (ii) The applicable requirements of its home state regulator for 32 acquiring or establishing and maintaining such office. 33 (c) The director, acting within sixty (60) days after receiving notice 34 under section 26-3403, Idaho Code, shall have certified to the home state 35 regulator that the requirements of this chapter have been met and the 36 notice has been approved or, if applicable, that any conditions imposed by 37 the director pursuant to subsection (2) of this section have been satis- 38 fied. 39 (2) The out-of-state trust institution may commence business at the trust 40 office on the sixty-first day after the date the director receives the notice 41 unless the director specifies an earlier or later date, provided, with respect 42 to an out-of-state trust institution that is not a depository institution and 43 for which the director shall have conditioned such approval on the satisfac- 44 tion by the out-of-state trust institution of any requirement applicable to a 45 state trust company pursuant to this act, such institution shall have satis- 46 fied such conditions and provided to the director satisfactory evidence 47 thereof. 48 (3) The sixty (60) day period of review may be extended by the director 49 on a determination that the written notice raises issues that require addi- 50 tional information or additional time for analysis. If the period of review is 51 extended, the out-of-state trust institution may establish the office only on 52 prior written approval by the director. 13 1 (4) The director may deny approval of the office if the director finds 2 that the out-of-state trust institution lacks sufficient financial resources 3 to undertake the proposed expansion without adversely affecting its safety or 4 soundness or that the proposed office is contrary to the public interest. In 5 acting on the notice, the director shall consider the views of the appropriate 6 bank supervisory agencies. 7 26-3405. REGISTRATION OF REPRESENTATIVE TRUST OFFICE. (1) An out-of-state 8 trust institution may establish or acquire and maintain a representative trust 9 office in this state. An out-of-state trust institution not maintaining a 10 trust office in this state and desiring to establish or acquire, and maintain 11 a representative trust office shall file a notice with the director on a form 12 prescribed by the director which shall set forth the name of the out-of-state 13 trust institution and the location of the proposed office and satisfactory 14 evidence that the out-of-state trust institution is a trust institution, fur- 15 nish a copy of the resolution adopted by the board authorizing the representa- 16 tive trust office, and pay the filing fee, if any, prescribed by the director. 17 (2) The out-of-state trust institution may commence business at the rep- 18 resentative trust office on the thirty-first day after the date the director 19 receives the notice, unless the director specifies an earlier or later date. 20 (3) The thirty (30) day period of review may be extended by the director 21 on a determination that the written notice raises issues that require addi- 22 tional information or additional time for analysis. If the period of review is 23 extended, the out-of-state trust institution may establish the representative 24 trust office only on prior written approval by the director. 25 (4) The director may deny approval of the representative trust office if 26 the director finds that the out-of-state trust institution lacks sufficient 27 financial resources to undertake the proposed expansion without adversely 28 affecting its safety or soundness or that the proposed office would be con- 29 trary to the public interests. In acting on the notice, the director shall 30 consider the views of the appropriate bank supervisory agencies. 31 26-3406. ADDITIONAL TRUST OFFICES. An out-of-state trust institution that 32 maintains a trust office in this state under this chapter may establish or 33 acquire additional trust offices or representative trust offices in this state 34 to the same extent that a state trust institution may establish or acquire 35 additional offices in this state pursuant to the procedures for establishing 36 or acquiring such offices set forth in section 26-3304, Idaho Code. 37 26-3407. NOTICE OF SUBSEQUENT MERGER, TRANSFER, OR CLOSING. Each out-of- 38 state trust institution that maintains an office in this state pursuant to 39 this act, or the home state regulator of such trust institution, shall give at 40 least thirty (30) days' prior written notice or, in the case of an emergency 41 transaction, such shorter notice as is consistent with applicable state or 42 federal law, to the director of: 43 (1) Any merger, consolidation, or other transaction that would cause a 44 change of control with respect to such out-of-state trust institution or any 45 bank holding company that controls such trust institution, with the result 46 that an application would be required to be filed pursuant to the federal 47 change in bank control act of 1978, as amended, 12 U.S.C. 1817(j), or the fed- 48 eral bank holding company act of 1956, as amended, 12 U.S.C. 1841 et seq., or 49 any successor statutes thereto; 50 (2) Any transfer of all or substantially all of the trust accounts or 51 trust assets of the out-of-state trust institution to another person; or 52 (3) The closing or disposition of any office in this state. 