CHARTERING A TRUST COMPANY IN TENNESSEE—HOW DO YOU DO IT?
First and foremost this article does not intend to replace your legal counsel and certainly should not lead you to think you can charter a trust company in Tennessee without the help of a lawyer. Chartering a trust company is not the same as chartering a bank. Banks have tellers and drive up windows and assists everyday folks with their banking needs. Said another way, once you charter a trust company in Tennessee you are not transacting business with the general public. Tenn. Code § 45-2-2001 states that transacting business with general public “means any sale, solicitation, arrangement, agreement, or transaction to provide fiduciary services as described in § 45-2-1002, whether or not for a fee, commission, or any other type of remuneration, with any client that is not a family client.”
Typically, banks can also have a trust division, but chartering a trust company is totally different. In fact, the proposed private trust company may request that they be exempted from any provision of the Banking Act or rules thereof. There are specific rules to follow if you wish for your company to be exempt from a particular section.
Tenn. Code § 45-2-2002 lays out the requirements to apply for a private trust company in Tennessee. Those requirements are as follows:
(1) A private trust company requesting an exemption from provisions of the Banking Act shall file an application with the commissioner containing the following:
(A) A nonrefundable application fee as set by the department;
(B) A detailed statement under oath showing the private trust company’s assets and liabilities as of the end of the month previous to the filing of the application;
(C) A statement under oath of the reason for requesting the exemption;
(D) A statement under oath that the private trust company is not currently transacting business with the public and that the company will not conduct business with the public without the prior written permission of the commissioner;
(E) The current street mailing address and telephone number of the physical location in this state at which the private trust company will maintain its books and records, together with a statement under oath that the address given is true and correct and is not a United States postal service post office box or a private mail box, postal box, or mail drop;
(F) A listing of the specific provisions for which the request for exemption is made; and
(G) A statement under oath of the name of the individual who will be the designated ancestor of the private trust company.
(2) The commissioner shall not approve a private trust company exemption unless the application is completed as required in this section.
(b) Requirements. To maintain status as an exempt private trust company under this chapter, the private trust company shall comply with the following:
(1) An exempt private trust company shall not transact business with the public;
(2) An exempt private trust company shall file an annual certification that it is maintaining the conditions and limitations of its exempt status. This annual certification shall be filed on a form provided by the commissioner and be accompanied by a fee determined by the department. The annual certification shall be filed on or before June 30 of each year. The commissioner may examine or investigate the private trust company, at the company’s expense, periodically as necessary to verify the certification; and
(3) An exempt private trust company shall comply with the principal office provisions, address and telephone requirements of this section.
(c) Change of Control.
(1) Control of an exempt private trust company may not be transferred or sold with exempt status. In any change of control, the acquiring control person must comply with this chapter, and the exempt status of the private trust company shall automatically terminate upon the effective date of the transfer. A separate application for exempt status must be filed if the acquiring person wishes to obtain or continue an exemption pursuant to this section.
(2) For the purposes of this part, a transfer of control of an exempt private trust company to a family member shall not be a change of control resulting in the termination of private trust company’s exempt status regardless of whether the transfer is:
(A) Direct or indirect;
(B) Inter vivos; or
(C) A result of death.
If you have questions about forming a trust company in Tennessee please feel free to reach out to me at any time. Contact Adam Bullock and Bullock Law Firm at (423) 566-6001, or by email at firstname.lastname@example.org