Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 SENATE BILL 230 3
4
By: Senator J. Boyd 5
By: Representative Achor 6
7
For An Act To Be Entitled 8
AN ACT TO REPEAL THE ARKANSAS TRUST INSTITUTIONS ACT; 9
TO CREATE THE ARKANSAS TRUST INSTITUTIONS ACT OF 10
2025; AND FOR OTHER PURPOSES. 11
12
13
Subtitle 14
TO REPEAL THE ARKANSAS TRUST 15
INSTITUTIONS ACT; AND TO CREATE THE 16
ARKANSAS TRUST INSTITUTIONS ACT OF 2025. 17
18
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 19
20
SECTION 1. Arkansas Code Title 23, Chapter 51, is amended to read as 21
follows: 22
23
CHAPTER 51 24
ARKANSAS TRUST INSTITUTIONS ACT 25
26
Subchapter 1 — Arkansas Trust Institutions Act 27
28
23-51-101. Title. 29
This chapter may be cited as the “Arkansas Trust Institutions Act”. 30
31
23-51-102. Certain definitions. 32
(a) For the purposes of this chapter: 33
(1) “Account” means the client relationship established with a 34
trust company involving the transfer of funds or property to the trust 35
company, including a relationship in which the trust company acts as trustee, 36 SB230
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executor, administrator, guardian, custodian, conservator, bailee, receiver, 1
registrar, or agent, but excluding a relationship in which the trust company 2
acts solely in an advisory capacity; 3
(2) “Act as a fiduciary” or “acting as a fiduciary” means to: 4
(A) Accept or execute trusts, including to: 5
(i) Act as trustee under a written agreement; 6
(ii) Receive money or other property in its capacity 7
as trustee for investment in real or personal property; 8
(iii) Act as trustee and perform the fiduciary 9
duties committed or transferred to it by order of a court of competent 10
jurisdiction; 11
(iv) Act as trustee of the estate of a deceased 12
person; or 13
(v) Act as trustee for a minor or incapacitated 14
person; 15
(B) Administer in any other fiduciary capacity real or 16
tangible personal property; or 17
(C) Act pursuant to an order of a court of competent 18
jurisdiction as executor or administrator of the estate of a deceased person 19
or as a guardian or conservator for a minor or incapacitated person; 20
(3) “Administer” with respect to real or tangible personal 21
property means, as an agent or in another representative capacity, to 22
possess, purchase, sell, lease or insure, safekeep or otherwise manage the 23
property; 24
(4) “Affiliate” means a company that directly or indirectly 25
controls, is controlled by, or is under common control with a trust 26
institution or other company; 27
(5) “Authorized trust institutions” means any state trust 28
company, subsidiary trust company, or trust office of a trust institution 29
located in Arkansas; 30
(6) “Bank” means a state bank, national bank, any bank chartered 31
by any state of the United States or any foreign bank organized under the 32
laws of a territory of the United States, the Commonwealth of Puerto Rico, 33
Guam, American Samoa or the United States Virgin Islands, the deposits of 34
which are insured by the Federal Deposit Insurance Corporation; 35
(7) “Bank supervisory agency” means: 36 SB230
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(A) Any agency of another state with primary 1
responsibility for chartering and supervising a trust institution; and 2
(B) The United States Office of the Comptroller of the 3
Currency, the Federal Deposit Insurance Corporation, the Board of Governors 4
of the Federal Reserve System, the Office of Thrift Supervision [abolished] 5
and any successor to these agencies; 6
(8) “Branch” with respect to a depository institution has the 7
meaning set forth in § 23 -48-702; 8
(9) “Capital” means: 9
(A) The sum of: 10
(i) The par value of all shares of the state trust 11
company having a par value that have been issued; 12
(ii) The consideration fixed by the board in the 13
manner provided by the Arkansas Business Corporation Act of 1987, § 4 -27-101 14
et seq., for all shares of the state trust company without par value that 15
have been issued, except a part of that consideration that: 16
(a) Has been actually received; 17
(b) Is less than all of that consideration; 18
and 19
(c) The board, by resolution adopted not later 20
than sixty (60) days after the date of issuance of those shares, has 21
allocated to surplus with the prior approval of the commissioner; and 22
(iii) An amount not included in subdivisions 23
(a)(9)(A)(i) and (ii) of this section that has been transferred to capital of 24
the state trust company, on the payment of a share dividend or on adoption by 25
the board of a resolution directing that all or part of surplus be 26
transferred to capital, minus each reduction made as permitted by law; less 27
(B) All amounts otherwise included in subdivisions 28
(a)(9)(A)(i) and (ii) of this section that are attributable to the issuance 29
of securities by the state trust company and that the commissioner 30
determines, after notice and an opportunity for hearing, should be classified 31
as debt rather than equity securities; 32
(10) “Capital base” means the sum of capital, surplus, and 33
undivided profits, plus any additions and less any subtractions which the 34
commissioner may by rule prescribe; 35
(11) “Charter” means a charter, license or other authority 36 SB230
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issued by the commissioner or a bank supervisory agency authorizing a trust 1
institution to act as a fiduciary in its home state; 2
(12) “Client” means a person to whom a trust institution owes a 3
duty or obligation under a trust or other account administered by the trust 4
institution or as an advisor or agent, regardless of whether the trust 5
institution owes a fiduciary duty to the person. The term includes the non -6
contingent beneficiaries of an account; 7
(13) “Commissioner” means the Bank Commissioner then in office 8
and, where appropriate, all of his or her successors and predecessors in 9
office; 10
(14) “Company” includes a bank, trust company, subsidiary trust 11
company, corporation, limited liability company, partnership, association, 12
business trust, foundation, or another trust; 13
(15) “Control” means: 14
(A) The ownership of or ability or power to vote, 15
directly, acting through one or more other persons, or otherwise indirectly, 16
more than twenty-five percent (25%) of the outstanding shares of a class of 17
voting securities of a state trust company or other company; 18
(B) The ability to control the election of a majority of 19
the board of a state trust company or other company; and 20
(C) The power to exercise, directly or indirectly, a 21
controlling influence over the management or policies of the state trust 22
company or other company as determined by the commissioner after notice and 23
an opportunity for hearing; 24
(16) “Department” means the State Bank Department; 25
(17) “Depository institution” means any company chartered to act 26
as a fiduciary and included for any purpose within any of the definitions of 27
“insured depository institution” as set forth in 12 U.S.C. §§ 1813(c)(2) and 28
(3); 29
(18) “Equity capital” means the amount by which the total assets 30
of a state trust company exceed the total liabilities of the state trust 31
company; 32
(19) “Equity security” means: 33
(A) Stock, other than adjustable rate preferred stock and 34
money market (auction rate) preferred stock; 35
(B) A certificate of interest or participation in a 36 SB230
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profit-sharing agreement, collateral -trust certificate, preorganization 1
certificate or subscription, transferable share or participation share, 2
investment contract, voting -trust certificate, or partnership interest; 3
(C) A security immediately convertible at the option of 4
the holder without payment of significant additional consideration into a 5
security described by this subdivision (a)(19); 6
(D) A security carrying a warrant or right to subscribe to 7
or purchase a security described by this subdivision (a)(19); and 8
(E) A certificate of interest or participation in, 9
temporary or interim certificate for, or receipt for a security described by 10
this subdivision (a)(19) that evidences an existing or contingent equity 11
ownership interest; 12
(20) “Fiduciary record” means a matter written, transcribed, 13
recorded, received or otherwise in the possession or control of a trust 14
company, whether in physical or electromagnetic form, that is necessary to 15
preserve information concerning an act or event relevant to an account or a 16
client of a trust company; 17
(21) “Hazardous condition” with respect to a trust company 18
means: 19
(A) A refusal by the trust company to permit examination 20
of its books, papers, accounts, records, or affairs by the commissioner; 21
(B) Violation by a trust company of a condition of its 22
chartering or an agreement entered into between the trust company and the 23
commissioner; or 24
(C) A circumstance or condition in which an unreasonable 25
risk of loss is threatened to clients or creditors of a trust company, 26
excluding risk of loss to a client that arises as a result of the client's 27
decisions or actions, but including a circumstance or condition in which a 28
trust company: 29
(i) Is unable or lacks the means to meet its current 30
obligations as they come due in the regular and ordinary course of business, 31
even though the book or fair market value of its assets may exceed its 32
liabilities; 33
(ii) Has equity capital less than the amount of 34
capital the trust company is required to maintain under § 23 -51-110, or the 35
adequacy of its equity capital is threatened, as determined under regulatory 36 SB230
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accounting principles; 1
(iii) Has concentrated an excessive or unreasonable 2
portion of its assets in a particular type or character of investment; 3
(iv) Violates or refuses to comply with this 4
chapter, another statute or rule applicable to trust companies, or any final 5
and enforceable order of the commissioner; 6
(v) Is in a condition that renders the continuation 7
of a particular business practice hazardous to its clients and creditors; or 8
(vi) Conducts business in an unsafe or unsound 9
manner, which includes, but is not limited to conducting business with: 10
(a) Inexperienced or inattentive management; 11
(b) Potentially dangerous operating practices; 12
(c) Infrequent or inadequate audits; 13
(d) Administration of assets that is notably 14
deficient in relation to the volume and character or responsibility for asset 15
holdings; 16
(e) Failure to adhere to sound administrative 17
practices; 18
(f) Frequent occurrences of violations of 19
laws, rules, or terms of the governing instruments; or 20
(g) Engaging in self -dealing or evidencing a 21
notable degree of potential or actual conflicts of interest; 22
(22) “Insider” means: 23
(A) Each director, officer or principal shareholder of the 24
trust company; 25
(B) Any company controlled by a person described by 26
subdivision (a)(23)(A) of this section; or 27
(C) Any person who participates or has authority to 28
participate, other than in the capacity of a director, in major policy -making 29
functions of the state trust company, whether or not the person has an 30
official title or the officer is serving without salary or compensation; 31
(23) “Insolvent” means a circumstance or condition in which a 32
state trust company: 33
(A) Is unable or lacks the means to meet its current 34
obligations as they come due in the regular and ordinary course of business, 35
even if the value of its assets exceeds its liabilities; 36 SB230
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(B) Has equity capital less than one million dollars 1
($1,000,000), as determined under regulatory accounting principles; 2
(C) Fails to maintain deposit insurance with the Federal 3
Deposit Insurance Corporation or its successor if the commissioner determines 4
that deposit insurance is necessary for the safe and sound operation of the 5
state trust company, or maintains adequate security for its deposits in 6
accordance with § 23 -51-130; 7
(D) Sells or attempts to sell substantially all of its 8
assets or merges or attempts to merge substantially all of its assets or 9
business with another entity other than as provided by §§ 23 -51-150 — 23-51-10
155; or 11
(E) Attempts to dissolve or liquidate other than as 12
provided by §§ 23-51-156 — 23-51-161; 13
(24) “Investment security” means a marketable obligation 14
evidencing indebtedness of a person in the form of a bond, note, debenture, 15
or other debt instrument not otherwise classified as a loan or extension of 16
credit; 17
(25) “License” means the authority granted by the commissioner 18
pursuant to this chapter to establish, acquire or maintain a trust office; 19
(26) “Loans and extensions of credit” means direct or indirect 20
advances of funds by a state trust company to a person that are conditioned 21
on the obligation of the person to repay the funds or that are repayable from 22
specific property pledged by or on behalf of the person; 23
(27) “New trust office” means a trust office located in a host 24
state which: 25
(A) Is originally established by the trust institution as 26
a trust office; and 27
(B) Does not become a trust office of the trust 28
institution as a result of: 29
(i) The acquisition of another trust institution or 30
trust office of another trust institution; or 31
(ii) A merger, consolidation, or conversion 32
involving any such trust institution or trust office; 33
(28) “Office” with respect to a trust institution means the 34
principal office, a trust office or a representative trust office, but not a 35
branch; 36 SB230
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(29) “Officer” means the presiding officer of the board, the 1
principal executive officer, or another officer appointed by the board of a 2
state trust company or other company, or a person or group of persons acting 3
in a comparable capacity for the state trust company or other company; 4
(30) “Operating subsidiary” means a company for which a state 5
trust company has the ownership, ability, or power to vote, directly, acting 6
through one or more other persons, or otherwise indirectly, more than fifty 7
percent (50%) of the outstanding shares of each class of voting securities or 8
its equivalent of the company; 9
(31) “Out-of-state bank” means a bank chartered to act as a 10
fiduciary in any state or states other than this state; 11
(32) “Out-of-state trust company” means either a trust company 12
that is not a state trust company or a savings association whose principal 13
office is not located in this state; 14
(33) “Out-of-state trust institution” means a trust institution 15
that is not a state trust institution; 16
(34) “Person” means an individual, a company or any other legal 17
entity; 18
(35) “Principal office” with respect to: 19
(A) A state trust company, means a location registered 20
with the commissioner as the state trust company's home office at which: 21
(i) The state trust company does business; 22
(ii) The state trust company keeps its corporate 23
books and a set of its material records, including material fiduciary 24
records; and 25
(iii) At least one executive officer of the state 26
trust company maintains an office; or 27
(B) A trust institution other than a state trust company, 28
means its principal place of business in the United States; 29
(36) “Principal shareholder” means a person who owns or has the 30
ability or power to vote, directly, acting through one or more other persons, 31
or otherwise indirectly, ten percent (10%) or more of the outstanding shares 32
of any class of voting securities of a state trust company or other company; 33
(37) “Private trust company” means a trust company that does not 34
engage in a trust business with the general public; 35
(38) “Receiver” means the commissioner, an agent of the 36 SB230
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commissioner or any federal or other governmental agency exercising the 1
powers and duties of a receiver pursuant to § 23 -51-164; 2
(39) “Savings association” means a depository institution that 3
is neither a bank nor a foreign bank; 4
(40) “Shareholder” means an owner of a share in a state trust 5
company; 6
(41) “Shares” means the units into which the proprietary 7
interests of a state trust company are divided or subdivided by means of 8
classes, series, relative rights, or preferences; 9
(42) “State” means any state of the United States, the District 10
of Columbia, any territory of the United States, the Commonwealth of Puerto 11
Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the 12
United States Virgin Islands, and the Northern Mariana Islands; 13
(43) “State bank” means a bank chartered to act as a fiduciary 14
by this state; 15
(44) “State trust company” means a corporation organized or 16
reorganized under this chapter; 17
(45) “State trust institution” means a trust institution having 18
its principal office in this state; 19
(46) “Subsidiary” means a company that is controlled by another 20
person. The term includes a subsidiary of a subsidiary; 21
(47) “Subsidiary trust company” means a corporation organized 22
under the Arkansas Business Corporation Act of 1987, § 4 -27-101 et seq. and 23
authorized by the commissioner pursuant to § 23 -47-801 et seq. or the Bank 24
Holding Company Subsidiary Trust Company Formation Act of 1989, § 23 -32-1901 25
et seq. [repealed], to conduct trust business and business incidental to 26
trust business in this state, of which more than fifty percent (50%) of the 27
voting stock is owned, directly or indirectly, by a bank holding company 28
which also owns, directly or indirectly, an affiliated bank, as that term is 29
defined in § 23-47-801 et seq.; 30
(48) “Surplus” means the amount by which the assets of a state 31
trust company exceeds its liabilities, capital, and undivided profits; 32
(49) “Trust business” means the holding out by a person to the 33
public by advertising, solicitation or other means that the person is 34
available to perform any service of a fiduciary in this or another state, 35
including but not limited to: 36 SB230
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(A) Acting as a fiduciary, or 1
(B) To the extent not acting as a fiduciary, any of the 2
following: 3
(i) Receiving for safekeeping personal property of 4
every description; 5
(ii) Acting as assignee, bailee, conservator, 6
custodian, escrow agent, registrar, receiver or transfer agent; or 7
(iii) Acting as financial advisor, investment 8
advisor or manager, agent or attorney -in-fact in any agreed upon capacity; 9
(50) “Trust company” means a state trust company, subsidiary 10
trust company or any other company chartered to act as a fiduciary that is 11
neither a depository institution nor a foreign bank; 12
(51) “Trust deposits” means the client funds held by a state 13
trust company and authorized to be deposited with itself pending investment, 14
distribution, or payment of debts on behalf of the client; 15
(52) “Trust institution” means a depository institution, state 16
bank or trust company; 17
(53) “Trust office” means an office, other than the principal 18
office, at which a trust institution is licensed by the commissioner to act 19
as a fiduciary; 20
(54)(A) “Unauthorized trust activity” means: 21
(i) A company, other than one identified in § 23 -51-22
165(a), acting as a fiduciary within this state; 23
(ii) A company engaging in a trust business in this 24
state at any office of the company that is not its principal office, if the 25
company is a state trust institution, or that is not a trust office or a 26
representative trust office of the company; or 27
(iii) An out-of-state trust institution engaging in 28
a trust business in this state at any time an order issued by the 29
commissioner under § 23 -51-182 is in effect. 30
(B) “Unauthorized trust activity” does not include a 31
foundation serving as a fiduciary; 32
(55) “Undivided profits” means the part of equity capital of a 33
state trust company equal to the balance of its net profits, income, gains, 34
and losses since the date of its formation, minus subsequent distributions to 35
shareholders and transfers to surplus or capital under share dividends or 36 SB230
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appropriate board resolutions. The term includes amounts allocated to 1
undivided profits as a result of a merger; and 2
(56) “Voting security” means a share, or other evidence of 3
proprietary interest in a state trust company or other company that has as an 4
attribute the right to vote or participate in the election of the board of 5
the state trust company or other company, regardless of whether the right is 6
limited to the election of fewer than all of the board members. The term 7
includes a security that is convertible or exchangeable into a voting 8
security. 9
(57)(A) “Foundation” means an organization that: 10
(i) Is organized and operated for religious, 11
educational, or charitable purposes, as defined in section 501(c)(3) of the 12
Internal Revenue Code of 1986, 26 U.S.C. § 501(c)(3), as it existed on 13
January 1, 2019; 14
(ii) Has equity capital of at least one million 15
dollars ($1,000,000); 16
(iii) Has fiduciary liability insurance coverage 17
with policy limits of not less than two million dollars ($2,000,000); 18
(iv) Adopts and maintains written fiduciary policies 19
and procedures; 20
(v) Has an annual independent audit that covers 21
fiduciary activities and assets; and 22
(vi)(a) Is serving as a fiduciary for a trust 23
or estate whose assets are less than seven hundred fifty thousand dollars 24
($750,000). 25
(b) Subdivision (a)(57)(A)(vi)(a) of this 26
section does not apply if: 27
(1) The foundation is the sole remainder 28
beneficiary of the trust or estate; or 29
(2) The remainder beneficiary is an 30
organization that is supported by the foundation. 31
(B) “Foundation” does not include a private foundation as 32
defined in section 509(a) of the Internal Revenue Code of 1986, 26 U.S.C. § 33
509(a). 34
(b) These definitions shall be liberally construed to accomplish 35
the purposes of this chapter. The commissioner by rule may adopt other 36 SB230
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definitions to accomplish the purposes of this chapter. 1
2
23-51-103. Rules. 3
The Bank Commissioner may promulgate such rules as he or she determines 4
to be necessary or appropriate in order to implement the provisions of this 5
chapter. 6
7
23-51-104. Organization and powers of state trust company. 8
(a) Subject to the other provisions of this chapter, one or more 9
persons may organize and charter a state trust company. A state trust company 10
may perform any act as a fiduciary or engage in any trust business within or 11
without this state. 12
(b) Subject to § 23 -51-111, a state trust company may exercise the 13
powers of an Arkansas business corporation reasonably necessary or helpful to 14
enable exercise of its specific powers under this chapter. 15
(c) A state trust company may contribute to community funds, or to 16
charitable, philanthropic, or benevolent instrumentalities conducive to 17
public welfare, amounts that its board considers appropriate and in the 18
interests of the state trust company. 19
(d) Subject to § 23 -51-130, a state trust company may deposit trust 20
funds with itself or an affiliate. 21
(e) Subject to obtaining any required insurance from the Federal 22
Deposit Insurance Corporation (FDIC), a state trust company may receive and 23
pay deposits with or without interest, made by agencies of the United States 24
Government or of a state, county, or municipality. 25
26
23-51-105. Articles of association of state trust company. 27
The articles of association of a state trust company must be signed and 28
acknowledged by each organizer and must contain: 29
(1) The name of the state trust company; 30
(2) The period of its duration, which may be perpetual; 31
(3) The powers of the state trust company, which may be stated 32
as: 33
(A) All powers granted to a state trust company in this 34
state; or 35
(B) A list of the specific powers that the state trust 36 SB230
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company chooses and is authorized to exercise; 1
(4) The aggregate number of shares that the state trust company 2
will be authorized to issue, the number of classes of shares, which may be 3
one or more, the number of shares of each class if more than one class, and a 4
statement of the par value of the shares of each class or that the shares are 5
to be without par value; 6
(5) If the shares are to be divided into classes, the 7
designation of each class and statement of the preferences, limitations, and 8
relative rights of the shares of each class; 9
(6) Any provision granting to shareholders the preemptive right 10
to acquire additional shares of the state trust company; 11
(7) Any provision granting the right of shareholders to 12
cumulative voting in the election of directors; 13
(8) The aggregate amount of consideration to be received for all 14
shares initially issued by the state trust company, and a statement signed 15
and verified by the organizers that the capital stock has been fully 16
subscribed and the purchase price therefor has been paid into an escrow 17
account approved by the Bank Commissioner; 18
(9) Any provision consistent with law that the organizers elect 19
to set forth in the articles of association for the regulation of the 20
internal affairs of the state trust company or that is otherwise required by 21
this chapter to be set forth in the articles of association; 22
(10) The street address of the state trust company's principal 23
office required to be maintained under § 23 -51-172; and 24
(11) The number of directors or managers constituting the 25
initial board, which may not be fewer than three (3), and the names and 26
street addresses of the persons who are to serve as directors until the first 27
annual meeting of shareholders or until successor directors have been elected 28
and qualified. 29
30
23-51-106. Application for state trust company charter. 31
(a) An application for a state trust company charter must be made 32
under oath and in the form required by the Bank Commissioner and must be 33
supported by information, data, records, and opinions of counsel that the 34
commissioner requires. The application must be accompanied by a non -35
refundable filing fee of not less than three thousand dollars ($3,000) nor 36 SB230
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more than ten thousand dollars ($10,000) as set by rule of the commissioner 1
and proof of escrow of deposit for the required capital. 2
(b) The commissioner shall grant a state trust company charter only on 3
proof that one or more viable markets exist within or outside of this state 4
that may be served in a profitable manner by the establishment of the 5
proposed state trust company. In making such a determination, the 6
commissioner shall examine the business plan which shall be submitted as part 7
of the application for a state trust company charter and consider: 8
(1) The market or markets to be served; 9
(2) Whether the proposed organizational and capital structure 10
and amount of initial capitalization is adequate for the proposed business 11
and location; 12
(3) Whether the anticipated volume and nature of business 13
indicates a reasonable probability of success and profitability based on the 14
market sought to be served; 15
(4) Whether the proposed officers and directors, as a group, 16
have sufficient fiduciary experience, ability, standing, competence, 17
trustworthiness, and integrity to justify a belief that the proposed state 18
trust company will operate in compliance with law and that success of the 19
proposed state trust company is probable; 20
(5) Whether each principal shareholder has sufficient 21
experience, ability, standing, competence, trustworthiness, and integrity to 22
justify a belief that the proposed state trust company will be free from 23
improper or unlawful influence or interference with respect to the state 24
trust company's operation in compliance with law; and 25
(6) Whether the organizers are acting in good faith. 26
(c) The failure of an applicant to furnish required information, data, 27
opinions of counsel, other material or the required fee is considered an 28
abandonment of the application. 29
30
23-51-107. Notice and investigation of charter application. 31
(a) The Bank Commissioner shall notify the organizers when the 32
application is complete and accepted for filing and all required fees and 33
deposits have been paid. Upon filing of an application with the commissioner, 34
the organizers of the proposed state trust company shall give notice of 35
filing through publication by one (1) insertion in a newspaper published in 36 SB230
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the City of Little Rock and having a general and substantially statewide 1
circulation and shall give written notice of filing through the United States 2
mail to all trust institutions maintaining a principal office or a trust 3
office in the county wherein the principal office of the proposed state trust 4
company is to be located. 5
(b) At the expense of the organizers, the commissioner shall 6
investigate the application and inquire into the identity and character of 7
each proposed director, officer, and principal shareholder. The commissioner 8
shall prepare a written report of the investigation, and any person may 9
request a copy of the nonconfidential portions of the application and written 10
report as provided by the Freedom of Information Act of 1967, § 25 -19-101 et 11
seq. Rules adopted under this chapter may specify the confidential or 12
nonconfidential character of information obtained by the State Bank 13
Department under this section. Except as provided in rules regarding 14
confidential information, the financial statement of a proposed officer, 15
director, or principal shareholder is confidential and not subject to public 16
disclosure. 17
18
23-51-108. Hearing and decision on charter application. 19
(a) No person shall appear in opposition to the application unless the 20
person shall have filed a written protest to the granting of the application 21
within thirty (30) days of the date of the notice of the filing of the 22
application. The protest must state the grounds for objection and must be 23
accompanied by a filing fee of not less than two thousand dollars ($2,000) 24
nor more than five thousand dollars ($5,000) for each protestant, such amount 25
to be set by rule promulgated by the Bank Commissioner. 26
(b) Once the written report of investigation has been completed, the 27
commissioner shall establish a time for hearing on the charter application. 28
(c) Notice of the time, place, and purpose of the hearing shall be 29
given at least thirty (30) days before the hearing as follows: 30
(1) By letter from the commissioner to the organizers of the 31
proposed state trust company and to each trust institution to which the 32
organizers of the application are required to give written notice pursuant to 33
§ 23-51-107(a); 34
(2) By letter from the commissioner to each person who has 35
notified the commissioner of an intention to oppose the application, provided 36 SB230
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that if a group of persons has protested the application, the notice may be 1
given to one (1) member of the group; and 2
(3) By release to news media. 3
(d) If the commissioner sets a hearing, the commissioner shall conduct 4
a public hearing and as many prehearing conferences and opportunities for 5
discovery as the commissioner considers advisable and consistent with 6
applicable law and rules. 7
(e) Based on the record of any hearing conducted pursuant to 8
subsection (d) of this section, the commissioner shall determine whether all 9
of the necessary conditions set forth in § 23 -51-106(b) have been established 10
and shall enter an order granting or denying the charter. The commissioner 11
may make approval of any application conditional and shall include any 12
conditions in the order granting the charter. 13
14
23-51-109. Issuance of charter. 15
(a) A state trust company may not engage in the trust business until 16
it receives its charter from the Bank Commissioner. The commissioner may not 17
deliver the charter until the state trust company has: 18
(1) Elected or qualified the initial officers and directors 19
named in the application for charter or other officers and directors approved 20
by the commissioner; and 21
(2) Complied with all other requirements of this chapter 22
relative to the organization of a state trust company. 23
(b) If a state trust company does not open and engage in the trust 24
business within six (6) months after the date it receives its charter or 25
conditional approval of application for charter, or within such further 26
period as such period may be extended, the commissioner shall revoke the 27
charter or cancel the conditional approval of application for charter without 28
judicial action. 29
30
23-51-110. Required capital. 31
(a) The Bank Commissioner may not issue a charter to a state trust 32
company having required capital of less than one million dollars 33
($1,000,000), except as provided in subsection (b) of this section. 34
(b) The commissioner may require additional capital for a proposed or 35
existing state trust company or, on application in the exercise of discretion 36 SB230
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consistent with protecting safety and soundness, reduce the amount of minimum 1
capital required for a proposed or existing state trust company, if the 2
commissioner finds the condition and operations of an existing state trust 3
company or the proposed scope or type of operations of a proposed state trust 4
company requires additional, or permits reduced, capital consistent with the 5
safety and soundness of the state trust company. The safety and soundness 6
factors to be considered by the commissioner in the exercise of such 7
discretion include but are not limited to, 8
(1) The nature and type of business conducted; 9
(2) The nature and degree of liquidity in assets held in a 10
corporate capacity; 11
(3) The amount of fiduciary assets under management; 12
(4) The type of fiduciary assets held and the depository of the 13
assets; 14
(5) The complexity of fiduciary duties and degree of discretion 15
undertaken; 16
(6) The competence and experience of management; 17
(7) The extent and adequacy of internal controls; 18
(8) The presence or absence of annual unqualified audits by an 19
independent certified public accountant; 20
(9) The reasonableness of business plans for retaining or 21
acquiring additional capital; and 22
(10) The existence and adequacy of insurance obtained or held by 23
the trust company for the purpose of protecting its clients, beneficiaries 24
and grantors. 25
(c) The proposed effective date of an order requiring an existing 26
state trust company to increase its capital must be stated in the order as no 27
sooner than twenty (20) days after the date the proposed order is mailed or 28
delivered. Unless the state trust company requests a hearing before the 29
commissioner in writing before the effective date of the proposed order, the 30
order becomes effective and is final and nonappealable. This subsection does 31
not prohibit an application to reduce capital requirements of a proposed or 32
an existing state trust company under subsection (b) of this section. 33
(d) Subject to subsection (b) of this section and § 23 -51-118, a state 34
trust company to which the commissioner issues a charter shall at all times 35
maintain capital in at least the amount required under subsection (a) of this 36 SB230
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section, plus any additional amount or less any reduction the commissioner 1
directs under subsection (b) of this section. 2
3
23-51-111. Application of laws relating to general business 4
corporations. 5
(a) The Arkansas Business Corporation Act of 1987, § 4 -27-101 et seq., 6
applies to a trust company to the extent not inconsistent with this chapter 7
or the proper business of a trust company, except that any reference to the 8
Secretary of State means the Bank Commissioner unless the context requires 9
otherwise. 10
(b) Unless expressly authorized by this chapter or a rule of the 11
commissioner, a trust company may not take an action authorized by the 12
Arkansas Business Corporation Act of 1987, § 4 -27-101 et seq., regarding its 13
corporate status, capital structure, or a matter of corporate governance, of 14
the type for which the Arkansas Business Corporation Act of 1987, § 4 -27-101 15
et seq., would require a filing with the Secretary of State if the trust 16
company were a business corporation, without first submitting the filing to 17
the commissioner for the same purposes for which it otherwise would be 18
required to be submitted to the Secretary of State and compliance with the 19
applicable provisions of this chapter. 20
(c) The commissioner may adopt rules to limit or refine the 21
applicability of subsection (a) of this section to a trust company or to 22
alter or supplement the procedures and requirements of the Arkansas Business 23
Corporation Act of 1987, § 4 -27-101 et seq., applicable to an action taken 24
under this chapter. 25
26
23-51-112. Commissioner hearings — Appeals. 27
(a) This section does not grant a right to a hearing to a person that 28
is not otherwise granted by governing law. A hearing before the Bank 29
