Source: http://www.leg.state.vt.us/docs/1998/acts/act098.htm
Timestamp: 2017-12-13 03:46:28
Document Index: 788035224

Matched Legal Cases: ['§ 510', '§ 510', '§ 2200', '§ 1813', '§ 3101', '§ 2216', '§ 1735', '§ 1735', '§ 2231', '§ 2231', '§ 103', '§ 104', '§ 3108', '§ 1109', '§ 1109', '§ 2402', '§ 15', '§ 2403', '§ 2404', '§ 2405', '§ 2406', '§ 2407', '§ 2408', '§ 2409', '§ 2410', '§ 2411', '§ 1357', '§ 5836']

NO. 98. AN ACT RELATING TO AUTOMATED TELLER MACHINE DISCLOSURES AND MORTGAGE LENDING.
(H.600)
Sec. 1. 8 V.S.A. § 510 is added to read:
§ 510. AUTOMATED TELLER MACHINE DISCLOSURES
(a) The owner of an automated teller machine or other remote service unit, including a cash dispensing machine, located or employed in this state shall disclose at the location of each such machine the identity, address and telephone number of the owner and the availability of consumer assistance. The owner shall also disclose to the consumer the amount of the fees or charges which the owner will assess to the consumer for the use of that machine. The commissioner shall approve the form, content, timing and location of such disclosures and any amendments thereto prior to use. The commissioner shall act on any submission made under this section within 30 days of receipt. If the commissioner determines that any disclosures do not provide adequate consumer protection, the commissioner may by order or by rule specify minimum disclosure standards, including the form, content, timing and location of such disclosures. The commissioner may impose on the owner of an automated teller machine or other remote service unit an administrative penalty of not more than $1,000.00 for each day's failure of the owner to apply to the commissioner for approval of disclosures required under this section, for each day's failure of the owner to use disclosures approved by the commissioner or for each day's continuing violation of an order of the commissioner relating to the disclosures required by this section.
(b) In addition to an automated teller machine or other remote service unit owned by a bank, savings and loan or credit union, the provisions of this section shall apply to any automated teller machine or other remote service unit not owned by a bank, savings and loan or credit union, except it shall not include a point-of-sale terminal owned or operated by a merchant who does not charge a fee for the use of the point-of-sale terminal. The activities of an automated teller machine or other remote service unit whose owner is not a bank, savings and loan or credit union shall be limited to cash dispensing or the offer orsale of nonbanking services and products.
Sec. 2. 8 V.S.A. § 2200(1) is amended to read:
(1) "Bank," "savings and loan association," "credit union," and "insurance company" shall mean institutions organized and regulated as such under the laws of the United States or any state or territory of the United States, and shall include any insured depository institution as such term is defined by the Federal Deposit Insurance Act, 12 U.S.C. § 1813(c)(2), and a bank not organized within the United States, or a United States or state branch or agency thereof, which is conducting business pursuant to the International Banking Act of 1978, 12 U.S.C. §§ 3101 et seq.
Sec. 3. 8 V.S.A. § 2216 is amended to read:
Every licensee engaging in the making of loans secured by a lien against real estate located in this state, whether conducting its affairs as an agent or principal and whether operating from facilities within the state or by mail, telephone or by electronic means, shall comply with the general provisions of this chapter and chapter 4 of Title 9 unless exempted herein. A licensee making such loans through a third person, shall only make loans through a person licensed as a mortgage broker under this chapter, unless such third person is exempt from such licensing provisions. Any lender who makes such loans through a third person required to be licensed and not so licensed, in addition to being subject to all applicable penalties under Vermont law, shall be responsible for the acts or omissions of the third person as a principal is responsible for the acts and omissions of its agent. Every licensee making loans secured by a lien against real estate shall comply with sections 1211, 1256, and 1260, and subchapter 6 of chapter 55 of this title, and shall also be subject to the following specific limitations:
(1) For loans secured by a first lien, the term shall not exceed 480 months, and the licensees may not exceed the interest rate permitted by section 41a(b)(8) of Title 9. All such lien documents shall include a power of sale pursuant to section 4531a et seq. of Title 12. The limitations on permitted charges contained in sections 2231 and 2233 of this title and sections 42, 44 and 46 of Title 9 shall not apply to any loan within the scope of12 U.S.C. § 1735f-7a. Permitted charges shall be as specified in sections 42, 44 and 46 of Title 9 for any loan secured by a first lien on real estate that is not included within the scope of 12 U.S.C. § 1735f-7a, instead of sections 2231 and 2233 of this title.
(2) For loans secured by a subordinate lien, the term shall not exceed 360 months, and the licensees may not exceed the interest rate permitted by chapter 4 of Title 9. All such lien documents shall include a power of sale pursuant to section 4531a et seq. of Title 12. Permitted charges for loans secured by a subordinate lien shall be as specified in sections 42, 44 and 46 of Title 9, instead of sections 2231 and 2233 of this title.
