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Code of Virginia
Title 6.2. Financial Institutions and Services
Chapter 10. Entities Conducting Trust Business
10/17/2021

Chapter 10. Entities Conducting Trust Business.

Article 1. Trust Powers and Trust Business.

§ 6.2-1000. Definitions.

As used in this chapter, unless the context requires otherwise:

"Affiliated trust company" means a trust company that is controlled by a trust company holding company.

"Trust business" means the holding out by a person or legal entity to the public at large by advertising, solicitation or other means that the person or legal entity is available to act as a fiduciary in the Commonwealth or is accepting and undertaking to perform the duties of a fiduciary in the regular course of its business. A person does not engage in trust business by:

1. Rendering services as an attorney at law in the performance of duties as a fiduciary;

2. Rendering services as a certified or registered public accountant in the performance of duties as such;

3. Acting as trustee under a deed of trust made only as security for the payment of money or for the performance of another act;

4. Acting as a trustee in bankruptcy or as a receiver;

5. 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;

6. Engaging in the business of an escrow agent;

7. Holding assets as trustee of a trust created for charitable purposes if:

a. The trustee is an entity exempt from federal income tax under § 501(c) (3) of the Internal Revenue Code; and

b. The trust is (i) exempt from federal income taxes under § 501(c) (3) of the Internal Revenue Code; (ii) a charitable remainder trust described in § 664 of the Internal Revenue Code; (iii) a pooled income fund described in § 642(c) (5) of the Internal Revenue Code; or (iv) a trust the charitable interest in which is either a guaranteed annuity or a fixed percentage distributed yearly of the fair market value of the trust property, described in § 2055(e) (2) (B) or § 2522(c) (2) (B) of the Internal Revenue Code;

8. Receiving rents and proceeds of sale as a licensed real estate broker on behalf of the principal; or

9. Engaging in securities transactions as a broker-dealer or salesman.

"Trust company" means a corporation, including an affiliated trust company, that is authorized to engage in the trust business under Article 2 (§ 6.2-1013 et seq.) of this chapter, the powers of which are expressly restricted to the conduct of trust business.

"Trust company holding company" means a corporation that controls a trust company. A trust company holding company shall not be deemed a financial institution holding company for any purpose under this title unless it controls a financial institution other than an affiliated trust company or another financial institution holding company.

"Trust institution" means any (i) bank authorized to engage in the trust business, (ii) trust company, or (iii) trust subsidiary.

"Trust subsidiary" or "subsidiary trust company" means a corporation organized under Chapter 9 (§ 13.1-601 et seq.) of Title 13.1, or an association organized under the National Banking Act with its main office located in the Commonwealth, that is authorized to transact trust business and business incidental thereto, but not to accept deposits except as incidental to such trust business.

1974, c. 286, § 6.1-32.2; 1991, c. 282; 1993, c. 432, §§ 6.1-32.11, 6.1-32.12; 1994, c. 524; 1995, c. 140; 1997, c. 801; 2001, c. 717; 2004, c. 781; 2010, c. 794.

§ 6.2-1001. Entities authorized to engage in trust business.

A. No entities, except (i) corporations duly chartered and already conducting trust business in the Commonwealth under authority of the laws of the Commonwealth or the United States, (ii) banks hereafter incorporated under the laws of the Commonwealth that are authorized to engage in the trust business through a separate trust department pursuant to Article 3 (§ 6.2-819 et seq.) of Chapter 8, (iii) corporations authorized to engage in the trust business in the Commonwealth under the banking laws of the United States, including any national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067, (iv) trust companies authorized to establish and operate one or more trust offices or engage in trust business in the Commonwealth under Article 2 (§ 6.2-1013 et seq.), (v) trust subsidiaries authorized to engage in trust business under Article 3 (§ 6.2-1047 et seq.), (vi) multistate trust institutions authorized to engage in trust business under Article 4 (§ 6.2-1065 et seq.), (vii) private trust companies authorized to engage in trust business under Article 5 (§ 6.2-1074 et seq.), or (viii) savings institutions authorized to engage in the trust business pursuant to Article 6 (§ 6.2-1081 et seq.), shall engage in the trust business in the Commonwealth. No foreign corporation, except as permitted in Chapter 7 (§ 6.2-700 et seq.), shall engage in trust business in the Commonwealth.

B. Nothing in this chapter shall prevent:

1. A natural person from qualifying and acting as trustee, personal representative, guardian, conservator, committee, or in any other fiduciary capacity;

2. Any person from (i) lending money on real estate and personal security or collateral, (ii) guaranteeing the payment of bonds, notes, bills and other obligations, or (iii) purchasing or selling stocks and bonds;

3. Any bank or trust company organized under the laws of the Commonwealth from qualifying and acting in another state as trustee, personal representative, guardian of a minor, conservator, or committee or in any other fiduciary capacity, when permitted so to do by the laws of such other state; or

4. An incorporated association that is authorized to sell burial association group life insurance certificates in the Commonwealth, as described in the definition of limited burial insurance authority in § 38.2-1800, the principal purpose of which is to assist its members in (i) financial planning for their funerals and burials and (ii) obtaining insurance for the payment, in whole or in part, for funeral, burial, and related expenses, from serving as trustee of a trust established pursuant to § 54.1-2822.

C. Nothing in this section shall be construed:

1. To prevent any bank or trust company organized in the Commonwealth and chartered under the laws of the United States from transacting business in the Commonwealth; or

2. To prevent a real estate broker as defined in § 54.1-2100 from owning or operating a bank provided that the requirements of this chapter are met.

D. Except as permitted by this chapter or by Article 3 (§ 6.2-819 et seq.) of Chapter 8, or by federal law in the case of a national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067, no entity shall qualify or act (i) as a personal representative of a deceased person; (ii) as a guardian for an infant or an incapacitated person; (iii) as a committee; (iv) as a conservator for an incapacitated person; (v) as a testamentary trustee, or trustee for any other trust if required by law to account to the commissioner of accounts of a circuit court in the Commonwealth; or (vi) in any other fiduciary capacity required to account to the commissioner of accounts of a circuit court in the Commonwealth.

Code 1950, § 6-9; 1966, c. 584, § 6.1-5; 1974, c. 286, § 6.1-32.5; 1985, c. 544; 1995, c. 301; 1997, c. 801; 1999, c. 835; 2003, cc. 536, 558, 910; 2007, c. 621; 2010, c. 794; 2011, c. 67; 2012, c. 608.

§ 6.2-1002. Powers of trust institutions.

A. All banks that are authorized to do a trust business and all trust companies shall have the following rights, powers, and privileges, and shall be subject to the following regulations and restrictions:

1. To act as agent for any person, corporation, municipality, or state, for the collection or disbursement of interest, or income or principal of securities;

2. To act as the fiscal or transfer agent of any state, municipality, or body politic or corporate, and in such capacity to receive and disburse money; to transfer, register, and countersign certificates of stock, bonds, or other evidences of indebtedness;

3. To act as agent of any corporation, foreign or domestic, for any lawful purpose;

4. To act as trustee under any mortgage or bond issued by an individual, municipality, or body politic or corporate, and to accept and execute any other municipal or corporate trust not inconsistent with the laws of the Commonwealth;

5. To act as guardian, receiver, or trustee of the estate of any minor and as depository of any money paid into court, whether for the benefit of any minor or other person;

6. To take, accept, and execute any and all such lawful trusts, duties, and powers in regard to the holding and management and disposition of any estate, real and personal, and the rents and profits thereof, or the sale or lease thereof, as may be granted or confided to it by any circuit court, judge, or clerk, or by any person, corporation, municipality, or other authority, and it shall be accountable to all parties in interest for the faithful discharge of every such trust, duty, or power which it may so accept;

7. To take, accept, and execute any and all such trusts and powers, of whatever nature and description, as may be conferred upon or entrusted or committed to it by any person, including any body politic or corporate or other authority, by grant, assignment, transfer, devise, bequest, or otherwise or as may be entrusted or committed or transferred to it or vested in it by order of any circuit court, judge, or clerk, and to receive and hold any property or estate, real or personal, which may be the subject of any such trust; and

8. To act as:

a. Executor under the last will and testament or administrator of the estate of any deceased person, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such deceased person;

b. Guardian of the person or of the estate of any infant, guardian or conservator of any incapacitated person, habitual drunkard, or person who by reason of advanced age or impaired health or physical disability has become mentally or physically incapable of taking proper care of his person or properly handling and managing his estate, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such person; or

c. Trustee or committee for any convict in the penitentiary, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such person.

B. Nothing in this section shall ever be construed as authorizing the creation of a trust not lawful as between individuals nor to prohibit the deposit of funds by court and fiduciaries in banks of deposit and discount and savings banks.

C. Every trust company doing business in the Commonwealth is authorized temporarily to suspend its usual business during a period of actual or threatened enemy attack, civil insurrection, or riot, affecting the community in which such institution is doing business or other emergency justifying temporary closing, such as fire, flood, or hurricane.

Code 1950, §§ 6-30, 6-94, 6-104; 1966, c. 584, §§ 6.1-12, 6.1-17; 1970, c. 15; 1974, c. 286, § 6.1-32.10; 1984, c. 172; 1993, c. 432; 1997, c. 801; 2010, c. 794.

§ 6.2-1003. When security not required; payment of probate taxes and fees.

A. No bank or trust company with a minimum unimpaired capital stock of $50,000 or more shall be required by any officer or court of the Commonwealth to (i) give security upon appointment to or acceptance of any office of trust which it may, by law, be authorized to execute or (ii) give security upon any bond given pursuant to § 19.2-386.6 or similar statute; however, no bank or trust company shall qualify on an estate having a value in excess of its combined unimpaired capital and surplus without giving bond for such excess.

B. When such bank or trust company shall qualify on any office of trust, the clerk in lieu of collecting the fees under Title 17.1 and probate taxes may render a bill or statement to the bank or trust company to be paid within five business days.

Code 1950, § 6-95; 1966, c. 584, § 6.1-18; 1988, c. 348; 1993, c. 866; 2010, c. 794; 2012, cc. 283, 756.

§ 6.2-1004. Who may take oath for corporate fiduciary.

In all cases where any trust institution shall be appointed to act as trustee, executor, or administrator of any estate or guardian for any infant, or in any other fiduciary capacity, it shall be lawful for any officer of the trust institution to take and subscribe for the institution any and all oaths required to be taken or subscribed by such executor, administrator, trustee, guardian, or other fiduciary.

Code 1950, § 6-96; 1966, c. 584, § 6.1-19; 1974, c. 665; 2010, c. 794.

§ 6.2-1005. Deposit or other use of trust funds.

A. Funds received or held in the trust department of a bank or by a trust company awaiting investment or distribution shall not be used by the bank or trust company in the conduct of its business.

B. Notwithstanding subsection A, such funds may be deposited by a bank in its commercial or savings department to the credit of its trust department, if the bank first delivers to the trust department, as collateral security therefor, securities of any of the following classes:

1. Bonds, notes, or certificates of indebtedness of the United States;

2. Other readily marketable securities of the classes in which fiduciaries are authorized or permitted to invest trust funds, as set forth in § 64.2-1502; or

3. Other readily marketable bonds, notes, or debentures, commonly known as investment securities, meeting the following requirements:

a. That the issue be of a sufficiently large total to make marketability possible;

b. Such a public distribution of the securities must have been provided for or made in a manner to protect or insure the marketability of the issue; and

c. That the trust agreement under which the security is issued provides for a trustee independent of the obligor, which trustee must be a trust institution.

C. The securities deposited as collateral pursuant to subsection B shall be owned by the bank and shall at all times be at least equal in market value to the amount of trust funds so used in the conduct of the business of the bank less such amount thereof as shall be insured by the Federal Deposit Insurance Corporation under existing or future federal law.

D. In the event of the failure or liquidation of such bank, the owners of the funds held in trust for investment shall have a lien on the bonds or other securities so set apart in addition to their claim against the estate of the bank.

Code 1950, § 6-99; 1966, c. 584, § 6.1-21; 1992, c. 810; 1993, c. 432; 1994, c. 7; 2010, c. 794.

§ 6.2-1006. Custody of trust securities to be kept separate; federal securities and obligations.

A. The securities and investments held in each trust shall be kept separate and distinct from the securities owned by the trust institution. The trust institution shall at all times show upon its trust records the interests of each separate fiduciary account and trust in each particular security or investment held by it in a fiduciary capacity. Trust securities and investments shall be placed in the joint custody or control of two or more officers or other employees designated by the board of directors of the trust institution. Such joint custody shall be interpreted to mean that neither of such officers or employees shall have access alone at any time to such securities and investments. All such officers and employees shall be bonded.

B. Securities and obligations of the United States and of agencies of the United States government may be held for the account of the trust institution by a Federal Reserve Bank in a book-entry custody account, without the requirement of the trust institution having physical possession of such securities, provided at all times that the records of the Federal Reserve Bank and the trust institution shall at all times identify separately those securities held for the account of the trust institution and those held by the trust institution in a fiduciary capacity.

Code 1950, § 6-100; 1966, c. 584, § 6.1-22; 1968, c. 59; 1974, cc. 75, 665; 2010, c. 794.

§ 6.2-1007. Investment of trust funds.

A. Funds received or held by a trust institution awaiting investment or distribution shall be invested or distributed as soon as practicable and shall not be held uninvested by the trust institution any longer than is reasonably necessary.

B. If the instrument creating the trust does not specify the character or class of investments to be made, and does not expressly grant to the trust institution, its officers or directors discretion in the matter of investments, funds held in trust shall be invested in any securities in which corporate or individual fiduciaries may lawfully invest.

C. If the instrument under which a trust institution is serving as fiduciary or cofiduciary does authorize it to retain:

1. Its own stock or securities, it shall be authorized to retain in like manner the stock or securities of a bank holding company of which it is a subsidiary; or

2. The stock or securities of a bank or trust company to the business of which the fiduciary has succeeded, or the stock or securities of a bank or trust company which has become a subsidiary of a bank holding company, such fiduciary shall be authorized in like manner to retain the stock of the successor bank or trust company or bank holding company.

