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Chapter 1112 | Ohio Family Trust Company Act

 
 
 
Section
Section 1112.02 | Applicability to family trust company.
 

Except as otherwise provided in this chapter or in any other provision of the Revised Code, a family trust company is subject to this chapter only to the extent that the family trust company transacts trust business in this state.

Section 1112.03 | Licensure.
 

(A)(1) A family trust company may be, but is not required to be, licensed under this chapter. If a family trust company does not apply for a license under this chapter, it is not subject to supervision by the superintendent of financial institutions, so long as the family trust company meets the criteria as set forth in this chapter for an unlicensed family trust company. It shall, however, before commencing operations as a family trust company and annually thereafter, submit to the superintendent an affidavit signed by a senior officer of the family trust company verifying that the family trust company meets all of the requirements set forth under this chapter to transact business as an unlicensed family trust company in this state. The superintendent may charge and collect a fee from the unlicensed family trust company when the unlicensed family trust company files the affidavit with the superintendent.

(2) If the superintendent requires a fee under division (A)(1) of this section, the superintendent shall adopt rules in accordance with Chapter 119. of the Revised Code to establish the amount of the fee.

(B) Except as otherwise provided in this chapter, a family trust company licensed under this chapter is not subject to any other chapter of Title XI of the Revised Code.

Section 1112.06 | Oath.
 

Each member of the governing board of a family trust company shall take and subscribe an oath that the member will administer the affairs of the family trust company diligently and honestly and that the member will not knowingly or willfully permit noncompliance with or violation of any of the laws relating to family trust companies.

Section 1112.07 | Application for license.
 

(A) A family trust company wishing to be licensed under this chapter shall file an application with the superintendent of financial institutions. The application shall be in the form prescribed by the superintendent and shall be accompanied by a nonrefundable application fee of five thousand dollars.

(B) Within sixty days after a complete application for a license is filed, the division of financial institutions shall investigate the relevant facts concerning the applicant. If the application involves investigation outside this state, the division may require the applicant to advance sufficient funds to pay any of the actual expenses of that investigation.

(C) In determining whether to approve or disapprove an application for a family trust company license, the superintendent shall consider all of the following:

(1) Whether the applicant is a corporation or limited liability company described in division (H) of section 1112.01 of the Revised Code;

(2) Whether the applicant's articles of incorporation or articles of organization authorize the applicant to serve as a trustee;

(3) Whether the applicant satisfies the requirements of section 1112.13 of the Revised Code;

(4) Whether it is reasonable to believe the applicant will comply with applicable laws and observe sound fiduciary standards in conducting trust business in this state.

(D) If an application for a license does not contain all of the information required or is not accompanied by the required fee, and if that information or fee is not submitted to the superintendent within twelve months after the superintendent first requests the information or fee, or within such later period as determined by the superintendent, the superintendent shall consider the application withdrawn. If an application is considered withdrawn under this division or if an applicant otherwise withdraws its application, the superintendent shall not issue a license to the applicant unless the applicant submits a new application and pays the required fee.

(E) When an applicant has satisfied all prior conditions imposed by the superintendent in approving the applicant's application for a family trust company license and has pledged securities as required by section 1112.12 of the Revised Code, the superintendent shall issue the applicant a trust company license. A license issued pursuant to this section shall remain in force and effect until surrendered by the licensee pursuant to section 1112.17 of the Revised Code or suspended or revoked by the superintendent pursuant to section 1112.24 or 1112.25 of the Revised Code.

Section 1112.09 | Transfer and assignment prohibited.
 

A family trust company's license to engage in trust business in this state is not transferable or assignable.

Section 1112.10 | More than one place of business.
 

Not more than one place of business shall be maintained under the same license issued under this chapter, but the superintendent of financial institutions may issue additional licenses to the same licensee. For every additional place of business in this state, the licensee shall submit an application in the form prescribed by the superintendent and pay a one-time nonrefundable fee of five hundred dollars. For every additional place of business outside of this state, the licensee shall give written notice thereof to the superintendent.

