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First Substitute S.B. 176

Senator John L. Valentine proposes the following substitute bill:


             1     
FINANCIAL INSTITUTIONS AMENDMENTS

             2     
2004 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Sponsor: John L. Valentine

             5     
             6      LONG TITLE
             7      General Description:
             8          This bill modifies the Financial Institutions Act to permit certain financial institutions
             9      to be organized as limited liability companies, to provide for industrial banks, and to
             10      provide for a study.
             11      Highlighted Provisions:
             12          This bill:
             13          .    provides the conditions under which specified financial institutions can be
             14      organized as or converted to a limited liability company;
             15          .    addresses application of corporate terminology to limited liability companies;
             16          .    changes references to industrial loan corporations to industrial banks;
             17          .    addresses formation and operation of industrial banks;
             18          .    provides grandfathering for nondepository industrial loan companies;
             19          .    provides for the study of whether specified financial institutions should be allowed
             20      to be organized as or convert to a limited liability company; and
             21          .    makes technical changes.
             22      Monies Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          This bill provides an immediate effective date.



             26          This bill provides revisor instructions.
             27      Utah Code Sections Affected:
             28      AMENDS:
             29          7-1-103, as last amended by Chapter 260, Laws of Utah 2000
             30          7-1-201, as last amended by Chapter 200, Laws of Utah 1994
             31          7-1-203, as last amended by Chapter 176, Laws of Utah 2002
             32          7-1-207, as last amended by Chapter 200, Laws of Utah 1994
             33          7-1-301, as last amended by Chapter 184, Laws of Utah 1999
             34          7-1-324, as enacted by Chapter 75, Laws of Utah 2003
             35          7-1-503, as last amended by Chapter 49, Laws of Utah 1995
             36          7-1-701, as last amended by Chapter 19, Laws of Utah 1997
             37          7-3-3, as last amended by Chapter 49, Laws of Utah 1995
             38          7-8-3, as last amended by Chapter 91, Laws of Utah 1997
             39          7-8-5, as last amended by Chapter 200, Laws of Utah 1994
             40          7-8-7, as last amended by Chapter 200, Laws of Utah 1994
             41          7-8-11, as last amended by Chapter 200, Laws of Utah 1994
             42          7-8-12, as last amended by Chapter 200, Laws of Utah 1994
             43          7-8-13, as last amended by Chapter 200, Laws of Utah 1994
             44          7-8-14, as last amended by Chapter 200, Laws of Utah 1994
             45          7-8-15, as last amended by Chapter 200, Laws of Utah 1994
             46          7-8-16, as last amended by Chapter 200, Laws of Utah 1994
             47          7-8-19, as last amended by Chapter 200, Laws of Utah 1994
             48          7-8-20, as enacted by Chapter 154, Laws of Utah 1993
             49          9-2-1923, as enacted by Chapter 291, Laws of Utah 2003
             50          25-5-4, as last amended by Chapter 182, Laws of Utah 1996
             51          31A-21-109, as enacted by Chapter 75, Laws of Utah 2003
             52          67-4a-102, as last amended by Chapter 248, Laws of Utah 1998
             53          75-6-101, as enacted by Chapter 150, Laws of Utah 1975
             54      ENACTS:
             55          7-1-810, Utah Code Annotated 1953
             56          7-8-21, Utah Code Annotated 1953



             57      Uncodified Material Affected:
             58      AMENDS UNCODIFIED MATERIAL:
             59      Uncodified Section 27, Chapter 327, Laws of Utah 2003
             60     
             61      Be it enacted by the Legislature of the state of Utah:
             62          Section 1. Section 7-1-103 is amended to read:
             63           7-1-103. Definitions.
             64          As used in this title:
             65          (1) (a) "Bank" means a person authorized under the laws of this state, another state, or
             66      the United States to accept deposits from the public.
             67          (b) "Bank" does not include:
             68          (i) a federal savings and loan association or federal savings bank;
             69          (ii) a savings and loan association or savings bank subject to Chapter 7, Savings and
             70      Loan Association Act;
             71          (iii) an industrial [loan corporation] bank subject to Chapter 8, Industrial Banks;
             72          (iv) a federally chartered credit union; or
             73          (v) a credit union subject to Chapter 9, Utah Credit Union Act.
             74          (2) "Banking business" means the offering of deposit accounts to the public and the
             75      conduct of such other business activities as may be authorized by this title.
             76          (3) (a) "Branch" means a place of business of a financial institution, other than its main
             77      office, at which deposits are received and paid.
             78          (b) "Branch" does not include:
             79          (i) an automated teller machine, as defined in Section 7-16a-102 ;
             80          (ii) a point-of-sale terminal, as defined in Section 7-16a-102 ; or
             81          (iii) a loan production office under Section 7-1-715 .
             82          (4) "Commissioner" means the Commissioner of Financial Institutions.
             83          (5) "Control" means the power, directly or indirectly, to:
             84          (a) direct or exercise a controlling influence over:
             85          (i) the management or policies of a financial institution[,]; or [over]
             86          (ii) the election of a majority of the directors or trustees of an institution;
             87          (b) vote 20% or more of any class of voting securities of a financial institution by an


             88      individual; or
             89          (c) vote more than 5% of any class of voting securities of a financial institution by a
             90      person other than an individual.
             91          (6) "Credit union" means a cooperative, nonprofit association incorporated under:
             92          (a) Chapter 9, Utah Credit Union Act; or
             93          (b) 12 U.S.C. Sec. 1751 et seq., Federal Credit Union Act, as amended.
             94          (7) "Department" means the Department of Financial Institutions.
             95          (8) "Depository institution" means a bank, savings and loan association, savings bank,
             96      industrial [loan corporation] bank, credit union, or other institution that:
             97          (a) holds or receives deposits, savings, or share accounts[, or];
             98          (b) issues certificates of deposit[,]; or
             99          (c) provides to its customers other depository accounts that are subject to withdrawal
             100      by checks, drafts, or other instruments or by electronic means to effect third party payments.
             101          (9) (a) "Depository institution holding company" means:
             102          (i) a person other than an individual that:
             103          (A) has control over any depository institution; or [that]
             104          (B) becomes a holding company of a depository institution under Section 7-1-703 ; or
             105          (ii) a person other than an individual that the commissioner finds, after considering the
             106      specific circumstances, is exercising or is capable of exercising a controlling influence over a
             107      depository institution by means other than those specifically described in this section.
             108          (b) Except as provided in Section 7-1-703 , a person is not a depository institution
             109      holding company solely because it owns or controls shares acquired in securing or collecting a
             110      debt previously contracted in good faith.
             111          (10) "Financial institution" means any institution subject to the jurisdiction of the
             112      department because of this title.
             113          (11) (a) "Financial institution holding company" means a person, other than an
             114      individual that has control over any financial institution or any person that becomes a financial
             115      institution holding company under this chapter, including an out-of-state or foreign depository
             116      institution holding company.
             117          (b) Ownership of a service corporation or service organization by a depository
             118      institution does not make that institution a financial institution holding company.


             119          (c) A person holding 5% or less of the voting securities of a financial institution is
             120      rebuttably presumed not to have control of the institution.
             121          (d) A trust company is not a holding company solely because it owns or holds 20% or
             122      more of the voting securities of a financial institution in a fiduciary capacity, unless the trust
             123      company exercises a controlling influence over the management or policies of the financial
             124      institution.
             125          (12) "Foreign depository institution" means a depository institution chartered or
             126      authorized to transact business by a foreign government.
             127          (13) "Foreign depository institution holding company" means the holding company of a
             128      foreign depository institution.
             129          (14) "Home state" means:
             130          (a) for a state chartered depository institution, the state that charters the institution;
             131          (b) for a federally chartered depository institution, the state where the institution's main
             132      office is located; and
             133          (c) for a depository institution holding company, the state in which the total deposits of
             134      all depository institution subsidiaries are the largest.
             135          (15) "Host state" means:
             136          (a) for a depository institution, a state, other than the institution's home state, where the
             137      institution maintains or seeks to establish a branch; and
             138          (b) for a depository institution holding company, a state, other than the depository
             139      institution holding company's home state, where the depository institution holding company
             140      controls or seeks to control a depository institution subsidiary.
             141          (16) "Industrial [loan corporation] bank" means a corporation or limited liability
             142      company conducting the business of an industrial [loan corporation] bank under Chapter 8,
             143      Industrial Banks.
             144          (17) "Industrial loan company" is as defined in Section 7-8-21 .
             145          [(17)] (18) "Insolvent" means the status of a financial institution that is unable to meet
             146      its obligations as they mature.
             147          [(18)] (19) "Institution" means:
             148          (a) a corporation[,];
             149          (b) a limited liability company[,];


             150          (c) a partnership[,];
             151          (d) a trust[,];
             152          (e) an association[,];
             153          (f) a joint venture[,];
             154          (g) a pool[,];
             155          (h) a syndicate[,];
             156          (i) an unincorporated organization[,]; or
             157          (j) any form of business entity.
             158          [(19)] (20) "Institution subject to the jurisdiction of the department" means an
             159      institution or other person described in Section 7-1-501 .
             160          [(20)] (21) "Liquidation" means the act or process of winding up the affairs of an
             161      institution subject to the jurisdiction of the department by realizing upon assets, paying
             162      liabilities, and appropriating profit or loss, as provided in Chapters 2 and 19.
             163          [(21)] (22) "Liquidator" means a person, agency, or instrumentality of this state or the
             164      United States appointed to conduct a liquidation.
             165          [(22)] (23) (a) "Member of a savings and loan association" means:
             166          (i) a person holding a savings account of a mutual association;
             167          (ii) a person borrowing from, assuming, or becoming obligated upon a loan or an
             168      interest in a loan held by a mutual association; or
             169          (iii) any person or class of persons granted membership rights by the articles of
             170      incorporation or the bylaws of an association.
             171          (b) A joint and survivorship or other multiple owner or borrower relationship
             172      constitutes a single membership.
             173          [(23)] (24) "Negotiable order of withdrawal" means a draft drawn on a NOW account.
             174          [(24)] (25) (a) "NOW account" means a savings account from which the owner may
             175      make withdrawals by negotiable or transferable instruments for the purpose of making transfers
             176      to third parties.
             177          (b) A "NOW account" is not a demand deposit.
             178          (c) Neither the owner of a NOW account nor any third party holder of an instrument
             179      requesting withdrawal from the account has a legal right to make withdrawal on demand.
             180          [(25)] (26) "Out-of-state" means, in reference to a depository institution or depository