Code 1950, §§ 6-98, 6-101; 1966, c. 584, § 6.1-23; 1972, c. 740; 1974, c. 665; 1993, c. 432; 2010, c. 794.

§ 6.2-1008. Dealings with self or affiliates.

A. No trust institution shall buy any property for a trust or estate from itself, or a department or branch thereof, or from an affiliate or subsidiary corporation, or from a director, officer, or employee of such trust institution. Any such purchase shall be voidable at the election of any beneficiary or successor trustee, unless (i) approved by an appropriate court, (ii) consented to by all beneficiaries after full and fair disclosure, (iii) authorized by the instrument creating the fiduciary relationship, or (iv) permitted by ruling of the Commissioner.

B. A sale of any trust or fiduciary property by a trust institution to itself, or a department or branch of such trust institution, or to an affiliate or subsidiary corporation, or to a director, officer, or employee of such trust institution, except as (i) approved by an appropriate court, (ii) consented to by all beneficiaries after full and fair disclosure, (iii) authorized by the instrument creating the fiduciary relationship, or (iv) permitted by ruling of the Commissioner, shall be a breach of trust and voidable at the election of any beneficiary or successor trustee.

C. Notwithstanding the provisions of subsections A and B, a trust institution, as fiduciary of one estate or trust, may buy or sell from or to itself, as fiduciary of another estate or trust, assets which at the time of sale are permissible fiduciary investments under Part A (§ 64.2-1200 et seq.) of Subtitle IV of Title 64.2, if the transaction is fair to both estates or trusts and is not prohibited by the terms of any instrument under which the fiduciary is acting.

Code 1950, § 6-102; 1966, c. 584, § 6.1-24; 1974, c. 665; 1991, c. 252; 2010, c. 794.

§ 6.2-1009. Common trust and collective investment funds.

A. As used in this section:

"Common trust fund" means a common trust fund described under § 584 of the Internal Revenue Code of 1986, as amended, as well as any other type of collective investment fund that is exempt from federal income taxation under any other provision of the Internal Revenue Code or regulations issued pursuant thereto.

"Maintaining bank" means a trust institution that establishes and maintains a common trust fund for the collective investment of qualified employee benefit trusts or funds held in a fiduciary capacity by it, including agency accounts under which the institution exercises investment discretion and assumes fiduciary responsibilities.

"Participating bank" means a trust institution duly authorized to act as a fiduciary, wherever located, that is owned, controlled by, or affiliated with (i) a maintaining bank or (ii) a bank holding company that also owns, controls, or is affiliated with a maintaining bank.

B. Any trust institution may establish and maintain one or more common trust funds for the collective investment of qualified employee benefit trusts or funds held in a fiduciary capacity by it, including agency accounts under which the institution exercises investment discretion and assumes fiduciary responsibilities.

C. The maintaining bank may include, for the purposes of collective investment in a common trust fund or funds established and maintained by it, funds held in a fiduciary capacity by any participating bank.

D. A maintaining bank may invest the funds held by it in any fiduciary capacity in one or more common trust funds, provided (i) such investment is not prohibited by the instrument, judgment, decree, or order creating such fiduciary relationship or amendment thereof; (ii) in the case of co-fiduciaries the written consent of the co-fiduciary is obtained by the maintaining bank; and (iii) the maintaining bank has no interest in the assets of the common trust fund other than as a fiduciary.

E. Unless ordered by an appropriate court, the maintaining bank operating a common trust fund shall not be required to render a court accounting with regard to such fund; but, by application to an appropriate court, it may secure approval of such an accounting on such conditions as the court may establish. This section shall not affect the duties of the trustees of the participating trusts under the common trust fund to render accounts of their several trusts.

F. All common trust funds shall be operated in conformity with the regulations issued from time to time by the Commission, which regulations shall conform substantially to the regulations of the Comptroller of the Currency governing the operations of common trust funds.

1983, c. 454, §§ 6.1-30.1, 6.1-30.2, 6.1-30.3; 1984, c. 299; 2010, c. 794.

§ 6.2-1010. Holding stock or other securities as fiduciary.

A. A trust institution holding stock or other securities as fiduciary may hold it in the name of a nominee without mention of the trust in the stock certificate or stock registry book or other book in which such securities are registered. A fiduciary registering stock or other securities in the name of a nominee as herein permitted, shall (i) clearly show upon its trust records the ownership of the stock or other securities by the fiduciary and the facts regarding its holding and (ii) provide that the nominee shall not have possession of the stock certificate or other securities nor access thereto except under the immediate supervision of the fiduciary. The fiduciary shall be personally liable for any loss to the trust resulting from any act of such nominee in connection with stock or other securities so held. Any individual serving as cofiduciary with a trust institution may consent to the trust institution holding such stock or other securities in the name of a nominee as herein provided; however, in such case the trust institution shall forthwith upon demand of the individual cofiduciary cause the stock or other securities to be transferred into the name of the fiduciaries in their fiduciary capacity.

B. Notwithstanding the provision relating to possession of the nominee, the trust institution may permit such certificates or other securities to remain in the possession of the nominee or a clearing corporation as defined in § 8.8A-102, within or without the Commonwealth, if the trust institution obtains adequate protection, through insurance or otherwise, against loss of such certificates or securities due to lack of possession by the fiduciary or possession thereof by the nominee or a clearing corporation.

C. The Commissioner or other appropriate regulatory official may review in advance and approve the protection through insurance or otherwise against loss due to lack of possession of these certificates or securities by the fiduciary.

Code 1950, § 6-103.1; 1958, c. 283; 1966, c. 584, § 6.1-31; 1972, c. 739; 1974, c. 665; 1978, c. 14; 2010, c. 794.

§ 6.2-1011. Voting of bank shares held by trust institution as fiduciary; when disqualified.

A. As used in this section, "banking corporation" includes a bank or a corporation or company that is a bank holding company under 12 U.S.C. § 1841, as amended from time to time.

B. When shares of a national banking association or of a banking corporation organized under the laws of the Commonwealth or another state are held by a trust institution that is serving as a personal representative of a decedent, trustee, guardian of any infant, agent or in any other fiduciary capacity, the trust institution may not (i) vote or participate in the voting of any voting securities of such bank if the securities held in such fiduciary capacity, together with all the other voting securities of such bank held in a fiduciary capacity, exceed 25 percent of the outstanding voting securities of such bank or (ii) vote such voting securities, if the voting securities of such bank held as a personal representative of the decedent, together with all other voting securities of such bank held in a fiduciary capacity, exceed five percent, unless there has been a determination by the Board of Governors of the Federal Reserve System that the right to vote five percent or more of the voting securities but less than 25 percent thereof does not constitute control of that bank.

C. If there is any personal representative, trustee, guardian of any infant, or other fiduciary in addition to the trust institution in such fiduciary capacity, the other fiduciary, if not a director, officer, or employee of the trust institution, may vote such shares. If the trust institution is the sole fiduciary, or if the trust institution is serving along with a director, officer, or employee of the trust institution, it may petition the court, as provided in subsection D, for the appointment of a cofiduciary for the sole purpose of voting such bank shares.

D. When a trust institution has qualified or is serving under the laws of the Commonwealth as personal representative of a decedent, trustee, guardian of any infant, or in any other fiduciary capacity, and in such estate or trust, there are shares of stock of a national banking association or a banking corporation organized under the laws of the Commonwealth or another state, and the trust institution is disqualified under subsection B from voting such shares, the trust institution or any interested party may petition the court in which the institution qualified or is capable to qualify to appoint a cofiduciary for the sole purpose of voting the shares of the banking association or banking corporation held by the estate or trust, which the trust institution is disqualified from voting. The appointment and qualification may be ex parte, and no prior notice to the beneficiary shall be required. The court at the time of such qualification may relieve the cofiduciary of any obligation for the giving of surety on his bond, and if the appointment of the cofiduciary is limited to voting of the bank stock, such order may provide that the cofiduciary shall not be liable or accountable as a fiduciary in the administration of such estate or trust except for the breach of any fiduciary duty in voting or failing to vote such bank stock. No director, officer, or employee of a trust institution shall be eligible to be named cofiduciary under the provisions of this subsection.

1972, c. 203, §§ 6.1-31.1, 6.1-31.2; 1974, c. 665; 2010, c. 794.

§ 6.2-1012. Suspension or prohibition of trust institutions.

The Commission may prohibit or suspend from engaging in trust business any (i) trust company that fails to comply with any of the provisions of § 6.2-1005, 6.2-1006, or 6.2-1008; (ii) bank doing a trust business that fails to comply with any of the provisions of § 6.2-821, 6.2-1005, 6.2-1006, or 6.2-1008; or (iii) trust subsidiary that fails to comply with the provisions of § 6.2-1006 or 6.2-1008.

Code 1950, § 6-103; 1966, c. 584, § 6.1-32; 1974, c. 665; 2010, c. 794.

Article 2. Trust Companies.

§ 6.2-1013. Definitions.

As used in this article, unless the context requires a different meaning:

"Agent" has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act (§ 13.1-501 et seq.).

"Broker-dealer" has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act.

"Control" means (i) ownership by a person of 25 percent or more of the voting stock of a trust company; (ii) control as defined in the Bank Holding Company Act of 1956 (12 U.S.C. § 1841 et seq.); or (iii) as determined by the Commission, the exercise of a controlling influence over the management and policies of a trust company.

"Fiduciary" means executor, administrator, conservator, guardian of a minor, committee, or trustee.

"Investment advisor" has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act.

"Investment advisor representative" has the meaning assigned to it in § 13.1-501 of the Virginia Securities Act.

"Investment company" has the meaning assigned to it in the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.).

"Operating plan" means a plan submitted by an applicant for a certificate of authority, which plan establishes the policies and procedures a trust company will have in effect when the institution opens for business and thereafter (i) to avoid or resolve conflicts of interests, (ii) to prevent improper influences from affecting the actions of the trustee, (iii) to ensure that trust accounts are handled in accordance with recognized standards of fiduciary conduct, and (iv) to assure compliance with applicable laws and regulations.

"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in a nonstock corporation or a limited liability company.

1993, c. 432, § 6.1-32.11; 1994, c. 524; 1995, c. 140; 1997, c. 801; 2004, c. 781; 2010, c. 794.

§ 6.2-1014. Certificate required.

No person shall engage in the trust business without first obtaining a certificate of authority from the Commission; however, a bank or savings institution authorized under state or federal laws to engage in the trust business or a trust subsidiary, including a national bank or federal savings bank described in clause (ii) of subsection B of § 6.2-1067, may engage in such business to the extent permitted by law without obtaining a certificate under this article.

1993, c. 432, § 6.1-32.13; 2010, c. 794; 2011, c. 67; 2012, c. 608.

§ 6.2-1015. Application for certificate; fee.

A. An application for a certificate shall (i) be in writing, in such form as the Commission prescribes, (ii) be verified under oath, (iii) be supported by such information, data, and records as the Commission may require, and (iv) include an operating plan.

B. Each application for a certificate of authority shall be accompanied by an investigation fee of $10,000.

1993, c. 432, § 6.1-32.14; 1995, c. 140; 2010, c. 794.

§ 6.2-1016. Bond required.

A. No applicant shall obtain a certificate without filing with the Commission, and maintaining continuously thereafter, a surety bond in such amount as the Commission may from time to time require.

B. In no event shall the amount of the surety bond be less than $1 million.

C. The surety bond required by this section shall be for the benefit of:

1. Any person damaged as a result of a violation of the provisions of, or any regulation adopted pursuant to, this chapter;

2. Any person damaged by the negligence, fraud, or embezzlement of a trust company organized under this article or its directors, officers, or employees; and

3. Any person damaged by any other breach of trust of any trust company organized under this article or its directors, officers, or employees.

D. The Commission may revoke the certificate of any trust company that the Commission finds has failed to maintain a bond as required by this section.

1993, c. 432, § 6.1-32.17; 2010, c. 794.

§ 6.2-1017. Procedure for granting or denying certificate.

Before any trust company shall begin business, it shall obtain from the Commission a certificate of authority authorizing it to do so. Prior to the issuance of such a certificate to a trust company or affiliated trust company, the Commission shall ascertain that:

1. All of the provisions of law have been complied with;

2. The applicant is formed as a trust company for no other reason than to engage in legitimate trust business;

3. Financially responsible persons have subscribed for capital stock, surplus, and a reserve for operation in an amount deemed by the Commission to be sufficient to warrant successful operation, but the capital stock shall not be less than $500,000;

4. Each principal of an applicant has the financial responsibility, character, reputation, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law;

5. Oaths of all the directors have been taken and filed in accordance with § 6.2-1029;

6. The moral fitness, financial responsibility, and business qualifications of those named as officers and directors of the applicant are such as to command the confidence of the community in which the trust company is proposed to be located;

7. If the applicant is an affiliated trust company, the trust company holding company of the applicant is qualified by virtue of its business record, experience, and financial responsibility to control a trust company;

8. In its opinion, the public interest will be served by the formation of a trust company in the community where it is proposed. Authorizing the applicant to engage in the trust business as a trust company shall be deemed in the public interest if, based on all relevant evidence and information, advantages such as, but not limited to, increased competition, additional convenience, or gains in efficiency outweigh possible adverse effects such as, but not limited to, diminished or unfair competition, undue concentration of resources, conflicts of interests, or unsafe or unsound practices;

9. The operating plan and any other relevant evidence and information warrant belief that the applicant will conduct its business in accordance with generally accepted fiduciary standards;

10. The applicant has provided a bond as required by § 6.2-1016;

11. The applicant is not in violation of § 6.2-1021; and

12. Anything else deemed pertinent.

1993, c. 432, § 6.1-32.18; 1994, c. 524; 1995, c. 140; 2010, c. 794.

§ 6.2-1018. Minimum capital; state of incorporation; form of entity.

A certificate shall not be issued under § 6.2-1017 to an applicant:

1. Unless it meets the minimum capital requirement for a trust company prescribed by § 6.2-1017; and

2. That is not a corporation organized under the laws of the Commonwealth.

1993, c. 432, §§ 6.1-32.15, 6.1-32.16; 1994, c. 7; 2010, c. 794.

