By Marchant, Grusendorf H.B. No. 1870
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of trust companies; providing
1-3 administrative and criminal penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. The Texas Trust Company Act is enacted to read as
1-6 follows:
1-7 CHAPTER 1. GENERAL PROVISIONS
1-8 Sec. 1.001. SHORT TITLE
1-9 Sec. 1.002. DEFINITIONS
1-10 Sec. 1.003. TRUST COMPANY RULES
1-11 CHAPTER 1. GENERAL PROVISIONS
1-12 Sec. 1.001. SHORT TITLE. This Act may be cited as the Texas
1-13 Trust Company Act.
1-14 Sec. 1.002. DEFINITIONS. (a) In this Act:
1-15 (1) "Account" means the client relationship
1-16 established with a trust company involving the transfer of funds or
1-17 property to the trust company, including a relationship in which
1-18 the trust company acts as trustee, executor, administrator,
1-19 guardian, custodian, conservator, receiver, registrar, or agent.
1-20 (2) "Affiliate" means a company that directly or
1-21 indirectly controls, is controlled by, or is under common control
1-22 with a state trust company or other company.
1-23 (3) "Bank" means a state or national bank.
1-24 (4) "Banking commissioner" means the banking
2-1 commissioner of Texas or a person designated by the banking
2-2 commissioner and acting under the banking commissioner's direction
2-3 and authority.
2-4 (5) "Board" means the board of directors, managers, or
2-5 managing participants of, or a person or group of persons acting in
2-6 a comparable capacity for, a state trust company or other entity.
2-7 (6) "Branch" means a location of a state trust
2-8 company, other than the trust company's home office, at which the
2-9 state trust company engages in the trust business.
2-10 (7) "Capital" means:
2-11 (A) the sum of:
2-12 (i) the par value of all shares or
2-13 participation shares of a state trust company having a par value
2-14 that have been issued;
2-15 (ii) the consideration fixed by the board
2-16 in the manner provided by the Texas Business Corporation Act for
2-17 all shares or participation shares of the state trust company
2-18 without par value that have been issued, except a part of that
2-19 consideration that:
2-20 (a) has been actually
2-21 received;
2-22 (b) is less than all of
2-23 that consideration; and
2-24 (c) the board, by
2-25 resolution adopted not later than the 60th day after the date of
2-26 issuance of those shares, has allocated to surplus with the prior
2-27 approval of the banking commissioner; and
3-1 (iii) an amount not included in
3-2 Subparagraphs (i) and (ii) of this paragraph that has been
3-3 transferred to capital of the state trust company, on the payment
3-4 of a share dividend or on adoption by the board of a resolution
3-5 directing that all or part of surplus be transferred to capital,
3-6 minus each reduction made as permitted by law; less
3-7 (B) all amounts otherwise included in Paragraphs
3-8 (A)(i) and (ii) of this subdivision that are attributable to the
3-9 issuance of securities by the state trust company and that the
3-10 banking commissioner determines, after notice and an opportunity
3-11 for hearing, should be classified as debt rather than equity
3-12 securities.
3-13 (8) "Certified surplus" means the part of surplus
3-14 designated by a vote of the board of a state trust company under
3-15 Section 3.105 of this Act and recorded in the board minutes as
3-16 certified.
3-17 (9) "Charter" means a corporate charter issued under
3-18 this Act to engage in a trust business.
3-19 (10) "Client" means a person to whom a trust company
3-20 owes a duty or obligation under a trust or other account
3-21 administered by the trust company, regardless of whether the trust
3-22 company owes a fiduciary duty to the person. The term includes a
3-23 beneficiary of a trust for whom the trust company acts as trustee
3-24 and a person for whom the trust company acts as agent, custodian,
3-25 or bailee.
3-26 (11) "Company" includes a bank, trust company,
3-27 corporation, partnership, association, business trust, or another
4-1 trust.
4-2 (12) "Conservator" means the banking commissioner or
4-3 an agent of the banking commissioner exercising the powers and
4-4 duties provided by Subchapter B, Chapter 6, of this Act.
4-5 (13) "Control" means:
4-6 (A) the ownership of or ability or power to
4-7 vote, directly, acting through one or more other persons, or
4-8 otherwise indirectly, 25 percent or more of the outstanding shares
4-9 of a class of voting securities of a state trust company or other
4-10 company;
4-11 (B) the ability to control the election of a
4-12 majority of the board of the state trust company or other company;
4-13 (C) the power to exercise, directly or
4-14 indirectly, a controlling influence over the management or policies
4-15 of the state trust company or other company as determined by the
4-16 banking commissioner after notice and an opportunity for hearing;
4-17 or
4-18 (D) the conditioning of the transfer of 25
4-19 percent or more of the outstanding shares or participation shares
4-20 of a class of voting securities of the state trust company or other
4-21 company on the transfer of 25 percent or more of the outstanding
4-22 shares of a class of voting securities of another state trust
4-23 company or other company.
4-24 (14) "Department" means the Texas Department of
4-25 Banking.
4-26 (15) "Depository institution" means an entity with the
4-27 power to accept deposits under applicable law.
5-1 (16) "Equity capital" means the amount by which the
5-2 total assets of a state trust company exceed the total liabilities
5-3 of the state trust company.
5-4 (17) "Equity security" means:
5-5 (A) stock or a similar security, any security
5-6 convertible, with or without consideration, into such a security, a
5-7 warrant or right to subscribe to or purchase such a security, or a
5-8 security carrying such a warrant or right;
5-9 (B) a certificate of interest or participation
5-10 in a profit-sharing agreement, collateral-trust certificate,
5-11 preorganization certificate or subscription, transferable share or
5-12 participation share, investment contract, voting-trust certificate,
5-13 or partnership interest; and
5-14 (C) a certificate of interest or participation
5-15 in, temporary or interim certificate for, or receipt for a security
5-16 described by this subdivision that evidences an existing or
5-17 contingent equity ownership interest.
5-18 (18) "Fiduciary record" means a matter written,
5-19 transcribed, recorded, received, or otherwise in the possession of
5-20 a trust company that is necessary to preserve information
5-21 concerning an act or event relevant to an account of a trust
5-22 company.
5-23 (19) "Finance commission" means the Finance Commission
5-24 of Texas.
5-25 (20) "Foreign corporation" means a company
5-26 incorporated or organized under the laws of a jurisdiction other
5-27 than this state. The term does not include a depository
6-1 institution incorporated or organized under the laws of the United
6-2 States and domiciled in this state.
6-3 (21) "Full liability participant" means a participant
6-4 that agrees under the terms of a participation agreement to be
6-5 liable under a judgment, decree, or order of court for the entire
6-6 amount of all debts, obligations, or liabilities of a limited trust
6-7 association.
6-8 (22) "Hazardous condition" means:
6-9 (A) a refusal by the trust company or an
6-10 affiliate of the trust company to permit an examination of its
6-11 books, papers, accounts, records, or affairs by the banking
6-12 commissioner as provided by Section 2.002 of this Act;
6-13 (B) violation by a trust company of a condition
6-14 of its chartering or an agreement entered into between the trust
6-15 company and the banking commissioner or the department; or
6-16 (C) a circumstance or condition in which an
6-17 unreasonable risk of loss is threatened to clients or creditors of
6-18 a trust company, excluding risk of loss to a client that arises as
6-19 a result of the client's decisions or actions, but including a
6-20 circumstance or condition in which a trust company:
6-21 (i) is unable or lacks the means to meet
6-22 its current obligations as they come due in the regular and
6-23 ordinary course of business, even if the book or fair market value
6-24 of its assets exceeds its liabilities;
6-25 (ii) has equity capital less than the
6-26 amount of restricted capital the trust company is required to
6-27 maintain under Section 3.007 of this Act, or has equity capital the
7-1 adequacy of which is threatened, as determined under regulatory
7-2 accounting principles;
7-3 (iii) has concentrated an excessive or
7-4 unreasonable portion of its assets in a particular type or
7-5 character of investment;
7-6 (iv) violates or refuses to comply with
7-7 this Act, another statute or regulation applicable to trust
7-8 companies, or a final and enforceable order of the banking
7-9 commissioner;
7-10 (v) is in a condition that renders the
7-11 continuation of a particular business practice hazardous to its
7-12 clients and creditors; or
7-13 (vi) conducts business in an unsafe or
7-14 unsound manner, including conducting business with:
7-15 (a) inexperienced or
7-16 inattentive management;
7-17 (b) weak or potentially
7-18 dangerous operating practices;
7-19 (c) infrequent or
7-20 inadequate audits;
7-21 (d) administration of
7-22 assets that is notably deficient in relation to the volume and
7-23 character of or responsibility for asset holdings;
7-24 (e) unsound administrative
7-25 practices;
7-26 (f) frequent and
7-27 uncorrected material occurrences of violations of law, including
8-1 rules, or terms of the governing instruments; or
8-2 (g) a notable degree of
8-3 conflicts of interest and engaging in self-dealing.
8-4 (23) "Home office" means a location registered with
8-5 the banking commissioner as a state trust company's home office at
8-6 which:
8-7 (A) the trust company does business;
8-8 (B) the trust company keeps its corporate books
8-9 and records; and
8-10 (C) at least one executive officer of the trust
8-11 company maintains an office.
8-12 (24) "Insider" means:
8-13 (A) each director, manager, managing
8-14 participant, officer, and principal shareholder or participant of a
8-15 state trust company;
8-16 (B) each affiliate of the state trust company
8-17 and each director, officer, and employee of the affiliate;
8-18 (C) any person who participates or has authority
8-19 to participate, other than in the capacity of a director, in major
8-20 policymaking functions of the state trust company, whether or not
8-21 the person has an official title or the officer is serving without
8-22 salary or compensation; or
8-23 (D) each company controlled by a person
8-24 described by Paragraph (A), (B), or (C) of this subdivision.
8-25 (25) "Insolvent" means a circumstance or condition in
8-26 which a state trust company:
8-27 (A) is unable or lacks the means to meet its
9-1 current obligations as they come due in the regular and ordinary
9-2 course of business, even if the value of its assets exceeds its
9-3 liabilities;
9-4 (B) has equity capital less than $500,000, as
9-5 determined under regulatory accounting principles;
9-6 (C) fails to maintain deposit insurance for its
9-7 deposits with the Federal Deposit Insurance Corporation or its
9-8 successor, or fails to maintain adequate security for its deposits
9-9 as provided by Section 5.401(c) of this Act;
9-10 (D) sells or attempts to sell substantially all
9-11 of its assets or merges or attempts to merge substantially all of
9-12 its assets or business with another entity other than as provided
9-13 by Chapter 3 of this Act; or
9-14 (E) attempts to dissolve or liquidate other than
9-15 as provided by Chapter 7 of this Act.
9-16 (26) "Investment security" means a marketable
9-17 obligation evidencing indebtedness of a person in the form of a
9-18 bond, note, debenture, or other debt instrument not otherwise
9-19 classified as a loan or extension of credit.
9-20 (27) "Limited trust association" means a state trust
9-21 company organized as a limited trust association, authorized to
9-22 issue participation shares, and controlled by its participants.
9-23 (28) "Loans and extensions of credit" means direct or
9-24 indirect advances of money by a state trust company to a person
9-25 that are conditioned on the obligation of the person to repay the
9-26 funds or that are repayable from specific property pledged by or on
9-27 behalf of the person.
10-1 (29) "Manager" means a person elected to the board of
10-2 a limited trust association.
10-3 (30) "Managing participant" means a participant in a
10-4 limited trust association in which management has been retained by
10-5 the participants.
10-6 (31) "Mutual funds" means equity securities of an
10-7 investment company registered under the Investment Company Act of
10-8 1940 (15 U.S.C. Section 80a-1 et seq.) and the Securities Act of
10-9 1933 (15 U.S.C. Section 77a et seq.). The term does not include
10-10 money market funds.
10-11 (32) "Officer" means the presiding officer of the
10-12 board, the principal executive officer, or another officer
10-13 appointed by the board of a state trust company or other company,
10-14 or a person or group of persons acting in a comparable capacity for
10-15 the state trust company or other company.
10-16 (33) "Operating subsidiary" means a company for which
10-17 a state trust company has the ownership, ability, or power to vote,
10-18 directly, acting through one or more other persons, or otherwise
10-19 indirectly, more than 50 percent of the outstanding shares of each
10-20 class of voting securities or its equivalent of the company.
10-21 (34) "Participant" means an owner of a participation
10-22 share in a limited trust association.
10-23 (35) "Participant-transferee" means a transferee of a
10-24 participation share who has not received the unanimous consent of
10-25 all participants to be a participant, or who becomes a
10-26 participant-transferee under Subchapter C, Chapter 4, of this Act.
10-27 (36) "Participation agreement" means the instrument
11-1 stating the agreement among the participants of a limited trust
11-2 association relating to the rights and duties of the participants
11-3 and participant-transferees, including allocations of income, loss,
11-4 deduction, credit, distributions, liquidation rights, redemption
11-5 rights, liabilities of participants, priority rights of
11-6 participant-transferees to transfer participation shares, rights of
11-7 participants to purchase participation shares of
11-8 participant-transferees, the procedures for elections and voting by
11-9 participants, and any other matter not prohibited by or
11-10 inconsistent with this Act.
11-11 (37) "Participation shares" means the units into which
11-12 the proprietary interests of a limited trust association are
11-13 divided or subdivided by means of classes, series, relative rights,
11-14 or preferences.
11-15 (38) "Person" means an individual or any other legal
11-16 entity.
11-17 (39) "Principal shareholder" means a person who owns
11-18 or has the ability or power to vote, directly, acting through one
11-19 or more other persons, or otherwise indirectly, 10 percent or more
11-20 of the outstanding shares or participation shares of any class of
11-21 voting securities of a state trust company or other company.
11-22 (40) "Restricted capital" means the sum of capital and
11-23 certified surplus.
11-24 (41) "Regulatory accounting principles" means
11-25 generally accepted accounting principles as modified by rules
11-26 adopted under this Act or an applicable federal statute or
11-27 regulation.
12-1 (42) "Secondary capital" means the amount by which the
12-2 assets of a state trust company exceed restricted capital, required
12-3 by Section 3.007 of this Act, and liabilities.
12-4 (43) "Shareholder" means an owner of a share in a
12-5 state trust company.
12-6 (44) "Shares" means the units into which the
12-7 proprietary interests of a state trust company are divided or
12-8 subdivided by means of classes, series, relative rights, or
12-9 preferences.
12-10 (45) "State bank" means a banking association or
12-11 limited banking association organized or reorganized under the
12-12 Texas Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
12-13 Statutes), including an association organized under the laws of
12-14 this state before September 1, 1997, with the express power to
12-15 receive and accept deposits and possessing other rights and powers
12-16 granted by that Act expressly or by implication. The term does not
12-17 include a savings association, savings bank, or credit union.
12-18 (46) "State trust company" means a trust association
12-19 or limited trust association organized or reorganized under this
12-20 Act, including an association organized under the laws of this
12-21 state before September 1, 1997.
12-22 (47) "Subsidiary" means a state trust company or other
12-23 company that is controlled by another person. The term includes a
12-24 subsidiary of a subsidiary.
12-25 (48) "Supervisor" means the banking commissioner or an
12-26 agent of the banking commissioner exercising the powers and duties
12-27 specified in Subchapter B, Chapter 6, of this Act.
13-1 (49) "Trust association" means a trust company
13-2 organized as a trust association, authorized to issue shares of
13-3 stock, and controlled by its shareholders.
13-4 (50) "Trust business" means the business of a company
13-5 holding itself out to the public as a fiduciary for hire or
13-6 compensation to hold or administer accounts.
13-7 (51) "Trust deposits" means client funds held by a
13-8 state trust company and authorized to be deposited with itself as a
13-9 permanent investment or pending investment, distribution, or
13-10 payment of debts on behalf of the client.
13-11 (52) "Unauthorized trust activity" means an act or
13-12 practice within this state by a person without a charter, license,
13-13 permit, registration, or other authority issued or granted by the
13-14 banking commissioner or other appropriate regulatory authority for
13-15 which such a charter, license, permit, registration, or other
13-16 authority is required to conduct trust business.
13-17 (53) "Undivided profits" means the part of equity
13-18 capital of a state trust company equal to the balance of its net
13-19 profits, income, gains, and losses since the date of its formation
13-20 minus subsequent distributions to shareholders or participants and
13-21 transfers to surplus or capital under share dividends or
13-22 appropriate board resolutions. The term includes amounts allocated
13-23 to undivided profits as a result of a merger.
13-24 (54) "Voting security" means a share, participation
13-25 share, or other evidence of proprietary interest in a state trust
13-26 company or other company that has as an attribute the right to vote
13-27 or participate in the election of the board of the trust company or
14-1 other company, regardless of whether the right is limited to the
14-2 election of fewer than all of the board members. The term includes
14-3 a security that is convertible or exchangeable into a voting
14-4 security and a nonvoting participation share of a managing
14-5 participant.
14-6 (b) The definitions shall be liberally construed to
14-7 accomplish the purposes of the Act.
14-8 (c) The finance commission by rule may adopt other
14-9 definitions to accomplish the purposes of this Act.
14-10 Sec. 1.003. TRUST COMPANY RULES. (a) The finance
14-11 commission may adopt rules to accomplish the purposes of this Act,
14-12 including rules necessary or reasonable to:
14-13 (1) implement and clarify this Act;
14-14 (2) preserve or protect the safety and soundness of
14-15 state trust companies;
14-16 (3) grant the same rights and privileges to state
14-17 trust companies with respect to the exercise of fiduciary powers
14-18 that are or may be granted to a state or national bank that is
14-19 domiciled in this state and exercising fiduciary powers;
14-20 (4) provide for recovery of the cost of maintenance
14-21 and operation of the department and the cost of enforcing this Act
14-22 through the imposition and collection of ratable and equitable fees
14-23 for notices, applications, and examinations; and
14-24 (5) facilitate the fair hearing and adjudication of
14-25 matters before the banking commissioner and the finance commission.
14-26 (b) The presence or absence in this Act of a specific
14-27 reference to rules regarding a particular subject does not enlarge
15-1 or diminish the rulemaking authority conferred by this section.
15-2 CHAPTER 2. POWERS AND DUTIES OF TEXAS DEPARTMENT OF BANKING
15-3 SUBCHAPTER A. OPERATION OF DEPARTMENT
15-4 Sec. 2.001. INTERPRETIVE STATEMENTS AND OPINIONS
15-5 Sec. 2.002. EXAMINATION
15-6 Sec. 2.003. STATEMENTS OF CONDITION AND INCOME
15-7 Sec. 2.004. LIABILITY LIMITED
15-8 (Sections 2.005-2.100 reserved for expansion)
15-9 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
15-10 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED
15-11 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION
15-12 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES
15-13 Sec. 2.104. OTHER DISCLOSURE PROHIBITED
15-14 Sec. 2.105. CIVIL DISCOVERY
15-15 Sec. 2.106. INVESTIGATIVE INFORMATION
15-16 Sec. 2.107. EMPLOYMENT INFORMATION
15-17 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS
15-18 CHAPTER 2. POWERS AND DUTIES OF TEXAS DEPARTMENT OF BANKING
15-19 SUBCHAPTER A. OPERATION OF DEPARTMENT
15-20 Sec. 2.001. INTERPRETIVE STATEMENTS AND OPINIONS. (a) The
15-21 banking commissioner may issue interpretive statements containing
15-22 matters of general policy for the guidance of state trust
15-23 companies. The banking commissioner shall file the statements for
15-24 publication in the Texas Register. The banking commissioner may
15-25 amend or repeal a published interpretive statement by issuing an
15-26 amended statement or notice of repeal of a statement and filing the
15-27 statement or notice for publication in the Texas Register. The
16-1 secretary of state shall publish the filed statements and notices
16-2 in the Texas Register and in a designated chapter of the Texas
16-3 Administrative Code.
16-4 (b) The banking commissioner may issue an opinion in
16-5 response to a specific request from a member of the public or the
16-6 state trust company industry directly or through the deputy banking
16-7 commissioner or the department's attorneys. If the banking
16-8 commissioner determines that the opinion is useful for the general
16-9 guidance of trust companies, the banking commissioner may file the
16-10 opinion for publication in the Texas Register. A published opinion
16-11 must be redacted in a manner that preserves the confidentiality of
16-12 the requesting party, unless the requesting party consents to be
16-13 identified in the published opinion. The banking commissioner may
16-14 amend or repeal a published opinion by issuing an amended opinion
16-15 or notice of repeal of an opinion and filing the opinion or notice
16-16 for publication in the Texas Register, except that the requesting
16-17 party may rely on the original opinion if all material facts were
16-18 originally disclosed to the banking commissioner, considerations of
16-19 safety and soundness of the affected trust companies are not
16-20 implicated with respect to further and prospective reliance on the
16-21 original opinion, and the text and interpretation of relevant
16-22 governing provisions of this Act have not been changed by
16-23 legislative or judicial action. The secretary of state shall
16-24 publish the filed opinions and notices in the Texas Register and a
16-25 designated chapter of the Texas Administrative Code.
16-26 (c) An interpretive statement or opinion issued under this
16-27 section does not have the force of law and is not a rule for the
17-1 purposes of Chapter 2001, Government Code, unless adopted by the
17-2 finance commission as provided by Chapter 2001, Government Code.
17-3 An interpretive statement or opinion is an administrative
17-4 construction of this Act entitled to great weight if the
17-5 construction is reasonable and does not conflict with this Act.
17-6 Sec. 2.002. EXAMINATION. (a) The banking commissioner
17-7 shall examine each state trust company annually. The banking
17-8 commissioner may examine a state trust company more often than
17-9 annually as the banking commissioner considers necessary to
17-10 safeguard the interests of clients, creditors, shareholders,
17-11 participants, or participant-transferees and to enforce this Act.
17-12 The banking commissioner may defer an examination for not more than
17-13 six months if the banking commissioner considers the deferment
17-14 necessary for the efficient enforcement of this Act.
17-15 (b) Each state trust company shall pay the cost of
17-16 examination, the equitable or proportionate cost of maintenance and
17-17 operation of the department, and the cost of enforcement of this
17-18 Act through the imposition and collection of fees established by
17-19 the finance commission under Section 1.003(a)(4) of this Act.
17-20 (c) The performance of data processing, electronic fund
17-21 transfers, or other services or activities performed on behalf of a
17-22 state trust company by a third-party contractor and the activities
17-23 of a state trust company affiliate are subject to regulation and
17-24 examination by the banking commissioner to the same extent as if
17-25 the services or activities were performed by that state trust
17-26 company on its own premises. The banking commissioner may collect
17-27 a fee from the state trust company to cover the cost of the
18-1 examination.
18-2 (d) The banking commissioner may administer oaths and
18-3 examine persons under oath on any subject that the banking
18-4 commissioner considers pertinent to the financial condition or the
18-5 safety and soundness of the activities of a state trust company.
18-6 (e) The banking commissioner shall report the results of the
18-7 examination in writing to the officers and directors, managers, or
18-8 managing participants of the state trust company. A report of
18-9 examination under this section is confidential and may be disclosed
18-10 only under the circumstances set forth in Subchapter B of this
18-11 chapter.
18-12 (f) The banking commissioner may accept an examination of a
18-13 state trust company, a third-party contractor, or an affiliate of
18-14 the state trust company by a federal or other governmental agency
18-15 in lieu of an examination under this section or may conduct an
18-16 examination of a state trust company, a third-party contractor, or
18-17 an affiliate of the state trust company jointly with a federal or
18-18 other governmental agency.
18-19 Sec. 2.003. STATEMENTS OF CONDITION AND INCOME. (a) Each
18-20 state trust company periodically shall file with the banking
18-21 commissioner a copy of its statement of condition and income.
18-22 (b) The finance commission by rule may:
18-23 (1) specify the form of the statement of condition and
18-24 income, including specified confidential and public information to
18-25 be in the statement;
18-26 (2) require public information in the statement to be
18-27 published at the times and in the publications and locations the
19-1 finance commission determines; and
19-2 (3) require the statement to be filed with the banking
19-3 commission at the intervals the finance commission determines.
19-4 (c) A state trust company that fails to file a statement of
19-5 condition and income on or before the date it is due is, after
19-6 notice and hearing, subject to a penalty of not more than $500 a
19-7 day for each day of noncompliance.
19-8 (d) Except for portions designated to be confidential by the
19-9 banking commissioner, a statement of condition and income is a
19-10 public record.
19-11 Sec. 2.004. LIABILITY LIMITED. (a) The banking
19-12 commissioner, each member of the finance commission, the deputy
19-13 banking commissioner, or an examiner, assistant examiner,
19-14 supervisor, conservator, agent, or other officer or employee of the
19-15 department is not personally liable for damages arising from the
19-16 person's official act or omission, unless the act or omission is
19-17 corrupt or malicious.
19-18 (b) The attorney general shall defend an action brought
19-19 against a person because of an official act or omission under
19-20 Subsection (a) of this section, regardless of whether the defendant
19-21 has terminated service with the department before the action
19-22 commences.
19-23 (Sections 2.005-2.100 reserved for expansion)
19-24 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
19-25 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED. (a)
19-26 Information obtained directly or indirectly by the department
19-27 relative to the financial condition or business affairs of a state
20-1 trust company, other than the public portions of a report of
20-2 condition or income statement, or a present, former, or prospective
20-3 shareholder, participant, officer, director, manager, affiliate, or
20-4 service provider of the state trust company, whether obtained
20-5 through application, examination, or otherwise, and each related
20-6 file or record of the department is confidential and may not be
20-7 disclosed by the banking commissioner or an employee of the
20-8 department except as expressly provided otherwise by this Act or a
20-9 rule adopted under Section 1.003(a)(1) of this Act.
20-10 (b) Information obtained by the department from a federal or
20-11 state regulatory agency that is confidential under federal or state
20-12 law may not be disclosed except as provided by federal or state
20-13 law.
20-14 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Confidential
20-15 information may not be disclosed to a member of the finance
20-16 commission. A member of the finance commission may not be given
20-17 access to the files and records of the department except that the
20-18 banking commissioner may disclose to the finance commission
20-19 information, files, and records pertinent to a hearing or matter
20-20 pending before the finance commission.
20-21 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) On request
20-22 and execution of an appropriate confidentiality agreement approved
20-23 by the banking commissioner, the banking commissioner may disclose
20-24 to a federal banking regulatory agency confidential information
20-25 relative to a state trust company within the agency's jurisdiction,
20-26 or an affiliate or service provider of the trust company, and may
20-27 permit the agency access to files and records or reports relating
21-1 to the trust company or its affiliate or service provider.
21-2 (b) If the banking commissioner considers it necessary or
21-3 proper to the enforcement of the laws of this state, another state,
21-4 the United States, or a foreign sovereign state, or to the best
21-5 interest of the public, the banking commissioner may disclose or
21-6 authorize release of confidential information to another department
21-7 of this state, another state, the United States, a foreign
21-8 sovereign state, or any related agency or instrumentality.
21-9 Sec. 2.104. OTHER DISCLOSURE PROHIBITED. Confidential
21-10 information that is provided to a state trust company, affiliate,
21-11 or service provider of the trust company, whether in the form of a
21-12 report of examination or otherwise, is the confidential property of
21-13 the department. The information may not be made public or
21-14 disclosed by the recipient or by an officer, director, manager,
21-15 employee, or agent of the recipient to a person not officially
21-16 connected to the recipient as officer, director, employee,
21-17 attorney, auditor, independent auditor, or bonding company, except
21-18 as authorized by rules adopted under this Act. A person commits
21-19 an offense if the person discloses or uses the information in
21-20 violation of this section. An offense under this section is
21-21 punishable as if it were an offense under Section 37.10, Penal
21-22 Code.
21-23 Sec. 2.105. CIVIL DISCOVERY. Discovery of confidential
21-24 information from a person subject to this subchapter under subpoena
21-25 or other legal process in a civil proceeding must comply with rules
21-26 adopted under this Act and other applicable law. The rules may
21-27 restrict release of confidential information to the portion
22-1 directly relevant to the legal dispute at issue and may require
22-2 that a protective order, in the form and under circumstances
22-3 specified by the rules, be issued by a court before release of the
22-4 confidential information.
22-5 Sec. 2.106. INVESTIGATIVE INFORMATION. Notwithstanding any
22-6 other law, the banking commissioner may refuse to release
22-7 information or records concerning a state trust company in the
22-8 custody of the department if, in the opinion of the banking
22-9 commissioner, release of the information or records might
22-10 jeopardize an ongoing investigation of potentially unlawful
22-11 activities.
22-12 Sec. 2.107. EMPLOYMENT INFORMATION. A person may provide
22-13 employment information to a state trust company or to a person
22-14 providing employment information to the trust company concerning
22-15 the known or suspected involvement of a present or former employee,
22-16 officer, or director in violation of any state or federal law,
22-17 rule, or regulation that has been reported to appropriate state or
22-18 federal authorities. A person may not be held liable for providing
22-19 information under this section unless the information provided is
22-20 false and the person provided the information with disregard for
22-21 the truth.
22-22 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS. (a)
22-23 Notwithstanding Article 2.44, Texas Business Corporation Act, a
22-24 shareholder or participant of a state trust company may not
22-25 examine:
22-26 (1) a report of examination or other confidential
22-27 property of the department that is in the possession of the state
23-1 trust company; or
23-2 (2) a book or record of the state trust company that
23-3 directly or indirectly pertains to financial or other information
23-4 maintained by the state trust company on behalf of its clients,
23-5 including a specific item in the minutes of the board or a
23-6 committee of the board regarding client account review and approval
23-7 or any report that would tend to identify the state trust company's
23-8 client.
23-9 (b) This section does not affect the rights of a shareholder
23-10 or participant of a state trust company when acting in another
23-11 capacity.
23-12 CHAPTER 3. POWERS; ORGANIZATION AND ORGANIZATIONAL CHANGES;
23-13 CAPITAL AND SURPLUS
23-14 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
23-15 Sec. 3.001. ORGANIZATION AND POWERS OF STATE TRUST COMPANY
23-16 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE TRUST COMPANY
23-17 Sec. 3.003. APPLICATION FOR STATE TRUST COMPANY CHARTER
23-18 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION
23-19 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION
23-20 Sec. 3.006. ISSUANCE OF CHARTER
23-21 Sec. 3.007. RESTRICTED CAPITAL
23-22 Sec. 3.008. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
23-23 CORPORATIONS
23-24 Sec. 3.009. BANKING COMMISSIONER HEARINGS
23-25 Sec. 3.010. FINANCE COMMISSION HEARINGS; APPEALS
23-26 Sec. 3.011. EXEMPTION
23-27 Sec. 3.012. APPLICATION FOR EXEMPTION
24-1 Sec. 3.013. ANNUAL CERTIFICATION
24-2 Sec. 3.014. LIMITATION ON EFFECT OF EXEMPTION
24-3 Sec. 3.015. CHANGE OF CONTROL
24-4 Sec. 3.016. GROUNDS FOR REVOCATION OF EXEMPTION
24-5 Sec. 3.017. NOTICE AND EFFECT OF REVOCATION OF EXEMPTION
24-6 Sec. 3.018. ACTION AFTER REVOCATION
24-7 Sec. 3.019. PRIOR EXEMPTION
24-8 Sec. 3.020. TRUST COMPANIES CHARTERED UNDER PRIOR LAW
24-9 Sec. 3.021. FOREIGN CORPORATIONS EXERCISING TRUST POWERS
24-10 Sec. 3.022. ACTIVITIES NOT REQUIRING CHARTER
24-11 (Sections 3.023-3.100 reserved for expansion)
24-12 SUBCHAPTER B. AMENDMENT OF ARTICLES; CHANGES IN CAPITAL AND
24-13 SURPLUS
24-14 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE TRUST COMPANY
24-15 ARTICLES OF ASSOCIATION
24-16 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
24-17 SHARES
24-18 Sec. 3.103. CHANGE IN RESTRICTED CAPITAL
24-19 Sec. 3.104. CAPITAL NOTES OR DEBENTURES
24-20 Sec. 3.105. BOARD DESIGNATION OF CERTIFIED SURPLUS
24-21 (Sections 3.106-3.200 reserved for expansion)
24-22 SUBCHAPTER C. STATE TRUST COMPANY OFFICES
24-23 Sec. 3.201. CONDUCT OF TRUST BUSINESS
24-24 Sec. 3.202. HOME OFFICE
24-25 Sec. 3.203. ADDITIONAL OFFICES
24-26 (Sections 3.204-3.300 reserved for expansion)
24-27 SUBCHAPTER D. MERGER
25-1 Sec. 3.301. MERGER AUTHORITY
25-2 Sec. 3.302. MERGER APPLICATION; GROUNDS FOR APPROVAL
25-3 Sec. 3.303. APPROVAL OF BANKING COMMISSIONER
25-4 Sec. 3.304. RIGHTS OF DISSENTERS TO MERGER
25-5 (Sections 3.305-3.400 reserved for expansion)
25-6 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
25-7 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER TRUST
25-8 COMPANY
25-9 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT
25-10 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION
25-11 Sec. 3.404. PAYMENT TO CREDITORS
25-12 Sec. 3.405. SALE OF ASSETS
25-13 (Sections 3.406-3.500 reserved for expansion)
25-14 SUBCHAPTER F. STATE TRUST REGULATORY SYSTEM:
25-15 EXIT OF STATE TRUST COMPANY
25-16 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE TRUST
25-17 COMPANY INTO NATIONAL BANK EXERCISING FIDUCIARY
25-18 POWERS
25-19 CHAPTER 3. POWERS; ORGANIZATION AND ORGANIZATIONAL CHANGES;
25-20 CAPITAL AND SURPLUS
25-21 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
25-22 Sec. 3.001. ORGANIZATION AND POWERS OF STATE TRUST COMPANY.
25-23 (a) Subject to the other provisions of this chapter, one or more
25-24 persons may organize and charter a state trust company as a state
25-25 trust association or a limited trust association. A state trust
25-26 company may perform any act as a fiduciary that a state bank or
25-27 national bank exclusively exercising trust powers may perform under
26-1 the laws of this state, including:
26-2 (1) acting as trustee under a written agreement;
26-3 (2) receiving money and other property in its capacity
26-4 as trustee for investment in real or personal property;
26-5 (3) acting as trustee and performing the fiduciary
26-6 duties committed or transferred to it by order of a court of
26-7 competent jurisdiction;
26-8 (4) acting as executor, administrator, or trustee of
26-9 the estate of a deceased person;
26-10 (5) acting as a custodian, guardian, conservator, or
26-11 trustee for a minor or incapacitated person;
26-12 (6) acting as a successor fiduciary to a depository
26-13 institution;
26-14 (7) receiving for safekeeping personal property;
26-15 (8) acting as custodian, assignee, transfer agent,
26-16 escrow agent, registrar, or receiver;
26-17 (9) acting as investment advisor, agent, or attorney
26-18 in fact according to an applicable agreement;
26-19 (10) exercising additional powers expressly conferred
26-20 by rule of the finance commission; and
26-21 (11) exercising any incidental power that is
26-22 reasonably necessary to enable it to fully exercise the powers
26-23 expressly conferred according to commonly accepted fiduciary
26-24 customs and usages.