(3) No licensee shall take a lien upon real estate as security for any loan made under this chapter, except such lien as is created by law upon the recording of a judgment or such lien as secures a loan in principal amount in excess of $3,000.00 at the time of making.
(4) Interest shall be computed by the actuarial method in accordance with section 41a(d) of Title 9.
(5) *[Permitted charges shall be as specified in sections 42, 44 and 46 of Title 9, instead of sections 2231 and 2233 of this title.]*
*[(6)]* Any loan secured by a lien on real estate, except a commercial loan, which does not contain a fixed rate or substantially equal payments for full amortization within the repayment period shall conform to the provisions of the commissioner's rules promulgated under section 1256 of this title, or to federal regulations where applicable by reason of federal law or action of the commissioner.
(6) This section shall not apply to commercial loans.
Sec. 4. 8 V.S.A. § 2231(a) and (b) are amended to read:
(a) Except for loans made pursuant to section *[2216(6)]* 2216 of this title and in compliance with applicable regulations of the commissioner, all loan contracts made under the provisions of this chapter shall require repayment in substantially equal consecutive monthly installments of principal and interest combined.
(b) In addition to the interest and charges herein provided for no further or other charge or amount for any examination, service, brokerage, commission, expense, fee,bonus, or other thing or otherwise shall be directly or indirectly charged, contracted for or received except filing, recording, releasing or termination fees paid or to be paid to a public officer; the premium or identifiable charge for credit life or disability insurance obtained, provided or sold by the licensee subject to the provisions of sections 4101-4115 or sections 3805 and 3806 of this title and any gain or advantage to the licensee from such shall not be deemed in violation of this chapter nor an additional charge in violation of this section or section 2230 of this title. *[If]* For loans subject to this subsection, if any interest, consideration, or charges in excess of those permitted by this *[chapter]* subsection, except as the result of an accidental or bona fide error are charged, contracted for or received, the contract of loan shall be void and the licensee shall have no right to collect or receive any principal, interest or charges whatsoever.
Sec. 5. 8 V.S.A. § 2231(d) is added to read:
(d) The provisions of subsection (b) of this section shall not apply to mortgage loans.
Sec. 6. 9 V.S.A. § 103(c) is added to read:
(c) The commissioner of the department of banking, insurance, securities, and health care administration may promulgate rules specifying the form, content and timing of commitment letters required by this section. The commissioner may order any person to make restitution to any person injured as a result of a violation of this subchapter and may impose an administrative penalty of up to $1,000.00 for a violation of this subchapter. The commissioner may order any person to cease violating this subchapter.
Sec. 7. 9 V.S.A. § 104 is added to read:
(a) The commissioner may promulgate disclosure rules for loans secured by a first lien on residential real estate in which the borrower is expected to be charged in excess of four points or interest in excess of three percent over the rate established pursuant to 32 V.S.A. § 3108, or both, on the loan. The rules may provide for restrictions on representations by the lender regarding the disclosures required by the rules.
(c) The commissioner may impose an administrative penalty of not more than $5,000.00 on any person that fails to comply with the provisions of this section. The commissioner may order a lender to refund any discount points or other charges paid by a borrower who has not received disclosures required by the rule.
Sec. 8. STUDY OF CONSUMER PROTECTION IN CREDIT AND LENDING
The commissioner of banking, insurance, securities, and health care administration shall report to the general assembly, on or before January 1, 1999, with findings and recommendations regarding consumer protection in credit and lending transactions. The report shall include findings and recommendations relating to:
(1) the status of state and federal laws regulating banks, credit unions, savings and loan institutions, and other companies making loans or extending credit;
(2) the considerations affecting Vermont's ability to protect Vermont consumers of credit, and any problems or concerns affecting the ability of state regulators to protect consumers;
(3) a comprehensive study of fees charged by lenders, including the fees charged to prospective home mortgage borrowers before receipt of an estimate of settlement costs;
(4) whether any credit and lending companies doing business in Vermont are engaged in unfair, deceptive, or unconscionable practices or unsuitable offers of financing or refinancing, that are difficult to address under current federal and state regulations; and
(5) any other findings and recommendations the commissioner believes may improve Vermont's ability to protect Vermont consumers in credit and lending transactions.
Sec. 8a. 8 V.S.A. § 1109 is added to read:
§ 1109. CONTROL OF PERSON NOT A BANK
A bank may control, acquire or hold an interest in a person that is not a bank upon written approval of the commissioner. For purposes of this section, "person" shall not mean a natural person.
