1-1 By: Pitts (Senate Sponsor - Lucio) H.B. No. 3101
1-2 (In the Senate - Received from the House May 11, 1995;
1-3 May 12, 1995, read first time and referred to Committee on Economic
1-4 Development; May 23, 1995, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 8, Nays 0;
1-6 May 23, 1995, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 3101 By: Ellis
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the amounts that may be charged and collected in
1-11 connection with a loan or other extension of credit for accounts
1-12 and notes receivable.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 SECTION 1. Chapter 1, Title 79, Revised Statutes (Article
1-15 5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by
1-16 adding Article 1.14 to read as follows:
1-17 Art. 1.14. PURCHASES OF ACCOUNTS RECEIVABLE. (a) In this
1-18 article:
1-19 (1) "Account purchase transaction" means an agreement
1-20 or agreements under which a person or entity engaged in a
1-21 commercial enterprise sells accounts, instruments, documents and/or
1-22 chattel paper subject to this chapter at a discount, whether or not
1-23 the person or entity has a related repurchase obligation.
1-24 (b) For the purposes of this chapter, the amount of any
1-25 discount in, or charged under, an account purchase transaction is
1-26 not compensation contracted for, charged, or received with respect
1-27 to that account purchase transaction.
1-28 (c) For the purposes of this chapter, the parties;
1-29 characterization of an account purchase transaction as a purchase
1-30 shall be conclusive that the account purchase transaction is not a
1-31 transaction for the use, forbearance or detention of money.
1-32 (d) This Article applies to an account purchase transaction
1-33 entered before, on, or after the effective date of this Act.
1-34 SECTION 2. Article 1.01, Title 79, Revised Statutes (Article
1-35 5069-1.01, Vernon's Texas Civil Statutes), is amended to read as
1-36 follows:
1-37 Art. 1.01. Definitions. In this Subtitle:
1-38 (a) "Interest" means <is the> compensation <allowed by
1-39 law> for the use, <or> forbearance, or detention of money;
1-40 provided, however, that this definition is subject to Articles
1-41 1.13, 1.14 and 1.15 of this Subtitle <this term shall not include
1-42 any time price differential however denominated arising out of a
1-43 credit sale>.
1-44 (b) "Legal interest <Interest>" means <is that>
1-45 interest <which is allowed by law> when an obligor has not agreed
1-46 to pay the creditor any compensation that constitutes <the parties
1-47 to a contract have not agreed on any particular rate of> interest.
1-48 The term does not include judgment interest.
1-49 (c) "Conventional interest <Interest>" means <is that>
1-50 interest when an obligor has agreed to pay to a creditor any
1-51 compensation that constitutes interest, regardless of whether the
1-52 agreement is unenforceable by the creditor. The term does not
1-53 include judgment interest <which is agreed upon and fixed by the
1-54 parties to a written contract>. If an obligor has agreed to pay to
1-55 a creditor any compensation that constitutes interest, the obligor
1-56 is considered to have agreed on the rate produced by the amount of
1-57 that interest, regardless of whether that rate is stated in the
1-58 agreement.
1-59 (d) "Creditor" means a person that loans money or otherwise
1-60 extends credit. <"Usury" is interest in excess of the amount
1-61 allowed by law.>
1-62 (e) "Person" means an individual, partnership, corporation,
1-63 joint venture, limited liability company, trust, association, or
1-64 other <any> legal entity, however organized.
1-65 (f) "Open-end account <Account>" means any account created
1-66 pursuant to<, under> a written contract under which a <the>
1-67 creditor may permit an <the> obligor to make purchases or borrow
1-68 money from time to time, and under which interest or time price
2-1 differential may from time to time be computed on an outstanding
2-2 unpaid balance. The term includes, but is not limited to, accounts
2-3 under agreements described by Section (4), Article 3.15; Section
2-4 (4), Article 4.01; and Chapters 6 and 15 of this Title.
2-5 (g) "Credit card transaction <Card Transaction>" means a
2-6 transaction in which a card is or may be used to debit an open-end
2-7 account in connection with the purchase or lease of goods or
2-8 services or the lending of money, which card is or may be used for
2-9 personal, family, or household use.