26-25 (b) Subject to Section 3.008 of this Act, a state trust
26-26 company may exercise the powers of a Texas business corporation
26-27 reasonably necessary to enable exercise of its specific powers
27-1 under this Act.
27-2 (c) A state trust company may contribute to a community fund
27-3 or to a charitable, philanthropic, or benevolent instrumentality
27-4 conducive to public welfare amounts that its board considers
27-5 appropriate and in the interests of the trust company.
27-6 (d) Subject to Section 5.401 of this Act, a state trust
27-7 company may deposit trust funds with itself.
27-8 (e) A state trust company insured by the Federal Deposit
27-9 Insurance Corporation may receive and pay deposits, with or without
27-10 interest, made by an agency of the United States Government, the
27-11 state, a county, or a municipality.
27-12 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE TRUST COMPANY.
27-13 The articles of association of a state trust company must be signed
27-14 and acknowledged by each organizer and must contain:
27-15 (1) the name of the state trust company, except that
27-16 the banking commissioner may determine that a proposed name is
27-17 potentially misleading to the public and require the organizers to
27-18 select a different name;
27-19 (2) the period of the state trust company's duration,
27-20 which may be perpetual;
27-21 (3) the powers of the state trust company, which may
27-22 be stated as:
27-23 (A) all powers granted to a state trust company
27-24 in this state; or
27-25 (B) a list of the specific powers that the state
27-26 trust company chooses and is authorized to exercise;
27-27 (4) the aggregate number of shares, or participation
28-1 shares in the case of a limited trust association, that the state
28-2 trust company will be authorized to issue, the number of classes of
28-3 shares or participation shares, which may be one or more, the
28-4 number of shares or participation shares of each class if more than
28-5 one class, and a statement of the par value of the shares or
28-6 participation shares of each class or that the shares or
28-7 participation shares are to be without par value;
28-8 (5) if the shares or participation shares are to be
28-9 divided into classes, the designation of each class and statement
28-10 of the preferences, limitations, and relative rights of the shares
28-11 or participation shares of each class, which in the case of a
28-12 limited trust association may be more fully set forth in the
28-13 participation agreement;
28-14 (6) any provision limiting or denying to shareholders
28-15 or participants the preemptive right to acquire additional or
28-16 treasury shares or participation shares of the state trust company;
28-17 (7) any provision granting the right of shareholders
28-18 or participants to cumulative voting in the election of directors
28-19 or managers;
28-20 (8) the aggregate amount of consideration to be
28-21 received for all shares or participation shares initially issued by
28-22 the state trust company, and a statement that all authorized shares
28-23 or participation shares have been subscribed and that all
28-24 subscriptions received provide for the consideration to be fully
28-25 paid in cash before issuance of the charter;
28-26 (9) any provision consistent with law that the
28-27 organizers elect to set forth in the articles of association for
29-1 the regulation of the internal affairs of the state trust company
29-2 or that is otherwise required by this Act to be set forth in the
29-3 articles of association;
29-4 (10) the street address of the state trust company's
29-5 home office required to be maintained under Section 3.202 of this
29-6 Act; and
29-7 (11) the number of directors or managers constituting
29-8 the initial board, which may not be fewer than five or more than
29-9 25, and the names and street addresses of the persons who are to
29-10 serve as directors or managers until the first annual meeting of
29-11 shareholders or participants or until successor directors or
29-12 managers have been elected and qualified; or, at the option of the
29-13 organizers of a limited trust association that will have not fewer
29-14 than five or more than 25 participants, a statement that management
29-15 is vested in a board comprised of all participants, with management
29-16 authority vested in each participant in proportion to the
29-17 participant's contribution to capital as adjusted from time to time
29-18 to properly reflect any additional contribution, and the names and
29-19 street addresses of the persons who are to be the initial managing
29-20 participants.
29-21 Sec. 3.003. APPLICATION FOR STATE TRUST COMPANY CHARTER.
29-22 (a) An application for a state trust company charter must be made
29-23 under oath and in the form required by the banking commissioner
29-24 and must be supported by information, data, records, and opinions
29-25 of counsel that the banking commissioner requires. The application
29-26 must be accompanied by all charter fees and deposits required by
29-27 statute or rule.
30-1 (b) The banking commissioner shall grant a state trust
30-2 company charter only on proof satisfactory to the banking
30-3 commissioner that public convenience and advantage will be promoted
30-4 by the establishment of the state trust company. In determining
30-5 whether public convenience and advantage will be promoted, the
30-6 banking commissioner shall consider:
30-7 (1) the convenience of the public to be served;
30-8 (2) whether the organizational and capital structure
30-9 and amount of initial capitalization is adequate for the business
30-10 and location;
30-11 (3) whether the anticipated volume and nature of
30-12 business indicates a reasonable probability of success and
30-13 profitability based on the market sought to be served;
30-14 (4) whether the proposed officers, directors, and
30-15 managers, or managing participants, as a group have sufficient
30-16 fiduciary experience, ability, standing, competence,
30-17 trustworthiness, and integrity to justify a belief that the state
30-18 trust company will operate in compliance with law and that success
30-19 of the state trust company is probable;
30-20 (5) whether each principal shareholder or participant
30-21 has sufficient experience, ability, standing, competence,
30-22 trustworthiness, and integrity to justify a belief that the state
30-23 trust company will be free from improper or unlawful influence or
30-24 interference with respect to the state trust company's operation in
30-25 compliance with law; and
30-26 (6) whether the organizers are acting in good faith.
30-27 (c) The organizers bear the burden of proof to establish
31-1 that public convenience and advantage will be promoted by the
31-2 establishment of the state trust company. The failure of an
31-3 applicant to furnish required information, data, opinions of
31-4 counsel, and other material, or the required fee, is considered an
31-5 abandonment of the application.
31-6 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
31-7 (a) The banking commissioner shall notify the organizers when the
31-8 application is complete and accepted for filing and all required
31-9 fees and deposits have been paid. Promptly after this
31-10 notification, the organizers shall publish notice of the
31-11 application and solicit comments and protests, in the form
31-12 specified by the banking commissioner, in a newspaper of general
31-13 circulation in the county where the initial home office of the
31-14 proposed state trust company is to be located. The banking
31-15 commissioner may require the organizers to publish the notice at
31-16 other locations reasonably necessary to solicit the views of
31-17 potentially affected persons.
31-18 (b) At the expense of the organizers, the banking
31-19 commissioner shall thoroughly investigate the application and
31-20 inquire fully into the identity and character of each proposed
31-21 director, manager, officer, managing participant, and principal
31-22 shareholder or participant. The banking commissioner shall prepare
31-23 a written report of the investigation, and any person, other than a
31-24 person protesting under Section 3.005 of this Act, may request a
31-25 copy of the nonconfidential portions of the application and written
31-26 report as provided by Chapter 552, Government Code. Rules adopted
31-27 under this Act may specify the confidential or nonconfidential
32-1 character of information obtained by the department under this
32-2 section. Except as provided by Subchapter B, Chapter 2, of this
32-3 Act, or in rules regarding confidential information, the financial
32-4 statement of a proposed officer, director, manager, or managing
32-5 participant is confidential and not subject to public disclosure.
32-6 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION.
32-7 (a) Any person may file a protest of an application with the
32-8 banking commissioner.
32-9 (b) If a protest of the application is not filed on or
32-10 before the 15th day after the last date the notice was published
32-11 under Section 3.004 of this Act, the banking commissioner may
32-12 immediately determine whether all of the necessary conditions set
32-13 forth in Section 3.003(b) of this Act have been established, based
32-14 on the application and investigation. The banking commissioner
32-15 shall approve the application for charter or set the charter
32-16 application for hearing.
32-17 (c) If a protest of the application is timely filed,
32-18 accompanied by the fees and deposits required by statute or rule,
32-19 or if the banking commissioner sets a hearing, the banking
32-20 commissioner shall conduct a public hearing and as many prehearing
32-21 conferences and opportunities for discovery as the banking
32-22 commissioner considers advisable and consistent with governing
32-23 statutes and rules. A person protesting the application is
32-24 entitled to the confidential portions of the application under a
32-25 protective order that restricts the use of confidential information
32-26 to the charter proceedings.
32-27 (d) Based on the record of the hearing, the banking
33-1 commissioner shall determine whether all of the necessary
33-2 conditions set forth in Section 3.003(b) of this Act have been
33-3 established and shall enter an order granting or denying the
33-4 charter. The banking commissioner may make approval of any
33-5 application conditional and shall include any conditions in the
33-6 order granting the charter.
33-7 (e) Chapter 2001, Government Code, does not apply to a
33-8 charter application filed for the purpose of assuming all or any
33-9 portion of the assets, liabilities, and accounts of any depository
33-10 institution or state trust company considered by the banking
33-11 commissioner to be in hazardous condition.
33-12 Sec. 3.006. ISSUANCE OF CHARTER. (a) A state trust company
33-13 may not engage in the trust business until it receives its charter
33-14 from the banking commissioner. The banking commissioner may not
33-15 deliver the charter until the state trust company has:
33-16 (1) received cash in at least the full amount of
33-17 restricted capital from subscriptions for the issuance of shares
33-18 or participation shares;
33-19 (2) elected or qualified the initial officers and
33-20 directors or managers, as appropriate, named in the application for
33-21 charter or other officers and directors or managers approved by the
33-22 banking commissioner; and
33-23 (3) complied with all other requirements of this Act
33-24 relating to the organization of the state trust company.
33-25 (b) If a state trust company does not open and engage in the
33-26 trust business within six months after the date it receives its
33-27 charter or conditional approval of application for charter, the
34-1 banking commissioner may revoke the charter or cancel the
34-2 conditional approval of application for charter without judicial
34-3 action.
34-4 Sec. 3.007. RESTRICTED CAPITAL. (a) The banking
34-5 commissioner may not issue a charter to a state trust company
34-6 having restricted capital of less than $1 million.
34-7 (b) The banking commissioner may, on a case-by-case basis,
34-8 require additional restricted capital for a proposed or existing
34-9 state trust company if the banking commissioner finds the condition
34-10 and operations of the existing state trust company or the proposed
34-11 scope or type of operations of the proposed state trust company
34-12 requires additional restricted capital to protect the safety and
34-13 soundness of the trust company. The safety and soundness factors
34-14 to be considered by the banking commissioner in the exercise of
34-15 discretion, include:
34-16 (1) the nature and type of business the state trust
34-17 company conducts;
34-18 (2) the nature and degree of liquidity in assets held
34-19 in a corporate capacity;
34-20 (3) the amount, type, and depository of fiduciary
34-21 assets that the state trust company manages;
34-22 (4) the complexity of the state trust company's
34-23 fiduciary duties and degree of discretion undertaken;
34-24 (5) the competence and experience of the state trust
34-25 company's management;
34-26 (6) the extent and adequacy of internal controls
34-27 maintained by the state trust company;
35-1 (7) the presence or absence of annual unqualified
35-2 audits by an independent certified public accountant;
35-3 (8) the reasonableness of the state trust company's
35-4 business plans for retaining or acquiring additional restricted
35-5 capital; and
35-6 (9) the existence and adequacy of insurance obtained
35-7 or held by the state trust company to protect its clients,
35-8 beneficiaries, and grantors.
35-9 (c) The effective date of any order under Subsection (b) of
35-10 this section must be stated in the order and must be on or after
35-11 the 21st day after the date the order is mailed or delivered.
35-12 Unless the state trust company requests a hearing before the
35-13 banking commissioner in writing before the effective date of the
35-14 order, the order takes effect and is final and nonappealable. This
35-15 subsection does not prohibit an application to reduce capital
35-16 requirements of an existing state trust company under Subsection
35-17 (e) of this section or under Section 3.011 of this Act.
35-18 (d) Subject to Subsection (e) of this section and Section
35-19 3.011 of this Act, a state trust company to which the banking
35-20 commissioner issues a charter shall at all times maintain
35-21 restricted capital in at least the amount required under Subsection
35-22 (a) of this section and in any additional amount the banking
35-23 commissioner requires under Subsection (b) of this section.
35-24 (e) Notwithstanding Subsection (a) of this section, on
35-25 application, the banking commissioner may, on a case-by-case basis
35-26 in the exercise of discretion, reduce the amount of minimum
35-27 restricted capital required for a state trust company in a manner
36-1 consistent with protecting the company's safety and soundness. In
36-2 making a determination under this subsection, the banking
36-3 commissioner shall consider the factors listed by Subsection (b) of
36-4 this section.
36-5 Sec. 3.008. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
36-6 CORPORATIONS. (a) The Texas Business Corporation Act and the
36-7 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
36-8 seq., Vernon's Texas Civil Statutes) are incorporated into this
36-9 chapter and apply to a state trust company as if they were part of
36-10 this Act to the extent not inconsistent with this Act or the proper
36-11 business of a state trust company, except that:
36-12 (1) a reference to the secretary of state means the
36-13 banking commissioner unless the context requires otherwise; and
36-14 (2) the right of shareholders or participants to
36-15 cumulative voting in the election of directors or managers exists
36-16 only if granted by the state trust company's articles of
36-17 association.
36-18 (b) Unless expressly authorized by this Act or a rule of the
36-19 finance commission, a state trust company may not take an action
36-20 authorized by the Texas Business Corporation Act regarding its
36-21 corporate status, capital structure, or a matter of corporate
36-22 governance, of the type for which the Texas Business Corporation
36-23 Act would require a filing with the secretary of state if the state
36-24 trust company were a business corporation, without submitting the
36-25 filing to the banking commissioner for prior written approval of
36-26 the action.
36-27 (c) The finance commission may adopt rules to alter or
37-1 supplement the procedures and requirements of the Texas Business
37-2 Corporation Act or the Texas Miscellaneous Corporation Laws Act
37-3 applicable to an action taken under this chapter by a state trust
37-4 company.
37-5 (d) This chapter may not be construed to mean that a state
37-6 trust company is a corporation incorporated under or governed by
37-7 the Texas Business Corporation Act or the Texas Miscellaneous
37-8 Corporation Laws Act.
37-9 Sec. 3.009. BANKING COMMISSIONER HEARINGS. (a) This
37-10 section does not grant a right to hearing to a person that is not
37-11 otherwise granted by governing law.
37-12 (b) The banking commissioner may convene a hearing to
37-13 receive evidence and argument regarding any matter before the
37-14 banking commissioner for decision or review under this Act. The
37-15 hearing must be conducted under Chapter 2001, Government Code.
37-16 (c) A hearing before the banking commissioner that is
37-17 required or authorized by law may be conducted by a hearing officer
37-18 on behalf of the banking commissioner. A matter made confidential
37-19 by law must be considered by the banking commissioner in a closed
37-20 hearing.
37-21 Sec. 3.010. FINANCE COMMISSION HEARINGS; APPEALS. (a)
37-22 Except as expressly provided otherwise by this Act, a decision or
37-23 order of the banking commissioner made under this Act after hearing
37-24 may be appealed directly to a district court of Travis County as
37-25 provided by Subsection (c) of this section or, at the option of the
37-26 appellant, to the finance commission for review.
37-27 (b) The finance commission shall consider the questions
38-1 raised by the application for review and may also consider
38-2 additional matters pertinent to the appeal. An order of the
38-3 banking commissioner continues in effect pending review unless the
38-4 order is stayed by the finance commission. The finance commission
38-5 may impose any condition before granting a stay of the appealed
38-6 order. The finance commission may not be required to accept
38-7 additional evidence or hold an evidentiary hearing if a hearing was
38-8 held and a record made before the banking commissioner. The
38-9 finance commission shall remand the proceeding to the banking
38-10 commissioner to receive any additional evidence the finance
38-11 commission chooses to consider. A hearing before the finance
38-12 commission that is required or authorized by law may be conducted
38-13 by a hearing officer on behalf of the finance commission. A matter
38-14 made confidential by law must be considered by the finance
38-15 commission in a closed hearing.
38-16 (c) A person affected by a final order of the banking
38-17 commissioner who elects to appeal directly to district court, or a
38-18 person affected by a final order of the finance commission under
38-19 this section, may appeal the final order by filing a petition for
38-20 judicial review under the substantial evidence rule in a district
38-21 court of Travis County as provided by Chapter 2001, Government
38-22 Code. A petition for appeal filed in the district court does not
38-23 stay or vacate the appealed order unless the court, after notice
38-24 and hearing, expressly stays or vacates the order.
38-25 Sec. 3.011. EXEMPTION. (a) A state trust company may
38-26 request in writing that it be exempted from specified provisions of
38-27 this Act. The banking commissioner may grant the exemption in
39-1 whole or in part if the banking commissioner finds that the state
39-2 trust company does not transact business with the public. A state
39-3 trust company does not transact business with the public if it does
39-4 not make any sale, solicitation, arrangement, agreement, or
39-5 transaction to provide a trust or other business service, whether
39-6 or not for a fee, commission, or any other type of remuneration,
39-7 with:
39-8 (1) an individual who is not related within the fourth
39-9 degree of affinity or consanguinity to an individual who controls
39-10 the state trust company; or
39-11 (2) a sole proprietorship, partnership, joint venture,
39-12 association, trust, estate, business trust, or corporation that is
39-13 not wholly owned by one or more individuals related within the
39-14 fourth degree of affinity or consanguinity to an individual who
39-15 controls the state trust company.
39-16 (b) At the expense of a state trust company, the banking
39-17 commissioner may examine or investigate the state trust company in
39-18 connection with an application for exemption. Unless the
39-19 application presents novel or unusual questions, the banking
39-20 commissioner shall approve the application for exemption or set the
39-21 application for hearing not later than the 61st day after the date
39-22 the banking commissioner considers the application complete and
39-23 accepted for filing. The banking commissioner may require the
39-24 submission of additional information as considered necessary to an
39-25 informed decision.
39-26 (c) An exemption granted under this section may be made
39-27 subject to conditions or limitations imposed by the banking
40-1 commissioner consistent with this Act.
40-2 (d) A state trust company that is or has been exempt from a
40-3 provision of this Act under this section or a predecessor statute
40-4 may not transact business with the public unless the banking
40-5 commissioner determines, as provided by Section 3.003 of this Act,
40-6 that public convenience and advantage will be promoted by
40-7 permitting the state trust company to engage in the trust business.
40-8 (e) The finance commission may adopt rules:
40-9 (1) defining other circumstances under which a state
40-10 trust company may be exempted from a provision of this Act because
40-11 it does not transact business with the public;
40-12 (2) specifying the provisions of this Act that are
40-13 subject to an exemption request; and
40-14 (3) establishing procedures and requirements for
40-15 obtaining, maintaining, or revoking an exemption.
40-16 Sec. 3.012. APPLICATION FOR EXEMPTION. (a) A state trust
40-17 company requesting an exemption under Section 3.011 of this Act
40-18 shall file an application with the banking commissioner including:
40-19 (1) a nonrefundable application fee set by the finance
40-20 commission;
40-21 (2) a detailed sworn statement showing the state trust
40-22 company's assets and liabilities as of the end of the calendar
40-23 month previous to the filing of the application;
40-24 (3) a sworn statement of the reason for requesting the
40-25 exemption;
40-26 (4) a sworn statement that the state trust company is
40-27 not transacting business with the public and that the company will
41-1 not transact business with the public without the prior written
41-2 permission of the banking commissioner;
41-3 (5) the current street mailing address and telephone
41-4 number of the physical location in this state at which the state
41-5 trust company will maintain its books and records, with a sworn
41-6 statement that the address given is true and correct and is not a
41-7 United States Postal Service post office box or a private mail box,
41-8 postal box, or mail drop; and
41-9 (6) a list of the specific provisions of this Act for
41-10 which the request for exemption is made.
41-11 (b) The banking commissioner may not approve a state trust
41-12 company exemption unless the application is completed as required
41-13 by Subsection (a) of this section.
41-14 Sec. 3.013. ANNUAL CERTIFICATION. Before June 30 of each
41-15 year, an exempt state trust company shall file a certification that
41-16 it is maintaining the conditions and limitations of its exemption
41-17 on a form provided by the banking commissioner. The certification
41-18 must be accompanied by a fee set by the finance commission. The
41-19 certification is not valid unless it bears an acknowledgment
41-20 stamped by the department. The department shall return a copy of
41-21 the acknowledged annual certification to the state trust company
41-22 not later than the 30th day after the date the certification is
41-23 filed. The state trust company shall notify the department of any
41-24 failure to return an acknowledged copy of any annual certification
41-25 within this period. The banking commissioner may examine or
41-26 investigate the state trust company periodically as necessary to
41-27 verify the certification.
42-1 Sec. 3.014. LIMITATION ON EFFECT OF EXEMPTION. (a) An
42-2 exempt state trust company shall comply with the home office
42-3 provisions of Section 3.202 of this Act.
42-4 (b) The granting of an exemption to a state trust company
42-5 does not affect the state trust company's obligation to pay any
42-6 corporate franchise tax required by state law.
42-7 Sec. 3.015. CHANGE OF CONTROL. Control of an exempt state
42-8 trust company may not be sold or transferred with exempt status.
42-9 If control of an exempt state trust company is transferred, the
42-10 acquiring person must comply with Sections 3.003, 3.004, 3.005, and
42-11 4.001 of this Act and the exempt status of the state trust company
42-12 automatically terminates on the effective date of the transfer.
42-13 The acquiring person must file a separate application to obtain an
42-14 exemption under this Act.
42-15 Sec. 3.016. GROUNDS FOR REVOCATION OF EXEMPTION. The
42-16 banking commissioner may revoke an exemption of a state trust
42-17 company if the trust company:
42-18 (1) makes a false statement under oath on any document
42-19 required to be filed by this Act or finance commission rule;
42-20 (2) fails to submit to an examination as required by
42-21 Section 2.002 of this Act;
42-22 (3) withholds requested information from the banking
42-23 commissioner; or
42-24 (4) violates any provision of this Act applicable to
42-25 an exempt state trust company.
42-26 Sec. 3.017. NOTICE AND EFFECT OF REVOCATION OF EXEMPTION.
42-27 If the banking commissioner determines from examination or other
43-1 credible evidence that an exempt state trust company has violated
43-2 any of the requirements of this subchapter relating to an exempt
43-3 state trust company, the banking commissioner may by personal
43-4 delivery or registered or certified mail, return receipt requested,
43-5 notify the state trust company in writing that the state trust
43-6 company's exemption has been revoked. The notice must state
43-7 grounds for the revocation with reasonable certainty. The notice
43-8 must state its effective date, which may not be before the fifth
43-9 day after the date the notification is mailed or delivered. The
43-10 revocation takes effect for the state trust company if the state
43-11 trust company does not request a hearing in writing before the
43-12 effective date. After taking effect the revocation is final and
43-13 nonappealable as to that state trust company, and the state trust
43-14 company is subject to all of the requirements and provisions of the
43-15 Act applicable to nonexempt state trust companies.
43-16 Sec. 3.018. ACTION AFTER REVOCATION. (a) A state trust
43-17 company shall have five days after the date the revocation takes
43-18 effect to comply with all of the provisions of Sections 3.003(b)
43-19 and (c). If, however, the banking commissioner determines at the
43-20 time of revocation that the state trust company has been engaging
43-21 in or attempting to engage in acts intended or designed to deceive
43-22 or defraud the public, the banking commissioner, in the banking
43-23 commissioner's sole discretion, may waive this compliance period.
43-24 (b) If the state trust company does not comply with all of
43-25 the provisions of this Act, including capitalization requirements
43-26 determined by the banking commissioner as necessary to assure the
43-27 safety and soundness of the state trust company, within the
44-1 prescribed period, the banking commissioner may:
44-2 (1) institute any action or remedy prescribed by this
44-3 Act or any applicable rule; or
44-4 (2) refer the state trust company to the attorney
44-5 general for institution of a quo warranto proceeding to revoke the
44-6 state trust company's charter.
44-7 Sec. 3.019. PRIOR EXEMPTION. A state trust company that was
44-8 exempt under a predecessor to this Act is considered exempt under
44-9 this Act.
44-10 Sec. 3.020. TRUST COMPANIES CHARTERED UNDER PRIOR LAW. The
44-11 charter of a corporation with trust powers incorporated under any
44-12 laws of this state before May 25, 1987, is void if the charter was
44-13 not presented to the department before May 26, 1988, for
44-14 substitution of a charter or if the department did not issue a new
44-15 substitution charter before May 26, 1989.
44-16 Sec. 3.021. FOREIGN CORPORATIONS EXERCISING TRUST POWERS.
44-17 (a) A foreign corporation may not conduct a trust business in this
44-18 state. A foreign corporation may control a state trust company in
44-19 this state, if the state trust company is formed or acquired and
44-20 operated as provided by this Act and applicable rules.
44-21 (b) A foreign corporation or other entity chartered or
44-22 domiciled in another jurisdiction as a trust company or depository
44-23 institution with trust powers may act as a trustee in this state
44-24 only as provided by Section 105A, Texas Probate Code.
44-25 Sec. 3.022. ACTIVITIES NOT REQUIRING CHARTER. A company
44-26 does not engage in the trust business in a manner requiring a state
44-27 charter by:
45-1 (1) acting in a manner authorized by law and in the
45-2 scope of authority as an agent of a state trust company;
45-3 (2) rendering a service customarily performed as an
45-4 attorney in a manner approved and authorized by the Supreme Court
45-5 of Texas or State Bar of Texas;
45-6 (3) acting as trustee under a deed of trust made only
45-7 as security for the payment of money or for the performance of
45-8 another act;
45-9 (4) conducting a trust business under a charter that
45-10 authorizes the exercise of trust powers as a depository
45-11 institution, if the exercise of trust powers in this state by the
45-12 depository institution is not otherwise prohibited by law;
45-13 (5) engaging in a business regulated by the Office of
45-14 Consumer Credit Commissioner, except as limited by rules adopted by
45-15 the finance commission;
45-16 (6) receiving and distributing rents and proceeds of
45-17 sale as a licensed real estate broker on behalf of a principal in a
45-18 manner authorized by the Texas Real Estate Commission;
45-19 (7) engaging in a securities transaction or providing
45-20 an investment advisory service as a licensed and registered dealer,
45-21 salesman, or advisor to the extent that the activity is regulated
45-22 by the State Securities Board or the Securities and Exchange
45-23 Commission;
45-24 (8) engaging in the sale and administration of an
45-25 insurance product by an insurance company or agent licensed by the
45-26 Texas Department of Insurance to the extent that the activity is
45-27 regulated by the Texas Department of Insurance;
46-1 (9) engaging in the lawful sale of prepaid funeral
46-2 benefits under a permit issued by the banking commissioner under
46-3 Chapter 512, Acts of the 54th Legislature, Regular Session, 1955
46-4 (Article 548b, Vernon's Texas Civil Statutes);
46-5 (10) engaging in the lawful business of a perpetual
46-6 care cemetery corporation under Chapter 712, Health and Safety
46-7 Code;
46-8 (11) engaging in the lawful sale of checks under a
46-9 license issued by the banking commissioner under The Sale of Checks
46-10 Act (Article 489d, Vernon's Texas Civil Statutes);
46-11 (12) acting as trustee under a voting trust as
46-12 provided by Article 2.30, Texas Business Corporation Act;
46-13 (13) acting as trustee by a public, private, or
46-14 independent institution of higher education or a university system,
46-15 as defined by Section 61.003, Education Code, including an
46-16 affiliated foundation or corporation of such an institution or
46-17 system acting as trustee as provided by the Education Code;
46-18 (14) engaging in another activity expressly excluded
46-19 from the application of this Act by rule of the finance commission;
46-20 (15) rendering services customarily performed by a
46-21 certified accountant in a manner authorized by the Texas State
46-22 Board of Public Accountancy;
46-23 (16) serving as trustee of a charitable trust as
46-24 provided by Article 2.31, Texas Non-Profit Corporation Act (Article
46-25 1396-2.31, Vernon's Texas Civil Statutes);
46-26 (17) performing escrow or settlement services if
46-27 licensed under Chapter 9, Insurance Code; or
47-1 (18) acting as a qualified intermediary in a tax
47-2 deferred exchange under 26 U.S.C. Section 1031 and applicable
47-3 regulations.
47-4 (Sections 3.023-3.100 reserved for expansion)
47-5 SUBCHAPTER B. AMENDMENT OF ARTICLES; CHANGES IN
47-6 CAPITAL AND SURPLUS
47-7 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE TRUST COMPANY
47-8 ARTICLES OF ASSOCIATION. (a) A state trust company that has been
47-9 granted a certificate of authority under Section 3.006 of this Act
47-10 or a predecessor statute may amend or restate its articles of
47-11 association for any lawful purpose, including the creation of
47-12 authorized but unissued shares or participation shares in one or
47-13 more classes or series.
47-14 (b) An amendment authorizing the issuance of shares or
47-15 participation shares in series must contain:
47-16 (1) the designation of each series and a statement of
47-17 any variations in the preferences, limitations, and relative rights
47-18 among series to the extent that the preferences, limitations, and
47-19 relative rights are to be established in the articles of
47-20 association; and
47-21 (2) a statement of any authority to be vested in the
47-22 board to establish series and determine the preferences,
47-23 limitations, and relative rights of each series.
47-24 (c) A limited trust association may not amend its articles
47-25 of association to extend its period of existence for a perpetual
47-26 period or for any period of years, unless the period of existence
47-27 is expressly contingent on those events resulting in dissolution of
48-1 the trust association under Section 4.207 of this Act.
48-2 (d) Amendment or restatement of the articles of association
48-3 of a state trust company and approval of the board and shareholders
48-4 or participants must be made or obtained in accordance with the
48-5 Texas Business Corporation Act for the amendment or restatement of
48-6 articles of incorporation, except as otherwise provided by this Act
48-7 or rules adopted under this Act. The original and one copy of the
48-8 articles of amendment or restated articles of association must be
48-9 filed with the banking commissioner for approval. Unless the
48-10 submission presents novel or unusual questions, the banking
48-11 commissioner shall approve or reject the amendment or restatement
48-12 not later than the 31st day after the date the banking commissioner
48-13 considers the submission informationally complete and accepted for
48-14 filing. The banking commissioner may require the submission of
48-15 additional information as considered necessary to an informed
48-16 decision to approve or reject any amendment or restatement of
48-17 articles of association under this section.
48-18 (e) If the banking commissioner finds that the amendment or
48-19 restatement conforms to law and any conditions imposed by the
48-20 banking commissioner, and any required filing fee has been paid,
48-21 the banking commissioner shall:
48-22 (1) endorse the face of the original and copy with the
48-23 date of approval and the word "Approved";
48-24 (2) file the original in the department's records; and
48-25 (3) deliver a certified copy of the amendment or
48-26 restatement to the state trust company.
48-27 (f) An amendment or restatement, if approved, takes effect
49-1 on the date of approval, unless the amendment or restatement
49-2 provides for a different effective date.
49-3 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
49-4 SHARES. (a) If the articles of association expressly give the
49-5 board authority to establish series and determine the preferences,
49-6 limitations, and relative rights of each series, the board may do
49-7 so only on compliance with this section and any rules adopted under
49-8 this chapter.
49-9 (b) A series of shares or participation shares may be
49-10 established in the manner provided by the Texas Business
49-11 Corporation Act as if a state trust company were a domestic
49-12 corporation, but the shares or participation shares of the series
49-13 may not be issued and sold except on compliance with Section 3.103
49-14 of this Act. The state trust company shall file the original and
49-15 one copy of the statement of action required by the Texas Business
49-16 Corporation Act with the banking commissioner. Unless the
49-17 submission presents novel or unusual questions, the banking
49-18 commissioner shall approve or reject the series not later than the
49-19 31st day after the date the banking commissioner considers the
49-20 submission informationally complete and accepted for filing. The
49-21 banking commissioner may require the submission of additional
49-22 information as considered necessary to an informed decision.
49-23 (c) If the banking commissioner finds that the interests of
49-24 the clients and creditors of the state trust company will not be
49-25 adversely affected by the series, that the series otherwise
49-26 conforms to law and any conditions imposed by the banking
49-27 commissioner, and that any required filing fee has been paid, the
50-1 banking commissioner shall:
50-2 (1) endorse the face of the original and copy of the
50-3 statement with the date of approval and the word "Approved";
50-4 (2) file the original in the department's records; and
50-5 (3) deliver a certified copy of the statement to the
50-6 trust company.
50-7 Sec. 3.103. CHANGE IN RESTRICTED CAPITAL. (a) A state
50-8 trust company may not reduce or increase its restricted capital
50-9 through dividend, redemption, issuance of shares or participation
50-10 shares, or otherwise without the prior approval of the banking
50-11 commissioner, except as permitted by this section or rules adopted
50-12 under this chapter.
50-13 (b) Unless otherwise restricted by rules, prior approval is
50-14 not required for an increase in restricted capital accomplished
50-15 through:
50-16 (1) issuance of shares of common stock or their
50-17 equivalent in participation shares for cash;
50-18 (2) declaration and payment of pro rata share
50-19 dividends as defined by the Texas Business Corporation Act; or
50-20 (3) adoption by the board of a resolution directing
50-21 that all or part of undivided profits be transferred to restricted
50-22 capital.
50-23 (c) Prior approval is not required for a decrease in
50-24 restricted capital caused by incurred losses in excess of undivided
50-25 profits.
50-26 Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) With the
50-27 prior written approval of the banking commissioner, a state trust
51-1 company may at any time through action of its board, and without
51-2 requiring action of its shareholders or participants, issue and
51-3 sell its capital notes or debentures. The notes or debentures must
51-4 be subordinate to the claims of depositors and may be subordinate
51-5 to other claims, including the claims of other creditors or classes
51-6 of creditors or the shareholders or participants.
51-7 (b) Capital notes or debentures may be convertible into
51-8 shares or participation shares of any class or series. The
51-9 issuance and sale of convertible capital notes or debentures are
51-10 subject to satisfaction of preemptive rights, if any, to the extent
51-11 provided by law.
