KS
Kansas House Bill HB2235

Kansas 2025-2026 Regular Session

Kansas House Bill HB2235 Compare Versions

Only one version of the bill is available at this time.
OldNewDifferences
11 Session of 2025
22 HOUSE BILL No. 2235
33 By Committee on Financial Institutions and Pensions
44 Requested by Representative Hoheisel
55 2-4
66 AN ACT concerning financial institutions; relating to the technology-
77 enabled fiduciary financial institutions act; making the act part of the
88 state banking code; defining certain terms; reducing the fiduciary
99 financial institution charter application fee; providing due dates for
1010 reports to the office of the state bank commissioner; exempting
1111 fiduciary financial institutions from certain records retention
1212 requirements; authorizing the issuance of certificates and trust
1313 certificates; providing for the supervision of fiduciary financial
1414 institutions by the bank commissioner; including Kansas nonprofit
1515 corporations as qualified charities for purposes of the fiduciary
1616 financial institution income tax credit; amending K.S.A. 9-542, 9-2303,
1717 9-2307, 9-2309, 9-2310, 9-2311, 9-2312 and 9-2322 and K.S.A. 2024
1818 Supp. 9-2301 and 79-32,283 and repealing the existing sections.
1919 Be it enacted by the Legislature of the State of Kansas:
2020 Section 1. K.S.A. 9-542 is hereby amended to read as follows: 9-542.
2121 Articles 5, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and, 21 and 23
2222 of chapter 9 of the Kansas Statutes Annotated, and K.S.A. 74-3004, 74-
2323 3005, 74-3006, 75-1304, 75-1305 and, 75-1306, and 75-1308, and K.S.A.
2424 9-814, 9-815, 9-816, 9-1141, 9-1409, 9-1725, 9-1726, 9-1810, 9-1811, 9-
2525 1919, 9-1920, 9-1921 and 9-2019, and amendments thereto, shall
2626 constitute and may be cited as the state banking code.
2727 Sec. 2. K.S.A. 2024 Supp. 9-2301 is hereby amended to read as
2828 follows: 9-2301. (a) The provisions of K.S.A. 9-2301 through 9-2327, and
2929 amendments thereto, shall be known and may be cited as the technology-
3030 enabled fiduciary financial institutions act. The technology-enabled
3131 fiduciary financial institutions act shall be a part of and supplemental to
3232 chapter 9 of the Kansas Statutes Annotated, and amendments thereto.
3333 (b) For purposes of the technology-enabled fiduciary financial
3434 institutions act:
3535 (1) "Act" means the technology-enabled fiduciary financial
3636 institutions act;
3737 (2) "alternative asset" means professionally managed investment
3838 assets that are not publicly traded, including, but not limited to, private
3939 equity, venture capital, leveraged buyouts, special situations, structured
4040 1
4141 2
4242 3
4343 4
4444 5
4545 6
4646 7
4747 8
4848 9
4949 10
5050 11
5151 12
5252 13
5353 14
5454 15
5555 16
5656 17
5757 18
5858 19
5959 20
6060 21
6161 22
6262 23
6363 24
6464 25
6565 26
6666 27
6767 28
6868 29
6969 30
7070 31
7171 32
7272 33
7373 34
7474 35 HB 2235 2
7575 credit, private debt, private real estate funds and natural resources,
7676 including any economic or beneficial interest therein and any items that
7777 may be held by an alternative asset custody account;
7878 (3) "alternative asset custody account" means an account created by
7979 the owner of an alternative asset that designates a fiduciary financial
8080 institution as custodian or agent and into which the owner transfers,
8181 electronically or otherwise, content, materials, data, information,
8282 documents, reports and contracts in any form, including, without
8383 limitation, evidence of ownership, subscription agreements, private
8484 placement memoranda, limited partnership agreements, limited liability
8585 company agreements, stock agreements in companies and attendant
8686 documents (including investor questionnaire, side letters, regulatory
8787 filings, confidentiality agreements, legal opinions, capitalization tables,
8888 joinder agreements, business plans and offering memorandums),
8989 certificates, depositary receipts, currency, operating agreements, financial
9090 statements, annual and quarterly reports, capital account statements, tax
9191 statements, correspondence from the general partner, manager or
9292 investment advisor of the alternative asset, an investment contract as
9393 defined in K.S.A. 17-12a102(28)(E), and amendments thereto, any digital
9494 or hard copy representation of the foregoing, including smart contracts,
9595 and any digital asset as defined in K.S.A. 58-4802, and amendments
9696 thereto, controllable electronic record, controllable account or
9797 controllable payment intangible whether such information and evidence of
9898 ownership is in hard copy form or a representation of such information
9999 that ownership is stored in a computer readable format from which the
100100 custodian may create and issue a certificate to the beneficial owner;
101101 (4) "charitable beneficiaries" means one or more charities,
102102 contributions to which are allowable as a deduction pursuant to section
103103 170 of the federal internal revenue code that are designated as
104104 beneficiaries of a fidfin trust"certificate" means a certificate representing
105105 the beneficial ownership of a trust or an asset held in an alternative asset
106106 custody account that may be implemented by a digitization process,
107107 including a machine-based system in which a record of ownership and
108108 transactions is maintained with the use of distributed ledger technology,
109109 smart contracts, peer-to-peer networks or other technologies that can
110110 generate a digital replication of the certificate which digital replication
111111 may be divided by such machine-based system as necessary to represent
112112 one or more beneficial owners and which may be secured, accessed or
113113 transferred by means of private keys, electronic signatures or other
114114 analogues comprised of code, script or programming language. Each
115115 digital certificate or divided replication thereof, may, depending on its
116116 terms, constitute a digital asset as defined in K.S.A. 58-4802, and
117117 amendments thereto, a controllable electronic record, a controllable
118118 1
119119 2
120120 3
121121 4
122122 5
123123 6
124124 7
125125 8
126126 9
127127 10
128128 11
129129 12
130130 13
131131 14
132132 15
133133 16
134134 17
135135 18
136136 19
137137 20
138138 21
139139 22
140140 23
141141 24
142142 25
143143 26
144144 27
145145 28
146146 29
147147 30
148148 31
149149 32
150150 33
151151 34
152152 35
153153 36
154154 37
155155 38
156156 39
157157 40
158158 41
159159 42
160160 43 HB 2235 3
161161 account or a controllable payment intangible and to the extent involved in
162162 a transaction shall be subject to K.S.A. 84-1-301, and amendments thereto;
163163 (5) "controllable account" means an account as defined in K.S.A. 84-
164164 9-102(a)(2)(A) through (D), and amendments thereto, evidenced by a
165165 controllable electronic record that provides that the account debtor
166166 undertakes to pay the person who has control of the controllable
167167 electronic record;
168168 (6) "controllable electronic record" means a record as defined in
169169 K.S.A. 84-9-102(a)(69), and amendments thereto, stored in an electronic
170170 medium that may be subject to control by:
171171 (A) Giving a person:
172172 (i) Power to avail such person of substantially all the benefit from the
173173 electronic record; and
174174 (ii) exclusive power to:
175175 (a) Prevent others from availing themselves of substantially all the
176176 benefit from the electronic record; and
177177 (b) transfer control of the electronic record to another person or
178178 cause another person to obtain control of another controllable electronic
179179 record as a result of the transfer of the electronic record; and
180180 (B) enabling the person readily to identify in any way, including by
181181 name, identifying number, cryptographic key, office or account number, as
182182 having the powers specified in subparagraph (A).