Section 1112.11 | Limitation of powers before licensure.
 

The existence of any licensed family trust company shall date from the filing of its articles of incorporation or articles of organization, from which time it shall have and may exercise the incidental powers conferred by law upon corporations or limited liability companies, as applicable. However, until it has obtained a license issued under this chapter, a family trust company shall not transact any business as a licensed family trust company, other than the election of officers, the taking and approving of their official bonds, the receipts of payment upon stock subscriptions, and other business incidental to its organization.

Section 1112.12 | Pledge of securities.
 

(A) Prior to transacting any business as a licensed family trust company, a family trust company shall pledge to the treasurer of state interest-bearing securities authorized in division (B) of this section, having a par value, not including unaccrued interest, of one hundred thousand dollars, and approved by the superintendent of financial institutions. The family trust company may pledge the securities either by delivery to the treasurer of state or by placing the securities with a qualified trustee for safekeeping to the account of the treasurer of state.

(B) Securities pledged by a family trust company to satisfy the requirements of division (A) of this section shall be one or more of the following, provided that the bonds or other obligations are rated at the time of purchase in the three highest classifications established by at least one nationally recognized standard rating service and purchased through a registered securities broker or dealer:

(1) Bonds, notes, or other obligations of or guaranteed by the United States or for which the full faith and credit of the United States is pledged for the payment of principal and interest;

(2) Bonds, notes, debentures, or other obligations or securities issued by any agency or instrumentality of the United States.

(C) The treasurer of state shall accept delivery of securities pursuant to this section when accompanied by the superintendent's approval of the securities or the written receipt of a qualified trustee describing the securities and showing the superintendent's approval of the securities, and shall issue a written acknowledgment of the delivery of the securities or the qualified trustee's receipt and the superintendent's approval to the family trust company.

(D) The superintendent shall approve securities to be pledged by a family trust company pursuant to this section if the securities are all of the following:

(1) Interest-bearing and of the value required by division (A) of this section;

(2) Of one or more of the kinds authorized by division (B) of this section and not a derivative of or merely an interest in any of those securities;

(3) Not in default.

(E) The treasurer of state shall, with the approval of the superintendent, permit a family trust company to pledge securities in substitution for securities pledged pursuant to this section and the withdrawal of the securities substituted for so long as the securities remaining pledged satisfy the requirements of division (A) of this section. The treasurer of state shall permit a family trust company to collect interest paid on securities pledged pursuant to this section so long as the family trust company is solvent. The treasurer of state shall, with the approval of the superintendent, permit a licensed family trust company to withdraw securities pledged pursuant to this section when the family trust company has discontinued its business as a licensed family trust company in this state.

(F) For purposes of this section, a qualified trustee is a federal reserve bank, a federal home loan bank, a trust company as defined in section 1101.01 of the Revised Code, or a bank or savings association that has pledged securities pursuant to section 1111.04 of the Revised Code, is authorized to accept and execute trusts, and is doing business under authority granted by the comptroller of the currency.

(G) The superintendent, with the approval of the treasurer of state, shall prescribe the form of all receipts and acknowledgments provided for by this section, and upon request shall furnish a copy of each form, with the superintendent's certification attached, to each qualified trustee eligible to hold securities for safekeeping under this section.

Section 1112.14 | Duties of licensed family trust company.
 

Each licensed family trust company shall do all of the following:

(A) Maintain office space in this state for the transaction of trust business and for the storage of, and access to, family trust company records;

(B) Hold in this state at least two governing board meetings per year at which a quorum of the board members are physically present;

(C) Employ, engage, or contract with at least one individual, on a part-time basis, to provide services in this state for the family trust company;

(D) Perform at least three of the following trust administration activities wholly or partly in this state for the accounts under the management, administration, or custody of the family trust company:

(1) Annual account reviews;

(2) Annual investment reviews;

(3) Trust accountings;

(4) Account correspondence;

(5) Completion of trust account tax returns;

(6) Distribution of account statements.

