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51A-6A CREATION OF TRUST COMPANIES
CHAPTER 51A-6A

CREATION OF TRUST COMPANIES

51A-6A-1      Definitions.
51A-6A-2      Confidential information.
51A-6A-3      "Community" defined.
51A-6A-4      Application for incorporation--Approval procedure--Emergency procedure.
51A-6A-5      Considerations in ruling on application-Proceedings on application.
51A-6A-5.1      Notice to division of material omission in application or change in facts reported in application.
51A-6A-6      Application fee.
51A-6A-6.1      Repealed.
51A-6A-7      Articles of organization or incorporation--Submission and approval--Required information.
51A-6A-8      Amendment of articles--Extension of existence.
51A-6A-9      Starting date of trust company existence--Commencement of business.
51A-6A-10      Statement of payment of capital--Certificate of organization.
51A-6A-11      Authority to transact business required--Violation as misdemeanor.
51A-6A-11.1      Public trust companies to maintain office and perform trust administration in South Dakota.
51A-6A-12      List of owners--Annual submission to director--Verification of list.
51A-6A-13      Governing board--Membership--Election--Vacancies.
51A-6A-14      Officers of governing board--Bond required.
51A-6A-15      Meetings of governing board--Examination and audit of books and records.
51A-6A-16      Oath of board members.
51A-6A-17      Persons convicted of certain crimes ineligible to serve as board member, officer, or key employee--Civil penalty--Criminal background investigation.
51A-6A-18      Repealed.
51A-6A-19      Determining capital--Minimum--Purpose of capital--Fidelity bond and liability insurance policy.
51A-6A-19.1      Additional capital requirements--Safety and soundness factors to be considered--Effective date of order--Hearing.
51A-6A-19.2      Investments pledged to the division for the security of trust creditors of trust company--Income from investments--Effective date of order requiring pledge increase--Hearing.
51A-6A-19.3      Pledge available to satisfy claims upon liquidation, abandonment of trust powers, or resignation.
51A-6A-20      Payment of subscriptions--Reduction of common stock.
51A-6A-21      Transferring stock and ownership units.
51A-6A-22      Increasing capital stock or ownership units.
51A-6A-23      Registration of capital stock or ownership units.
51A-6A-24      Issuance of preferred stock.
51A-6A-25      Rights and liability of preferred stockholders--Dividends.
51A-6A-26      Issuance of convertible or nonconvertible capital notes or debentures.
51A-6A-27      Source of dividends.
51A-6A-28      Dividends from undivided profits.
51A-6A-29      Powers of trust company.
51A-6A-30      Retention of records--Promulgation of rules--Reproduction of records--Duty of confidentiality.
51A-6A-31      Periodic examination of trust company--Report of examination--Cooperative, coordinating and information-sharing agreements among agencies.
51A-6A-32      Examination of fiduciary affairs of officers or employees--Examination of affiliated companies or corporations.
51A-6A-33      Examination expenses paid by trust companies--Fees.
51A-6A-34      Annual report of trust company to director--Form of report--Request for additional reports.
51A-6A-35      Authority of trust company revoked upon obstruction or interference with, or refusal to submit to, examination of director.
51A-6A-36      Service of notice of charges--Contents of notice--Temporary cease and desist order.
51A-6A-37      Revocation of franchise for failure to comply with lawful requirements.
51A-6A-38      Hearing on revocation of trust authority.
51A-6A-39      Confidentiality of information generated by examination--Disclosure--Hearing.
51A-6A-40      Correction of unsafe or unsound condition or operation--Appointment of special assistant--Appeal of appointment.
51A-6A-41      Insolvency defined.
51A-6A-42      Director to take charge of insolvent trust company--Appointment of special assistant.
51A-6A-43      Plan for reorganization of insolvent trust company.
51A-6A-44      Appointment of receiver--Bond--Qualifications--Report--Removal.
51A-6A-45      Powers and duties of receiver--Order of payment of liabilities.
51A-6A-45.1      Liability of receiver.
51A-6A-46      Periodic examination of trust company in the hands of a receiver.
51A-6A-46.1      Suspension, liquidation, order against unsound practice, removal of director or officer, or injunction.
51A-6A-46.2      Confidentiality of information--Inapplicability to certain actions.
51A-6A-47      Acquisition of trust company--Notice to director--Approval--Order of disapproval--Hearing.
51A-6A-48      Contents of notice of proposed acquisition.
51A-6A-49      Reason for disapproval of acquisition.
51A-6A-50      Procedure for merger, consolidation, conversion, or transfer of assets and liabilities to another bank or trust company.
51A-6A-51      Necessity of execution or delivery of deed for merger or consolidation.
51A-6A-52      Fiduciary capacity of successor trust company.
51A-6A-53      Name of trust company--Name change.
51A-6A-54      Approval required for changing place of business--Examination and investigation by director.
51A-6A-55 to 51A-6A-57. Repealed.
51A-6A-58      Establishment of trust service offices--Application.
51A-6A-59, 51A-6A-60. Repealed.
51A-6A-61      Membership in federal reserve bank.
51A-6A-62      Depositing securities into federal reserve bank.
51A-6A-63      Registering investments in name of nominee--Liability of trust company.
51A-6A-64      Common trust funds and collective investment funds.
51A-6A-65      Conversion from state bank to trust company--Application--Investigation--Regulation.
51A-6A-66      Exclusion of entity from chapters 51A-5, 51A-6, and 51A-6A--Governing documents--Notice to director.


51A-6A-1 Definitions.
     51A-6A-1.   Definitions. Terms used in this chapter mean:
             (1)      "Articles," in the case of a corporation, articles of incorporation; in the case of a limited liability company, articles of organization;
             (2)      "Board member," in the case of a corporation, a director; in the case of a limited liability company, a member of the board of managers if manager-managed or board of members if member-managed;
             (3)      "Client," an individual, corporation, association, or other legal entity receiving or benefitting from fiduciary services provided by a trust company or bank;
             (4)      "Commission," the State Banking Commission;
             (5)      "Contracting trustee," any trust company which accepts or succeeds to any fiduciary responsibility in any manner provided in this chapter;
             (6)      "Control," the power, directly or indirectly, to direct the management or policies of a trust company or to vote twenty-five percent or more of any class of voting shares of a trust company;
             (7)      "Director," the director of the Division of Banking;
             (7A)      "Fiduciary for hire," acting as a administrator, conservator, custodian, executor, guardian, personal representative, or trustee, for any person, trust, or estate for compensation or gain or in anticipation of compensation or gain;
             (8)      "Financial institution," any bank, national banking association, savings and loan association, or savings bank which has its principal place of business in this state but which does not have trust powers, or which has trust powers, but does not exercise those trust powers;
             (9)      "Governing board," in the case of a corporation, the board of directors; in the case of a limited liability company, the board of managers if manager-managed or board of members if member-managed;
             (10)      "Originating trustee," any trust company, bank, national banking association, savings and loan association, or savings bank which has trust powers and its principal place of business in this state and which places or transfers any fiduciary responsibility to a contracting trustee in the manner provided in this chapter;
             (10.1) "Out-of-state trust institution," a nondepository corporation, limited liability company, or other similar entity chartered or licensed by the banking regulatory agency of a state, territory, or district, other than South Dakota, to engage in the trust company business in that state, territory, or district under the primary supervision of such regulator.
             (11)      "Owner," in the case of a corporation, a common stockholder; in the case of a limited liability company, a person who owns ownership units;
             (12)      "Person," an individual or a corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, or any other form of an entity;
             (12A)      "Public trust company," a trust company that engages in trust company business with the general public by advertising, solicitation or other means, or a trust company that engages in trust company business but does not fall within the definition of a private trust company established by the commission through rules promulgated pursuant to chapter 1-26. The commission shall consider the size, number of clients served and the family and other relationships among the clients served, complexity, and related safety and soundness issues as it establishes in rule a definition for the term private trust company;
             (13)      "Trust company," a nondepository trust company incorporated or organized under the laws of this state engaged in the trust company business, and any national bank which has its main office in this state, and which has as its sole purpose the conduct of trust business;
             (14)      "Trust company business," engaging in, or representing or offering to engage in, the business of acting as a fiduciary for hire, except that no accountant, attorney, credit union, insurance broker, insurance company, investment advisor, real estate broker or sales agent, savings and loan association, savings bank, securities broker or dealer, real estate title insurance company, or real estate escrow company may be deemed to be engaged in a trust company business with respect to fiduciary services customarily performed by them for compensation as a traditional incident to their regular business activities. Trust company business as defined in this chapter does not constitute banking as defined in subdivision 51A-1-2(4), and may not be construed as banking for purposes of § 47-34-5;
             (15)      "Trust service office," any office, agency, or other place of business at which the powers granted to trust companies are exercised either by a trust company other than the place of business specified in a trust company's certificate of authority or within this state by an out-of-state trust institution.