§ 6.2-1019. Issuance of shares; subscriptions to stock; stock option plans.

A. A trust company shall not issue no-par stock. The stock of a trust company shall be paid for in money at not less than par value, and a trust company shall not begin business until it has received payment in full of the amounts of initial capital specified in its certificate of authority.

B. Money received for subscriptions to or purchases of stock of a trust company before it opens for business shall be deposited in escrow in one or more insured financial institutions or invested in United States government obligations. Such funds shall be under the joint control of at least two organizing directors of the trust company, each of whom shall be bonded for an amount not less than the total amount of money under their control. Such funds, together with any income thereon, less such organizational expenses as have been approved by the trust company's board of directors, shall be remitted to the trust company on the day it opens for business.

C. If the trust company is denied a certificate of authority, or it is otherwise determined that the trust company will not open for business, such funds, after payment of any amount owing for expenses in connection with such attempted organization, including reasonable consulting fees, attorney fees, salaries, filing fees, and other expenses, shall be refunded to subscribers or shareholders. The directors of the trust company, individually, jointly, and severally, shall be liable for any failure of the trust company to refund such funds to the subscribers or shareholders. This liability may be enforced by a suit in equity instituted by one or more of the subscribers or stockholders on behalf of all subscribers or stockholders against the trust company and one or more of its directors.

D. The requirement that capital stock be paid for in money shall not be construed to prohibit the establishment, as otherwise authorized by law, of stock option plans and stock purchase plans, or the issuance of stock pursuant to such plans. Such plans shall be established only after the trust company has opened for business and shall be approved by the shareholders of the company in accordance with applicable provisions of the Virginia Stock Corporation Act (§ 13.1-601 et seq.).

1994, c. 5, § 6.1-32.18:1; 2010, c. 794.

§ 6.2-1020. Certain transactions by affiliated trust companies prohibited.

An affiliated trust company shall not:

1. During the underwriting period, purchase from an affiliated broker-dealer, for any trust account or for its own account, any security that is being underwritten by that broker-dealer; or

2. Purchase for any trust account or for its own account any security that is issued by a company that owns five percent or more of the capital stock of, or is affiliated with, the affiliated trust company.

1994, c. 524, § 6.1-32.14:2; 1995, c. 140; 2010, c. 794.

§ 6.2-1021. Commissions or fees for sale of stock not permitted.

The Commission shall not issue a certificate of authority to a trust company if any commissions, fees, brokerage, or other compensation by whatever name have been paid or contracted to be paid by the trust company, or by anyone in its behalf, directly or indirectly, to any person for the sale of stock in such trust company. Nothing herein shall be construed to prohibit a trust company that has been issued a certificate of authority and is conducting operations from paying or contracting to pay such commissions or fees in connection with the issue or reissue of shares of stock of the trust company.

1994, c. 5, § 6.1-32.18:2; 2010, c. 794.

§ 6.2-1022. Reacquisition of shares; dividends.

A. A trust company may not purchase, redeem or otherwise reacquire shares of stock it has issued, except that the Commission, upon the petition of a trust company, may permit the company to reacquire its own stock if the Commission finds that the proposed reacquisition will not jeopardize the safety and soundness of the trust company and will not be contrary to the public interest.

B. The board of directors of any trust company may declare a dividend of so much as it finds expedient of the net undivided profits of the trust company, after providing for all expenses, losses, interest, and taxes owed by the trust company. However, before any dividend is declared, capital funds originally paid in shall have been restored by earnings to their initial level, and no dividend shall be declared or paid by the trust company that would impair the paid-in capital of the trust company. Notwithstanding the foregoing provisions of this section, the Commission may limit the payment of dividends by a trust company when it is determined that the limitation is in the public interest and is necessary to ensure the financial soundness of the trust company.

1994, c. 5, § 6.1-32.18:3; 2010, c. 794.

§ 6.2-1023. Acquisition of stock; application.

A. Except as provided in this section, no person shall acquire, directly or indirectly, 10 percent or more of the voting shares of a trust company unless such person first:

1. Files an application with the Commission in such form as the Commission may prescribe;

2. Delivers such other information to the Commission as the Commission may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, and principals and of any proposed new directors, senior officers, and principals of the trust company; and

3. Pays such application fee as the Commission may prescribe.

B. Upon the filing and investigation of an application, the Commission shall permit the acquisition, subject to § 6.2-1024, if it finds that the applicant and (i) its members if applicable, (ii) its directors, senior officers, and principals, and (iii) any proposed new directors, senior officers, and principals, have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application, accompanied by the required fee, is filed, unless the period is extended by order of the Commission reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.

C. The foregoing provisions of this section shall not apply to a person owning 51 percent or more of the capital stock of the trust company at the time of the proposed acquisition; however, such person shall give the Commission 30 days advance written notice of the proposed acquisition and provide such additional information as the Commission may require.

1993, c. 432, § 6.1-32.19; 1995, c. 140; 2004, c. 781; 2010, c. 794.

§ 6.2-1024. Restrictions on control, officers and directors.

A. None of the following individuals or entities shall acquire control of any trust company under § 6.2-1023:

1. An agent;

2. A broker-dealer;

3. An investment advisor;

4. An investment advisor representative;

5. An investment company; or

6. Any corporation, limited liability company, partnership, business trust, association, or similar organization.

B. Nothing in this section shall prohibit (i) the formation of a trust company holding company by a trust company, (ii) any officer, director, or employee of a trust company holding company or a subsidiary of a trust company holding company from owning, indirectly, five percent or more of any class of capital stock of an affiliated trust company, or (iii) the acquisition of a trust company pursuant to § 6.2-1023 by a bank holding company as defined in 12 U.S.C. § 1841 or by a corporation that controls a subsidiary authorized to engage in the trust business under federal law or the laws of any state.

1993, c. 432, § 6.1-32.20; 1994, c. 524; 1995, c. 140; 2004, c. 781; 2010, c. 794.

§ 6.2-1025. Report to Commission of election of director.

Within 60 days following the election or reelection of any person as a director of a trust company, the trust company shall furnish such information to the Commission relative to his personal character, integrity, financial condition, and personal and business background as the Commission shall from time to time prescribe. Such report, under oath, shall be signed by the director as well as a designated officer of the trust company. Any person knowingly making a false statement in such a report is guilty of perjury.

1968, c. 606, § 6.1-48.1; 1974, c. 665, § 6.1-51.1; 1992, c. 552; 1994, c. 105; 2010, c. 794.

§ 6.2-1026. Removal of director or officer; appeals; penalty.

A. Whenever any director or officer of a trust company doing business in the Commonwealth, shall have continued to violate any law relating to such trust company or shall have continued unsafe or unsound practices in conducting the business of such trust company, after the director or officer, and the board of directors of the trust company of which he is a director or officer, have been warned in writing by the Commissioner to discontinue such violation of law or such unsafe or unsound practices, the Commissioner shall certify the facts to the Commission. The Commission shall thereupon enter an order requiring such director or officer to appear before the Commission, within not less than 10 days, to show cause why he should not be removed from office and thereafter restrained from participating in any manner in the management of such trust company. Such order shall contain a brief statement of the facts certified to the Commission by the Commissioner. A copy of such order shall be served upon such director or officer, and a copy thereof shall be sent by registered mail to each director of the trust company affected.

B. If, after granting the accused director or officer a reasonable opportunity to be heard, the Commission shall find that he has continued to violate any law relating to such trust company, or has continued unsafe or unsound practices in conducting the business of such trust company, after he and the board of directors of the trust company of which he is a director or officer have been warned in writing by the Commissioner to discontinue such violation of law or unsafe or unsound practices, the Commission shall enter an order removing such director or officer from office and restraining such director or officer from thereafter participating in any manner in the management of such trust company. A copy of such order shall be served upon such director or officer. A copy of such order shall also be served upon the trust company of which he is a director or officer. Upon such removal the director or officer shall cease to be a director or officer of such trust company and thereafter cease to participate in any manner in the management of such trust company.

C. Any director or officer aggrieved (i) by any order of the Commission entered under subsection B or (ii) by an order refusing to remove another director or officer from office or to restrain him from participating in the management of the trust company, shall have, of right, an appeal to the Supreme Court of Virginia within 60 days from the date of the order.

D. Any director or officer removed or restrained under the provisions of subsection B from participating in any manner in the management of any trust company of which he is a director or officer, and who thereafter participates in any manner in the management of such trust company except as a stockholder therein, is guilty of a Class 6 felony.

Code 1950, §§ 6-40, 6-41, 6-42; 1966, c. 584, §§ 6.1-49, 6.1-50, 6.1-51; 1974, c. 665, § 6.1-51.1; 1979, c. 58; 1992, c. 136; 2010, c. 794.

§ 6.2-1027. Bonds required of officers and employees; blanket bond.

A. The board of directors of every trust company shall require bonds from all of the active officials and employees of such corporation. In lieu of such bonds, the board may obtain one or more blanket bonds. The surety on every bond shall be a bonding or surety company authorized to transact business in Virginia, and the penalty of any such bond shall be increased whenever in the opinion of the Commission it is necessary for the protection of the public interest.

B. If a trust company is unable to obtain the bond required by this section, it shall immediately notify the Commission. The Commission may then direct the trust company to have an audit performed at its expense by an independent certified public accounting firm. The trust company shall obtain blanket bond coverage as soon as such coverage is available. Failure to obtain blanket bond coverage may be cause for action by the Commission as provided by § 6.2-1036.

Code 1950, § 6-46; 1966, c. 584, § 6.1-54; 1974, c. 665; 1979, c. 52; 1992, c. 365; 2010, c. 794.

§ 6.2-1028. Offices.

A. When satisfied that the public interest, as defined in subdivision 8 of § 6.2-1017, will be served, the Commission may authorize:

1. A trust company having paid-up and unimpaired capital and surplus in an amount deemed sufficient to warrant expansion to establish additional offices; and

2. The relocation of any office.

B. The office at which a trust company begins business shall be designated initially as its principal office. The board of directors of a trust company may thereafter redesignate as the principal office another authorized office of the trust company in the Commonwealth. The trust company shall notify the Commission of any such redesignation not later than 30 days before its effective date and shall confirm to the Commission any redesignation within 10 days of its occurrence.

1993, c. 432, § 6.1-32.21; 1997, c. 51; 2010, c. 794.

§ 6.2-1029. Directors.

A. The affairs of every trust company shall be directed by a board of directors. The board shall consist of not less than five nor more than 25 individuals. A majority of the directors shall be citizens of the Commonwealth.

B. Every director of a trust company shall be the sole owner, and have in his personal possession or control shares, of stock of such trust company having a book value of not less than $2,000 and, within 30 days of election, shall take an oath that he will diligently and honestly perform his duties as a director and that he is the sole owner and has in his possession or control the required amount of stock, unencumbered in any way. When a director is reelected or reappointed, he shall take an oath certifying his ownership and control of the required amount of unencumbered stock throughout his previous term.

C. Any director who (i) fails, for a period of 30 days, to take the oath or (ii) does not comply with the requirement for ownership of stock, both as required by subsection B, shall automatically forfeit his office.

D. Within 60 days following the election or reelection of any individual as a director of a trust company, the trust company shall furnish such information to the Commission relative to his personal character, integrity, financial condition, and personal and business background, as the Commission shall from time to time prescribe. Such report, under oath, shall be signed by the director as well as a designated officer of the trust company. Any person knowingly making a false statement in such a report is guilty of perjury.

1993, c. 432, § 6.1-32.22; 1994, c. 105; 2010, c. 794.

§ 6.2-1030. Discount by officer, director, or employee of refused paper.

No officer, director, or employee of a trust company may purchase or discount any note or paper at a rate of interest in excess of what the trust company might charge knowing that the trust company has refused to purchase or discount such paper.

Code 1950, § 6-44; 1966, c. 584, § 6.1-53; 2010, c. 794.

§ 6.2-1031. Reports.

Each trust company and trust company holding company shall file statements of condition and other reports with the Commission in accordance with requirements established by regulation.

1993, c. 432, § 6.1-32.23; 1995, c. 140; 2010, c. 794.

§ 6.2-1032. Investigations; examinations.

A. The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any trust company and of any trust company holding company. Examinations of such trust companies shall be conducted at least twice in each three-year period.

B. In the course of such investigations and examination, the principals, officers, directors, and employees of such trust company or trust company holding company being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making the investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

1993, c. 432, § 6.1-32.24; 1995, c. 140; 2010, c. 794.

§ 6.2-1033. Fees.

A. In order to defray the costs of their examination, supervision, and regulation, every trust company shall pay a fee of $330 per day per examiner during examinations.

B. Each trust company and each trust company holding company shall also pay to the Commission:

1. Such additional or special costs as the Commission may incur in connection with its examination;

2. For investigating an application for authority to establish a branch office pursuant to § 6.2-1028, a fee of $1,800;

3. For investigating an application to change the location of a principal office or branch office, a fee of $1,000; and

4. For investigating an application made pursuant to § 6.2-1023, a fee of $7,000.

1993, c. 432, § 6.1-32.25; 1994, c. 6; 1995, c. 140; 2010, c. 794.

§ 6.2-1034. Regulations.

The Commission may adopt such regulations as it deems appropriate to effect the purposes of this article. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard in accordance with the Commission's Rules. In adopting regulations applicable to affiliated trust companies, the Commission shall be guided, where appropriate, by those standards and requirements concerning self-dealing and conflicts of interests that apply to banks, bank holding companies, and their subsidiaries when engaged in both trust and securities activities.

1993, c. 432, § 6.1-32.26; 1995, c. 140; 2010, c. 794.

§ 6.2-1035. Audits.

The Commission may require trust companies or trust company holding companies to have audits made of their books, records, and methods of operation annually. The Commission may require such audits to be conducted at any other time that it appears to the Commission that (i) the internal controls of a trust company or trust company holding company are not adequate, (ii) it is engaging in unsound practices, or (iii) its financial condition makes such audit necessary.

1993, c. 432, § 6.1-32.27; 1995, c. 140; 2010, c. 794.

§ 6.2-1036. Commission's remedial powers.