(E) Maintain all of the following:

(1) A minimum of three directors or managers, at least one of whom is a resident of this state;

(2) A minimum stockholders' equity of an amount determined by the division of financial institutions, which amount shall be at least two hundred thousand dollars but not more than five hundred thousand dollars. The equity may be comprised of cash, securities, including stock of a nonpublicly traded business entity, or other reasonably liquid assets exclusive of all organization expenses.

(3) All applicable state and local business licenses and permits;

(4) A bank account with a state chartered or national bank having a principal or branch office in this state.

Section 1112.15 | Board meetings.
 

The governing board of a licensed family trust company shall hold at least one regular meeting during each calendar quarter. At each of the quarterly meetings, the board, or an auditor selected by the board, shall thoroughly review the books, records, funds, and securities held by the family trust company. If the board selects an auditor, the auditor's findings shall be reported directly to the board. In lieu of the quarterly examinations, the board may accept an annual audit conducted by a certified public accountant or an independent auditor selected by the board.

Section 1112.16 | Other licensing and regulation requirements.
 

Except as otherwise provided in section 1112.04 of the Revised Code, a licensed family trust company has all the rights, privileges, and exemptions from licensing and regulation requirements that are granted by any law of this state to trust companies licensed under Chapter 1111. of the Revised Code, including, without limitation, the requirements for registration, licensing, and supervision set forth in Chapter 1707. of the Revised Code. A family trust company established under Chapter 1112. of the Revised Code is not subject to taxation under Chapter 5726. of the Revised Code.

Section 1112.17 | Voluntary surrender of license.
 

(A) A family trust company licensed under this chapter may cease doing trust business and voluntarily surrender its license to engage in trust business in this state, and as a consequence be relieved of the necessity to comply with the requirements of this chapter, only with the consent of the superintendent of financial institutions.

(B) A licensed family trust company proposing to cease doing trust business in this state shall submit both of the following to the superintendent:

(1) A certified copy of the resolution of the licensed family trust company's board of directors reflecting the board's decision that the trust company should cease doing trust business in this state and adopting a plan for winding up its trust business in this state;

(2) The licensed family trust company's plan for winding up its trust business in this state.

(C) The superintendent may approve or deny the licensed family trust company's plan for winding up its trust business in this state based on the superintendent's evaluation of whether the plan provides adequate protection for those persons and interests that the trust company serves as a fiduciary. The superintendent's approval may be subject to any condition the superintendent determines appropriate under the circumstances.

(D) During the implementation of a licensed family trust company's plan for winding up its trust business in this state, the superintendent shall retain the authority to supervise the trust company and may conduct any examination relating to either the trust company or the plan the superintendent considers necessary or appropriate.

(E) If the superintendent has reason to conclude that the licensed family trust company is not safely or expeditiously implementing the approved plan for winding up the licensed family trust company's trust business in this state, the superintendent may do either of the following:

(1) Begin revocation proceedings under section 1112.24 of the Revised Code;

(2) Take possession of the trust company's trust business in this state in the same manner, with the same effect, and subject to the same rights accorded to the trust company under section 1112.26 of the Revised Code.

(F) The superintendent shall cancel the family trust company's license to do trust business in this state if the superintendent has approved the licensed family trust company's plan for winding up its trust business in this state and, when applicable, the licensed family trust company has met all of the following conditions:

(1) The licensed family trust company has completed its plan for winding up its trust business in this state consistent with any conditions imposed by the superintendent in approving the plan.

(2) The licensed family trust company has been relieved in accordance with the law of all duties as trustee, executor, administrator, registrar of stocks and bonds, or any other fiduciary under court, private, or other appointment the trust company had accepted.

(3) The licensed family trust company has, in accordance with the law, wound up its trust business in each of the other jurisdictions in which the family trust company solicited appointment or served as a fiduciary or engaged in trust business.

(G) Upon the superintendent's canceling the licensed family trust company's license to do trust business in this state, the company shall no longer, without obtaining a license from the superintendent, engage in trust business in this state.

