In this subtitle the following words have the meanings indicated. “Common trust fund” means a fund that a trust company maintains under this subtitle solely for the collective investment of money held by the trust company as fiduciary. “Fund plan” means a written plan for the establishment and administration of a common trust fund. “Trust company” includes a national banking association that has powers similar to those given to a trust company under the laws of this State. “Valuation date” means a date as of which a trust company determines the value of the assets in a common trust fund that it administers.

A trust company shall establish and maintain a common trust fund only in accordance with a fund plan that is approved: By resolution of the board of directors of the trust company; and By legal counsel. Notwithstanding any provision of law that applies to a participating fiduciary account, a fund plan controls: Participations in the fund; and The rights and benefits in participating accounts of all persons who have interests in the fund.

Except as provided in § 3-507 of this subtitle, a fund plan shall state the name of the fund and include detailed provisions, not inconsistent with this subtitle, as to: The intervals at which the trust company will determine the value of the assets in the fund; The intervals at which the trust company will have an audit made of the fund; The manner in which the fund is to be operated; The investment powers of the trust company with respect to the fund; The terms and conditions that govern entry in and withdrawal from the fund; The auditing and settling of accounts of the trust company with respect to the fund; The basis and method to be used for valuing fund assets; The circumstances and manner in which the fund may be terminated; and Any other matters that are necessary to define clearly the rights and duties of the trust company and fund participants.

A fund plan may provide for: The amortization of premiums on bonds or other obligations; The disposition of discounts, profits, stock rights, stock dividends, and extraordinary dividends; The allocation or apportionment between principal or income of the items specified in item (2) of this subsection; and Any other similar matters. To the extent that a fund plan does not provide otherwise as to the determination, allocation, and apportionment of principal and income, the principles of Titles 14 and 14.5 of the Estates and Trusts Article apply.

Notwithstanding any other provision of this subtitle, a trust company may provide in a fund plan that the fund shall be administered in accordance with those federal rules and regulations that relate to the collective investment of trust funds by national banking associations.

A copy of the fund plan and any amendments to it shall be filed at the principal banking office of the trust company, where it shall be available during regular business hours for inspection by any cofiduciary or person who has an interest in a participating account. On a reasonable request, a copy of the fund plan shall be provided to any cofiduciary or person who has an interest in a participating account.

A trust company, acting in a fiduciary capacity, may invest money in one or more common trust funds if: The trust company holds the money for investment; and The instrument or authorization that created the fiduciary relationship does not contain any terms inconsistent with this type of investment.

A trust company may invest in a common trust fund money from an account that it administers as a cofiduciary if the trust company: Otherwise may do so under § 3-510 of this subtitle; and First obtains the written consent of all other cofiduciaries of that account. A trust company that administers a common trust fund, in which an account held by the trust company as cofiduciary participates, is solely responsible for management and control of the fund. A cofiduciary, other than the trust company, who consents in good faith to the participation of an account in a common trust fund is not liable to the beneficiaries for the management of the fund. On receipt of the written request of a cofiduciary to do so, the trust company shall withdraw the participation of a fiduciary account in a common trust fund at the earliest date that the fund plan permits.

Except as otherwise provided in this section, a trust company may not: Invest its own funds in a common trust fund that it administers; or Have any interest, other than its fiduciary interest, in the assets in a common trust fund that it administers. If, because of a creditor relationship or otherwise, a trust company acquires an interest in a participation in a common trust fund that it administers, the participation shall be withdrawn on the next valuation date allowed by the fund plan. A trust company does not have a prohibited interest in the assets of a common trust fund that it administers merely because the trust company owns in its own right any stocks, bonds, or other obligations issued by a person from whom the fund also holds stocks, bonds, or other obligations.

Entry into and withdrawal from participation in a common trust fund may occur only on a valuation date, or, if provided by the plan, within 2 business days after a valuation date. Participation shall be based on the valuation as of the valuation date associated with the entry or withdrawal. When participation is withdrawn from a common trust fund, the trust company may make distribution in cash, ratably in kind, or both, but all distributions associated with a valuation date shall be made in the same way.

A trust company that administers a common trust fund may issue a certificate of participation for each participating account. A certificate of participation is not assignable and may not be issued in any form that purports to be negotiable or assignable. In any report or accounting required from the trust company by law, a statement that is signed and verified by one of its officers as to the existence, extent, and value of a participation in a common trust fund that it administers may be accepted as evidence of those facts by any court, trust clerk, or supervisory authority.

The trust company that establishes a common trust fund has exclusive management and control of the fund, including the sole right to transfer, change, or dispose of the assets in the fund. Except as otherwise provided in paragraph (2) of this subsection, a trust company may not: Charge a fee for the management of a common trust fund; or Receive from the fund or from any participating account any additional fee, commission, or compensation of any kind because of the participation of the account in the fund. A trust company may reimburse itself, from a common trust fund that it administers, for: Those reasonable expenses incurred in the administration of the fund that could have been charged to a separate fiduciary account if that account were not participating in the fund; and Reasonable expenses incurred for audits of the fund by independent certified public accountants or court auditors as permitted or required under the fund plan or as otherwise required by law.

For each common trust fund that it administers, a trust company shall set valuation dates at regular intervals of not more than 3 months. At regular intervals of not more than 12 months, a trust company shall have an audit of each common trust fund by an independent certified public accountant who shall report directly to the board of directors of the trust company. A trust company that administers a common trust fund may apply to a court for approval of an accounting of the fund. A petition for approval of an accounting under this section shall be made to the court of equity for the county where the trust company has its principal banking office. A court may impose conditions and notice requirements before approving an accounting under this section.

The ownership of and title to the individual assets in a common trust fund are solely in the trust company, as trustee of the fund. A trust company shall show clearly on its records: The name of each fiduciary account on behalf of which the trust company holds a participation in a common trust fund; and The extent of the interest held for that fiduciary account.

A trust company may register in the name of a nominee any assets of a common trust fund that it administers. The nominee may be either an individual or a partnership. A trust company that registers assets in the name of a nominee shall: Show the assets and the name of the nominee on its records; and If the nominee is operated or controlled by the trust company, supervise any possession or control of the assets by the nominee. A transfer agent or registrar of a corporation whose stocks, bonds, securities, or other obligations are registered in the name of a nominee under this section is not required to investigate and may not be held liable for treating the nominee as the owner of the assets.

A trust company may invest the assets of a common trust fund in any investment in which a fiduciary who is not restricted by investment limitations under the governing instrument or authorization may invest under the laws of this State.

A transfer agent or a transferee of an asset held in the name of a trustee of a common trust fund may presume conclusively that the trustee has an absolute right to transfer or assign the asset. A transfer agent or a transferee of an asset held in the name of a trustee of a common trust fund is not chargeable with any duty in relation to the fund, a participating account, or any beneficiary of a participating account. A transferee of an asset held in the name of a trustee of a common trust fund is not liable for the application of any purchase money paid to the trustee.