183183 "Controllable electronic record" does not include a controllable
184184 account, a controllable payment intangible, a deposit account, an
185185 electronic copy of a record evidencing chattel paper, an electronic
186186 document of title, electronic money, investment property or a transferable
187187 record.
188188 (7) "controllable payment intangible" means a payment intangible as
189189 defined in K.S.A. 84-9-102(a)(61), and amendments thereto, evidenced by
190190 a controllable electronic record that provides that the account debtor
191191 undertakes to pay the person who has control of the controllable
192192 electronic record;
193193 (8) "custodial services" means the safekeeping and management of an
194194 alternative asset custody account, including the execution of customer
195195 instructions, serving as agent, issuing depositary receipts, fund
196196 administrative services and overall decision-making and management of
197197 the account by a fiduciary financial institution and "custodial services"
198198 shall be deemed to involve the exercise of fiduciary and trust powers;
199199 (6)(9) "director" means a person designated as a member of the board
200200 of directors pursuant to K.S.A. 9-2306, and amendments thereto;
201201 (7)(10) "economic growth zone" means an incorporated community
202202 with a population of not more than 5,000 people located within one of the
203203 following counties: Allen, Anderson, Barber, Bourbon, Brown, Chase,
204204 1
205205 2
206206 3
207207 4
208208 5
209209 6
210210 7
211211 8
212212 9
213213 10
214214 11
215215 12
216216 13
217217 14
218218 15
219219 16
220220 17
221221 18
222222 19
223223 20
224224 21
225225 22
226226 23
227227 24
228228 25
229229 26
230230 27
231231 28
232232 29
233233 30
234234 31
235235 32
236236 33
237237 34
238238 35
239239 36
240240 37
241241 38
242242 39
243243 40
244244 41
245245 42
246246 43 HB 2235 4
247247 Chautauqua, Cherokee, Cheyenne, Clark, Clay, Cloud, Coffey, Comanche,
248248 Decatur, Doniphan, Edwards, Elk, Ellsworth, Gove, Graham, Grant, Gray,
249249 Greeley, Greenwood, Hamilton, Harper, Harvey, Haskell, Hodgeman,
250250 Jackson, Jewell, Kearny, Kingman, Kiowa, Labette, Lane, Lincoln, Linn,
251251 Logan, Marion, Marshall, Meade, Mitchell, Montgomery, Morris, Morton,
252252 Nemaha, Neosho, Ness, Norton, Osborne, Ottawa, Pawnee, Phillips, Pratt,
253253 Rawlins, Republic, Rice, Rooks, Rush, Russell, Scott, Sheridan, Sherman,
254254 Smith, Stafford, Stanton, Stevens, Sumner, Trego, Thomas, Wabaunsee,
255255 Wallace, Washington, Wichita, Wilson or Woodson;
256256 (8)(11) "excluded fiduciary" means a fiduciary financial institution in
257257 its capacity as trustee of a fidfin trust, provided that a fiduciary financial
258258 institution shall only be deemed an "excluded fiduciary" to the extent the
259259 fiduciary financial institution is excluded from exercising certain powers
260260 under the instrument that may be exercised by the trust advisor or other
261261 persons designated in the instrument;
262262 (9)(12) "fidfin," "fidfin services" or "fidfin transactions" means the
263263 financing of a fidfin trust or the acquisition of alternative assets on behalf
264264 of and through a fidfin trust, or both, as provided in K.S.A. 9-2311, and
265265 amendments thereto, including loans, extensions of credit and direct
266266 investments;
267267 (10)(13) "fidfin trust" means a trust created to facilitate the delivery
268268 of fidfin services by a fiduciary financial institution;
269269 (11)(14) "fiduciary" means a trustee, a trust advisor or a custodian of
270270 an alternative asset custody account appointed under an instrument that is
271271 acting in a fiduciary capacity for any person, trust or estate;
272272 (12)(15) "instrument" means any document creating a fidfin trust or
273273 alternative asset custody account;
274274 (13)(16) "officer" means a person who participates or has authority to
275275 participate, other than in the capacity of a director, in major policymaking
276276 functions of a bank, trust company or fiduciary financial institution,
277277 whether or not the officer has an official title or if the officer is serving
278278 without salary or other compensation. "Officer" includes the chairperson
279279 of the board, president, vice president, cashier, secretary and treasurer of a
280280 bank, trust company or fiduciary financial institution;
281281 (14)(17) "organizer" means a person who filed the fiduciary financial
282282 institution formation documents;
283283 (15)(18) "out-of-state bank" means a national or state bank, savings
284284 and loan association or savings bank not incorporated under the laws of
285285 Kansas;
286286 (16)(19) "out-of-state financial institution" means an out-of-state
287287 bank or an out-of-state trust company;
288288 (17)(20) "out-of-state trust company" means a national or state trust
289289 company not incorporated under the laws of Kansas;
290290 1
291291 2
292292 3
293293 4
294294 5
295295 6
296296 7
297297 8
298298 9
299299 10
300300 11
301301 12
302302 13
303303 14
304304 15
305305 16
306306 17
307307 18
308308 19
309309 20
310310 21
311311 22
312312 23
313313 24
314314 25
315315 26
316316 27
317317 28
318318 29
319319 30
320320 31
321321 32
322322 33
323323 34
324324 35
325325 36
326326 37
327327 38
328328 39
329329 40
330330 41
331331 42
332332 43 HB 2235 5
333333 (18)(21) "qualified charities" means the same as defined in K.S.A.