51-12 (c) Without the prior written approval of the banking
51-13 commissioner, interest due or principal repayable on outstanding
51-14 capital notes or debentures may not be paid by a state trust
51-15 company when the state trust company is in hazardous condition or
51-16 insolvent, as determined by the banking commissioner, or to the
51-17 extent that payment will cause the state trust company to be in
51-18 hazardous condition or insolvent.
51-19 (d) The amount of any outstanding capital notes or
51-20 debentures that meet the requirements of this section and that are
51-21 subordinated to unsecured creditors of the state trust company may
51-22 be included in equity capital of the state trust company for
51-23 purposes of determining hazardous condition or insolvency, and for
51-24 such other purposes provided by rules adopted under this Act.
51-25 Sec. 3.105. BOARD DESIGNATION OF CERTIFIED SURPLUS.
51-26 Periodically the board may vote to designate and record the amount
51-27 of certified surplus in its minutes. Except to absorb losses in
52-1 excess of undivided profits and uncertified surplus, certified
52-2 surplus may not be reduced without the prior written approval of
52-3 the banking commissioner.
52-4 (Sections 3.106-3.200 reserved for expansion)
52-5 SUBCHAPTER C. STATE TRUST COMPANY OFFICES
52-6 Sec. 3.201. CONDUCT OF TRUST BUSINESS. A state trust
52-7 company may engage in the trust business at its home office and at
52-8 other locations as permitted by this subchapter.
52-9 Sec. 3.202. HOME OFFICE. (a) Each state trust company must
52-10 have and continuously maintain in this state a home office at which
52-11 the state trust company does business and keeps its corporate books
52-12 and records. At least one executive officer must maintain an
52-13 office at the home office.
52-14 (b) Each officer at the home office is an agent for service
52-15 of process for a state trust company.
52-16 (c) A state trust company may change its home office to any
52-17 location in this state, if the location that is the home office
52-18 before the change remains an office of the state trust company at
52-19 which the state trust company does business. To change the
52-20 location of its home office, the state trust company must file a
52-21 written notice with the banking commissioner setting forth the name
52-22 of the state trust company, the street address of its home office
52-23 before the change, the street address to which the home office is
52-24 to be changed, and a copy of the resolution adopted by the board
52-25 authorizing the change. The change of home office takes effect on
52-26 the 31st day after the date the banking commissioner receives the
52-27 notice.
53-1 (d) A relocation of a state trust company's home office may
53-2 not be made, or another action that would effect an abandonment of
53-3 the state trust company's initial home office may not be taken,
53-4 without the prior written approval of the banking commissioner.
53-5 The state trust company must establish to the satisfaction of the
53-6 banking commissioner that the abandonment is consistent with the
53-7 original determination of public convenience and advantage for the
53-8 establishment of a state trust company at that location.
53-9 Sec. 3.203. ADDITIONAL OFFICES. (a) A state trust company
53-10 may establish and maintain additional offices anywhere in this
53-11 state by filing a written notice with the banking commissioner
53-12 setting forth the name of the state trust company, the street
53-13 address of the proposed additional office, a description of the
53-14 activities proposed to be conducted at the additional office, and a
53-15 copy of the resolution adopted by the board authorizing the
53-16 additional office.
53-17 (b) A state trust company may commence business at the
53-18 additional office on the 31st day after the date the banking
53-19 commissioner receives the notice, unless the banking commissioner
53-20 specifies an earlier or later date. The banking commissioner may
53-21 specify a later date on a determination that the written notice
53-22 raises issues that require additional information or additional
53-23 time for analysis. If a later date is specified, the state trust
53-24 company may establish the additional office only on prior written
53-25 approval by the banking commissioner. The banking commissioner may
53-26 deny permission to establish an additional office of the state
53-27 trust company if the banking commissioner has a significant
54-1 supervisory or regulatory concern regarding the proposed additional
54-2 office, the applicant, or an affiliate.
54-3 (Sections 3.204-3.300 reserved for expansion)
54-4 SUBCHAPTER D. MERGER
54-5 Sec. 3.301. MERGER AUTHORITY. (a) Subject to this
54-6 subchapter and with the prior written approval of the banking
54-7 commissioner, a state trust company may merge with another person
54-8 to the same extent as a business corporation under the Texas
54-9 Business Corporation Act.
54-10 (b) Implementation of the plan of merger by the parties and
54-11 approval of the board, shareholders, participants, or owners of the
54-12 parties must be made or obtained as provided by the Texas Business
54-13 Corporation Act as if the state trust company were a domestic
54-14 corporation and all other parties to the merger were foreign
54-15 corporations and other entities, except as otherwise provided by
54-16 rules adopted under this chapter.
54-17 Sec. 3.302. MERGER APPLICATION; GROUNDS FOR APPROVAL.
54-18 (a) To apply for approval of a merger, the parties must submit the
54-19 original articles of merger, a number of copies of the articles of
54-20 merger equal to the number of surviving, new, and acquiring
54-21 entities, and an application in the form required by the banking
54-22 commissioner. The banking commissioner may require the submission
54-23 of additional information as considered necessary to an informed
54-24 decision.
54-25 (b) The banking commissioner shall investigate the condition
54-26 of the merging parties.
54-27 (c) The banking commissioner may approve the merger if:
55-1 (1) each resulting state trust company will be solvent
55-2 and have adequate capitalization for its business and location;
55-3 (2) each resulting state trust company has in all
55-4 respects complied with the statutes and rules relating to the
55-5 organization of a state trust company;
55-6 (3) all obligations and liabilities of each trust
55-7 company that is a party to the merger have been properly discharged
55-8 or otherwise lawfully assumed or retained by a trust company or
55-9 other fiduciary;
55-10 (4) each surviving, new, or acquiring person that is
55-11 not authorized to engage in the trust business will not engage in
55-12 the trust business and has in all respects complied with the laws
55-13 of this state; and
55-14 (5) all conditions imposed by the banking commissioner
55-15 have been satisfied or otherwise resolved.
55-16 Sec. 3.303. APPROVAL OF BANKING COMMISSIONER. (a) If the
55-17 banking commissioner approves the merger and finds that all
55-18 required filing fees and investigative costs have been paid, the
55-19 banking commissioner shall:
55-20 (1) endorse the face of the original and each copy of
55-21 the articles of merger with the date of approval and the word
55-22 "Approved";
55-23 (2) file the original in the department's records; and
55-24 (3) deliver a certified copy of the articles of merger
55-25 to each surviving, new, or acquiring entity.
55-26 (b) A merger is effective on the date of approval, unless
55-27 the merger agreement provides and the banking commissioner consents
56-1 to a different effective date.
56-2 Sec. 3.304. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
56-3 participant, or participant-transferee may dissent from the merger
56-4 to the extent and by following the procedure provided by the Texas
56-5 Business Corporation Act or rules adopted under this Act.
56-6 (Sections 3.305-3.400 reserved for expansion)
56-7 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
56-8 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER TRUST
56-9 COMPANY. (a) A state trust company, with the prior written
56-10 approval of the banking commissioner, may purchase all or
56-11 substantially all of the assets of another regulated financial
56-12 institution, including the right to control accounts established
56-13 with the state trust company. Except as otherwise expressly
56-14 provided by another statute, the purchase of all or part of the
56-15 assets of the institution does not make the purchasing state trust
56-16 company responsible for any liability or obligation of the selling
56-17 institution that the purchasing state trust company does not
56-18 expressly assume. Except as otherwise provided by this Act, this
56-19 subchapter does not govern or prohibit the purchase by a state
56-20 trust company of all or part of the assets of a corporation or
56-21 other entity that is not a state trust company.
56-22 (b) To make a purchase under this section, an application in
56-23 the form required by the banking commissioner must be filed with
56-24 the banking commissioner. The banking commissioner shall
56-25 investigate the condition of the purchaser and seller and may
56-26 require the submission of additional information as considered
56-27 necessary to make an informed decision. The banking commissioner
57-1 shall approve the purchase if:
57-2 (1) the acquiring state trust company will be solvent
57-3 and have sufficient capitalization for its business and location;
57-4 (2) the acquiring state trust company has complied
57-5 with all applicable statutes and rules;
57-6 (3) all obligations and liabilities of each trust
57-7 company that is a party to the purchase or sale of assets have been
57-8 properly discharged or otherwise lawfully assumed or retained by a
57-9 trust company or other fiduciary;
57-10 (4) all conditions imposed by the banking commissioner
57-11 have been satisfied or otherwise resolved; and
57-12 (5) all fees and costs have been paid.
57-13 (c) A purchase is effective on the date of approval unless
57-14 the purchase agreement provides for and the banking commissioner
57-15 consents to a different effective date.
57-16 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. The
57-17 purchasing state trust company may hold the purchase price and any
57-18 additional funds delivered to it by the selling institution in
57-19 trust for the selling institution and may act as agent of the
57-20 selling institution in disbursing those funds in trust by paying
57-21 the creditors of the selling institution. If the purchasing state
57-22 trust company acts under written contract of agency approved by the
57-23 banking commissioner that specifically names each creditor and the
57-24 amount to be paid each, and if the agency is limited to the purely
57-25 ministerial act of paying creditors the amounts due them as
57-26 determined by the selling institution and reflected in the contract
57-27 of agency and does not involve discretionary duties or authority
58-1 other than the identification of the creditors named, the
58-2 purchasing trust company:
58-3 (1) may rely on the contract of agency and the
58-4 instructions included in it; and
58-5 (2) is not responsible for:
58-6 (A) any error made by the selling institution in
58-7 determining its liabilities and creditors to whom the liabilities
58-8 are due or the amounts due the creditors; or
58-9 (B) any preference that results from the
58-10 payments made under the contract of agency and the instructions
58-11 included in it.
58-12 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. If the
58-13 selling institution is at any time after the sale of assets
58-14 voluntarily or involuntarily closed for liquidation by a state or
58-15 federal regulatory agency, the purchasing state trust company shall
58-16 pay to the receiver of the selling institution the balance of the
58-17 money held by it in trust for the selling institution and not yet
58-18 paid to the creditors of the selling institution. Without further
58-19 action the purchasing state trust company is discharged of all
58-20 responsibilities to the selling institution, its receiver, or its
58-21 creditors, shareholders, participants, or participant-transferees.
58-22 Sec. 3.404. PAYMENT TO CREDITORS. Payment to a creditor of
58-23 the selling institution of the amount to be paid the person under
58-24 the terms of the contract of agency may be made by the purchasing
58-25 state trust company by opening an agency account in the name of the
58-26 creditor, crediting the account with the amount to be paid the
58-27 creditor under the terms of the agency contract, and mailing or
59-1 personally delivering a duplicate ticket evidencing the credit to
59-2 the creditor at the creditor's address shown in the records of the
59-3 selling institution. The relationship between the purchasing state
59-4 trust company and the creditor is that of agent to creditor only to
59-5 the extent of the credit reflected by the ticket.
59-6 Sec. 3.405. SALE OF ASSETS. (a) The board of a state trust
59-7 company, with the banking commissioner's approval, may cause the
59-8 state trust company to sell all or substantially all of its assets,
59-9 including the right to control accounts established with the state
59-10 trust company, without shareholder or participant approval if the
59-11 banking commissioner finds:
59-12 (1) the interests of the state trust company's
59-13 clients, depositors, and creditors are jeopardized because of the
59-14 hazardous condition of the state trust company;
59-15 (2) the sale is in the best interest of the state
59-16 trust company's clients, depositors, and creditors; and
59-17 (3) if the deposits of the state trust company are
59-18 insured, the Federal Deposit Insurance Corporation or its successor
59-19 approves the transaction.
59-20 (b) A sale under this section must include an assumption and
59-21 promise by the buyer to pay or otherwise discharge:
59-22 (1) all of a state trust company's liabilities to
59-23 clients and depositors;
59-24 (2) all of the state trust company's liabilities for
59-25 salaries of the state trust company's employees incurred before the
59-26 date of the sale;
59-27 (3) obligations incurred by the banking commissioner
60-1 arising out of the supervision or sale of the state trust company;
60-2 and
60-3 (4) fees and assessments due the department.
60-4 (c) This section does not limit the incidental power of a
60-5 state trust company to buy and sell assets in the ordinary course
60-6 of business.
60-7 (d) This section does not affect the banking commissioner's
60-8 right to take action under another law. The sale by a state trust
60-9 company of all or substantially all of its assets with shareholder
60-10 or participant approval is considered a voluntary dissolution and
60-11 liquidation and is governed by Subchapter B, Chapter 7, of this
60-12 Act.
60-13 (Sections 3.406-3.500 reserved for expansion)
60-14 SUBCHAPTER F. STATE TRUST REGULATORY SYSTEM:
60-15 EXIT OF STATE TRUST COMPANY
60-16 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
60-17 TRUST COMPANY INTO NATIONAL BANK EXERCISING FIDUCIARY POWERS.
60-18 (a) A state trust company may act as necessary under the laws of
60-19 the United States or this state to merge, reorganize, or convert
60-20 into a national bank exercising fiduciary powers.
60-21 (b) The merger, reorganization, or conversion must be made
60-22 and approval of the state trust company's board, shareholders, or
60-23 participants must be obtained in accordance with the Texas Business
60-24 Corporation Act as if the state trust company were a domestic
60-25 corporation and all other parties to the transaction, if any, were
60-26 foreign corporations or other entities, except as may be otherwise
60-27 provided by rules. For purposes of this subsection, a conversion
61-1 is considered a merger into the successor national bank exercising
61-2 fiduciary powers.
61-3 (c) The state trust company does not cease to be a state
61-4 trust company subject to the supervision of the banking
61-5 commissioner unless:
61-6 (1) the banking commissioner has been given written
61-7 notice of the intention to merge, reorganize, or convert before the
61-8 31st day before the date of the proposed transaction;
61-9 (2) the state trust company has published notice of
61-10 the transaction, in the form and frequency specified by the banking
61-11 commissioner, in a newspaper of general circulation published in
61-12 the county of its home office or, if such a newspaper is not
61-13 published in the county, in an adjacent county and in other
61-14 locations that the banking commissioner considers appropriate;
61-15 (3) the state trust company has filed with the banking
61-16 commissioner:
61-17 (A) a copy of the application filed with the
61-18 successor regulatory authority, including a copy of each contract
61-19 evidencing or implementing the merger, reorganization, or
61-20 conversion, or other documents sufficient to show compliance with
61-21 applicable law;
61-22 (B) a certified copy of all minutes of board
61-23 meetings and shareholder or participant meetings at which action
61-24 was taken regarding the merger, reorganization, or conversion; and
61-25 (C) a publisher's certificate showing
61-26 publication of the required notice;
61-27 (4) the banking commissioner determines that:
62-1 (A) all accounts and liabilities of the state
62-2 trust company are fully discharged, assumed, or otherwise retained
62-3 by the successor national bank exercising fiduciary powers;
62-4 (B) any conditions imposed by the banking
62-5 commissioner for the protection of clients and creditors have been
62-6 met or otherwise resolved; and
62-7 (C) any required filing fees have been paid; and
62-8 (5) the state trust company has received a certificate
62-9 of authority to do business as a national bank exercising fiduciary
62-10 powers.
62-11 CHAPTER 4. SHARES AND PARTICIPATION SHARES; SHAREHOLDERS AND
62-12 PARTICIPANTS; MANAGEMENT
62-13 SUBCHAPTER A. TRANSFER OF OWNERSHIP INTERESTS IN STATE
62-14 TRUST COMPANY
62-15 Sec. 4.001. ACQUISITION OF CONTROL
62-16 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL
62-17 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL
62-18 Sec. 4.004. APPEAL FROM ADVERSE DECISION
62-19 Sec. 4.005. OBJECTION TO OTHER TRANSFER
62-20 Sec. 4.006. CIVIL ENFORCEMENT; CRIMINAL PENALTIES
62-21 (Sections 4.007-4.100 reserved for expansion)
62-22 SUBCHAPTER B. BOARD AND OFFICERS
62-23 Sec. 4.101. VOTING SECURITIES HELD BY TRUST COMPANY
62-24 Sec. 4.102. BYLAWS
62-25 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
62-26 PARTICIPANTS
62-27 Sec. 4.104. REQUIRED BOARD MEETINGS
63-1 Sec. 4.105. OFFICERS
63-2 Sec. 4.106. CERTAIN CRIMINAL OFFENSES
63-3 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES
63-4 Sec. 4.108. FIDUCIARY RESPONSIBILITY
63-5 Sec. 4.109. RECORDKEEPING
63-6 Sec. 4.110. BONDING REQUIREMENTS
63-7 Sec. 4.111. REPORTS OF APPARENT CRIME
63-8 (Sections 4.112-4.200 reserved for expansion)
63-9 SUBCHAPTER C. SPECIAL PROVISIONS FOR LIMITED TRUST ASSOCIATIONS
63-10 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY
63-11 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS
63-12 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS
63-13 Sec. 4.204. MANAGEMENT OF LIMITED TRUST ASSOCIATION
63-14 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
63-15 CONTRIBUTION TO CAPITAL
63-16 Sec. 4.206. INTEREST IN LIMITED TRUST ASSOCIATION;
63-17 TRANSFERABILITY OF INTEREST
63-18 Sec. 4.207. DISSOLUTION
63-19 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES
63-20 Sec. 4.209. DISTRIBUTIONS
63-21 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED TRUST
63-22 ASSOCIATIONS
63-23 CHAPTER 4. SHARES AND PARTICIPATION SHARES; SHAREHOLDERS AND
63-24 PARTICIPANTS; MANAGEMENT
63-25 SUBCHAPTER A. TRANSFER OF OWNERSHIP INTERESTS IN
63-26 STATE TRUST COMPANY
63-27 Sec. 4.001. ACQUISITION OF CONTROL. (a) Except as
64-1 expressly permitted by this Act, a person may not without the prior
64-2 written approval of the banking commissioner directly or indirectly
64-3 acquire a legal or beneficial interest in voting securities of a
64-4 state trust company or a corporation or other entity owning voting
64-5 securities of the state trust company if, after the acquisition,
64-6 the person would control the state trust company. For purposes of
64-7 this subchapter and except as otherwise provided by rules adopted
64-8 under this Act, the principal shareholder or principal participant
64-9 of a state trust company that directly or indirectly owns or has
64-10 the power to vote a greater percentage of voting securities of the
64-11 state trust company than any other shareholder or participant is
64-12 considered to control the state trust company.
64-13 (b) This subchapter does not prohibit a person from
64-14 negotiating to acquire, but not acquiring, control of a state trust
64-15 company or a person that controls a state trust company.
64-16 (c) This section does not apply to:
64-17 (1) the acquisition of securities in connection with
64-18 the exercise of a security interest or otherwise in full or partial
64-19 satisfaction of a debt previously contracted for in good faith if
64-20 the acquiring person files written notice of acquisition with the
64-21 banking commissioner before the person votes the securities
64-22 acquired;
64-23 (2) the acquisition of voting securities in any class
64-24 or series by a controlling person who has previously complied with
64-25 and received approval under this subchapter or who was identified
64-26 as a controlling person in a prior application filed with and
64-27 approved by the banking commissioner;
65-1 (3) an acquisition or transfer by operation of law,
65-2 will, or intestate succession if the acquiring person files written
65-3 notice of acquisition with the banking commissioner before the
65-4 person votes the securities acquired; or
65-5 (4) a transaction exempted by the banking commissioner
65-6 or by rules adopted under this Act because the transaction is not
65-7 within the purposes of this subchapter or the regulation of which
65-8 is not necessary or appropriate to achieve the objectives of this
65-9 subchapter.
65-10 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
65-11 (a) An application for approval to acquire control of a state
65-12 trust company or a person that controls a state trust company must
65-13 be filed under oath by the transferee on a form prescribed by the
65-14 banking commissioner and accompanied by any filing fee required by
65-15 statute or rule. The application must contain all information
65-16 required by rules adopted under this Act or that the banking
65-17 commissioner requires in a particular application as necessary to
65-18 an informed decision to approve or reject the acquisition.
65-19 (b) If a person or transferee proposing to acquire voting
65-20 securities subject to this section includes a group of individuals
65-21 or entities acting in concert, the information required by the
65-22 banking commissioner may be required of each member of the group.
65-23 (c) Information obtained by the banking commissioner under
65-24 this section is confidential and may not be disclosed by the
65-25 banking commissioner or any employee of the department except as
65-26 provided by Subchapter B, Chapter 2, of this Act.
65-27 (d) Promptly after the applicants are notified by the
66-1 banking commissioner that the application is complete and accepted
66-2 for filing, the applicants shall publish notice of the application,
66-3 its date of filing, and the identity of each applicant, in the form
66-4 specified by the banking commissioner, in a newspaper of general
66-5 circulation in the county where the state trust company's home
66-6 office is located. Publication of notice of an application filed
66-7 in contemplation of a public tender offer subject to 15 U.S.C.
66-8 Section 78n(d)(1) may be deferred for not more than 34 days after
66-9 the date the application is filed if:
66-10 (1) the applicant requests confidential treatment and
66-11 represents that a public announcement of the tender offer and the
66-12 filing of appropriate forms with the Securities and Exchange
66-13 Commission or the appropriate federal banking agency, as
66-14 applicable, will occur within the period of deferral; and
66-15 (2) the banking commissioner determines that the
66-16 public interest will not be harmed by the requested confidential
66-17 treatment.
66-18 (e) The banking commissioner may waive the requirement that
66-19 a notice be published or permit delayed publication on a
66-20 determination that waiver or delay is in the public interest. If
66-21 publication of notice is waived under this subsection, the
66-22 information that would be contained in a published notice becomes
66-23 public information under Chapter 552, Government Code, on the 35th
66-24 day after the date the application is filed.
66-25 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
66-26 (a) Not later than the 60th day after the date the notice is
66-27 published, the banking commissioner shall approve the application
67-1 or set the application for hearing. If the banking commissioner
67-2 sets a hearing, the department shall participate as the opposing
67-3 party and the banking commissioner shall conduct a hearing and one
67-4 or more prehearing conferences and opportunities for discovery as
67-5 the banking commissioner considers advisable and consistent with
67-6 governing statutes and rules. A hearing held under this section is
67-7 confidential and closed to the public.
67-8 (b) Based on the record, the banking commissioner may issue
67-9 an order denying an application if:
67-10 (1) the acquisition would substantially lessen
67-11 competition, be in restraint of trade, result in a monopoly, or be
67-12 in furtherance of a combination or conspiracy to monopolize or
67-13 attempt to monopolize the trust industry in any part of this state,
67-14 unless:
67-15 (A) the anticompetitive effects of the
67-16 acquisition are clearly outweighed in the public interest by the
67-17 probable effect of acquisition in meeting the convenience and needs
67-18 of the community to be served; and
67-19 (B) the acquisition is not in violation of the
67-20 law of this state or the United States;
67-21 (2) the financial condition of the transferee, or any
67-22 member of a group comprising the transferee, might jeopardize the
67-23 financial stability of the state trust company being acquired;
67-24 (3) plans or proposals to operate, liquidate, or sell
67-25 the state trust company or its assets are not in the best interests
67-26 of the state trust company;
67-27 (4) the experience, ability, standing, competence,
68-1 trustworthiness, and integrity of the transferee, or any member of
68-2 a group comprising the transferee, are insufficient to justify a
68-3 belief that the state trust company will be free from improper or
68-4 unlawful influence or interference with respect to the state trust
68-5 company's operation in compliance with law;
68-6 (5) the state trust company will not be solvent, have
68-7 adequate capitalization, or be in compliance with the laws of this
68-8 state after the acquisition;
68-9 (6) the transferee has failed to furnish all
68-10 information pertinent to the application reasonably required by the
68-11 banking commissioner; or
68-12 (7) the transferee is not acting in good faith.
68-13 (c) If an application filed under this section is approved
68-14 by the banking commissioner, the transaction may be consummated.
68-15 Any written commitment from the transferee offered to and accepted
68-16 by the banking commissioner as a condition that the application
68-17 will be approved is enforceable against the state trust company and
68-18 the transferee and is considered for all purposes an agreement
68-19 under this Act.
68-20 Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
68-21 has been held, the banking commissioner has entered an order
68-22 denying the application, and the order has become final, the
68-23 transferee may appeal the final order by filing a petition for
68-24 judicial review under the substantial evidence rule in a district
68-25 court of Travis County as provided by Chapter 2001, Government
68-26 Code.
68-27 (b) The filing of an appeal under this section does not stay
69-1 the order of the banking commissioner.
69-2 Sec. 4.005. OBJECTION TO OTHER TRANSFER. This subchapter
69-3 does not prevent the banking commissioner from investigating,
69-4 commenting on, or seeking to enjoin or set aside a transfer of
69-5 voting securities that evidence a direct or indirect interest in a
69-6 state trust company, regardless of whether the transfer is included
69-7 within this subchapter, if the banking commissioner considers the
69-8 transfer to be against the public interest.
69-9 Sec. 4.006. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a) If
69-10 the banking commissioner believes that a person has committed or is
69-11 about to commit a violation of this subchapter or a rule or order
69-12 of the banking commissioner pertaining to this subchapter, the
69-13 attorney general on behalf of the banking commissioner may apply to
69-14 a district court of Travis County for an order enjoining the
69-15 violation and for other equitable relief the nature of the case
69-16 requires.
69-17 (b) A person who knowingly fails or refuses to file the
69-18 application required by Section 4.002 of this Act commits an
69-19 offense. An offense under this subsection is a Class A
69-20 misdemeanor.
69-21 (Sections 4.007-4.100 reserved for expansion)
69-22 SUBCHAPTER B. BOARD AND OFFICERS
69-23 Sec. 4.101. VOTING SECURITIES HELD BY TRUST COMPANY. (a)
69-24 Voting securities of a state trust company held by the state trust
69-25 company in a fiduciary capacity under a will or trust, whether
69-26 registered in its own name or in the name of its nominee, may not
69-27 be voted in the election of directors or managers or on a matter
70-1 affecting the compensation of directors, managers, officers, or
70-2 employees of the state trust company in that capacity, unless:
70-3 (1) under the terms of the will or trust, the manner
70-4 in which the voting securities are to be voted may be determined by
70-5 a donor or beneficiary of the will or trust and the donor or
70-6 beneficiary actually makes the determination in the matter at
70-7 issue;
70-8 (2) the terms of the will or trust expressly direct
70-9 the manner in which the securities must be voted to the extent that
70-10 no discretion is vested in the state trust company as fiduciary; or
70-11 (3) the securities are voted solely by a cofiduciary
70-12 that is not an affiliate of the state trust company, as if the
70-13 cofiduciary were the sole fiduciary.
70-14 (b) Voting securities of a state trust company that cannot
70-15 be voted under this section are considered to be authorized but
70-16 unissued for purposes of determining the procedures for and results
70-17 of the affected vote.
70-18 Sec. 4.102. BYLAWS. (a) Each state trust company shall
70-19 adopt bylaws and may amend its bylaws from time to time for the
70-20 purposes and in accordance with the procedures set forth in the
70-21 Texas Business Corporation Act.
70-22 (b) A limited trust association in which management is
70-23 retained by the participants is not required to adopt bylaws if
70-24 provisions required by law to be contained in the bylaws are
70-25 contained in the articles of association or the participation
70-26 agreement. If a limited trust association has adopted bylaws that
70-27 designate each full liability participant, the limited trust
71-1 association shall file with the banking commissioner a copy of the
71-2 bylaws. Only the portion of the bylaws designating each full
71-3 liability participant is a public record.
71-4 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
71-5 PARTICIPANTS. (a) The board of a state trust company must consist
71-6 of not fewer than five or more than 25 directors, managers, or
71-7 managing participants, the majority of whom must be residents of
71-8 this state. Except for a limited trust association in which
71-9 management has been retained by its participants, the principal
71-10 executive officer of the state trust company is a member of the
71-11 board. The principal executive officer acting in the capacity of
71-12 board member is the board's presiding officer unless the board
71-13 elects a different presiding officer to perform the duties as
71-14 designated by the board.
71-15 (b) Unless the banking commissioner consents otherwise in
71-16 writing, a person may not serve as director, manager, or managing
71-17 participant of a state trust company if:
71-18 (1) the state trust company incurs an unreimbursed
71-19 loss attributable to a charged-off obligation of or holds a
71-20 judgment against the person or an entity that was controlled by the
71-21 person at the time of funding and at the time of default on the
71-22 loan that gave rise to the judgment or charged-off obligation;
71-23 (2) the person has been convicted of a felony; or
71-24 (3) the person has violated, with respect to a trust
71-25 under which the state trust company has fiduciary responsibility,
71-26 Section 113.052 or 113.053(a), Property Code, relating to loan of
71-27 trust funds and purchase or sale of trust property by the trustee,
72-1 and the violation has not been corrected.
72-2 (c) If a state trust company other than a limited trust
72-3 association operated by managing participants does not elect
72-4 directors or managers before the 61st day after the date of its
72-5 regular annual meeting, the banking commissioner may appoint a
72-6 conservator under Chapter 6 of this Act to operate the state trust
72-7 company and elect directors or managers, as appropriate. If the
72-8 conservator is unable to locate or elect persons willing and able
72-9 to serve as directors or managers, the banking commissioner may
72-10 close the state trust company for liquidation.
72-11 (d) A vacancy on the board that reduces the number of
72-12 directors, managers, or managing participants to fewer than five
72-13 must be filled not later than the 30th day after the date the
72-14 vacancy occurs. A limited trust association with fewer than five
72-15 managing participants must add one or more new participants or
72-16 elect a board of managers of not fewer than five persons to resolve
72-17 the vacancy. After 30 days after the date the vacancy occurs, the
72-18 banking commissioner may appoint a conservator under Chapter 6 of
72-19 this Act to operate the state trust company and elect a board of
72-20 not fewer than five persons to resolve the vacancy. If the
72-21 conservator is unable to locate or elect five persons willing and
72-22 able to serve as directors or managers, the banking commissioner
72-23 may close the state trust company for liquidation.
72-24 (e) Before each term to which a person is elected to serve
72-25 as a director or manager of a state trust company, or annually for
72-26 a person who is a managing participant, the person shall submit an
72-27 affidavit for filing in the minutes of the state trust company
73-1 stating that the person, to the extent applicable:
73-2 (1) accepts the position and is not disqualified from
73-3 serving in the position;
73-4 (2) will not violate or knowingly permit an officer,
73-5 director, manager, managing participant, or employee of the state
73-6 trust company to violate any law applicable to the conduct of
73-7 business of the trust company; and
73-8 (3) will diligently perform the duties of the
73-9 position.
73-10 (f) An advisory director or manager is not considered a
73-11 director if the advisory director or manager:
73-12 (1) is not elected by the shareholders or participants
73-13 of the state trust company;
73-14 (2) does not vote on matters before the board or a
73-15 committee of the board and is not counted for purposes of
73-16 determining a quorum of the board or committee; and
73-17 (3) provides solely general policy advice to the
73-18 board.
73-19 Sec. 4.104. REQUIRED BOARD MEETINGS. The board of a state
73-20 trust company shall hold at least one regular meeting each
73-21 quarter. At each regular meeting the board shall review and
73-22 approve the minutes of the prior meeting and review the operations,
73-23 activities, and financial condition of the state trust company.
73-24 The board may designate committees from among its members to
73-25 perform these duties and approve or disapprove the committees'
73-26 reports at each regular meeting. All actions of the board must be
73-27 recorded in its minutes.
74-1 Sec. 4.105. OFFICERS. (a) The board shall annually appoint
74-2 the officers of the state trust company, who serve at the pleasure
74-3 of the board. The state trust company must have a principal
74-4 executive officer primarily responsible for the execution of board
74-5 policies and operation of the state trust company and an officer
74-6 responsible for the maintenance and storage of all corporate books
74-7 and records of the state trust company and for required attestation
74-8 of signatures. These positions may not be held by the same person.
74-9 The board may appoint other officers of the state trust company as
74-10 the board considers necessary.
74-11 (b) Unless expressly authorized by a resolution of the board
74-12 recorded in its minutes, an officer or employee may not create or
74-13 dispose of a state trust company asset or create or incur a
74-14 liability on behalf of the state trust company.
74-15 Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) An officer,
74-16 director, manager, managing participant, employee, shareholder, or
74-17 participant of a state trust company commits an offense if the
74-18 person knowingly:
74-19 (1) conceals information or a fact or removes,
74-20 destroys, or conceals a book or record of the state trust company
74-21 for the purpose of concealing information or a fact from the
74-22 banking commissioner or an agent of the banking commissioner; or
74-23 (2) for the purpose of concealing, removes or destroys
74-24 any book or record of the state trust company that is material to a
74-25 pending or anticipated legal or administrative proceeding.
74-26 (b) An officer, director, manager, managing participant, or
74-27 employee of a state trust company commits an offense if the
75-1 person knowingly makes a false entry in the books or records or in
75-2 any report or statement of the state trust company.
75-3 (c) An offense under this section is a felony of the third
75-4 degree.
75-5 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
75-6 (a) Without the prior approval of a disinterested majority of the
75-7 board recorded in the minutes, or if a disinterested majority
75-8 cannot be obtained the prior written approval of the banking
75-9 commissioner, a state trust company may not directly or indirectly:
75-10 (1) sell or lease an asset of the state trust company
75-11 to an officer, director, manager, managing participant, or
75-12 principal shareholder or participant of the state trust company or
75-13 an affiliate of the state trust company;
75-14 (2) purchase or lease an asset in which an officer,
75-15 director, manager, managing participant, or principal shareholder
75-16 or participant of the state trust company or an affiliate of the
75-17 state trust company has an interest; or
75-18 (3) subject to Section 5.201 of this Act, extend
75-19 credit to an officer, director, manager, managing participant, or
75-20 principal shareholder or participant of the state trust company or
75-21 an affiliate of the state trust company.
75-22 (b) Notwithstanding Subsection (a) of this section, a lease
75-23 transaction described in Subsection (a)(2) of this section
75-24 involving real property may not be consummated, renewed, or
75-25 extended without the prior written approval of the banking
75-26 commissioner. For purposes of this subsection only, an affiliate
75-27 of a state trust company does not include a subsidiary of the state
76-1 trust company.
