ArkansasSB2302025 Regular SessionSenate

TO REPEAL THE ARKANSAS TRUST INSTITUTIONS ACT; AND TO CREATE THE ARKANSAS TRUST INSTITUTIONS ACT OF 2025.

Sponsored By: Brandon Achor (Republican), Justin Boyd (Republican)

Enacted

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Bill Overview

Analyzed Economic Effects

35 provisions identified: 9 benefits, 3 costs, 23 mixed.

Trust clients get fee and conflict protections

Trustee and fiduciary pay agreements must be negotiated fairly, and charges must be reasonable for the services provided. The law sets no specific fee cap. Trust companies must disclose actual or potential conflicts reasonably expected to affect their independence or judgment before entering an agreement. The disclosure rule covers written agreements entered after September 1, 2025, and requires disclosure before a written or oral agreement.

Trust clients get loss and record safeguards

State trust companies must obtain reasonable client protection against fraud, theft, forgery, and similar insurable losses. Coverage generally includes all directors, officers, and employees, using an insurer or surety authorized in Arkansas or otherwise acceptable to the commissioner. The provider must be legally allowed to issue the coverage; the law sets no specific coverage amount. The commissioner must approve an individual waiver when the coverage requirement is unnecessary or burdensome. Companies must also keep trust-account records separate from other records and include important information about each account.

Arkansas residents can choose trust providers

Arkansas residents can choose any trust institution to act as their fiduciary, managing money or property for them. An institution with an Arkansas trust office or representative office and its affected clients can also choose the governing law. Choices include Arkansas, a state where affected clients live, or the state where the institution has its main office. This choice covers their written agreement or the document under which the institution acts.

Trust clients can choose investment law

A trust institution with an Arkansas trust office or representative office and its affected clients can jointly choose investment standards. They can choose Arkansas law, the law of a state where affected clients live, or the institution's principal-office state. This choice sets the legal investment standards, not a guaranteed return.

Trust record misconduct carries felony penalties

Knowingly hiding information or company records from the Arkansas Bank Commissioner is a Class D felony. The same penalty applies to destroying or removing records to hide information material to a pending or expected proceeding. Knowingly making false entries in a trust company's books, records, reports, or statements is also a Class D felony.

Trust companies must quickly report suspected theft

Trust companies must report robberies and shortages of company or trust funds exceeding $5,000 within 48 hours of discovery. They must also report apparent or suspected misuse of funds or property by directors, officers, or employees, regardless of amount. Reports go to the Bank Commissioner, and an oral report must be promptly confirmed in writing. Companies and their directors, officers, employees, and agents are protected from liability based on information in these required reports.

Out-of-state trust firms can expand

Out-of-state trust institutions with an Arkansas trust office can open or acquire more trust offices or representative offices. Added locations must follow the requirements for Arkansas state trust institutions. At each qualifying trust office, these firms can offer any activity Arkansas law allows for state trust institutions.

Trust institutions can offer broader services

Arkansas state banks and trust companies can perform fiduciary services and use related business powers allowed by law. Chartered trust companies can conduct trust business inside or outside Arkansas. They can deposit trust funds with themselves or affiliates, subject to Arkansas Code § 23-51-508. They can handle government-agency deposits, with or without interest, after obtaining any required federal deposit insurance. Their boards can approve gifts to community funds and public-welfare charities when appropriate and in the company's interests.

Trust oversight targets conflicts and misconduct

Covered trust regulators cannot hold specified company jobs or ownership interests, accept payments or gifts, or borrow from state trust companies. They can keep deposits and buy noncredit services on ordinary customer terms. Without written commissioner consent, directors are barred for felonies, specified unreimbursed company losses or judgments, or uncorrected trust-loan violations. The commissioner can stop violations or unauthorized trust activity and remove leaders or employees for specified misconduct or persistent violations. Unsafe-conduct orders require statutory risks to assets or the public; business bans generally require notice and a hearing, except for urgent extraordinary cases.

Trust charter objections require costly filings

To appear in opposition to a state trust company charter application, a person must file a written protest. The protest must explain the objection and be filed within 30 days after notice of the application. The person must also pay a fee of $2,000 to $5,000, set by the commissioner through rules.

Trust company buyers face tighter rules

A private trust company's exemption cannot be sold or transferred with control of the company. The exemption ends on the control transfer's effective date. The buyer must follow the act unless a separate exemption application is filed and approved. A person required to apply for control of an Arkansas state trust company must file that application. Knowingly failing or refusing to file is a Class A misdemeanor.

