Bill Text: NY A06128 | 2009-2010 | General Assembly | Introduced
Bill Title: An act to establish a business trust law, constituting chapter 4-A of the consolidated laws; and to amend the general associations law, in relation to business trusts
Spectrum: Partisan Bill (Democrat 12-0)
Status: (Introduced - Dead) 2010-01-06 - referred to judiciary [A06128 Detail]
Download: New_York-2009-A06128-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
6128
2009-2010 Regular Sessions
I N A S S E M B L Y
February 25, 2009
___________
Introduced by M. of A. SCHIMMINGER, TOWNS, ORTIZ -- Multi-Sponsored by
-- M. of A. CLARK, COOK, HOOPER, JOHN, MAGEE, McENENY, MILLMAN, PHEF-
FER, SEMINERIO -- read once and referred to the Committee on Judiciary
AN ACT to establish a business trust law, constituting chapter 4-A of
the consolidated laws; and to amend the general associations law, in
relation to business trusts
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. A new consolidated chapter, to be chapter 4-A of the
2 consolidated laws, is enacted to read as follows:
3 CHAPTER 4-A OF THE CONSOLIDATED LAWS
4 BUSINESS TRUST LAW
5 Article Section
6 1. Short title and definitions. (SS101-102)
7 2. Business trusts. (SS201-218)
8 3. Merger and consolidation. (SS301-305)
9 4. Dissolution. (SS401-405)
10 5. Miscellaneous. (SS501-510)
11 6. Savings clauses; effective date. (SS601-606)
12 ARTICLE 1
13 SHORT TITLE AND DEFINITIONS
14 Section 101. Short title.
15 102. Definitions.
16 S 101. Short title. This chapter shall be known and may be cited as
17 the "business trust law".
18 S 102. Definitions. As used in this chapter:
19 a. "Beneficial owner" shall mean any owner of a beneficial interest in
20 a business trust, the fact of ownership to be determined and evidenced
21 (whether by means of registration, the issuance of certificates or
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09243-01-9
A. 6128 2
1 otherwise) in conformity to the applicable provisions of the governing
2 instrument of the business trust.
3 b. "Business trust" shall mean an unincorporated organization which:
4 (1) is created by a trust instrument under which property is or will
5 be held, managed, administered, controlled, invested, reinvested or
6 operated, or business or professional activities are carried on or will
7 be carried on, by a trustee or trustees for the benefit of such person
8 or persons who are or may become entitled to a beneficial interest in
9 the trust property including but not limited to a trust of the type
10 known at common law as a "business trust" or "Massachusetts trust" or a
11 trust qualifying as a real estate investment trust under S 856, et seq.,
12 of the United States Internal Revenue Code of 1986, as amended, or under
13 any successor provision (whether or not a "business trust"; as such term
14 is used in the United States Bankruptcy Code, 11 U.S.C. S 101(9)), or a
15 trust qualifying as a real estate mortgage investment conduit under S
16 860D of the United States Internal Revenue Code of 1986, as amended, or
17 under any successor provision; and
18 (2) files a certificate of business trust pursuant to section two
19 hundred twelve of this chapter. Any such organization so organized shall
20 be a business trust and a separate legal entity. A business trust may be
21 organized to carry on any lawful business or activity, whether or not
22 conducted for profit, including without limitation for any of the
23 purposes referred to in paragraph one of this subdivision except to do
24 in this state any business for which another provision of law specif-
25 ically requires some other business entity or natural person to be
26 formed or used.
27 c. "Governing instrument" shall mean any written trust instrument
28 which creates a business trust, provides for the affairs of the business
29 trust and conduct of its business. The governing instrument:
30 (1) may provide that a person shall become a beneficial owner and
31 shall become bound by the governing instrument if such person, or a
32 representative authorized by such person orally, in writing or by other
33 action such as payment for a beneficial interest, complies with the
34 conditions for becoming a beneficial owner set forth in the governing
35 instrument or any other writing and acquires a beneficial interest; and
36 (2) may consist of one or more written agreements, instruments or
37 other writings, and may include or incorporate by-laws containing
38 provisions relating to the business of the business trust, the conduct
39 of its affairs and its rights or powers or the rights or powers of its
40 trustees, beneficial owners, agents or employees.
41 d. "Other business entity" shall mean any person other than a natural
42 person or domestic business trust.
43 e. "Person" shall mean any association, corporation, joint stock
44 company, estate, general partnership (including any registered limited
45 liability partnership or foreign limited liability partnership), limited
46 association, limited liability company (including a professional service
47 limited liability company), joint venture, limited partnership, natural
48 person, real estate investment trust, business trust or other trust,
49 custodian, nominee, or any other individual or entity in its own or any
50 representative capacity.
51 f. "Trustee" shall mean the person or persons appointed as a trustee
52 in accordance with the governing instrument of a business trust, and may
53 include all the beneficial owners or any number of such owners.
54 ARTICLE 2
55 BUSINESS TRUSTS
56 Section 201. Contributions by beneficial owners.
A. 6128 3
1 202. Liability of beneficial owners, trustees and agents.
2 203. Business transactions of a beneficial owner with a business
3 trust.
4 204. Legal proceedings.
5 205. Rights of beneficial owners in trust property.
6 206. Management of business trust.
7 207. Trustee in state.
8 208. Existence of business trust.
9 209. Applicability of trust law.
10 210. Business trust name.
11 211. Reservation of business trust name.
12 212. Certificate of business trust.
13 213. Amendment of the certificate of business trust.
14 214. Cancellation of certificate of business trust.
15 215. Restated certificate of trust.
16 216. Execution of certificates.
17 217. Delivery to the department of state.
18 218. Execution, amendment or cancellation by judicial act.
19 S 201. Contributions by beneficial owners. a. A contribution of a
20 beneficial owner to a business trust may be made in cash, property or
21 services rendered, or by a promissory note or other obligation to
22 contribute cash or property or to perform services; provided, however,
23 that a person may become a beneficial owner of a business trust and may
24 receive a beneficial interest in a business trust without making a
25 contribution or being obligated to make a contribution to the business
26 trust.
27 b. Except as provided in the governing instrument, a beneficial owner
28 shall be obligated to the business trust to perform any promise, to
29 contribute cash or property or to perform services that is otherwise
30 enforceable pursuant to law, even if the beneficial owner is unable to
31 perform because of death, disability or any other reason. Except as
32 provided in the governing instrument, a beneficial owner who fails to
33 make the required contribution of property or services, shall be obli-
34 gated, at the option of the business trust, to contribute cash equal to
35 that portion of the value as stated in the records of the business
36 trust, if so stated, of the contribution that has not been made. Such
37 option shall be in addition to, not in lieu of, any other rights includ-
38 ing the right to specific performance that the business trust may
39 enforce against such beneficial owner under the governing instrument or
40 applicable law.
41 c. Unless otherwise provided in the governing instrument and except as
42 provided in section two hundred two of this article, the obligation of a
43 beneficial owner to make a contribution, or to return money or other
44 property paid or distributed in violation of this chapter may be compro-
45 mised only by the consent of all beneficial owners. A conditional obli-
46 gation of a beneficial owner to make a contribution, or return money or
47 other property to a business trust shall not be enforced unless the
48 conditions of the obligation have been satisfied or waived as to or by
49 such beneficial owner. Conditional obligations shall include contrib-
50 utions payable upon a discretionary call of a business trust or a bene-
51 ficial owner prior to the time the call occurs.
52 d. A governing instrument may provide that the interest of any benefi-
53 cial owner who fails to make any required contribution shall be subject
54 to specified consequences of such failure. Such consequences may
55 include, but are not limited to, reduction or elimination of the
56 defaulting beneficial owner's interest in the business trust, subordi-
A. 6128 4
1 nation of the defaulting beneficial owner's interest to those of nonde-
2 faulting beneficial owners, a forced sale of the defaulting beneficial
3 owner's beneficial interest, forfeiture of the defaulting beneficial
4 owner's beneficial interest, the lending by the other beneficial owners
5 of the amount necessary to meet the defaulting beneficial owner's
6 commitment, a fixing of the value of the defaulting beneficial owner's
7 beneficial interest by appraisal or by formula and redemption or sale of
8 such defaulting beneficial owner's beneficial interest at such value, or
9 any other consequences.
10 S 202. Liability of beneficial owners, trustees and agents. a. Neither
11 a beneficial owner or trustee of a business trust nor an agent of a
12 business trust (including a person having more than one such capacity)
13 shall be liable for any debts, obligations or liabilities of the busi-
14 ness trust or each other, whether arising in tort, contract or other-
15 wise, solely by reason of being a beneficial owner, trustee or agent
16 acting or omitting to act in such capacity or participating as an
17 employee, consultant, contractor or otherwise in the conduct of the
18 business of the business trust.
19 b. Notwithstanding the provisions of subdivision a of this section,
20 all or specified beneficial owners of a business trust may be liable for
21 all or specified debts, obligations or liabilities of a business trust
22 if (1) a statement to such effect is specifically contained in the
23 certificate of business trust of the business trust, and (2) any such
24 beneficial owner so liable shall have either (A) specifically consented
25 in writing (i) to the adoption of such provision, or (ii) to be bound by
26 such provision, or (B) specifically voted for the adoption of such
27 provision. The absence of either such statement in the certificate of
28 business trust or such consent or vote of any such beneficial owner
29 shall in no way affect or impair the ability of a beneficial owner to
30 act as a guarantor or surety for, provide collateral for or otherwise be
31 liable for the debts, obligations or liabilities of a business trust as
32 authorized pursuant to section two hundred three of this article.
