HB-6299, As Passed House, September 21, 2006

SUBSTITUTE FOR

HOUSE BILL NO. 6299

     A bill to amend 1999 PA 276, entitled

"Banking code of 1999,"

by amending sections 4401 and 4405 (MCL 487.14401 and 487.14405).

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 4401. (1) Upon application, the commissioner may grant to

any bank or state foreign bank branch  full trust powers  ,  as

provided in this section,  but subject to the conditions,

limitations, and restrictions in this act.  , except that

     (2) The commissioner shall not grant trust powers  shall not

be granted to a state agency.

(3)  (2) Upon approval of the  If the commissioner approves an

application described in subsection (1), the bank or state foreign

bank branch  shall have  has the power to conduct a trust business.

including, but not by way of limitation,  This power includes, but

is not limited to, all of the following:

     (a) In  and by its corporate name, to take, receive, hold,

repay, reconvey, and dispose of any effects and property, both real

and personal, that  may be  are granted, committed, transferred, or

conveyed to it with its consent,  upon any terms or upon any 

according to the terms of any agreement or trust, at any time, by

any  person, including minors, bodies  individual, minor, corporate

body,  or by any court, or any other person and to administer,

fulfill, and discharge the duties of the trust.  for the

remuneration as agreed upon.

     (b) To act as agent for the transaction of business, the

management of estates, the collection of rents, interest,

dividends, and money, and the collection of principal and interest

on mortgages, bonds, notes, and securities for money;  and to

enforce the payment  thereof, and also  of any of these

obligations; to act as agent for the purpose of issuing,

negotiating, registering, transferring, or countersigning the

certificates of stock, bonds, or other obligations of any

corporation, association, or municipality; and to manage any

sinking fund of any corporation, association, or municipality on

the terms  as agreed upon  to which the parties have agreed.

     (c) To accept and to execute the  offices  office of personal

representative, trustee, receiver, conservator, liquidating agent,

assignee, or guardian of any minor, incompetent person, legally

incapacitated person, or any other person subject to guardianship.

In all cases when  If an application is made to a court for the

appointment of a trustee, receiver, personal representative, or

guardian of any minor, incompetent person, legally incapacitated

person, or any other person subject to guardianship, the court may

appoint the bank or state foreign bank branch, with its consent, to

hold  the  that office. The accounts of  the  a bank or state

foreign bank branch as trustee, receiver, conservator, liquidating

agent, assignee, personal representative, or guardian shall be

regularly settled and adjusted by the proper office or tribunals.

All proper, legal, usual, and customary charges, costs, and

expenses shall be allowed to the bank or state foreign bank branch

for the care and management of  the  an estate  so committed to it

under this section.  In case of appointment  If appointed by any

court,  the  a bank or state foreign bank branch  shall not be  is

not required to give any security except in the discretion of the

court. If the court orders the bank or state foreign bank branch to

give security, the security shall be a bond in an amount fixed by

the court and with a surety company authorized to do business in

this state, or with personal surety or sureties on the bond

satisfactory to the court.

     (d)  To  Subject to law, to exercise by its board of directors

or authorized officers or agents  , subject to law, all incidental

powers  as are necessary to carry on a trust business.

     (e) A bank or state foreign bank branch acting as a fiduciary

may charge a reasonable fee for its services. In any action or

proceeding concerning fees, there is a rebuttable presumption that

a fee is reasonable if the fee or its method of computation is

specified in a fee schedule or fee agreement of the bank or state

foreign bank branch in effect at the time the service is provided

and if the agency or custody principal, the trust grantor, or any

other person who is entitled to be kept reasonably informed of the

fiduciary account and its administration under the estates and

protected individuals code, 1998 PA 386, MCL 700.1101 to 700.8102,

received reasonable notice of that fee schedule or fee agreement

before the fee is charged.