Trust company leaders face oversight duties

State trust-company boards must have at least three directors, with more than half living in Arkansas. Before each elected term, directors must file sworn statements accepting their roles, confirming qualifications, and promising lawful, diligent service. Boards are responsible for trust duties, including policies, investments, property sales, and review of staff and committees. Boards must elect officers each year and can remove them at their discretion. Companies must have a chief executive and an officer responsible for corporate records and confirming signatures.

Trustees can delegate with client safeguards

Trustees and other fiduciaries can delegate investment, management, or administrative work, but must carefully select and review the provider. They generally remain responsible for the work, except as provided in Arkansas Code § 28-73-807. Hiring and paying an affiliate requires permission from the trust document, a court order, every affected client's written consent, or statutory delegation standards. Affiliate fees must be competitive with fees charged by unrelated providers for similar services.

Trust records stay private with exceptions

Specified State Bank Department records are confidential and generally exempt from Arkansas public-records requests. These include examination reports, examination information, investigations and reports about trust companies or customers, and submitted personal financial statements. Disclosure is allowed through department rules, valid subpoenas, and sharing with federal or other-state financial regulators. Examination reports and related documents may be released under a protective order when the commissioner waives confidentiality in the interest of justice. Official orders may be disclosed when the commissioner finds no competitive advantage or harm to the company's safety and soundness.

Arkansas trust providers can expand offices

State trust institutions can apply to establish or acquire trust and representative offices anywhere in Arkansas. Arkansas-chartered institutions can also apply for offices in other states, supplying office, market, jurisdiction, board, and fee information. Out-of-state business generally starts 30 days after application receipt unless another date is set; extended review requires written approval first. Expansion can be denied for insufficient resources, unsafe operations, or harm to the public interest. Trust business at authorized offices, branches, and foreign locations must follow local law; Arkansas prohibitions can be waived only after a safety finding.

Family trust exemptions carry ongoing duties

Private trust companies that do not serve the public can seek full or partial exemptions and pay a nonrefundable $3,000 to $5,000 fee. Applicants must meet family-control, disclosure, and Arkansas records-office requirements; exempt companies must certify annually by June 30 and pay applicable franchise taxes. False statements, refusal of examination, withheld information, or violations can trigger revocation. Written notice must give at least five calendar days before revocation; a written hearing request before that date prevents it taking effect. Companies generally have five calendar days after revocation to comply, but attempted public deception or fraud can shorten or eliminate that period.

Out-of-state trust offices need reciprocal access

Out-of-state trust institutions without an Arkansas trust office can establish or acquire one when their home state allows comparable Arkansas institutions similar access. They must meet Arkansas and home-state requirements, including a written promise to follow applicable Arkansas law. New-office business generally starts 60 days after application receipt unless the commissioner sets another date. The commissioner must certify approval and satisfaction of requirements within 60 days, including any imposed conditions. Extended review requires prior written approval before establishing the office.

Private trust companies can serve public

A private trust company can apply to end private status and serve the general public. It must provide a board resolution, acknowledge that exemptions end, and pay any required filing fee. Public business generally starts 30 days after approval, unless the commissioner sets another date; extended review requires prior written approval. Approval can be denied for insufficient resources, harm to the public interest, or failure to meet formerly exempted requirements within a reasonable period.

Representative trust offices cannot manage trusts

Out-of-state trust institutions can establish, acquire, and maintain Arkansas representative offices, but cannot act as trustees or other fiduciaries there. Institutions without an Arkansas trust office must apply with good-standing and board documents and any prescribed fee. Business generally starts on day 31 after the commissioner acknowledges receipt, unless another date is set. Extended review requires prior written approval before opening. Approval can be denied for inadequate resources, unsafe operations, or harm to the public interest.

State oversees trust company shutdowns

A state trust company choosing to liquidate must surrender its assets and business to the Arkansas Bank Commissioner. This requires approval by a majority of directors or members and notice to the commissioner. Suspending operations immediately puts the company under the commissioner's control for liquidation. Companies cannot make a general transfer of assets for creditors outside this process. State-bank liquidation procedures apply, and the commissioner keeps control until the company can reopen or liquidation is complete.

Trust accounts keep duties after transfers

Mergers need prior written commissioner approval and required board and shareholder approvals; a resulting state trust company must be solvent and adequately funded. Buying all or nearly all specified trust assets needs approval based on financial safety, sufficient capital, and legal compliance. Purchased accounts carry their rights and duties to the buyer automatically; other seller liabilities transfer only when expressly assumed. Approved mergers and purchases start upon approval unless the commissioner consents to another agreement date. Selling all assets to another state- or federally chartered trust institution needs commissioner and majority-board approval, filed records, and generally cancels the seller's charter.

