The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 077: Independent Trust Companies

• § 2401. Definitions

  As used in this chapter:

  (1) “Act as fiduciary” or “acting as a fiduciary” means to:

  (A) accept or execute trusts, including to:

  (i) act as trustee under a written agreement;

  (ii) receive money or other property in its capacity as trustee for investment in real or personal property;

  (iii) act as trustee and perform the fiduciary duties committed or transferred to it by order of a court of competent jurisdiction;

  (iv) act as trustee of the estate of a deceased person; or

  (v) act as trustee for a minor or incapacitated person;

  (B) administer in any other fiduciary capacity real or tangible personal property; or

  (C) act pursuant to order of a court of competent jurisdiction as executor or administrator of the estate of a deceased person or as a guardian or conservator for a minor or incapacitated person.

  (2) “Company” means corporation or limited liability company.

  (3) “Independent trust company” means a company formed in this or any other state, that is chartered to act as a fiduciary or engages in a trust business, but is neither a depository institution nor a foreign bank as defined in Section 1(b)(7) of the International Banking Act of 1978.

  (4) “Trust business” means the holding out by a person to the public by advertising, solicitation or other means that the person is available to act as a fiduciary in this or another state for hire or compensation. (Added 1997, No. 98 (Adj. Sess.), § 8b.)

• § 2402. Authority to organize; powers; limitations; prohibitions; exemptions

  (a) A company organized in this State may form an independent trust company in accordance with the provisions of this chapter. A company shall obtain a certificate of authority from the Commissioner before it may act as a fiduciary or engage in a trust business in this State.

  (b) An independent trust company formed and authorized under this chapter shall have the same fiduciary powers, duties, and obligation as a financial institution operating a trust department under subchapter 4 of chapter 204 of this title. An independent trust company formed under this title shall have the privileges and be subject to the provisions granted or contained in the general law governing the company and in this chapter, except where the general law governing the company is inconsistent with this chapter. In case of conflict between the general law governing the company and this chapter, this chapter shall control. Such companies shall not be required to make any annual report except as provided in this chapter. Except as provided in this chapter, subchapter 4 of chapter 204, and section 12602 of this title, no person shall engage in a trust business in this State without first obtaining a certificate of authority from the Commissioner.

  (c) An independent trust company shall not accept deposits or make loans or conduct any other business except that which is incidental to and consistent with a trust business.

  (d) An independent trust company may prudently invest its capital and surplus in stocks, bonds, mortgages, mutual funds, and other securities. An independent trust company may invest in, purchase, hold, convey, and lease real estate.

  (e) An independent trust company may issue or sell capital notes or debentures with the written approval of the Commissioner.

  (f) An independent trust company formed and authorized under this chapter shall:

  (1) maintain its principal place of business in this State;

  (2) appoint a registered agent to accept service of process and to otherwise act on its behalf in this State, provided that whenever such registered agent cannot with reasonable diligence be found at the Vermont registered office of the independent trust company, the Secretary of State shall be an agent of such independent trust company upon whom any process, notice, or demand may be served;

  (3) hold at least four meetings of its governing body each year, including once quarterly, and at least one such meeting each year shall be held in Vermont; and

  (4) have at least one Vermont resident as a member of its governing body.

  (g) For the purposes of this chapter, a person does not engage in a trust business merely by:

  (1) rendering services as an attorney-at-law or an accountant;

  (2) acting as trustee under a deed of trust made only as security for the payment of money or for the performance of another act;

  (3) acting as a trustee in bankruptcy or as a receiver;

  (4) holding trusts of real estate for the primary purpose of subdivision, development, or sale, or to facilitate any business transaction with respect to such real estate, provided the person is not regularly engaged in the business of acting as a trustee for such trusts;

  (5) holding assets as trustee of trusts created for charitable purposes;

  (6) receiving rents and proceeds of sale as a licensed real estate broker on behalf of a principal;

  (7) engaging in securities transactions as a broker-dealer or a sales representative registered under 9 V.S.A. chapter 131;

  (8) engaging in the sale of insurance policies and annuity or endowment contracts in this State issued by an insurance company authorized to write such policies or contracts and subject to regulation and control of the Commissioner;

  (9) if an individual, acting as a guardian, conservator, special conservator, trustee, or personal representative pursuant to a court order or other statutory authority;

  (10) acting under the authority of 11A V.S.A. § 15.01(d); or

  (11) if an individual, serving as trustee of any of the following:

  (A) one or more trusts for each of which at least one settlor is a member of the trustee’s family;

  (B) not more than five trusts if the individual has not solicited appointment as trustee for any trusteeships. (Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 18, eff. Jan. 1, 2001; 2011, No. 78 (Adj. Sess.), § 11, eff. April 2, 2012; 2017, No. 134 (Adj. Sess.), § 7.)

