SECTIONS 1560-1565

1560.  A trust company may invest its contributed capital only inthe securities and properties in which a commercial bank is permittedto invest its funds pursuant to Sections 1000 to 1018, inclusive,and in loans on real property which commercial banks are permitted tomake pursuant to Article 2 (commencing with Section 1220) of Chapter10.1561.  Trust funds received by any trust company in connection withits trust business, if invested, shall be invested as provided inPart 4 (commencing with Section 16000) of Division 9 of the ProbateCode.1561.1.  (a) As used in this section: (1) "Fund" means any investment company registered under theInvestment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), asamended from time to time. (2) "Trust" means any court trust or private trust. (3) "Trust Law" means Division 9 (commencing with Section 15000)of the Probate Code. (b) Within the standards established by trust law, including, butnot limited to, Division 9 (commencing with Section 15000) of theProbate Code, a trust company acting in any capacity under a trustmay, in the exercise of its investment discretion unless the trustinstrument provides expressly to the contrary, invest and reinvest inthe securities of or other interests in any fund to which the trustcompany or its affiliate is providing services including, but notlimited to, services as an investment adviser, sponsor, distributor,custodian, agent, registrar, administrator, servicer, or manager, andfor which the trust company or its affiliate receives compensation. (c) Before or within 30 days after the initial investment upon theexercise of discretionary powers authorized by subdivision (b), thetrust company, acting in any capacity under a trust, shall furnishwritten notice of the exercise of the discretionary powers and a copyof the prospectus relating to the securities to all persons to whomthe trust company is required to render statements of accountpursuant to applicable provisions of the Trust Law or to whom thetrust company regularly provides a statement of account unlessspecifically waived in writing. (d) With respect to any trust so invested, the trust company shalldisclose to all persons identified in subdivision (c), at leastannually by prospectus, statement of account, or other writtennotice, a brief description of the fees or rates charged by the trustcompany and its affiliates for its services as investment adviser orinvestment manager to the fund. (e) In connection with an investment or reinvestment authorized bysubdivision (b), the portion of compensation a trust companyreceives from the trust reasonably attributable to investmentadvisory or investment management services to the trust shall bereduced (but not below zero) by an amount equal to compensation thatis received by the trust company or its affiliates for providinginvestment advisory or investment management services to the fund forthe portion of the trust invested in the fund.1562.  Any trust company or bank authorized to engage in the trustbusiness holding trust funds awaiting investment or distribution maydeposit or leave on deposit such funds with any state or nationalbank. Such funds shall not, however, be deposited or left with thesame corporation or association depositing or leaving on deposit suchfunds or with any corporation or association holding or owning amajority of the capital stock of the trust company or bank making orleaving such deposit, unless such corporation or association shallfirst pledge, as security for such deposit, securities eligible forinvestment by savings banks having a market value of not less thanthe funds so deposited. No security shall be required with respect toany part of such deposits which is insured under the provisions ofany law of the United States.1563.  Any trust company acting in any capacity under a court orprivate trust or when acting in such capacity with one or morepersons as cofiduciary or cofiduciaries, unless the instrumentcreating such trust contains a provision to the contrary, may, withthe consent of such cofiduciary or cofiduciaries cause any stock orother securities held in any such capacity to be registered in thename of a nominee or nominees of such trust company and any trustcompany when acting as depositary or custodian for the trustee of anyother court or private trust, unless the instrument creating thetrust contains a provision to the contrary, may, with the consent ofthe trustee of such other trust, cause any stock or other securitiesheld by it in such capacity to be registered in the name of a nomineeor nominees of such trust company. Any such trust company shall beliable for any loss occasioned by the acts of any nominee of suchtrust company with respect to such stock or other securities soregistered. The records of such trust company shall at all times showthe ownership of any such stock or other securities and of thoseheld in bearer form. Such stock or other securities and those held inbearer form shall at all times be kept by such trust companyseparate and apart from its other assets and may be kept by suchtrust company: (a) In a manner such that all certificates representing the stockor other securities from time to time constituting the assets of aparticular estate, trust or other fiduciary account are held separatefrom those of all other estates, trusts or accounts; or (b) In a manner such that, without certification as to ownershipattached, certificates representing stock or other securities of thesame class of the same issuer and from time to time constitutingassets of particular estates, trusts or other fiduciary accounts areheld in bulk, including, to the extent feasible, the merging ofcertificates of small