State Codes and Statutes

State Codes and Statutes

Statutes > North-carolina > Chapter_53 > GS_53-301

Article 24.

Trust Companies andInterstate Trust Business.

Part 1. Definitions.

§ 53‑301.  Definitions.

(a)        Except as otherwiseprovided in this Article, or when the context clearly indicates that adifferent meaning is intended, the following definitions shall apply throughoutthis Article:

(1)        "Account"means the client relationship established with a trust institution involvingthe transfer of real or personal property to the trust institution or theassumption of duties by the trust institution concerning real or personalproperty.

(2)        "Act as afiduciary" means:

a.         To (i) act astrustee under a written instrument or by judicial appointment or order; (ii)receive money or other property as trustee for investment or reinvestment inreal or personal property; (iii) act as custodian or custodial trustee under agifts to minors act, a transfers to minors act, a custodial trust act, orsimilar statute; (iv) act as personal representative of the estate of adeceased person; (v) act as trustee, guardian, or conservator for the person orestate of an incompetent such as a minor or incapacitated person, or in othercircumstances in which a guardian may be appointed; or (vi) act in a capacitysimilar to one listed in (i) through (v), however such capacity may be designatedunder applicable law or governing instrument; or

b.         To possess,purchase, sell, safekeep, or otherwise manage or administer property in anyother fiduciary capacity.

(3)        "Affiliate"means a company that directly or indirectly controls, is controlled by, or isunder common control with another company.

(3a)      "Affiliatetransfer" means a transfer of an account pursuant to Part 7 of thisArticle by one trust institution affiliate of that trust institution.

(4)        "Authorizedtrust institution" means any State trust company and any trust office orrepresentative trust office of a trust institution located in this State thatis not a bank.

(5)        "Bank" hasthe meaning set forth in 12 U.S.C. § 1813(a)(1), except that "bank"does not include a trust company.

(6)        "Banksupervisory agency" means:

a.         Any agency ofanother state or a home country with primary responsibility for chartering orsupervising a trust institution; and

b.         The Office of theComptroller of the Currency, the Federal Deposit Insurance Corporation, theBoard of Governors of the Federal Reserve System, a Federal Reserve Bank actingin a supervisory capacity over any bank or bank holding company, the Office ofThrift Supervision, and any successor to these agencies.

(7)        "Branch"has the meaning set forth in G.S. 53‑1(1a).

(8)        "Charter"means a charter issued to a State trust company by the Commissioner or acharter, license, or other authority issued by the Commissioner or a banksupervisory agency authorizing a trust institution to act as a fiduciary in itshome state or home country, and the issuance of the charter, license, or otherauthority.

(9)        "Client"means a person to whom a trust institution owes a duty or obligation under anaccount.

(10)      "Commission"means the North Carolina State Banking Commission.

(11)      "Commissioner"means the Commissioner of Banks for the State of North Carolina.

(12)      "Company"includes a bank, trust company, corporation, partnership, association, limitedliability company, trust, business trust, joint venture, foundation, pool,syndicate, unincorporated organization, or other form of entity notspecifically listed herein.

(13)      "Control,"with respect to a State trust company, means:

a.         The ownership of orability or power to vote directly, acting through one or more other persons, orotherwise indirectly, ten percent (10%) or more of the outstanding shares of aclass of voting securities of the State trust company;

b.         The ability tocontrol, directly or indirectly, the election of a majority of the board of theState trust company; or

c.         The power toexercise, directly or indirectly, a controlling influence over the managementor policies of the State trust company.

(14)      "Debtsecurity" means a marketable obligation evidencing indebtedness of acompany in the form of a bond, note, debenture, or other debt instrument.

(15)      "Depositoryinstitution" means any company within any of the definitions of"insured depository institution" set forth in 12 U.S.C. § 1813(c).

(16)      "Equitycapital" means the amount by which the total assets of a State trustcompany exceed its total liabilities.

(17)      "Equitysecurity" means:

a.         Stock, other thanadjustable rate preferred stock and money market (auction rate) preferredstock;

b.         A certificate ofinterest or participation in a profit‑sharing agreement, collateral‑trustcertificate, preorganization certificate or subscription, transferable share,investment contract, or voting‑trust certificate;

c.         A securityimmediately convertible at the option of the holder without payment ofsignificant additional consideration into a security described by thissubdivision;

d.         A security carryinga warrant or right to subscribe to or purchase a security described by thissubdivision; and

e.         A certificate ofinterest or participation in, temporary or interim certificate for, or receiptfor a security described by this subdivision that evidences an existing orcontingent equity ownership interest.