33 S 203. Business transactions of a beneficial owner with a business
34 trust. Except as may be provided in the governing instrument of a busi-
35 ness trust, a beneficial owner may lend money to, borrow money from, act
36 as a guarantor or surety for, provide collateral for the obligations of,
37 and transact other business with the business trust and, subject to
38 other applicable provisions of law, have the same rights and obligations
39 with respect thereto as a person who is not a beneficial owner.
40 S 204. Legal proceedings. a. A business trust may sue and be sued, and
41 service of process may be effectuated by service of a summons and
42 complaint, or a summons with notice, as provided by rule three hundred
43 five of the civil practice law and rules, upon at least one trustee of
44 the business trust or the registered agent for service of process of the
45 business trust, if any, as provided by subdivision three of section
46 three hundred eight and rule three hundred eighteen of the civil prac-
47 tice law and rules, in the manner provided by section three hundred
48 eight of the civil practice law and rules. Furthermore, a business trust
49 may be sued for debts and other obligations or liabilities contracted or
50 incurred by the trustees or by the duly authorized agents of such trus-
51 tees, in the performance of their duties under the governing instrument
52 of the business trust, and for any damages to persons or property
53 resulting from the negligence of such trustees or agents acting in the
54 performance of such duties. Notwithstanding any other provision of this
55 section, in the event that the governing instrument of a business trust
56 creates one or more series as provided in paragraph two of subdivision b
A. 6128 5
1 of section two hundred six of this article, and if separate and distinct
2 records are maintained for any such series and the assets associated
3 with any such series are held and accounted for separately from the
4 other assets of the business trust, or any other series thereof, and if
5 the governing instrument so provides, and notice of the limitation on
6 liabilities of such series is set forth in the certificate of business
7 trust of the business trust, then the debts, liabilities, obligations
8 and expenses incurred, contracted for or otherwise existing with respect
9 to a particular series shall be enforceable against the assets of such
10 series only, and not against the assets of the business trust generally.
11 b. A trustee of a business trust or the registered agent of the busi-
12 ness trust for service of process as provided by subdivision three of
13 section three hundred eight and rule three hundred eighteen of the civil
14 practice law and rules, may be served with process in the manner
15 prescribed in subdivision a of this section in all civil actions or
16 proceedings brought in this state involving or relating to the activ-
17 ities of the business trust or a violation by a trustee of a duty to the
18 business trust or any beneficial owner thereof, whether or not the trus-
19 tee is a trustee at the time suit is commenced. Every resident or
20 nonresident of this state who accepts election or appointment as a trus-
21 tee or serves as a trustee of a business trust shall, by such acceptance
22 of service as a trustee, be deemed to have consented to the appointment
23 of the New York trustee or registered agent of the business trust as
24 required by section two hundred seven of this article, as such person's
25 agent upon whom service of process may be made as provided in this
26 section. Such acceptance of service shall signify the consent of such
27 trustee that any process when so served shall be of the same legal force
28 and validity as if served upon such trustee within this state and such
29 appointment of such New York trustee or registered agent shall be irrev-
30 ocable.
31 c. In the governing instrument of a business trust or other writing, a
32 trustee may consent to be subject to the nonexclusive jurisdiction of
33 the courts of or arbitration in a specified jurisdiction, or the exclu-
34 sive jurisdiction of the courts of this state, and to be served with
35 legal process in the manner prescribed in such governing instrument of
36 the business trust or other writing.
37 d. A partnership (whether general or limited), corporation or other
38 business entity formed or organized under the laws of any foreign coun-
39 try or other jurisdiction other than this state shall not be deemed to
40 be doing business in this state solely by reason of its being a trustee
41 of a business trust.
42 e. The secretary of state shall be the agent of every domestic busi-
43 ness trust and every authorized foreign business trust upon whom process
44 against the business trust may be served. No domestic or foreign busi-
45 ness trust may be formed or authorized to do business in this state
46 under this chapter unless in its certificate of business trust or in its
47 application for authority it designates the secretary of state as such
48 agent. Any designated post office address to which the secretary of
49 state shall mail a copy of process served upon him or her as agent of a
50 domestic business trust or a foreign business trust shall continue until
51 the filing of a certificate under this article directing the mailing to
52 a different post office address.
53 f. Service of process on the secretary of state as agent of a domestic
54 business trust or authorized foreign business trust shall be made by
55 delivering a copy personally to and leaving with the secretary of state
56 or his or her deputy, or with any person authorized by the secretary of
A. 6128 6
1 state to receive such service, at the office of the department of state
2 in the city of Albany, duplicate copies of such process together with
3 the statutory fee, which fee shall be a taxable disbursement. Service of
4 process on such business trust shall be complete when the secretary of
5 state is so served. The secretary of state shall promptly send one such
6 copy by certified mail, return receipt requested, to such business trust
7 at the post office address on file in the department of state specified
8 for such purpose. The secretary of state shall keep a record of each
9 process served upon the secretary of state pursuant to this chapter,
10 including the date of such service and the action taken by the secretary
11 of state with reference thereto.
12 g. Nothing in this section shall be construed in a manner inconsistent
13 with any provision of article three of the civil practice law and rules,
14 nor shall anything in this section limit or affect the right to serve
15 process in any other manner provided by law. This section is an exten-
16 sion of and not a limitation upon the right otherwise existing of
17 service of legal process upon nonresidents.
18 S 205. Rights of beneficial owners in trust property. a. Except as
19 otherwise provided in the governing instrument of a business trust, a
20 beneficial owner shall have an undivided beneficial interest in the
21 property of the business trust and shall share in the profits and losses
22 of the business trust in the proportion (expressed as a percentage) of
23 the entire undivided beneficial interest in the business trust owned by
24 such beneficial owner. The governing instrument of a business trust may
25 provide that the business trust or the trustees, acting for and on
26 behalf of the business trust, shall be deemed to hold beneficial owner-
27 ship of any income earned on the securities of the business trust issued
28 by any business entities formed, organized or existing under the laws of
29 any jurisdiction, including the laws of any foreign country.
30 b. No creditor of a beneficial owner shall have any right, in such
31 capacity, to obtain possession of or otherwise exercise legal or equita-
32 ble remedies with respect to the property of the business trust.
33 c. A beneficial owner's beneficial interest in a business trust shall
34 be personal property notwithstanding the nature of the property of the
35 trust. Except as otherwise provided in the governing instrument of a
36 business trust, a beneficial owner has no interest in any specific prop-
37 erty of the business trust.
38 d. A beneficial owner's beneficial interest in a business trust shall
39 be freely transferable, except as provided in the governing instrument
40 of the business trust.
41 e. Except as otherwise provided in the governing instrument of a busi-
42 ness trust, when a beneficial owner becomes entitled to receive a
43 distribution, such beneficial owner shall have the status of and be
44 entitled to all remedies available to a creditor of the business trust
45 with respect to the distribution. A governing instrument may provide for
46 the establishment of record dates with respect to allocations and
47 distributions by the business trust.
48 S 206. Management of business trust. a. The business and affairs of a
49 business trust shall be managed by or under the direction of its trus-
50 tees. To the extent provided in the governing instrument of a business
51 trust, any person (including a beneficial owner) shall be entitled to
52 direct the trustees in the management of a business trust. Except as
53 otherwise provided in the governing instrument of a business trust,
54 neither the power to give direction to a trustee nor the exercise there-
55 of by any person (including a beneficial owner) shall cause such person
56 to be a trustee.
A. 6128 7
1 b. A governing instrument may include any provision relating to the
2 management of the business and affairs of the business trust, and the
3 rights, duties and obligations of the trustees, beneficial owners and
4 other persons, which is not contrary to the provisions of this chapter
5 and, without limitation:
6 (1) may provide for classes, groups or series of trustees or benefi-
7 cial owners, or classes, groups or series of beneficial interests,
8 having such relative rights, powers and duties as the governing instru-
9 ment may provide, and may make provision for the future creation of
10 additional classes, groups or series of trustees, beneficial owners or
11 beneficial interests, having such relative rights, powers and duties as
12 may from time to time be established, including rights, powers and
13 duties senior or subordinate to existing classes, groups or series of
14 trustees, beneficial owners or beneficial interests;
15 (2) may establish or provide for the establishment of designated
16 series of trustees, beneficial owners or beneficial interests having
17 separate rights, powers or duties with respect to specified property or
18 obligations of the business trust or profits and losses associated with
19 specified property or obligations, and any such series may have a sepa-
20 rate business purpose or investment objective;
21 (3) may provide for the taking of any action, including amendment of
22 the governing instrument, the accomplishment of a merger or consol-
23 idation, the appointment of one or more trustees, the sale, lease,
24 exchange, transfer, pledge or other disposition of all or any part of
25 the assets of the business trust or the assets of any series, or the
26 dissolution of the business trust, or may provide for the taking of any
27 action to create a class, group or series of beneficial interests that
28 was not previously outstanding, in any case without the vote or approval
29 of any particular trustee or beneficial owner, or class, group or series
30 of trustees or beneficial owners;
31 (4) may grant or deny to all or certain trustees or beneficial owners,
32 or a specified class, group or series of trustees or beneficial owners,
33 the right to vote, separately or with any or all other classes, groups,
34 or series of the trustees or beneficial owners, on any matter, such
35 voting being on a per capita, number, financial interest, class, group,
36 series or any other basis;
37 (5) may, to the extent that voting rights are granted in the governing
38 instrument, establish provisions relating to notice of the time, place
39 or purpose of any meeting at which any matter is to be voted on, waiver
40 of any such notice, action by consent without a meeting, the establish-
41 ment of record dates, quorum requirements, voting in person, by proxy or
42 in any other manner, or any other matter with respect to the exercise of
43 any such right to vote;
44 (6) may provide for the present or future creation of more than one
45 business trust, including the creation of a future business trust to
46 which all or any part of the assets, liabilities, profits or losses of
47 any existing business trust will be transferred, and for the conversion
48 of beneficial interests in an existing business trust, or series thereof
49 into beneficial interests in the separate business trust or series ther-
50 eof; and
51 (7) may provide for the appointment, election or engagement, either as
52 agents or independent contractors of the business trust or as delegates
53 of the trustees, as officers, employees, managers or other persons who
54 may manage the business and affairs of the business trust and may have
55 such titles and such relative rights, powers and duties as the governing
56 instrument shall provide. Except to the extent otherwise provided in the
A. 6128 8
1 governing instrument of a business trust, the trustees shall choose and
2 supervise such officers, managers, employees and other persons.