14 1 SECTION 11. That Title 26, Idaho Code, be, and the same is hereby amended 2 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 3 ter 35, Title 26, Idaho Code, and to read as follows: 4 CHAPTER 35 5 TRUST INSTITUTIONS -- 6 STATE TRUST COMPANY ORGANIZATION -- 7 GENERAL PROVISIONS 8 26-3501. PREREQUISITE TO ENGAGING IN TRUST BUSINESS. (1) A corporation 9 duly organized for the purpose of engaging in the trust business may apply for 10 a charter to operate as a state trust company. A state trust company may per- 11 form any act as a fiduciary or engage in any trust business within or without 12 this state. 13 (2) A bank having the power to engage in the trust business, which is 14 organized under the laws of this state or authorized to do business in this 15 state, and which is chartered under the provisions of the Idaho bank act to 16 engage in banking business in the state of Idaho, may apply for a charter from 17 the director authorizing it to operate a trust department. 18 (3) To the extent not inconsistent with specific provisions of this chap- 19 ter, and in the discretion of the director, provisions of the Idaho bank act 20 regarding organization, operation and closing of banks shall apply to appli- 21 cants for a charter under this chapter and to state trust companies. 22 26-3502. APPLICATION FOR CHARTER. An application for a state trust com- 23 pany or trust department charter shall be in writing and in such form as the 24 director shall prescribe, verified under oath and supported by such informa- 25 tion, data and records as the director may require. 26 26-3503. APPLICATION FEE. A reasonable application fee, as set by the 27 director, shall be paid to the department with respect to each application for 28 a charter under this chapter at the time the application is filed. 29 26-3504. MINIMUM CAPITAL. (1) A charter shall not be issued to a corpora- 30 tion applying for a state trust company charter having a paid-in capital of 31 less than one million five hundred thousand dollars ($1,500,000). 32 (2) A charter to operate a trust department shall not be issued to a bank 33 unless the capital of the bank is in an amount of not less than one million 34 five hundred thousand dollars ($1,500,000), in addition to its statutory 35 required minimum capital for a bank charter required by section 26-205, Idaho 36 Code. 37 (3) Subject to subsection (4) of this section, a state trust company or 38 state bank shall at all times maintain capital in at least the amount required 39 under subsections (1) and (2) of this section. 40 (4) The director may require additional capital for a proposed or exist- 41 ing state trust company or state bank or, on application in the exercise of 42 discretion consistent with protecting safety and soundness, reduce the amount 43 of minimum capital required for a proposed or existing state trust company or 44 state bank. 45 26-3505. ISSUANCE OF CHARTER. Upon the filing of an application the 46 director shall make or cause to be made an investigation and examination of 47 the facts concerning the applicant and shall issue a charter if he finds: 48 (1) The applicant is a corporation having powers and purposes to engage 49 in the trust business, organized under the laws of this state or authorized to 15 1 do business in this state as a foreign corporation; and 2 (2) The applicant has complied with all of the applicable provisions of 3 this act; and 4 (3) The ability and integrity of the persons involved in the management 5 of the applicant's business are such as to demonstrate that it will be oper- 6 ated in a sound and lawful manner; and 7 (4) The applicant has adequate facilities to engage in trust business. 8 26-3506. RECORDS -- PRESERVATION OF RECORDS. A state trust company or 9 trust department shall keep and use in its business any books, accounts and 10 records which will enable the director to determine whether the trust institu- 11 tion is complying with the provisions of this act and the rules and orders of 12 the director. The director may by rule or order provide which books, accounts 13 and records shall be kept, and the periods of time and the manner in which 14 they shall be preserved. 