Section 1112.18 | Recordkeeping.
 

(A) A family trust company shall keep separate and complete records for each fiduciary account or relationship, including a record of any securities constituting assets of each particular estate, trust, or account.

(B) A family trust company may place securities it holds in any fiduciary capacity with a qualified custodian of securities. A qualified custodian of securities that has custody of securities held by a family trust company in a fiduciary capacity may place those securities with another qualified custodian of securities.

(C) A family trust company may register and hold securities it holds in any fiduciary capacity in its own name, in the name of a nominee, or, if appropriate to the securities, in bearer form. A custodian of securities that has custody of securities held by a family trust company in a fiduciary capacity may hold or place those securities in the name of the family trust company, the custodian's own name, the name of either of their nominees, or, if appropriate to the securities, in bearer form.

(D) A family trust company, and a custodian of securities that has custody of securities held by a family trust company in any fiduciary capacity, may hold securities it holds in any fiduciary capacity, including those held in bearer form, in bulk, whether or not the securities are certificated, without certification of ownership attached to the securities.

(E)(1) A family trust company that serves as a cofiduciary may, with the consent of the other cofiduciaries, do any of the following:

(a) Place securities it holds in any fiduciary capacity with a custodian of securities, as provided in division (B) of this section;

(b) Register and hold securities it holds in any fiduciary capacity in its own name, in the name of a nominee, or in bearer form, as provided in division (C) of this section;

(c) Hold securities it holds in any fiduciary capacity in bulk, as provided in division (D) of this section.

(2) Any person that serves as a cofiduciary with a family trust company for any property in this state consisting of securities may consent to the family trust company taking any of the actions authorized by division (E)(1) of this section.

Section 1112.19 | Retention and reproduction of documents.
 

(A) A family trust company may, for any business purpose, retain a document, paper, or other instrument. A family trust company may record by use of a process to record, copy, photograph, or store a representation of the original document, paper, or other instrument or record if all of the following apply:

(1) The process correctly and accurately copies or reproduces, or provides a means for correctly and accurately copying or reproducing, the original document, paper, or other instrument or record with regard to both its substance and appearance, except the copy or reproduction need not reflect the original paper or other medium, size, or color, unless the medium, size, or color is necessary to establish the authenticity of the original.

(2) The process does not permit the recording, copy, photographic image, or stored representation of the original document, paper, or other instrument or record to be altered or manipulated.

(3) Any medium the process uses to record, copy, photograph, or store a representation of the original document, paper, or other instrument or record is a durable medium for retaining and reproducing records.

(B) The superintendent of financial institutions shall identify and publish a list of processes that satisfy the conditions of division (A) of this section.

(C) Each family trust company that uses a process authorized by this section to preserve any of its records shall also provide for safekeeping and for examining, viewing, or projecting the records preserved, and for producing reproductions of the original records.

Section 1112.20 | Remedies and sanctions.
 

(A) Any licensed family trust company is subject to all powers of, and remedies and sanctions available to, the superintendent of financial institutions and the division of financial institutions under Chapters 1101. to 1127. of the Revised Code, in addition to the specific powers, remedies, and sanctions provided for in this chapter.

(B)(1) With regard to a licensed family trust company, "regulated person," as used in division (B) of this section, means a director, officer, employee, or controlling shareholder of or agent for the licensed family trust company or a person who participates in the management of the licensed family trust company, whether or not the person is assigned to an office of the licensed family trust company in this state or specifically to the licensed trust company's trust business in this state.

(2) An order to cease and desist issued under section 1121.32 of the Revised Code, a removal or prohibition order issued under section 1121.33 of the Revised Code, or a suspension order issued under section 1121.34 of the Revised Code, which order is issued against a regulated person who is a regulated person because of the person's relationship with a licensed family trust company doing trust business in this state, does not affect the relationship between the regulated person and the licensed family trust company except as it relates to the conduct of the licensed family trust company's trust business in this state.