Source: SL 1995, ch 268, § 1; SL 2005, ch 260, §§ 12, 13; SL 2010, ch 232, §§ 16, 17; SL 2013, ch 239, § 7.


51A-6A-2 Confidential information.
     51A-6A-2.   Confidential information. For the purposes of this chapter, confidential information includes the names of stockholders or owners, ownership information, capital contributions, addresses, business affiliations, state and commission findings through any examination or inquiry of any kind, and any information required to be reported or filed with the director or the commission, and any information or agreement relating to any merger, consolidation, or transfer, and any agreements or information relating to any relationship with a contracting trustee.

Source: SL 1995, ch 268, § 1A.


51A-6A-3 "Community" defined.
     51A-6A-3.   "Community" defined. For the purposes of this chapter, community shall be broadly construed and shall include geographic or market based parameters, or both.

Source: SL 1995, ch 268, § 1B.


51A-6A-4 Application for incorporation--Approval procedure--Emergency procedure.
     51A-6A-4.   Application for incorporation--Approval procedure--Emergency procedure. No trust company may be incorporated or organized under the laws of this state or transact trust company business in this state until the application for its incorporation or organization and application or authority to do business and the location of its principal office have been submitted to and approved under the same procedure for bank applications as provided in § 51A-2-16, except that conditions for considering an application involving a trust company shall be as set forth in § 51A-6A-5. The director shall prescribe the form for making an application and any application submitted shall contain such information as required. The applicant may, with approval of the director, designate confidential information.
     If upon the dissolution or insolvency of any trust company, it is the opinion of the director that by reason of the loss of services in the community, an emergency exists which may result in serious inconvenience or losses to customers or it is in the public interest of the community, the director may accept and approve an application for incorporation or organization and an application for authority to do business without prior notice. Upon approval of an application by the director for authority to do business of a successor trust company, the director may call a special meeting of the commission and submit the application to the commission for its review and confirmation.

Source: SL 1995, ch 268, § 2; SL 2006, ch 243, § 3; SL 2008, ch 258, § 3.


51A-6A-5 Considerations in ruling on application-Proceedings on application.
     51A-6A-5.   Considerations in ruling on application-Proceedings on application. In ruling on an application required under this chapter, the director or the commission, as the case may be, shall consider the following:
             (1)      The financial standing, general business experience, and character of the organizers or incorporators of the applicant;
             (2)      The character, qualifications, and experience of the officers of the applicant;
             (3)      The applicant's ability to serve the community or clients as described in the application; and
             (4)      The prospects for success of the proposed trust company.
     In any hearing on the application before the commission, the director shall submit to the commission for its consideration the director's findings with respect to the above conditions together with all other pertinent information in the director's possession. If the director or the commission, as the case may be, determines any of these conditions unfavorable to the applicant, then the application shall be disapproved, but if not, then the application shall be approved. Any proceeding before the commission on an application shall be held in conformance with chapter 1-26.

Source: SL 1995, ch 268, § 3; SL 2008, ch 258, § 4.


51A-6A-5.1 Notice to division of material omission in application or change in facts reported in appl...
     51A-6A-5.1.   Notice to division of material omission in application or change in facts reported in application. Any trust company shall immediately notify the division of any material omission from the application or any material change in the facts reported in an application, either of which could have led to an unfavorable finding with respect to the criteria established in § 51A-6A-5. Failure to so notify the division of the material omission from the application or the existence of the material change in facts as reported in the application, either of which could have led to an unfavorable finding with respect to the criteria established in § 51A-6A-5, may subject the trust company to revocation proceedings or other regulatory action as provided in this title. The director shall give notice of the revocation or other regulatory action to the president or other managing officer of the trust company, and any revocation action shall thereupon proceed according to § 51A-6A-38.

Source: SL 2013, ch 239, § 5.


51A-6A-6 Application fee.
     51A-6A-6.   Application fee. All applications for charters under this chapter shall include a five thousand dollar application fee which is nonrefundable. This fee shall be remitted by the Division of Banking to the state general fund.

Source: SL 1995, ch 268, § 4; SL 1998, ch 282, § 33.


51A-6A-6.1
     51A-6A-6.1.   Repealed by SL 1998, ch 282, § 34.


51A-6A-7 Articles of organization or incorporation--Submission and approval--Required information.
     51A-6A-7.   Articles of organization or incorporation--Submission and approval--Required information. Any three or more persons may organize a trust company and make and file articles as provided by the laws of this state. No trust company may be organized or incorporated to engage in business as such until the articles have been submitted and approved in accordance with § 51A-6A-4. The name selected for the trust company may not be the name of any other trust company doing business in the state, and the director shall accept or reject the name. However, the approval of a trust company name by the director may not supersede any person's rights pursuant to state or federal trademark law. The articles, in addition to any other information required by law, shall state:
             (1)      That the corporation or limited liability company is formed for the purpose of engaging in the trust company business; and
             (2)      The period for which such corporation or limited liability company is organized, which may be perpetual.
     The articles may contain any other provisions as are consistent with law. The articles shall be subscribed by one or more of the organizers of the proposed trust company and shall be acknowledged by them. The full amount of the capital required by § 51A-6A-19 shall be subscribed before the articles are filed.

Source: SL 1995, ch 268, § 5; SL 2008, ch 258, § 5; SL 2011, ch 212, § 38.


51A-6A-8 Amendment of articles--Extension of existence.
     51A-6A-8.   Amendment of articles--Extension of existence. Prior to the expiration of the period for which it was incorporated or organized a trust company may, with the approval of at least a majority of the capital stock or ownership units of such trust company, amend its articles to extend its existence for an additional period, which may be perpetual.

Source: SL 1995, ch 268, § 5A; SL 2011, ch 212, § 39.


51A-6A-9 Starting date of trust company existence--Commencement of business.
     51A-6A-9.   Starting date of trust company existence--Commencement of business. The existence of any trust company shall date from the filing of its articles from which time it shall have and may exercise the incidental powers conferred by law upon corporations or limited liability companies, as applicable. However, no trust company may transact any business except 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, until it has secured the required approval and the authorization of the director to commence business.

Source: SL 1995, ch 268, § 6; SL 2008, ch 258, § 6.


51A-6A-10 Statement of payment of capital--Certificate of organization.
     51A-6A-10.   Statement of payment of capital--Certificate of organization. When the capital of any trust company is paid in, the president or cashier shall transmit to the director a verified statement showing the names and addresses of all owners, the amount of stock or units each subscribed, and the amount paid in by each. The director shall review each trust company as to the amount of money paid in for capital, surplus, and undivided profits; by whom the amounts were paid, the amount of capital stock or units owned in good faith by each owner, and whether the trust company has complied with the provisions of law. If the director determines that the trust company has been organized as provided by law, has complied with the provisions of law, and has secured the required approval, the director shall issue a certificate showing that the trust company has been organized and its capital paid in as required by law and that the trust company is authorized to transact trust business as provided by law.

Source: SL 1995, ch 268, § 7; SL 2008, ch 258, § 7.


51A-6A-11 Authority to transact business required--Violation as misdemeanor.
     51A-6A-11.   Authority to transact business required--Violation as misdemeanor. No individual, firm, or corporation may advertise, publish, or otherwise promulgate that they are engaged in the trust company business, or transact trust company business, without having first obtained authority from the director. Any individual or member of any firm or officer of any corporation violating this section shall be guilty of an unclassified misdemeanor, and upon conviction shall be punished by a fine not exceeding five thousand dollars.

Source: SL 1995, ch 268, § 8.


51A-6A-11.1 Public trust companies to maintain office and perform trust administration in South Dakota...
     51A-6A-11.1.   Public trust companies to maintain office and perform trust administration in South Dakota. A public trust company shall:
             (1)      Maintain office space in South Dakota for trust company business and for the storage of, and access to, trust company records required by § 51A-6A-30;
             (2)      Hold no less than two governing board meetings with a quorum physically present in South Dakota annually;
             (3)      Employ, engage, or contract with at least one trust officer or key employee to provide services for the trust company in South Dakota related to the powers of the company in § 51A-6A-29 and to facilitate the examinations required by § 51A-6A-31; and
             (4)      Perform trust administration in South Dakota.
     Each public trust company chartered in South Dakota prior to July 1, 2012, shall meet the requirements of this section no later than July 1, 2015, unless the director grants an extension of up to twenty-four months upon a showing of good faith effort. A public trust company seeking an extension of time shall include in its application to the director the reasons for any delay and a detailed time line for expected compliance with this section.
     The commission may promulgate rules pursuant to chapter 1-26 to establish additional guidelines regarding what constitutes trust administration in South Dakota for purposes of this section.