Sec. 8b. 8 V.S.A. chapter 77 is added to read:
CHAPTER 77. INDEPENDENT TRUST COMPANIES
(1) "Act as fiduciary" or "acting as a fiduciary" means to:
(C) act pursuant to order of a court of competent jurisdiction as executor or administrator of the estate of a deceased person or as a guardian or conservator for a minor or incapacitated person.
(2) "Company" means corporation or limited liability company.
(3) "Independent trust company" means a company formed in this or any other state, that is chartered to act as a fiduciary or engages in a trust business, but is neither a depository institution nor a foreign bank as defined in section 1(b)(7) of the International Banking Act of 1978.
(4) "Trust business" means the holding out by a person to the public by advertising, solicitation or other means that the person is available to act as a fiduciary in this or another state for hire or compensation.
§ 2402. AUTHORITY TO ORGANIZE; POWERS; LIMITATIONS; PROHIBITIONS;
(a) A company organized in this state may form an independent trust company in accordance with the provisions of this chapter. A company shall obtain a certificate of authority from the commissioner before it may act as a fiduciary or engage in a trust business in this state.
(b) An independent trust company formed and authorized under this chapter shall have the same fiduciary powers, duties and obligations as a bank operating a trust department under chapter 59 of this title. An independent trust company formed under this title shallhave the privileges and be subject to the provisions granted or contained in the general law governing the company and in this chapter, except where the general law governing the company is inconsistent with this chapter. In case of conflict between the general law governing the company and this chapter, this chapter shall control. Such companies shall not be required to make any annual report except as provided in this chapter. Except as provided in this chapter, chapter 59 and chapter 62 of this title, no person shall engage in a trust business in this state without first obtaining a certificate of authority from the commissioner.
(c) An independent trust company shall not accept deposits or make loans or conduct any other business except that which is incidental to and consistent with a trust business.
(d) An independent trust company may prudently invest its capital and surplus in stocks, bonds, mortgages, mutual funds and other securities. An independent trust company may invest in, purchase, hold, convey and lease real estate.
(e) An independent trust company may issue or sell capital notes or debentures with the written approval of the commissioner.
(f) For the purposes of this chapter, a person does not engage in a trust business merely by:
(1) Rendering services as an attorney at law or an accountant;
(2) Acting as trustee under a deed of trust made only as security for the payment of money or for the performance of another act;
(3) Acting as a trustee in bankruptcy or as a receiver;
(4) Holding trusts of real estate for the primary purpose of subdivision, development or sale, or to facilitate any business transaction with respect to such real estate, provided the person is not regularly engaged in the business of acting as a trustee for such trusts;
(5) Holding assets as trustee of trusts created for charitable purposes;
(6) Receiving rents and proceeds of sale as a licensed real estate broker on behalf of a principal;
(7) Engaging in securities transactions as a broker-dealer or a sales representative registered under chapter 131 of Title 9;
(8) Engaging in the sale of insurance policies and annuity or endowment contracts in this state issued by an insurance company authorized to write such policies or contracts and subject to regulation and control of the commissioner;
(9) If an individual, acting as a guardian, conservator, special conservator, trustee or personal representative pursuant to a court order or other statutory authority;
(10) Acting under the authority of 11A V.S.A. § 15.01(d);
(11) If an individual, serving as trustee of any of the following:
(A) One or more trusts for each of which at least one settlor is a member of the trustee's family;
(B) Not more than five trusts if the individual has not solicited appointment as trustee for any trusteeships.
§ 2403. FORMATION
(a) One or more persons may form an independent trust company in accordance with the provisions of this chapter.
(b) The organizers forming an independent trust company shall apply to the commissioner for a certificate of authority on prescribed forms containing information as may be required by the commissioner. The application shall include the proposed name of the business for approval under section 2404 of this chapter and the basic organizational documents including any operating agreement for the company prepared in compliance with Title 11 or 11A.
(c) Upon receiving a completed application for a certificate of authority and the proposed basic organizational documents, the commissioner shall investigate and examine the proposed independent trust company to determine whether it will be adequately staffed, equipped and able to furnish trust services and that its establishment and maintenance will promote the general good of the state.
(d) If the commissioner finds that the establishment and maintenance of the proposed trust company will promote the general good of the state, the commissioner shall deliver to the organizers a certificate of authority under the commissioner's seal. The certificate of authority, basic organizational documents except the operating agreement and the organizational fee shall be transmitted to the secretary of state, who shall thereuponproceed according to the provisions of law. If the organizational documents are recorded by the secretary, the certificate of the commissioner shall be recorded therewith.
(e) Each application for a certificate of authority shall be accompanied by an application fee as provided in section 78 of this title, for new financial institutions.