Commissioner that is required or authorized by law may be conducted by a 30
hearing officer on behalf of the commissioner. A matter made confidential by 31
law must be considered by the commissioner in a closed hearing. 32
(b) The commissioner may convene a hearing to receive evidence and 33
argument regarding any matter before the commissioner for decision or review 34
under this chapter. 35
(c) No person shall appear in opposition to the application unless the 36 SB230
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person shall have filed a written protest pursuant to § 23 -51-108 and paid 1
the applicable fee. 2
(d) At the hearing all organizers of the proposed state trust company 3
and any person making a timely written protest against the application may 4
appear. The attorneys for any such person may appear and be heard. 5
(e) The commissioner may subpoena witnesses on his or her own motion 6
or on the request of any party to the proceedings. 7
(f) The admission of evidence at the hearing shall be controlled by § 8
25-15-213. The parties shall have the right to cross -examine witnesses. 9
Official notice may be taken of judicially cognizable facts and of generally 10
recognized technical or scientific facts within the commissioner's 11
specialized knowledge. The parties may bind themselves by stipulation. 12
(g) The organizers shall be responsible for procuring and paying for a 13
verbatim record of the proceeding. It will be the duty of the organizers to 14
furnish at least one (1) copy of the transcript to the commissioner free of 15
charge. 16
(h) The commissioner shall render his or her decision in writing, at 17
or after a hearing, which decision shall include the commissioner's findings 18
of fact and conclusions of law. 19
(i)(1) The time for filing a petition for judicial review under the 20
Arkansas Administrative Procedure Act, § 25 -15-201 et seq., shall run from 21
the date the final decision of the commissioner is mailed or delivered, in 22
written form, to the parties desiring to appeal. 23
(2) The hearing of such a petition for review will be advanced 24
on the docket of each reviewing court as a matter of public interest. 25
26
23-51-113. Trust companies chartered under prior law. 27
The charter of a corporation which was previously a trust company 28
incorporated under any laws of this state prior to the adoption of the 29
Arkansas Banking Code of 1997 may be converted to a state trust company under 30
this chapter, if the charter, or evidence satisfactory to the Bank 31
Commissioner that the corporation is still in existence and in good standing, 32
is presented to the State Bank Department within six (6) months of enactment 33
of this chapter for substitution of a charter issued under this chapter. 34
35
23-51-114. Amendment of state trust company articles of association. 36 SB230
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(a) A state trust company that has been granted a charter under § 23 -1
51-109 or a predecessor statute may amend or restate its articles of 2
association for any lawful purpose, including the creation of authorized but 3
unissued shares in one or more classes or series. 4
(b) An amendment authorizing the issuance of shares in series must 5
contain: 6
(1) The designation of each series and of any variations in the 7
preferences, limitations, and relative rights among series to the extent that 8
the preferences, limitations, and relative rights are to be established in 9
the articles of association; and 10
(2) A statement of any authority to be vested in the board to 11
establish series and determine the preferences, limitations, and relative 12
rights of each series. 13
(c) Amendment or restatement of the articles of association of a state 14
trust company and approval of the board and shareholders must be made or 15
obtained in accordance with provisions of the Arkansas Business Corporation 16
Act of 1987, § 4-27-101 et seq., for the amendment or restatement of articles 17
of incorporation except as otherwise provided by this chapter or rules 18
adopted under this chapter. The original and one (1) copy of the articles of 19
amendment or restated articles of association must be filed with the Bank 20
Commissioner for approval. Unless the submission presents novel or unusual 21
questions, the commissioner shall approve or reject the amendment or 22
restatement within thirty (30) days after the date the commissioner considers 23
the submission informationally complete and accepted for filing. The 24
commissioner may require the submission of additional information as 25
considered necessary to an informed decision to approve or reject any 26
amendment or restatement or articles of association under this section. 27
(d) If the commissioner finds that the amendment or restatement 28
conforms to law and any conditions imposed by the commissioner, and any 29
required filing fee has been paid, the commissioner shall: 30
(1) Endorse the face of the original and copy with the date of 31
approval and the word “Approved”; 32
(2) File the original in the State Bank Department's records; 33
and 34
(3) Deliver a certified copy to the amendment or restatement to 35
the state trust company. 36 SB230
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(e) An amendment or restatement, if approved, takes effect on the date 1
of approval, unless the amendment or restatement provides for a different 2
effective date. 3
4
23-51-115. Establishing a series of shares. 5
(a) If the articles of association expressly give the board authority 6
to establish series and determine the preferences, limitations, and relative 7
rights of each series of shares, the board may do so only on compliance with 8
this section and any rules adopted under this chapter. 9
(b) A series of shares may be established in the manner provided by 10
the provisions of the Arkansas Business Corporation Act of 1987, § 4 -27-101 11
et seq., as if the state trust company were a domestic corporation, but the 12
shares of the series may not be issued and sold except upon compliance with 13
this section. The state trust company shall file the original and one copy of 14
the articles of amendment required by the Arkansas Business Corporation Act 15
of 1987, § 4-27-101 et seq., with the Bank Commissioner. Unless the 16
submission presents novel or unusual questions, the commissioner shall 17
approve or reject the series within thirty (30) days after the date the 18
commissioner considers the submission informationally complete and accepted 19
for filing. The commissioner may require the submission of additional 20
information as considered necessary to an informed decision. 21
(c) If the commissioner finds that the interests of the clients and 22
creditors of the state trust company will not be adversely affected by the 23
series, that the series otherwise conforms to law and any conditions imposed 24
by the commissioner, and that any required filing fee has been paid, the 25
commissioner shall: 26
(1) Endorse the face of the original and copy of the statement 27
with the date of approval and the word “Approved”; 28
(2) File the original in the State Bank Department's records; 29
and 30
(3) Deliver a certified copy of the statement to the state trust 31
company. 32
33
23-51-116. Change in outstanding capital and surplus. 34
(a) A state trust company may not reduce or increase its outstanding 35
capital through dividend, redemption, issuance of shares or otherwise, 36 SB230
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without the prior approval of the Bank Commissioner, except as permitted by 1
this section or rules adopted under this chapter. 2
(b) Unless otherwise restricted by rules, prior approval is not 3
required for an increase in capital accomplished through: 4
(1) Issuance of shares of common stock for cash; 5
(2) Declaration and payment of pro rata share dividends as 6
defined in the Arkansas Business Corporation Act of 1987, § 4 -27-101 et seq.; 7
or 8
(3) Adoption by the board of a resolution directing that all or 9
part of undivided profits be transferred to capital. 10
(c) Prior approval is not required for a decrease in surplus caused by 11
incurred losses in excess of undivided profits. 12
13
23-51-117. Capital notes or debentures. 14
(a) With the prior written approval of the Bank Commissioner, any 15
state trust company may, at any time, through action of its board, and 16
without requiring action of its shareholders, issue and sell its capital 17
notes or debentures, which must be subordinate to the claims of depositors 18
and may be subordinate to other claims, including the claims of other 19
creditors or classes of creditors or the shareholders. 20
(b) Capital notes or debentures may be convertible into shares of any 21
class or series. The issuance and sale of convertible capital notes or 22
debentures are subject to satisfaction of preemptive rights, if any, to the 23
extent provided by law. 24
(c) Without the prior written approval of the commissioner, interest 25
due or principal repayable on outstanding capital notes or debentures may not 26
be paid by a state trust company when the state trust company is in hazardous 27
condition or insolvent, as determined by the commissioner, or to the extent 28
that payment will cause the state trust company to be in hazardous condition 29
or insolvent. 30
(d) The amount of any outstanding capital notes or debentures that 31
meet the requirements of this section and are subordinated to unsecured 32
creditors of the state trust company may be included in equity capital of the 33
state trust company for purposes of determining hazardous condition or 34
insolvency, and for such other purposes as may be provided by rules adopted 35
under this chapter. 36 SB230
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1
23-51-118. Private trust company. 2
(a) A private trust company engaging in the trust business in this 3
state shall comply with each and every provision of this chapter applicable 4
to a trust company unless expressly exempted therefrom in writing by the Bank 5
Commissioner pursuant to this section or by rule adopted by the commissioner. 6
(b) A private trust company or proposed private trust company may 7
request in writing that it be exempted from specified provisions of §§ 23 -51-8
105(11), 23-51-106(b), 23-51-107, 23-51-110(a), 23-51-122, 23-51-126(b), (c), 9
and (d), 23-51-127, and 23-51-128. The commissioner may grant the exemption 10
in whole or in part if the commissioner finds that the private trust company 11
does not and will not transact business with the general public. For purposes 12
of this section: 13
(1) “Transact business with the general public” means any sales, 14
solicitations, arrangements, agreements, or transactions to provide trust or 15
other business services, whether or not for a fee, commission, or any other 16
type of remuneration, with any client that is not a family member or a sole 17
proprietorship, partnership, joint venture, association, trust, estate, 18
business trust, or other company that is not one hundred percent (100%) owned 19
by one or more family members; 20
(2) “Family member” means any individual who is related within 21
the fourth degree of affinity or consanguinity to an individual or 22
individuals who control a private trust company or which is controlled by one 23
(1) or more trusts or charitable organizations established by the individual 24
or individuals; and 25
(3) All individuals who control a private trust company or 26
establish trusts or charitable organizations controlling the private trust 27
company must be related within the second degree of affinity or 28
consanguinity. 29
(c) At the expense of the private trust company, the commissioner may 30
examine or investigate the private trust company in connection with an 31
application for exemption. Unless the application presents novel or unusual 32
questions, the commissioner shall approve the application for exemption or 33
set the application for hearing not later than sixty (60) days after the date 34
the commissioner considers the application complete and accepted for filing. 35
The commissioner may require the submission of additional information as 36 SB230
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considered necessary to an informed decision. 1
(d) Any exemption granted under this section may be made subject to 2
conditions or limitations imposed by the commissioner consistent with this 3
chapter. 4
(e) The commissioner may adopt rules defining other circumstances that 5
do not constitute transaction of business with the public, specifying the 6
provisions of this chapter that are subject to an exemption request, and 7
establishing procedures and requirements for obtaining, maintaining, or 8
revoking exempt status. 9
10
23-51-119. Requirements for a private trust company. 11
(a) Application. 12
(1) A private trust company requesting an exemption from the 13
provisions of this chapter pursuant to § 23 -51-118 shall file an application 14
with the Bank Commissioner containing the following: 15
(A) A non-refundable application fee on an amount not less 16
than three thousand dollars ($3,000) nor more than five thousand dollars 17
($5,000), as set by rules issued by the commissioner; 18
(B) A detailed statement under oath showing the private 19
trust company's assets and liabilities as of the end of the month previous to 20
the filing of the application; 21
(C) A statement under oath of the reason for requesting 22
the exemption; 23
(D) A statement under oath that the private trust company 24
is not currently transacting business with the public and that the company 25
will not conduct business with the public without the prior written 26
permission of the commissioner; 27
(E) The current street mailing address and telephone 28
number of the physical location in this state at which the private trust 29
company will maintain its books and records, together with a statement under 30
oath that the address given is true and correct and is not a United States 31
Postal Service post office box or a private mail box, postal box, or mail 32
drop; and 33
(F) Listing of the specific provisions of the chapter for 34
which the request for exemption is made. 35
(2) The commissioner shall not approve a private trust company 36 SB230
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exemption unless the application is completed as required in subdivision 1
(a)(1) of this section. 2
(b) Requirements. To maintain status as an exempt private trust 3
company under this chapter, the private trust company shall comply with the 4
following: 5
(1) An exempt private trust company shall not transact business 6
with the public; 7
(2) An exempt private trust company shall file an annual 8
certification that it is maintaining the conditions and limitations of its 9
exempt status. This annual certification shall be filed on a form provided by 10
the commissioner and be accompanied by a fee set by regulations issued by the 11
commissioner. The annual certification shall be filed on or before June 30 of 12
each year. No annual certification shall be valid unless it bears an 13
acknowledgment stamped by the State Bank Department. The department shall 14
have thirty (30) days from the date of receipt to return a copy of the 15
acknowledged annual certification to the private trust company. The burden 16
shall be on the exempt private trust company to notify the department of any 17
failure to return an acknowledged copy of any annual certification within the 18
thirty-day period. The commissioner may examine or investigate the private 19
state trust company periodically as necessary to verify the certification; 20
(3) An exempt private trust company shall comply with the 21
principal office provisions of § 23 -51-172 and with the address and telephone 22
requirements of subdivision (a)(1)(E) of this section; 23
(4) The exempt private trust company shall pay all applicable 24
corporate franchise taxes. 25
(c) Change of Control. Control of an exempt private trust company may 26
not be transferred or sold with exempt status. In any change of control, the 27
acquiring control person must comply with the provisions of this chapter and 28
the exempt status of the private trust company shall automatically terminate 29
upon the effective date of the transfer. A separate application for exempt 30
status must be filed if the acquiring person wishes to obtain or continue an 31
exemption pursuant to this section. 32
(d) Authority to Revoke. The commissioner shall have authority to 33
revoke the exempt status of a private trust company in the following 34
circumstances: 35
(1) The exempt private trust company makes a false statement 36 SB230
26 02/13/2025 12:57:21 PM ANS145
under oath on any document required to be filed by the chapter or by any 1
regulation promulgated by the commissioner; 2
(2) The exempt private trust company fails to submit to an 3
examination as required by § 23 -51-184; 4
(3) The exempt private trust company withholds requested 5
information from the commissioner; or 6
(4) The exempt private trust company violates any provision of 7
this section applicable to exempt private trust companies. 8
(e) Notification of Revocation of Exemption. If the commissioner 9
determines from examination or other credible evidence that an exempt private 10
trust company has violated any of the requirements of this section, the 11
commissioner may by personal delivery or registered or certified mail, return 12
receipt requested, notify the exempt private trust company in writing that 13
the private trust company's exempt status has been revoked. The notification 14
must state grounds for the revocation with reasonable certainty. The notice 15
must state its effective date, which may not be sooner than five (5) calendar 16
days after the date the notification is mailed or delivered. The revocation 17
takes effect for the private trust company if the private trust company does 18
not request a hearing in writing before the effective date. After taking 19
effect the revocation is final and nonappealable as to that private trust 20
company, and the private trust company shall be subject to all of the 21
requirements and provisions of the chapter applicable to non -exempt state 22
trust companies. 23
(f) Compliance Period. A private trust company shall have five (5) 24
calendar days after the revocation is effective to comply with the provisions 25
of this chapter from which it was formerly exempt. If, however, the 26
commissioner determines, at the time of revocation, that the private trust 27
company has been engaging in or attempting to engage in acts intended or 28
designed to deceive or defraud the public, the commissioner may shorten or 29
eliminate, in the commissioner's sole discretion, the five (5) calendar days 30
compliance period. 31
(g) Remedies for Failure to Comply. If the private trust company does 32
not comply with all of the provisions of this chapter, including such 33
capitalization requirements as have been determined by the commissioner as 34
necessary to assure the safety and soundness of the private trust company, 35
within the prescribed time period, the commissioner may: 36 SB230
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(1) Institute any action or remedy prescribed by this chapter, 1
or any applicable rule; or 2
(2) Refer the private trust company to the Attorney General for 3
institution of a quo warranto proceeding to revoke the charter. 4
5
23-51-120. Conversion to public trust company. 6
(a) A private trust company may terminate its status as a private 7
trust company and commence transacting business with the general public. A 8
private trust company desiring to commence transacting business with the 9
general public shall file a notice on a form prescribed by the Bank 10
Commissioner, which shall set forth the name of the private trust company and 11
an acknowledgment that any exemption granted or otherwise applicable to the 12
private trust company pursuant to § 23 -51-118 shall cease to apply on the 13
effective date of the notice, furnish a copy of the resolution adopted by the 14
board authorizing the private trust company to commence transacting business 15
with the general public, and pay the filing fee, if any, prescribed by the 16
commissioner. 17
(b) The notificant may commence transacting business with the general 18
public thirty (30) days after the date the commissioner receives the notice, 19
unless the commissioner specifies another date. 20
(c) The thirty-day period of review may be extended by the 21
commissioner on determination that the written notice raises issues that 22
require additional information or additional time for analysis. If the period 23
for review is extended, the notificant may commence transacting business with 24
the public only on prior written approval by the commissioner. 25
(d) The commissioner may deny approval of the notice of the private 26
trust company to commence transacting business with the general public if the 27
commissioner finds that the notificant lacks sufficient financial resources 28
to undertake the proposed expansion without adversely affecting its safety or 29
soundness or that the proposed transacting of business of the general public 30
would be contrary to the public interest or if the commissioner determines 31
that the notificant will not within a reasonable period be in compliance with 32
any provision of this chapter from which the notificant had been previously 33
exempted pursuant to § 23 -51-118. 34
35
23-51-121. Investment in state trust company facilities — Definition. 36 SB230
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(a) In this chapter, “state trust company facility” means real estate, 1
including an improvement, owned, or leased to the extent the lease or the 2
leasehold improvements are capitalized, by a state trust company for the 3
purpose of: 4
(1) Providing space for state trust company employees to perform 5
their duties and space for parking by state trust company employees and 6
customers; 7
(2) Conducting trust business, including meeting the reasonable 8
needs and convenience of the state trust company's customers, computer 9
operations, document and other item processing, maintenance and record 10
retention and storage; 11
(3) Holding, improving, and occupying as an incident to future 12
expansion of the state trust company's facilities; or 13
(4) Conducting another activity authorized by rules adopted 14
under this chapter. 15
(b) Without the prior written approval of the Bank Commissioner, a 16
state trust company may not directly or indirectly invest an amount in excess 17
of its capital and surplus in state trust company facilities, furniture, 18
fixtures, and equipment. Except as otherwise provided by rules adopted under 19
this chapter, in computing this limitation a state trust company: 20
(1) Shall include: 21
(A) Its direct investment in state trust company 22
facilities; 23
(B) Any investment in equity or investment securities of a 24
company holding title to a facility used by the state trust company for the 25
purposes specified by subsection (a) of this section; 26
(C) Any loan made by the state trust company to or on the 27
security of equity or investment securities issued by a company holding title 28
to a facility used by the state trust company; and 29
(D) Any indebtedness incurred on state trust company 30
facilities by a company: 31
(i) That holds title to the facility; 32
(ii) That is an affiliate of the state trust company; 33
and 34
(iii) In which the state trust company is invested in 35
the manner described by subdivision (b)(1)(B) or subdivision (b)(1)(C) of 36 SB230
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this section; and 1
(2) May exclude an amount included under subdivisions (b)(1)(B) -2
(D) of this section to the extent any lease of a facility from the company 3
holding title to the facility is capitalized on the books of the state trust 4
company. 5
(c) Real estate acquired under subdivision (a)(3) of this section and 6
not improved and occupied by the state trust company ceases to be a state 7
trust company facility on the third anniversary of the date of its 8
acquisition, unless the commissioner on application grants written approval 9
to further delay in the improvement and occupation of the property by the 10
state trust company. 11
(d) A state trust company shall comply with generally accepted 12
accounting principles, consistently applied, in accounting for its investment 13
in and depreciation of state trust company facilities, furniture, fixtures, 14
and equipment. 15
16
23-51-122. Other real estate. 17
(a) A state trust company may not acquire real estate except: 18
(1) As permitted by § 23 -51-121 or as otherwise provided by this 19
chapter, including rules adopted under this chapter; 20
(2) If necessary to avoid or minimize a loss on a loan or 21
investment previously made in good faith; or 22
(3) With the prior written approval of the Bank Commissioner. 23
(b) To the extent reasonably necessary to avoid or minimize loss on 24
real estate acquired as permitted by subsection (a) of this section, a state 25
trust company may exchange real estate for other real estate or personal 26
property, invest additional funds in or improve real estate acquired under 27
this subsection or subsection (a) of this section, or acquire additional real 28
estate. 29
(c) A state trust company shall dispose of any real estate subject to 30
subdivisions (a)(1) and (2) of this section not later than: 31
(1) The fifth anniversary of the date: 32
(A) It was acquired, except as otherwise provided by rules 33
adopted under this chapter; or 34
(B) It ceases to be used as a state trust company 35
facility; or 36 SB230
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(2) The third anniversary of the date it ceases to be a state 1
trust company facility as provided by § 23 -51-121(c). 2
(d) The commissioner on application may grant one (1) or more 3
extensions of time for disposing of real estate if the commissioner 4
determines that: 5
(1) The state trust company has made a good faith effort to 6
dispose of the real estate; or 7
(2) Disposal of the real estate would be detrimental to the 8
state trust company. 9
10
23-51-123. Securities. 11
(a) A state trust company may invest its corporate funds in any type 12
or character of equity or investment securities subject to the limitations 13
provided by this section. 14
(b) Unless the Bank Commissioner approves maintenance of a lesser 15
amount in writing, a state trust company must invest and maintain an amount 16
equal to not less than forty percent (40%) of the state trust company's 17
capital under § 23-51-110 in unencumbered cash, cash equivalents, and readily 18
marketable securities. 19
(c) Subject to subsection (d) of this section, the total investment in 20
equity and investment securities of any one issuer, obligor, or maker, held 21
by the state trust company for its own account, may not exceed an amount 22
equal to twenty percent (20%) of the state trust company's capital base. The 23
commissioner may authorize investments in excess of this limitation on 24
written application if the commissioner concludes that: 25
(1) The excess investment is not prohibited by other applicable 26
law; and 27
(2) The safety and soundness of the requesting state trust 28
company is not adversely affected. 29
(d) Notwithstanding subsection (c) of this section, a state trust 30
company may purchase for its own account, without limitation and subject only 31
to the exercise of prudent judgment: 32
(1) Direct obligations of the United States Government; 33
(2) Obligations of agencies and instrumentalities created by act 34
of the United States Congress and authorized thereby to issue securities or 35
evidences of indebtedness, regardless of guarantee of repayment by the United 36 SB230
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States Government; 1
(3) Obligations the principal and interest of which are fully 2
guaranteed by the United States Government or an agency or an instrumentality 3
created by an act of the United States Congress and authorized thereby to 4
issue such a guarantee; 5
(4) Obligations the principal and interest of which are fully 6
secured, insured, or covered by commitments or agreements to purchase by the 7
United States Government or an agency or instrumentality created by an act of 8
the United States Congress and authorized thereby to issue such commitments 9
or agreements; 10
(5) General obligations of the states of the United States and 11
of the political subdivisions, municipalities, commonwealths, territories or 12
insular possessions thereof; 13
(6) Obligations issued by the State Board of Education under 14
authority of the Arkansas Constitution or applicable statutes; 15
(7) Warrants of political subdivisions of the State of Arkansas 16
and municipalities thereof having maturities not exceeding one (1) year; 17
(8) Prerefunded municipal bonds, the principal and interest of 18
which are fully secured by the principal and interest of a direct obligation 19
of the United States Government; 20
(9) The sale of federal funds with a maturity of not more than 21
one (1) business day; 22
(10) Demand, savings, or time deposits or accounts of any 23
depository institution chartered by the United States, any state of the 24
United States, or the District of Columbia, provided funds invested in such 25
demand, savings, or time deposits or accounts are fully insured by a federal 26
deposit insurance agency; 27
(11) Repurchase agreements that are fully collateralized by 28
direct obligations of the United States Government, and general obligations 29
of any state of the United States or any political subdivision thereof, 30
provided that any such repurchase agreement shall provide for the taking of 31
delivery of the collateral, either directly or through an authorized 32
custodian; 33
(12) Securities of, or other interest in, any open -end type 34
investment company or investment trust registered under the Investment 35
Company Act of 1940, and which is defined as a “money market fund” under 17 36 SB230
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C.F.R. § 270.2a-7, provided that the portfolio of such investment company or 1
investment trust is limited principally to United States Government 2
obligations and to repurchase agreements fully collateralized by United 3
States Government obligations, and provided further that any such investment 4
company or investment trust shall take delivery of the collateral either 5
directly or through an authorized custodian. 6
(e) The commissioner may adopt rules to establish limits, 7
requirements, or exemptions other than those specified by this section for 8
particular classes or categories of investment, or limit or expand investment 9
authority for state trust companies for particular classes or categories of 10
securities or other property. 11
12
23-51-124. Transactions in state trust company shares. 13
(a) A state trust company may acquire its own shares if: 14
(1) The amount of its undivided profits is sufficient to fully 15
absorb the acquisition of the shares under regulatory accounting principles; 16
and 17
(2) The state trust company obtains the prior written approval 18
of the Bank Commissioner. 19
(b) A state trust company shall not make loans upon the security of 20
its own shares. 21
22
23-51-125. Subsidiaries. 23
(a) Except as otherwise provided by this chapter or rules adopted 24
under this chapter, a state trust company may acquire or establish a 25
subsidiary to conduct any activity that may lawfully be conducted through the 26
form of organization chosen for the subsidiary. 27
(b) A state trust company may not invest more than an amount equal to 28
twenty percent (20%) of its capital base in a single subsidiary and may not 29
invest an amount in excess of forty percent (40%) of its capital base in all 30
subsidiaries. The amount of a state trust company's investment in a 31
subsidiary is the total amount of the state trust company's investment in 32
equity or investment securities issued by its subsidiary and any loans and 33
extensions of credit from the state trust company to its subsidiary. The Bank 34
Commissioner may authorize investments in excess of these limitations on 35
written application if the commissioner concludes that: 36 SB230
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(1) The excess investment is not prohibited by other applicable 1
law; and 2
(2) The safety and soundness of the requesting state trust 3
company is not adversely affected. 4
(c) A state trust company that intends to acquire, establish, or 5
perform new activities through a subsidiary shall submit a letter to the 6
commissioner describing in detail the proposed activities of the subsidiary. 7
(d) The state trust company may acquire or establish a subsidiary or 8
begin performing new activities in an existing subsidiary thirty (30) days 9
after the date the commissioner receives the state trust company's letter, 10
unless the commissioner specifies another date. The commissioner may extend 11
the thirty-day period of review on a determination that the state trust 12
company's letter raises issues that require additional information or 13
additional time for analysis. If the period of review is extended, the state 14
trust company may acquire or establish the subsidiary, or perform new 15
activities in an existing subsidiary, only on prior written approval of the 16
commissioner. 17
(e) A subsidiary of a state trust company is subject to rule by the 18
commissioner to the extent provided by this chapter or rules adopted under 19
this chapter. In the absence of limiting rules, the commissioner may regulate 20
a subsidiary as if it were a state trust company. 21
22
23-51-126. Mutual funds. 23
(a) A state trust company may invest for its own account in equity 24
securities of an investment company registered under the Investment Company 25
Act of 1940, 15 U.S.C. Sec. 80a -1 et seq., and the Securities Act of 1933, 15 26
U.S.C. Sec. 77a et seq., if the portfolio of the investment company consists 27
wholly of investments in which the state trust company could invest directly 28
for its own account. 29
(b) If the portfolio of an investment company described in subsection 30
(a) of this section consists wholly of investments in which the state trust 31
company could invest directly without limitation under § 23 -51-123(d), the 32
state trust company may invest in the investment company without limitation. 33
(c) If the portfolio of an investment company described in subsection 34
(a) of this section contains any investment that is subject to the limits of 35
§ 23-51-123(c), the state trust company may invest in the investment company 36 SB230
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not more than an amount equal to twenty percent (20%) of the state trust 1
company's capital base. This provision does not apply to a money market fund. 2
(d) In evaluating investment limits under this chapter, a state trust 3
company may not be required to combine: 4
(1) The state trust company's pro rata share of the securities 5
of an issuer in the portfolio of an investment company with the state trust 6
company's pro rata share of the securities of that issuer held by another 7
investment company in which the state trust company has invested; or 8
(2) The state trust company's own direct investment in the 9
securities of an issuer with the state trust company's pro rata share of the 10
securities of that issuer held by each investment company in which the state 11
trust company has invested under this section. 12
13
23-51-127. Engaging in commerce prohibited. 14
Except as otherwise provided by this chapter or rules adopted under 15
this chapter, a state trust company may not invest its funds in trade or 16
commerce by buying, selling, or otherwise dealing in goods or by owning or 17
operating a business not part of the state trust business, except as 18
necessary to fulfil a fiduciary obligation to a client. 19
20
23-51-128. Lending limits. 21
(a) A state trust company's total outstanding loans and extensions of 22
credit to a person other than an insider may not exceed an amount equal to 23
twenty percent (20%) of the state trust company's capital base. 24
(b) The aggregate loans and extensions of credit outstanding at any 25
time to insiders of the state trust company may not exceed an amount equal to 26
twenty percent (20%) of the state trust company's capital base. All covered 27
transactions between an insider and a state trust company must be engaged in 28
only on terms and under circumstances, including credit standards, that are 29
substantially the same as those for comparable transactions with a non -30
insider. 31
(c) The Bank Commissioner may adopt rules to administer and carry out 32
this section, including rules to establish limits, requirements, or 33
exemptions other than those specified by this section for particular classes 34
or categories of loans or extensions of credit, and establish collective 35
lending and investment limits. 36 SB230
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(d) The commissioner may determine whether a loan or extension of 1
credit putatively made to a person will be attributed to another person for 2
purposes of this section. 3
(e) A state trust company may not lend trust deposits, except that a 4
trustee may make a loan to a beneficiary of the trust if the loan is 5
expressly authorized or directed by the instrument or transaction 6
establishing the trust. 7
(f) An officer, director, or employee of a state trust company who 8
approves or participates in the approval of a loan with actual knowledge that 9
the loan violates this section is jointly and severally liable to the state 10