15 26-3507. DISCLOSURE OF INFORMATION. A state trust company or trust 16 department, its officers and employees, shall not disclose information to any 17 person concerning the existence, condition, management and administration of 18 any trust of which it is the trustee except as such disclosure: 19 (1) Is specifically authorized by the terms of the trust or upon the 20 direction of the trustor; 21 (2) Is determined by an officer of the state trust institution to be nec- 22 essary for the proper administration of such trust; 23 (3) Is required by a court of competent jurisdiction; 24 (4) Is made, in the case of an irrevocable trust, to or upon the instruc- 25 tions of any beneficiary thereunder whether or not presently entitled to 26 receive benefits from the trust; 27 (5) Is made to the director or to any state or federal regulatory or 28 insuring agency lawfully requiring such disclosure; 29 (6) Is required by title 15, Idaho Code. 30 26-3508. TRUST FUNDS. (1) All moneys received by a state trust company as 31 a fiduciary on trust business within this state shall be deposited in a bank, 32 in a specially designated account or accounts, shall not be commingled with 33 any funds of the state trust company and shall remain on deposit until dis- 34 bursed or invested in accordance with the powers and duties of the state trust 35 company in its capacity as fiduciary. 36 (2) A bank which is chartered by the director to operate a trust depart- 37 ment shall establish and maintain a trust department in which separate books 38 and records for each trust or estate shall be maintained. All property held by 39 the bank as a fiduciary shall be segregated from and unmingled with other 40 property of the bank; provided, cash held by the bank as a fiduciary may be 41 deposited to the credit of the bank as such fiduciary in time or demand 42 deposit accounts with itself, or may be deposited in time or demand deposit 43 accounts with any other bank in this state so long as said bank or banks are 44 insured by the federal deposit insurance corporation. Property held by a bank 45 as a fiduciary may be held in the name of nominees of the bank whether the 46 bank is the sole fiduciary or acting with others, but the bank shall be 47 responsible for the acts of any such nominee. 48 26-3509. LOANS TO DIRECTORS, OFFICERS OR EMPLOYEES PROHIBITED -- LOANS TO 49 AFFILIATES OR SUBSIDIARIES PROHIBITED. (1) A state trust company or bank hav- 50 ing a trust department shall not make any loan to any director, officer or 51 employee of the trust institution or to any affiliate or subsidiary corpora- 16 1 tion or to any director, officer or employee of an affiliate or subsidiary 2 corporation from its trust funds. A state trust company or bank having a trust 3 department shall not permit any director, officer, employee, affiliate or sub- 4 sidiary corporation to become indebted to it in any manner out of its trust 5 funds unless specifically authorized to do so by the terms of the trust. 6 (2) This section shall not prevent the maintenance by a state trust com- 7 pany of its trust funds in time or demand deposits in an affiliate which is a 8 bank, or a trust department of a bank from maintaining its trust funds in the 9 bank in accordance with section 26-3508, Idaho Code. 10 26-3510. CLOSING OF TRUST UNDULY DELAYED. If, as a result of an examina- 11 tion, the director finds that the closing of any trust by a state trust com- 12 pany has been unreasonably delayed, the director may initiate proceedings in a 13 court of competent jurisdiction to require the state trust institution to per- 14 form its duties in closing the trust. 15 SECTION 12. That Title 26, Idaho Code, be, and the same is hereby amended 16 by the addition thereto of a NEW CHAPTER, to be known and designated as Chap- 17 ter 36, Title 26, Idaho Code, and to read as follows: 18 CHAPTER 36 19 TRUST INSTITUTIONS -- SUPERVISION AND ENFORCEMENT 20 26-3601. ADMINISTRATION AND RULES. Every authorized trust institution 21 shall be under the supervision of the director. The director may issue, pro- 22 mulgate, amend and rescind rules or orders necessary or proper to carry out 23 the provisions of this act. All authorized trust institutions doing business 24 under the provisions of this act shall conduct their business in a manner con- 25 sistent with all laws relating to authorized trust institutions, and all rules 26 or orders that may be promulgated or issued by the director. 27 26-3602. EXAMINATIONS -- PERIODIC REPORTS -- COOPERATIVE AGREEMENTS -- 28 ASSESSMENT OF FEES. (1) The director may make such examinations, with or with- 29 out notice, of any office or branch established or maintained in this state 30 pursuant to this act as the director may deem necessary to determine whether 31 the office is being operated in compliance with the laws of this state and in 32 accordance with safe and sound banking practices. The director may compel the 33 attendance of any person or the production of any books, accounts and records 34 for the purpose of such examination. 35 (2) The director may require periodic reports regarding any trust insti- 36 tution that has established or maintained an office in this state pursuant to 37 this act. The required reports shall be provided by such trust institution or, 38 if an out-of-state trust institution, may be provided by the home state regu- 39 lator. 