             181      institution holding company, an institution or company whose home state is not Utah.
             182          [(26)] (27) "Person" means:
             183          (a) an individual[,];
             184          (b) a corporation[,];
             185          (c) a limited liability company[,];
             186          (d) a partnership[,];
             187          (e) a trust[,];
             188          (f) an association[,];
             189          (g) a joint venture[,];
             190          (h) a pool[,];
             191          (i) a syndicate[,];
             192          (j) a sole proprietorship[,];
             193          (k) an unincorporated organization[,]; or
             194          (l) any form of business entity.
             195          [(27)] (28) "Receiver" means a person, agency, or instrumentality of this state or the
             196      United States appointed to administer and manage an institution subject to the jurisdiction of
             197      the department in receivership, as provided in Chapters 2 and 19.
             198          [(28)] (29) "Receivership" means the administration and management of the affairs of
             199      an institution subject to the jurisdiction of the department to conserve, preserve, and properly
             200      dispose of the assets, liabilities, and revenues of an institution in possession, as provided in
             201      Chapters 2 and 19.
             202          [(29)] (30) "Savings account" means any deposit or other account at a depository
             203      institution that is not a transaction account.
             204          [(30)] (31) (a) "Savings and loan association" means any of the following subject to
             205      this title:
             206          (i) a mutual or capital stock savings association[,];
             207          (ii) a savings and loan association[,];
             208          (iii) a mutual or capital stock savings bank[,]; or
             209          (iv) a building and loan association [subject to this title, including].
             210          (b) "Savings and loan association" includes the following as defined in Section 7-7-2 :
             211          (i) all federal associations; and


             212          (ii) all out-of-state associations[, as defined in Section 7-7-2 ].
             213          [(31)] (32) "Service corporation" or "service organization" means a corporation or
             214      other business entity owned or controlled by one or more financial institutions that is engaged
             215      or proposes to engage in business activities related to the business of financial institutions.
             216          [(32)] (33) "State" means, unless the context demands otherwise[,]:
             217          (a) a state[,];
             218          (b) the District of Columbia[,]; or
             219          (c) the territories of the United States.
             220          [(33)] (34) "Subsidiary" means a business entity under the control of an institution.
             221          [(34)] (35) (a) "Transaction account" means a deposit, account, or other contractual
             222      arrangement in which a depositor, account holder, or other customer is permitted, directly or
             223      indirectly, to make withdrawals by:
             224          (i) check or other negotiable or transferable instrument[, by];
             225          (ii) payment order of withdrawal[, by];
             226          (iii) telephone transfer[, by];
             227          (iv) other electronic means[,]; or [by]
             228          (v) any other means or device for the purpose of making payments or transfers to third
             229      persons.
             230          (b) "Transaction account" includes:
             231          (i) demand deposits;
             232          (ii) NOW accounts;
             233          (iii) savings deposits subject to automatic transfers; and
             234          (iv) share draft accounts.
             235          [(35)] (36) "Trust company" means a person authorized to conduct a trust business, as
             236      provided in Chapter 5, Trust Business.
             237          [(36)] (37) "Utah depository institution" means a depository institution whose home
             238      state is Utah.
             239          [(37)] (38) "Utah depository institution holding company" means a depository
             240      institution holding company whose home state is Utah.
             241          Section 2. Section 7-1-201 is amended to read:
             242           7-1-201. Creation of department -- Organization.


             243          (1) There is created the Department of Financial Institutions that is responsible for the
             244      execution of the laws of this state relating to all financial institutions and other persons subject
             245      to this title, and relating to the businesses they conduct.
             246          (2) The department organization includes:
             247          [(1)] (a) the commissioner of financial institutions, who shall be the chief executive
             248      officer of the department;
             249          [(2)] (b) the Board of Financial Institutions;
             250          [(3)] (c) the chief examiner;
             251          [(4)] (d) the supervisor of banks;
             252          [(5)] (e) the supervisor of savings and loan associations;
             253          [(6)] (f) the supervisor of industrial [loan corporations] banks;
             254          [(7)] (g) the supervisor of credit unions; and
             255          [(8)] (h) other supervisors, examiners, and personnel as may be required to carry out
             256      the duties, powers, and responsibilities of the department.
             257          Section 3. Section 7-1-203 is amended to read:
             258           7-1-203. Board of Financial Institutions.
             259          (1) There is created a Board of Financial Institutions consisting of the commissioner
             260      and the following five members, who shall be qualified by training and experience in their
             261      respective fields and shall be appointed by the governor with the consent of the Senate:
             262          (a) one representative from the commercial banking business;
             263          (b) one representative from the savings and loan, consumer lending, mortgage
             264      brokerage, or escrow agency business;
             265          (c) one representative from the industrial [loan corporation] bank business;
             266          (d) one representative from the credit union business; and
             267          (e) one representative of the general public who, as a result of education, training,
             268      experience, or interest, is well qualified to consider economic and financial issues and data as
             269      they may affect the public interest in the soundness of the financial systems of this state.
             270          (2) The commissioner shall act as chair.
             271          (3) (a) All members of the board shall be residents of this state.
             272          (b) No more than three members of the board may be from the same political party.
             273          (c) No more than two members of the board may be connected with the same financial


             274      institution or its holding company.
             275          (d) A member may not participate in any matter involving any institution with which
             276      the member has a conflict of interest.
             277          (4) (a) Except as required by Subsection (4)(b), the terms of office shall be four years
             278      each expiring on July 1.
             279          (b) Notwithstanding the requirements of Subsection (4)(a), the governor shall, at the
             280      time of appointment or reappointment, adjust the length of terms to ensure that the terms of
             281      board members are staggered so that approximately half of the board is appointed every two
             282      years.
             283          (c) All members serve until their respective successors are appointed and qualified.
             284          (d) When a vacancy occurs in the membership for any reason, the replacement shall be
             285      appointed for the unexpired term.
             286          (5) (a) The board shall meet at least quarterly on a date it sets.
             287          (b) The commissioner or any two members of the board may call additional meetings.
             288          (c) Four members constitute a quorum for the transaction of business.
             289          (d) Actions of the board require a vote of a majority of those present.
             290          (e) Meetings of the board and records of its proceedings are subject to Title 52, Chapter
             291      4, Open and Public Meetings, except for discussion of confidential information pertaining to a
             292      particular financial institution.
             293          (6) (a) Each member of the board shall, by sworn or written statement filed with the
             294      commissioner, disclose any position of employment or ownership interest that the member has
             295      with respect to any institution subject to the jurisdiction of the department.
             296          (b) The member shall:
             297          (i) file [this] the statement required by this Subsection (6) when first appointed to the
             298      board; and [shall]
             299          (ii) subsequently file amendments to the statement if there is any material change in the
             300      matters covered by the statement.
             301          (7) (a) (i) Members who are not government employees shall receive no compensation
             302      or benefits for their services, but may receive per diem and expenses incurred in the
             303      performance of the member's official duties at the rates established by the Division of Finance
             304      under Sections 63A-3-106 and 63A-3-107 .


             305          (ii) Members may decline to receive per diem and expenses for their service.
             306          (b) (i) State government officer and employee members who do not receive salary, per
             307      diem, or expenses from their agency for their service may receive per diem and expenses
             308      incurred in the performance of their official duties from the board at the rates established by the
             309      Division of Finance under Sections 63A-3-106 and 63A-3-107 .
             310          (ii) State government officer and employee members may decline to receive per diem
             311      and expenses for their service.
             312          (8) The board shall advise the commissioner with respect to:
             313          (a) the exercise of [his] the commissioner's duties, powers, and responsibilities under
             314      this title; and
             315          (b) the organization and performance of the department and its employees.
             316          (9) The board shall recommend annually to the governor and the Legislature a budget
             317      for the requirements of the department in carrying out its duties, functions, and responsibilities
             318      under this title.
             319          Section 4. Section 7-1-207 is amended to read:
             320           7-1-207. Supervisor of industrial banks -- Responsibilities.
             321          (1) The commissioner shall designate an examiner as supervisor of industrial [loan
             322      corporations] banks who shall be sufficiently qualified by training and experience in the
             323      business of industrial [loan corporations] banks or other financial institutions or as an
             324      employee of a state or federal agency supervising financial institutions to perform the duties of
             325      the office.
             326          (2) (a) The supervisor of industrial [loan corporations] banks is responsible, subject to
             327      the direction and control of the commissioner, for the general supervision and examination of
             328      all industrial [loan corporations] banks subject to the jurisdiction of the department and other
             329      institutions as assigned.
             330          (b) The supervisor shall:
             331          (i) assist and advise the commissioner in the execution of the laws of this state relating
             332      to these institutions[,]; and [shall]
             333          (ii) perform other duties prescribed in this title or assigned by the commissioner.
             334          Section 5. Section 7-1-301 is amended to read:
             335           7-1-301. Powers and duties of commissioner -- Rulemaking.


             336          Without limiting the other powers, duties, and responsibilities specified in this title, the
             337      commissioner has all the functions, powers, duties, and responsibilities with respect to
             338      institutions, persons, or businesses subject to the jurisdiction of the department contained in
             339      this title, including all of the functions, powers, duties, and responsibilities described in
             340      Subsections (1) through (15).
             341          (1) The commissioner may govern the administration and operation of the department.
             342          (2) The commissioner may supervise the conduct, operation, management,
             343      examination, and statements and reports of examinations of financial institutions and other
             344      persons subject to the jurisdiction of the department.
             345          (3) (a) The commissioner may authorize a state chartered depository institution to
             346      engage in any activity it could engage in, and to grant to that institution all additional rights,
             347      powers, privileges, benefits, or immunities it would possess, if it were chartered under the laws
             348      of the United States.
             349          (b) The commissioner may authorize a depository institution chartered by this state to
             350      engage in any activity that a Utah branch of an out-of-state depository institution of the same
             351      class can engage in, and to grant to the Utah institution all additional rights, powers, privileges,
             352      benefits, or immunities it needs to engage in the activity.
             353          (c) In granting authority under this Subsection (3), the commissioner shall consider:
             354          (i) the need for competitive equality between institutions chartered by this state and
             355      institutions operating in this state that are chartered by another state or by the federal
             356      government; and
             357          (ii) the adverse effect on shareholders, members, depositors, and other customers of
             358      financial institutions chartered by this state if equal power and protection of those institutions,
             359      compared with federally chartered or out-of-state institutions of the same class, are not
             360      promptly available.
             361          (4) The commissioner may safeguard the interest of shareholders, members, depositors,
             362      and other customers of institutions and other persons subject to the jurisdiction of the
             363      department.
             364          (5) (a) The commissioner may establish criteria consistent with this title to be applied
             365      in granting applications for approval of:
             366          (i) a new institution;


             367          (ii) a new branch;
             368          (iii) the relocation of an office or branch;
             369          (iv) a merger;
             370          (v) a consolidation;
             371          (vi) a change in control of an institution or other person subject to the jurisdiction of
             372      the department; and
             373          (vii) other applications specified in this title.
             374          (b) The criteria established under Subsection (5)(a) may not be applied to make it more
             375      difficult for a state chartered institution to obtain approval of an application than for a federally
             376      chartered institution in the same class to obtain approval from the appropriate federal
             377      regulatory agency or administrator.
             378          (6) (a) The commissioner may protect the privacy of the records of any institution
             379      subject to the jurisdiction of the department pertaining to a particular depositor or other
             380      customer of the institution. Rules adopted under this Subsection (6) shall be consistent with
             381      federal laws and regulations applicable to the institution.
             382          (b) Any institution that consents to produce records or that is required to produce
             383      records in compliance with a subpoena or other order of a court of competent jurisdiction or in
             384      compliance with an order obtained pursuant to Sections 78-27-45 through 78-27-50.5 shall be
             385      reimbursed for the cost of retrieval and reproduction of the records by the party seeking the
             386      information. The commissioner may by rule establish the rates and conditions under which
             387      reimbursement is made.
             388          (7) (a) The commissioner may classify all records kept by institutions subject to the
             389      jurisdiction of the department and to prescribe the period for which each class of records is
             390      retained.
             391          (b) Rules adopted under this Subsection (7) for any class of financial institution shall
             392      be consistent with federal laws and regulations applicable to the class.
             393          [(b)] (c) Rules made under this Subsection (7)[(a)] shall provide that:
             394          (i) An institution may dispose of any record after retaining it for the period prescribed
             395      by the commissioner for retention of records of its class. If an institution disposes of a record
             396      after the prescribed period, the institution has no duty to produce it in any action or proceeding
             397      and is not liable to any person by reason of that disposition.