3 c. To the extent that, at law or in equity, a trustee has duties
4 (including fiduciary duties) and liabilities relating thereto to a busi-
5 ness trust or to a beneficial owner:
6 (1) any such trustee acting under a governing instrument shall not be
7 liable to the business trust or to any such beneficial owner for the
8 trustee's good faith reliance on the provisions of such governing
9 instrument; and
10 (2) the trustee's duties and liabilities may be expanded or restricted
11 by provisions in a governing instrument.
12 d. To the extent that, at law or in equity, an officer, employee,
13 manager or other person designated pursuant to paragraph seven of subdi-
14 vision b of this section has duties (including fiduciary duties) and
15 liabilities relating thereto to a business trust, a beneficial owner or
16 a trustee:
17 (1) any such officer, employee, manager or other person acting under a
18 governing instrument shall not be liable to the business trust, any
19 beneficial owner or any trustee for such person's good faith reliance on
20 the provisions of such governing instrument; and
21 (2) the duties and liabilities of an officer, employee, manager or
22 other person acting pursuant to paragraph seven of subdivision b of this
23 section may be expanded or restricted by provisions in a governing
24 instrument.
25 S 207. Trustee in state. a. Every domestic business trust shall at all
26 times have at least one trustee who, in the case of a natural person,
27 shall be a resident of this state or which, in all other cases, has its
28 principal place of business in this state.
29 b. Notwithstanding the provisions of subdivision a of this section, no
30 business trust which is, becomes or will become prior to or within one
31 hundred eighty days following the first issuance of beneficial inter-
32 ests, a registered investment company under the Investment Company Act
33 of 1940, as amended, shall be required to have a trustee who is a resi-
34 dent of this state or have a principal place of business in this state
35 as long as such business trust shall have and maintain in this state:
36 (1) a registered office, which need not be a place of business in this
37 state; and
38 (2) a registered agent for service of process on the business trust,
39 who may be either an individual resident in this state whose business
40 office is identical with such business trust's registered office, a
41 domestic corporation, or a foreign corporation authorized to transact
42 business in this state, having a business office identical with such
43 registered office.
44 c. Any business trust adopting or maintaining a registered office and
45 registered agent in this state under subdivision b of this section may,
46 upon adoption of such registered office and registered agent, change the
47 location of its registered office in this state to any other place in
48 the state, or may change the registered agent to any other person or
49 entity by filing an amendment to its certificate of business trust in
50 accordance with the applicable provisions of this article. If a business
51 trust which is an investment company registered as aforesaid maintains a
52 registered office and registered agent in this state under subdivision b
53 of this section, then the reference in paragraph three of subdivision a
54 of section two hundred twelve of this article to the "name and address
55 of at least one trustee that meets the requirements of this section"
56 shall be deemed a reference to the name and the business address of the
A. 6128 9
1 registered agent and registered office maintained under this section,
2 and the certificate of business trust filed under section two hundred
3 twelve of this article shall reflect such information in lieu of the
4 information otherwise required by paragraph three of subdivision a of
5 section two hundred twelve of this article.
6 d. Service of process upon a registered agent maintained by a business
7 trust pursuant to subdivision b of this section shall be effective as if
8 served upon one of the trustees of the business trust pursuant to
9 section two hundred four of this article.
10 S 208. Existence of business trust. a. Except as otherwise provided in
11 the governing instrument of a business trust, the business trust shall
12 have perpetual existence.
13 b. Except as otherwise provided in the governing instrument of a busi-
14 ness trust, the death, incapacity, dissolution, termination or bankrupt-
15 cy of a beneficial owner shall not result in the termination or dissol-
16 ution of a business trust.
17 S 209. Applicability of trust law. Except as otherwise provided in the
18 governing instrument of a business trust or in this chapter, the laws of
19 the state pertaining to trusts including the common law of business
20 trusts are applicable to business trusts organized under this chapter;
21 provided, however, that for purposes of taxation a business trust shall
22 be classified as a corporation, an association, a partnership, a trust
23 or otherwise, as shall be determined under the United States Internal
24 Revenue Code of 1986, as amended, or under any successor provision.
25 S 210. Business trust name. The name of each business trust as set
26 forth in its certificate of business trust and the name of each foreign
27 business trust as set forth in its application for authority:
28 a. shall contain without abbreviation the words "Business Trust" or
29 the abbreviation "B.T." or "BT";
30 b. shall be such as to distinguish it from the name of (1) any other
31 domestic business trust as defined in subdivision b of section one
32 hundred two of this chapter, (2) any foreign business trust authorized
33 to do business as a foreign business trust in this state, or (3) a
34 fictitious name of a foreign business trust authorized to do business as
35 a foreign business trust in this state appearing on an application filed
36 pursuant to section five hundred four of this chapter;
37 c. shall, unless the business trust or foreign business trust shall
38 have complied with the provisions of section one hundred thirty of the
39 general business law, be the name used by the business trust in its
40 conduct of business;
41 d. shall not contain any word or phrase, or any abbreviation or deriv-
42 ative thereof, the use of which is prohibited or restricted by any other
43 statute of this state, unless in the latter case the restrictions have
44 been complied with;
45 e. shall not contain the following words, phrases or any abbreviation
46 or derivative thereof:
47 board of trade state police urban development
48 chamber of commerce state trooper urban relocation
49 community renewal tenant relocation corporation
50 incorporated partnership limited liability company;
51 f. shall not contain the following words, or any abbreviation or
52 derivative thereof:
53 acceptance doctor lawyer
54 annuity endowment loan
A. 6128 10
1 assurance fidelity mortgage
2 attorney finance savings
3 bank guaranty surety
4 benefit indemnity title
5 bond insurance underwriter
6 casualty investment
7 unless the approval of the superintendent of banks or the superintendent
8 of insurance, as appropriate, is attached to the certificate of business
9 trust, application for authority or amendment thereof; or unless the
10 word "doctor" or "lawyer" or an abbreviation or derivative thereof is
11 used in a context which clearly denotes a purpose other than the prac-
12 tice of law or medicine;
13 g. shall not, unless the approval of the office of temporary and disa-
14 bility assistance or office of children and family services is attached
15 to the certificate of business trust or application for authority or
16 amendment thereof, contain the words "blind" or "handicapped" or the
17 phrase "physically or mentally challenged". Such approval shall be
18 granted by the office of temporary and disability assistance or office
19 of children and family services if in its opinion the words "blind" or
20 "handicapped" or "physically or mentally challenged" as used in the
21 proposed name will not tend to mislead or confuse the public into
22 believing that the business trust or foreign business trust is organized
23 for charitable or nonprofit purposes related to the blind or the hand-
24 icapped;
25 h. shall not, unless the approval of the attorney general is attached
26 to the certificate of business trust or application for authority,
27 contain the word "exchange" or any abbreviation or derivative thereof.
28 Such approval shall not be granted by the attorney general if in his or
29 her opinion the use of the word "exchange" in the business trust's
30 proposed name would falsely imply that the business trust conducts its
31 business at a place where trade is carried on in securities or commod-
32 ities by brokers, dealers or merchants; and
33 i. shall not contain any word or phrase, or any abbreviation or deriv-
34 ative thereof, the use of which is prohibited or restricted by any other
35 statute of this state, unless in the latter case the restrictions have
36 been complied with.
37 S 211. Reservation of business trust name. a. Subject to the
38 provisions of section two hundred ten of this article, the exclusive
39 right to the use of a name may be reserved by:
40 (1) any person intending to organize or cause the organization of a
41 business trust under this chapter;
42 (2) any domestic business trust or any foreign business trust author-
43 ized to do business in this state intending to change its name;
44 (3) any foreign business trust intending to apply for authority to do
45 business in this state and to adopt that name; and
46 (4) any person intending to organize a foreign business trust and
47 intending to have it apply for authority to do business in this state.