Section 1112.21 | Reports.
 

Each family trust company licensed under this chapter shall file with the superintendent of financial institutions any report the superintendent may require, in the form and manner and containing the information prescribed by the superintendent.

Section 1112.22 | Examination of records and affairs.
 

(A) Not later than eighteen months after a licensed family trust company receives its initial license under this chapter, and as often thereafter as the superintendent of financial institutions considers necessary, but at least once each thirty-six-month cycle, the superintendent, or any deputy or examiner appointed by the superintendent for that purpose, shall thoroughly examine the records and affairs of the licensed family trust company. For purposes of the examination, the superintendent may require the attendance of, and examine under oath, any governing board member, officer, manager, employee, or agent of a licensed family trust company. A licensed family trust company shall produce and make available all records or other documents requested by the superintendent, in either electronic or paper form, whether the examination is conducted at the office of the family trust company or wholly or partially off-site.

(B) The findings of any examination conducted under this section shall be recorded in a written examination report that contains a full, true, and careful statement of the condition of the licensed family trust company. The superintendent shall provide a copy of the written examination report to the governing board of the licensed family trust company.

(C) A licensed family trust company being examined shall pay the expense of any examination conducted under this section, including salaries, travel expenses, supplies, and equipment.

Section 1112.25 | Revocation for suspension or termination of authority, appointment of receiver, and other acts.
 

(A) The superintendent of financial institutions may revoke a trust company's license to do trust business in this state, if the superintendent determines, after notice in accordance with section 1121.37 of the Revised Code and opportunity for hearing in accordance with section 1121.38 of the Revised Code, that any of the following factors is true:

(1) The existence of the family trust company, or its authority to transact business, has been terminated or suspended under the laws of the state or country in which the trust company is incorporated.

(2) The family trust company's authority to transact trust business has been terminated or suspended under the laws of the state or country in which the trust company is incorporated, or its license to engage in trust business has been terminated or suspended under the laws of any other jurisdiction in which the family trust company had been licensed to engage in trust business.

(3) A receiver, liquidator, or conservator has been appointed for the family trust company under the laws of the state or country in which the family trust company is incorporated or for its business in any other jurisdiction in which the family trust company transacts business.

(4) The family trust company is violating or has violated, or the superintendent has reasonable cause to believe the family trust company is about to violate, any of the following:

(a) A law or rule;

(b) A condition imposed by the superintendent in writing in connection with approving an application or notice or granting any other request of the family trust company;

(c) A written agreement the family trust company entered into with the superintendent;

(d) A cease and desist order issued by the superintendent under section 1121.32 of the Revised Code.

(5) The family trust company is engaging or has engaged, or the superintendent has reasonable cause to believe the family trust company is about to engage, in any unsafe or unsound practice.

(6) The family trust company has ceased to pay its debts in the ordinary course of business, is incapable of paying its debts as they mature, has liabilities in excess of its assets, or is subject to or has applied for an adjudication in bankruptcy, reorganization, or other relief under any bankruptcy, reorganization, insolvency, or moratorium law.

(7) The family trust company has ceased or failed to conduct trust business in this state.

(8) The family trust company has failed to pay any fees, charges, forfeitures, or penalties assessed under Chapters 1101. to 1127. of the Revised Code.

(B)(1) If the superintendent has reasonable cause to believe any of the factors in division (A) of this section is true, and the superintendent determines it is necessary to protect the persons and interests in this state that the family trust company serves as a fiduciary or the property in this state that the trust company holds title to or an interest in a fiduciary, the superintendent may immediately suspend the family trust company's license to do trust business in this state.

(2) Within ten days after the order suspending a family trust company's license to do trust business in this state is served upon it, the family trust company may apply to the court of common pleas of any county in this state in which the family trust company is doing business, or the court of common pleas of Franklin county, for an injunction setting aside, limiting, or suspending enforcement of the suspension order pending an opportunity for hearing on whether the family trust company's license to do trust business in this state should be revoked, and the court has jurisdiction to issue the injunction.