2-10 (h) "Merchant discount <Discount>" means any charge, fee,
2-11 discount, compensating balance, or other consideration imposed by a
2-12 creditor on or received directly or indirectly by the creditor from
2-13 any seller or lessor of goods or services in connection with a
2-14 credit card transaction under a lender credit card agreement
2-15 between an obligor <the customer> and the creditor. The term
2-16 includes any consideration whatsoever received by the <a> creditor
2-17 from any person other than the obligor in connection with a credit
2-18 card transaction under a lender credit card agreement between the
2-19 obligor and the creditor. Any such consideration received by a
2-20 subsidiary of the creditor or parent company of the creditor or any
2-21 subsidiary of the creditor's parent company shall be deemed to have
2-22 been received by the creditor <in determining if any such
2-23 consideration has been received by the creditor>.
2-24 (i) "Lender credit card agreement <Credit Card Agreement>"
2-25 means an agreement between a creditor (other than the seller or
2-26 lessor) and an obligor under which credit is or may be extended for
2-27 personal, family, or household use and under which: (1) by means
2-28 of a credit card the obligor may obtain loans from the creditor,
2-29 which may be advanced by other participating persons, and may lease
2-30 or purchase goods or services from more than one participating
2-31 lessor or seller who honor the creditor's card, and the creditor or
2-32 some other person acting in cooperation with the creditor will
2-33 reimburse the other participating persons, lessors, or sellers for
2-34 the goods or services purchased or leased, and the obligor is
2-35 obligated under his or her agreement with the creditor to pay the
2-36 creditor the amount of such loans or the costs of such leases or
2-37 purchases; (2) the unpaid balance of such loans, leases, and
2-38 purchases and any interest thereon are debited to the obligor's
2-39 account with the creditor under the obligor's agreement with the
2-40 creditor; (3) interest is not precomputed but may be computed on
2-41 the balances of the obligor's account outstanding with the creditor
2-42 from time to time; and (4) the obligor may defer payment of any
2-43 part of the balance. The term includes all agreements for open-end
2-44 accounts authorized or defined under Articles 3.15(4), 4.01(4),
2-45 15.01(k), and 15.01(l) of this Title pursuant to which credit card
2-46 transactions <as defined in Article 1.01(g) of this Title> may be
2-47 made or in connection with which a merchant discount <as defined in
2-48 Article 1.01(h) of this Title> is imposed or received by the
2-49 creditor. The term does not include an open-end account credit
2-50 agreement between a seller or lessor and its own buyer or lessee.
2-51 The term does not include agreements under which the entire balance
2-52 is due and payable in full each month and no interest is charged
2-53 when the obligor pays in accordance with such terms.
2-54 (j) "Affiliate of an obligor" means a person that directly
2-55 or indirectly, through one or more intermediaries, controls, is
2-56 controlled by, or is under common control with the obligor.
2-57 "Control" means the possession, directly or indirectly, of the
2-58 power to direct or cause the direction of the management and
2-59 policies of a person, whether through the ownership of voting
2-60 securities, by contract, or otherwise.
2-61 (k) "Business entity" means a partnership, corporation,
2-62 joint venture, limited liability company, or other business
2-63 organization or association, however organized.
2-64 (l) "Commercial loan" means a loan that is made primarily
2-65 for business, commercial, investment, or other similar purposes.
2-66 The term does not include a loan that is made primarily for
2-67 personal, family, or household use
2-68 (m) "Contract interest" means conventional interest,
2-69 regardless of whether denominated as interest, that an obligor has
2-70 agreed to pay to a creditor.
3-1 (n) "Guaranty" means an agreement pursuant to which an
3-2 obligor:
3-3 (1) assumes, guarantees, or otherwise becomes
3-4 primarily or contingently liable for the payment or performance of
3-5 an obligation of another person;
3-6 (2) provides security for the payment or performance
3-7 of an obligation of another person, through the creation of a lien
3-8 or security interest or otherwise; or
3-9 (3) agrees to purchase or to advance consideration to
3-10 purchase the obligation or any property constituting security for
3-11 the payment or performance of the obligation.
3-12 (o) "Judgment interest" means interest on a money judgment,
3-13 whether the interest accrues before, on, or after the date the
3-14 judgment is rendered. For purposes of this Subtitle, "money
3-15 judgment" includes legal interest or conventional interest, if any,
3-16 that is payable to a judgment creditor pursuant to a judgment.
3-17 (p) "Loan" means a loan of money or other extension of
3-18 credit if the obligor has unconditionally agreed to pay to the
3-19 creditor the principal amount of the loan or other extension of
3-20 credit. The term does not include a judgment.