48 b. A fictitious name for use pursuant to section five hundred four of
49 this chapter may be reserved by:
50 (1) any foreign business trust intending to apply for authority to do
51 business in this state pursuant to subdivision a of section five hundred
52 four of this chapter;
53 (2) any authorized foreign business trust intending to change the
54 fictitious name under which it does business in this state; and
A. 6128 11
1 (3) any authorized foreign business trust that has changed its name in
2 its jurisdiction of organization, such new name not being available in
3 this state.
4 c. Application to reserve a business trust name shall be delivered to
5 the department of state. It shall set forth the name and address of the
6 applicant, the name to be reserved, and a statement of the basis for the
7 application under subdivision a or b of this section. The secretary of
8 state may require that there be included in the application a statement
9 as to the nature of the business to be conducted by the business trust,
10 it being sufficient to state either alone or with any other purposes,
11 that the business trust intends to conduct any lawful act or activity
12 for which business trusts may be formed under this chapter, provided
13 that it also shall state that it is not intended to be formed to engage
14 in any act or activity requiring the consent or approval of any state
15 official, department, board or agency or other body without such consent
16 or approval first being obtained. If the name is available for use by
17 the applicant for a business trust, the department of state shall
18 reserve the name for the use of the applicant for a period of sixty days
19 and issue a certificate of reservation. The restrictions and qualifica-
20 tions set forth in section two hundred ten of this article shall not be
21 waived by the issuance of a certificate of reservation. The certificate
22 of reservation shall include the name of the applicant, the name
23 reserved and the date of reservation. The certificate of reservation,
24 or in lieu thereof an affidavit by the applicant or by his or her agent
25 or attorney that the certificate of reservation has been lost or
26 destroyed, shall accompany the certificate of business trust or the
27 application for authority when either is delivered to the department of
28 state.
29 d. The department of state may extend the reservation for additional
30 periods of not more than sixty days each, upon the written request of
31 the applicant or his or her attorney in fact or agent delivered to the
32 department of state and filed before expiration of the reservation peri-
33 od then in effect. Such request shall have attached to it the certif-
34 icate of reservation of name. No more than two such extensions shall be
35 granted.
36 e. Upon request of the applicant delivered to the department of state
37 before the expiration of the reservation period, the department shall
38 cancel the reservation.
39 S 212. Certificate of business trust. a. In order to form a business
40 trust, a certificate of business trust shall be executed in accordance
41 with section two hundred sixteen of this article. The certificate, enti-
42 tled "Certificate of business trust of ... (name of business trust)
43 under section two hundred twelve of the Business Trust Law," shall be
44 delivered to the department of state in accordance with section two
45 hundred seventeen of this article and shall set forth:
46 (1) the name of the business trust;
47 (2) if the business trust is to have a registered agent, the name and
48 address of such registered agent within this state and a statement that
49 the registered agent is to be the agent of the business trust upon whom
50 process against it may be served;
51 (3) the name and address of at least one trustee that meets the
52 requirements of section two hundred seven of this article and if differ-
53 ent the address of the principal place of business of the business
54 trust;
55 (4) the designation of the secretary of state as agent of the business
56 trust upon whom process against it may be served and the post office
A. 6128 12
1 address within or without this state to which the secretary of state
2 shall mail a copy of any process against the business trust served upon
3 him or her;
4 (5) the latest date upon which the business trust is to dissolve or
5 that its existence is perpetual;
6 (6) if all or specified classes of beneficial owners are to be liable
7 in their capacity as beneficial owners for all or specified debts, obli-
8 gations or liabilities of the business trust as authorized pursuant to
9 section two hundred two of this article, a statement that all or speci-
10 fied beneficial owners are so liable for such debts, obligations or
11 liabilities in their capacity as beneficial owners of the business trust
12 as authorized pursuant to section two hundred two of this article; and
13 (7) any other provisions, not inconsistent with law, that the trustees
14 determine to include therein including, but not limited to, the business
15 purpose for which the business trust is formed.
16 b. A business trust is formed at the time of the filing of the initial
17 certificate of business trust with the department of state or at any
18 later time not to exceed sixty days from the date of filing specified in
19 the certificate of business trust. The filing of the certificate shall,
20 in the absence of actual fraud, be conclusive evidence of the formation
21 of the business trust as of the time of filing or the effective date if
22 later, except in an action or special proceeding brought by the attorney
23 general.
24 c. Within one hundred twenty days after the effectiveness of the
25 initial certificate of business trust, a copy of the same or a notice
26 containing the substance thereof shall be published once in each week
27 for six successive weeks, in two newspapers of the county in which the
28 principal place of business of the business trust is located, to be
29 designated by the county clerk, one of which newspapers shall be a news-
30 paper published in the city or town in which the principal place of
31 business is intended to be located, if a newspaper be published therein,
32 or, if no newspaper is published therein, in the newspaper nearest ther-
33 eto, and proof of such publication by the affidavit of the printer or
34 publisher of each of such newspapers must be filed with the department
35 of state. The notice shall include: (1) the name of the business trust;
36 (2) the date of filing of the certificate of business trust with the
37 department of state; (3) the county within this state, in which the
38 principal place of business in this state of the business trust is to be
39 located; (4) a statement that the secretary of state has been designated
40 as agent of the business trust upon whom process against it may be
41 served and the post office address within or without this state to which
42 the secretary of state shall mail a copy of any process against it
43 served upon him or her; (5) if the business trust is to have a regis-
44 tered agent, his or her name and address within this state and a state-
45 ment that the registered agent is to be agent of the business trust upon
46 whom process against it may be served; (6) the name and address of at
47 least one trustee that meets the requirements of section two hundred
48 seven of this article and if different the address of the principal
49 place of business of the business trust; (7) the latest date upon which
50 the business trust is to dissolve or that its existence is perpetual;
51 and (8) the character or purpose of the business of such business trust.
52 Failure to cause such notice to be published or to file such proof with-
53 in one hundred twenty days of the effective date of the initial certif-
54 icate of business trust shall prohibit the business trust from maintain-
55 ing any action or special proceeding in this state unless and until such
56 business trust cause such notice to be published and files such proof of
A. 6128 13
1 publication. The failure of a business trust to cause such notice to be
2 published or to file proof of publication shall not impair the validity
3 of any contract or act of the business trust or the right of the busi-
4 ness trust or the right of any other party to the contract to maintain
5 any action or special proceeding thereon, and shall not prevent the
6 business trust from defending any action or special proceeding in this
7 state.
8 S 213. Amendment of the certificate of business trust. a. A certif-
9 icate of business trust is amended by delivery to the department of
10 state of a certificate of amendment thereto entitled "Certificate of
11 amendment of the certificate of business trust of... (name of business
12 trust) under section two hundred thirteen of the Business Trust Law,"
13 and executed in accordance with section two hundred sixteen of this
14 article.
15 b. The certificate of amendment may set forth only such provisions as
16 are included in the initial certificate of business trust on file at the
17 time of making such amendment.
18 c. The certificate of amendment shall set forth:
19 (1) the name of the business trust and, if it has been changed, the
20 name under which it was formed;
21 (2) the date of filing of its certificate of business trust; and
22 (3) each amendment effected thereby, setting forth the subject matter
23 of each provision of the certificate of business trust that is to be
24 amended or eliminated and the full text of the provision or provisions,
25 if any, which are to be substituted or added.
26 d. A trustee, who becomes aware that any statement in a certificate of
27 business trust was false in any material respect when made or that a
28 matter described has changed making the certificate inaccurate in any
29 material respect, shall amend the certificate within seventy-five days
30 of becoming aware of such fact.
31 e. A certificate of business trust may be amended at any time for any
32 other proper purpose which the trustees may determine.
33 f. A certificate of amendment shall be effective at the time of its
34 filing with the department of state.
35 S 214. Cancellation of certificate of business trust. a. Within ninety
36 days following the dissolution and the commencement of winding up of a
37 business trust, or at any time there are no trustees a certificate of
38 cancellation shall be filed with the department of state entitled,
39 "Certificate of cancellation of... (name of business trust) under
40 section two hundred fourteen of the Business Trust Law," and executed in
41 accordance with section two hundred sixteen of this article. The certif-
42 icate of cancellation shall set forth:
43 (1) the name of the business trust, and if it has been changed the
44 name under which it was formed;
45 (2) the date of filing of its certificate of business trust and each
46 subsequent amendment thereto;
47 (3) the event giving rise to the filing of the certificate of cancel-
48 lation; and
49 (4) any other information the trustees determine to include therein.
50 b. The cancellation of the certificate of business trust shall be
51 effective at the time of the filing of the certificate of cancellation.
52 c. The cancellation of the certificate of business trust shall not
53 affect the liability of the trustees or the beneficial owners during the
54 period of winding up and termination of the business trust.
55 S 215. Restated certificate of trust. a. A business trust may restate
56 in a single certificate the text of its certificate of trust, without
A. 6128 14
1 making any amendment thereby. Alternatively, a business trust may
2 restate in a single certificate the text of its certificate of trust and
3 as amended thereby to effect any one or more of the amendments author-
4 ized by this chapter.
5 b. The restated certificate of trust shall be executed by at least one
6 of the trustees in accordance with section two hundred sixteen of this
7 article.
