1-1 By: Marchant (Senate Sponsor - Harris of Tarrant) H.B. No. 1076
1-2 (In the Senate - Received from the House March 30, 1993;
1-3 March 31, 1993, read first time and referred to Committee on
1-4 Economic Development; April 15, 1993, reported favorably by the
1-5 following vote: Yeas 6, Nays 0; April 15, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Parker x
1-9 Lucio x
1-10 Ellis x
1-11 Haley x
1-12 Harris of Dallas x
1-13 Harris of Tarrant x
1-14 Leedom x
1-15 Madla x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 A BILL TO BE ENTITLED
1-20 AN ACT
1-21 relating to the personal liability of officers and directors of
1-22 insured depository institutions.
1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-24 SECTION 1. Article 10, Chapter IV, The Texas Banking Code
1-25 (Article 342-410, Vernon's Texas Civil Statutes), is amended to
1-26 read as follows:
1-27 Art. 10. Directors, Officers and
1-28 Employees--Liability--Reimbursement For Expenses. A. Except as
1-29 otherwise provided by statute, directors and officers of state
1-30 banks shall be liable for financial losses sustained by state banks
1-31 to the extent that directors and officers of other corporations are
1-32 now responsible for such losses in equity and common law. Any
1-33 officer or director who does not approve of any act or omission of
1-34 the board, and desires to relieve himself from any personal
1-35 liability for such act or omission shall promptly announce his
1-36 opposition to such act or omission and cause such opposition to be
1-37 spread upon the minutes of the directors' meeting. If for any
1-38 reason such opposition is not spread upon the minutes of the
1-39 directors' meeting, he shall promptly report the facts to the
1-40 Banking Commissioner.
1-41 B. Any person may be indemnified or reimbursed by a state
1-42 bank, through action of its board, for reasonable expenses actually
1-43 incurred by him in connection with any action, suit or proceeding
1-44 to which he is a party by reason of his being or having been a
1-45 director, officer or employee of said bank or having served as a
1-46 director, officer, partner, venturer, proprietor, trustee, agent,
1-47 or similar functionary of another foreign or domestic corporation,
1-48 partnership, joint venture, sole proprietorship, trust, employee
1-49 benefit plan, or other enterprise, at the request of the bank. The
1-50 board may authorize the purchase by the bank of insurance covering
1-51 the indemnification of directors, officers or employees and may
1-52 prospectively indemnify directors, officers, or employees. If
1-53 there is a compromise of such an action or threatened action, there
1-54 shall be no indemnification or reimbursement for the amount paid to
1-55 settle the claim or for reasonable expenses incurred in connection
1-56 with such claim without the vote, or the written consent, of the
1-57 owners of record of a majority of the stock of the bank. No such
1-58 person shall be indemnified or reimbursed if he has been finally
1-59 adjudged to have been guilty of, or liable for, willful misconduct,
1-60 gross neglect of duty, or a criminal act. This article shall not
1-61 bar any right or action to which such person would be entitled at
1-62 common law or any other statute of this State.
1-63 C. For the purpose of applying this article to the Financial
1-64 Institutions Reform, Recovery, and Enforcement Act of 1989 (Pub. L.
1-65 No. 101-73, 12 U.S.C. Section 1811 et seq.), a disinterested
1-66 director or officer of an insured depository institution may not be
1-67 held personally liable in an action seeking monetary damages
1-68 brought by the Federal Deposit Insurance Corporation, the
2-1 Resolution Trust Corporation, or any other federal banking
2-2 regulatory agency as provided by 12 U.S.C. Section 1821(k) unless
2-3 the damages arise from the gross negligence or wilful or
2-4 intentional misconduct of the officer or director during the
2-5 officer's or director's term of office with the insured depository
2-6 institution. A director or officer is disinterested with respect
2-7 to a decision or transaction if the decision or transaction does
2-8 not involve:
2-9 (1) personal profit for the director or officer by
2-10 dealing with the insured depository institution or usurping an
2-11 opportunity of the institution;
2-12 (2) buying or selling assets of the insured depository
2-13 institution;
2-14 (3) dealing with another insured depository
2-15 institution or a corporation or other entity in which the director
2-16 or officer:
2-17 (A) is also a director or officer; or
2-18 (B) has a significant financial interest; or
2-19 (4) dealing with a family member of the director or
2-20 officer.
2-21 D. In this article, "insured depository institution" has the
2-22 meaning assigned by 12 U.S.C. Section 1813(c).
2-23 SECTION 2. This Act is not intended to change existing law
2-24 regarding the personal liability of a director or officer of an
2-25 insured depository institution but is a clarification of the law in
2-26 effect immediately before the effective date of this Act regarding
2-27 those matters. This Act applies to an action brought by a federal
2-28 regulatory agency under 12 U.S.C. Section 1821(k) against a
2-29 director or officer of an insured depository institution,
2-30 regardless of whether the action was filed before, on, or after the
2-31 effective date of this Act, unless the action was finally
2-32 adjudicated by a court of competent jurisdiction before the
2-33 effective date of this Act.
2-34 SECTION 3. The importance of this legislation and the
2-35 crowded condition of the calendars in both houses create an
2-36 emergency and an imperative public necessity that the
2-37 constitutional rule requiring bills to be read on three several
2-38 days in each house be suspended, and this rule is hereby suspended,
2-39 and that this Act take effect and be in force from and after its
2-40 passage, and it is so enacted.
2-41 * * * * *
2-42 Austin,
2-43 Texas
2-44 April 15, 1993
2-45 Hon. Bob Bullock
2-46 President of the Senate
2-47 Sir:
2-48 We, your Committee on Economic Development to which was referred
2-49 H.B. No. 1076, have had the same under consideration, and I am
2-50 instructed to report it back to the Senate with the recommendation
2-51 that it do pass and be printed.
2-52 Parker,
2-53 Chairman
2-54 * * * * *
2-55 WITNESSES
2-56 FOR AGAINST ON
2-57 ___________________________________________________________________
2-58 Name: Karen Neeley x
2-59 Representing: Ind. Bankers Assn. of Tx
2-60 City: Austin
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2-62 Name: Gayle Vickers x
2-63 Representing: Texas Bankers Assn.
2-64 City: Austin
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