3-21 (q) "Obligor" means a person to whom money is loaned or
3-22 credit is otherwise extended. The term does not include a surety,
3-23 guarantor, or similar person.
3-24 (r) "Qualified commercial loan" means:
3-25 (1) a commercial loan in the original principal amount
3-26 of $5 million or more; or
3-27 (2) any renewal or extension of a commercial loan in
3-28 the original principal amount of $5 million or more, regardless of
3-29 whether the principal amount of the loan at the time of its renewal
3-30 or extension is $5 million or more.
3-31 (s) "Time price differential" means an amount, however
3-32 denominated, that is:
3-33 (1) added to the price at which a seller offers to
3-34 sell services or real or personal property to a purchaser for cash
3-35 payable at the time of sale; and
3-36 (2) paid or payable to the seller by the purchaser for
3-37 the privilege of paying the offered sales price after the time of
3-38 sale.
3-39 SECTION 3. Article 1.02, Title 79, Revised Statutes (Article
3-40 5069-1.02, Vernon's Texas Civil Statutes), is amended to read as
3-41 follows:
3-42 Art. 1.02. CONVENTIONAL INTEREST OR TIME PRICE DIFFERENTIAL
3-43 ALLOWED; MAXIMUM RATE <MAXIMUM RATES> OF CONVENTIONAL INTEREST
3-44 EXCEPT AS OTHERWISE FIXED BY LAW. (a) A creditor may contract
3-45 for, charge, and receive from an obligor conventional interest or a
3-46 time price differential.
3-47 (b) Except as otherwise fixed by law, the maximum rate of
3-48 conventional interest shall be ten percent a year <per annum>. <A
3-49 greater rate of interest than ten percent per annum unless
3-50 otherwise authorized by law shall be deemed usurious. All
3-51 contracts for usury are contrary to public policy and shall be
3-52 subject to the appropriate penalties prescribed in Article 1.06 of
3-53 this Subtitle.>
3-54 SECTION 4. Article 1.03, Title 79, Revised Statutes (Article
3-55 5069-1.03, Vernon's Texas Civil Statutes), is amended to read as
3-56 follows:
3-57 Art. 1.03. LEGAL INTEREST ALLOWED; MAXIMUM RATE OF LEGAL
3-58 INTEREST <APPLICABLE>. (a) Unless a creditor has agreed with an
3-59 obligor not to charge the obligor any interest, the creditor may
3-60 charge and receive from the obligor legal interest on the principal
3-61 amount of the credit extended by the creditor to the obligor.
3-62 (b) The maximum rate of legal <When no specified rate of
3-63 interest is agreed upon by the parties,> interest is fixed at <at
3-64 the rate of> six percent a year <per annum shall be allowed on all
3-65 accounts and contracts ascertaining the sum payable,> commencing on
3-66 the 30th <thirtieth (30th)> day <from and> after the date the
3-67 principal amount first became <time when the sum is> due and
3-68 payable.
3-69 SECTION 5. Article 1.04, Title 79, Revised Statutes (Article
3-70 5069-1.04, Vernon's Texas Civil Statutes), is amended by amending
4-1 the article heading to read as follows:
4-2 Art. 1.04. MAXIMUM <LIMIT ON> RATE OF CONVENTIONAL INTEREST;
4-3 MAXIMUM RATE PRODUCED BY A TIME PRICE DIFFERENTIAL PURSUANT TO
4-4 CERTAIN AGREEMENTS.
4-5 SECTION 6. Articles 1.04(a), (b), (c), and (o), Title 79,
4-6 Revised Statutes (Article 5069-1.04, Vernon's Texas Civil
4-7 Statutes), are amended to read as follows:
4-8 (a) The parties to any <written> contract may agree to a
4-9 <and stipulate for any> rate or amount of conventional interest, or
4-10 in an agreement described in Chapter 6, 6A, or 7 of this Title, a
4-11 <any> rate or amount of time price differential producing a rate,
4-12 that does not exceed:
4-13 (1) an indicated rate ceiling that is the auction
4-14 average rate quoted on a bank discount basis for 26-week treasury
4-15 bills issued by the United States government, as published by the
4-16 Federal Reserve Board, for the week preceding the week in which the
4-17 rate is contracted for, multiplied by two, and rounded to the
4-18 nearest one-quarter of one percent; or, as an alternative,
4-19 (2) an annualized or quarterly ceiling that is the
4-20 average of the computations under Subsection (1) of this section
4-21 and is computed pursuant to Section (d) of this Article.
