New Hampshire permits out-of-state trust companies to relocate their charters from other states to New Hampshire. The process is called “domestication.” We recently helped a trust company domesticate in New Hampshire and the process is now clear. Below is a summary of what you can expect.
In recent years, New Hampshire has taken steps to modernize its trust laws. Its Trust Code (NHRSA 564-B) is one of the most progressive in the United States. In addition, it has revised or enacted a host of other statutes (Uniform Principal and Income Act (NHRSA 564-C), Qualified Disposition in Trust Act (NHRSA 564-D), Uniform Power of Attorney Act (NHRSA 564-E) and the New Hampshire Foundation Act (NHRSA 564-F)) to make the state attractive for trust business. Furthermore, the New Hampshire Banking Department (NHBD) has reformed its laws and regulations relating to trust companies and has deep experience in supervising them. So, trust companies that are seeking a favorable legal environment for their clients and want to have a regulator that is flexible and knowledgeable about the trust business, New Hampshire is getting attention.
1. A trust company should review with its legal counsel legal issues that might have to be address in the course of domestication. A review should be conducted as to how the state in which the trust company is chartered would handle a domestication and what changes, if any, might have to be made to accommodate New Hampshire law. For example, New Hampshire does not require the trust company to have a presence in the state, but where would its principal office be located? Does it meet the capital and insurance requirements of New Hampshire law?
2. The trust company should develop a business plan that articulates its reason for wanting to domesticate to New Hampshire and lays out its strategy for the next five years. This plan is critical to the application process because it will educate the NHBD about the trust company’s business model.
3. The trust company should schedule a meeting with the Bank Commissioner and use ideas expressed in its business plan to acquaint the NHBD about its business and the proposed timing of the domestication. Any issues that should be addressed in the domestication process can be identified and discussed in that meeting.
4. The trust company should then prepare the application with the help of legal counsel to provide the required information. In addition to the business plan, a capital plan and pro forma financial statements should be produced. Biographical and financial reports must be submitted on directors and executive offices, together with fingerprints for criminal background checks. The location of its offices should be identified, together with plans for securing approvals, if any, required by the states in which the trust company will operate. The trust company should also explain how it will comply with the pledge requirement to providing the NHBD with funding should the trust company fail and be liquidated by the department. Finally, it should be submitted along with its proposed policies and procedures.
5. After submission of the application and the payment of a $10,000 application fee, the NHBD has 30 days to review the application for completeness and 60 days to act on a completed application. Information may be requested during this review.
6. The Bank Commissioner will issue a conditional approval which sets forth what information must be provided to the NHBD to obtain final approval to conduct business. Typically, this involves evidence of capital, insurance, and various commitments. At this time, any applications to out of state banking authorities should be submitted for permission to operate the trust offices of the trust company if not in New Hampshire.
7. Upon the submission of the required information, the Bank Commissioner will issue a Certificate to Transact Business.
8. A final filing need to be made with the New Hampshire Secretary of State to complete the domestication. Also, the original charter of the trust company needs to be returned to the out of state banking authority.
For a trust company seeking to domesticate, developing the information required for the filing would involve reworking existing documents to comply with New Hampshire requirements. That is a far simpler task than creating original documents. In most instances, with some minor modifications, the documents will be in compliance. New Hampshire allows a trust company to be in corporate or limited liability form and the domestication is a continuation of the original entity for tax and trust purposes. A trust company should plan on at least six months from beginning to the end to complete the process of domestication.
If you are considering domestication of a trust company charter in New Hampshire, please contact John Funk or Susan Hollinger.
* John Funk is admitted in New Hampshire, Massachusetts, Maine and Vermont. Susan Hollinger is admitted in New Hampshire, Massachusetts and Vermont.