76-2 (c) Subject to Section 5.201 of this Act, a state trust
76-3 company may not directly or indirectly extend credit to an
76-4 employee, officer, director, manager, managing participant, or
76-5 principal shareholder or participant of the state trust company or
76-6 an affiliate of the state trust company, unless the extension of
76-7 credit:
76-8 (1) is made on substantially the same terms, including
76-9 interest rates and collateral, as those prevailing at the time for
76-10 comparable transactions by the state trust company with persons who
76-11 are not employees, officers, directors, managers, managing
76-12 participants, principal shareholders, participants, or affiliates
76-13 of the state trust company;
76-14 (2) does not involve more than the normal risk of
76-15 repayment or present other unfavorable features; and
76-16 (3) the state trust company follows credit
76-17 underwriting procedures that are not less stringent than those
76-18 applicable to comparable transactions by the state trust company
76-19 with persons who are not employees, officers, directors, managers,
76-20 managing participants, principal shareholders, participants, or
76-21 affiliates of the state trust company.
76-22 (d) An officer, director, manager, or managing participant
76-23 of a state trust company who knowingly participates in or permits a
76-24 violation of this section commits an offense. An offense under
76-25 this subsection is a felony of the third degree.
76-26 (e) The finance commission may adopt rules to administer and
76-27 carry out this section, including rules to establish limits,
77-1 requirements, or exemptions other than those specified by this
77-2 section for particular categories of transactions.
77-3 Sec. 4.108. FIDUCIARY RESPONSIBILITY. The board of a state
77-4 trust company is responsible for the proper exercise of fiduciary
77-5 powers by the state trust company and each matter pertinent to the
77-6 exercise of fiduciary powers, including:
77-7 (1) the determination of policies;
77-8 (2) the investment and disposition of property held in
77-9 a fiduciary capacity; and
77-10 (3) the direction and review of the actions of each
77-11 officer, employee, and committee used by the state trust company in
77-12 the exercise of its fiduciary powers.
77-13 Sec. 4.109. RECORDKEEPING. A state trust company shall keep
77-14 its fiduciary records separate and distinct from other records of
77-15 the state trust company in compliance with the rules adopted under
77-16 this Act. The fiduciary records must contain all appropriate
77-17 material information relative to each account.
77-18 Sec. 4.110. BONDING REQUIREMENTS. (a) The board of a state
77-19 trust company shall require a bond for protection and indemnity of
77-20 clients, in reasonable amounts established by rules adopted under
77-21 this chapter, against dishonesty, fraud, defalcation, forgery,
77-22 theft, and other similar insurable losses with a corporate
77-23 insurance or surety company:
77-24 (1) authorized to do business in this state; or
77-25 (2) acceptable to the banking commissioner and
77-26 otherwise lawfully permitted to issue the coverage against those
77-27 losses in this state.
78-1 (b) Except as otherwise provided by rule, a bond is required
78-2 to cover each director, manager, managing participant, officer, and
78-3 employee of a state trust company without regard to whether the
78-4 person receives salary or other compensation.
78-5 (c) A state trust company may apply to the banking
78-6 commissioner for permission to eliminate the bonding requirement of
78-7 this section for a particular individual. The banking commissioner
78-8 shall approve the application if the banking commissioner finds
78-9 that the bonding requirement is unnecessary or burdensome. Unless
78-10 the application presents novel or unusual questions, the banking
78-11 commissioner shall approve the application or set the application
78-12 for hearing not later than the 61st day after the date the banking
78-13 commissioner considers the application complete and accepted for
78-14 filing.
78-15 Sec. 4.111. REPORTS OF APPARENT CRIME. (a) A state trust
78-16 company that is the victim of a robbery, has a shortage of
78-17 corporate or fiduciary funds in excess of $5,000, or is the victim
78-18 of an apparent or suspected misapplication of its corporate or
78-19 fiduciary funds or property in any amount by a director, manager,
78-20 managing participant, officer, or employee shall report such
78-21 robbery, shortage, or apparent or suspected misapplication to the
78-22 banking commissioner within 48 hours after the time it is
78-23 discovered. The initial report may be oral if the report is
78-24 promptly confirmed in writing. The state trust company or a
78-25 director, manager, managing participant, officer, employee, or
78-26 agent is not subject to liability for defamation or another charge
78-27 resulting from information supplied in the report.
79-1 (b) A trust report filed with the banking commissioner under
79-2 this section may be a copy of a written report filed with an
79-3 appropriate federal agency.
79-4 (Sections 4.112-4.200 reserved for expansion)
79-5 SUBCHAPTER C. SPECIAL PROVISIONS FOR LIMITED TRUST ASSOCIATIONS
79-6 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a) A
79-7 limited trust association shall file with the banking commissioner
79-8 a copy of any participation agreement by which a participant of the
79-9 limited trust association agrees to become a full liability
79-10 participant and the name and address of each full liability
79-11 participant. Only the portion of the filed copy containing the
79-12 designation of each full liability participant is a public record.
79-13 (b) The banking commissioner may require a complete copy of
79-14 the participation agreement to be filed with the department,
79-15 regardless of whether a state trust company has a full liability
79-16 participant, except that the provisions of the participation
79-17 agreement other than those by which a participant of the limited
79-18 trust association agrees to become a full liability participant are
79-19 confidential and subject to release only as provided by Subchapter
79-20 B, Chapter 2, of this Act.
79-21 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS.
79-22 (a) Except as provided by Subsection (b) of this section, the
79-23 participants, participant-transferees, and managers of a limited
79-24 trust association may not be held liable for a debt, obligation, or
79-25 liability of the limited trust association, including a debt,
79-26 obligation, or liability under a judgment, decree, or order of
79-27 court. A participant, other than a full liability participant, or
80-1 a manager of a limited trust association is not a proper party to
80-2 proceedings by or against a limited trust association, unless the
80-3 object of the proceeding is to enforce a participant's or manager's
80-4 right against or liability to a limited trust association.
80-5 (b) A full liability participant of a limited trust
80-6 association is liable under a judgment, decree, or order of court
80-7 for a debt, obligation, or liability of the limited trust
80-8 association that accrued during the participation of the full
80-9 liability participant in the limited trust association and before
80-10 the full liability participant or a successor in interest files a
80-11 notice of withdrawal as a full liability participant from the
80-12 limited trust association with the banking commissioner. The filed
80-13 notice of withdrawal is a public record.
80-14 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Except as
80-15 provided by this section or the articles of association of the
80-16 limited trust association, a debt, liability, or other obligation
80-17 may be contracted for or incurred on behalf of a limited trust
80-18 association only by:
80-19 (1) a majority of the managers, if management of the
80-20 limited trust association has been vested in a board of managers;
80-21 (2) a majority of the managing participants; or
80-22 (3) an officer or other agent vested with actual or
80-23 apparent authority to contract for or incur the debt, liability, or
80-24 other obligation.
80-25 Sec. 4.204. MANAGEMENT OF LIMITED TRUST ASSOCIATION. (a)
80-26 Management of a limited trust association is vested in the
80-27 participants in proportion to each participant's contribution to
81-1 capital, as adjusted periodically to properly reflect any
81-2 additional contribution. The articles of association may provide
81-3 that management of a limited trust association is vested in a
81-4 board of managers to be elected annually by the participants as
81-5 prescribed by the bylaws.
81-6 (b) Participants of a limited trust association may not
81-7 retain management and must elect a board of managers if:
81-8 (1) any participant is disqualified from serving as a
81-9 managing participant under Section 4.103 of this Act;
81-10 (2) the limited trust association has fewer than five
81-11 or more than 25 participants; or
81-12 (3) any participant has been removed by the banking
81-13 commissioner under Subchapter A, Chapter 6, of this Act.
81-14 (c) The articles of association, bylaws, and participation
81-15 agreement of a limited trust association may use the terms
81-16 "director" and "board" instead of "manager" and "board of
81-17 managers," respectively.
81-18 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
81-19 CONTRIBUTION TO CAPITAL. (a) A participant may not receive from a
81-20 limited trust association any part of the participant's
81-21 contribution to capital until:
81-22 (1) all liabilities of the limited trust association,
81-23 except liabilities to participants on account of contribution to
81-24 capital, have been paid or, if after the withdrawal or reduction,
81-25 sufficient property of the limited trust association will remain to
81-26 pay all liabilities of the limited trust association, except
81-27 liabilities to participants on account of contribution to capital;
82-1 (2) all participants consent, unless the return of the
82-2 contribution to capital may be demanded as provided by this
82-3 chapter; or
82-4 (3) the articles of association are canceled or
82-5 amended to set out the withdrawal or reduction.
82-6 (b) A participant may demand the return of the participant's
82-7 contribution to capital on the dissolution of the association and
82-8 the failure by the full liability participants to exercise the
82-9 right for the business of the limited trust association to be
82-10 carried on by the remaining participants as provided by Section
82-11 4.207 of this Act.
82-12 (c) Unless allowed by the articles of association or by the
82-13 unanimous consent of all participants of the limited trust
82-14 association, a participant may demand the return of the
82-15 participant's contribution to capital only in cash.
82-16 Sec. 4.206. INTEREST IN LIMITED TRUST ASSOCIATION;
82-17 TRANSFERABILITY OF INTEREST. (a) The interest of a participant or
82-18 participant-transferee in a limited trust association is the
82-19 personal estate of the participant or the participant-transferee
82-20 and may be transferred as provided by the bylaws or the
82-21 participation agreement. A transferee of a participant's interest
82-22 has the status of a participant-transferee and does not by the
82-23 transfer become a participant or obtain a right to participate in
82-24 the management of the limited trust association. A
82-25 participant-transferee is entitled to receive only a share of
82-26 profits, return of contribution, or other distributive benefit in
82-27 respect to the interest transferred to which the participant who
83-1 transferred the interest would have been entitled. A
83-2 participant-transferee may become a participant only as provided by
83-3 the bylaws or the participation agreement.
83-4 (b) A limited trust association may add additional
83-5 participants in the same manner as participant-transferees after
83-6 payment in full of the capital contribution to the limited trust
83-7 association payable for the issuance of additional participation
83-8 interests.
83-9 Sec. 4.207. DISSOLUTION. (a) A limited trust association
83-10 organized under this chapter is dissolved on:
83-11 (1) the expiration of the period fixed for the
83-12 duration of the limited trust association;
83-13 (2) a vote to dissolve or the execution of a written
83-14 consent to dissolve by all full liability participants, if any, and
83-15 a sufficient number of other participants that combined with all
83-16 full liability participants hold at least two-thirds of the
83-17 participation shares in each class in the association, or a greater
83-18 fraction as provided by the articles of association;
83-19 (3) except as provided by the articles of association,
83-20 the death, insanity, expulsion, bankruptcy, retirement, or
83-21 resignation of a participant unless a majority in interest of all
83-22 remaining participants elect in writing not later than the 90th
83-23 day after the date of the event to continue the business of the
83-24 association; or
83-25 (4) the occurrence of an event of dissolution
83-26 specified in the articles of association.
83-27 (b) A dissolution under this section is considered to be the
84-1 initiation of a voluntary liquidation under Subchapter B, Chapter
84-2 7, of this Act.
84-3 (c) An event of dissolution described by Subsection (a)(3)
84-4 of this section does not cancel or revoke a contract to which the
84-5 limited trust association is a party, including a trust indenture
84-6 or agreement or voluntary dissolution under Subchapter B, Chapter
84-7 7, of this Act, until the period for the remaining participants to
84-8 continue the business of the limited trust association has expired
84-9 without the remaining participants having completed the necessary
84-10 action to continue the business of the limited trust association.
84-11 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. The profits
84-12 and losses of a limited trust association may be allocated among
84-13 the participants and among classes of participants as provided by
84-14 the participation agreement. Without the prior written approval of
84-15 the banking commissioner, the profits and losses must be allocated
84-16 based on the relative interests of the participants as reflected in
84-17 the articles of association and related documents filed with and
84-18 approved by the banking commissioner.
84-19 Sec. 4.209. DISTRIBUTIONS. Subject to Section 3.103 of this
84-20 Act, distributions of cash or other assets of a limited trust
84-21 association may be made to the participants as provided by the
84-22 participation agreement. Without the prior written approval of the
84-23 banking commissioner, distributions must be made to the
84-24 participants based on the relative interests of the participants as
84-25 reflected in the articles of association and related documents
84-26 filed with and approved by the banking commissioner.
84-27 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED TRUST
85-1 ASSOCIATIONS. For purposes of the provisions of this Act other
85-2 than this subchapter, as the context requires:
85-3 (1) a manager and the board of managers are considered
85-4 to be a director and the board of directors, respectively;
85-5 (2) if there is not a board of managers, a participant
85-6 is considered to be a director and all of the participants are
85-7 considered to be the board of directors;
85-8 (3) a participant or participant-transferee is
85-9 considered to be a shareholder;
85-10 (4) a participation share is considered to be a share
85-11 of stock; and
85-12 (5) a distribution is considered to be a dividend.
85-13 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
85-14 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
85-15 OF STATE TRUST COMPANY FACILITIES
85-16 Sec. 5.001. INVESTMENT IN STATE TRUST COMPANY FACILITIES
85-17 (Sections 5.002-5.100 reserved for expansion)
85-18 SUBCHAPTER B. STATE TRUST COMPANY INVESTMENTS
85-19 Sec. 5.101. SECURITIES
85-20 Sec. 5.102. TRANSACTIONS IN STATE TRUST COMPANY SHARES OR
85-21 PARTICIPATION SHARES
85-22 Sec. 5.103. SUBSIDIARIES
85-23 Sec. 5.104. OTHER REAL ESTATE
85-24 (Sections 5.105-5.200 reserved for expansion)
85-25 SUBCHAPTER C. LOANS
85-26 Sec. 5.201. LENDING LIMITS
85-27 Sec. 5.202. LEASE FINANCING TRANSACTIONS
86-1 (Sections 5.203-5.300 reserved for expansion)
86-2 SUBCHAPTER D. OTHER INVESTMENT PROVISIONS
86-3 Sec. 5.301. OTHER INVESTMENT PROVISIONS
86-4 Sec. 5.302. ENGAGING IN COMMERCE PROHIBITED
86-5 (Sections 5.303-5.400 reserved for expansion)
86-6 SUBCHAPTER E. TRUST DEPOSITS
86-7 Sec. 5.401. TRUST DEPOSITS
86-8 (Sections 5.402-5.500 reserved for expansion)
86-9 SUBCHAPTER F. LIABILITIES AND PLEDGE OF ASSETS
86-10 Sec. 5.501. BORROWING LIMIT
86-11 Sec. 5.502. PLEDGE OF ASSETS
86-12 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
86-13 SUBCHAPTER A. ACQUISITION AND OWNERSHIP OF STATE
86-14 TRUST COMPANY FACILITIES
86-15 Sec. 5.001. INVESTMENT IN STATE TRUST COMPANY FACILITIES.
86-16 (a) In this subchapter, "state trust company facility" means real
86-17 estate, including an improvement, owned, or leased to the extent
86-18 the lease or the leasehold improvements are capitalized, by a state
86-19 trust company for the purpose of:
86-20 (1) providing space for state trust company employees
86-21 to perform their duties and space for parking by state trust
86-22 company employees and customers;
86-23 (2) conducting trust business, including meeting the
86-24 reasonable needs and convenience of the public and the state trust
86-25 company's clients, computer operations, document and other item
86-26 processing, maintenance, and record retention and storage;
86-27 (3) holding, improving, and occupying as an incident
87-1 to future expansion of the state trust company's facilities; or
87-2 (4) conducting another activity authorized by rules
87-3 adopted under this Act.
87-4 (b) Without the prior written approval of the banking
87-5 commissioner, a state trust company may not directly or indirectly
87-6 invest an amount in excess of 60 percent of its restricted capital
87-7 in state trust company facilities, furniture, fixtures, and
87-8 equipment. Except as otherwise provided by rules adopted under
87-9 this Act, in computing this limitation a state trust company:
87-10 (1) shall include:
87-11 (A) its direct investment in state trust company
87-12 facilities;
87-13 (B) any investment in equity or investment
87-14 securities of a company holding title to a facility used by the
87-15 state trust company for the purposes specified by Subsection (a) of
87-16 this section;
87-17 (C) any loan made by the state trust company to
87-18 or on the security of equity or investment securities issued by a
87-19 company holding title to a facility used by the state trust
87-20 company; and
87-21 (D) any indebtedness incurred on state trust
87-22 company facilities by a company:
87-23 (i) that holds title to the facility;
87-24 (ii) that is an affiliate of the state
87-25 trust company; and
87-26 (iii) in which the state trust company is
87-27 invested in the manner described by Paragraph (B) or (C) of this
88-1 subdivision; and
88-2 (2) may exclude an amount included under Subdivisions
88-3 (1)(B)-(D) of this subsection to the extent any lease of a facility
88-4 from the company holding title to the facility is capitalized on
88-5 the books of the state trust company.
88-6 (c) Real estate acquired under Subsection (a)(3) of this
88-7 section and not improved and occupied by the state trust company
88-8 ceases to be a state trust company facility on the third
88-9 anniversary of the date of its acquisition, unless the banking
88-10 commissioner on application grants written approval to further
88-11 delay in the improvement and occupation of the property by the
88-12 state trust company.
88-13 (d) A state trust company shall comply with regulatory
88-14 accounting principles in accounting for its investment in and
88-15 depreciation of state trust company facilities, furniture,
88-16 fixtures, and equipment.
88-17 (Sections 5.002-5.100 reserved for expansion)
88-18 SUBCHAPTER B. STATE TRUST COMPANY INVESTMENTS
88-19 Sec. 5.101. SECURITIES. (a) A state trust company may
88-20 invest its restricted capital in any type or character of equity
88-21 or investment securities under the limitations provided by this
88-22 section.
88-23 (b) Unless the banking commissioner approves maintenance of
88-24 a lesser amount in writing, a state trust company must invest and
88-25 maintain an amount equal to at least 40 percent of the state trust
88-26 company's restricted capital under Section 3.007 of this Act in
88-27 investment securities that are readily marketable and can be
89-1 converted to cash within four business days.
89-2 (c) Subject to Subsection (d) of this section, the total
89-3 investment of its restricted capital in equity and investment
89-4 securities of any one issuer, obligor, or maker, and the total
89-5 investment of its restricted capital in mutual funds, held by the
89-6 state trust company for its own account, may not exceed an amount
89-7 equal to 15 percent of the state trust company's restricted
89-8 capital. The banking commissioner may authorize investments in
89-9 excess of this limitation on written application if the banking
89-10 commissioner concludes that:
89-11 (1) the excess investment is not prohibited by other
89-12 applicable law; and
89-13 (2) the safety and soundness of the requesting state
89-14 trust company is not adversely affected.
89-15 (d) Notwithstanding Subsection (c) of this section, a state
89-16 trust company may invest its restricted capital in, without
89-17 limitation and subject only to the exercise of prudent judgment:
89-18 (1) bonds and other legally created general
89-19 obligations of a state, an agency or political subdivision of a
89-20 state, the United States, or an agency or instrumentality of the
89-21 United States;
89-22 (2) an investment security that this state, an agency
89-23 or political subdivision of this state, the United States, or an
89-24 agency or instrumentality of the United States has unconditionally
89-25 agreed to purchase, insure, or guarantee;
89-26 (3) securities that are offered and sold under 15
89-27 U.S.C. Section 77d(5);
90-1 (4) mortgage related securities as defined in 15
90-2 U.S.C. Section 78c(a), except that notwithstanding Section 347 of
90-3 the Riegle Community Development and Regulatory Improvement Act of
90-4 1994, a note or obligation that is secured by a first lien on one
90-5 or more parcels of real estate on which is located one or more
90-6 commercial structures is subject to the limitations of Subsection
90-7 (c) of this section;
90-8 (5) investment securities issued or guaranteed by the
90-9 Federal Home Loan Mortgage Corporation, the Federal National
90-10 Mortgage Association, the Government National Mortgage Association,
90-11 the Federal Agricultural Mortgage Association, or the Federal Farm
90-12 Credit Banks Funding Corporation;
90-13 (6) investment securities issued or guaranteed by the
90-14 North American Development Bank; or
90-15 (7) securities issued by a Federal Home Loan Bank.
90-16 (e) Notwithstanding 15 U.S.C. Section 77r-1(c), Subsection
90-17 (c) of this section applies to investments in small business
90-18 related securities as defined by 15 U.S.C. Section 78c(a).
90-19 (f) In the exercise of prudent judgment, a state trust
90-20 company shall, at a minimum:
90-21 (1) exercise care and caution to make and implement
90-22 investment and management decisions for the entire investment
90-23 portfolio, taking into consideration the safety and soundness of
90-24 the state trust company;
90-25 (2) pursue an overall investment strategy to enable
90-26 management to make appropriate present and future decisions; and
90-27 (3) consider, to the extent relevant to the decision
91-1 or action, the size, diversification and liquidity of its corporate
91-2 assets, the general economic conditions, the possible effect of
91-3 inflation or deflation, the expected tax consequences of the
91-4 investment decisions or strategies, the role that each investment
91-5 or course of action plays within the investment portfolio, and the
91-6 expected total return of the portfolio.
91-7 (g) A state trust company may invest its secondary capital
91-8 in any type or character of equity or investment securities subject
91-9 to the exercise of prudent judgment. The factors to be considered
91-10 by a state trust company in exercise of prudent judgment include
91-11 the factors contained in Section 5.101(f) of this Act.
91-12 (h) The finance commission may adopt rules to administer and
91-13 carry out this section, including rules to establish limits,
91-14 requirements, or exemptions other than those specified by this
91-15 section for particular classes or categories of investment, or
91-16 limit or expand investment authority for state trust companies for
91-17 particular classes or categories of securities or other property.
91-18 Sec. 5.102. TRANSACTIONS IN STATE TRUST COMPANY SHARES OR
91-19 PARTICIPATION SHARES. Except with the prior written approval of
91-20 the banking commissioner:
91-21 (1) a state trust company may not acquire its own
91-22 shares or participation shares unless the amount of its undivided
91-23 profits is sufficient to fully absorb the acquisition of the shares
91-24 or participation shares under regulatory accounting principles; and
91-25 (2) a state trust company may not acquire a lien upon
91-26 its own shares or participation shares unless the amount of
91-27 indebtedness secured is less than the amount of the state trust
92-1 company's undivided profits.
92-2 Sec. 5.103. SUBSIDIARIES. (a) Except as otherwise provided
92-3 by this Act or rules adopted under this Act, and subject to the
92-4 exercise of prudent judgment, a state trust company may invest its
92-5 secondary capital to acquire or establish one or more subsidiaries
92-6 to conduct any activity that may lawfully be conducted through the
92-7 form of organization chosen for the subsidiary. The factors to be
92-8 considered by a state trust company in exercise of prudent judgment
92-9 include the factors contained in Section 5.101(f) of this Act.
92-10 (b) A state trust company that intends to acquire,
92-11 establish, or perform new activities through a subsidiary shall
92-12 submit a letter to the banking commissioner describing in detail
92-13 the proposed activities of the subsidiary.
92-14 (c) The state trust company may acquire or establish a
92-15 subsidiary or begin performing new activities in an existing
92-16 subsidiary on the 31st day after the date the banking commissioner
92-17 receives the state trust company's letter, unless the banking
92-18 commissioner specifies an earlier or later date. The banking
92-19 commissioner may extend the 30-day period of review on a
92-20 determination that the state trust company's letter raises issues
92-21 that require additional information or additional time for
92-22 analysis. If the period of review is extended, the state trust
92-23 company may acquire or establish the subsidiary, or perform new
92-24 activities in an existing subsidiary, only on prior written
92-25 approval of the banking commissioner.
92-26 (d) A subsidiary of a state trust company is subject to
92-27 regulation by the banking commissioner to the extent provided by
93-1 this Act or rules adopted under this section. In the absence of
93-2 limiting rules, the banking commissioner may regulate a subsidiary
93-3 as if it were a state trust company.
93-4 Sec. 5.104. OTHER REAL ESTATE. (a) A state trust company
93-5 may not invest its restricted capital in real estate except:
93-6 (1) as permitted by Section 5.001 of this Act or as
93-7 otherwise provided by this Act, including rules adopted under this
93-8 Act; or
93-9 (2) if necessary to avoid or minimize a loss on a loan
93-10 or investment previously made in good faith.
93-11 (b) With the prior written approval of the banking
93-12 commissioner, a state trust company may exchange real estate for
93-13 other real estate or personal property, invest additional funds in
93-14 or improve real estate acquired under this subsection or Subsection
93-15 (a) of this section, or acquire additional real estate to avoid or
93-16 minimize loss on real estate acquired as permitted by Subsection
93-17 (a) of this section.
93-18 (c) A state trust company shall dispose of any real estate
93-19 subject to Subsection (a) of this section not later than:
93-20 (1) the fifth anniversary of the date:
93-21 (A) it was acquired, except as otherwise
93-22 provided by rules adopted under this Act; or
93-23 (B) it ceases to be used as a state trust
93-24 company facility; or
93-25 (2) the second anniversary of the date it ceases to be
93-26 a state trust company facility as provided by Section 5.001(c) of
93-27 this Act.
94-1 (d) The banking commissioner on application may grant one or
94-2 more extensions of time for disposing of real estate under
94-3 Subsection (c) of this section if the banking commissioner
94-4 determines that:
94-5 (1) the state trust company has made a good faith
94-6 effort to dispose of the real estate; or
94-7 (2) disposal of the real estate would be detrimental
94-8 to the state trust company.
94-9 (e) Subject to the exercise of prudent judgment, a state
94-10 trust company may invest its secondary capital in real estate. The
94-11 factors to be considered by a state trust company in exercise of
94-12 prudent judgment include the factors contained in Section 5.101(f)
94-13 of this Act.
94-14 (Sections 5.105-5.200 reserved for expansion)
94-15 SUBCHAPTER C. LOANS
94-16 Sec. 5.201. LENDING LIMITS. (a) A state trust company's
94-17 total outstanding loans and extensions of credit to a person other
94-18 than an insider may not exceed an amount equal to 15 percent of the
94-19 state trust company's restricted capital.
94-20 (b) The aggregate loans and extensions of credit outstanding
94-21 at any time to insiders of the state trust company may not exceed
94-22 an amount equal to 15 percent of the state trust company's
94-23 restricted capital. All covered transactions between an insider
94-24 and a state trust company must be engaged in only on terms and
94-25 under circumstances, including credit standards, that are
94-26 substantially the same as those for comparable transactions with a
94-27 non-insider.
95-1 (c) The finance commission may adopt rules to administer and
95-2 carry out this section, including rules to establish limits,
95-3 requirements, or exemptions other than those specified by this
95-4 section for particular classes or categories of loans or extensions
95-5 of credit, and establish collective lending and investment limits.
95-6 (d) The banking commissioner may determine whether a loan or
95-7 extension of credit putatively made to a person will be attributed
95-8 to another person for purposes of this section.
95-9 (e) A state trust company may not lend trust deposits,
95-10 except that a trustee may make a loan to a beneficiary of the trust
95-11 if the loan is expressly authorized or directed by the instrument
95-12 or transaction establishing the trust.
95-13 (f) An officer, director, manager, managing participant, or
95-14 employee of a state trust company who approves or participates in
95-15 the approval of a loan with actual knowledge that the loan violates
95-16 this section is jointly and severally liable to the state trust
95-17 company for the lesser of the amount by which the loan exceeded
95-18 applicable lending limits or the state trust company's actual loss
95-19 and remains liable for that amount until the loan and all prior
95-20 indebtedness of the borrower to the state trust company have been
95-21 fully repaid. The state trust company may initiate a proceeding to
95-22 collect an amount due under this subsection at any time before the
95-23 date the borrower defaults on the subject loan or any prior
95-24 indebtedness or before the fourth anniversary of that date. A
95-25 person that is liable for and pays amounts to the state trust
95-26 company under this subsection is entitled to an assignment of the
95-27 state trust company's claim against the borrower to the extent of
96-1 the payments. For purposes of this subsection, an officer,
96-2 director, manager, managing participant, or employee of a state
96-3 trust company is presumed to know the amount of the state trust
96-4 company's lending limit under Subsection (a) of this section and
96-5 the amount of the borrower's aggregate outstanding indebtedness to
96-6 the state trust company immediately before a new loan or extension
96-7 of credit to that borrower.
96-8 (g) This subchapter does not confer general banking
96-9 privileges on state trust companies.
96-10 Sec. 5.202. LEASE FINANCING TRANSACTIONS. (a) Subject to
96-11 rules adopted under this Act, a state trust company may become the
96-12 owner and lessor of tangible personal property for lease financing
96-13 transactions on a net lease basis on the specific request and for
96-14 the use of a client. Without the written approval of the banking
96-15 commissioner to continue holding property acquired for leasing
96-16 purposes under this subsection, the state trust company may not
96-17 hold the property more than six months after the date of expiration
96-18 of the original or any extended or renewed lease period agreed to
96-19 by the client for whom the property was acquired or by a subsequent
96-20 lessee.
96-21 (b) Rental payments received by the state trust company in a
96-22 lease financing transaction under this section are considered to be
96-23 rent and not interest or compensation for the use, forbearance, or
96-24 detention of money. However, a lease financing transaction is
96-25 considered to be a loan or extension of credit for purposes of
96-26 Section 5.201 of this Act.
96-27 (Sections 5.203-5.300 reserved for expansion)
97-1 SUBCHAPTER D. OTHER INVESTMENT PROVISIONS
97-2 Sec. 5.301. OTHER INVESTMENT PROVISIONS. (a) Without the
97-3 prior written approval of the banking commissioner, a state trust
97-4 company may not make any investment of its secondary capital in any
97-5 investment that incurs or may incur, under regulatory accounting
97-6 principles, a liability or contingent liability for the state trust
97-7 company.
97-8 (b) The banking commissioner may, on a case-by-case basis,
97-9 require a state trust company to dispose of any investment of its
97-10 secondary capital, if the banking commissioner finds that the
97-11 divestiture of the asset is necessary to protect the safety and
97-12 soundness of the state trust company. Among the safety and
97-13 soundness factors to be considered by the banking commissioner in
97-14 the exercise of discretion, include the factors contained in
97-15 Section 3.007(b) of this Act. The proposed effective date of an
97-16 order requiring an existing state trust company to divest of an
97-17 asset must be stated in the order as on or after the 21st day after
97-18 the date the proposed order is mailed or delivered. Unless the
97-19 state trust company requests a hearing before the banking
97-20 commissioner in writing before the effective date of the proposed
97-21 order, the order becomes effective and is final and nonappealable.
97-22 (c) Subject to Subsections (a) and (b) of this section, to
97-23 Section 5.302 of this Act, and to the exercise of prudent judgment,
97-24 a state trust company may invest its secondary capital in any type
97-25 or character of investment for the purpose of generating income or
97-26 profit. The factors to be considered by a state trust company in
97-27 exercise of prudent judgment include the factors contained in
98-1 Section 5.101(f) of this Act.
98-2 Sec. 5.302. ENGAGING IN COMMERCE PROHIBITED. Except as
98-3 otherwise provided by this Act or rules adopted under this Act, a
98-4 state trust company may not invest its funds in trade or commerce
98-5 by buying, selling, or otherwise dealing goods or by owning or
98-6 operating a business not part of the state trust business, except
98-7 as necessary to fulfill a fiduciary obligation to a client.
98-8 (Sections 5.303-5.400 reserved for expansion)
98-9 SUBCHAPTER E. TRUST DEPOSITS
98-10 Sec. 5.401. TRUST DEPOSITS. (a) A state trust company may
98-11 deposit trust funds with itself as an investment if authorized by
98-12 the settlor or the beneficiary provided:
98-13 (1) it maintains as security for the deposits a
98-14 separate fund of securities, legal for trust investments, under
98-15 control of a federal reserve bank or a clearing corporation, as
98-16 defined by Section 8.102, Business & Commerce Code, either in this
98-17 state or elsewhere;
98-18 (2) the total market value of the security is at all
98-19 times at least equal to the amount of the deposit; and
98-20 (3) the separate fund is designated as such.
98-21 (b) A state trust company may make periodic withdrawals from
98-22 or additions to the securities fund required by Subsection (a) of
98-23 this section as long as the required value is maintained. Income
98-24 from the securities in the fund belongs to the state trust company.
98-25 (c) Security for a deposit under this section is not
98-26 required for a deposit under Subsection (a) of this section to the
98-27 extent the deposit is insured by the Federal Deposit Insurance
99-1 Corporation or its successor.
99-2 (d) This subchapter does not confer general banking
99-3 privileges on state trust companies.
99-4 (Sections 5.402-5.500 reserved for expansion)
99-5 SUBCHAPTER F. LIABILITIES AND PLEDGE OF ASSETS
99-6 Sec. 5.501. BORROWING LIMIT. Except with the prior written
99-7 approval of the banking commissioner, a state trust company may not
99-8 have outstanding liabilities, excluding trust deposit liabilities
99-9 arising pursuant to Section 5.401 of this Act, which exceed an
99-10 amount equal to five times its restricted capital.
99-11 Sec. 5.502. PLEDGE OF ASSETS. (a) A state trust company
99-12 may not pledge or create a lien on any of its assets except:
99-13 (1) to secure the repayment of money borrowed;
99-14 (2) to secure trust deposits as specifically
99-15 authorized or required by Section 5.401 of this Act, Title 9,
99-16 Property Code, or by rules adopted under this chapter; or
99-17 (3) to secure deposits made by the United States
99-18 Government, state, county, or municipality, or an agency thereof.
99-19 (b) An act, deed, conveyance, pledge, or contract in
99-20 violation of this section is void.
