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New Hampshire: A Leading Jurisdiction for Trust Companies

In another big step forward for New Hampshire in the area of trust company regulation, on June 4, 2013, Governor Maggie Hassan signed into law House Bill 560, eliminating the New Hampshire Board of Trust Company Incorporation (Trust Board) and transferring its duties to the Commissioner of the New Hampshire Banking Department (Banking Commissioner).  Effective July 4, 2013, the Banking Commissioner became solely responsible for the regulation and supervision of trust companies chartered in New Hampshire.

The Trust Board was established by state law in 1915 and, in conjunction with the New Hampshire Banking Department, was charged with reviewing and approving bank and trust company charters, amendments to those charters, and dissolutions of bank and trust companies.  Chartering new banks was historically a contentious issue among existing banks, and the Trust Board’s approval process operated as a forum that allowed them to defend their territory.  This was a particularly important interest, given that banks at that time were unable to branch more than a limited distance from their main offices.  The Trust Board weighed the rights of existing banks against the public purpose of establishing a new bank in the territory.  However, branching limitations were repealed in the 1980s, after which bank chartering became much less contentious.  Other changes in state and federal banking laws also resulted in the Trust Board’s losing significant authority over the chartering process.  As a result, the Trust Board became outmoded and an unnecessary regulatory step.

The elimination of the Trust Board is the latest step the state has taken to make New Hampshire a leading jurisdiction for the formation and operation of trust companies.  In 2006, the state took a major step towards making the trust company regulatory regime in New Hampshire even more flexible and trust friendly, with the passage of the Trust Modernization and Competitiveness Act (TMCA).  The TMCA created numerous advantages to forming and operating trust companies in New Hampshire, such as the following:

  • Allowing highly rated non-depository trust companies to satisfy examination requirements through off-site examinations of qualified audit reports and fiduciary audits
  • Affording trust companies heightened protection of confidential information
  • Authorizing trust companies to act as a trustee or executor without posting a fiduciary bond
  • Allowing banking and trust companies to lend trust assets to their directors, officers, and employees
  • Permitting a trust company in New Hampshire to be formed with as few as three persons and allowing trust companies to be organized as limited liability companies or in corporate form
  • Requiring no physical location in New Hampshire
  • Recognizing family fiduciary services companies and enabling them to qualify for exemption from regulatory requirements.

The passage of the TMCA and New Hampshire’s hospitable trust environment have drawn increasing numbers of trust companies to New Hampshire from other jurisdictions.  The elimination of the Trust Board makes it even easier to establish trust companies in New Hampshire and to take advantage of the state’s favorable legal and regulatory climate.