A. If the Commission finds that a trust company (i) has failed to fully observe the laws of the Commonwealth, (ii) is being operated in an unsafe or unsound manner, (iii) has failed to comply with any Commission order or regulation, (iv) is engaging in any irregular practices, or (v) is, or is about to become, insolvent or its capital has been, or is in danger of being, impaired, the Commission shall give notice thereof to the officers and directors of the company. If necessary to conserve the assets of the company or protect the public interest, the Commission may:

1. Close the company for a period not exceeding 60 days, which period may be further extended for a like period or periods as the Commission deems necessary;

2. Require that all orders and regulations of the Commission be complied with;

3. Require that the company make reports daily or at such other times as may be required as to the results achieved in carrying out the Commission's orders;

4. Require that any irregularities be promptly corrected;

5. Require that any impairment of capital be made good; or

6. Temporarily suspend the right of the company to receive any further property in a fiduciary capacity.

B. If the Commission determines that a receiver should be appointed for a trust company, the Commission may close the company; take charge of the books, assets and affairs of the company; and apply to any circuit court in the Commonwealth for the appointment of a receiver to take charge of the company's business, assets and affairs. Proceedings for appointment of a receiver for a trust company shall not be entertained by any court except on application of the Commission.

C. The Commissioner may issue and serve upon a trust company a cease and desist order if, in the opinion of the Commissioner, the company is engaging, has engaged, or, there is reasonable cause to believe, is about to engage in an unsafe or unsound practice, irregularity, or any violation of law, rule, or regulation applicable to the conduct of its business, or any Commission order. The cease and desist order shall contain a statement of the facts upon which it is based and may require, in terms that may be mandatory or otherwise, the company and its directors, officers, employees, and agents to cease and desist from the practice or violation. The order shall specify its effective date and shall notify the company of its right to request a hearing in accordance with the Commission's Rules.

D. When the practice or violation specified in an order issued pursuant to subsection C, or any continuation thereof, is likely to prejudice the company's stockholders, or persons having an interest in property held by the company in a fiduciary capacity, the Commissioner may make the order effective immediately. An order shall remain in effect until withdrawn by the Commissioner or terminated by the Commission after a hearing. A request for a hearing shall be given expeditious treatment on the Commission's docket, and the Commission need not allow 10 days' notice to the company.

1993, c. 432, § 6.1-32.28; 1994, c. 524; 1995, c. 140; 2010, c. 794.

§ 6.2-1037. Effect of surrender or revocation of certificate.

If a trust company surrenders its certificate or its certificate is revoked, the trust company, its assets, and the assets it holds in trust shall nevertheless continue to be subject to the provisions of this article, including the provisions of § 6.2-1036.

1993, c. 432, § 6.1-32.29; 2010, c. 794.

§ 6.2-1038. Appointment of receiver.

A. When in the judgment of the Commission it is necessary for the protection of the interests of the Commonwealth or of the creditors of any trust company doing business in the Commonwealth, the Commission shall apply to any court in the Commonwealth having jurisdiction to appoint receivers for the appointment of a receiver to take charge of the business affairs and assets and to wind up the affairs and business of any such trust company failing to comply with the requirements of the Commission, or found upon examination to be insolvent or unable to meet its obligations and the legal demands made upon it in the ordinary course and conduct of its business.

B. Reference is hereby made to §§ 6.2-916 through 6.2-924 and Article 14 (§ 6.2-925 et seq.) of Chapter 8 for provisions applicable to receiverships of trust companies.

Code 1950, § 6-116; 1966, c. 584, § 6.1-102; 2010, c. 794.

§ 6.2-1039. Engaging in trust business without authority; Commission may examine accounts of suspected person; penalty.

A. Every person who trades or deals as a trust company, or conducts a trust business, without authority of law, and their officers and agents, is guilty of a Class 6 felony.

B. The Commission shall have authority to examine the accounts, books, and papers of any person who it has reason to suspect is doing a trust business, in order to ascertain whether such person has violated, or is violating, any provision of this title. The refusal to submit such accounts, books, and papers shall be prima facie evidence of such violation.

Code 1950, § 6-133; 1966, c. 584, § 6.1-111; 1992, c. 136; 1994, c. 7; 2010, c. 794.

§ 6.2-1040. Unlawful use of terms indicating that business is trust company; penalty.

A. A person not authorized to engage in the trust business in the Commonwealth by the provisions of this title or under the laws of the United States, shall not (i) use any office sign having thereon any name or other words indicating that any such office is the office of a trust company; (ii) use or circulate any letterheads, billheads, blank notes, blank receipts, certificates, circulars or any written or printed paper, having thereon any name or word indicating that such person is a trust company; or (iii) use the word "trust" or the equivalent thereof in any foreign language, or the plural thereof in connection with any business other than a trust business.

B. The foregoing prohibitions shall not apply to use by a trust company holding company of the word "trust" or the equivalent thereof in its name, or of a name similar to that of a subsidiary trust company of such trust company holding company.

C. The use of the above-mentioned words in the name of, or in connection with, any other business shall not be prohibited if the context or remaining words show clearly and definitely that the business is not a trust company, and is not carrying on a trust business.

D. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 6 felony.

Code 1950, § 6-134; 1966, c. 584, § 6.1-112; 1972, c. 187; 1992, cc. 24, 136; 2000, c. 56; 2003, c. 592; 2010, c. 794.

§ 6.2-1041. Civil penalties for failure to comply with § 62-1031 or 62-1032.

A. Any trust company failing to comply with any of the provisions of § 6.2-1031, for a period of longer than 30 days, after being called upon by the Commission for a statement, or to do such other act as is therein provided, shall be subject to assessment by the Commission of a civil penalty of not less than $100 nor more than $1,000 per day for each day of noncompliance.

B. Any officer of any trust company who shall refuse to give any examiner the information or refuse to be sworn, as required by § 6.2-1032, shall be subject to assessment by the Commission of a civil penalty of not less than $25 nor more than $100 per day for each day of noncompliance.

Code 1950, § 6-128; 1966, c. 584, § 6.1-114; 1974, c. 665; 1976, c. 658; 1988, c. 555; 1997, c. 142; 2010, c. 794.

§ 6.2-1042. Making derogatory statements affecting trust companies; penalty.

Any person who willfully and maliciously makes, circulates or transmits to another, any statement, rumor or suggestion that is directly or by reference derogatory to the financial condition, or affects the solvency or financial standing of, any trust company doing business in the Commonwealth, or who counsels, aids, procures or induces another to start, transmit, or circulate any such statement or rumor, is guilty of a Class 1 misdemeanor.

Code 1950, § 6-132; 1966, c. 584, § 6.1-119; 1991, c. 710; 2010, c. 794.

§ 6.2-1043. Use of trust company name, logo, or symbol for marketing purposes; penalty.

A. As used in this section, "name, logo, or symbol, or any combination thereof, of a trust company" includes any name, logo, or symbol, or any combination thereof, that is deceptively similar to the name, logo, or symbol of a trust company.

B. Except as provided in subsection C, no person shall use the name, logo, or symbol, or any combination thereof, of a trust company in marketing material provided to or solicitation of another person in a manner such that a reasonable person may believe that the marketing material or solicitation originated from or is endorsed by the trust company or that the trust company is responsible for the marketing material or solicitation.

C. This section shall not apply to (i) an affiliate or agent of the trust company or (ii) a person who uses the name, logo, or symbol of a trust company with the consent of the trust company.

D. Any person violating the provisions of this section, either individually or as an interested party, is guilty of a Class 1 misdemeanor. This section shall not affect the availability of any remedies otherwise available to a trust company.

2005, c. 240, § 6.1-119.1; 2010, c. 794.

§ 6.2-1044. Offenses by officer, director, agent or employee of trust company; penalties.

A. Any officer, director, agent, or employee of any trust company who embezzles, abstracts, or willfully misapplies any of the moneys, funds or credits of, or in the possession or control of the trust company is guilty of larceny and subject to the penalties provided in § 18.2-95 or 18.2-96.

B. Any officer, director, agent or employee of any trust company who (i) issues or puts forth any certificate of deposit, (ii) draws any order or bill of exchange, (iii) makes any acceptance, (iv) assigns any note, bond, draft, bill of exchange, mortgage, judgment, decree or other instrument in writing, or (v) makes any false entry in any book, report or statement of such trust company with intent in any case to injure or defraud the trust company, or any other individual or entity, or to deceive any officer of the trust company or the Commission, or any agent or examiner authorized to examine the affairs of the trust company, and any person, who, with like intent, aids or abets any such officer, director, agent or employee of such trust company in any act described in clauses (i) through (v), is guilty of a Class 5 felony.

C. Any officer of a trust company who knowingly makes a false statement of the condition of any trust company is guilty of a Class 5 felony.

Code 1950, §§ 6-128, 6-138; 1966, c. 584, § 6.1-122; 1974, c. 665; 2010, c. 794.

§ 6.2-1045. Officers, directors, agents and employees violating or causing trust company to violate laws; civil liability not affected.

Any officer, director, agent, or employee of any trust company who knowingly violates or who knowingly causes any trust company to violate any provision of this chapter, or knowingly participates or knowingly acquiesces in any such violation, unless other punishment is provided for the offense of such officer, agent, or employee, is guilty of a Class 1 misdemeanor. The provisions of this section shall not affect the civil liability of any such officer, director, agent or employee.

Code 1950, § 6-139; 1966, c. 584, § 6.1-123; 1974, c. 665; 2010, c. 794.

§ 6.2-1046. Civil penalties for violation of Commission's orders.

A. The Commission may impose, enter judgment for, and enforce by its process, a civil penalty not exceeding $10,000 upon any trust company or against any of its directors, officers, or employees, who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any lawful order of the Commission.

B. The Commission may remove from office any director or officer of a trust company for a second or subsequent violation by him of any such order.

C. In all cases the defendant shall have an opportunity to be heard and to introduce evidence, and the right to appeal as provided by law.

1968, c. 791, § 6.1-125; 1974, c. 665; 1976, c. 658; 2010, c. 794.

Article 3. Trust Subsidiaries.

§ 6.2-1047. Definitions.

As used in this article, unless the context requires a different meaning:

"Affiliate bank" with respect to a trust subsidiary means (i) a bank of which more than 50 percent of the shares are owned directly or indirectly through a subsidiary by the same Virginia bank holding company that owns directly or indirectly through a subsidiary all the shares, except directors' qualifying shares, of a trust subsidiary or a subsidiary bank or (ii) a bank that owns some or all of the shares of a trust subsidiary or a subsidiary bank.

"Bank" has the meaning assigned to it in § 6.2-800.

"Bank holding company" has the meaning assigned to it in § 6.2-800.

"Bank under common ownership" means a bank of which 80 percent or more of its common stock is owned, directly or indirectly through a subsidiary, by the same Virginia bank holding company as owns, directly or indirectly through a subsidiary, at least 80 percent of the stock of the subsidiary bank substituted as fiduciary.

"Fiduciary capacity" means every capacity in which a trust institution is granted the right to act pursuant to § 6.2-1002 and every other capacity in which a bank acts, or may act, through its trust department, including, without limitation, trusteeship with respect to common trust funds.

"Main office" is the place designated in the articles of incorporation or articles of association as the main office of the bank or trust subsidiary at which the principal functions of the bank or trust subsidiary are to be conducted.

"Owning bank" means a bank owning 10 percent or more of the shares of a trust subsidiary.

"Subsidiary bank" means a bank authorized to exercise trust powers, at least 80 percent of the outstanding shares of which are owned directly or indirectly through a subsidiary by a Virginia bank holding company.

"Trust office" means, with regard to a trust subsidiary or a bank having trust powers, an office for trust purposes only, at which the trust subsidiary or bank holds itself out as dealing with the public in the solicitation and conduct of its trust business.

"Trust subsidiary under common ownership" means a trust subsidiary at least 80 percent or more of which is owned, directly or indirectly through a subsidiary, by the same Virginia bank holding company as owns, directly or indirectly through a subsidiary, at least 80 percent of the stock of the subsidiary bank substituted as fiduciary.

"Virginia bank holding company" means a bank holding company that, directly or indirectly through a subsidiary, owns or controls a bank the main office of which is located in the Commonwealth.

1974, c. 286, § 6.1-32.2; 1991, c. 282; 2010, c. 794; 2020, c. 239.

§ 6.2-1048. Organization of subsidiary trust companies.

A. A subsidiary trust company may be incorporated and organized under Article 3 (§ 13.1-618 et seq.) of Chapter 9 of Title 13.1 or under federal laws relating to national banking associations for the purpose of conducting a trust business and other activities and business incidental thereto in which a trust subsidiary is permitted to engage as provided in § 6.2-1049.

B. All the outstanding voting shares of a subsidiary trust company, other than directors' qualifying shares, shall be owned directly or indirectly through a subsidiary by (i) one or more Virginia bank holding companies, (ii) one or more banks authorized to have a main or parent office in Virginia, or (iii) both.

C. A trust subsidiary shall be subject to regular examination and supervision by the Commission or by the Comptroller of the Currency of the United States.

D. If incorporated under Title 13.1, a trust subsidiary shall pay such examination fees as may be from time to time imposed upon trust departments of banks that are subject to examination by the Commission.

1974, c. 286, § 6.1-32.3; 1991, c. 282; 2004, c. 781; 2010, c. 794.

§ 6.2-1049. Permissible business.

A trust subsidiary shall be permitted to engage in trust business and activities that may be engaged in by a bank pursuant to § 6.2-1002, and business incidental thereto. A trust subsidiary shall not accept deposits or conduct any other business except as may be incidental to the trust business being conducted by it.

1974, c. 286, § 6.1-32.5; 1997, c. 801; 2010, c. 794.

§ 6.2-1050. Directors.

The affairs of every trust subsidiary incorporated under the laws of the Commonwealth shall be managed by a board of directors. The board shall consist of not fewer than five individuals. A majority of the directors shall be citizens of the Commonwealth. Directors need not be stockholders of the trust subsidiary unless the articles of incorporation so require.

1974, c. 286, § 6.1-32.4; 2010, c. 794.

§ 6.2-1051. Report to Commission of election of director.