(f) If the proposed independent trust company fails to open for business within six (6) months after the date the certificate of authority is granted, the certificate of authority shall be void. The commissioner may extend the time within which the independent trust company may open for business, for good cause and upon written application filed prior to the expiration of the six-month period.
(g) At the time it commences business, an independent trust company shall have unimpaired capital in the amount of $250,000.00 or one-quarter of one percent of the first year's projected assets under management, whichever is greater. The unimpaired capital and surplus of an independent trust company shall be held as security for the faithful discharge of the fiduciary duties undertaken as well as for the claims of other creditors. The commissioner may from time to time require or allow adjustments to capital as deemed necessary or desirable for the protection of customers and the safety of the trust business. The safety and soundness factors to be considered by the commissioner in the exercise of such discretion include:
(2) the nature and degree of liquidity in assets held in a corporate or company capacity;
(3) the amount of fiduciary assets under management;
(4) the complexity of fiduciary duties and degree of discretion undertaken; and
(5) the extent and adequacy of internal controls.
(h) The commissioner, in addition to the capital requirements provided in subsection (g) of this section, may require any independent trust company authorized to do a trust business in this state to post bond in an amount acceptable to the commissioner.
§ 2404. NAME; MULTIPLE LOCATIONS
(a) An independent trust company shall file any name proposed to be used in connection with a trust business or establishing a principal office or trust office in this statepursuant to this chapter. The commissioner shall not approve a proposed name if the commissioner determines that the name may be misleading or likely to confuse the public, or deceptively similar to any name in use in this state.
(b) An independent trust company organized or regulated under this chapter may petition the commissioner for permission to establish and maintain new or additional offices for the transaction of its trust business.
(c) An independent trust company shall not operate any new or additional office unless the commissioner has determined that the establishment of the office will promote the general good of the state, applying the standards and procedures contained in subsection (c) of section 2403 of this chapter, as applicable. If the commissioner determines that the establishment will promote the general good, the commissioner shall approve the new or additional office.
§ 2405. PERIODIC REPORTS; EXAMINATIONS; COOPERATIVE AGREEMENTS
(a) Each independent trust company shall annually file a report on its financial condition with the commissioner on or before February 15 for the preceding year ending December 31 containing such information and in such format as the commissioner may prescribe. The commissioner may require additional reports from any independent trust company that is doing a trust business in this state. The commissioner may accept a copy of any report from the primary regulator of the independent trust company, if the commissioner determines that the report is substantially similar to a report required under this section.
(b) The commissioner may make such examination of any person or location as the commissioner may deem necessary to determine whether an independent trust company is being operated in compliance with the laws of this state and in accordance with safe and sound business and trust practices, to the extent consistent with subsection (c) of this section.
(c) The commissioner may enter into cooperative, coordinating and information-sharing agreements with any other supervisory agencies or any organization affiliated with or representing one or more supervisory agencies with respect to the periodic examination or other supervision of any independent trust company not formed in this state or anyoffice of an independent trust company in any state. The commissioner may accept reports of examination or investigation from such agencies in lieu of conducting an independent examination or investigation.
(d) The commissioner may enter into joint examinations or joint enforcement actions with other supervisory agencies having concurrent jurisdiction over any independent trust company or any office of an independent trust company established and maintained in this state; provided, that the commissioner may at any time take such actions independently if the commissioner deems such actions to be necessary or appropriate to carry out the responsibilities under this chapter or to ensure compliance with the laws of this state.
(e) The independent trust company shall provide the commissioner with written notice of any regulatory action taken against it in any other jurisdiction within 30 days of receipt of such action by the independent trust company.
(f) Any independent trust company that maintains one or more offices in this state may be assessed and, if assessed, shall pay assessment and examination fees at a rate determined by the commissioner pursuant to sections 78 and 504 of this title.
§ 2406. RECIPROCITY
(a) An independent trust company organized under the laws of a jurisdiction other than Vermont shall be authorized to engage in a trust business in this state, to the same extent and under the same conditions that an independent trust company formed in this state may operate in such other jurisdiction. The independent trust company organized under the laws of a jurisdiction other than Vermont must obtain the commissioner's written authorization before it may engage in a trust business in this state.
(b) For purposes of this section, an independent trust company organized under the laws of a jurisdiction other than Vermont shall mean an entity that is organized and regulated in a manner that is substantially similar to an independent trust company formed under this chapter by whatever name, but which is not a bank or special purpose bank.