334334 79-32,283, and amendments thereto;
335335 (22) (A) "qualified investment" means the purchase or development,
336336 in the aggregate, of at least 10,000 square feet of commercial, industrial,
337337 multiuse or multifamily real estate in the economic growth zone where the
338338 fiduciary financial institution maintains its principal office pursuant to
339339 K.S.A. 9-2309, and amendments thereto, provided that such community
340340 has committed to develop the necessary infrastructure to support a
341341 "qualified investment." A "qualified investment":
342342 (i) May include, as part of satisfying the square footage requirements,
343343 the suitable office space of such fiduciary financial institution, as provided
344344 in K.S.A. 9-2309, and amendments thereto, if owned by the fiduciary
345345 financial institution;
346346 (ii) shall be exempt from the provisions and limitations of K.S.A. 9-
347347 1102, and amendments thereto;
348348 (iii) may be retained by a fiduciary financial institution for as long as
349349 the fiduciary financial institution operates in this state; and
350350 (iv) may be sold, transferred or otherwise disposed of, including a
351351 sale or transfer to an affiliate of the fiduciary financial institution, if the
352352 fiduciary financial institution continues to maintain its principal office in
353353 an economic growth zone pursuant to K.S.A. 9-2309, and amendments
354354 thereto;
355355 (B) notwithstanding the foregoing provisions, if a fiduciary financial
356356 institution leases any portion of a qualified investment made by another
357357 fiduciary financial institution as the lessee fiduciary financial institution's
358358 suitable office space:
359359 (i) The lessee fiduciary financial institution shall make, or cause to be
360360 made, a qualified investment in an economic growth zone other than the
361361 economic growth zone where such fiduciary financial institution maintains
362362 its principal office;
363363 (ii) the leased square footage shall count toward the square footage
364364 requirement applicable to a qualified investment under this section, if such
365365 lease has an initial term of not less than five years; and
366366 (iii) the square footage requirement otherwise applicable to a
367367 qualified investment of the lessee fiduciary financial institution shall be
368368 reduced from 10,000 square feet to 5,000 square feet;
369369 (19)(23) "technology-enabled fiduciary financial institution" or
370370 "fiduciary financial institution" means any limited liability company,
371371 limited partnership or corporation that:
372372 (A) Is organized to perform any one or more of the activities and
373373 services authorized by this act;
374374 (B) has been authorized to conduct business as a fiduciary financial
375375 institution under this chapter pursuant to the provisions of K.S.A. 9-2302,
376376 1
377377 2
378378 3
379379 4
380380 5
381381 6
382382 7
383383 8
384384 9
385385 10
386386 11
387387 12
388388 13
389389 14
390390 15
391391 16
392392 17
393393 18
394394 19
395395 20
396396 21
397397 22
398398 23
399399 24
400400 25
401401 26
402402 27
403403 28
404404 29
405405 30
406406 31
407407 32
408408 33
409409 34
410410 35
411411 36
412412 37
413413 38
414414 39
415415 40
416416 41
417417 42
418418 43 HB 2235 6
419419 and amendments thereto;
420420 (C) has made, committed to make or caused to be made a qualified
421421 investment; and
422422 (D) has committed, in or as a part of the application provided in
423423 K.S.A. 9-2302, and amendments thereto, to conduct any fidfin transactions
424424 in accordance with K.S.A. 9-2311, and amendments thereto, including the
425425 distributions required therein;
426426 (20)(24) "trust" means a trust created pursuant to the Kansas uniform
427427 trust code, K.S.A. 58a-101 et seq., and amendments thereto, or a trust
428428 created or otherwise authorized to transact business pursuant to the
429429 Kansas business trust act of 1961, K.S.A. 17-2707 et seq. 17-2030, and
430430 amendments thereto, the beneficial ownership of which may be
431431 represented by a trust certificate;
432432 (21)(25) "trust advisor" means a fiduciary granted authority by an
433433 instrument to exercise, consent, direct, including the power to direct as
434434 provided in K.S.A. 58a-808, and amendments thereto, or approve all or
435435 any portion of the powers and discretion conferred upon the trustee of a
436436 fidfin trust, including the power to invest the assets of a fidfin trust or
437437 make or cause distributions to be made from such fidfin trust; and
438438 (22)(26) the definitions of K.S.A. 9-701, and amendments thereto,
439439 apply to fiduciary financial institutions except as otherwise provided in
440440 this act.
441441 Sec. 3. K.S.A. 9-2303 is hereby amended to read as follows: 9-2303.
442442 (a) An application for a fiduciary financial institution charter shall include
443443 a nonrefundable fee to be remitted in a manner prescribed by the
444444 commissioner. Until July 1, 2025, the application fee shall be $250,000.