Within 60 days following the election or reelection of any person as a director of a trust subsidiary, the trust subsidiary shall furnish such information to the Commission relative to his personal character, integrity, financial condition, and personal and business background as the Commission shall from time to time prescribe. Such report, under oath, shall be signed by the director as well as a designated officer of the trust subsidiary. Any person knowingly making a false statement in such a report is guilty of perjury.

1968, c. 606, § 6.1-48.1; 1974, c. 665, § 6.1-51.1; 1992, c. 552; 1994, c. 105; 2010, c. 794.

§ 6.2-1052. Removal of director or officer; appeals; penalty.

A. Whenever any director or officer of a trust subsidiary doing business in the Commonwealth, shall have continued to violate any law relating to such trust subsidiary or shall have continued unsafe or unsound practices in conducting the business of such trust subsidiary, after the director or officer, and the board of directors of the trust subsidiary of which he is a director or officer, have been warned in writing by the Commissioner to discontinue such violation of law or such unsafe or unsound practices, the Commissioner shall certify the facts to the Commission. The Commission shall thereupon enter an order requiring such director or officer to appear before the Commission, within not less than 10 days, to show cause why he should not be removed from office and thereafter restrained from participating in any manner in the management of such trust subsidiary. Such order shall contain a brief statement of the facts certified to the Commission by the Commissioner. A copy of such order shall be served upon such director or officer, and a copy thereof shall be sent by registered mail to each director of the trust subsidiary affected.

B. If, after granting the accused director or officer a reasonable opportunity to be heard, the Commission shall find that he has continued to violate any law relating to such trust subsidiary, or has continued unsafe or unsound practices in conducting the business of such trust subsidiary, after he and the board of directors of the trust subsidiary of which he is a director or officer have been warned in writing by the Commissioner to discontinue such violation of law or unsafe or unsound practices, the Commission shall enter an order removing such director or officer from office and restraining such director or officer from thereafter participating in any manner in the management of such trust subsidiary. A copy of such order shall be served upon such director or officer. A copy of such order shall also be served upon the trust subsidiary of which he is a director or officer. Upon such removal the director or officer shall cease to be a director or officer of such trust subsidiary and thereafter cease to participate in any manner in the management of such trust subsidiary.

C. Any director or officer aggrieved by (i) any order of the Commission entered under subsection B or (ii) an order refusing to remove another director or officer from office or to restrain him from participating in the management of the trust subsidiary, shall have, of right, an appeal to the Supreme Court of Virginia within 60 days from the date of the order.

D. Any director or officer removed or restrained under the provisions of subsection B from participating in any manner in the management of any trust subsidiary of which he is a director or officer, and who thereafter participates in any manner in the management of such trust subsidiary except as a stockholder therein, is guilty of a Class 6 felony.

Code 1950, §§ 6-40, 6-41, 6-42; 1966, c. 584, §§ 6.1-49, 6.1-50, 6.1-51; 1974, c. 665, § 6.1-51.1; 1979, c. 58; 1992, c. 136; 2010, c. 794.

§ 6.2-1053. Bonds required of officers and employees; blanket bond.

A. The board of directors of every trust subsidiary shall require bonds from all of the active officials and employees of such corporation. In lieu of such bonds, the board may obtain one or more blanket bonds. The surety on every bond shall be a bonding or surety company authorized to transact business in Virginia, and the penalty of any such bond shall be increased whenever in the opinion of the Commission it is necessary for the protection of the public interest.

B. If a trust subsidiary is unable to obtain the bond required by this section, it shall immediately notify the Commission, which may then direct the trust subsidiary to have an audit performed at its expense by an independent certified public accounting firm. The trust subsidiary shall obtain blanket bond coverage as soon as such coverage is available. Failure to obtain blanket bond coverage may be cause for action by the Commission as provided by § 6.2-906.

Code 1950, § 6-46; 1966, c. 584, § 6.1-54; 1974, c. 665; 1979, c. 52; 1992, c. 365; 2010, c. 794.

§ 6.2-1054. Certificate required.

No trust subsidiary, other than a wholly owned subsidiary of a national banking association, shall engage in trust business without first obtaining a certificate of authority from the Commission, or the Comptroller of the Currency if it is organized as a national banking association. The Commission shall not grant such certificate unless:

1. The capital and surplus of the trust subsidiary equal or exceed $200,000; and

2. The Commission is satisfied that (i) the trust subsidiary is capable of complying with the provisions of this chapter and (ii) the officers and directors have the moral fitness and business qualifications necessary to manage the trust subsidiary.

1974, c. 286, § 6.1-32.5; 1997, c. 801; 2010, c. 794.

§ 6.2-1055. Trust offices.

A trust subsidiary may have trust offices at locations where branches are permitted under § 6.2-831, upon approval of the Commission.

1974, c. 286, § 6.1-32.6; 1987, c. 352; 2010, c. 794.

§ 6.2-1056. When security not required of trust subsidiaries.

No trust subsidiary with combined unimpaired capital stock and surplus of $200,000 or more shall be required by any officer or court of the Commonwealth to give security upon appointment to or acceptance of any office or trust that it may, by law, be authorized to execute. No trust subsidiary shall qualify in a fiduciary capacity on an estate that has a value in excess of its combined unimpaired capital and surplus, without giving security for such excess, unless:

1. The requirement that the trust subsidiary give security for such excess is waived by the person creating such fiduciary relationship;

2. A Virginia bank holding company or a bank owning, directly or indirectly through a subsidiary bank, 100 percent of the stock, exclusive of directors' qualifying shares, of the trust subsidiary files with the Commission and with the circuit court for the jurisdiction in which the main office of the bank holding company or bank is located an undertaking to be fully responsible for the existing and future fiduciary acts and omissions of its trust subsidiary. If such undertaking is filed, a trust subsidiary may qualify in a fiduciary capacity without giving security if the assets it is to receive in such capacity have a value not greater than the combined and unimpaired capital and surplus of the parent Virginia bank holding company or parent bank that has undertaken to be responsible for the acts of such trust subsidiary. If no such undertaking shall have been filed, and corporate surety is provided, the premium thereof shall be borne by the trust subsidiary and not the fiduciary estate; or

3. If an affiliate bank shall already have qualified in any fiduciary capacity and given bond, without security, and the trust subsidiary or subsidiary bank shall qualify as successor fiduciary, then, if the order of substitution so provides, and the fiduciary for which there is to be substitution consents, the predecessor fiduciary shall remain liable on its bond for the acts of its named successor and no security shall be required of the successor fiduciary, if the bond of the fiduciary for which there is to be substitution is otherwise sufficient.

1974, c. 286, § 6.1-32.7; 2010, c. 794.

§ 6.2-1057. Deposits held or received by trust subsidiaries or subsidiary bank with affiliate banks.

A. Funds received or held by a trust subsidiary or subsidiary bank while awaiting investment or distribution shall not be used by an affiliate bank or owning bank in the conduct of its business or deposited in such bank, unless the bank first delivers to its trust department or to the trust subsidiary or subsidiary bank, as collateral security therefor, securities of any of the classes described in subdivision B 1, B 2, or B 3 of § 6.2-1005, in an amount described in subsection B.

B. The securities deposited as collateral as required by subsection A shall be owned by the bank and shall at all times be at least equal in market value to the amount of trust funds held on deposit by such trust subsidiary or subsidiary bank, less such amount thereof as are insured by the Federal Deposit Insurance Corporation.

C. In the event of the failure or liquidation of such bank, the trust subsidiary or subsidiary bank and the owners of the beneficial interest in such trust funds shall have a lien on the bonds or other securities so set apart, in addition to their claims against the estate of the bank.

1974, c. 286, § 6.1-32.8; 1991, c. 282; 2010, c. 794.

§ 6.2-1058. Substitution of trust subsidiary as fiduciary.

A. Upon obtaining a certificate to engage in the trust business, a trust subsidiary may file an application in the circuit court of the jurisdiction in which its main office is located requesting that it be substituted, except as may be excluded in such application, in every fiduciary capacity for each of its owning banks, or, in the case of a Virginia bank holding company, for any one or more of its affiliate banks specified in the application.

B. Upon finding that (i) the trust subsidiary has obtained a certificate to engage in the trust business by the Commission, or by the Comptroller of the Currency if the trust subsidiary is a national banking association, the main office of which is in the Commonwealth and (ii) the requirements of § 6.2-1056 have been met, the court shall enter an order substituting the trust subsidiary in every fiduciary capacity for each of its specified affiliate banks, or specified owning banks, except as may be otherwise specified in the application.

C. Upon entry of such order, the trust subsidiary shall, without further act, be substituted in every fiduciary capacity. The substitution shall be evidenced by filing a copy of the order with the clerk of any circuit court in the Commonwealth. The order shall be indexed in each index in the records of such court in which substitutions of fiduciaries are otherwise indexed. The application may be made ex parte and need not list the fiduciary capacities in which substitution is made. If the requirements of § 6.2-1056 have been met, the order of substitution shall specify that the trust subsidiary shall be deemed without further act to have given bond with open penalty with respect to each fiduciary capacity in which there is substitution.

D. Any bond, with corporate surety, posted under this section or § 6.2-1056 may be a blanket bond conditioned as otherwise contemplated by law.

E. Each designation in a will or other instrument heretofore or hereafter executed of a bank as fiduciary shall be deemed a designation of the trust subsidiary substituted for such bank pursuant to this section except when the instrument is executed after such substitution and expressly negates the application of this section. No waiver of surety with respect to any fiduciary bond shall be effective except in such case when the bond would be otherwise sufficient as contemplated by § 6.2-1056 or 6.2-1059. Any grant in such an instrument of any discretionary power shall be deemed conferred upon the fiduciary deemed to have been nominated hereunder.

F. A bank shall account jointly with the trust subsidiary that has been substituted as fiduciary for such bank pursuant to this section for the accounting period during which the trust subsidiary is initially so substituted. Upon substitution pursuant to this section, the bank shall deliver to the trust subsidiary all assets held by the bank as fiduciary, except assets held for accounts to which there has been no substitution. Upon such substitution, all such assets shall become the property of the trust subsidiary as fiduciary without the necessity of any instrument of transfer or conveyance.

1974, c. 286, § 6.1-32.9; 1987, c. 352; 1991, c. 282; 2010, c. 794.

§ 6.2-1059. Substitution of subsidiary bank as fiduciary.

A. Upon obtaining permission to engage in the trust business, a subsidiary bank may file an application in the circuit court of the jurisdiction in which its main office is located requesting that it be substituted, except as may be specified in such application, in every fiduciary capacity for a bank under common ownership or a trust subsidiary under common ownership.

B. Upon a finding that (i) the subsidiary bank has been granted such permission to engage in the trust business by the Commission or the Comptroller of the Currency and (ii) the unimpaired capital and surplus of such subsidiary bank is sufficient as prescribed in § 6.2-1003, or bond with corporate surety has been posted for any excess, or has been validly waived, the court shall enter an order substituting the subsidiary bank in every fiduciary capacity for each of the specified banks or trust subsidiaries under common ownership, except as may be otherwise specified in the application.

C. Upon entry of such order, such subsidiary bank shall, without further act, be substituted in every such fiduciary capacity. The substitution shall be evidenced by filing a copy of the order with the clerk of any circuit court in the Commonwealth. The order shall be indexed in each index in the records of such court in which substitutions of fiduciaries are otherwise indexed. The application may be made ex parte and need not list the fiduciary capacities in which substitution is made. If a bank or trust subsidiary under common ownership with the subsidiary bank shall already have qualified in any fiduciary capacity and given bond, without surety, then if the order of substitution shall so provide, which it may provide only if the fiduciary for which there is to be substitution consents, the predecessor fiduciary shall remain liable on its bond for the acts of its named successor, and no security or corporate surety shall be required of the successor fiduciary on its bond.

D. Any bond, with corporate surety, posted under this section or under § 6.2-1056 may be a blanket bond conditioned as otherwise contemplated by law.

E. Each designation in a will or other instrument heretofore or hereafter executed of a bank or trust subsidiary as fiduciary shall be deemed a designation of the subsidiary bank substituted for such bank or trust subsidiary pursuant to this section except when the instrument is executed after such substitution and expressly negates the application of this section. No waiver of surety with respect to any fiduciary bond shall be effective except in such case when the bond would be otherwise sufficient as contemplated by § 6.2-1056 or this section. Any grant in such an instrument of any discretionary power shall be deemed conferred upon the fiduciary deemed to have been nominated hereunder.

F. A bank or trust subsidiary shall account jointly with the subsidiary bank that has been substituted as fiduciary for such bank or trust subsidiary pursuant to this section for the accounting period during which the subsidiary bank is initially so substituted. Upon substitution pursuant to this section, the bank or trust subsidiary shall deliver to the substituted subsidiary bank all assets held by the bank or trust subsidiary as fiduciary, except assets held for accounts to which there has been no substitution. Upon such substitution, all such assets shall become the property of the subsidiary bank as fiduciary without the necessity of any instrument of transfer or conveyance.

1974, c. 286, § 6.1-32.9; 1987, c. 352; 1991, c. 282; 2010, c. 794; 2020, c. 239.

§ 6.2-1060. Trust subsidiaries to have same powers and restrictions as bank trust departments.

Wherever there is granted to or imposed upon a bank having and exercising trust powers any further powers in the nature of trust powers or any restriction upon any such powers, whether under this title or otherwise, it is intended that such grant to or restriction upon a bank in its trust powers shall be equally applicable to a trust subsidiary, unless context shall otherwise require or unless this chapter or Chapter 8 (§ 6.2-800 et seq.) specifically covers such situation or provides otherwise.

1974, c. 286, § 6.1-32.10; 2010, c. 794.

§ 6.2-1061. Reports; investigations and examinations; civil penalties.

A. Each trust subsidiary shall file statements of condition and other reports with the Commission in accordance with the requirements established by regulation.

B. The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any trust subsidiary. Examinations of such trust subsidiaries shall be conducted at least twice in each three-year period.

C. In the course of such investigations and examination, the principals, officers, directors, and employees of such trust subsidiary being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making the investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.

