«Drafted by the NATIONAL CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS and by it APPROVED AND RECOMMENDED FOR ENACTMENT IN ALL THE STATES at its ...»
UNIFORM STATUTORY TRUST ENTITY ACT
Drafted by the
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
and by it
APPROVED AND RECOMMENDED FOR ENACTMENT
IN ALL THE STATES
MEETING IN ITS ONE-HUNDRED-AND-EIGHTEENTH YEAR
IN SANTA FE, NEW MEXICOJULY 9-16, 2009
WITH PREFATORY NOTE AND COMMENTSCOPYRIGHT 8 2009 By
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWSMarch 31, 2010
ABOUT ULCThe Uniform Law Commission (ULC), also known as National Conference of Commissioners on Uniform State Laws (NCCUSL), now in its 118th year, provides states with non-partisan, well-conceived and well-drafted legislation that brings clarity and stability to critical areas of state statutory law.
ULC members must be lawyers, qualified to practice law. They are practicing lawyers, judges, legislators and legislative staff and law professors, who have been appointed by state governments as well as the District of Columbia, Puerto Rico and the U.S. Virgin Islands to research, draft and promote enactment of uniform state laws in areas of state law where uniformity is desirable and practical.
• ULC strengthens the federal system by providing rules and procedures that are consistent from state to state but that also reflect the diverse experience of the states.
• ULC statutes are representative of state experience, because the organization is made up of representatives from each state, appointed by state government.
• ULC keeps state law up-to-date by addressing important and timely legal issues.
• ULC’s efforts reduce the need for individuals and businesses to deal with different laws as they move and do business in different states.
• ULC’s work facilitates economic development and provides a legal platform for foreign entities to deal with U.S. citizens and businesses.
• Uniform Law Commissioners donate thousands of hours of their time and legal and drafting expertise every year as a public service, and receive no salary or compensation for their work.
• ULC’s deliberative and uniquely open drafting process draws on the expertise of commissioners, but also utilizes input from legal experts, and advisors and observers representing the views of other legal organizations or interests that will be subject to the proposed laws.
• ULC is a state-supported organization that represents true value for the states, providing services that most states could not otherwise afford or duplicate.
DRAFTING COMMITTEE ON UNIFORM STATUTORY TRUST ENTITY ACTThe Committee appointed by and representing the National Conference of Commissioners on
Uniform State Laws in preparing this act consists of the following individuals:
JUSTIN L. VIGDOR, 2400 Chase Square, Rochester, NY 14604, Chair THOMAS J. BUITEWEG, 121 W. Washington, Suite 300, Ann Arbor, MI 48104 ANN E. CONAWAY, Widener University School of Law, 4601 Concord Pike, Wilmington, DE 19803 LANI LIU EWART, 1099 Alakea St., Suite 1800, Honolulu, HI 96813 THOMAS L. JONES, University of Alabama School of Law, University Station, P.O. Box 865557, Tuscaloosa, AL 35486-0050 DIMITRI G. KARCAZES, 55 E. Monroe St., Suite 3300, Chicago, IL 60603 JOHN H. LANGBEIN, Yale Law School, P.O. Box 208215, New Haven, CT 06520-8215 L. GENE LEMON, 1136 W. Butler Dr., Phoenix, AZ 85021-4428 HARRY M. WALSH, 456 Summit Ave. #206, St. Paul, MN 55102 ROBERT H. SITKOFF, Harvard Law School, 1575 Massachusetts Ave., Cambridge, MA 02138, Reporter EX OFFICIO MARTHA LEE WALTERS, Oregon Supreme Court, 1163 State St., Salem, OR 97301-2563, President ANNE L. MCGIHON, 837 Sherman St., Denver, CO 80203, Division Chair
AMERICAN BAR ASSOCIATION ADVISORELLISA OPSTBAUM HABBART, 300 Martin Luther King Blvd., Suite 200, Wilmington, DE 19801, ABA Advisor WILLIAM H. CLARK, JR., One Logan Square, 18th and Cherry Streets, Philadelphia, PA 19103-6996, ABA Section Advisor ROBERT R. KEATINGE, 555 17th St., Suite 3200, Denver, CO 80202-3979, ABA Section Advisor THOMAS E. RUTLEDGE, 2000 PNC Plaza, 500 W. Jefferson St., Louisville, KY 40202-2874, ABA Section Advisor
GENERAL PROVISIONSSECTION 101. SHORT TITLE.
SECTION 102. DEFINITIONS.
SECTION 103. GOVERNING INSTRUMENT.
SECTION 104. MANDATORY RULES.
SECTION 105. APPLICABILITY OF TRUST LAW.
SECTION 106. RULE OF CONSTRUCTION.