8 c. The restated certificate shall be delivered to the department of
9 state in accordance with section two hundred seventeen of this article
10 and shall set forth:
11 (1) the name of the business trust and, if it has been changed, the
12 name under which it was formed;
13 (2) the date of filing of its certificate of trust;
14 (3) if the restated certificate restates the text of the certificate
15 of trust without making any amendments, then a statement that the text
16 of the certificate of trust is thereby restated without amendment to
17 read as therein set forth in full; and
18 (4) if the restated certificate restates the text of the certificate
19 of trust and is amended thereby, then a statement that the certificate
20 of trust is amended to effect one or more of the amendments authorized
21 by this chapter, specifying each such amendment and that the text of the
22 certificate of trust is thereby restated as amended to read as therein
23 set forth in full.
24 d. Any amendments affected by the restatement of the certificate of
25 trust shall be subject to the provisions of this chapter which would
26 apply if a separate certificate of amendment were filed to effect such
27 amendment.
28 S 216. Execution of certificates. a. Each certificate required by this
29 chapter to be delivered to the department of state shall be executed in
30 the following manner:
31 (1) a certificate of business trust shall be signed by all of the
32 trustees of the business trust;
33 (2) a restated certificate of business trust or amended and restated
34 certificate of business trust shall be signed by at least one of the
35 trustees of the business trust;
36 (3) a certificate of cancellation shall be signed by all of the trus-
37 tees or as otherwise provided in the governing instrument of the busi-
38 ness trust;
39 (4) if a business trust is filing a certificate of merger or consol-
40 idation, the certificate of merger or consolidation shall be signed by
41 all of the trustees or as otherwise provided in the governing instrument
42 of the business trust, or if the certificate of merger or consolidation
43 is being filed by another business entity, the certificate of merger or
44 consolidation shall be signed by a person authorized to execute such
45 instrument on behalf of such other business entity; and
46 (5) all other certificates shall be signed by at least one trustee of
47 the business trust.
48 b. Any trustee may sign a certificate by an attorney in fact. Powers
49 of attorney relating to the signing of a certificate as an attorney in
50 fact need not be delivered to the department of state nor provided as
51 evidence of authority by the person filing, but shall be retained in the
52 records of the business trust.
53 c. Each certificate shall be signed and verified, or affirmed under
54 penalties of perjury.
55 d. Each certificate must be dated, and the name and capacity of each
56 signer shall be stated beneath or opposite his or her signature.
A. 6128 15
1 S 217. Delivery to the department of state. Every signed certificate
2 of business trust, a restated certificate of business trust and any
3 signed certificate of amendment or other certificates filed pursuant to
4 this article, and any judicial decree of amendment or cancellation shall
5 be delivered to the department of state. If the certificate delivered to
6 the department of state for filing complies as to form with the require-
7 ments of law and the filing fee, if any, required by any statute in
8 connection therewith has been paid, the certificate shall be filed and
9 indexed by the department of state. The department of state shall not
10 review such certificates for legal sufficiency, but shall limit its
11 review to the requirements set forth in this section.
12 S 218. Execution, amendment or cancellation by judicial act. If a
13 person required by section two hundred twelve, two hundred thirteen or
14 two hundred fourteen of this article to execute a certificate of busi-
15 ness trust, a restated certificate of business trust, or an amendment or
16 cancellation thereof fails or refuses to do so, any beneficial owner and
17 any permitted assignee of a beneficial owner, who is adversely affected
18 by the failure or refusal, may petition the supreme court in the judi-
19 cial district in which the office of the business trust is located to
20 direct the execution of such certificate. If the court finds that such
21 certificate should be executed and that such person has failed or
22 refused to execute such certificate, it shall order such person to file
23 the appropriate certificate.
24 ARTICLE 3
25 MERGER AND CONSOLIDATION
26 Section 301. Definitions.
27 302. Merger and consolidation.
28 303. Procedures for merger or consolidation.
29 304. Certificate of merger or consolidation; contents.
30 305. Effect of merger or consolidation.
31 S 301. Definitions. As used in this article:
32 a. "Consolidation" shall mean a procedure by which a business trust
33 and one or more other business trusts or other business entities consol-
34 idate into a single business trust or other business entity that shall
35 be a new business trust or other business entity to be formed pursuant
36 to the consolidation.
37 b. "Merger" shall mean a procedure by which a business trust and one
38 or more other business trusts or other business entities merge into a
39 single business trust or the business entity that shall be one of the
40 constituent business trusts or other business entities.
41 S 302. Merger and consolidation. Pursuant to an agreement of merger or
42 consolidation, and to the extent not expressly prohibited by law, a
43 domestic business trust may merge or consolidate with or into one or
44 more business trusts or other business entities formed or organized or
45 existing under the laws of this state, any other state, the United
46 States or any foreign country or other foreign jurisdiction, with such
47 domestic business trust or other business entity as the agreement shall
48 provide being the surviving or resulting entity.
49 S 303. Procedures for merger or consolidation. a. The rights or secu-
50 rities of, or interests in a business trust or other business entity
51 that is a constituent party to the merger or consolidation may be
52 exchanged for or converted into cash, property, rights or securities of,
53 or interest in the surviving or resulting business trust or other busi-
54 ness entity or, in addition to or in lieu thereof, may be exchanged for
55 or converted into cash, property, rights or securities of, or interest
A. 6128 16
1 in, a business trust or other business entity that is not the surviving
2 or resulting business trust or other business entity in the merger or
3 consolidation.
4 b. Every business trust or other business entity shall adopt an agree-
5 ment of merger or consolidation, setting forth the terms and conditions
6 of the conversion of the beneficial interests of the beneficial owners
7 of the business trust into interests in the surviving or resulting busi-
8 ness trust or other business entity or the cash or other consideration
9 to be paid or delivered in exchange for beneficial interests in each
10 business trust, or a combination thereof.
11 c. The agreement of merger or consolidation shall be approved on
12 behalf of each domestic business trust (1) by such beneficial owners and
13 trustees as shall be required by the governing instrument of the busi-
14 ness trust, which shall not be less than beneficial owners owning a
15 majority of the beneficial interests in the business trust, or (2) if no
16 provision is made, by all of the beneficial owners and all of the trus-
17 tees.
18 d. Notwithstanding an authorization by the relevant number of benefi-
19 cial owners and trustees, the agreement of merger or consolidation may
20 be terminated or amended pursuant to a provision for such termination or
21 amendment, if any, contained in the agreement of merger or consol-
22 idation.
23 S 304. Certificate of merger or consolidation; contents. After
24 approval of the agreement of merger or consolidation by each business
25 trust or other business entity merging or consolidating under this arti-
26 cle, unless the merger or consolidation is terminated pursuant to subdi-
27 vision d of section three hundred three of this article, a certificate
28 of merger or consolidation, entitled "Certificate of merger (or consol-
29 idation) of ... and ... into ... (names of business trusts or other
30 business entities)", shall be signed and verified or affirmed under
31 penalties of perjury on behalf of each business trust and other business
32 entity and delivered to the department of state. The certificate of
33 merger or consolidation shall set forth:
34 a. the name and jurisdiction of formation or organization of each of
35 the business trusts or other business entities which is to merge or
36 consolidate;
37 b. for each domestic business trust that is to merge or consolidate,
38 the date when its initial certificate of business trust was filed by the
39 department of state pursuant to this chapter, and, as to each foreign
40 business trust or other foreign business entity which is to merge or
41 consolidate, the jurisdiction and date of its formation and the date
42 when its application for authority to do business in this state was
43 filed by the department of state, and its fictitious name used within
44 this state pursuant to section two hundred ten of this chapter, if
45 applicable, or if no such application has been filed, a statement to
46 such effect;
47 c. that an agreement of merger or consolidation has been approved and
48 executed by each of the business trusts or other business entities which
49 is to merge or consolidate;
50 d. the name of the surviving or resulting business trust or other
51 business entity;
52 e. the future effective date or time, which shall be a date or time
53 certain, of the merger or consolidation in accordance with the agreement
54 of merger or consolidation, if it is not to be effective upon the filing
55 of the certificate of merger or consolidation;
A. 6128 17
1 f. if a domestic business trust is the surviving business trust, such
2 changes in its certificate of business trust as shall be necessary by
3 reason of the merger;
4 g. if a domestic business trust is the resulting business trust in a
5 consolidation, the matters required to be set forth under section two
6 hundred twelve of this chapter;
7 h. if the surviving or resulting entity is not a domestic business
8 trust, an agreement that such surviving or resulting entity may be
9 served with process in this state in any action or special proceeding
10 for the enforcement of any liability or obligation of any domestic busi-
11 ness trust previously amenable to suit in this state that is to merge or
12 consolidate, and for the enforcement as provided in this chapter of the
13 right of beneficial owners of any domestic business trust to receive
14 payment for their interests against the surviving or resulting entity;
15 i. a designation of the secretary of state as the agent for the
16 surviving or resulting entity upon whom process against it may be served
17 in the manner set forth in section two hundred four of this chapter in
18 any action or special proceeding, and a post office address, within or
19 without this state, to which the secretary of state shall mail a copy of
20 any process served upon him or her. Such post office address shall
21 supersede any prior address designated as the address to which process
22 shall be mailed;
23 j. that the agreement of merger or consolidation is on file at a place
24 of business of the surviving or resulting entity, and shall state the
25 address thereof; and
26 k. that a copy of the agreement of merger or consolidation will be
27 furnished by the surviving or resulting entity, on request and without
28 cost, to any beneficial owner or trustee of any domestic business trust
29 or any person holding an interest in any other business entity that is
30 to merge or consolidate.