4-22 (b)(1) If a computation under Section (a)(1), (a)(2), or (c)
4-23 of this Article is less than 18 percent a year, the ceiling under
4-24 that provision is 18 percent a year. If a computation under
4-25 Section (a)(1), (a)(2), or (c) of this Article is more than 24
4-26 percent a year, the ceiling under that provision is 24 percent a
4-27 year.
4-28 (2) Notwithstanding the provisions of Subsection (1)
4-29 of this Section (b), in the case of any qualified commercial loan
4-30 <on any contract under which credit in an amount in excess of
4-31 $250,000 is or is to be extended, or any extension or renewal of
4-32 such a contract, and under which the credit is extended for
4-33 business, commercial, investment, or other similar purpose, but
4-34 excluding any contract that is not for any of those purposes and is
4-35 primarily for personal, family, household, or agricultural use>,
4-36 the 24 percent limitation on the ceilings in Section (b)(1) above
4-37 that is applicable to the computations under Section (a)(1),
4-38 (a)(2), or (c) of this Article shall not apply, and the limitation
4-39 on the ceilings determined by those computations shall be 28
4-40 percent a year.
4-41 (3) References in this Article to the indicated rate
4-42 ceiling, annualized ceiling, quarterly ceiling, or monthly ceiling
4-43 mean such a ceiling as modified by this Section (b).
4-44 (4) Any credit agreement described in Section (a),
4-45 Article 1.11, of this Title is subject to the terms, ceilings, and
4-46 other provisions of that Article and, except as limited by Article
4-47 1.11, to the terms, ceilings, and other provisions of this Article.
4-48 (5) Notwithstanding any other provision of law, on any
4-49 lender credit card agreement in connection with which a merchant
4-50 discount <as defined in Article 1.01(h) of this Title> is imposed
4-51 or received by the creditor, the creditor may not contract for,
4-52 charge, or receive, on any amount owed for any credit card
4-53 transaction, a rate in excess of the ceiling allowed under Article
4-54 15.02(d) of this Title (which ceiling shall be adjusted in
4-55 accordance with Article 15.02(d)) or any other fees or charges
4-56 which are not authorized under Chapter 15 of this Title or which
4-57 are in excess of the amounts authorized under Chapter 15.
4-58 (6) Notwithstanding Article 15.10 of this Title, any
4-59 lender credit card agreement in which the creditor is a bank,
4-60 savings and loan association, or authorized lender under Chapter 3
4-61 of this Title is subject to Chapter 15 of this Title and Article
4-62 15.02(d) thereof.
4-63 (7) If a creditor and an obligor agree that contract
4-64 interest in respect of any qualified commercial loan shall be
4-65 computed on the basis of a 360-day Year of twelve 30-day months,
4-66 each rate per year referred to in this Article, in the case of such
4-67 a loan, means a rate per year consisting of 360 days and of twelve
4-68 30-day months.
4-69 (c) A monthly ceiling is available only in variable rate
4-70 contracts, including contracts for open-end accounts, that are not
5-1 made for personal, family, or household use. Subject to Section
5-2 (b) of this Article, the monthly ceiling is the average of all the
5-3 computations under Section (a)(1) of this Article for auctions
5-4 occurring during the preceding calendar month and shall be computed
5-5 by the consumer credit commissioner on the first business day of
5-6 the calendar month in which the rate applies. In contracts for
5-7 which the monthly ceiling is available under this section, if the
5-8 parties agree that the rate is subject to being adjusted on a
5-9 monthly basis in accordance with Section (f) of this Article, they
5-10 may further contract that the rate from time to time in effect may
5-11 not exceed the monthly ceiling from time to time in effect under
5-12 this section, in which event <and> the monthly ceiling from time to
5-13 time in effect is the ceiling on those contracts, instead of any
5-14 ceiling under Section (a) <Article 1.04(a)> of this Article
5-15 <Title>.