FORMATION; CERTIFICATE OF TRUST AND OTHER FILINGS; PROCESSSECTION 201. CERTIFICATE OF TRUST.
SECTION 202. AMENDMENT OR RESTATEMENT OF CERTIFICATE OF TRUST;
STATEMENT OF CORRECTION.
SECTION 203. SIGNING OF RECORDS
SECTION 204. DELIVERY TO AND FILING OF RECORDS BY [SECRETARY OFSTATE]; EFFECTIVE TIME AND DATE.
SECTION 205. CORRECTING FILED RECORD
SECTION 206. CERTIFICATE OF GOOD STANDING.
SECTION 207. NAME OF STATUTORY TRUST.
SECTION 208. RESERVATION OF NAME.
SECTION 209. AGENT FOR SERVICE OF PROCESS.
SECTION 210. CHANGE OF DESIGNATED OFFICE OR AGENT FOR SERVICE OFPROCESS.
SECTION 211. RESIGNATION OF AGENT FOR SERVICE OF PROCESS.
SECTION 212. SERVICE OF PROCESS, NOTICE, OR DEMAND.
SECTION 213. [ANNUAL] [BIENNIAL] REPORT FOR [SECRETARY OF STATE].......... 33 [ARTICLE] 3
GOVERNING LAW; AUTHORIZATION; DURATION; POWERSSECTION 301. GOVERNING LAW
SECTION 302. STATUTORY TRUST AS ENTITY
SECTION 303. PERMISSIBLE PURPOSES.
SECTION 304. STATUTORY TRUST SOLELY LIABLE FOR DEBT, OBLIGATION,OR OTHER LIABILITY OF STATUTORY TRUST.
SECTION 305. NO CREDITOR RIGHTS IN TRUST PROPERTY.
SECTION 306. DURATION.
SECTION 307. POWER TO HOLD PROPERTY; TITLE TO TRUST PROPERTY............... 42 SECTION 308. POWER TO SUE AND BE SUED
SERIES TRUSTSSECTION 401. STATUTORY TRUST HAVING SERIES.
SECTION 402. LIABILITY OF SERIES TRUST.
SECTION 403. DUTIES OF TRUSTEE IN SERIES TRUST
SECTION 404. DISSOLUTION OF SERIES.
TRUSTEES AND TRUST MANAGEMENTSECTION 501. MANAGEMENT OF STATUTORY TRUST.
SECTION 502. TRUSTEE POWERS.
SECTION 503. ACTION BY TRUSTEES.
SECTION 504. PROTECTION OF PERSON DEALING WITH TRUSTEE
SECTION 505. STANDARDS OF CONDUCT FOR TRUSTEES
SECTION 506. GOOD-FAITH RELIANCE.
SECTION 507. INTERESTED TRANSACTIONS.
SECTION 508. TRUSTEE’S RIGHT TO INFORMATION.
SECTION 509. INDEMNIFICATION, ADVANCEMENT, AND EXONERATION.............. 56 SECTION 510. DIRECTION OF TRUSTEES.
SECTION 511. DELEGATION BY TRUSTEE.
SECTION 512. INDEPENDENT TRUSTEE IN REGISTERED INVESTMENTCOMPANY
BENEFICIARIES AND BENEFICIAL RIGHTSSECTION 601. BENEFICIAL INTEREST.
SECTION 602. VOTING OR CONSENT BY BENEFICIAL OWNERS
SECTION 603. CONTRIBUTION BY BENEFICIAL OWNER.
SECTION 604. DISTRIBUTION TO BENEFICIAL OWNER.
SECTION 605. REDEMPTION OF BENEFICIAL INTEREST
SECTION 606. CHARGING ORDER.
SECTION 607. TRANSACTION WITH BENEFICIAL OWNER.
SECTION 608. BENEFICIAL OWNER’S RIGHT TO INFORMATION
SECTION 609. ACTION BY BENEFICIAL OWNER.
CONVERSION AND MERGERSECTION 701. DEFINITIONS.
SECTION 702. CONVERSION.
SECTION 703. ACTION ON PLAN OF CONVERSION BY CONVERTINGSTATUTORY TRUST.
SECTION 704. FILINGS REQUIRED FOR CONVERSION; EFFECTIVE DATE................. 76 SECTION 705. EFFECT OF CONVERSION.
SECTION 706. MERGER.
SECTION 707. ACTION ON PLAN OF MERGER BY CONSTITUENT STATUTORYTRUST.
SECTION 708. FILINGS REQUIRED FOR MERGER; EFFECTIVE DATE.
SECTION 709. EFFECT OF MERGER.
SECTION 710. [ARTICLE] NOT EXCLUSIVE.
DISSOLUTION AND WINDING UPSECTION 801. EVENTS CAUSING DISSOLUTION.
