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Kansas Senate Bill SB204

Kansas 2023-2024 Regular Session

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11 Session of 2023
22 SENATE BILL No. 204
33 By Joint Committee on Fiduciary Financial Institutions Oversight
44 2-8
55 AN ACT concerning financial institutions; relating to the technology-
66 enabled fiduciary financial institutions act; replacing the definition of
77 "charitable beneficiaries" with "qualified charities" therein; amending
88 K.S.A. 9-2301 and repealing the existing section.
99 Be it enacted by the Legislature of the State of Kansas:
1010 Section 1. K.S.A. 9-2301 is hereby amended to read as follows: 9-
1111 2301. (a) The provisions of K.S.A. 9-2301 through 9-2327, and
1212 amendments thereto, shall be known and may be cited as the technology-
1313 enabled fiduciary financial institutions act. The technology-enabled
1414 fiduciary financial institutions act shall be a part of and supplemental to
1515 chapter 9 of the Kansas Statutes Annotated, and amendments thereto.
1616 (b) For purposes of the technology-enabled fiduciary financial
1717 institutions act:
1818 (1) "Act" means the technology-enabled fiduciary financial
1919 institutions act;
2020 (2) "alternative asset" means professionally managed investment
2121 assets that are not publicly traded, including, but not limited to, private
2222 equity, venture capital, leveraged buyouts, special situations, structured
2323 credit, private debt, private real estate funds and natural resources,
2424 including any economic or beneficial interest therein;
2525 (3) "alternative asset custody account" means an account created by
2626 the owner of an alternative asset that designates a fiduciary financial
2727 institution as custodian or agent and into which the owner transfers,
2828 electronically or otherwise, content, materials, data, information,
2929 documents, reports and contracts in any form, including, without
3030 limitation, evidence of ownership, subscription agreements, private
3131 placement memoranda, limited partnership agreements, operating
3232 agreements, financial statements, annual and quarterly reports, capital
3333 account statements, tax statements, correspondence from the general
3434 partner, manager or investment advisor of the alternative asset, an
3535 investment contract as defined in K.S.A. 17-12a102(28)(E), and
3636 amendments thereto, and any digital asset as defined in K.S.A. 58-4802,
3737 and amendments thereto, whether such information is in hard copy form or
3838 a representation of such information that is stored in a computer readable
3939 format;
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7676 (4) "charitable beneficiaries" means one or more charities,
7777 contributions to which are allowable as a deduction pursuant to section
7878 170 of the federal internal revenue code that are designated as
7979 beneficiaries of a fidfin trust;
8080 (5) "custodial services" means the safekeeping and management of an
8181 alternative asset custody account, including the execution of customer
8282 instructions, serving as agent, fund administrative services and overall
8383 decision-making and management of the account by a fiduciary financial
8484 institution and "custodial services" shall be deemed to involve the exercise
8585 of fiduciary and trust powers;
8686 (6)(5) "economic growth zone" means an incorporated community
8787 with a population of not more than 5,000 people located within one of the
8888 following counties: Allen, Anderson, Barber, Bourbon, Brown, Chase,
8989 Chautauqua, Cherokee, Cheyenne, Clark, Clay, Cloud, Coffey, Comanche,
9090 Decatur, Doniphan, Edwards, Elk, Ellsworth, Gove, Graham, Grant, Gray,
9191 Greeley, Greenwood, Hamilton, Harper, Harvey, Haskell, Hodgeman,
9292 Jackson, Jewell, Kearny, Kingman, Kiowa, Labette, Lane, Lincoln, Linn,
9393 Logan, Marion, Marshall, Meade, Mitchell, Montgomery, Morris, Morton,
9494 Nemaha, Neosho, Ness, Norton, Osborne, Ottawa, Pawnee, Phillips, Pratt,
9595 Rawlins, Republic, Rice, Rooks, Rush, Russell, Scott, Sheridan, Sherman,
9696 Smith, Stafford, Stanton, Stevens, Sumner, Trego, Thomas, Wabaunsee,
9797 Wallace, Washington, Wichita, Wilson or Woodson;
9898 (7)(6) "excluded fiduciary" means a fiduciary financial institution in
9999 its capacity as trustee of a fidfin trust, provided that a fiduciary financial
100100 institution shall only be deemed an "excluded fiduciary" to the extent the
101101 fiduciary financial institution is excluded from exercising certain powers
102102 under the instrument that may be exercised by the trust advisor or other
103103 persons designated in the instrument;
104104 (8)(7) "fidfin," "fidfin services" or "fidfin transactions" means the
105105 financing of a fidfin trust or the acquisition of alternative assets on behalf
106106 of and through a fidfin trust, or both, as provided in K.S.A. 9-2311, and
107107 amendments thereto, including loans, extensions of credit and direct
108108 investments;
109109 (9)(8) "fidfin trust" means a trust created to facilitate the delivery of
110110 fidfin services by a fiduciary financial institution;
111111 (10)(9) "fiduciary" means a trustee, a trust advisor or a custodian of