40 (3) The director may enter into cooperative, coordinating and 41 information-sharing agreements with any other bank supervisory agencies or any 42 organization affiliated with or representing one (1) or more bank supervisory 43 agencies with respect to the periodic examination or other supervision of any 44 office in this state of an out-of-state trust institution, or any office of a 45 state trust institution in any host state, and the director may accept the 46 agency's or organization's report of examination and report of investigation 47 in lieu of conducting an examination or investigation. 48 (4) The director may enter into joint examinations or joint enforcement 49 actions with other bank supervisory agencies having concurrent jurisdiction 50 over any office established and maintained in this state by an out-of-state 17 1 trust institution or any office established and maintained by a state trust 2 institution in any host state; provided, that the director may at any time 3 take such actions independently if the director deems such actions to be nec- 4 essary or appropriate under this act or to ensure compliance with the laws of 5 this state; but provided further that, in the case of an out-of-state trust 6 institution, the director shall recognize the exclusive authority of the home 7 state regulator over corporate governance matters and the primary responsibil- 8 ity of the home state regulator with respect to safety and soundness matters. 9 (5) Each trust institution that maintains one (1) or more offices in this 10 state may be assessed and, if assessed, shall pay reasonable supervisory and 11 examination fees as set by the director. Such fees may be shared with other 12 bank supervisory agencies or any organization affiliated with or representing 13 one (1) or more bank supervisory agencies in accordance with agreements 14 between such parties and the director. 15 26-3603. ADMINISTRATIVE ORDERS. (1) The director shall have the power to: 16 (a) Order any authorized trust institution, or subsidiary thereof, or any 17 director, officer, or employee to cease and desist violating any provision 18 of this act or any rule or order issued thereunder; 19 (b) Order any authorized trust institution, or subsidiary thereof, or any 20 director, officer, or employee to cease and desist from a course of con- 21 duct that is unsafe or unsound and which is likely to cause insolvency or 22 dissipation of assets or is likely to jeopardize or otherwise seriously 23 prejudice the interests of the public in their relationship with the 24 authorized trust institution; 25 (c) Order any person to cease and desist from engaging in an unauthorized 26 trust activity; 27 (d) Temporarily or permanently prohibit the trust institution or person 28 subject to an order under this section from engaging in the trust business 29 in this state. 30 (2) The director may determine by order that an out-of-state trust insti- 31 tution engaging in or proposing to engage in a trust business in this state 32 does not meet the requirements for establishing a representative trust office 33 in this state, which order shall be effective on the date of issuance or such 34 other date as the director shall determine. 35 (3) The director may impose a civil money penalty payable to the general 36 fund of not more than five thousand dollars ($5,000) for each violation of an 37 order issued under this section committed by a subject of the order. 38 (4) Failure by an authorized trust institution to comply with an order 39 issued under this section within such reasonable time as the director pre- 40 scribes is grounds for suspension or revocation of its charter or license 41 issued under this act. 42 26-3604. NOTICE AND OPPORTUNITY FOR HEARING. Consistent with chapter 52, 43 title 67, Idaho Code, notice and opportunity for hearing shall be provided in 44 connection with any of the foregoing actions. Provided however, in cases 45 involving extraordinary circumstances requiring immediate action, the director 46 may take such action, but shall promptly afford a subsequent hearing upon 47 application to rescind the action taken. The director shall promptly give 48 notice to the home state regulator of each enforcement action taken against an 49 out-of-state trust institution and, to the extent practicable, shall consult 50 and cooperate with the home state regulator in pursuing and resolving said 51 enforcement action. 52 26-3605. SUBPOENA POWER -- EXAMINATION UNDER OATH. The director shall 18 1 have the power to subpoena witnesses, compel their attendance, require the 2 production of evidence, administer oaths, and examine any person under oath in 3 connection with any subject related to a duty imposed or a power vested in the 4 director by this act. 5 26-3606. REMOVAL OF DIRECTORS, OFFICERS AND EMPLOYEES. The director shall 6 have the power to require the immediate removal from office of any officer, 7 director, or employee of any authorized trust institution, who shall be found 8 to be dishonest, incompetent, or reckless in the management of the affairs of 9 the authorized trust institution, or who persistently violates the laws of 10 this state or the rules, orders and instructions issued by the director. 