• § 2403. Formation

  (a) One or more persons may form an independent trust company in accordance with the provisions of this chapter.

  (b) The organizers forming an independent trust company shall apply to the Commissioner for a certificate of authority on prescribed forms containing information as may be required by the Commissioner. The application shall include the proposed name of the business for approval under section 2404 of this title and the basic organizational documents including any operating agreement for the company prepared in compliance with Title 11 or 11A.

  (c) Upon receiving a completed application for a certificate of authority and the proposed basic organizational documents, the Commissioner shall investigate and examine the proposed independent trust company to determine whether it will be adequately staffed, equipped, and able to furnish trust services and that its establishment and maintenance will promote the general good of the State.

  (d) If the Commissioner finds that the establishment and maintenance of the proposed trust company will promote the general good of the State, the Commissioner shall deliver to the organizers a certificate of authority under the Commissioner’s seal. The certificate of authority, basic organizational documents except the operating agreement and the organizational fee shall be transmitted to the Secretary of State, who shall thereupon proceed according to the provisions of law. If the organizational documents are recorded by the Secretary, the certificate of the Commissioner shall be recorded therewith.

  (e) Each application for a certificate of authority shall be accompanied by an application fee as provided in section 19 of this title for new financial institutions.

  (f) If the proposed independent trust company fails to open for business within six months after the date the certificate of authority is granted, the certificate of authority shall be void. The Commissioner may extend the time within which the independent trust company may open for business for good cause and upon written application filed prior to the expiration of the six-month period.

  (g) At the time it commences business, an independent trust company shall have unimpaired capital in an amount not less than $250,000.00 or one-quarter of one percent of its assets under management, whichever is greater. Thereafter, an independent trust company shall maintain unimpaired capital in an amount not less than $250,000.00 or one-quarter of one percent of its assets under management, whichever is greater, up to a maximum of $1,000,000.00. The unimpaired capital and surplus of an independent trust company shall be held as security for the faithful discharge of the fiduciary duties undertaken as well as for the claims of other creditors. The Commissioner may from time to time require or allow increases or decreases to the unimpaired capital otherwise required by this subsection, up to such $1,000,000.00 maximum, as deemed necessary or desirable for the protection of customers and the safety of the trust business. The safety and soundness factors to be considered by the Commissioner 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 or company capacity;

  (3) the amount of fiduciary assets under management;

  (4) the complexity of fiduciary duties and degree of discretion undertaken; and

  (5) the extent and adequacy of internal controls.

  (h) The Commissioner, in addition to the capital requirements provided in subsection (g) of this section, may require any independent trust company authorized to do a trust business in this State to post bond in an amount acceptable to the Commissioner. (Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 19, eff. Jan. 1, 2001; 2003, No. 105 (Adj. Sess.), § 11; 2009, No. 42, § 2; 2009, No. 137 (Adj. Sess.), § 1.)

• § 2404. Name; multiple locations

  (a) An independent trust company shall file any name proposed to be used in connection with a trust business or establishing a principal office or trust office in this State pursuant to this chapter. The Commissioner shall not approve a proposed name if the Commissioner determines that the name may be misleading or likely to confuse the public, or deceptively similar to any name in use in this State.

  (b) An independent trust company organized or regulated under this chapter may petition the Commissioner for permission to establish and maintain new or additional offices for the transaction of its trust business.

  (c) An independent trust company shall not operate any new or additional office unless the Commissioner has determined that the establishment of the office will promote the general good of the State, applying the standards and procedures contained in subsection 2403(c) of this title, as applicable. If the Commissioner determines that the establishment will promote the general good, the Commissioner shall approve the new or additional office. (Added 1997, No. 98 (Adj. Sess.), § 8b.)

• § 2405. Periodic reports; examinations; cooperative agreements

  (a) The Commissioner may require reports from any independent trust company doing a trust business in this State, containing such information, including on its financial condition, at such times and in such format as the Commissioner may prescribe.