Source: SL 2010, ch 232, § 18; SL 2012, ch 233, § 2.


51A-6A-12 List of owners--Annual submission to director--Verification of list.
     51A-6A-12.   List of owners--Annual submission to director--Verification of list. Every trust company shall keep a full and correct list of names and addresses of all of its owners and the number of shares owned by each. This list of owners shall be kept and maintained in the office where its business is transacted, and during the business hours of the trust company, the list is subject to the inspection of all owners. The president or cashier of any trust company shall submit to the director on or before the thirty-first day of January of each year a list of owners as of the first day of the calendar year. The president or cashier shall verify the correctness of the list under oath.

Source: SL 1995, ch 268, § 9.


51A-6A-13 Governing board--Membership--Election--Vacancies.
     51A-6A-13.   Governing board--Membership--Election--Vacancies. The business of any trust company shall be managed and controlled by its governing board and includes the authority to provide for bonus payments, in addition to ordinary compensation, for any of its officers and employees. The governing board of a private trust company shall consist of not less than three nor more than twelve members, all of whom shall be elected by the owners of the trust company at any regular annual meeting, with terms not to exceed three years. The governing board of a public trust company shall consist of not less than five nor more than twelve members, all of whom shall be elected by the owners of the trust company at any regular meeting held during each calendar year. If the number of board members elected is less than twelve, the number of board members may be increased so long as the total number does not exceed twelve. If the number is increased, the first additional board members may be elected at a special meeting of the owners. The board members shall be elected and any vacancies filled in the manner as provided in the provisions regarding general corporations or limited liability companies, as applicable. At all times one of the directors shall be a resident of this state and at least one-half of the directors shall be citizens of the United States. Any board member of any trust company who becomes indebted to the trust company on any judgment forfeits the position of board member, and the vacancy shall be filled as provided by law.
     A public trust company chartered in South Dakota prior to July 1, 2011, if currently operating with less than five members of its governing board, shall supply evidence of compliance with this section at the same time the report of condition and fees are due as provided in § 51A-6A-34 and ARSD 20:07:22:02 for calendar year 2011.

Source: SL 1995, ch 268, § 10; SL 1998, ch 282, § 32; SL 2006, ch 243, § 11; SL 2007, ch 276, § 1; SL 2009, ch 252, § 1; SL 2011, ch 212, § 11.


51A-6A-14 Officers of governing board--Bond required.
     51A-6A-14.   Officers of governing board--Bond required. The governing board may elect a chairperson, a president, one or more vice presidents, a secretary, and a cashier. The office of president and cashier may not be filled by the same person. The officers shall hold their offices for a term not to exceed one year and until their successors are elected and qualified. The governing board shall require all officers and employees having the care or handling of the funds of the trust company to give a good and sufficient bond to be executed by an approved corporate surety authorized to do business in this state. The amount and form of the bond shall be approved by the governing board and the director, and it shall be held by the director. The costs of the bonds shall be paid by the trust company. Any officer who becomes indebted to the trust company on any judgment shall forfeit the office and the governing board shall fill the vacancy.

Source: SL 1995, ch 268, § 11.


51A-6A-15 Meetings of governing board--Examination and audit of books and records.
     51A-6A-15.   Meetings of governing board--Examination and audit of books and records. The governing board shall hold at least four regular meetings each year, at least one of which shall be held during each calendar quarter. The governing board or an auditor selected by them shall make a thorough examination of the books, records, funds, and securities held by the trust company at each of the quarterly meetings. The result of the examination shall be recorded in detail. If the governing board selects an auditor, the auditor's findings shall be reported directly to the governing board. In lieu of the required four quarterly examinations, the governing board may accept one annual audit by a certified public accountant or an independent auditor approved by the director.

Source: SL 1995, ch 268, § 12.


51A-6A-16 Oath of board members.
     51A-6A-16.   Oath of board members. Each board member shall take and subscribe an oath that the member will administer the affairs of the trust company diligently and honestly and that the member will not knowingly or willfully permit any of the laws relating to trust companies to be violated.

Source: SL 1995, ch 268, § 14.


51A-6A-17 Persons convicted of certain crimes ineligible to serve as board member, officer, or key e...
     51A-6A-17.   Persons convicted of certain crimes ineligible to serve as board member, officer, or key employee--Civil penalty--Criminal background investigation. Except with the written consent of the director, no person may serve as a board member, officer, or key employee of a trust company who has been convicted of any felony or any crime involving fraud, dishonesty, or a breach of trust. Any trust company who willfully violates this prohibition is subject to a civil penalty of one thousand dollars for each day the violation continues. A civil penalty imposed pursuant to this section for a single violation may not exceed fifty thousand dollars. Any civil penalty imposed by the director under this section is subject to review by the commission in accordance with chapter 1-26.
     As part of any application to obtain authority to transact business as a private trust company, the applicant shall obtain and provide for each proposed incorporator, organizer, board member, manager, officer, and key employee of the proposed company, as applicable, the results of an independent criminal background investigation acceptable to the director, and independent credit report from a consumer reporting agency as described in 15 U.S.C. 1681a(p) as of January 1, 2010, and a report of ongoing or pending litigation.
     As part of any application to obtain authority to transact trust company business as a public trust company, each proposed incorporator, organizer, board member, manager, officer, and key employee, as applicable, shall submit to a state and federal criminal background investigation by means of fingerprint checks by the Division of Criminal Investigation and the Federal Bureau of Investigation. Upon application, the division shall submit completed fingerprint cards to the Division of Criminal Investigation for purposes of conducting both the state and federal criminal background investigation. Upon completion of the criminal background check, the Division of Criminal Investigation shall forward to the division all information obtained as a result of the criminal background investigation. For any person described above who is not a citizen of the United States, the director may conduct an international background investigation or require the applicant or person to obtain and provide the results of an international background investigation acceptable to the director. The applicant shall also obtain and provide the results of an independent credit report from a consumer reporting agency as described in 15 U.S.C. 1681a(p) as of January 1, 2010, and a report of ongoing or pending litigation for each person as described above.
     Prior to beginning employment with any trust company, each potential director, manager, member, officer, or key employee shall undergo the same investigation process as required above for new applicants. At the discretion of the director, any person subject to the requirements of this section may enter into service on a temporary basis pending receipt of results from the criminal background investigation. For purposes of this section, a key employee does not include an employee whose primary responsibilities are limited to clerical or support duties, and officer does not include any person who is not involved in the ongoing policy making or management of the trust company.
     Any trust company shall immediately notify the division of any material change in the background of any person subject to the background investigation process as described above.
     The division may require a fingerprint-based state, federal, and international criminal background investigation, as applicable, for any director, officer, or employee, who is the subject of an investigation by the division. Failure to submit to or cooperate with the criminal background investigation is grounds for the denial of an application or may result in the revocation of a trust company's authority to transact trust company business.
     The applicant or trust company, as the case may be, shall pay any fees or costs associated with the fingerprinting, background investigations, or reports required by this section. A person who has undergone a state, federal, or international background investigation required by this section, may, at the discretion of the director, be allowed to fulfill this requirement for future trust company employment by sworn affidavit stating that there have been no material changes to the person's background.

Source: SL 1995, ch 268, § 15; SL 2010, ch 232, § 19; SL 2012, ch 252, § 16; SL 2013, ch 239, § 1.


51A-6A-18
     51A-6A-18.   Repealed by SL 2002, ch 220, § 1.


51A-6A-19 Determining capital--Minimum--Purpose of capital--Fidelity bond and liability insurance po...
     51A-6A-19.   Determining capital--Minimum--Purpose of capital--Fidelity bond and liability insurance policy. For purposes of this section, the capital of a trust company is the total of the aggregate par value of its outstanding shares of capital stock or ownership units, its surplus, and its undivided profits. The minimum capital of a trust company is two hundred thousand dollars. The director may require that the trust company have more capital than the amount specified if the director determines that the amount and character of the anticipated business of the trust company and the safety of the customers so require. This chapter recognizes that capital for a trust company serves a different purpose than does capital for a bank. It is not intended that capital requirements for trust companies be judged by the same standards as banks. Basic protection for fiduciary clients of a trust company shall be provided by the purchase of a fidelity bond and a director's and officer's liability insurance policy. The bond and insurance shall be in an amount of not less than one million dollars each. The trust company shall give notice of cancellation or nonrenewal of the bond or insurance policy to the director within ten days of the receipt of cancellation or nonrenewal. Except as may be provided elsewhere in this chapter, no trust company may reduce voluntarily its capital stock or ownership units or surplus below the amount required in this section.

Source: SL 1995, ch 268, § 17; SL 2002, ch 220, § 2; SL 2006, ch 243, § 2; SL 2008, ch 258, § 8; SL 2013, ch 239, § 3.


