sb 0165

CHAPTER 65

SB 165 - FINAL VERSION

AN ACT relative to the voluntary dissolution of nondepository trust companies.

SPONSORS: Sen. Flanders, Dist 7

This bill creates a procedure for the voluntary dissolution of nondepository trust companies through liquidation or conversion to another type of business entity that does not have banking or trust powers.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

AN ACT relative to the voluntary dissolution of nondepository trust companies.

Be it Enacted by the Senate and House of Representatives in General Court convened:

65:1 New Subdivision; Voluntary Dissolution of Nondepository Trust Companies. Amend RSA 392 by inserting after section 42 the following new subdivision:

392:43 Voluntary Dissolution of Nondepository Trust Company. A trust company organized as a nondepository institution under the provisions of RSA 392 or under the provisions of RSA 392-A may voluntarily dissolve in the manner provided in this chapter. Such dissolution may be accomplished by the liquidation of the trust company or by reorganizing the trust company into a domestic or foreign corporation, limited liability company, limited partnership, or limited liability partnership that does not have banking or trust powers, and in both instances surrendering its trust company charter to the board of trust company incorporation. A trust company that reorganizes into any other entity pursuant to this section shall not engage in any activity that is authorized only for a bank or a trust company.

392:44 Voluntary Dissolution by Liquidation. A nondepository trust company, organized under the provisions of RSA 392 or under the provisions of RSA 392-A, which voluntarily dissolves by means of liquidation, shall do so by complying with the procedures for a voluntary dissolution set forth in the provisions of state law applicable to domestic business corporations, if organized as a banking corporation, or by complying with the procedures for a voluntary dissolution of a domestic limited liability company, limited partnership, or limited liability partnership, as applicable, if the dissolving trust company was organized as such other type of banking entity, provided, however, that any filing required to be made with the secretary of state shall be made instead with the board of trust company incorporation.

392:45 Voluntary Dissolution by Reorganization. A nondepository trust company organized under the provisions of RSA 392 or under the provisions of RSA 392-A which voluntarily dissolves by means of a reorganization into a domestic or foreign corporation, limited liability company, limited partnership, or limited liability partnership which is not authorized to engage in banking or trust activities shall do so by compliance with the procedures for a reorganization into such type of business entity as set forth in the provisions of domestic and foreign law applicable to such business entities, provided, however, that any filing required to be made with the secretary of state shall be made instead with the board of trust company incorporation.

I. A nondepository trust company seeking to dissolve its charter shall file an application for dissolution with the board of trust company incorporation accompanied by a filing fee of $1500 payable to the bank commissioner. The bank commissioner shall examine the application for completeness and compliance with the requirements of this section, the domestic business entity laws applicable to the requested type of liquidation or reorganization, and its rules. The application shall include a comprehensive plan of dissolution setting forth the disposition of all assets and liabilities, in reasonable detail to effect the liquidation or reorganization. Among other things, the plan of dissolution shall provide for the discharge or assumption of all of the nondepository trust company's known or unknown claims and liabilities and the transfer of all of its responsibilities as a trustee to a successor trustee or trustees. Additionally, the filing shall include such other certifications, affidavits, documents or information with respect to the dissolution as the board may require to understand how such assets and liabilities will be disposed of, the time table for effecting disposition of such assets and liabilities, and the applicant's proposal for dealing with any claims that are asserted after the dissolution has been completed. The bank commissioner may conduct a special examination of the applicant for purposes of evaluating the application. Cost of the special examination shall be paid by the applicant.

II. If the bank commissioner finds that the application for dissolution is incomplete, the bank commissioner shall return it for completion not later than 60 days after it is filed. If the application is found to be complete by the bank commissioner, he or she shall so notify the board in writing and shall report any information he or she has obtained from an examination of the applicant to the board. Not later than 30 days thereafter, the board shall hold a hearing for the purpose of determining whether the plan of dissolution disposes of the assets and liabilities in a lawful manner, is fair and equitable to all interested persons, has no adverse effect on the business of banking in the state and in general carries out the purposes and intentions of RSA 392:43-45. Not later than 30 days thereafter, the board shall either approve or not approve the application. If the board approves the application, then the applicant may proceed with the dissolution under the plan, subject to such conditions that the board may prescribe. If the applicant subsequently determines that the plan of dissolution must be amended to complete the dissolution, it shall file an amended plan with the board and obtain its approval to proceed under the amended plan. If the board does not approve the application or amended plan, if any, the applicant may appeal the decision pursuant to RSA 541.

