76-5

76-5

Los Angeles Office

December 6, 1976

Re: Section 106 and Section 1500 of the California Financial Code Voting Trustee as

Doing a Trust Business

Dear ______________:

This is in reply to your letter of November 29, 1976, requesting an opinion indicating whether a non-profit corporation acting as a voting trustee constitutes doing a trust business in this state requiring a trust license.

Trust business is defined in Section 106 of the California Financial Code. The doing of such a business consists of engaging in the activities enumerated in that section for profit and on a regular, continuous or systematic basis.

The nature of the activity of a voting trustee is that of exercising the right to vote entrusted shares pursuant to a valid voting trust agreement, an activity similar to that of a proxy-holder. Such a voting trustee does not administer or manage the assets of a trust, nor act in any of the capacities listed in Section 106 of the California Financial Code for profit and on a regular basis. However, the voting trustee is subject to the usual fiduciary duties of trustee.

For those reasons, it is our opinion that a non-profit corporation acting as an instructed voting trustee pursuant to a valid voting trust agreement on a one-time basis without renumeration does not constitute the doing of a trust business pursuant to Section 106 of the California Financial Code and, accordingly, no trust license is required to conduct such activity pursuant to Section 1500 of the California Financial Code.

We trust this answers your inquiry. Should you have any further question regarding this matter, please do not hesitate to contact us.

Very truly yours,

CARL J. SCHMITT Superintendent of Banks

By

DIANA H. NISHIURA Counsel

DHN:ma

cc: State Banking Department, S.F.

December 3, 1976

Superintendent of Banks State Banking Department 600 South Commonwealth, Suite 1501 Los Angeles, California 90005

Attention: Diana H. Nishiura

Re: Opinion on Trustee Status

Dear Miss Nishiura:

This is in response to your request for our opinion on the trustee status of the ___________________ under the facts presented in our letter of November 29, 1976 requesting an opinion from your office.

Please be advised that we are of the opinion that the _____________________, a California non profit corporation, under the facts set forth in our letter of November 29, 1976 is not engaged in a trust business or acting as a trust company as defined by the California Financial Code and does not require a certificate of authority or license to act as a voting trustee. We base our opinion on the fact that the trustee will be acting under a voting trust in conformity with section 706 of the California Corporations Code effective January 1, 1977, and, as an instructed voting trustee, will neither manage funds nor manage an estate corpus as a trustee. We also believe that the fact that the _____________________ will receive no renumeration for its services, would exclude it from the regulation contemplated by the California Financial Code.

Sincerely,

November 29, 1976

Superintendent of Banks State Banking Department 600 South Commonwealth, Suite 1501 Los Angeles, California 90005

Attention: Diana H. Nishiura

Re: Opinion on Trustee Status

Dear Sir:

Pursuant to our conversations with Ms. Nishiura we are hereby respectfully requesting your opinion as follows:

The _____________________, a California non-profit corporation, under the facts as set forth in their request for an opinion dated November 29, 1976 is not engaged in a trust business or acting as a trust company as defined by the California Financial Code and does not require a certificate of authority or license to act as a voting trustee.

The ____________________ is an incorporated, non-profit trade association which includes as its members approximately seventy-five percent (75%) of the state and federally-chartered credit unions with principal offices in the State of California. It is contemplated that twenty-one (21) or more (probably in excess of 100) credit unions will purchase stock in a newly organized California corporation (hereinafter referred to as “holding company”) which will eventually acquire the stock of a bank. The credit unions which beneficially own stock in the holding company will assign the voting rights in said stock to the _________________ under a Trust Agreement which has a term of ten (10) years. The voting trust will be in conformity with section 706 of the California Corporations Code effective January 1, 1977. Unless a credit union stockholder expresses its desire to the contrary in any specific voting situation, the _______________ will vote the stock as directed by its Board of Directors. The Board of Directors is composed of approximately 60 individuals elected from and representing credit unions in areas throughout the State of California

The _________________ will be acting as an instructed voting trustee of a voting trust and will neither manage funds nor manage an estate corpus as a trustee.

The _____________________, as trustee of the voting trust, will receive no remuneration of its services from the credit unions which beneficially own the stock. Costs, if any, incurred in exercising the voting rights will be reimbursed by said credit unions. All dividends on the stock subject to the voting trust will be paid directly to the credit unions which have the beneficial interest.

We will appreciate your favorable reply as soon as possible. Thank you for your consideration and assistance in this matter.

Sincerely,