51A-6A-19.1 Additional capital requirements--Safety and soundness factors to be considered--Effective ...
     51A-6A-19.1.   Additional capital requirements--Safety and soundness factors to be considered--Effective date of order--Hearing. The director may require additional capital for an existing trust company if the director finds the condition and operations of an existing trust company requires additional capital consistent with the safety and soundness of the trust company. The safety and soundness factors to be considered by the director in the exercise of such discretion include:
             (1)      The nature and type of business conducted;
             (2)      The nature and degree of liquidity in assets held in a corporate capacity;
             (3)      The amount of fiduciary assets under management or administration;
             (4)      The type of fiduciary assets held and the depository of such assets;
             (5)      The complexity of fiduciary duties and degree of discretion undertaken;
             (6)      The competence and experience of management;
             (7)      The extent and adequacy of internal controls;
             (8)      The presence or absence of annual unqualified audits by an independent certified public accountant;
             (9)      The reasonableness of business plans for retaining or acquiring additional capital;
             (10)      The existence and adequacy of insurance obtained or held by the trust company for the purpose of protecting its clients, beneficiaries, and grantors; and
             (11)      Any other factor deemed relevant by the director.
     The proposed effective date of an order requiring an existing trust company to increase its capital must be stated in the order as on or after the thirty-first day after the date of the proposed order. Unless the trust company requests a hearing before the commission in writing before the effective date of the proposed order, the order becomes effective and is final. Any hearing before the commission shall be held pursuant to chapter 1-26.

Source: SL 2010, ch 232, § 20.


51A-6A-19.2 Investments pledged to the division for the security of trust creditors of trust company--...
     51A-6A-19.2.   Investments pledged to the division for the security of trust creditors of trust company--Income from investments--Effective date of order requiring pledge increase--Hearing. Any trust company authorized by this title, shall, before transacting any such business pledge to the division and maintain at all times investments for the security of the trust creditors of the trust company including as a priority claim costs incurred by the division in a receivership or liquidation of the trust company in the event it should fail. The amount of the pledge shall be determined by the director in an amount deemed appropriate to defray such costs, but may not be less than a market value of one hundred thousand dollars, and may not exceed five hundred thousand dollars for a private trust company or one million dollars for a public trust company. All investments pledged to the division shall be held at a depository institution in this state and all costs associated with pledging and holding such investments are the responsibility of the trust company.
     The investments pledged to the division shall be of the same nature and quality as those required for public funds as provided in §§ 4-5-6 and 4-5-6.1.
     The commission may promulgate rules pursuant to chapter 1-26 to establish additional investment guidelines or investment options for purposes of the pledge required by this section.
     In the event of a receivership of a trust company, the director may, without regard to priorities, preferences, or adverse claims, reduce the pledged investments to cash and, as soon as practicable, utilize the cash to defray the costs associated with the receivership.
     Income from such investments shall belong to and be paid to the trust company as long as it continues to conduct its business in the ordinary course and so long as authorized by the director.
     The proposed effective date of an order requiring an existing trust company to increase its pledge shall be stated in the order as on or after the thirty-first day after the date of the proposed order. Unless the trust company requests a hearing before the commission in writing before the effective date of the proposed order, the order becomes effective and is final. Any hearing before the commission shall be held pursuant to chapter 1-26.

Source: SL 2010, ch 232, § 21; SL 2012, ch 233, § 1.


51A-6A-19.3 Pledge available to satisfy claims upon liquidation, abandonment of trust powers, or resig...
     51A-6A-19.3.   Pledge available to satisfy claims upon liquidation, abandonment of trust powers, or resignation. Upon liquidation, abandonment of trust powers, or resignation from all duties exercised pursuant to § 51A-6A-29, the pledge required by § 51A-6A-19. 2 shall be made available for the reasonable satisfaction of claims involving trust company accounts. Any surplus remaining after the satisfaction of all such claims and costs incurred by the division shall be returned to the trust company. Unless the division has reason to believe that claims are forthcoming, the division shall release any pledge no later than twelve months from the date all affected accounts are moved to a successor trustee, custodian, or administrator.

Source: SL 2013, ch 239, § 2.


51A-6A-20 Payment of subscriptions--Reduction of common stock.
     51A-6A-20.   Payment of subscriptions--Reduction of common stock. All subscriptions to the stock or ownership units shall be paid in cash. If a trust company in corporate form reduces its common stock and issues preferred stock in lieu of the reduction, it may reduce the par value of the common stock in the proportion that the total amount of capital stock is reduced, but when the preferred stock is retired the par value of the common shares shall be restored.

Source: SL 1995, ch 268, § 18; SL 2012, ch 252, § 17.


51A-6A-21 Transferring stock and ownership units.
     51A-6A-21.   Transferring stock and ownership units. The shares of stock and ownership units of any trust company are personal property and shall be transferred on the books of the trust company in such manner as the bylaws or operating regulations of the trust company may direct. No stock or ownership units may be transferred on the books of the trust company when the trust company is in a failing condition, or when its capital is impaired, except upon approval of the director. If a transfer of shares of stock of any trust company, or holding company that owns a majority of the outstanding shares of a trust company, occurs which results through direct or indirect ownership by a stockholder or an affiliated group of stockholders of ten percent or more of the outstanding stock of the trust company, or holding company that owns a majority of the outstanding shares of a trust company, and if additional shares of stock of the trust company are transferred to such stockholders, affiliated group of stockholders, or holding company, the president or other chief executive officer of the trust company shall report the transfer to the director within ten days after transfer of the shares of stock on the books of the trust company.

Source: SL 1995, ch 268, § 19; SL 2013, ch 239, § 4.


51A-6A-22 Increasing capital stock or ownership units.
     51A-6A-22.   Increasing capital stock or ownership units. The capital stock or ownership units of any trust company may be increased. The president and cashier shall forward a verified statement to the director showing the amount of the increase, the names and addresses of the subscribers, the amount subscribed by each, and that the same had been paid in full to the trust company. The date and amount of the increase also shall be certified to the secretary of state.

Source: SL 1995, ch 268, § 20.


51A-6A-23 Registration of capital stock or ownership units.
     51A-6A-23.   Registration of capital stock or ownership units. If the director determines that the capital stock of any trust company is impaired, the director shall notify the trust company to restore the capital stock or ownership units within ninety days of receipt of the notice. Within fifteen days of receipt of the notice, the governing board of the trust company shall levy an assessment on the owners sufficient to restore the capital stock or ownership units. The trust company, with its governing board's approval, may reduce its capital stock or ownership units to the extent of the impairment, if such reduction will not reduce the capital below the amount required by this chapter.

Source: SL 1995, ch 268, § 21.


51A-6A-24 Issuance of preferred stock.
     51A-6A-24.   Issuance of preferred stock. Any trust company in corporate form may issue preferred stock of one or more classes in such amounts as are approved by the director. The holders of two-thirds of the common stock of the trust company shall approve the issuance at a meeting held for that purpose. Notice shall be given by registered mail to each stockholder at least five days before the date of the meeting. No issue of preferred stock is valid until the par value of all stock so issued is paid in. No preferred stock may be retired unless the common stock is increased in an amount equal to the amount of the preferred stock retired.

Source: SL 1995, ch 268, § 22; SL 2012, ch 252, § 18.


51A-6A-25 Rights and liability of preferred stockholders--Dividends.
     51A-6A-25.   Rights and liability of preferred stockholders--Dividends. The holders of preferred stock are not liable for assessments to restore any impairment in the capital stock of a trust company. The holders of preferred stock are entitled to receive cumulative dividends, have voting and conversion rights, and have control of management, as may be provided in the articles of incorporation and upon the written approval of the director. The preferred stock shall be retired as provided in the articles of incorporation.
     No dividends may be declared or paid on common stock until all cumulative dividends, if any, on the preferred stock have been paid, and if the trust company is dissolved or placed in liquidation, no payments may be made to the holders of common stock until the holders of the preferred stock first have been paid in full for any sums due upon the preferred stock.

Source: SL 1995, ch 268, § 23.


51A-6A-26 Issuance of convertible or nonconvertible capital notes or debentures.
     51A-6A-26.   Issuance of convertible or nonconvertible capital notes or debentures. In accordance with normal business considerations and upon approval of owners owning two-thirds of the voting stock or ownership units of the trust company, the trust company may issue convertible or nonconvertible capital notes or debentures in such amounts and under such terms and conditions as approved by the commission. However, the principal amount of capital notes or debentures outstanding at any time may not exceed an amount equal to one hundred percent of the trust company's paid-in capital stock or ownership units plus fifty percent of the amount of its unimpaired surplus fund. Capital notes or debentures that are by their terms expressly subordinated to the prior payment in full of all liabilities of the trust company are part of the unimpaired capital funds of the trust company.

