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
14-26 commission.
14-27 (b) The presence or absence in this Act of a specific
15-1 reference to rules regarding a particular subject does not enlarge
15-2 or diminish the rulemaking authority conferred by this section.
15-3 CHAPTER 2. POWERS AND DUTIES OF TEXAS DEPARTMENT OF BANKING
15-4 SUBCHAPTER A. OPERATION OF DEPARTMENT
15-5 Sec. 2.001. INTERPRETIVE STATEMENTS AND OPINIONS
15-6 Sec. 2.002. EXAMINATION
15-7 Sec. 2.003. STATEMENTS OF CONDITION AND INCOME
15-8 Sec. 2.004. LIABILITY LIMITED
15-9 (Sections 2.005-2.100 reserved for expansion)
15-10 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
15-11 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED
15-12 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION
15-13 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES
15-14 Sec. 2.104. OTHER DISCLOSURE PROHIBITED
15-15 Sec. 2.105. CIVIL DISCOVERY
15-16 Sec. 2.106. INVESTIGATIVE INFORMATION
15-17 Sec. 2.107. EMPLOYMENT INFORMATION
15-18 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS
15-19 CHAPTER 2. POWERS AND DUTIES OF TEXAS DEPARTMENT OF BANKING
15-20 SUBCHAPTER A. OPERATION OF DEPARTMENT
15-21 Sec. 2.001. INTERPRETIVE STATEMENTS AND OPINIONS. (a) The
15-22 banking commissioner may issue interpretive statements containing
15-23 matters of general policy for the guidance of state trust
15-24 companies. The banking commissioner shall file the statements for
15-25 publication in the Texas Register. The banking commissioner may
15-26 amend or repeal a published interpretive statement by issuing an
15-27 amended statement or notice of repeal of a statement and filing the
16-1 statement or notice for publication in the Texas Register. The
16-2 secretary of state shall publish the filed statements and notices
16-3 in the Texas Register and in a designated chapter of the Texas
16-4 Administrative Code.
16-5 (b) The banking commissioner may issue an opinion in
16-6 response to a specific request from a member of the public or the
16-7 state trust company industry directly or through the deputy banking
16-8 commissioner or the department's attorneys. If the banking
16-9 commissioner determines that the opinion is useful for the general
16-10 guidance of trust companies, the banking commissioner may file the
16-11 opinion for publication in the Texas Register. A published opinion
16-12 must be redacted in a manner that preserves the confidentiality of
16-13 the requesting party, unless the requesting party consents to be
16-14 identified in the published opinion. The banking commissioner may
16-15 amend or repeal a published opinion by issuing an amended opinion
16-16 or notice of repeal of an opinion and filing the opinion or notice
16-17 for publication in the Texas Register, except that the requesting
16-18 party may rely on the original opinion if all material facts were
16-19 originally disclosed to the banking commissioner, considerations of
16-20 safety and soundness of the affected trust companies are not
16-21 implicated with respect to further and prospective reliance on the
16-22 original opinion, and the text and interpretation of relevant
16-23 governing provisions of this Act have not been changed by
16-24 legislative or judicial action. The secretary of state shall
16-25 publish the filed opinions and notices in the Texas Register and a
16-26 designated chapter of the Texas Administrative Code.
16-27 (c) An interpretive statement or opinion issued under this
17-1 section does not have the force of law and is not a rule for the
17-2 purposes of Chapter 2001, Government Code, unless adopted by the
17-3 finance commission as provided by Chapter 2001, Government Code.
17-4 An interpretive statement or opinion is an administrative
17-5 construction of this Act entitled to great weight if the
17-6 construction is reasonable and does not conflict with this Act.
17-7 Sec. 2.002. EXAMINATION. (a) The banking commissioner
17-8 shall examine each state trust company annually. The banking
17-9 commissioner may examine a state trust company more often than
17-10 annually as the banking commissioner considers necessary to
17-11 safeguard the interests of clients, creditors, shareholders,
17-12 participants, or participant-transferees and to enforce this Act.
17-13 The banking commissioner may defer an examination for not more than
17-14 six months if the banking commissioner considers the deferment
17-15 necessary for the efficient enforcement of this Act.
17-16 (b) Each state trust company shall pay the cost of
17-17 examination, the equitable or proportionate cost of maintenance and
17-18 operation of the department, and the cost of enforcement of this
17-19 Act through the imposition and collection of fees established by
17-20 the finance commission under Section 1.003(a)(4) of this Act.
17-21 (c) The performance of data processing, electronic fund
17-22 transfers, or other services or activities performed on behalf of a
17-23 state trust company by a third-party contractor and the activities
17-24 of a state trust company affiliate are subject to regulation and
17-25 examination by the banking commissioner to the same extent as if
17-26 the services or activities were performed by that state trust
17-27 company on its own premises. The banking commissioner may collect
18-1 a fee from the state trust company to cover the cost of the
18-2 examination.
18-3 (d) The banking commissioner may administer oaths and
18-4 examine persons under oath on any subject that the banking
18-5 commissioner considers pertinent to the financial condition or the
18-6 safety and soundness of the activities of a state trust company.
18-7 (e) The banking commissioner shall report the results of the
18-8 examination in writing to the officers and directors, managers, or
18-9 managing participants of the state trust company. A report of
18-10 examination under this section is confidential and may be disclosed
18-11 only under the circumstances set forth in Subchapter B of this
18-12 chapter.
18-13 (f) The banking commissioner may accept an examination of a
18-14 state trust company, a third-party contractor, or an affiliate of
18-15 the state trust company by a federal or other governmental agency
18-16 in lieu of an examination under this section or may conduct an
18-17 examination of a state trust company, a third-party contractor, or
18-18 an affiliate of the state trust company jointly with a federal or
18-19 other governmental agency.
18-20 Sec. 2.003. STATEMENTS OF CONDITION AND INCOME. (a) Each
18-21 state trust company periodically shall file with the banking
18-22 commissioner a copy of its statement of condition and income.
18-23 (b) The finance commission by rule may:
18-24 (1) specify the form of the statement of condition and
18-25 income, including specified confidential and public information to
18-26 be in the statement;
18-27 (2) require public information in the statement to be
19-1 published at the times and in the publications and locations the
19-2 finance commission determines; and
19-3 (3) require the statement to be filed with the banking
19-4 commission at the intervals the finance commission determines.
19-5 (c) A state trust company that fails to file a statement of
19-6 condition and income on or before the date it is due is, after
19-7 notice and hearing, subject to a penalty of not more than $500 a
19-8 day for each day of noncompliance.
19-9 (d) Except for portions designated to be confidential by the
19-10 banking commissioner, a statement of condition and income is a
19-11 public record.
19-12 Sec. 2.004. LIABILITY LIMITED. (a) The banking
19-13 commissioner, each member of the finance commission, the deputy
19-14 banking commissioner, or an examiner, assistant examiner,
19-15 supervisor, conservator, agent, or other officer or employee of the
19-16 department is not personally liable for damages arising from the
19-17 person's official act or omission, unless the act or omission is
19-18 corrupt or malicious.
19-19 (b) The attorney general shall defend an action brought
19-20 against a person because of an official act or omission under
19-21 Subsection (a) of this section, regardless of whether the defendant
19-22 has terminated service with the department before the action
19-23 commences.
19-24 (Sections 2.005-2.100 reserved for expansion)
19-25 SUBCHAPTER B. CONFIDENTIALITY OF INFORMATION
19-26 Sec. 2.101. DISCLOSURE BY DEPARTMENT PROHIBITED.
19-27 (a) Information obtained directly or indirectly by the department
20-1 relative to the financial condition or business affairs of a state
20-2 trust company, other than the public portions of a report of
20-3 condition or income statement, or a present, former, or prospective
20-4 shareholder, participant, officer, director, manager, affiliate, or
20-5 service provider of the state trust company, whether obtained
20-6 through application, examination, or otherwise, and each related
20-7 file or record of the department is confidential and may not be
20-8 disclosed by the banking commissioner or an employee of the
20-9 department except as expressly provided otherwise by this Act or a
20-10 rule adopted under Section 1.003(a)(1) of this Act.
20-11 (b) Information obtained by the department from a federal or
20-12 state regulatory agency that is confidential under federal or state
20-13 law may not be disclosed except as provided by federal or state
20-14 law.
20-15 Sec. 2.102. DISCLOSURE TO FINANCE COMMISSION. Confidential
20-16 information may not be disclosed to a member of the finance
20-17 commission. A member of the finance commission may not be given
20-18 access to the files and records of the department except that the
20-19 banking commissioner may disclose to the finance commission
20-20 information, files, and records pertinent to a hearing or matter
20-21 pending before the finance commission.
20-22 Sec. 2.103. DISCLOSURE TO OTHER AGENCIES. (a) On request
20-23 and execution of an appropriate confidentiality agreement approved
20-24 by the banking commissioner, the banking commissioner may disclose
20-25 to a federal banking regulatory agency confidential information
20-26 relative to a state trust company within the agency's jurisdiction,
20-27 or an affiliate or service provider of the trust company, and may
21-1 permit the agency access to files and records or reports relating
21-2 to the trust company or its affiliate or service provider.
21-3 (b) If the banking commissioner considers it necessary or
21-4 proper to the enforcement of the laws of this state, another state,
21-5 the United States, or a foreign sovereign state, or to the best
21-6 interest of the public, the banking commissioner may disclose or
21-7 authorize release of confidential information to another department
21-8 of this state, another state, the United States, a foreign
21-9 sovereign state, or any related agency or instrumentality.
21-10 Sec. 2.104. OTHER DISCLOSURE PROHIBITED. Confidential
21-11 information that is provided to a state trust company, affiliate,
21-12 or service provider of the trust company, whether in the form of a
21-13 report of examination or otherwise, is the confidential property of
21-14 the department. The information may not be made public or
21-15 disclosed by the recipient or by an officer, director, manager,
21-16 employee, or agent of the recipient to a person not officially
21-17 connected to the recipient as officer, director, employee,
21-18 attorney, auditor, independent auditor, or bonding company, except
21-19 as authorized by rules adopted under this Act. A person commits
21-20 an offense if the person discloses or uses the information in
21-21 violation of this section. An offense under this section is
21-22 punishable as if it were an offense under Section 37.10, Penal
21-23 Code.
21-24 Sec. 2.105. CIVIL DISCOVERY. Discovery of confidential
21-25 information from a person subject to this subchapter under subpoena
21-26 or other legal process in a civil proceeding must comply with rules
21-27 adopted under this Act and other applicable law. The rules may
22-1 restrict release of confidential information to the portion
22-2 directly relevant to the legal dispute at issue and may require
22-3 that a protective order, in the form and under circumstances
22-4 specified by the rules, be issued by a court before release of the
22-5 confidential information.
22-6 Sec. 2.106. INVESTIGATIVE INFORMATION. Notwithstanding any
22-7 other law, the banking commissioner may refuse to release
22-8 information or records concerning a state trust company in the
22-9 custody of the department if, in the opinion of the banking
22-10 commissioner, release of the information or records might
22-11 jeopardize an ongoing investigation of potentially unlawful
22-12 activities.
22-13 Sec. 2.107. EMPLOYMENT INFORMATION. A person may provide
22-14 employment information to a state trust company or to a person
22-15 providing employment information to the trust company concerning
22-16 the known or suspected involvement of a present or former employee,
22-17 officer, or director in violation of any state or federal law,
22-18 rule, or regulation that has been reported to appropriate state or
22-19 federal authorities. A person may not be held liable for providing
22-20 information under this section unless the information provided is
22-21 false and the person provided the information with disregard for
22-22 the truth.
22-23 Sec. 2.108. SHAREHOLDER INSPECTION RIGHTS.
22-24 (a) Notwithstanding Article 2.44, Texas Business Corporation Act,
22-25 a shareholder or participant of a state trust company may not
22-26 examine:
22-27 (1) a report of examination or other confidential
23-1 property of the department that is in the possession of the state
23-2 trust company; or
23-3 (2) a book or record of the state trust company that
23-4 directly or indirectly pertains to financial or other information
23-5 maintained by the state trust company on behalf of its clients,
23-6 including a specific item in the minutes of the board or a
23-7 committee of the board regarding client account review and approval
23-8 or any report that would tend to identify the state trust company's
23-9 client.
23-10 (b) This section does not affect the rights of a shareholder
23-11 or participant of a state trust company when acting in another
23-12 capacity.
23-13 CHAPTER 3. POWERS; ORGANIZATION AND ORGANIZATIONAL CHANGES;
23-14 CAPITAL AND SURPLUS
23-15 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
23-16 Sec. 3.001. ORGANIZATION AND POWERS OF STATE TRUST COMPANY
23-17 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE TRUST COMPANY
23-18 Sec. 3.003. APPLICATION FOR STATE TRUST COMPANY CHARTER
23-19 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION
23-20 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION
23-21 Sec. 3.006. ISSUANCE OF CHARTER
23-22 Sec. 3.007. RESTRICTED CAPITAL
23-23 Sec. 3.008. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
23-24 CORPORATIONS
23-25 Sec. 3.009. BANKING COMMISSIONER HEARINGS
23-26 Sec. 3.010. FINANCE COMMISSION HEARINGS; APPEALS
23-27 Sec. 3.011. EXEMPTION
24-1 Sec. 3.012. APPLICATION FOR EXEMPTION
24-2 Sec. 3.013. ANNUAL CERTIFICATION
24-3 Sec. 3.014. LIMITATION ON EFFECT OF EXEMPTION
24-4 Sec. 3.015. CHANGE OF CONTROL
24-5 Sec. 3.016. GROUNDS FOR REVOCATION OF EXEMPTION
24-6 Sec. 3.017. NOTICE AND EFFECT OF REVOCATION OF EXEMPTION
24-7 Sec. 3.018. ACTION AFTER REVOCATION
24-8 Sec. 3.019. PRIOR EXEMPTION
24-9 Sec. 3.020. TRUST COMPANIES CHARTERED UNDER PRIOR LAW
24-10 Sec. 3.021. FOREIGN CORPORATIONS EXERCISING TRUST POWERS
24-11 Sec. 3.022. ACTIVITIES NOT REQUIRING CHARTER
24-12 (Sections 3.023-3.100 reserved for expansion)
24-13 SUBCHAPTER B. AMENDMENT OF ARTICLES; CHANGES IN CAPITAL AND
24-14 SURPLUS
24-15 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE TRUST COMPANY
24-16 ARTICLES OF ASSOCIATION
24-17 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
24-18 SHARES
24-19 Sec. 3.103. CHANGE IN RESTRICTED CAPITAL
24-20 Sec. 3.104. CAPITAL NOTES OR DEBENTURES
24-21 Sec. 3.105. BOARD DESIGNATION OF CERTIFIED SURPLUS
24-22 (Sections 3.106-3.200 reserved for expansion)
24-23 SUBCHAPTER C. STATE TRUST COMPANY OFFICES
24-24 Sec. 3.201. CONDUCT OF TRUST BUSINESS
24-25 Sec. 3.202. HOME OFFICE
24-26 Sec. 3.203. ADDITIONAL OFFICES
24-27 (Sections 3.204-3.300 reserved for expansion)
25-1 SUBCHAPTER D. MERGER
25-2 Sec. 3.301. MERGER AUTHORITY
25-3 Sec. 3.302. MERGER APPLICATION; GROUNDS FOR APPROVAL
25-4 Sec. 3.303. APPROVAL OF BANKING COMMISSIONER
25-5 Sec. 3.304. RIGHTS OF DISSENTERS TO MERGER
25-6 (Sections 3.305-3.400 reserved for expansion)
25-7 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
25-8 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER TRUST
25-9 COMPANY
25-10 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT
25-11 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION
25-12 Sec. 3.404. PAYMENT TO CREDITORS
25-13 Sec. 3.405. SALE OF ASSETS
25-14 (Sections 3.406-3.500 reserved for expansion)
25-15 SUBCHAPTER F. STATE TRUST REGULATORY SYSTEM:
25-16 EXIT OF STATE TRUST COMPANY
25-17 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE TRUST
25-18 COMPANY INTO NATIONAL BANK EXERCISING FIDUCIARY
25-19 POWERS
25-20 CHAPTER 3. POWERS; ORGANIZATION AND ORGANIZATIONAL CHANGES;
25-21 CAPITAL AND SURPLUS
25-22 SUBCHAPTER A. ORGANIZATION PROVISIONS; GENERAL PROVISIONS
25-23 Sec. 3.001. ORGANIZATION AND POWERS OF STATE TRUST COMPANY.
25-24 (a) Subject to the other provisions of this chapter, one or more
25-25 persons may organize and charter a state trust company as a state
25-26 trust association or a limited trust association. A state trust
25-27 company may perform any act as a fiduciary that a state bank or
26-1 national bank exclusively exercising trust powers may perform under
26-2 the laws of this state, including:
26-3 (1) acting as trustee under a written agreement;
26-4 (2) receiving money and other property in its capacity
26-5 as trustee for investment in real or personal property;
26-6 (3) acting as trustee and performing the fiduciary
26-7 duties committed or transferred to it by order of a court of
26-8 competent jurisdiction;
26-9 (4) acting as executor, administrator, or trustee of
26-10 the estate of a deceased person;
26-11 (5) acting as a custodian, guardian, conservator, or
26-12 trustee for a minor or incapacitated person;
26-13 (6) acting as a successor fiduciary to a depository
26-14 institution;
26-15 (7) receiving for safekeeping personal property;
26-16 (8) acting as custodian, assignee, transfer agent,
26-17 escrow agent, registrar, or receiver;
26-18 (9) acting as investment advisor, agent, or attorney
26-19 in fact according to an applicable agreement;
26-20 (10) exercising additional powers expressly conferred
26-21 by rule of the finance commission; and
26-22 (11) exercising any incidental power that is
26-23 reasonably necessary to enable it to fully exercise the powers
26-24 expressly conferred according to commonly accepted fiduciary
26-25 customs and usages.
26-26 (b) Subject to Section 3.008 of this Act, a state trust
26-27 company may exercise the powers of a Texas business corporation
27-1 reasonably necessary to enable exercise of its specific powers
27-2 under this Act.
27-3 (c) A state trust company may contribute to a community fund
27-4 or to a charitable, philanthropic, or benevolent instrumentality
27-5 conducive to public welfare amounts that its board considers
27-6 appropriate and in the interests of the trust company.
27-7 (d) Subject to Section 5.401 of this Act, a state trust
27-8 company may deposit trust funds with itself.
27-9 (e) A state trust company insured by the Federal Deposit
27-10 Insurance Corporation may receive and pay deposits, with or without
27-11 interest, made by an agency of the United States Government, the
27-12 state, a county, or a municipality.
27-13 Sec. 3.002. ARTICLES OF ASSOCIATION OF STATE TRUST COMPANY.
27-14 The articles of association of a state trust company must be signed
27-15 and acknowledged by each organizer and must contain:
27-16 (1) the name of the state trust company, except that
27-17 the banking commissioner may determine that a proposed name is
27-18 potentially misleading to the public and require the organizers to
27-19 select a different name;
27-20 (2) the period of the state trust company's duration,
27-21 which may be perpetual;
27-22 (3) the powers of the state trust company, which may
27-23 be stated as:
27-24 (A) all powers granted to a state trust company
27-25 in this state; or
27-26 (B) a list of the specific powers that the state
27-27 trust company chooses and is authorized to exercise;
28-1 (4) the aggregate number of shares, or participation
28-2 shares in the case of a limited trust association, that the state
28-3 trust company will be authorized to issue, the number of classes of
28-4 shares or participation shares, which may be one or more, the
28-5 number of shares or participation shares of each class if more than
28-6 one class, and a statement of the par value of the shares or
28-7 participation shares of each class or that the shares or
28-8 participation shares are to be without par value;
28-9 (5) if the shares or participation shares are to be
28-10 divided into classes, the designation of each class and statement
28-11 of the preferences, limitations, and relative rights of the shares
28-12 or participation shares of each class, which in the case of a
28-13 limited trust association may be more fully set forth in the
28-14 participation agreement;
28-15 (6) any provision limiting or denying to shareholders
28-16 or participants the preemptive right to acquire additional or
28-17 treasury shares or participation shares of the state trust company;
28-18 (7) any provision granting the right of shareholders
28-19 or participants to cumulative voting in the election of directors
28-20 or managers;
28-21 (8) the aggregate amount of consideration to be
28-22 received for all shares or participation shares initially issued by
28-23 the state trust company, and a statement that all authorized shares
28-24 or participation shares have been subscribed and that all
28-25 subscriptions received provide for the consideration to be fully
28-26 paid in cash before issuance of the charter;
28-27 (9) any provision consistent with law that the
29-1 organizers elect to set forth in the articles of association for
29-2 the regulation of the internal affairs of the state trust company
29-3 or that is otherwise required by this Act to be set forth in the
29-4 articles of association;
29-5 (10) the street address of the state trust company's
29-6 home office required to be maintained under Section 3.202 of this
29-7 Act; and
29-8 (11) the number of directors or managers constituting
29-9 the initial board, which may not be fewer than five or more than
29-10 25, and the names and street addresses of the persons who are to
29-11 serve as directors or managers until the first annual meeting of
29-12 shareholders or participants or until successor directors or
29-13 managers have been elected and qualified; or, at the option of the
29-14 organizers of a limited trust association that will have not fewer
29-15 than five or more than 25 participants, a statement that management
29-16 is vested in a board comprised of all participants, with management
29-17 authority vested in each participant in proportion to the
29-18 participant's contribution to capital as adjusted from time to time
29-19 to properly reflect any additional contribution, and the names and
29-20 street addresses of the persons who are to be the initial managing
29-21 participants.
29-22 Sec. 3.003. APPLICATION FOR STATE TRUST COMPANY CHARTER.
29-23 (a) An application for a state trust company charter must be made
29-24 under oath and in the form required by the banking commissioner
29-25 and must be supported by information, data, records, and opinions
29-26 of counsel that the banking commissioner requires. The application
29-27 must be accompanied by all charter fees and deposits required by
30-1 statute or rule.