§ 2407. DISCONTINUING TRUST BUSINESS; MERGER AND CONSOLIDATION;
SALE OF TRUST BUSINESS; CHANGE IN CONTROL
(a) Discontinuance. An independent trust company that intends to discontinue its trust business in this state shall furnish notice to the commissioner of its intention not less than60 days before the discontinuance. It shall also mail written notice to the principals of each trust account affected. For purposes of this section, the term "principal" with respect to a trust account shall mean the individual or entity to whom the independent trust company ordinarily furnishes statements of account and other customer communications regarding such trust account. The form of notice required by this subsection shall be approved by the commissioner and shall include a plain statement of the intended plans for discontinuance of the business of the independent trust company, and shall include the name, mailing address and telephone number of one or more officers, managers, employees or agents of the company available during regular business hours to answer customer questions regarding the proposed discontinuance. The company shall furnish an affidavit of the mailing of the notice to the principals affected, and the affidavit shall constitute the company's compliance with the customer notice requirement of this section. Following the mailing of the notice and prior to the effective date of the discontinuance, the company shall furnish the commissioner with satisfactory evidence that all affected trust accounts have been transferred to one or more entities with authority to engage in a trust business in this state in accordance with subsections (c) through (j) of this section, that the principal has released and discharged the independent trust company of any further obligation with respect to the account or that all accounts are otherwise protected. The independent trust company shall surrender its certificate of authority to the commissioner upon the effective date of the discontinuance, and thereafter the company may not use the word "trust" in its company or trade name or in connection with its business. After surrender of the certificate, the commissioner shall have continuing jurisdiction over the company with respect to compliance with applicable law.
(b) Merger or consolidation. An independent trust company formed in this state may merge or consolidate with another entity. The independent trust company must obtain the commissioner's prior written approval of the transaction. The commissioner shall approve the transaction if the commissioner determines that the resulting entity is qualified to do a trust business in this state and that the transaction will promote the general good of the state. Whenever an independent trust company merges or consolidates under this section, the resulting entity shall have, possess and own, all property, rights, powers, franchises,privileges and appointments of every nature whatsoever of each of the merging or consolidating entities. If any of the merging or consolidating entities are acting or have been acting as a fiduciary or in any like capacity, the resulting entity shall have, possess and be vested with and succeed to all of the property, rights, powers, privileges, duties and obligations appertaining to each such fiduciary capacity, without further or additional appointment, obligation or designation, provided the independent trust company or resulting entity, as the case may be, has complied with the provisions of subsections (d) through (j) of this section. The resulting entity shall be a continuation of the entity of each and all of the entities so merged or consolidated. Except as provided in this chapter, it shall hold, exercise and perform all rights, powers, privileges, duties and obligations appertaining to any and all trust, representative or fiduciary relationships of each of the merged or consolidated entities, and shall be liable for all of the debts, contracts and obligations of each of the merged or consolidated companies. Any such debt, undertaking or obligations of any merged or consolidated entity may be enforced against it as fully and effectively as it could have been against the merged or consolidated entity.
(c) Sale of assets or trust business. An independent trust company may transfer all or substantially all of its assets or all or a portion of its trust business to another entity qualified to do a trust business in this state. Prior to transferring all or substantially all of its assets or any portion or all of its trust business to another entity, an independent trust company shall obtain the commissioner's written approval. The commissioner shall approve the transaction if the commissioner determines that the transferee entity is qualified to do a trust business in this state and that the transaction will promote the general good.
(d) Petition; notice to the commissioner; order. Whenever an independent trust company intends to merge into, consolidate with or transfer all or substantially all of its assets or any of its trust business to another entity qualified to do a trust business in this state as provided in subsection (b) or (c) of this section, it shall file a petition in the probate court of the probate district in which its main office is located requesting that the court substitute the resulting or transferee entity, except as may be specifically excluded in such petition, in every fiduciary capacity specified in the petition. The petition may bemade ex parte and need not list the fiduciary capacities in which substitution is made. A copy of the petition shall be furnished to the commissioner prior to filing with the probate court. Upon a finding that the resulting or transferee entity is authorized to engage in a trust business by the commissioner, the commissioner has approved the transaction, and that independent trust company has complied with the notification requirements in this subsection and subsection (e) of this section, the court shall enter an order substituting the resulting or transferee entity in every fiduciary capacity for the independent trust company, except as otherwise specified in the independent trust company's petition. The petition made pursuant to this section shall be considered in a summary fashion by the court, and the court shall act on the petition within 30 days of filing. Upon entry of the court's substitution order, the resulting or transferee entity shall, without further act, be deemed substituted by operation of law in every such fiduciary capacity. The substitution shall be evidenced by filing a copy of the order with the clerk of the Vermont probate court in each probate district in which the independent trust company served in a fiduciary capacity prior to the entry of the order. The order shall be accompanied by written notification to the court of each fiduciary appointment previously made by the court that is affected by the substitution order, and evidence of compliance with subsection (h) of this section. The order of substitution shall be indexed in the records of the courts in the manner in which substitutions of fiduciaries are indexed.