trust company for the lesser of the amount by which the loan exceeded 11
applicable lending limits or the state trust company's actual loss and 12
remains liable for that amount until the loan and all prior indebtedness of 13
the borrower to the state trust company have been fully repaid. The state 14
trust company may initiate a proceeding to collect an amount due under this 15
subsection at any time before the date the borrower defaults on the subject 16
loan or any prior indebtedness or before the fourth anniversary of that date. 17
A person that is liable for and pays amounts to the state trust company under 18
this subsection is entitled to an assignment of the state trust company's 19
claim against the borrower to the extent of the payments. For purposes of 20
this subsection, an officer, director, or employee of a state trust company 21
is presumed to know the amount of the state trust company's lending limit 22
under subsection (a) of this section and the amount of the borrower's 23
aggregate outstanding indebtedness to the state trust company immediately 24
before a new loan or extension of credit to that borrower. 25
26
23-51-129. Lease financing transactions. 27
(a) Subject to rules adopted under this chapter, a state trust company 28
may become the owner and lessor of tangible personal property for lease 29
financing transactions on a net lease basis on the specific request and for 30
the use of a client. Without the written approval of the Bank Commissioner to 31
continue holding property acquired for leasing purposes under this 32
subsection, the state trust company may not hold the property more than six 33
(6) months after the date of expiration of the original or any extended or 34
renewed lease period agreed to by the client for whom the property was 35
acquired or by a subsequent lessee. 36 SB230
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(b) Rental payments received by the trust company in a lease financing 1
transaction under this section are considered to be rent and not interest or 2
compensation for the use, forbearance, or detention of money. However, a 3
lease financing transaction is considered to be a loan or extension of credit 4
for purposes of § 23 -51-128. 5
6
23-51-130. Trust deposit. 7
(a) A state trust company may deposit trust funds with itself as an 8
investment if authorized by the settlor or the beneficiary, provided: 9
(1) It maintains as security for the deposits a separate fund of 10
securities, legal for trust investments, under control of a federal reserve 11
bank or other entity approved by the Bank Commissioner, either in this state 12
or elsewhere; 13
(2) The total market value of the security is at all times at 14
least equal to the amount of the deposit; 15
(3) The separate fund is designated as such; and 16
(4) The separate fund is maintained under the control of another 17
trust institution, bank or government agency. 18
(b) A state trust company may make periodic withdrawals from or 19
additions to the securities fund required by subsection (a) of this section 20
as long as the required value is maintained. Income from the securities in 21
the fund belongs to the state trust company. 22
(c) Security for a deposit under this section is not required for a 23
deposit under subsection (a) of this section to the extent the deposit is 24
insured by the Federal Deposit Insurance Corporation or its successor. 25
26
23-51-131. Common investment funds. 27
(a) A state trust company may establish common trust funds to provide 28
investment to itself as a fiduciary. 29
(b) The Bank Commissioner may adopt rules to administer and carry out 30
this section, including but not limited to rules to establish investment and 31
participation limitations, disclosure of fees, audit requirements, limit or 32
expand investment authority for particular classes or categories of 33
securities or other property, advertising, exemptions, and other requirements 34
that may be necessary to carry out this section. 35
36 SB230
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23-51-132. Borrowing limit. 1
Except with the prior written approval of the Bank Commissioner, a 2
state trust company may not have liabilities outstanding exceeding an amount 3
equal to three times its capital base. 4
5
23-51-133. Pledge of assets. 6
A state trust company may not pledge or create a lien on any of its 7
assets except to secure the repayment of money borrowed or as specifically 8
authorized or required by § 23 -51-130, or by rules adopted under this 9
chapter. An act, deed, conveyance, pledge, or contract in violation of this 10
section is void. 11
12
23-51-134. Acquisition of control. 13
(a) Except as expressly otherwise permitted, a person may not without 14
the prior written approval of the Bank Commissioner directly or indirectly 15
acquire control of a state trust company through a change in a legal or 16
beneficial interest in voting securities of a state trust company or a 17
corporation or other entity owning voting securities of a state trust 18
company. 19
(b) This chapter does not prohibit a person from negotiating to 20
acquire, but not acquiring, control of a state trust company or a person that 21
controls a state trust company. 22
(c) This section does not apply to: 23
(1) The acquisition of securities in connection with the 24
exercise of a security interest or otherwise in full or partial satisfaction 25
of a debt previously contracted for in good faith if the acquiring person 26
files written notice of acquisition with the commissioner before the person 27
votes the securities acquired; 28
(2) The acquisition of voting securities in any class or series 29
by a controlling person who has previously complied with and received 30
approval under this chapter or who was identified as a controlling person in 31
a prior application filed with and approved by the commissioner; 32
(3) An acquisition or transfer by operation of law, will, or 33
intestate succession if the acquiring person files written notice of 34
acquisition with the commissioner before the person votes the securities 35
acquired; 36 SB230
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(4) A transaction exempted by the commissioner by rule or order 1
because the transaction is not within the purposes of this chapter or the 2
rule of which is not necessary or appropriate to achieve the objectives of 3
this chapter. 4
5
23-51-135. Application regarding acquisition of control. 6
(a) The proposed transferee seeking approval to acquire control of a 7
state trust company or a person that controls a state trust company must file 8
with the Bank Commissioner: 9
(1) An application in the form prescribed by the commissioner; 10
(2) The filing fee in an amount not less than one thousand five 11
hundred dollars ($1,500) and not more than three thousand dollars ($3,000), 12
as set by rules issued by the commissioner; and 13
(3) All information required by rule or that the commissioner 14
requires in a particular application as necessary to an informed decision to 15
approve or reject the proposed acquisition. 16
(b) If the proposed transferee includes any group of individuals or 17
entities acting in concert, the information required by the commissioner may 18
be required of each member of the group. 19
(c) If the proposed transferee is not an Arkansas resident, an 20
Arkansas company, or an out -of-state company qualified to do business in this 21
state, a written consent to service of process on a resident of this state in 22
any action or suit arising out of or connected with the proposed acquisition. 23
(d) The proposed transferee must give public notice of the 24
application, its date of filing, and the identity of each participant, in the 25
form specified by the commissioner, through publication by one (1) insertion 26
in a newspaper published in the City of Little Rock and having a general and 27
substantially statewide circulation, promptly after the commissioner accepts 28
the application as complete. 29
30
23-51-136. Hearing and decision on acquisition of control. 31
(a) Not later than sixty (60) days after the application is officially 32
filed, the Bank Commissioner may approve the application or set the 33
application for hearing. If the commissioner sets a hearing, the commissioner 34
shall conduct a hearing as he or she considers advisable and consistent with 35
governing statutes and rules. 36 SB230
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(b) Based on the record, the commissioner may issue an order denying 1
an application if: 2
(1) The acquisition would substantially lessen competition, be 3
in restraint of trade, result in a monopoly, or be in furtherance of a 4
combination or conspiracy to monopolize or attempt to monopolize the trust 5
industry in any part of this state, unless: 6
(A) The anticompetitive effects of the proposed 7
acquisition are clearly outweighed in the public interest by the probable 8
effect of acquisition in meeting the convenience and needs of the community 9
to be served; and 10
(B) The proposed acquisition is not in violation of law of 11
this state or the United States; 12
(2) The financial condition of the proposed transferee, or any 13
member of a group composing the proposed transferee, might jeopardize the 14
financial stability of the state trust company being acquired; 15
(3) Plans or proposals to operate, liquidate, or sell the state 16
trust company or its assets are not in the best interests of the state trust 17
company; 18
(4) The experience, ability, standing, competence, 19
trustworthiness, and integrity of the proposed transferee, or any member of a 20
group comprising the proposed transferee, are insufficient to justify a 21
belief that the state trust company will be free from improper or unlawful 22
influence or interference with respect to the state trust company's operation 23
in compliance with law; 24
(5) The state trust company will be insolvent, in a hazardous 25
condition, not have adequate capitalization, or not be in compliance with the 26
laws of this state after the acquisition; 27
(6) The proposed transferee has failed to furnish all 28
information pertinent to the application reasonably required by the 29
commissioner; or 30
(7) The proposed transferee is not acting in good faith. 31
(c) If an application filed under this section is approved by the 32
commissioner, the transaction may be consummated. Any written commitment from 33
the proposed transferee offered to and accepted by the commissioner as a 34
condition that the application will be approved is enforceable against the 35
state trust company and the transferee and is considered for all purposes an 36 SB230
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agreement under this chapter. 1
2
23-51-137. Appeal from adverse decision. 3
(a)(1) If a hearing has been held, the Bank Commissioner has entered 4
an order denying the application, and the order has become final, the 5
proposed transferee may appeal the final order by filing a petition for 6
judicial review under the Arkansas Administrative Procedure Act, § 25 -15-201 7
et seq. 8
(2) The time for filing such a petition for judicial review 9
shall run from the date the final decision of the commissioner is mailed or 10
delivered, in written form, to the parties desiring to appeal. 11
(3) The hearing of such a petition for review will be advanced 12
on the docket of each reviewing court as a matter of public interest. 13
(b) The filing of an appeal under this section does not stay the order 14
of the commissioner. 15
16
23-51-138. Objection to other transfer. 17
This chapter may not be construed to prevent the Bank Commissioner from 18
investigating, commenting on, or seeking to enjoin or set aside a transfer of 19
voting securities that evidence a direct or indirect interest in a state 20
trust company, regardless of whether the transfer is included within this 21
chapter, if the commissioner considers the transfer to be against the public 22
interest. 23
24
23-51-139. Civil enforcement — Criminal penalties. 25
(a) The Bank Commissioner may bring any appropriate civil action 26
against any person who the commissioner believes has committed or is about to 27
commit a violation of this chapter or a rule or order of the commissioner 28
pertaining to this chapter. 29
(b) A person who knowingly fails or refuses to file the application 30
required by § 23-51-135 commits an offense. An offense under this subsection 31
is a Class A misdemeanor. 32
33
23-51-140. Voting securities held by state trust company. 34
(a) Voting securities of a state trust company held by the state trust 35
company in a fiduciary capacity under a will or trust, whether registered in 36 SB230
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its own name or in the name of its nominee, may not be voted in the election 1
of directors or managers or on a matter affecting the compensation of 2
directors, managers, officers, or employees of the state trust company in 3
that capacity, unless: 4
(1) Under the terms of the will or trust, the manner in which 5
the voting securities are to be voted may be determined by a donor or 6
beneficiary of the will or trust and the donor or beneficiary actually makes 7
the determination in the matter at issue; 8
(2) The terms of the will or trust expressly direct the manner 9
in which the securities must be voted to the extent that no discretion is 10
vested in the state trust company as fiduciary; or 11
(3) The securities are voted solely by a co -fiduciary that is 12
not an affiliate of the state trust company, as if the co -fiduciary were the 13
sole fiduciary. 14
(b) Voting securities of a state trust company that cannot be voted 15
under this section are considered to be authorized but unissued for purposes 16
of determining the procedures for and results of the affected vote. 17
18
23-51-141. Bylaws. 19
Each state trust company shall adopt bylaws and may amend its bylaws 20
from time to time for the purposes and in accordance with the procedures set 21
forth in the Arkansas Business Corporation Act, § 4 -27-101 et seq. 22
23
23-51-142. Board of directors. 24
(a) The board of a state trust company shall be governed by the 25
provisions of the Arkansas Business Corporation Act, § 4 -27-101 et seq., 26
provided that the board must consist of not fewer than three directors, the 27
majority of whom must be residents of this state. 28
(b) Unless the Bank Commissioner consents otherwise in writing, a 29
person may not serve as director of a state trust company if: 30
(1) The state trust company incurs an unreimbursed loss 31
attributable to a charged -off obligation of or holds a judgment against the 32
person or an entity that was controlled by the person at the time of funding 33
and at the time of default on the loan that gave rise to the judgment or 34
charged-off obligation; 35
(2) The person has been convicted of a felony; or 36 SB230
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(3) The person has violated a provision of this chapter, 1
relating to loan of trust funds and purchase or sale of trust property by the 2
trustee, and the violation has not been corrected. 3
(c) If a state trust company does not elect directors prior to sixty 4
(60) days after the date of its regular annual meeting, the commissioner may 5
commence a proceeding to appoint a receiver pursuant to § 23 -51-164 to 6
operate the state trust company and elect directors or managers, as 7
appropriate. If the conservator is unable to locate or elect persons willing 8
and able to serve as directors, the commissioner may close the state trust 9
company for liquidation. 10
(d) A vacancy on the board that reduces the number of directors to 11
fewer than three must be filed not later than ninety (90) days after the date 12
the vacancy occurs. If the vacancy has not been filled upon the expiration of 13
ninety (90) days following the date the vacancy occurs, the commissioner may 14
commence a proceeding to appoint a receiver pursuant to § 23 -51-164 to 15
operate the state trust company and elect a board of not fewer than three 16
persons to resolve the vacancy. If the conservator is unable to locate or 17
elect three persons willing and able to serve as directors, the commissioner 18
may close the state trust company for liquidation. 19
(e) Before each term to which a person is elected to serve as a 20
director of a state trust company, the person shall submit an affidavit for 21
filing in the minutes of the state trust company stating that the person, to 22
the extent applicable: 23
(1) Accepts the position and is not disqualified from serving in 24
the position; 25
(2) Will not violate or knowingly permit an officer, director, 26
or employee of the state trust company to violate any law applicable to the 27
conduct of business of the state trust company; and 28
(3) Will diligently perform the duties of the position. 29
(f) An advisory director is not considered a director if the advisory 30
director: 31
(1) Is not elected by the shareholders of the state trust 32
company; 33
(2) Does not vote on matters before the board or a committee of 34
the board and is not counted for purposes of determining a quorum of the 35
board or committee; and 36 SB230
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(3) Provides solely general policy advice to the board. 1
2
23-51-143. Officers. 3
The board shall annually elect the officers of the state trust company, 4
who serve at the pleasure of the board. The state trust company must have a 5
principal executive officer primarily responsible for the execution of board 6
policies and operation of the state trust company and an officer responsible 7
for the maintenance and storage of all corporate books and records of the 8
state trust company and for required attestation of signatures. The board may 9
appoint other officers of the state trust company as the board considers 10
necessary. The duties of any two or more officers may be combined by the 11
board and held by one person. 12
13
23-51-144. Certain criminal offenses. 14
(a) An officer, director, employee or shareholder of a state trust 15
company commits an offense if the person knowingly: 16
(1) Conceals information or a fact, or removes, destroys, or 17
conceals a book or record of the state trust company for the purpose of 18
concealing information or a fact from the Bank Commissioner or an agent of 19
the commissioner; or 20
(2) For the purpose of concealing, removes or destroys any book 21
or record of the state trust company that is material to a pending or 22
anticipated legal or administrative proceeding. 23
(b) An officer, director or employee of a state trust company commits 24
an offense if the person knowingly makes a false entry in the books or 25
records or in any report or statement of the state trust company. 26
(c) An offense under this section is a Class D felony. 27
28
23-51-145. Transactions with management and affiliates. 29
(a) Without the prior approval of a disinterested majority of the 30
board recorded in the minutes, or if a disinterested majority cannot be 31
obtained the prior written approval of a majority of the disinterested 32
directors and the Bank Commissioner, a state trust company may not directly 33
or indirectly: 34
(1) Sell or lease an asset of the state trust company to an 35
officer, director, or principal shareholder of the state trust company or an 36 SB230
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affiliate of the state trust company; 1
(2) Purchase or lease an asset in which an officer, director or 2
principal shareholder of the state trust company or an affiliate of the state 3
trust company has an interest; or 4
(3) Subject to § 23 -51-128, extend credit to an officer, 5
director, or principal shareholder of the state trust company or an affiliate 6
of the state trust company. 7
(b) Notwithstanding subsection (a) of this section, a lease 8
transaction described in subdivision (a)(2) of this section involving real 9
property may not be consummated, renewed, or extended without the prior 10
written approval of the commissioner. For purposes of this subsection only, 11
an affiliate of the state trust company does not include a subsidiary of the 12
state trust company. 13
(c) Subject to § 23 -51-128, a state trust company may not directly or 14
indirectly extend credit to an employee, officer, director or principal 15
shareholder of the state trust company or an affiliate of the state trust 16
company, unless the extension of credit: 17
(1) Is made on substantially the same terms, including interest 18
rates and collateral, as those prevailing at the time for comparable 19
transactions by the state trust company with persons who are not employees, 20
officers, directors, principal shareholders, or affiliates of the state trust 21
company; 22
(2) Does not involve more than the normal risk of repayment or 23
present other unfavorable features; and 24
(3) The state trust company follows credit underwriting 25
procedures that are not less stringent than those applicable to comparable 26
transactions by the state trust company with persons who are not employees, 27
officers, directors, principal shareholders or affiliates of the state trust 28
company. 29
(d) An officer or director of the state trust company who knowingly 30
participates in or knowingly permits a violation of this section shall be 31
guilty of a Class D felony. 32
(e) The commissioner may adopt rules to administer and carry out this 33
section, including rules to establish limits, requirements, or exemptions 34
other than those specified by this section for particular categories of 35
transactions. 36 SB230
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1
23-51-146. Fiduciary responsibility. 2
The board of a state trust company is responsible for the proper 3
exercise of fiduciary powers by the state trust company and each matter 4
pertinent to the exercise of fiduciary powers, including: 5
(1) The determination of policies; 6
(2) The investment and disposition of property held in a 7
fiduciary capacity; and 8
(3) The direction and review of the actions of each officer, 9
employee, and committee used by the state trust company in the exercise of 10
its fiduciary powers. 11
12
23-51-147. Recordkeeping. 13
A state trust company shall keep its fiduciary records separate and 14
distinct from other records of the state trust company. The fiduciary records 15
must contain all material information relative to each account as appropriate 16
under the circumstances. 17
18
23-51-148. Bonding requirements. 19
(a) The board of a state trust company shall require protection and 20
indemnity for clients in reasonable amounts established by rules adopted 21
under this chapter, against dishonesty, fraud, defalcation, forgery, theft, 22
and other similar insurable losses, with corporate insurance or surety 23
companies: 24
(1) Authorized to do business in this state; or 25
(2) Acceptable to the Bank Commissioner and otherwise lawfully 26
permitted to issue the coverage against those losses in this state. 27
(b) Except as otherwise provided by rule, coverage required under 28
subsection (a) of this section must include each director, officer, and 29
employee of the state trust company without regard to whether the person 30
receives salary or other compensation. 31
(c) A state trust company may apply to the commissioner for permission 32
to eliminate the bonding requirement of this section for a particular 33
individual. The commissioner shall approve the application if the 34
commissioner finds that the bonding requirement is unnecessary or burdensome. 35
Unless the application presents novel or unusual questions, the commissioner 36 SB230
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shall approve the application or set the application for hearing not later 1
than sixty (60) days after the date the commissioner considers the 2
application complete and accepted for filing. 3
23-51-149. Reports of apparent crime. 4
A trust company that is the victim of a robbery, has a shortage of 5
corporate or fiduciary funds in excess of five thousand dollars ($5,000), or 6
is the victim of an apparent or suspected misapplication of its corporate or 7
fiduciary funds or property in any amount by a director, officer, or employee 8
shall report the robbery, shortages or apparent or suspected misapplication 9
to the Bank Commissioner within forty -eight (48) hours after the time it is 10
discovered. The initial report may be oral if the report is promptly 11
confirmed in writing. The trust company or a director, officer, employee, or 12
agent is not subject to liability for defamation or another charge resulting 13
from information supplied in the report. 14
15
23-51-150. Merger authority. 16
(a) With the prior written approval of the Bank Commissioner, a state 17
trust company may merge or consolidate with a state bank to the same extent 18
as a state bank under the Arkansas Banking Code of 1997 or with another 19
person to the same extent as a business corporation under the Arkansas 20
Business Corporation Act of 1987, § 4 -27-101 et seq., subject to this 21
chapter. 22
(b) Implementation of a plan of merger by a trust company and a state 23
bank, approval of the board, and shareholders of the parties must be made or 24
obtained as provided by the Arkansas Banking Code of 1997 as if the state 25
trust company were a state bank, except as otherwise provided by rules 26
adopted under this chapter. 27
(c) Implementation of the plan of merger with a person other than a 28
state bank, approval of the board and shareholders of the parties must be 29
made or obtained as provided by the Arkansas Business Corporation Act of 30
1987, § 4-27-101 et seq., as if the state trust company were a domestic 31
corporation and all other parties to the merger were foreign corporations and 32
other entities, except as otherwise provided by rules adopted under this 33
chapter. 34
35
23-51-151. Merger application. 36 SB230
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(a) The original articles of merger, a number of copies of the 1
articles of merger equal to the number of surviving, new, and acquiring 2
entities, and an application in the form required by the Bank Commissioner 3
must be filed with the commissioner. The commissioner shall investigate the 4
condition of the merging parties. The commissioner may require the submission 5
of additional information as considered necessary to an informed decision. 6
(b) The commissioner may approve the merger if: 7
(1) Each resulting state trust company will be solvent and have 8
adequate capitalization for its business and location; 9
(2) Each resulting state trust company has in all respects 10
complied with the statutes and rules relative to the organization of a state 11
trust company; 12
(3) All fiduciary obligations and liabilities of each state 13
trust company that is a party to the merger have been properly discharged or 14
otherwise lawfully assumed or retained by a state trust company or other 15
fiduciary; 16
(4) Each surviving, new, or acquiring person that is not 17
authorized to engage in the trust business will not engage in the trust 18
business and has in all respects complied with the laws of this state; and 19
(5) All conditions imposed by the commissioner have been 20
satisfied or otherwise resolved. 21
22
23-51-152. Approval of commissioner. 23
(a) If the Bank Commissioner approves the merger and finds that all 24
required filing fees and investigative costs have been paid, the commissioner 25
shall: 26
(1) Endorse the face of the original and each copy with the date 27
of approval and the word “Approved”; 28
(2) File the original in the State Bank Department's records; 29
and 30
(3) Deliver a certified copy of the articles of merger to each 31
surviving, new, or acquiring entity. 32
(b) A merger is effective on the date of approval, unless the merger 33
agreement provides and the commissioner consents to a different effective 34
date. 35
36 SB230
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23-51-153. Rights of dissenters to mergers. 1
A shareholder may dissent from the merger to the extent and by 2
following the procedure provided by the Arkansas Business Corporation Act of 3
1987, § 4-27-101 et seq., or rules adopted under this chapter. 4
5
23-51-154. Authority to purchase assets of another trust institution. 6
(a) Subject to the provisions of this section, a state trust company 7
may purchase assets of another state trust company or trust -related assets of 8
another trust institution, including the right to control accounts 9
established with the trust institution. Except as otherwise expressly 10
provided by this chapter or any other applicable statutes, the purchase of 11
all or part of the assets of the trust institution does not make the 12
purchasing state trust company responsible for any liability or obligation of 13
the selling trust institution that is not expressly assumed by the purchasing 14
state trust company. Except as otherwise provided by this chapter, this 15
chapter does not govern or prohibit the purchase by a trust institution of 16
all or part of the assets of a corporation or other entity that is not a 17
trust institution. 18
(b) An application in the form required by the Bank Commissioner must 19
be filed with the commissioner for any acquisition of all or substantially 20
all of (i) the assets of a state trust company or (ii) the trust assets of 21
another trust institution by a state trust company. The commissioner shall 22
investigate the condition of the purchaser and seller and may require the 23
submission of additional information as considered necessary to make an 24
informed decision. The commissioner shall approve the purchase if: 25
(1) The acquiring state trust company will be solvent, not in a 26
hazardous condition and have sufficient capitalization for its business and 27
location; 28
(2) The acquiring state trust company has complied with all 29
applicable statutes and rules, including without limitation any applicable 30
requirements of §§ 23 -51-178 and 23-51-179; 31
(3) All fiduciary obligations and liabilities of the parties 32
have been properly discharged or otherwise assumed by the acquiring state 33
trust company; 34
(4) All conditions imposed by the commissioner have been 35
satisfied or otherwise resolved; and 36 SB230
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(5) All fees and costs have been paid. 1
(c) A purchase requiring an application pursuant to subsection (b) of 2
this section is effective on the date of approval, unless the purchase 3
agreement provides for, and the commissioner consents to, a different 4
effective date. 5
(d) The acquiring state trust company shall succeed by operation of 6
law to all of the rights, privileges and obligations of the selling trust 7
institution under each account included in the assets acquired. 8
9
23-51-155. Sale of assets. 10
(a) The board of a state trust company, with the Bank Commissioner's 11
approval, may cause a state trust company to sell all or substantially all of 12
its assets, including the right to control accounts established with the 13
trust company, without shareholder approval if the commissioner finds: 14
(1) The interests of the state trust company's clients, 15
depositors, and creditors are jeopardized because of insolvency or imminent 16
insolvency of the state trust company; 17
(2) The sale is in the best interest of the state trust 18
company's clients and creditors; and 19
(3) The Federal Deposit Insurance Corporation or its successor 20
approves the transaction unless the deposits of the state trust company are 21
not insured. 22
(b) A sale under this section must include an assumption and promise 23
by the buyer to pay or otherwise discharge: 24
(1) All of the state trust company's liabilities to clients and 25
depositors; 26
(2) All of the state trust company's liabilities for salaries of 27
the state trust company's employees incurred before the date of the sale; 28
(3) Obligations incurred by the commissioner arising out of the 29
supervision or sale of the state trust company; and 30
(4) Fees and assessments due the State Bank Department. 31
(c) This section does not limit the incidental power of a state trust 32
company to buy and sell assets in the ordinary course of business. 33
(d) This section does not affect the commissioner's right to take 34
action under any other law. The sale by a trust company of all or 35
substantially all of its assets with shareholder approval is deemed a 36 SB230
50 02/13/2025 12:57:21 PM ANS145
voluntary dissolution and liquidation and shall be governed by § 23 -49-119. 1
2
23-51-156. Required vote of shareholders. 3
A state trust company may go into voluntary liquidation and be closed, 4
and may surrender its charter and franchise as a corporation of this state by 5
the affirmative votes of its shareholders owning a majority of its voting 6
stock. 7
8
23-51-157. Corporate procedure. 9
Shareholder action to liquidate a state trust company shall be taken at 10
a meeting of the shareholders duly called by resolution of the board of 11
directors, written notice of which, stating the purpose of the meeting, shall 12
be mailed to each shareholder, or in case of a shareholder's death, to the 13
shareholder's legal representative, addressed to the shareholder's last known 14
residence not less than ten (10) days prior to the date of the meeting. If 15
stockholders shall, by the required vote, elect to liquidate a trust company, 16
a certified copy of all proceedings of the meeting at which such an action 17
shall have been taken, attested by an officer of the trust company, shall be 18
transmitted to the Bank Commissioner for approval. 19
20
23-51-158. Authority to liquidate — Publication. 21
If the Bank Commissioner shall approve the liquidation, the 22
commissioner shall issue to the state trust company under the commissioner's 23
seal, a permit for that purpose. No such permit shall be issued by the 24
commissioner until the commissioner shall be satisfied that provision has 25
been made by the state trust company to satisfy and pay off all creditors. If 26
not so satisfied, the commissioner shall refuse to issue a permit, and shall 27
be authorized to take possession of the state trust company and its assets 28
and business, and hold the same and liquidate the state trust company in the 29
manner provided in this chapter. When the commissioner shall approve the 30
voluntary liquidation of a state trust company, the directors of said state 31
trust company shall cause to be published in a newspaper with a substantially 32
statewide circulation published in the City of Little Rock a notice that the 33
state trust company is closing down its affairs and going into liquidation, 34
and notify its creditors to present their claims for payment. The notice 35
shall be published once a week for four consecutive weeks. 36 SB230
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1
23-51-159. Examination and reports. 2
When any state trust company shall be in process of voluntary 3
liquidation, it shall be subject to examination by the Bank Commissioner, and 4
shall furnish such reports from time to time as may be called for by the 5
commissioner. 6
7
23-51-160. Unclaimed property. 8
All unclaimed property remaining in the hands of a liquidated state 9
trust company shall be subject to the provisions of the Uniform Disposition 10
of Unclaimed Property Act, § 18 -28-201 et seq. 11
12
23-51-161. Sale or transfer of property. 13
Upon the approval of the Bank Commissioner, any state trust company may 14
sell and transfer to any other trust institution, whether state or federally 15
chartered, all of its assets of every kind upon such terms as may be agreed 16
upon and approved by the commissioner and by a majority vote of its board of 17
directors. A certified copy of the minutes of any meeting at which such an 18
action is taken, attested by an officer of the trust company, together with a 19
copy of the contract of sale and transfer, shall be filed with the 20
commissioner. Whenever voluntary liquidation shall be approved by the 21
commissioner or the sale and transfer of the assets of any state trust 22
company shall be approved by the commissioner, the charter of the state trust 23
company shall be canceled, subject, however, to its continued existence, as 24
provided by this chapter and the general law relative to corporations. 25
26
23-51-162. When commissioner may take charge. 27
The Bank Commissioner may forthwith take possession of the business and 28
property of any state trust company to which this chapter is applicable 29
whenever it shall appear that the state trust company: 30
(1) Has violated its charter or any laws applicable thereto; 31
(2) Is conducting its business in an unauthorized or unsafe 32
manner; 33
(3) Is in an unsafe or unsound condition to transact its 34
business; 35
(4) Has an impairment of its capital; 36 SB230
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(5) Is in a hazardous condition; 1
(6) Has become otherwise insolvent; 2
(7) Has neglected or refused to comply with the terms of a duly 3
issued lawful order of the commissioner; 4
(8) Has refused, upon proper demand, to submit its records, 5
affairs, and concerns for inspection and examination of a duly appointed or 6
authorized examiner of the commissioner; 7
(9) Is employing officers who have refused to be examined upon 8
oath regarding its affairs; or 9
(10) Has made a voluntary assignment of its assets to trustees. 10
11
23-51-163. Directors may act. 12
Any state trust company may place its assets and business under the 13
control of the Bank Commissioner for liquidation by a resolution of a 14