99-21 CHAPTER 6. ENFORCEMENT ACTIONS
99-22 SUBCHAPTER A. ENFORCEMENT ORDERS: STATE TRUST COMPANIES
99-23 AND MANAGEMENT
99-24 Sec. 6.001. DETERMINATION LETTER
99-25 Sec. 6.002. CEASE AND DESIST ORDER
99-26 Sec. 6.003. REMOVAL OR PROHIBITION ORDER
99-27 Sec. 6.004. HEARING ON PROPOSED ORDER
100-1 Sec. 6.005. EMERGENCY ORDERS
100-2 Sec. 6.006. COPY OF LETTER OR ORDER IN STATE TRUST COMPANY
100-3 RECORDS
100-4 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER
100-5 Sec. 6.008. LIMITATION ON ACTION
100-6 Sec. 6.009. ENFORCEMENT OF FINAL ORDER
100-7 Sec. 6.010. ADMINISTRATIVE PENALTIES
100-8 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE PENALTIES
100-9 Sec. 6.012. CONFIDENTIALITY OF RECORDS
100-10 Sec. 6.013. COLLECTION OF FEES
100-11 (Sections 6.014-6.100 reserved for expansion)
100-12 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
100-13 Sec. 6.101. ORDER OF SUPERVISION
100-14 Sec. 6.102. ORDER OF CONSERVATORSHIP
100-15 Sec. 6.103. HEARING
100-16 Sec. 6.104. POST-HEARING ORDER
100-17 Sec. 6.105. CONFIDENTIALITY OF RECORDS
100-18 Sec. 6.106. DUTIES OF STATE TRUST COMPANY UNDER SUPERVISION
100-19 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR
100-20 Sec. 6.108. QUALIFICATIONS OF APPOINTEE
100-21 Sec. 6.109. EXPENSES
100-22 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR DECISIONS
100-23 Sec. 6.111. VENUE
100-24 Sec. 6.112. DURATION
100-25 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES
100-26 (Sections 6.114-6.200 reserved for expansion)
101-1 SUBCHAPTER C. UNAUTHORIZED TRUST ACTIVITY: INVESTIGATION
101-2 AND ENFORCEMENT
101-3 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED TRUST ACTIVITY
101-4 Sec. 6.202. UNAUTHORIZED USE OF "TRUST" AND SIMILAR WORDS
101-5 Sec. 6.203. SUBPOENA AUTHORITY
101-6 Sec. 6.204. ENFORCEMENT OF SUBPOENA
101-7 Sec. 6.205. CONFIDENTIALITY OF SUBPOENAED RECORDS
101-8 Sec. 6.206. EVIDENCE
101-9 Sec. 6.207. CEASE AND DESIST ORDER REGARDING UNAUTHORIZED TRUST
101-10 ACTIVITY
101-11 Sec. 6.208. EMERGENCY CEASE AND DESIST ORDER REGARDING
101-12 UNAUTHORIZED TRUST ACTIVITY
101-13 Sec. 6.209. APPEAL OF CEASE AND DESIST ORDER REGARDING
101-14 UNAUTHORIZED TRUST ACTIVITY
101-15 Sec. 6.210. VIOLATION OF FINAL CEASE AND DESIST ORDER REGARDING
101-16 UNAUTHORIZED TRUST ACTIVITY
101-17 Sec. 6.211. PENALTY ORDER FOR UNAUTHORIZED TRUST ACTIVITY
101-18 Sec. 6.212. PAYMENT AND APPEAL OF PENALTY ORDER
101-19 Sec. 6.213. JUDICIAL REVIEW OF PENALTY ORDER
101-20 Sec. 6.214. DEPOSIT TO GENERAL REVENUE FUND
101-21 CHAPTER 6. ENFORCEMENT ACTIONS
101-22 SUBCHAPTER A. ENFORCEMENT ORDERS:
101-23 STATE TRUST COMPANIES AND MANAGEMENT
101-24 Sec. 6.001. DETERMINATION LETTER. (a) If the banking
101-25 commissioner determines from examination or other credible evidence
101-26 that a state trust company is in a condition that may warrant the
101-27 issuance of an enforcement order under this chapter, the banking
102-1 commissioner may, by personal delivery or by registered or
102-2 certified mail, return receipt requested, notify the state trust
102-3 company in writing of the determination, the requirements the state
102-4 trust company must satisfy to abate the determination, and the time
102-5 in which the requirements must be satisfied to avert further
102-6 administrative action.
102-7 (b) The determination letter may be issued in connection
102-8 with the issuance of a cease and desist, removal, or prohibition
102-9 order under this subchapter or an order of supervision or
102-10 conservatorship under Subchapter B of this chapter.
102-11 Sec. 6.002. CEASE AND DESIST ORDER. (a) The banking
102-12 commissioner has grounds to issue a cease and desist order to an
102-13 officer, employee, director, manager, or managing participant of a
102-14 state trust company, or the state trust company itself acting
102-15 through an authorized person, if the banking commissioner
102-16 determines from examination or other credible evidence that the
102-17 state trust company or person, directly or indirectly:
102-18 (1) has violated this Act or another applicable law or
102-19 rule;
102-20 (2) has engaged in a breach of trust or other
102-21 fiduciary duty;
102-22 (3) has refused to submit to examination or
102-23 examination under oath;
102-24 (4) has conducted business in an unsafe or unsound
102-25 manner; or
102-26 (5) has violated a condition of the state trust
102-27 company's charter or an agreement between the state trust company
103-1 or the person and the banking commissioner or the department.
103-2 (b) If the banking commissioner has grounds for action under
103-3 Subsection (a) of this section and further finds that an order to
103-4 cease and desist from a violation appears to be necessary and in
103-5 the best interest of a state trust company involved and its
103-6 clients, creditors, and shareholders or participants, the banking
103-7 commissioner, by personal delivery or by registered or certified
103-8 mail, return receipt requested, may serve a proposed cease and
103-9 desist order on the state trust company and each person who
103-10 committed or participated in the violation. The order must state
103-11 the grounds for the order with reasonable certainty. The order
103-12 must state its effective date, which may not be before the 21st day
103-13 after the date the order is mailed or delivered. The order takes
103-14 effect for the state trust company if the trust company does not
103-15 request a hearing in writing before the effective date and takes
103-16 effect for each other person against whom the order is directed if
103-17 that person does not request a hearing in writing before the
103-18 effective date. After taking effect, the order is final and
103-19 nonappealable as to that state trust company or other person.
103-20 Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) The banking
103-21 commissioner has grounds to remove a present or former officer,
103-22 director, manager, managing participant, or employee of a state
103-23 trust company from office or employment in, or prohibit a
103-24 controlling shareholder or participant or other person
103-25 participating in the affairs of the state trust company from
103-26 further participation in the affairs of, the state trust company,
103-27 state bank, or other entity chartered or licensed by the banking
104-1 commissioner under the laws of this state, if the banking
104-2 commissioner determines from examination or other credible evidence
104-3 that:
104-4 (1) the person committed, participated, or acted, in
104-5 other than an inadvertent or unintentional manner, as described by
104-6 Section 6.002(a) of this Act with regard to the affairs of the
104-7 state trust company, or violated a final cease and desist order
104-8 issued in response to the same or a similar act;
104-9 (2) because of this action by the person:
104-10 (A) the state trust company has suffered or will
104-11 probably suffer financial loss or other damage;
104-12 (B) the interests of the trust company's clients
104-13 have been or could be prejudiced; or
104-14 (C) the person has received financial gain or
104-15 other benefit by reason of the violation; and
104-16 (3) this action by the person:
104-17 (A) involves personal dishonesty on the part of
104-18 the person; or
104-19 (B) demonstrates wilful or continuing disregard
104-20 for the safety or soundness of the state trust company.
104-21 (b) If the banking commissioner finds grounds for action
104-22 under Subsection (a) of this section and further finds that a
104-23 removal or prohibition order appears to be necessary and in the
104-24 best interest of the state trust company involved and its clients,
104-25 creditors, and shareholders or participants, the banking
104-26 commissioner, by personal delivery or by registered or certified
104-27 mail, return receipt requested, may serve a proposed removal or
105-1 prohibition order, as appropriate, on an officer, employee,
105-2 director, manager or managing participant, controlling shareholder
105-3 or participant, or other person alleged to have committed or
105-4 participated in the violation. The order must state the grounds
105-5 for removal or prohibition with reasonable certainty. The order
105-6 must state its effective date, which may not be before the 21st day
105-7 after the date the order is mailed or delivered. The order takes
105-8 effect for a person against whom the order is directed if the
105-9 person does not request a hearing in writing before the effective
105-10 date. After taking effect the order is final and nonappealable as
105-11 to that person.
105-12 Sec. 6.004. HEARING ON PROPOSED ORDER. (a) A requested
105-13 hearing on a proposed order shall be held not later than the 30th
105-14 day after the date the first request for a hearing on the order was
105-15 received by the banking commissioner unless the parties agree to a
105-16 later hearing date. Each party shall be given written notice by
105-17 personal delivery or by registered or certified mail, return
105-18 receipt requested, of the date set by the banking commissioner for
105-19 the hearing not later than the 11th day before that date. The
105-20 hearing shall be conducted as provided by Chapter 2001, Government
105-21 Code. At the hearing, the banking commissioner has the burden of
105-22 proof and each person against whom the order is directed may
105-23 cross-examine and present evidence to show why the order should not
105-24 be issued.
105-25 (b) After the hearing, the banking commissioner shall issue
105-26 or decline to issue the order. The order may be modified as
105-27 necessary to conform to the findings at the hearing and to require
106-1 the board to take necessary affirmative action to correct the
106-2 conditions cited in the order.
106-3 (c) An order issued under this section is immediately final
106-4 for purposes of enforcement and appeal. The order may be appealed
106-5 as provided by Section 3.010 of this Act.
106-6 Sec. 6.005. EMERGENCY ORDERS. (a) If the banking
106-7 commissioner believes that immediate action is needed to prevent
106-8 immediate and irreparable harm to the state trust company and its
106-9 clients, creditors, and shareholders or participants, the banking
106-10 commissioner may issue one or more cease and desist, removal, or
106-11 prohibition orders as emergency orders to become effective
106-12 immediately on service without prior notice or hearing. Service
106-13 must be by personal delivery or by registered or certified mail,
106-14 return receipt requested.
106-15 (b) In each emergency order the banking commissioner shall
106-16 notify the state trust company and any person against whom the
106-17 order is directed of the specific conduct, activity, or omission
106-18 requiring the order, the citation of each statute or rule alleged
106-19 to have been violated, the immediate and irreparable harm alleged
106-20 to be threatened, and the right to a hearing. A hearing on the
106-21 order may be requested in writing not later than the 10th day after
106-22 the date the order is served. Unless a person against whom the
106-23 order is directed requests a hearing in writing before the 11th day
106-24 after the date the order is served on the person, the order is
106-25 final and nonappealable as to that person.
106-26 (c) A hearing on an emergency order, if requested, must be
106-27 given priority over all other matters pending before the banking
107-1 commissioner and must be held not later than the 20th day after the
107-2 date the order is requested unless the parties agree to a later
107-3 hearing date.
107-4 (d) Until the hearing, an emergency order continues in
107-5 effect unless the order is stayed by the banking commissioner. The
107-6 banking commissioner may impose any condition before granting a
107-7 stay of the emergency order.
107-8 (e) After the hearing, the banking commissioner may affirm,
107-9 modify, or set aside in whole or part the emergency order. An
107-10 order affirming or modifying the order is immediately final for
107-11 purposes of enforcement and appeal. The order may be appealed as
107-12 provided by Section 3.010 of this Act.
107-13 Sec. 6.006. COPY OF LETTER OR ORDER IN STATE TRUST COMPANY
107-14 RECORDS. A copy of any determination letter, proposed order,
107-15 emergency order, or final order issued by the banking commissioner
107-16 under this subchapter shall be immediately brought to the attention
107-17 of the board of the affected state trust company, regardless of
107-18 whether the state trust company is a party, and filed in the
107-19 minutes of the board. Each director, manager, or managing
107-20 participant shall immediately certify to the banking commissioner
107-21 in writing that the certifying person has read and understood the
107-22 determination letter, proposed order, emergency order, or final
107-23 order. The required certification may not be considered an
107-24 admission of a person in a subsequent legal or administrative
107-25 proceeding.
107-26 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
107-27 (a) Without the prior written approval of the banking
108-1 commissioner, a person subject to a final and enforceable removal
108-2 or prohibition order issued by the banking commissioner:
108-3 (1) may not serve as a director, officer, or employee
108-4 of any state trust company, state bank, or other entity chartered
108-5 or licensed by the banking commissioner under the laws of this
108-6 state while the order is in effect;
108-7 (2) may not directly or indirectly participate in any
108-8 manner in the management of such an entity;
108-9 (3) may not directly or indirectly vote for a director
108-10 of such an entity;
108-11 (4) may not solicit, procure, transfer, attempt to
108-12 transfer, vote, or attempt to vote a proxy, consent, or
108-13 authorization with respect to voting rights in such an entity; and
108-14 (5) remains entitled to receive dividends or a share
108-15 of profits, return of contribution, or other distributive benefit
108-16 from such an entity with respect to voting securities in the entity
108-17 owned by the person.
108-18 (b) If voting securities of an entity identified in
108-19 Subsection (a)(1) of this section cannot be voted under this
108-20 section, the voting securities are considered to be authorized but
108-21 unissued for purposes of determining the procedures for and results
108-22 of the affected vote.
108-23 (c) Participants of a limited trust association in which a
108-24 participant has been finally removed or prohibited from
108-25 participation in the state trust company's affairs under this
108-26 subchapter shall elect a board of managers.
108-27 (d) This section and Section 6.008 of this Act do not
109-1 prohibit a removal or prohibition order that has indefinite
109-2 duration or that by its terms is perpetual.
109-3 Sec. 6.008. LIMITATION ON ACTION. The banking commissioner
109-4 may not initiate an enforcement action under this subchapter later
109-5 than the fifth anniversary of the date the conduct or acts involved
109-6 were discovered or reasonably should have been discovered by the
109-7 banking commissioner.
109-8 Sec. 6.009. ENFORCEMENT OF FINAL ORDER. (a) If the banking
109-9 commissioner reasonably believes that a state trust company or
109-10 person has violated a final and enforceable cease and desist,
109-11 removal, or prohibition order issued under this subchapter, the
109-12 banking commissioner may:
109-13 (1) initiate administrative penalty proceedings
109-14 against the state trust company under Section 6.010 of this Act;
109-15 (2) refer the matter to the attorney general for
109-16 enforcement by injunction or other available remedy; or
109-17 (3) pursue any other action the banking commissioner
109-18 considers appropriate under applicable law.
109-19 (b) If the attorney general prevails in an action brought
109-20 under Subsection (a)(2) of this section, the attorney general is
109-21 entitled to recover reasonable attorney's fees from a state trust
109-22 company or person violating the order.
109-23 Sec. 6.010. ADMINISTRATIVE PENALTIES. (a) The banking
109-24 commissioner may initiate a proceeding for an administrative
109-25 penalty against a state trust company under Section 6.009(a)(1) of
109-26 this Act by serving on the state trust company, by personal
109-27 delivery or registered or certified mail, return receipt requested,
110-1 notice of the time and place of a hearing on the penalty. The
110-2 hearing may not be held earlier than the 20th day after the date
110-3 the notice is served and shall be conducted under Chapter 2001,
110-4 Government Code. The notice must contain a statement of the acts
110-5 or conduct alleged to be in violation of the order.
110-6 (b) In determining whether an order has been violated, the
110-7 banking commissioner shall consider the maintenance of procedures
110-8 reasonably adopted to ensure compliance with the order.
110-9 (c) If the banking commissioner determines after the hearing
110-10 that an order has been violated, the banking commissioner may
110-11 impose an administrative penalty against a state trust company in
110-12 an amount not to exceed $500 for each day the state trust company
110-13 is in violation of the final order.
110-14 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE PENALTIES.
110-15 (a) When a penalty order under Section 6.010 of this Act becomes
110-16 final, a state trust company shall pay the penalty or appeal by
110-17 filing a petition for judicial review under the substantial
110-18 evidence rule in a district court of Travis County.
110-19 (b) The petition for judicial review stays the penalty order
110-20 during the period preceding the decision of the court. If the
110-21 court sustains the order, the court shall order the state trust
110-22 company to pay the full amount of the penalty or a lower amount
110-23 determined by the court. If the court does not sustain the order,
110-24 a penalty is not owed. If the final judgment of the court requires
110-25 payment of a penalty, interest accrues on the penalty, at the rate
110-26 charged on loans to depository institutions by the New York Federal
110-27 Reserve Bank, beginning on the date the judgment is final and
111-1 ending on the date the penalty and interest are paid.
111-2 (c) If the state trust company does not pay a final and
111-3 nonappealable penalty order, the banking commissioner shall refer
111-4 the matter to the attorney general for enforcement. The attorney
111-5 general is entitled to recover reasonable attorney's fees from the
111-6 state trust company if the attorney general prevails in judicial
111-7 action necessary for collection of the penalty.
111-8 (d) A penalty collected under this section shall be remitted
111-9 to the comptroller for deposit to the credit of the general revenue
111-10 fund.
111-11 Sec. 6.012. CONFIDENTIALITY OF RECORDS. A copy of a notice,
111-12 correspondence, transcript, pleading, or other document in the
111-13 records of the department relating to an order issued under this
111-14 subchapter is confidential and may be released only as provided by
111-15 Subchapter B, Chapter 2, of this Act, except that the banking
111-16 commissioner shall publish all final removal and prohibition orders
111-17 on a periodic basis. The banking commissioner may publish a final
111-18 cease and desist order or information regarding the existence of
111-19 the order to the public if the banking commissioner concludes that
111-20 effective enforcement of the order would be enhanced by the
111-21 release.
111-22 Sec. 6.013. COLLECTION OF FEES. The banking commissioner
111-23 may sue to enforce the collection of a fee owed to the department
111-24 under a law administered by the banking commissioner. In the suit
111-25 a certificate by the banking commissioner showing the delinquency
111-26 is prima facie evidence of:
111-27 (1) the levy of the fee or the delinquency of the
112-1 stated fee amount; and
112-2 (2) compliance by the banking commissioner with the
112-3 law relating to the computation and levy of the fee.
112-4 (Sections 6.014-6.100 reserved for expansion)
112-5 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
112-6 Sec. 6.101. ORDER OF SUPERVISION. If the banking
112-7 commissioner determines from examination or other credible evidence
112-8 that a state trust company is in hazardous condition and that an
112-9 order of supervision appears to be necessary and in the best
112-10 interest of the state trust company and its clients, creditors, and
112-11 shareholders or participants, or the public, the banking
112-12 commissioner may without prior notice issue an order appointing a
112-13 supervisor over the state trust company. The supervisor serves
112-14 until the earlier of the expiration of the period stated in the
112-15 order of supervision or the date the banking commissioner
112-16 determines that the requirements for abatement of the order have
112-17 been satisfied.
112-18 Sec. 6.102. ORDER OF CONSERVATORSHIP. In addition to the
112-19 grounds for conservatorship provided by Sections 4.103 and 6.104 of
112-20 this Act, if the banking commissioner determines from examination
112-21 or other credible evidence that a state trust company is in
112-22 hazardous condition and immediate and irreparable harm is
112-23 threatened to the state trust company, its clients, creditors, or
112-24 shareholders or participants, or the public, the banking
112-25 commissioner may without prior notice issue an order appointing a
112-26 conservator at any time before, during, or after the period of
112-27 supervision. An order of conservatorship issued under this section
113-1 must specifically state the basis for the order.
113-2 Sec. 6.103. HEARING. (a) An order issued under Section
113-3 6.101 or 6.102 of this Act must contain or be accompanied by a
113-4 notice that a hearing before the banking commissioner will be held
113-5 at the request of a state trust company at which the state trust
113-6 company may cross-examine and present evidence to contest the order
113-7 or show that it has satisfied all requirements for abatement of the
113-8 order. The banking commissioner has the burden of proof for any
113-9 continuation of the order or the issuance of a new order.
113-10 (b) A state trust company that seeks to contest or modify
113-11 the order or demonstrate that it has satisfied all requirements for
113-12 abatement of the order shall submit a written request for a hearing
113-13 to the banking commissioner. The request must state the grounds
113-14 for the request to set aside or modify the order. On receiving a
113-15 request for hearing, the banking commissioner shall serve notice by
113-16 personal delivery or by registered or certified mail, return
113-17 receipt requested, of the time and place of the hearing, which must
113-18 be not later than the 10th day after the date the banking
113-19 commissioner receives the request for a hearing unless the parties
113-20 agree to a later hearing date.
113-21 (c) The banking commissioner may delay a decision for a
113-22 prompt examination of the state trust company and may reopen the
113-23 record as necessary to allow presentation of the results of the
113-24 examination and appropriate opportunity for cross-examination and
113-25 presentation of other relevant evidence.
113-26 Sec. 6.104. POST-HEARING ORDER. (a) If the banking
113-27 commissioner after the hearing finds that a state trust company has
114-1 been rehabilitated, its hazardous condition has been remedied,
114-2 irreparable harm is no longer threatened, or that the state trust
114-3 company should otherwise be released from the order, the banking
114-4 commissioner shall release the state trust company from the order,
114-5 subject to conditions the banking commissioner from the evidence
114-6 believes are warranted to preserve the safety and soundness of the
114-7 state trust company.
114-8 (b) If the banking commissioner after the hearing finds that
114-9 a state trust company has failed to comply with the lawful
114-10 requirements of the banking commissioner, has not been
114-11 rehabilitated, is insolvent, or otherwise continues in hazardous
114-12 condition, the banking commissioner by order shall:
114-13 (1) appoint or reappoint a supervisor pursuant to
114-14 Section 6.101 of this Act;
114-15 (2) appoint or reappoint a conservator pursuant to
114-16 Section 6.102 of this Act; or
114-17 (3) take other appropriate action authorized by law.
114-18 (c) An order issued under Subsection (b) of this section
114-19 is immediately final for purposes of appeal. The order may be
114-20 appealed as provided by Section 3.010 of this Act.
114-21 (d) This subchapter does not prevent release of a state
114-22 trust company from supervision or conservatorship before a hearing
114-23 if the banking commissioner is satisfied that requirements for
114-24 abatement have been adequately satisfied.
114-25 Sec. 6.105. CONFIDENTIALITY OF RECORDS. An order issued
114-26 under this subchapter and a copy of a notice, correspondence,
114-27 transcript, pleading, or other document in the records of the
115-1 department relating to the order are confidential and may be
115-2 released only as provided by Subchapter B, Chapter 2, of this Act,
115-3 except that the banking commissioner may release an order or
115-4 information regarding the existence of an order to the public if
115-5 the banking commissioner concludes that effective enforcement of
115-6 the order would be enhanced by the release.
115-7 Sec. 6.106. DUTIES OF STATE TRUST COMPANY UNDER SUPERVISION.
115-8 During the period of supervision, a state trust company may not,
115-9 without the prior approval of the banking commissioner or the
115-10 supervisor or as otherwise permitted or restricted by the order of
115-11 supervision:
115-12 (1) dispose of, sell, transfer, convey, or encumber
115-13 the state trust company's assets;
115-14 (2) lend or invest the trust company's funds;
115-15 (3) incur a debt, obligation, or liability;
115-16 (4) pay a cash dividend to the state trust company's
115-17 shareholders or participants; or
115-18 (5) solicit or accept any new client accounts.
115-19 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR. (a) A
115-20 conservator appointed under this subchapter shall immediately take
115-21 charge of a state trust company and all of its property, books,
115-22 records, and affairs on behalf and at the direction and control of
115-23 the banking commissioner.
115-24 (b) Subject to any limitation contained in the order of
115-25 appointment or other direction of the banking commissioner, the
115-26 conservator has all the powers of the directors, managers, managing
115-27 participants, officers, and shareholders or participants of a state
116-1 trust company, shall conduct the business of the state trust
116-2 company, and shall take all steps the conservator considers
116-3 appropriate to remove the causes and conditions that required the
116-4 appointment of a conservator. During the conservatorship, the
116-5 board may not direct or participate in the affairs of the state
116-6 trust company.
116-7 (c) Except as otherwise provided by this subchapter, rules
116-8 adopted under this Act, or Section 2.010, Texas Banking Act
116-9 (Article 342-2.010, Vernon's Texas Civil Statutes), the conservator
116-10 has the rights and privileges and is subject to the duties,
116-11 restrictions, penalties, conditions, and limitations of the
116-12 directors, officers, and employees of state trust companies.
116-13 Sec. 6.108. QUALIFICATIONS OF APPOINTEE. The banking
116-14 commissioner may appoint any person as a supervisor or conservator
116-15 who in the sole judgment of the banking commissioner is qualified
116-16 to serve. The banking commissioner may serve or may appoint an
116-17 employee of the department to serve as supervisor or conservator.
116-18 Sec. 6.109. EXPENSES. (a) The banking commissioner shall
116-19 determine and approve the reasonable expenses attributable to the
116-20 service of a supervisor or conservator, including costs incurred by
116-21 the department and the compensation and expenses of the supervisor
116-22 or conservator and any professional employees appointed to
116-23 represent or assist the supervisor or conservator. The banking
116-24 commissioner or an employee of the department may not receive
116-25 compensation in addition to salary for serving as supervisor or
116-26 conservator, but the department may receive reimbursement for the
116-27 fully allocated personnel cost associated with service of the
117-1 banking commissioner or an employee as supervisor or conservator.
117-2 (b) All approved expenses shall be paid by the state trust
117-3 company as the banking commissioner determines. The banking
117-4 commissioner has a lien against the assets and funds of the state
117-5 trust company to secure payment of approved expenses. The lien has
117-6 a higher priority than any other lien against the state trust
117-7 company.
117-8 (c) Notwithstanding any other provision of this subchapter,
117-9 the state trust company may employ an attorney and other persons
117-10 the state trust company selects to assist the state trust company
117-11 in contesting or satisfying the requirements of an order of
117-12 supervision or conservatorship. The banking commissioner shall
117-13 authorize the payment of reasonable fees and expenses from the
117-14 state trust company for the attorney or other persons as expenses
117-15 of the supervision or conservatorship.
117-16 (d) The banking commissioner may defer collection of
117-17 assessment and examination fees by the department from the state
117-18 trust company during a period of supervision or conservatorship, if
117-19 deferral would appear to aid prospects for rehabilitation. As a
117-20 condition of release from supervision or conservatorship, the
117-21 banking commissioner may require the rehabilitated state trust
117-22 company to pay or develop a reasonable plan for payment of deferred
117-23 fees.
117-24 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR DECISIONS.
117-25 (a) Notwithstanding Section 6.107(b) of this Act, a majority of
117-26 the state trust company's board, acting directly or through counsel
117-27 who affirmatively represents that the requisite majority has been
118-1 obtained, may request in writing that the banking commissioner
118-2 review an action taken or proposed by the supervisor or
118-3 conservator. The request must specify why the action would not be
118-4 in the best interest of the state trust company. The banking
118-5 commissioner shall investigate to the extent necessary and make a
118-6 prompt written ruling on the request. If the action is proposed
118-7 rather than already taken or if the effect of the action can be
118-8 postponed, the banking commissioner may stay the action on request
118-9 pending review.
118-10 (b) If a majority of the state trust company's board objects
118-11 to the banking commissioner's ruling, the majority may, not later
118-12 than the 10th day after the date the state trust company is
118-13 notified of the ruling, request a hearing before the banking
118-14 commissioner.
118-15 (c) The banking commissioner shall give the board notice of
118-16 the time and place of the hearing by personal delivery or by
118-17 registered or certified mail, return receipt requested. The
118-18 hearing may not be held later than the 10th day after the date the
118-19 banking commissioner receives the request for a hearing unless the
118-20 parties agree to a later hearing date. At the hearing the board
118-21 has the burden of proof to demonstrate that the action is not in
118-22 the best interest of the state trust company.
118-23 (d) After the hearing, the banking commissioner may affirm,
118-24 modify, or set aside in whole or part the prior ruling. An order
118-25 supporting the action contested by the board is immediately final
118-26 for purposes of appeal. The order may be appealed as provided by
118-27 Section 3.010 of this Act. If the order is appealed to the finance
119-1 commission, the finance commission may affirm, terminate, or modify
119-2 the order, continue or end supervision or conservatorship, and
119-3 order further relief as justice, equity, and protection of clients,
119-4 creditors, and the public require.
119-5 Sec. 6.111. VENUE. A suit filed against a state trust
119-6 company while the state trust company is under an order of
119-7 conservatorship, or a suit filed against a person in connection
119-8 with an action taken or decision made by that person as a
119-9 supervisor or conservator of a state trust company, regardless of
119-10 whether the state trust company remains under an order of
119-11 supervision or conservatorship, must be brought in Travis County.
119-12 A conservator may sue a person on the trust company's behalf to
119-13 preserve, protect, or recover state trust company assets, including
119-14 claims or causes of action. The suit may be in:
119-15 (1) Travis County; or
119-16 (2) another location where jurisdiction and venue
119-17 against that person may be obtained under law.
119-18 Sec. 6.112. DURATION. A supervisor or conservator shall
119-19 serve for the period necessary to accomplish the purposes of the
119-20 supervision or conservatorship as intended by this subchapter. A
119-21 rehabilitated state trust company shall be returned to its former
119-22 or new management under conditions reasonable and necessary to
119-23 prevent recurrence of the conditions causing the supervision or
119-24 conservatorship.
119-25 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES. If the
119-26 banking commissioner determines that a state trust company should
119-27 be closed and liquidated under Chapter 7 of this Act, the banking
120-1 commissioner may take any action authorized under that chapter
120-2 regardless of the existence of supervision or conservatorship. A
120-3 period of supervision or conservatorship is not required before a
120-4 trust company is closed for liquidation or other remedial action is
120-5 taken.
120-6 (Sections 6.114-6.200 reserved for expansion)
120-7 SUBCHAPTER C. UNAUTHORIZED TRUST ACTIVITY: INVESTIGATION
120-8 AND ENFORCEMENT
120-9 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED TRUST ACTIVITY.
120-10 (a) If the banking commissioner has reason to believe that a
120-11 person has engaged, is engaging, or is likely to engage in an
120-12 unauthorized trust activity, the banking commissioner may:
120-13 (1) make any investigation necessary inside or outside
120-14 this state to determine whether the unauthorized trust activity has
120-15 occurred or is likely to occur, or to aid in the enforcement of the
120-16 laws administered by the banking commissioner;
120-17 (2) initiate appropriate disciplinary action as
120-18 provided by this subchapter; and
120-19 (3) report any unauthorized trust activity to a law
120-20 enforcement agency or another regulatory agency with appropriate
120-21 jurisdiction.
120-22 (b) The banking commissioner may furnish any materials,
120-23 documents, reports, complaints, or other evidence the banking
120-24 commissioner has compiled in connection with the unauthorized
120-25 activity to a law enforcement agency on written request and may
120-26 assist the law enforcement agency or other regulatory agency as
120-27 requested.
121-1 (c) A person acting without malice, fraudulent intent, or
121-2 bad faith is not subject to liability, including liability for
121-3 libel, slander, or other relevant tort, because the person files a
121-4 report or furnishes, orally or in writing, information concerning a
121-5 suspected, anticipated, or completed unauthorized activity to a law
121-6 enforcement agency, the banking commissioner or another regulatory
121-7 agency with appropriate jurisdiction, or an agent or employee of a
121-8 law enforcement agency, the banking commissioner, or other
121-9 regulatory agency. The person is entitled to attorney's fees and
121-10 court costs if the person prevails in an action for libel, slander,
121-11 or any other relevant tort based on the report or other information
121-12 the person furnished as provided by this subchapter. This section
121-13 does not:
121-14 (1) affect or modify a common law or statutory
121-15 privilege or immunity;
121-16 (2) preempt the authority or relieve the duty of a law
121-17 enforcement agency or other regulatory agency with appropriate
121-18 jurisdiction to investigate and prosecute suspected criminal acts;
121-19 (3) prohibit a person from voluntarily disclosing
121-20 information to a law enforcement agency or other regulatory agency;
121-21 or
121-22 (4) limit a power or duty granted to the banking
121-23 commissioner under this Act or other law.
121-24 Sec. 6.202. UNAUTHORIZED USE OF "TRUST" AND SIMILAR WORDS.
121-25 (a) Except as provided in Subsection (b) of this section, a person
121-26 or company may not use in a business name or advertising the words
121-27 "trust," "trust company," or any similar term or phrase, any word
122-1 pronounced "trust" or "trust company," any foreign word which means
122-2 "trust" or "trust company," or any term that tends to imply the
122-3 business is holding out to the public that it engages in the
122-4 business of a fiduciary for hire unless the banking commissioner
122-5 has approved the use in writing after finding that the use will not
122-6 be misleading. This subsection does not prohibit an individual
122-7 from engaging in the business of a fiduciary for compensation or
122-8 from using the words "trust" or "trustee" for the purpose of
122-9 identifying assets held or actions taken in an existing capacity.
122-10 (b) This section does not apply to:
122-11 (1) a state or national bank, a state or federal
122-12 savings bank, a state or federal savings association, a state or
122-13 federal credit union, or a depository or trust company institution
122-14 authorized under this Act to conduct a trust business in this
122-15 state; and
122-16 (2) another entity organized under the laws of this
122-17 state, another state, the United States, or a foreign sovereign
122-18 state to the extent that:
122-19 (A) the entity is authorized under its charter
122-20 or the laws of this state or the United States to use a term, word,
122-21 character, ideogram, phonogram, or phrase prohibited by Subsection
122-22 (a) of this section; and
122-23 (B) the entity is authorized by the laws of this
122-24 state or the United States to conduct the activities in which the
122-25 entity is engaged in this state.
122-26 Sec. 6.203. SUBPOENA AUTHORITY. (a) This section applies
122-27 only to an investigation of an unauthorized trust activity as
123-1 provided by Section 6.201 of this Act, and does not affect the
123-2 conduct of a contested case under Chapter 2001, Government Code.
123-3 (b) The banking commissioner may issue a subpoena to compel
123-4 the attendance and testimony of a witness and the production of a
123-5 book, account, record, paper, or correspondence relating to a
123-6 matter that the banking commissioner has authority to consider or
123-7 investigate at the department's offices in Austin or at another
123-8 place the banking commissioner designates.
123-9 (c) The banking commissioner or the deputy banking
123-10 commissioner shall sign and issue the subpoena.
123-11 (d) A person who is required by subpoena to attend a
123-12 proceeding before the banking commissioner is entitled to receive:
123-13 (1) reimbursement for mileage, in the amount provided
123-14 for travel by state employees, for traveling to or returning from a
123-15 proceeding that is more than 25 miles from the witness's residence;
123-16 and
123-17 (2) a fee for each day or part of a day the witness is
123-18 necessarily present as a witness in an amount equal to the per diem
123-19 travel allowance of a state employee.
123-20 (e) The banking commissioner may serve the subpoena or have
123-21 it served by an authorized agent of the banking commissioner, a
123-22 sheriff, or a constable. The sheriff's or constable's fee for
123-23 serving the subpoena must be the same as the fee paid the sheriff
123-24 or constable for similar services.
123-25 (f) A person possessing materials located outside this state
123-26 that are requested by the banking commissioner may make the
123-27 materials available to the banking commissioner or a representative
124-1 of the banking commissioner for examination at the place where the
124-2 materials are located. The banking commissioner may designate a
124-3 representative, including an official of the state in which the
124-4 materials are located, to examine the materials and may respond to
124-5 similar requests from an official of another state, the United
124-6 States, or a foreign country.