(e) Notice of petition to customer. After the entity that will be the resulting or transferee entity under subsection (b) or (c) of this section is authorized to do a trust business in this state by the commissioner, but at least 30 days before the filing of the petition referred to in subsection (d) of this section, the independent trust company shall mail written notice of the proposed substitution to the principals of each trust account affected. The form of notice required by this subsection shall be approved by the commissioner and shall include a statement that the independent trust company intends to merge or consolidate with, or transfer all or substantially all of its assets or all or a portion of its trust business, to a resulting or transferee entity, as the case may be, and intends to substitute the resulting or transferee entity as or for the independent trust company. The notice shall include the name, mailing address and telephone number of one or moreofficers, managers, employees or agents of the independent trust company available during regular business hours to answer customer questions regarding the proposed substitution. The independent trust company shall furnish an affidavit of the mailing of the notice to the probate court in conjunction with the filing of the independent trust company's petition referred to in subsection (d) of this section, and the affidavit shall constitute the independent trust company's compliance with this section. Following the mailing of the notice and prior to the effective date of the substitution order, each prospective trust customer of the independent trust company or of the resulting or transferee entity shall be furnished with a copy of the notice required by this subsection before the customer and the company enter into a trust account relationship.
(f) Post-order notice. Within 30 days after the entry of the substitution order referred to in subsection (d) of this section, the resulting or transferee entity shall mail written notice of the entry of the order of substitution to the principals of each trust account affected. The notice shall specify that the substitution has been effected and shall include the name, mailing address and telephone number of one or more officers, managers or employees of the resulting or transferee entity available during regular business hours to answer customer questions regarding the substitution.
(g) Effect of substitution order. Each fiduciary designation in a will, trust or other instrument executed before or after the entry of an order of substitution, shall be deemed by operation of law to be a designation of the resulting or transferee entity, substituted pursuant to this section, without further act or amendment of the will, trust or other instrument, unless the will, trust or other instrument is executed after the date of entry of the order of substitution and specifically negates application of this section.
(h) Bonds. If any company for which the resulting or transferee entity has been substituted pursuant to this section has given bond in any fiduciary capacity, the resulting or transferee entity shall be required to furnish to the court or authority making the appointment a substitute bond in like amount and terms before the company shall be released from liability on its bond.
(i) Accounting. Any company, for which the resulting or transferee entity has been substituted pursuant to this section, shall account jointly with the resulting or transfereeentity for the accounting period during which the effective date of the substitution occurs. Upon substitution pursuant to this section, the company shall deliver to the resulting or transferee entity all assets addressed in the substitution order held by the company as fiduciary and upon the substitution, all the assets shall become the property of the resulting or transferee entity as fiduciary without the necessity of any instrument of transfer or conveyance.
(j) Affiliated transactions. Upon substitution of the resulting or transferee entity pursuant to this section, the resulting or transferee entity shall pay fair consideration to any affiliated independent trust company for which it has been substituted as fiduciary for the trust business it has acquired from the affiliate as a result of the substitution.
(k) Change in control. Any person that intends to transfer 10 percent or more of the voting interests in an independent trust company regulated under this chapter to any other person shall provide the commissioner with at least 30 days' written notice.
§ 2408. LAWS APPLICABLE; MATTERS OF CONTRACT
(a) An independent trust company exercising trust powers under this chapter shall be subject to the same responsibilities, liabilities and penalties as an individual acting in like capacity, and the company shall have the same powers and shall receive the same compensation as individuals acting in like capacity, if fixed by law.
(b) The exercise of powers not listed in subsection (a) of this section, and the performance of the other duties by the company may be as contracted for by the parties interested.
(c) In performing its duties under a trust, an independent trust company shall be subject to all applicable provisions of chapter 105 of Title 14.
§ 2409. FINANCIAL TRANSACTIONS
(a) No assets held in a fiduciary capacity shall be mingled with the investments of the independent trust company or be liable for the debts or obligations of the independent trust company. Independent trust companies shall keep all monies, property, or securities held separate and apart from the assets of the company and all assets held by the independent trust company as a fiduciary shall be designated in a manner that the owner,trust or estate to which such assets belong may be clearly identified.
(b) Consistent with its fiduciary obligations, every independent trust company holding funds awaiting investment or distribution may deposit or leave on deposit such funds with a federally insured state or national bank. The funds shall not be deposited or left with the same corporation or association depositing or leaving on deposit such funds, nor with a corporation or association holding or owning a majority of the capital stock of or other voting interest in the independent trust company making or leaving the deposit, unless the corporation or association shall first pledge, as security for the deposit, securities eligible for investment by state banks that have a market value equal to that of the deposited funds. No security shall be required with respect to any portion of such deposits which are insured under the provisions of any law of the United States.