majority of its directors or members upon notice to the commissioner, and, 15
upon taking possession of the state trust company, the commissioner, or duly 16
appointed agent, shall retain possession thereof until the state trust 17
company shall be authorized by the commissioner to resume business or until 18
the affairs of the state trust company shall be fully liquidated as herein 19
provided. No state trust company shall make any general assignment for the 20
benefit of its creditors except by surrendering possession of its assets to 21
the commissioner, as herein provided. Whenever any state trust company for 22
any reason shall suspend operations for any length of time, the state trust 23
company shall, immediately upon the suspension of operations, be deemed in 24
the possession of the commissioner and subject to liquidation hereunder. 25
26
23-51-164. Application of Arkansas Banking Code of 1997. 27
When the Bank Commissioner, or duly appointed agent, shall take 28
possession of any state trust company under § 23 -51-162 or § 23-51-163, the 29
commissioner or agent shall proceed with the dissolution and liquidation of 30
the state trust company under the procedures established for the dissolution 31
and liquidation of state banks under the Arkansas Banking Code of 1997. 32
33
23-51-165. Companies authorized to act as fiduciaries. 34
(a) A company shall not act as a fiduciary in this state except: 35
(1) A state trust company; 36 SB230
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(2) A state bank; 1
(3) An association organized under the laws of this state and 2
authorized to act as a fiduciary under § 23 -37-101 et seq.; 3
(4) A national bank having its principal office in this state 4
and authorized by the United States Comptroller of the Currency to act as a 5
fiduciary under 12 U.S.C. § 92a; 6
(5) A federally chartered savings association having its 7
principal office in this state and authorized by its federal chartering 8
authority to act as a fiduciary; 9
(6) A subsidiary trust company authorized to act as a fiduciary 10
under § 23-47-801 et seq.; 11
(7) An out-of-state bank with a branch in this state established 12
or maintained under the Arkansas Interstate Banking and Branching Act, § 23 -13
48-901 et seq., or a trust office licensed by the Bank Commissioner under 14
this chapter; 15
(8) An out-of-state trust company with a trust office licensed 16
by the commissioner under this chapter; or 17
(9) A foundation. 18
(b) A company shall not engage in an unauthorized trust activity. 19
20
23-51-166. Activities not requiring a charter, etc. 21
Notwithstanding any other provision of this chapter, a company does not 22
engage in the trust business or in any other business in a manner requiring a 23
charter or license under this chapter or in an unauthorized trust activity 24
by: 25
(1) Acting in a manner authorized by law and in the scope of 26
authority as an agent of a trust institution with respect to an activity 27
which is not an unauthorized trust activity; 28
(2) Rendering a service customarily performed as an attorney or 29
law firm in a manner approved and authorized by the Supreme Court or the laws 30
of this state; 31
(3) Acting as trustee under a deed of trust delivered only as 32
security for the payment of money or for the performance of another act; 33
(4) Receiving and distributing rents and proceeds of sale as a 34
licensed real estate broker on behalf of a principal in a manner authorized 35
by the Real Estate License Law, § 17 -42-101 et seq.; 36 SB230
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(5) Engaging in a securities transaction or providing an 1
investment advisory service as a licensed and registered broker -dealer, 2
investment advisor or registered representative thereof, provided the 3
activity is regulated by the State Securities Department or the United States 4
Securities and Exchange Commission; 5
(6) Engaging in the sale and administration of an insurance 6
product by an insurance company or agent licensed by the State Insurance 7
Department to the extent that the activity is regulated by the State 8
Insurance Department; 9
(7) Engaging in the lawful sale of prepaid funeral benefits 10
under a permit issued by the State Insurance Department under the Arkansas 11
Prepaid Funeral Benefits Law, § 23 -40-101 et seq., or engaging in the lawful 12
business of maintaining a perpetual care cemetery trust pursuant to § 20 -17-13
904 or a permanent maintenance fund for perpetually maintained cemeteries 14
under the Cemetery Act for Perpetually Maintained Cemeteries, § 20 -17-1001 et 15
seq.; 16
(8) Acting as trustee under a voting trust as provided by § 4 -17
26-706 or § 4-27-730; 18
(9) Engaging in other activities expressly excluded from the 19
application of this chapter by rules issued by the Bank Commissioner; 20
(10) Rendering services customarily performed by a public 21
accountant or a certified public accountant in a manner authorized by the 22
Arkansas State Board of Public Accountancy; 23
(11) Provided the company is a trust institution and is not 24
barred by order of the commissioner from engaging in a trust business in this 25
state pursuant to § 23 -51-182(b): 26
(A) Marketing or soliciting in this state through the 27
mails, telephone, any electronic means or in person with respect to acting or 28
proposing to act as a fiduciary outside of this state; 29
(B) Delivering money or other intangible assets and 30
receiving the same from a client or other person in this state; or 31
(C) Accepting or executing outside of this state a trust 32
of any client or otherwise acting as a fiduciary outside of this state for 33
any client; or 34
(12) If the company is a foundation, serving as a fiduciary. 35
36 SB230
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23-51-167. Trust business of state trust institution. 1
(a) A state trust institution may act as a fiduciary or otherwise 2
engage in a trust business in this or any other state or foreign country, 3
subject to complying with applicable laws of the state or foreign country, at 4
an office established and maintained pursuant to this chapter, at a branch or 5
at any other authorized location other than an office or branch. 6
(b) In addition, a state trust institution may conduct any activities 7
at any office outside this state that are permissible for a trust institution 8
chartered by the host state where the office is located, except to the extent 9
such activities are expressly prohibited by the laws of this state or by any 10
rule or order of the Bank Commissioner applicable to the state trust 11
institution. Provided, however, that the commissioner may waive any such 12
prohibition if he or she determines, by order or rule, that the involvement 13
of out-of-state offices of state trust institutions in particular activities 14
would not threaten the safety or soundness of the state trust institutions. 15
16
23-51-168. Trust business of out -of-state trust institution. 17
An out-of-state trust institution which establishes or maintains one 18
(1) or more offices in this state under this chapter may conduct any activity 19
at each such office which would be authorized under the laws of this state 20
for a state trust institution to conduct at such an office. 21
22
23-51-169. Name of trust institution. 23
A state trust company or out -of-state trust institution may register 24
any name with the Bank Commissioner in connection with establishing a 25
principal office or trust office in this state pursuant to this chapter, 26
except that the commissioner may determine that a name proposed to be 27
registered is potentially misleading to the public and require the registrant 28
to select a name which is not potentially misleading. 29
30
23-51-170. Trust business. 31
A state trust company or a state bank may: 32
(1) Perform any act as a fiduciary; 33
(2) Engage in any trust business; 34
(3) Exercise any incidental power that is reasonably necessary 35
to enable it to fully exercise, according to commonly accepted fiduciary 36 SB230
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customs and usages, a power conferred in this chapter; and 1
(4) If a state trust company, exercise any other power 2
authorized by § 23-51-104. 3
4
23-51-171. Branches and offices of state trust institutions. 5
(a) A state trust institution may act as a fiduciary and engage in a 6
trust business at each trust office as permitted by this chapter and at a 7
branch. 8
(b) Notwithstanding the foregoing subsection (a) of this section, a 9
state bank or a state trust company may not engage at an out -of-state office 10
in any trust business not permitted to be conducted at such an office by the 11
laws of the host state applicable to trust institutions chartered by the host 12
state. 13
14
23-51-172. State trust company principal office. 15
(a) Each state trust company must have and continuously maintain a 16
principal office in this state. 17
(b) Each executive officer at the principal office is an agent of the 18
state trust company for service of process. 19
(c) A state trust company may change its principal office to any 20
location within this state by filing a written notice with the Bank 21
Commissioner setting forth the name of the state trust company, the street 22
address of its principal office before the change, the street address to 23
which the principal office is to be changed, and a copy of the resolution 24
adopted by the board authorizing the change. 25
(d) The change of principal office shall take effect thirty (30) days 26
after the date the commissioner receives the notice pursuant to subsection 27
(c) of this section, unless the commissioner establishes another date or 28
unless prior to that day the commissioner notifies the state trust company 29
that it must establish to the satisfaction of the commissioner that the 30
relocation is consistent with the original determination made under § 23 -51-31
106(b) for the establishment of a state trust company at that location, in 32
which event the change of principal office shall take effect when approved by 33
the commissioner. 34
35
23-51-173. Trust office. 36 SB230
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(a) A state trust institution may establish or acquire and maintain 1
trust offices anywhere in this state. A state trust institution desiring to 2
establish or acquire and maintain such an office shall file a written notice 3
with the Bank Commissioner setting forth the name of the state trust 4
institution, the location of the proposed additional trust office and a 5
general description of the surrounding area, whether the location will be 6
owned or leased, furnish a copy of the resolution adopted by the board 7
authorizing the additional trust office, general description of the 8
activities to be conducted, an estimate of the cost of the trust office and 9
pay the filing fee, if any, prescribed by the commissioner. 10
(b) The notificant may commence business at the additional trust 11
office thirty (30) days after the date the commissioner receives the notice, 12
unless the commissioner specifies another date. 13
(c) The thirty-day period of review may be extended by the 14
commissioner on a determination that the written notice raises issues that 15
require additional information or additional time for analysis. If the period 16
of review is extended, the state trust institution may establish the 17
additional office only on prior written approval by the commissioner. 18
(d) The commissioner may deny approval of the additional office if the 19
commissioner finds that the notificant lacks sufficient financial resources 20
to undertake the proposed expansion without adversely affecting its safety or 21
soundness or that the proposed office would be contrary to the public 22
interest. 23
24
23-51-174. Out-of-state offices. 25
(a) A state bank, a state trust company, or a savings association 26
chartered under the laws of this state may establish and maintain a new trust 27
office or acquire and maintain an office in a state other than this state. 28
Such a trust institution desiring to establish or acquire and maintain an 29
office in another state under this section shall file a notice on a form 30
prescribed by the Bank Commissioner, which shall set forth the name of the 31
trust institution, the location of the proposed office, and a general 32
description of the surrounding area, whether the location will be owned or 33
leased, and whether the laws of the jurisdiction where the office will be 34
located permit the office to be maintained by the trust institution, furnish 35
a copy of the resolution adopted by the board authorizing the out -of-state 36 SB230
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office, and pay the filing fee, if any, prescribed by the commissioner. 1
(b) The notificant may commence business at the additional office 2
thirty (30) days after the date the commissioner receives the notice, unless 3
the commissioner specifies another date. 4
(c) The thirty-day period of review may be extended by the 5
commissioner on a determination that the written notice raises issues that 6
require additional information or additional time for analysis. If the period 7
of review is extended, the trust institution may establish the additional 8
office only on prior written approval by the commissioner. 9
(d) The commissioner may deny approval of the additional office if the 10
commissioner finds that the notificant lacks sufficient financial resources 11
to undertake the proposed expansion without adversely affecting its safety or 12
soundness or that the proposed office would be contrary to the public 13
interest. In acting on the notice, the commissioner shall consider the views 14
of the appropriate bank supervisory agencies. 15
16
23-51-175. Trust business at a branch or trust office. 17
An out-of-state trust institution may act as a fiduciary in this state 18
or engage in a trust business at an office in this state only if it maintains 19
a trust office in this state as permitted by this chapter or a branch in this 20
state. 21
22
23-51-176. Establishing an interstate trust office. 23
(a) An out-of-state trust institution that does not operate a trust 24
office in this state and that meets the requirements of this chapter may 25
establish and maintain a new trust office in this state. 26
(b) An out-of-state trust institution may not establish a new trust 27
office in this state unless a similar institution chartered under the laws of 28
this state to act as a fiduciary, is permitted to establish a new trust 29
office that may engage in activities substantially similar to those permitted 30
to trust offices of out -of-state trust institutions under § 23 -51-175, in the 31
state where the out-of-state trust institution has its principal office. 32
33
23-51-177. Acquiring an interstate trust office. 34
(a) An out-of-state trust institution that does not operate a trust 35
office in this state and that meets the requirements of this chapter may 36 SB230
59 02/13/2025 12:57:21 PM ANS145
acquire and maintain a trust office in this state. 1
(b) No out-of-state trust institution may maintain a trust office in 2
this state unless a similar institution chartered under the laws of this 3
state to act as a fiduciary is permitted to acquire and maintain a trust 4
office through an acquisition of a trust office in the state where the out -5
of-state trust institution has its principal office and may engage in 6
activities substantially similar to those permitted to trust offices of out -7
of-state trust institutions under § 23 -51-175, in the state where the out -of-8
state trust institution has its principal office. 9
10
23-51-178. Requirement of notice. 11
An out-of-state trust institution desiring to establish and maintain a 12
new trust office or acquire and maintain a trust office in this state 13
pursuant to this chapter shall provide, or cause its home state regulator to 14
provide, written notice of the proposed transaction to the Bank Commissioner 15
on or after the date on which the out -of-state trust institution applies to 16
the home state regulator for approval to establish and maintain or acquire 17
the trust office. The filing of the notice shall be preceded or accompanied 18
by a copy of the resolution adopted by the board authorizing the additional 19
office and the filing fee, if any, prescribed by the commissioner. 20
21
23-51-179. Conditions for approval. 22
(a) No trust office of an out -of-state trust institution may be 23
acquired or established in this state under this chapter unless: 24
(1) The out-of-state trust institution shall have confirmed in 25
writing to the Bank Commissioner that for as long as it maintains a trust 26
office in this state, it will comply with all applicable laws of this state; 27
(2) The notificant shall have provided satisfactory evidence to 28
the commissioner of compliance with any applicable requirements of § 4 -27-29
1501 et seq. and the applicable requirements of its home state regulator for 30
acquiring or establishing and maintaining the office; 31
(3) The commissioner, acting within sixty (60) days after 32
receiving notice under § 23 -51-178, shall have certified to the home state 33
regulator that the requirements of this chapter have been met and the notice 34
has been approved or, if applicable, that any conditions imposed by the 35
commissioner pursuant to subsection (b) of this section have been satisfied. 36 SB230
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(b) The out-of-state trust institution may commence business at the 1
trust office sixty (60) days after the date the commissioner receives the 2
notice unless the commissioner specifies another date, provided, with respect 3
to an out-of-state trust institution that is not a depository institution and 4
for which the commissioner shall have conditioned such approval on the 5
satisfaction by the notificant of any requirement applicable to a state trust 6
company pursuant to § 23 -51-106(b) or § 23-51-110, the institution shall have 7
satisfied such conditions and provided to the commissioner satisfactory 8
evidence thereof. 9
(c) The sixty-day period of review may be extended by the commissioner 10
on a determination that the written notice raises issues that require 11
additional information or additional time for analysis. If the period of 12
review is extended, the out -of-state trust institution may establish the 13
office only on prior written approval by the commissioner. 14
(d) The commissioner may deny approval of the office if the 15
commissioner finds that the notificant lacks sufficient financial resources 16
to undertake the proposed expansion without adversely affecting its safety or 17
soundness or that the proposed office is contrary to the public interest. In 18
acting on the notice, the commissioner shall consider the views of the 19
appropriate bank supervisory agencies. 20
21
23-51-180. Additional trust offices. 22
An out-of-state trust institution that maintains a trust office in this 23
state under this chapter may establish or acquire additional trust offices or 24
representative trust offices in this state to the same extent that a state 25
trust institution may establish or acquire additional offices in this state 26
pursuant to the procedures for establishing or acquiring such offices set 27
forth in § 23-51-173. 28
29
23-51-181. Examinations — Periodic reports — Cooperative agreements — 30
Assessment of fees. 31
(a) To the extent consistent with subsection (c) of this section, the 32
Bank Commissioner may make such examinations of any office established and 33
maintained in this state pursuant to this chapter by an out -of-state trust 34
institution as the commissioner may deem necessary to determine whether the 35
office is being operated in compliance with the laws of this state and in 36 SB230
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accordance with safe and sound banking practices. The provisions of the 1
Arkansas Banking Code of 1997 shall apply to such examinations. 2
(b) The commissioner may require periodic reports regarding any out -3
of-state trust institution that has established and maintained an office in 4
this state pursuant to this chapter. The required reports shall be provided 5
by the trust institution or by the home state regulator. Any reporting 6
requirements prescribed by the commissioner under this subsection shall be 7
consistent with the reporting requirements applicable to state trust 8
companies and appropriate for the purpose of enabling the commissioner to 9
carry out his or her responsibilities under this chapter. 10
(c) The commissioner may enter into cooperative, coordinating, and 11
information-sharing agreements with any other bank supervisory agencies or 12
any organization affiliated with or representing one (1) or more bank 13
supervisory agencies with respect to the periodic examination or other 14
supervision of any office in this state of an out -of-state trust institution, 15
or any office of a state trust institution in any host state, and the 16
commissioner may accept such a party's report of examination and report of 17
investigation in lieu of conducting his or her own examination or 18
investigation. 19
(d) The commissioner may enter into contracts with any bank 20
supervisory agency that has concurrent jurisdiction over a state trust 21
institution or an out -of-state trust institution maintaining an office in 22
this state to engage the services of the agency's examiners at a reasonable 23
rate of compensation, or to provide the services of the commissioner's 24
examiners to the agency at a reasonable rate of compensation. Any such 25
contract shall be deemed a sole source contract under § 19 -11-232. 26
(e) The commissioner may enter into joint examinations or joint 27
enforcement actions with other bank supervisory agencies having concurrent 28
jurisdiction over any office established and maintained in this state by an 29
out-of-state trust institution or any office established and maintained by a 30
state trust institution in any host state, provided that the commissioner may 31
at any time take such actions independently if the commissioner deems such 32
actions to be necessary or appropriate to carry out his or her 33
responsibilities under this chapter or to ensure compliance with the laws of 34
this state, but provided further that in the case of an out -of-state trust 35
institution, the commissioner shall recognize the exclusive authority of the 36 SB230
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home state regulator over corporate governance matters and the primary 1
responsibility of the home state regulator with respect to safety and 2
soundness matters. 3
(f) Each out-of-state trust institution that maintains one (1) or more 4
offices in this state may be assessed and, if assessed, shall pay supervisory 5
and examination fees in accordance with the laws of this state and rules of 6
the commissioner. The fees may be shared with other bank supervisory agencies 7
or any organization affiliated with or representing one (1) or more bank 8
supervisory agencies in accordance with agreements between such parties and 9
the commissioner. 10
11
23-51-182. Enforcement. 12
(a)(1) Consistent with the Arkansas Administrative Procedure Act, § 13
25-15-201 et seq., after notice and opportunity for hearing, the Bank 14
Commissioner may determine: 15
(A) That an office maintained by an out -of-state trust 16
institution in this state is being operated in violation of any provision of 17
the laws of this state or in an unsafe and unsound manner; or 18
(B) That a company is engaged in an unauthorized trust 19
activity 20
(2) In either event, the commissioner shall have the authority 21
to take all such enforcement actions as he or she would be empowered to take 22
if the office or the company were a state trust company, including but not 23
limited to issuing an order temporarily or permanently prohibiting the 24
company from engaging in a trust business in this state. 25
(b) In cases involving extraordinary circumstances requiring immediate 26
action, the commissioner may take any action permitted by subsection (a) of 27
this section without notice or opportunity for hearing, but shall promptly 28
afford a subsequent hearing upon an application to rescind the action taken. 29
The commissioner shall promptly give notice to the home state regulator of 30
each enforcement action taken against an out -of-state trust institution and, 31
to the extent practicable, shall consult and cooperate with the home state 32
regulator in pursuing and resolving the enforcement action. 33
34
23-51-183. Notice of subsequent merger, closing, etc. 35
Each out-of-state trust institution that maintains an office in this 36 SB230
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state pursuant to this chapter, or the home state regulator of such a trust 1
institution, shall give at least thirty (30) days prior written notice or, in 2
the case of an emergency transaction, such shorter notice as is consistent 3
with applicable state or federal law, to the Bank Commissioner of: 4
(1) Any merger, consolidation, or other transaction that would 5
cause a change of control with respect to the out -of-state trust institution 6
or any bank holding company that controls the trust institution, with the 7
result that an application would be required to be filed pursuant to the 8
Change in Bank Control Act of 1978, as amended, 12 U.S.C. § 1817(j), or the 9
Bank Holding Company Act of 1956, as amended, 12 U.S.C. § 1841 et seq., or 10
any successor statutes thereto; 11
(2) Any transfer of all or substantially all of the trust 12
accounts or trust assets of the out -of-state trust institution to another 13
person; or 14
(3) The closing or disposition of any office in this state. 15
16
23-51-184. Commissioner shall supervise and examine authorized trust 17
institutions. 18
Every authorized trust institution shall be under the supervision of 19
the Bank Commissioner. The commissioner shall execute and enforce through the 20
State Bank Department and such other agents as are now or may hereafter be 21
created or appointed, all laws which are now or may hereafter be enacted 22
relating to authorized trust institutions. For the more complete and thorough 23
enforcement of the provisions of this chapter, the commissioner is hereby 24
empowered to promulgate such rules not inconsistent with the provisions of 25
this chapter, as may, in his or her opinion, be necessary to carry out the 26
provisions of the laws relating to authorized trust institutions and as may 27
be further necessary to insure safe and conservative management of an 28
authorized trust institution under his or her supervision taking into 29
consideration the appropriate interest of the creditors, stockholders, and 30
the public in their relations with the authorized trust institutions. All 31
authorized trust institutions doing business under the provisions of this 32
chapter shall conduct their business in a manner consistent with all laws 33
relating to authorized trust institutions and all rules and instructions that 34
may be promulgated or issued by the commissioner. 35
36 SB230
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23-51-185. Examinations — Assessments. 1
(a) The Bank Commissioner may examine each state trust company every 2
twenty-four (24) months or more often as he or she determines is necessary to 3
safeguard the interests of the public and the safety and soundness of the 4
institution. 5
(b) Each state-chartered trust company shall pay to the State Bank 6
Department within ten (10) days after notice from the commissioner in January 7
and July of each year an assessment fee to defray the costs of examination 8
and the costs of operations of the department which will be charged in 9
accordance with an assessment fee schedule approved by the commissioner. 10
(c) The commissioner may accept examinations of a state trust company 11
by a federal or other governmental agency in lieu of an examination under 12
this section or may conduct examinations of a state trust company jointly or 13
concurrently with a federal or other governmental agency. 14
15
23-51-186. Statements of condition and income. 16
Each state trust company shall periodically file with the Bank 17
Commissioner a copy of its statement of condition and income. The 18
commissioner shall have the power to call for these reports whenever deemed 19
necessary, in order to obtain a full and complete knowledge of the condition 20
of the trust company. 21
22
23-51-187. Confidential records. 23
(a) The following records of the State Bank Department shall be 24
confidential and shall not be exhibited or revealed to the public except as 25
stated in this section or in accordance with department rules: 26
(1) All examination reports filed with the department; 27
(2) All records disclosing information obtained from 28
examinations; 29
(3) Investigations and reports revealing facts concerning a 30
state trust company or the customers of the organization; and 31
(4) All personal financial statements submitted to the 32
department for any purpose. 33
(b) Notwithstanding any provision of this section to the contrary, 34
records deemed confidential in accordance with this section may, in the Bank 35
Commissioner's discretion, be disclosed as follows: 36 SB230
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(1) Under a validly issued subpoena and, in the interest of 1
justice, the commissioner may waive the privilege created herein and produce 2
examination reports and other related documents under the provisions of a 3
protective order entered by a court or administrative tribunal of competent 4
jurisdiction when the order is designed to protect the confidential nature of 5
the information so disclosed from public dissemination; 6
(2) Official orders of the department may be disclosed within 7
the discretion of the commissioner if the commissioner makes a determination 8
that such a disclosure would not give advantage to a competitor or adversely 9
affect the safety and soundness of the state trust company; and 10
(3) To federal financial institutions' regulatory agencies and 11
financial institutions' regulatory agencies of other states. 12
(c) The commissioner shall have the power to promulgate rules with 13
regard to disclosure of confidential information. 14
15
23-51-188. Administrative orders — Penalties for violation. 16
(a) In addition to any other powers conferred by this chapter, the 17
Bank Commissioner shall have the power to: 18
(1) Order any authorized trust institution, or subsidiary 19
thereof, or any director, officer, or employee to cease and desist violating 20
any provision of this chapter or any lawful rule issued thereunder; 21
(2) Order any authorized trust institution, or subsidiary 22
thereof, or any director, officer, or employee to cease and desist from a 23
course of conduct that is unsafe or unsound and which is likely to cause 24
insolvency or dissipation of assets or is likely to jeopardize or otherwise 25
seriously prejudice the interests of the public in their relationship with 26
the authorized trust institution; 27
(3) Order any company to cease engaging in an unauthorized trust 28
activity; and 29
(4) Enter any order pursuant to § 23 -51-182. 30
(b) The commissioner may impose a civil money penalty of not more than 31
one thousand dollars ($1,000) for each violation by any authorized trust 32
institution, or subsidiary thereof, or any director, officer, or employee of 33
an order issued under subdivision (a)(1) of this section. Provided further, 34
the commissioner may impose a civil money penalty of not more than five 35
hundred dollars ($500) per day for each day that an authorized trust 36 SB230
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institution, or subsidiary thereof, or any director, officer, or employee 1
violates a cease and desist order issued under subdivision (a)(2) or 2
subdivision (a)(3) of this section. 3
4
23-51-189. Notice and opportunity for hearing. 5
Consistent with the Arkansas Administrative Procedure Act, § 25 -15-201 6
et seq., notice and opportunity for hearing shall be provided before any of 7
the foregoing actions shall be undertaken by the Bank Commissioner. Provided, 8
however, in cases involving extraordinary circumstances requiring immediate 9
action, the commissioner may take such an action, but shall promptly afford a 10
subsequent hearing upon application to rescind the action taken. 11
12
23-51-190. Subpoena power and examination under oath. 13
The Bank Commissioner shall have the power to subpoena witnesses, 14
compel their attendance, require the production of evidence, administer 15
oaths, and examine any person under oath in connection with any subject 16
related to a duty imposed or a power vested in the commissioner. 17
18
23-51-191. Removal of directors, officers, and employees. 19
Consistent with § 23 -51-189, the Bank Commissioner shall have the 20
right, and is hereby empowered, to require the immediate removal from office 21
of any officer, director, or employee of any authorized trust institution who 22
shall be found to be dishonest, incompetent, or reckless in the management of 23
the affairs of the authorized trust institution or who persistently violates 24
the laws of this state or the lawful orders, instructions, and rules issued 25
by the commissioner. 26
27
23-51-192. Delegation and fiduciary responsibility. 28
(a) Any person acting as a trustee or as any other fiduciary under the 29
laws of this state may delegate any investment, management, or administrative 30
function if the person exercises reasonable care, judgment, and caution in: 31
(1) Selecting the delegate, taking into account the delegate's 32
financial standing and reputation; 33
(2) Establishing the scope and other terms of any delegation; 34
and 35
(3) Reviewing periodically the delegate's actions in order to 36 SB230
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monitor overall performance and compliance with the scope and other terms of 1
the delegation. 2
(b) Notwithstanding any delegation permitted by subsection (a) of this 3
section, any person acting as a trustee, except as provided in § 28 -73-807, 4
or in any other fiduciary capacity under the laws of this state shall retain 5
responsibility for the due performance of any delegated fiduciary function. 6
7
23-51-193. Affiliates. 8
(a) Any person acting as a trustee or in any other fiduciary capacity 9
under § 23-51-192 may hire and compensate, as a delegate, an affiliate of the 10
person if: 11
(1) Authorized by a trust or fiduciary instrument; 12
(2) Authorized by court order; 13
(3) Authorized in writing by each affected client; or 14
(4) The standards of § 23-51-192 are satisfied. 15
(b) Fees paid to an affiliate shall be competitive with fees charged 16
by nonaffiliates that provide substantially similar services. 17
18
23-51-194. Fee determination. 19
The compensation arrangement between a client and any person acting as 20
a trustee or as any other fiduciary pursuant to this chapter shall be at 21
arm's length and any compensation pursuant to such an arrangement shall be a 22
reasonable amount with respect to the services rendered. 23
24
23-51-195. Disclosure of potential conflicts of interest. 25
Any company, proposing to act as a trustee or in any other fiduciary 26
capacity pursuant to a written agreement to be entered into with a 27
prospective client after August 1, 1997, which company has any potential or 28
actual conflict of interest which may reasonably be expected to have an 29
impact on the independence or judgment of the trustee or fiduciary, shall 30
disclose appropriate information concerning the actual or potential conflict 31
of interest prior to entering into any written or oral trust or fiduciary 32
agreement with the client or prospective client. 33
34
23-51-196. Interests in trust institutions prohibited. 35
(a) Neither the Bank Commissioner nor any employee or officer of the 36 SB230
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State Bank Department who participates in the examination of a trust 1
institution, or who may be called upon to make an official decision or 2
determination affecting the operation of a trust institution, shall be an 3
officer, director, attorney, owner, or holder of stock in any state trust 4
company, or any company which owns or controls a state trust company, or 5
receive, directly or indirectly, any payment or gratuity from any such 6
organizations. A person subject to this section may not borrow money from a 7
state trust company. 8
(b) A person subject to this section may: 9
(1) Be a depositor in any trust institution that the department 10
regulates; and 11
(2) Purchase trust or fiduciary services, other than credit 12
services, under rates and terms generally available to other customers of the 13
trust institution. 14
15
23-51-197. Designation of trustee. 16
Any person residing in this state may designate any trust institution 17
to act as a fiduciary on behalf of the person. 18
19
23-51-198. Choice of law governing trusts. 20
Any trust institution that maintains a trust office in this state and 21
its affected clients may designate either this state, a state where affected 22
clients reside, or the state where the trust institution has its principal 23
office as the state whose laws shall govern any written agreement between the 24
trust institution and its client or any instrument under which the trust 25
institution acts for a client. 26
27
23-51-199. Choice of law governing fiduciary investments. 28
Any trust institution that maintains a trust office in this state and 29
its affected clients may designate either this state, a state where affected 30