31 S 305. Effect of merger or consolidation. a. Upon the effective date
32 of any merger or consolidation pursuant to this chapter, for all
33 purposes of the laws of this state, all of the rights, privileges, immu-
34 nities, powers and purposes of each of the business trusts and other
35 business entities that have merged or consolidated, and all property,
36 real, personal and mixed, tangible and intangible, and all debts, obli-
37 gations, liabilities, penalties and duties of such business trusts and
38 other business entities, as well as all other things belonging to each
39 of such business trusts and other business entities, shall be vested in
40 the surviving or resulting business trust or other business entity, and
41 shall thereafter be the property of the surviving or resulting business
42 trust or other business entity as they were of each of the business
43 trusts and other business entities that have merged or consolidated, and
44 the title to any real property vested by deed or otherwise, under the
45 laws of this state, in any such business trusts and other business enti-
46 ties shall not revert or be in any way impaired by reason of this chap-
47 ter; but all rights of creditors and all liens upon any property of any
48 such business trusts and other business entities shall be preserved
49 unimpaired, and all debts, obligations, liabilities, penalties and
50 duties of each of such business trusts and other business entities that
51 have merged or consolidated shall thenceforth attach to the surviving or
52 resulting business trust or other business entity and may be enforced
53 against it to the same extent as if such debts, obligations, liabilities
54 and duties have been incurred or contracted by it.
55 b. Upon the effective date of any merger or consolidation, no action,
56 suit or proceeding, civil or criminal, then pending by or against any
A. 6128 18
1 constituent business trust or other business entity in its common name
2 shall abate or be discontinued by reason of such merger or consol-
3 idation, but may be prosecuted by or may proceed against such surviving
4 or resulting business trust or other business entity.
5 c. Unless otherwise agreed by the entities participating in the merg-
6 er, a merger or consolidation of a domestic business trust, including a
7 domestic business trust that is not the surviving or resulting entity in
8 the merger or consolidation, shall not require such domestic business
9 trust to wind up its affairs under section four hundred one of this
10 chapter.
11 d. A certificate of merger or consolidation shall act as a certificate
12 of cancellation for a business trust that is not the surviving or
13 resulting entity in the merger or consolidation.
14 e. Notwithstanding any provision of the governing instrument of a
15 business trust, a governing instrument of a business trust containing a
16 specific reference to this subdivision may provide that an agreement of
17 merger or consolidation approved in accordance with subdivision a of
18 this section may:
19 (1) effect any amendment to the governing instrument of the business
20 trust, or
21 (2) effect the adoption of a new governing instrument of the business
22 trust if it is the surviving or resulting business trust in the merger
23 or consolidation. Any amendment to the governing instrument of a busi-
24 ness trust or adoption of a new governing instrument of the business
25 trust made pursuant to this paragraph shall be effective upon the effec-
26 tive date of the merger or consolidation. The provisions of this section
27 shall not be construed to limit the accomplishment of a merger or
28 consolidation or of any of the matters referred to in this subdivision
29 by any other means provided for in the governing instrument of a busi-
30 ness trust or other agreement or as otherwise permitted by law, includ-
31 ing that the governing instrument of any constituent business trust to
32 the merger or consolidation shall be the governing instrument of the
33 surviving or resulting domestic business trust.
34 ARTICLE 4
35 DISSOLUTION
36 Section 401. Dissolution.
37 402. Judicial dissolution.
38 403. Winding up.
39 404. Distribution of assets.
40 405. Winding up of a series.
41 S 401. Dissolution. A business trust shall be dissolved and its
42 affairs shall be wound up upon the happening of the occurrence of the
43 first of the following:
44 a. at the time, if any, provided in the certificate of business trust;
45 b. at the time or upon the happening of events specified in the
46 governing instrument of the business trust;
47 c. unless otherwise specified in the governing instrument of the busi-
48 ness trust, upon the consent of a majority of the beneficial owners; or
49 d. pursuant to a decree of judicial dissolution pursuant to section
50 four hundred two of this article.
51 Upon the winding up of a business trust pursuant to this section, a
52 certificate of cancellation of the business trust shall be filed by
53 applicant pursuant to section two hundred fourteen of this chapter.
A. 6128 19
1 S 402. Judicial dissolution. On application by a majority of the bene-
2 ficial owners or a trustee, the supreme court in the judicial district
3 in which:
4 a. the principal place of business of the business trust; or
5 b. the address of the trustee, as designated in the certificate of
6 business trust, is located, may decree dissolution of a business trust
7 whenever it is not reasonably practicable to carry on the business in
8 conformity with the governing instrument of the business trust. A certi-
9 fied copy of the order of dissolution shall be filed by the applicant
10 with the department of state within thirty days of its issuance. A
11 certificate of cancellation of the business trust shall be filed by the
12 applicant pursuant to section two hundred fourteen of this chapter.
13 S 403. Winding up. a. In the event of a dissolution of a business
14 trust, except for a dissolution pursuant to section four hundred two of
15 this article, unless otherwise provided in the governing instrument of
16 the business trust, the beneficial owners may wind up the affairs of the
17 business trust. Upon cause shown, the supreme court in the judicial
18 district in which the office of the business trust is located may wind
19 up the affairs of the business trust upon application of any trustee or
20 of the majority of beneficial owners, their legal representatives or
21 assignees, and in connection therewith may appoint a receiver or liqui-
22 dating trustee.
23 b. Upon dissolution of a business trust, the persons winding up the
24 affairs of the business trust may, in the name of and for and on behalf
25 of the business trust, prosecute and defend suits, whether civil, crimi-
26 nal or administrative, settle and close the business of the business
27 trust, dispose of and convey the property of the business trust,
28 discharge the liabilities of the business trust, and distribute to the
29 beneficial owners any remaining assets of the business trust, all with-
30 out affecting the liability of beneficial owners participating in the
31 winding up of the business trust's affairs.
32 S 404. Distribution of assets. Upon the winding up of a business
33 trust, the assets shall be distributed as follows:
34 a. to creditors of the business trust, including beneficial owners who
35 are creditors, to the extent permitted by law, in satisfaction of
36 liabilities of the business trust whether by payment or by establishment
37 of adequate reserves; and
38 b. except as provided in the governing instrument of the business
39 trust, to beneficial owners, first for the return of their contrib-
40 utions, if any, and secondly respecting their beneficial interests in
41 the business trust as set forth in section two hundred five of this
42 chapter.
43 S 405. Winding up of a series. Except to the extent otherwise provided
44 in the governing instrument of the business trust, a series established
45 in accordance with section two hundred six of this chapter may be
46 dissolved and its affairs wound up without causing the dissolution of
47 the business trust or any other series thereof. Unless otherwise
48 provided in the governing instrument of the business trust, the dissol-
49 ution, winding up, liquidation or termination of the business trust or
50 any series thereof shall not affect the limitation of liability with
51 respect to a series established in accordance with section two hundred
52 six of this chapter. A series established in accordance with section two
53 hundred six of this chapter is dissolved and its affairs shall be wound
54 up at the time or upon the happening of events specified in the govern-
55 ing instrument of the business trust. Except to the extent otherwise
56 provided in the governing instrument of a business trust, the death,
A. 6128 20
1 incapacity, dissolution, termination or bankruptcy of a beneficial owner
2 of such series shall not result in the termination or dissolution of
3 such series and such series may not be terminated or revoked by a bene-
4 ficial owner of such series or other person except in accordance with
5 the terms of the governing instrument of the business trust.
6 ARTICLE 5
7 MISCELLANEOUS
8 Section 501. Derivative actions.
9 502. Indemnification.
10 503. Fees.
11 504. Application for authority for a foreign business trust;
12 contents.
13 505. Amendments to application for authority.
14 506. Application for authority; effect.
15 507. Surrender of certificate of authority.
16 508. Termination of existence.
17 509. Doing business without certificate of authority.
18 510. Violations.
19 S 501. Derivative actions. a. A beneficial owner may bring a deriva-
20 tive action in the right of a business trust to recover a judgment in
21 its favor if the trustees with authority to do so have refused to bring
22 the action or if an effort to cause those trustees to bring the action
23 is not likely to succeed.
24 b. In any such action, the plaintiff shall be a beneficial owner at
25 the time of bringing the action and shall have been a beneficial owner
26 at the time of the transaction of which the plaintiff complains or the
27 plaintiff's status as a beneficial owner or interest shall have devolved
28 upon plaintiff by operation of law or pursuant to the terms of the
29 governing instrument of the business trust from a person who was a bene-
30 ficial owner at the time of the transaction.
31 c. In any such action, the complaint shall set forth with particulari-
32 ty the effort, if any, of the plaintiff to secure initiation of the
33 action by the trustees, or the reasons for not making such effort.
34 d. If a derivative action is successful, in whole or in part, or if
35 anything is received by a business trust as a result of a judgment,
36 compromise or settlement of such action, the court may award the plain-
37 tiff reasonable expenses, including reasonable attorney's fees. If
38 anything is so received by the plaintiff, the court shall make such
39 award of plaintiff's expenses payable out of those proceeds and direct
40 plaintiff to remit to the business trust the remainder thereof, and if
41 those proceeds are insufficient to reimburse plaintiff's reasonable
42 expenses, the court may direct that any such award of plaintiff's
43 expenses or a portion thereof be paid by the business trust.