(c) An independent trust company acting in any capacity under a trust, unless the instrument creating the trust provides otherwise, may cause any securities or other property held by it in its representative capacity to be registered in the name of a nominee or nominees of the independent trust company.
(d) An independent trust company when acting as depositary or custodian for the personal representative of a trust, unless the instrument creating the trust provides otherwise, may with the consent of the personal representative of the trust, cause any securities or other property held by it to be registered in the name of a nominee or nominees of the independent trust company.
(e) An independent trust company shall be liable for any loss occasioned by the acts of any of its nominees with respect to securities or other property registered under subsections (c) and (d) of this section.
(f) No corporation or the registrar or transfer agent thereof shall be liable for registering or causing to be registered upon the books of the corporation any securities in the name of any nominee of an independent trust company or for transferring or causing to be transferred upon the books of the corporation any securities theretofore registered by the corporation in the name of any nominee of an independent trust company, as provided in this section, when the transfer is made on the authorization of the nominee.
(g) In its discretion, and subject to provisions of subsection (h) of this section, anindependent trust company may associate together for common investment the funds of individual trusts held by it whether created by order of court or otherwise, if the terms of the trust do not require a separate investment. Without limiting the generality of the foregoing, an independent trust company may collectively invest funds received or held as fiduciary as follows:
(1) In a common trust fund maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as executor, administrator, guardian or trustee under a will or deed;
(3) In a common trust fund, maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as managing agent.
(h) An independent trust company may create a trust investment account to which may be entrusted for investment the whole or any part of the funds of trust permissible to be associated as provided in subsection (g) of this section. Where an independent trust company which has established an associated trust investment account is the cotrustee of a trust permissible to be associated as provided in subsection (g) of this section, the whole or any part of the funds of the trust may be entrusted to that account for investment if all cotrustees of the trust consent thereto. An individual trust whose funds are thus associated shall at all times be the equitable owner of its pro rata share of the funds of the associated trust investment account and shall share pro rata the net income of that account and the net increase or decrease of its principal for any reason during the time its funds are a part of the associated trust investment account. The net income shall be distributed pro rata to the individual trust accounts at reasonable intervals. Funds of individual trusts transferred to that account or withdrawn therefrom shall be on the basis of the market value of the total funds of the account at the time being.
(i) The board or similarly functioning unit of a limited liability company of anindependent trust company is responsible for the proper exercise of fiduciary powers by the independent trust company and each matter pertinent to the exercise of fiduciary powers. The board shall adopt and follow written policies and procedures adequate to maintain its fiduciary activities in compliance with applicable law. The policies and procedures shall include, for the company and its directors, officers, managers, members, employees, and agents, methods for preventing conflicts of interest, self-dealing, and the improper use of material inside information in connection with any decision or recommendation made as a fiduciary. The written policies and procedures shall also prescribe the investment and disposition of property held in a fiduciary capacity.
§ 2410. POWERS OF THE COMMISSIONER
(a) In addition to other powers conferred by this chapter, the commissioner may:
(1) Restrict the transaction of any trust account when the commissioner finds that extraordinary circumstances make the restriction necessary for the proper protection of the trust customers of the independent trust company.
(2) Order the holders of shares or other voting interest in an independent trust company to refrain from voting those shares or other voting interest on any matter if the commissioner finds that the order is necessary to protect the company against reckless, incompetent or careless management, safeguard the assets of trust customers, or prevent the wilful violation of this chapter or of any lawful order issued under it, and in such a case, the shares or other voting interest of such a holder shall not be counted in determining the existence of a quorum or a percentage of the outstanding shares or voting interest necessary to take any company action.
(3) Order any person to cease violating this title or a lawful regulation issued under it or to cease engaging in any unsound trust or fiduciary practice.
(4)(A) Impose a penalty of not more than $15,000.00 for each violation upon any independent trust company which, or any director, member, trustee, officer, manager or employee of an independent trust company who:
(i) knowingly violates this title or a lawful regulation or order issued under it; or
(ii) has knowingly engaged or participated in any materially unsafe orunsound practice in connection with the independent trust company; or
(iii) has knowingly committed or engaged in any act, omission, or practice which constitutes a breach of fiduciary duty to the independent trust company.
(B) In determining the amount of a penalty assessed pursuant to this subsection, the commissioner shall consider the following factors:
(i) the appropriateness of the penalty with respect to the financial resources and good faith of the person or independent trust company charged;
(ii) the gravity of the violation or practice;
(iii) the history of previous violations or practices of a similar nature;
(iv) the economic benefit derived by the person from the violation or practice; and
(v) other factors as justice may require.
(C) An independent trust company shall not indemnify a director, member, officer, manager or employee for a penalty imposed under this subsection.
