81-27-6 - 001. Additional definitions.
§ 81-27-6.001. Additional definitions.
(a) In Articles 6, 7 and 8 of this chapter:
(1) "Capital" means:
(A) The sum of:
(i) The par value of all shares or participation shares of the state trust company having a par value that have been issued;
(ii) The consideration fixed by the board in the manner provided by the Mississippi Business Corporation Act for all shares or participation shares of the state trust company without par value that have been issued, except a part of that consideration that:
a. Has been actually received;
b. Is less than all of that consideration; and
c. The board, by resolution adopted not later than the sixtieth day after the date of issuance of those shares, has allocated to surplus with the prior approval of the commissioner; and
(iii) An amount not included in items (i) and (ii) that has been transferred to capital of the state trust company, on the payment of a share dividend or on adoption by the board of a resolution directing that all or part of surplus be transferred to capital, minus each reduction made as permitted by law; less
(B) All amounts otherwise included in subparagraphs (A)(i) and (ii) of this paragraph (1) that are attributable to the issuance of securities by the state trust company and that the commissioner determines, after notice and an opportunity for hearing, should be classified as debt rather than equity securities.
(2) "Conservator" means the commissioner or an agent of the commissioner exercising the powers and duties provided by subarticle B of Article 7 of this chapter.
(3) "Control" means:
(A) The ownership of or ability or power to vote, directly, acting through one or more other persons, or otherwise indirectly, more than twenty-five percent (25%) of the outstanding shares of a class of voting securities of a state trust company or other company;
(B) The ability to control the election of a majority of the board of a state trust company or other company;
(C) The power to exercise, directly or indirectly, a controlling influence over the management or policies of the state trust company or other company as determined by the commissioner after notice and an opportunity for hearing; or
(D) The conditioning of the transfer of more than twenty-five percent (25%) of the outstanding shares or participation shares of a class of voting securities of a state trust company or other company on the transfer of more than twenty-five percent (25%) of the outstanding shares of a class of voting securities of another state trust company or other company.
(4) "Equity capital" means the amount by which the total assets of a state trust company exceed the total liabilities of the state trust company.
(5) "Equity security" means:
(A) Stock, other than adjustable rate preferred stock and money market (auction rate) preferred stock;
(B) A certificate of interest or participation in a profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share or participation share, investment contract, voting-trust certificate, or partnership interest;
(C) A security immediately convertible at the option of the holder without payment of significant additional consideration into a security described by this paragraph (5);
(D) A security carrying a warrant or right to subscribe to or purchase a security described by this paragraph (5); and
(E) A certificate of interest or participation in, temporary or interim certificate for, or receipt for a security described by this paragraph (5) that evidences an existing or contingent equity ownership interest.
(6) "Hazardous condition" with respect to a trust company means:
(A) A refusal by the trust company to permit examination of its books, papers, accounts, records, or affairs by the commissioner;
(B) Violation by a trust company of a condition of its chartering or an agreement entered into between the trust company and the commissioner or the department; or
(C) A circumstance or condition in which an unreasonable risk of loss is threatened to clients or creditors of a trust company, excluding risk of loss to a client that arises as a result of the client's decisions or actions, but including a circumstance or condition in which a trust company:
(i) Is unable or lacks the means to meet its current obligations as they come due in the regular and ordinary course of business, even though the book or fair market value of its assets may exceed its liabilities;
(ii) Has equity capital less than the amount of restricted capital the trust company is required to maintain under Section 81-27-4.106, or the adequacy of its equity capital is threatened, as determined under regulatory accounting principles;
(iii) Has concentrated an excessive or unreasonable portion of its assets in a particular type or character of investment;
(iv) Violates or refuses to comply with this chapter, another statute or rule or regulation applicable to trust companies, or any final and enforceable order of the commissioner;
(v) Is in a condition that renders the continuation of a particular business practice hazardous to its clients and creditors; or
(vi) Conducts business in an unsafe or unsound manner, which includes, but is not limited to conducting business with,
a. Inexperienced or inattentive management;
b. Potentially dangerous operating practices;
c. Infrequent or inadequate audits;
d. Administration of assets that is notably deficient in relation to the volume and character or responsibility for asset holdings;
e. Failure to adhere to sound administrative practices;
f. Frequent occurrences of violations of laws, rules, regulations or terms of the governing instruments; or
g. Engaging in self-dealing or evidencing a notable degree of potential or actual conflicts of interest.