30-2 (b) The banking commissioner shall grant a state trust
30-3 company charter only on proof satisfactory to the banking
30-4 commissioner that public convenience and advantage will be promoted
30-5 by the establishment of the state trust company. In determining
30-6 whether public convenience and advantage will be promoted, the
30-7 banking commissioner shall consider:
30-8 (1) the convenience of the public to be served;
30-9 (2) whether the organizational and capital structure
30-10 and amount of initial capitalization is adequate for the business
30-11 and location;
30-12 (3) whether the anticipated volume and nature of
30-13 business indicates a reasonable probability of success and
30-14 profitability based on the market sought to be served;
30-15 (4) whether the proposed officers, directors, and
30-16 managers, or managing participants, as a group have sufficient
30-17 fiduciary experience, ability, standing, competence,
30-18 trustworthiness, and integrity to justify a belief that the state
30-19 trust company will operate in compliance with law and that success
30-20 of the state trust company is probable;
30-21 (5) whether each principal shareholder or participant
30-22 has sufficient experience, ability, standing, competence,
30-23 trustworthiness, and integrity to justify a belief that the state
30-24 trust company will be free from improper or unlawful influence or
30-25 interference with respect to the state trust company's operation in
30-26 compliance with law; and
30-27 (6) whether the organizers are acting in good faith.
31-1 (c) The organizers bear the burden of proof to establish
31-2 that public convenience and advantage will be promoted by the
31-3 establishment of the state trust company. The failure of an
31-4 applicant to furnish required information, data, opinions of
31-5 counsel, and other material, or the required fee, is considered an
31-6 abandonment of the application.
31-7 Sec. 3.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
31-8 (a) The banking commissioner shall notify the organizers when the
31-9 application is complete and accepted for filing and all required
31-10 fees and deposits have been paid. Promptly after this
31-11 notification, the organizers shall publish notice of the
31-12 application and solicit comments and protests, in the form
31-13 specified by the banking commissioner, in a newspaper of general
31-14 circulation in the county where the initial home office of the
31-15 proposed state trust company is to be located. The banking
31-16 commissioner may require the organizers to publish the notice at
31-17 other locations reasonably necessary to solicit the views of
31-18 potentially affected persons.
31-19 (b) At the expense of the organizers, the banking
31-20 commissioner shall thoroughly investigate the application and
31-21 inquire fully into the identity and character of each proposed
31-22 director, manager, officer, managing participant, and principal
31-23 shareholder or participant. The banking commissioner shall prepare
31-24 a written report of the investigation, and any person, other than a
31-25 person protesting under Section 3.005 of this Act, may request a
31-26 copy of the nonconfidential portions of the application and written
31-27 report as provided by Chapter 552, Government Code. Rules adopted
32-1 under this Act may specify the confidential or nonconfidential
32-2 character of information obtained by the department under this
32-3 section. Except as provided by Subchapter B, Chapter 2, of this
32-4 Act, or in rules regarding confidential information, the financial
32-5 statement of a proposed officer, director, manager, or managing
32-6 participant is confidential and not subject to public disclosure.
32-7 Sec. 3.005. HEARING AND DECISION ON CHARTER APPLICATION.
32-8 (a) Any person may file a protest of an application with the
32-9 banking commissioner.
32-10 (b) If a protest of the application is not filed on or
32-11 before the 15th day after the last date the notice was published
32-12 under Section 3.004 of this Act, the banking commissioner may
32-13 immediately determine whether all of the necessary conditions set
32-14 forth in Section 3.003(b) of this Act have been established, based
32-15 on the application and investigation. The banking commissioner
32-16 shall approve the application for charter or set the charter
32-17 application for hearing.
32-18 (c) If a protest of the application is timely filed,
32-19 accompanied by the fees and deposits required by statute or rule,
32-20 or if the banking commissioner sets a hearing, the banking
32-21 commissioner shall conduct a public hearing and as many prehearing
32-22 conferences and opportunities for discovery as the banking
32-23 commissioner considers advisable and consistent with governing
32-24 statutes and rules. A person protesting the application is
32-25 entitled to the confidential portions of the application under a
32-26 protective order that restricts the use of confidential information
32-27 to the charter proceedings.
33-1 (d) Based on the record of the hearing, the banking
33-2 commissioner shall determine whether all of the necessary
33-3 conditions set forth in Section 3.003(b) of this Act have been
33-4 established and shall enter an order granting or denying the
33-5 charter. The banking commissioner may make approval of any
33-6 application conditional and shall include any conditions in the
33-7 order granting the charter.
33-8 (e) Chapter 2001, Government Code, does not apply to a
33-9 charter application filed for the purpose of assuming all or any
33-10 portion of the assets, liabilities, and accounts of any depository
33-11 institution or state trust company considered by the banking
33-12 commissioner to be in hazardous condition.
33-13 Sec. 3.006. ISSUANCE OF CHARTER. (a) A state trust company
33-14 may not engage in the trust business until it receives its charter
33-15 from the banking commissioner. The banking commissioner may not
33-16 deliver the charter until the state trust company has:
33-17 (1) received cash in at least the full amount of
33-18 restricted capital from subscriptions for the issuance of shares
33-19 or participation shares;
33-20 (2) elected or qualified the initial officers and
33-21 directors or managers, as appropriate, named in the application for
33-22 charter or other officers and directors or managers approved by the
33-23 banking commissioner; and
33-24 (3) complied with all other requirements of this Act
33-25 relating to the organization of the state trust company.
33-26 (b) If a state trust company does not open and engage in the
33-27 trust business within six months after the date it receives its
34-1 charter or conditional approval of application for charter, the
34-2 banking commissioner may revoke the charter or cancel the
34-3 conditional approval of application for charter without judicial
34-4 action.
34-5 Sec. 3.007. RESTRICTED CAPITAL. (a) The banking
34-6 commissioner may not issue a charter to a state trust company
34-7 having restricted capital of less than $1 million.
34-8 (b) The banking commissioner may, on a case-by-case basis,
34-9 require additional restricted capital for a proposed or existing
34-10 state trust company if the banking commissioner finds the condition
34-11 and operations of the existing state trust company or the proposed
34-12 scope or type of operations of the proposed state trust company
34-13 requires additional restricted capital to protect the safety and
34-14 soundness of the trust company. The safety and soundness factors
34-15 to be considered by the banking commissioner in the exercise of
34-16 discretion, include:
34-17 (1) the nature and type of business the state trust
34-18 company conducts;
34-19 (2) the nature and degree of liquidity in assets held
34-20 in a corporate capacity;
34-21 (3) the amount, type, and depository of fiduciary
34-22 assets that the state trust company manages;
34-23 (4) the complexity of the state trust company's
34-24 fiduciary duties and degree of discretion undertaken;
34-25 (5) the competence and experience of the state trust
34-26 company's management;
34-27 (6) the extent and adequacy of internal controls
35-1 maintained by the state trust company;
35-2 (7) the presence or absence of annual unqualified
35-3 audits by an independent certified public accountant;
35-4 (8) the reasonableness of the state trust company's
35-5 business plans for retaining or acquiring additional restricted
35-6 capital; and
35-7 (9) the existence and adequacy of insurance obtained
35-8 or held by the state trust company to protect its clients,
35-9 beneficiaries, and grantors.
35-10 (c) The effective date of any order under Subsection (b) of
35-11 this section must be stated in the order and must be on or after
35-12 the 21st day after the date the order is mailed or delivered.
35-13 Unless the state trust company requests a hearing before the
35-14 banking commissioner in writing before the effective date of the
35-15 order, the order takes effect and is final and nonappealable. This
35-16 subsection does not prohibit an application to reduce capital
35-17 requirements of an existing state trust company under Subsection
35-18 (e) of this section or under Section 3.011 of this Act.
35-19 (d) Subject to Subsection (e) of this section and Section
35-20 3.011 of this Act, a state trust company to which the banking
35-21 commissioner issues a charter shall at all times maintain
35-22 restricted capital in at least the amount required under Subsection
35-23 (a) of this section and in any additional amount the banking
35-24 commissioner requires under Subsection (b) of this section.
35-25 (e) Notwithstanding Subsection (a) of this section, on
35-26 application, the banking commissioner may, on a case-by-case basis
35-27 in the exercise of discretion, reduce the amount of minimum
36-1 restricted capital required for a state trust company in a manner
36-2 consistent with protecting the company's safety and soundness. In
36-3 making a determination under this subsection, the banking
36-4 commissioner shall consider the factors listed by Subsection (b) of
36-5 this section.
36-6 Sec. 3.008. APPLICATION OF LAWS RELATING TO GENERAL BUSINESS
36-7 CORPORATIONS. (a) The Texas Business Corporation Act and the
36-8 Texas Miscellaneous Corporation Laws Act (Article 1302-1.01 et
36-9 seq., Vernon's Texas Civil Statutes) are incorporated into this
36-10 chapter and apply to a state trust company as if they were part of
36-11 this Act to the extent not inconsistent with this Act or the proper
36-12 business of a state trust company, except that:
36-13 (1) a reference to the secretary of state means the
36-14 banking commissioner unless the context requires otherwise; and
36-15 (2) the right of shareholders or participants to
36-16 cumulative voting in the election of directors or managers exists
36-17 only if granted by the state trust company's articles of
36-18 association.
36-19 (b) Unless expressly authorized by this Act or a rule of the
36-20 finance commission, a state trust company may not take an action
36-21 authorized by the Texas Business Corporation Act regarding its
36-22 corporate status, capital structure, or a matter of corporate
36-23 governance, of the type for which the Texas Business Corporation
36-24 Act would require a filing with the secretary of state if the state
36-25 trust company were a business corporation, without submitting the
36-26 filing to the banking commissioner for prior written approval of
36-27 the action.
37-1 (c) The finance commission may adopt rules to alter or
37-2 supplement the procedures and requirements of the Texas Business
37-3 Corporation Act or the Texas Miscellaneous Corporation Laws Act
37-4 applicable to an action taken under this chapter by a state trust
37-5 company.
37-6 (d) This chapter may not be construed to mean that a state
37-7 trust company is a corporation incorporated under or governed by
37-8 the Texas Business Corporation Act or the Texas Miscellaneous
37-9 Corporation Laws Act.
37-10 Sec. 3.009. BANKING COMMISSIONER HEARINGS. (a) This
37-11 section does not grant a right to hearing to a person that is not
37-12 otherwise granted by governing law.
37-13 (b) The banking commissioner may convene a hearing to
37-14 receive evidence and argument regarding any matter before the
37-15 banking commissioner for decision or review under this Act. The
37-16 hearing must be conducted under Chapter 2001, Government Code.
37-17 (c) A hearing before the banking commissioner that is
37-18 required or authorized by law may be conducted by a hearing officer
37-19 on behalf of the banking commissioner. A matter made confidential
37-20 by law must be considered by the banking commissioner in a closed
37-21 hearing.
37-22 Sec. 3.010. FINANCE COMMISSION HEARINGS; APPEALS.
37-23 (a) Except as expressly provided otherwise by this Act, a decision
37-24 or order of the banking commissioner made under this Act after
37-25 hearing may be appealed directly to a district court of Travis
37-26 County as provided by Subsection (c) of this section or, at the
37-27 option of the appellant, to the finance commission for review.
38-1 (b) The finance commission shall consider the questions
38-2 raised by the application for review and may also consider
38-3 additional matters pertinent to the appeal. An order of the
38-4 banking commissioner continues in effect pending review unless the
38-5 order is stayed by the finance commission. The finance commission
38-6 may impose any condition before granting a stay of the appealed
38-7 order. The finance commission may not be required to accept
38-8 additional evidence or hold an evidentiary hearing if a hearing was
38-9 held and a record made before the banking commissioner. The
38-10 finance commission shall remand the proceeding to the banking
38-11 commissioner to receive any additional evidence the finance
38-12 commission chooses to consider. A hearing before the finance
38-13 commission that is required or authorized by law may be conducted
38-14 by a hearing officer on behalf of the finance commission. A matter
38-15 made confidential by law must be considered by the finance
38-16 commission in a closed hearing.
38-17 (c) A person affected by a final order of the banking
38-18 commissioner who elects to appeal directly to district court, or a
38-19 person affected by a final order of the finance commission under
38-20 this section, may appeal the final order by filing a petition for
38-21 judicial review under the substantial evidence rule in a district
38-22 court of Travis County as provided by Chapter 2001, Government
38-23 Code. A petition for appeal filed in the district court does not
38-24 stay or vacate the appealed order unless the court, after notice
38-25 and hearing, expressly stays or vacates the order.
38-26 Sec. 3.011. EXEMPTION. (a) A state trust company may
38-27 request in writing that it be exempted from specified provisions of
39-1 this Act. The banking commissioner may grant the exemption in
39-2 whole or in part if the banking commissioner finds that the state
39-3 trust company does not transact business with the public. A state
39-4 trust company does not transact business with the public if it does
39-5 not make any sale, solicitation, arrangement, agreement, or
39-6 transaction to provide a trust or other business service, whether
39-7 or not for a fee, commission, or any other type of remuneration,
39-8 with:
39-9 (1) an individual who is not related within the fourth
39-10 degree of affinity or consanguinity to an individual who controls
39-11 the state trust company; or
39-12 (2) a sole proprietorship, partnership, joint venture,
39-13 association, trust, estate, business trust, or corporation that is
39-14 not wholly owned by one or more individuals related within the
39-15 fourth degree of affinity or consanguinity to an individual who
39-16 controls the state trust company.
39-17 (b) At the expense of a state trust company, the banking
39-18 commissioner may examine or investigate the state trust company in
39-19 connection with an application for exemption. Unless the
39-20 application presents novel or unusual questions, the banking
39-21 commissioner shall approve the application for exemption or set the
39-22 application for hearing not later than the 61st day after the date
39-23 the banking commissioner considers the application complete and
39-24 accepted for filing. The banking commissioner may require the
39-25 submission of additional information as considered necessary to an
39-26 informed decision.
39-27 (c) An exemption granted under this section may be made
40-1 subject to conditions or limitations imposed by the banking
40-2 commissioner consistent with this Act.
40-3 (d) A state trust company that is or has been exempt from a
40-4 provision of this Act under this section or a predecessor statute
40-5 may not transact business with the public unless the banking
40-6 commissioner determines, as provided by Section 3.003 of this Act,
40-7 that public convenience and advantage will be promoted by
40-8 permitting the state trust company to engage in the trust business.
40-9 (e) The finance commission may adopt rules:
40-10 (1) defining other circumstances under which a state
40-11 trust company may be exempted from a provision of this Act because
40-12 it does not transact business with the public;
40-13 (2) specifying the provisions of this Act that are
40-14 subject to an exemption request; and
40-15 (3) establishing procedures and requirements for
40-16 obtaining, maintaining, or revoking an exemption.
40-17 Sec. 3.012. APPLICATION FOR EXEMPTION. (a) A state trust
40-18 company requesting an exemption under Section 3.011 of this Act
40-19 shall file an application with the banking commissioner including:
40-20 (1) a nonrefundable application fee set by the finance
40-21 commission;
40-22 (2) a detailed sworn statement showing the state trust
40-23 company's assets and liabilities as of the end of the calendar
40-24 month previous to the filing of the application;
40-25 (3) a sworn statement of the reason for requesting the
40-26 exemption;
40-27 (4) a sworn statement that the state trust company is
41-1 not transacting business with the public and that the company will
41-2 not transact business with the public without the prior written
41-3 permission of the banking commissioner;
41-4 (5) the current street mailing address and telephone
41-5 number of the physical location in this state at which the state
41-6 trust company will maintain its books and records, with a sworn
41-7 statement that the address given is true and correct and is not a
41-8 United States Postal Service post office box or a private mail box,
41-9 postal box, or mail drop; and
41-10 (6) a list of the specific provisions of this Act for
41-11 which the request for exemption is made.
41-12 (b) The banking commissioner may not approve a state trust
41-13 company exemption unless the application is completed as required
41-14 by Subsection (a) of this section.
41-15 Sec. 3.013. ANNUAL CERTIFICATION. Before June 30 of each
41-16 year, an exempt state trust company shall file a certification that
41-17 it is maintaining the conditions and limitations of its exemption
41-18 on a form provided by the banking commissioner. The certification
41-19 must be accompanied by a fee set by the finance commission. The
41-20 certification is not valid unless it bears an acknowledgment
41-21 stamped by the department. The department shall return a copy of
41-22 the acknowledged annual certification to the state trust company
41-23 not later than the 30th day after the date the certification is
41-24 filed. The state trust company shall notify the department of any
41-25 failure to return an acknowledged copy of any annual certification
41-26 within this period. The banking commissioner may examine or
41-27 investigate the state trust company periodically as necessary to
42-1 verify the certification.
42-2 Sec. 3.014. LIMITATION ON EFFECT OF EXEMPTION. (a) An
42-3 exempt state trust company shall comply with the home office
42-4 provisions of Section 3.202 of this Act.
42-5 (b) The granting of an exemption to a state trust company
42-6 does not affect the state trust company's obligation to pay any
42-7 corporate franchise tax required by state law.
42-8 Sec. 3.015. CHANGE OF CONTROL. Control of an exempt state
42-9 trust company may not be sold or transferred with exempt status.
42-10 If control of an exempt state trust company is transferred, the
42-11 acquiring person must comply with Sections 3.003, 3.004, 3.005, and
42-12 4.001 of this Act and the exempt status of the state trust company
42-13 automatically terminates on the effective date of the transfer.
42-14 The acquiring person must file a separate application to obtain an
42-15 exemption under this Act.
42-16 Sec. 3.016. GROUNDS FOR REVOCATION OF EXEMPTION. The
42-17 banking commissioner may revoke an exemption of a state trust
42-18 company if the trust company:
42-19 (1) makes a false statement under oath on any document
42-20 required to be filed by this Act or finance commission rule;
42-21 (2) fails to submit to an examination as required by
42-22 Section 2.002 of this Act;
42-23 (3) withholds requested information from the banking
42-24 commissioner; or
42-25 (4) violates any provision of this Act applicable to
42-26 an exempt state trust company.
42-27 Sec. 3.017. NOTICE AND EFFECT OF REVOCATION OF EXEMPTION.
43-1 If the banking commissioner determines from examination or other
43-2 credible evidence that an exempt state trust company has violated
43-3 any of the requirements of this subchapter relating to an exempt
43-4 state trust company, the banking commissioner may by personal
43-5 delivery or registered or certified mail, return receipt requested,
43-6 notify the state trust company in writing that the state trust
43-7 company's exemption has been revoked. The notice must state
43-8 grounds for the revocation with reasonable certainty. The notice
43-9 must state its effective date, which may not be before the fifth
43-10 day after the date the notification is mailed or delivered. The
43-11 revocation takes effect for the state trust company if the state
43-12 trust company does not request a hearing in writing before the
43-13 effective date. After taking effect the revocation is final and
43-14 nonappealable as to that state trust company, and the state trust
43-15 company is subject to all of the requirements and provisions of the
43-16 Act applicable to nonexempt state trust companies.
43-17 Sec. 3.018. ACTION AFTER REVOCATION. (a) A state trust
43-18 company shall have five days after the date the revocation takes
43-19 effect to comply with all of the provisions of Sections 3.003(b)
43-20 and (c). If, however, the banking commissioner determines at the
43-21 time of revocation that the state trust company has been engaging
43-22 in or attempting to engage in acts intended or designed to deceive
43-23 or defraud the public, the banking commissioner, in the banking
43-24 commissioner's sole discretion, may waive this compliance period.
43-25 (b) If the state trust company does not comply with all of
43-26 the provisions of this Act, including capitalization requirements
43-27 determined by the banking commissioner as necessary to assure the
44-1 safety and soundness of the state trust company, within the
44-2 prescribed period, the banking commissioner may:
44-3 (1) institute any action or remedy prescribed by this
44-4 Act or any applicable rule; or
44-5 (2) refer the state trust company to the attorney
44-6 general for institution of a quo warranto proceeding to revoke the
44-7 state trust company's charter.
44-8 Sec. 3.019. PRIOR EXEMPTION. A state trust company that was
44-9 exempt under a predecessor to this Act is considered exempt under
44-10 this Act.
44-11 Sec. 3.020. TRUST COMPANIES CHARTERED UNDER PRIOR LAW. The
44-12 charter of a corporation with trust powers incorporated under any
44-13 laws of this state before May 25, 1987, is void if the charter was
44-14 not presented to the department before May 26, 1988, for
44-15 substitution of a charter or if the department did not issue a new
44-16 substitution charter before May 26, 1989.
44-17 Sec. 3.021. FOREIGN CORPORATIONS EXERCISING TRUST POWERS.
44-18 (a) A foreign corporation may not conduct a trust business in this
44-19 state. A foreign corporation may control a state trust company in
44-20 this state, if the state trust company is formed or acquired and
44-21 operated as provided by this Act and applicable rules.
44-22 (b) A foreign corporation or other entity chartered or
44-23 domiciled in another jurisdiction as a trust company or depository
44-24 institution with trust powers may act as a trustee in this state
44-25 only as provided by Section 105A, Texas Probate Code.
