§ 11-109-205 — Transactions with affiliates

Colorado § 11-109-205

• Jurisdiction: Colorado
• Title 11: Financial
• Art.: Trust Companies

Text

(1) Unless otherwise prohibited by
law, a trust company and its affiliates may engage in any of the transactions
described in subsection (2) of this section if such transactions are either:

(a) On terms and under circumstances, including credit standards, that are
substantially the same, or at least as favorable to such trust company or its
subsidiary, as those prevailing at the time for comparable transactions with or
involving nonaffiliated companies; or

(b) In the absence of comparable transactions, on terms and under
circumstances, including credit standards, that in good faith would be offered to, or
would apply to, nonaffiliated companies.

(2) Transactions covered. Subsection (1) of this section shall apply to the
following:

(a) A purchase of, or an investment in, securities issued by the affiliate;

(b) A purchase of assets, including assets subject to an agreement to
repurchase, from the affiliate;

(c) The acceptance of securities issued by the affiliate as collateral security
for a loan or extension of credit to any person or company;

(d) The sale of securities or other assets to an affiliate, including assets
subject to an agreement to repurchase;

(e) The payment of money or the furnishing of services to an affiliate under
contract, lease, or otherwise;

(f) Any transaction in which an affiliate acts as an agent or broker or receives
a fee for its services for the trust company or for any other person; and

(g) Any transaction or series of transactions with a third party including
those in which an affiliate has a financial interest in the third party or is a
participant in such transaction or series of transactions.

(3) (a) A company or shareholder shall be deemed to have control over
another company if such company or shareholder:

(I) Directly or indirectly, or acting through one or more other persons, owns,
controls, or has power to vote twenty-five percent or more of any class of voting
securities of the other company; or

(II) Controls in any manner the election of a majority of the directors or
trustees of the other company.

(b) Notwithstanding any other provision of this section, no company shall be
deemed to own or control another company by virtue of its ownership or control of
shares in a fiduciary capacity or if the company owning or controlling such shares is
a business trust.

(4) The banking board may promulgate rules to exempt transactions or
relationships from the requirements of this section if the banking board finds such
exemptions are in the public interest and consistent with the purposes of this
section.

(5) As used in this section, unless the context otherwise requires:

(a) (I) Affiliate with respect to a trust company means:

(A) Any company that controls the trust company and any other company
that is controlled by the company that controls the trust company;

(B) Any company that is controlled, directly or indirectly, by a trust or
otherwise, by or for the benefit of shareholders who beneficially or otherwise
control, directly or indirectly, by trust or otherwise, the trust company or any
company that controls the trust company;

(C) Any company in which a majority of its directors or trustees constitute a
majority of the persons holding any such office with the trust company or any
company that controls the trust company;

(D) Any company, including a real estate investment trust, that is sponsored
and advised on a contractual basis by the trust company or any subsidiary or
affiliate of the trust company; and

(E) Any investment company with respect to which a trust company or any
affiliate thereof is an investment advisor as defined in 15 U.S.C. sec. 80a-2 (a)(20).

(II) Affiliate with respect to a trust company does not include:

(A) Any company that is a subsidiary of a trust company; and

(B) Any company engaged solely in holding the premises of the trust
company.

(b) Company means a corporation, partnership, business trust, association,
or similar organization and, unless specifically excluded, the term company
includes a trust company and a bank.

(c) Securities shall have the same meaning as set forth in section 11-51-201
(17).

Legislative History

Source: L. 2003: Entire article added with relocations, p. 1183, � 3, effective July 1.