(7) "Insider" means:
(A) Each director, manager, managing participant, officer, and principal shareholder or participant of the trust company;
(B) Any company controlled by a person described by subparagraph (A) of this paragraph (7); or
(C) Any person who participates or has authority to participate, other than in the capacity of a director, in major policy-making functions of the state trust company, whether or not the person has an official title or the officer is serving without salary or compensation.
(8) "Insolvent" means a circumstance or condition in which a state trust company:
(A) Is unable or lacks the means to meet its current obligations as they come due in the regular and ordinary course of business, even if the value of its assets exceeds its liabilities;
(B) Has equity capital less than Five Hundred Thousand Dollars ($500,000.00), as determined under regulatory accounting principles;
(C) Fails to maintain deposit insurance with the Federal Deposit Insurance Corporation or its successor if the commissioner determines that deposit insurance is necessary for the safe and sound operation of the state trust company, or maintains adequate security for its deposits in accordance with Section 81-27-5.301.
(D) Sells or attempts to sell substantially all of its assets or merges or attempts to merge substantially all of its assets or business with another entity other than as provided by Article 3 of this chapter; or
(E) Attempts to dissolve or liquidate other than as provided by Subarticle A of Article 8 of this chapter.
(9) "Investment security" means a marketable obligation evidencing indebtedness of a person in the form of a bond, note, debenture, or other debt instrument not otherwise classified as a loan or extension of credit.
(10) "Limited liability trust company" means an entity organized under the Mississippi Limited Liability Company Act (Section 79-29-101 et seq.) that is chartered as a trust company under this chapter.
(11) "Loans and extensions of credit" means direct or indirect advances of funds by a state trust company to a person that are conditioned on the obligation of the person to repay the funds or that are repayable from specific property pledged by or on behalf of the person.
(12) "Manager" means a person elected to the board of a limited liability trust company.
(13) "Officer" means the presiding officer of the board, the principal executive officer, or another officer appointed by the board of a state trust company or other company, or a person or group of persons acting in a comparable capacity for the state trust company or other company.
(14) "Operating subsidiary" means a company for which a state trust company has the ownership, ability, or power to vote, directly, acting through one or more other persons, or otherwise indirectly, more than fifty percent (50%) of the outstanding shares of each class of voting securities or its equivalent of the company.
(15) "Participant" means an owner of a participation share in a limited liability trust company.
(16) "Participation shares" means the units into which the proprietary interests of a limited liability trust company are divided or subdivided by means of classes, series, relative rights, or preferences.
(17) "Principal shareholder" means a person who owns or has the ability or power to vote, directly, acting through one or more other persons, or otherwise indirectly, ten percent (10%) or more of the outstanding shares or participation shares of any class of voting securities of a state trust company or other company.
(18) "Private trust company" means a trust company that does not engage in a trust business with the general public.
(19) "Shareholder" means an owner of a share in a state trust company.
(20) "Shares" means the units into which the proprietary interests of a state trust company are divided or subdivided by means of classes, series, relative rights, or preferences.
(21) "Subsidiary" means a company that is controlled by another person. The term includes a subsidiary of a subsidiary.
(22) "Surplus" means the amount by which the assets of a state trust company exceeds its liabilities, capital, and undivided profits.
(23) "Trust deposits" means the client funds held by a state trust company and authorized to be deposited with itself pending investment, distribution, or payment of debts on behalf of the client.
(24) "Undivided profits" means the part of equity capital of a state trust company equal to the balance of its net profits, income, gains, and losses since the date of its formation, minus subsequent distributions to shareholders or participants and transfers to surplus or capital under share dividends or appropriate board resolutions. The term includes amounts allocated to undivided profits as a result of a merger.
(25) "Voting security" means a share, participation share, or other evidence of proprietary interest in a state trust company or other company that has as an attribute the right to vote or participate in the election of the board of the state trust company or other company, regardless of whether the right is limited to the election of fewer than all of the board members. The term includes a security that is convertible or exchangeable into a voting security and a nonvoting participation share of a managing participant.
(b) The definitions shall be liberally construed to accomplish the purposes of Articles 6, 7 and 8 of this chapter. Additional definitions applicable to Articles 6, 7 and 8 of this chapter are contained in Section 81-27-1.002. The commissioner by rule or regulation may adopt other definitions to accomplish the purposes of Articles 6, 7 and 8 of this chapter.
Sources: Laws, 1998, ch. 437, § 1, eff from and after July 1, 1998.