44-26 Sec. 3.022. ACTIVITIES NOT REQUIRING CHARTER. A company
44-27 does not engage in the trust business in a manner requiring a state
45-1 charter by:
45-2 (1) acting in a manner authorized by law and in the
45-3 scope of authority as an agent of a state trust company;
45-4 (2) rendering a service customarily performed as an
45-5 attorney in a manner approved and authorized by the Supreme Court
45-6 of Texas or State Bar of Texas;
45-7 (3) acting as trustee under a deed of trust made only
45-8 as security for the payment of money or for the performance of
45-9 another act;
45-10 (4) conducting a trust business under a charter that
45-11 authorizes the exercise of trust powers as a depository
45-12 institution, if the exercise of trust powers in this state by the
45-13 depository institution is not otherwise prohibited by law;
45-14 (5) engaging in a business regulated by the Office of
45-15 Consumer Credit Commissioner, except as limited by rules adopted by
45-16 the finance commission;
45-17 (6) receiving and distributing rents and proceeds of
45-18 sale as a licensed real estate broker on behalf of a principal in a
45-19 manner authorized by the Texas Real Estate Commission;
45-20 (7) engaging in a securities transaction or providing
45-21 an investment advisory service as a licensed and registered dealer,
45-22 salesman, or advisor to the extent that the activity is regulated
45-23 by the State Securities Board or the Securities and Exchange
45-24 Commission;
45-25 (8) engaging in the sale and administration of an
45-26 insurance product by an insurance company or agent licensed by the
45-27 Texas Department of Insurance to the extent that the activity is
46-1 regulated by the Texas Department of Insurance;
46-2 (9) engaging in the lawful sale of prepaid funeral
46-3 benefits under a permit issued by the banking commissioner under
46-4 Chapter 512, Acts of the 54th Legislature, Regular Session, 1955
46-5 (Article 548b, Vernon's Texas Civil Statutes);
46-6 (10) engaging in the lawful business of a perpetual
46-7 care cemetery corporation under Chapter 712, Health and Safety
46-8 Code;
46-9 (11) engaging in the lawful sale of checks under a
46-10 license issued by the banking commissioner under The Sale of Checks
46-11 Act (Article 489d, Vernon's Texas Civil Statutes);
46-12 (12) acting as trustee under a voting trust as
46-13 provided by Article 2.30, Texas Business Corporation Act;
46-14 (13) acting as trustee by a public, private, or
46-15 independent institution of higher education or a university system,
46-16 as defined by Section 61.003, Education Code, including an
46-17 affiliated foundation or corporation of such an institution or
46-18 system acting as trustee as provided by the Education Code;
46-19 (14) engaging in another activity expressly excluded
46-20 from the application of this Act by rule of the finance commission;
46-21 (15) rendering services customarily performed by a
46-22 certified accountant in a manner authorized by the Texas State
46-23 Board of Public Accountancy;
46-24 (16) serving as trustee of a charitable trust as
46-25 provided by Article 2.31, Texas Non-Profit Corporation Act (Article
46-26 1396-2.31, Vernon's Texas Civil Statutes);
46-27 (17) performing escrow or settlement services if
47-1 licensed under Chapter 9, Insurance Code; or
47-2 (18) acting as a qualified intermediary in a tax
47-3 deferred exchange under 26 U.S.C. Section 1031 and applicable
47-4 regulations.
47-5 (Sections 3.023-3.100 reserved for expansion)
47-6 SUBCHAPTER B. AMENDMENT OF ARTICLES; CHANGES IN
47-7 CAPITAL AND SURPLUS
47-8 Sec. 3.101. AMENDMENT OR RESTATEMENT OF STATE TRUST COMPANY
47-9 ARTICLES OF ASSOCIATION. (a) A state trust company that has been
47-10 granted a certificate of authority under Section 3.006 of this Act
47-11 or a predecessor statute may amend or restate its articles of
47-12 association for any lawful purpose, including the creation of
47-13 authorized but unissued shares or participation shares in one or
47-14 more classes or series.
47-15 (b) An amendment authorizing the issuance of shares or
47-16 participation shares in series must contain:
47-17 (1) the designation of each series and a statement of
47-18 any variations in the preferences, limitations, and relative rights
47-19 among series to the extent that the preferences, limitations, and
47-20 relative rights are to be established in the articles of
47-21 association; and
47-22 (2) a statement of any authority to be vested in the
47-23 board to establish series and determine the preferences,
47-24 limitations, and relative rights of each series.
47-25 (c) A limited trust association may not amend its articles
47-26 of association to extend its period of existence for a perpetual
47-27 period or for any period of years, unless the period of existence
48-1 is expressly contingent on those events resulting in dissolution of
48-2 the trust association under Section 4.207 of this Act.
48-3 (d) Amendment or restatement of the articles of association
48-4 of a state trust company and approval of the board and shareholders
48-5 or participants must be made or obtained in accordance with the
48-6 Texas Business Corporation Act for the amendment or restatement of
48-7 articles of incorporation, except as otherwise provided by this Act
48-8 or rules adopted under this Act. The original and one copy of the
48-9 articles of amendment or restated articles of association must be
48-10 filed with the banking commissioner for approval. Unless the
48-11 submission presents novel or unusual questions, the banking
48-12 commissioner shall approve or reject the amendment or restatement
48-13 not later than the 31st day after the date the banking commissioner
48-14 considers the submission informationally complete and accepted for
48-15 filing. The banking commissioner may require the submission of
48-16 additional information as considered necessary to an informed
48-17 decision to approve or reject any amendment or restatement of
48-18 articles of association under this section.
48-19 (e) If the banking commissioner finds that the amendment or
48-20 restatement conforms to law and any conditions imposed by the
48-21 banking commissioner, and any required filing fee has been paid,
48-22 the banking commissioner shall:
48-23 (1) endorse the face of the original and copy with the
48-24 date of approval and the word "Approved";
48-25 (2) file the original in the department's records; and
48-26 (3) deliver a certified copy of the amendment or
48-27 restatement to the state trust company.
49-1 (f) An amendment or restatement, if approved, takes effect
49-2 on the date of approval, unless the amendment or restatement
49-3 provides for a different effective date.
49-4 Sec. 3.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
49-5 SHARES. (a) If the articles of association expressly give the
49-6 board authority to establish series and determine the preferences,
49-7 limitations, and relative rights of each series, the board may do
49-8 so only on compliance with this section and any rules adopted under
49-9 this chapter.
49-10 (b) A series of shares or participation shares may be
49-11 established in the manner provided by the Texas Business
49-12 Corporation Act as if a state trust company were a domestic
49-13 corporation, but the shares or participation shares of the series
49-14 may not be issued and sold except on compliance with Section 3.103
49-15 of this Act. The state trust company shall file the original and
49-16 one copy of the statement of action required by the Texas Business
49-17 Corporation Act with the banking commissioner. Unless the
49-18 submission presents novel or unusual questions, the banking
49-19 commissioner shall approve or reject the series not later than the
49-20 31st day after the date the banking commissioner considers the
49-21 submission informationally complete and accepted for filing. The
49-22 banking commissioner may require the submission of additional
49-23 information as considered necessary to an informed decision.
49-24 (c) If the banking commissioner finds that the interests of
49-25 the clients and creditors of the state trust company will not be
49-26 adversely affected by the series, that the series otherwise
49-27 conforms to law and any conditions imposed by the banking
50-1 commissioner, and that any required filing fee has been paid, the
50-2 banking commissioner shall:
50-3 (1) endorse the face of the original and copy of the
50-4 statement with the date of approval and the word "Approved";
50-5 (2) file the original in the department's records; and
50-6 (3) deliver a certified copy of the statement to the
50-7 trust company.
50-8 Sec. 3.103. CHANGE IN RESTRICTED CAPITAL. (a) A state
50-9 trust company may not reduce or increase its restricted capital
50-10 through dividend, redemption, issuance of shares or participation
50-11 shares, or otherwise without the prior approval of the banking
50-12 commissioner, except as permitted by this section or rules adopted
50-13 under this chapter.
50-14 (b) Unless otherwise restricted by rules, prior approval is
50-15 not required for an increase in restricted capital accomplished
50-16 through:
50-17 (1) issuance of shares of common stock or their
50-18 equivalent in participation shares for cash;
50-19 (2) declaration and payment of pro rata share
50-20 dividends as defined by the Texas Business Corporation Act; or
50-21 (3) adoption by the board of a resolution directing
50-22 that all or part of undivided profits be transferred to restricted
50-23 capital.
50-24 (c) Prior approval is not required for a decrease in
50-25 restricted capital caused by incurred losses in excess of undivided
50-26 profits.
50-27 Sec. 3.104. CAPITAL NOTES OR DEBENTURES. (a) With the
51-1 prior written approval of the banking commissioner, a state trust
51-2 company may at any time through action of its board, and without
51-3 requiring action of its shareholders or participants, issue and
51-4 sell its capital notes or debentures. The notes or debentures must
51-5 be subordinate to the claims of depositors and may be subordinate
51-6 to other claims, including the claims of other creditors or classes
51-7 of creditors or the shareholders or participants.
51-8 (b) Capital notes or debentures may be convertible into
51-9 shares or participation shares of any class or series. The
51-10 issuance and sale of convertible capital notes or debentures are
51-11 subject to satisfaction of preemptive rights, if any, to the extent
51-12 provided by law.
51-13 (c) Without the prior written approval of the banking
51-14 commissioner, interest due or principal repayable on outstanding
51-15 capital notes or debentures may not be paid by a state trust
51-16 company when the state trust company is in hazardous condition or
51-17 insolvent, as determined by the banking commissioner, or to the
51-18 extent that payment will cause the state trust company to be in
51-19 hazardous condition or insolvent.
51-20 (d) The amount of any outstanding capital notes or
51-21 debentures that meet the requirements of this section and that are
51-22 subordinated to unsecured creditors of the state trust company may
51-23 be included in equity capital of the state trust company for
51-24 purposes of determining hazardous condition or insolvency, and for
51-25 such other purposes provided by rules adopted under this Act.
51-26 Sec. 3.105. BOARD DESIGNATION OF CERTIFIED SURPLUS.
51-27 Periodically the board may vote to designate and record the amount
52-1 of certified surplus in its minutes. Except to absorb losses in
52-2 excess of undivided profits and uncertified surplus, certified
52-3 surplus may not be reduced without the prior written approval of
52-4 the banking commissioner.
52-5 (Sections 3.106-3.200 reserved for expansion)
52-6 SUBCHAPTER C. STATE TRUST COMPANY OFFICES
52-7 Sec. 3.201. CONDUCT OF TRUST BUSINESS. A state trust
52-8 company may engage in the trust business at its home office and at
52-9 other locations as permitted by this subchapter.
52-10 Sec. 3.202. HOME OFFICE. (a) Each state trust company must
52-11 have and continuously maintain in this state a home office at which
52-12 the state trust company does business and keeps its corporate books
52-13 and records. At least one executive officer must maintain an
52-14 office at the home office.
52-15 (b) Each officer at the home office is an agent for service
52-16 of process for a state trust company.
52-17 (c) A state trust company may change its home office to any
52-18 location in this state, if the location that is the home office
52-19 before the change remains an office of the state trust company at
52-20 which the state trust company does business. To change the
52-21 location of its home office, the state trust company must file a
52-22 written notice with the banking commissioner setting forth the name
52-23 of the state trust company, the street address of its home office
52-24 before the change, the street address to which the home office is
52-25 to be changed, and a copy of the resolution adopted by the board
52-26 authorizing the change. The change of home office takes effect on
52-27 the 31st day after the date the banking commissioner receives the
53-1 notice.
53-2 (d) A relocation of a state trust company's home office may
53-3 not be made, or another action that would effect an abandonment of
53-4 the state trust company's initial home office may not be taken,
53-5 without the prior written approval of the banking commissioner.
53-6 The state trust company must establish to the satisfaction of the
53-7 banking commissioner that the abandonment is consistent with the
53-8 original determination of public convenience and advantage for the
53-9 establishment of a state trust company at that location.
53-10 Sec. 3.203. ADDITIONAL OFFICES. (a) A state trust company
53-11 may establish and maintain additional offices anywhere in this
53-12 state by filing a written notice with the banking commissioner
53-13 setting forth the name of the state trust company, the street
53-14 address of the proposed additional office, a description of the
53-15 activities proposed to be conducted at the additional office, and a
53-16 copy of the resolution adopted by the board authorizing the
53-17 additional office.
53-18 (b) A state trust company may commence business at the
53-19 additional office on the 31st day after the date the banking
53-20 commissioner receives the notice, unless the banking commissioner
53-21 specifies an earlier or later date. The banking commissioner may
53-22 specify a later date on a determination that the written notice
53-23 raises issues that require additional information or additional
53-24 time for analysis. If a later date is specified, the state trust
53-25 company may establish the additional office only on prior written
53-26 approval by the banking commissioner. The banking commissioner may
53-27 deny permission to establish an additional office of the state
54-1 trust company if the banking commissioner has a significant
54-2 supervisory or regulatory concern regarding the proposed additional
54-3 office, the applicant, or an affiliate.
54-4 (Sections 3.204-3.300 reserved for expansion)
54-5 SUBCHAPTER D. MERGER
54-6 Sec. 3.301. MERGER AUTHORITY. (a) Subject to this
54-7 subchapter and with the prior written approval of the banking
54-8 commissioner, a state trust company may merge with another person
54-9 to the same extent as a business corporation under the Texas
54-10 Business Corporation Act.
54-11 (b) Implementation of the plan of merger by the parties and
54-12 approval of the board, shareholders, participants, or owners of the
54-13 parties must be made or obtained as provided by the Texas Business
54-14 Corporation Act as if the state trust company were a domestic
54-15 corporation and all other parties to the merger were foreign
54-16 corporations and other entities, except as otherwise provided by
54-17 rules adopted under this chapter.
54-18 Sec. 3.302. MERGER APPLICATION; GROUNDS FOR APPROVAL.
54-19 (a) To apply for approval of a merger, the parties must submit the
54-20 original articles of merger, a number of copies of the articles of
54-21 merger equal to the number of surviving, new, and acquiring
54-22 entities, and an application in the form required by the banking
54-23 commissioner. The banking commissioner may require the submission
54-24 of additional information as considered necessary to an informed
54-25 decision.
54-26 (b) The banking commissioner shall investigate the condition
54-27 of the merging parties.
55-1 (c) The banking commissioner may approve the merger if:
55-2 (1) each resulting state trust company will be solvent
55-3 and have adequate capitalization for its business and location;
55-4 (2) each resulting state trust company has in all
55-5 respects complied with the statutes and rules relating to the
55-6 organization of a state trust company;
55-7 (3) all obligations and liabilities of each trust
55-8 company that is a party to the merger have been properly discharged
55-9 or otherwise lawfully assumed or retained by a trust company or
55-10 other fiduciary;
55-11 (4) each surviving, new, or acquiring person that is
55-12 not authorized to engage in the trust business will not engage in
55-13 the trust business and has in all respects complied with the laws
55-14 of this state; and
55-15 (5) all conditions imposed by the banking commissioner
55-16 have been satisfied or otherwise resolved.
55-17 Sec. 3.303. APPROVAL OF BANKING COMMISSIONER. (a) If the
55-18 banking commissioner approves the merger and finds that all
55-19 required filing fees and investigative costs have been paid, the
55-20 banking commissioner shall:
55-21 (1) endorse the face of the original and each copy of
55-22 the articles of merger with the date of approval and the word
55-23 "Approved";
55-24 (2) file the original in the department's records; and
55-25 (3) deliver a certified copy of the articles of merger
55-26 to each surviving, new, or acquiring entity.
55-27 (b) A merger is effective on the date of approval, unless
56-1 the merger agreement provides and the banking commissioner consents
56-2 to a different effective date.
56-3 Sec. 3.304. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
56-4 participant, or participant-transferee may dissent from the merger
56-5 to the extent and by following the procedure provided by the Texas
56-6 Business Corporation Act or rules adopted under this Act.
56-7 (Sections 3.305-3.400 reserved for expansion)
56-8 SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
56-9 Sec. 3.401. AUTHORITY TO PURCHASE ASSETS OF ANOTHER TRUST
56-10 COMPANY. (a) A state trust company, with the prior written
56-11 approval of the banking commissioner, may purchase all or
56-12 substantially all of the assets of another regulated financial
56-13 institution, including the right to control accounts established
56-14 with the state trust company. Except as otherwise expressly
56-15 provided by another statute, the purchase of all or part of the
56-16 assets of the institution does not make the purchasing state trust
56-17 company responsible for any liability or obligation of the selling
56-18 institution that the purchasing state trust company does not
56-19 expressly assume. Except as otherwise provided by this Act, this
56-20 subchapter does not govern or prohibit the purchase by a state
56-21 trust company of all or part of the assets of a corporation or
56-22 other entity that is not a state trust company.
56-23 (b) To make a purchase under this section, an application in
56-24 the form required by the banking commissioner must be filed with
56-25 the banking commissioner. The banking commissioner shall
56-26 investigate the condition of the purchaser and seller and may
56-27 require the submission of additional information as considered
57-1 necessary to make an informed decision. The banking commissioner
57-2 shall approve the purchase if:
57-3 (1) the acquiring state trust company will be solvent
57-4 and have sufficient capitalization for its business and location;
57-5 (2) the acquiring state trust company has complied
57-6 with all applicable statutes and rules;
57-7 (3) all obligations and liabilities of each trust
57-8 company that is a party to the purchase or sale of assets have been
57-9 properly discharged or otherwise lawfully assumed or retained by a
57-10 trust company or other fiduciary;
57-11 (4) all conditions imposed by the banking commissioner
57-12 have been satisfied or otherwise resolved; and
57-13 (5) all fees and costs have been paid.
57-14 (c) A purchase is effective on the date of approval unless
57-15 the purchase agreement provides for and the banking commissioner
57-16 consents to a different effective date.
57-17 Sec. 3.402. AUTHORITY TO ACT AS DISBURSING AGENT. The
57-18 purchasing state trust company may hold the purchase price and any
57-19 additional funds delivered to it by the selling institution in
57-20 trust for the selling institution and may act as agent of the
57-21 selling institution in disbursing those funds in trust by paying
57-22 the creditors of the selling institution. If the purchasing state
57-23 trust company acts under written contract of agency approved by the
57-24 banking commissioner that specifically names each creditor and the
57-25 amount to be paid each, and if the agency is limited to the purely
57-26 ministerial act of paying creditors the amounts due them as
57-27 determined by the selling institution and reflected in the contract
58-1 of agency and does not involve discretionary duties or authority
58-2 other than the identification of the creditors named, the
58-3 purchasing trust company:
58-4 (1) may rely on the contract of agency and the
58-5 instructions included in it; and
58-6 (2) is not responsible for:
58-7 (A) any error made by the selling institution in
58-8 determining its liabilities and creditors to whom the liabilities
58-9 are due or the amounts due the creditors; or
58-10 (B) any preference that results from the
58-11 payments made under the contract of agency and the instructions
58-12 included in it.
58-13 Sec. 3.403. LIQUIDATION OF SELLING INSTITUTION. If the
58-14 selling institution is at any time after the sale of assets
58-15 voluntarily or involuntarily closed for liquidation by a state or
58-16 federal regulatory agency, the purchasing state trust company shall
58-17 pay to the receiver of the selling institution the balance of the
58-18 money held by it in trust for the selling institution and not yet
58-19 paid to the creditors of the selling institution. Without further
58-20 action the purchasing state trust company is discharged of all
58-21 responsibilities to the selling institution, its receiver, or its
58-22 creditors, shareholders, participants, or participant-transferees.
58-23 Sec. 3.404. PAYMENT TO CREDITORS. Payment to a creditor of
58-24 the selling institution of the amount to be paid the person under
58-25 the terms of the contract of agency may be made by the purchasing
58-26 state trust company by opening an agency account in the name of the
58-27 creditor, crediting the account with the amount to be paid the
59-1 creditor under the terms of the agency contract, and mailing or
59-2 personally delivering a duplicate ticket evidencing the credit to
59-3 the creditor at the creditor's address shown in the records of the
59-4 selling institution. The relationship between the purchasing state
59-5 trust company and the creditor is that of agent to creditor only to
59-6 the extent of the credit reflected by the ticket.
59-7 Sec. 3.405. SALE OF ASSETS. (a) The board of a state trust
59-8 company, with the banking commissioner's approval, may cause the
59-9 state trust company to sell all or substantially all of its assets,
59-10 including the right to control accounts established with the state
59-11 trust company, without shareholder or participant approval if the
59-12 banking commissioner finds:
59-13 (1) the interests of the state trust company's
59-14 clients, depositors, and creditors are jeopardized because of the
59-15 hazardous condition of the state trust company;
59-16 (2) the sale is in the best interest of the state
59-17 trust company's clients, depositors, and creditors; and
59-18 (3) if the deposits of the state trust company are
59-19 insured, the Federal Deposit Insurance Corporation or its successor
59-20 approves the transaction.
59-21 (b) A sale under this section must include an assumption and
59-22 promise by the buyer to pay or otherwise discharge:
59-23 (1) all of a state trust company's liabilities to
59-24 clients and depositors;
59-25 (2) all of the state trust company's liabilities for
59-26 salaries of the state trust company's employees incurred before the
59-27 date of the sale;
60-1 (3) obligations incurred by the banking commissioner
60-2 arising out of the supervision or sale of the state trust company;
60-3 and
60-4 (4) fees and assessments due the department.
60-5 (c) This section does not limit the incidental power of a
60-6 state trust company to buy and sell assets in the ordinary course
60-7 of business.
60-8 (d) This section does not affect the banking commissioner's
60-9 right to take action under another law. The sale by a state trust
60-10 company of all or substantially all of its assets with shareholder
60-11 or participant approval is considered a voluntary dissolution and
60-12 liquidation and is governed by Subchapter B, Chapter 7, of this
60-13 Act.
60-14 (Sections 3.406-3.500 reserved for expansion)
60-15 SUBCHAPTER F. STATE TRUST REGULATORY SYSTEM:
60-16 EXIT OF STATE TRUST COMPANY
60-17 Sec. 3.501. MERGER, REORGANIZATION, OR CONVERSION OF STATE
60-18 TRUST COMPANY INTO NATIONAL BANK EXERCISING FIDUCIARY POWERS.
60-19 (a) A state trust company may act as necessary under the laws of
60-20 the United States or this state to merge, reorganize, or convert
60-21 into a national bank exercising fiduciary powers.
60-22 (b) The merger, reorganization, or conversion must be made
60-23 and approval of the state trust company's board, shareholders, or
60-24 participants must be obtained in accordance with the Texas Business
60-25 Corporation Act as if the state trust company were a domestic
60-26 corporation and all other parties to the transaction, if any, were
60-27 foreign corporations or other entities, except as may be otherwise
61-1 provided by rules. For purposes of this subsection, a conversion
61-2 is considered a merger into the successor national bank exercising
61-3 fiduciary powers.