445445 On and after July 1, 2025, the application fee shall be $100,000 $50,000.
446446 The expense of every annual regular fiduciary financial institution
447447 examination, together with the expense of administering fiduciary
448448 financial institution laws, including salaries, travel expenses, third-party
449449 fees for consultants or other entities necessary to assist the commissioner,
450450 supplies and equipment, shall be paid by the fiduciary financial institutions
451451 of this state. Prior to the beginning of each fiscal year, the commissioner
452452 shall make an estimate of the fiduciary financial institution expenses to be
453453 incurred by the office of the state bank commissioner during such fiscal
454454 year in an amount not less than $1,000,000. The commissioner shall
455455 allocate and assess each fiduciary financial institution in this state on the
456456 basis of such fiduciary financial institution's total fidfin transaction
457457 balances, consisting of the aggregate fidfin financing balances of the
458458 fiduciary financial institution reflected in the last December 31 report filed
459459 with the commissioner pursuant to K.S.A. 9-1704, and amendments
460460 thereto. If a fiduciary financial institution has no fidfin transaction
461461 balances, but such fiduciary financial institution is otherwise providing
462462 1
463463 2
464464 3
465465 4
466466 5
467467 6
468468 7
469469 8
470470 9
471471 10
472472 11
473473 12
474474 13
475475 14
476476 15
477477 16
478478 17
479479 18
480480 19
481481 20
482482 21
483483 22
484484 23
485485 24
486486 25
487487 26
488488 27
489489 28
490490 29
491491 30
492492 31
493493 32
494494 33
495495 34
496496 35
497497 36
498498 37
499499 38
500500 39
501501 40
502502 41
503503 42
504504 43 HB 2235 7
505505 custodial services or trust services, the commissioner shall allocate and
506506 assess such fiduciary financial institution in a manner the commissioner
507507 deems reasonable and appropriate. A fiduciary financial institution that has
508508 no fidfin transaction balances and no alternative asset custody accounts
509509 reflected in the last December 31 report filed with the commissioner may
510510 be granted inactive status by the commissioner. The annual assessment
511511 shall not exceed $10,000 for such an inactive fiduciary financial
512512 institution. The annual fee shall be first assessed for the year immediately
513513 following the year the fiduciary financial institution received authority to
514514 engage in fidfin transactions, custodial services and trust business and for
515515 each year thereafter.
516516 (b) (1) A statement of each assessment made under the provisions of
517517 subsection (a) shall be sent by the commissioner on July 1 or the next
518518 business day thereafter to each fiduciary financial institution. When the
519519 commissioner issues such a statement, payment shall be made within 15
520520 business days after the date the statement was sent in a manner prescribed
521521 by the commissioner, which may include such installment periods as the
522522 commissioner deems appropriate but not more frequently than monthly.
523523 (2) The commissioner shall remit all moneys received from such fees
524524 and assessments to the state treasurer in accordance with the provisions of
525525 K.S.A. 75-4215, and amendments thereto. Upon receipt of each such
526526 remittance, the state treasurer shall deposit the entire amount in the state
527527 treasury and credit 75% of each remittance to the bank commissioner fee
528528 fund and 25% to the technology-enabled fiduciary financial institutions
529529 development and expansion fund established in K.S.A. 9-2324, and
530530 amendments thereto.
531531 Sec. 4. K.S.A. 9-2307 is hereby amended to read as follows: 9-2307.
532532 (a) A fiduciary financial institution shall make a report to the
533533 commissioner pursuant to the provisions of K.S.A. 9-1704, and
534534 amendments thereto, except that such report required by K.S.A. 9-1704(b),
535535 and amendments thereto, shall not be due until March 1 of each year. All
536536 other financial reports of a fiduciary financial institution shall be due not
537537 earlier than 60 days after the request for such report is made by the
538538 commissioner. In making such a report, a fiduciary financial institution
539539 shall:
540540 (1) Report the fiduciary financial institution's fidfin transactions
541541 pursuant to generally accepted accounting principles; and
542542 (2) calculate such fiduciary financial institution's capital solvency by
543543 including the value of all tangible and intangible assets owned by the
544544 fiduciary financial institution, regardless of use.
545545 (b) In regulating, supervising and examining a fiduciary financial
546546 institution, the state banking board and the commissioner shall:
547547 (1) Consider that the collateral or underlying assets associated with
548548 1
549549 2
550550 3
551551 4
552552 5
553553 6
554554 7
555555 8
556556 9
557557 10
558558 11
559559 12
560560 13
561561 14
562562 15
563563 16
564564 17
565565 18
566566 19
567567 20
568568 21
569569 22
570570 23
571571 24
572572 25
573573 26
574574 27
575575 28
576576 29
577577 30
578578 31
579579 32
580580 33
581581 34
582582 35
583583 36
584584 37
585585 38
586586 39
587587 40
588588 41
589589 42
590590 43 HB 2235 8
591591 fidfin transactions are volatile in nature and that such volatility has been
592592 accepted by the members and customers of the fiduciary financial
593593 institution;
594594 (2) respect the form, treatment and character of fidfin transactions
595595 under the laws of this state notwithstanding the treatment or
596596 characterization of such transactions under generally accepted accounting
597597 principles or for tax purposes;
598598 (3) evaluate whether available capital, including the agreement of a
599599 fiduciary financial institution's members to contribute capital pursuant to
600600 K.S.A. 9-2305, and amendments thereto, exceeds the fiduciary financial
601601 institution's obligations, determined in accordance with generally accepted
602602 accounting principles;
603603 (4) evaluate the background and qualifications of a fiduciary financial
604604 institution's executive officers and directors, the internal controls and audit
605605 processes enacted by the fiduciary financial institution and adherence to its
606606 policies and procedures;
607607 (5) evaluate the profitability of a fiduciary financial institution in
608608 accordance with subsection (c);
609609 (6) evaluate a fiduciary financial institution's compliance with
610610 applicable state and federal laws; and
611611 (7) evaluate a fiduciary financial institution's information technology
612612 systems, policies and practices.
613613 (c) Profitability shall not be a consideration in evaluating a fiduciary
614614 financial institution if sufficient capital and equity exist in the business,
615615 including, without limitation, membership capital, surplus, undivided
616616 profits and commitments by members to contribute additional capital to
617617 the fiduciary financial institution pursuant to K.S.A. 9-2305, and
618618 amendments thereto, to satisfy the fiduciary financial institution's
619619 obligations.