5-16 (o)(1) <All other written contracts whatsoever, except those
5-17 otherwise authorized by law, which may in any way, directly or
5-18 indirectly, provide for a greater rate of interest shall be subject
5-19 to the appropriate penalties prescribed in this Subtitle.>
5-20 <(2)> If, in any contract, including one for an
5-21 open-end account, subject to Chapter 4, 5, 6, 6A, 7, or 15 of this
5-22 Title, any person contracts for, charges, or receives a rate or
5-23 amount of interest or time price differential that exceeds the rate
5-24 allowed by that Chapter and the rate allowed by this Article, the
5-25 amount of the penalty for that overcharge shall be determined under
5-26 Chapter 8 of this Title rather than under this Subtitle, and all of
5-27 the provisions of Articles 8.01, 8.02, 8.03, 8.04, 8.05, and 8.06
5-28 of this Title are in effect as to that contract and are applicable
5-29 to this Article as if it were a part of Subtitle 2 of this Title.
5-30 The failure to perform any duty or comply with any prohibition
5-31 required by this Article <1.04>, in a contract entered under
5-32 authority of this Article <1.04>, shall be subject to the penalties
5-33 set out in Article 8.01(b) and shall be subject to such of the
5-34 other provisions of Articles 8.01 through 8.06 which apply to
5-35 failures to perform duties or comply with prohibitions to the same
5-36 extent as if the duties and prohibitions in this Article <1.04>
5-37 were contained in Subtitle 2.
5-38 (2) <(3)> The consumer credit commissioner, subject to
5-39 Section (l), Article 2.01, of this Title, shall enforce Chapters 2,
5-40 3, 4, 5, 6, 6A, 7, 8, 15, and 51 of this Title, as modified by this
5-41 Article and Article 2.08 of this Title, and shall enforce this
5-42 Article as applicable to contracts subject to those Chapters.
5-43 Article 3.08 of this Title is applicable to transactions made by
5-44 licensees pursuant to this Article that otherwise are subject to
5-45 Chapters 4, 5, or 15 of this Title. The provisions of Article 3.12
5-46 of this Title will apply to loans made under authority of this
5-47 Article which are subject to Chapter 4 of this Title. In any
5-48 contracts subject to the Texas Credit Union Act, as amended
5-49 (Article 2461-1.01 et seq., Vernon's Texas Civil Statutes), the
5-50 credit union commissioner shall enforce this Article.
5-51 (3) <(4)> In any contract subject to Chapter 24 of the
5-52 Insurance Code, the State Board of Insurance shall enforce this
5-53 Article.
5-54 SECTION 7. Title 79, Revised Statutes (Article 5069-1.01) et
5-55 seq., Vernon's Texas Civil Statutes, is amended by adding Article
5-56 1.15 to read as follows:
5-57 Art. 1.15. INTEREST ON CERTAIN NOTES. (a) For the purposes
5-58 of this title, in determining the amount of rate of interest
5-59 charged on a note that was purchased from a federal agency, at a
5-60 discount, interest includes in addition to other amounts charged,
5-61 the amount computed by subtracting the amount for which the note
5-62 was purchased from the total amount of the principal of the note
5-63 paid by the maker of guarantor of the note. Any collateral
5-64 securing the payment of the note shall be deducted from the
5-65 purchase price of the note before calculating the rate of interest.
5-66 This article does not apply to a transaction if the seller or
5-67 purchaser of a note is a financial institution.
5-68 SECTION 8. Article 1.13, Title 79, Revised Statutes (Article
5-69 5069-1.13, Vernon's Texas Civil Statutes), is amended to read as
5-70 follows:
6-1 Art. 1.13. CERTAIN SUMS EXCLUDED FROM DEFINITION OF INTEREST
6-2 WITH RESPECT TO ASSET-BACKED SECURITIES. (a) In this Article
6-3 <article>:
6-4 (1) "Asset-backed securities" means debt obligations
6-5 or certificates of beneficial ownership that are:
6-6 (A) part of a single issue or single series of
6-7 securities aggregating $1,000,000 or more issuable in one or more
6-8 classes;
6-9 (B) secured by a pledge of or represent an
6-10 undivided ownership interest in one or more financial assets,
6-11 either fixed or revolving, that by their terms convert into cash
6-12 within a finite time period plus any rights or other assets
6-13 designed to assure the servicing or timely distribution of proceeds
6-14 to security holders; and
6-15 (C) issued by a pass-through entity for a
6-16 business, commercial, agricultural investment, or similar purpose.