III. Upon completion of all actions required under the plan of dissolution and conditions, if any, prescribed by the board of incorporation, necessary to liquidate the trust company or to effect the reorganization, the applicant shall submit a written report of its actions to the board of incorporation and the applicant's board of directors shall certify, under oath, that it is true and correct. Following receipt of the report, the bank commissioner may examine the trust company to determine whether the commissioner is satisfied that all required actions have been taken to liquidate or reorganize the trust company in accordance with the plan of dissolution and any conditions prescribed by the board. Not later than 60 days after the filing of the report, the board of incorporation shall examine the report and the bank commissioner's findings, and, if it is satisfied, shall so notify the applicant in writing that the dissolution has been completed and is final. Thereupon, the applicant shall surrender its charter to the board, and the board shall issue a certificate of dissolution to be filed with the secretary of state pursuant to RSA 392:47. If the board is not satisfied that all required actions have been taken, it shall notify the applicant in writing what additional actions shall be taken to be eligible for a certificate of dissolution. The board shall establish a deadline for the submission of evidence that the additional actions have been taken. The board may extend the deadline for good cause shown. If the applicant fails to file a supplemental report showing that the additional actions have been taken before the deadline, or submits a report that is found not to be satisfactory by the board of incorporation, the board shall notify the applicant in writing that its application is not approved, and the applicant may appeal the decision pursuant to RSA 541.

IV. The board may adopt rules, pursuant to RSA 541-A, relative to the procedures and requirements for a dissolution pursuant to RSA 392:43-47.

392:47 Procedure; Effect; Recording Fee. When the board of trust company incorporation approves a voluntary dissolution application, the applicant shall file the certificate of dissolution in the office of the secretary of state, accompanied by a fee of $35. In the case of a reorganization, the applicant shall also file the documents required by the secretary of state for domestic business entities to complete a statutory reorganization of the type approved by the board, including the organizational instruments for the reorganized entity. The secretary of state shall record the certificate and other documents, if any, and issue a certificate evidencing such liquidation or reorganization, as applicable. When the secretary of state has issued a certificate evidencing the liquidation or reorganization, as applicable, the dissolving banking corporation, limited liability company, limited liability partnership or limited partnership shall be deemed to have been voluntarily dissolved or reorganized, as applicable, with the same effect as if such voluntary dissolution or reorganization had been effected by a domestic business corporation, limited liability company, limited partnership, or limited liability partnership, by making the filings required of such domestic business entities under the provisions of state law applicable to such domestic business entities.

65:2 Capital; Other Funds; Voluntary Dissolution. Amend RSA 392-A:3 to read as follows:

392-A:3 Capital; Other Funds. A merchant bank shall maintain capital at a level which is commensurate with the risk undertaken in connection with its loans, investments, and other activities, as determined annually by its board of directors, if it is a corporation, or its equivalent governing body if it is any other type of business entity, but in no event shall its capital be less than 6 percent of its assets. The initial capital of a merchant bank shall consist of common stock in the amount of at least $2,500,000 paid in the form of cash or its equivalent. The balance of any capital required by the board of trust company incorporation may consist of preferred stock or other equity capital, subordinated notes, or debentures, as approved by said board. Notwithstanding the foregoing, the capital structure of a New Hampshire financial institution that reorganizes into a merchant bank may continue in the same form and amount as existed at the time of reorganization, provided that the capital is at least $2,500,000. A merchant bank may borrow funds to engage in the merchant banking business only from accredited investors. Following the organization or reorganization of a merchant bank, if the bank commissioner finds that the capital is inadequate based on the risk profile of its investments, the bank commissioner may require that the capital be increased by an amount necessary to protect the safety and soundness of the merchant bank. A merchant bank may voluntarily dissolve, either by liquidation or reorganization into another type of business entity, in accordance with the provisions of RSA 392.

65:3 Approval of Conversion of a Corporation; Nondepository Trust Companies Added. Amend RSA 293-A:11.09 to read as follows:

293-A:11.09 Approval of Conversion of a Corporation. A corporation may convert to a limited liability company organized under the laws of the state of New Hampshire upon the authorization of such conversion in accordance with this section and fulfillment of the requirements of RSA 304-C:17-a. The board of directors of the corporation shall adopt a plan of conversion and shall submit the plan of conversion for approval of the shareholders in the manner provided for shareholder approval of a plan of merger under RSA 293-A:11.03 for a merger requiring shareholder approval. After a plan of conversion is authorized and at any time before the certificate of conversion is filed, the planned conversion may be abandoned, subject to any contractual rights, without further shareholder action, in accordance with the procedures set forth in the plan of conversion, or if none is set forth, in the manner determined by the board of directors. The term "corporation," as used in this section, shall include nondepository trust companies incorporated as banking corporations under the provisions of RSA 392 or RSA 392-A. Such nondepository trust companies shall be entitled to employ the procedures provided in this section to voluntarily dissolve their trust company charters pursuant to RSA 392:43-47 and to reorganize as domestic business corporations subject to the provisions of this statute.

65:4 Limited Liability Companies; Definitions; "Business Entity"; Nondepository Trust Company Added. Amend RSA 304-C:1, I-a to read as follows:

I-a. "Business entity" means a domestic or foreign limited liability company, corporation, general partnership, [or] limited partnership or nondepository trust company organized under RSA 392 or RSA 392-A.