Banks and Trust Companies - Fiduciary Activities

Steps Required To Form An Illinois Trust Company

The Division of Banking welcomes your interest in establishing a new Illinois trust company. If you elect to proceed, the Director's office will be happy to assist you in clarifying the procedures and standards that must be met in order to establish a trust company in Illinois.
The process for establishing a trust company is a major undertaking that requires substantial personal and financial commitment by the organizers and the proposed Chief Executive Officer (CEO). The Office of the Director encourages and expects such a commitment. The commitment exhibited by the organizers, and the proposed CEO, will be one of the important factors influencing our decision to approve the issuance of a Certificate of Authority to accept and execute trusts.
The process for establishing an Illinois trust company occurs in five basic steps: (1) the pre-filing meeting; (2) filing and processing of the application; (3) preliminary decision; (4) post-incorporation procedures; and (5) pre-opening procedures. Detailed procedures for each of these steps are presented in the enclosed instructions. However, we would like to take this opportunity to emphasize several important requirements of which prospective organizers must be mindful. Failure to satisfy the requirements generally will result in processing delays and may prevent approval of the application.
The current minimum capital requirements to form an Illinois Trust Company is $3 million plus such other amounts as determined by the Director based on the scope of the trust company's proposed operation.

• As soon as the organizers are prepared to proceed, a representative should contact the Division of Specialized Activities Supervision of the Department's Springfield Office to schedule a pre-filing meeting. The Division will normally schedule pre-filing meetings within 30 days of request and will not accept applications until the meeting has been held. The meeting provides a forum to clarify any areas of the application process not fully understood by the organizers and for the Director's office to explain the Office's certification policy and procedures. The organizers may request a waiver of the pre-filing meeting. However, waivers are granted only under very limited circumstances.
• All organizers of the proposed trust company are expected to attend the pre-filing meeting.
• The organizing group must have identified a proposed CEO before the application for a Certificate of Authority is made. Management is critical to the success of a trust company and selection of a qualified CEO is one of the organizing group's most important decisions. The organizers are responsible for thoroughly investigating the background and qualifications of the candidate prior to submission to the Director. The CEO must be actively involved in developing the operating plan for the trust company since it will be that individual's responsibility to successfully implement the proposed plan once the company opens.
• All organizers and the proposed CEO are expected to be familiar with the content of the enclosed instructions and application prior to the pre-filing meeting. This facilitates discussion at the pre-filing meeting and benefits organizers by focusing the discussion around their specific questions and concerns.
• If members of the organizing group are not present or if the organizers exhibit little or no familiarity with the enclosed instructions and application, the pre-filing meeting may be rescheduled to allow the organizers to properly prepare for their responsibilities.
• At the pre-filing meeting, a member of the organizing group must be identified as spokesperson to represent the organizers in all subsequent contact with the Director's Office.

• The application and a check for the appropriate filing fee must be filed in the Director's Springfield Office. Initially, we will review the application to ensure it is technically complete. This review only determines if the required parts of the application have been completed. No substantive analysis of the proposal to certificate the trust company is done at this time.

If the application is incomplete or requires correction, the spokesperson will be informed of the required corrections. The organizers will generally have only one opportunity to make technical corrections. If the organizers fail to make the corrections of which they were informed, upon resubmission, the application may be considered withdrawn. Filing fees will not be refunded. Subsequent refilings will require a new application and filing fee.

• Following receipt of a technically complete application, we will proceed with an in depth review and analysis of the application. The decision to approve or disapprove the application will be based on our evaluation of the prospects for success of the proposed trust company. The evaluation will be based primarily on the information contained in the application and on other information available to the Office of the Director as a result of our supervisory activities.

• It is the organizers' responsibility to provide sufficient information in their initial complete application to convince the Office of the Director that they thoughtfully conceived their plan to establish a trust company and that the trust company has a reasonable prospect for success. Generally, we will not ask organizers to expand upon the information submitted in the application. If the information provided is not sufficient to make a determination that the trust company has a reasonable prospect for success, the application will be disapproved. On the other hand, at any time, we may seek clarifications or request additional information that organizers could not have reasonably been expected to provide.

• Failure to have a suitable CEO adversely affects the probable success of the proposed trust company and reflects poorly on the judgement of the organizers. Selection of a CEO whom the Director finds unqualified for the position, whose prior experience in trust administration is unsatisfactory, or who is otherwise unacceptable to the Director's Office could reflect negatively on the organizers and result in the application being disapproved. The Director's Office generally will not grant approvals subject to the condition that a more suitable CEO be proposed.

• If amendments are made to the application which are so extensive that we conclude that the original application is obsolete and therefore no longer an accurate reflection of the applicant's proposal, the original application will be considered withdrawn and a new application and filing fee will be required.

• During the review period, communications with the Director's Office should be limited to substantive matters. Frequent calls checking on the status of an application simply delay processing. We will process the application in the most expedient manner and will inform the spokesperson promptly when a decision is made.

• Although we will strive to reach a prompt decision, we cannot guarantee that delays will not occur. Therefore, we suggest that real estate or employment commitments related to an application for a trust company include provisions for delays in obtaining preliminary approval and opening the trust company.

• Following our review of the application, we will decide whether to grant preliminary approval to proceed to organize a trust company. Preliminary approval only indicates permission to proceed with the organization by filing the proposed Articles of Incorporation of the trust company with the Office of the Secretary of State. It is not an assurance that we will grant a Certificate of Authority to authorize the Trust Company to accept and execute trusts.

• Preliminary approval will be rescinded for failure to perform the steps required to organize the trust company.

• A significant change (whether beneficial or not) in the ownership, CEO, organizers, operating plan or capitalization for the trust company, from what was originally presented, may result in rescission of preliminary approval.

• Preliminary approval will be rescinded if, prior to opening, any information becomes available to the Director's Office that provides sufficient cause to change our evaluation of the prospects for success of the proposed trust company or the likelihood that it will be operated in a safe and sound manner.

Organization of the Trust Company

• The organizers will have 90 days from the date of preliminary approval to file their Articles of Incorporation with the Office of the Secretary of State. Failure to complete the organization within 90 days may cause preliminary approval to be rescinded. Extensions to the 90 day period are only granted under very limited circumstances.

• The organizers will have an additional 90 days from the date of preliminary approval to file the documents required in the post incorporation procedure. Failure to provide the items within the required time limit may cause preliminary approval to be rescinded. Extensions to the 90 day period are only granted under very limited circumstances.

• A Certificate of Authority to establish an Illinois trust company will not be issued until all steps required to organize a trust company are completed.

• The trust company also must pledge to the Department a surety bond or securities in the amount of $2 million, reducible to cash by the Department, for the purpose of covering any costs attributable to a receivership of the trust company.  The pledged securities or surety bond is in addition to the trust company’s minimum capital requirement.

• Prior to opening, we will examine the proposed trust company. We suggest that the planned opening date be at least two weeks after the scheduled examination date. This will provide the organizers with an opportunity to correct problems noted at the pre-opening examination and avoid any difficulties or embarrassment that may result from canceling planned opening ceremonies.

• If significant departures from the trust company proposal evaluated by the Director's Office are discovered at the pre-opening examination, or if the Director's Office is aware of other reasons for reassessing the organizers' capabilities, the certificate may not be granted and preliminary approval may be rescinded.

Thank you for your interest in establishing an Illinois trust company.

If you have any questions regarding the enclosed instructions and application, please feel free to contact our office at (217) 785-2901.