clients reside, or the state where the trust institution has its principal 31
office as the state whose laws shall govern with respect to the fiduciary 32
investment standards applicable to any written agreement between the trust 33
institution or its client and any other instrument under which the trust 34
institution acts for a client. 35
36 SB230
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23-51-200 — 23-51-211. [Repealed.] 1
2
CHAPTER 51 3
ARKANSAS TRUST INSTITUTIONS ACT OF 2025 4
5
Subchapter 1 — General Provisions 6
7
23-51-101. Title. 8
This chapter shall be known as and may be cited as the "Arkansas Trust 9
Institutions Act of 2025". 10
11
23-51-102. Administration. 12
(a)(1) This chapter shall be administered by the Bank Commissioner, 13
and every authorized trust institution shall be under the supervision of the 14
commissioner. 15
(2) The commissioner shall execute and enforce through the State 16
Bank Department or other agents all laws relating to authorized trust 17
institutions. 18
(3) The commissioner may promulgate rules as he or she 19
determines to be necessary or appropriate to implement this chapter. 20
(b) The commissioner may subpoena witnesses, compel their attendance, 21
require the production of evidence, administer oaths, and examine a person 22
under oath in connection with any subject related to a duty imposed or a 23
power vested in the commissioner. 24
(c)(1)(A) The commissioner or an employee or officer of the department 25
who participates in the examination of a trust institution, or who may be 26
called upon to make an official decision or determination affecting the 27
operation of a trust institution, shall not be an officer, director, 28
attorney, owner, or holder of stock in a state trust company, or a company 29
that owns or controls a state trust company, or receive, directly or 30
indirectly, a payment or gratuity from a trust institution, state trust 31
company, or company controlling a trust company. 32
(B) A person subject to this section shall not borrow 33
money from a state trust company. 34
(2) A person subject to this section may: 35
(A) Be a depositor in a trust institution that the 36 SB230
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department regulates; and 1
(B) Purchase trust or fiduciary services, other than 2
credit services, under rates and terms generally available to other customers 3
of the trust institution. 4
5
23-51-103. Definitions. 6
As used in this chapter: 7
(1) "Account" means a client relationship established with a 8
trust company involving the transfer of funds or property to the trust 9
company, including a relationship in which the trust company acts as trustee, 10
executor, administrator, guardian, custodian, conservator, bailee, receiver, 11
registrar, or agent, but excluding a relationship in which the trust company 12
acts solely in an advisory capacity; 13
(2) "Act as a fiduciary" means to: 14
(A) Accept or execute trusts, including to: 15
(i) Act as trustee under a written agreement; 16
(ii) Receive money or other property in the 17
fiduciary's capacity as trustee for investment in real or personal property; 18
(iii) Act as trustee and perform the fiduciary 19
duties committed or transferred to the fiduciary by order of a court of 20
competent jurisdiction; 21
(iv) Act as trustee of the estate of a deceased 22
person; 23
(v) Act as trustee for a minor or incapacitated 24
person; or 25
(vi) Conduct trust business as defined in this 26
section; 27
(B) Administer in any other fiduciary capacity real or 28
tangible personal property; or 29
(C) Act pursuant to an order of a court of competent 30
jurisdiction as executor or administrator of the estate of a deceased person 31
or as a guardian or conservator for a minor or incapacitated person; 32
(3) "Administer" means, with respect to real or tangible 33
personal property and as an agent or in another representative capacity, to 34
possess, purchase, sell, lease or insure, safekeep, or otherwise manage the 35
property; 36 SB230
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(4) "Affiliate" means a company that directly or indirectly 1
controls, is controlled by, or is under common control with a trust 2
institution or other company; 3
(5) "Authorized trust institution" means a state trust company, 4
subsidiary trust company, or trust office or representative trust office of a 5
trust institution located in Arkansas; 6
(6) "Bank" means a state bank, national bank, a bank chartered 7
by any state of the United States, or a foreign bank organized under the laws 8
of a territory of the United States, the Commonwealth of Puerto Rico, Guam, 9
American Samoa, or the United States Virgin Islands, the deposits of which 10
are insured by the Federal Deposit Insurance Corporation; 11
(7) "Bank supervisory agency" means: 12
(A) An agency of another state with primary responsibility 13
for chartering and supervising a trust institution; and 14
(B) The United States Office of the Comptroller of the 15
Currency, the Federal Deposit Insurance Corporation, the Board of Governors 16
of the Federal Reserve System, and any successor to these agencies; 17
(8) "Branch" means the same as defined in § 23 -48-702 with 18
respect to a depository institution; 19
(9) "Capital" means: 20
(A) The sum of: 21
(i) The par value of all shares of the state trust 22
company having a par value that have been issued; 23
(ii) The consideration fixed by the board in the 24
manner provided by the Arkansas Business Corporation Act, § 4 -27-101 et seq., 25
for all shares of the state trust company without par value that have been 26
issued, except a part of that consideration that: 27
(a) Has been actually received; 28
(b) Is less than all of that consideration; 29
and 30
(c) The board, by resolution adopted not later 31
than sixty (60) days after the date of issuance of those shares, has 32
allocated to surplus with the prior approval of the Bank Commissioner; and 33
(iii) An amount not included in subdivisions 34
(a)(9)(A)(i) and (ii) of this section that has been transferred to capital of 35
the state trust company, on the payment of a share dividend or on adoption by 36 SB230
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the board of a resolution directing that all or part of surplus be 1
transferred to capital, minus each reduction made as permitted by law; less 2
(B) All amounts otherwise included in subdivisions 3
(a)(9)(A)(i) and (ii) of this section that are attributable to the issuance 4
of securities by the state trust company and that the commissioner 5
determines, after notice and an opportunity for hearing, should be classified 6
as debt rather than equity securities; 7
(10) "Capital base" means the sum of capital, surplus, and 8
undivided profits, plus any additions and less any subtractions that the 9
commissioner may by rule prescribe; 10
(11) "Charter" means a charter, license, or other authority 11
issued by the commissioner or a bank supervisory agency authorizing a trust 12
institution to act as a fiduciary in its home state; 13
(12)(A) "Client" means a person to whom a trust institution owes 14
a duty or obligation under a trust or other account administered by the trust 15
institution or as an advisor or agent, whether or not the trust institution 16
owes a fiduciary duty to the person. 17
(B) "Client" includes the noncontingent beneficiaries of 18
an account; 19
(13) "Company" means a bank, trust company, subsidiary trust 20
company, corporation, limited liability company, partnership, association, 21
business trust, foundation, or another trust; 22
(14) "Control" means: 23
(A) The ownership of or ability or power to vote, 24
directly, acting through one (1) or more other persons, or otherwise 25
indirectly, more than twenty -five percent (25%) of the outstanding shares of 26
a class of voting securities of a state trust company or other company; 27
(B) The ability to control the election of a majority of 28
the board of a state trust company or other company; and 29
(C) The power to exercise, directly or indirectly, a 30
controlling influence over the management or policies of the state trust 31
company or other company as determined by the commissioner after notice and 32
an opportunity for hearing; 33
(15) "Depository institution" means a company chartered to act 34
as a fiduciary and included for any purpose within any of the definitions of 35
“insured depository institution” as stated in 12 U.S.C. § 1813, as it existed 36 SB230
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on January 1, 2025; 1
(16) "Equity capital" means an amount by which the total assets 2
of a state trust company exceed the total liabilities of the state trust 3
company; 4
(17) "Equity security" means: 5
(A) Stock, other than adjustable rate preferred stock and 6
money market, including auction rate, preferred stock; 7
(B) A certificate of interest or participation in a 8
profit-sharing agreement, collateral -trust certificate, preorganization 9
certificate or subscription, transferable share or participation share, 10
investment contract, voting -trust certificate, or partnership interest; 11
(C) A security immediately convertible at the option of 12
the holder without payment of significant additional consideration into a 13
security described by this subdivision (17); 14
(D) A security carrying a warrant or right to subscribe to 15
or purchase a security described by this subdivision (17); and 16
(E) A certificate of interest or participation in, 17
temporary or interim certificate for, or receipt for a security described by 18
this subdivision (17) that evidences an existing or contingent equity 19
ownership interest; 20
(18) "Fiduciary record" means a matter written, transcribed, 21
recorded, received, or otherwise in the possession or control of a trust 22
company, whether in physical or electromagnetic form, that is necessary to 23
preserve information concerning an act or event relevant to an account or a 24
client of a trust company; 25
(19)(A) "Foundation" means an organization that: 26
(i) Is organized and operated for religious, 27
educational, or charitable purposes, as defined in 26 U.S.C. § 501(c)(3), as 28
it existed on January 1, 2025; 29
(ii) Has equity capital of at least one million 30
dollars ($1,000,000); 31
(iii) Has fiduciary liability insurance coverage 32
with policy limits of not less than two million dollars ($2,000,000); 33
(iv) Adopts and maintains written fiduciary policies 34
and procedures; 35
(v) Has an annual independent audit that covers 36 SB230
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fiduciary activities and assets; and 1
(vi)(a) Is serving as a fiduciary for a trust or 2
estate whose assets are less than seven hundred fifty thousand dollars 3
($750,000). 4
(b) Subdivision (19)(A)(vi)(a) of this section 5
does not apply if: 6
(1) The foundation is the sole remainder 7
beneficiary of the trust or estate; or 8
(2) The remainder beneficiary is an 9
organization that is supported by the foundation. 10
(B) "Foundation" does not include a private foundation as 11
defined in 26 U.S.C. § 509(a), as it existed on January 1, 2025; 12
(20) "Hazardous condition" means, with respect to a trust 13
company: 14
(A) A refusal by the trust company to permit examination 15
of its books, papers, accounts, records, or affairs by the commissioner; 16
(B) Violation by a trust company of a condition of its 17
chartering or an agreement entered into between the trust company and the 18
commissioner; or 19
(C) A circumstance or condition in which an unreasonable 20
risk of loss is threatened to clients or creditors of a trust company, 21
excluding risk of loss to a client that arises as a result of the client's 22
decisions or actions, but including a circumstance or condition in which a 23
trust company: 24
(i) Is unable or lacks the means to meet its current 25
obligations as they come due in the regular and ordinary course of business, 26
even though the book or fair market value of its assets may exceed its 27
liabilities; 28
(ii) Has equity capital less than the amount of 29
capital the trust company is required to maintain under § 23 -51-403, or the 30
adequacy of its equity capital is threatened, as determined under regulatory 31
accounting principles; 32
(iii) Has concentrated an excessive or unreasonable 33
portion of its assets in a particular type or character of investment; 34
(iv) Violates or refuses to comply with this 35
chapter, another statute or rule applicable to trust companies, or a final 36 SB230
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and enforceable order of the commissioner; 1
(v) Is in a condition that renders the continuation 2
of a particular business practice hazardous to its clients and creditors; or 3
(vi) Conducts business in an unsafe or unsound 4
manner, which includes without limitation conducting business with: 5
(a) Inexperienced or inattentive management; 6
(b) Potentially dangerous operating practices; 7
(c) Infrequent or inadequate audits; 8
(d) Administration of assets that is notably 9
deficient in relation to the volume and character or responsibility for asset 10
holdings; 11
(e) Failure to adhere to sound administrative 12
practices; 13
(f) Frequent occurrences of violations of 14
laws, rules, or terms of the governing instruments; or 15
(g) Engaging in self -dealing or evidencing a 16
notable degree of potential or actual conflicts of interest; 17
(21) "Insider" means: 18
(A) A director, officer, or principal shareholder of the 19
trust company; 20
(B) A company controlled by a person described by 21
subdivision (21)(A) of this section; or 22
(C) A person who participates or has authority to 23
participate, other than in the capacity of a director, in major policy -making 24
functions of the state trust company, whether or not the person has an 25
official title or the officer is serving without salary or compensation; 26
(22) "Insolvent" means a circumstance or condition in which a 27
state trust company: 28
(A) Is unable or lacks the means to meet its current 29
obligations as they come due in the regular and ordinary course of business, 30
even if the value of its assets exceeds its liabilities; 31
(B) Has equity capital less than one million dollars 32
($1,000,000), as determined under regulatory accounting principles; 33
(C) Fails to maintain deposit insurance with the Federal 34
Deposit Insurance Corporation or its successor if the commissioner determines 35
that deposit insurance is necessary for the safe and sound operation of the 36 SB230
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state trust company, or fails to maintain adequate security for its deposits 1
according to § 23-51-508; 2
(D) Sells or attempts to sell substantially all of its 3
assets or merges or attempts to merge substantially all of its assets or 4
business with another entity other than as provided by §§ 23 -51-701 — 23-51-5
706; or 6
(E) Attempts to dissolve or liquidate other than as 7
provided by § 23-51-1001; 8
(23) "Investment security" means a marketable obligation 9
evidencing indebtedness of a person in the form of a bond, note, debenture, 10
or other debt instrument not otherwise classified as a loan or extension of 11
credit; 12
(24) "License" means the authority granted by the commissioner 13
under this chapter to establish, acquire, or maintain a trust office; 14
(25) "Loans and extensions of credit" means direct or indirect 15
advances of funds by a state trust company to a person that are conditioned 16
on the obligation of the person to repay the funds or that are repayable from 17
specific property pledged by or on behalf of the person; 18
(26) "New trust office" means a trust office located in a host 19
state that: 20
(A) Is originally established by the trust institution as 21
a trust office; and 22
(B) Does not become a trust office of the trust 23
institution as a result of: 24
(i) The acquisition of another trust institution or 25
trust office of another trust institution; or 26
(ii) A merger, consolidation, or conversion 27
involving any trust institution or trust office; 28
(27)(A) "Office" means, with respect to a trust institution, a 29
physical location including the principal office, a trust office, or a 30
representative trust office. 31
(B) "Office" does not include a branch; 32
(28) "Officer" means the presiding officer of a board, a 33
principal executive officer, or another officer appointed by the board of a 34
state trust company or other company, or a person or group of persons acting 35
in a comparable capacity for the state trust company or other company; 36 SB230
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(29) "Out-of-state bank" means a bank chartered to act as a 1
fiduciary in any state or states other than this state; 2
(30) "Out-of-state trust company" means either a trust company 3
that is not a state trust company or a savings association whose principal 4
office is not located in this state; 5
(31) "Out-of-state trust institution" means a trust institution 6
that is not a state trust institution; 7
(32) "Person" means an individual, a company, or any other legal 8
entity; 9
(33) "Principal office" with respect to: 10
(A) A state trust company, means a location registered 11
with the commissioner as the state trust company's home office at which: 12
(i) The state trust company does business; 13
(ii) The state trust company keeps its corporate 14
books and a set of its material records, including material fiduciary 15
records; and 16
(iii) At least one (1) executive officer of the 17
state trust company maintains an office; or 18
(B) A trust institution other than a state trust company, 19
means its principal place of business in the United States; 20
(34) "Principal shareholder" means a person who owns or has the 21
ability or power to vote, directly, acting through one (1) or more other 22
persons, or otherwise indirectly, ten percent (10%) or more of the 23
outstanding shares of any class of voting securities of a state trust company 24
or other company; 25
(35) "Private trust company" means a trust company that does not 26
engage in a trust business with the general public; 27
(36) "Receiver" means the commissioner, an agent of the 28
commissioner, or any federal or other governmental agency exercising the 29
powers and duties of a receiver under § 23 -51-1003; 30
(37) "Representative trust office" means an office at which a 31
trust institution has been authorized by the commissioner to engage in a 32
trust business other than acting as a fiduciary; 33
(38) "Savings association" means a depository institution that 34
is neither a bank nor a foreign bank; 35
(39) "Shareholder" means an owner of a share in a state trust 36 SB230
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company; 1
(40) "Shares" means the units into which the proprietary 2
interests of a state trust company are divided or subdivided by means of 3
classes, series, relative rights, or preferences; 4
(41) "State" means any state of the United States, the District 5
of Columbia, any territory of the United States, the Commonwealth of Puerto 6
Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the 7
United States Virgin Islands, and the Northern Mariana Islands; 8
(42) "State bank" means a bank chartered to act as a fiduciary 9
by this state; 10
(43) "State trust company" means a corporation organized or 11
reorganized under this chapter; 12
(44) "State trust company facility" means real estate, including 13
an improvement, owned, or leased to the extent the lease or the leasehold 14
improvements are capitalized, by a state trust company for the purpose of: 15
(A) Providing space for state trust company employees to 16
perform their duties and space for parking by state trust company employees 17
and customers; 18
(B) Conducting trust business, including meeting the 19
reasonable needs and convenience of the state trust company's customers, 20
computer operations, document and other item processing, maintenance and 21
record retention, and storage; 22
(C) Holding, improving, and occupying as an incident to 23
future expansion of the state trust company's facilities; or 24
(D) Conducting another activity authorized by rules 25
adopted under this chapter; 26
(45) "State trust institution" means a trust institution having 27
its principal office in this state; 28
(46)(A) "Subsidiary" means a company that is controlled by 29
another person. 30
(B) "Subsidiary" includes a subsidiary of a subsidiary; 31
(47) "Subsidiary trust company" means a corporation organized 32
under the Arkansas Business Corporation Act, § 4 -27-101 et seq., and 33
authorized by the commissioner pursuant to § 23 -47-801 et seq., to conduct 34
trust business and business incidental to trust business in this state, of 35
which more than fifty percent (50%) of the voting stock is owned, directly or 36 SB230
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indirectly, by a bank holding company which also owns, directly or 1
indirectly, an affiliated bank, as that term is defined in § 23 -47-801 et 2
seq.; 3
(48) "Surplus" means the amount by which the assets of a state 4
trust company exceeds its liabilities, capital, and undivided profits; 5
(49) "Trust business" means the holding out by a person to the 6
public by advertising, solicitation, or other means that the person is 7
available to perform any service of a fiduciary in this or another state, 8
including without limitation: 9
(A) Acting as a fiduciary; or 10
(B) To the extent not acting as a fiduciary, any of the 11
following: 12
(i) Receiving for safekeeping personal property of 13
every description; 14
(ii) Acting as assignee, bailee, conservator, 15
custodian, escrow agent, registrar, receiver, or transfer agent; or 16
(iii) Acting as financial advisor, investment 17
advisor or manager, agent, or attorney -in-fact in any agreed-upon capacity; 18
(50) "Trust company" means a state trust company, subsidiary 19
trust company, or any other company chartered to act as a fiduciary that is 20
neither a depository institution nor a foreign bank; 21
(51) "Trust deposits" means the client funds held by a state 22
trust company and authorized to be deposited with itself pending investment, 23
distribution, or payment of debts on behalf of the client; 24
(52) "Trust institution" means a depository institution, state 25
bank, or trust company; 26
(53) "Trust office" means a physical office, other than the 27
principal office, at which a trust institution is licensed by the 28
commissioner to act as a fiduciary; 29
(54)(A) "Unauthorized trust activity" means: 30
(i) A company, other than one identified in § 23 -51-31
103, acting as a fiduciary within this state; 32
(ii) A company engaging in a trust business in this 33
state at any office of the company that is not its principal office, if the 34
company is a state trust institution, or that is not a trust office or a 35
representative trust office of the company; or 36 SB230
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(iii) An out-of-state trust institution engaging in 1
a trust business in this state at any time under an order issued by the 2
commissioner under § 23 -51-301 is in effect. 3
(B) "Unauthorized trust activity" does not include a 4
foundation serving as a fiduciary; 5
(55)(A) "Undivided profits" means the part of equity capital of 6
a state trust company equal to the balance of its net profits, income, gains, 7
and losses since the date of its formation, minus subsequent distributions to 8
shareholders and transfers to surplus or capital under share dividends or 9
appropriate board resolutions. 10
(B) "Undivided profits" includes amounts allocated to 11
undivided profits as a result of a merger; and 12
(56)(A) "Voting security" means a share, or other evidence of 13
proprietary interest in a state trust company or other company that has as an 14
attribute the right to vote or participate in the election of the board of 15
the state trust company or other company, whether or not the right is limited 16
to the election of fewer than all of the board members. 17
(B) "Voting security" includes a security that is 18
convertible or exchangeable into a voting security. 19
20
23-51-104. Company authorized to act as fiduciary. 21
(a) A company shall not act as a fiduciary in this state except: 22
(1) A state trust company; 23
(2) A state bank; 24
(3) An association organized under the laws of this state and 25
authorized to act as a fiduciary under § 23 -37-101 et seq.; 26
(4) A national bank having its principal office in this state 27
and authorized by the United States Comptroller of the Currency to act as a 28
fiduciary under 12 U.S.C. § 92a, as it existed on January 1, 2025; 29
(5) A federally chartered savings association having its 30
principal office in this state and authorized by its federal chartering 31
authority to act as a fiduciary; 32
(6) A subsidiary trust company authorized to act as a fiduciary 33
under § 23-47-801 et seq.; 34
(7) An out-of-state bank with a branch in this state established 35
or maintained under § 23 -48-901 et seq., or a trust office licensed by the 36 SB230
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Bank Commissioner under this chapter; 1
(8) An out-of-state trust company with a trust office or a trust 2
representative office licensed by the commissioner under this chapter; or 3
(9) A foundation. 4
(b) A company shall not engage in an unauthorized trust activity. 5
6
23-51-105. Trust business. 7
A state trust company or a state bank may: 8
(1) Perform any act as a fiduciary; 9
(2) Engage in any trust business; 10
(3) Exercise any incidental power that is reasonably necessary 11
to enable it to fully exercise, according to commonly accepted fiduciary 12
customs and usages, a power conferred in this chapter; and 13
(4) If a state trust company, exercise any other power 14
authorized by § 23-51-401. 15
16
23-51-106. Activities not requiring charter or license. 17
Notwithstanding any other provision of this chapter, a company does not 18
engage in the trust business or in any other business in a manner requiring a 19
charter or license under this chapter or in an unauthorized trust activity 20
by: 21
(1) Acting in a manner authorized by law and in the scope of 22
authority as an agent of a trust institution with respect to an activity that 23
is not an unauthorized trust activity; 24
(2) Rendering a service customarily performed as an attorney or 25
law firm in a manner approved and authorized by the Supreme Court or the laws 26
of this state; 27
(3) Acting as trustee under a deed of trust delivered only as 28
security for the payment of money or for the performance of another act; 29
(4) Receiving and distributing rents and proceeds of sale as a 30
licensed real estate broker on behalf of a principal in a manner authorized 31
by the Real Estate License Law, § 17 -42-101 et seq.; 32
(5) Engaging in a securities transaction or providing an 33
investment advisory service as a licensed and registered broker -dealer, 34
investment advisor or registered representative thereof, provided the 35
activity is regulated by the State Securities Department or the United States 36 SB230
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Securities and Exchange Commission; 1
(6) Engaging in the sale and administration of an insurance 2
product by an insurance company or agent licensed by the State Insurance 3
Department to the extent that the activity is regulated by the State 4
Insurance Department; 5
(7) Engaging in the lawful sale of prepaid funeral benefits 6
under a permit issued by the State Insurance Department under the Arkansas 7
Prepaid Funeral Benefits Law, § 23 -40-101 et seq., or engaging in the lawful 8
business of maintaining a perpetual care cemetery trust pursuant to § 20 -17-9
904 or a permanent maintenance fund for perpetually maintained cemeteries 10
under the Cemetery Act for Perpetually Maintained Cemeteries, § 20 -17-1001 et 11
seq.; 12
(8) Acting as trustee under a voting trust as provided by § 4 -13
26-706 or § 4-27-730; 14
(9) Engaging in other activities expressly excluded from the 15
application of this chapter by rules issued by the Bank Commissioner; 16
(10) Rendering services customarily performed by a public 17
accountant or a certified public accountant in a manner authorized by the 18
Arkansas State Board of Public Accountancy; 19
(11) If the company is a trust institution and is not barred by 20
order of the commissioner from engaging in a trust business in this state 21
under this chapter: 22
(A) Marketing or soliciting in this state through the 23
mails, telephone, any electronic means, or in person with respect to acting 24
or proposing to act as a fiduciary outside of this state; 25
(B) Delivering money or other intangible assets and 26
receiving the same from a client or other person in this state; or 27
(C) Accepting or executing outside of this state a trust 28
of a client or otherwise acting as a fiduciary outside of this state for a 29
client; or 30
(12) If the company is a foundation, serving as a fiduciary. 31
32
23-51-107. Trust business of state trust institution. 33
(a) A state trust institution may act as a fiduciary or otherwise 34
engage in a trust business in this or any other state or foreign country, 35
subject to complying with applicable laws of the state or foreign country, 36 SB230
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at: 1
(1) An office established and maintained under this chapter; 2
(2) A branch; or 3
(3) Any other authorized location other than an office or 4
branch. 5
(b)(1) Except as provided in subdivision (b)(2) of this section, a 6
state trust institution may conduct any activities at an office outside this 7
state that are permissible for a trust institution chartered by the host 8
state where the office is located, except to the extent the activities are 9
expressly prohibited by the laws of this state or by any rule or order of the 10
Bank Commissioner applicable to the state trust institution. 11
(2) The commissioner may waive any prohibition if he or she 12
determines, by order or rule, that the involvement of out -of-state offices of 13
state trust institutions in particular activities would not threaten the 14
safety or soundness of the state trust institutions. 15
16
23-51-108. Trust charters under prior law. 17
A charter of a corporation that was previously a state trust company 18
incorporated under any laws of this state before the effective date of this 19
act shall continue to be effective and shall operate according to this 20
chapter and other applicable law. 21
22
23-51-109. Application of laws relating to general business 23
corporations. 24
(a) The Arkansas Business Corporation Act, § 4 -27-101 et seq., applies 25
to a trust company to the extent not inconsistent with this chapter or the 26
proper business of a trust company, except that a reference to the Secretary 27
of State under the Arkansas Business Corporation Act, § 4 -27-101 et seq., 28
means the Bank Commissioner unless the context requires otherwise. 29
(b) Unless expressly authorized by this chapter or a rule of the 30
commissioner, a trust company shall not take an action authorized by the 31
Arkansas Business Corporation Act, § 4 -27-101 et seq., regarding its 32
corporate status, capital structure, or a matter of corporate governance, of 33
the type for which the Arkansas Business Corporation Act, § 4 -27-101 et seq., 34
would require a filing with the Secretary of State if the trust company were 35
a business corporation, without first submitting the filing to the 36 SB230
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commissioner for the same purposes for which it otherwise would be required 1
to be submitted to the Secretary of State and compliance with this chapter. 2
(c) The commissioner may adopt rules to limit or refine the 3
applicability of subsection (a) of this section to a trust company or to 4
alter or supplement the procedures and requirements of the Arkansas Business 5
Corporation Act, § 4 -27-101 et seq., applicable to an action taken under this 6
chapter. 7
8
23-51-110. Engaging in commerce prohibited. 9
Except as otherwise provided by this chapter or rules adopted under 10
this chapter, a state trust company shall not invest its funds in trade or 11
commerce by buying, selling, or otherwise dealing in goods or by owning or 12
operating a business not part of the state trust business, except as 13
necessary to fulfill a fiduciary obligation to a client. 14
15
23-51-111. Name of trust institution. 16
(a) Except as provided under subsection (b) of this section, a state 17
trust company or out -of-state trust institution may register a name with the 18
Bank Commissioner in connection with establishing a principal office, trust 19
office, or representative trust office in this state under this chapter. 20
(b) The commissioner may determine that a name proposed to be 21
registered is potentially misleading to the public and require the registrant 22
to select a name that is not potentially misleading. 23
24
23-51-112. Confidential records. 25
(a) The following records of the State Bank Department shall be 26
confidential and shall not be subject to disclosure under the Freedom of 27
Information Act, § 25 -19-101 et seq. except as stated in this section or 28
according to department rules: 29
(1) An examination report filed with the department; 30
(2) A record disclosing information obtained from an 31
examination; 32
(3) Investigations and reports revealing facts concerning a 33
state trust company or the customers of the organization; and 34
(4) Any personal financial statements submitted to the 35
department. 36 SB230
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(b) Notwithstanding any provision of this section to the contrary, 1
records deemed confidential according to this section, in the Bank 2
Commissioner's discretion, may be disclosed as follows: 3
(1) Under a validly issued subpoena and, in the interest of 4
justice, the commissioner may waive the privilege created under this section 5
and produce examination reports and other related documents under the 6
provisions of a protective order entered by a court or administrative 7
tribunal of competent jurisdiction when the order is designed to protect the 8
confidential nature of the information that is disclosed from public 9
dissemination; 10
(2) An official order of the department may be disclosed within 11
the discretion of the commissioner if the commissioner makes a determination 12
that the disclosure would not give advantage to a competitor or adversely 13
affect the safety and soundness of the state trust company; and 14
(3) To federal financial institutions' regulatory agencies and 15
financial institutions' regulatory agencies of other states. 16
(c) The commissioner may promulgate rules about disclosure of 17
confidential information. 18
19
Subchapter 2 — Supervision 20
21
23-51-201. Examination of state trust companies. 22
(a) The Bank Commissioner shall examine a state trust company at least 23
one (1) time every twenty -four (24) months or more often as the commissioner 24
determines is necessary to safeguard the interests of the public and the 25
safety and soundness of the institution. 26
(b) A state trust company shall pay to the State Bank Department 27
within ten (10) days after notice from the commissioner in January and July 28
of each year an assessment fee to defray the costs of examination and the 29
costs of operations of the department which will be charged according to an 30
assessment fee schedule approved by the commissioner. 31
(c) The commissioner may: 32
(1) Accept examinations of a state trust company by a bank 33
supervisory agency in lieu of an examination under this section; or 34
(2) Conduct examinations of a state trust company jointly or 35
concurrently with a bank supervisory agency. 36 SB230
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(d)(1) A state trust company shall periodically file with the 1
commissioner a copy of its statement of condition and income. 2
(2) The commissioner may call for a report under subdivision 3
(d)(1) of this section whenever deemed necessary, to obtain a full and 4
complete knowledge of the condition of the state trust company. 5
6
23-51-202. Examination of out -of-state trust institutions. 7
(a)(1) To the extent consistent with § 23 -51-203, the Bank 8
Commissioner may make an examination of an office established and maintained 9
in this state under this chapter by an out -of-state trust institution as the 10
commissioner may deem necessary to determine whether the office is being 11
operated in compliance with the laws of this state and according to safe and 12
sound banking practices. 13
(2) The Arkansas Banking Code of 1997, § 23 -45-101 et seq., 14
applies to an examination under subdivision (a)(1) of this section. 15
(b)(1) The commissioner may require a periodic report regarding an 16
out-of-state trust institution that has established and maintained an office 17
in this state under this chapter. 18
(2) The periodic report required under subdivision (b)(1) of 19
this section shall be provided by the trust institution or by the home state 20
regulator. 21
(3) A reporting requirement prescribed by the commissioner under 22
this subsection shall be consistent with the reporting requirements 23
applicable to state trust companies and appropriate for the purpose of 24
enabling the commissioner to carry out his or her responsibilities under this 25
chapter. 26
27
23-51-203. Cooperative agreements. 28
(a)(1) The Bank Commissioner may enter into cooperative, coordinating, 29
and information-sharing agreements with any other bank supervisory agencies 30
or any organization affiliated with or representing one (1) or more bank 31
