Virginia § 6.2-1090 - Dealings with self or affiliates

§ 6.2-1090. Dealings with self or affiliates

A. Unless authorized by the governing instrument or by court order, funds held by an association as fiduciary shall not be invested in stock or obligations of, or property acquired from, the association or its affiliates or their directors, officers, or employees, or organizations in which the association or its affiliates or their officers, directors, or employees possess such an interest as might affect the exercise of the best judgment of the association in acquiring the stock, obligations, or property.

B. Property held by an association as fiduciary shall not be sold or transferred, by loan or otherwise, to the association or its affiliates or their directors, officers, or employees, or to organizations in which the association or its affiliates or their officers, directors, or employees possess such an interest as might affect the exercise of the best judgment of the association in selling or transferring such property, except:

1. When lawfully authorized by the governing instrument or by court order;

2. In cases in which the association has been advised by its legal counsel in writing that it has incurred, as fiduciary, a contingent or potential liability, and the association desires to relieve itself from such liability, in which case such sale or transfer may be made with the approval of the board of directors and the Commissioner, provided that in all such cases the association, upon the consummation of the sale or transfer, shall make reimbursement in cash at no loss to the trust account;

3. As provided in §§ 6.2-1089 and 6.2-1094; or

4. When required by the Commissioner.

C. If the retention of stock or obligations of the association or its affiliates is authorized by the governing instrument or court order, the association may exercise rights to purchase its own stock or the stock of its affiliates, or securities convertible into such stock, when such rights are offered pro rata to all stockholders of the association or its affiliates, as the case may be. When the exercise of such rights or the receipt of a stock dividend results in fractional shareholdings, additional fractional shares may be purchased to complement the fractional shares so acquired. In elections of directors, shares of an association or its affiliates held by the association as sole fiduciary, whether in its own name as fiduciary or in the name of its nominee, may not be voted by the association or its nominee unless, under the terms of the governing instrument or a court order, the manner in which such shares shall be voted may be directed by a donor or beneficiary of the trust account, and the donor or beneficiary actually directs how the shares will be voted. In addition, where the association is acting as sole fiduciary with respect to a trust account containing voting shares of the association or its affiliates, the association may, in accordance with the provisions of subsection B of § 6.2-1091, petition an appropriate court for appointment of a co-fiduciary for the purpose of voting such shares.

1984, c. 303, § 6.1-195.87; 2010, c. 794.