denomination into one or more certificates oflarge denomination, provided that a trust company, when operatingunder the method of safekeeping security certificates described inthis subdivision, shall be subject to such rules and regulations as,in the case of state chartered institutions, the commissioner and, inthe case of national bank associations, the Comptroller of theCurrency, may from time to time issue. Such trust company shall, ondemand by any party to an accounting by such trust company asfiduciary or on demand by the attorney for such party, certify inwriting the stock or other securities held by such trust company assuch fiduciary for such party. No domestic or foreign corporation or the registrar or transferagent of any such corporation shall be liable for registering orcausing to be registered on the books of such corporation any shareor shares or other securities in the name of any nominee of suchtrust company or for transferring or causing to be transferred on thebooks of any such corporation any share or shares or othersecurities theretofore registered by such corporation in the name ofany nominee of such trust company as herein provided when thetransfer is made upon the authorization of such nominee.1564.  (a) For purposes of this section, two or more trust companiesshall be deemed to be affiliated if they are members of the sameaffiliated group, within the meaning of Section 1504 of the InternalRevenue Code. (b) Any trust company may establish and administer common trustfunds composed of property permitted by law for the investment oftrust funds, for the purpose of furnishing investments to any one ormore of the following: (1) itself, as fiduciary; (2) itself andothers, as cofiduciaries; (3) any affiliated trust company including,without limitation, any foreign (other state) affiliated trustcompany, as fiduciary; and (4) any affiliated trust companyincluding, without limitation, any foreign (other state) affiliatedtrust company and others, as cofiduciaries. Any trust company may assuch fiduciary or cofiduciary invest funds which it lawfully holdsfor investment in interests in common trust funds administered byitself or by any affiliated trust company including, withoutlimitation, any foreign (other state) affiliated trust company, ifsuch investment is not prohibited by the instrument, judgment,decree, order, or statute creating or governing such fiduciaryrelationship, and if, in the case of cofiduciaries, the trust companyprocures the consent of its cofiduciaries to such investment. (c) Each common trust fund established hereunder shall be treatedas an entity separate and distinct from the fiduciary relationshipsparticipating therein. No fiduciary in administering a participatingfiduciary relationship shall be required to make any apportionment orallocation between the principal and income of this relationshipdifferent from that made for the common trust fund. No participatingfiduciary relationship, nor any person having an interest in thatrelationship, shall have or be deemed to have any ownership in anyparticular property of the common trust fund, but each participatingfiduciary relationship shall have a proportionate undivided interestin the fund and its income, and the ownership of all property of thecommon trust fund shall be in the trustee of the fund. (d) This section shall apply to fiduciary relationships now inexistence or hereafter established, whether the same be revocable orirrevocable. The commissioner, at his or her direction, may make anexamination of any common trust fund established hereunder at thetimes and to the extent as he or she may deem advisable. Theprovisions of the Corporate Securities Law shall not apply to thecreation, administration, or termination of common trust funds, norto participation therein.1565.  With regard to any participation certificates heretoforeissued by any trust company, secured by a trust deed or mortgage, thefull legal title in the deed or mortgage and debt (referred to inthis section as "security") shall be held by the trust companyissuing the certificates as trustee of an express trust, with allpowers necessary to extend, renew, enforce, collect, and liquidatethe same, acquire title to the property covered thereby eitherthrough foreclosure or by voluntary conveyance; manage, lease, sell(either for cash or upon deferred payments), exchange, or otherwiserealize upon the security or property and distribute the net proceedsthereof. All sums so realized shall, as and when received by suchtrustee, after payment of its compensation and all costs, charges,and expenses, including brokers' commissions and advances for taxesand assessments, incurred or made in connection with the protection,administration, and liquidation of the security or property, bedistributed to the trusts or persons who are beneficiaries of thetrust, as their interests may appear therein. The rights andinterests therein of any such beneficiary failing to contribute ondemand its or his pro rata of sums advanced, expended, or required bythe trust company in the protection, administration, or liquidationof the trust shall be subject to a lien for all sums, with legalinterest thereon advanced, expended, or required for any of suchpurposes by the trustee or by any other beneficiary of the trust. The trust in such security or property shall continue in the trustcompany so long as any of the certificates are outstanding,irrespective of any distribution of the certificates from the trustin which the same are held. The purpose of this section is to define and clarify the rightsand obligations of trust companies and of all persons and trustsinterested in participation certificates issued under any authorityof law.