D. Any trust subsidiary that fails to comply with the provisions of subsection A, for a period of longer than 30 days, after being called upon by the Commission for a statement, or to do such other act as is therein provided, shall be subject to assessment by the Commission of a civil penalty of not less than $100 nor more than $1,000 per day for each day of noncompliance.

E. Any officer of any trust subsidiary being investigated or examined by the Commission who shall refuse to give any examiner the information or refuse to be sworn, as required by subsections B and C, shall be subject to assessment by the Commission of a civil penalty of not less than $25 nor more than $100 per day for each day of noncompliance.

Code 1950, § 6-128; 1966, c. 584, § 6.1-114; 1974, c. 665; 1976, c. 658; 1988, c. 555; 1997, c. 142; 2010, c. 794.

§ 6.2-1062. Offenses by officer, director, agent or employee of trust subsidiary; penalties.

A. Any officer, director, agent, or employee of any trust subsidiary who embezzles, abstracts, or willfully misapplies any of the moneys, funds or credits of, or in the possession or control of the trust subsidiary is guilty of larceny and subject to the penalties provided in § 18.2-95 or 18.2-96.

B. Any officer, director, agent or employee of any trust subsidiary who (i) issues or puts forth any certificate of deposit, (ii) draws any order or bill of exchange, (iii) makes any acceptance, (iv) assigns any note, bond, draft, bill of exchange, mortgage, judgment, decree or other instrument in writing, or (v) makes any false entry in any book, report or statement of such trust subsidiary with intent in any case to injure or defraud the trust subsidiary, or any other individual or entity, or to deceive any officer of the trust subsidiary or the Commission, or any agent or examiner authorized to examine the affairs of the trust subsidiary, and any person, who, with like intent, aids or abets any such officer, director, agent or employee of such trust subsidiary in any act described in clauses (i) through (v), is guilty of a Class 5 felony.

C. Any officer of a trust subsidiary who knowingly makes a false statement of the condition of any trust subsidiary is guilty of a Class 5 felony.

Code 1950, §§ 6-128, 6-138; 1966, c. 584, § 6.1-122; 1974, c. 665; 2010, c. 794.

§ 6.2-1063. Officers, directors, agents and employees violating or causing trust subsidiary to violate laws; civil liability not affected.

Any officer, director, agent, or employee of any trust subsidiary who knowingly violates or who knowingly causes any trust subsidiary to violate any provision of this chapter, or knowingly participates or knowingly acquiesces in any such violation, unless other punishment is provided for the offense of such officer, agent, or employee, is guilty of a Class 1 misdemeanor. The provisions of this section shall not affect the civil liability of any such officer, director, agent or employee.

Code 1950, § 6-139; 1966, c. 584, § 6.1-123; 1974, c. 665; 2010, c. 794.

§ 6.2-1064. Civil penalties for violation of Commission's orders.

A. The Commission may impose, enter judgment for, and enforce by its process, a civil penalty not exceeding $10,000 upon any trust subsidiary or against any of its directors, officers, or employees, who it determines, in proceedings commenced in accordance with the Commission's Rules, has violated any lawful order of the Commission.

B. The Commission may remove from office any director or officer of a trust subsidiary for a second or subsequent violation by him of any such order.

C. In all cases the defendant shall have an opportunity to be heard and to introduce evidence, and the right to appeal as provided by law.

1968, c. 791, § 6.1-125; 1974, c. 665; 1976, c. 658; 2010, c. 794.

Article 4. Multistate Trust Institutions.

§ 6.2-1065. Definitions.

As used in this article, unless the context requires a different meaning:

"Acquisition of a trust office" means the acquisition of a trust office located in a host state, without acquiring the trust institution of such office.

"Bank" has the meaning assigned to it in 12 U.S.C. § 1813 (a)(1) of the Federal Deposit Insurance Company Act of 1956 (12 U.S.C. § 1811 et seq.), as amended.

"Bank supervisory agency" means: (i) any agency of another state with primary responsibility for chartering and supervising a trust institution and (ii) the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the Board of Governors of the Federal Reserve System and any successor to these agencies.

"Home state" means (i) with respect to a federally chartered trust institution, the state where such institution maintains its principal office and (ii) with respect to any other trust institution, the state that chartered such institution.

"Home state regulator" means the bank supervisory agency with primary responsibility for chartering and supervising an out-of-state trust institution.

"Host state" means a state, other than the home state of a trust institution, in which the trust institution maintains or seeks to acquire or establish an office.

"New trust office" means a trust office located in a host state that (i) is originally established by the trust institution as a trust office and (ii) does not become a trust office of the trust institution as a result of (a) the acquisition of another trust institution or trust office of another trust institution or (b) a merger, consolidation, or conversion involving any such trust institution or trust office.

"Office" with respect to a trust institution means the principal office or a trust office, but not a branch.

"Out-of-state bank" means a bank chartered to act as a fiduciary whose home state is a state other than the Commonwealth.

"Out-of-state trust company" means a trust company or trust subsidiary whose home state is a state other than the Commonwealth.

"Out-of-state trust institution" means a trust institution whose home state is a state other than the Commonwealth.

"Principal office" with respect to (i) a state trust company, means a location designated by such trust company as its main office pursuant to § 6.2-1028 or 6.2-1047 or (ii) a trust institution other than a state trust company, means its principal place of business in the United States.

"State bank" or "Virginia state bank" means a bank chartered under the laws of the Commonwealth and permitted to engage in the trust business pursuant to § 6.2-819.

"State trust company" means a corporation organized or reorganized as a trust company under Article 2 (§ 6.2-1013 et seq.) or Article 3 (§ 6.2-1047 et seq.) of this chapter.

"State trust institution" means a trust institution having its principal office in the Commonwealth.

"Trust company" means a state trust company or any other entity chartered to act as a fiduciary that is not a bank.

"Trust institution" means a bank or trust company chartered by a state bank supervisory agency or by the Office of the Comptroller of Currency.

"Trust office" means an office at which a trust institution engages in a trust business and not in the banking business.

1999, c. 835, § 6.1-32.32; 2010, c. 794.

§ 6.2-1066. Interstate trust offices by Virginia state banks.

A. With the prior approval of the Commission, any Virginia state bank or state trust company may establish a new trust office or acquire a trust office in a state other than the Commonwealth.

B. A Virginia state bank or state trust company desiring to establish and maintain a trust office in another state under this section shall file an application or notice on a form prescribed by the Commission and pay the branch application fee set forth in subdivision B 3 of § 6.2-908. If the Commission finds that the applicant has the financial resources sufficient to undertake the proposed expansion without adversely affecting its soundness and that the laws of the host state permit the establishment of the trust office, it may approve the application. In acting on the application, the Commission shall consider the views of the state bank supervisor of the host state where the trust office is proposed to be located.

1999, c. 835, § 6.1-32.33; 2010, c. 794.

§ 6.2-1067. Trust business of out-of-state trust institution.

A. An out-of-state trust institution that establishes or maintains one or more offices in the Commonwealth under this article may conduct any activity at each such office that would be authorized under the laws of the Commonwealth for a state trust institution to conduct at such an office.

B. An out-of-state trust institution may engage in a trust business in the Commonwealth if it (i) maintains (a) a trust office in the Commonwealth as permitted by this article or (b) a branch in the Commonwealth, or (ii) is a national bank or federal savings bank, with or without an office or a branch in the Commonwealth, that is supervised and regulated by the federal Comptroller of the Currency and is authorized to serve as trustee, as executor, as administrator, or in another fiduciary capacity pursuant to § 92a of the National Bank Act (12 U.S.C. § 21 et seq.) or § 5(n) of the Home Owners' Loan Act (12 U.S.C. § 1461 et seq.).

1999, c. 835, §§ 6.1-32.34, 6.1-32.35; 2010, c. 794; 2012, c. 608.

§ 6.2-1068. Establishing or acquiring an interstate trust office; additional trust offices; notice of closure.

A. An out-of-state trust institution that does not already maintain a trust office in the Commonwealth and that meets the requirements of this article may:

1. Establish and maintain a new trust office in the Commonwealth; or

2. Acquire and maintain a trust office in the Commonwealth.

B. An out-of-state trust institution that maintains a trust office in the Commonwealth under this article may establish or acquire additional trust offices in the Commonwealth to the same extent that a state trust institution may establish or acquire additional offices in the Commonwealth, provided it follows the procedures for establishing or acquiring such offices set forth in this article.

C. An out-of-state trust institution that maintains an office in the Commonwealth under this article shall give at least 30 days' prior written notice, or in the case of an emergency transaction, such shorter notice as is consistent with applicable state or federal law, to the Commission of any merger, consolidation, or other transaction involving the trust institution that would cause any trust office operated by the institution in this state to be maintained by another trust institution or cause the operation of such an office to cease.

1999, c. 835, §§ 6.1-32.36, 6.1-32.37, 6.1-32.42, 6.1-32.44; 2010, c. 794.

§ 6.2-1069. Filing requirements.

An out-of-state trust institution desiring to establish and maintain a new trust office or acquire and maintain a trust office in the Commonwealth pursuant to this article shall submit to the Commission a copy of the application or notice it files with its home state regulator or the responsible federal bank supervisory agency to establish or acquire such office. Such submission shall be made at the same time the application or notice is filed by the out-of-state trust institution with such home state regulator or responsible federal bank supervisory agency. The out-of-state trust institution shall also comply with the requirements of Article 17 (§ 13.1-757 et seq.) of the Virginia Stock Corporation Act and pay any filing fee required by the Commission.

1999, c. 835, § 6.1-32.38; 2010, c. 794.

§ 6.2-1070. Conditions for approval.

A trust office of an out-of-state trust institution shall not be acquired or established under this article unless:

1. In the case of a new trust office, the laws of the home state of the out-of-state trust institution permit state trust institutions to establish and maintain new trust offices in that state under substantially the same terms as set forth in this article.

2. In the case of a trust office to be established through the acquisition of a trust office, the laws of the home state of the out-of-state trust institution permit state trust institutions to establish and maintain trust offices in that state through the acquisition of trust offices under substantially the same terms as set forth in this article.

1999, c. 835, § 6.1-32.39; 2010, c. 794.

§ 6.2-1071. Examinations; periodic reports; cooperative agreements; assessment of fees.

A. The Commission may make such examinations of any office established and maintained in the Commonwealth pursuant to this article by an out-of-state trust institution as the Commission may deem necessary to determine whether the office is operating in compliance with the laws of the Commonwealth and to ensure the office is being operated in a safe and sound manner. The provisions of § 6.2-901 that apply to examinations of banks shall apply to examinations of an office conducted under this section. The Commission shall also have authority to examine the principal office of an out-of-state trust institution, as necessary. When any such examination is conducted outside the Commonwealth, the out-of-state trust institution shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of such examination, or shall pay for such examination at a reasonable per diem rate approved by the Commission.

B. The Commission may require periodic reports from any out-of-state trust institution that maintains an office in the Commonwealth to the extent such reporting requirements (i) apply equally to similarly situated trust institutions having Virginia as their home state and (ii) are not preempted by federal laws. Such reports shall be filed under oath with such frequency and in such scope and detail as may be appropriate for the purpose of assuring continuing compliance with the provisions of this article.

C. The Commission may enter into cooperative agreements with the appropriate state bank supervisors and federal bank regulatory agencies for the examination of any trust office in the Commonwealth of an out-of-state trust institution or any office of a state trust institution in any host state, and may accept such agency's report of examination and report of investigation in lieu of conducting its own examinations or investigations. The Commission may enter into joint actions with other state bank supervisors and federal banking agencies having concurrent jurisdiction over any office maintained in this state by an out-of-state trust institution or any office established and maintained by a state trust institution in any host state; however, the Commission may take such actions independently to carry out its responsibilities under this article and to assure compliance with the laws of the Commonwealth.

D. Out-of-state trust institutions may be assessed and, if assessed, shall pay supervisory and examination fees in accordance with the laws of the Commonwealth and regulations of the Commission. Such fees may be shared with other state and federal bank supervisory agencies in accordance with agreements between them and the Commission.

1999, c. 835, § 6.1-32.40; 2010, c. 794.

§ 6.2-1072. Enforcement.

If the Commission determines that there is any violation of any applicable law or regulation in the operation of an out-of-state trust institution engaged in business in this state or that a trust office of such an institution in this state is being operated in an unsafe and unsound manner, the Commission shall have authority to undertake such enforcement actions as it would be permitted to take if the office were a Virginia state bank or state trust company.

1999, c. 835, § 6.1-32.41; 2010, c. 794.

§ 6.2-1073. Regulations; fees.

The Commission may adopt such regulations, and may provide for the payment of such reasonable application and administration fees, as it finds necessary and appropriate in order to implement the provisions of this article.

1999, c. 835, § 6.1-32.43; 2010, c. 794.

Article 5. Private Trust Companies.

§ 6.2-1074. Definitions.

As used in this article, unless the context requires a different meaning:

"Degrees of kinship" means, with respect to two persons, (i) degrees of lineal kinship computed by counting one degree for each person in the line of ascent or descent, exclusive of the person from whom the computing begins and (ii) degrees of collateral kinship computed by commencing with one of the persons and ascending from that person to a common ancestor, descending from that ancestor to the other person, and counting one degree for each person in the line of ascent and in the line of descent, exclusive of the person from whom the computation begins, the total to represent the degree of such kinship.

"Designated relative" means the individual to or through whom the family members are related.

"Family" means a designated relative and family members of that designated relative.

"Family member" means the designated relative and:

1. Any individual within (i) the fifth degree of lineal kinship to the designated relative or (ii) the ninth degree of collateral kinship to the designated relative, for which purposes only a legally adopted individual shall be treated as a natural child of the adoptive parents;

2. The present or past spouse of the designated relative and of any individual qualifying as a family member under subdivision 1;

3. A trust established (i) by a family member or (ii) exclusively for the benefit of one or more family members;

4. A stock corporation, limited partnership or limited liability company, all of the capital stock, partnership interests, membership interests, or other equity interests of which are owned by one or more family members, their spouses qualifying under subdivision 2, their trusts qualifying under subdivision 3, or their estates qualifying under subdivision 5;

5. The estate of a family member; or

6. A charitable foundation or other charitable entity created by a family member.

"Fiduciary" means executor, administrator, conservator, guardian, committee, or trustee.