Trust charter applicants face fees and screening

Trust-company applicants must submit sworn applications, required materials, proof of capital held in escrow, and a nonrefundable $3,000–$10,000 fee set by rule. Approval requires a market the company can serve profitably and review of its plan, capital, prospects, and organizers' qualifications and good faith. Missing required materials or fees means the application is abandoned. Proposed officers', directors', and principal shareholders' financial statements remain confidential; nonconfidential application records remain available through public-records requests. Companies must open within six months of receiving a charter or conditional approval unless extended, or face revocation or cancellation without court action.

Trust companies can change shares carefully

State trust companies generally need prior approval to change capital through dividends, share sales, redemptions, or other means. Rule-based exceptions cover specified cash stock sales, proportional share dividends, profit transfers to capital, and loss-related surplus decreases. Companies can amend their governing documents for lawful purposes with commissioner approval, effective upon approval unless another date is named. Boards can create share series only when their governing documents expressly allow it. Shares cannot be issued or sold until the commissioner approves and finds clients' and creditors' interests will not be harmed.

Trust companies face Arkansas office rules

State trust companies must continuously keep their main office in Arkansas. An in-state move requires written notice and a board resolution. The move usually takes effect 30 days after receipt, unless the commissioner sets another date or requires approval. State and out-of-state trust institutions opening Arkansas offices can register their names with the commissioner. The commissioner can require a different name when a proposed name could mislead the public.

Trust companies face business filing rules

Organizers must sign formation documents listing the company's name, duration, powers, shares, starting capital, main office, and initial board. The initial board must have at least three directors or managers; companies must also adopt bylaws and follow state corporation-law amendment procedures. Certain status, capital, or governance filings must reach the Bank Commissioner before action, unless the act or commissioner rules waive submission. Companies can establish or acquire subsidiaries for lawful activities, but must send a letter describing proposed subsidiary activities or new activities. They can usually proceed after 30 days; the commissioner can set another date, and extended review requires prior written approval.

Trust companies face minimum capital rules

A new state trust company charter generally requires at least $1 million in capital. The Bank Commissioner can require more or approve a reduction on application when consistent with safe and sound operations. Capital requirements can also change based on a company's condition, operations, or planned business, and companies must maintain the adjusted amount. An existing company's capital-increase order takes effect no sooner than 20 days after mailing or delivery, unless it timely requests a hearing.

Trust company closures protect creditor claims

Voluntary closure needs approval from holders of a majority of voting stock and the commissioner, plus arrangements to pay creditors. Companies must publish notice weekly for four consecutive weeks, notify creditors to present claims, and remain subject to exams and reporting. For insolvency or imminent insolvency threatening clients, depositors, and creditors, the commissioner can approve a protective asset sale without shareholder approval. Federal Deposit Insurance Corporation approval is required unless deposits are uninsured; buyers must assume specified client, depositor, salary, supervision, sale, and department-fee obligations. A shareholder-approved sale is treated as voluntary dissolution and liquidation.

Trust company debt protects depositors first

A state trust company's board can issue capital notes or similar debt without shareholder action, with prior written commissioner approval. This debt ranks below depositors' claims; convertible debt remains subject to existing shareholder purchase rights. Qualifying debt ranking below unsecured creditors can count as equity capital when assessing financial danger or insolvency. Rules can allow that capital treatment for additional purposes. Interest and principal payments need prior written approval when the company is insolvent, financially hazardous, or the payment would cause either condition.

Trust company investments face spending limits

State trust companies cannot invest in unrelated commerce unless the law permits it or client duties require it. Subsidiary investments, including loans, are capped at 20% of capital base for one subsidiary and 40% for all subsidiaries. The Bank Commissioner can approve excess subsidiary investments only when lawful and safe for the company. Facilities and equipment investments above capital and surplus need prior written approval; specified indirect investments count, with a lease-related exclusion. Certain real-property leases also need approval before completion, renewal, or extension; subsidiaries are not affiliates for that rule.

Trust company loans face new safeguards

A state trust company's loans to one non-insider cannot exceed 20% of its capital base; all insider loans share a 20% cap. Companies cannot lend trust deposits; trustees can lend to beneficiaries only when the trust document expressly allows or requires it. Credit to company or affiliate insiders must use comparable outside-customer terms and equally strict lending checks. These loans cannot carry more than normal repayment risk or other unfavorable features. Officers or directors who knowingly participate in or permit violations of insider-credit rules face a Class D felony upon conviction.