(18)      "Executiveofficer" means an officer of a company who is named an executive officerby the company or who participates in major policy‑making functions ofthe company.

(19)      "Federallychartered savings association" means a company described in 12 U.S.C. §1813(b)(2).

(20)      "Fiduciaryrecord" means a matter written, transcribed, recorded, received, orotherwise in the possession or control of a trust institution, whether inphysical, electronic, magnetic, or other form, that preserves informationconcerning an account or a client.

(21)      "Foreignbank" means a foreign bank, as defined in 12 U.S.C. § 1813(s)(1), except fora bank organized under the laws of a territory of the United States.

(22)      "Foreign trustinstitution" means a trust institution, other than a foreign bank,chartered in a foreign country.

(23)      "Hazardouscondition" with respect to a trust institution means:

a.         A refusal by thetrust institution to permit examination of its books, papers, accounts,records, or affairs by the Commissioner or a duly appointed or authorizedexaminer of the Commissioner, or a refusal by the officers or directors of atrust institution to be examined under oath regarding its affairs;

b.         A material violationby a trust institution of a condition of its chartering or an agreement enteredinto between the trust institution and the Commissioner; or

c.         A circumstance orcondition in which an unreasonable risk of loss is threatened to clients,creditors, or shareholders of a trust institution because the trustinstitution:

1.         Has equity capitalthat is, or is in substantial danger of becoming, inadequate for the safe andsound conduct of its business without regard to whether it is, or is insubstantial danger of becoming, insolvent;

2.         Has concentrated anexcessive or unreasonable portion of its assets in a particular type orcharacter of investment;

3.         Violates or fails tocomply with this Article, another statute or rule applicable to trustinstitutions, or any duly issued order of the Commissioner;

4.         Is in a conditionthat renders the continuation of a particular business practice hazardous toits clients, creditors, or shareholders; or

5.         Conducts business inan unsafe or unsound manner, which includes conducting business with:

I.          Materiallyinexperienced or inattentive management;

II.         Dangerous operatingpractices;

III.       Materiallyinfrequent or inadequate audits;

IV.       Materially deficientadministration of assets in relation to the volume and character of the assetsit administers or the trust institution's responsibility for such assets;

V.        Materially frequentor serious failures to adhere to sound administrative practices;

VI.       Materially frequentor serious violations of applicable laws, rules, or terms of instrumentsgoverning accounts; or

VII.      Materially seriousself‑dealing or conflicts of interest.

(24)      "Homecountry" means a foreign country in which a foreign trust institution ischartered.

(25)      "Home countryregulator" means the bank supervisory agency with primary responsibilityfor chartering and supervising a foreign trust institution.

(26)      "Homestate" means:

a.         With respect to afederally chartered savings association and a national bank, the state in whichthe institution maintains its principal office;

b.         With respect to aforeign bank, the home state of the foreign bank as determined in accordancewith the International Banking Act of 1978, 12 U.S.C. §§ 3101, et seq., andArticle 18A of this Chapter or, if there is no such home state, the state inwhich the foreign bank maintains its principal office in the United States; and

c.         With respect to anyother trust institution, the state or home country which chartered the institution.

(27)      "Home stateregulator" means the bank supervisory agency with primary responsibilityfor chartering and supervising an out‑of‑state trust institution.

(28)      "Hoststate" means a state other than the home state of a trust institution, ora foreign country, in which the trust institution maintains or seeks toestablish or acquire and maintain a trust office or representative trustoffice.

(29)      "Initialcapital" means the amount of equity capital required for approval of acharter pursuant to G.S. 53‑337.

(30)      "Insolvent,"with respect to a State trust company, means a circumstance or condition inwhich a State trust company:

a.         Is unable or lacksthe means to meet its current obligations as they come due in the regular andordinary course of business, without regard to whether its assets exceed itsliabilities;

b.         Has equity capitalless than one‑fourth of its initial capital, except as otherwisespecified by the Commissioner; or

c.         Has purported tomake a voluntary assignment of its assets for the benefit of creditors or totake any action for protection against creditors under any bankruptcy orinsolvency law.

(31)      "Jeopardized"means insolvent, in a hazardous condition, or in such other condition as theCommissioner determines warrants the use of procedures set forth in thisArticle relating to jeopardized State trust companies.