112112 an alternative asset custody account appointed under an instrument that is
113113 acting in a fiduciary capacity for any person, trust or estate;
114114 (11)(10) "instrument" means any document creating a fidfin trust or
115115 alternative asset custody account;
116116 (12)(11) "out-of-state bank" means a national or state bank, savings
117117 and loan association or savings bank not incorporated under the laws of
118118 Kansas;
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162162 (13)(12) "out-of-state financial institution" means an out-of-state
163163 bank or an out-of-state trust company;
164164 (14)(13) "out-of-state trust company" means a national or state trust
165165 company not incorporated under the laws of Kansas;
166166 (14) "qualified charities" means the same as defined in K.S.A. 79-
167167 32,283, and amendments thereto;
168168 (15) (A) "qualified investment" means the purchase or development,
169169 in the aggregate, of at least 10,000 square feet of commercial, industrial,
170170 multiuse or multifamily real estate in the economic growth zone where the
171171 fiduciary financial institution maintains its principal office pursuant to
172172 K.S.A. 9-2309, and amendments thereto, provided that such community
173173 has committed to develop the necessary infrastructure to support a
174174 "qualified investment." A "qualified investment":
175175 (i) May include, as part of satisfying the square footage requirements,
176176 the suitable office space of such fiduciary financial institution, as provided
177177 in K.S.A. 9-2309, and amendments thereto, if owned by the fiduciary
178178 financial institution;
179179 (ii) shall be exempt from the provisions and limitations of K.S.A. 9-
180180 1102, and amendments thereto;
181181 (iii) may be retained by a fiduciary financial institution for as long as
182182 the fiduciary financial institution operates in this state; and
183183 (iv) may be sold, transferred or otherwise disposed of, including a
184184 sale or transfer to an affiliate of the fiduciary financial institution, if the
185185 fiduciary financial institution continues to maintain its principal office in
186186 an economic growth zone pursuant to K.S.A. 9-2309, and amendments
187187 thereto;
188188 (B) notwithstanding the foregoing provisions, if a fiduciary financial
189189 institution leases any portion of a qualified investment made by another
190190 fiduciary financial institution as the lessee fiduciary financial institution's
191191 suitable office space:
192192 (i) The lessee fiduciary financial institution shall make, or cause to be
193193 made, a qualified investment in an economic growth zone other than the
194194 economic growth zone where such fiduciary financial institution maintains
195195 its principal office;
196196 (ii) the leased square footage shall count toward the square footage
197197 requirement applicable to a qualified investment under this section, if such
198198 lease has an initial term of not less than five years; and
199199 (iii) the square footage requirement otherwise applicable to a
200200 qualified investment of the lessee fiduciary financial institution shall be
201201 reduced from 10,000 square feet to 5,000 square feet;
202202 (16) "technology-enabled fiduciary financial institution" or "fiduciary
203203 financial institution" means any limited liability company, limited
204204 partnership or corporation that:
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248248 (A) Is organized to perform any one or more of the activities and
249249 services authorized by this act;
250250 (B) has been authorized to conduct business as a fiduciary financial
251251 institution under this chapter pursuant to the provisions of K.S.A. 9-2302,
252252 and amendments thereto;
253253 (C) has made, committed to make or caused to be made a qualified
254254 investment; and
255255 (D) has committed, in or as a part of the application provided in
256256 K.S.A. 9-2302, and amendments thereto, to conduct any fidfin transactions
257257 in accordance with K.S.A. 9-2311, and amendments thereto, including the
258258 distributions required therein;
259259 (17) "trust" means a trust created pursuant to the Kansas uniform trust
260260 code, K.S.A. 58a-101 et seq., and amendments thereto, or created pursuant
261261 to the Kansas business trust act of 1961, K.S.A. 17-2707 et seq., and
262262 amendments thereto;
263263 (18) "trust advisor" means a fiduciary granted authority by an
264264 instrument to exercise, consent, direct, including the power to direct as
265265 provided in K.S.A. 58a-808, and amendments thereto, or approve all or
266266 any portion of the powers and discretion conferred upon the trustee of a
267267 fidfin trust, including the power to invest the assets of a fidfin trust or
268268 make or cause distributions to be made from such fidfin trust; and
269269 (19) the definitions of K.S.A. 9-701, and amendments thereto, apply
270270 to fiduciary financial institutions except as otherwise provided in this act.
271271 Sec. 2. K.S.A. 9-2301 is hereby repealed.
272272 Sec. 3. This act shall take effect and be in force from and after its
273273 publication in the statute book.
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