  (b) The Commissioner may make such examination of any person or location as the Commissioner may deem necessary to determine whether an independent trust company is being operated in compliance with the laws of this State and in accordance with safe and sound business and trust practices, to the extent consistent with subsection (c) of this section.

  (c) The Commissioner may enter into cooperative, coordinating, and information-sharing agreements with any other supervisory agencies or any organization affiliated with or representing one or more supervisory agencies with respect to the periodic examination or other supervision of any independent trust company not formed in this State or any office of an independent trust company in any state. The Commissioner may accept reports of examination or investigation from such agencies in lieu of conducting an independent examination or investigation.

  (d) The Commissioner may enter into joint examinations or joint enforcement actions with other supervisory agencies having concurrent jurisdiction over any independent trust company or any office of an independent trust company established and maintained in this State; provided, that the Commissioner may at any time take such actions independently if the Commissioner deems such actions to be necessary or appropriate to carry out the responsibilities under this chapter or to ensure compliance with the laws of this State.

  (e) The independent trust company shall provide the Commissioner with written notice of any regulatory action taken against it in any other jurisdiction within 30 days of receipt of such action by the independent trust company.

  (f) Any independent trust company that maintains one or more offices in this State shall be assessed by the following applicable method:

  (1) an independent trust company whose primary activity is transactional shall pay to the Department an annual assessment equal to $0.0001 per dollar volume of activity performed for the most recent year ending December 31, which assessment shall not be less than $2,000.00 or greater than $50,000.00, and which shall be paid on or before April 1 of each year; or

  (2) an independent trust company whose primary activity in the State is asset management shall pay to the Department an assessment based on assets under management in this State on the preceding June 30 as provided under subsection 19(d) of this title.

  (g) An independent trust company assessed pursuant to subdivision (f)(1) of this section shall pay to the Department the costs and expenses of all examinations, including both regular examinations and special or expanded scope examinations as provided under section 18 of this title. An independent trust company assessed pursuant to subdivision (f)(2) of this section shall not be billed for regular examinations, but shall pay to the Department the costs and expenses of all special or expanded scope examinations as provided under sections 18 and 19 of this title. (Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 20, eff. Jan. 1, 2001; 2011, No. 21, § 5, eff. May 11, 2011; 2011, No. 78 (Adj. Sess.), § 9, eff. April 2, 2012; 2013, No. 29, § 8, eff. May 13, 2013; 2021, No. 25, § 5, eff. May 12, 2021.)

• § 2406. Reciprocity

  (a) An independent trust company organized under the laws of a jurisdiction other than Vermont shall be authorized to engage in a trust business in this State, to the same extent and under the same conditions that an independent trust company formed in this State may operate in such other jurisdiction. The independent trust company organized under the laws of a jurisdiction other than Vermont must obtain the Commissioner’s written authorization before it may engage in a trust business in this State.

  (b) For purposes of this section, an independent trust company organized under the laws of a jurisdiction other than Vermont shall mean an entity that is organized and regulated in a manner that is substantially similar to an independent trust company formed under this chapter by whatever name, but which is not a financial institution within the meaning of subdivision 11101(32) of this title. (Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 21, eff. Jan. 1, 2001.)

• § 2407. Discontinuing trust business; merger and consolidation; sale of trust business; change in control

  (a) Discontinuance. An independent trust company that intends to discontinue its trust business in this State shall furnish notice to the Commissioner of its intention not less than 60 days before the discontinuance. It shall also mail written notice to the principals of each trust account affected. For purposes of this section, the term “principal” with respect to a trust account shall mean the individual or entity to whom the independent trust company ordinarily furnishes statements of account and other customer communications regarding such trust account. The form of notice required by this subsection shall be approved by the Commissioner and shall include a plain statement of the intended plans for discontinuance of the business of the independent trust company, and shall include the name, mailing address and telephone number of one or more officers, managers, employees, or agents of the company available during regular business hours to answer customer questions regarding the proposed discontinuance. The company shall furnish an affidavit of the mailing of the notice to the principals affected, and the affidavit shall constitute the company’s compliance with the customer notice requirement of this section. Following the mailing of the notice and prior to the effective date of the discontinuance, the company shall furnish the Commissioner with satisfactory evidence that all affected trust accounts have been transferred to one or more entities with authority to engage in a trust business in this State in accordance with subsections (c) through (j) of this section, that the principal has released and discharged the independent trust company of any further obligation with respect to the account or that all accounts are otherwise protected. The independent trust company shall surrender its certificate of authority to the Commissioner upon the effective date of the discontinuance, and thereafter the company may not use the word “trust” in its company or trade name or in connection with its business. After surrender of the certificate, the Commissioner shall have continuing jurisdiction over the company with respect to compliance with applicable law.