124-7 (g) A subpoena issued under this section to a financial
124-8 institution is not subject to Section 30.007, Civil Practice and
124-9 Remedies Code, as added by Chapter 914, Acts of the 74th
124-10 Legislature, Regular Session, 1995.
124-11 (h) The authority granted under this section is in addition
124-12 to other law authorizing the banking commissioner to obtain or
124-13 require information.
124-14 Sec. 6.204. ENFORCEMENT OF SUBPOENA. (a) If necessary the
124-15 banking commissioner may apply to a district court of Travis County
124-16 or of the county in which the subpoena was served for enforcement
124-17 of the subpoena, and the court may issue an order compelling
124-18 compliance.
124-19 (b) If the court orders compliance with the subpoena or
124-20 finds the person in contempt for failure to obey the order, the
124-21 banking commissioner, or the attorney general if representing the
124-22 banking commissioner, may recover reasonable court costs,
124-23 attorney's fees, and investigative costs incurred in the
124-24 proceeding.
124-25 Sec. 6.205. CONFIDENTIALITY OF SUBPOENAED RECORDS. (a) A
124-26 book, account, record, paper, correspondence, or other document
124-27 subpoenaed and produced under this section that is otherwise made
125-1 privileged or confidential by law remains privileged or
125-2 confidential unless admitted into evidence at an administrative
125-3 hearing or in a court. The banking commissioner may issue an order
125-4 protecting the confidentiality or privilege of the document and
125-5 restricting its use or distribution by any person or in any
125-6 proceeding, other than a proceeding before the banking
125-7 commissioner.
125-8 (b) Subject to Subchapter B, Chapter 2, of this Act, and
125-9 confidentiality provisions of other law administered by the banking
125-10 commissioner, information or material acquired under this section
125-11 under a subpoena is not a public record for the period the banking
125-12 commissioner considers reasonably necessary to complete the
125-13 investigation, protect the person being investigated from
125-14 unwarranted injury, or serve the public interest. The information
125-15 or material is not subject to a subpoena, except a valid grand jury
125-16 subpoena, until released for public inspection by the banking
125-17 commissioner or, after notice and a hearing, a district court
125-18 determines that the public interest and any investigation by the
125-19 banking commissioner would not be jeopardized by obeying the
125-20 subpoena. The district court order may not apply to:
125-21 (1) a record or communication received from another
125-22 law enforcement or regulatory agency except on compliance with the
125-23 confidentiality laws governing the records of the other agency; or
125-24 (2) an internal note, memorandum, report, or
125-25 communication made in connection with a matter that the banking
125-26 commissioner has the authority to consider or investigate, except
125-27 on good cause and compliance with applicable confidentiality laws.
126-1 Sec. 6.206. EVIDENCE. (a) On certification by the banking
126-2 commissioner, a book, record, paper, or document produced or
126-3 testimony taken as provided by Section 6.203 of this Act and held
126-4 by the department is admissible as evidence in any case without
126-5 prior proof of its correctness and without other proof. The
126-6 certified book, record, document, or paper, or a certified copy, is
126-7 prima facie evidence of the facts it contains.
126-8 (b) This section does not limit another provision of this
126-9 Act or a law that provides for the admission of evidence or its
126-10 evidentiary value.
126-11 Sec. 6.207. CEASE AND DESIST ORDER REGARDING UNAUTHORIZED
126-12 TRUST ACTIVITY. (a) If the banking commissioner believes a person
126-13 is engaging or is likely to engage in an unauthorized trust
126-14 activity, the banking commissioner may serve on the person, by
126-15 personal delivery or registered or certified mail, return receipt
126-16 requested, to the person's last known address, a proposed cease and
126-17 desist order. The proposed order must state the acts or practices
126-18 alleged to be an unauthorized activity. The proposed order must
126-19 state its effective date, which may not be before the 21st day
126-20 after the date the proposed order is mailed or delivered. Unless
126-21 the person against whom the proposed order is directed requests a
126-22 hearing in writing before the effective date of the proposed order,
126-23 the order takes effect and is final and nonappealable as to that
126-24 person.
126-25 (b) A requested hearing on a proposed order shall be held
126-26 not later than the 30th day after the date the first written
126-27 request for a hearing on the order is received by the banking
127-1 commissioner unless the parties agree to a later hearing date. At
127-2 the hearing, the banking commissioner has the burden of proof and
127-3 must present evidence in support of the order. Each person against
127-4 whom the order is directed may cross-examine and show cause why the
127-5 order should not be issued.
127-6 (c) After the hearing, the banking commissioner shall issue
127-7 or decline to issue a cease and desist order. The proposed order
127-8 may be modified as necessary to conform to the findings at the
127-9 hearing. An order issued under this section is immediately final
127-10 for purposes of enforcement and appeal and must require the person
127-11 to immediately cease and desist from the unauthorized trust
127-12 activity.
127-13 (d) The banking commissioner may release a final cease and
127-14 desist order issued under this section or information regarding the
127-15 existence of the order to the public if the banking commissioner
127-16 finds that effective enforcement of the order would be enhanced by
127-17 a release or the public interest will be served.
127-18 Sec. 6.208. EMERGENCY CEASE AND DESIST ORDER REGARDING
127-19 UNAUTHORIZED TRUST ACTIVITY. (a) The banking commissioner may
127-20 issue an emergency cease and desist order if the banking
127-21 commissioner reasonably believes a person is engaging in a
127-22 continuing unauthorized trust activity that is fraudulent or
127-23 threatens immediate and irreparable public harm.
127-24 (b) On issuance of an emergency cease and desist order, the
127-25 banking commissioner shall serve on each person affected by the
127-26 order, by personal delivery or registered or certified mail, return
127-27 receipt requested, to the person's last known address, an order
128-1 that states the specific charges and requires the person
128-2 immediately to cease and desist from the unauthorized activity.
128-3 The order must contain a notice that a request for hearing may be
128-4 filed under this section.
128-5 (c) A person affected by an emergency cease and desist order
128-6 may request a hearing before the banking commissioner not later
128-7 than the 10th day after the date on which the person receives the
128-8 order. A request for a hearing must be in writing and directed to
128-9 the banking commissioner and must state the grounds for the request
128-10 to set aside or modify the order. Unless a person against whom the
128-11 emergency order is directed requests a hearing in writing before
128-12 the 11th day after the date it is served on the person, the
128-13 emergency order is final and nonappealable as to that person.
128-14 (d) On receiving a request for a hearing, the banking
128-15 commissioner shall serve notice of the time and place of the
128-16 hearing by personal delivery or registered or certified mail,
128-17 return receipt requested. The hearing must be held not later than
128-18 the 10th day after the date the banking commissioner receives the
128-19 request for a hearing unless the parties agree to a later hearing
128-20 date. At the hearing, the banking commissioner has the burden of
128-21 proof and must present evidence in support of the order. The
128-22 person requesting the hearing may cross-examine witnesses and show
128-23 cause why the order should not be affirmed.
128-24 (e) Until the hearing, an emergency cease and desist order
128-25 continues in effect unless the order is stayed by the banking
128-26 commissioner. The banking commissioner may impose any condition
128-27 before granting a stay of the order.
129-1 (f) After the hearing, the banking commissioner shall
129-2 affirm, modify, or set aside in whole or part the emergency cease
129-3 and desist order. An order affirming or modifying the emergency
129-4 cease and desist order is immediately final for purposes of
129-5 enforcement and appeal.
129-6 (g) The banking commissioner may release a final cease and
129-7 desist order issued under this section or information regarding the
129-8 existence of the order to the public if the banking commissioner
129-9 finds that effective enforcement of the order would be enhanced by
129-10 a release or the public interest will be served.
129-11 Sec. 6.209. APPEAL OF CEASE AND DESIST ORDER REGARDING
129-12 UNAUTHORIZED TRUST ACTIVITY. (a) A person affected by a cease and
129-13 desist order issued, affirmed, or modified after a hearing may file
129-14 a petition for judicial review in the district court of Travis
129-15 County under the substantial evidence rule as provided by Chapter
129-16 2001, Government Code.
129-17 (b) A filed petition for judicial review does not stay or
129-18 vacate the order unless the court, after hearing, specifically
129-19 stays or vacates the order.
129-20 Sec. 6.210. VIOLATION OF FINAL CEASE AND DESIST ORDER
129-21 REGARDING UNAUTHORIZED TRUST ACTIVITY. (a) If the banking
129-22 commissioner reasonably believes that a person has violated a final
129-23 and enforceable cease and desist order, the banking commissioner
129-24 may:
129-25 (1) initiate administrative penalty proceedings under
129-26 Section 6.211 of this Act;
129-27 (2) refer the matter to the attorney general for
130-1 enforcement by injunction and any other available remedy; or
130-2 (3) pursue any other action the banking commissioner
130-3 considers appropriate under applicable law.
130-4 (b) If the attorney general prevails in an action brought
130-5 under Subsection (a)(2) of this section, the attorney general is
130-6 entitled to reasonable attorney's fees.
130-7 Sec. 6.211. PENALTY ORDER FOR UNAUTHORIZED TRUST ACTIVITY.
130-8 (a) The banking commissioner may initiate an action for an
130-9 administrative penalty against a person under Section 6.210(a)(1)
130-10 of this Act by serving on the person, by personal delivery or
130-11 registered or certified mail, return receipt requested, to the
130-12 person's last known address, notice of the time and place of a
130-13 hearing on the penalty. The hearing may not be held earlier than
130-14 the 20th day after the date the notice is served and shall be
130-15 conducted under Chapter 2001, Government Code. The notice must
130-16 contain a statement of the facts or conduct alleged to be in
130-17 violation of the cease and desist order.
130-18 (b) In determining whether a cease and desist order has been
130-19 violated, the banking commissioner shall consider the maintenance
130-20 of procedures reasonably adopted to ensure compliance with the
130-21 order.
130-22 (c) If the banking commissioner after the hearing determines
130-23 that a cease and desist order has been violated, the banking
130-24 commissioner may:
130-25 (1) impose an administrative penalty in an amount not
130-26 to exceed $25,000 for each separate act of unauthorized activity;
130-27 (2) direct the person against whom the order was
131-1 issued to make complete restitution, in the form and amount and
131-2 within the period determined by the banking commissioner, to each
131-3 resident of this state and entity operating in this state damaged
131-4 by the violation; or
131-5 (3) impose both the penalty and direct restitution.
131-6 (d) In determining the amount of the penalty and whether to
131-7 impose restitution, the banking commissioner shall consider:
131-8 (1) the seriousness of the violation, including the
131-9 nature, circumstances, extent, and gravity of any prohibited act;
131-10 (2) the economic harm caused by the violation;
131-11 (3) the history of previous violations;
131-12 (4) the amount necessary to deter future violations;
131-13 (5) efforts to correct the violation;
131-14 (6) whether the violation was intentional or
131-15 unintentional;
131-16 (7) the financial ability of the person against whom
131-17 the penalty is to be assessed; and
131-18 (8) any other matter that justice may require.
131-19 Sec. 6.212. PAYMENT AND APPEAL OF PENALTY ORDER. (a) When
131-20 a penalty order under Section 6.211 of this Act becomes final, a
131-21 person affected by the order shall, within the time permitted by
131-22 law for appeal:
131-23 (1) pay the amount of the penalty;
131-24 (2) pay the amount of the penalty and file a petition
131-25 for judicial review contesting the occurrence of the violation, the
131-26 amount of the penalty, or both; or
131-27 (3) without paying the amount of the penalty, file a
132-1 petition for judicial review contesting the occurrence of the
132-2 violation, the amount of the penalty, or both.
132-3 (b) Within the time permitted by law for appeal, a person
132-4 who acts under Subsection (a)(3) of this section may:
132-5 (1) stay enforcement of the penalty by:
132-6 (A) paying the amount of the penalty to the
132-7 court for placement in an escrow account; or
132-8 (B) giving the court a supersedeas bond that is
132-9 approved by the court for the amount of the penalty and that is
132-10 effective until all judicial review of the order is final; or
132-11 (2) request the court to stay enforcement of the
132-12 penalty by:
132-13 (A) filing with the court a sworn affidavit of
132-14 the person stating that the person is financially unable to pay the
132-15 amount of the penalty and is financially unable to give the
132-16 supersedeas bond; and
132-17 (B) giving a copy of the affidavit to the
132-18 banking commissioner by certified mail.
132-19 (c) If the banking commissioner receives a copy of an
132-20 affidavit under Subsection (b)(2) of this section, the banking
132-21 commissioner may file with the court, within five days after the
132-22 date the copy is received, a contest to the affidavit. The court
132-23 shall hold a hearing on the facts alleged in the affidavit as soon
132-24 as practicable and shall stay the enforcement of the penalty on
132-25 finding that the alleged facts are true. The person who files an
132-26 affidavit has the burden of proving that the person is financially
132-27 unable to pay the amount of the penalty and to give a supersedeas
133-1 bond.
133-2 (d) If the person does not pay the amount of the penalty and
133-3 the enforcement of the penalty is not stayed, the banking
133-4 commissioner may refer the matter to the attorney general for
133-5 collection of the amount of the penalty.
133-6 Sec. 6.213. JUDICIAL REVIEW OF PENALTY ORDER. (a) Judicial
133-7 review of a penalty order of the banking commissioner:
133-8 (1) is instituted by filing a petition as provided by
133-9 Chapter 2001, Government Code; and
133-10 (2) is under the substantial evidence rule.
133-11 (b) If the court sustains the order, the court shall order
133-12 the person to pay the full amount of the penalty or a lower amount
133-13 determined by the court. If the court does not sustain the order,
133-14 a penalty is not owed.
133-15 (c) When the judgment of the court becomes final, if the
133-16 person paid the amount of the penalty and if that amount is reduced
133-17 or is not upheld by the court, the court shall order that the
133-18 appropriate amount plus accrued interest computed at the annual
133-19 rate of 10 percent be remitted to the person. The interest shall
133-20 be paid for the period beginning on the date the penalty was paid
133-21 and ending on the date the penalty is remitted. If the person gave
133-22 a supersedeas bond and the amount of the penalty is not upheld by
133-23 the court, the court shall order the release of the bond. If the
133-24 person gave a supersedeas bond and the amount of the penalty is
133-25 reduced, the court shall order the release of the bond after the
133-26 person pays the amount of the penalty.
133-27 (d) If the judgment of the court requires payment of a
134-1 penalty that has not previously been paid, the court shall order as
134-2 part of its judgment that interest accrues on the penalty at the
134-3 annual rate of 10 percent, beginning on the date the judgment is
134-4 final and ending on the date the penalty and interest are paid.
134-5 Sec. 6.214. DEPOSIT TO GENERAL REVENUE FUND. A penalty
134-6 collected under this subchapter shall be remitted to the
134-7 comptroller for deposit to the credit of the general revenue fund.
134-8 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
134-9 SUBCHAPTER A. GENERAL PROVISIONS
134-10 Sec. 7.001. DEFINITION
134-11 Sec. 7.002. REMEDIES EXCLUSIVE
134-12 Sec. 7.003. APPOINTMENT OF INDEPENDENT RECEIVER
134-13 Sec. 7.004. FEDERAL DEPOSIT INSURANCE CORPORATION AS
134-14 LIQUIDATOR
134-15 Sec. 7.005. SUCCESSION OF TRUST POWERS
134-16 (Sections 7.006-7.100 reserved for expansion)
134-17 SUBCHAPTER B. VOLUNTARY DISSOLUTION
134-18 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY DISSOLUTION
134-19 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION
134-20 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS
134-21 Sec. 7.104. FIDUCIARY ACTIVITIES
134-22 Sec. 7.105. FINAL LIQUIDATION
134-23 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF REMEDIES
134-24 (Sections 7.107-7.200 reserved for expansion)
134-25 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
134-26 Sec. 7.201. ACTION TO CLOSE STATE TRUST COMPANY
134-27 Sec. 7.202. INVOLUNTARY CLOSING
135-1 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP
135-2 Sec. 7.204. CONTEST OF LIQUIDATION
135-3 Sec. 7.205. NOTICE OF STATE TRUST COMPANY CLOSING
135-4 Sec. 7.206. INVENTORY
135-5 Sec. 7.207. TITLE IN RECEIVER
135-6 Sec. 7.208. RIGHTS FIXED
135-7 Sec. 7.209. DEPOSITORIES
135-8 Sec. 7.210. PENDING LAWSUITS
135-9 Sec. 7.211. NEW LAWSUITS
135-10 Sec. 7.212. RECORDS WITH THIRD PARTIES
135-11 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION
135-12 Sec. 7.214. SUBPOENA
135-13 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS
135-14 Sec. 7.216. PREFERENCES
135-15 Sec. 7.217. OTHER POWERS OF RECEIVER; ADMINISTRATIVE
135-16 EXPENSES
135-17 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS
135-18 Sec. 7.219. DISCRETION OF COURT
135-19 Sec. 7.220. FILING REPORTS; EXPENSES
135-20 Sec. 7.221. COURT-ORDERED AUDIT
135-21 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS
135-22 Sec. 7.223. FIDUCIARY ACTIVITIES
135-23 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS
135-24 Sec. 7.225. RECORDS ADMITTED
135-25 Sec. 7.226. RESUMPTION OF BUSINESS
135-26 Sec. 7.227. AFTER-DISCOVERED ASSETS
135-27 (Sections 7.228-7.300 reserved for expansion)
136-1 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
136-2 Sec. 7.301. FILING CLAIMS
136-3 Sec. 7.302. PROOF OF CLAIM
136-4 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM
136-5 Sec. 7.304. SECURED CLAIMS
136-6 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS
136-7 Sec. 7.306. SET-OFF
136-8 Sec. 7.307. ACTION ON CLAIMS
136-9 Sec. 7.308. OBJECTION TO APPROVED CLAIM
136-10 Sec. 7.309. APPEAL OF REJECTED CLAIM
136-11 Sec. 7.310. PAYMENT OF CLAIMS
136-12 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED STATE TRUST
136-13 COMPANY
136-14 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED STATE TRUST
136-15 COMPANY
136-16 Sec. 7.313. EXCESS ASSETS
136-17 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY
136-18 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
136-19 SUBCHAPTER A. GENERAL PROVISIONS
136-20 Sec. 7.001. DEFINITION. In this chapter, "administrative
136-21 expense" means:
136-22 (1) an expense designated as an administrative expense
136-23 by Subchapter C or D of this chapter;
136-24 (2) court costs and expenses of operation and
136-25 liquidation of a state trust company estate;
136-26 (3) wages owed to an employee of a state trust company
136-27 for services rendered within three months before the date the state
137-1 trust company was closed for liquidation and not exceeding:
137-2 (A) $2,000 to each employee; or
137-3 (B) another amount set by rules adopted under
137-4 this Act;
137-5 (4) current wages owed to an employee of a state trust
137-6 company whose services are retained by the receiver for services
137-7 rendered after the date the state trust company is closed for
137-8 liquidation;
137-9 (5) an unpaid expense of supervision or
137-10 conservatorship of the state trust company before its closing for
137-11 liquidation; and
137-12 (6) any unpaid fees or assessments owed to the
137-13 department.
137-14 Sec. 7.002. REMEDIES EXCLUSIVE. (a) Unless the banking
137-15 commissioner requests, a court may not:
137-16 (1) order the closing or suspension of operation of a
137-17 state trust company; or
137-18 (2) appoint for a state trust company a receiver,
137-19 supervisor, conservator, or liquidator, or other manager or
137-20 overseer with similar responsibility.
137-21 (b) A person may not be designated receiver, supervisor,
137-22 conservator, or liquidator without the voluntary approval and
137-23 concurrence of the banking commissioner.
137-24 (c) This chapter prevails over any other conflicting law of
137-25 this state.
137-26 Sec. 7.003. APPOINTMENT OF INDEPENDENT RECEIVER. (a) On
137-27 request of the banking commissioner, the court in which the
138-1 liquidation proceeding is pending may appoint an independent
138-2 receiver and may require a suitable bond of the independent
138-3 receiver.
138-4 (b) If an independent receiver is appointed, the banking
138-5 commissioner is discharged as receiver but shall remain a party to
138-6 the liquidation proceeding with standing to initiate or contest any
138-7 motion. The views of the banking commissioner are entitled to
138-8 deference if not contrary to the plain meaning of this chapter.
138-9 Sec. 7.004. FEDERAL DEPOSIT INSURANCE CORPORATION AS
138-10 LIQUIDATOR. The banking commissioner without court action may
138-11 tender a state trust company that has been closed for liquidation
138-12 to the Federal Deposit Insurance Corporation or its successor as
138-13 receiver and liquidating agent if the trust deposits of the state
138-14 trust company were insured by the Federal Deposit Insurance
138-15 Corporation or its successor on the date of closing. After
138-16 acceptance of tender of the state trust company, the Federal
138-17 Deposit Insurance Corporation or its successor shall perform the
138-18 acts and duties as receiver of the state trust company that it
138-19 considers necessary or desirable and that are permitted or required
138-20 by federal law or this chapter. If the Federal Deposit Insurance
138-21 Corporation or its successor refuses to accept tender of the state
138-22 trust company, the banking commissioner shall act as receiver.
138-23 Sec. 7.005. SUCCESSION OF TRUST POWERS. (a) If a state
138-24 trust company in the process of voluntary or involuntary
138-25 dissolution and liquidation is acting as trustee, guardian,
138-26 executor, administrator, or escrow agent, or in another fiduciary
138-27 or custodial capacity, the banking commissioner may authorize the
139-1 sale of the state trust company's administration of fiduciary
139-2 accounts to a successor entity with fiduciary powers.
139-3 (b) The successor entity shall, without the necessity of
139-4 action by a court or the creator or a beneficiary of the fiduciary
139-5 relationship, continue the office, trust, or fiduciary relationship
139-6 and shall perform all the duties and exercise all the powers
139-7 connected with or incidental to the fiduciary relationship in the
139-8 same manner as if the successor entity had been originally
139-9 designated as the fiduciary.
139-10 (c) This section applies to all fiduciary relationships,
139-11 including a trust established for the benefit of a minor by court
139-12 order under Section 142.005, Property Code. This section does not
139-13 affect any right of a court or a party to the instrument governing
139-14 the fiduciary relationship to subsequently designate another
139-15 trustee as the successor fiduciary.
139-16 (Sections 7.006-7.100 reserved for expansion)
139-17 SUBCHAPTER B. VOLUNTARY DISSOLUTION
139-18 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY DISSOLUTION.
139-19 (a) A state trust company may initiate voluntary dissolution and
139-20 surrender its charter as provided by this subchapter:
139-21 (1) with the approval of the banking commissioner;
139-22 (2) after complying with the provisions of the Texas
139-23 Business Corporation Act regarding board and shareholder approval
139-24 for voluntary dissolution; and
139-25 (3) by filing the notice of dissolution as provided by
139-26 Section 7.102(a) of this Act.
139-27 (b) Unless the banking commissioner directs or consents
140-1 otherwise, the home office and all branch offices of the state
140-2 trust company shall remain open for business during normal business
140-3 hours until the last date specified in published notices for
140-4 presentation of claims, withdrawal of accounts, and redemption of
140-5 property.
140-6 (c) The shareholders or participants of a state trust
140-7 company initiating voluntary dissolution shall by resolution
140-8 appoint one or more persons to act as liquidating agent or
140-9 committee who shall conduct the liquidation as provided by law and
140-10 under the supervision of the board. The board, in consultation
140-11 with the banking commissioner, shall require the liquidating agent
140-12 or committee to give a suitable bond.
140-13 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION. (a) After
140-14 resolutions to dissolve and liquidate the state trust company have
140-15 been adopted by the board and shareholders or participants, a
140-16 majority of the directors, managers, or managing participants shall
140-17 verify and file duplicate certified copies with the banking
140-18 commissioner of:
140-19 (1) the resolutions of the shareholders or
140-20 participants that are adopted at a meeting for which proper notice
140-21 was given or by unanimous written consent and that approve the
140-22 dissolution and liquidation of the state trust company;
140-23 (2) if the trust company is operated by a board of
140-24 directors or managers, the resolutions of the board approving the
140-25 dissolution and liquidation of the state trust company;
140-26 (3) a copy of the notice to the shareholders or
140-27 participants informing them of the meeting; and
141-1 (4) a plan of liquidation.
141-2 (b) The banking commissioner shall review the submitted
141-3 documentation and conduct any necessary investigation or
141-4 examination. If the proceedings appear to have been properly
141-5 conducted and the bond to be given by the liquidating agent or
141-6 committee is adequate for its purposes, the banking commissioner
141-7 shall consent to dissolution and direct the state trust company to
141-8 publish notice of its pending dissolution.
141-9 (c) The state trust company shall publish notice in a
141-10 newspaper of general circulation in each community where its home
141-11 office or a branch is located at least once each week for eight
141-12 consecutive weeks or at other times specified by the banking
141-13 commissioner or rules adopted under this Act. The notice must
141-14 state that the state trust company is liquidating, that clients,
141-15 depositors, and creditors must present their claims for payment on
141-16 or before a specific date, and that all safe deposit box holders
141-17 and bailors of property left with the state trust company should
141-18 remove their property on or before a specified date. The dates
141-19 selected by the state trust company must be approved by the banking
141-20 commissioner and must allow the affairs of the state trust company
141-21 to be wound up as quickly as feasible and allow creditors, clients,
141-22 and owners of property adequate time for presentation of claims,
141-23 withdrawal of accounts, and redemption of property. The banking
141-24 commissioner may adjust the dates with or without republication of
141-25 notice if additional time appears needed for these activities.
141-26 (d) At the same time as or promptly after publication of the
141-27 notice, the state trust company shall mail to each of the state
142-1 trust company's known clients, depositors, creditors, safe deposit
142-2 box holders, and bailors of property left with the state trust
142-3 company, at the mailing address shown on the state trust company's
142-4 records, an individual notice containing the information required
142-5 in a notice under Subsection (c) of this section and specific
142-6 information pertinent to the account or property of the addressee.
142-7 (e) A notice under this section must be in the form and
142-8 include the information required by the banking commissioner.
142-9 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
142-10 contract between the state trust company and a person for bailment,
142-11 or of deposit for hire, or for the lease of a safe, vault, or box,
142-12 ceases on the date specified as the date for removal of property in
142-13 the notices or a later date approved by the banking commissioner.
142-14 A person who has paid rental or storage charges for a period
142-15 extending beyond the date designated for removal of property has an
142-16 unsecured claim against the state trust company for a refund of any
142-17 unearned amount paid.
142-18 (b) If the property is not removed by the date specified in
142-19 the notices or by the banking commissioner, an officer of the state
142-20 trust company, in the presence of a notary public who is not an
142-21 officer or employee of the state trust company and who is bonded in
142-22 an amount and by sureties approved by the banking commissioner,
142-23 shall inventory the property and may open a safe, vault, box,
142-24 package, parcel, or receptacle in the custody or possession of the
142-25 state trust company to make the inventory. The property shall be
142-26 marked to identify, to the extent possible, its owner or the person
142-27 who left it with the state trust company. After all property
143-1 belonging to others that is in the state trust company's custody
143-2 and control has been inventoried, a master list certified by the
143-3 state trust company officer and the notary public shall be
143-4 furnished to the banking commissioner. The master list shall be
143-5 kept in a place and dealt with in a manner the banking commissioner
143-6 specifies pending delivery of the property to its owner or to the
143-7 comptroller as unclaimed property.
143-8 Sec. 7.104. FIDUCIARY ACTIVITIES. (a) As soon after
143-9 publication of the notice of dissolution as is practicable, the
143-10 state trust company shall terminate all fiduciary positions it
143-11 holds, surrender all property held by it as a fiduciary, and settle
143-12 its fiduciary accounts.
143-13 (b) Unless all fiduciary accounts are settled and
143-14 transferred by the last date specified in published notices or by
143-15 the banking commissioner and unless the banking commissioner
143-16 directs otherwise, the state trust company shall mail individual
143-17 notices to each trustor and beneficiary of any remaining trust,
143-18 escrow arrangement, or other fiduciary relationship advising the
143-19 person of an office location open during normal business hours and
143-20 a telephone number at that location where administration of the
143-21 remaining fiduciary accounts will continue until settled or
143-22 transferred.
143-23 Sec. 7.105. FINAL LIQUIDATION. (a) After the state trust
143-24 company has taken all of the actions specified by Sections 7.102,
143-25 7.103, and 7.104 of this Act and has paid all its debts and
143-26 obligations and transferred all property for which a legal claimant
143-27 has been found after the time for presentation of claims has
144-1 expired, the state trust company shall, under oath or affirmation
144-2 of a majority of its board or managing participants, make a list
144-3 from its books of the names of each depositor, creditor, owner of
144-4 personal property in the state trust company's possession or
144-5 custody, or lessee of any safe, vault, or box, who has not claimed
144-6 or has not received a deposit, debt, dividend, interest, balance,
144-7 or other amount or property due to the person.
144-8 (b) The list, accompanied by any necessary identifying
144-9 information, shall be filed with the banking commissioner. The
144-10 state trust company shall pay any unclaimed funds and deliver any
144-11 unclaimed property to the comptroller as provided by Chapter 74,
144-12 Property Code, and certify to the banking commissioner that the
144-13 unclaimed funds and property have been paid or delivered.
144-14 (c) After the banking commissioner has reviewed the list and
144-15 has reconciled the unclaimed cash and property with the amounts of
144-16 money and property reported and transferred to the comptroller, the
144-17 banking commissioner shall allow the state trust company to
144-18 distribute the state trust company's remaining assets, if any,
144-19 among its shareholders, participants, or participant-transferees as
144-20 their ownership interests appear.
144-21 (d) After distribution of all remaining assets, the state
144-22 trust company shall:
144-23 (1) file with the department, under the oath or
144-24 affirmation of a majority of its board or managing participants,
144-25 another affidavit accompanied by schedules showing the distribution
144-26 to each shareholder, participant, or participant-transferee; and
144-27 (2) tender to the department:
145-1 (A) all copies of reports of examination of the
145-2 state trust company in its possession; and
145-3 (B) its original charter, or an affidavit
145-4 stating that the original charter is lost, and any branch
145-5 certificates of authority.
145-6 (e) After verifying the submitted information and documents,
145-7 the banking commissioner shall issue a certificate canceling the
145-8 charter of the state trust company.
145-9 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF REMEDIES.
145-10 (a) A state trust company in the process of voluntary dissolution
145-11 and liquidation remains subject to this Act, including provisions
145-12 for examination by the banking commissioner, and the state trust
145-13 company shall furnish reports required by the banking commissioner.
145-14 (b) The banking commissioner may authorize a deviation from
145-15 the procedures for voluntary dissolution in this subchapter if the
145-16 banking commissioner determines that the interests of claimants are
145-17 not jeopardized by the deviation.
145-18 (c) If the banking commissioner determines that the
145-19 voluntary liquidation is being conducted in an improper or illegal
145-20 manner or is not in the best interests of the state trust company's
145-21 clients and creditors or that the state trust company is insolvent
145-22 or imminently insolvent, the banking commissioner may close the
145-23 state trust company for involuntary dissolution and liquidation
145-24 under this chapter.
145-25 (d) After a state trust company's charter has been
145-26 voluntarily surrendered and canceled, the state trust company may
145-27 not resume business or reopen except on application for and
146-1 approval of a new charter.
146-2 (Sections 7.107-7.200 reserved for expansion)
146-3 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
146-4 Sec. 7.201. ACTION TO CLOSE STATE TRUST COMPANY. (a) The
146-5 banking commissioner may close and liquidate a state trust company
146-6 on finding that:
146-7 (1) the interests of its clients and creditors are
146-8 jeopardized by the state trust company's insolvency or imminent
146-9 insolvency; and
146-10 (2) the best interests of clients and creditors would
146-11 be served by requiring that the state trust company be closed and
146-12 its assets liquidated.
146-13 (b) A majority of the state trust company's directors,
146-14 managers, or managing participants may voluntarily close the state
146-15 trust company and place it with the banking commissioner for
146-16 liquidation.
146-17 Sec. 7.202. INVOLUNTARY CLOSING. (a) After closing a state
146-18 trust company under Section 7.201 of this Act, the banking
146-19 commissioner shall place a sign at its main entrance stating that
146-20 the state trust company has been closed and the findings on which
146-21 the closing of the state trust company is based. A correspondent
146-22 bank of the closed state trust company may not pay an item drawn on
146-23 the account of the closed state trust company that is presented for
146-24 payment after the correspondent has received actual notice of
146-25 closing unless it previously certified the item for payment.
146-26 (b) As soon as practicable after posting the sign at the
146-27 state trust company's main entrance, the banking commissioner shall
147-1 tender the state trust company to the Federal Deposit Insurance
147-2 Corporation as provided by Section 7.004 of this Act or initiate a
147-3 receivership proceeding by filing a copy of the notice contained on
147-4 the sign in a district court in the county where the state trust
147-5 company's home office is located. The court in which the notice is
147-6 filed shall docket it as a case styled, "In re liquidation of ____"
147-7 (inserting the name of the state trust company). As soon as this
147-8 notice is filed, the court has constructive custody of all the
147-9 state trust company's assets, and any action initiated that seeks
147-10 to directly or indirectly affect state trust company assets is
147-11 considered to be an intervention in the receivership proceeding and
147-12 subject to this subchapter and Subchapter D of this chapter.
147-13 (c) Venue for an action instituted to effect, contest, or
147-14 otherwise intervene in the liquidation of a state trust company is
147-15 in Travis County, except that on motion filed and served
147-16 concurrently with or before the filing of the answer, the court
147-17 may, upon a finding of good cause, transfer the action to the
147-18 county of the state trust company's home office.
147-19 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP. (a) The
147-20 court may not require a bond from the banking commissioner as
147-21 receiver. Any reference in this chapter to the receiver is a
147-22 reference to the banking commissioner as receiver and any
147-23 successors in office, the Federal Deposit Insurance Corporation if
147-24 acting as receiver as provided by Section 7.004 of this Act and
147-25 federal law, or an independent receiver appointed at the request of
147-26 the banking commissioner as provided by Section 7.003 of this Act.
147-27 The receiver and all employees and agents acting on behalf of the
148-1 receiver are acting in an official capacity and are subject to the
148-2 protection of Section 2.010, Texas Banking Act (Article 342-2.010,
148-3 Vernon's Texas Civil Statutes). The acts of the receiver are the
148-4 acts of the state trust company in liquidation and this state and
148-5 its political subdivisions are not liable and may not be held
148-6 accountable for any debt or obligation of a state trust company in
148-7 receivership.