Source: SL 1995, ch 268, § 24.


51A-6A-27 Source of dividends.
     51A-6A-27.   Source of dividends. No trust company during the time it continues in business, may permit to be withdrawn, in the form of dividends, any portion of its capital required pursuant to § 51A-6A-19. The current dividends of any trust company shall be paid from undivided profits after deducting losses, to be ascertained by generally accepted accounting principals at the time of making the dividend.

Source: SL 1995, ch 268, § 25.


51A-6A-28 Dividends from undivided profits.
     51A-6A-28.   Dividends from undivided profits. The governing board of any trust company may declare dividends from undivided profits, provided that the trust company is in compliance with the capital requirements pursuant to § 51A-6A-19.

Source: SL 1995, ch 268, § 26.


51A-6A-29 Powers of trust company.
     51A-6A-29.   Powers of trust company. A trust company may exercise the following powers necessary or incidental to carrying on a trust company business, including:
             (1)      Act as agent, custodian, or attorney-in-fact for any person, and, in such capacity, take and hold property on deposit for safekeeping and act as general or special agent or attorney-in-fact in the acquisition, management, sale, assignment, transfer, encumbrance, conveyance, or other disposition of property, in the collection or disbursement of income from or principal of property, and generally in any matter incidental to any of the foregoing;
             (2)      Act as registrar or transfer agent for any corporation, partnership, association, limited liability company, municipality, state, or public authority, and in such capacity, receive and disburse money, transfer, register, and countersign certificates of stock, bonds, or other evidences of indebtedness or securities, and perform any acts which may be incidental thereto;
             (3)      Act as trustee or fiduciary under any mortgage or bond issued by a person;
             (4)      Act as trustee or fiduciary under any trust established by a person;
             (5)      Act as fiduciary, assignee for the benefit of creditors, receiver, or trustee under or pursuant to the order or direction of any court or public official of competent jurisdiction;
             (6)      Act as fiduciary, guardian, conservator, assignee, or receiver of the estate of any person and as executor of the last will and testament or administrator, fiduciary, or personal representative of the estate of any deceased person when appointed by a court or public official of competent jurisdiction;
             (7)      Establish and maintain common trust funds or collective investment funds pursuant to the provisions of chapter 55-6; or
             (8)      Act in any fiduciary capacity and perform any act as a fiduciary which a South Dakota bank with trust powers may perform in the exercise of those trust powers.

Source: SL 1995, ch 268, § 27; SL 2011, ch 212, § 21; SL 2014, ch 226, § 1.


51A-6A-30 Retention of records--Promulgation of rules--Reproduction of records--Duty of confidential...
     51A-6A-30.   Retention of records--Promulgation of rules--Reproduction of records--Duty of confidentiality. A trust company shall retain its business records in accordance with the provisions of this section. Each trust company shall retain permanently the minute books of meetings of its owners and governing board, its capital stock and ownership unit ledger and capital stock or ownership unit certificate ledger or stubs, its general ledger or the record kept in lieu of a general ledger, its daily statements of condition, and all records which the director shall, in accordance with the provisions of this section, require to be retained permanently. All other records of a trust company shall be retained for such periods as the commission prescribes. The commission shall promulgate rules pursuant to chapter 1-26 classifying all records kept by trust companies, prescribing the period for which records of each class shall be retained, and requiring a record of destruction of records as the commission deems advisable. The periods may be permanent or for a term of years. Before adoption, amendment, or revocation of the rules the commission shall consider:
             (1)      Actions and administrative proceedings in which the production of trust company records might be necessary or desirable;
             (2)      State and federal statutes of limitation applicable to such actions or proceedings;
             (3)      The availability of information contained in trust company records from other sources; and
             (4)      Any other matters as the commission considers pertinent to the interest of customers and owners of trust companies and of the people of this state having the records available.
     Any trust company may destroy any record which has been retained for the period prescribed, in accordance with the terms of this section for retention of records of its class, and is, after it has destroyed a record, under no duty to produce the record.
     Instead of retention of the original records, any trust company may cause any of its records in its custody, including those held by it as a fiduciary, to be photographed or otherwise reproduced to permanent form. Any photograph or reproduction has the same force and effect as the original and may be admitted in evidence equally with the original.
     Any trust company may cause any transactions, information, and data occurring in the regular course of its operations to be recorded and maintained by electronic means. When the electronic records of the transactions, information, and data are converted to writing, the writings shall constitute the original records of the transactions, information, and data and have the force and effect of the original records.
     Nothing in this section may be construed to affect any duty of a trust company to preserve the confidentiality of its records.

Source: SL 1995, ch 268, § 28.


51A-6A-31 Periodic examination of trust company--Report of examination--Cooperative, coordinating an...
     51A-6A-31.   Periodic examination of trust company--Report of examination--Cooperative, coordinating and information-sharing agreements among agencies. The director shall examine each trust company at least once every thirty-six months or more frequently if the director considers it necessary to make a full and careful examination and inquiry into the condition of the affairs of the trust company. For purposes of the examination, the director may administer oaths and examine under oath the board members, officers, employees, and agents of any trust company. The examination shall be reduced to writing by the person making it, and the person's reports shall contain a full, true, and careful statement of the condition of the trust company. The director, in lieu of making a direct examination and inquiry at the trust company office, may examine the trust company in whole or in part by examining the trust company records or documents off-site. For an examination conducted wholly or partially off-site, the director may require production of any records or documents of the trust company at the director's office. The director shall provide a copy of the written examination report to the governing board of the trust company. Neither the director nor any employee of the Division of Banking may have any ownership interest in a trust company.
     The director may examine an out-of-state trust institution's trust service offices either on- or off-site to determine whether such offices are being operated in compliance with the laws of this state and in accordance with safe and sound practices.
     The director may enter into cooperative, coordinating, and information-sharing agreements with any other supervisory agency or any organization affiliated with or representing one or more supervisory agencies with respect to the periodic examination or other supervision of any trust company or out-of-state trust institution, and the director may accept such agency's or organization's report of examination or investigation in lieu of conducting an examination or investigation.

Source: SL 1995, ch 268, § 29; SL 2006, ch 243, § 1.


51A-6A-32 Examination of fiduciary affairs of officers or employees--Examination of affiliated compa...
     51A-6A-32.   Examination of fiduciary affairs of officers or employees--Examination of affiliated companies or corporations. If upon the examination of any trust company, the director considers it necessary, the director may examine the fiduciary affairs of any officer or employee of any trust company; and upon similar determination, the director may examine any investment company or holding company or corporation that is affiliated with any trust company as to matters relevant to the safety and soundness of the trust company. Determinations by the director pursuant to this section are subject to review by the commission pursuant to chapter 1-26.

Source: SL 1995, ch 268, § 30; SL 2014, ch 226, § 3.


51A-6A-33 Examination expenses paid by trust companies--Fees.
     51A-6A-33.   Examination expenses paid by trust companies--Fees. The expense of every examination, together with the expense of administering the applicable laws, including salaries, travel expenses, supplies, and equipment, shall be paid by the trust companies of the state. A fee shall be imposed upon a trust company consistent with § 51A-2-36.

Source: SL 1995, ch 268, § 31.


51A-6A-34 Annual report of trust company to director--Form of report--Request for additional reports...
     51A-6A-34.   Annual report of trust company to director--Form of report--Request for additional reports. Each trust company shall make at least one report to the director during each year, at a time determined by the director. The director may require additional reports from each trust company if the director considers it advisable. The form of all the reports shall be prescribed by the director. If the director considers it necessary, the director may call upon any trust company for a report of its condition upon any given day. A copy of each request made by the director for a statement from all trust companies doing business under this chapter shall be mailed to each trust company. The copy of the request shall be considered to be legal notice to a trust company.

Source: SL 1995, ch 268, § 32.


51A-6A-35 Authority of trust company revoked upon obstruction or interference with, or refusal to su...
     51A-6A-35.   Authority of trust company revoked upon obstruction or interference with, or refusal to submit to, examination of director. If any officer of any trust company refuses to submit the books, records, papers, and instruments of the trust company to the examination and inspection of the director or in any manner obstruct or interfere with the examination and investigation of the trust company or refuse to be examined on oath concerning any of the affairs of the trust company, the director may revoke the authority of the trust company to transact business, and with the concurrence of the attorney general, may institute proceedings for the appointment of a receiver for the trust company.

Source: SL 1995, ch 268, § 33.