  (b) Merger or consolidation. An independent trust company formed in this State may merge or consolidate with another entity. The independent trust company must obtain the Commissioner’s prior written approval of the transaction. The Commissioner shall approve the transaction if the Commissioner determines that the resulting entity is qualified to do a trust business in this State and that the transaction will promote the general good of the State. Whenever an independent trust company merges or consolidates under this section, the resulting entity shall have, possess, and own, all property, rights, powers, franchises, privileges, and appointments of every nature whatsoever of each of the merging or consolidating entities. If any of the merging or consolidating entities are acting or have been acting as a fiduciary or in any like capacity, the resulting entity shall have, possess, and be vested with and succeed to all of the property, rights, powers, privileges, duties, and obligations appertaining to each such fiduciary capacity, without further or additional appointment, obligation, or designation, provided the independent trust company or resulting entity, as the case may be, has complied with the provisions of subsections (d) through (j) of this section. The resulting entity shall be a continuation of the entity of each and all of the entities so merged or consolidated. Except as provided in this chapter, it shall hold, exercise, and perform all rights, powers, privileges, duties, and obligations appertaining to any and all trust, representative, or fiduciary relationships of each of the merged or consolidated entities, and shall be liable for all of the debts, contracts, and obligations of each of the merged or consolidated companies. Any such debt, undertaking, or obligations of any merged or consolidated entity may be enforced against it as fully and effectively as it could have been against the merged or consolidated entity.

  (c) Sale of assets or trust business. An independent trust company may transfer all or substantially all of its assets or all or a portion of its trust business to another entity qualified to do a trust business in this State. Prior to transferring all or substantially all of its assets or any portion or all of its trust business to another entity, an independent trust company shall obtain the Commissioner’s written approval. The Commissioner shall approve the transaction if the Commissioner determines that the transferee entity is qualified to do a trust business in this State and that the transaction will promote the general good.

  (d) Petition; notice to the Commissioner; order. Whenever an independent trust company intends to merge into, consolidate with, or transfer all or substantially all of its assets or any of its trust business to another entity qualified to do a trust business in this State as provided in subsection (b) or (c) of this section, it shall file a petition in the Probate Division of the Superior Court of the Probate District in which its main office is located requesting that the Court substitute the resulting or transferee entity, except as may be specifically excluded in such petition, in every fiduciary capacity specified in the petition. The petition may be made ex parte and need not list the fiduciary capacities in which substitution is made. A copy of the petition shall be furnished to the Commissioner prior to filing with the Probate Division of the Superior Court. Upon a finding that the resulting or transferee entity is authorized to engage in a trust business by the Commissioner, the Commissioner has approved the transaction, and that independent trust company has complied with the notification requirements in this subsection and subsection (e) of this section, the Court shall enter an order substituting the resulting or transferee entity in every fiduciary capacity for the independent trust company, except as otherwise specified in the independent trust company’s petition. The petition made pursuant to this section shall be considered in a summary fashion by the Court, and the Court shall act on the petition within 30 days of filing. Upon entry of the Court’s substitution order, the resulting or transferee entity shall, without further act, be deemed substituted by operation of law in every such fiduciary capacity. The substitution shall be evidenced by filing a copy of the order with the clerk of the Probate Division of the Vermont Superior Court in each Probate District in which the independent trust company served in a fiduciary capacity prior to the entry of the order. The order shall be accompanied by written notification to the Court of each fiduciary appointment previously made by the Court that is affected by the substitution order, and evidence of compliance with subsection (h) of this section. The order of substitution shall be indexed in the records of the courts in the manner in which substitutions of fiduciaries are indexed.