             398          (ii) Any institution may keep records in its custody in the form of microfilm or
             399      equivalent reproduction. Any such reproduction shall have the same force and effect as the
             400      original and shall be admissible into evidence as if it were the original.
             401          [(c)] (d) In adopting rules under this Subsection (7), the commissioner shall take into
             402      consideration:
             403          (i) actions at law and administrative proceedings in which the production of the records
             404      might be necessary or desirable;
             405          (ii) state and federal statutes of limitation applicable to the actions or proceedings;
             406          (iii) the availability from other sources of information contained in these records; and
             407          (iv) other matters the commissioner considers pertinent in formulating rules that
             408      require institutions to retain their records for as short a period as commensurate with the
             409      interest in having the records available of:
             410          (A) customers, members, depositors, and shareholders of the institutions; and
             411          (B) the people of this state.
             412          (8) (a) The commissioner may establish reasonable classes of depository and other
             413      financial institutions including separate classes for:
             414          (i) savings and loan associations and related institutions[,];
             415          (ii) banks and related institutions[,];
             416          (iii) credit unions[,]; and
             417          (iv) industrial [loan corporations] banks.
             418          (b) If the restrictions or requirements the commissioner imposes are not more stringent
             419      than those applicable under federal law or regulation to federally chartered institutions of the
             420      same class, the commissioner may establish the following for each class in a manner consistent
             421      with this title:
             422          (i) eligible classes and types of investments for the deposits and other funds of those
             423      financial institutions;
             424          (ii) minimum standards, in amounts sufficient to protect depositors and other creditors,
             425      for the amount and types of capital required to engage in the business conducted by each class
             426      or to obtain a license or to establish a branch or additional office of an institution of each class;
             427          (iii) eligible obligations, reserves, and other accounts to be included in the computation
             428      of capital;


             429          (iv) minimum liquidity requirements for financial institutions within each class in
             430      amounts sufficient to meet the demands of depositors and other creditors for liquid funds;
             431          (v) limitations on the amount and type of borrowings by each class of financial
             432      institution in relation to the amount of its capital and the character and condition of its assets
             433      and its deposits and other liabilities;
             434          (vi) limitations on the amount and nature of loans and extensions of credit to any
             435      person or related persons by each class of financial institution in relation to the amount of its
             436      capital; and
             437          (vii) limitations on the amount and nature of loans and extensions of credit by a
             438      financial institution or other person within each class to an executive officer, director, or
             439      principal shareholder of:
             440          (A) the institution or other person;
             441          (B) any company of which the institution or other person is a subsidiary;
             442          (C) any subsidiary of the institution or other person;
             443          (D) any affiliate of the institution; and
             444          (E) a company controlled by an executive officer, director, or principal shareholder of
             445      the institution.
             446          (9) The commissioner may define unfair trade practices of financial institutions and
             447      other persons subject to the jurisdiction of the department and to prohibit or restrict these
             448      practices.
             449          (10) The commissioner may establish reasonable standards to promote the fair and
             450      truthful advertising of:
             451          (a) services offered by a financial institution;
             452          (b) the charges for the services advertised under Subsection (10)(a);
             453          (c) the interest or other compensation to be paid on deposits or any debt instrument
             454      offered for sale by the institution;
             455          (d) the nature and extent of any:
             456          (i) insurance on deposits[,];
             457          (ii) savings accounts[,];
             458          (iii) share accounts[,];
             459          (iv) certificates of deposit[,];


             460          (v) time deposit accounts[,];
             461          (vi) NOW accounts[,];
             462          (vii) share draft accounts[,];
             463          (viii) transaction accounts[,]; or
             464          (ix) any evidence of indebtedness issued, offered for sale, offered to sell or sold by any
             465      financial institution or other person subject to the jurisdiction of the department; and
             466          (e) the safety or financial soundness of any financial institution or other person subject
             467      to the jurisdiction of the department.
             468          (11) The commissioner may define what constitutes an impairment of capital for each
             469      class of financial institution or other person subject to the jurisdiction of the department.
             470          (12) The commissioner may designate days on which depository institutions are closed
             471      in accordance with Section 7-1-808 .
             472          (13) The commissioner may regulate the issuance, advertising, offer for sale, and sale
             473      of a security to the extent authorized by Section 7-1-503 .
             474          (14) The commissioner may require the officers of any institution or other person
             475      subject to the commissioner's jurisdiction to open and keep a standard set of books, computer
             476      records, or both for the purpose of keeping accurate and convenient records of the transactions
             477      and accounts of the institution in a manner to enable the commissioner, supervisors, and
             478      department examiners to readily ascertain the institution's true condition. These requirements
             479      shall be consistent with generally accepted accounting principles for financial institutions.
             480          (15) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act,
             481      the commissioner may adopt and issue rules consistent with the purposes and provisions of this
             482      title, and may revise, amend, or repeal the rules adopted.
             483          Section 6. Section 7-1-324 is amended to read:
             484           7-1-324. Debt cancellation agreements and debt suspension agreements.
             485          (1) As used in this section:
             486          (a) "Class of depository institution" means a class consisting of:
             487          (i) banks;
             488          (ii) credit unions;
             489          (iii) industrial [loan corporations] banks;
             490          (iv) savings and loan associations; or


             491          (v) wholly owned subsidiaries of a depository institution listed in this Subsection
             492      (1)(a).
             493          (b) "Debt cancellation agreement" is as defined in Section 31A-21-109 .
             494          (c) "Debt suspension agreement" is as defined in Section 31A-21-109 .
             495          (2) Subject to the other provisions of this section, the commissioner may by rule, made
             496      in accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act:
             497          (a) authorize any member of a class of depository institution that is subject to the
             498      jurisdiction of the department to issue:
             499          (i) a debt cancellation agreement; or
             500          (ii) a debt suspension agreement; and
             501          (b) regulate the issuance of a debt cancellation agreement or a debt suspension
             502      agreement issued in this state by a member of a class of depository institution.
             503          (3) (a) Any rule adopted by the commissioner under this section as applied to a class of
             504      depository institution shall be substantially similar to any federal regulation applying to the
             505      same class of depository institution.
             506          (b) Any rule adopted by the commissioner applicable to a class of depository institution
             507      described in this Subsection (3)(b) shall be substantially similar to any federal regulation
             508      applicable to a bank if no federal regulation authorizes or regulates the issuance of a debt
             509      cancellation agreement or debt suspension agreement for that class of depository institution.
             510          (4) (a) An out-of-state depository institution may issue a debt cancellation agreement
             511      or debt suspension agreement in this state if:
             512          (i) the home state of the out-of-state depository institution authorizes and regulates the
             513      issuance of a debt cancellation agreement or debt suspension agreement by the out-of-state
             514      depository institution; and
             515          (ii) subject to Subsection (4)(b), the out-of-state depository institution complies with
             516      regulations from the out-of-state depository institution's home state that regulate the issuance of
             517      a debt cancellation agreement or a debt suspension agreement.
             518          (b) Notwithstanding Subsection (4)(a), an out-of-state depository institution described
             519      in Subsection (4)(a) shall comply with rules adopted by the commissioner under this section
             520      that regulate the issuance of a debt cancellation agreement or a debt suspension agreement in
             521      this state by the class of depository institution to which the out-of-state depository institution


             522      belongs if the regulations of the out-of-state depository institution's home state do not provide
             523      at least the same level of protection with respect to a debt cancellation agreement or debt
             524      suspension agreement as the rules adopted by the commissioner under this section with respect
             525      to the same class of depository institution:
             526          (i) for the safety and soundness of the depository institution; and
             527          (ii) for consumer protections for the borrowers of the depository institution.
             528          Section 7. Section 7-1-503 is amended to read:
             529           7-1-503. Regulation of sale by financial institution of its securities -- Solicitation
             530      of deposit accounts restricted -- Violations.
             531          (1) As used in this section, "security" has the same meaning as in Section 61-1-13 ,
             532      except that "security" does not include:
             533          (a) a certificate of deposit or similar instrument issued by:
             534          (i) a bank[,];
             535          (ii) a savings and loan association[,];
             536          (iii) a credit union[,]; or
             537          (iv) an industrial [loan corporation] bank;
             538          (b) a loan participation, letter of credit, or other form of indebtedness incurred in the
             539      ordinary course of business by:
             540          (i) a bank[,];
             541          (ii) a savings and loan association[,];
             542          (iii) a credit union[,]; or
             543          (iv) an industrial [loan corporation] bank; or
             544          (c) (i) a promissory note or other evidence of indebtedness and the underlying security
             545      for it[,];
             546          (ii) a lease of personal property[,];
             547          (iii) a contract to sell real or personal property[,]; or
             548          (iv) any other loan or investment sold by a depository institution in the secondary
             549      market.
             550          (2) A person subject to the jurisdiction of the department may not, directly or
             551      indirectly, issue, offer, offer to sell, offer for sale, or sell any security of which it is the issuer
             552      without:


             553          (a) the prior approval of the commissioner;
             554          (b) payment of the fee prescribed in Section 7-1-401 ; and
             555          (c) complying with the rules of the department with respect to securities.
             556          (3) (a) A person not otherwise subject to the jurisdiction of the department may not
             557      issue, offer to sell, offer for sale, or sell, or otherwise solicit the general public to deposit in any
             558      account or to purchase or invest in any instrument creating or evidencing a debtor-creditor
             559      relationship, if the account or instrument is represented to be an account with or an instrument
             560      issued by a financial institution subject to the jurisdiction of the department, without:
             561          (i) the prior approval of the commissioner;
             562          (ii) payment of the fee prescribed in Section 7-1-401 ; and
             563          (iii) complying with the rules of the department with respect to securities.
             564          (b) Subsection (3)(a) does not apply to:
             565          (i) insurance companies that have been issued certificates of authority under Title 31A,
             566      Insurance Code[,];
             567          (ii) brokers or dealers registered under:
             568          (A) Title 61, Chapter 1, Utah Uniform Securities Act[,]; or
             569          (B) the federal Securities Exchange Act of 1934[,]; or
             570          (iii) nondepository institutions to the extent that the securities are not offered for sale
             571      or sold through or by agents, representatives, officers, or employees of an affiliated Utah
             572      depository institution[,]; or
             573          (iv) out-of-state depository institution with at least one branch in Utah or otherwise
             574      offered for sale or sold on its premises.
             575          (4) The rules of the department:
             576          (a) shall, at a minimum, require registration with the department; and
             577          (b) may require the use of an offering circular containing such material information as
             578      to the nature of the security and the financial condition of the issuer as the commissioner may
             579      require to protect the public interest.
             580          (5) The provisions of Sections 61-1-21 , 61-1-21.1, and 61-1-22 apply to violations of
             581      this section.
             582          Section 8. Section 7-1-701 is amended to read:
             583           7-1-701. Representation and transacting business as financial institution


             584      restricted -- Restricted names -- Penalty.
             585          (1) As used in this section, "transact business" includes:
             586          (a) advertising;
             587          (b) representing oneself in any manner as being engaged in transacting business;
             588          (c) registering an assumed name under which to transact business; or
             589          (d) using an assumed business name, sign, letterhead, business card, promotion, or
             590      other indication that one is transacting business.
             591          (2) Unless authorized by the department or an agency of the federal government to do
             592      so, it is unlawful for any person to:
             593          (a) transact business as a:
             594          (i) bank;
             595          (ii) savings and loan association;
             596          (iii) savings bank;
             597          (iv) industrial [loan corporation] bank;
             598          (v) credit union;
             599          (vi) trust company; or
             600          (vii) other financial or depository institution; or
             601          (b) engage in any other activity subject to the jurisdiction of the department.
             602          (3) (a) Except as provided in Subsections (3)(b) through (d), only the following may
             603      transact business in this state under a name that includes "bank," "banker," "banking,"
             604      "banque," "banc," "banco," "bancorp," "bancorporation," any derivative of these words, or any
             605      other word or combination of words reasonably identifying the business of a bank:
             606          (i) a national bank;
             607          (ii) a bank authorized to do business under Chapter 3, Banks;
             608          (iii) a bank holding company; or
             609          (iv) an industrial [loan corporation authorized to:] bank.
             610          [(A) conduct business under Chapter 8, Industrial Loan Corporations; and]
             611          [(B) accept or hold deposit accounts insured by a federal deposit insurance agency.]
             612          (b) A person authorized to operate in this state as a credit card bank, as defined in
             613      Section 7-3-3 [,]:
             614          (i) may transact business under the name "credit card bank"; and


             615          (ii) may not transact business under the name of "bank" unless it is immediately
             616      preceded by "credit card."
             617          (c) A nonbank subsidiary of a bank holding company may transact business under a
             618      name restricted in Subsection (3)(a) if the name:
             619          (i) is also part of the name of its parent holding company; or
             620          (ii) is used for a group of subsidiaries of the parent holding company.
             621          (d) The Utah Bankers Association or other bona fide trade association of authorized
             622      banks may transact its affairs in this state under a name restricted under Subsection (3)(a) if it
             623      does not operate and does not hold itself out to the public as operating a depository or financial
             624      institution.
             625          (4) (a) Except as provided in Subsection (4)(b), only the following may transact
             626      business in this state under a name that includes "savings association," "savings and loan
             627      association," "building and loan association," "building association," any derivative of these
             628      words, or any other word or combination of words reasonably identifying the business of a
             629      savings and loan association:
             630          (i) a federal savings and loan association;
             631          (ii) a federal savings bank; or
             632          (iii) a savings and loan association authorized to do business under Chapter 7, Savings
             633      and Loan Associations Act.
             634          (b) A national bank may transact business under a name restricted in Subsection (4)(a)
             635      if the restricted words are part of the bank's corporate name.
             636          (5) Only the following may transact business under the name "savings bank":
             637          (a) a depository institution listed in Subsection (3)(a);
             638          (b) a depository institution listed in Subsection (4)(a); or
             639          (c) a depository institution authorized under state law to operate in this state as a
             640      savings bank.
             641          (6) (a) Only an industrial loan [corporation] company authorized to do business under
             642      Chapter 8, Industrial [Loan Corporations,] Banks, to the extent permitted by Section 7-8-21 ,
             643      may transact business in this state under a name that includes "industrial loan [corporation]
             644      company," "ILC," ["thrift,"] or any other word, combination of words, or abbreviation
             645      reasonably identifying the business of an industrial loan [corporation] company.


             646          (b) Only an industrial bank authorized to do business under Chapter 8, Industrial
             647      Banks, may transact business in this state under a name that includes "industrial bank," "thrift,"
             648      or any other word, combination of words, or abbreviation reasonably identifying the business
             649      of an industrial bank.
             650          (7) (a) Except as provided in Subsection (7)(b), only a credit union authorized to do
             651      business under the laws of the United States or Chapter 9, Utah Credit Union Act, may transact
             652      business in this state under a name that includes "credit union" or any other word or
             653      combination of words reasonably identifying the business of a credit union.
             654          (b) The restriction in Subsection (7)(a) does not apply to the Utah League of Credit
             655      Unions, any credit union chapter, or any other association affiliated with the Utah League of
             656      Credit Unions that restricts its services primarily to credit unions.
             657          (8) (a) Except as provided in Subsection (8)(b), only a person granted trust powers
             658      under Chapter 5, Trust Business, may transact business in this state under a name that includes
             659      "trust," "trustee," "trust company," or any other word or combination of words reasonably
             660      identifying the business of a trust company.
             661          (b) A business entity organized as a business trust, as defined in Section 7-5-1 , may use
             662      "business trust" in its name if it does not hold itself out as being a trust company.
             663          (9) The restrictions of Subsections (3) through (8) do not apply to:
             664          (a) the name under which an out-of-state depository institution operates a loan
             665      production office in this state, if the commissioner approves the name as not being reasonably
             666      likely to mislead the public;
             667          (b) the name under which a service organization of a financial institution transacts
             668      business, if the commissioner approves the name as not being reasonably likely to mislead the
             669      public;
             670          (c) the name under which a subsidiary of a depository or financial institution transacts
             671      business, if the commissioner approves the name as not being reasonably likely to mislead the
             672      public; or
             673          (d) a trade association or other nonprofit organization composed of members of a
             674      particular class of financial institutions using words applicable to that class.
             675          (10) (a) Upon written request, the commissioner may grant an exemption to this
             676      section if the commissioner finds that the use of an otherwise restricted name or word is not


             677      reasonably likely to cause confusion or lead the public to believe that the person requesting the
             678      exemption is a depository or financial institution or is conducting a business subject to the
             679      jurisdiction of the department.
             680          (b) In granting an exemption under Subsection (10)(a), the commissioner may restrict
             681      or condition the use of the name or word or the activities of the person or business as the
             682      commissioner considers necessary to protect the public.
             683          (11) (a) Each person[, corporation, association, or other business entity] and each
             684      principal and officer of a business entity violating this section is guilty of a class A
             685      misdemeanor. Each day of violation constitutes a separate offense.
             686          (b) In addition to a criminal penalty imposed under Subsection (11)(a), the
             687      commissioner may issue a cease and desist order against a person violating this section. The
             688      commissioner may impose a civil penalty of up to $500 for each day the person fails to comply
             689      with the cease and desist order.
             690          Section 9. Section 7-1-810 is enacted to read:
             691          7-1-810. Limited liability companies.
             692          (1) Notwithstanding any other provision of this title, if the conditions of this section are
             693      met, the following may be organized as or convert to a limited liability company under Title
             694      48, Chapter 2c, Utah Revised Limited Liability Company Act:
             695          (a) an industrial bank chartered under Chapter 8, Industrial Banks;
             696          (b) an industrial loan company as defined in Section 7-8-21 ; or
             697          (c) any of the following if the institution is an S-Corporation, as defined in Section
             698      1361, Internal Revenue Code, immediately before becoming a limited liability company:
             699          (i) a bank chartered under Chapter 3, Banks;
             700          (ii) a savings and loan association chartered under Chapter 7, Savings and Loan
             701      Associations Act; or
             702          (iii) a depository institution holding company.
             703          (2) (a) Before an institution described in Subsection (1) may organize as or convert to a
             704      limited liability company, the institution shall obtain approval of the commissioner.
             705          (b) (i) To obtain the approval under this section from the commissioner, the institution
             706      shall file a request for approval with the commissioner at least 30 days before the day on which
             707      the institution becomes a limited liability company.


             708          (ii) If the commissioner does not disapprove the request for approval within 30 days
             709      from the day on which the commissioner receives the request, the request is considered
             710      approved.
             711          (iii) When taking action on a request for approval filed under this section, the
             712      commissioner may:
             713          (A) approve the request;
             714          (B) approve the request subject to terms and conditions the commissioner considers
             715      necessary; or
             716          (C) disapprove the request.
             717          (3) To approve a request for approval, the commissioner shall find:
             718          (a) for an institution described in Subsection (1) that is required to be insured by a
             719      federal deposit insurance agency, that the institution:
             720          (i) will operate in a safe and sound manner;
             721          (ii) has the following characteristics:
             722          (A) the institution is not subject to automatic termination, dissolution, or suspension
             723      upon the happening of some event other than the passage of time;
             724          (B) the exclusive authority to manage the institution is vested in a board of managers
             725      or directors that:
             726          (I) is elected or appointed by the owners;
             727          (II) is not required to have owners of the institution included on the board;
             728          (III) possesses adequate independence and authority to supervise the operation of the
             729      institution; and
             730          (IV) operates with substantially the same rights, powers, privileges, duties, and
             731      responsibilities, as the board of directors of a corporation;
             732          (C) neither state law, nor the institution's operating agreement, bylaws, or other
             733      organizational documents provide that an owner of the institution is liable for the debts,
             734      liabilities, and obligations of the institution in excess of the amount of the owner's investment;
             735      and
             736          (D) (I) neither state law, nor the institution's operating agreement, bylaws, or other
             737      organizational documents require the consent of any other owner of the institution in order for
             738      any owner to transfer an ownership interest in the institution, including voting rights; and