44 e. A beneficial owner's right to bring a derivative action may be
45 subject to such additional standards and restrictions, if any, as are
46 set forth in the governing instrument of the business trust including,
47 without limitation, the requirement that beneficial owners owning a
48 specified minimum beneficial interest in the business trust join in the
49 bringing of the derivative action.
50 S 502. Indemnification. a. Subject to such standards and restrictions,
51 if any, as are set forth in the governing instrument of a business
52 trust, a business trust shall have the power to indemnify and hold harm-
53 less any trustee or beneficial owner or other person from and against
54 any and all claims and demands whatsoever.
A. 6128 21
1 b. The absence of a provision for indemnity in the governing instru-
2 ment of a business trust shall not be construed to deprive any trustee
3 or beneficial owner or other person of any right to indemnity which is
4 otherwise available to such person under the laws of this state or
5 otherwise.
6 S 503. Fees. Except as otherwise provided, the department of state
7 shall collect the following fees pursuant to this chapter:
8 a. For the reservation of a business trust name pursuant to section
9 two hundred eleven of this chapter, twenty dollars.
10 b. For filing a certificate of business trust pursuant to section two
11 hundred twelve of this chapter, two hundred dollars.
12 c. For filing a certificate of amendment to the certificate of busi-
13 ness trust pursuant to section two hundred thirteen of this chapter to
14 change the location of the registered office or to change the registered
15 agent, thirty dollars.
16 d. For filing a certificate of amendment to the certificate of busi-
17 ness trust pursuant to section two hundred thirteen of this chapter,
18 other than a change of or change of location of the registered office of
19 a registered agent, sixty dollars.
20 e. For filing a certificate of cancellation pursuant to section two
21 hundred fourteen of this chapter, sixty dollars.
22 f. For filing a restated certificate of business trust pursuant to
23 section two hundred fifteen of this chapter, two hundred dollars.
24 g. For filing a certificate of cancellation in accordance with a judi-
25 cial order pursuant to section two hundred eighteen of this chapter,
26 sixty dollars.
27 h. For filing a certificate of merger or consolidation pursuant to
28 section three hundred four of this chapter, sixty dollars.
29 i. For filing an application for authority pursuant to section five
30 hundred four of this article, two hundred dollars.
31 j. For filing an amendment to an application for authority pursuant to
32 section five hundred five of this article to change the registered agent
33 or the post office address or location of the registered agent, twenty
34 dollars.
35 k. For filing an amendment to an application for authority pursuant to
36 section five hundred six of this article, other than a change of, or
37 change of address or location of a registered agent, sixty dollars.
38 l. For filing a certificate of surrender of authority pursuant to
39 section five hundred seven of this article, sixty dollars.
40 m. For filing a certificate of termination of existence pursuant to
41 section five hundred eight of this article, sixty dollars.
42 n. For accepting service of process on behalf of a business trust,
43 forty dollars.
44 o. For filing an affidavit of publication pursuant to section two
45 hundred twelve or five hundred four of this chapter, twenty-five
46 dollars.
47 S 504. Application for authority for a foreign business trust;
48 contents. a. Before doing business in this state, a foreign business
49 trust shall apply for authority to do business in this state by submit-
50 ting to the department of state (1) a certificate of existence or, if no
51 such certificate is issued by the jurisdiction of organization, a certi-
52 fied copy of the certificate of business trust and all subsequent amend-
53 ments thereto or, if no certificate of business trust has been filed, a
54 certified copy of the instrument filed as its organizational basis and
55 all amendments thereof (if such certificate or instrument is in a
56 foreign language, a translation thereof under oath of the translator
A. 6128 22
1 shall be attached thereto) and (2) an application for authority as a
2 foreign business trust entitled "Application for authority of ... (name
3 of business trust) under S 504 of the Business Trust Law," signed and
4 verified or affirmed under penalties of perjury by a trustee and setting
5 forth:
6 (A) the name of the foreign business trust and, if a foreign business
7 trust's name is not acceptable for authorization pursuant to section two
8 hundred ten of this chapter, the fictitious name under which it proposes
9 to apply for authority to do business in this state, which name shall be
10 in compliance with section two hundred ten of this chapter and shall be
11 used by the foreign business trust in all its dealings with the depart-
12 ment of state and in the conduct of its business in this state. A filing
13 under section one hundred thirty of the general business law shall not
14 constitute the adoption of a fictitious name;
15 (B) the jurisdiction and date of its organization;
16 (C) a designation of the secretary of state as its agent upon whom
17 process against it may be served and post office address within this
18 state to which the secretary of state shall mail a copy of any process
19 against it served upon him or her;
20 (D) if it is to have a registered agent, the name and address within
21 the state of the registered agent and a statement that the registered
22 agent is to be its agent upon whom process may be served;
23 (E) the address of the office required to be maintained in the juris-
24 diction of its organization by the laws of that jurisdiction or, if not
25 so required, of the principal office of the foreign business trust;
26 (F) the name and business address of at least one trustee;
27 (G) a statement that the foreign business trust is in existence in the
28 jurisdiction of its organization at the time of the filing of such
29 application; and
30 (H) the name and business address of the authorized officer in its
31 jurisdiction of its organization where a copy of its certificate of
32 business trust is filed and, if no public filing of its certificate of
33 business trust is required by the law of its jurisdiction of organiza-
34 tion, a statement that the business trust shall provide, on request, a
35 copy thereof with all amendments thereto (if such documents are in a
36 foreign language, a translation in English thereof under oath of the
37 translator shall be attached thereto), and the name and post office
38 address of the person responsible for providing such copies.
39 b. Without excluding other activities which may not constitute doing
40 business in this state, a foreign business trust shall not be considered
41 to be doing business in this state for the purposes of this chapter, by
42 reason of carrying on in this state any one or more of the following
43 activities:
44 (1) maintaining or defending any action or proceeding, whether judi-
45 cial, administrative, arbitrative or otherwise, or effecting settlement
46 of claims or disputes;
47 (2) holding meetings of its trustees or beneficial owners;
48 (3) maintaining bank accounts; or
49 (4) maintaining offices or agencies only for the transfer, exchange
50 and registration of its beneficial ownership interests, or appointing
51 and managing depositories with relation to its beneficial ownership
52 interests.
53 c. The specification in subdivision b of this section shall not estab-
54 lish a standard for activities which may subject a foreign business
55 trust to service of process under this chapter or any other statute of
56 this state.
A. 6128 23
1 d. Within one hundred twenty days after the filing of the application
2 for authority with the department of state, a copy of the same or a
3 notice containing the substance thereof shall be published once in each
4 week for six successive weeks, in two newspapers of the county within
5 this state in which the principal place of business of the foreign busi-
6 ness trust is located, to be designated by the county clerk, one of
7 which newspapers shall be a newspaper published in the city or town in
8 which the principal place of business in this state of the foreign busi-
9 ness trust is intended to be located, if a newspaper be published there-
10 in; or if no newspaper is published therein, in the newspaper nearest
11 thereto, and proof of such publication by the affidavit of the printer
12 or publisher of each of such newspapers must be filed with the depart-
13 ment of state. The notice shall include: (1) the name of the foreign
14 business trust and any fictitious name under which it has applied for
15 authority to conduct business in this state; (2) the date of filing of
16 the application for authority with the department of state; (3) the
17 jurisdiction and date of its organization; (4) the county within this
18 state, in which the principal place of business in this state of the
19 foreign business trust is to be located; (5) a statement that the secre-
20 tary of state has been designated as agent of the foreign business trust
21 upon whom process against it may be served and the post office address
22 within or without this state to which the secretary of state shall mail
23 a copy of any process against it served upon him or her; (6) if the
24 foreign business trust is to have a registered agent, his or her name
25 and address within this state and a statement that the registered agent
26 is to be the agent of the foreign business trust upon whom process
27 against it may be served; (7) the address of the office required to be
28 maintained in the jurisdiction of its organization by the laws of that
29 jurisdiction or, if not so required, of the principal office of the
30 foreign business trust; (8) the name and business address of at least
31 one trustee; (9) the name and business address of the authorized officer
32 in its jurisdiction of organization where a copy of its certificate of
33 business trust is filed, or, if no public filing of its certificate of
34 organization is required by the law of its jurisdiction of organization,
35 a statement that the foreign business trust shall provide, on request, a
36 copy thereof with all amendments thereto (if such documents are in
37 foreign language, a translation in English thereof under oath of the
38 translator shall be attached thereto), and the name and post office
39 address of the person responsible for providing such copies; and (10)
40 the character or purpose of the business of such foreign business trust.
41 Failure to cause such notice to be published or to file such proof with-
42 in one hundred twenty days of the filing of the application for authori-
43 ty shall prohibit the foreign business trust from maintaining any action
44 or special proceeding in this state unless and until such foreign busi-
45 ness trust causes such notice to be published and files such proof of
46 publication. The failure of a foreign business trust to cause such
47 notice to be published or to file proof of publication shall not impair
48 the validity of any contract or act of the foreign business trust or the
49 right of any other party to the contract to maintain any action or
50 special proceeding thereon, and shall not prevent the foreign business
51 trust from defending any action or special proceeding in this state.
52 S 505. Amendments to application for authority. a. A foreign business
53 trust may amend its application for authority from time to time if the
54 amendments contain only such provisions as might be lawfully contained
55 in an application for authority at the time of making such amendment.