148-8 (b) The receiver has all the powers of the directors,
148-9 managers, managing participants, officers, and shareholders or
148-10 participants of the state trust company as necessary to support an
148-11 action taken on behalf of the state trust company.
148-12 (c) Section 64.072, Civil Practice and Remedies Code,
148-13 applies to the receivership of a state trust company except as
148-14 provided by this subsection. A state trust company receivership
148-15 shall be administered continuously for the length of time necessary
148-16 to complete its purposes, and a period prescribed by other law
148-17 limiting the time for the administration of receiverships or of
148-18 corporate affairs generally, including Section 64.072(d), Civil
148-19 Practice and Remedies Code, does not apply.
148-20 Sec. 7.204. CONTEST OF LIQUIDATION. (a) A state trust
148-21 company, acting through a majority of its directors, managers, or
148-22 managing participants, may intervene in the action filed by the
148-23 banking commissioner to challenge the banking commissioner's
148-24 closing of the state trust company and to enjoin the banking
148-25 commissioner or other receiver from liquidating its assets. The
148-26 intervenors must file the intervention not later than the second
148-27 business day after the closing of the state trust company,
149-1 excluding legal holidays. The court may issue an ex parte order
149-2 restraining the receiver from liquidating state trust company
149-3 assets pending a hearing on the injunction. The receiver shall
149-4 comply with the restraining order but may petition the court for
149-5 permission to liquidate an asset as necessary to prevent its loss
149-6 or diminution pending the outcome of the injunction.
149-7 (b) The court shall hear this action as quickly as possible
149-8 and shall give it priority over other business.
149-9 (c) The state trust company or receiver may appeal the
149-10 court's judgment as in other civil cases, except that the receiver
149-11 shall retain all state trust company assets pending a final
149-12 appellate court order even if the banking commissioner does not
149-13 prevail in the trial court. If the banking commissioner prevails
149-14 in the trial court, liquidation of the state trust company may
149-15 proceed unless the trial court or appellate court orders otherwise.
149-16 If liquidation is enjoined or stayed pending appeal, the trial
149-17 court retains jurisdiction to permit liquidation of an asset as
149-18 necessary to prevent its loss or diminution pending the outcome of
149-19 the appeal.
149-20 Sec. 7.205. NOTICE OF STATE TRUST COMPANY CLOSING. (a) As
149-21 soon as reasonably practicable after initiation of the receivership
149-22 proceeding, the receiver shall publish notice, in a newspaper of
149-23 general circulation in each community where the state trust
149-24 company's home office and a branch are located. The notice must
149-25 state that the state trust company has been closed for liquidation,
149-26 that clients and creditors must present their claims for payment on
149-27 or before a specific date, and that all safe deposit box holders
150-1 and bailors of property left with the state trust company should
150-2 remove their property not later than a specified date. The
150-3 receiver shall select the dates to allow the affairs of the state
150-4 trust company to be wound up as quickly as feasible while allowing
150-5 creditors, clients, and owners of property adequate time for
150-6 presentation of claims, withdrawal of accounts, and redemption of
150-7 property, but may not select a date before the 121st day after the
150-8 date of the notice. The receiver may adjust the dates with the
150-9 approval of the court with or without republication of notice if
150-10 additional time appears needed for these activities.
150-11 (b) As soon as reasonably practicable given the state of
150-12 state trust company records and the adequacy of staffing, the
150-13 receiver shall mail to each of the state trust company's known
150-14 clients, creditors, safe deposit box holders, and bailors of
150-15 property left with the state trust company, at the mailing address
150-16 shown on the state trust company's records, an individual notice
150-17 containing the information required in a notice under Subsection
150-18 (a) of this section and specific information pertinent to the
150-19 account or property of the addressee.
150-20 (c) The receiver may determine the form and content notices
150-21 under this section.
150-22 Sec. 7.206. INVENTORY. As soon as reasonably practicable
150-23 given the state of state trust company records and the adequacy of
150-24 staffing, the receiver shall prepare a comprehensive inventory of
150-25 the state trust company's assets for filing with the court. The
150-26 inventory shall be open to inspection.
150-27 Sec. 7.207. TITLE IN RECEIVER. (a) The receiver has the
151-1 title to all the state trust company's property, contracts, and
151-2 rights of action, wherever located, beginning on the date the state
151-3 trust company is closed for liquidation.
151-4 (b) The rights of the receiver have priority over a
151-5 contractual lien or statutory landlord's lien under Chapter 54,
151-6 Property Code, judgment lien, attachment lien, or voluntary lien
151-7 that arises after the date of the closing of the state trust
151-8 company for liquidation.
151-9 (c) The filing or recording of a receivership order in a
151-10 record office of this state gives the same notice that would be
151-11 given by a deed, bill of sale, or other evidence of title duly
151-12 filed or recorded by the state trust company in liquidation. The
151-13 recording clerk shall index a recorded receivership order in the
151-14 records to which the order relates.
151-15 Sec. 7.208. RIGHTS FIXED. The rights and liabilities of the
151-16 state trust company in liquidation and of a client, creditor,
151-17 officer, director, manager, managing participant, employee,
151-18 shareholder, participant, participant-transferee, agent, or other
151-19 person interested in the state trust company's estate are fixed on
151-20 the date of closing of the state trust company for liquidation
151-21 except as otherwise directed by the court or as expressly provided
151-22 otherwise by this subchapter or Subchapter D of this chapter.
151-23 Sec. 7.209. DEPOSITORIES. (a) The receiver may deposit
151-24 funds collected on behalf of the state trust company estate in:
151-25 (1) the Texas Treasury Safekeeping Trust Company in
151-26 accordance with procedures established by the comptroller; or
151-27 (2) one or more depository institutions in this state,
152-1 the deposits of which are insured by the Federal Deposit Insurance
152-2 Corporation or its successor, if the receiver, using sound
152-3 financial judgment, determines that it would be advantageous to do
152-4 so.
152-5 (b) If receivership funds deposited in an account at a state
152-6 bank exceed the maximum insured amount, the receiver shall require
152-7 the excess deposit to be adequately secured through pledge of
152-8 securities or otherwise, without approval of the court. The
152-9 depository bank may secure the deposits of the state trust company
152-10 in liquidation on behalf of the receiver, notwithstanding any other
152-11 provision of this Act.
152-12 Sec. 7.210. PENDING LAWSUITS. (a) A judgment or order of a
152-13 court of this state or of any other jurisdiction in an action
152-14 pending by or against the state trust company, rendered after the
152-15 date the state trust company was closed for liquidation, is not
152-16 binding on the receiver unless the receiver was made a party to the
152-17 suit.
152-18 (b) Before the first anniversary of the date the state trust
152-19 company was closed for liquidation, the receiver may not be
152-20 required to plead to any suit pending against the state trust
152-21 company in a court in this state on the date the state trust
152-22 company was closed for liquidation and in which the receiver is a
152-23 proper plaintiff or defendant.
152-24 (c) Sections 64.052, 64.053, and 64.056, Civil Practice and
152-25 Remedies Code, do not apply to a state trust company estate being
152-26 administered under this subchapter and Subchapter D of this
152-27 chapter.
153-1 Sec. 7.211. NEW LAWSUITS. (a) Except as otherwise provided
153-2 by this section, the court in which the receivership proceeding is
153-3 pending under this subchapter has exclusive jurisdiction to hear
153-4 and determine all actions or proceedings instituted by or against
153-5 the state trust company or receiver after the receivership
153-6 proceeding starts.
153-7 (b) The receiver may file in any jurisdiction an ancillary
153-8 suit that may be helpful to obtain jurisdiction or venue over a
153-9 person or property.
153-10 (c) Exclusive venue of an action or proceeding instituted
153-11 against the receiver or the receiver's employee, including an
153-12 employee of the department, that asserts personal liability on the
153-13 part of the receiver or employee lies in Travis County.
153-14 Sec. 7.212. RECORDS WITH THIRD PARTIES. (a) Each state
153-15 trust company affiliate, officer, director, manager, managing
153-16 participant, employee, shareholder, participant,
153-17 participant-transferee, trustee, agent, servant, employee,
153-18 attorney, attorney-in-fact, or correspondent shall immediately
153-19 deliver to the receiver any property, book, record, account,
153-20 document, or other writing of the state trust company or that
153-21 relates to the business of the state trust company without cost to
153-22 the receiver.
153-23 (b) If by contract or otherwise any book, record, account,
153-24 document, or other property that can be copied is the property of a
153-25 person listed in Subsection (a) of this section, it shall be
153-26 copied, the copy shall be delivered to the receiver, and the
153-27 original shall be retained by the owner until notification by the
154-1 receiver that it is no longer required in the administration of the
154-2 state trust company's estate or at another time the court, after
154-3 notice and hearing, directs. A copy is considered to be a record
154-4 of the state trust company in liquidation under Section 7.225 of
154-5 this Act.
154-6 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION. (a) On
154-7 application by the receiver, the court may with or without notice
154-8 issue an injunction:
154-9 (1) restraining each state trust company officer,
154-10 director, manager, managing participant, employee, shareholder,
154-11 participant, participant-transferee, trustee, agent, servant,
154-12 employee, attorney, attorney-in-fact, accountant or accounting
154-13 firm, correspondent, or another person from transacting the state
154-14 trust company's business or wasting or disposing of its property;
154-15 or
154-16 (2) requiring the delivery of its property or assets
154-17 to the receiver subject to the further order of the court.
154-18 (b) The court, at any time during a proceeding under this
154-19 subchapter, may issue another injunction or order considered
154-20 necessary or desirable to prevent:
154-21 (1) interference with the receiver or the proceeding;
154-22 (2) waste of the assets of the state trust company;
154-23 (3) the beginning or prosecution of an action;
154-24 (4) the obtaining of a preference, judgment,
154-25 attachment, garnishment, or other lien; or
154-26 (5) the making of a levy against the state trust
154-27 company or against its assets.
155-1 Sec. 7.214. SUBPOENA. (a) In addition to the authority
155-2 granted by law to the receiver relating to the taking of a
155-3 deposition of a witness in a civil action, the receiver may request
155-4 the court ex parte to issue a subpoena to compel the attendance and
155-5 testimony of a witness before the receiver and the production of a
155-6 book, account, record, paper, or correspondence or other record
155-7 relating to the receivership estate. For this purpose, the
155-8 receiver or the receiver's designated representative may administer
155-9 an oath or affirmation, examine a witness, or receive evidence.
155-10 The court has statewide subpoena power and may compel attendance
155-11 and production of a record before the receiver at the state trust
155-12 company, the office of the receiver, or another location.
155-13 (b) A person served with a subpoena under this section may
155-14 file a motion with the court for a protective order as provided by
155-15 Rule 166b, Texas Rules of Civil Procedure. In a case of
155-16 disobedience of a subpoena, or of the contumacy of a witness
155-17 appearing before the receiver or the receiver's designated
155-18 representative, the receiver may request and the court may issue an
155-19 order requiring the person subpoenaed to obey the subpoena, give
155-20 evidence, or produce a book, account, record, paper, or
155-21 correspondence or other record relating to the matter in question.
155-22 (c) Each witness who is required to appear before the
155-23 receiver is entitled to receive:
155-24 (1) reimbursement for mileage, in the amount for
155-25 travel by state employees, for traveling to or returning from a
155-26 proceeding that is more than 25 miles from the witness's residence;
155-27 and
156-1 (2) a fee of not less than $10 a day and not more than
156-2 an amount equal to the per diem travel allowance of a state
156-3 employee for each day or part of a day the witness is necessarily
156-4 present as a witness, as established by the receiver with the
156-5 approval of the court.
156-6 (d) All disbursements made in the payment of fees under
156-7 Subsection (c) of this section are administrative expenses of
156-8 liquidation.
156-9 (e) The receiver may serve the subpoena or have it served by
156-10 the receiver's authorized agent, a sheriff, or a constable. The
156-11 sheriff's or constable's fee for serving a subpoena must be the
156-12 same as the fee paid the sheriff or constable for similar services.
156-13 (f) A subpoena issued under this section to a financial
156-14 institution is not subject to Section 30.007, Civil Practice and
156-15 Remedies Code, as added by Chapter 914, Acts of the 74th
156-16 Legislature, Regular Session, 1995.
156-17 (g) On certification by the receiver under official seal, a
156-18 book, account, record, paper, correspondence, or other record or
156-19 document produced or testimony taken as provided by this section
156-20 and held by the receiver is admissible in evidence in any case
156-21 without prior proof of its correctness and without other proof
156-22 except the certificate of the receiver that the book, account,
156-23 record, paper, correspondence, document, or testimony was received
156-24 from the person producing the material or testifying. The
156-25 certified book, account, record, paper, correspondence, or other
156-26 record or document, or a certified copy of such a document, is
156-27 prima facie evidence of the facts it contains. This section does
157-1 not limit another provision of this subchapter, Subchapter D of
157-2 this chapter, or another law that provides for the admission of
157-3 evidence or its evidentiary value.
157-4 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS. (a) Not
157-5 later than six months after the date the receivership proceeding
157-6 begins, the receiver may terminate any executory contract to which
157-7 the state trust company is a party, or any obligation of the state
157-8 trust company as a lessee. A lessor who receives notice of the
157-9 receiver's election to terminate the lease before the 60th day
157-10 preceding the termination date is not entitled to rent or damages
157-11 for termination, other than rent accrued to the date of
157-12 termination.
157-13 (b) An agreement that tends to diminish or defeat the
157-14 interest of the estate in a state trust company asset is not valid
157-15 against the receiver unless the agreement:
157-16 (1) is in writing;
157-17 (2) was executed by the state trust company and any
157-18 person claiming an adverse interest under the agreement, including
157-19 the obligor, at the same time as the acquisition of the asset by
157-20 the state trust company;
157-21 (3) was approved by the board of the state trust
157-22 company or its designated committee, and the approval is reflected
157-23 in the minutes of the board or committee; and
157-24 (4) has been continuously since its execution an
157-25 official record of the state trust company.
157-26 Sec. 7.216. PREFERENCES. (a) Any transfer of or lien on
157-27 the property or assets of a state trust company is voidable by the
158-1 receiver if the transfer or lien:
158-2 (1) is made or created after:
158-3 (A) four months before the date the state trust
158-4 company is closed for liquidation; or
158-5 (B) one year before the date the state trust
158-6 company is closed for liquidation if the receiving creditor was at
158-7 the time an affiliate, officer, director, manager, managing
158-8 participant, principal shareholder, or participant of the state
158-9 trust company or an affiliate of the trust company;
158-10 (2) was made or created with the intent of giving to a
158-11 creditor or depositor, or enabling a creditor or depositor to
158-12 obtain, a greater percentage of the claimant's debt than is given
158-13 or obtained by another claimant of the same class; and
158-14 (3) is accepted by a creditor or depositor having
158-15 reasonable cause to believe that a preference will occur.
158-16 (b) Each state trust company officer, director, manager,
158-17 managing participant, employee, shareholder, participant,
158-18 participant-transferee, trustee, agent, servant, employee,
158-19 attorney-in-fact, or correspondent, or other person acting on
158-20 behalf of the state trust company, who has participated in
158-21 implementing a voidable transfer or lien, and each person receiving
158-22 property or the benefit of property of the state trust company as a
158-23 result of the voidable transfer or lien, is personally liable for
158-24 the property or benefit received and shall account to the receiver
158-25 for the benefit of the clients and creditors of the state trust
158-26 company.
158-27 (c) The receiver may avoid a transfer of or lien on the
159-1 property or assets of a state trust company that a client,
159-2 creditor, shareholder, participant, or participant-transferee of
159-3 the state trust company could have avoided and may recover the
159-4 property transferred or its value from the person to whom it was
159-5 transferred or from a person who has received it, unless the
159-6 transferee or recipient was a bona fide holder for value before the
159-7 date the state trust company was closed for liquidation.
159-8 Sec. 7.217. OTHER POWERS OF RECEIVER; ADMINISTRATIVE
159-9 EXPENSES. The receiver may employ agents, legal counsel,
159-10 accountants, appraisers, consultants, and other personnel the
159-11 receiver considers necessary to assist in the performance of the
159-12 receiver's duties. The receiver may use personnel of the
159-13 department if the receiver considers the use to be advantageous or
159-14 desirable. The expense of employing these persons is an
159-15 administrative expense of liquidation.
159-16 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS. (a) In
159-17 the course of liquidating a state trust company, the receiver on
159-18 order of the court entered with or without hearing may:
159-19 (1) sell all or part of the real and personal property
159-20 of the state trust company;
159-21 (2) borrow money and pledge all or part of the assets
159-22 of the state trust company to secure the debt created, except that
159-23 the receiver may not be held personally liable to repay borrowed
159-24 funds;
159-25 (3) compromise or compound a doubtful or uncollectible
159-26 debt or claim owed by or owing to the state trust company; and
159-27 (4) enter another agreement on behalf of the state
160-1 trust company that the receiver considers necessary or proper to
160-2 the management, conservation, or liquidation of its assets.
160-3 (b) If the amount of a debt or claim owed by or owing to the
160-4 state trust company or the value of an item of property of the
160-5 trust company does not exceed $20,000, excluding interest, the
160-6 receiver may compromise or compound the debt or claim or sell the
160-7 property on terms the receiver considers to be in the best
160-8 interests of the state trust company estate without obtaining the
160-9 approval of the court.
160-10 (c) The receiver may with the approval of the court sell or
160-11 offer or agree to sell an asset of the state trust company, other
160-12 than fiduciary assets, to a depositor or creditor of the state
160-13 trust company. Payment may be in whole or in part out of
160-14 distributions payable to the purchasing creditor or depositor on
160-15 account of an approved claim against the state trust company's
160-16 estate. On application by the receiver, the court may designate
160-17 one or more representatives to act for certain clients or creditors
160-18 as a class in the purchase, holding, and management of assets
160-19 purchased by the class under this section, and the receiver may
160-20 with the approval of the court advance the expenses of the
160-21 appointed representative against the security of the claims of the
160-22 class.
160-23 Sec. 7.219. DISCRETION OF COURT. If the court requires
160-24 notice and hearing before entering an order, the court shall fix
160-25 the time and place of the hearing and prescribe whether the notice
160-26 is to be given by service on specific parties, by publication, or
160-27 by a combination of these methods. The court may not enter an
161-1 order requested by a person other than the receiver without notice
161-2 to the receiver and an opportunity for the receiver to be heard.
161-3 Sec. 7.220. FILING REPORTS; EXPENSES. (a) The receiver
161-4 shall file quarterly reports with the court showing the operation,
161-5 receipts, expenditures, and general condition of the state trust
161-6 company in liquidation. The receiver shall also file a final
161-7 report regarding the liquidated state trust company showing all
161-8 receipts and expenditures and giving a full explanation and a
161-9 statement of the disposition of all assets of the state trust
161-10 company.
161-11 (b) The receiver shall pay all administrative expenses out
161-12 of funds or assets of the state trust company. Each quarter the
161-13 receiver shall submit an itemized report of those expenses, sworn
161-14 to by the receiver. The court shall approve the report unless an
161-15 objection is filed before the 11th day after the date of submission
161-16 of the account. An objection, if any, may be made only by a party
161-17 in interest and must specify each item objected to and the ground
161-18 for the objection. The court shall set the objection for hearing
161-19 and notify the parties of this action. The objecting party has the
161-20 burden of proof to show that the item objected to is improper,
161-21 unnecessary, or excessive.
161-22 (c) The court may prescribe whether the notice of the
161-23 receiver's report is to be given by service on specific parties, by
161-24 publication, or by a combination of these methods.
161-25 Sec. 7.221. COURT-ORDERED AUDIT. The court in which the
161-26 receivership proceeding is pending may order an audit of the books
161-27 and records of the receiver that relate to the receivership. A
162-1 report of an audit ordered under this section shall be filed with
162-2 the court. The receiver shall make the books and records relating
162-3 to the receivership available to the auditor as required by the
162-4 court order. The receiver shall pay the expenses of an audit
162-5 ordered under this section as an administrative expense.
162-6 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
162-7 contract between the state trust company and another person for
162-8 bailment, of deposit for hire, or for the lease of a safe, vault,
162-9 or box ceases on the date specified for removal of property in the
162-10 notices that were published and mailed or a later date approved by
162-11 the receiver or the court. A person who has paid rental or storage
162-12 charges for a period extending beyond the date designated as the
162-13 date for removal of property shall have a claim against the state
162-14 trust company estate for a refund of any unearned amount paid.
162-15 (b) If the property is not removed by the date specified in
162-16 the notices or by the receiver or the court, the receiver shall
162-17 inventory the property and may open a safe, vault, or box, or any
162-18 package, parcel, or receptacle, in the custody or possession of the
162-19 receiver, to make the inventory. The property shall be marked to
162-20 identify, to the extent possible, its owner or the person who left
162-21 it with the state trust company. After all property belonging to
162-22 others that is in the receiver's custody and control has been
162-23 inventoried, the receiver shall compile a master list that is
162-24 divided for each office of the state trust company that received
162-25 property that remains unclaimed. The receiver shall publish, in a
162-26 newspaper of general circulation in each community in which the
162-27 state trust company had an office that received property that
163-1 remains unclaimed, the list and the names of the owners of the
163-2 property as shown in the state trust company's records. The
163-3 published notice shall specify a procedure for claiming the
163-4 property, unless the court, on application of the receiver,
163-5 approves an alternate procedure.
163-6 Sec. 7.223. FIDUCIARY ACTIVITIES. (a) As soon after
163-7 beginning the receivership proceeding as is practicable, the
163-8 receiver shall terminate all fiduciary positions it holds,
163-9 surrender all property held by it as a fiduciary, and settle the
163-10 state trust company's fiduciary accounts. The receiver shall
163-11 release all segregated and identifiable fiduciary property held by
163-12 the state trust company to successor fiduciaries.
163-13 (b) With the approval of the court, the receiver may sell
163-14 the administration of all or substantially all remaining fiduciary
163-15 accounts to one or more successor fiduciaries on terms that appear
163-16 to be in the best interests of the state trust company's estate and
163-17 the persons interested in the fiduciary accounts.
163-18 (c) If commingled fiduciary funds held by the state trust
163-19 company as trustee are insufficient to satisfy all fiduciary claims
163-20 to the commingled funds, the receiver shall distribute commingled
163-21 funds pro rata to all fiduciary claimants of commingled funds based
163-22 on their proportionate interests after payment of administrative
163-23 expenses related solely to the fiduciary claims. The fictional
163-24 tracing rule does not apply.
163-25 (d) The receiver may require certain fiduciary claimants to
163-26 file proofs of claim if the records of the state trust company are
163-27 insufficient to identify their respective interests.
164-1 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS. (a) On
164-2 approval by the court, the receiver may dispose of records of the
164-3 state trust company in liquidation that are obsolete and
164-4 unnecessary to the continued administration of the receivership
164-5 proceeding.
164-6 (b) The receiver may devise a method for the effective,
164-7 efficient, and economical maintenance of the records of the state
164-8 trust company and of the receiver's office, including maintaining
164-9 those records on any medium approved by the records management
164-10 division of the Texas State Library.
164-11 (c) To maintain the records of a liquidated state trust
164-12 company after the closing of the receivership proceeding, the
164-13 receiver may reserve assets of an estate, deposit them in an
164-14 account, and use them for maintenance, storage, and disposal of
164-15 records in closed receivership estates.
164-16 (d) Records of a liquidated state trust company are not
164-17 government records for any purpose, including Chapter 552,
164-18 Government Code, but shall be preserved and disposed of as if they
164-19 were records of the department under Chapter 441, Government Code.
164-20 These records are confidential as provided by Subchapter B, Chapter
164-21 2, of this Act, rules adopted under this Act, and Section 30.007,
164-22 Civil Practice and Remedies Code, as added by Chapter 914, Acts of
164-23 the 74th Legislature, Regular Session, 1995.
164-24 Sec. 7.225. RECORDS ADMITTED. (a) A book, record,
164-25 document, or paper of a state trust company in liquidation obtained
164-26 by the receiver and held in the course of the receivership
164-27 proceeding, or a certified copy of such a record under the official
165-1 seal of the receiver shall be received in evidence in all cases
165-2 without proof of correctness or other proof, except the certificate
165-3 of the receiver that the records were received from the custody of
165-4 the state trust company or found among its effects.
165-5 (b) The receiver may certify the correctness of a paper,
165-6 document, or record of the receiver's office, including those
165-7 described by Subsection (a) of this section, and may certify any
165-8 fact contained in the paper, document, or record. The paper,
165-9 document, or record shall be received in evidence in all cases in
165-10 which the original would be evidence.
165-11 (c) The original book, record, document, or paper, or a
165-12 certified copy of such a record is prima facie evidence of the
165-13 facts it contains.
165-14 (d) A copy of an original record or another record that is
165-15 maintained on a medium approved by the records management division
165-16 of the Texas State Library, within the scope of this section, and
165-17 produced by the receiver or the receiver's authorized
165-18 representative under this section has the same force and effect as
165-19 the original record and may be used the same as the original record
165-20 in a judicial or administrative proceeding in this state.
165-21 Sec. 7.226. RESUMPTION OF BUSINESS. (a) A state trust
165-22 company closed under Section 7.201 of this Act may not be reopened
165-23 without the approval of the banking commissioner unless a contest
165-24 of liquidation under Section 7.204 of this Act is finally resolved
165-25 adversely to the banking commissioner and the court authorizes its
165-26 reopening.
165-27 (b) If a state trust company reopens under this section, the
166-1 banking commissioner may place temporary limits on the right of
166-2 withdrawals by, or payments to, individual clients and creditors,
166-3 in accordance with applicable law.
166-4 (c) As a depositor or creditor of a reopened state trust
166-5 company, this state or a political subdivision of this state may
166-6 agree to temporary limits that the banking commissioner places on
166-7 payments or withdrawals.
166-8 Sec. 7.227. AFTER-DISCOVERED ASSETS. (a) If the banking
166-9 commissioner discovers, after the receivership has been closed by
166-10 final order of the court, assets that have value and were abandoned
166-11 as worthless or unknown during receivership, the banking
166-12 commissioner shall report the discovery to the court. The court
166-13 may reopen the receivership proceeding for continued liquidation
166-14 if the value of the after-discovered assets justifies the
166-15 reopening.
166-16 (b) If the banking commissioner suspects that the
166-17 information may have been intentionally or fraudulently concealed,
166-18 the banking commissioner shall notify appropriate civil and
166-19 criminal authorities to determine what penalties, if any, may be
166-20 available.
166-21 (Sections 7.228-7.300 reserved for expansion)
166-22 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
166-23 Sec. 7.301. FILING CLAIMS. (a) A person other than a
166-24 shareholder, participant, or participant-transferee acting in that
166-25 capacity who has a claim against a state trust company in
166-26 liquidation, including a claimant with a secured claim and a
166-27 claimant under a fiduciary relationship that has been ordered by
167-1 the receiver to file a claim pursuant to Section 7.223 of this Act,
167-2 may assert the claim by presenting proof of the claim to the
167-3 receiver at a place specified by the receiver within the period
167-4 specified by the receiver under Section 7.205 of this Act. Receipt
167-5 of the required proof of claim by the receiver is a condition
167-6 precedent to the payment of a claim. Except as provided by
167-7 Subsection (b) of this section and Section 7.310(b) of this Act, a
167-8 claim that is not filed within the period specified by the court
167-9 may not participate in a distribution of the assets by the
167-10 receiver. Interest does not accrue on a claim after the date the
167-11 state trust company is closed for liquidation.
167-12 (b) Subject to court approval, the receiver may accept a
167-13 claim filed after the date specified if the claim is filed with the
167-14 receiver not later than the 180th day after the date notice of the
167-15 claimant's right to file a proof of claim is mailed to the
167-16 claimant. If accepted and approved, the claim is subordinate to an
167-17 approved claim of a general creditor.
167-18 Sec. 7.302. PROOF OF CLAIM. (a) A proof of claim must be a
167-19 written statement signed by the claimant that includes:
167-20 (1) the claim;
167-21 (2) the consideration for the claim;
167-22 (3) a statement of whether collateral is held or a
167-23 security interest is asserted against the claim and, if so, a
167-24 description of the collateral held or security interest asserted;
167-25 (4) any right of priority of payment for the claim or
167-26 other specific right asserted by the claimant;
167-27 (5) a statement of whether a payment has been made on
168-1 the claim and, if so, the amount and source of the payment, to the
168-2 extent known by the claimant;
168-3 (6) a statement that the amount claimed is justly owed
168-4 by the state trust company in liquidation to the claimant; and
168-5 (7) any other matter that is required by the court in
168-6 which the receivership is pending.
168-7 (b) The receiver may designate the form of the proof of
168-8 claim. A proof of claim shall be filed under oath unless the oath
168-9 is waived by the receiver. A proof of claim filed with the
168-10 receiver is considered filed in an official proceeding for purposes
168-11 of Chapter 37, Penal Code.
168-12 (c) If a claim is founded on an instrument in writing, the
168-13 original instrument, unless lost or destroyed, shall be filed with
168-14 the proof of claim. After the instrument is filed, the receiver
168-15 may permit the claimant to substitute a copy of the instrument
168-16 until the final disposition of the claim. If the instrument is
168-17 lost or destroyed, a statement of that fact and of the
168-18 circumstances of the loss or destruction shall be filed under oath
168-19 with the claim.
168-20 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM. A judgment entered
168-21 against a state trust company before the date the state trust
168-22 company was closed for liquidation may not be given higher priority
168-23 than an unsecured creditor unless the judgment creditor in a proof
168-24 of claim proves the allegations supporting the judgment to the
168-25 receiver's satisfaction. A judgment against the state trust
168-26 company entered after the date the state trust company was closed
168-27 for liquidation may not be considered as evidence of liability or
169-1 of the amount of damages. A judgment against the state trust
169-2 company taken by default or by collusion before the date the state
169-3 trust company was closed for liquidation may not be considered as
169-4 conclusive evidence of the liability of the state trust company to
169-5 the judgment creditor or of the amount of damages to which the
169-6 judgment creditor is entitled.
169-7 Sec. 7.304. SECURED CLAIMS. (a) The owner of a secured
169-8 deposit may file a claim as a creditor against a state trust
169-9 company in liquidation. The value of security shall be determined
169-10 under supervision of the court by converting the security into
169-11 money.
169-12 (b) The owner of a secured claim against a state trust
169-13 company in liquidation may surrender the security and file a claim
169-14 as a general creditor or apply the security to the claim and
169-15 discharge the claim. If the owner applies the security and
169-16 discharges the claim, any deficiency shall be treated as a claim
169-17 against the general assets of the state trust company on the same
169-18 basis as a claim of an unsecured creditor. The amount of the
169-19 deficiency shall be determined as provided by Section 7.305 of this
169-20 Act, except that if the amount of the deficiency has been
169-21 adjudicated by a court of competent jurisdiction in a proceeding in
169-22 which the receiver has had notice and an opportunity to be heard,
169-23 the court's decision is conclusive as to the amount.
169-24 (c) The value of security held by a secured creditor shall
169-25 be determined under supervision of the court by:
169-26 (1) converting the security into money according to
169-27 the terms of the agreement under which the security was delivered
170-1 to the creditor; or
170-2 (2) agreement, arbitration, compromise, or litigation
170-3 between the creditor and the receiver.
170-4 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS. (a) A
170-5 claim based on an unliquidated or undetermined demand shall be
170-6 filed within the period provided by Subchapter C of this chapter
170-7 for the filing of a claim. The claim may not share in any
170-8 distribution to claimants until the claim is definitely liquidated,
170-9 determined, and allowed. After the claim is liquidated,
170-10 determined, and allowed, the claim shares ratably with the claims
170-11 of the same class in all subsequent distributions.
170-12 (b) For the purposes of this section, a demand is considered
170-13 unliquidated or undetermined if the right of action on the demand
170-14 accrued while a state trust company was closed for liquidation and
170-15 the liability on the demand has not been determined or the amount
170-16 of the demand has not been liquidated.
170-17 (c) If the receiver in all other respects is in a position
170-18 to close the receivership proceeding, the proposed closing is
170-19 sufficient grounds for the rejection of any remaining claim based
170-20 on an unliquidated or undetermined demand. The receiver shall
170-21 notify the claimant of the intention to close the proceeding. If
170-22 the demand is not liquidated or determined before the 61st day
170-23 after the date of the notice, the receiver may reject the claim.
170-24 Sec. 7.306. SET-OFF. (a) Mutual credits and mutual debts
170-25 shall be set off and only the balance allowed or paid, except that
170-26 a set-off may not be allowed in favor of a person if:
170-27 (1) the obligation of a state trust company to the
171-1 person did not on the date the state trust company was closed for
171-2 liquidation entitle the person to share as a claimant in the assets
171-3 of the state trust company;
171-4 (2) the obligation of the state trust company to the
171-5 person was purchased by or transferred to the person after the date
171-6 the state trust company was closed for liquidation or for the
171-7 purpose of increasing set-off rights; or
171-8 (3) the obligation of the person or the state trust
171-9 company is as a trustee or fiduciary.
171-10 (b) On request, the receiver shall provide a person with an
171-11 accounting statement identifying each debt that is due and payable.
171-12 If a person owes a state trust company an amount that is due and
171-13 payable against which the person asserts set-off of mutual credits
171-14 that may become due and payable from the state trust company in the
171-15 future, the person shall promptly pay to the receiver the amount
171-16 due and payable. The receiver shall promptly refund, to the
171-17 extent of the person's prior payment, mutual credits that become
171-18 due and payable to the person by the state trust company in
171-19 liquidation.
171-20 Sec. 7.307. ACTION ON CLAIMS. (a) Not later than six
171-21 months after the last day permitted for the filing of claims or a
171-22 later date allowed by the court, the receiver shall accept or
171-23 reject each filed claim in whole or in part, except for an
171-24 unliquidated or undetermined claim governed by Section 7.305 of
171-25 this Act. The receiver may approve or reject a claim filed against
171-26 a state trust company in liquidation, and shall reject a claim if
171-27 the receiver doubts its validity.
172-1 (b) The receiver shall mail written notice to each claimant,
172-2 specifying the disposition of the person's claim. If a claim is
172-3 rejected in whole or in part, the receiver in the notice shall
172-4 specify the basis for rejection and advise the claimant of the
172-5 procedures and deadline for appeal.
172-6 (c) The receiver shall send each claimant a summary schedule
172-7 of approved and rejected claims by priority class and notify the
172-8 claimant:
172-9 (1) that a copy of a schedule of claims disposition
172-10 including only the name of the claimant, the amount of the claim
172-11 allowed, and the amount of the claim rejected is available on
172-12 request; and
172-13 (2) of the procedure and deadline for filing objection
172-14 to an approved claim.