     Sec. 4405. (1)  Funds  A bank shall invest any money or

property held by  a  the bank as fiduciary and available for

investment  shall be invested at the time and in the manner

specified  by  in the agreement, instrument, or order creating or

defining the trust or other capacity in which the bank is acting

or,  where  if the bank holds the  funds  money or property as

agent, as directed or permitted by the bank's principal. In the

absence of investment specifications or limitations in the

agreement, instrument, or order,  funds  the bank shall invest any

money or property held by  a  the bank as fiduciary  shall within

a reasonable time  be invested in real or personal property, of

whatever type or nature,  as  that a prudent investor would

purchase, taking into account the purposes, terms, and distribution

requirements expressed in the governing instrument, in the exercise

of reasonable care, skill, and caution under conditions existing at

the time of purchase.  Compliance  A bank's compliance with the

prudent investor rule  shall be  described in this subsection is

determined in light of the facts and circumstances that exist at

the time of  a fiduciary's  the bank's decision or action as a

fiduciary and requires a standard of conduct, not outcome or

performance.

     (2)  Except as otherwise permitted by law, a court order, or

the agreement, instrument, or order creating or defining the trust,

or other capacity in which the bank is acting or with the consent

of all interested parties or their representatives, or where the

bank holds the funds or property as agent, as directed or permitted

by the bank's principal, funds or property held by a bank as

fiduciary shall not be invested  A bank shall not invest any money

or property held as fiduciary in any securities or other

properties, real or personal, purchased from the bank in its

individual capacity or from any affiliate of the bank  .  unless 1

of the following applies:

     (a) The investment is otherwise permitted by law, a court

order, or the agreement, instrument, or order that creates or

defines the trust or other fiduciary capacity in which the bank is

acting.

     (b) All interested parties or their representatives consent to

the investment.

     (c) The bank holds the money or property as an agent and the

bank's principal directs or permits the investment.

     (3)  Notwithstanding any other statutory or common law, except

Except when the agreement, instrument, or order creating or

defining the trust or other capacity in which the bank, or the bank

and 1 or more cofiduciaries, is acting prohibits the investment or

transaction, a bank  ,  or a bank and 1 or more cofiduciaries  ,

may  invest  do any of the following with any money or property

over which the bank or the bank and 1 or more cofiduciaries

exercises investment discretion:

     (a) Invest the money or property in a registered investment

company  any funds or property with respect to which the bank, or

the bank and 1 or more cofiduciaries, exercises investment

discretion, even though either or both of the following apply:

(i)  (a) The bank or 1 or more affiliates of the bank provide

services as investment adviser, sponsor, distributor, manager,

custodian, transfer agent, registrar, or otherwise, to the

investment company and receives reasonable remuneration for those

services.

(ii)  (b) The bank as fiduciary owns or controls a majority of

the voting shares of the investment company or a majority of the

shares voted for the election of its directors or trustees or the

bank as fiduciary otherwise controls the election of a majority of

its  the investment company's directors or trustees.

     (b) With the written consent of the revocable trust grantor or

agency principal, or if the trust is irrevocable or the trust

grantor is deceased or reasonably believed by the trustee to be

incapacitated, after providing advance notice at least 45 days

before the use of the money or property to any person then entitled

to be kept reasonably informed of the fiduciary account and its

administration under the estates and protected individuals code,

1998 PA 386, MCL 700.1101 to 700.8102, use the money or property to

purchase any product, service, or security from or through the bank

or an affiliate of the bank, including, but not limited to, an

insurance product or a security that is underwritten or distributed

by the bank or an affiliate of the bank or by a syndicate or

selling group that includes the bank or an affiliate of the bank,

if the purchase price is reasonable. Any advance notice required

under this subdivision shall list the type of products, services,

or securities available for purchase from or through the bank or an

affiliate of the bank and shall provide the name and address of an

individual at the bank to whom a beneficiary receiving the notice

may direct any objection. If the bank receives a written objection

to a notice provided under this subdivision, and the objection is

not resolved or withdrawn, the bank shall not use the money or

property to purchase any product, service, or security from or

through the bank or an affiliate of the bank for at least 60 days

after the bank receives the written objection. A bank or 1 or more

affiliates of the bank may receive reasonable compensation in

connection with the purchase of the product, service, or security

under this subdivision.

     (4) As used in subsection (3), "registered investment company"

means an investment company that is registered under the investment

company act of 1940,  title I of chapter 686, 54 Stat. 789  15 USC

80a-1 to 80a-64.

     (5) For purposes of this section, a bank is considered to  be

holding  hold funds or property in a fiduciary capacity if it is

holding the assets as trustee, personal representative, custodian,

conservator, guardian, agent, or in any other fiduciary capacity.