Organization of a Trust Company A trust company, like a state bank, is organized under state law. In New York it may be formed by seven or more natural persons filing and publishing a notice of intention and filing an organization certificate, in the same manner as in the case of organizing a state bank. The capital requirements for a trust company are as follows: When the usual investigation is completed by the Superin tendent of Banks and he has indorsed the organization certificate, the corporate existence of the trust company begins, but it cannot commence business until the full payment of the capital stock is certified to the Superintendent and a list of stockholders giving the name, residence, number of shares owned, and post-office address of each of them, is verified by two officers and filed with the Superintendent of Banks. The trust company must deposit with the Superintendent, registered in his official title in trust for the depositors and creditors of the company, interest-bearing stocks or bonds either of the United States, or of the state of New York or any municipality in the state, issued by the authority of the legislature. These deposited stocks or bonds must amount to To per cent of the trust company's capital stock and must not be less than $roo,000 if its principal office is located in a city whose population exceeds soo,000, $5o,000 if the population is between roo,000 and 500,00o, $30,00o if between 25,00o and ioo,000, and $20,00o in places less than 25,00o.
After all requirements as to certificates of intention, organiza tion, payment of capital and deposit of securities have been fulfilled, the Superintendent of Banks issues an authorization cer tificate. The persons named in the organization certificate, or such of them as are holders of at least ten shares of stock, con stitute the first board of directors. which should number not less than seven nor more than thirty. The directors should then organize and elect a president from their own number, together with a vice-president and other officers required under their by laws. The directors have a three-year tenure of office and the members of the first board are required to group themselves in three classes so that one-third will be elected and take office an nually thereafter. Every director in a trust company must hold in his own right at least ten shares of its capital stock. Not less than two-thirds of the directors must be citizens of the United States.
Conversion of a State Bank into a Trust Company In New York a state bank desiring to become a trust com pany must call a meeting of its stockholders, giving them due notice twenty days in advance. If holders of two-thirds of the capital stock agree at the meeting, the bank may be converted. A resolution must be adopted at the meeting directing that not less than thirteen nor more than thirty stockholders of the bank be designated by name to execute an organization certificate to meet the legal requirements. All persons named in the resolu tion are required to subscribe and acknowledge the organiza tion certificate and attach to it copies of the minutes of the meeting, verified by the president and secretary of the meeting. Duplicates of affidavits of service of notice and of the organization certificate are sent to the Superintendent of Banks, who, upon approval, indorses the certificate permitting the trust company to commence business when the capital stock has been paid up and the required securities deposited. When the corporate existence of a trust company begins, all the property of the state bank immediately becomes the property of the trust company without conveyance or transfer.
Conversion of a Trust Company The procedure to be followed in converting a trust company in New York is the same as in converting a state bank, except with regard to funds held by a trust company as executor, trustee, or administrator, by decree of court. Before converting, a trust
company must divest itself of such funds through court procedure. When this is done, the usual procedure is followed.
Organization of a Mutual Savings Bank In New York a savings bank may be formed by filing with the Superintendent of Banks a notice of intention to organize, signed by not less than nine nor more than thirty persons. The procedure as to publication of such notice is the same for a say ings bank as for a state bank or trust company. The same also applies to the filing of an organization certificate, which specifi cally states: (I) the name by which the bank is to be known; (2) its proposed place of business; (3) the name, occupation, and post-office address of each incorporator, (4) the sum which each incorporator will contribute in cash to the guaranty fund; (5) a declaration that each incorporator will accept the liabilities and faithfully discharge the duties of a trustee.
When the Superintendent of Banks approves the organization certificate the corporate existence of the bank begins, and it may proceed with the necessary details to complete its organization; but it cannot transact business until the incorporators deposit, in cash, to the credit of the savings bank an initial guaranty fund amounting to not less than $5,000. The incorporators are re quired to enter into an agreement with the Superintendent of Banks as trustee for the depositors of the bank to make further contributions in cash if necessary to conduct the business. The agreement is secured by a surety bond and filed with the Super intendent. In addition to the guaranty fund the incorporators are required to deposit in the savings bank as an expense fund $5,000 in cash to pay the bank's operating expenses until such time as its earnings are sufficient to pay its way. The guaranty fund and the expense fund are repaid, pro rata, to the contributors or trus tees whenever the guaranty fund is in excess of 5 per cent of the amount due depositors.
Upon receipt of the organization certificate, the incorpora tors or board of trustees should organize; adopt by-laws, rules, and regulations; and file with the Superintendent of Banks the name, residence, and post-office address of each officer of the bank. The Superintendent then issues an authorization certifi cate permitting the bank to commence business.
The trustees are required to elect from their own number a president, two vice-presidents, and such other officers as are necessary to conduct business. Each officer upon notice of elec tion is put under oath to administer the affairs of the bank honestly and diligently, and these oaths are subscribed to by the trustees and forwarded to the Superintendent of Banks. The persons named in the authorization certificate are the first trus tees. They must be citizens of the United States; at least four fifths of them must reside in the state, and not less than two-thirds of them in the county where the bank is located. No person is permitted to be a trustee of a savings bank if he falls under any of the following heads: r. A person who is not a resident of the state (although in the case of New York City one-fifth of the trustees may reside in a state adjoining that city).
2. A person who has been adjudged a bankrupt, has taken advantage of the insolvency law, or has made a general assignment for the benefit of creditors.
3. A person who has not satisfied a judgment recovered against him for money outstanding for more than three months.
4. A person who is a trustee, officer, clerk, or employee in another savings bank.