51A-6A-36 Service of notice of charges--Contents of notice--Temporary cease and desist order.
     51A-6A-36.   Service of notice of charges--Contents of notice--Temporary cease and desist order. If the director determines that any trust company is engaging or has engaged, or the director has reasonable cause to believe that the trust company is about to engage, in an unsafe or unsound practice in conducting the business of the trust company, or if the director determines that any trust company is violating or has violated, or the director has reasonable cause to believe that the trust company is about to violate a law, rule, or order of the director or the commission, the director may issue and serve upon the trust company a notice of charges. The notice shall contain a statement of the facts constituting any alleged unsafe or unsound practice or any alleged violation and shall state the time and place at which a hearing will be held by the commission to determine whether an order to cease and desist should be issued by the commission against the trust company. The hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of the notice. The hearing shall be conducted pursuant to chapter 1-26. Any determination by the director or the commission under this section is subject to review under chapter 1-26.
     Unless the trust company appears at the hearing, the trust company is considered to have consented to the issuance of the cease and desist order. In the event of such consent, or if upon the record made at the hearing, the commission finds that any unsafe or unsound practice or violation specified in the notice of charges has been established, the commission may issue and serve upon the trust company an order to cease and desist from any such practice or violation. The order may, by provisions which may be mandatory or otherwise, require the trust company and its board members, officers, employees, and agents to cease and desist from the practice or violation and to take affirmative action to correct the conditions resulting from the practice or violation. A cease and desist order becomes effective at the time specified in the order, and remains effective and enforceable as provided in the order, except to such extent as it is stayed, modified, terminated, or set aside by action of the commission.
     If the director determines that any unsafe or unsound practice or violation specified in the notice of charges served upon the trust company, or the continuation of the practice or violation, is likely to cause insolvency or substantial dissipation of assets or earnings of the trust company, or is likely to otherwise seriously prejudice the interests of its customers, the director may issue a temporary order requiring the trust company to cease and desist from the practice or violation. The order is effective upon service upon the trust company and shall remain effective and enforceable pending the completion of the proceedings pursuant to the notice and until the commission dismisses the charges specified in the notice, or if a cease and desist order is issued against the trust company, until the effective date of the order.

Source: SL 1995, ch 268, § 34.


51A-6A-37 Revocation of franchise for failure to comply with lawful requirements.
     51A-6A-37.   Revocation of franchise for failure to comply with lawful requirements. Any trust company which refuses or neglects to comply with any requirement lawfully made upon it by the director for a period of ninety days after demand in writing is made forfeits its franchise, and the director shall thereupon revoke its authority to transact business. The director shall give notice of the revocation to the president or other managing officer of the trust company. The attorney general, upon the request of the director, then shall begin action for the appointment of a receiver for the trust company and to dissolve the trust company.

Source: SL 1995, ch 268, § 35.


51A-6A-38 Hearing on revocation of trust authority.
     51A-6A-38.   Hearing on revocation of trust authority. A trust company subject to revocation of trust authority shall be afforded the right to a hearing in accordance with the provisions of chapter 1-26. Any revocation of authority to transact trust business is subject to review in accordance with chapter 1-26.

Source: SL 1995, ch 268, § 36.


51A-6A-39 Confidentiality of information generated by examination--Disclosure--Hearing.
     51A-6A-39.   Confidentiality of information generated by examination--Disclosure--Hearing. All information the director generates in making an investigation or examination of a state trust company is confidential. All confidential information shall remain the property of the division and shall be furnished to the trust company for its confidential use. Under no circumstances may a trust company disclose a report or any supporting documentation to anyone, other than directors and officers of the trust company or anyone acting in a fiduciary capacity for the trust company, without written permission from the director.
     The director shall give ten days' prior written notice of intent to disclose confidential information to the affected trust company. Any trust company which receives a notice may object to the disclosure of the confidential information and shall be afforded the right to a hearing in accordance with the provisions of chapter 1-26. If a trust company requests a hearing, the director may not reveal confidential information prior to the conclusion of the hearing and a ruling. Disclosure of confidential information shall be made only to formal regulatory bodies which clearly have a need for the confidential information. Prior to dissemination of any confidential information, the director shall require a written agreement not to reveal the confidential information by the party receiving the confidential information. In no event may the director disclose confidential information to the general public, any competitor, or any potential competitor of a trust company.
     The submission of any information to the division in the course of any investigation or examination may not be construed as waiving, destroying, or otherwise affecting any privilege any person may claim with respect to the information under South Dakota law or federal law.

Source: SL 1995, ch 268, § 37; SL 2008, ch 258, § 9; SL 2012, ch 233, § 3.


51A-6A-40 Correction of unsafe or unsound condition or operation--Appointment of special assistant--...
     51A-6A-40.   Correction of unsafe or unsound condition or operation--Appointment of special assistant--Appeal of appointment. If the director determines that the business of any trust company is being conducted in an unsafe or unsound manner, the director may appoint a special assistant who shall immediately take charge of the operation of the trust company for the purpose of correcting any unsafe or unsound condition or operation. After appointment, the special assistant shall continue to serve under the direction of the director for a period of time as the director determines is reasonable and necessary or until relieved by order of the commission or of a court of competent jurisdiction. The special assistant's salary, which shall be determined by the director, and expenses shall be borne by the trust company under supervision. After an appointment of a special assistant, a trust company may, within thirty days from the date of the notice of the appointment, appeal in writing to the commission. If a trust company appeals, the commission shall fix a date for a hearing which shall be within thirty days from the date of the appeal. The hearing shall be conducted in accordance with the provisions of chapter 1-26. The commission shall render an order as to the correctness or incorrectness of the director's decision to take over the conduct of the trust company, and the order of such commission is subject to review under chapter 1-26.

Source: SL 1995, ch 268, § 38.


51A-6A-41 Insolvency defined.
     51A-6A-41.   Insolvency defined. A trust company is insolvent if:
             (1)      The actual cash market value of its assets is insufficient to pay its creditor liabilities except that for this purpose unconditional evidence of indebtedness of the United States of America may be valued, at the discretion of the director, at par, cost or fair market value, whichever is the lesser; or
             (2)      It is unable to meet the demands of its creditors in the usual and customary manner.

Source: SL 1995, ch 268, § 39.


51A-6A-42 Director to take charge of insolvent trust company--Appointment of special assistant.
     51A-6A-42.   Director to take charge of insolvent trust company--Appointment of special assistant. If it appears upon the examination of any trust company or from any report made to the director that any trust company is insolvent, the director shall take charge of the trust company and all of its property and assets. In so doing the director may appoint a special assistant to take charge temporarily of the affairs of the insolvent trust company until a receiver is appointed. The assistant shall qualify, give bond, and receive compensation the same as the regular examiner, but the compensation shall be paid by the insolvent trust company, or in case of the appointment of a receiver, allowed by the court as costs in the case. No trust company may continue in the charge of a special assistant for a longer period than six months.

Source: SL 1995, ch 268, § 40; SL 2012, ch 252, § 19.


51A-6A-43 Plan for reorganization of insolvent trust company.
     51A-6A-43.   Plan for reorganization of insolvent trust company. The owners of any insolvent trust company and its creditors may formulate a plan for the reorganization of the trust company while the trust company is in the charge of the director or a special assistant or a receiver at any time before a dividend has been paid. The creditors of the insolvent trust company may formulate a plan for the reorganization of the trust company. If the plan is subscribed to in writing by creditors having not less than eighty percent of the known claims against the trust company, the commission approves the plan, and a copy of the plan is filed with the director, the plan is legal, valid, and binding upon all creditors of the insolvent trust company to the same extent and with the same effect as if all of the creditors had joined in the execution of the plan.

Source: SL 1995, ch 268, § 41.


51A-6A-44 Appointment of receiver--Bond--Qualifications--Report--Removal.
     51A-6A-44.   Appointment of receiver--Bond--Qualifications--Report--Removal. When the director takes charge of any trust company, the director shall ascertain its actual condition as soon as possible by making a thorough investigation into its affairs and condition. If the director is satisfied that the trust company cannot resume business or liquidate its indebtedness to the satisfaction of its creditors, the director shall appoint a receiver and require the receiver to give such bond as the director considers proper. The director also shall fix reasonable compensation for the receiver, but the compensation for the receiver is subject to the approval of the circuit court of the county in which the trust company is located upon the application of any party in interest.
     Any receiver shall have had at least five years of experience with financial institutions. However, upon written application made within thirty days after the findings of insolvency, the director shall appoint as receiver any person whom the holders of more than sixty percent of the claims against the trust company agree upon in writing. The creditors may also agree upon the compensation and charges to be paid the receiver. Any receiver so appointed shall make a complete report to the director covering the receiver's acts and proceedings as a receiver. The director may remove for cause any receiver and appoint the receiver's successor.

Source: SL 1995, ch 268, § 42; SL 2005, ch 260, § 10.