             739          (II) the institution is able to obtain new investment funding if needed to maintain
             740      adequate capital; and
             741          (iii) is able to comply with all legal and regulatory requirements for an insured
             742      depository institution under applicable federal and state law; and
             743          (b) for an institution described in Subsection (1) that is not required to be insured by a
             744      federal deposit insurance agency, that the institution will operate in a safe and sound manner.
             745          (4) (a) An institution listed in Subsection (3)(a) that is organized as a limited liability
             746      company shall maintain the characteristics listed in Subsection (3)(a)(ii) during such time as it
             747      is authorized to conduct business under this title as a limited liability company.
             748          (b) Notwithstanding Subsection (3)(a)(ii)(A), an institution listed in Subsection (3)(a)
             749      that is a limited liability company may be voluntarily dissolved by its members:
             750          (i) in accordance with Title 48, Chapter 2c, Part 12, Dissolution; and
             751          (ii) with the prior written approval of the commissioner.
             752          (5) All rights, privileges, powers, duties, and obligations of an institution described in
             753      Subsection (1) that is organized as a limited liability company and its members and managers
             754      shall be governed by Title 48, Chapter 2c, Utah Revised Limited Liability Company Act,
             755      except as otherwise provided in this title.
             756          (6) Unless the context requires otherwise, for the purpose of applying this title to an
             757      institution described in Subsection (1) that is organized as a limited liability company:
             758          (a) a citation to Title 16, Chapter 10a, Utah Revised Business Corporation Act,
             759      includes the equivalent citation to Title 48, Chapter 2c, Utah Revised Limited Liability
             760      Company Act;
             761          (b) "articles of incorporation" includes a limited liability company's articles of
             762      organization as that term is used in Section 48-2c-403 ;
             763          (c) "board of directors" includes any of the following of a limited liability company:
             764          (i) all managers;
             765          (ii) all directors; or
             766          (iii) one or more persons who have, with respect to an institution described in
             767      Subsection (1), authority substantially similar to that of a board of directors of a corporation;
             768          (d) "bylaws" includes a limited liability company's operating agreement as that term is
             769      defined in Section 48-2c-102 ;


             770          (e) "corporation" includes a limited liability company organized under Title 48,
             771      Chapter 2c, Utah Revised Limited Liability Company Act;
             772          (f) "director" includes any of the following of a limited liability company:
             773          (i) a manger;
             774          (ii) a director; or
             775          (iii) other person who has with respect to the institution described in Subsection (1),
             776      authority substantially similar to that of a director of a corporation;
             777          (g) "dividend" includes distributions made by a limited liability company under Title
             778      48, Chapter 2c, Part 10, Distributions;
             779          (h) "incorporator" includes the organizers of a limited liability company as provided in
             780      Title 48, Chapter 2c, Part 4, Formation;
             781          (i) "officer" includes any of the following of an institution described in Subsection (1):
             782          (i) an officer; or
             783          (ii) other person who has with respect to the institution described in Subsection (1)
             784      authority substantially similar to that of an officer of a corporation;
             785          (j) "security," "shares," or "stock" of a corporation includes:
             786          (i) a membership interest in a limited liability company as provided in Title 48,
             787      Chapter 2c, Part 7, Members; and
             788          (ii) any certificate or other evidence of an ownership interest in a limited liability
             789      company; and
             790          (k) "stockholder" or "shareholder" includes an owner of an interest in an institution
             791      described in Subsection (1) including a member as provided in Title 48, Chapter 2c, Part 7,
             792      Members.
             793          (7) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the
             794      commissioner shall make rules governing the form of a request for approval filed under this
             795      section.
             796          Section 10. Section 7-3-3 is amended to read:
             797           7-3-3. "Banking business" defined -- Credit card banks -- Insurance of deposit
             798      accounts.
             799          (1) (a) Except as provided under Subsection (1)(b), a person is considered to be
             800      conducting a banking business and is a bank subject to the provisions of this title that are


             801      applicable to banks if the person is authorized under the laws of this state, another state, the
             802      United States, the District of Columbia, or any territory of the United States to accept deposits
             803      from the public and to conduct such other business activities as may be authorized by statute or
             804      by the commissioner in accordance with Subsection 7-3-10 (2).
             805          (b) A person is not considered to be a bank subject to the provisions of this title that are
             806      applicable to banks if the person is authorized to conduct the business of:
             807          (i) a federal savings and loan association [or];
             808          (ii) a federal savings bank[,];
             809          (iii) a savings and loan association [or] subject to Chapter 7, Savings and Loan
             810      Associations Act;
             811          (iv) a savings bank subject to Chapter 7, Savings and Loan Associations Act;
             812          (v) an industrial [loan corporation] bank subject to Chapter 8, Industrial Banks;
             813          (vi) a federally chartered credit union[,]; or
             814          (vii) a credit union subject to Chapter 9, Utah Credit Union Act.
             815          (2) A person authorized to operate as a bank in this state may operate as a credit card
             816      bank if it:
             817          (a) engages only in credit card operations;
             818          (b) does not accept demand deposits or deposits that the depositor may withdraw by
             819      check or similar means for payment to third parties or others;
             820          (c) does not accept any savings or time deposits of less than $100,000;
             821          (d) maintains only one office that accepts deposits; and
             822          (e) does not engage in the business of making commercial loans.
             823          (3) All deposit accounts in banks or branches subject to the jurisdiction of the
             824      department shall be insured by the Federal Deposit Insurance Corporation or any successor to
             825      [it] the Federal Deposit Insurance Corporation.
             826          Section 11. Section 7-8-3 is amended to read:
             827           7-8-3. Organization -- Authorization to conduct business -- Deposit insurance.
             828          (1) (a) Subject to Subsection (4), the commissioner may authorize a person described
             829      in Subsection (2) to conduct business as an industrial bank.
             830          [(1)] (2) (a) Each [domestic corporation] person organized to conduct the business of
             831      an industrial [loan corporation] bank in this state shall be organized under:


             832          (i) Title 16, Chapter 10a, Utah Revised Business Corporation Act[.]; or
             833          (ii) in accordance with Section 7-1-810 , Title 48, Chapter 2c, Utah Revised Limited
             834      Liability Company Act.
             835          (b) A person may not conduct business as an industrial bank authorized under this
             836      chapter to conduct business as an industrial bank in any form of entity other than those
             837      provided in Subsection (2)(a).
             838          (3) (a) All rights, privileges, powers, duties, and obligations of [the] a corporation
             839      authorized to conduct business as an industrial bank and its officers, directors, and stockholders
             840      shall be governed by Title 16, Chapter 10a, Utah Revised Business Corporation Act, except as
             841      otherwise provided in this title.
             842          (b) All rights, privileges, powers, duties, and obligations of a limited liability company
             843      authorized to conduct business as an industrial bank and its members and managers shall be
             844      governed by Title 48, Chapter 2c, Utah Revised Limited Liability Company Act, except as
             845      otherwise provided in this title.
             846          [(2) The commissioner may authorize a domestic corporation to conduct business as an
             847      industrial loan corporation.]
             848          (4) (a) An industrial bank is authorized to receive and hold deposits.
             849          (b) An industrial bank may not conduct business under this chapter as an industrial
             850      bank unless the industrial bank obtains insurance from the Federal Deposit Insurance
             851      Corporation or a successor federal deposit insurance entity for any deposits received or held by
             852      the industrial bank.
             853          Section 12. Section 7-8-5 is amended to read:
             854           7-8-5. Acquisition of own stock restricted -- Capital requirements.
             855          (1) (a) An industrial [loan corporation] bank may not accept as collateral, or be a
             856      purchaser of, shares of its own capital stock, unless taking the shares as collateral or purchasing
             857      them is necessary to prevent loss upon a debt previously contracted in good faith.
             858          (b) All shares of stock acquired under this Subsection (1) by the industrial [loan
             859      corporation] bank through any purchase, foreclosure, judgment, or otherwise shall be sold
             860      within 12 months from the date of acquisition.
             861          (c) The par value of all the shares held after acceptance or purchase may not exceed
             862      10% of the capital and surplus of the industrial [loan corporation] bank.


             863          (2) (a) Each industrial [loan corporation] bank accepting or holding deposits shall
             864      maintain the minimum amount of capital required by its federal deposit insurer.
             865          (b) The commissioner may require a greater amount of capital if [he] the commissioner
             866      determines that it is necessary to protect the interests of:
             867          (i) the depositors and other customers of the industrial [loan corporation] bank; and
             868          (ii) the public.
             869          [(3) An industrial loan corporation may accept or hold deposits only if its accounts are
             870      insured by a federal deposit insurance agency.]
             871          Section 13. Section 7-8-7 is amended to read:
             872           7-8-7. Reports to commissioner.
             873          Each industrial [loan corporation] bank shall file reports of its condition in accordance
             874      with Section 7-1-318 .
             875          Section 14. Section 7-8-11 is amended to read:
             876           7-8-11. Dividends.
             877          (1) The board of directors of an industrial [loan corporation authorized to accept
             878      deposits] bank may declare a dividend out of the net profits of the [corporation] industrial bank
             879      after providing for all expenses, losses, interest, and taxes accrued or due from the
             880      [corporation] industrial bank in accordance with this section and subject to Section 7-8-12 .
             881          (2) The [corporation] industrial bank shall transfer to a surplus fund at least 10% of its
             882      net profits before dividends for the period covered by the dividend, until the surplus reaches
             883      100% of its capital stock.
             884          (3) Any amount paid from the [corporation's] industrial bank's net earnings into a fund
             885      for the retirement of any debenture capital or preferred stock for the period covered by the
             886      dividend is considered an addition to its surplus fund if, upon the retirement of the debenture
             887      capital or preferred stock, the amount paid into the retirement fund for the period may be
             888      properly carried to the surplus fund of the [corporation] industrial bank. In this case the
             889      industrial [loan corporation] bank shall transfer to the surplus fund the amount paid into the
             890      retirement fund.
             891          Section 15. Section 7-8-12 is amended to read:
             892           7-8-12. Charge off of losses sustained on receivables and operating losses --
             893      Replenishment of surplus account.