"Operating plan" means a plan that establishes the policies and procedures a private trust company will have in effect when the institution opens for business and thereafter (i) to ensure that trust accounts are handled in accordance with recognized standards of fiduciary conduct and (ii) to assure compliance with applicable laws and regulations.

"Private trust business" means acting as or performing the duties of a fiduciary in the regular course of its business for family members.

"Private trust company" means a corporation or limited liability company that is organized to engage in private trust business under this article with one or more family members and that does not transact business with the general public.

"Tax" includes, but is not limited to, federal, state or local income, gift, estate, generation-skipping transfer, or inheritance tax.

2003, c. 910, §§ 6.1-32.30:1; 6.1-32.30:7; 2010, c. 794.

§ 6.2-1075. Organization; minimum capital; notice to Bureau; control.

A. No person other than a corporation or limited liability company organized under the laws of the Commonwealth to engage exclusively in the private trust business shall act as a private trust company.

B. No person may act as a private trust company unless and until family members have subscribed for capital stock or interests, surplus, and a reserve for operation in an amount equal to or in excess of $500,000.

C. No person shall engage in business as a private trust company without first giving written notice to the Bureau. The notice shall identify (i) the designated relative whose relationship to other individuals determines whether the individuals are family members and (ii) the location of the principal office and additional office, if any, within the Commonwealth. The notice shall be accompanied by an operating plan and such other books, records, documents, or information as the Commissioner may require. The notice shall also certify that (a) all provisions of law have been complied with; (b) the private trust company is formed for no other reason than to engage in the private trust business; and (c) family members have subscribed for capital stock, surplus, and a reserve for operation in an amount equal to or in excess of $500,000.

D. All of the capital stock, membership interests, or other equity interests of a private trust company shall be and shall remain owned by, and under the voting control of, family members, including any spouses, trusts, stock corporations, limited partnerships, limited liability companies, or estates qualifying under subdivision 2, 3, 4, or 5 of the definition of "family member" set forth in § 6.2-1074, of one or more families.

2003, c. 910, § 6.1-32.30:2; 2010, c. 794.

§ 6.2-1076. Operation and powers.

Every private trust company shall have and shall conduct its business in accordance with an operating plan and in accordance with generally accepted fiduciary standards. A private trust company when engaging in a private trust business shall have the same rights, powers, and privileges as a trust institution pursuant to § 6.2-1002, including the power to act as executor under the last will and testament or administrator of the estate of any deceased family member.

2003, c. 910, § 6.1-32.30:3; 2010, c. 794.

§ 6.2-1077. Reacquisition of shares or interests; dividends.

A private trust company shall not purchase, redeem, or otherwise reacquire shares of stock or membership interests that the private trust company has issued, or declare a dividend or other distribution to its stockholders, members, or holders of equity interests, to the extent that such purchase, redemption, reacquisition, dividend, or distribution shall cause the private trust company's paid-in capital, retained surplus and reserves to be reduced below $500,000.

2003, c. 910, § 6.1-32.30:4; 2010, c. 794.

§ 6.2-1078. Offices.

A. The office at which a private trust company begins business shall be designated initially as its principal office. The board of directors or managers of a private trust company may thereafter redesignate as the principal office another authorized office of the private trust company in the Commonwealth.

B. The board of directors or managers of a private trust company may designate, and from time to time redesignate, one additional office at which the private trust company may conduct business in the Commonwealth.

C. The private trust company shall notify the Bureau of any such redesignation of its principal office or designation or redesignation of an additional office not later than 30 days before its effective date and shall confirm to the Bureau any such designation or redesignation within 10 days of its occurrence.

2003, c. 910, § 6.1-32.30:5; 2010, c. 794.

§ 6.2-1079. Directors or managers.

The affairs of every private trust company shall be directed by a board of directors if a corporation, or managers if a limited liability company, consisting of not less than five nor more than 25 persons. At least one director or manager shall be a citizen of the Commonwealth.

2003, c. 910, § 6.1-32.30:6; 2010, c. 794.

§ 6.2-1080. Limitation on powers.

A. In the exercise of any power held by a private trust company in its capacity as a fiduciary, the private trust company shall have a duty not to exercise any power in such a way as to deprive the estate, trust, or other entity for which it acts as a fiduciary of an otherwise available tax exemption, deduction, or credit for tax purposes or deprive a donor of trust assets of a tax exemption, deduction, or credit or operate to impose a tax upon a donor or other person as owner of any portion of the estate, trust, or otherwise.

B. Without limitation to subsection A, no family member who is a stockholder or member or who otherwise holds an equity interest in, or is serving as a director, officer, manager, or employee of, a private trust company shall participate in or otherwise have a voice in any discretionary decision by the private trust company to distribute income or principal of any trust in order to discharge a legal obligation of the family member or for the family member's pecuniary benefit, unless:

1. The exercise of the discretion is limited by an ascertainable standard relating to the health, education, support, or maintenance of that family member;

2. The distribution is necessary for that family member's support, health, or education; or

3. The instrument governing the administration of that trust clearly so provides.

2003, c. 910, § 6.1-32.30:7; 2010, c. 794.

Article 6. Trust Powers of Savings Institutions.

§ 6.2-1081. Definitions.

As used in this article, unless the context requires a different meaning:

"Affiliate" means, with respect to an association, a bank holding company, as defined in 12 U.S.C. § 1841, or savings and loan holding company of which the association is a subsidiary, a corporation that is also a subsidiary of a bank holding company or savings and loan holding company of which the association is a subsidiary, a corporation with respect to which the association owns 25 percent or more of the outstanding voting shares of such corporation, or any other corporation that the Commissioner determines is, in fact, controlled by the association.

"Association" has the meaning assigned to it in § 6.2-1100.

"Common trust funds" means common trust funds that are described under § 584 of the Internal Revenue Code of 1954, as well as any other type of collective investment fund that is exempt from federal income taxation under any other provision of the Internal Revenue Code or regulations issued pursuant thereto.

"Fiduciary" means the status resulting from an association's undertaking to act alone, through an affiliate, or jointly with others, primarily for the benefit of another, and includes an association's acting as trustee, executor, administrator, committee, guardian, conservator, receiver, managing agent, registrar of stocks and bonds, escrow, transfer, or paying agent, trustee of employee pension, welfare and profit sharing trusts, and in any other similar capacity.

"Fiduciary records" means all matters which are written, transcribed, recorded, received, or otherwise come into the possession of an association and are necessary to preserve information concerning the actions and events relevant to the fiduciary activities of an association.

"Governing instrument" means the written document or documents pursuant to which an association undertakes to act in a fiduciary capacity, and includes a will, codicil, deed of trust, trust deed, and other similar instruments.

"Investment authority" means the responsibility conferred by action of law or a provision of a governing instrument to make, select, or change investments, review investment decisions made by others, or to provide investment advice or counsel to others.

"Managing agent" means the fiduciary relationship assumed by an association upon the creation of an account that names the association as agent and confers investment authority upon the association.

"Savings institution holding company" has the meaning assigned to it in § 6.2-1100.

"Trust account" means the account established pursuant to a trust, estate, or other fiduciary relationship that has been established with an association.

"Trust department" means that group or groups of officers and employees of an association, or of an affiliate of an association, to whom are assigned the performance of fiduciary services by the association.

"Uniform Transfers to Minors Act" means Chapter 19 (§ 64.2-1900 et seq.) of Title 64.2 or any comparable act in effect in any other state.

1984, c. 303, § 6.1-195.78; 1997, c. 801; 2010, c. 794.

§ 6.2-1082. Applications for permission to offer trust services.

A. An association desiring to exercise fiduciary powers, either through a trust department or through an affiliate, shall file with the Commission an application indicating which trust services it wishes to offer and providing the information necessary to make the determinations required under subsection B.

B. In addition to assessing any other facts or circumstances deemed proper, the Commission, in passing upon an application to exercise trust powers, shall not grant such application unless the Commission finds that:

1. The association's capital structure is sufficiently strong to support such additional undertaking;

2. The personnel who will direct the proposed trust department have adequate experience and training, and will devote sufficient time to its affairs to ensure compliance with the law and to protect the association against surcharge;

3. The granting of trust powers to the association will be in the public interest; and

4. The association has available legal counsel to advise and pass upon fiduciary matters wherever necessary.

1984, c. 303, § 6.1-195.79; 2010, c. 794.

§ 6.2-1083. Commission to issue certificate; powers of associations authorized to offer trust services.

A. Upon granting the application of an association to exercise trust powers, the Commission shall issue a certificate authorizing the association or affiliate to exercise trust powers and offer fiduciary services. Unless such certificate otherwise provides, such association shall have the following rights, powers, and privileges, and shall be subject to the following regulations and restrictions:

1. To act as agent for any person, including any locality or state, for the collection or disbursement of interest, or income or principal of securities;

2. To act as the fiscal or transfer agent of any state, locality, or other body public or corporate, and in such capacity to receive and disburse money, to transfer, register and countersign certificates of stock, bonds, or other evidences of indebtedness;

3. To act as agent of any corporation, foreign or domestic, for any lawful purpose;

4. To act as trustee under any deed of trust, mortgage, or bond issued by an individual, municipality, or body politic or corporate, and to accept and execute any other municipal or corporate trust not inconsistent with the laws of the Commonwealth;

5. To act as a guardian, conservator, as a custodian under the Uniform Transfers to Minors Act (§ 64.2-1900 et seq.), and as depository of any money paid into court, whether for the benefit of a person under a disability or other person;

6. To take, accept, and execute any and all trusts and powers, of whatever nature and description, as may be conferred upon or entrusted or committed to it by any person, or any body politic or corporate, or by other authority, by grant, assignment, transfer, devise, bequest, or otherwise or as may be entrusted or committed or transferred to it or vested in it by order of any circuit court, judge, or clerk; to receive and hold any property or estate, real or personal, which may be the subject of any such trust; and to be accountable to all parties in interest for the faithful discharge of every such trust, duty, or power which it may so accept; and

7. To act as executor under the last will and testament, or administrator of the estate, of any deceased person, under appointment of any circuit court, judge, or clerk thereof, having jurisdiction of the estate of such deceased person.

B. Nothing in this chapter shall be construed as authorizing the creation of a trust not lawful as between individuals, nor to prohibit the deposit of funds by courts and fiduciaries in savings and loan associations and savings banks.

C. All rights, powers, and privileges, and all regulations, restrictions, and limitations, granted to or made applicable to associations by the provisions of this chapter shall likewise apply to any affiliate of an association which is authorized by the Commission to exercise trust powers. Any such affiliate shall be organized and operated solely for the purpose of offering trust services pursuant to the provisions of this chapter.

D. All federal savings and loan associations and federal savings banks, that have been, or hereafter may be, permitted by law to act in any fiduciary capacity, shall have the rights, powers, privileges, and immunities conferred by this chapter to the extent permitted by federal law.

1984, c. 303, § 6.1-195.80; 1997, c. 801; 2010, c. 794.

§ 6.2-1084. Continuation of trust powers in the event of consolidation or merger of two or more associations.

If an association consolidates or merges with another association or a bank and the association has, prior to such consolidation or merger, exercised trust powers under a certificate issued by the Commission, which certificate is in effect at the time of the consolidation or merger, the rights existing under such certificate shall pass to the resulting corporation. The resulting corporation may exercise such trust powers in the same manner and to the same extent as the association to which such certificate was originally issued. No new application to continue to exercise such powers is necessary. If the name of the resulting corporation differs from that of the association to which the right to exercise trust powers was originally granted, the Commission shall issue a certificate showing the right of such resulting corporation to exercise the trust powers theretofore granted to any of the associations participating in the consolidation or merger.

1984, c. 303, § 6.1-195.81; 2010, c. 794.

§ 6.2-1085. When security not required.

No association with a minimum combined unimpaired capital and surplus of $50,000 or more shall be required by any officer or court of the Commonwealth to give security upon appointment to or acceptance of any fiduciary office which it may, by law, be authorized to execute, or to give security upon any bond given pursuant to § 19.2-386.6 or similar statute. No association shall qualify on an estate having a value in excess of its combined unimpaired capital and surplus without giving security for such excess on its bond, unless the giving of such security is waived under the terms of the governing instrument or by court order.

1984, c. 303, § 6.1-195.82; 1993, c. 866; 2010, c. 794; 2012, cc. 283, 756.

§ 6.2-1086. Association's operation and supervision of trust department.

A. The board of directors of an association is responsible for the proper exercise of fiduciary powers by the association. All matters pertinent thereto, including the determination of policies, the investment and disposition of property held in a fiduciary capacity, and the direction and review of the actions of all officers, employees, and committees utilized by the association in the exercise of its fiduciary powers, are the responsibility of the board. In discharging this responsibility, the board of directors may assign, by action duly entered in the minutes, the administration of such of the association's trust powers as it may consider proper to assign to such directors, officers, employees, or committees as it may designate.

B. No fiduciary account shall be accepted without the approval of the directors, officers, or committees to whom the board may have assigned the performance of that responsibility. A written record shall be made of such acceptances and of the relinquishment or closing out of all fiduciary accounts.

C. Upon the establishment of a trust account for which the association has investment authority, a prompt review of the assets of such account shall be made. The board of directors shall also ensure that at least once during every calendar year thereafter, and within 15 months of the last review, all the assets held in or held for each trust account for which the association has investment authority are reviewed to determine the advisability of retaining or disposing of such assets. The board of directors shall act to ensure that all investments have been made in accordance with the terms and purposes of the governing instrument and in accordance with applicable law.

D. The trust department may utilize personnel and facilities of other departments of the association, and other departments of the association may utilize personnel and facilities of the trust department to the extent not otherwise prohibited by the law.

E. Every association exercising trust powers shall adopt written policies and procedures to ensure that the securities laws of the United States and the Commonwealth are complied with in connection with any decision or recommendation to purchase or sell any security. Such policies and procedures, in particular, shall ensure that the association's trust department shall not use material inside information in connection with any decision or recommendation to purchase or sell any security.