51A-6A-45 Powers and duties of receiver--Order of payment of liabilities.
     51A-6A-45.   Powers and duties of receiver--Order of payment of liabilities. The receiver, under the direction of the director, shall take charge of any insolvent trust company and all of its assets and property and liquidate the affairs and business for the benefit of clients, creditors, and owners. The receiver may sell or compound all bad and doubtful debts and sell all the property of the trust company upon such terms as the circuit court of the county in which the trust company is located approves. The receiver shall pay over all moneys received to the creditors of the trust company as ordered by the director. In distributing assets of an insolvent trust company in payment of its liabilities, the order of payment, if its assets are insufficient to pay in full all of its liabilities, shall be by category as follows:
             (1)      The costs and expenses of the receivership and real and personal property taxes assessed against the trust company pursuant to applicable law;
             (2)      Claims which are secured or given priority by applicable law;
             (3)      Claims of unsecured creditors;
             (4)      All other claims exclusive of claims on capital notes and debentures; and
             (5)      Claims on capital notes and debentures.
     If the assets are insufficient for the payment in full of all claims within a category, the claims shall be paid in the order provided by other applicable law or, in the absence of such applicable law, pro rata.

Source: SL 1995, ch 268, § 43.


51A-6A-45.1 Liability of receiver.
     51A-6A-45.1.   Liability of receiver. No receiver, appointed pursuant to § 51A-6A-44, is liable to any person for good faith compliance with any law, statute, rule, or judgment, decree, or order of a court. Nor is any receiver liable to any person for any action taken or omitted unless a court finds that the receiver acted or failed to act as a result of misfeasance, bad faith, gross negligence, or reckless disregard of duty.

Source: SL 2005, ch 260, § 11.


51A-6A-46 Periodic examination of trust company in the hands of a receiver.
     51A-6A-46.   Periodic examination of trust company in the hands of a receiver. At least once each six months the director shall examine each trust company in the hands of a receiver and shall file a copy of the examination report with the clerk of the circuit court of the county in which the trust company is located. Each receiver shall submit the records and affairs of the trust company to an examination by the director.

Source: SL 1995, ch 268, § 44.


51A-6A-46.1 Suspension, liquidation, order against unsound practice, removal of director or officer, o...
     51A-6A-46.1.   Suspension, liquidation, order against unsound practice, removal of director or officer, or injunction. In addition to the powers granted to the director and the commission in §§ 51A-6A-35 to 51A-6A-46, inclusive, the powers granted to the director and commission pursuant to §§ 51A-15-11 to 51A-15-44, inclusive, 51A-2-22, and 51A-2-25 to 51A-2-27, inclusive, may be utilized by the director and the commission with regard to trust companies. The powers granted by §§ 51A-15-11 to 51A-15-44, inclusive, 51A-2-22, and 51A-2-25 to 51A-2-27, inclusive, may be used by the director and the commission in connection with a trust company as a supplement to or as an independent alternative to the powers granted in §§ 51A-6A-35 to 51A-6A-46, inclusive.

Source: SL 2004, ch 312, § 4; SL 2010, ch 232, § 22.


51A-6A-46.2 Confidentiality of information--Inapplicability to certain actions.
     51A-6A-46.2.   Confidentiality of information--Inapplicability to certain actions. The provisions of §§ 51A-6A-2 and 51A-6A-39 do not apply to the disclosure of information by the director or the commission in connection with the institution and prosecution of an action against a trust company under §§ 51A-15-11 to 51A-15-44, inclusive, or 51A-2-25 to 51A-2-27, inclusive, or 51A-6A-35 to 51A-6A-46, inclusive. Disclosure of confidential information may be made only to formal governmental regulatory bodies which have a need for the confidential information.

Source: SL 2004, ch 312, § 5.


51A-6A-47 Acquisition of trust company--Notice to director--Approval--Order of disapproval--Hearing....
     51A-6A-47.   Acquisition of trust company--Notice to director--Approval--Order of disapproval--Hearing. A person acquiring control through direct or indirect ownership by an owner or an affiliated group of owners shall give the director at least sixty days prior written notice of any proposed trust company acquisition. If the director does not issue an order disapproving the proposed acquisition within that time or extend the period during which a disapproval may be issued, the proposed acquisition is approved. The period for disapproval shall be thirty days after notice is received by the director and may be further extended only if the director determines that any acquiring person has not furnished all the information required under § 51A-6A-48 or if in the director's judgment, any material information submitted is substantially inaccurate. An acquisition may be made prior to expiration of the disapproval period if the director issues written notice of the director's intent not to disapprove the action.
     If the director disapproves an acquisition, the director shall serve the acquiring person with an order of disapproval. The order shall provide a statement of the basis for the disapproval. Within thirty days after service of an order of disapproval, the acquiring person may request a hearing on the proposed acquisition with the commission. Upon receipt of a timely request, the commission shall conduct a hearing in accordance with the provisions of chapter 1-26. Any disapproval by the commission of a proposed acquisition is subject to review in accordance with chapter 1-26.
     Actual expenses incurred by the director or commission in carrying out any investigation that may be necessary or required by statute shall be paid by the person submitting the proposed acquisition.

Source: SL 1995, ch 268, § 45; SL 2013, ch 239, § 6.


51A-6A-48 Contents of notice of proposed acquisition.
     51A-6A-48.   Contents of notice of proposed acquisition. A notice of a proposed trust company acquisition shall contain, in the form prescribed by the director, the following information:
             (1)      The identity, personal history, business background, and experience of any person by whom or on whose behalf the acquisition is to be made, including the person's material business activities and affiliations during the past five years and a description of any material pending legal or administrative proceedings in which the person is a party and any criminal indictment or conviction of the person by a state or federal court;
             (2)      A statement of the assets and liabilities of any person by whom or on whose behalf the acquisition is to be made, as of the end of the fiscal year for each of the five fiscal years immediately preceding the date of the notice, together with related statements of income and source and application of funds for each of the fiscal years then concluded and an interim statement of the assets and liabilities for any person, together with related statements of income and source and application of funds, as of a date not more than ninety days prior to the date of the notice;
             (3)      The terms and conditions of the proposed acquisition and the manner in which the acquisition is to be made;
             (4)      The identity, source, and amount of the funds or other considerations used or to be used in making the acquisition and, if any part of these funds or other considerations has been or is to be borrowed or otherwise obtained for the purpose of making the acquisition, a description of the transaction, the names of the parties to the transaction, and any arrangements, agreements, or understandings with such persons;
             (5)      Any plans or proposals which any acquiring person making the acquisition may have to liquidate the trust company, to sell its assets or merge it with any company, or to make any other major change in its business or corporate structure or management;
             (6)      The identification of any person employed, retained, or to be compensated by the acquiring person or by any person on the acquiring person's behalf to make solicitations or recommendations to owners for the purpose of assisting in the acquisition and a brief description of the terms of the employment, retainer, or arrangement for compensation;
             (7)      Copies of all invitations or tenders or advertisements making a tender offer to owners for purchase of their stock or ownership units to be used in connection with the proposed acquisition; and
             (8)      Any additional relevant information in such forms as the directors may require by specific request in connection with any particular notice.

Source: SL 1995, ch 268, § 46.


51A-6A-49 Reason for disapproval of acquisition.
     51A-6A-49.   Reason for disapproval of acquisition. The director may disapprove any proposed acquisition if:
             (1)      The proposed acquisition of control would result in a monopoly or would be in furtherance of any combination or conspiracy to monopolize or attempt to monopolize the trust business in any part of this state;
             (2)      The financial condition of any acquiring person is such as might jeopardize the financial stability of the trust company or prejudice the interests of the clients of the trust company;
             (3)      The competence, experience, or integrity of any acquiring person or of any of the proposed management personnel indicates that it would not be in the interest of the clients of the trust company or in the interest of the public to permit such person to control the trust company; or
             (4)      Any acquiring person neglects, fails, or refuses to furnish the director all the information required by the director.

Source: SL 1995, ch 268, § 47.


51A-6A-50 Procedure for merger, consolidation, conversion, or transfer of assets and liabilities to ...
     51A-6A-50.   Procedure for merger, consolidation, conversion, or transfer of assets and liabilities to another bank or trust company. Before any trust company can merge, consolidate with, convert from a corporation to a limited liability company or from a limited liability company to a corporation under § 47-1A-950 or 47-1A-950.1, or transfer its assets and liabilities to another trust company or bank, it shall file with the director, certified copies of all proceedings of its governing board and owners relating to the merger, consolidation, conversion, or transfer. The owners' proceedings shall show that a majority of the owners voted in favor of the merger, consolidation, conversion, or transfer. The owners' proceedings shall contain a complete copy of the agreement made and entered into, with reference to the merger, consolidation, conversion, or transfer. Upon the filing of the owners' and governing board's proceedings, the director shall make an investigation to determine whether:
             (1)      The interests of the clients, creditors, and owners of each are protected;
             (2)      The merger, consolidation, conversion, or transfer is in the public interest; and
             (3)      The merger, consolidation, conversion, or transfer is made for legitimate purposes.
     The director's consent to or rejection of a merger, consolidation, conversion, or transfer shall be based upon the investigation. No merger, consolidation, conversion, or transfer may be made without the consent of the director. The expense of the investigation shall be paid by the persons filing the request.

