What is a Minimal Purpose Trust Company
A limited purpose trust company is a trust company that has been chartered by the state to execute specific trust functions. These functions can include acting as a depositor or safekeeper for securities or mortgages. The Participants Cartel Company is an example of a mortgage depositor trust.
BREAKING DOWN Limited Purpose Trust Company
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Powers of a Small Purpose Trust Company
The powers granted to a limited purpose trust company may vary depending on the state in which the consign company is chartered. In New York, limited purpose trust companies do not have the power to make loans or accept pay ins, for example; however, there may be some limited circumstances under which a limited purpose trust company wish have this power, if the loan or deposit were necessary for the trust to exercise its other fiduciary powers.
Any stipulations imposed on the operation of a specific limited purpose trust company will be specified in its organization certificate. An organization certificate does not detail the types of business in which the limited purpose trust may engage, but the trust company must agree to stick to a individual type of business in order to be granted its charter. The character of this business must be stated in the organization’s application to be covenanted as a limited purpose trust company, and it cannot be changed without permission from the state’s Superintendent of Financial Rites.