620620 (d) The provisions of K.S.A. 9-1130(b), and amendments thereto, and
621621 K.A.R. 17-12-2 shall not apply to a fiduciary financial institution.
622622 Sec. 5. K.S.A. 9-2309 is hereby amended to read as follows: 9-2309.
623623 (a) A fiduciary financial institution shall:
624624 (1) Maintain suitable office space in an economic growth zone, as
625625 defined in K.S.A. 9-2301, and amendments thereto, for fidfin transactions,
626626 custodial services and trust business and for the storage of, and access to,
627627 fiduciary financial institution records;
628628 (2) employ, engage or contract with at least three employees to
629629 provide services for the fiduciary financial institution in Kansas related to
630630 the powers of the fiduciary financial institution and to facilitate the
631631 examinations required by this act; and
632632 (3) perform fidfin transactions, custodial services and trust business
633633 in Kansas, and a fiduciary financial institution may also engage in fidfin
634634 1
635635 2
636636 3
637637 4
638638 5
639639 6
640640 7
641641 8
642642 9
643643 10
644644 11
645645 12
646646 13
647647 14
648648 15
649649 16
650650 17
651651 18
652652 19
653653 20
654654 21
655655 22
656656 23
657657 24
658658 25
659659 26
660660 27
661661 28
662662 29
663663 30
664664 31
665665 32
666666 33
667667 34
668668 35
669669 36
670670 37
671671 38
672672 39
673673 40
674674 41
675675 42
676676 43 HB 2235 9
677677 transactions, custodial services and trust business in other states to the
678678 extent permitted by applicable law.
679679 (b) As used in this section, the term "suitable office space" means at
680680 least 2,000 square feet of class A office space located in an economic
681681 growth zone selected by the fiduciary financial institution that the
682682 fiduciary financial institution utilizes as such fiduciary financial
683683 institution's principal office.
684684 (c) The fiduciary financial institution's principal office shall:
685685 (1) Be in premises distinct and divided from the office space of any
686686 other entity;
687687 (2) be located in an economic growth zone selected by the fiduciary
688688 financial institution;
689689 (3) have the name, charter and certificate of authority of the fiduciary
690690 financial institution prominently displayed;
691691 (4) have access to premises in or adjacent to the office space
692692 sufficient to facilitate on-site examinations and supervision by the state
693693 banking board or commissioner;
694694 (5) to the extent the fiduciary financial institution maintains hard
695695 copies of any documents required to be maintained under this chapter,
696696 have a secure fireproof file cabinet that contains all such hard copies; and
697697 (6) to the extent the fiduciary financial institution maintains any
698698 record electronically, have a secure computer terminal or other secure
699699 electronic device that provides access to such records, including account
700700 information, as necessary to facilitate an efficient and effective
701701 examination.
702702 (d) Fidfin transactions, custodial services and trust business is
703703 deemed to have been performed in Kansas for purposes of this section if
704704 fidfin transaction or custodial service agreements are approved or signed
705705 in this state on behalf of the fiduciary financial institution and at least three
706706 of the following acts are performed by a technology platform wholly or
707707 partly operated in this state:
708708 (1) Annual account reviews;
709709 (2) annual investment reviews;
710710 (3) trust or custodial accounting;
711711 (4) account correspondence;
712712 (5) reviewing and signing trust account or custodial account tax
713713 returns; or
714714 (6) distributing account statements.
715715 Sec. 6. K.S.A. 9-2310 is hereby amended to read as follows: 9-2310.
716716 Any fiduciary financial institution is hereby authorized to exercise by its
717717 board of directors or duly authorized officers or agents, subject to law, the
718718 following powers:
719719 (a) To engage in fidfin transactions in accordance with K.S.A. 9-
720720 1
721721 2
722722 3
723723 4
724724 5
725725 6
726726 7
727727 8
728728 9
729729 10
730730 11
731731 12
732732 13
733733 14
734734 15
735735 16
736736 17
737737 18
738738 19
739739 20
740740 21
741741 22
742742 23
743743 24
744744 25
745745 26
746746 27
747747 28
748748 29
749749 30
750750 31
751751 32
752752 33
753753 34
754754 35
755755 36
756756 37
757757 38
758758 39
759759 40
760760 41
761761 42
762762 43 HB 2235 10
763763 2311, and amendments thereto;
764764 (b) to receive, retain and manage alternative asset custody accounts in
765765 accordance with K.S.A. 9-2313, and amendments thereto, and to issue
766766 certificates associated with such accounts or the underlying alternative
767767 assets; and
768768 (c) to engage in trust business as defined in K.S.A. 9-701, and
769769 amendments thereto, as incidental to the activities in subsections (a) and
770770 (b), including, as trustee, issuing trust certificates on behalf of a trust.
771771 Sec. 7. K.S.A. 9-2311 is hereby amended to read as follows: 9-2311.
772772 (a) If authorized by the terms of an instrument as such term is defined in
773773 K.S.A. 9-2301, and amendments thereto, a fiduciary financial institution
774774 may:
775775 (1) Extend financing, such as through loans or extensions of credit to
776776 a fidfin trust when:
777777 (A) The fiduciary financial institution serves as trustee of the
778778 borrowing fidfin trust;
779779 (B) the financing is collateralized or supported by the assets of such
780780 fidfin trust;
781781 (C) the financing is nonrecourse as to the fiduciary financial
782782 institution's customer and is not otherwise guaranteed by such customer;
783783 (D) the fiduciary financial institution agrees, in the applicable
784784 financing agreement or other written document, that the fiduciary financial
785785 institution is providing financing in a fiduciary capacity; and
786786 (E) the fiduciary financial institution agrees that such fiduciary
787787 financial institution will manage the collateral or assets underlying the
788788 financing in a fiduciary capacity; and
789789 (2) acquire or invest in an alternative asset on behalf of and through a
790790 fidfin trust; and
791791 (3) undertake such actions with regard to a trust as defined in K.S.A.
792792 9-2301, and amendments thereto.
793793 (b) The financing of a fidfin trust pursuant to subsection (a)(1) and
794794 (a)(2) shall be considered a fiduciary finance or fidfin transaction.
795795 (c) If authorized or directed by the terms of an instrument, no
796796 fiduciary financial institution shall be deemed to have a conflict of interest,
797797 to have violated a duty to a fidfin trust or the beneficiaries thereof or to
798798 have engaged in self-dealing by entering into a fidfin transaction.