Source: SL 1995, ch 268, § 48; SL 2012, ch 252, § 20.


51A-6A-51 Necessity of execution or delivery of deed for merger or consolidation.
     51A-6A-51.   Necessity of execution or delivery of deed for merger or consolidation. When a merger or consolidation of any trust company occurs, the successor consolidated trust company or bank becomes the owner of, and entitled to, the possession of all rights, franchises, and interests, real estate, and personal property as is covered by the merger or consolidation agreement without the necessity of the execution or delivery of a deed or other form of transfer.

Source: SL 1995, ch 268, § 49.


51A-6A-52 Fiduciary capacity of successor trust company.
     51A-6A-52.   Fiduciary capacity of successor trust company. Upon the merger or consolidation of any trust company, the successor trust company, upon acquiring trust authority, may be appointed to act as trustee, personal representative, conservator, or any other fiduciary capacity to the same extent and with the same authority as the trust company to which it succeeds.

Source: SL 1995, ch 268, § 50.


51A-6A-53 Name of trust company--Name change.
     51A-6A-53.   Name of trust company--Name change. No trust company may take the name of any other trust company incorporated in the state or a name so similar to another as to be easily confused with it. No trust company may change its name until the name change has been submitted to and approved by the director. The director may refuse authority to any trust company violating this provision.

Source: SL 1995, ch 268, § 51.


51A-6A-54 Approval required for changing place of business--Examination and investigation by directo...
     51A-6A-54.   Approval required for changing place of business--Examination and investigation by director. No trust company incorporated under the laws of this state may change its place of business, from one city or town to another or from one location to another within the same city or town, without the prior approval of the director. Any trust company desiring to change its place of business shall file a written application with the director in the form and containing the information as the director requires. The director shall examine and investigate the application and approve or disapprove the application. The expenses of the examination and investigation shall be paid by the trust company.

Source: SL 1995, ch 268, § 52; SL 2008, ch 258, § 10.


51A-6A-55
     51A-6A-55 to 51A-6A-57.   Repealed by SL 2013, ch 239, §§ 8 to 10.


51A-6A-58 Establishment of trust service offices--Application.
     51A-6A-58.   Establishment of trust service offices--Application. After first applying for and obtaining the approval of the director, one or more trust service offices may be established and operated by a trust company incorporated under the laws of this state or by an out-of-state trust institution, if and to the extent that the state, territory, or district in which the out-of-state trust institution is chartered or licensed to engage in a trust company business grants authority for a trust company organized and doing business under the laws of this state to establish an office in that state, territory, or district. An application to establish and operate a trust service office or to relocate an existing trust service office shall be submitted and approved in the manner set forth in § 51A-6A-4.
     A trust company may establish a trust service office in another state, territory, or district and may conduct any activities at that office that are permissible for a trust company under the laws of that state, territory, or district subject to the laws of this state and subject to the rules, orders, or declaratory rules of the commission or the director.

Source: SL 1995, ch 268, § 56; SL 2005, ch 260, § 14; SL 2008, ch 258, § 11.


51A-6A-59
     51A-6A-59, 51A-6A-60.   Repealed by SL 2008, ch 258, §§ 12, 13.


51A-6A-61 Membership in federal reserve bank.
     51A-6A-61.   Membership in federal reserve bank. Any trust company may become a stockholder in and a member of the federal reserve bank of the federal reserve district where the trust company is located.

Source: SL 1995, ch 268, § 59.


51A-6A-62 Depositing securities into federal reserve bank.
     51A-6A-62.   Depositing securities into federal reserve bank. Any trust company when acting as fiduciary, and any trust company when holding securities as custodian for a fiduciary, may deposit, or arrange for the deposit, with the federal reserve bank in its district, of any securities the principal and interest of which the United States or any department, agency, or instrumentality of the United States has agreed to pay, or has guaranteed payment, to be credited to one or more accounts on the books of the federal reserve bank in the name of the trust company. Any account used for this purpose shall be designated as a fiduciary or safekeeping account, and other similar securities may be credited to the account. A trust company depositing securities with a federal reserve bank is subject to any rules with respect to the making and maintenance of the deposits as the director may promulgate pursuant to chapter 1-26. The records of the trust company shall always show the ownership of the securities held in the account.

Source: SL 1995, ch 268, § 60.


51A-6A-63 Registering investments in name of nominee--Liability of trust company.
     51A-6A-63.   Registering investments in name of nominee--Liability of trust company. Any trust company, when acting in this state as a fiduciary or a co-fiduciary with others, may with the consent of its co-fiduciary or co-fiduciaries, if any, cause any investment held in any such capacity, to be registered and held in the name of a nominee or nominees of the trust company. The trust company is liable for the acts of any nominee with respect to any investment so registered.

Source: SL 1995, ch 268, § 61.


51A-6A-64 Common trust funds and collective investment funds.
     51A-6A-64.   Common trust funds and collective investment funds. Any trust company qualified to act as a fiduciary in this state may establish common trust funds or collective investment funds for the purpose of furnishing investments to itself as fiduciary, or to itself and others, as co-fiduciaries. Any trust company qualified to act as fiduciary in this state may, as such fiduciary or co-fiduciary, invest funds that it lawfully holds for investment in the common trust funds or collective investment funds, if the investment is not prohibited by the instrument, judgment, decree, or order creating the fiduciary relationship. Any common trust fund or collective investment funds shall be established and maintained according to the provisions of chapter 55-6.

Source: SL 1995, ch 268, § 62; SL 2011, ch 212, § 22; SL 2014, ch 226, § 2.


51A-6A-65 Conversion from state bank to trust company--Application--Investigation--Regulation.
     51A-6A-65.   Conversion from state bank to trust company--Application--Investigation--Regulation. Any state bank chartered under Title 51A which exercises only trust powers and which has never accepted deposits may make application to the director to reorganize as a trust company under chapter 51A-6A. An application for conversion from a state bank to a trust company shall consist of a letter of intent signed by a majority of the bank's board of directors together with any additional information required by the director. The stockholders of the bank shall make, execute, and acknowledge amendments to their articles of incorporation as required in order to terminate the corporation's former status as a bank and to conform its articles of incorporation to the requirements of chapter 51A-6A. Upon receipt of the application for approval of a conversion, the director shall conduct such investigation as the director deems necessary to ascertain whether:
             (1)      The letter of intent and supporting items satisfy the requirements of this title;
             (2)      The plan of conversion adequately protects the interests of the beneficiaries of any trusts for which the bank is a trustee; and
             (3)      The requirements for a conversion under all applicable laws have been satisfied and the resulting trust company would satisfy the requirements for trust companies authorized by this title.
     Upon filing and approval of such articles of amendment as provided by this title, and upon the issuance of a certificate of authority by the director as provided by this title, such corporation may transact business as a trust company and is subject to regulation as a trust company under this title.

Source: SL 1998, ch 282, § 43; SL 2008, ch 258, § 14.


51A-6A-66 Exclusion of entity from chapters 51A-5, 51A-6, and 51A-6A--Governing documents--Notice to...
     51A-6A-66.   Exclusion of entity from chapters 51A-5, 51A-6, and 51A-6A--Governing documents--Notice to director. An entity may be excluded from the provisions of chapters 51A-5, 51A-6, and 51A-6A if:
             (1)      The entity is established for the exclusive purpose of acting as a trust protector, investment trust advisor, or distribution trust advisor, as defined by § 55-1B-1, or any combination of such purposes;
             (2)      The entity is acting in such capacity under a trust instrument which names a South Dakota trust company, a South Dakota bank with trust powers, or a national bank with trust powers as trustee;
             (3)      The entity is not engaged in trust company business with the general public as a public trust company or with any family as a private trust company;
             (4)      The entity does not hold itself out as being in the business of acting as a fiduciary for hire as either a public or private trust company;
             (5)      The entity files an annual report with the South Dakota secretary of state and provides a copy to the Division of Banking; and
             (6)      The entity agrees to be subject to examination by the Division of Banking at the discretion of the director.
     The governing documents of any such excluded entity shall limit its authorized activities to the functions permitted to a trust protector, investment trust advisor, or distribution trust advisor pursuant to chapter 55-1B, or any combination of such purposes, and limit the performance of those functions with respect to a specifically named trust or family of trusts.
     An entity complying with this section shall notify the director of its existence, capacity to act, and the name of the trustee for the trust or family of trusts.

Source: SL 2011, ch 212, § 7; SL 2013, ch 239, § 11.


Title 51A

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