(32)      "License",with respect to a State trust company, means the authority granted by theCommissioner pursuant to G.S. 53‑160.

(33)      "Nationalbank" means a bank chartered under 12 U.S.C. § 21.

(34)      "Office"with respect to a trust institution means its principal office, a trust office,or a representative trust office, but not a branch. With respect to an out‑of‑statetrust institution or a foreign trust institution without a physical office inthis State, the term "office" also means the registered office.

(35)      "Out‑of‑statetrust institution" means a trust institution that is neither a State trustinstitution nor a foreign trust institution.

(36)      "Person"means an individual or a company.

(37)      "Principaloffice" means:

a.         With respect to aState trust company, a location, registered with the Commissioner as the Statetrust company's principal office, at which:

1.         The State trustcompany does business; and

2.         At least oneexecutive officer of the State trust company maintains a customary place ofwork; and

b.         With respect to atrust institution other than a State trust company, its principal place ofbusiness.

(38)      "Principalshareholder" means a person who owns or has the ability or power to vote,directly, acting through one or more other persons, or otherwise indirectly,ten percent (10%) or more of the outstanding shares of any class of votingsecurities of a company.

(39)      "Private trustcompany" means a State trust company that is organized to engage inbusiness with one or more family members and does not transact business withthe general public, as defined in G.S. 53‑363.

(39a)    "Registeredoffice" means a registered office as described in G.S. 55D‑30.

(40)      "Representativetrust office" means an office at which a trust institution engages intrust marketing, but not trust business.

(41)      "Savingsassociation" has the meaning set forth in 12 U.S.C. § 1813(b)(1).

(42)      "State"means any state of the United States, the District of Columbia, and anyterritory of the United States.

(43)      "Statebank" means:

a.         A bank organizedunder the provisions of this Chapter and authorized to act as a fiduciary bythis State or

b.         A foreign banklawfully doing business in this State pursuant to Article 18A of this Chapter.

(44)      "State savingsassociation" means a savings association organized under the laws of thisState and authorized to act as a fiduciary pursuant to Chapter 54B or Chapter54C of the General Statutes.

(45)      "State trust company"means a corporation organized under the provisions of this Article and a trustcompany previously organized under other provisions of Chapter 53 of theGeneral Statutes to operate only as a trust company and not as a commercialbank.

(46)      "State trustcompany facility" has the meaning set forth in G.S. 53‑340.

(47)      "State trustinstitution" means a trust institution organized under the laws of, orhaving its principal office in, this State.

(48)      "Subsidiary"means a company that is controlled by another company, and includes asubsidiary of a subsidiary.

(49)      "Territory ofthe United States" means any geographic area over which the United Statesexercises sovereignty.

(49a)    "Transferringtrust institution" means a trust institution that proposes to make, ordoes make, an affiliate transfer.

(49b)    "Transferee trustinstitution" means a trust institution to which an affiliate transfer isproposed to be made, or is made.

(50)      "Trustbusiness" means acting as a fiduciary or in other capacities permissiblefor a trust institution under G.S. 53‑331.

(51)      "Trustcompany" means a trust institution that is neither a depositoryinstitution nor a foreign bank.

(52)      "Trustinstitution" means any company lawfully acting as a fiduciary in a stateor in a foreign country.

(53)      "Trustmarketing" means the holding out by a company to the public byadvertising, solicitation, or other means that the company is available to actas a fiduciary.

(54)      "Trustoffice" means an office, other than the principal office, through which atrust institution acts as a fiduciary, including, with respect to an out‑of‑statetrust institution or a foreign trust institution without a physical office inthis State, the registered office.

(55)      "Unauthorizedtrust activity" means:

a.         Engaging in trustbusiness within this State by a company other than one identified in G.S. 53‑303;or

b.         Maintenance of arepresentative trust office by an out‑of‑state trust institutionwithout approval from or in violation of an order issued by the Commissioner.

(b)        These definitionsshall be liberally construed to accomplish the purposes of this Article. TheCommission may adopt other definitions to accomplish the purposes of thisArticle.

(c)        References tostatutory laws of North Carolina and of the United States of America shall bedeemed to refer to recodified, amended, predecessor, or successor statutes.References to agencies of North Carolina and of the United States of Americashall be deemed to refer to predecessor or successor agencies. (2001‑263, s. 1; 2005‑269,ss. 1, 2, 3; 2005‑274, s. 1.)