Trust company takeovers require approval fees

Taking direct or indirect control of an Arkansas state trust company generally requires the Bank Commissioner's prior written approval. Applicants pay a rule-set filing fee of $1,500 to $3,000. They must submit required information and publish notice after the application is accepted as complete. Exceptions cover specified debt-related acquisitions, already-approved controlling persons, transfers by operation of law, and commissioner-exempted transactions. The commissioner can deny approval for statutory risks, including harm to competition, financial stability, or lawful operation.

Trust insiders face fair-dealing and loan accountability

Covered deals with trust-company insiders must use terms and credit standards substantially like comparable deals with outsiders. Officers or directors who knowingly make, approve, permit, or fail to prevent a loan violating lending limits face personal liability. They can owe the company or commissioner the full loan amount. They avoid that liability by serving written disapproval on both the board and commissioner when they first learn of the loan.

Trust institutions face exams and oversight fees

The Arkansas Bank Commissioner oversees authorized trust institutions, makes rules, and can require testimony and evidence. State trust companies must undergo exams at least every 24 months, or more often when needed for safety. They must file condition and income reports periodically and whenever the commissioner requests them. Assessment fees follow the commissioner's schedule and are due within 10 days after January and July notices. Out-of-state institutions with Arkansas offices can face office exams, compatible reporting requirements, and supervisory or examination fees; amounts are not specified.

Trust providers need authority to operate

Only authorized institutions and qualifying foundations can conduct trust business in Arkansas. Out-of-state providers need the required Arkansas branch or licensed office. New state trust companies need a charter, approved leaders, and completed organizational steps before doing trust business. Existing state trust companies keep their charters but must follow the new law. Listed authorized services, including legal, real-estate, regulated securities, insurance, and certain funeral and cemetery services, are exempt from trust licensing.

Trust violators face penalties and takeovers

Covered compliance-order violations carry civil penalties up to $1,000 each; violations of unsafe-conduct or removal orders carry up to $500 daily. The commissioner can bring civil cases for actual or anticipated violations of the act, related rules, or orders. In extraordinary urgent situations, the commissioner can act without prior notice or hearing, but must promptly hear applications to undo the action. The commissioner can take over a state trust company for legal grounds such as unsafe operations, insolvency, impaired capital, or refusing orders or exams. Control continues until the company is allowed to resume business or is fully liquidated.

Sponsors & Cosponsors

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 119 • No: 0

House vote • 3/3/2025

House Vote - Monday, March 3, 2025 2:06:50 PM

Yes: 92 • No: 0

Senate vote • 2/19/2025

Senate Vote - Wednesday, February 19, 2025 2:09:45 PM

Yes: 27 • No: 0 • Other: 1

Actions Timeline

Notification that SB230 is now Act 237
3/4/2025Senate
DELIVERED TO GOVERNOR.
3/3/2025Senate
Reported correctly enrolled and ordered delivered to the Governor.
3/3/2025Senate
ORDERED ENROLLED
3/3/2025Senate
Returned from the House as passed.
3/3/2025Senate
Returned to the Senate as passed.
3/3/2025House
Read the third time and passed and ordered transmitted to the Senate.
3/3/2025House
Returned by the Committee Do Pass
2/26/2025House
Read the first time, rules suspended, read the second time and referred to the Committee on INSURANCE & COMMERCE- HOUSE
2/19/2025House
RECEIVED FROM THE SENATE
2/19/2025House
Ordered immediately transmitted to the House.
2/19/2025Senate
Read the third time and passed.
2/19/2025Senate
Returned by the Committee, with the recommendation that it Do Pass
2/18/2025Senate
Re-referred to INSURANCE & COMMERCE - SENATE
2/17/2025Senate
REPORTED CORRECTLY ENGROSSED
2/17/2025Senate
Amendment # 1 read the first time, rules suspended, read the second time and adopted, ordered engrossed.
2/17/2025Senate
Withdrawn from Committee and placed on 2nd reading for purpose of amendment # 1
2/17/2025Senate
Read first time, rules suspended, read second time, referred to INSURANCE & COMMERCE - SENATE
2/13/2025Senate
Filed
2/13/2025Senate

Bill Text

SB230 - Introduced
2/13/2025
PDF
Act Version
PDF

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