61-4 (c) The state trust company does not cease to be a state
61-5 trust company subject to the supervision of the banking
61-6 commissioner unless:
61-7 (1) the banking commissioner has been given written
61-8 notice of the intention to merge, reorganize, or convert before the
61-9 31st day before the date of the proposed transaction;
61-10 (2) the state trust company has published notice of
61-11 the transaction, in the form and frequency specified by the banking
61-12 commissioner, in a newspaper of general circulation published in
61-13 the county of its home office or, if such a newspaper is not
61-14 published in the county, in an adjacent county and in other
61-15 locations that the banking commissioner considers appropriate;
61-16 (3) the state trust company has filed with the banking
61-17 commissioner:
61-18 (A) a copy of the application filed with the
61-19 successor regulatory authority, including a copy of each contract
61-20 evidencing or implementing the merger, reorganization, or
61-21 conversion, or other documents sufficient to show compliance with
61-22 applicable law;
61-23 (B) a certified copy of all minutes of board
61-24 meetings and shareholder or participant meetings at which action
61-25 was taken regarding the merger, reorganization, or conversion; and
61-26 (C) a publisher's certificate showing
61-27 publication of the required notice;
62-1 (4) the banking commissioner determines that:
62-2 (A) all accounts and liabilities of the state
62-3 trust company are fully discharged, assumed, or otherwise retained
62-4 by the successor national bank exercising fiduciary powers;
62-5 (B) any conditions imposed by the banking
62-6 commissioner for the protection of clients and creditors have been
62-7 met or otherwise resolved; and
62-8 (C) any required filing fees have been paid; and
62-9 (5) the state trust company has received a certificate
62-10 of authority to do business as a national bank exercising fiduciary
62-11 powers.
62-12 CHAPTER 4. SHARES AND PARTICIPATION SHARES; SHAREHOLDERS AND
62-13 PARTICIPANTS; MANAGEMENT
62-14 SUBCHAPTER A. TRANSFER OF OWNERSHIP INTERESTS IN STATE
62-15 TRUST COMPANY
62-16 Sec. 4.001. ACQUISITION OF CONTROL
62-17 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL
62-18 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL
62-19 Sec. 4.004. APPEAL FROM ADVERSE DECISION
62-20 Sec. 4.005. OBJECTION TO OTHER TRANSFER
62-21 Sec. 4.006. CIVIL ENFORCEMENT; CRIMINAL PENALTIES
62-22 (Sections 4.007-4.100 reserved for expansion)
62-23 SUBCHAPTER B. BOARD AND OFFICERS
62-24 Sec. 4.101. VOTING SECURITIES HELD BY TRUST COMPANY
62-25 Sec. 4.102. BYLAWS
62-26 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
62-27 PARTICIPANTS
63-1 Sec. 4.104. REQUIRED BOARD MEETINGS
63-2 Sec. 4.105. OFFICERS
63-3 Sec. 4.106. CERTAIN CRIMINAL OFFENSES
63-4 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES
63-5 Sec. 4.108. FIDUCIARY RESPONSIBILITY
63-6 Sec. 4.109. RECORDKEEPING
63-7 Sec. 4.110. BONDING REQUIREMENTS
63-8 Sec. 4.111. REPORTS OF APPARENT CRIME
63-9 (Sections 4.112-4.200 reserved for expansion)
63-10 SUBCHAPTER C. SPECIAL PROVISIONS FOR LIMITED TRUST ASSOCIATIONS
63-11 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY
63-12 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS
63-13 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS
63-14 Sec. 4.204. MANAGEMENT OF LIMITED TRUST ASSOCIATION
63-15 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
63-16 CONTRIBUTION TO CAPITAL
63-17 Sec. 4.206. INTEREST IN LIMITED TRUST ASSOCIATION;
63-18 TRANSFERABILITY OF INTEREST
63-19 Sec. 4.207. DISSOLUTION
63-20 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES
63-21 Sec. 4.209. DISTRIBUTIONS
63-22 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED TRUST
63-23 ASSOCIATIONS
64-1 CHAPTER 4. SHARES AND PARTICIPATION SHARES; SHAREHOLDERS AND
64-2 PARTICIPANTS; MANAGEMENT
64-3 SUBCHAPTER A. TRANSFER OF OWNERSHIP INTERESTS IN
64-4 STATE TRUST COMPANY
64-5 Sec. 4.001. ACQUISITION OF CONTROL. (a) Except as
64-6 expressly permitted by this Act, a person may not without the prior
64-7 written approval of the banking commissioner directly or indirectly
64-8 acquire a legal or beneficial interest in voting securities of a
64-9 state trust company or a corporation or other entity owning voting
64-10 securities of the state trust company if, after the acquisition,
64-11 the person would control the state trust company. For purposes of
64-12 this subchapter and except as otherwise provided by rules adopted
64-13 under this Act, the principal shareholder or principal participant
64-14 of a state trust company that directly or indirectly owns or has
64-15 the power to vote a greater percentage of voting securities of the
64-16 state trust company than any other shareholder or participant is
64-17 considered to control the state trust company.
64-18 (b) This subchapter does not prohibit a person from
64-19 negotiating to acquire, but not acquiring, control of a state trust
64-20 company or a person that controls a state trust company.
64-21 (c) This section does not apply to:
64-22 (1) the acquisition of securities in connection with
64-23 the exercise of a security interest or otherwise in full or partial
64-24 satisfaction of a debt previously contracted for in good faith if
64-25 the acquiring person files written notice of acquisition with the
64-26 banking commissioner before the person votes the securities
64-27 acquired;
65-1 (2) the acquisition of voting securities in any class
65-2 or series by a controlling person who has previously complied with
65-3 and received approval under this subchapter or who was identified
65-4 as a controlling person in a prior application filed with and
65-5 approved by the banking commissioner;
65-6 (3) an acquisition or transfer by operation of law,
65-7 will, or intestate succession if the acquiring person files written
65-8 notice of acquisition with the banking commissioner before the
65-9 person votes the securities acquired; or
65-10 (4) a transaction exempted by the banking commissioner
65-11 or by rules adopted under this Act because the transaction is not
65-12 within the purposes of this subchapter or the regulation of which
65-13 is not necessary or appropriate to achieve the objectives of this
65-14 subchapter.
65-15 Sec. 4.002. APPLICATION REGARDING ACQUISITION OF CONTROL.
65-16 (a) An application for approval to acquire control of a state
65-17 trust company or a person that controls a state trust company must
65-18 be filed under oath by the transferee on a form prescribed by the
65-19 banking commissioner and accompanied by any filing fee required by
65-20 statute or rule. The application must contain all information
65-21 required by rules adopted under this Act or that the banking
65-22 commissioner requires in a particular application as necessary to
65-23 an informed decision to approve or reject the acquisition.
65-24 (b) If a person or transferee proposing to acquire voting
65-25 securities subject to this section includes a group of individuals
65-26 or entities acting in concert, the information required by the
65-27 banking commissioner may be required of each member of the group.
66-1 (c) Information obtained by the banking commissioner under
66-2 this section is confidential and may not be disclosed by the
66-3 banking commissioner or any employee of the department except as
66-4 provided by Subchapter B, Chapter 2, of this Act.
66-5 (d) Promptly after the applicants are notified by the
66-6 banking commissioner that the application is complete and accepted
66-7 for filing, the applicants shall publish notice of the application,
66-8 its date of filing, and the identity of each applicant, in the form
66-9 specified by the banking commissioner, in a newspaper of general
66-10 circulation in the county where the state trust company's home
66-11 office is located. Publication of notice of an application filed
66-12 in contemplation of a public tender offer subject to 15 U.S.C.
66-13 Section 78n(d)(1) may be deferred for not more than 34 days after
66-14 the date the application is filed if:
66-15 (1) the applicant requests confidential treatment and
66-16 represents that a public announcement of the tender offer and the
66-17 filing of appropriate forms with the Securities and Exchange
66-18 Commission or the appropriate federal banking agency, as
66-19 applicable, will occur within the period of deferral; and
66-20 (2) the banking commissioner determines that the
66-21 public interest will not be harmed by the requested confidential
66-22 treatment.
66-23 (e) The banking commissioner may waive the requirement that
66-24 a notice be published or permit delayed publication on a
66-25 determination that waiver or delay is in the public interest. If
66-26 publication of notice is waived under this subsection, the
66-27 information that would be contained in a published notice becomes
67-1 public information under Chapter 552, Government Code, on the 35th
67-2 day after the date the application is filed.
67-3 Sec. 4.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
67-4 (a) Not later than the 60th day after the date the notice is
67-5 published, the banking commissioner shall approve the application
67-6 or set the application for hearing. If the banking commissioner
67-7 sets a hearing, the department shall participate as the opposing
67-8 party and the banking commissioner shall conduct a hearing and one
67-9 or more prehearing conferences and opportunities for discovery as
67-10 the banking commissioner considers advisable and consistent with
67-11 governing statutes and rules. A hearing held under this section is
67-12 confidential and closed to the public.
67-13 (b) Based on the record, the banking commissioner may issue
67-14 an order denying an application if:
67-15 (1) the acquisition would substantially lessen
67-16 competition, be in restraint of trade, result in a monopoly, or be
67-17 in furtherance of a combination or conspiracy to monopolize or
67-18 attempt to monopolize the trust industry in any part of this state,
67-19 unless:
67-20 (A) the anticompetitive effects of the
67-21 acquisition are clearly outweighed in the public interest by the
67-22 probable effect of acquisition in meeting the convenience and needs
67-23 of the community to be served; and
67-24 (B) the acquisition is not in violation of the
67-25 law of this state or the United States;
67-26 (2) the financial condition of the transferee, or any
67-27 member of a group comprising the transferee, might jeopardize the
68-1 financial stability of the state trust company being acquired;
68-2 (3) plans or proposals to operate, liquidate, or sell
68-3 the state trust company or its assets are not in the best interests
68-4 of the state trust company;
68-5 (4) the experience, ability, standing, competence,
68-6 trustworthiness, and integrity of the transferee, or any member of
68-7 a group comprising the transferee, are insufficient to justify a
68-8 belief that the state trust company will be free from improper or
68-9 unlawful influence or interference with respect to the state trust
68-10 company's operation in compliance with law;
68-11 (5) the state trust company will not be solvent, have
68-12 adequate capitalization, or be in compliance with the laws of this
68-13 state after the acquisition;
68-14 (6) the transferee has failed to furnish all
68-15 information pertinent to the application reasonably required by the
68-16 banking commissioner; or
68-17 (7) the transferee is not acting in good faith.
68-18 (c) If an application filed under this section is approved
68-19 by the banking commissioner, the transaction may be consummated.
68-20 Any written commitment from the transferee offered to and accepted
68-21 by the banking commissioner as a condition that the application
68-22 will be approved is enforceable against the state trust company and
68-23 the transferee and is considered for all purposes an agreement
68-24 under this Act.
68-25 Sec. 4.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
68-26 has been held, the banking commissioner has entered an order
68-27 denying the application, and the order has become final, the
69-1 transferee may appeal the final order by filing a petition for
69-2 judicial review under the substantial evidence rule in a district
69-3 court of Travis County as provided by Chapter 2001, Government
69-4 Code.
69-5 (b) The filing of an appeal under this section does not stay
69-6 the order of the banking commissioner.
69-7 Sec. 4.005. OBJECTION TO OTHER TRANSFER. This subchapter
69-8 does not prevent the banking commissioner from investigating,
69-9 commenting on, or seeking to enjoin or set aside a transfer of
69-10 voting securities that evidence a direct or indirect interest in a
69-11 state trust company, regardless of whether the transfer is included
69-12 within this subchapter, if the banking commissioner considers the
69-13 transfer to be against the public interest.
69-14 Sec. 4.006. CIVIL ENFORCEMENT; CRIMINAL PENALTIES. (a) If
69-15 the banking commissioner believes that a person has committed or is
69-16 about to commit a violation of this subchapter or a rule or order
69-17 of the banking commissioner pertaining to this subchapter, the
69-18 attorney general on behalf of the banking commissioner may apply to
69-19 a district court of Travis County for an order enjoining the
69-20 violation and for other equitable relief the nature of the case
69-21 requires.
69-22 (b) A person who knowingly fails or refuses to file the
69-23 application required by Section 4.002 of this Act commits an
69-24 offense. An offense under this subsection is a Class A
69-25 misdemeanor.
69-26 (Sections 4.007-4.100 reserved for expansion)
70-1 SUBCHAPTER B. BOARD AND OFFICERS
70-2 Sec. 4.101. VOTING SECURITIES HELD BY TRUST COMPANY.
70-3 (a) Voting securities of a state trust company held by the state
70-4 trust company in a fiduciary capacity under a will or trust,
70-5 whether registered in its own name or in the name of its nominee,
70-6 may not be voted in the election of directors or managers or on a
70-7 matter affecting the compensation of directors, managers, officers,
70-8 or employees of the state trust company in that capacity, unless:
70-9 (1) under the terms of the will or trust, the manner
70-10 in which the voting securities are to be voted may be determined by
70-11 a donor or beneficiary of the will or trust and the donor or
70-12 beneficiary actually makes the determination in the matter at
70-13 issue;
70-14 (2) the terms of the will or trust expressly direct
70-15 the manner in which the securities must be voted to the extent that
70-16 no discretion is vested in the state trust company as fiduciary; or
70-17 (3) the securities are voted solely by a cofiduciary
70-18 that is not an affiliate of the state trust company, as if the
70-19 cofiduciary were the sole fiduciary.
70-20 (b) Voting securities of a state trust company that cannot
70-21 be voted under this section are considered to be authorized but
70-22 unissued for purposes of determining the procedures for and results
70-23 of the affected vote.
70-24 Sec. 4.102. BYLAWS. (a) Each state trust company shall
70-25 adopt bylaws and may amend its bylaws from time to time for the
70-26 purposes and in accordance with the procedures set forth in the
70-27 Texas Business Corporation Act.
71-1 (b) A limited trust association in which management is
71-2 retained by the participants is not required to adopt bylaws if
71-3 provisions required by law to be contained in the bylaws are
71-4 contained in the articles of association or the participation
71-5 agreement. If a limited trust association has adopted bylaws that
71-6 designate each full liability participant, the limited trust
71-7 association shall file with the banking commissioner a copy of the
71-8 bylaws. Only the portion of the bylaws designating each full
71-9 liability participant is a public record.
71-10 Sec. 4.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
71-11 PARTICIPANTS. (a) The board of a state trust company must consist
71-12 of not fewer than five or more than 25 directors, managers, or
71-13 managing participants, the majority of whom must be residents of
71-14 this state. Except for a limited trust association in which
71-15 management has been retained by its participants, the principal
71-16 executive officer of the state trust company is a member of the
71-17 board. The principal executive officer acting in the capacity of
71-18 board member is the board's presiding officer unless the board
71-19 elects a different presiding officer to perform the duties as
71-20 designated by the board.
71-21 (b) Unless the banking commissioner consents otherwise in
71-22 writing, a person may not serve as director, manager, or managing
71-23 participant of a state trust company if:
71-24 (1) the state trust company incurs an unreimbursed
71-25 loss attributable to a charged-off obligation of or holds a
71-26 judgment against the person or an entity that was controlled by the
71-27 person at the time of funding and at the time of default on the
72-1 loan that gave rise to the judgment or charged-off obligation;
72-2 (2) the person has been convicted of a felony; or
72-3 (3) the person has violated, with respect to a trust
72-4 under which the state trust company has fiduciary responsibility,
72-5 Section 113.052 or 113.053(a), Property Code, relating to loan of
72-6 trust funds and purchase or sale of trust property by the trustee,
72-7 and the violation has not been corrected.
72-8 (c) If a state trust company other than a limited trust
72-9 association operated by managing participants does not elect
72-10 directors or managers before the 61st day after the date of its
72-11 regular annual meeting, the banking commissioner may appoint a
72-12 conservator under Chapter 6 of this Act to operate the state trust
72-13 company and elect directors or managers, as appropriate. If the
72-14 conservator is unable to locate or elect persons willing and able
72-15 to serve as directors or managers, the banking commissioner may
72-16 close the state trust company for liquidation.
72-17 (d) A vacancy on the board that reduces the number of
72-18 directors, managers, or managing participants to fewer than five
72-19 must be filled not later than the 30th day after the date the
72-20 vacancy occurs. A limited trust association with fewer than five
72-21 managing participants must add one or more new participants or
72-22 elect a board of managers of not fewer than five persons to resolve
72-23 the vacancy. After 30 days after the date the vacancy occurs, the
72-24 banking commissioner may appoint a conservator under Chapter 6 of
72-25 this Act to operate the state trust company and elect a board of
72-26 not fewer than five persons to resolve the vacancy. If the
72-27 conservator is unable to locate or elect five persons willing and
73-1 able to serve as directors or managers, the banking commissioner
73-2 may close the state trust company for liquidation.
73-3 (e) Before each term to which a person is elected to serve
73-4 as a director or manager of a state trust company, or annually for
73-5 a person who is a managing participant, the person shall submit an
73-6 affidavit for filing in the minutes of the state trust company
73-7 stating that the person, to the extent applicable:
73-8 (1) accepts the position and is not disqualified from
73-9 serving in the position;
73-10 (2) will not violate or knowingly permit an officer,
73-11 director, manager, managing participant, or employee of the state
73-12 trust company to violate any law applicable to the conduct of
73-13 business of the trust company; and
73-14 (3) will diligently perform the duties of the
73-15 position.
73-16 (f) An advisory director or manager is not considered a
73-17 director if the advisory director or manager:
73-18 (1) is not elected by the shareholders or participants
73-19 of the state trust company;
73-20 (2) does not vote on matters before the board or a
73-21 committee of the board and is not counted for purposes of
73-22 determining a quorum of the board or committee; and
73-23 (3) provides solely general policy advice to the
73-24 board.
73-25 Sec. 4.104. REQUIRED BOARD MEETINGS. The board of a state
73-26 trust company shall hold at least one regular meeting each quarter.
73-27 At each regular meeting the board shall review and approve the
74-1 minutes of the prior meeting and review the operations, activities,
74-2 and financial condition of the state trust company. The board may
74-3 designate committees from among its members to perform these duties
74-4 and approve or disapprove the committees' reports at each regular
74-5 meeting. All actions of the board must be recorded in its minutes.
74-6 Sec. 4.105. OFFICERS. (a) The board shall annually appoint
74-7 the officers of the state trust company, who serve at the pleasure
74-8 of the board. The state trust company must have a principal
74-9 executive officer primarily responsible for the execution of board
74-10 policies and operation of the state trust company and an officer
74-11 responsible for the maintenance and storage of all corporate books
74-12 and records of the state trust company and for required attestation
74-13 of signatures. These positions may not be held by the same person.
74-14 The board may appoint other officers of the state trust company as
74-15 the board considers necessary.
74-16 (b) Unless expressly authorized by a resolution of the board
74-17 recorded in its minutes, an officer or employee may not create or
74-18 dispose of a state trust company asset or create or incur a
74-19 liability on behalf of the state trust company.
74-20 Sec. 4.106. CERTAIN CRIMINAL OFFENSES. (a) An officer,
74-21 director, manager, managing participant, employee, shareholder, or
74-22 participant of a state trust company commits an offense if the
74-23 person knowingly:
74-24 (1) conceals information or a fact or removes,
74-25 destroys, or conceals a book or record of the state trust company
74-26 for the purpose of concealing information or a fact from the
74-27 banking commissioner or an agent of the banking commissioner; or
75-1 (2) for the purpose of concealing, removes or destroys
75-2 any book or record of the state trust company that is material to a
75-3 pending or anticipated legal or administrative proceeding.
75-4 (b) An officer, director, manager, managing participant, or
75-5 employee of a state trust company commits an offense if the
75-6 person knowingly makes a false entry in the books or records or in
75-7 any report or statement of the state trust company.
75-8 (c) An offense under this section is a felony of the third
75-9 degree.
75-10 Sec. 4.107. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES.
75-11 (a) Without the prior approval of a disinterested majority of the
75-12 board recorded in the minutes, or if a disinterested majority
75-13 cannot be obtained the prior written approval of the banking
75-14 commissioner, a state trust company may not directly or indirectly:
75-15 (1) sell or lease an asset of the state trust company
75-16 to an officer, director, manager, managing participant, or
75-17 principal shareholder or participant of the state trust company or
75-18 an affiliate of the state trust company;
75-19 (2) purchase or lease an asset in which an officer,
75-20 director, manager, managing participant, or principal shareholder
75-21 or participant of the state trust company or an affiliate of the
75-22 state trust company has an interest; or
75-23 (3) subject to Section 5.201 of this Act, extend
75-24 credit to an officer, director, manager, managing participant, or
75-25 principal shareholder or participant of the state trust company or
75-26 an affiliate of the state trust company.
75-27 (b) Notwithstanding Subsection (a) of this section, a lease
76-1 transaction described in Subsection (a)(2) of this section
76-2 involving real property may not be consummated, renewed, or
76-3 extended without the prior written approval of the banking
76-4 commissioner. For purposes of this subsection only, an affiliate
76-5 of a state trust company does not include a subsidiary of the state
76-6 trust company.
76-7 (c) Subject to Section 5.201 of this Act, a state trust
76-8 company may not directly or indirectly extend credit to an
76-9 employee, officer, director, manager, managing participant, or
76-10 principal shareholder or participant of the state trust company or
76-11 an affiliate of the state trust company, unless the extension of
76-12 credit:
76-13 (1) is made on substantially the same terms, including
76-14 interest rates and collateral, as those prevailing at the time for
76-15 comparable transactions by the state trust company with persons who
76-16 are not employees, officers, directors, managers, managing
76-17 participants, principal shareholders, participants, or affiliates
76-18 of the state trust company;
76-19 (2) does not involve more than the normal risk of
76-20 repayment or present other unfavorable features; and
76-21 (3) the state trust company follows credit
76-22 underwriting procedures that are not less stringent than those
76-23 applicable to comparable transactions by the state trust company
76-24 with persons who are not employees, officers, directors, managers,
76-25 managing participants, principal shareholders, participants, or
76-26 affiliates of the state trust company.
76-27 (d) An officer, director, manager, or managing participant
77-1 of a state trust company who knowingly participates in or permits a
77-2 violation of this section commits an offense. An offense under
77-3 this subsection is a felony of the third degree.