172-15 (d) The receiver and the receiver's agents and employees,
172-16 including employees of the department, are not liable for and a
172-17 cause of action may not be brought against any of them for an
172-18 action taken or not taken by them relating to the adjustment,
172-19 negotiation, or settlement of claims.
172-20 Sec. 7.308. OBJECTION TO APPROVED CLAIM. On or before the
172-21 date specified for objection to an approved claim, which shall be
172-22 set by the receiver with court approval, a depositor, creditor,
172-23 other claimant, shareholder, participant, or participant-transferee
172-24 of the state trust company may file an objection to an approved
172-25 claim. The objection shall be heard and determined by the court.
172-26 If the objection is sustained, the court shall direct an
172-27 appropriate modification of the schedule.
173-1 Sec. 7.309. APPEAL OF REJECTED CLAIM. If an action on a
173-2 rejected claim is not brought in the court in which the
173-3 receivership proceeding is pending within three months after the
173-4 date of service of notice, the action of the receiver is final and
173-5 not subject to review. If the action is timely brought, review is
173-6 de novo as if originally filed in the court and subject to the
173-7 rules of procedure and appeal applicable to civil cases. This
173-8 action is separate from the receivership proceeding and is not
173-9 initiated by a claimant's attempt to appeal the action of the
173-10 receiver by intervening in the receivership proceeding.
173-11 Sec. 7.310. PAYMENT OF CLAIMS. (a) Except as expressly
173-12 provided otherwise by this subchapter or Subchapter C of this
173-13 chapter, without the approval of the court the receiver may not
173-14 make a payment on a claim, other than a claim for an obligation
173-15 incurred by the receiver for administrative expenses.
173-16 (b) The banking commissioner shall deposit in one or more
173-17 banks located in this state all funds available for the benefit of
173-18 nonclaiming depositors and creditors. The banking commissioner
173-19 shall pay the depositors or creditors on demand any amount held for
173-20 their benefit.
173-21 (c) After all objections have been heard and decided as
173-22 provided by Section 7.308 of this Act, the time for filing appeals
173-23 has expired as provided by Section 7.309 of this Act, and funds
173-24 have been made available to provide for the payment of all
173-25 nonclaiming depositors and creditors in accordance with Subsection
173-26 (b) of this section, the receiver may periodically make partial
173-27 distribution to the holders of approved claims if a proper reserve
174-1 is established for the pro rata payment of rejected claims that
174-2 have been appealed and any claims based on unliquidated or
174-3 undetermined demands governed by Section 7.305 of this Act.
174-4 (d) As soon as practicable after the determination of all
174-5 objections, appeals, and claims based on previously unliquidated or
174-6 undetermined demands governed by Section 7.305 of this Act and
174-7 funds have been made available to provide for the payment of all
174-8 nonclaiming depositors and creditors in accordance with Subsection
174-9 (b) of this section, the receiver shall distribute the assets of
174-10 the state trust company in satisfaction of approved claims other
174-11 than claims asserted in a person's capacity as a shareholder,
174-12 participant, or participant-transferee.
174-13 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED STATE TRUST
174-14 COMPANY. The distribution of assets from the estate of a state
174-15 trust company the trust deposits of which are insured by the
174-16 Federal Deposit Insurance Corporation or its successor shall be
174-17 made in the same order of priority as assets would be distributed
174-18 on liquidation or purchase of assets and assumption of liabilities
174-19 of a national bank under federal law.
174-20 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED STATE TRUST
174-21 COMPANY. (a) The priority of distribution of assets from the
174-22 estate of a state trust company the trust deposits of which are not
174-23 insured by the Federal Deposit Insurance Corporation or its
174-24 successor shall be in accordance with the order of each class as
174-25 provided by this section. Every claim in each class shall be paid
174-26 in full, or adequate funds shall be retained for that payment,
174-27 before the members of the next class receive any payment. A
175-1 subclass may not be established within a class, except for a
175-2 preference or subordination within a class expressly created by
175-3 contract or other instrument or in the articles of association.
175-4 (b) Assets shall be distributed in the following order of
175-5 priority:
175-6 (1) administrative expenses;
175-7 (2) approved claims of secured trust deposits to the
175-8 extent of the value of the security as provided by Section 7.304(a)
175-9 of this Act;
175-10 (3) approved claims of secured creditors to the extent
175-11 of the value of the security as provided by Section 7.304(b) of
175-12 this Act;
175-13 (4) approved claims by beneficiaries of insufficient
175-14 commingled fiduciary funds or missing fiduciary property and
175-15 approved claims of clients of the state trust company;
175-16 (5) other approved claims of general creditors not
175-17 falling within a higher priority under this section, including
175-18 unsecured claims for taxes and debts due the federal government or
175-19 a state or local government;
175-20 (6) approved claims of a type described by
175-21 Subdivisions (1)-(5) of this subsection that were not filed within
175-22 the period prescribed by this subchapter; and
175-23 (7) claims of capital note or debenture holders or
175-24 holders of similar obligations and proprietary claims of
175-25 shareholders, participants, participant-transferees, or other
175-26 owners according to the terms established by issue, class, or
175-27 series.
176-1 (c) Subject to Sections 7.310 and 7.313 of this Act and
176-2 after fully satisfying all timely filed and approved claims of a
176-3 higher priority, the banking commissioner may make a ratable
176-4 distribution to approved claimants within a particular class or
176-5 priority if there are insufficient funds to fully satisfy all of
176-6 those claims, after reserving funds for administrative expenses, if
176-7 necessary.
176-8 Sec. 7.313. EXCESS ASSETS. (a) If state trust company
176-9 assets remain after the receiver has provided for unclaimed
176-10 distributions and all of the liabilities of the state trust company
176-11 in liquidation, the receiver shall distribute the remaining assets
176-12 to the shareholders or participants of the state trust company. If
176-13 the remaining assets are not liquid or otherwise require continuing
176-14 administration, the receiver may call a meeting of the shareholders
176-15 or participants and participant-transferees of the state trust
176-16 company by giving notice in a newspaper of general circulation in
176-17 the county where the home office of the state trust company was
176-18 located and by written notice to the shareholders or participants
176-19 and participant-transferees of record at their last known
176-20 addresses.
176-21 (b) At the meeting, the shareholders or participants shall
176-22 appoint one or more agents to take over the affairs to continue the
176-23 liquidation for the benefit of the shareholders or participants and
176-24 participant-transferees. Voting privileges are governed by the
176-25 state trust company's bylaws and articles of association. If a
176-26 quorum cannot be obtained at the meeting, the banking commissioner
176-27 shall appoint an agent.
177-1 (c) An agent appointed under Subsection (b) of this section
177-2 shall execute and file with the court a bond approved by the court,
177-3 conditioned on the faithful performance of all the duties of the
177-4 trust. Under order of the court the receiver shall transfer and
177-5 deliver to the agent or agents for continued liquidation under the
177-6 court's supervision all assets of the state trust company remaining
177-7 in the receiver's hands, and the court shall discharge the receiver
177-8 from further liability to the state trust company and its clients,
177-9 creditors, shareholders, participants, and participant-transferees.
177-10 The state trust company may not resume business and the charter of
177-11 the state trust company is void on the date the court issues the
177-12 order directing the receiver to transfer and deliver the remaining
177-13 assets of the state trust company to the agent or agents.
177-14 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY. After completion
177-15 of the liquidation, any unclaimed property remaining in the hands
177-16 of the receiver shall be tendered to the comptroller as provided by
177-17 Chapter 74, Property Code.
177-18 CHAPTER 8. GENERAL PROVISIONS
177-19 Sec. 8.001. LIABILITIES, DEFENSES, AND INDEMNIFICATION
177-20 OF CORPORATE OFFICIALS
177-21 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION
177-22 Sec. 8.003. SLANDER OR LIBEL OF STATE TRUST COMPANY
177-23 Sec. 8.004. AUTHORITY TO ACT AS NOTARY PUBLIC
177-24 Sec. 8.005. EXEMPTION FROM SECURITIES LAW
177-25 Sec. 8.006. SUCCESSION OF TRUST POWERS
177-26 Sec. 8.007. DISCOVERY OF CLIENT RECORDS
177-27 Sec. 8.008. COMPLIANCE REVIEW COMMITTEE
178-1 Sec. 8.009. PARITY
178-2 CHAPTER 8. GENERAL PROVISIONS
178-3 Sec. 8.001. LIABILITIES, DEFENSES, AND INDEMNIFICATION OF
178-4 CORPORATE OFFICIALS. (a) The provisions of the Texas Business
178-5 Corporation Act regarding liability, defenses, and indemnification
178-6 of a director, officer, agent, or employee apply to a director,
178-7 officer, agent, or employee of a state trust company in this state.
178-8 Except as limited by those provisions, a disinterested director,
178-9 manager, managing participant, officer, or employee of a state
178-10 trust company may not be held personally liable in an action
178-11 seeking monetary damages arising from the conduct of the state
178-12 trust company's affairs unless the damages resulted from the gross
178-13 negligence or wilful or intentional misconduct of the person during
178-14 the person's term of office with the state trust company.
178-15 (b) A director, manager, managing participant, officer, or
178-16 employee of a state trust company is disinterested with respect to
178-17 a decision or transaction if the director, manager, managing
178-18 participant, officer, or employee fully discloses any interest in
178-19 the decision or transaction and does not participate in the
178-20 decision or transaction, or if the decision or transaction does not
178-21 involve:
178-22 (1) personal profit for the director, manager,
178-23 managing participant, officer, or employee through dealing with the
178-24 state trust company or usurping an opportunity of the trust
178-25 company;
178-26 (2) buying or selling assets of the state trust
178-27 company in a transaction in which the director, manager, managing
179-1 participant, officer, or employee has a direct or indirect
179-2 pecuniary interest;
179-3 (3) dealing with a state trust company or other person
179-4 in which the director, manager, managing participant, officer, or
179-5 employee is also a director, manager, managing participant,
179-6 officer, or employee or otherwise has a significant direct or
179-7 indirect financial interest; or
179-8 (4) dealing with a family member of the director,
179-9 manager, managing participant, officer, or employee.
179-10 (c) A director, manager, managing participant, or officer
179-11 who, in performing the person's duties and functions, acts in good
179-12 faith and reasonably believes that reliance is warranted is
179-13 entitled to rely on information or an opinion, report, statement,
179-14 including a financial statement or other financial data, decision,
179-15 judgment, or performance, including a decision, judgment, or
179-16 performance by a committee, prepared, presented, made, or rendered
179-17 by:
179-18 (1) one or more directors, managers, managing
179-19 participants, officers, or employees of the state trust company, or
179-20 of an entity under joint or common control with the state trust
179-21 company, who the director, manager, managing participant, or
179-22 officer reasonably believes merits confidence;
179-23 (2) legal counsel, a public accountant, or another
179-24 person who the director, manager, managing participant, or officer
179-25 reasonably believes merits confidence; or
179-26 (3) a committee of the board of which the director,
179-27 manager, or managing participant is not a member.
180-1 (d) In this section, "family member" means a person's:
180-2 (1) spouse;
180-3 (2) minor child; or
180-4 (3) adult child who resides in the person's home.
180-5 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION. (a) An
180-6 attachment, injunction, or execution for the purpose of collecting
180-7 a money judgment or securing a prospective money judgment against a
180-8 state trust company may not be issued against a state trust company
180-9 located in this state before the judgment is final and all appeals
180-10 have been exhausted or foreclosed by law.
180-11 (b) This section does not affect an attachment, injunction,
180-12 execution, or writ of garnishment issued to or served on a state
180-13 trust company for the purpose of collecting a money judgment or
180-14 securing a prospective money judgment against a client of or client
180-15 account in the state trust company.
180-16 Sec. 8.003. SLANDER OR LIBEL OF STATE TRUST COMPANY. (a) A
180-17 person commits an offense if the person:
180-18 (1) knowingly makes, circulates, or transmits to
180-19 another person an untrue statement that is derogatory to the
180-20 financial condition of a state trust company located in this state;
180-21 or
180-22 (2) intentionally, to injure the state trust company,
180-23 counsels, aids, procures, or induces another person to knowingly
180-24 make, circulate, or transmit to another person an untrue statement
180-25 that is derogatory to the financial condition of a state trust
180-26 company located in this state.
180-27 (b) An offense under this section is a state jail felony.
181-1 Sec. 8.004. AUTHORITY TO ACT AS NOTARY PUBLIC. A notary
181-2 public is not disqualified from taking an acknowledgment or proof
181-3 of a written instrument as provided by Section 406.016, Government
181-4 Code, solely because of the person's ownership of stock or
181-5 participation interest in or employment by a state trust company
181-6 that is an interested party in the underlying transaction.
181-7 Sec. 8.005. EXEMPTION FROM SECURITIES LAW. (a) An officer,
181-8 director, manager, managing participant, or employee of a state
181-9 trust company with fewer than 500 shareholders or participants or a
181-10 holding company with fewer than 500 shareholders or participants
181-11 that controls a state trust company is exempt from the registration
181-12 and licensing provisions of The Securities Act (Article 581-1 et
181-13 seq., Vernon's Texas Civil Statutes) with respect to that person's
181-14 participation in a sale or other transaction involving securities
181-15 issued by the state trust company or the holding company of which
181-16 that person is an officer, director, manager, managing participant,
181-17 or employee.
181-18 (b) A person may not be compensated for services performed
181-19 under the exemption provided by this section.
181-20 Sec. 8.006. SUCCESSION OF TRUST POWERS. If a reorganizing
181-21 or selling state trust company at the time of a merger,
181-22 reorganization, conversion, or sale of substantially all of its
181-23 assets under Chapter 3 of this Act or other applicable law is
181-24 acting as trustee, guardian, executor, or administrator, or in
181-25 another fiduciary capacity, the successor entity with fiduciary
181-26 powers may, without the necessity of judicial action or action by
181-27 the creator of the trust, continue the office, trust, or fiduciary
182-1 relationship. The successor entity may perform all the duties and
182-2 exercise all the powers connected with or incidental to the
182-3 fiduciary relationship in the same manner as if the successor
182-4 entity had been originally designated as the fiduciary.
182-5 Sec. 8.007. DISCOVERY OF CLIENT RECORDS. Civil discovery of
182-6 a client record maintained by a state trust company is governed by
182-7 Section 30.007, Civil Practice and Remedies Code, as added by
182-8 Chapter 914, Acts of the 74th Legislature, Regular Session, 1995.
182-9 Sec. 8.008. COMPLIANCE REVIEW COMMITTEE. (a) In this
182-10 section:
182-11 (1) "Civil action" means a civil proceeding pending in
182-12 a court or other adjudicatory tribunal with jurisdiction to issue a
182-13 request or subpoena for records, including an alternative dispute
182-14 resolution mechanism, voluntary or required, under which a party
182-15 may compel the production of records. The term does not include an
182-16 examination or enforcement proceeding initiated by the Federal
182-17 Deposit Insurance Corporation or its successor and the board of
182-18 governors of the Federal Reserve System or its successor, in
182-19 exercise of their jurisdiction.
182-20 (2) "Compliance review document" means a document
182-21 prepared for or created by a compliance review committee.
182-22 (b) A state trust company or an affiliate of a state trust
182-23 company, including its holding company, may establish a compliance
182-24 review committee to test, review, or evaluate the institution's
182-25 conduct, transactions, or potential transactions for the purpose of
182-26 monitoring and improving or enforcing compliance with:
182-27 (1) a statutory or regulatory requirement;
183-1 (2) financial reporting to a governmental agency;
183-2 (3) the policies and procedures of the state trust
183-3 company or its affiliates; or
183-4 (4) safe, sound, and fair lending practices.
183-5 (c) Except as provided by Subsection (d) of this section:
183-6 (1) a compliance review document is confidential and
183-7 is not discoverable or admissible in evidence in a civil action;
183-8 (2) an individual serving on a compliance review
183-9 committee or acting under the direction of a compliance review
183-10 committee may not be required to testify in a civil action as to
183-11 the contents or conclusions of a compliance review document or as
183-12 to an action taken or discussions conducted by or for a compliance
183-13 review committee; and
183-14 (3) a compliance review document or an action taken or
183-15 discussion conducted by or for a compliance review committee that
183-16 is disclosed to a governmental agency remains confidential and is
183-17 not discoverable or admissible in a civil action.
183-18 (d) Subsection (c)(2) of this section does not apply to an
183-19 individual that has management responsibility for the operations,
183-20 records, employees, or activities being examined or evaluated by
183-21 the compliance review committee.
183-22 (e) This section does not limit the discovery or
183-23 admissibility in a civil action of a document that is not a
183-24 compliance review document.
183-25 Sec. 8.009. PARITY. (a) A state trust company has the same
183-26 rights and privileges with respect to the exercise of fiduciary
183-27 powers that are or may be granted to a state or national bank that
184-1 is domiciled in this state and exercising fiduciary powers.
184-2 (b) A state trust company that intends to exercise a right
184-3 or privilege with respect to the exercise of fiduciary powers
184-4 granted to a regulated financial institution described in
184-5 Subsection (a) of this section that is not authorized for state
184-6 trust companies under the statutes and rules of this state shall
184-7 submit a letter to the banking commissioner, describing in detail
184-8 the activity in which the state trust company intends to engage and
184-9 the specific authority for the regulated financial institution
184-10 described in Subsection (a) to undertake the proposed activity and
184-11 shall attach copies, if available, of relevant state and federal
184-12 law, including regulations and interpretive letters. The state
184-13 trust company may begin to perform the proposed activity after the
184-14 30th day after the date the banking commissioner receives the state
184-15 trust company's letter unless the banking commissioner specifies an
184-16 earlier or later date or prohibits the activity. The banking
184-17 commissioner may prohibit the state trust company from performing
184-18 the activity only if the banking commissioner finds that:
184-19 (1) a regulated financial institution described in
184-20 Subsection (a) of this section that is domiciled in this state does
184-21 not possess the specific right or privilege to perform the activity
184-22 the state trust company seeks to perform; or
184-23 (2) the performance of the activity by the state trust
184-24 company would adversely affect the safety and soundness of the
184-25 requesting state trust company.
184-26 (c) The banking commissioner may extend the 30-day period
184-27 under Subsection (b) of this section if the banking commissioner
185-1 determines that the state trust company's letter raises issues
185-2 requiring additional information or additional time for analysis.
185-3 If the 30-day period is extended, the state trust company may
185-4 perform the proposed activity only on prior written approval by the
185-5 banking commissioner, except that the banking commissioner must
185-6 approve or prohibit the proposed activity or convene a hearing
185-7 under Section 3.009 of this Act not later than the 60th day after
185-8 the date the commissioner receives the state trust company's
185-9 letter. If a hearing is convened under Section 3.009 of this Act,
185-10 the banking commissioner must approve or prohibit the proposed
185-11 activity not later than the 30th day after the date the hearing is
185-12 completed.
185-13 (d) A state trust company that is denied the requested right
185-14 or privilege to engage in an activity by the banking commissioner
185-15 under this section may appeal as provided by Section 3.010 of this
185-16 Act or may resubmit a letter under this subsection with additional
185-17 information or authority relevant to the banking commissioner's
185-18 determination. A denial is immediately final for purposes of
185-19 appeal.
185-20 (e) The finance commission may adopt rules implementing the
185-21 method or manner in which a state trust company exercises specific
185-22 rights and privileges, including rules regarding the exercise of
185-23 rights and privileges that would be prohibited to state trust
185-24 companies. The finance commission may not adopt rules under this
185-25 subsection unless it finds that:
185-26 (1) regulated financial institutions described in
185-27 Subsection (a) of this section that are domiciled in this state
186-1 possess the rights or privileges to perform activities the rules
186-2 would permit state trust companies to perform; and
186-3 (2) the rules contain adequate safeguards and
186-4 controls, consistent with safety and soundness, to address the
186-5 concern of the legislature evidenced by the state law the rules
186-6 would impact.
186-7 (f) The exercise of rights and privileges by a state trust
186-8 company in compliance with and in the manner authorized by this
186-9 section is not a violation of any statute of this state.
186-10 SECTION 2. Section 2001.223, Government Code, is amended to
186-11 read as follows:
186-12 Sec. 2001.223. Exceptions From Declaratory Judgment, Court
186-13 Enforcement, and Contested Case Provisions. Section 2001.038 and
186-14 Subchapters C through H do not apply to:
186-15 (1) the granting, payment, denial, or withdrawal of
186-16 financial or medical assistance or benefits under service programs
186-17 of the Texas Department of Human Services;
186-18 (2) action by the Banking Commissioner or the Finance
186-19 Commission of Texas regarding the issuance of a state bank or state
186-20 trust company charter for a bank or trust company to assume the
186-21 assets and liabilities of a financial institution that the
186-22 commissioner considers to be in hazardous condition as defined by
186-23 Section 1.002(a), Texas Banking Act (Article 342-1.002, Vernon's
186-24 Texas Civil Statutes), or Section 1.002(a), Texas Trust Company
186-25 Act, as applicable;
186-26 (3) a hearing or interview conducted by the Board of
186-27 Pardons and Paroles or the pardons and paroles division of the
187-1 Texas Department of Criminal Justice relating to the grant,
187-2 rescission, or revocation of parole or other form of administrative
187-3 release; or
187-4 (4) the suspension, revocation, or termination of the
187-5 certification of a breath analysis operator or technical supervisor
187-6 under the rules of the Department of Public Safety.
187-7 SECTION 3. Section 712.0441(h), Health and Safety Code, is
187-8 amended to read as follows:
187-9 (h) If a fund is misappropriated by its trustee or is not
187-10 otherwise handled as required by this chapter, the commissioner may
187-11 take action against the trustee as provided in Chapter 6, Texas
187-12 Trust Company Act [Articles 342-1104 and 342-1105 of The Texas
187-13 Banking Code].
187-14 SECTION 4. Section 1, Article 9.05, Insurance Code, is
187-15 amended to read as follows:
187-16 Sec. 1. Any corporation heretofore chartered under the
187-17 provisions of Article 9.03 of this Act, or its antecedents, Article
187-18 9.01, Texas Insurance Code, or Chapter 40, Acts, 41st Legislature,
187-19 1929 (codified as Article 1302a, Vernon's Texas Civil Statutes),
187-20 having as one of its powers "to act as trustee under any lawful
187-21 trust committed to it by contract or will, appointment by any court
187-22 having jurisdiction of the subject matter, as trustee, receiver or
187-23 guardian and as executor or guardian under the terms of any will
187-24 and as any administrator of the estates of decedents under the
187-25 appointment of the court" may transfer and assign to a state bank
187-26 [or trust company] created under the provisions of the Texas
187-27 Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
188-1 Statutes) or a predecessor of that Act, as amended, or to a state
188-2 trust company created under the provisions of the Texas Trust
188-3 Company Act or a predecessor of that Act, as amended, all of its
188-4 fiduciary business in which such corporation is named or acting as
188-5 guardian, trustee, executor, administrator or in any other
188-6 fiduciary capacity, whereupon said state bank or trust company
188-7 shall, without the necessity of any judicial action in the courts
188-8 of the State of Texas or any action by the creator or beneficiary
188-9 of such trust or estate, continue the guardianship, trusteeship,
188-10 executorship, administration or other fiduciary relationship, and
188-11 perform all of the duties and obligations of such corporation, and
188-12 exercise all of the powers and authority relative thereto now being
188-13 exercised by such corporation, and provided further that the
188-14 transfer or assignment by such corporation of such fiduciary
188-15 business being conducted by it under the powers granted in its
188-16 original charter, as amended, shall not constitute or be deemed a
188-17 resignation or refusal to act upon the part of such corporation as
188-18 to any such guardianship, trust, executorship, administration, or
188-19 any other fiduciary capacity; and provided further that the naming
188-20 or designation by a testator or the creator of a living trust of
188-21 such corporation to act as trustee, guardian, executor, or in any
188-22 other fiduciary capacity, shall be considered the naming or
188-23 designation of the state bank or trust company and authorizing such
188-24 state bank or trust company to act in said fiduciary capacity. All
188-25 transfers and assignments of fiduciary business by such
188-26 corporations to a state bank or trust company consistent with the
188-27 provisions of this Act are hereby validated.
189-1 SECTION 5. Section 105A(c), Texas Probate Code, is amended
189-2 to read as follows:
189-3 (c) No foreign bank or trust company shall establish or
189-4 maintain any branch office, agency or other place of business
189-5 within this state, or shall in any way solicit, directly or
189-6 indirectly, any fiduciary business in this state of the types
189-7 embraced by subdivision (a) hereof. Except as authorized herein or
189-8 as may otherwise be authorized by the laws of this state, no
189-9 foreign bank or trust company shall act in a fiduciary capacity in
189-10 this state. Nothing in this Section shall be construed to
189-11 authorize foreign banks and trust companies to issue or to sell or
189-12 otherwise market or distribute in this state any investment
189-13 certificates, trust certificates, or other types of securities
189-14 (including without limiting the generality of the foregoing any
189-15 securities of the types authorized by Chapter 7 of the Insurance
189-16 Code of 1951 prior to the repeal thereof), or to conduct any
189-17 activities or exercise any powers of the type embraced and
189-18 regulated by the Texas Banking Act (Article 342-1.001 et seq.,
189-19 Vernon's Texas Civil Statutes) or the Texas Trust Company Act other
189-20 than those conducted and exercised in a fiduciary capacity under
189-21 the terms and conditions hereof.
189-22 SECTION 6. Section 2.13, Texas Savings Bank Act (Article
189-23 489e, Vernon's Texas Civil Statutes), is amended to read as
189-24 follows:
189-25 Sec. 2.13. The name of a savings bank must include the words
189-26 "State Savings Bank" or the abbreviation "SSB." These words or the
189-27 abbreviation must be preceded by an appropriate descriptive word or
190-1 words approved by the commissioner. The commissioner may not
190-2 approve the incorporation of a savings bank having the same name as
190-3 another financial institution authorized to do business in this
190-4 state under this Act, the Texas Savings and Loan Act (Article 852a,
190-5 Vernon's Texas Civil Statutes), [or] the Texas Banking Act (Article
190-6 342-1.001 et seq., Vernon's Texas Civil Statutes), or the Texas
190-7 Trust Company Act or a name so nearly resembling the name of
190-8 another financial institution as to be calculated to deceive unless
190-9 the savings bank is formed by the reincorporation, reorganization,
190-10 or consolidation of the other financial institution or on the sale
190-11 of the property or franchise of the other savings bank. A person
190-12 or company, either domestic or foreign, other than a state or
190-13 federal savings bank, may not do business under a name or title
190-14 that contains the words "savings bank," that indicates or
190-15 reasonably implies that the business is the character or kind of
190-16 business carried on or transacted by a savings bank, or that is
190-17 calculated to lead any person to believe that its business is that
190-18 of a savings bank. On application by the commissioner or any
190-19 savings bank, a court of competent jurisdiction may issue an
190-20 injunction to restrain a person or company from violating this
190-21 section.
190-22 SECTION 7. Article 7.06(2), Texas Miscellaneous Corporation
190-23 Laws Act (Article 1302-7.06, Vernon's Texas Civil Statutes), is
190-24 amended to read as follows:
190-25 (2) "Corporation" means:
190-26 (a) Any corporation, association, or other
190-27 organization incorporated or organized under the Texas Business
191-1 Corporation Act, the Texas Non-Profit Corporation Act (Article
191-2 1396-1.01 et seq., Vernon's Texas Civil Statutes), the Texas
191-3 Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
191-4 Statutes) or a predecessor of that Act, the Texas Trust Company Act
191-5 or a predecessor of that Act, the Insurance Code, the Texas Savings
191-6 and Loan Act (Article 852a, Vernon's Texas Civil Statutes), Chapter
191-7 76, Acts of the 43rd Legislature, 1st Called Session, 1933 (Article
191-8 1434a, Vernon's Texas Civil Statutes), the Texas Credit Union Act
191-9 (Article 2461-1.01 et seq., Vernon's Texas Civil Statutes), the
191-10 Cooperative Association Act (Article 1396-50.01, Vernon's Texas
191-11 Civil Statutes), Articles 1399 through 1407, Revised Statutes,
191-12 Article 1448, Revised Statutes, Section 2, Chapter 42, Acts of the
191-13 42nd Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's
191-14 Texas Civil Statutes), the State Housing Law (Article 1528a,
191-15 Vernon's Texas Civil Statutes), the Electric Cooperative
191-16 Corporation Act (Article 1528b, Vernon's Texas Civil Statutes), the
191-17 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
191-18 Statutes), the Automobile Club Services Act (Article 1528d,
191-19 Vernon's Texas Civil Statutes), the Texas Professional Corporation
191-20 Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
191-21 Professional Association Act (Article 1528f, Vernon's Texas Civil
191-22 Statutes), the Texas Mutual Trust Investment Company Act (Article
191-23 1528i, Vernon's Texas Civil Statutes), Chapter 221, Health and
191-24 Safety Code, the Texas Transportation Corporation Act (Article
191-25 1528l, Vernon's Texas Civil Statutes), the Cultural Education
191-26 Facilities Corporation Act (Article 1528m, Vernon's Texas Civil
191-27 Statutes), Chapter 262, Health and Safety Code, Chapter 264, Health
192-1 and Safety Code, Title 4, Agriculture [Agricultural] Code,
192-2 Subchapter A, Chapter 301, Health and Safety Code, Subchapter B,
192-3 Chapter 301, Health and Safety Code, or the Higher Education
192-4 Authority Act, Chapter 53, Education Code;
192-5 (b) Any corporation, association, or other
192-6 organization incorporated or organized under the laws of this state
192-7 that is governed in whole or in part by the Texas Business
192-8 Corporation Act, the Texas Non-Profit Corporation Act (Article
192-9 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
192-10 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
192-11 Vernon's Texas Civil Statutes); or
192-12 (c) To the extent permitted by federal law, any
192-13 federally chartered bank, savings and loan association, or credit
192-14 union.
192-15 SECTION 8. Section 6, Acts of the 60th Legislature, Regular
192-16 Session, 1967 (Article 5069-50.04, Vernon's Texas Civil Statutes),
192-17 is amended to read as follows:
192-18 Sec. 6. The provisions of this Act are cumulative of the
192-19 Texas Banking Act; the Texas Trust Company Act; the "Texas Savings
192-20 and Loan Act," as amended; and Articles 2461 through 2484, Revised
192-21 Civil Statutes of Texas, 1925, as amended and the amendments
192-22 thereto, and Section 5 of House Bill No. 47, Acts of the 46th
192-23 Legislature, Regular Session, 1939, and Chapter 173, Acts of the
192-24 51st Legislature, Regular Session, 1949, relating to Credit Unions
192-25 and the amendments thereto.
192-26 SECTION 9. Chapter XI, The Texas Banking Code (Article
192-27 342-1101 et seq., Vernon's Texas Civil Statutes), is repealed.
193-1 SECTION 10. A change in law made by this Act does not
193-2 affect:
193-3 (1) the validity of any action taken by the Finance
193-4 Commission of Texas or banking commissioner of Texas before the
193-5 effective date of this Act; or
193-6 (2) a civil, criminal, or administrative proceeding
193-7 completed before the effective date of this Act.
193-8 SECTION 11. A trust company that exists on the effective
193-9 date of this Act retains the powers provided by its charter and is
193-10 subject to the jurisdiction and control of the banking commissioner
193-11 of Texas as if it were a trust company chartered under the Texas
193-12 Trust Company Act, as added by this Act.
193-13 SECTION 12. (a) The changes in criminal law made by this
193-14 Act apply only to an offense committed on or after the effective
193-15 date of this Act. For purposes of this section, an offense is
193-16 committed before the effective date of this Act if any element of
193-17 the offense occurs before that date.
193-18 (b) The repeal of a criminal law made by this Act does not
193-19 apply to an offense committed under the repealed law before the
193-20 effective date of this Act.
193-21 (c) An offense committed before the effective date of this
193-22 Act is covered by the law in effect when the offense was committed,
193-23 and the former law is continued in effect for that purpose.
193-24 SECTION 13. A principal shareholder or participant that is
193-25 considered to control a state trust company under Section 4.001(a),
193-26 Texas Trust Company Act, as added by this Act, is not required to
193-27 file a change of control application under Section 4.002, Texas
194-1 Trust Company Act, as added by this Act, until the person acquires
194-2 one or more additional shares or participation shares of the state
194-3 trust company on or after the effective date of this Act.
194-4 SECTION 14. The changes in civil enforcement provisions,
194-5 penalties, and procedures made by Chapter 6, Texas Trust Company
194-6 Act, as added by this Act, do not apply to a civil enforcement
194-7 proceeding begun by the service of a notice for hearing or proposed
194-8 civil enforcement order by the banking commissioner before the
194-9 effective date of this Act. That proceeding is governed by the law
194-10 in effect when the proceeding was begun, and that law is continued
194-11 in effect for that purpose.
194-12 SECTION 15. (a) If this Act conflicts with another Act of
194-13 the 75th Legislature, Regular Session, 1997, other than an Act
194-14 adopting a nonsubstantive revision of statutes relating to
194-15 financial institutions and practices:
194-16 (1) the change in law made in the other Act prevails
194-17 and the substance of the change is given effect as part of the
194-18 Texas Trust Company Act adopted by this Act unless:
194-19 (A) this Act or the conflicting Act expressly
194-20 provides otherwise; or
194-21 (B) it is not possible to give the conflicting
194-22 law effect within the context of the Texas Trust Company Act, in
194-23 which event the Texas Trust Company Act prevails; and
194-24 (2) the text of a law that is reenacted in the other
194-25 Act only because of the constitutional requirement that the amended
194-26 law be reenacted at length is superseded by this Act.
194-27 (b) If this Act conflicts with an Act of the 75th
195-1 Legislature, Regular Session, 1997, adopting a nonsubstantive
195-2 revision of statutes relating to financial institutions and
195-3 practices, this Act prevails.
195-4 (c) If this Act and another Act of the 75th Legislature,
195-5 Regular Session, 1997, make the same substantive change from the
195-6 current law but differ in text, this Act prevails regardless of the
195-7 relative dates of enactment.
195-8 SECTION 16. This Act takes effect September 1, 1997.
195-9 SECTION 17. The importance of this legislation and the
195-10 crowded condition of the calendars in both houses create an
195-11 emergency and an imperative public necessity that the
195-12 constitutional rule requiring bills to be read on three several
195-13 days in each house be suspended, and this rule is hereby suspended.