Section 1112.26 | Taking possession by superintendent.
 

(A) If the superintendent of financial institutions revokes a family trust company's license to do trust business in this state pursuant to division (A) of section 1111.32 of the Revised Code, the superintendent may take possession of the family trust company's trust business in this state and may appoint a receiver for the liquidation of the trust business in this state. If the family trust company has its principal place of business in this state, the superintendent may take possession of, and appoint a receiver for the liquidation of, its entire trust business wherever it is conducted.

(B) The superintendent's taking possession of, and appointing a receiver for the liquidation of, a family trust company's trust business in this state under division (A) of this section and the liquidation of the family trust company's trust business in this state shall be conducted in accordance with the procedures and subject to the rights, powers, duties, requirements, and limitations provided in Chapter 1125. of the Revised Code for taking possession of the business and property and liquidation of a bank, except for the following:

(1) After payment of the expenses of the liquidation and claims against the family trust company arising from its doing trust business in this state in accordance with divisions (A) and (B) of section 1125.25 of the Revised Code, the receiver shall distribute any remaining funds from the liquidation of the trust company's trust business in this state to the receiver for liquidation of the family trust company's trust business in another state of the United States or for conducting a liquidation of all or part of the family trust company's trust business under laws of the United States, or equitably among the receivers if the trust company's trust business is being liquidated under the laws of more than one other state or the United States, for payment of the expenses of liquidation and claims against the family trust company's trust business. If there is no liquidation of the family trust company's trust business under way in any other state or under laws of the United States, the receiver shall, after satisfying the requirements of divisions (A) and (B) of section 1125.25 of the Revised Code, pay any remaining funds from the liquidation of the family trust company's trust business in this state to the family trust company.

(2) When the receiver has completed the liquidation of the family trust company's trust business in this state, the receiver shall, with notice to the superintendent, petition the court for an order declaring the family trust company's trust business in this state is properly wound up in the manner provided in section 1125.30 of the Revised Code. Upon the filing of the petition, the court shall proceed as provided in section 1125.30 of the Revised Code.

An order issued by the court pursuant to a petition filed under division (B)(2) of this section shall comply with section 1125.30 of the Revised Code. However, the order shall only declare the family trust company's trust business in this state has been properly wound up and shall not declare the family trust company is dissolved. The court may make whatever additional orders and grant whatever additional relief the court determines is proper upon the evidence submitted.

Once the order is issued declaring the family trust company's trust business in this state is properly wound up, both of the following shall occur:

(a) The family trust company shall, except for any further winding up, cease engaging in trust business in this state and, if the family trust company has its principal place of business in this state, cease engaging in trust business in any jurisdiction.

(b) The receiver shall promptly file, with both the secretary of state and the superintendent, a copy of the order, certified by the clerk of the court.

(C) If the family trust company is a bank doing business under authority granted by the superintendent, all of the following apply:

(1) If the family trust company is being liquidated under Chapter 1125. of the Revised Code, the trust company's trust business shall also be liquidated even if there would not be independent grounds for liquidation of the trust business under this section.

(2) If the family trust company's trust business is being liquidated under this section and the trust company as a whole is being liquidated under Chapter 1125. of the Revised Code, the liquidations shall be merged.

(3) If the family trust company is not authorized to engage in any business other than trust business, its liquidation shall be of the company as a whole, conducted under Chapter 1125. of the Revised Code, and completed by the dissolution of the trust company.

Section 1112.27 | Ownership interest by superintendent prohibited.
 

The superintendent of financial institutions shall not have an ownership interest in a licensed family trust company.

Section 1112.28 | Adoption of rules.
 

The superintendent of financial institutions may, in accordance with Chapter 119. of the Revised Code, adopt any rule necessary to carry out the purposes of this chapter.

Section 1112.99 | Penalty for divulgence of confidential material.
 

Whoever violates division (B) of section 1112.23 of the Revised Code is guilty of a felony of the fourth degree.