77-4 (e) The finance commission may adopt rules to administer and
77-5 carry out this section, including rules to establish limits,
77-6 requirements, or exemptions other than those specified by this
77-7 section for particular categories of transactions.
77-8 Sec. 4.108. FIDUCIARY RESPONSIBILITY. The board of a state
77-9 trust company is responsible for the proper exercise of fiduciary
77-10 powers by the state trust company and each matter pertinent to the
77-11 exercise of fiduciary powers, including:
77-12 (1) the determination of policies;
77-13 (2) the investment and disposition of property held in
77-14 a fiduciary capacity; and
77-15 (3) the direction and review of the actions of each
77-16 officer, employee, and committee used by the state trust company in
77-17 the exercise of its fiduciary powers.
77-18 Sec. 4.109. RECORDKEEPING. A state trust company shall keep
77-19 its fiduciary records separate and distinct from other records of
77-20 the state trust company in compliance with the rules adopted under
77-21 this Act. The fiduciary records must contain all appropriate
77-22 material information relative to each account.
77-23 Sec. 4.110. BONDING REQUIREMENTS. (a) The board of a state
77-24 trust company shall require a bond for protection and indemnity of
77-25 clients, in reasonable amounts established by rules adopted under
77-26 this chapter, against dishonesty, fraud, defalcation, forgery,
77-27 theft, and other similar insurable losses with a corporate
78-1 insurance or surety company:
78-2 (1) authorized to do business in this state; or
78-3 (2) acceptable to the banking commissioner and
78-4 otherwise lawfully permitted to issue the coverage against those
78-5 losses in this state.
78-6 (b) Except as otherwise provided by rule, a bond is required
78-7 to cover each director, manager, managing participant, officer, and
78-8 employee of a state trust company without regard to whether the
78-9 person receives salary or other compensation.
78-10 (c) A state trust company may apply to the banking
78-11 commissioner for permission to eliminate the bonding requirement of
78-12 this section for a particular individual. The banking commissioner
78-13 shall approve the application if the banking commissioner finds
78-14 that the bonding requirement is unnecessary or burdensome. Unless
78-15 the application presents novel or unusual questions, the banking
78-16 commissioner shall approve the application or set the application
78-17 for hearing not later than the 61st day after the date the banking
78-18 commissioner considers the application complete and accepted for
78-19 filing.
78-20 Sec. 4.111. REPORTS OF APPARENT CRIME. (a) A state trust
78-21 company that is the victim of a robbery, has a shortage of
78-22 corporate or fiduciary funds in excess of $5,000, or is the victim
78-23 of an apparent or suspected misapplication of its corporate or
78-24 fiduciary funds or property in any amount by a director, manager,
78-25 managing participant, officer, or employee shall report such
78-26 robbery, shortage, or apparent or suspected misapplication to the
78-27 banking commissioner within 48 hours after the time it is
79-1 discovered. The initial report may be oral if the report is
79-2 promptly confirmed in writing. The state trust company or a
79-3 director, manager, managing participant, officer, employee, or
79-4 agent is not subject to liability for defamation or another charge
79-5 resulting from information supplied in the report.
79-6 (b) A trust report filed with the banking commissioner under
79-7 this section may be a copy of a written report filed with an
79-8 appropriate federal agency.
79-9 (Sections 4.112-4.200 reserved for expansion)
79-10 SUBCHAPTER C. SPECIAL PROVISIONS FOR LIMITED TRUST ASSOCIATIONS
79-11 Sec. 4.201. FILING OF NOTICE OF FULL LIABILITY. (a) A
79-12 limited trust association shall file with the banking commissioner
79-13 a copy of any participation agreement by which a participant of the
79-14 limited trust association agrees to become a full liability
79-15 participant and the name and address of each full liability
79-16 participant. Only the portion of the filed copy containing the
79-17 designation of each full liability participant is a public record.
79-18 (b) The banking commissioner may require a complete copy of
79-19 the participation agreement to be filed with the department,
79-20 regardless of whether a state trust company has a full liability
79-21 participant, except that the provisions of the participation
79-22 agreement other than those by which a participant of the limited
79-23 trust association agrees to become a full liability participant are
79-24 confidential and subject to release only as provided by Subchapter
79-25 B, Chapter 2, of this Act.
79-26 Sec. 4.202. LIABILITY OF PARTICIPANTS AND MANAGERS.
79-27 (a) Except as provided by Subsection (b) of this section, the
80-1 participants, participant-transferees, and managers of a limited
80-2 trust association may not be held liable for a debt, obligation, or
80-3 liability of the limited trust association, including a debt,
80-4 obligation, or liability under a judgment, decree, or order of
80-5 court. A participant, other than a full liability participant, or
80-6 a manager of a limited trust association is not a proper party to
80-7 proceedings by or against a limited trust association, unless the
80-8 object of the proceeding is to enforce a participant's or manager's
80-9 right against or liability to a limited trust association.
80-10 (b) A full liability participant of a limited trust
80-11 association is liable under a judgment, decree, or order of court
80-12 for a debt, obligation, or liability of the limited trust
80-13 association that accrued during the participation of the full
80-14 liability participant in the limited trust association and before
80-15 the full liability participant or a successor in interest files a
80-16 notice of withdrawal as a full liability participant from the
80-17 limited trust association with the banking commissioner. The filed
80-18 notice of withdrawal is a public record.
80-19 Sec. 4.203. CONTRACTING DEBTS AND OBLIGATIONS. Except as
80-20 provided by this section or the articles of association of the
80-21 limited trust association, a debt, liability, or other obligation
80-22 may be contracted for or incurred on behalf of a limited trust
80-23 association only by:
80-24 (1) a majority of the managers, if management of the
80-25 limited trust association has been vested in a board of managers;
80-26 (2) a majority of the managing participants; or
80-27 (3) an officer or other agent vested with actual or
81-1 apparent authority to contract for or incur the debt, liability, or
81-2 other obligation.
81-3 Sec. 4.204. MANAGEMENT OF LIMITED TRUST ASSOCIATION.
81-4 (a) Management of a limited trust association is vested in the
81-5 participants in proportion to each participant's contribution to
81-6 capital, as adjusted periodically to properly reflect any
81-7 additional contribution. The articles of association may provide
81-8 that management of a limited trust association is vested in a
81-9 board of managers to be elected annually by the participants as
81-10 prescribed by the bylaws.
81-11 (b) Participants of a limited trust association may not
81-12 retain management and must elect a board of managers if:
81-13 (1) any participant is disqualified from serving as a
81-14 managing participant under Section 4.103 of this Act;
81-15 (2) the limited trust association has fewer than five
81-16 or more than 25 participants; or
81-17 (3) any participant has been removed by the banking
81-18 commissioner under Subchapter A, Chapter 6, of this Act.
81-19 (c) The articles of association, bylaws, and participation
81-20 agreement of a limited trust association may use the terms
81-21 "director" and "board" instead of "manager" and "board of
81-22 managers," respectively.
81-23 Sec. 4.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
81-24 CONTRIBUTION TO CAPITAL. (a) A participant may not receive from a
81-25 limited trust association any part of the participant's
81-26 contribution to capital until:
81-27 (1) all liabilities of the limited trust association,
82-1 except liabilities to participants on account of contribution to
82-2 capital, have been paid or, if after the withdrawal or reduction,
82-3 sufficient property of the limited trust association will remain to
82-4 pay all liabilities of the limited trust association, except
82-5 liabilities to participants on account of contribution to capital;
82-6 (2) all participants consent, unless the return of the
82-7 contribution to capital may be demanded as provided by this
82-8 chapter; or
82-9 (3) the articles of association are canceled or
82-10 amended to set out the withdrawal or reduction.
82-11 (b) A participant may demand the return of the participant's
82-12 contribution to capital on the dissolution of the association and
82-13 the failure by the full liability participants to exercise the
82-14 right for the business of the limited trust association to be
82-15 carried on by the remaining participants as provided by Section
82-16 4.207 of this Act.
82-17 (c) Unless allowed by the articles of association or by the
82-18 unanimous consent of all participants of the limited trust
82-19 association, a participant may demand the return of the
82-20 participant's contribution to capital only in cash.
82-21 Sec. 4.206. INTEREST IN LIMITED TRUST ASSOCIATION;
82-22 TRANSFERABILITY OF INTEREST. (a) The interest of a participant or
82-23 participant-transferee in a limited trust association is the
82-24 personal estate of the participant or the participant-transferee
82-25 and may be transferred as provided by the bylaws or the
82-26 participation agreement. A transferee of a participant's interest
82-27 has the status of a participant-transferee and does not by the
83-1 transfer become a participant or obtain a right to participate in
83-2 the management of the limited trust association. A
83-3 participant-transferee is entitled to receive only a share of
83-4 profits, return of contribution, or other distributive benefit in
83-5 respect to the interest transferred to which the participant who
83-6 transferred the interest would have been entitled. A
83-7 participant-transferee may become a participant only as provided by
83-8 the bylaws or the participation agreement.
83-9 (b) A limited trust association may add additional
83-10 participants in the same manner as participant-transferees after
83-11 payment in full of the capital contribution to the limited trust
83-12 association payable for the issuance of additional participation
83-13 interests.
83-14 Sec. 4.207. DISSOLUTION. (a) A limited trust association
83-15 organized under this chapter is dissolved on:
83-16 (1) the expiration of the period fixed for the
83-17 duration of the limited trust association;
83-18 (2) a vote to dissolve or the execution of a written
83-19 consent to dissolve by all full liability participants, if any, and
83-20 a sufficient number of other participants that combined with all
83-21 full liability participants hold at least two-thirds of the
83-22 participation shares in each class in the association, or a greater
83-23 fraction as provided by the articles of association;
83-24 (3) except as provided by the articles of association,
83-25 the death, insanity, expulsion, bankruptcy, retirement, or
83-26 resignation of a participant unless a majority in interest of all
83-27 remaining participants elect in writing not later than the 90th
84-1 day after the date of the event to continue the business of the
84-2 association; or
84-3 (4) the occurrence of an event of dissolution
84-4 specified in the articles of association.
84-5 (b) A dissolution under this section is considered to be the
84-6 initiation of a voluntary liquidation under Subchapter B, Chapter
84-7 7, of this Act.
84-8 (c) An event of dissolution described by Subsection (a)(3)
84-9 of this section does not cancel or revoke a contract to which the
84-10 limited trust association is a party, including a trust indenture
84-11 or agreement or voluntary dissolution under Subchapter B, Chapter
84-12 7, of this Act, until the period for the remaining participants to
84-13 continue the business of the limited trust association has expired
84-14 without the remaining participants having completed the necessary
84-15 action to continue the business of the limited trust association.
84-16 Sec. 4.208. ALLOCATION OF PROFITS AND LOSSES. The profits
84-17 and losses of a limited trust association may be allocated among
84-18 the participants and among classes of participants as provided by
84-19 the participation agreement. Without the prior written approval of
84-20 the banking commissioner, the profits and losses must be allocated
84-21 based on the relative interests of the participants as reflected in
84-22 the articles of association and related documents filed with and
84-23 approved by the banking commissioner.
84-24 Sec. 4.209. DISTRIBUTIONS. Subject to Section 3.103 of this
84-25 Act, distributions of cash or other assets of a limited trust
84-26 association may be made to the participants as provided by the
84-27 participation agreement. Without the prior written approval of the
85-1 banking commissioner, distributions must be made to the
85-2 participants based on the relative interests of the participants as
85-3 reflected in the articles of association and related documents
85-4 filed with and approved by the banking commissioner.
85-5 Sec. 4.210. OTHER PROVISIONS RELATED TO LIMITED TRUST
85-6 ASSOCIATIONS. For purposes of the provisions of this Act other
85-7 than this subchapter, as the context requires:
85-8 (1) a manager and the board of managers are considered
85-9 to be a director and the board of directors, respectively;
85-10 (2) if there is not a board of managers, a participant
85-11 is considered to be a director and all of the participants are
85-12 considered to be the board of directors;
85-13 (3) a participant or participant-transferee is
85-14 considered to be a shareholder;
85-15 (4) a participation share is considered to be a share
85-16 of stock; and
85-17 (5) a distribution is considered to be a dividend.
85-18 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
85-19 SUBCHAPTER A. ACQUISITION AND OWNERSHIP
85-20 OF STATE TRUST COMPANY FACILITIES
85-21 Sec. 5.001. INVESTMENT IN STATE TRUST COMPANY FACILITIES
85-22 (Sections 5.002-5.100 reserved for expansion)
85-23 SUBCHAPTER B. STATE TRUST COMPANY INVESTMENTS
85-24 Sec. 5.101. SECURITIES
85-25 Sec. 5.102. TRANSACTIONS IN STATE TRUST COMPANY SHARES OR
85-26 PARTICIPATION SHARES
85-27 Sec. 5.103. SUBSIDIARIES
86-1 Sec. 5.104. OTHER REAL ESTATE
86-2 (Sections 5.105-5.200 reserved for expansion)
86-3 SUBCHAPTER C. LOANS
86-4 Sec. 5.201. LENDING LIMITS
86-5 Sec. 5.202. LEASE FINANCING TRANSACTIONS
86-6 (Sections 5.203-5.300 reserved for expansion)
86-7 SUBCHAPTER D. OTHER INVESTMENT PROVISIONS
86-8 Sec. 5.301. OTHER INVESTMENT PROVISIONS
86-9 Sec. 5.302. ENGAGING IN COMMERCE PROHIBITED
86-10 (Sections 5.303-5.400 reserved for expansion)
86-11 SUBCHAPTER E. TRUST DEPOSITS
86-12 Sec. 5.401. TRUST DEPOSITS
86-13 (Sections 5.402-5.500 reserved for expansion)
86-14 SUBCHAPTER F. LIABILITIES AND PLEDGE OF ASSETS
86-15 Sec. 5.501. BORROWING LIMIT
86-16 Sec. 5.502. PLEDGE OF ASSETS
86-17 CHAPTER 5. INVESTMENTS, LOANS, AND DEPOSITS
86-18 SUBCHAPTER A. ACQUISITION AND OWNERSHIP OF STATE
86-19 TRUST COMPANY FACILITIES
86-20 Sec. 5.001. INVESTMENT IN STATE TRUST COMPANY FACILITIES.
86-21 (a) In this subchapter, "state trust company facility" means real
86-22 estate, including an improvement, owned, or leased to the extent
86-23 the lease or the leasehold improvements are capitalized, by a state
86-24 trust company for the purpose of:
86-25 (1) providing space for state trust company employees
86-26 to perform their duties and space for parking by state trust
86-27 company employees and customers;
87-1 (2) conducting trust business, including meeting the
87-2 reasonable needs and convenience of the public and the state trust
87-3 company's clients, computer operations, document and other item
87-4 processing, maintenance, and record retention and storage;
87-5 (3) holding, improving, and occupying as an incident
87-6 to future expansion of the state trust company's facilities; or
87-7 (4) conducting another activity authorized by rules
87-8 adopted under this Act.
87-9 (b) Without the prior written approval of the banking
87-10 commissioner, a state trust company may not directly or indirectly
87-11 invest an amount in excess of 60 percent of its restricted capital
87-12 in state trust company facilities, furniture, fixtures, and
87-13 equipment. Except as otherwise provided by rules adopted under
87-14 this Act, in computing this limitation a state trust company:
87-15 (1) shall include:
87-16 (A) its direct investment in state trust company
87-17 facilities;
87-18 (B) any investment in equity or investment
87-19 securities of a company holding title to a facility used by the
87-20 state trust company for the purposes specified by Subsection (a) of
87-21 this section;
87-22 (C) any loan made by the state trust company to
87-23 or on the security of equity or investment securities issued by a
87-24 company holding title to a facility used by the state trust
87-25 company; and
87-26 (D) any indebtedness incurred on state trust
87-27 company facilities by a company:
88-1 (i) that holds title to the facility;
88-2 (ii) that is an affiliate of the state
88-3 trust company; and
88-4 (iii) in which the state trust company is
88-5 invested in the manner described by Paragraph (B) or (C) of this
88-6 subdivision; and
88-7 (2) may exclude an amount included under Subdivisions
88-8 (1)(B)-(D) of this subsection to the extent any lease of a facility
88-9 from the company holding title to the facility is capitalized on
88-10 the books of the state trust company.
88-11 (c) Real estate acquired under Subsection (a)(3) of this
88-12 section and not improved and occupied by the state trust company
88-13 ceases to be a state trust company facility on the third
88-14 anniversary of the date of its acquisition, unless the banking
88-15 commissioner on application grants written approval to further
88-16 delay in the improvement and occupation of the property by the
88-17 state trust company.
88-18 (d) A state trust company shall comply with regulatory
88-19 accounting principles in accounting for its investment in and
88-20 depreciation of state trust company facilities, furniture,
88-21 fixtures, and equipment.
88-22 (Sections 5.002-5.100 reserved for expansion)
88-23 SUBCHAPTER B. STATE TRUST COMPANY INVESTMENTS
88-24 Sec. 5.101. SECURITIES. (a) A state trust company may
88-25 invest its restricted capital in any type or character of equity
88-26 or investment securities under the limitations provided by this
88-27 section.
89-1 (b) Unless the banking commissioner approves maintenance of
89-2 a lesser amount in writing, a state trust company must invest and
89-3 maintain an amount equal to at least 40 percent of the state trust
89-4 company's restricted capital under Section 3.007 of this Act in
89-5 investment securities that are readily marketable and can be
89-6 converted to cash within four business days.
89-7 (c) Subject to Subsection (d) of this section, the total
89-8 investment of its restricted capital in equity and investment
89-9 securities of any one issuer, obligor, or maker, and the total
89-10 investment of its restricted capital in mutual funds, held by the
89-11 state trust company for its own account, may not exceed an amount
89-12 equal to 15 percent of the state trust company's restricted
89-13 capital. The banking commissioner may authorize investments in
89-14 excess of this limitation on written application if the banking
89-15 commissioner concludes that:
89-16 (1) the excess investment is not prohibited by other
89-17 applicable law; and
89-18 (2) the safety and soundness of the requesting state
89-19 trust company is not adversely affected.
89-20 (d) Notwithstanding Subsection (c) of this section, a state
89-21 trust company may invest its restricted capital in, without
89-22 limitation and subject only to the exercise of prudent judgment:
89-23 (1) bonds and other legally created general
89-24 obligations of a state, an agency or political subdivision of a
89-25 state, the United States, or an agency or instrumentality of the
89-26 United States;
89-27 (2) an investment security that this state, an agency
90-1 or political subdivision of this state, the United States, or an
90-2 agency or instrumentality of the United States has unconditionally
90-3 agreed to purchase, insure, or guarantee;
90-4 (3) securities that are offered and sold under 15
90-5 U.S.C. Section 77d(5);
90-6 (4) mortgage related securities as defined in 15
90-7 U.S.C. Section 78c(a), except that notwithstanding Section 347 of
90-8 the Riegle Community Development and Regulatory Improvement Act of
90-9 1994, a note or obligation that is secured by a first lien on one
90-10 or more parcels of real estate on which is located one or more
90-11 commercial structures is subject to the limitations of Subsection
90-12 (c) of this section;
90-13 (5) investment securities issued or guaranteed by the
90-14 Federal Home Loan Mortgage Corporation, the Federal National
90-15 Mortgage Association, the Government National Mortgage Association,
90-16 the Federal Agricultural Mortgage Association, or the Federal Farm
90-17 Credit Banks Funding Corporation;
90-18 (6) investment securities issued or guaranteed by the
90-19 North American Development Bank; or
90-20 (7) securities issued by a Federal Home Loan Bank.
90-21 (e) Notwithstanding 15 U.S.C. Section 77r-1(c), Subsection
90-22 (c) of this section applies to investments in small business
90-23 related securities as defined by 15 U.S.C. Section 78c(a).
90-24 (f) In the exercise of prudent judgment, a state trust
90-25 company shall, at a minimum:
90-26 (1) exercise care and caution to make and implement
90-27 investment and management decisions for the entire investment
91-1 portfolio, taking into consideration the safety and soundness of
91-2 the state trust company;
91-3 (2) pursue an overall investment strategy to enable
91-4 management to make appropriate present and future decisions; and
91-5 (3) consider, to the extent relevant to the decision
91-6 or action, the size, diversification and liquidity of its corporate
91-7 assets, the general economic conditions, the possible effect of
91-8 inflation or deflation, the expected tax consequences of the
91-9 investment decisions or strategies, the role that each investment
91-10 or course of action plays within the investment portfolio, and the
91-11 expected total return of the portfolio.
91-12 (g) A state trust company may invest its secondary capital
91-13 in any type or character of equity or investment securities subject
91-14 to the exercise of prudent judgment. The factors to be considered
91-15 by a state trust company in exercise of prudent judgment include
91-16 the factors contained in Section 5.101(f) of this Act.
91-17 (h) The finance commission may adopt rules to administer and
91-18 carry out this section, including rules to establish limits,
91-19 requirements, or exemptions other than those specified by this
91-20 section for particular classes or categories of investment, or
91-21 limit or expand investment authority for state trust companies for
91-22 particular classes or categories of securities or other property.
91-23 Sec. 5.102. TRANSACTIONS IN STATE TRUST COMPANY SHARES OR
91-24 PARTICIPATION SHARES. Except with the prior written approval of
91-25 the banking commissioner:
91-26 (1) a state trust company may not acquire its own
91-27 shares or participation shares unless the amount of its undivided
92-1 profits is sufficient to fully absorb the acquisition of the shares
92-2 or participation shares under regulatory accounting principles; and
92-3 (2) a state trust company may not acquire a lien upon
92-4 its own shares or participation shares unless the amount of
92-5 indebtedness secured is less than the amount of the state trust
92-6 company's undivided profits.
92-7 Sec. 5.103. SUBSIDIARIES. (a) Except as otherwise provided
92-8 by this Act or rules adopted under this Act, and subject to the
92-9 exercise of prudent judgment, a state trust company may invest its
92-10 secondary capital to acquire or establish one or more subsidiaries
92-11 to conduct any activity that may lawfully be conducted through the
92-12 form of organization chosen for the subsidiary. The factors to be
92-13 considered by a state trust company in exercise of prudent judgment
92-14 include the factors contained in Section 5.101(f) of this Act.