  (e) Notice of petition to customer. After the entity that will be the resulting or transferee entity under subsection (b) or (c) of this section is authorized to do a trust business in this State by the Commissioner, but at least 30 days before the filing of the petition referred to in subsection (d) of this section, the independent trust company shall mail written notice of the proposed substitution to the principals of each trust account affected. The form of notice required by this subsection shall be approved by the Commissioner and shall include a statement that the independent trust company intends to merge or consolidate with, or transfer all or substantially all of its assets or all or a portion of its trust business, to a resulting or transferee entity, as the case may be, and intends to substitute the resulting or transferee entity as or for the independent trust company. The notice shall include the name, mailing address, and telephone number of one or more officers, managers, employees, or agents of the independent trust company available during regular business hours to answer customer questions regarding the proposed substitution. The independent trust company shall furnish an affidavit of the mailing of the notice to the Probate Division of the Superior Court in conjunction with the filing of the independent trust company’s petition referred to in subsection (d) of this section, and the affidavit shall constitute the independent trust company’s compliance with this section. Following the mailing of the notice and prior to the effective date of the substitution order, each prospective trust customer of the independent trust company or of the resulting or transferee entity shall be furnished with a copy of the notice required by this subsection before the customer and the company enter into a trust account relationship.

  (f) Post-order notice. Within 30 days after the entry of the substitution order referred to in subsection (d) of this section, the resulting or transferee entity shall mail written notice of the entry of the order of substitution to the principals of each trust account affected. The notice shall specify that the substitution has been effected and shall include the name, mailing address, and telephone number of one or more officers, managers, or employees of the resulting or transferee entity available during regular business hours to answer customer questions regarding the substitution.

  (g) Effect of substitution order. Each fiduciary designation in a will, trust, or other instrument executed before or after the entry of an order of substitution, shall be deemed by operation of law to be a designation of the resulting or transferee entity, substituted pursuant to this section, without further act or amendment of the will, trust, or other instrument, unless the will, trust, or other instrument is executed after the date of entry of the order of substitution and specifically negates application of this section.

  (h) Bonds. If any company for which the resulting or transferee entity has been substituted pursuant to this section has given bond in any fiduciary capacity, the resulting or transferee entity shall be required to furnish to the Court or authority making the appointment a substitute bond in like amount and terms before the company shall be released from liability on its bond.

  (i) Accounting. Any company, for which the resulting or transferee entity has been substituted pursuant to this section, shall account jointly with the resulting or transferee entity for the accounting period during which the effective date of the substitution occurs. Upon substitution pursuant to this section, the company shall deliver to the resulting or transferee entity all assets addressed in the substitution order held by the company as fiduciary and upon the substitution, all the assets shall become the property of the resulting or transferee entity as fiduciary without the necessity of any instrument of transfer or conveyance.

  (j) Affiliated transactions. Upon substitution of the resulting or transferee entity pursuant to this section, the resulting or transferee entity shall pay fair consideration to any affiliated independent trust company for which it has been substituted as fiduciary for the trust business it has acquired from the affiliate as a result of the substitution.

  (k) Change in control. Any person that intends to transfer 10 percent or more of the voting interests in an independent trust company regulated under this chapter to any other person shall provide the Commissioner with at least 30 days’ written notice. (Added 1997, No. 98 (Adj. Sess.), § 8b; amended 2009, No. 154 (Adj. Sess.), § 238a, eff. Feb. 1, 2011.)

• § 2408. Laws applicable; matters of contract

  (a) An independent trust company exercising trust powers under this chapter shall be subject to the same responsibilities, liabilities, and penalties as an individual acting in like capacity, and the company shall have the same powers and shall receive the same compensation as individuals acting in like capacity, if fixed by law.

  (b) The exercise of powers not listed in subsection (a) of this section, and the performance of the other duties by the company may be as contracted for by the parties interested.

  (c) In performing its duties under a trust, an independent trust company shall be subject to all applicable provisions of 14 V.S.A. chapter 105. (Added 1997, No. 98 (Adj. Sess.), § 8b.)

• § 2409. Financial transactions

  (a) No assets held in a fiduciary capacity shall be mingled with the investments of the independent trust company or be liable for the debts or obligations of the independent trust company. Independent trust companies shall keep all monies, property, or securities held separate and apart from the assets of the company and all assets held by the independent trust company as a fiduciary shall be designated in a manner that the owner, trust, or estate to which such assets belong may be clearly identified.

  (b) Consistent with its fiduciary obligations, every independent trust company holding funds awaiting investment or distribution may deposit or leave on deposit such funds with a federally insured state or national bank. The funds shall not be deposited or left with the same corporation or association depositing or leaving on deposit such funds, nor with a corporation or association holding or owning a majority of the capital stock of or other voting interest in the independent trust company making or leaving the deposit, unless the corporation or association shall first pledge, as security for the deposit, securities eligible for investment by state banks that have a market value equal to that of the deposited funds. No security shall be required with respect to any portion of such deposits which are insured under the provisions of any law of the United States.