supervisory agencies with respect to the periodic examination or other 32
supervision of an office in this state of an out -of-state trust institution 33
or an office of a state trust institution in a host state. 34
(2) The commissioner may accept a party's report of examination 35
and report of investigation in lieu of conducting his or her own examination 36 SB230
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or investigation. 1
(b)(1) The commissioner may contract with a bank supervisory agency 2
that has concurrent jurisdiction over a state trust institution or an out -of-3
state trust institution maintaining an office in this state to engage the 4
services of the bank supervisory agency's examiners at a reasonable rate of 5
compensation, or to provide the services of the commissioner's examiners to 6
the bank supervisory agency at a reasonable rate of compensation. 7
(2) A contract under subdivision (b)(1) of this section shall be 8
deemed a sole source contract under § 19 -11-232. 9
(c) The commissioner may enter into joint examinations or joint 10
enforcement actions with other bank supervisory agencies having concurrent 11
jurisdiction over an office established and maintained in this state by an 12
out-of-state trust institution or an office established and maintained by a 13
state trust institution in any host state, if: 14
(1) The commissioner may at any time take action independently 15
if the commissioner deems the action to be necessary or appropriate to carry 16
out his or her responsibilities under this chapter or to ensure compliance 17
with the laws of this state; or 18
(2) In the case of an out -of-state trust institution, the 19
commissioner recognizes the exclusive authority of the home state regulator 20
over corporate governance matters and the primary responsibility of the home 21
state regulator with respect to safety and soundness matters. 22
(d)(1) An out-of-state trust institution that maintains at least one 23
(1) office in this state may be assessed and, if assessed, shall pay 24
supervisory and examination fees according to the laws of this state and 25
rules of the commissioner. 26
(2) The fees may be shared with other bank supervisory agencies 27
or an organization affiliated with or representing one (1) or more bank 28
supervisory agencies according to agreements between the parties and the 29
commissioner. 30
31
23-51-204. Reports of apparent crime. 32
(a)(1) A trust company that is the victim of a robbery, has a shortage 33
of corporate or fiduciary funds in excess of five thousand dollars ($5,000), 34
or is the victim of an apparent or suspected misapplication of its corporate 35
or fiduciary funds or property in any amount by a director, officer, or 36 SB230
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employee shall report the robbery, shortages, or apparent or suspected 1
misapplication to the Bank Commissioner within forty -eight (48) hours after 2
the time it is discovered. 3
(2) The initial report required under subdivision (a)(1) of this 4
section may be oral if the report is promptly confirmed in writing. 5
(b) The trust company or a director, officer, employee, or agent is 6
not subject to liability for defamation or another charge resulting from 7
information supplied in a report under subdivision (a)(1) of this section. 8
9
Subchapter 3 — Enforcement 10
11
23-51-301. Enforcement. 12
(a)(1) Consistent with the Arkansas Administrative Procedure Act, § 13
25-15-201 et seq., after notice and opportunity for hearing, the Bank 14
Commissioner may determine: 15
(A) That an office maintained by an out -of-state trust 16
institution in this state is being operated in violation of the laws of this 17
state or in an unsafe and unsound manner; or 18
(B) That a company is engaged in an unauthorized trust 19
activity. 20
(2) In either event as described in subdivision (a)(1) of this 21
section, the commissioner may take enforcement action as he or she would be 22
empowered to take if the office maintained by an out -of-state trust 23
institution or the company were a state trust company, including without 24
limitation issuing an order temporarily or permanently prohibiting the 25
company from engaging in a trust business in this state. 26
(b)(1) The commissioner may determine by order that an out -of-state 27
trust institution engaging in or proposing to engage in a trust business in 28
this state does not meet the requirements for establishing a representative 29
trust office in this state under § 23 -51-909. 30
(2) An order under subdivision (b)(1) of this section is 31
effective on the date of issuance or other date as the commissioner shall 32
determine. 33
(c)(1) In cases involving extraordinary circumstances requiring 34
immediate action, the commissioner may take an action permitted by subsection 35
(a) of this section without notice or opportunity for hearing. 36 SB230
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(2) The commissioner shall promptly afford a subsequent hearing 1
upon an application to rescind the action taken under subdivision (c)(1) of 2
this section. 3
(3) The commissioner shall promptly give notice to the home 4
state regulator of each enforcement action taken against an out -of-state 5
trust institution and, to the extent practicable, shall consult and cooperate 6
with the home state regulator in pursuing and resolving the enforcement 7
action. 8
9
23-51-302. Violation of administrative orders. 10
(a) The Bank Commissioner may: 11
(1) Order an authorized trust institution, or subsidiary of an 12
authorized trust institution, or a director, officer, or employee to cease 13
and desist violating this chapter or any lawful rule issued under this 14
chapter; 15
(2) Order an authorized trust institution, or subsidiary of an 16
authorized trust institution, or a director, officer, or employee to cease 17
and desist from a course of conduct that is unsafe or unsound and that is 18
likely to cause insolvency or dissipation of assets or is likely to 19
jeopardize or otherwise seriously prejudice the interests of the public in 20
their relationship with the authorized trust institution; 21
(3) Require the immediate removal from office of an officer, 22
director, or employee of an authorized trust institution who: 23
(A) Has been found to be dishonest, incompetent, or 24
reckless in the management of the affairs of the authorized trust 25
institution; or 26
(B) Persistently violates the laws of this state or the 27
lawful orders, instructions, and rules issued by the commissioner; 28
(4) Order a company to cease engaging in an unauthorized trust 29
activity; or 30
(5) Enter an order under § 23 -51-301. 31
(b)(1) The commissioner may impose a civil money penalty of not more 32
than one thousand dollars ($1,000) for each violation by an authorized trust 33
institution, or subsidiary of an authorized trust institution, or a director, 34
officer, or employee of an order issued under subdivision (a)(1) of this 35
section. 36 SB230
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(2) The commissioner may impose a civil money penalty of not 1
more than five hundred dollars ($500) per day for each day that an authorized 2
trust institution, or subsidiary of an authorized trust institution, or a 3
director, officer, or employee violates a cease and desist order issued under 4
subdivision (a)(2) or subdivision (a)(3) of this section. 5
(c)(1) Notice and opportunity for a hearing shall be: 6
(A) Provided before any of the actions are taken under 7
this section by the commissioner; and 8
(B) Consistent with the Arkansas Administrative Procedure 9
Act, § 25-15-201 et seq. 10
(2)(A) In cases involving extraordinary circumstances requiring 11
immediate action, the commissioner may take an action permitted by subsection 12
(a) of this section without notice or opportunity for hearing. 13
(B) The commissioner shall promptly afford a subsequent 14
hearing upon an application to rescind the action taken under subdivision 15
(c)(2)(A) of this section. 16
17
23-51-303. Civil enforcement. 18
The Bank Commissioner may bring a civil action against a person who the 19
commissioner believes has committed or is about to commit a violation of: 20
(1) This chapter; or 21
(2) A rule or order of the commissioner pertaining to this 22
chapter. 23
24
23-51-304. Certain criminal offenses. 25
(a)(1) An officer, director, employee, or shareholder of a state trust 26
company commits an offense if the officer, director, employee, or shareholder 27
of a state trust company knowingly: 28
(A) Conceals information or a fact or removes, destroys, 29
or conceals a book or record of the state trust company for the purpose of 30
concealing information or a fact from the Bank Commissioner or an agent of 31
the commissioner; or 32
(B) For the purpose of concealing information, removes or 33
destroys a book or record of the state trust company that is material to a 34
pending or anticipated legal or administrative proceeding. 35
(2) An officer, director, or employee of a state trust company 36 SB230
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commits an offense if the person knowingly makes a false entry in the books 1
or records or in a report or statement of the state trust company. 2
(3) An offense under this subsection is a Class D felony. 3
(b) A person who knowingly fails or refuses to file the application 4
for acquisition of control of a state trust company as required by § 23 -51-5
602 commits a Class A misdemeanor. 6
7
23-51-305. When commissioner may take possession of state trust 8
company. 9
(a) The Bank Commissioner may take possession of the business and 10
property of a state trust company to which this chapter is applicable 11
whenever it appears that the state trust company: 12
(1) Has violated its charter or any laws applicable to the 13
charter of a state trust company; 14
(2) Is conducting its business in an unauthorized or unsafe 15
manner; 16
(3) Is in an unsafe or unsound condition to transact its 17
business; 18
(4) Has an impairment of its capital; 19
(5) Is in a hazardous condition; 20
(6) Has become otherwise insolvent; 21
(7) Has neglected or refused to comply with the terms of an 22
order issued by the commissioner; 23
(8) Has refused, upon proper demand, to submit its records, 24
affairs, and concerns for inspection and examination of an appointed or 25
authorized examiner of the commissioner; 26
(9) Is employing officers who have refused to be examined upon 27
oath regarding its affairs; or 28
(10) Has made a voluntary assignment of its assets to trustees. 29
(b) A state trust company that the commissioner takes possession of 30
under this subchapter shall remain in the commissioner’s possession until the 31
state trust company is authorized by the commissioner to resume business or 32
until the state trust company is fully liquidated under subchapter 10 of this 33
chapter. 34
35
Subchapter 4 — Organization of a State Trust Company 36 SB230
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1
23-51-401. Organization and powers of state trust company. 2
(a)(1) Subject to the other provisions of this chapter, one (1) or 3
more persons may organize and charter a state trust company. 4
(2) A state trust company may perform any act as a fiduciary or 5
engage in any trust business within or without this state. 6
(b) Subject to § 23 -51-108, a state trust company may exercise the 7
powers of an Arkansas business corporation reasonably necessary or helpful to 8
enable exercise of its specific powers under this chapter. 9
(c) A state trust company may contribute to community funds, or to 10
charitable, philanthropic, or benevolent instrumentalities conducive to 11
public welfare, amounts that its board considers appropriate and in the 12
interests of the state trust company. 13
(d) Subject to § 23 -51-508, a state trust company may deposit trust 14
funds with itself or an affiliate. 15
(e) Subject to obtaining any required insurance from the Federal 16
Deposit Insurance Corporation, a state trust company may receive and pay 17
deposits with or without interest, made by agencies of the United States 18
Government or of a state, county, or municipality. 19
20
23-51-402. State trust company principal office. 21
(a) A state trust company shall have and continuously maintain a 22
principal office in this state. 23
(b) An executive officer at the principal office is an agent of the 24
state trust company for service of process. 25
(c) A state trust company may change its principal office to any 26
location within this state by filing a written notice with the Bank 27
Commissioner stating: 28
(1) The name of the state trust company; 29
(2) The street address of its principal office before the 30
change; 31
(3) The street address to which the principal office is to be 32
changed; and 33
(4) A copy of the resolution adopted by the board of the state 34
trust company authorizing the change. 35
(d) The change of principal office shall take effect thirty (30) days 36 SB230
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after the date the commissioner receives the notice under subsection (c) of 1
this section, unless the commissioner establishes another date or unless 2
before that day the commissioner notifies the state trust company that it has 3
to establish to the satisfaction of the commissioner that the relocation is 4
consistent with the original determination made under § 23 -51-406 for the 5
establishment of a state trust company at that location, in which event the 6
change of principal office shall take effect when approved by the 7
commissioner. 8
9
23-51-403. Required capital. 10
(a) Except as provided in subsection (b) of this section, the Bank 11
Commissioner shall not issue a charter to a state trust company having 12
required capital of less than one million dollars ($1,000,000). 13
(b)(1) The commissioner may require additional capital for a proposed 14
or existing state trust company or, on application in the exercise of 15
discretion consistent with protecting safety and soundness, reduce the amount 16
of minimum capital required for a proposed or existing state trust company, 17
if the commissioner finds the condition and operations of an existing state 18
trust company or the proposed scope or type of operations of a proposed state 19
trust company requires additional, or permits reduced, capital consistent 20
with the safety and soundness of the state trust company. 21
(2) The safety and soundness factors to be considered by the 22
commissioner in the exercise of his or her discretion under subdivision 23
(b)(1) of this section include without limitation: 24
(A) The nature and type of business conducted; 25
(B) The nature and degree of liquidity in assets held in a 26
corporate capacity; 27
(C) The amount of fiduciary assets under management; 28
(D) The type of fiduciary assets held and the depository 29
of the assets; 30
(E) The complexity of fiduciary duties and degree of 31
discretion undertaken; 32
(F) The competence and experience of management; 33
(G) The extent and adequacy of internal controls; 34
(H) The presence or absence of annual unqualified audits 35
by an independent certified public accountant; 36 SB230
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(I) The reasonableness of business plans for retaining or 1
acquiring additional capital; and 2
(J) The existence and adequacy of insurance obtained or 3
held by the state trust company for the purpose of protecting its clients, 4
beneficiaries, and grantors. 5
(c)(1) The proposed effective date of an order requiring an existing 6
state trust company to increase its capital shall be stated in the order no 7
sooner than twenty (20) days after the date the proposed order is mailed or 8
delivered. 9
(2) Unless the state trust company requests a hearing before the 10
commissioner in writing before the effective date of the proposed order, the 11
order becomes effective and is final and nonappealable. 12
(3) This subsection does not prohibit an application to reduce 13
capital requirements of a proposed or an existing state trust company under 14
subsection (b) of this section. 15
(d) Subject to subsection (b) of this section and subchapter 12 of 16
this chapter, a state trust company to which the commissioner issues a 17
charter shall at all times maintain capital in at least the amount required 18
under subsection (a) of this section, plus any additional amount or less any 19
reduction the commissioner directs under subsection (b) of this section. 20
21
23-51-404. Change in outstanding capital and surplus. 22
(a) A state trust company shall not reduce or increase its outstanding 23
capital through dividend, redemption, issuance of shares, or otherwise 24
without the prior approval of the Bank Commissioner, except as permitted by 25
this section or rules adopted under this chapter. 26
(b) Unless otherwise restricted by rules, prior approval is not 27
required for an increase in capital accomplished through: 28
(1) Issuance of shares of common stock for cash; 29
(2) Declaration and payment of pro rata share dividends as 30
defined in the Arkansas Business Corporation Act, § 4 -27-101 et seq.; or 31
(3) Adoption by the board of the state trust company of a 32
resolution directing that all or part of undivided profits be transferred to 33
capital. 34
(c) Prior approval is not required for a decrease in surplus caused by 35
incurred losses in excess of undivided profits. 36 SB230
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1
23-51-405. Articles of association of state trust company. 2
(a) The articles of association of a state trust company shall be 3
signed and acknowledged by each organizer. 4
(b) The articles of association of a state trust company shall 5
include: 6
(1) The name of the state trust company; 7
(2) The period of the state trust company's duration, which may 8
be perpetual; 9
(3) The powers of the state trust company, which may be stated 10
as: 11
(A) All powers granted to a state trust company in this 12
state; or 13
(B) A list of the specific powers that the state trust 14
company chooses and is authorized to exercise; 15
(4) The aggregate number of shares that the state trust company 16
will be authorized to issue, the number of classes of shares, which may be 17
one (1) or more, the number of shares of each class if more than one (1) 18
class, and a statement of the par value of the shares of each class or that 19
the shares are to be without par value; 20
(5) If the shares are to be divided into classes, the 21
designation of each class and statement of the preferences, limitations, and 22
relative rights of the shares of each class; 23
(6) Any provision granting to shareholders the preemptive right 24
to acquire additional shares of the state trust company; 25
(7) Any provision granting the right of shareholders to 26
cumulative voting in the election of directors of the state trust company; 27
(8) The aggregate amount of consideration to be received for all 28
shares initially issued by the state trust company and a statement signed and 29
verified by the organizers that the capital stock has been fully subscribed 30
and the purchase price for the capital stock has been paid into an escrow 31
account approved by the Bank Commissioner; 32
(9) Any provision consistent with law that the organizers elect 33
to state in the articles of association for the regulation of the internal 34
affairs of the state trust company or that is otherwise required by this 35
chapter to be stated in the articles of association; 36 SB230
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(10) The street address of the state trust company's principal 1
office required to be maintained under § 23 -51-402; and 2
(11) The number of directors or managers constituting the 3
initial board of the state trust company, which shall not be fewer than three 4
(3), and the names and street addresses of the persons who are to serve as 5
directors until the first annual meeting of shareholders or until successor 6
directors have been elected and qualified. 7
8
23-51-406. Application for state trust company charter. 9
(a) An application for a state trust company charter shall be: 10
(1) Made under oath and in the form required by the Bank 11
Commissioner; 12
(2) Supported by information, data, records, and opinions of 13
counsel that the commissioner requires. 14
(3) Accompanied by a nonrefundable filing fee of not less than 15
three thousand dollars ($3,000) nor more than ten thousand dollars ($10,000) 16
as set by rule of the commissioner; and 17
(4) Accompanied by proof of escrow of deposit for the required 18
capital. 19
(b)(1) The commissioner shall grant a state trust company charter only 20
on proof that one (1) or more viable markets exist within or outside of this 21
state that may be served in a profitable manner by the establishment of the 22
proposed state trust company. 23
(2) In making such a determination under subdivision (b)(1) of 24
this section, the commissioner shall: 25
(A) Examine the business plan which shall be submitted as 26
part of the application for a state trust company charter; and 27
(B) Consider the following information: 28
(i) The market or markets to be served; 29
(ii) Whether or not the proposed organizational and 30
capital structure and amount of initial capitalization is adequate for the 31
proposed business and location; 32
(iii) Whether or not the anticipated volume and 33
nature of business indicates a reasonable probability of success and 34
profitability based on the market sought to be served; 35
(iv) Whether or not the proposed officers and 36 SB230
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directors of the state trust company, as a group, have sufficient fiduciary 1
experience, ability, standing, competence, trustworthiness, and integrity to 2
justify a belief that the proposed state trust company will operate in 3
compliance with law and that success of the proposed state trust company is 4
probable; 5
(v) Whether or not each principal shareholder of the 6
proposed state trust company has sufficient experience, ability, standing, 7
competence, trustworthiness, and integrity to justify a belief that the 8
proposed state trust company will be free from improper or unlawful influence 9
or interference with respect to the state trust company's operation in 10
compliance with law; and 11
(vi) Whether or not the organizers of the proposed 12
state trust company are acting in good faith. 13
(c) The failure of an applicant for a state trust company charter to 14
furnish required information, data, opinions of counsel, other material or 15
the required fee is considered an abandonment of the application. 16
17
23-51-407. Notice and investigation of charter application for state 18
trust company. 19
(a) The Bank Commissioner shall notify the organizers of the proposed 20
state trust company when the application is complete and accepted for filing 21
and all required fees and deposits have been paid. 22
(b) Upon submission of an application to the commissioner, the 23
organizers of the proposed state trust company shall provide: 24
(1) Notice through publication of one (1) notice published in a 25
newspaper having a general and substantially statewide circulation; and 26
(2) Written notice of filing through the United States mail to 27
all trust institutions maintaining a principal office or a trust office in 28
the county wherein the principal office of the proposed state trust company 29
is to be located. 30
(c)(1) The commissioner shall investigate the application for a 31
charter for a state trust company and inquire into the identity and character 32
of each proposed director, officer, and principal shareholder of the state 33
trust company. 34
(2) The investigation under subdivision (c)(1) of this section 35
may be conducted at the expense of the organizers of the state trust company. 36 SB230
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(3) The commissioner shall prepare a written report of the 1
investigation under this subsection, and any person may request a copy of the 2
nonconfidential portions of the application as provided by the Freedom of 3
Information Act of 1967, § 25 -19-101 et seq. 4
(4)(A) Rules adopted under this chapter may specify the 5
confidential or nonconfidential character of information obtained by the 6
State Bank Department under this section. 7
(B) Except as provided in rules regarding confidential 8
information, the financial statement of a proposed officer, director, or 9
principal shareholder of the state trust company is confidential and not 10
subject to public disclosure. 11
12
23-51-408. Written protest — Filing fee — Hearing and decision on 13
charter application. 14
(a)(1) A person shall not appear in opposition to an application for a 15
charter for a state trust company unless the person has filed an official 16
protest to the granting of the application within thirty (30) days of the 17
date of the notice of the filing of the application. 18
(2) The protest filed under subdivision (a)(1) of this section 19
shall: 20
(A) Be in writing; 21
(B) State the grounds for objection; and 22
(C)(i) Be accompanied by a filing fee of not less than two 23
thousand dollars ($2,000) nor more than five thousand dollars ($5,000) for 24
each protestant. 25
(ii) The amount of the filing fee under subdivision 26
(a)(2)(C)(i) of this section is set by rule promulgated by the Bank 27
Commissioner. 28
(b) Once the written report of investigation under § 23 -51-407 has 29
been completed, the commissioner may establish a time for hearing on the 30
charter application. 31
(c) Notice of the time, place, and purpose of the hearing under 32
subsection (b) of this section shall be given at least thirty (30) days 33
before the hearing, as follows: 34
(1) By letter from the commissioner to the organizers of the 35
proposed state trust company and to each trust institution to which the 36 SB230
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organizers of the application are required to give written notice under § 23 -1
51-407(a); 2
(2) By letter from the commissioner to each person who has filed 3
an official protest against the application for a charter for a state trust 4
company with the commissioner, provided that if a group of persons has 5
protested the application, the notice may be given to one (1) member of the 6
group; and 7
(3) By release to news media. 8
(d)(1) If the commissioner sets a hearing under subsection (b) of this 9
section, the commissioner shall conduct a public hearing. 10
(2) The commissioner may conduct as many prehearing conferences 11
and opportunities for discovery as the commissioner considers necessary. 12
(e)(1) Based on the record of a hearing conducted under subsection (d) 13
of this section, the commissioner shall: 14
(A) Determine whether or not all of the necessary 15
conditions stated in § 23 -51-406(b) have been established; and 16
(B) Enter an order granting or denying the charter for a 17
state trust company. 18
(2) The commissioner may make approval of any application 19
conditional and shall include any conditions in the order granting the 20
charter. 21
22
23-51-409. Issuance of charter. 23
(a) A state trust company shall not engage in the trust business until 24
it receives its charter from the Bank Commissioner. 25
(b) The commissioner shall not deliver the charter for a state trust 26
company until the state trust company has: 27
(1) Elected or qualified the initial officers and directors 28
named in the application for charter or other officers and directors approved 29
by the commissioner; and 30
(2) Complied with all other requirements of this chapter 31
relative to the organization of a state trust company. 32
(c) If a state trust company does not open and engage in the trust 33
business within six (6) months after the date it receives its charter or 34
conditional approval of application for charter, or within the period that 35
may have been extended, the commissioner may revoke the charter or cancel the 36 SB230
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conditional approval of application for charter without judicial action. 1
2
23-51-410. Amendment or restatement of state trust company articles of 3
association. 4
(a) A state trust company that has been granted a charter under § 23 -5
51-409 or a predecessor statute may amend or restate its articles of 6
association for any lawful purpose, including the creation of authorized but 7
unissued shares in one (1) or more classes or series. 8
(b) An amendment authorizing the issuance of shares in series shall 9
contain: 10
(1) The designation of each series and of any variations in the 11
preferences, limitations, and relative rights among series to the extent that 12
the preferences, limitations, and relative rights are to be established in 13
the articles of association; and 14
(2) A statement of any authority to be vested in the board of 15
the state trust company to establish series and determine the preferences, 16
limitations, and relative rights of each series. 17
(c)(1) Amendment or restatement of the articles of association of a 18
state trust company and approval of the board and shareholders of the state 19
trust company shall be made according to the Arkansas Business Corporation 20
Act, § 4-27-101 et seq., for the amendment or restatement of articles of 21
incorporation except as otherwise provided by this chapter or rules adopted 22
under this chapter. 23
(2) The original and one (1) copy of the articles of amendment 24
or restated articles of association shall be filed with the Bank Commissioner 25
for approval. 26
(3) Unless the submission presents novel or unusual questions, 27
the commissioner shall approve or reject the amendment or restatement within 28
thirty (30) days after the date the commissioner considers the submission 29
complete and accepted for filing. 30
(4) The commissioner may require the submission of additional 31
information as considered necessary to an informed decision to approve or 32
reject any amendment or restatement of the articles of association under this 33
section. 34
(d) If the commissioner finds that the amendment or restatement of the 35
articles of association of a state trust company conforms to law and any 36 SB230
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conditions imposed by the commissioner, and any required filing fee has been 1
paid, the commissioner shall: 2
(1) Endorse the face of the original and copy with the date of 3
approval and the word “Approved”; 4
(2) File the original in the State Bank Department's records; 5
and 6
(3) Deliver a certified copy to the amendment or restatement to 7
the state trust company. 8
(e) An amendment or restatement of the articles of association of a 9
state trust company, if approved, takes effect on the date of approval, 10
unless the amendment or restatement provides for a different effective date. 11
12
23-51-411. Establishing series of shares. 13
(a) If the articles of association expressly give the board of a state 14
trust company authority to establish series and determine the preferences, 15
limitations, and relative rights of each series of shares, the board may do 16
so only in compliance with this section and any rules adopted under this 17
chapter. 18
(b)(1) A series of shares may be established by the board of a state 19
trust company in the manner provided by the Arkansas Business Corporation 20
Act, § 4-27-101 et seq., as if the state trust company were a domestic 21
corporation, but the shares of the series shall not be issued and sold except 22
upon compliance with this section. 23
(2) The state trust company shall file the original and one (1) 24
copy of the articles of amendment required by the Arkansas Business 25
Corporation Act, § 4 -27-101 et seq., with the Bank Commissioner. 26
(3) Unless the submission presents novel or unusual questions, 27
the commissioner shall approve or reject the series of shares within thirty 28
(30) days after the date the commissioner considers the submission complete 29
and accepted for filing. 30
(4) The commissioner may require the submission of additional 31
information as considered necessary to an informed decision. 32
(c) If the commissioner finds that the interests of the clients and 33
creditors of the state trust company will not be adversely affected by the 34
series, that the series of shares otherwise conforms to law and any 35
conditions imposed by the commissioner, and that any required filing fee has 36 SB230
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been paid, the commissioner shall: 1
(1) Endorse the face of the original and copy of the statement 2
with the date of approval and the word “Approved”; 3
(2) File the original in the State Bank Department's records; 4
and 5
(3) Deliver a certified copy of the statement to the state trust 6
company. 7
8
23-51-412. Capital notes or debentures. 9
(a) With the prior written approval of the Bank Commissioner, a state 10
trust company, at any time, through action of its board, and without 11
requiring action of its shareholders, may issue and sell its capital notes or 12
debentures, which shall be subordinate to the claims of depositors and may be 13
subordinate to other claims, including the claims of other creditors or 14
classes of creditors or the shareholders. 15
(b)(1) Capital notes or debentures may be convertible into shares of 16
any class or series. 17
(2) The issuance and sale of convertible capital notes or 18
debentures are subject to satisfaction of preemptive rights, if any, to the 19
extent provided by law. 20
(c) Without the prior written approval of the commissioner, interest 21
due or principal repayable on outstanding capital notes or debentures shall 22
not be paid by a state trust company when the state trust company is in 23
hazardous condition or insolvent, as determined by the commissioner, or to 24
the extent that payment will cause the state trust company to be in hazardous 25
condition or insolvent. 26
(d) The amount of any outstanding capital notes or debentures that 27
meet the requirements of this section and are subordinated to unsecured 28
creditors of the state trust company may be included in equity capital of the 29
state trust company for purposes of determining hazardous condition or 30
insolvency, and for such other purposes as may be provided by rules adopted 31
under this chapter. 32
33
23-51-413. Bylaws. 34
A state trust company shall adopt bylaws and may amend its bylaws from 35
time to time for the purposes and in accordance with the procedures stated in 36 SB230
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the Arkansas Business Corporation Act, § 4 -27-101 et seq. 1
2
23-51-414. Board of state trust company. 3
(a) The board of a state trust company shall be governed by the 4
Arkansas Business Corporation Act, § 4 -27-101 et seq., provided that the 5
board shall consist of not fewer than three (3) directors, the majority of 6
whom shall be residents of this state. 7
(b) Unless the Bank Commissioner consents in writing, a person shall 8
not serve as director of a state trust company if: 9
(1) The state trust company incurs an unreimbursed loss 10
attributable to a charged -off obligation of or holds a judgment against the 11
person or an entity that was controlled by the person at the time of funding 12
and at the time of default on the loan that gave rise to the judgment or 13
charged-off obligation; 14
(2) The person has been convicted of a felony; or 15
(3) The person has violated this chapter relating to loan of 16
trust funds and purchase or sale of trust property by the trustee, and the 17
violation has not been corrected. 18
(c)(1) If a state trust company does not elect directors prior to 19
sixty (60) days after the date of its regular annual meeting, the 20
commissioner may commence a proceeding to appoint a receiver under § 23 -51-21
1003 to operate the state trust company and elect directors or managers, as 22
appropriate. 23
(2) If the conservator is unable to locate or elect persons 24
willing and able to serve as directors, the commissioner may close the state 25
trust company for liquidation. 26
(d)(1) A vacancy on the board of a state trust company that reduces 27
the number of directors to fewer than three (3) shall be filed not later than 28
ninety (90) days after the date the vacancy occurs. 29
(2) If the vacancy has not been filled upon the expiration of 30
ninety (90) days following the date the vacancy occurs, the commissioner may 31
commence a proceeding to appoint a receiver under § 23 -51-1003 to operate the 32
state trust company and elect a board of not fewer than three (3) persons to 33
resolve the vacancy. 34
(3) If the conservator is unable to locate or elect three (3) 35
persons willing and able to serve as directors, the commissioner may close 36 SB230
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the state trust company for liquidation. 1
(e) Before each term to which a person is elected to serve as a 2
director of a state trust company, the person shall submit an affidavit for 3
filing in the minutes of the state trust company stating that the person, to 4
the extent applicable: 5
(1) Accepts the position and is not disqualified from serving in 6
the position; 7
(2) Will not violate or knowingly permit an officer, director, 8
or employee of the state trust company to violate any law applicable to the 9
conduct of business of the state trust company; and 10
(3) Will diligently perform the duties of the position. 11
(f) An advisory director is not considered a director if the advisory 12
director: 13
(1) Is not elected by the shareholders of the state trust 14
company; 15
(2) Does not vote on matters before the board of a state trust 16