92-15 (b) A state trust company that intends to acquire,
92-16 establish, or perform new activities through a subsidiary shall
92-17 submit a letter to the banking commissioner describing in detail
92-18 the proposed activities of the subsidiary.
92-19 (c) The state trust company may acquire or establish a
92-20 subsidiary or begin performing new activities in an existing
92-21 subsidiary on the 31st day after the date the banking commissioner
92-22 receives the state trust company's letter, unless the banking
92-23 commissioner specifies an earlier or later date. The banking
92-24 commissioner may extend the 30-day period of review on a
92-25 determination that the state trust company's letter raises issues
92-26 that require additional information or additional time for
92-27 analysis. If the period of review is extended, the state trust
93-1 company may acquire or establish the subsidiary, or perform new
93-2 activities in an existing subsidiary, only on prior written
93-3 approval of the banking commissioner.
93-4 (d) A subsidiary of a state trust company is subject to
93-5 regulation by the banking commissioner to the extent provided by
93-6 this Act or rules adopted under this section. In the absence of
93-7 limiting rules, the banking commissioner may regulate a subsidiary
93-8 as if it were a state trust company.
93-9 Sec. 5.104. OTHER REAL ESTATE. (a) A state trust company
93-10 may not invest its restricted capital in real estate except:
93-11 (1) as permitted by Section 5.001 of this Act or as
93-12 otherwise provided by this Act, including rules adopted under this
93-13 Act; or
93-14 (2) if necessary to avoid or minimize a loss on a loan
93-15 or investment previously made in good faith.
93-16 (b) With the prior written approval of the banking
93-17 commissioner, a state trust company may exchange real estate for
93-18 other real estate or personal property, invest additional funds in
93-19 or improve real estate acquired under this subsection or Subsection
93-20 (a) of this section, or acquire additional real estate to avoid or
93-21 minimize loss on real estate acquired as permitted by Subsection
93-22 (a) of this section.
93-23 (c) A state trust company shall dispose of any real estate
93-24 subject to Subsection (a) of this section not later than:
93-25 (1) the fifth anniversary of the date:
93-26 (A) it was acquired, except as otherwise
93-27 provided by rules adopted under this Act; or
94-1 (B) it ceases to be used as a state trust
94-2 company facility; or
94-3 (2) the second anniversary of the date it ceases to be
94-4 a state trust company facility as provided by Section 5.001(c) of
94-5 this Act.
94-6 (d) The banking commissioner on application may grant one or
94-7 more extensions of time for disposing of real estate under
94-8 Subsection (c) of this section if the banking commissioner
94-9 determines that:
94-10 (1) the state trust company has made a good faith
94-11 effort to dispose of the real estate; or
94-12 (2) disposal of the real estate would be detrimental
94-13 to the state trust company.
94-14 (e) Subject to the exercise of prudent judgment, a state
94-15 trust company may invest its secondary capital in real estate. The
94-16 factors to be considered by a state trust company in exercise of
94-17 prudent judgment include the factors contained in Section 5.101(f)
94-18 of this Act.
94-19 (Sections 5.105-5.200 reserved for expansion)
94-20 SUBCHAPTER C. LOANS
94-21 Sec. 5.201. LENDING LIMITS. (a) A state trust company's
94-22 total outstanding loans and extensions of credit to a person other
94-23 than an insider may not exceed an amount equal to 15 percent of the
94-24 state trust company's restricted capital.
94-25 (b) The aggregate loans and extensions of credit outstanding
94-26 at any time to insiders of the state trust company may not exceed
94-27 an amount equal to 15 percent of the state trust company's
95-1 restricted capital. All covered transactions between an insider
95-2 and a state trust company must be engaged in only on terms and
95-3 under circumstances, including credit standards, that are
95-4 substantially the same as those for comparable transactions with a
95-5 non-insider.
95-6 (c) The finance commission may adopt rules to administer and
95-7 carry out this section, including rules to establish limits,
95-8 requirements, or exemptions other than those specified by this
95-9 section for particular classes or categories of loans or extensions
95-10 of credit, and establish collective lending and investment limits.
95-11 (d) The banking commissioner may determine whether a loan or
95-12 extension of credit putatively made to a person will be attributed
95-13 to another person for purposes of this section.
95-14 (e) A state trust company may not lend trust deposits,
95-15 except that a trustee may make a loan to a beneficiary of the trust
95-16 if the loan is expressly authorized or directed by the instrument
95-17 or transaction establishing the trust.
95-18 (f) An officer, director, manager, managing participant, or
95-19 employee of a state trust company who approves or participates in
95-20 the approval of a loan with actual knowledge that the loan violates
95-21 this section is jointly and severally liable to the state trust
95-22 company for the lesser of the amount by which the loan exceeded
95-23 applicable lending limits or the state trust company's actual loss
95-24 and remains liable for that amount until the loan and all prior
95-25 indebtedness of the borrower to the state trust company have been
95-26 fully repaid. The state trust company may initiate a proceeding to
95-27 collect an amount due under this subsection at any time before the
96-1 date the borrower defaults on the subject loan or any prior
96-2 indebtedness or before the fourth anniversary of that date. A
96-3 person that is liable for and pays amounts to the state trust
96-4 company under this subsection is entitled to an assignment of the
96-5 state trust company's claim against the borrower to the extent of
96-6 the payments. For purposes of this subsection, an officer,
96-7 director, manager, managing participant, or employee of a state
96-8 trust company is presumed to know the amount of the state trust
96-9 company's lending limit under Subsection (a) of this section and
96-10 the amount of the borrower's aggregate outstanding indebtedness to
96-11 the state trust company immediately before a new loan or extension
96-12 of credit to that borrower.
96-13 (g) This subchapter does not confer general banking
96-14 privileges on state trust companies.
96-15 Sec. 5.202. LEASE FINANCING TRANSACTIONS. (a) Subject to
96-16 rules adopted under this Act, a state trust company may become the
96-17 owner and lessor of tangible personal property for lease financing
96-18 transactions on a net lease basis on the specific request and for
96-19 the use of a client. Without the written approval of the banking
96-20 commissioner to continue holding property acquired for leasing
96-21 purposes under this subsection, the state trust company may not
96-22 hold the property more than six months after the date of expiration
96-23 of the original or any extended or renewed lease period agreed to
96-24 by the client for whom the property was acquired or by a subsequent
96-25 lessee.
96-26 (b) Rental payments received by the state trust company in a
96-27 lease financing transaction under this section are considered to be
97-1 rent and not interest or compensation for the use, forbearance, or
97-2 detention of money. However, a lease financing transaction is
97-3 considered to be a loan or extension of credit for purposes of
97-4 Section 5.201 of this Act.
97-5 (Sections 5.203-5.300 reserved for expansion)
97-6 SUBCHAPTER D. OTHER INVESTMENT PROVISIONS
97-7 Sec. 5.301. OTHER INVESTMENT PROVISIONS. (a) Without the
97-8 prior written approval of the banking commissioner, a state trust
97-9 company may not make any investment of its secondary capital in any
97-10 investment that incurs or may incur, under regulatory accounting
97-11 principles, a liability or contingent liability for the state trust
97-12 company.
97-13 (b) The banking commissioner may, on a case-by-case basis,
97-14 require a state trust company to dispose of any investment of its
97-15 secondary capital, if the banking commissioner finds that the
97-16 divestiture of the asset is necessary to protect the safety and
97-17 soundness of the state trust company. Among the safety and
97-18 soundness factors to be considered by the banking commissioner in
97-19 the exercise of discretion, include the factors contained in
97-20 Section 3.007(b) of this Act. The proposed effective date of an
97-21 order requiring an existing state trust company to divest of an
97-22 asset must be stated in the order as on or after the 21st day after
97-23 the date the proposed order is mailed or delivered. Unless the
97-24 state trust company requests a hearing before the banking
97-25 commissioner in writing before the effective date of the proposed
97-26 order, the order becomes effective and is final and nonappealable.
97-27 (c) Subject to Subsections (a) and (b) of this section, to
98-1 Section 5.302 of this Act, and to the exercise of prudent judgment,
98-2 a state trust company may invest its secondary capital in any type
98-3 or character of investment for the purpose of generating income or
98-4 profit. The factors to be considered by a state trust company in
98-5 exercise of prudent judgment include the factors contained in
98-6 Section 5.101(f) of this Act.
98-7 Sec. 5.302. ENGAGING IN COMMERCE PROHIBITED. Except as
98-8 otherwise provided by this Act or rules adopted under this Act, a
98-9 state trust company may not invest its funds in trade or commerce
98-10 by buying, selling, or otherwise dealing goods or by owning or
98-11 operating a business not part of the state trust business, except
98-12 as necessary to fulfill a fiduciary obligation to a client.
98-13 (Sections 5.303-5.400 reserved for expansion)
98-14 SUBCHAPTER E. TRUST DEPOSITS
98-15 Sec. 5.401. TRUST DEPOSITS. (a) A state trust company may
98-16 deposit trust funds with itself as an investment if authorized by
98-17 the settlor or the beneficiary provided:
98-18 (1) it maintains as security for the deposits a
98-19 separate fund of securities, legal for trust investments, under
98-20 control of a federal reserve bank or a clearing corporation, as
98-21 defined by Section 8.102, Business & Commerce Code, either in this
98-22 state or elsewhere;
98-23 (2) the total market value of the security is at all
98-24 times at least equal to the amount of the deposit; and
98-25 (3) the separate fund is designated as such.
98-26 (b) A state trust company may make periodic withdrawals from
98-27 or additions to the securities fund required by Subsection (a) of
99-1 this section as long as the required value is maintained. Income
99-2 from the securities in the fund belongs to the state trust company.
99-3 (c) Security for a deposit under this section is not
99-4 required for a deposit under Subsection (a) of this section to the
99-5 extent the deposit is insured by the Federal Deposit Insurance
99-6 Corporation or its successor.
99-7 (d) This subchapter does not confer general banking
99-8 privileges on state trust companies.
99-9 (Sections 5.402-5.500 reserved for expansion)
99-10 SUBCHAPTER F. LIABILITIES AND PLEDGE OF ASSETS
99-11 Sec. 5.501. BORROWING LIMIT. Except with the prior written
99-12 approval of the banking commissioner, a state trust company may not
99-13 have outstanding liabilities, excluding trust deposit liabilities
99-14 arising pursuant to Section 5.401 of this Act, which exceed an
99-15 amount equal to five times its restricted capital.
99-16 Sec. 5.502. PLEDGE OF ASSETS. (a) A state trust company
99-17 may not pledge or create a lien on any of its assets except:
99-18 (1) to secure the repayment of money borrowed;
99-19 (2) to secure trust deposits as specifically
99-20 authorized or required by Section 5.401 of this Act, by Title 9,
99-21 Property Code, or by rules adopted under this chapter; or
99-22 (3) to secure deposits made by the United States
99-23 Government, state, county, or municipality, or an agency thereof.
99-24 (b) An act, deed, conveyance, pledge, or contract in
99-25 violation of this section is void.
100-1 CHAPTER 6. ENFORCEMENT ACTIONS
100-2 SUBCHAPTER A. ENFORCEMENT ORDERS: STATE TRUST COMPANIES
100-3 AND MANAGEMENT
100-4 Sec. 6.001. DETERMINATION LETTER
100-5 Sec. 6.002. CEASE AND DESIST ORDER
100-6 Sec. 6.003. REMOVAL OR PROHIBITION ORDER
100-7 Sec. 6.004. HEARING ON PROPOSED ORDER
100-8 Sec. 6.005. EMERGENCY ORDERS
100-9 Sec. 6.006. COPY OF LETTER OR ORDER IN STATE TRUST COMPANY
100-10 RECORDS
100-11 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER
100-12 Sec. 6.008. LIMITATION ON ACTION
100-13 Sec. 6.009. ENFORCEMENT OF FINAL ORDER
100-14 Sec. 6.010. ADMINISTRATIVE PENALTIES
100-15 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE PENALTIES
100-16 Sec. 6.012. CONFIDENTIALITY OF RECORDS
100-17 Sec. 6.013. COLLECTION OF FEES
100-18 (Sections 6.014-6.100 reserved for expansion)
100-19 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
100-20 Sec. 6.101. ORDER OF SUPERVISION
100-21 Sec. 6.102. ORDER OF CONSERVATORSHIP
100-22 Sec. 6.103. HEARING
100-23 Sec. 6.104. POST-HEARING ORDER
100-24 Sec. 6.105. CONFIDENTIALITY OF RECORDS
100-25 Sec. 6.106. DUTIES OF STATE TRUST COMPANY UNDER SUPERVISION
100-26 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR
100-27 Sec. 6.108. QUALIFICATIONS OF APPOINTEE
101-1 Sec. 6.109. EXPENSES
101-2 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR DECISIONS
101-3 Sec. 6.111. VENUE
101-4 Sec. 6.112. DURATION
101-5 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES
101-6 (Sections 6.114-6.200 reserved for expansion)
101-7 SUBCHAPTER C. UNAUTHORIZED TRUST ACTIVITY: INVESTIGATION
101-8 AND ENFORCEMENT
101-9 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED TRUST ACTIVITY
101-10 Sec. 6.202. UNAUTHORIZED USE OF "TRUST" AND SIMILAR WORDS
101-11 Sec. 6.203. SUBPOENA AUTHORITY
101-12 Sec. 6.204. ENFORCEMENT OF SUBPOENA
101-13 Sec. 6.205. CONFIDENTIALITY OF SUBPOENAED RECORDS
101-14 Sec. 6.206. EVIDENCE
101-15 Sec. 6.207. CEASE AND DESIST ORDER REGARDING UNAUTHORIZED TRUST
101-16 ACTIVITY
101-17 Sec. 6.208. EMERGENCY CEASE AND DESIST ORDER REGARDING
101-18 UNAUTHORIZED TRUST ACTIVITY
101-19 Sec. 6.209. APPEAL OF CEASE AND DESIST ORDER REGARDING
101-20 UNAUTHORIZED TRUST ACTIVITY
101-21 Sec. 6.210. VIOLATION OF FINAL CEASE AND DESIST ORDER REGARDING
101-22 UNAUTHORIZED TRUST ACTIVITY
101-23 Sec. 6.211. PENALTY ORDER FOR UNAUTHORIZED TRUST ACTIVITY
101-24 Sec. 6.212. PAYMENT AND APPEAL OF PENALTY ORDER
101-25 Sec. 6.213. JUDICIAL REVIEW OF PENALTY ORDER
101-26 Sec. 6.214. DEPOSIT TO GENERAL REVENUE FUND
102-1 CHAPTER 6. ENFORCEMENT ACTIONS
102-2 SUBCHAPTER A. ENFORCEMENT ORDERS:
102-3 STATE TRUST COMPANIES AND MANAGEMENT
102-4 Sec. 6.001. DETERMINATION LETTER. (a) If the banking
102-5 commissioner determines from examination or other credible evidence
102-6 that a state trust company is in a condition that may warrant the
102-7 issuance of an enforcement order under this chapter, the banking
102-8 commissioner may, by personal delivery or by registered or
102-9 certified mail, return receipt requested, notify the state trust
102-10 company in writing of the determination, the requirements the state
102-11 trust company must satisfy to abate the determination, and the time
102-12 in which the requirements must be satisfied to avert further
102-13 administrative action.
102-14 (b) The determination letter may be issued in connection
102-15 with the issuance of a cease and desist, removal, or prohibition
102-16 order under this subchapter or an order of supervision or
102-17 conservatorship under Subchapter B of this chapter.
102-18 Sec. 6.002. CEASE AND DESIST ORDER. (a) The banking
102-19 commissioner has grounds to issue a cease and desist order to an
102-20 officer, employee, director, manager, or managing participant of a
102-21 state trust company, or the state trust company itself acting
102-22 through an authorized person, if the banking commissioner
102-23 determines from examination or other credible evidence that the
102-24 state trust company or person, directly or indirectly:
102-25 (1) has violated this Act or another applicable law or
102-26 rule;
102-27 (2) has engaged in a breach of trust or other
103-1 fiduciary duty;
103-2 (3) has refused to submit to examination or
103-3 examination under oath;
103-4 (4) has conducted business in an unsafe or unsound
103-5 manner; or
103-6 (5) has violated a condition of the state trust
103-7 company's charter or an agreement between the state trust company
103-8 or the person and the banking commissioner or the department.
103-9 (b) If the banking commissioner has grounds for action under
103-10 Subsection (a) of this section and further finds that an order to
103-11 cease and desist from a violation appears to be necessary and in
103-12 the best interest of a state trust company involved and its
103-13 clients, creditors, and shareholders or participants, the banking
103-14 commissioner, by personal delivery or by registered or certified
103-15 mail, return receipt requested, may serve a proposed cease and
103-16 desist order on the state trust company and each person who
103-17 committed or participated in the violation. The order must state
103-18 the grounds for the order with reasonable certainty. The order
103-19 must state its effective date, which may not be before the 21st day
103-20 after the date the order is mailed or delivered. The order takes
103-21 effect for the state trust company if the trust company does not
103-22 request a hearing in writing before the effective date and takes
103-23 effect for each other person against whom the order is directed if
103-24 that person does not request a hearing in writing before the
103-25 effective date. After taking effect, the order is final and
103-26 nonappealable as to that state trust company or other person.
103-27 Sec. 6.003. REMOVAL OR PROHIBITION ORDER. (a) The banking
104-1 commissioner has grounds to remove a present or former officer,
104-2 director, manager, managing participant, or employee of a state
104-3 trust company from office or employment in, or prohibit a
104-4 controlling shareholder or participant or other person
104-5 participating in the affairs of the state trust company from
104-6 further participation in the affairs of, the state trust company,
104-7 state bank, or other entity chartered or licensed by the banking
104-8 commissioner under the laws of this state, if the banking
104-9 commissioner determines from examination or other credible evidence
104-10 that:
104-11 (1) the person committed, participated, or acted, in
104-12 other than an inadvertent or unintentional manner, as described by
104-13 Section 6.002(a) of this Act with regard to the affairs of the
104-14 state trust company, or violated a final cease and desist order
104-15 issued in response to the same or a similar act;
104-16 (2) because of this action by the person:
104-17 (A) the state trust company has suffered or will
104-18 probably suffer financial loss or other damage;
104-19 (B) the interests of the trust company's clients
104-20 have been or could be prejudiced; or
104-21 (C) the person has received financial gain or
104-22 other benefit by reason of the violation; and
104-23 (3) this action by the person:
104-24 (A) involves personal dishonesty on the part of
104-25 the person; or
104-26 (B) demonstrates wilful or continuing disregard
104-27 for the safety or soundness of the state trust company.
105-1 (b) If the banking commissioner finds grounds for action
105-2 under Subsection (a) of this section and further finds that a
105-3 removal or prohibition order appears to be necessary and in the
105-4 best interest of the state trust company involved and its clients,
105-5 creditors, and shareholders or participants, the banking
105-6 commissioner, by personal delivery or by registered or certified
105-7 mail, return receipt requested, may serve a proposed removal or
105-8 prohibition order, as appropriate, on an officer, employee,
105-9 director, manager or managing participant, controlling shareholder
105-10 or participant, or other person alleged to have committed or
105-11 participated in the violation. The order must state the grounds
105-12 for removal or prohibition with reasonable certainty. The order
105-13 must state its effective date, which may not be before the 21st day
105-14 after the date the order is mailed or delivered. The order takes
105-15 effect for a person against whom the order is directed if the
105-16 person does not request a hearing in writing before the effective
105-17 date. After taking effect the order is final and nonappealable as
105-18 to that person.
105-19 Sec. 6.004. HEARING ON PROPOSED ORDER. (a) A requested
105-20 hearing on a proposed order shall be held not later than the 30th
105-21 day after the date the first request for a hearing on the order was
105-22 received by the banking commissioner unless the parties agree to a
105-23 later hearing date. Each party shall be given written notice by
105-24 personal delivery or by registered or certified mail, return
105-25 receipt requested, of the date set by the banking commissioner for
105-26 the hearing not later than the 11th day before that date. The
105-27 hearing shall be conducted as provided by Chapter 2001, Government
106-1 Code. At the hearing, the banking commissioner has the burden of
106-2 proof and each person against whom the order is directed may
106-3 cross-examine and present evidence to show why the order should not
106-4 be issued.
106-5 (b) After the hearing, the banking commissioner shall issue
106-6 or decline to issue the order. The order may be modified as
106-7 necessary to conform to the findings at the hearing and to require
106-8 the board to take necessary affirmative action to correct the
106-9 conditions cited in the order.
106-10 (c) An order issued under this section is immediately final
106-11 for purposes of enforcement and appeal. The order may be appealed
106-12 as provided by Section 3.010 of this Act.
106-13 Sec. 6.005. EMERGENCY ORDERS. (a) If the banking
106-14 commissioner believes that immediate action is needed to prevent
106-15 immediate and irreparable harm to the state trust company and its
106-16 clients, creditors, and shareholders or participants, the banking
106-17 commissioner may issue one or more cease and desist, removal, or
106-18 prohibition orders as emergency orders to become effective
106-19 immediately on service without prior notice or hearing. Service
106-20 must be by personal delivery or by registered or certified mail,
106-21 return receipt requested.
106-22 (b) In each emergency order the banking commissioner shall
106-23 notify the state trust company and any person against whom the
106-24 order is directed of the specific conduct, activity, or omission
106-25 requiring the order, the citation of each statute or rule alleged
106-26 to have been violated, the immediate and irreparable harm alleged
106-27 to be threatened, and the right to a hearing. A hearing on the
107-1 order may be requested in writing not later than the 10th day after
107-2 the date the order is served. Unless a person against whom the
107-3 order is directed requests a hearing in writing before the 11th day
107-4 after the date the order is served on the person, the order is
107-5 final and nonappealable as to that person.
107-6 (c) A hearing on an emergency order, if requested, must be
107-7 given priority over all other matters pending before the banking
107-8 commissioner and must be held not later than the 20th day after the
107-9 date the order is requested unless the parties agree to a later
107-10 hearing date.