SECTION 802. ARTICLES OF DISSOLUTION.
SECTION 803. WINDING UP
SECTION 804. NOTICE TO CLAIMANT
SECTION 805. PUBLICATION OF NOTICE.
SECTION 806. ADMINISTRATIVE DISSOLUTION.
SECTION 807. REINSTATEMENT FOLLOWING ADMINISTRATIVE DISSOLUTION... 91 SECTION 808. REVIEW OF REJECTION OF REINSTATEMENT.
FOREIGN STATUTORY TRUSTSSECTION 901. GOVERNING LAW.
SECTION 902. APPLICATION FOR CERTIFICATE OF REGISTRATION.
SECTION 903. ACTIVITIES NOT CONSTITUTING DOING BUSINESS.
SECTION 904. FILING OF CERTIFICATE OF REGISTRATION.
SECTION 905. CERTIFIED COPY OF CERTIFICATE OF REGISTRATION.
SECTION 906. NONCOMPLYING NAME OF FOREIGN STATUTORY TRUST............... 98 SECTION 907. REVOCATION OF CERTIFICATE OF REGISTRATION.
SECTION 908. CANCELLATION OF CERTIFICATE OF REGISTRATION.
SECTION 909. EFFECT OF FAILURE TO HAVE CERTIFICATE OF REGISTRATION.. 100 SECTION 910. ACTION BY [ATTORNEY GENERAL].
MISCELLANEOUS PROVISIONSSECTION 1001. UNIFORMITY OF APPLICATION AND CONSTRUCTION.
SECTION 1002. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL ANDNATIONAL COMMERCE ACT.
SECTION 1003. SAVINGS CLAUSE.
SECTION 1004. RESERVATION OF POWER TO AMEND OR REPEAL.
SECTION 1005. APPLICATION TO EXISTING RELATIONSHIPS.
SECTION 1006. REPEALS.
SECTION 1007. EFFECTIVE DATE.
UNIFORM STATUTORY TRUST ENTITY ACT
Introduction. In large part because of uncertainty over the legal status of the business trust at common law, use of the common-law trust as a mode of business organization declined over the course of the twentieth century. Today, most commercial enterprise that is not organized as a sole proprietorship makes use of the partnership, limited liability company, or corporate forms of organization.
To address the legal uncertainty surrounding the common-law business trust, at least thirty states have enacted legislation that validates the trust as a permissible form of business organization. But the entity that arises under the more recent of these statutes is better understood as a “statutory business trust,” “statutory trust entity,” or “statutory trust” than as a common-law business trust with statutory validation.
A statutory trust differs from a common-law trust in important respects. A common-law trust, whether its purpose is donative or commercial, arises from private action without the involvement of a public official. Because a common-law trust is not a juridical entity, it must sue and be sued, own property, and transact in the name of the trustee and in the trustee’s capacity as such. By contrast, a statutory trust is a juridical entity, separate from its trustees and beneficial owners, that has capacity to sue and be sued, own property, and transact in its own name. A statutory trust is formed by the filing of a certificate of trust by a public official, typically the Secretary of State, in the public record.
The modern business trust statutes do not prohibit use of a common-law trust for commercial purposes. Instead, such a statute offers the transactional planner an additional option, which is governed by the act. Common-law trusts, whether donative or commercial, remain subject to the principles of law and equity applicable to private and charitable trusts.
Since the 1980s, statutory trust entities have thrived in a variety of niches, particularly in the organization of mutual funds and in the practice of asset securitization. See Steven L.
Schwarcz, Commercial Trusts as Business Organizations: Unraveling the Mystery, 58 Bus. Law.
559 (2003); John H. Langbein, The Secret Life of the Trust: The Trust as an Instrument of Commerce, 107 Yale L.J. 165 (1997); Sheldon A. Jones, Laura M. Moret & James M. Storey, The Massachusetts Business Trust and Registered Investment Companies, 13 Del. J. Corp. L.
421 (1988). The statutory trust has also come to be used in certain tax-advantaged real estate transactions. See, e.g., Rev. Rul. 2004-86, 2004-33 I.R.B. 191.
The primary stimulus for the drafting of the Uniform Statutory Trust Entity Act has been the increasing popularity of statutory trust entities. Increasing use of the statutory trust as a mode of business organization has led to a recognition that in many states the status of such trusts is unclear and that much of the existing legislation is out-of-date or incomplete. The case law on statutory trusts is sparse.
Models for Drafting. Although the Uniform Statutory Trust Entity Act is the first Uniform Act on the subject of statutory business trusts, comprehensive statutory trust legislation exists in several states. Notable examples include the statutory trust acts of Connecticut, Delaware, Maryland, New Hampshire, Nevada, South Dakota, Wyoming, and Virginia, all of which were consulted in the drafting of this act.