company or a committee of the board and is not counted for purposes of 17
determining a quorum of the board or committee; and 18
(3) Provides solely general policy advice to the board of a 19
state trust company. 20
21
23-51-415. Fiduciary responsibility. 22
The board of a state trust company is responsible for the proper 23
exercise of fiduciary powers by the state trust company and each matter 24
pertinent to the exercise of fiduciary powers, including: 25
(1) The determination of policies; 26
(2) The investment and disposition of property held in a 27
fiduciary capacity; and 28
(3) The direction and review of the actions of an officer, 29
employee, and committee used by the state trust company in the exercise of 30
its fiduciary powers. 31
32
23-51-416. Officers of a state trust company. 33
(a) The board of a state trust company shall annually elect the 34
officers of the state trust company, who serve at the pleasure of the board. 35
(b)(1) The state trust company shall have a principal executive 36 SB230
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officer primarily responsible for the execution of board policies and 1
operation of the state trust company and an officer responsible for the 2
maintenance and storage of all corporate books and records of the state trust 3
company and for required attestation of signatures. 4
(2) The board may appoint other officers of the state trust 5
company as the board considers necessary. 6
(3) The duties of any two (2) or more officers may be combined 7
by the board and held by one (1) person. 8
9
23-51-417. Bonding requirements. 10
(a) The board of a state trust company shall require protection and 11
indemnity for clients in reasonable amounts established by rules adopted 12
under this chapter against dishonesty, fraud, defalcation, forgery, theft, 13
and other similar insurable losses with corporate insurance or surety 14
companies: 15
(1) Authorized to do business in this state; or 16
(2) Acceptable to the Bank Commissioner and otherwise lawfully 17
permitted to issue the coverage against those losses in this state. 18
(b) Except as otherwise provided by rule, coverage required under 19
subsection (a) of this section shall include each director, officer, and 20
employee of the state trust company without regard to whether the person 21
receives salary or other compensation. 22
(c)(1) A state trust company may apply to the commissioner for 23
permission to eliminate the bonding requirement of this section for a 24
particular individual. 25
(2) The commissioner shall approve the application if the 26
commissioner finds that the bonding requirement is unnecessary or burdensome. 27
(3) Unless the application presents novel or unusual questions, 28
the commissioner shall approve the application or set the application for 29
hearing not later than sixty (60) days after the date the commissioner 30
considers the application complete and accepted for filing. 31
32
23-51-418. Recordkeeping. 33
(a) A state trust company shall keep its fiduciary records separate 34
and distinct from other records of the state trust company. 35
(b) The fiduciary records under subsection (a) of this section shall 36 SB230
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contain all material information relative to each account as appropriate 1
under the circumstances. 2
3
Subchapter 5 — Permissible Activities for a State Trust Company 4
5
23-51-501. Lending limits. 6
(a) A state trust company's total outstanding loans and extensions of 7
credit to a person other than an insider shall not exceed an amount equal to 8
twenty percent (20%) of the state trust company's capital base. 9
(b)(1) The aggregate loans and extensions of credit outstanding at any 10
time to insiders of the state trust company shall not exceed an amount equal 11
to twenty percent (20%) of the state trust company's capital base. 12
(2) A covered transaction between an insider and a state trust 13
company shall be engaged in only on terms and under circumstances, including 14
credit standards, that are substantially the same as those for comparable 15
transactions with a noninsider. 16
(c)(1) The Bank Commissioner may adopt rules to implement and 17
administer this section. 18
(2) The commissioner may include rules: 19
(A) To establish limits, requirements, or exemptions other 20
than those specified by this section for particular classes or categories of 21
loans or extensions of credit; and 22
(B) Establish collective lending and investment limits. 23
(d) The commissioner may determine whether a loan or extension of 24
credit made to a person will be attributed to another person for purposes of 25
this section. 26
(e) A state trust company shall not lend trust deposits, except that a 27
trustee may make a loan to a beneficiary of the trust if the loan is 28
expressly authorized or directed by the instrument or transaction 29
establishing the trust. 30
(f)(1) An officer or director of a state trust company who shall 31
knowingly make or approve a loan in violation of this section or who shall 32
knowingly permit such a loan to be made, or who shall fail to exercise his or 33
her authority to prevent the making of the loan shall be personally liable to 34
the state trust company, or to the commissioner, for the full amount of the 35
loan. 36 SB230
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(2) However, written notice of disapproval of the loan, served 1
on the board of the state trust company and also the commissioner at the time 2
the making or existence of the loan first comes to his or her knowledge, 3
shall relieve an officer or director from personal liability. 4
5
23-51-502. Investment in state trust company facilities. 6
(a)(1) Without the prior written approval of the Bank Commissioner, a 7
state trust company shall not directly or indirectly invest an amount in 8
excess of its capital and surplus in state trust company facilities, 9
furniture, fixtures, and equipment. 10
(2) Except as otherwise provided by rules adopted under this 11
chapter, in computing this limitation a state trust company shall include: 12
(A) Its direct investment in state trust company 13
facilities; 14
(B) Any investment in equity or investment securities of a 15
company holding title to a facility used by the state trust company as 16
specified by subdivision (a)(2)(A) of this section; 17
(C) Any loan made by the state trust company to or on the 18
security of equity or investment securities issued by a company holding title 19
to a facility used by the state trust company; and 20
(D) Any indebtedness incurred on state trust company 21
facilities by a company: 22
(i) That holds title to the facility; 23
(ii) That is an affiliate of the state trust 24
company; and 25
(iii) In which the state trust company is invested 26
in the manner described by subdivision (a)(2)(B) or subdivision (a)(2)(C) of 27
this section; and 28
(E) May exclude an amount included under subdivisions 29
(a)(2)(B)-(D) of this section to the extent any lease of a facility from the 30
company holding title to the facility is capitalized on the books of the 31
state trust company. 32
(b) Real estate acquired for a state trust facility and not improved 33
and occupied by the state trust company ceases to be a state trust company 34
facility on the fifth anniversary of the date of its acquisition, unless the 35
commissioner on application grants written approval to further delay in the 36 SB230
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improvement and occupation of the property by the state trust company. 1
(c) A state trust company shall comply with generally accepted 2
accounting principles, consistently applied, in accounting for its investment 3
in and depreciation of state trust company facilities, furniture, fixtures, 4
and equipment. 5
6
23-51-503. Other real estate. 7
(a) A state trust company shall not acquire real estate except: 8
(1) As permitted by § 23 -51-502 or as otherwise provided by this 9
chapter, including rules adopted under this chapter; 10
(2) If necessary to avoid or minimize a loss on a loan or 11
investment previously made in good faith; or 12
(3) With the prior written approval of the Bank Commissioner. 13
(b) To the extent reasonably necessary to avoid or minimize loss on 14
real estate acquired as permitted by subsection (a) of this section, a state 15
trust company may exchange real estate for other real estate or personal 16
property, invest additional funds in or improve real estate acquired under 17
this subsection or subsection (a) of this section, or acquire additional real 18
estate. 19
(c) A state trust company shall dispose of any real estate subject to 20
subdivisions (a)(1) and (2) of this section not later than: 21
(1) The fifth anniversary of the date: 22
(A) It was acquired, except as otherwise provided by rules 23
adopted under this chapter; or 24
(B) It ceases to be used as a state trust company 25
facility; or 26
(2) The third anniversary of the date it ceases to be a state 27
trust company facility as provided by § 23 -51-502(b). 28
(d) A state trust company may apply to the commissioner for one (1) or 29
more extensions of time for disposing of real estate, which the commissioner 30
may grant if the commissioner determines that: 31
(1) The state trust company has made a good faith effort to 32
dispose of the real estate; or 33
(2) Disposal of the real estate would be detrimental to the 34
state trust company. 35
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23-51-504. Investment in securities. 1
(a) A state trust company may invest its corporate funds in any type 2
or character of equity or investment securities subject to the limitations 3
provided by this section. 4
(b) Unless the Bank Commissioner approves maintenance of a lesser 5
amount in writing, a state trust company shall invest and maintain an amount 6
equal to not less than forty percent (40%) of the state trust company's 7
capital under § 23-51-403 in unencumbered cash, cash equivalents, and readily 8
marketable securities. 9
(c)(1) Subject to subsection (d) of this section, the total investment 10
in equity and investment securities of any one issuer, obligor, or maker, 11
held by the state trust company for its own account, shall not exceed an 12
amount equal to twenty percent (20%) of the state trust company's capital 13
base. 14
(2) The commissioner may authorize investments in excess of this 15
limitation on written application if the commissioner concludes that: 16
(A) The excess investment is not prohibited by other 17
applicable law; and 18
(B) The safety and soundness of the requesting state trust 19
company is not adversely affected. 20
(d) Notwithstanding subsection (c) of this section, a state trust 21
company may purchase for its own account, without limitation and subject only 22
to the exercise of prudent judgment: 23
(1) Direct obligations of the United States Government; 24
(2) Obligations of agencies and instrumentalities created by act 25
of the United States Congress and authorized thereby to issue securities or 26
evidences of indebtedness, regardless of guarantee of repayment by the United 27
States Government; 28
(3) Obligations the principal and interest of which are fully 29
guaranteed by the United States Government or an agency or an instrumentality 30
created by an act of the United States Congress and authorized thereby to 31
issue such a guarantee; 32
(4) Obligations the principal and interest of which are fully 33
secured, insured, or covered by commitments or agreements to purchase by the 34
United States Government or an agency or instrumentality created by an act of 35
the United States Congress and authorized thereby to issue such commitments 36 SB230
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or agreements; 1
(5) General obligations of the states of the United States and 2
of the political subdivisions, municipalities, commonwealths, territories or 3
insular possessions of the United States; 4
(6) Obligations issued by the State Board of Education under 5
authority of the Arkansas Constitution or applicable statutes; 6
(7) Warrants of political subdivisions of the State of Arkansas 7
and municipalities of the State of Arkansas having maturities not exceeding 8
one (1) year; 9
(8) Prerefunded municipal bonds, the principal and interest of 10
which are fully secured by the principal and interest of a direct obligation 11
of the United States Government; 12
(9) The sale of federal funds with a maturity of not more than 13
one (1) business day; 14
(10) Demand, savings, or time deposits or accounts of a 15
depository institution chartered by the United States, any state, or the 16
District of Columbia, provided funds invested in the demand, savings, or time 17
deposits or accounts are fully insured by a federal deposit insurance agency; 18
(11) Repurchase agreements that are fully collateralized by 19
direct obligations of the United States Government, and general obligations 20
of any state or any political subdivision of a state, if the repurchase 21
agreement provides for the taking of delivery of the collateral, either 22
directly or through an authorized custodian; and 23
(12) Securities of, or other interest in, any open -end type 24
investment company or investment trust registered under the Investment 25
Company Act of 1940, and which is defined as a “money market fund” under 17 26
C.F.R. § 270.2a-7, as it existed on January 1, 2025, if: 27
(A) The portfolio of the investment company or investment 28
trust is limited principally to United States Government obligations and to 29
repurchase agreements fully collateralized by United States Government 30
obligations; and 31
(B) The investment company or investment trust takes 32
delivery of the collateral either directly or through an authorized 33
custodian. 34
(e) The commissioner may adopt rules to establish limits, 35
requirements, or exemptions other than those specified by this section for 36 SB230
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particular classes or categories of investment, or limit or expand investment 1
authority for state trust companies for particular classes or categories of 2
securities or other property. 3
4
23-51-505. Transactions in state trust company shares. 5
(a) A state trust company may acquire its own shares if: 6
(1) The amount of its undivided profits is sufficient to fully 7
absorb the acquisition of the shares under regulatory accounting principles; 8
and 9
(2) The state trust company obtains the prior written approval 10
of the Bank Commissioner. 11
(b) A state trust company shall not make loans upon the security of 12
its own shares. 13
14
23-51-506. Mutual funds. 15
(a) A state trust company may invest for its own account in equity 16
securities of an investment company registered under the Investment Company 17
Act of 1940, 15 U.S.C. § 80a -1 et seq., as it existed on January 1, 2025, and 18
the Securities Act of 1933, 15 U.S.C. § 77a et seq., as it existed on January 19
1, 2025, if the portfolio of the investment company consists wholly of 20
investments in which the state trust company could invest directly for its 21
own account. 22
(b) If the portfolio of an investment company described in subsection 23
(a) of this section consists wholly of investments in which the state trust 24
company could invest directly without limitation under § 23 -51-504, the state 25
trust company may invest in the investment company without limitation. 26
(c)(1) If the portfolio of an investment company described in 27
subsection (a) of this section contains an investment that is subject to the 28
limits of § 23-51-504, the state trust company shall not invest in the 29
investment company more than an amount equal to twenty percent (20%) of the 30
state trust company's capital base. 31
(2) Subdivision (c)(1) of this section does not apply to a money 32
market fund. 33
(d) In evaluating investment limits under this chapter, a state trust 34
company shall not be required to combine: 35
(1) The state trust company's pro rata share of the securities 36 SB230
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of an issuer in the portfolio of an investment company with the state trust 1
company's pro rata share of the securities of that issuer held by another 2
investment company in which the state trust company has invested; or 3
(2) The state trust company's own direct investment in the 4
securities of an issuer with the state trust company's pro rata share of the 5
securities of that issuer held by each investment company in which the state 6
trust company has invested under this section. 7
8
23-51-507. Lease financing transactions. 9
(a)(1) Subject to rules adopted under this chapter, a state trust 10
company may become the owner and lessor of tangible personal property for 11
lease financing transactions on a net lease basis on the specific request and 12
for the use of a client. 13
(2) Without the written approval of the Bank Commissioner to 14
continue holding property acquired for leasing purposes under this 15
subsection, the state trust company shall not hold the property more than six 16
(6) months after the date of expiration of the original or any extended or 17
renewed lease period agreed to by the client for whom the property was 18
acquired or by a subsequent lessee. 19
(b)(1) Rental payments received by the state trust company in a lease 20
financing transaction under this section are considered to be rent and not 21
interest or compensation for the use, forbearance, or detention of money. 22
(2) A lease financing transaction under this section is 23
considered to be a loan or extension of credit for purposes of this 24
subchapter. 25
26
23-51-508. Trust funds deposits. 27
(a) A state trust company may deposit trust funds with itself as an 28
investment if authorized by the settlor or the beneficiary, if: 29
(1) The state trust company maintains as security for the 30
deposits a separate fund of securities, legal for trust investments, under 31
control of a federal reserve bank or other entity approved by the Bank 32
Commissioner, either in this state or elsewhere; 33
(2) The total market value of the security is at all times at 34
least equal to the amount of the deposit; 35
(3) The separate fund is designated as a separate fund; and 36 SB230
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(4) The separate fund is maintained under the control of another 1
trust institution, bank, or government agency. 2
(b)(1) A state trust company may make periodic withdrawals from or 3
additions to the securities fund required by subsection (a) of this section 4
as long as the required value is maintained. 5
(2) Income from the securities in the fund belongs to the state 6
trust company. 7
(c) Security for a deposit under this section is not required for a 8
deposit under subsection (a) of this section to the extent the deposit is 9
insured by the Federal Deposit Insurance Corporation or its successor. 10
11
23-51-509. Common investment funds. 12
(a) A state trust company may establish common trust funds to provide 13
investment to itself as a fiduciary. 14
(b) The Bank Commissioner may adopt rules to implement and administer 15
this section, including without limitation rules to establish investment and 16
participation limitations, disclosure of fees, audit requirements, limit or 17
expand investment authority for particular classes or categories of 18
securities or other property, advertising, exemptions, and other requirements 19
that may be necessary to administer this section. 20
21
23-51-510. Transactions with management and affiliates. 22
(a) Without the prior approval of a disinterested majority of the 23
board of a state trust company recorded in the minutes, or if a disinterested 24
majority cannot be obtained the prior written approval of a majority of the 25
disinterested directors of a state trust company and the Bank Commissioner, a 26
state trust company shall not directly or indirectly: 27
(1) Sell or lease an asset of the state trust company to an 28
officer, director, or principal shareholder of the state trust company or an 29
affiliate of the state trust company; 30
(2) Purchase or lease an asset in which an officer, director or 31
principal shareholder of the state trust company or an affiliate of the state 32
trust company has an interest; or 33
(3) Subject to § 23 -51-501, extend credit to an officer, 34
director, or principal shareholder of the state trust company or an affiliate 35
of the state trust company. 36 SB230
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(b)(1) Notwithstanding subsection (a) of this section, a lease 1
transaction described in subdivision (a)(2) of this section involving real 2
property shall not be consummated, renewed, or extended without the prior 3
written approval of the commissioner. 4
(2) For purposes of this subdivision only, an affiliate of the 5
state trust company does not include a subsidiary of the state trust company. 6
(c) Subject to § 23 -51-501, a state trust company shall not directly 7
or indirectly extend credit to an employee, officer, director, or principal 8
shareholder of the state trust company or an affiliate of the state trust 9
company, unless: 10
(1) The extension of credit: 11
(A) Is made on substantially the same terms, including 12
interest rates and collateral, as those prevailing at the time for comparable 13
transactions by the state trust company with persons who are not employees, 14
officers, directors, principal shareholders, or affiliates of the state trust 15
company; and 16
(B) Does not involve more than the normal risk of 17
repayment or present other unfavorable features; and 18
(2) The state trust company follows credit underwriting 19
procedures that are not less stringent than those applicable to comparable 20
transactions by the state trust company with persons who are not employees, 21
officers, directors, principal shareholders or affiliates of the state trust 22
company. 23
(d) An officer or director of the state trust company who knowingly 24
participates in or knowingly permits a violation of this section upon 25
conviction is guilty of a Class D felony. 26
(e) The commissioner may adopt rules to implement and administer this 27
section, including rules to establish limits, requirements, or exemptions 28
other than those specified by this section for particular categories of 29
transactions. 30
31
23-51-511. Subsidiaries. 32
(a) Except as otherwise provided by this chapter or rules adopted 33
under this chapter, a state trust company may acquire or establish a 34
subsidiary to conduct any activity that may lawfully be conducted through the 35
form of organization chosen for the subsidiary. 36 SB230
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(b)(1) A state trust company shall not: 1
(A) Invest more than an amount equal to twenty percent 2
(20%) of its capital base in a single subsidiary; and 3
(B) Invest an amount in excess of forty percent (40%) of 4
its capital base in all subsidiaries. 5
(2) The amount of a state trust company's investment in a 6
subsidiary is the total amount of the state trust company's investment in 7
equity or investment securities issued by its subsidiary and any loans and 8
extensions of credit from the state trust company to its subsidiary. 9
(3) The Bank Commissioner may authorize investments in excess of 10
these limitations on written application if the commissioner concludes that: 11
(A) The excess investment is not prohibited by other 12
applicable law; and 13
(B) The safety and soundness of the requesting state trust 14
company is not adversely affected. 15
(c) A state trust company that intends to acquire, establish, or 16
perform new activities through a subsidiary shall submit a letter to the 17
commissioner describing in detail the proposed activities of the subsidiary. 18
(d)(1) The state trust company may acquire or establish a subsidiary 19
or begin performing new activities in an existing subsidiary thirty (30) days 20
after the date the commissioner receives the state trust company's letter 21
submitted under subsection (c) of this section, unless the commissioner 22
specifies another date. 23
(2) The commissioner may extend the thirty -day period of review 24
on a determination that the state trust company's letter raises issues that 25
require additional information or additional time for analysis. 26
(3) If the period of review is extended, the state trust company 27
may acquire or establish the subsidiary, or perform new activities in an 28
existing subsidiary, only on prior written approval of the commissioner. 29
(e)(1) A subsidiary of a state trust company is subject to rules 30
adopted under this chapter. 31
(2) In the absence of rules, the commissioner may regulate a 32
subsidiary as if it were a state trust company. 33
34
Subchapter 6 — Acquisition of Control 35
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23-51-601. Acquisition of control — Limitations. 1
(a) Except as expressly otherwise permitted, a person shall not, 2
without the prior written approval of the Bank Commissioner, directly or 3
indirectly acquire control of a state trust company through a change in a 4
legal or beneficial interest in voting securities of a state trust company or 5
a corporation or other entity owning voting securities of a state trust 6
company. 7
(b) This subchapter does not prohibit a person from negotiating to 8
acquire control of a state trust company or a person that controls a state 9
trust company. 10
(c) This section does not apply to: 11
(1) The acquisition of securities in connection with the 12
exercise of a security interest or otherwise in full or partial satisfaction 13
of a debt previously contracted for in good faith if the acquiring person 14
files written notice of acquisition with the commissioner before the person 15
votes the securities acquired; 16
(2) The acquisition of voting securities in any class or series 17
by a controlling person who has previously complied with and received 18
approval under this chapter or who was identified as a controlling person in 19
a prior application filed with and approved by the commissioner; 20
(3) An acquisition or transfer by operation of law, will, or 21
intestate succession if the acquiring person files written notice of 22
acquisition with the commissioner before the person votes the securities 23
acquired; or 24
(4) A transaction exempted by the commissioner by rule or order 25
because the transaction is not within the purposes of this subchapter or the 26
rule of the commissioner that the transaction is not necessary or appropriate 27
to achieve the objectives of this subchapter. 28
29
23-51-602. Application for acquisition of control. 30
(a) The proposed transferee seeking approval to acquire control of a 31
state trust company or a corporation or other entity that controls a state 32
trust company shall file with the Bank Commissioner: 33
(1) An application in the form prescribed by the commissioner; 34
(2) The filing fee in an amount not less than one thousand five 35
hundred dollars ($1,500) and not more than three thousand dollars ($3,000), 36 SB230
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as set by rules issued by the commissioner; and 1
(3) All information required by rule or that the commissioner 2
requires in a particular application as necessary to make an informed 3
decision to approve or reject the proposed acquisition. 4
(b) If the proposed transferee includes any group of individuals or 5
entities acting in concert, the information required by the commissioner may 6
be required of each member of the group. 7
(c) If the proposed transferee is not an Arkansas resident, an 8
Arkansas company, or an out -of-state company qualified to do business in this 9
state, a written consent to service of process on a resident of this state is 10
required for any action or suit arising out of or connected with the proposed 11
acquisition. 12
(d) The proposed transferee shall give public notice of the 13
application, its date of filing, and the identity of each participant, in the 14
form specified by the commissioner, through publication by one (1) insertion 15
in a newspaper of general statewide circulation, promptly after the 16
commissioner accepts the application as complete. 17
18
23-51-603. Hearing and decision on acquisition of control. 19
(a)(1) Not later than sixty (60) days after the application for 20
acquisition of control is officially filed under § 23 -51-602, the Bank 21
Commissioner may approve the application or set the application for hearing. 22
(2) If the commissioner sets a hearing, the commissioner shall 23
conduct a hearing as he or she considers advisable and consistent with 24
governing statutes and rules. 25
(b) Based on the record, the commissioner may issue an order denying 26
an application for acquisition of control if: 27
(1) The acquisition of control would substantially lessen 28
competition, be in restraint of trade, or is not in the public interest, 29
unless: 30
(A) The anticompetitive effects of the proposed 31
acquisition of control are clearly outweighed in the public interest by the 32
probable effect of acquisition of control in meeting the convenience and 33
needs of the community to be served; and 34
(B) The proposed acquisition of control is not in 35
violation of law of this state or the United States; 36 SB230
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(2) The financial condition of the proposed transferee, or any 1
member of a group composing the proposed transferee, might jeopardize the 2
financial stability of the state trust company being acquired; 3
(3) Plans or proposals to operate, liquidate, or sell the state 4
trust company or its assets are not in the best interests of the state trust 5
company; 6
(4) The experience, ability, standing, competence, 7
trustworthiness, and integrity of the proposed transferee, or any member of a 8
group comprising the proposed transferee, are insufficient to justify a 9
belief that the state trust company will be free from improper or unlawful 10
influence or interference with respect to the state trust company's operation 11
in compliance with law; 12
(5) The state trust company will be insolvent, in a hazardous 13
condition, not have adequate capitalization, or not be in compliance with the 14
laws of this state after the acquisition; 15
(6) The proposed transferee has failed to furnish all 16
information pertinent to the application reasonably required by the 17
commissioner; or 18
(7) The proposed transferee is not acting in good faith. 19
(c)(1) If an application for acquisition of control filed under § 23 -20
51-602 is approved by the commissioner under this section, the transaction 21
may be consummated. 22
(2) Any written commitment from the proposed transferee offered 23
to and accepted by the commissioner as a condition that the application will 24
be approved is enforceable against the state trust company and the transferee 25
and is considered for all purposes an agreement under this subchapter. 26
27
23-51-604. Appeal from adverse decision. 28
(a)(1) If a hearing has been held and the Bank Commissioner has 29
entered an order denying the application for acquisition of control filed 30
under § 23-51-602 and the order has become final, the proposed transferee may 31
appeal the final order by filing a petition for judicial review under the 32
Arkansas Administrative Procedure Act, § 25 -15-201 et seq. 33
(2) The time for filing a petition for judicial review under 34
subdivision (a)(1) of this section shall run from the date the final decision 35
of the commissioner is mailed or delivered, in written form, to the parties 36 SB230
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desiring to appeal. 1
(b) The filing of an appeal under this section does not stay the order 2
of the commissioner. 3
4
23-51-605. Objection to other transfer. 5
This subchapter shall not be construed to prevent the Bank Commissioner 6
from investigating, commenting on, or seeking to enjoin or set aside a 7
transfer of voting securities that evidence a direct or indirect interest in 8
a state trust company, whether or not the transfer is included within this 9
subchapter, if the commissioner considers the transfer to be against the 10
public interest. 11
12
Subchapter 7 — Mergers, Purchases and Assumptions, and Sale of Assets 13
14
23-51-701. Merger authority. 15
(a) With the prior written approval of the Bank Commissioner, a state 16
trust company may merge: 17
(1) With and into a state bank to the same extent as a state 18
bank under the Arkansas Banking Code of 1997, chapters 45 -50 of this title; 19
or 20
(2) With another person to the same extent as a business 21
corporation under the Arkansas Business Corporation Act of 1987, § 4 -27-101 22
et seq., subject to this chapter. 23
(b) The approval of the board and the shareholders of both the state 24
trust company and the state bank who are parties to the merger shall be 25
obtained according to § 23 -48-503 as if the state trust company were a state 26
bank, except as otherwise provided by rules adopted under this chapter. 27
(c) The approval of the board and the shareholders of both the state 28
trust company and the person or named entities who are parties to the merger 29
shall be obtained according to the Arkansas Business Corporation Act of 1987, 30
§ 4-27-101 et seq., as if the state trust company were a domestic 31
corporation, except as otherwise provided by rules adopted under this 32
chapter. 33
34
23-51-702. Merger application. 35
(a) To apply for a merger under this subchapter, two (2) original 36 SB230
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copies of the articles of merger and an application in the form required by 1
the Bank Commissioner shall be filed with the commissioner. 2
(b) The commissioner shall investigate the condition of the merging 3
parties. 4
(c) The commissioner may require the submission of additional 5
information as considered necessary to an informed decision. 6
7
23-51-703. Approval of merger by Bank Commissioner. 8
(a) The Bank Commissioner may approve a merger under this subchapter 9
if: 10
(1) A resulting state trust company will be solvent and have 11
adequate capitalization for its business and location; 12
(2) A resulting state trust company has in all respects complied 13
with the statutes and rules relative to the organization of a state trust 14
company; 15
(3) All fiduciary obligations and liabilities of a state trust 16
company that is a party to the merger have been properly discharged or 17
otherwise lawfully assumed or retained by a state trust company or other 18
fiduciary; 19
(4) A surviving, new, or acquiring person that is not authorized 20
to engage in the trust business will not engage in the trust business and has 21
in all respects complied with the laws of this state; and 22
(5) All conditions imposed by the commissioner have been 23
satisfied or otherwise resolved. 24
(b) If the commissioner approves the merger under this section and 25
finds that all required filing fees and investigative costs have been paid, 26
the commissioner shall: 27
(1) Endorse the face of both original copies of the articles of 28
merger with the date of approval and the word “Approved”; 29
(2) File one (1) original copy of the articles of merger in the 30
State Bank Department's records; and 31
(3) Deliver one (1) original copy of the articles of merger to 32
each surviving, new, or acquiring entity. 33
(c) A merger approved under this section is effective on the date of 34
approval, unless the merger agreement provides and the commissioner consents 35
to a different effective date. 36 SB230
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1
23-51-704. Rights of dissenters to mergers. 2
A shareholder of the state trust company may dissent from a merger 3
under this subchapter to the extent and by following the procedure provided 4
by the Arkansas Business Corporation Act of 1987, § 4 -27-101 et seq., or 5
rules adopted under this chapter. 6
7
23-51-705. Authority to purchase assets of another trust institution. 8
(a)(1) Subject to this section, a state trust company may purchase 9
assets of another state trust company or trust -related assets of another 10
trust institution, including the right to control accounts established with 11
the trust institution. 12
(2) Except as otherwise expressly provided by this chapter or 13
any other applicable statutes, the purchase of all or part of the assets of 14
the trust institution does not make the purchasing state trust company 15
responsible for any liability or obligation of the selling trust institution 16
that is not expressly assumed by the purchasing state trust company. 17
(3) Except as otherwise provided by this chapter, this 18
subchapter does not govern or prohibit the purchase by a trust institution of 19
all or part of the assets of a corporation or other entity that is not a 20
trust institution. 21
(b)(1) An application in the form required by the Bank Commissioner 22
shall be filed with the commissioner for any acquisition of all or 23
substantially all of: 24
(A) The assets of a state trust company; or 25
(B) The trust assets of another trust institution by a 26
state trust company. 27
(2) The commissioner shall investigate the condition of the 28
purchaser and seller and may require the submission of additional information 29
as considered necessary to make an informed decision. 30
(3) The commissioner shall approve the purchase if: 31
(A) The acquiring state trust company will be solvent, not 32
in a hazardous condition, and have sufficient capital for its business and 33
location; 34
(B) The acquiring state trust company has complied with 35
all applicable statutes and rules, including without limitation any 36 SB230