(5) Suspend or revoke the certificate of authority of an independent trust company if, after notice and opportunity for a hearing, the commissioner determines that:
(A) The independent trust company has failed or refused to comply with any law or regulation or an order issued pursuant to this title;
(B) The application for certificate of authority contained a false representation or omission of a material fact; or
(C) Any officer or manager or agent of the independent trust company, in connection with an application for a certificate of authority, knowingly made a false representation of a material fact or failed to disclose a material fact to the commissioner or the duly authorized agent of the commissioner.
(6)(A) Remove a director, member, trustee, officer, manager or employee of an independent trust company who:
(i) knowingly violates this title or a lawful regulation or an order issued under this title; or
(ii) is convicted of a crime involving dishonesty; or
(iii) has knowingly engaged or participated in any materially unsafe orunsound practice in connection with the independent trust company; or
(iv) has knowingly committed or engaged in any act, omission, or practice which constitutes a breach of fiduciary duty to the independent trust company.
(B) Provided further, with respect to the acts or omissions under subdivisions (A)(iii) and (iv) of this subdivision that the commissioner finds:
(i) the independent trust company has suffered or probably will suffer substantial financial loss or other damage;
(ii) the interest of its trust customers or accounts could be seriously prejudiced by such violation, practice or breach of fiduciary duty; or
(iii) the director, member, trustee, officer, manager or employee has received material financial gain by reason of such violation, practice or breach.
(b) The commissioner shall provide notice of any order proposed pursuant to this chapter and the grounds thereof by mail to the independent trust company and any affected director, member, trustee, officer, manager or employee. The independent trust company or any person so served may, within 30 days of service on the independent trust company, request that a hearing be held by the commissioner. The provisions of chapter 25 of Title 3 shall govern any hearing held by the commissioner under this chapter. The hearing shall be private unless the commissioner determines that a public hearing is necessary to protect the public interest. If no hearing is requested, the proposed order shall become final 30 days after service on the independent trust company. If it is deemed necessary to assure the continued safety and soundness of the independent trust company, the commissioner may order an immediate suspension of the certificate of authority of the independent trust company or, in the case of a removal, immediate suspension of the director, member, trustee, officer, manager or employee pending completion of further administrative proceedings on removal pursuant to subdivision (a)(6) of this section.
(c) It shall be a criminal offense, punishable by a fine of $1,000.00 or a year in prison, or both, for any person to violate this title, to violate any order of the commissioner, or, after receipt of a removal order, or an order assessing a penalty, to perform any duty or exercise any power of any independent trust company until the penalty has been satisfied, or otherwise satisfactorily resolved between the parties, or the removal or penalty order isvacated by the commissioner or by a court of competent jurisdiction.
§ 2411. UNSAFE CONDITION; RECEIVERSHIP
If the commissioner finds a deficiency in capital or other unsafe or unsound condition of an independent trust company has not been remedied within the time prescribed under an order of the commissioner issued pursuant to this chapter, the commissioner may apply to the superior court in Washington County, to be appointed receiver for the liquidation or rehabilitation of the company. The expense of the receivership shall be paid out of the assets of the independent trust company. The provisions of chapter 63, subchapters 2, 3 and 4 of this title shall apply to an independent trust company formed or regulated under this chapter as if the independent trust company were a bank to the extent applicable.
Sec. 8c. 8 V.S.A. § 1357(a) is amended to read:
(a) In its discretion, and subject to provisions of subsection (b) hereof, a bank exercising trust powers may associate together for common investment the funds of individual trusts held by it whether created by order of court or otherwise, if the terms of the trust do not require a separate investment. Without limiting the generality of the foregoing, a bank may *[invest collectively]* collectively invest funds received or held as fiduciary as follows:
(1) In a common trust fund maintained by the bank exclusively for the collective investment and reinvestment of moneys contributed thereto by bank in its capacity as executor, administrator, guardian or trustee under a will or deed;
(3) In a common trust fund, maintained by the bank exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank in its capacity as managing agent.
Sec. 8d. 32 V.S.A. § 5836(i) is added to read:
(i) An independent trust company established pursuant to chapter 77 of Title 8 is not a bank, or trust company within the meaning of this section.
Sec. 9. EFFECTIVE DATE; APPLICABILITY
(a) This act shall take effect from passage, except that Sec. 8b shall take effect on
(b) Secs. 3, 4 and 5 are intended to clarify existing law and be remedial in nature. The sanctions provided in Sec. 1 shall not apply for 90 days from passage to the owner of an automated teller machine who submits the information required by Sec. 1 within 60 days of passage. Notwithstanding Sec. 1, the commissioner shall have 90 days from passage to act on any submission under section 1 of this act. The commissioner may waive
compliance with Sec. 1 for the owner of an automated teller machine for an additional 30 days, not to exceed 120 days from passage, for good cause shown.