799799 (d) The combination rules provisions of K.S.A. 9-1104(f), and
800800 amendments thereto, shall be inapplicable to a fiduciary financial
801801 institution's fidfin transactions regardless of the identity of the fidfin trust
802802 beneficiary if:
803803 (1) The borrower is a fidfin trust; and
804804 (2) the fiduciary financial institution serves as trustee of the
805805 borrowing fidfin trust.
806806 1
807807 2
808808 3
809809 4
810810 5
811811 6
812812 7
813813 8
814814 9
815815 10
816816 11
817817 12
818818 13
819819 14
820820 15
821821 16
822822 17
823823 18
824824 19
825825 20
826826 21
827827 22
828828 23
829829 24
830830 25
831831 26
832832 27
833833 28
834834 29
835835 30
836836 31
837837 32
838838 33
839839 34
840840 35
841841 36
842842 37
843843 38
844844 39
845845 40
846846 41
847847 42
848848 43 HB 2235 11
849849 (e) A fiduciary financial institution that engages in a fidfin transaction
850850 shall be a fiduciary. Subject to the duties and standards of utmost care and
851851 loyalty that are associated with serving as a fiduciary, a fiduciary financial
852852 institution shall be deemed to be exercising fiduciary powers. All income
853853 generated by such fidfin transactions, including interest and investment
854854 income, shall be deemed to be income derived from the exercise of such
855855 fiduciary powers.
856856 (f) A fiduciary financial institution that engages in fidfin transactions
857857 shall distribute, cause to be distributed or otherwise facilitate the
858858 distribution of the required distribution amount as provided by this section.
859859 For purposes of this section, "required distribution amount" means cash,
860860 beneficial interests or other assets with a value equal to 2.5% of such
861861 fiduciary financial institution's fidfin transactions originated during the
862862 calendar year. Such transactions shall exclude any renewals, extensions of
863863 credit or accruals associated with transactions made in a prior calendar
864864 year, less any credit available to such fiduciary financial institution
865865 pursuant to K.S.A. 9-2302, and amendments thereto. The required
866866 distribution amount shall be distributed as follows:
867867 (1) (A) To the department of commerce:
868868 Required distribution amount Percentage to department of commerce
869869 $0 to $500,000 90%
870870 $500,001 to $1,000,000 50%
871871 Above $1,000,000 10%
872872 (B) the amounts specified in subparagraph (A) shall apply to
873873 fiduciary financial institutions chartered prior to January 1, 2023. For
874874 fiduciary financial institutions chartered after such date, the department of
875875 commerce may publish one or more schedules in the Kansas register as the
876876 department of commerce deems reasonably necessary to facilitate
877877 economic growth and development in one or more economic growth
878878 zones. No such schedule shall be effective until after its publication in the
879879 Kansas register. The department of commerce shall timely submit any
880880 schedule published under this section to the commissioner. The
881881 commissioner shall provide a copy of such schedule to any applicant for a
882882 fiduciary financial institution charter prior to the issuance of such charter.
883883 A fiduciary financial institution shall be subject to the schedule in
884884 existence on the date such fiduciary financial institution's charter is issued
885885 and shall not be subject to any schedules published after such date; and
886886 (C) the department of commerce shall remit all distributions under
887887 this subsection to the state treasurer in accordance with the provisions of
888888 K.S.A. 75-4215, and amendments thereto. Upon receipt of each such
889889 remittance, the state treasurer shall deposit the entire amount in the state
890890 treasury to the credit of the technology-enabled fiduciary financial
891891 institutions development and expansion fund established in K.S.A. 9-2324,
892892 1
893893 2
894894 3
895895 4
896896 5
897897 6
898898 7
899899 8
900900 9
901901 10
902902 11
903903 12
904904 13
905905 14
906906 15
907907 16
908908 17
909909 18
910910 19
911911 20
912912 21
913913 22
914914 23
915915 24
916916 25
917917 26
918918 27
919919 28
920920 29
921921 30
922922 31
923923 32
924924 33
925925 34
926926 35
927927 36
928928 37
929929 38
930930 39
931931 40
932932 41
933933 42
934934 43 HB 2235 12
935935 and amendments thereto; and
936936 (2) the balance of the required distribution amount shall be distributed
937937 to one or more qualified charities as defined in K.S.A. 2024 Supp. 79-
938938 32,283, and amendments thereto, as shall be selected by the fiduciary
939939 financial institution. An economic growth zone or qualified charity shall
940940 have no obligation to repay any distributions received under this act or to
941941 make any contributions to a fiduciary financial institution.
942942 (g) The form, treatment and character of fidfin transactions under the
943943 laws of this state shall be respected for all purposes of this act
944944 notwithstanding the treatment or characterization of such transactions
945945 under generally accepted accounting principles or for tax purposes.
946946 (h) A fiduciary financial institution shall disclose to a customer the
947947 information required by rules and regulations adopted by the
948948 commissioner pursuant to K.S.A. 9-2322, and amendments thereto, to
949949 ensure that the customer is informed regarding the nature of the customer's
950950 transactions with the fiduciary financial institution, taking into account the
951951 level of sophistication of the customer.
952952 Sec. 8. K.S.A. 9-2312 is hereby amended to read as follows: 9-2312.
953953 (a) Subject to the requirements of K.S.A. 9-2309(d), and amendments
954954 thereto, a fiduciary financial institution may:
955955 (1) Employ attorneys, accountants, investment advisors, agents or
956956 other persons, even if they are affiliated or associated with the fiduciary
957957 financial institution, to advise or assist the fiduciary financial institution in
958958 the performance of such fiduciary financial institution's fidfin transactions,
959959 custodial services and trust business and act without independent
960960 investigation upon such recommendations;
961961 (2) employ one or more agents to perform any act of fidfin
962962 transactions, custodial services or trust business;
963963 (3) license internet-related services, including web services, software,
964964 mobile applications, technology-enabled platforms and processes to or
965965 from affiliates, third parties, other fiduciary financial institutions and their
966966 affiliates;
967967 (4) license fidfin products and forms, as defined in K.S.A. 9-2321,
968968 and amendments thereto, to or from other fiduciary financial institutions
969969 and their affiliates;
970970 (5) perform any services that a fiduciary financial institution is
971971 authorized to perform under the laws of this state on behalf of another
972972 fiduciary financial institution; and
973973 (6) employ another fiduciary financial institution to perform any
974974 services that a fiduciary financial institution is authorized to perform under
975975 the laws of this state.