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applicable requirements of §§ 23 -51-903 and 23-51-906; 1
(C) All fiduciary obligations and liabilities of the 2
parties have been properly discharged or otherwise assumed by the acquiring 3
state trust company; 4
(D) All conditions imposed by the commissioner have been 5
satisfied or otherwise resolved; and 6
(E) All fees and costs have been paid. 7
(c) A purchase requiring an application under subsection (b) of this 8
section is effective on: 9
(1) The date of approval; or 10
(2) On the effective date stated in the purchase agreement if 11
the commissioner consents to that date. 12
(d) The acquiring state trust company shall succeed by operation of 13
law to all of the rights, privileges, and obligations of the selling trust 14
institution under each account included in the assets acquired. 15
16
23-51-706. Sale of assets. 17
(a) The board of a state trust company, with the Bank Commissioner's 18
approval, may cause a state trust company to sell all or substantially all of 19
its assets, including the right to control accounts established with the 20
state trust company, without shareholder approval if the commissioner finds: 21
(1) The interests of the state trust company's clients, 22
depositors, and creditors are jeopardized because of insolvency or imminent 23
insolvency of the state trust company; 24
(2) The sale is in the best interest of the state trust 25
company's clients and creditors; and 26
(3) The Federal Deposit Insurance Corporation or its successor 27
approves the transaction unless the deposits of the state trust company are 28
not insured. 29
(b) A sale under this section shall include an assumption and promise 30
by the buyer to pay or otherwise discharge: 31
(1) All of the state trust company's liabilities to clients and 32
depositors; 33
(2) All of the state trust company's liabilities for salaries of 34
the state trust company's employees incurred before the date of the sale; 35
(3) Obligations incurred by the commissioner arising out of the 36 SB230
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supervision or sale of the state trust company; and 1
(4) Fees and assessments due the State Bank Department. 2
(c) This section does not limit the incidental power of a state trust 3
company to buy and sell assets in the ordinary course of business. 4
(d)(1) This section does not affect the commissioner's right to take 5
action under any other law. 6
(2) The sale by a state trust company of all or substantially 7
all of its assets with shareholder approval is deemed a voluntary dissolution 8
and liquidation and shall be governed by subchapter 10 of this chapter. 9
10
Subchapter 8 — Trust Offices 11
12
23-51-801. Branches of offices of state trust institutions. 13
(a) A state trust institution may act as a fiduciary and engage in a 14
trust business at each trust office as permitted by this chapter and at a 15
branch. 16
(b) Notwithstanding subsection (a) of this section, a state bank or a 17
state trust company shall not engage at an out -of-state office in any trust 18
business not permitted to be conducted at the out -of-state office by the laws 19
of the host state applicable to trust institutions chartered by the host 20
state. 21
22
23-51-802. Trust offices and representative trust offices. 23
(a)(1) A state trust institution may establish or acquire and maintain 24
trust offices or representative trust offices anywhere in this state. 25
(2) A state trust institution desiring to establish or acquire 26
and maintain a trust office or representative trust office under subdivision 27
(a)(1) of this section shall file an application with the Bank Commissioner 28
providing: 29
(A) The name of the state trust institution; 30
(B) The location of the proposed additional trust office 31
or representative trust office; 32
(C) A general description of the surrounding market area; 33
(D) Whether or not the location will be owned or leased; 34
(E) A copy of the resolution adopted by the board of the 35
state trust institution authorizing the additional trust office or 36 SB230
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representative trust office; 1
(F) A general description of the activities to be 2
conducted; 3
(G) An estimate of the cost of the trust office or 4
representative trust office; 5
(H) Any additional information required by commissioner; 6
and 7
(I) The payment for the filing fee, if any, prescribed by 8
the commissioner. 9
(c) The commissioner may approve the application of a state bank to 10
establish a full-service branch if the commissioner determines that the 11
establishment of the full -service branch is consistent with: 12
(1) Maintaining a sound banking system; 13
(2) Encouraging the state bank to help meet the credit needs of 14
the community; 15
(3) Relying on the marketplace as generally the best regulator 16
of economic activity; and 17
(4) Encouraging healthy competition to promote efficiency and 18
better service to customers. 19
(d) The commissioner may deny approval of the additional trust office 20
or representative trust office under subsection (a) of this section if the 21
commissioner finds that the applicant lacks sufficient financial resources to 22
undertake the proposed expansion without adversely affecting its safety or 23
soundness or that the proposed trust office or representative trust office 24
would be contrary to the public interest. 25
26
23-51-803. Out-of-state trust offices or representative trust offices. 27
(a)(1) A state bank, a state trust company, or a savings association 28
chartered under the laws of this state may establish and maintain a new trust 29
office or representative trust office or acquire and maintain a trust office 30
or representative trust office in a state other than this state. 31
(2) A trust institution desiring to establish or acquire and 32
maintain a trust office or representative trust office in another state under 33
this section shall file an application in the form prescribed by the Bank 34
Commissioner. 35
(3) The application required under subdivision (a)(2) of this 36 SB230
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section shall provide: 1
(A) The name of the trust institution; 2
(B) The location of the proposed trust office or 3
representative trust office; 4
(C) A general description of the surrounding market area; 5
(D) Whether or not the location will be owned or leased; 6
(E) Whether or not the laws of the jurisdiction where the 7
trust office or representative trust office will be located permit the trust 8
office or representative trust office to be maintained by the trust 9
institution; 10
(F) A copy of the resolution adopted by the board 11
authorizing the out-of-state trust office or representative trust office; and 12
(G) The payment for the filing fee, if any, prescribed by 13
the commissioner. 14
(b) An applicant under this section may commence business at the 15
additional trust office or representative trust office thirty (30) days after 16
the date the commissioner receives the application, unless the commissioner 17
specifies another date. 18
(c)(1) The thirty-day period of review under subsection (b) of this 19
section may be extended by the commissioner on a determination that the 20
written notice raises issues that require additional information or 21
additional time for analysis. 22
(2) If the period of review is extended, the trust institution 23
may establish the additional trust office or representative trust office only 24
on prior written approval by the commissioner. 25
(d)(1) The commissioner may deny approval of the additional trust 26
office or representative trust office under this section if the commissioner 27
finds that the applicant lacks sufficient financial resources to undertake 28
the proposed expansion without adversely affecting its safety or soundness or 29
that the proposed additional trust office or representative trust office 30
would be contrary to the public interest. 31
(2) In acting on the notice, the commissioner shall consider the 32
views of the appropriate bank supervisory agencies. 33
34
Subchapter 9 — Trust Offices of Out -of-State Trust Institutions 35
36 SB230
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23-51-901. Out-of-state trust institution — Engaging in trust business 1
at branch or trust office. 2
An out-of-state trust institution may act as a fiduciary in this state 3
or engage in a trust business at a trust office in this state only if it 4
maintains a trust office in this state as permitted by this chapter or a 5
branch in this state. 6
7
23-51-902. Establishing interstate trust office. 8
(a) An out-of-state trust institution that does not operate a trust 9
office in this state and that meets the requirements of this chapter may 10
establish and maintain a new trust office in this state. 11
(b) An out-of-state trust institution shall not establish a new trust 12
office in this state unless a similar institution chartered under the laws of 13
this state to act as a fiduciary is permitted to establish a new trust office 14
that may engage in activities substantially similar to those permitted to 15
trust offices of out -of-state trust institutions under § 23 -51-901 in the 16
state where the out-of-state trust institution has its principal office. 17
18
23-51-903. Conditions for approval. 19
(a) A trust office of an out -of-state trust institution shall not be 20
acquired or established in this state under this chapter unless: 21
(1) The out-of-state trust institution has confirmed in writing 22
to the Bank Commissioner that for as long as the out -of-state trust 23
institution maintains a trust office in this state, the out -of-state trust 24
institution will comply with all applicable laws of this state; 25
(2) The applicant has provided satisfactory evidence to the 26
commissioner of compliance with any applicable requirements of § 4 -27-1501 et 27
seq. and the applicable requirements of the applicant's home state regulator 28
for acquiring or establishing and maintaining the trust office; and 29
(3) The commissioner, acting within sixty (60) days after 30
receiving an application under § 23 -51-906, has certified to the home state 31
regulator that the requirements of this chapter have been met and the 32
application has been approved or, if applicable, that any conditions imposed 33
by the commissioner under subsection (b) of this section have been satisfied. 34
(b) The out-of-state trust institution may commence business at the 35
trust office sixty (60) days after the date the commissioner receives the 36 SB230
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application required under this chapter unless the commissioner specifies 1
another date, if, with respect to an out -of-state trust institution that is 2
not a depository institution and for which the commissioner has conditioned 3
the approval on the satisfaction by the applicant of any requirement 4
applicable to a state trust company under § 23 -51-403 or § 23-51-406(b), the 5
institution has satisfied the conditions and provided to the commissioner 6
satisfactory evidence that the conditions have been satisfied. 7
(c)(1) The sixty-day period of review under subsection (b) of this 8
section may be extended by the commissioner on a determination that the 9
application raises issues that require additional information or additional 10
time for analysis. 11
(2) If the period of review is extended, the out -of-state trust 12
institution may establish the trust office only on prior written approval by 13
the commissioner. 14
(d)(1) The commissioner may deny approval of the trust office under 15
this section if the commissioner finds that the applicant lacks sufficient 16
financial resources to undertake the proposed expansion without adversely 17
affecting its safety or soundness or that the proposed office is contrary to 18
the public interest. 19
(2) In acting on the notice, the commissioner shall consider the 20
views of the appropriate bank supervisory agencies. 21
22
23-51-904. Additional trust offices. 23
An out-of-state trust institution that maintains a trust office in this 24
state under this chapter may establish or acquire additional trust offices or 25
representative trust offices in this state to the same extent that a state 26
trust institution may establish or acquire additional trust offices or 27
representative trust offices in this state under § 23 -51-802. 28
29
23-51-905. Acquiring interstate trust office. 30
(a) An out-of-state trust institution that does not operate a trust 31
office in this state and that meets the requirements of this chapter may 32
acquire and maintain a trust office in this state. 33
(b) An out-of-state trust institution shall not maintain a trust 34
office in this state unless a similar institution chartered under the laws of 35
this state to act as a fiduciary is permitted to acquire and maintain a trust 36 SB230
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office through an acquisition of a trust office in the state where the out -1
of-state trust institution has its principal office and may engage in 2
activities substantially similar to those permitted to trust offices of out -3
of-state trust institutions under § 23 -51-901 in the state where the out -of-4
state trust institution has its principal office. 5
6
23-51-906. Requirement of notice. 7
(a) An out-of-state trust institution desiring to establish and 8
maintain a new trust office or acquire and maintain a trust office in this 9
state under this chapter shall provide, or cause its home state regulator to 10
provide, written notice of the proposed transaction to the Bank Commissioner 11
on or after the date on which the out -of-state trust institution applies to 12
the home state regulator for approval to establish and maintain or acquire 13
the trust office. 14
(b) The filing of the notice under subsection (a) of this section 15
shall be preceded or accompanied by a copy of the resolution adopted by the 16
board of the out-of-state trust institution authorizing the additional trust 17
office and the filing fee, if any, prescribed by the commissioner. 18
19
23-51-907. Trust business of out -of-state trust institution. 20
An out-of-state trust institution that establishes or maintains one (1) 21
or more trust offices in this state under this subchapter may conduct any 22
activity at each trust office that would be authorized under the laws of this 23
state for a state trust institution to conduct at a trust office. 24
25
23-51-908. Representative trust office business. 26
(a) An out-of-state trust institution shall not act as a fiduciary, 27
but may otherwise engage in a trust business, at a representative trust 28
office as permitted by this subchapter. 29
(b) Subject to the requirements contained in this subchapter, an out -30
of-state trust institution may establish and maintain representative trust 31
offices anywhere in this state. 32
33
23-51-909. Registration of representative trust office. 34
(a)(1) An out-of-state trust institution may establish or acquire and 35
maintain a representative trust office in this state. 36 SB230
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(2) An out-of-state trust institution not maintaining a trust 1
office in this state and desiring to establish or acquire and maintain a 2
representative trust office shall file an application in the form prescribed 3
by the Bank Commissioner. 4
(3) The application under subdivision (a)(2) of this section 5
shall provide: 6
(A) The name of the out -of-state trust institution; 7
(B) A certificate of good standing from the out -of-state 8
trust institution's chartering authority; 9
(C) A copy of the resolution adopted by the board 10
authorizing the representative trust office of the out -of-state trust 11
institution; and 12
(D) The payment for the filing fee, if any, prescribed by 13
the commissioner. 14
(b) An applicant under subsection (a) of this section may commence 15
business at the representative trust office on the thirty -first day after the 16
date the commissioner acknowledges receipt of the application, unless the 17
commissioner specifies an earlier or later date. 18
(c)(1) The thirty-day period of review under subsection (a) of this 19
section may be extended by the commissioner on a determination that the 20
application raises issues that require additional information or additional 21
time for analysis. 22
(2) If the period of review is extended, the out -of-state trust 23
institution may establish the representative trust office only on prior 24
written approval by the commissioner. 25
(d)(1) The commissioner may deny approval of the representative trust 26
office under this section if the commissioner finds that the applicant lacks 27
sufficient financial resources to undertake the proposed expansion without 28
adversely affecting its safety or soundness or that the proposed 29
representative trust office would be contrary to the public interests. 30
(2) In acting on the application, the commissioner shall 31
consider the views of the appropriate bank supervisory agencies. 32
33
Subchapter 10 — Liquidation 34
35
23-51-1001. Voluntary liquidation. 36 SB230
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(a) A state trust company may go into voluntary liquidation and be 1
closed, and may surrender the state trust company's charter and franchise as 2
a corporation of this state by the affirmative votes of the shareholders of 3
the state trust company owning a majority of the voting stock of the state 4
trust company. 5
(b)(1) Shareholder action to liquidate a state trust company shall be 6
taken at a meeting of the shareholders called by resolution of the board of 7
the state trust company. 8
(2) The written notice required under subdivision (b)(1) of this 9
section shall state the purpose of the meeting and be mailed to each 10
shareholder, or in case of a shareholder's death, to the shareholder's legal 11
representative, addressed to the shareholder's last known residence not less 12
than ten (10) days before the date of the meeting. 13
(3) If shareholders elect to liquidate a state trust company 14
under subsection (a) of this section, a certified copy of all proceedings of 15
the meeting at which the action has been taken, attested by an officer of the 16
state trust company, shall be transmitted to the Bank Commissioner for 17
approval. 18
(c)(1) If the commissioner approves the liquidation, the commissioner 19
shall issue to the state trust company under the commissioner's seal, an 20
order for that purpose. 21
(2) An order shall not be issued by the commissioner under 22
subdivision (c)(1) of this section until the commissioner is satisfied that 23
provision has been made by the state trust company to satisfy and pay off all 24
creditors. 25
(3)(A) When the commissioner approves the voluntary liquidation 26
of a state trust company, the board of the state trust company shall: 27
(i) Publish a notice in a newspaper with a 28
substantially statewide circulation published in the City of Little Rock that 29
the state trust company is closing down its affairs and going into 30
liquidation; and 31
(ii) Notify the creditors of the state trust company 32
to present their claims for payment. 33
(B) The notice required under subdivision (c)(3)(A)(i) of 34
this section shall be published one (1) time a week for four (4) consecutive 35
weeks. 36 SB230
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(d) When a state trust company is in the process of voluntary 1
liquidation, the state trust company is subject to examination by the 2
commissioner and shall furnish reports from time to time as the commissioner 3
may require. 4
(e) All unclaimed property remaining in the hands of a liquidated 5
state trust company is subject to the Unclaimed Property Act, § 18 -28-201 et 6
seq. 7
(f)(1) Upon the approval of the commissioner, a state trust company 8
may sell and transfer to another trust institution, whether state or 9
federally chartered, all of its assets of every kind upon terms as may be 10
agreed upon and approved by the commissioner and by a majority vote of its 11
board. 12
(2) A certified copy of the minutes of a meeting at which an 13
action is taken, attested by an officer of the state trust company, together 14
with a copy of the contract of sale and transfer, shall be filed with the 15
commissioner. 16
(3) Whenever voluntary liquidation is approved by the 17
commissioner or the sale and transfer of the assets of any state trust 18
company is approved by the commissioner, the charter of the state trust 19
company shall be canceled, subject, however, to its continued existence, as 20
provided by this chapter and the Arkansas Business Corporation Act, § 4 -27-21
101 et seq. 22
23
23-51-1002. Placing state trust company under Bank Commissioner’s 24
control. 25
(a)(1) A state trust company may place its assets and business under 26
the control of the Bank Commissioner for liquidation by a resolution of a 27
majority of its directors or members upon notice to the commissioner. 28
(2) Upon taking possession of the state trust company, the 29
commissioner, or the commissioner's appointed agent, shall retain possession 30
of the state trust company until the state trust company is authorized by the 31
commissioner to resume business or until the affairs of the state trust 32
company has fully liquidated under this chapter. 33
(3) A state trust company shall not make any general assignment 34
for the benefit of its creditors except by surrendering possession of its 35
assets to the commissioner, as provided under this chapter. 36 SB230
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(b) If for any reason a state trust company suspends operations for 1
any length of time, the state trust company immediately upon the suspension 2
of operations, shall be deemed in the possession of the commissioner and 3
subject to liquidation under this chapter. 4
5
23-51-1003. Application of Arkansas Banking Code of 1997. 6
When the Bank Commissioner, or the commissioner's appointed agent, 7
takes possession of a state trust company under this subchapter, the 8
commissioner or the commissioner's appointed agent shall proceed with the 9
dissolution and liquidation of the state trust company under the procedures 10
established for the dissolution and liquidation of state banks under the 11
Arkansas Banking Code of 1997, chapters 45 -50 of this title. 12
13
Subchapter 11 — Trusts and Fiduciaries 14
15
23-51-1101. Delegation and fiduciary responsibility. 16
(a) A person acting as a trustee or as any other fiduciary under the 17
laws of this state may delegate any investment, management, or administrative 18
function if the person exercises reasonable care, judgment, and caution in: 19
(1) Selecting the delegate, taking into account the delegate's 20
financial standing and reputation; 21
(2) Establishing the scope and other terms of any delegation; 22
and 23
(3) Reviewing periodically the delegate's actions in order to 24
monitor overall performance and compliance with the scope and other terms of 25
the delegation. 26
(b) Notwithstanding any delegation permitted under subsection (a) of 27
this section, a person acting as a trustee, except as provided in § 28 -73-28
807, or in any other fiduciary capacity under the laws of this state shall 29
retain responsibility for the due performance of any delegated fiduciary 30
function. 31
32
23-51-1102. Affiliates. 33
(a) A person acting as a trustee or in any other fiduciary capacity 34
under § 23-51-1101, may hire and compensate, as a delegate, an affiliate of 35
the person if: 36 SB230
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(1) Authorized by a trust or fiduciary instrument; 1
(2) Authorized by court order; 2
(3) Authorized in writing by each affected client; or 3
(4) The standards of § 23 -51-1101 are satisfied. 4
(b) Fees paid to an affiliate shall be competitive with fees charged 5
by nonaffiliates that provide substantially similar services. 6
7
23-51-1103. Fee determination. 8
The compensation arrangement between a client and a person acting as a 9
trustee or as any other fiduciary under this chapter shall be at arm's 10
length, and any compensation under such an arrangement shall be a reasonable 11
amount with respect to the services rendered. 12
13
23-51-1104. Disclosure of potential conflicts of interest. 14
A company, proposing to act as a trustee or in any other fiduciary 15
capacity under a written agreement to be entered into with a prospective 16
client after September 1, 2025, and that company has any potential or actual 17
conflict of interest that may reasonably be expected to have an impact on the 18
independence or judgment of the trustee or fiduciary, shall disclose 19
appropriate information concerning the actual or potential conflict of 20
interest before entering into any written or oral trust or fiduciary 21
agreement with the client or prospective client. 22
23
23-51-1105. Designation of trustee. 24
A person residing in this state may designate any trust institution to 25
act as a fiduciary on behalf of the person. 26
27
23-51-1106. Choice of law governing trusts. 28
A trust institution that maintains a trust office or representative 29
trust office in this state and its affected clients may designate either this 30
state, a state where affected clients reside, or the state where the trust 31
institution has its principal office as the state whose laws shall govern any 32
written agreement between the trust institution and its client or any 33
instrument under which the trust institution acts for a client. 34
35
23-51-1107. Choice of law governing fiduciary investments. 36 SB230
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A trust institution that maintains a trust office or representative 1
trust office in this state and its affected clients may designate either this 2
state, a state where affected clients reside, or the state where the trust 3
institution has its principal office as the state whose laws shall govern 4
with respect to the fiduciary investment standards applicable to any written 5
agreement between the trust institution or its client and any other 6
instrument under which the trust institution acts for a client. 7
8
Subchapter 12 — Private Trust Company 9
10
23-51-1201. Private trust company. 11
(a) A private trust company engaging in the trust business in this 12
state shall comply with the provisions of this chapter applicable to a trust 13
company unless expressly exempted from those provisions in writing by the 14
Bank Commissioner under this section or by rule adopted by the commissioner. 15
(b)(1) A private trust company or proposed private trust company may 16
request in writing that it be exempted from specified provisions of §§ 23 -51-17
110, 23-51-403(a), 23-51-405(b)(11), 23-51-406(b)(1), 23-51-407, 23-51-501, 18
23-51-503, and 23-51-506(b)—(d). 19
(2) The commissioner may grant the exemption in whole or in part 20
if the commissioner finds that the private trust company does not and will 21
not transact business with the general public. 22
(c) An exemption granted under this section may be made subject to 23
conditions or limitations imposed by the commissioner consistent with this 24
subchapter. 25
(d)(1) At the expense of the private trust company, the commissioner 26
may examine or investigate the private trust company in connection with an 27
application for exemption. 28
(2) Unless the application presents novel or unusual questions, 29
the commissioner shall approve the application for exemption or set the 30
application for hearing not later than sixty (60) days after the date the 31
commissioner considers the application complete and accepted for filing. 32
(3) The commissioner may require the submission of additional 33
information as considered necessary to an informed decision. 34
35
23-51-1202. Definitions. 36 SB230
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As used in this subchapter: 1
(1) "Family member" means an individual who is related within 2
the fourth degree of affinity or consanguinity to an individual or 3
individuals who control a private trust company or that is controlled by one 4
(1) or more trusts or charitable organizations established by the individual 5
or individuals; and 6
(2) "Transact business with the general public" means any sales, 7
solicitations, arrangements, agreements, or transactions to provide trust or 8
other business services, whether or not for a fee, commission, or any other 9
type of remuneration, with any client that is not a family member or a sole 10
proprietorship, partnership, joint venture, association, trust, estate, 11
business trust, or other company that is not one hundred percent (100%) owned 12
by one (1) or more family members. 13
14
23-51-1203. Requirements for a private trust company. 15
(a)(1) A private trust company requesting an exemption from this 16
chapter under § 23-51-1201 shall file an application with the Bank 17
Commissioner containing: 18
(A) A nonrefundable application fee of an amount not less 19
than three thousand dollars ($3,000) nor more than five thousand dollars 20
($5,000), as set by rules issued by the commissioner; 21
(B) A detailed statement under oath showing the private 22
trust company's assets and liabilities as of the end of the month previous to 23
the filing of the application; 24
(C) A statement under oath of the reason for requesting 25
the exemption; 26
(D) A statement under oath that the private trust company 27
is not currently transacting business with the public and that the company 28
will not conduct business with the public without the prior written 29
permission of the commissioner; 30
(E) The current street mailing address and telephone 31
number of the physical location in this state at which the private trust 32
company will maintain its books and records, together with a statement under 33
oath that the address given is true and correct and is not a United States 34
Postal Service post office box or a private mailbox, postal box, or mail 35
drop; 36 SB230
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(F) A listing of the specific provisions of this chapter 1
for which the request for exemption is made; and 2
(G)(i) A certification that the private trust company is 3
managed by, and its members are family members. 4
(ii) All individuals who control a private trust 5
company or establish trusts or charitable organizations controlling the 6
private trust company shall be related within the second degree of affinity 7
or consanguinity. 8
(2) The commissioner shall not approve a private trust company 9
exemption unless the application is completed as required in subdivision 10
(a)(1) of this section. 11
(b) To maintain status as an exempt private trust company under this 12
chapter, the exempt private trust company shall: 13
(1) Not transact business with the public; 14
(2)(A) File an annual certification that it is maintaining the 15
conditions and limitations of its exempt status. 16
(B) The annual certification required under subdivision 17
(b)(2)(A) of this section shall be filed: 18
(i) On a form provided by the commissioner and be 19
accompanied by a fee set by rules issued by the commissioner; and 20
(ii) On or before June 30 of each year. 21
(C)(i) An annual certification shall not be valid unless 22
it bears an acknowledgment stamped by the State Bank Department. 23
(ii) The department shall have thirty (30) days from 24
the date of receipt to return a copy of the acknowledged annual certification 25
to the exempt private trust company. 26
(iii) The burden shall be on the exempt private 27
trust company to notify the department of a failure to return an acknowledged 28
copy of an annual certification within the thirty -day period. 29
(iv) The commissioner may examine or investigate the 30
exempt private trust company periodically as necessary to verify the annual 31
certification; 32
(3) Comply with the principal office provisions of § 23 -51-402 33
and with the address and telephone requirements of subdivision (a)(1)(E) of 34
this section; and 35
(4) Pay all applicable corporate franchise taxes. 36 SB230
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1
23-51-1204. Change of control. 2
(a) Control of an exempt private trust company shall not be 3
transferred or sold with exempt status. 4
(b) In a change of control, the acquiring control person shall comply 5
with this chapter, and the exempt status of the private trust company shall 6
automatically terminate upon the effective date of the transfer. 7
(c) A separate application for exempt status shall be filed if the 8
acquiring person wishes to obtain or continue an exemption under this 9
section. 10
11
23-51-1205. Authority to revoke. 12
(a) The Bank Commissioner may revoke the exempt status of a private 13
trust company if the private trust company: 14
(1) Makes a false statement under oath on a document required to 15
be filed under this chapter or by any rule promulgated by the commissioner; 16
(2) Fails to submit to an examination as required by § 23 -51-17
1201(c); 18
(3) Withholds requested information from the commissioner; or 19
(4) Violates any provision of this section applicable to an 20
exempt private trust company. 21
(b)(1) If the commissioner determines from examination or other 22
credible evidence that a private trust company has violated any of the 23
requirements of this section, the commissioner may by personal delivery or 24
registered or certified mail, return receipt requested, notify the private 25
trust company in writing that the private trust company's exempt status has 26
been revoked. 27
(2) The notification required under subdivision (b)(1) of this 28
section shall: 29
(A) State grounds for the revocation with reasonable 30
certainty; and 31
(B) State the effective date of the revocation, which may 32
not be sooner than five (5) calendar days after the date the notification is 33
mailed or delivered. 34
(c)(1) A revocation under this section takes effect for the private 35
trust company if the private trust company does not request a hearing in 36 SB230
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writing before the effective date. 1
(2) After taking effect the revocation is final and 2
nonappealable as to that private trust company, and the private trust company 3
shall be subject to all of the requirements and provisions of this chapter 4
applicable to state trust companies. 5
(d)(1) A private trust company shall have five (5) calendar days after 6
the revocation is effective to comply with the provisions of this chapter 7
from which it was formerly exempt. 8
(2) If, however, the commissioner determines, at the time of 9
revocation, that the private trust company has been engaging in or attempting 10
to engage in acts intended or designed to deceive or defraud the public, the 11
commissioner may shorten or eliminate, in the commissioner's sole discretion, 12
the five (5) calendar days compliance period. 13
(e) If the private trust company does not comply with this subchapter, 14
including the capitalization requirements as have been determined by the 15
commissioner as necessary to assure the safety and soundness of the private 16
trust company, within the prescribed time period, the commissioner may: 17
(1) Institute any action or remedy prescribed by this chapter, 18
or any applicable rule; or 19
(2) Refer the private trust company to the Attorney General for 20
to initiate a quo warranto proceeding to revoke the charter. 21
22
23-51-1206. Conversion to public trust company. 23
(a)(1) A private trust company may terminate its status as a private 24
trust company and commence transacting business with the general public. 25
(2) A private trust company desiring to commence transacting 26
business with the general public shall file an application on a form 27
prescribed by the Bank Commissioner. 28
(3) The application required under subdivision (a)(2) of this 29
section shall provide: 30
(A) The name of the private trust company; 31
(B) An acknowledgment that any exemption granted or 32
otherwise applicable to the private trust company under this subchapter, 33
shall cease to apply on the effective date of the notice; 34
(C) A copy of the resolution adopted by the board 35
authorizing the private trust company to commence transacting business with 36 SB230
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the general public; and 1
(D) The payment of the filing fee, if any, prescribed by 2
the commissioner. 3
(b) The applicant may commence transacting business with the general 4
public thirty (30) days after the application is approved by the 5
commissioner, unless the commissioner specifies another date. 6
(c)(1) The thirty-day period of review under subsection (b) of this 7
section may be extended by the commissioner on determination that the 8
application raises issues that require additional information or additional 9
time for analysis. 10
(2) If the period for review is extended, the applicant may 11
commence transacting business with the public only on prior written approval 12
by the commissioner. 13
(d) The commissioner may deny approval of the application of the 14
private trust company to commence transacting business with the general 15
public if the commissioner finds that the: 16
(1) Applicant lacks sufficient financial resources to undertake 17
the proposed expansion without adversely affecting its safety or soundness; 18
(2) Proposed transacting of business with the general public 19
would be contrary to the public interest; or 20
(3) Applicant will not within a reasonable period be in 21
compliance with any provision of this chapter from which the applicant had 22
been previously exempted under this subchapter. 23
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