F. Every association exercising fiduciary powers shall designate, employ, or retain legal counsel who shall be readily available to pass upon fiduciary matters and to advise the association and its trust department.

1984, c. 303, § 6.1-195.83; 2010, c. 794.

§ 6.2-1087. Books and accounts.

Every association exercising trust powers shall keep its fiduciary records separate and distinct from other records of the association. All fiduciary records shall be so kept and retained for such time as to enable the association to furnish such information or reports with respect thereto as may be required by the Commissioner. The fiduciary records shall contain full information relative to each account. Every association shall also keep an adequate record of all pending litigation to which the association is a party in connection with its exercise of trust powers.

1984, c. 30, § 6.1-195.84; 2010, c. 794.

§ 6.2-1088. Investment of funds and assets held as fiduciary.

Funds and assets held by an association in a fiduciary capacity shall be invested in accordance with the provisions of the governing instrument. When such instrument does not specify the character or class of investments to be made and does not vest in the association, its directors, or its officers absolute and uncontrolled investment discretion in the matter, funds and assets held pursuant to such instrument shall be invested in any investment in which fiduciaries may invest under the provisions of Chapter 15 (§ 64.2-1500 et seq.) of Title 64.2. An association acting as fiduciary under appointment by a court may likewise invest in any investments in which fiduciaries may invest under the provisions of Chapter 15 (§ 64.2-1500 et seq.) of Title 64.2 unless otherwise provided by order of the appointing court. Unless the governing instrument or order establishing the fiduciary relationship provides otherwise, funds and assets held by an association in a fiduciary capacity may also be invested in common trust funds and collective investment funds pursuant to the provisions of § 6.2-1095.

1984, c. 303, § 6.1-195.85; 2010, c. 794.

§ 6.2-1089. Funds awaiting investment or distribution.

A. Funds and assets held in a fiduciary capacity by an association awaiting investment or distribution shall not be held uninvested or undistributed any longer than is reasonable for the proper management of the trust account.

B. Funds and assets held in trust by an association, including managing agency accounts, awaiting investment or distribution, unless prohibited by the governing instrument, may be deposited in other departments of the association, provided that the association shall first set aside under the sole control of the trust department, as collateral security:

1. Direct obligations of the United States, or other obligations fully guaranteed by the United States as to principal and interest;

2. Readily marketable securities of the classes in which fiduciaries are authorized or permitted to invest trust funds, as set forth in § 64.2-1502; or

3. Other readily marketable securities as may be authorized by the Commissioner.

Such collateral securities, or securities substituted therefor as collateral, shall at all times be at least equal in face value to the amount of trust funds so deposited, but such security shall not be required to the extent that the funds so deposited are insured by the Federal Deposit Insurance Corporation or other federal insurance agency. The requirements of this subsection are met when qualifying assets of the association are pledged in such manner as to fully secure all trust account funds deposited by the trust department of the association in another department of the association.

C. Any funds held by an association as fiduciary awaiting investment or distribution and deposited in other departments of the association shall be made productive.

D. In the event of the failure or liquidation of an association, the owners of the funds held in trust and deposited in another department of the association shall have a first lien on the securities set apart as collateral for such funds, in addition to any other claim that such owners may have against the association.

1984, c. 303, § 6.1-195.86; 1990, c. 3; 1992, c. 810; 2010, c. 794.

§ 6.2-1090. Dealings with self or affiliates.

A. Unless authorized by the governing instrument or by court order, funds held by an association as fiduciary shall not be invested in stock or obligations of, or property acquired from, the association or its affiliates or their directors, officers, or employees, or organizations in which the association or its affiliates or their officers, directors, or employees possess such an interest as might affect the exercise of the best judgment of the association in acquiring the stock, obligations, or property.

B. Property held by an association as fiduciary shall not be sold or transferred, by loan or otherwise, to the association or its affiliates or their directors, officers, or employees, or to organizations in which the association or its affiliates or their officers, directors, or employees possess such an interest as might affect the exercise of the best judgment of the association in selling or transferring such property, except:

1. When lawfully authorized by the governing instrument or by court order;

2. In cases in which the association has been advised by its legal counsel in writing that it has incurred, as fiduciary, a contingent or potential liability, and the association desires to relieve itself from such liability, in which case such sale or transfer may be made with the approval of the board of directors and the Commissioner, provided that in all such cases the association, upon the consummation of the sale or transfer, shall make reimbursement in cash at no loss to the trust account;

3. As provided in §§ 6.2-1089 and 6.2-1094; or

4. When required by the Commissioner.

C. If the retention of stock or obligations of the association or its affiliates is authorized by the governing instrument or court order, the association may exercise rights to purchase its own stock or the stock of its affiliates, or securities convertible into such stock, when such rights are offered pro rata to all stockholders of the association or its affiliates, as the case may be. When the exercise of such rights or the receipt of a stock dividend results in fractional shareholdings, additional fractional shares may be purchased to complement the fractional shares so acquired. In elections of directors, shares of an association or its affiliates held by the association as sole fiduciary, whether in its own name as fiduciary or in the name of its nominee, may not be voted by the association or its nominee unless, under the terms of the governing instrument or a court order, the manner in which such shares shall be voted may be directed by a donor or beneficiary of the trust account, and the donor or beneficiary actually directs how the shares will be voted. In addition, where the association is acting as sole fiduciary with respect to a trust account containing voting shares of the association or its affiliates, the association may, in accordance with the provisions of subsection B of § 6.2-1091, petition an appropriate court for appointment of a co-fiduciary for the purpose of voting such shares.

1984, c. 303, § 6.1-195.87; 2010, c. 794.

§ 6.2-1091. Voting of financial institution stock held by association as fiduciary; when association disqualified from voting.

A. When voting shares of a financial institution are held by an association in a trust account, the association may not vote or participate in the voting of any such shares if the securities held in such fiduciary capacity, together with all the other voting securities of such financial institution held in a fiduciary capacity by the association and its affiliates, exceed 25 percent of the outstanding voting securities of such financial institution. If the voting securities of any financial institution held by an association in a trust account, together with all other voting securities of such financial institution held in a fiduciary capacity by the association and its affiliates, exceed five percent of the outstanding voting securities of such financial institution, but less than 25 percent thereof, the association may not vote or participate in the voting of any such voting securities unless there has been a determination by the Commissioner that the right to vote such shares does not constitute control of the particular financial institution in question.

B. If any person is acting as fiduciary, in addition to the association, for the trust account containing such voting securities, such other fiduciary, if not a director, officer, or employee of the association or its affiliates, may vote such shares. If the association is the sole fiduciary for the trust account, the association may petition an appropriate court for the appointment of a co-fiduciary for the sole purpose of voting such shares. Such appointment and qualification may be ex parte, and no prior notice to the beneficiaries of the trust account shall be required. The court at the time of such qualifications may relieve the co-fiduciary of any obligation for the giving of security on his bond. If the appointment of the co-fiduciary is limited to voting such shares, such order may provide that the co-fiduciary shall not be liable or accountable in the administration of the trust account, except for the breach of any fiduciary duty in voting or failing to vote such shares. No director, officer, or employee of the petitioning association or its affiliates shall be eligible to be named co-fiduciary under the provisions of this section.

C. The provisions of this section shall also apply in the case of voting shares of a bank holding company, as defined in 12 U.S.C. § 1841, or a savings and loan holding company held by an association in a fiduciary capacity.

1984, c. 303, § 6.1-195.88; 2010, c. 794.

§ 6.2-1092. Transactions between trust accounts.

A. An association may sell assets held by it as fiduciary in one trust account to itself as fiduciary in another trust account if the transaction is fair to both accounts and if such transaction is not prohibited by the terms of the governing instruments, court order, or the law of the Commonwealth.

B. An association may make a loan to a trust account from the funds belonging to another such account, when the making of such loan to a designated trust account is authorized by the governing instrument creating the account from which such loans are made, or by court order, and the terms of the transaction are fair to all of the trust accounts involved.

C. An association may make a loan to a trust account and may take as security therefor assets of the account, provided such transaction is fair to such account and is not otherwise prohibited by the governing instrument, by court order, or by the law of the Commonwealth.

1984, c. 303, § 6.1-195.89; 2010, c. 794.

§ 6.2-1093. Custody of assets and investments held in trust.

A. The assets and investments of each trust account shall be kept separate from the assets of the association and shall be placed in the joint custody or control of not fewer than two of the officers or employees of the association designated for that purpose by the board of directors of the association. All such officers and employees shall be adequately bonded.

B. The assets and investments of each trust account shall be either kept separate from those of all other trust accounts, except as provided in § 6.2-1095, or otherwise adequately identified as the property of the relevant account.

1984, c. 303, § 6.1-195.90; 2010, c. 794.

§ 6.2-1094. Establishment of common trust funds and collective investment funds; court accountings.

A. Any association authorized by the Commission to offer fiduciary services may establish and maintain one or more common trust funds for the collective investment of funds held in a fiduciary capacity by it. The association may include, in such common trust fund or funds established and maintained by it, funds held in a fiduciary capacity by any affiliate of the association.

B. An association may invest funds held by it in any fiduciary capacity in one or more common trust funds, provided (i) such investment is not prohibited by the governing instrument or court order creating such fiduciary relationship; (ii) in the case of co-fiduciaries, the written consent of the co-fiduciary is obtained by the association; and (iii) the association has no interest in the assets of the common trust fund other than as a fiduciary.

C. Unless ordered by an appropriate court, an association operating a common trust fund or funds shall not be required to render a court accounting with regard to such fund or funds, but, by application to an appropriate court, such association may secure approval of such an accounting on such conditions as the court may establish. Nothing contained herein shall affect the duties of the fiduciaries of the trust accounts participating in the common trust fund to render accounts of their several trusts.

1984, c. 303, § 6.1-195.91; 2010, c. 794.

§ 6.2-1095. Compensation of association acting as fiduciary.

A. If the amount of the compensation for acting in a fiduciary capacity is not provided for in the governing instrument or otherwise agreed to by the parties, an association acting in such capacity may charge or deduct reasonable compensation for its services. When the association is acting in a fiduciary capacity under appointment by a court, it shall receive such compensation as may be allowed or approved by that court.

B. No association, except with the specific approval of its board of directors, shall permit any of its officers or employees, while serving as such, to retain any compensation for acting as a co-fiduciary with the association in the administration of any trust account undertaken by it.

C. No association shall permit an officer or employee engaged in the operation of its trust department to accept a devise, bequest, or gift of trust account assets, unless the devise, bequest, or gift is directed or made by a relative of such officer or employee, or is approved by the board of directors of the association.

1984, c. 303, § 6.1-195.92; 2010, c. 794.

§ 6.2-1096. Surrender of trust powers by association.

Any association that has been granted the right to exercise trust powers and that desires to surrender such rights shall file with the Commission a certified copy of the resolution of its board of directors signifying such desire. Upon receipt of such resolution, the Commission shall make an investigation. If the Commission is satisfied that the association has been properly discharged from all fiduciary duties that it has undertaken, the Commission shall issue a certificate to such association certifying that it is no longer authorized to exercise fiduciary powers. Upon issuance of such a certificate by the Commission, an association shall no longer be subject to the provisions of this article and shall not exercise thereafter any of the powers granted by this article without first applying for and obtaining a new authorization to exercise such powers.

1984, c. 303, § 6.1-195.93; 2010, c. 794.

§ 6.2-1097. Effect on trust accounts of appointment of receiver for association or of voluntary dissolution of association.

A. If a receiver is appointed for an association, the receiver shall, pursuant to the orders of the Commission and of any court having jurisdiction, proceed to close such of the association's trust accounts as can be closed promptly and shall promptly transfer all other such accounts to substitute fiduciaries.

B. If an association exercising trust powers commences a voluntary dissolution, the liquidating agent shall proceed at once to liquidate the affairs of the trust department as follows:

1. All trusts and estates over which a court is exercising jurisdiction shall be closed or disposed of as soon as practicable in accordance with the orders or instructions of such court;

2. All other trust accounts which can be closed promptly shall be closed as soon as practicable and final accountings made therefor; and

3. All remaining trust accounts shall be transferred by appropriate legal proceedings to substitute fiduciaries.

1984, c. 303, § 6.1-195.94; 2010, c. 794.

§ 6.2-1098. Revocation of trust powers.

A. If, in the opinion of the Commission, an association is unlawfully or unsoundly exercising, or has unlawfully or unsoundly exercised, or has failed for a period of five consecutive years to exercise, the powers granted by this chapter, or otherwise fails or has failed to comply with the requirements of this chapter, the Commission may issue and serve upon the association a notice of intent to revoke the authority of the association to exercise the powers granted by this chapter. The notice shall contain a statement of the facts constituting the alleged unlawful or unsound exercise of powers, or failure to exercise powers, or failure to comply, and shall fix a time and place at which a hearing will be held before the Commission to determine whether an order revoking authority to exercise such powers should issue against the association.

B. Such hearing shall be conducted in accordance with the Commission's Rules, and shall be fixed for a date not earlier than 30 days and not later than 60 days after the service of such notice, unless an earlier or later date is set by the Commission at the request of the association so served.

C. Unless the association so served shall appear by a duly authorized representative, it shall be deemed to have consented to the issuance of the revocation order. In the event of such consent or if, upon the record made at any such hearing, the Commission shall find that any allegation specified in the notice of charges has been established, the Commission shall issue and serve upon the association an order prohibiting it from accepting any new or additional trust accounts and revoking authority to exercise any and all powers granted by this chapter, except that such order shall permit the association to continue to service all previously accepted trust accounts pending their expeditious divestiture or termination.

D. A revocation order shall become effective not later than the expiration of 30 days after service of such order upon the association and shall remain effective and enforceable, except to such extent as it is stayed, modified, terminated, or set aside by action of the Commission or a reviewing court. In the case of a revocation order issued upon the consent of an association, such order shall become effective at the time specified therein.

1984, c. 303, § 6.1-195.95; 2010, c. 794.

§ 6.2-1099. Trust powers of state savings banks.

State savings banks, and their subsidiaries and affiliates, may exercise fiduciary powers in the same manner as associations pursuant to this article.

1991, c. 230, § 6.1-194.138; 2010, c. 794.