A. 6128 24
1 b. Every foreign business trust which has received a filing receipt
2 evidencing authority, shall, within ninety days after the change of any
3 of the information required to be set forth in its application for
4 authority pursuant to section five hundred four of this article, deliver
5 an amendment to its application to the department of state entitled
6 "Certificate of amendment of application for authority of ... (name of
7 business trust) under S 505 of the Business Trust Law," signed and veri-
8 fied or affirmed under penalties of perjury by a trustee. The certif-
9 icate shall state:
10 (1) the name of the foreign business trust as it appears on the index
11 of names of existing domestic and authorized foreign business trusts of
12 any type or kind in the department of state, and the fictitious name, if
13 any, the foreign business trust has agreed to use in this state pursuant
14 to section five hundred four of this article;
15 (2) the jurisdiction of its organization;
16 (3) the date it was authorized to do business in this state;
17 (4) each amendment effected thereby; and
18 (5) if the true name of the foreign business trust is to be changed, a
19 statement that the change of name has been effected under the laws of
20 the jurisdiction of its organization and the date the change was so
21 effected.
22 S 506. Application for authority; effect. a. Upon filing by the
23 department of state of the application for authority, the foreign busi-
24 ness trust shall be authorized to do business in this state. Such
25 authority shall continue so long as it retains its authority to do busi-
26 ness in the jurisdiction of its organization and its authority to do
27 business has not been surrendered, suspended or annulled in accordance
28 with the law.
29 b. A foreign business trust which has received a certificate of
30 authority shall have such powers to conduct business in this state as
31 are permitted by the laws of the jurisdiction in which it was organized,
32 but not greater than those of a domestic business trust; provided, that
33 this subdivision shall not affect the powers of the foreign business
34 trust outside this state.
35 S 507. Surrender of certificate of authority. a. A foreign business
36 trust may surrender its certificate of authority by delivering to the
37 department of state a certificate entitled, "Certificate of surrender of
38 authority of ... (name of business trust)" signed and verified or
39 affirmed under penalties of perjury by a trustee, receiver or other
40 person authorized by law to wind up such business trust. The authority
41 of the foreign business trust to do business in this state shall termi-
42 nate on the filing by the department of state of the certificate of
43 surrender of authority. A surrender shall not terminate the authority of
44 the secretary of state to accept service of process on the foreign busi-
45 ness trust with respect to causes of action arising out of doing busi-
46 ness in this state.
47 b. The certificate of surrender of authority shall state:
48 (1) the name of the foreign business trust as it appears on the index
49 of names of existing domestic and authorized foreign business trusts of
50 any type or kind in the department of state, and the fictitious name, if
51 any, the foreign business trust has agreed to use in this state pursuant
52 to section five hundred four of this article;
53 (2) the jurisdiction where it was organized;
54 (3) the date on which its certificate of authority to do business in
55 this state was filed by the department of state;
56 (4) that it surrenders its authority to do business in this state;
A. 6128 25
1 (5) that it revokes the authority of its registered agent, if any,
2 previously designated, and that it consents that process against it in
3 any action or special proceeding based upon any liability or obligation
4 incurred by it within this state before the filing of the certificate of
5 surrender may be served on the secretary of state in the manner set
6 forth in section two hundred four of this chapter; and
7 (6) a post office address within or without this state to which the
8 secretary of state shall mail a copy of any process against it served
9 upon him or her. The post office address may be changed by delivering to
10 the department of state a certificate of amendment under section five
11 hundred five of this article.
12 S 508. Termination of existence. When a foreign business trust which
13 has received a certificate of authority is dissolved or its authority to
14 conduct its business or existence is otherwise terminated or cancelled
15 in the jurisdiction of its organization or when such foreign business
16 trust is merged into or consolidated with another foreign business enti-
17 ty, (a) a certificate of the secretary of state, or official performing
18 the equivalent function as to business trust records, in the jurisdic-
19 tion of organization of such business trust attesting to the occurrence
20 of any such event, or (b) a certified copy of an order or decree of a
21 court of such jurisdiction directing the dissolution of such foreign
22 business trust, the termination of its existence or the surrender of its
23 authority, shall be delivered to the department of state. The filing of
24 the certificate, order or decree shall have the same effect as the
25 filing of a certificate of surrender of authority under section five
26 hundred six of this article. The secretary of state shall continue as
27 agent of the foreign business trust upon whom process against it may be
28 served in the manner set forth in section two hundred four of this chap-
29 ter, in any action or proceeding based upon any liability or obligation
30 incurred by the foreign business trust within this state prior to the
31 filing of such certificate, order or decree.
32 S 509. Doing business without certificate of authority. a. A foreign
33 business trust doing business in this state without having received a
34 certificate of authority to do business in this state shall not maintain
35 any action, suit or special proceeding in any court of this state unless
36 and until such foreign business trust shall have received a certificate
37 of authority in this state and shall have filed proof of publication
38 pursuant to section five hundred four of this article.
39 b. The failure of a foreign business trust doing business in this
40 state to comply with the provisions of this chapter shall not impair the
41 validity of any contract or act of the foreign business trust or prevent
42 the foreign business trust from defending any action or special proceed-
43 ing in any court of this state.
44 c. By doing business in this state without authority, a foreign busi-
45 ness trust appoints the secretary of state as its agent for service of
46 process with respect to causes of action arising out of doing business
47 in this state. In any such case, process against such foreign business
48 trust may be served upon the secretary of state in the manner set forth
49 in section two hundred four of this chapter.
50 S 510. Violations. The attorney general shall, in his or her own
51 discretion or upon the motion of proper parties, bring an action to
52 restrain a foreign business trust without a certificate of authority
53 from doing any business in this state in violation of this chapter, or
54 from doing any business in this state which is prohibited under the laws
55 of this state. The attorney general may bring an action or special
56 proceeding to annul the authority of a foreign business trust which is
A. 6128 26
1 doing any business in this state which is prohibited under the laws of
2 this state. The attorney general shall deliver a certified copy of the
3 order of annulment to the department of state. Upon the filing thereof
4 by the department of state, the certificate of authority of the foreign
5 business trust to do business in this state shall be annulled, and the
6 provisions of section five hundred nine of this article shall thereafter
7 be applicable. The secretary of state shall continue as agent of the
8 foreign business trust upon whom process against it may be served in any
9 action, suit or special proceeding based upon any liability or obli-
10 gation incurred by the foreign business trust within the state prior to
11 the filing of the certified copy of the order of annulment by the
12 department of state.
13 ARTICLE 6
14 SAVINGS CLAUSES; EFFECTIVE DATE
15 Section 601. Severability.
16 602. Common law business trusts.
17 603. General associations law not applicable.
18 604. Reserved power of state to amend or repeal chapter.
19 605. Construction and application of chapter and governing
20 instrument.
21 606. Effective date.
22 S 601. Severability. The provisions of this chapter shall apply to
23 business trusts created on or after the effective date of this chapter.
24 If any provision of this chapter or its application to any person or
25 circumstances is held invalid, the invalidity shall not affect other
26 provisions or applications of this chapter which can be given effect
27 without the invalid provision or application, and to this end the
28 provisions of this chapter are severable.
29 S 602. Common law business trusts. This chapter shall have no effect
30 on the validity, powers, rights or liabilities of common law business
31 trusts created before or after the effective date of this chapter or the
32 trustees or beneficiaries thereof. Common law business trusts created
33 before or after the effective date of this chapter may elect to be
34 governed by the provisions of this chapter upon the filing of a certif-
35 icate of business trust in accordance with section two hundred twelve of
36 this chapter; provided, however, that a common law business trust
37 created before the effective date of this chapter shall not be governed
38 by the provisions of this chapter to the extent of any inconsistent
39 provisions contained in its governing instrument not thereafter modified
40 by amendment.
41 S 603. General associations law not applicable. The provisions of the
42 general associations law shall not apply to any unincorporated associ-
43 ation that is a business trust governed by the provisions of this chap-
44 ter.
45 S 604. Reserved power of state to amend or repeal chapter. All
46 provisions of this chapter may be altered from time to time or repealed
47 and all rights of business trusts, trustees, beneficial owners and other
48 persons are subject to this reservation.
49 S 605. Construction and application of chapter and governing instru-
50 ment. a. The rule that statutes in derogation of the common law are to
51 be strictly construed shall have no application to this chapter.
52 b. It is the policy of this chapter to give maximum effect to the
53 principle of freedom of contract and the enforceability of governing
54 instruments.
55 S 606. Effective date. This chapter shall take effect on the ninetieth
56 day after it shall have become a law.
A. 6128 27
1 S 2. Subdivision 2 of section 2 of the general associations law, as
2 amended by chapter 13 of the laws of 1938, is amended to read as
3 follows:
4 2. The term "business trust" means any association operating a busi-
5 ness under a written instrument or declaration of trust, the beneficial
6 interest under which is divided into shares represented by certificates,
7 BUT SHALL NOT INCLUDE A BUSINESS TRUST WHICH FILES A CERTIFICATE OF
8 BUSINESS TRUST OR AN APPLICATION FOR AUTHORITY PURSUANT TO THE BUSINESS
9 TRUST LAW.
10 S 3. This act shall take effect on the ninetieth day after it shall
11 have become a law.