11 26-3607. IMPAIRMENT OF CAPITAL -- UNSAFE CONDITION -- RECEIVERSHIP. If it 12 appears to the director that the capital of a state trust company is either 13 reduced or impaired below one million five hundred thousand dollars 14 ($1,500,000) or the affairs of the company are in an unsound condition, the 15 director shall order the state trust company to make good any deficit or to 16 remedy the unsafe condition of its affairs within sixty (60) days of the date 17 of such order and may restrict and regulate the operation of the state trust 18 company until the capital is so restored. If the deficiency in capital has not 19 been made good and the unsafe condition remedied within sixty (60) days, the 20 director may apply to the district court, in the county in which the principal 21 office of the state trust company is located, to be appointed receiver for the 22 liquidation or rehabilitation of the state trust company. The expense of such 23 receivership shall be paid out of the assets of the state trust company. 24 26-3608. LIMIT OF LEGAL ACTION. This chapter does not limit any statutory 25 or common law right of a person to bring an action in a court for any act 26 involved in the transaction of trust business or the right of the state to 27 bring an action against any person for a violation of law based on such act. 28 The director may enforce any of his orders through injunctive proceedings or 29 any other appropriate action brought in the name of this state. 30 26-3609. CONTINUED OPERATION. Any bank chartered to operate a trust 31 department on July 1, 2000, is hereby authorized to continue to operate a 32 trust department after July 1, 2000; provided that such bank must conform its 33 trust department operations with the provisions of this act. 34 SECTION 13. This act shall be in full force and effect on and after July 35 1, 2000.
AH0389
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature Second Regular Session - 2000
Moved by Black
Seconded by Tilman
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 389
1 AMENDMENTS TO SECTION 8
2 On page 9 of the printed bill, delete lines 4 and 5, and insert:
3 "(2) Obtaining trust business as a result of an existing attorney-client
4 relationship or certified public accountant-client relationship;"; delete
5 lines 31 and 32, and insert:
6 "(11) Acting as a fiduciary for relatives;" in line 42, delete "." and
7 insert: ";" and following line 42, insert:
8 "(13) Acting pursuant to court appointment as:
9 (a) A personal representative of a decedent's estate; or
10 (b) A guardian or conservator of an estate.".
Moved by Callister
Seconded by Hammond
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENT TO H.B. NO. 389
11 AMENDMENTS TO SECTION 4
12 On page 3 of the printed bill, in line 35, delete "ADMINIS-" and in line
13 36, delete "TRATIVE AND"; in line 43, delete "or is" and in line 44, delete
14 "about to engage"; in line 45 delete ":"; and delete lines 46 through 51; on
15 page 4, delete lines 1 through 5; in line 6 delete "(b) Bring" and insert:
16 "bring"; in line 13, delete "(i)" and insert: "(a)"; in line 16, delete "(ii)"
17 and insert: "(b)"; and in line 19, delete "(iii)" and insert: "(c)".
18 CORRECTION TO TITLE
19 On page 1, in line 6, delete "ADMINISTRATIVE AND".
Moved by Alltus
Seconded by Denney
IN THE HOUSE OF REPRESENTATIVES
HOUSE AMENDMENTS TO H.B. NO. 389
20 AMENDMENTS TO SECTION 4
21 On page 3 of the printed bill, in line 50, delete "department" and insert:
22 "general fund"; and on page 4, in line 14, delete "department" and insert:
23 "general fund".
24 AMENDMENT TO SECTION 12
25 On page 17, in line 50, following "penalty" insert: "payable to the gen-
2
1 eral fund".
STATEMENT OF PURPOSE
RS09363
This legislation will amend the Idaho Bank Act to modernize its
trust provisions. In increasing numbers, banks and other
institutions engaged in a trust business are seeking to operate
efficiently across state lines. Currently, Idaho's law prohibits
any person from engaging in trust activity in Idaho unless it has
obtained a charter for that purpose from the Department. In the
current financial marketplace, this prohibition discourages
qualified trust institutions from operating in Idaho, and prevents
their services from being offered to Idaho residents. The proposed
legislation has been patterned after model legislation drafted by
the Conference of State Bank Supervisors, and being adopted in
various forms by some other states. It permits in-state and out-
of-state banks and other state-chartered trust institutions to
operate on an interstate basis, subject to an appropriate level of
state banking supervision.
FISCAL IMPACT
No fiscal impact.
CONTACT
Name: Kelly Robison
Agency: Department of Finance
Phone: 332-8032
Statement of Purpose/Fiscal Impact H038