107-11 (d) Until the hearing, an emergency order continues in
107-12 effect unless the order is stayed by the banking commissioner. The
107-13 banking commissioner may impose any condition before granting a
107-14 stay of the emergency order.
107-15 (e) After the hearing, the banking commissioner may affirm,
107-16 modify, or set aside in whole or part the emergency order. An
107-17 order affirming or modifying the order is immediately final for
107-18 purposes of enforcement and appeal. The order may be appealed as
107-19 provided by Section 3.010 of this Act.
107-20 Sec. 6.006. COPY OF LETTER OR ORDER IN STATE TRUST COMPANY
107-21 RECORDS. A copy of any determination letter, proposed order,
107-22 emergency order, or final order issued by the banking commissioner
107-23 under this subchapter shall be immediately brought to the attention
107-24 of the board of the affected state trust company, regardless of
107-25 whether the state trust company is a party, and filed in the
107-26 minutes of the board. Each director, manager, or managing
107-27 participant shall immediately certify to the banking commissioner
108-1 in writing that the certifying person has read and understood the
108-2 determination letter, proposed order, emergency order, or final
108-3 order. The required certification may not be considered an
108-4 admission of a person in a subsequent legal or administrative
108-5 proceeding.
108-6 Sec. 6.007. EFFECT OF FINAL REMOVAL OR PROHIBITION ORDER.
108-7 (a) Without the prior written approval of the banking
108-8 commissioner, a person subject to a final and enforceable removal
108-9 or prohibition order issued by the banking commissioner:
108-10 (1) may not serve as a director, officer, or employee
108-11 of any state trust company, state bank, or other entity chartered
108-12 or licensed by the banking commissioner under the laws of this
108-13 state while the order is in effect;
108-14 (2) may not directly or indirectly participate in any
108-15 manner in the management of such an entity;
108-16 (3) may not directly or indirectly vote for a director
108-17 of such an entity;
108-18 (4) may not solicit, procure, transfer, attempt to
108-19 transfer, vote, or attempt to vote a proxy, consent, or
108-20 authorization with respect to voting rights in such an entity; and
108-21 (5) remains entitled to receive dividends or a share
108-22 of profits, return of contribution, or other distributive benefit
108-23 from such an entity with respect to voting securities in the entity
108-24 owned by the person.
108-25 (b) If voting securities of an entity identified in
108-26 Subsection (a)(1) of this section cannot be voted under this
108-27 section, the voting securities are considered to be authorized but
109-1 unissued for purposes of determining the procedures for and results
109-2 of the affected vote.
109-3 (c) Participants of a limited trust association in which a
109-4 participant has been finally removed or prohibited from
109-5 participation in the state trust company's affairs under this
109-6 subchapter shall elect a board of managers.
109-7 (d) This section and Section 6.008 of this Act do not
109-8 prohibit a removal or prohibition order that has indefinite
109-9 duration or that by its terms is perpetual.
109-10 Sec. 6.008. LIMITATION ON ACTION. The banking commissioner
109-11 may not initiate an enforcement action under this subchapter later
109-12 than the fifth anniversary of the date the conduct or acts involved
109-13 were discovered or reasonably should have been discovered by the
109-14 banking commissioner.
109-15 Sec. 6.009. ENFORCEMENT OF FINAL ORDER. (a) If the banking
109-16 commissioner reasonably believes that a state trust company or
109-17 person has violated a final and enforceable cease and desist,
109-18 removal, or prohibition order issued under this subchapter, the
109-19 banking commissioner may:
109-20 (1) initiate administrative penalty proceedings
109-21 against the state trust company under Section 6.010 of this Act;
109-22 (2) refer the matter to the attorney general for
109-23 enforcement by injunction or other available remedy; or
109-24 (3) pursue any other action the banking commissioner
109-25 considers appropriate under applicable law.
109-26 (b) If the attorney general prevails in an action brought
109-27 under Subsection (a)(2) of this section, the attorney general is
110-1 entitled to recover reasonable attorney's fees from a state trust
110-2 company or person violating the order.
110-3 Sec. 6.010. ADMINISTRATIVE PENALTIES. (a) The banking
110-4 commissioner may initiate a proceeding for an administrative
110-5 penalty against a state trust company under Section 6.009(a)(1) of
110-6 this Act by serving on the state trust company, by personal
110-7 delivery or registered or certified mail, return receipt requested,
110-8 notice of the time and place of a hearing on the penalty. The
110-9 hearing may not be held earlier than the 20th day after the date
110-10 the notice is served and shall be conducted under Chapter 2001,
110-11 Government Code. The notice must contain a statement of the acts
110-12 or conduct alleged to be in violation of the order.
110-13 (b) In determining whether an order has been violated, the
110-14 banking commissioner shall consider the maintenance of procedures
110-15 reasonably adopted to ensure compliance with the order.
110-16 (c) If the banking commissioner determines after the hearing
110-17 that an order has been violated, the banking commissioner may
110-18 impose an administrative penalty against a state trust company in
110-19 an amount not to exceed $500 for each day the state trust company
110-20 is in violation of the final order.
110-21 Sec. 6.011. PAYMENT OR APPEAL OF ADMINISTRATIVE PENALTIES.
110-22 (a) When a penalty order under Section 6.010 of this Act becomes
110-23 final, a state trust company shall pay the penalty or appeal by
110-24 filing a petition for judicial review under the substantial
110-25 evidence rule in a district court of Travis County.
110-26 (b) The petition for judicial review stays the penalty order
110-27 during the period preceding the decision of the court. If the
111-1 court sustains the order, the court shall order the state trust
111-2 company to pay the full amount of the penalty or a lower amount
111-3 determined by the court. If the court does not sustain the order,
111-4 a penalty is not owed. If the final judgment of the court requires
111-5 payment of a penalty, interest accrues on the penalty, at the rate
111-6 charged on loans to depository institutions by the New York Federal
111-7 Reserve Bank, beginning on the date the judgment is final and
111-8 ending on the date the penalty and interest are paid.
111-9 (c) If the state trust company does not pay a final and
111-10 nonappealable penalty order, the banking commissioner shall refer
111-11 the matter to the attorney general for enforcement. The attorney
111-12 general is entitled to recover reasonable attorney's fees from the
111-13 state trust company if the attorney general prevails in judicial
111-14 action necessary for collection of the penalty.
111-15 (d) A penalty collected under this section shall be remitted
111-16 to the comptroller for deposit to the credit of the general revenue
111-17 fund.
111-18 Sec. 6.012. CONFIDENTIALITY OF RECORDS. A copy of a notice,
111-19 correspondence, transcript, pleading, or other document in the
111-20 records of the department relating to an order issued under this
111-21 subchapter is confidential and may be released only as provided by
111-22 Subchapter B, Chapter 2, of this Act, except that the banking
111-23 commissioner shall publish all final removal and prohibition orders
111-24 on a periodic basis. The banking commissioner may publish a final
111-25 cease and desist order or information regarding the existence of
111-26 the order to the public if the banking commissioner concludes that
111-27 effective enforcement of the order would be enhanced by the
112-1 release.
112-2 Sec. 6.013. COLLECTION OF FEES. The banking commissioner
112-3 may sue to enforce the collection of a fee owed to the department
112-4 under a law administered by the banking commissioner. In the suit
112-5 a certificate by the banking commissioner showing the delinquency
112-6 is prima facie evidence of:
112-7 (1) the levy of the fee or the delinquency of the
112-8 stated fee amount; and
112-9 (2) compliance by the banking commissioner with the
112-10 law relating to the computation and levy of the fee.
112-11 (Sections 6.014-6.100 reserved for expansion)
112-12 SUBCHAPTER B. SUPERVISION AND CONSERVATORSHIP
112-13 Sec. 6.101. ORDER OF SUPERVISION. If the banking
112-14 commissioner determines from examination or other credible evidence
112-15 that a state trust company is in hazardous condition and that an
112-16 order of supervision appears to be necessary and in the best
112-17 interest of the state trust company and its clients, creditors, and
112-18 shareholders or participants, or the public, the banking
112-19 commissioner may without prior notice issue an order appointing a
112-20 supervisor over the state trust company. The supervisor serves
112-21 until the earlier of the expiration of the period stated in the
112-22 order of supervision or the date the banking commissioner
112-23 determines that the requirements for abatement of the order have
112-24 been satisfied.
112-25 Sec. 6.102. ORDER OF CONSERVATORSHIP. In addition to the
112-26 grounds for conservatorship provided by Sections 4.103 and 6.104 of
112-27 this Act, if the banking commissioner determines from examination
113-1 or other credible evidence that a state trust company is in
113-2 hazardous condition and immediate and irreparable harm is
113-3 threatened to the state trust company, its clients, creditors, or
113-4 shareholders or participants, or the public, the banking
113-5 commissioner may without prior notice issue an order appointing a
113-6 conservator at any time before, during, or after the period of
113-7 supervision. An order of conservatorship issued under this section
113-8 must specifically state the basis for the order.
113-9 Sec. 6.103. HEARING. (a) An order issued under Section
113-10 6.101 or 6.102 of this Act must contain or be accompanied by a
113-11 notice that a hearing before the banking commissioner will be held
113-12 at the request of a state trust company at which the state trust
113-13 company may cross-examine and present evidence to contest the order
113-14 or show that it has satisfied all requirements for abatement of the
113-15 order. The banking commissioner has the burden of proof for any
113-16 continuation of the order or the issuance of a new order.
113-17 (b) A state trust company that seeks to contest or modify
113-18 the order or demonstrate that it has satisfied all requirements for
113-19 abatement of the order shall submit a written request for a hearing
113-20 to the banking commissioner. The request must state the grounds
113-21 for the request to set aside or modify the order. On receiving a
113-22 request for hearing, the banking commissioner shall serve notice by
113-23 personal delivery or by registered or certified mail, return
113-24 receipt requested, of the time and place of the hearing, which must
113-25 be not later than the 10th day after the date the banking
113-26 commissioner receives the request for a hearing unless the parties
113-27 agree to a later hearing date.
114-1 (c) The banking commissioner may delay a decision for a
114-2 prompt examination of the state trust company and may reopen the
114-3 record as necessary to allow presentation of the results of the
114-4 examination and appropriate opportunity for cross-examination and
114-5 presentation of other relevant evidence.
114-6 Sec. 6.104. POST-HEARING ORDER. (a) If the banking
114-7 commissioner after the hearing finds that a state trust company has
114-8 been rehabilitated, its hazardous condition has been remedied,
114-9 irreparable harm is no longer threatened, or that the state trust
114-10 company should otherwise be released from the order, the banking
114-11 commissioner shall release the state trust company from the order,
114-12 subject to conditions the banking commissioner from the evidence
114-13 believes are warranted to preserve the safety and soundness of the
114-14 state trust company.
114-15 (b) If the banking commissioner after the hearing finds that
114-16 a state trust company has failed to comply with the lawful
114-17 requirements of the banking commissioner, has not been
114-18 rehabilitated, is insolvent, or otherwise continues in hazardous
114-19 condition, the banking commissioner by order shall:
114-20 (1) appoint or reappoint a supervisor pursuant to
114-21 Section 6.101 of this Act;
114-22 (2) appoint or reappoint a conservator pursuant to
114-23 Section 6.102 of this Act; or
114-24 (3) take other appropriate action authorized by law.
114-25 (c) An order issued under Subsection (b) of this section is
114-26 immediately final for purposes of appeal. The order may be
114-27 appealed as provided by Section 3.010 of this Act.
115-1 (d) This subchapter does not prevent release of a state
115-2 trust company from supervision or conservatorship before a hearing
115-3 if the banking commissioner is satisfied that requirements for
115-4 abatement have been adequately satisfied.
115-5 Sec. 6.105. CONFIDENTIALITY OF RECORDS. An order issued
115-6 under this subchapter and a copy of a notice, correspondence,
115-7 transcript, pleading, or other document in the records of the
115-8 department relating to the order are confidential and may be
115-9 released only as provided by Subchapter B, Chapter 2, of this Act,
115-10 except that the banking commissioner may release an order or
115-11 information regarding the existence of an order to the public if
115-12 the banking commissioner concludes that effective enforcement of
115-13 the order would be enhanced by the release.
115-14 Sec. 6.106. DUTIES OF STATE TRUST COMPANY UNDER SUPERVISION.
115-15 During the period of supervision, a state trust company may not,
115-16 without the prior approval of the banking commissioner or the
115-17 supervisor or as otherwise permitted or restricted by the order of
115-18 supervision:
115-19 (1) dispose of, sell, transfer, convey, or encumber
115-20 the state trust company's assets;
115-21 (2) lend or invest the trust company's funds;
115-22 (3) incur a debt, obligation, or liability;
115-23 (4) pay a cash dividend to the state trust company's
115-24 shareholders or participants; or
115-25 (5) solicit or accept any new client accounts.
115-26 Sec. 6.107. POWERS AND DUTIES OF CONSERVATOR. (a) A
115-27 conservator appointed under this subchapter shall immediately take
116-1 charge of a state trust company and all of its property, books,
116-2 records, and affairs on behalf and at the direction and control of
116-3 the banking commissioner.
116-4 (b) Subject to any limitation contained in the order of
116-5 appointment or other direction of the banking commissioner, the
116-6 conservator has all the powers of the directors, managers, managing
116-7 participants, officers, and shareholders or participants of a state
116-8 trust company, shall conduct the business of the state trust
116-9 company, and shall take all steps the conservator considers
116-10 appropriate to remove the causes and conditions that required the
116-11 appointment of a conservator. During the conservatorship, the
116-12 board may not direct or participate in the affairs of the state
116-13 trust company.
116-14 (c) Except as otherwise provided by this subchapter, rules
116-15 adopted under this Act, or Section 2.010, Texas Banking Act
116-16 (Article 342-2.010, Vernon's Texas Civil Statutes), the conservator
116-17 has the rights and privileges and is subject to the duties,
116-18 restrictions, penalties, conditions, and limitations of the
116-19 directors, officers, and employees of state trust companies.
116-20 Sec. 6.108. QUALIFICATIONS OF APPOINTEE. The banking
116-21 commissioner may appoint any person as a supervisor or conservator
116-22 who in the sole judgment of the banking commissioner is qualified
116-23 to serve. The banking commissioner may serve or may appoint an
116-24 employee of the department to serve as supervisor or conservator.
116-25 Sec. 6.109. EXPENSES. (a) The banking commissioner shall
116-26 determine and approve the reasonable expenses attributable to the
116-27 service of a supervisor or conservator, including costs incurred by
117-1 the department and the compensation and expenses of the supervisor
117-2 or conservator and any professional employees appointed to
117-3 represent or assist the supervisor or conservator. The banking
117-4 commissioner or an employee of the department may not receive
117-5 compensation in addition to salary for serving as supervisor or
117-6 conservator, but the department may receive reimbursement for the
117-7 fully allocated personnel cost associated with service of the
117-8 banking commissioner or an employee as supervisor or conservator.
117-9 (b) All approved expenses shall be paid by the state trust
117-10 company as the banking commissioner determines. The banking
117-11 commissioner has a lien against the assets and funds of the state
117-12 trust company to secure payment of approved expenses. The lien has
117-13 a higher priority than any other lien against the state trust
117-14 company.
117-15 (c) Notwithstanding any other provision of this subchapter,
117-16 the state trust company may employ an attorney and other persons
117-17 the state trust company selects to assist the state trust company
117-18 in contesting or satisfying the requirements of an order of
117-19 supervision or conservatorship. The banking commissioner shall
117-20 authorize the payment of reasonable fees and expenses from the
117-21 state trust company for the attorney or other persons as expenses
117-22 of the supervision or conservatorship.
117-23 (d) The banking commissioner may defer collection of
117-24 assessment and examination fees by the department from the state
117-25 trust company during a period of supervision or conservatorship, if
117-26 deferral would appear to aid prospects for rehabilitation. As a
117-27 condition of release from supervision or conservatorship, the
118-1 banking commissioner may require the rehabilitated state trust
118-2 company to pay or develop a reasonable plan for payment of deferred
118-3 fees.
118-4 Sec. 6.110. REVIEW OF SUPERVISOR OR CONSERVATOR DECISIONS.
118-5 (a) Notwithstanding Section 6.107(b) of this Act, a majority of
118-6 the state trust company's board, acting directly or through counsel
118-7 who affirmatively represents that the requisite majority has been
118-8 obtained, may request in writing that the banking commissioner
118-9 review an action taken or proposed by the supervisor or
118-10 conservator. The request must specify why the action would not be
118-11 in the best interest of the state trust company. The banking
118-12 commissioner shall investigate to the extent necessary and make a
118-13 prompt written ruling on the request. If the action is proposed
118-14 rather than already taken or if the effect of the action can be
118-15 postponed, the banking commissioner may stay the action on request
118-16 pending review.
118-17 (b) If a majority of the state trust company's board objects
118-18 to the banking commissioner's ruling, the majority may, not later
118-19 than the 10th day after the date the state trust company is
118-20 notified of the ruling, request a hearing before the banking
118-21 commissioner.
118-22 (c) The banking commissioner shall give the board notice of
118-23 the time and place of the hearing by personal delivery or by
118-24 registered or certified mail, return receipt requested. The
118-25 hearing may not be held later than the 10th day after the date the
118-26 banking commissioner receives the request for a hearing unless the
118-27 parties agree to a later hearing date. At the hearing the board
119-1 has the burden of proof to demonstrate that the action is not in
119-2 the best interest of the state trust company.
119-3 (d) After the hearing, the banking commissioner may affirm,
119-4 modify, or set aside in whole or part the prior ruling. An order
119-5 supporting the action contested by the board is immediately final
119-6 for purposes of appeal. The order may be appealed as provided by
119-7 Section 3.010 of this Act. If the order is appealed to the finance
119-8 commission, the finance commission may affirm, terminate, or modify
119-9 the order, continue or end supervision or conservatorship, and
119-10 order further relief as justice, equity, and protection of clients,
119-11 creditors, and the public require.
119-12 Sec. 6.111. VENUE. A suit filed against a state trust
119-13 company while the state trust company is under an order of
119-14 conservatorship, or a suit filed against a person in connection
119-15 with an action taken or decision made by that person as a
119-16 supervisor or conservator of a state trust company, regardless of
119-17 whether the state trust company remains under an order of
119-18 supervision or conservatorship, must be brought in Travis County.
119-19 A conservator may sue a person on the trust company's behalf to
119-20 preserve, protect, or recover state trust company assets, including
119-21 claims or causes of action. The suit may be in:
119-22 (1) Travis County; or
119-23 (2) another location where jurisdiction and venue
119-24 against that person may be obtained under law.
119-25 Sec. 6.112. DURATION. A supervisor or conservator shall
119-26 serve for the period necessary to accomplish the purposes of the
119-27 supervision or conservatorship as intended by this subchapter. A
120-1 rehabilitated state trust company shall be returned to its former
120-2 or new management under conditions reasonable and necessary to
120-3 prevent recurrence of the conditions causing the supervision or
120-4 conservatorship.
120-5 Sec. 6.113. ADMINISTRATIVE ELECTION OF REMEDIES. If the
120-6 banking commissioner determines that a state trust company should
120-7 be closed and liquidated under Chapter 7 of this Act, the banking
120-8 commissioner may take any action authorized under that chapter
120-9 regardless of the existence of supervision or conservatorship. A
120-10 period of supervision or conservatorship is not required before a
120-11 trust company is closed for liquidation or other remedial action is
120-12 taken.
120-13 (Sections 6.114-6.200 reserved for expansion)
120-14 SUBCHAPTER C. UNAUTHORIZED TRUST ACTIVITY: INVESTIGATION
120-15 AND ENFORCEMENT
120-16 Sec. 6.201. INVESTIGATION OF UNAUTHORIZED TRUST ACTIVITY.
120-17 (a) If the banking commissioner has reason to believe that a
120-18 person has engaged, is engaging, or is likely to engage in an
120-19 unauthorized trust activity, the banking commissioner may:
120-20 (1) make any investigation necessary inside or outside
120-21 this state to determine whether the unauthorized trust activity has
120-22 occurred or is likely to occur, or to aid in the enforcement of the
120-23 laws administered by the banking commissioner;
120-24 (2) initiate appropriate disciplinary action as
120-25 provided by this subchapter; and
120-26 (3) report any unauthorized trust activity to a law
120-27 enforcement agency or another regulatory agency with appropriate
121-1 jurisdiction.
121-2 (b) The banking commissioner may furnish any materials,
121-3 documents, reports, complaints, or other evidence the banking
121-4 commissioner has compiled in connection with the unauthorized
121-5 activity to a law enforcement agency on written request and may
121-6 assist the law enforcement agency or other regulatory agency as
121-7 requested.
121-8 (c) A person acting without malice, fraudulent intent, or
121-9 bad faith is not subject to liability, including liability for
121-10 libel, slander, or other relevant tort, because the person files a
121-11 report or furnishes, orally or in writing, information concerning a
121-12 suspected, anticipated, or completed unauthorized activity to a law
121-13 enforcement agency, the banking commissioner or another regulatory
121-14 agency with appropriate jurisdiction, or an agent or employee of a
121-15 law enforcement agency, the banking commissioner, or other
121-16 regulatory agency. The person is entitled to attorney's fees and
121-17 court costs if the person prevails in an action for libel, slander,
121-18 or any other relevant tort based on the report or other information
121-19 the person furnished as provided by this subchapter. This section
121-20 does not:
121-21 (1) affect or modify a common law or statutory
121-22 privilege or immunity;
121-23 (2) preempt the authority or relieve the duty of a law
121-24 enforcement agency or other regulatory agency with appropriate
121-25 jurisdiction to investigate and prosecute suspected criminal acts;
121-26 (3) prohibit a person from voluntarily disclosing
121-27 information to a law enforcement agency or other regulatory agency;
122-1 or
122-2 (4) limit a power or duty granted to the banking
122-3 commissioner under this Act or other law.
122-4 Sec. 6.202. UNAUTHORIZED USE OF "TRUST" AND SIMILAR WORDS.
