H.B. No. 1076
1-1 AN ACT
1-2 relating to the personal liability of officers and directors of
1-3 insured depository institutions.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Article 10, Chapter IV, The Texas Banking Code
1-6 (Article 342-410, Vernon's Texas Civil Statutes), is amended to
1-7 read as follows:
1-8 Art. 10. Directors, Officers and
1-9 Employees--Liability--Reimbursement For Expenses. A. Except as
1-10 otherwise provided by statute, directors and officers of state
1-11 banks shall be liable for financial losses sustained by state banks
1-12 to the extent that directors and officers of other corporations are
1-13 now responsible for such losses in equity and common law. Any
1-14 officer or director who does not approve of any act or omission of
1-15 the board, and desires to relieve himself from any personal
1-16 liability for such act or omission shall promptly announce his
1-17 opposition to such act or omission and cause such opposition to be
1-18 spread upon the minutes of the directors' meeting. If for any
1-19 reason such opposition is not spread upon the minutes of the
1-20 directors' meeting, he shall promptly report the facts to the
1-21 Banking Commissioner.
1-22 B. Any person may be indemnified or reimbursed by a state
1-23 bank, through action of its board, for reasonable expenses actually
1-24 incurred by him in connection with any action, suit or proceeding
2-1 to which he is a party by reason of his being or having been a
2-2 director, officer or employee of said bank or having served as a
2-3 director, officer, partner, venturer, proprietor, trustee, agent,
2-4 or similar functionary of another foreign or domestic corporation,
2-5 partnership, joint venture, sole proprietorship, trust, employee
2-6 benefit plan, or other enterprise, at the request of the bank. The
2-7 board may authorize the purchase by the bank of insurance covering
2-8 the indemnification of directors, officers or employees and may
2-9 prospectively indemnify directors, officers, or employees. If
2-10 there is a compromise of such an action or threatened action, there
2-11 shall be no indemnification or reimbursement for the amount paid to
2-12 settle the claim or for reasonable expenses incurred in connection
2-13 with such claim without the vote, or the written consent, of the
2-14 owners of record of a majority of the stock of the bank. No such
2-15 person shall be indemnified or reimbursed if he has been finally
2-16 adjudged to have been guilty of, or liable for, willful misconduct,
2-17 gross neglect of duty, or a criminal act. This article shall not
2-18 bar any right or action to which such person would be entitled at
2-19 common law or any other statute of this State.
2-20 C. For the purpose of applying this article to the Financial
2-21 Institutions Reform, Recovery, and Enforcement Act of 1989 (Pub. L.
2-22 No. 101-73, 12 U.S.C. Section 1811 et seq.), a disinterested
2-23 director or officer of an insured depository institution may not be
2-24 held personally liable in an action seeking monetary damages
2-25 brought by the Federal Deposit Insurance Corporation, the
2-26 Resolution Trust Corporation, or any other federal banking
2-27 regulatory agency as provided by 12 U.S.C. Section 1821(k) unless
3-1 the damages arise from the gross negligence or wilful or
3-2 intentional misconduct of the officer or director during the
3-3 officer's or director's term of office with the insured depository
3-4 institution. A director or officer is disinterested with respect
3-5 to a decision or transaction if the decision or transaction does
3-6 not involve:
3-7 (1) personal profit for the director or officer by
3-8 dealing with the insured depository institution or usurping an
3-9 opportunity of the institution;
3-10 (2) buying or selling assets of the insured depository
3-11 institution;
3-12 (3) dealing with another insured depository
3-13 institution or a corporation or other entity in which the director
3-14 or officer:
3-15 (A) is also a director or officer; or
3-16 (B) has a significant financial interest; or
3-17 (4) dealing with a family member of the director or
3-18 officer.
3-19 D. In this article, "insured depository institution" has the
3-20 meaning assigned by 12 U.S.C. Section 1813(c).
3-21 SECTION 2. This Act is not intended to change existing law
3-22 regarding the personal liability of a director or officer of an
3-23 insured depository institution but is a clarification of the law in
3-24 effect immediately before the effective date of this Act regarding
3-25 those matters. This Act applies to an action brought by a federal
3-26 regulatory agency under 12 U.S.C. Section 1821(k) against a
3-27 director or officer of an insured depository institution,
4-1 regardless of whether the action was filed before, on, or after the
4-2 effective date of this Act, unless the action was finally
4-3 adjudicated by a court of competent jurisdiction before the
4-4 effective date of this Act.
4-5 SECTION 3. The importance of this legislation and the
4-6 crowded condition of the calendars in both houses create an
4-7 emergency and an imperative public necessity that the
4-8 constitutional rule requiring bills to be read on three several
4-9 days in each house be suspended, and this rule is hereby suspended,
4-10 and that this Act take effect and be in force from and after its
4-11 passage, and it is so enacted.