             894          (1) (a) Losses sustained on receivables by an industrial [loan corporation authorized to
             895      accept deposits] bank shall be charged first to the [corporation's] industrial bank's reserve for
             896      losses and then to its current income.
             897          (b) Operating losses shall be charged first to the [corporation's] industrial bank's
             898      current income, next to undivided profits and then, after undivided profits have been
             899      exhausted, to the surplus account.
             900          (2) A charge to the [corporation's] industrial bank's surplus account shall be
             901      replenished from net profits or capital contributions. The [corporation] industrial bank may
             902      declare or pay a dividend only with the written permission of the commissioner until its surplus
             903      account reaches an amount prescribed by the commissioner in writing.
             904          Section 16. Section 7-8-13 is amended to read:
             905           7-8-13. Real estate acquisition, holding, and conveyance.
             906          An industrial [loan corporation] bank may purchase, hold, and convey real estate, other
             907      than premises used in the conduct of its business, only for the purposes and in a manner
             908      prescribed by rule.
             909          Section 17. Section 7-8-14 is amended to read:
             910           7-8-14. Investment in property used in conduct of business.
             911          (1) An industrial [loan corporation] bank may invest in premises, equipment, and other
             912      property used in conducting its own business, as the board of directors may approve by
             913      resolution. This property may include:
             914          (a) real property and any interest in real property, furniture, fixtures, and equipment for
             915      use in carrying on its own business; and
             916          (b) the stock, bonds, debentures, or other obligations of any subsidiary or affiliate
             917      whose exclusive activity is the ownership and management of property used in conducting the
             918      industrial [loan corporation] bank's business.
             919          (2) The amount of these investments may not exceed 50% of the industrial [loan
             920      corporation's] bank's total capital, unless the commissioner approves a higher amount in
             921      writing.
             922          Section 18. Section 7-8-15 is amended to read:
             923           7-8-15. Bad debts.
             924          (1) All demand and matured debts due to any industrial [loan corporation] bank on


             925      which interest is past due and has not been paid for a period of six months, unless they are well
             926      secured and in the process of collection, are considered bad debts and shall be charged off to
             927      the profit and loss account.
             928          (2) The [corporation] industrial bank shall maintain in its files documentation to
             929      support its evaluation of the security and monthly reports of its collection efforts and a plan of
             930      collection.
             931          Section 19. Section 7-8-16 is amended to read:
             932           7-8-16. Registration of industrial bank holding company -- Filing and contents of
             933      statement -- Exemptions -- Rules.
             934          (1) Each industrial [loan corporation] bank holding company shall register with the
             935      department by filing a registration statement in a form prescribed by the commissioner. The
             936      statement shall include:
             937          (a) the name, address, and principal occupation of each officer and director of the
             938      registrant;
             939          (b) a statement of financial condition as of a date not more than six months prior to the
             940      date of registration;
             941          (c) a certificate of good standing in the state in which the registrant is incorporated; and
             942          (d) evidence that the company is authorized to transact business in this state.
             943          (2) (a) A person may not form an industrial [loan corporation] bank holding company,
             944      unless it:
             945          (i) is authorized to do so by the commissioner; and
             946          (ii) is registered with the department as provided in Subsection (1).
             947          (b) An applicant for authorization to form a holding company shall file an application
             948      in a form prescribed by the commissioner by rule.
             949          (3) The commissioner may exempt an industrial [loan corporation] bank holding
             950      company in whole or in part from registration if it is:
             951          (a) a bank holding company or savings and loan holding company subject to federal
             952      regulation;
             953          (b) a person that is a holding company only because [it] the person owns or controls
             954      voting shares of an industrial [loan corporation] bank or holding company acquired in
             955      connection with the underwriting of securities if [it] the person holds these shares no longer


             956      than 120 days, unless the commissioner approves a longer period to permit their sale on a
             957      reasonable basis;
             958          (c) a person exempt from the jurisdiction of the department under Section 7-1-502 ; or
             959          (d) a person exempted in writing by the commissioner or by rule.
             960          (4) The commissioner may adopt rules with respect to industrial [loan corporation]
             961      banks holding companies as are necessary to protect:
             962          (a) depositors[,];
             963          (b) other creditors[,];
             964          (c) the public[,]; and
             965          (d) the financial system of the state.
             966          Section 20. Section 7-8-19 is amended to read:
             967           7-8-19. Meetings of the board of directors.
             968          (1) A quorum of the board of directors of each industrial [loan corporation] bank shall
             969      meet at least once each quarter.
             970          (2) Minutes of each meeting of the board of directors shall be:
             971          (a) kept by the secretary of the [corporation] industrial bank; and
             972          (b) maintained at the head office of the [corporation] industrial bank.
             973          Section 21. Section 7-8-20 is amended to read:
             974           7-8-20. Limitations on loans to one borrower -- Exceptions -- Rules.
             975          (1) Except as provided in this section, the total loans and extensions of credit by any
             976      industrial [loan corporation] bank to any person outstanding at any one time may not exceed
             977      15% of the industrial [loan corporation's] bank's total capital.
             978          (2) Subsection (1) does not apply to an extension of credit that is subject to, or
             979      expressly exempted from, a federal statute or federal regulation limiting the amount of total
             980      loans and credit that may be extended to any person or group of persons.
             981          (3) The commissioner may by rule:
             982          (a) exempt from Subsection (1) any class of loans or class of extensions of credit that
             983      are adequately secured or are not otherwise a risk to the safe and sound operation of an
             984      industrial [loan corporation] bank;
             985          (b) define terms and phrases necessary to interpret and implement this section;
             986          (c) adopt standards for aggregating or segregating loans to the same or different


             987      persons;
             988          (d) describe records required to be maintained;
             989          (e) require specific actions to be taken by an institution's board of directors or
             990      executive officers; and
             991          (f) prescribe other actions necessary to interpret and implement this section.
             992          Section 22. Section 7-8-21 is enacted to read:
             993          7-8-21. Application of chapter to industrial loan companies.
             994          (1) As used in this section, "industrial loan company" is a person that on the effective
             995      date of this bill is:
             996          (a) authorized to conduct business under this chapter; and
             997          (b) not authorized to hold or receive deposits.
             998          (2) An industrial loan company may operate as an industrial bank under this chapter
             999      except that the industrial loan company:
             1000          (a) may not hold or receive deposits without:
             1001          (i) the prior written approval of the commissioner; and
             1002          (ii) obtaining insurance from the Federal Deposit Insurance Corporation or a successor
             1003      federal deposit insurance entity;
             1004          (b) may not engage in any conduct authorized by this title that is conditioned on the
             1005      industrial loan company being a depository institution without meeting the conditions
             1006      described in Subsections (2)(a)(i) and (ii); and
             1007          (c) may not use a term listed in Subsection 7-1-701 (3) in its name without meeting the
             1008      conditions described in Subsections (2)(a)(i) and (ii).
             1009          (3) If a person is not authorized to conduct business under this chapter on the effective
             1010      date of this bill, that person may not be considered an industrial loan company under this
             1011      section.
             1012          Section 23. Section 9-2-1923 is amended to read:
             1013           9-2-1923. Permissible investments.
             1014          Investments by designated investors in the Utah fund of funds are permissible
             1015      investments under applicable laws of the state for:
             1016          (1) state-chartered banks;
             1017          (2) state-chartered savings and loan associations;


             1018          (3) state-chartered credit unions;
             1019          (4) state-chartered industrial [loan corporations] banks; and
             1020          (5) domestic insurance companies.
             1021          Section 24. Section 25-5-4 is amended to read:
             1022           25-5-4. Certain agreements void unless written and signed.
             1023          (1) The following agreements are void unless the agreement, or some note or
             1024      memorandum of the agreement, is in writing, signed by the party to be charged with the
             1025      agreement:
             1026          [(1)] (a) every agreement that by its terms is not to be performed within one year from
             1027      the making of the agreement;
             1028          [(2)] (b) every promise to answer for the debt, default, or miscarriage of another;
             1029          [(3)] (c) every agreement, promise, or undertaking made upon consideration of
             1030      marriage, except mutual promises to marry;
             1031          [(4)] (d) every special promise made by an executor or administrator to answer in
             1032      damages for the liabilities, or to pay the debts, of the testator or intestate out of his own estate;
             1033          [(5)] (e) every agreement authorizing or employing an agent or broker to purchase or
             1034      sell real estate for compensation; and
             1035          [(6)] (f) every credit agreement.
             1036          (2) (a) As used in [Subsection (6)] Subsections (1)(f) and this Subsection (2):
             1037          (i) (A) "Credit agreement" means an agreement by a financial institution to:
             1038          (I) lend, delay, or otherwise modify an obligation to repay money, goods, or things in
             1039      action[, to];
             1040          (II) otherwise extend credit[,]; or [to]
             1041          (III) make any other financial accommodation.
             1042          (B) "Credit agreement" does not include the usual and customary agreements related to
             1043      deposit accounts or overdrafts or other terms associated with deposit accounts or overdrafts.
             1044          (ii) "Creditor" means a financial institution which extends credit or extends a financial
             1045      accommodation under a credit agreement with a debtor.
             1046          (iii) "Debtor" means a person who seeks or obtains credit, or seeks or receives a
             1047      financial accommodation, under a credit agreement with a financial institution.
             1048          (iv) "Financial institution" means:


             1049          (A) a state or federally chartered:
             1050          (I) bank[,];
             1051          (II) savings and loan association[,];
             1052          (III) savings bank[,];
             1053          (IV) industrial [loan corporation,] bank; or
             1054          (V) credit union[,]; or
             1055          (B) any other institution under the jurisdiction of the commissioner of Financial
             1056      Institutions as provided in Title 7, Financial Institutions Act.
             1057          (b) (i) Except as provided in Subsection [(6)] (2)(e), a debtor or a creditor may not
             1058      maintain an action on a credit agreement unless the agreement:
             1059          (A) is in writing[,];
             1060          (B) expresses consideration[,];
             1061          (C) sets forth the relevant terms and conditions[,]; and
             1062          (D) is signed by the party against whom enforcement of the agreement would be
             1063      sought.
             1064          (ii) For purposes of this act, a signed application constitutes a signed agreement, if the
             1065      creditor does not customarily obtain an additional signed agreement from the debtor when
             1066      granting the application.
             1067          (c) The following actions do not give rise to a claim that a credit agreement is created,
             1068      unless the agreement satisfies the requirements of Subsection [(6)] (2)(b):
             1069          (i) the rendering of financial advice by a creditor to a debtor;
             1070          (ii) the consultation by a creditor with a debtor; or
             1071          (iii) the creation for any purpose between a creditor and a debtor of fiduciary or other
             1072      business relationships.
             1073          (d) Each credit agreement shall contain a clearly stated typewritten or printed provision
             1074      giving notice to the debtor that the written agreement is a final expression of the agreement
             1075      between the creditor and debtor and the written agreement may not be contradicted by evidence
             1076      of any alleged oral agreement. The provision does not have to be on the promissory note or
             1077      other evidence of indebtedness that is tied to the credit agreement.
             1078          (e) A credit agreement is binding and enforceable without any signature by the party to
             1079      be charged if:


             1080          (i) the debtor is provided with a written copy of the terms of the agreement;
             1081          (ii) the agreement provides that any use of the credit offered shall constitute acceptance
             1082      of those terms; and
             1083          (iii) after the debtor receives the agreement, the debtor, or a person authorized by the
             1084      debtor, requests funds pursuant to the credit agreement or otherwise uses the credit offered.
             1085          Section 25. Section 31A-21-109 is amended to read:
             1086           31A-21-109. Debt cancellation agreements and debt suspension agreements.
             1087          (1) As used in this section:
             1088          (a) "Debt cancellation agreement" means a contract between a lender and a borrower
             1089      where the lender, for a separately stated consideration, agrees to waive all or part of the debt in
             1090      the event of a fortuitous event such as death, disability, or the destruction of the lender's
             1091      collateral.
             1092          (b) "Debt suspension agreement" means a contract between a lender and a borrower
             1093      where the lender, for a separately stated consideration, agrees to suspend scheduled installment
             1094      payments for an agreed period of time in the event of a:
             1095          (i) fortuitous event such as involuntary unemployment or accident; or
             1096          (ii) fortuitous condition such as sickness.
             1097          (c) "Institution" means:
             1098          (i) a bank as defined in Section 7-1-103 ;
             1099          (ii) a credit union as defined in Section 7-1-103 ;
             1100          (iii) an industrial [loan corporation] bank as defined in Section 7-1-103 ; or
             1101          (iv) a savings and loan association as defined in Section 7-1-103 .
             1102          (d) "Regulate the issuance" includes regulation of the following with respect to a debt
             1103      cancellation agreement or a debt suspension agreement:
             1104          (i) terms;
             1105          (ii) conditions;
             1106          (iii) rates;
             1107          (iv) forms; and
             1108          (v) claims.
             1109          (e) "Subsidiary" is as defined in Section 7-1-103 .
             1110          (2) Except as provided in Subsection (6), the commissioner has sole jurisdiction over


             1111      the regulation of a debt cancellation agreement or debt suspension agreement.
             1112          (3) Subject to this section, the commissioner may by rule, made in accordance with
             1113      Title 63, Chapter 46a, Utah Administrative Rulemaking Act:
             1114          (a) authorize an insurer to issue:
             1115          (i) a debt cancellation agreement; or
             1116          (ii) a debt suspension agreement; and
             1117          (b) regulate the issuance of:
             1118          (i) a debt cancellation agreement; or
             1119          (ii) a debt suspension agreement.
             1120          (4) Except as provided in Subsection (6), a debt cancellation agreement or a debt
             1121      suspension agreement may be issued only by an insurer authorized to issue a debt cancellation
             1122      agreement or debt suspension agreement under this section.
             1123          (5) (a) The rules promulgated by the commissioner under this section shall regulate the
             1124      issuance of a debt cancellation agreement or debt suspension agreement according to the
             1125      functional insurance equivalent of each type of debt cancellation agreement or debt suspension
             1126      agreement.
             1127          (b) Except as provided in Subsection (5)(c), in accordance with Title 63, Chapter 46a,
             1128      Utah Administrative Rulemaking Act, the commissioner may by rule determine the functional
             1129      insurance equivalent of each type of debt cancellation agreement or debt suspension agreement.
             1130          (c) Notwithstanding Subsection (5)(b), the functional insurance equivalent of a debt
             1131      cancellation agreement that provides for the cancellation of indebtedness at death is credit life
             1132      insurance.
             1133          (6) Notwithstanding the other provisions of this section, the issuance of a debt
             1134      cancellation agreement or a debt suspension agreement by an institution or a subsidiary of an
             1135      institution is:
             1136          (a) not subject to this section; and
             1137          (b) subject to the jurisdiction of the primary regulator of:
             1138          (i) the institution; or
             1139          (ii) the subsidiary of an institution.
             1140          Section 26. Section 67-4a-102 is amended to read:
             1141           67-4a-102. Definitions.


             1142          As used in this chapter:
             1143          (1) "Administrator" means the deputy state treasurer assigned by the state treasurer to
             1144      administer the law governing unclaimed property in Utah.
             1145          (2) "Apparent owner" means the person whose name appears on the records of the
             1146      holder as the person entitled to property held, issued, or owing by the holder.
             1147          (3) (a) "Bank draft" means a check, draft, or similar instrument on which a banking or
             1148      financial organization is directly liable.
             1149          (b) "Bank draft" includes:
             1150          (i) cashier's checks; and
             1151          (ii) certified checks.
             1152          (c) "Bank draft" does not include:
             1153          (i) traveler's checks; or
             1154          (ii) money orders.
             1155          (4) "Banking organization" means:
             1156          (a) a bank[,];
             1157          (b) an industrial [loan corporation,] bank;
             1158          (c) a trust company[,];
             1159          (d) a savings bank[,]; or
             1160          (e) any organization defined by other law as a bank or banking organization.
             1161          (5) "Business association" means a nonpublic corporation, joint stock company,
             1162      investment company, business trust, partnership, or association for business purposes of two or
             1163      more individuals, whether or not for profit, including:
             1164          (a) a banking organization[,];
             1165          (b) a financial organization[,];
             1166          (c) an insurance company[,]; or
             1167          (d) a utility.
             1168          (6) "Cashier's check" means a check drawn by a banking organization on itself, signed
             1169      by an officer of the banking organization, authorizing payment of the amount shown on its face
             1170      to the payee.
             1171          (7) "Class action" means a legal action:
             1172          (a) certified by the court as a class action; or


             1173          (b) treated by the court as a class action without being formally certified as a class
             1174      action.
             1175          (8) (a) "Deposit in a financial institution" means a demand, savings, or matured time
             1176      deposit with a banking or financial organization.
             1177          (b) "Deposit in a financial institution" includes:
             1178          (i) any interest or dividends on a deposit; and
             1179          (ii) a deposit that is automatically renewable.
             1180          (9) "Domicile" means the state of incorporation of a corporation and the state of the
             1181      principal place of business of an unincorporated person.
             1182          (10) "Financial organization" means:
             1183          (a) a savings and loan association; or
             1184          (b) a credit union.
             1185          (11) "Government entity" means:
             1186          (a) the state[,];
             1187          (b) any administrative unit of the state[,];
             1188          (c) any political subdivision of the state[,];
             1189          (d) any administrative unit of a political subdivision of the state[,]; or
             1190          (e) any officer or employee of [those entities] an entity described in Subsections (11)(a)
             1191      through (d).
             1192          (12) "Holder" means a person, wherever organized or domiciled, who is:
             1193          (a) in possession of property belonging to another;
             1194          (b) a trustee;
             1195          (c) indebted to another on an obligation; or
             1196          (d) charged with the duty of paying or delivering intangible property under Section
             1197      67-4a-302 .
             1198          (13) "Insurance company" means an association, corporation, fraternal or mutual
             1199      benefit organization, whether or not for profit, that is engaged in providing insurance coverage,
             1200      including:
             1201          (a) accident[,] insurance;
             1202          (b) burial[,] insurance;
             1203          (c) casualty[,] insurance;


             1204          (d) credit life[,] insurance;
             1205          (e) contract performance[,] insurance;
             1206          (f) dental[,] insurance;
             1207          (g) fidelity[,] insurance;
             1208          (h) fire[,] insurance;
             1209          (i) health[,] insurance;
             1210          (j) hospitalization[,] insurance;
             1211          (k) illness[,] insurance;
             1212          (l) life insurance, including endowments and annuities[,];
             1213          (m) malpractice[,] insurance;
             1214          (n) marine[,] insurance;
             1215          (o) mortgage[,] insurance;
             1216          (p) surety[,] insurance; and
             1217          (q) wage protection insurance.
             1218          (14) (a) "Intangible property" includes:
             1219          (i) monies, checks, drafts, deposits in a financial institution, interest, dividends, and
             1220      income;
             1221          (ii) credit balances, customer overpayments, gift certificates over $25, security
             1222      deposits, refunds, credit memos, unpaid wages, unused airline tickets, and unidentified
             1223      remittances;
             1224          (iii) stocks, mutual funds, and other intangible ownership interests in business
             1225      associations;
             1226          (iv) monies deposited to redeem stocks, bonds, coupons, and other securities or to
             1227      make distributions;
             1228          (v) bonds, notes, and any other debt obligations;
             1229          (vi) amounts due and payable under the terms of insurance policies;
             1230          (vii) amounts distributable from a trust or custodial fund established under a plan to
             1231      provide health, welfare, pension, vacation, severance, retirement, death, stock purchase, profit
             1232      sharing, employee savings, supplemental unemployment insurance or similar benefits; and
             1233          (viii) amounts distributable from a mineral interest in land.
             1234          (b) "Intangible property" does not include patronage capital of electric, telephone, and


             1235      agricultural cooperatives.
             1236          (15) "Last-known address" means a description of the location of the apparent owner
             1237      sufficient for the purpose of the delivery of mail.
             1238          (16) "Mineral" means oil, gas, uranium, sulphur, lignite, coal, and any other substance
             1239      that is ordinarily and naturally considered a mineral, regardless of the depth at which the oil,
             1240      gas, uranium, sulphur, lignite, coal, or other substance is found.
             1241          (17) "Mineral proceeds" includes:
             1242          (a) all obligations to pay resulting from the production and sale of minerals, including:
             1243          (i) net revenue interest[,];
             1244          (ii) royalties[,];
             1245          (iii) overriding royalties[,];
             1246          (iv) production payments[,]; and
             1247          (v) joint operating agreements; and
             1248          (b) all obligations for the acquisition and retention of a mineral lease, including:
             1249          (i) bonuses[,];
             1250          (ii) delay rentals[,];
             1251          (iii) shut-in royalties[,]; and
             1252          (iv) minimum royalties.
             1253          (18) (a) "Money order" means a negotiable draft issued by a business association for
             1254      which the business association is not directly liable.
             1255          (b) "Money order" does not mean a cashier's check.
             1256          (19) "Net intangible property" means intangible property that is held, issued, or owing
             1257      in the ordinary course of a holder's business plus any income or increment derived from it and
             1258      less any lawful charges.
             1259          (20) "Owner" means:
             1260          (a) a depositor in the case of a deposit;
             1261          (b) a beneficiary in the case of a trust other than a deposit in trust;
             1262          (c) a creditor, claimant, or payee in the case of other intangible property; or
             1263          (d) a person or that person's legal representative having a legal or equitable interest in
             1264      property subject to this chapter.
             1265          (21) (a) "Ownership purchase funds" means any funds paid toward the purchase of a


             1266      share, a mutual investment certificate, or any other interest in a banking or financial
             1267      organization.
             1268          (b) "Ownership purchase funds" includes any interest or dividends paid on those funds.
             1269          (22) "Person" means:
             1270          (a) an individual[,];
             1271          (b) a business association[,];
             1272          (c) a government entity[,];
             1273          (d) a public corporation[,];
             1274          (e) a public authority[,];
             1275          (f) an estate[,];
             1276          (g) a trust[,];
             1277          (h) two or more persons having a joint or common interest[,]; or
             1278          (i) any other legal or commercial entity.
             1279          (23) "State" means any state, district, commonwealth, territory, insular possession, or
             1280      any other area subject to the legislative authority of the United States.
             1281          (24) "Utility" means a person who owns or operates for public use any plant,
             1282      equipment, property, franchise, or license for:
             1283          (a) the transmission of communications, including cable television; or
             1284          (b) the production, storage, transmission, sale, delivery, or furnishing of electricity,
             1285      water, steam, or gas.
             1286          Section 27. Section 75-6-101 is amended to read:
             1287           75-6-101. Definitions.
             1288          As used in this part:
             1289          (1) "Account" means a contract of deposit of funds between a depositor and a financial
             1290      institution and includes:
             1291          (a) a checking account[,];
             1292          (b) a savings account[,];
             1293          (c) a certificate of deposit[,];
             1294          (d) a share account[,]; and
             1295          (e) other like arrangement.
             1296          (2) "Beneficiary" means a person named in a trust account as one for whom a party to