  (c) An independent trust company acting in any capacity under a trust, unless the instrument creating the trust provides otherwise, may cause any securities or other property held by it in its representative capacity to be registered in the name of a nominee or nominees of the independent trust company.

  (d) An independent trust company when acting as depositary or custodian for the personal representative of a trust, unless the instrument creating the trust provides otherwise, may with the consent of the personal representative of the trust, cause any securities or other property held by it to be registered in the name of a nominee or nominees of the independent trust company.

  (e) An independent trust company shall be liable for any loss occasioned by the acts of any of its nominees with respect to securities or other property registered under subsections (c) and (d) of this section.

  (f) No corporation or the registrar or transfer agent thereof shall be liable for registering or causing to be registered upon the books of the corporation any securities in the name of any nominee of an independent trust company or for transferring or causing to be transferred upon the books of the corporation any securities theretofore registered by the corporation in the name of any nominee of an independent trust company, as provided in this section, when the transfer is made on the authorization of the nominee.

  (g) In its discretion, and subject to provisions of subsection (h) of this section, an independent trust company may associate together for common investment the funds of individual trusts held by it whether created by order of court or otherwise, if the terms of the trust do not require a separate investment. Without limiting the generality of the foregoing, an independent trust company may collectively invest funds received or held as fiduciary as follows:

  (1) in a common trust fund maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as executor, administrator, guardian, or trustee under a will or deed;

  (2) in a fund consisting solely of assets of retirement, pension, profit sharing, stock bonus, or other trusts which are exempt from federal income taxation under the Internal Revenue Code; or

  (3) in a common trust fund, maintained by the independent trust company exclusively for the collective investment and reinvestment of monies contributed thereto by the independent trust company in its capacity as managing agent.

  (h) An independent trust company may create a trust investment account to which may be entrusted for investment the whole or any part of the funds of trust permissible to be associated as provided in subsection (g) of this section. Where an independent trust company which has established an associated trust investment account is the cotrustee of a trust permissible to be associated as provided in subsection (g) of this section, the whole or any part of the funds of the trust may be entrusted to that account for investment if all cotrustees of the trust consent thereto. An individual trust whose funds are thus associated shall at all times be the equitable owner of its pro rata share of the funds of the associated trust investment account and shall share pro rata the net income of that account and the net increase or decrease of its principal for any reason during the time its funds are a part of the associated trust investment account. The net income shall be distributed pro rata to the individual trust accounts at reasonable intervals. Funds of individual trusts transferred to that account or withdrawn therefrom shall be on the basis of the market value of the total funds of the account at the time being.

  (i) The board or similarly functioning unit of a limited liability company of an independent trust company is responsible for the proper exercise of fiduciary powers by the independent trust company and each matter pertinent to the exercise of fiduciary powers. The board shall adopt and follow written policies and procedures adequate to maintain its fiduciary activities in compliance with applicable law. The policies and procedures shall include, for the company and its directors, officers, managers, members, employees, and agents, methods for preventing conflicts of interest, self-dealing, and the improper use of material inside information in connection with any decision or recommendation made as a fiduciary. The written policies and procedures shall also prescribe the investment and disposition of property held in a fiduciary capacity. (Added 1997, No. 98 (Adj. Sess.), § 8b.)

• § 2410. Powers of the Commissioner

  (a) In addition to other powers conferred by this chapter, the Commissioner may:

  (1) Restrict the transaction of any trust account when the Commissioner finds that extraordinary circumstances make the restriction necessary for the proper protection of the trust customers of the independent trust company.

  (2) Order the holders of shares or other voting interest in an independent trust company to refrain from voting those shares or other voting interest on any matter if the Commissioner finds that the order is necessary to protect the company against reckless, incompetent, or careless management, safeguard the assets of trust customers, or prevent the wilful violation of this chapter or of any lawful order issued under it, and in such a case, the shares or other voting interest of such a holder shall not be counted in determining the existence of a quorum or a percentage of the outstanding shares or voting interest necessary to take any company action.

  (3) Order any person to cease violating this title or a lawful regulation issued under it or to cease engaging in any unsound trust or fiduciary practice.