976976 (b) A party engaged by a fiduciary financial institution pursuant to
977977 subsection (a) shall not be deemed to have engaged in fidfin transactions,
978978 1
979979 2
980980 3
981981 4
982982 5
983983 6
984984 7
985985 8
986986 9
987987 10
988988 11
989989 12
990990 13
991991 14
992992 15
993993 16
994994 17
995995 18
996996 19
997997 20
998998 21
999999 22
10001000 23
10011001 24
10021002 25
10031003 26
10041004 27
10051005 28
10061006 29
10071007 30
10081008 31
10091009 32
10101010 33
10111011 34
10121012 35
10131013 36
10141014 37
10151015 38
10161016 39
10171017 40
10181018 41
10191019 42
10201020 43 HB 2235 13
10211021 custodial services or trust business in this state nor shall such party be
10221022 deemed a trust service office of the fiduciary financial institution under
10231023 K.S.A. 9-2108, and amendments thereto, or a trust facility or out-of-state
10241024 facility under K.S.A. 9-2111, and amendments thereto, by reason of
10251025 providing services to a fiduciary financial institution or licensing products,
10261026 platforms, systems or processes to such fiduciary financial institution.
10271027 (c) A fiduciary financial institution that provides services or licenses
10281028 fidfin products or forms pursuant to subsection (a) shall not be deemed a
10291029 trust service office of the fiduciary financial institution that has acquired
10301030 such services or licensed such products or forms.
10311031 (d) If a fiduciary financial institution offers its technology-enabled
10321032 platform to provide fidfin services to residents of other states, neither the
10331033 marketing, use and deployment of such platform by parties in other states
10341034 nor the origination of fidfin services through such platform shall constitute
10351035 an out-of-state trust facility under K.S.A. 9-2111, and amendments thereto,
10361036 if the fiduciary financial institution complies with the provisions of K.S.A.
10371037 9-2309, and amendments thereto.
10381038 (e) A fiduciary financial institution shall provide notice to the
10391039 commissioner pursuant to the provisions of K.S.A. 9-2103(a)(12), and
10401040 amendments thereto, if such fiduciary financial institution engages a party
10411041 pursuant to the provisions of subsection (a).
10421042 (f) Whenever a fiduciary financial institution causes to be performed
10431043 for such fiduciary financial institution, by contract or otherwise, any
10441044 service authorized under this act or the state banking code, such
10451045 performance shall be subject to regulation, supervision and examination by
10461046 the commissioner to the same extent as if such service was being
10471047 performed by the fiduciary financial institution itself.
10481048 Sec. 9. K.S.A. 9-2322 is hereby amended to read as follows: 9-2322.
10491049 (a) Pursuant to K.S.A. 9-1713, and amendments thereto, the commissioner
10501050 shall adopt rules and regulations on or before January 1, 2022, as are
10511051 necessary to administer this act and supervise and examine a fiduciary
10521052 financial institution.
10531053 (b) The office of the state bank commissioner may enter into
10541054 contracts for technical assistance and professional services as are
10551055 necessary to administer the provisions of this act and to meet the deadline
10561056 for the adoption of rules and regulations provided by this section. Such
10571057 contracts shall be exempt from the requirements of K.S.A. 75-3739, 75-
10581058 37,102 and 75-37,132, and amendments thereto, or any other statute
10591059 relating to the procurement of such services.
10601060 Sec. 10. K.S.A. 2024 Supp. 79-32,283 is hereby amended to read as
10611061 follows: 79-32,283. (a) For taxable years commencing after December 31,
10621062 2020, there shall be allowed as a credit against the tax liability of a
10631063 fiduciary financial institution imposed pursuant to the Kansas income tax
10641064 1
10651065 2
10661066 3
10671067 4
10681068 5
10691069 6
10701070 7
10711071 8
10721072 9
10731073 10
10741074 11
10751075 12
10761076 13
10771077 14
10781078 15
10791079 16
10801080 17
10811081 18
10821082 19
10831083 20
10841084 21
10851085 22
10861086 23
10871087 24
10881088 25
10891089 26
10901090 27
10911091 28
10921092 29
10931093 30
10941094 31
10951095 32
10961096 33
10971097 34
10981098 35
10991099 36
11001100 37
11011101 38
11021102 39
11031103 40
11041104 41
11051105 42
11061106 43 HB 2235 14
11071107 act or the privilege tax imposed upon a fiduciary financial institution
11081108 pursuant to article 11 of chapter 79 of the Kansas Statutes Annotated, and
11091109 amendments thereto, in an amount equal to the qualified charitable
11101110 distributions made in connection with the fiduciary financial institution's
11111111 fidfin activities during such taxable year if the fiduciary financial
11121112 institution maintained such fiduciary financial institution's principal office
11131113 in an economic growth zone during such taxable year in accordance with
11141114 the provisions of K.S.A. 9-2309, and amendments thereto.
11151115 (b) For purposes of this section:
11161116 (1) "Economic growth zone" and "fidfin" means the same as defined
11171117 in K.S.A. 9-2301, and amendments thereto;
11181118 (2) "qualified charitable distributions" means distributions of cash,
11191119 beneficial interests or other assets to one or more qualified charities having
11201120 an aggregate value equal to at least 2.5% of the fiduciary financial
11211121 institution's transactions originated during the taxable year. Such
11221122 transactions shall exclude any renewals, extensions of credit or accruals
11231123 associated with transactions made in a prior taxable year; and
11241124 (3) (A) "qualified charities" means one or more:
11251125 (i) Charities, in to which contributions are allowable as a deduction
11261126 pursuant to section 170 of the federal internal revenue code if such
11271127 charities have:; or
11281128 (ii) Kansas nonprofit corporations regardless of their federal income
11291129 tax treatment.