             1297      the account is named as trustee.
             1298          (3) "Financial institution" means any organization authorized to do business under state
             1299      or federal laws relating to financial institutions, including, without limitation[,]:
             1300          (a) banks [and];
             1301          (b) trust companies[,];
             1302          (c) industrial [loan corporations with thrift certificate authorization,] banks;
             1303          (d) savings banks[,];
             1304          (e) building and loan associations[,];
             1305          (f) savings and loan companies or associations[,]; and
             1306          (g) credit unions.
             1307          (4) "Joint account" means an account payable on request to one or more of two or more
             1308      parties whether or not mention is made of any right of survivorship.
             1309          (5) (a) "Multiple-party account" means any of the following types of account:
             1310          [(a)] (i) a joint account;
             1311          [(b)] (ii) a P.O.D. account; or
             1312          [(c)] (iii) a trust account. [It]
             1313          (b) "Multiple-party account" does not include:
             1314          (i) accounts established for deposit of funds of a partnership, joint venture, or other
             1315      association for business purposes[,]; or
             1316          (ii) accounts controlled by one or more persons as the duly authorized agent or trustee
             1317      for a corporation, unincorporated association, charitable or civic organization, or a regular
             1318      fiduciary or trust account where the relationship is established other than by deposit agreement.
             1319          (6) (a) "Net contribution" of a party to a joint account as of any given time is the sum
             1320      of all deposits to it made by or for [him] the party, less all withdrawals made by or for [him]
             1321      the party which have not been paid to or applied to the use of any other party, plus a pro rata
             1322      share of any interest or dividends included in the current balance. [The term]
             1323          (b) "Net contribution" includes, in addition, any proceeds of deposit life insurance
             1324      added to the account by reason of the death of the party whose net contribution is in question.
             1325          (7) (a) "Party" means a person, including a minor, who, by the terms of the account,
             1326      has a present right, subject to request, to payment from a multiple-party account.
             1327          (b) A P.O.D. payee or beneficiary of a trust account is a party only after the account


             1328      becomes payable to him by reason of his surviving the original payee or trustee and includes a
             1329      guardian, conservator, personal representative, or assignee, including an attaching creditor, of a
             1330      party. [It also]
             1331          (c) "Party" includes a person identified as a trustee of an account for another whether
             1332      or not a beneficiary is named[, but it].
             1333          (d) "Party" does not include any named beneficiary unless [he] the named beneficiary
             1334      has a present right of withdrawal.
             1335          (8) "Payment" of sums on deposit includes withdrawal, payment on check or other
             1336      directive of a party, and any pledge of sums on deposit by a party and any setoff, reduction, or
             1337      other disposition of all or part of an account pursuant to a pledge.
             1338          (9) "Proof of death" includes a death certificate or record or report which is prima facie
             1339      proof of death under Section 75-1-107 .
             1340          (10) "P.O.D. account" means an account payable on request to one person during
             1341      lifetime and on [his] that person's death to:
             1342          (a) one or more P.O.D. payees[,]; or [to]
             1343          (b) one or more persons during their lifetimes and on the death of all of them to one or
             1344      more P.O.D. payees.
             1345          (11) "P.O.D. payee" means a person designated on a P.O.D. account as one to whom
             1346      the account is payable on request after the death of one or more persons.
             1347          (12) "Request" means a proper request for withdrawal, or a check or order for payment,
             1348      which complies with all conditions of the account, including special requirements concerning
             1349      necessary signatures and regulations of the financial institution; but if the financial institution
             1350      conditions withdrawal or payment on advance notice, for purposes of this part the request for
             1351      withdrawal or payment is treated as immediately effective and a notice of intent to withdraw is
             1352      treated as a request for withdrawal.
             1353          (13) "Sums on deposit" means the balance payable on a multiple-party account,
             1354      including interest, dividends, and in addition any deposit life insurance proceeds added to the
             1355      account by reason of the death of a party.
             1356          (14) (a) "Trust account" means an account in the name of one or more parties as trustee
             1357      for one or more beneficiaries where the relationship is established by the form of the account
             1358      and the deposit agreement with the financial institution and there is no subject of the trust other


             1359      than the sums on deposit in the account; and it is not essential that payment to the beneficiary
             1360      be mentioned in the deposit agreement.
             1361          (b) A trust account does not include a regular trust account under a testamentary trust
             1362      or a trust agreement which has significance apart from the account, or a fiduciary account
             1363      arising from a fiduciary relation such as attorney-client.
             1364          (15) "Withdrawal" includes payment to a third person pursuant to check or other
             1365      directive of a party.
             1366          Section 28. Uncodified Section 27, Chapter 327, Laws of Utah 2003 is amended to
             1367      read:
             1368          Section 27. Financial Institutions Task Force.
             1369          (1) There is created the Financial Institutions Task Force consisting of the following 12
             1370      members:
             1371          (a) five members of the Senate appointed by the president of the Senate, no more than
             1372      four of whom may be from the same political party; and
             1373          (b) seven members of the House of Representatives appointed by the speaker of the
             1374      House of Representatives, no more than five of whom may be from the same political party.
             1375          (2) (a) The president of the Senate shall designate a member of the Senate appointed
             1376      under Subsection (1)(a) as a cochair of the task force.
             1377          (b) The speaker of the House of Representatives shall designate a member of the House
             1378      of Representatives appointed under Subsection (1)(b) as a cochair of the task force.
             1379          (3) In conducting its business, the task force shall comply with the rules of legislative
             1380      interim committees.
             1381          (4) Salaries and expenses of the members of the task force shall be paid in accordance
             1382      with Section 36-2-2 and Legislative Joint Rule 15.03.
             1383          (5) The Office of Legislative Research and General Counsel shall provide staff support
             1384      to the task force.
             1385          (6) The task force shall study:
             1386          (a) the structural differences between credit unions and other financial institutions;
             1387          (b) whether to clarify the language defining the appropriate purposes and operations of
             1388      credit unions chartered in this state including what are the appropriate eligibility standards for
             1389      members of a credit union that should be imposed by statute;


             1390          (c) what should be the appropriate field of membership requirements for a credit union;
             1391          (d) the policies that should govern all questions applicable to taxing or not taxing
             1392      nonexempt credit unions;
             1393          (e) the policies underlying whether or not to tax or assess other fees on banks and
             1394      nonexempt credit unions;
             1395          (f) (i) whether or not any credit union should be allowed to pay a competitive equity
             1396      assessment;
             1397          (ii) if a credit union is allowed to pay a competitive equity assessment, which credit
             1398      unions should be allowed to pay a competitive equity assessment; and
             1399          (iii) how any competitive equity assessment to be paid by a credit union should be
             1400      calculated including whether required reserves should be subtracted from any of a credit
             1401      union's annual cash retained earnings of a credit union that may be subject to a competitive
             1402      equity assessment;
             1403          (g) if a competitive equity assessment is allowed to be paid by a credit union or if state
             1404      corporate franchise and income taxes are imposed on nonexempt credit unions, the benefits or
             1405      restrictions that should be conditioned on the payment of the competitive equity assessment or
             1406      state corporate franchise and income taxes including:
             1407          (i) whether or not, to the extent that a bank could extend the credit or to the extent that
             1408      the extension of credit is not inconsistent with the requirements of National Credit Union
             1409      Administration, a credit union that pays a competitive equity assessment should be exempted
             1410      from certain restrictions on extending member-business loans such as the restrictions under:
             1411          (A) Subsection 7-9-5 (12)(b);
             1412          (B) Subsection 7-9-20 (7)(b)(ii), except that certain membership requirements may
             1413      always need to be required for member-business loans;
             1414          (C) Subsection 7-9-20 (7)(c); and
             1415          (D) Subsection 7-9-20 (8)(b)(ii);
             1416          (ii) whether or not without payment of a competitive equity assessment a nonexempt
             1417      credit union should be able to establish a branch that is to be located outside of the county in
             1418      which the nonexempt credit union has the greatest number of branches;
             1419          (iii) whether or not, except in supervisory actions, a nonexempt credit union could
             1420      merge with another credit union without payment of the competitive equity assessment; and


             1421          (iv) whether or not limitations related to the grandfathering under Section 7-9-53
             1422      should be modified or removed;
             1423          (h) whether the judicial review process of decisions of the Commissioner of Financial
             1424      Institutions should be modified;
             1425          (i) (i) the powers and duties of the Commissioner of Financial Institutions to regulate
             1426      the activities of credit unions and banks; and
             1427          (ii) whether additional powers or duties should be given to the Commissioner of
             1428      Financial Institutions;
             1429          (j) the effect of a credit union chartered in this state converting to a federal credit union
             1430      charter including any:
             1431          (i) loss of sales and uses taxes;
             1432          (ii) loss of fees paid to the Department of Financial Institutions; and
             1433          (iii) loss of taxes and fees paid to political subdivisions of the state;
             1434          (k) the methods by which financial institutions in this state may obtain capital;
             1435          (l) the appropriate lending practices of credit unions including:
             1436          (i) extension of member-business loans;
             1437          (ii) extension of credit that does not constitute a member-business loan; and
             1438          (iii) participation in co-lending arrangements including loan participation
             1439      arrangements; [and]
             1440          (m) whether one or more of the following should be allowed to be organized as or
             1441      convert to a limited liability company:
             1442          (i) a bank chartered under Chapter 3, Banks;
             1443          (ii) a savings and loan association chartered under Chapter 7, Savings and Loan
             1444      Associations Act;
             1445          (iii) a depository institution holding company; or
             1446          (iv) a subsidiary of an institution described in Subsections (6)(m)(i) through (iii); and
             1447          [(m)] (n) any other issues related to financial institutions and credit unions that the task
             1448      force determines to be appropriate.
             1449          (7) The task force shall:
             1450          (a) make an interim report to the Business and Labor Interim Committee by no later
             1451      than November 30, 2003; and


             1452          (b) make a final report to the Business and Labor Interim Committee, including any
             1453      proposed legislation, by no later than November 30, 2004.
             1454          Section 29. Effective date.
             1455          If approved by two-thirds of all the members elected to each house, this bill takes effect
             1456      upon approval by the governor, or the day following the constitutional time limit of Utah
             1457      Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
             1458      the date of veto override.
             1459          Section 30. Revisor instructions.
             1460           It is the intent of the Legislature that in preparing the Utah Code database for
             1461      publication the Office of Legislative Research and General Counsel replace the phrase "the
             1462      effective date of this bill" in Section 7-8-21 with the bill's effective date.


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