  (4)(A) Impose a penalty of not more than $15,000.00 for each violation upon any independent trust company which, or any director, member, trustee, officer, manager, or employee of an independent trust company who:

  (i) knowingly violates this title or a lawful regulation or order issued under it; or

  (ii) has knowingly engaged or participated in any materially unsafe or unsound practice in connection with the independent trust company; or

  (iii) has knowingly committed or engaged in any act, omission, or practice which constitutes a breach of fiduciary duty to the independent trust company.

  (B) In determining the amount of a penalty assessed pursuant to this subsection, the Commissioner shall consider the following factors:

  (i) the appropriateness of the penalty with respect to the financial resources and good faith of the person or independent trust company charged;

  (ii) the gravity of the violation or practice;

  (iii) the history of previous violations or practices of a similar nature;

  (iv) the economic benefit derived by the person from the violation or practice; and

  (v) other factors as justice may require.

  (C) An independent trust company shall not indemnify a director, member, officer, manager or employee for a penalty imposed under this subsection.

  (5) Suspend or revoke the certificate of authority of an independent trust company if, after notice and opportunity for a hearing, the Commissioner determines that:

  (A) the independent trust company has failed or refused to comply with any law or regulation or an order issued pursuant to this title;

  (B) the application for certificate of authority contained a false representation or omission of a material fact; or

  (C) any officer or manager or agent of the independent trust company, in connection with an application for a certificate of authority, knowingly made a false representation of a material fact or failed to disclose a material fact to the Commissioner or the duly authorized agent of the Commissioner.

  (6)(A) Remove a director, member, trustee, officer, manager, or employee of an independent trust company who:

  (i) knowingly violates this title or a lawful regulation or an order issued under this title;

  (ii) is convicted of a crime involving dishonesty;

  (iii) has knowingly engaged or participated in any materially unsafe or unsound practice in connection with the independent trust company; or

  (iv) has knowingly committed or engaged in any act, omission, or practice which constitutes a breach of fiduciary duty to the independent trust company.

  (B) Provided further, with respect to the acts or omissions under subdivisions (A)(iii) and (iv) of this subdivision (5) that the Commissioner finds:

  (i) the independent trust company has suffered or probably will suffer substantial financial loss or other damage;

  (ii) the interest of its trust customers or accounts could be seriously prejudiced by such violation, practice or breach of fiduciary duty; or

  (iii) the director, member, trustee, officer, manager, or employee has received material financial gain by reason of such violation, practice or breach.

  (b) The Commissioner shall provide notice of any order proposed pursuant to this chapter and the grounds thereof by mail to the independent trust company and any affected director, member, trustee, officer, manager, or employee. The independent trust company or any person so served may, within 30 days of service on the independent trust company, request that a hearing be held by the Commissioner. The provisions of 3 V.S.A. chapter 25 shall govern any hearing held by the Commissioner under this chapter. The hearing shall be private unless the Commissioner determines that a public hearing is necessary to protect the public interest. If no hearing is requested, the proposed order shall become final 30 days after service on the independent trust company. If it is deemed necessary to assure the continued safety and soundness of the independent trust company, the Commissioner may order an immediate suspension of the certificate of authority of the independent trust company or, in the case of a removal, immediate suspension of the director, member, trustee, officer, manager, or employee pending completion of further administrative proceedings on removal pursuant to subdivision (a)(6) of this section.

  (c) It shall be a criminal offense, punishable by a fine of $1,000.00 or a year in prison, or both, for any person to violate this title, to violate any order of the Commissioner, or, after receipt of a removal order, or an order assessing a penalty, to perform any duty or exercise any power of any independent trust company until the penalty has been satisfied, or otherwise satisfactorily resolved between the parties, or the removal or penalty order is vacated by the Commissioner or by a court of competent jurisdiction. (Added 1997, No. 98 (Adj. Sess.), § 8b.)

• § 2411. Unsafe condition; receivership

  If the Commissioner finds a deficiency in capital or other unsafe or unsound condition of an independent trust company has not been remedied within the time prescribed under an order of the Commissioner issued pursuant to this chapter, the Commissioner may apply to the Superior Court in Washington County, to be appointed receiver for the liquidation or rehabilitation of the company. The expense of the receivership shall be paid out of the assets of the independent trust company. The provisions of subchapters 2, 3, and 4 of chapter 209 of this title shall apply to an independent trust company formed or regulated under this chapter as if the independent trust company were a financial institution to the extent applicable. (Added 1997, No. 98 (Adj. Sess.), § 8b; amended 1999, No. 153 (Adj. Sess.), § 22, eff. Jan. 1, 2001.)