CHAPTER 261
FORMERLY
SENATE BILL NO. 563
AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE BY PROVIDING FOR THE ORGANIZATION OF LIMITED PURPOSE TRUST COMPANIES AND TO AMEND THE CAPITAL STOCK REQUIREMENTS OF BANKS AND TRUST COMPANIES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Two-thirds of all members elected to each House thereof concurring therein):
Section 1. This Act may be referred to as "The Limited Purpose Trust Company Act."
Section 2. Amend Part II, Title 5, Delaware Code, by denominating Subchapter V as Subchapter VI. Section 3. Amend Part II, Title 5, Delaware Code, by adding a new Subchapter V as follows:
"Subchapter V. Limited Purpose Trust Companies
§773. Definitions.
As used in this subchapter:
(a) 'Affiliate' means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. 'Control' means beneficial ownership directly, or indirectly through one or more intermediaries, of more than 50 per centum of the voting securities or partnership interests in any person other than an individual.
(b) 'Loans' means consumer loans for personal, property or household purposes, mortgage loans, and commercial loans other than to affiliates.
(c) 'Located in the State' means, with respect to state chartered banks or trust companies, banks or trust companies created under the laws of this State and, with respect to national banking associations, banks or trust companies whose prinicipal place of business is located in this State.
(d) 'Trust company powers' means all of the powers, rights, privileges and franchises incident to a trust company established under Subchapter IV of Part II of this Title, except:
(1) to receive deposits subject to check or to repayment upon presentation of a passbook, certificate of deposit, or other evidence of debt, or upon request of the depositor; and
(2) to make loans.
§774. Limited Purpose Trust Companies.
A corporation established under this subchapter shall be known as a limited purpose trust company. The Commissioner shall issue no certificate of public convenience and advantage with respect to any corporation proposed to be established under this chapter solely for the purpose of exercising trust company powers, excepting a corporation organized under this subchapter.
§775. Powers of Limited Purpose Trust Company.
(a) With respect to a limited purpose trust company, the powers conferred by Subchapter IV of Part II of this Title or otherwise by law shall be limited solely to such powers as are necessary or incidental to the performance of trust company powers.
(A) an affiliate or affiliates; or
(B) a corporation or corporations established under this subchapter; or
(3) have more than a single office within this State open to the public for the conduct of its business.
§776. Organization, Number of Incorporators.
(a) Except as otherwise required by the provisions of this subchapter, the organization of a limited purpose trust company shall be governed by the provisions of Subchapter II of Part II of this Title, provided that:
(1) the articles of association of a limited purpose trust company shall specifically state that the formation of a limited purpose trust company is the purpose for which the subscribers thereto associate themselves;
(2) any application for a certificate of public convenience and advantage made with respect to a limited purpose trust company shall plainly state on its face that the application is for such a certificate with respect to a limited purpose trust company and not for a certificate with respect to a bank or trust company; and
(3) any certificate of public convenience and advantage issued by the Commissioner on such application shall similarly state on its fact that such certificate approves the formation of a limited purpose trust company pursuant to this subchapter.
(b) The number of persons who associate themselves for the purpose of forming a limited purpose trust company shall be no less than three.
§777. Conditions and Findings.
(a) In determining whether a certificate of public convenience and advantage shall be issued with respect to any limited purpose trust company, the Commissioner shall consider:
(1) the financial and managerial resources of the limited purpose trust company;
(2) the future prospects of the limited purpose trust company;
(3) the financial history of affiliates of the limited purpose trust company, if any;
(4) whether the organization of the limited purpose trust company may result in undue concentration of resources or substantial lessening of competition in this State; and
(5) the convenience and needs of the public and this State.
(b) No certificate of public convenience and advantage shall be issued with respect to any limited purpose trust company except on a finding:
(1) that the limited purpose trust company will be operated in a manner so as not to attract customers from the general public in this State to the substantial detriment of existing banks or trust companies located in this State other than corporations established under this subchapter, provided that such limited purpose trust company may be operated in a manner likely to attract and retain customers with whom it or any affiliate thereof have or have ha business relations;
(2) that the limited purpose trust company itself, or together with its affiliates, will employ within 3 years of its commencement of business in this State at least 100 persons within this State, provided that the Commissioner shall extend, upon request of the limited purpose trust company, the time within which to employ such 100 persons to a fourth year if 50 such persons are employed by the end of the third year and thereafter to a fifth year for reasonable cause shown; and
(3) that the limited purpose trust company itself, or together with its affiliates, has a total ownership equity of at least $25,000,000.
(4) that, pursuant to its application for such certificate, the limited purpose trust company has specifically agreed to be bound by the conditions set forth in this Subchapter V.
(c) Every corporation formed under this subchapter shall operate in compliance with the standards set forth in subsection (b) of this section.
§778. Revocation of Charter.
If any limited purpose trust company is found by the Commissioner to have violated any condition of §777(c) of this subchapter or to have exercised powers beyond those conferred by §775 of this subchapter, the Commissioner shall issue an order pursuant to §136 to cease and desist such violation by a date certain. Upon a finding that the limited purpose trust company has not complied with such order, the Commissioner shall take such steps as set forth in 5131 as regards violations of this Code.
§779. Applibility of Other Provisions of Law; Severability of Provisions.
(a) To the extent not inconsistent with the object, purpose, and provisions of this subchapter, a limited purpose trust company shall be subject to any section of this Code or any other statute or law of this State applicable to trust companies.
(b) If any provision of this subchapter, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of this subchapter, and the application of such provision to persons or circumstances other than those as for which it is held invalid, shall not be affected thereby."
Section 4. Any persons having undertaken prior to the enactment of this Act any of the actions required by Title 5 of the Delaware Code for the organization and establishment of a trust company may elect to have such procedures apply to the organization and establishment of a limited trust company under this Act and the State Bank Commissioner shall accept such procedures in fulfillment of the requirements of the Act, or allow such amendments to the actions already taken so they are in substantial compliance with the requirements of this Act, but shall not require more than one public notice of such election.
Section 5. Amend Section 745, Part II, Title 5, Delaware Code, by striking said Section in its entirety and substituting in lieu thereof the following:
"§745. Capital Stock; Minimum Required.
The capital stock of a bank organized under this chapter shall be as follows: not less than $500,000 if the bank is located in a city or town having a population of more than 50,000 persons; not less than $350,000 if the bank is located in a city or town of not more than 50,000 nor less than 5,000 persons; and not less than $250,000 if the bank is located in a town of not more than 5,000 persons. The capital stock of a trust company or limited purpose trust company organized under this chapter shall not in any ease be less than $500,000. In addition to the capital stock required by the foregoing, every corporation organized under this chapter shall have a paid in surplus account equal to no less than one-half of the minimum capital stock required by this section."
Approved June 9, 1982.