11301130 (B) Such "qualified charities" shall have:
11311131 (A)(i) Been organized pursuant to a charter promulgated by the
11321132 department of commerce for the purposes of making distributions for the
11331133 benefit of economic growth zones;
11341134 (B)(ii) committed in writing to utilize the entire amount of the
11351135 qualified charitable distributions, excluding reasonable administrative
11361136 expenses, exclusively for the benefit of charitable causes located in one or
11371137 more economic growth zones or postsecondary educational institutions as
11381138 defined in K.S.A. 74-3201b, and amendments thereto; and
11391139 (C)(iii) agreed to provide an annual report to the department of
11401140 commerce detailing qualified distributions received during such year,
11411141 distributions made pursuant to this subparagraph (B) and the remaining
11421142 balance of qualified distributions as of the end of the reporting year.
11431143 (C) The requirements of subparagraph (A)(B)(i) shall not apply to a
11441144 charity, contributions to which are allowable as a deduction pursuant to
11451145 section 170 of the federal internal revenue code, that has committed in
11461146 writing to utilize the entire amount of the qualified charitable distributions,
11471147 excluding reasonable administrative expenses, exclusively for the benefit
11481148 of the economic growth zone identified in K.S.A. 9-2325(a)(2), and
11491149 amendments thereto.
11501150 1
11511151 2
11521152 3
11531153 4
11541154 5
11551155 6
11561156 7
11571157 8
11581158 9
11591159 10
11601160 11
11611161 12
11621162 13
11631163 14
11641164 15
11651165 16
11661166 17
11671167 18
11681168 19
11691169 20
11701170 21
11711171 22
11721172 23
11731173 24
11741174 25
11751175 26
11761176 27
11771177 28
11781178 29
11791179 30
11801180 31
11811181 32
11821182 33
11831183 34
11841184 35
11851185 36
11861186 37
11871187 38
11881188 39
11891189 40
11901190 41
11911191 42
11921192 43 HB 2235 15
11931193 (c) No credit shall be allowed under this section if the fiduciary
11941194 financial institution's tax return on which the credit is claimed is not timely
11951195 filed, including any extension.
11961196 (d) A distribution or remittance to the department of commerce
11971197 pursuant to K.S.A. 9-2311, and amendments thereto, shall be deemed a
11981198 qualified charitable distribution for purposes of this section.
11991199 (e) A fiduciary financial institution shall not be required to ensure that
12001200 qualified charitable distributions are made solely for the benefit of the
12011201 economic growth zones where such fiduciary financial institution has:
12021202 (1) Established such fiduciary financial institution's principal office
12031203 pursuant to K.S.A. 9-2309, and amendments thereto; or
12041204 (2) made qualified investments as defined in K.S.A. 9-2301, and
12051205 amendments thereto. Qualified charitable distributions may be made for
12061206 the benefit of any one or more economic growth zones.
12071207 (f) If a fiduciary financial institution is a pass-through entity for
12081208 Kansas tax purposes and the credit allowed by this section for a taxable
12091209 year is greater than the fiduciary financial institution's tax liability against
12101210 which the tax credit may be applied, a member of the entity or any other
12111211 party who is required to report such income on a Kansas income tax return
12121212 is entitled to a tax credit equal to the tax credit determined for the fiduciary
12131213 financial institution for the taxable year in excess of the fiduciary financial
12141214 institution's tax liability under the Kansas income tax act or privilege tax
12151215 under article 11 of chapter 79 of the Kansas Statutes Annotated, and
12161216 amendments thereto, for the taxable year multiplied by the percentage of
12171217 the fiduciary financial institution's distributive income to which the
12181218 member is entitled. Tax credits allowed and earned under this section shall
12191219 not be sold, assigned, conveyed or otherwise transferred.
12201220 (g) If the amount of a tax credit allowed a member or other party
12211221 under this section exceeds the taxpayer's income tax liability for the
12221222 taxable year in which the tax credit is allowed, the amount thereof that
12231223 exceeds such tax liability may be carried over for deduction from the
12241224 taxpayer's income or privilege tax liability in the next succeeding taxable
12251225 year or years until the total amount of the tax credit has been deducted
12261226 from tax liability, except that no such tax credit shall be carried over for
12271227 deduction after the 5
12281228 th
12291229 taxable year succeeding the taxable year in which
12301230 the tax credit is first allowed.
12311231 (h) In any taxable year, a fiduciary financial institution shall pay the
12321232 greater of the qualified charitable distributions made during such taxable
12331233 year or the tax liability of a fiduciary financial institution imposed
12341234 pursuant to the Kansas income tax act or the privilege tax imposed upon a
12351235 fiduciary financial institution pursuant to article 11 of chapter 79 of the
12361236 Kansas Statutes Annotated, and amendments thereto.
12371237 (i) This section shall be a part of and supplemental to the Kansas
12381238 1
12391239 2
12401240 3
12411241 4
12421242 5
12431243 6
12441244 7
12451245 8
12461246 9
12471247 10
12481248 11
12491249 12
12501250 13
12511251 14
12521252 15
12531253 16
12541254 17
12551255 18
12561256 19
12571257 20
12581258 21
12591259 22
12601260 23
12611261 24
12621262 25
12631263 26
12641264 27
12651265 28
12661266 29
12671267 30
12681268 31
12691269 32
12701270 33
12711271 34
12721272 35
12731273 36
12741274 37
12751275 38
12761276 39
12771277 40
12781278 41
12791279 42
12801280 43 HB 2235 16
12811281 income tax act.
12821282 Sec. 11. K.S.A. 9-542, 9-2303, 9-2307, 9-2309, 9-2310, 9-2311, 9-
12831283 2312 and 9-2322 and K.S.A. 2024 Supp. 9-2301 and 79-32,283 are hereby
12841284 repealed.
12851285 Sec. 12. This act shall take effect and be in force from and after its
12861286 publication in the statute book.
12871287 1
12881288 2
12891289 3
12901290 4
12911291 5
12921292 6