6-17 (2) "Pass-through entity" means a business entity
6-18 <corporation, limited liability company>, association, <general
6-19 partnership, registered limited liability partnership, limited
6-20 partnership or business> grantor or common-law trust under state
6-21 law, or segregated pool of assets under federal tax law that, on
6-22 the date of original issuance of asset-backed securities, does not
6-23 have significant assets other than:
6-24 (A) assets pledged to or held for the benefit of
6-25 holders of the asset-backed securities; or
6-26 (B) assets pledged to or held for the benefit of
6-27 holders of other asset-backed securities issued on an earlier date.
6-28 (b) The <Notwithstanding Article 1.01 of this subtitle, for
6-29 purposes of this title the> term "interest," as used in this
6-30 Subtitle, does not include <excludes> any sums paid or passed
6-31 through, obligated to be paid or to be passed through, or not paid
6-32 as a result of a discounted sale price to the holders of
6-33 asset-backed securities by a pass-through entity, in connection
6-34 with the original issuance or otherwise, regardless of the
6-35 denomination of the sums under the terms of the asset-backed
6-36 securities. <Sums excluded from the definition of interest by this
6-37 article are not subject to Article 1.04 of this subtitle.>
6-38 (c) This Article <article> does not affect or otherwise
6-39 apply to conventional interest<, as defined by Article 1.01 of this
6-40 subtitle,> paid, charged, or received on the ultimate underlying
6-41 assets pledged to or held for the benefit of the holders of
6-42 asset-backed securities.
6-43 SECTION 9. Subtitle 1, Title 79, Revised Statutes (Article
6-44 5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by
6-45 adding Articles 1.14 and 1.15 to read as follows:
6-46 Art. 1.14. CERTAIN ITEMS THAT DO NOT CONSTITUTE INTEREST.
6-47 (a) "Interest," as used in this Subtitle, does not include any
6-48 time price differential. The contracting for, charging, or receipt
6-49 of a time price differential is not affected by this Title, except
6-50 to the extent that an agreement described by Chapter 6, 6A, or 7 of
6-51 this Title is affected by Article 1.04 of this Subtitle.
6-52 (b) In the case of any qualified commercial loan made to a
6-53 business entity, "interest," as used in this Subtitle, does not
6-54 include:
6-55 (1) any discount or commission that an obligor has
6-56 paid or agreed to pay to one or more underwriters of securities
6-57 issued by the obligor.
6-58 (2) any option or other right to exchange, redeem, or
6-59 convert all or a portion of the principal amount of the loan, or
6-60 interest on the principal amount, for or into capital stock or
6-61 other equity securities of an obligor or of any affiliate of the
6-62 obligor;
6-63 (3) any option or other right to purchase in any other
6-64 manner capital stock or other equity securities of an obligor or of
6-65 any affiliate of the obligor;
6-66 (4) any option or other right, whether by contract,
6-67 conveyance, or otherwise, to participate in or own a share of the
6-68 income, revenues, production, or profits:
6-69 (A) of an obligor or any affiliate of the
6-70 obligor;
7-1 (B) of any segment of the business or operations
7-2 of an obligor or any affiliate of the obligor; or
7-3 (C) derived or to be derived from any interest
7-4 of an obligor or of any affiliate of the obligor in any real or
7-5 personal property, including any proceeds of the sale or other
7-6 disposition of the interest; or
7-7 (5) any compensation realized as a result of the
7-8 receipt, exercise, sale, or other disposition of any option or
7-9 other right described by Subsection (2) or (3) of this Section.
7-10 (c) For purposes of this Article, "security" and "equity
7-11 security" have the meanings assigned to those terms by the
7-12 Securities Exchange Act of 1934 (15 U.S.C. Section 78a et seq.).
7-13 Art. 1.15. GUARANTIES. (a) "Interest" as used in this
7-14 Subtitle, does not include:
7-15 (1) a guaranty that a creditor requires as a condition
7-16 to making, renewing, or extending a qualified commercial loan made
7-17 to a business entity; or
7-18 (2) any compensation received by the creditor pursuant
7-19 to the guaranty.
7-20 (b) This Article does not apply to any loan that is subject
7-21 to Subtitle 2 or Chapter 15 or this Title.
7-22 SECTION 10. This Act takes effect September 1, 1995.
7-23 SECTION 11. The importance of this legislation and the
7-24 crowded condition of the calendars in both houses create an
7-25 emergency and an imperative public necessity that the
7-26 constitutional rule requiring bills to be read on three several
7-27 days in each house be suspended, and this rule is hereby suspended.
7-28 * * * * *