122-5 (a) Except as provided in Subsection (b) of this section, a person
122-6 or company may not use in a business name or advertising the words
122-7 "trust," "trust company," or any similar term or phrase, any word
122-8 pronounced "trust" or "trust company," any foreign word which means
122-9 "trust" or "trust company," or any term that tends to imply the
122-10 business is holding out to the public that it engages in the
122-11 business of a fiduciary for hire unless the banking commissioner
122-12 has approved the use in writing after finding that the use will not
122-13 be misleading. This subsection does not prohibit an individual
122-14 from engaging in the business of a fiduciary for compensation or
122-15 from using the words "trust" or "trustee" for the purpose of
122-16 identifying assets held or actions taken in an existing capacity.
122-17 (b) This section does not apply to:
122-18 (1) a state or national bank, a state or federal
122-19 savings bank, a state or federal savings association, a state or
122-20 federal credit union, or a depository or trust company institution
122-21 authorized under this Act to conduct a trust business in this
122-22 state; and
122-23 (2) another entity organized under the laws of this
122-24 state, another state, the United States, or a foreign sovereign
122-25 state to the extent that:
122-26 (A) the entity is authorized under its charter
122-27 or the laws of this state or the United States to use a term, word,
123-1 character, ideogram, phonogram, or phrase prohibited by Subsection
123-2 (a) of this section; and
123-3 (B) the entity is authorized by the laws of this
123-4 state or the United States to conduct the activities in which the
123-5 entity is engaged in this state.
123-6 Sec. 6.203. SUBPOENA AUTHORITY. (a) This section applies
123-7 only to an investigation of an unauthorized trust activity as
123-8 provided by Section 6.201 of this Act, and does not affect the
123-9 conduct of a contested case under Chapter 2001, Government Code.
123-10 (b) The banking commissioner may issue a subpoena to compel
123-11 the attendance and testimony of a witness and the production of a
123-12 book, account, record, paper, or correspondence relating to a
123-13 matter that the banking commissioner has authority to consider or
123-14 investigate at the department's offices in Austin or at another
123-15 place the banking commissioner designates.
123-16 (c) The banking commissioner or the deputy banking
123-17 commissioner shall sign and issue the subpoena.
123-18 (d) A person who is required by subpoena to attend a
123-19 proceeding before the banking commissioner is entitled to receive:
123-20 (1) reimbursement for mileage, in the amount provided
123-21 for travel by state employees, for traveling to or returning from a
123-22 proceeding that is more than 25 miles from the witness's residence;
123-23 and
123-24 (2) a fee for each day or part of a day the witness is
123-25 necessarily present as a witness in an amount equal to the per diem
123-26 travel allowance of a state employee.
123-27 (e) The banking commissioner may serve the subpoena or have
124-1 it served by an authorized agent of the banking commissioner, a
124-2 sheriff, or a constable. The sheriff's or constable's fee for
124-3 serving the subpoena must be the same as the fee paid the sheriff
124-4 or constable for similar services.
124-5 (f) A person possessing materials located outside this state
124-6 that are requested by the banking commissioner may make the
124-7 materials available to the banking commissioner or a representative
124-8 of the banking commissioner for examination at the place where the
124-9 materials are located. The banking commissioner may designate a
124-10 representative, including an official of the state in which the
124-11 materials are located, to examine the materials and may respond to
124-12 similar requests from an official of another state, the United
124-13 States, or a foreign country.
124-14 (g) A subpoena issued under this section to a financial
124-15 institution is not subject to Section 30.007, Civil Practice and
124-16 Remedies Code, as added by Chapter 914, Acts of the 74th
124-17 Legislature, Regular Session, 1995.
124-18 (h) The authority granted under this section is in addition
124-19 to other law authorizing the banking commissioner to obtain or
124-20 require information.
124-21 Sec. 6.204. ENFORCEMENT OF SUBPOENA. (a) If necessary the
124-22 banking commissioner may apply to a district court of Travis County
124-23 or of the county in which the subpoena was served for enforcement
124-24 of the subpoena, and the court may issue an order compelling
124-25 compliance.
124-26 (b) If the court orders compliance with the subpoena or
124-27 finds the person in contempt for failure to obey the order, the
125-1 banking commissioner, or the attorney general if representing the
125-2 banking commissioner, may recover reasonable court costs,
125-3 attorney's fees, and investigative costs incurred in the
125-4 proceeding.
125-5 Sec. 6.205. CONFIDENTIALITY OF SUBPOENAED RECORDS. (a) A
125-6 book, account, record, paper, correspondence, or other document
125-7 subpoenaed and produced under this section that is otherwise made
125-8 privileged or confidential by law remains privileged or
125-9 confidential unless admitted into evidence at an administrative
125-10 hearing or in a court. The banking commissioner may issue an order
125-11 protecting the confidentiality or privilege of the document and
125-12 restricting its use or distribution by any person or in any
125-13 proceeding, other than a proceeding before the banking
125-14 commissioner.
125-15 (b) Subject to Subchapter B, Chapter 2, of this Act, and
125-16 confidentiality provisions of other law administered by the banking
125-17 commissioner, information or material acquired under this section
125-18 under a subpoena is not a public record for the period the banking
125-19 commissioner considers reasonably necessary to complete the
125-20 investigation, protect the person being investigated from
125-21 unwarranted injury, or serve the public interest. The information
125-22 or material is not subject to a subpoena, except a valid grand jury
125-23 subpoena, until released for public inspection by the banking
125-24 commissioner or, after notice and a hearing, a district court
125-25 determines that the public interest and any investigation by the
125-26 banking commissioner would not be jeopardized by obeying the
125-27 subpoena. The district court order may not apply to:
126-1 (1) a record or communication received from another
126-2 law enforcement or regulatory agency except on compliance with the
126-3 confidentiality laws governing the records of the other agency; or
126-4 (2) an internal note, memorandum, report, or
126-5 communication made in connection with a matter that the banking
126-6 commissioner has the authority to consider or investigate, except
126-7 on good cause and compliance with applicable confidentiality laws.
126-8 Sec. 6.206. EVIDENCE. (a) On certification by the banking
126-9 commissioner, a book, record, paper, or document produced or
126-10 testimony taken as provided by Section 6.203 of this Act and held
126-11 by the department is admissible as evidence in any case without
126-12 prior proof of its correctness and without other proof. The
126-13 certified book, record, document, or paper, or a certified copy, is
126-14 prima facie evidence of the facts it contains.
126-15 (b) This section does not limit another provision of this
126-16 Act or a law that provides for the admission of evidence or its
126-17 evidentiary value.
126-18 Sec. 6.207. CEASE AND DESIST ORDER REGARDING UNAUTHORIZED
126-19 TRUST ACTIVITY. (a) If the banking commissioner believes a person
126-20 is engaging or is likely to engage in an unauthorized trust
126-21 activity, the banking commissioner may serve on the person, by
126-22 personal delivery or registered or certified mail, return receipt
126-23 requested, to the person's last known address, a proposed cease and
126-24 desist order. The proposed order must state the acts or practices
126-25 alleged to be an unauthorized activity. The proposed order must
126-26 state its effective date, which may not be before the 21st day
126-27 after the date the proposed order is mailed or delivered. Unless
127-1 the person against whom the proposed order is directed requests a
127-2 hearing in writing before the effective date of the proposed order,
127-3 the order takes effect and is final and nonappealable as to that
127-4 person.
127-5 (b) A requested hearing on a proposed order shall be held
127-6 not later than the 30th day after the date the first written
127-7 request for a hearing on the order is received by the banking
127-8 commissioner unless the parties agree to a later hearing date. At
127-9 the hearing, the banking commissioner has the burden of proof and
127-10 must present evidence in support of the order. Each person against
127-11 whom the order is directed may cross-examine and show cause why the
127-12 order should not be issued.
127-13 (c) After the hearing, the banking commissioner shall issue
127-14 or decline to issue a cease and desist order. The proposed order
127-15 may be modified as necessary to conform to the findings at the
127-16 hearing. An order issued under this section is immediately final
127-17 for purposes of enforcement and appeal and must require the person
127-18 to immediately cease and desist from the unauthorized trust
127-19 activity.
127-20 (d) The banking commissioner may release a final cease and
127-21 desist order issued under this section or information regarding the
127-22 existence of the order to the public if the banking commissioner
127-23 finds that effective enforcement of the order would be enhanced by
127-24 a release or the public interest will be served.
127-25 Sec. 6.208. EMERGENCY CEASE AND DESIST ORDER REGARDING
127-26 UNAUTHORIZED TRUST ACTIVITY. (a) The banking commissioner may
127-27 issue an emergency cease and desist order if the banking
128-1 commissioner reasonably believes a person is engaging in a
128-2 continuing unauthorized trust activity that is fraudulent or
128-3 threatens immediate and irreparable public harm.
128-4 (b) On issuance of an emergency cease and desist order, the
128-5 banking commissioner shall serve on each person affected by the
128-6 order, by personal delivery or registered or certified mail, return
128-7 receipt requested, to the person's last known address, an order
128-8 that states the specific charges and requires the person
128-9 immediately to cease and desist from the unauthorized activity.
128-10 The order must contain a notice that a request for hearing may be
128-11 filed under this section.
128-12 (c) A person affected by an emergency cease and desist order
128-13 may request a hearing before the banking commissioner not later
128-14 than the 10th day after the date on which the person receives the
128-15 order. A request for a hearing must be in writing and directed to
128-16 the banking commissioner and must state the grounds for the request
128-17 to set aside or modify the order. Unless a person against whom the
128-18 emergency order is directed requests a hearing in writing before
128-19 the 11th day after the date it is served on the person, the
128-20 emergency order is final and nonappealable as to that person.
128-21 (d) On receiving a request for a hearing, the banking
128-22 commissioner shall serve notice of the time and place of the
128-23 hearing by personal delivery or registered or certified mail,
128-24 return receipt requested. The hearing must be held not later than
128-25 the 10th day after the date the banking commissioner receives the
128-26 request for a hearing unless the parties agree to a later hearing
128-27 date. At the hearing, the banking commissioner has the burden of
129-1 proof and must present evidence in support of the order. The
129-2 person requesting the hearing may cross-examine witnesses and show
129-3 cause why the order should not be affirmed.
129-4 (e) Until the hearing, an emergency cease and desist order
129-5 continues in effect unless the order is stayed by the banking
129-6 commissioner. The banking commissioner may impose any condition
129-7 before granting a stay of the order.
129-8 (f) After the hearing, the banking commissioner shall
129-9 affirm, modify, or set aside in whole or part the emergency cease
129-10 and desist order. An order affirming or modifying the emergency
129-11 cease and desist order is immediately final for purposes of
129-12 enforcement and appeal.
129-13 (g) The banking commissioner may release a final cease and
129-14 desist order issued under this section or information regarding the
129-15 existence of the order to the public if the banking commissioner
129-16 finds that effective enforcement of the order would be enhanced by
129-17 a release or the public interest will be served.
129-18 Sec. 6.209. APPEAL OF CEASE AND DESIST ORDER REGARDING
129-19 UNAUTHORIZED TRUST ACTIVITY. (a) A person affected by a cease and
129-20 desist order issued, affirmed, or modified after a hearing may file
129-21 a petition for judicial review in the district court of Travis
129-22 County under the substantial evidence rule as provided by Chapter
129-23 2001, Government Code.
129-24 (b) A filed petition for judicial review does not stay or
129-25 vacate the order unless the court, after hearing, specifically
129-26 stays or vacates the order.
129-27 Sec. 6.210. VIOLATION OF FINAL CEASE AND DESIST ORDER
130-1 REGARDING UNAUTHORIZED TRUST ACTIVITY. (a) If the banking
130-2 commissioner reasonably believes that a person has violated a final
130-3 and enforceable cease and desist order, the banking commissioner
130-4 may:
130-5 (1) initiate administrative penalty proceedings under
130-6 Section 6.211 of this Act;
130-7 (2) refer the matter to the attorney general for
130-8 enforcement by injunction and any other available remedy; or
130-9 (3) pursue any other action the banking commissioner
130-10 considers appropriate under applicable law.
130-11 (b) If the attorney general prevails in an action brought
130-12 under Subsection (a)(2) of this section, the attorney general is
130-13 entitled to reasonable attorney's fees.
130-14 Sec. 6.211. PENALTY ORDER FOR UNAUTHORIZED TRUST ACTIVITY.
130-15 (a) The banking commissioner may initiate an action for an
130-16 administrative penalty against a person under Section 6.210(a)(1)
130-17 of this Act by serving on the person, by personal delivery or
130-18 registered or certified mail, return receipt requested, to the
130-19 person's last known address, notice of the time and place of a
130-20 hearing on the penalty. The hearing may not be held earlier than
130-21 the 20th day after the date the notice is served and shall be
130-22 conducted under Chapter 2001, Government Code. The notice must
130-23 contain a statement of the facts or conduct alleged to be in
130-24 violation of the cease and desist order.
130-25 (b) In determining whether a cease and desist order has been
130-26 violated, the banking commissioner shall consider the maintenance
130-27 of procedures reasonably adopted to ensure compliance with the
131-1 order.
131-2 (c) If the banking commissioner after the hearing determines
131-3 that a cease and desist order has been violated, the banking
131-4 commissioner may:
131-5 (1) impose an administrative penalty in an amount not
131-6 to exceed $25,000 for each separate act of unauthorized activity;
131-7 (2) direct the person against whom the order was
131-8 issued to make complete restitution, in the form and amount and
131-9 within the period determined by the banking commissioner, to each
131-10 resident of this state and entity operating in this state damaged
131-11 by the violation; or
131-12 (3) impose both the penalty and direct restitution.
131-13 (d) In determining the amount of the penalty and whether to
131-14 impose restitution, the banking commissioner shall consider:
131-15 (1) the seriousness of the violation, including the
131-16 nature, circumstances, extent, and gravity of any prohibited act;
131-17 (2) the economic harm caused by the violation;
131-18 (3) the history of previous violations;
131-19 (4) the amount necessary to deter future violations;
131-20 (5) efforts to correct the violation;
131-21 (6) whether the violation was intentional or
131-22 unintentional;
131-23 (7) the financial ability of the person against whom
131-24 the penalty is to be assessed; and
131-25 (8) any other matter that justice may require.
131-26 Sec. 6.212. PAYMENT AND APPEAL OF PENALTY ORDER. (a) When
131-27 a penalty order under Section 6.211 of this Act becomes final, a
132-1 person affected by the order shall, within the time permitted by
132-2 law for appeal:
132-3 (1) pay the amount of the penalty;
132-4 (2) pay the amount of the penalty and file a petition
132-5 for judicial review contesting the occurrence of the violation, the
132-6 amount of the penalty, or both; or
132-7 (3) without paying the amount of the penalty, file a
132-8 petition for judicial review contesting the occurrence of the
132-9 violation, the amount of the penalty, or both.
132-10 (b) Within the time permitted by law for appeal, a person
132-11 who acts under Subsection (a)(3) of this section may:
132-12 (1) stay enforcement of the penalty by:
132-13 (A) paying the amount of the penalty to the
132-14 court for placement in an escrow account; or
132-15 (B) giving the court a supersedeas bond that is
132-16 approved by the court for the amount of the penalty and that is
132-17 effective until all judicial review of the order is final; or
132-18 (2) request the court to stay enforcement of the
132-19 penalty by:
132-20 (A) filing with the court a sworn affidavit of
132-21 the person stating that the person is financially unable to pay the
132-22 amount of the penalty and is financially unable to give the
132-23 supersedeas bond; and
132-24 (B) giving a copy of the affidavit to the
132-25 banking commissioner by certified mail.
132-26 (c) If the banking commissioner receives a copy of an
132-27 affidavit under Subsection (b)(2) of this section, the banking
133-1 commissioner may file with the court, within five days after the
133-2 date the copy is received, a contest to the affidavit. The court
133-3 shall hold a hearing on the facts alleged in the affidavit as soon
133-4 as practicable and shall stay the enforcement of the penalty on
133-5 finding that the alleged facts are true. The person who files an
133-6 affidavit has the burden of proving that the person is financially
133-7 unable to pay the amount of the penalty and to give a supersedeas
133-8 bond.
133-9 (d) If the person does not pay the amount of the penalty and
133-10 the enforcement of the penalty is not stayed, the banking
133-11 commissioner may refer the matter to the attorney general for
133-12 collection of the amount of the penalty.
133-13 Sec. 6.213. JUDICIAL REVIEW OF PENALTY ORDER. (a) Judicial
133-14 review of a penalty order of the banking commissioner:
133-15 (1) is instituted by filing a petition as provided by
133-16 Chapter 2001, Government Code; and
133-17 (2) is under the substantial evidence rule.
133-18 (b) If the court sustains the order, the court shall order
133-19 the person to pay the full amount of the penalty or a lower amount
133-20 determined by the court. If the court does not sustain the order,
133-21 a penalty is not owed.
133-22 (c) When the judgment of the court becomes final, if the
133-23 person paid the amount of the penalty and if that amount is reduced
133-24 or is not upheld by the court, the court shall order that the
133-25 appropriate amount plus accrued interest computed at the annual
133-26 rate of 10 percent be remitted to the person. The interest shall
133-27 be paid for the period beginning on the date the penalty was paid
134-1 and ending on the date the penalty is remitted. If the person gave
134-2 a supersedeas bond and the amount of the penalty is not upheld by
134-3 the court, the court shall order the release of the bond. If the
134-4 person gave a supersedeas bond and the amount of the penalty is
134-5 reduced, the court shall order the release of the bond after the
134-6 person pays the amount of the penalty.
134-7 (d) If the judgment of the court requires payment of a
134-8 penalty that has not previously been paid, the court shall order as
134-9 part of its judgment that interest accrues on the penalty at the
134-10 annual rate of 10 percent, beginning on the date the judgment is
134-11 final and ending on the date the penalty and interest are paid.
134-12 Sec. 6.214. DEPOSIT TO GENERAL REVENUE FUND. A penalty
134-13 collected under this subchapter shall be remitted to the
134-14 comptroller for deposit to the credit of the general revenue fund.
134-15 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
134-16 SUBCHAPTER A. GENERAL PROVISIONS
134-17 Sec. 7.001. DEFINITION
134-18 Sec. 7.002. REMEDIES EXCLUSIVE
134-19 Sec. 7.003. APPOINTMENT OF INDEPENDENT RECEIVER
134-20 Sec. 7.004. FEDERAL DEPOSIT INSURANCE CORPORATION AS
134-21 LIQUIDATOR
134-22 Sec. 7.005. SUCCESSION OF TRUST POWERS
134-23 (Sections 7.006-7.100 reserved for expansion)
134-24 SUBCHAPTER B. VOLUNTARY DISSOLUTION
134-25 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY DISSOLUTION
134-26 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION
134-27 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS
135-1 Sec. 7.104. FIDUCIARY ACTIVITIES
135-2 Sec. 7.105. FINAL LIQUIDATION
135-3 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF REMEDIES
135-4 (Sections 7.107-7.200 reserved for expansion)
135-5 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
135-6 Sec. 7.201. ACTION TO CLOSE STATE TRUST COMPANY
135-7 Sec. 7.202. INVOLUNTARY CLOSING
135-8 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP
135-9 Sec. 7.204. CONTEST OF LIQUIDATION
135-10 Sec. 7.205. NOTICE OF STATE TRUST COMPANY CLOSING
135-11 Sec. 7.206. INVENTORY
135-12 Sec. 7.207. TITLE IN RECEIVER
135-13 Sec. 7.208. RIGHTS FIXED
135-14 Sec. 7.209. DEPOSITORIES
135-15 Sec. 7.210. PENDING LAWSUITS
135-16 Sec. 7.211. NEW LAWSUITS
135-17 Sec. 7.212. RECORDS WITH THIRD PARTIES
135-18 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION
135-19 Sec. 7.214. SUBPOENA
135-20 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS
135-21 Sec. 7.216. PREFERENCES
135-22 Sec. 7.217. OTHER POWERS OF RECEIVER; ADMINISTRATIVE
135-23 EXPENSES
135-24 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS
135-25 Sec. 7.219. DISCRETION OF COURT
135-26 Sec. 7.220. FILING REPORTS; EXPENSES
135-27 Sec. 7.221. COURT-ORDERED AUDIT
136-1 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS
136-2 Sec. 7.223. FIDUCIARY ACTIVITIES
136-3 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS
136-4 Sec. 7.225. RECORDS ADMITTED
136-5 Sec. 7.226. RESUMPTION OF BUSINESS
136-6 Sec. 7.227. AFTER-DISCOVERED ASSETS
136-7 (Sections 7.228-7.300 reserved for expansion)
136-8 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
136-9 Sec. 7.301. FILING CLAIMS
136-10 Sec. 7.302. PROOF OF CLAIM
136-11 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM
136-12 Sec. 7.304. SECURED CLAIMS
136-13 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS
136-14 Sec. 7.306. SET-OFF
136-15 Sec. 7.307. ACTION ON CLAIMS
136-16 Sec. 7.308. OBJECTION TO APPROVED CLAIM
136-17 Sec. 7.309. APPEAL OF REJECTED CLAIM
136-18 Sec. 7.310. PAYMENT OF CLAIMS
136-19 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED STATE TRUST
136-20 COMPANY
136-21 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED STATE TRUST
136-22 COMPANY
136-23 Sec. 7.313. EXCESS ASSETS
136-24 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY
136-25 CHAPTER 7. DISSOLUTION AND RECEIVERSHIP
136-26 SUBCHAPTER A. GENERAL PROVISIONS
136-27 Sec. 7.001. DEFINITION. In this chapter, "administrative
137-1 expense" means:
137-2 (1) an expense designated as an administrative expense
137-3 by Subchapter C or D of this chapter;
137-4 (2) court costs and expenses of operation and
137-5 liquidation of a state trust company estate;
137-6 (3) wages owed to an employee of a state trust company
137-7 for services rendered within three months before the date the state
137-8 trust company was closed for liquidation and not exceeding:
137-9 (A) $2,000 to each employee; or
137-10 (B) another amount set by rules adopted under
137-11 this Act;
137-12 (4) current wages owed to an employee of a state trust
137-13 company whose services are retained by the receiver for services
137-14 rendered after the date the state trust company is closed for
137-15 liquidation;
137-16 (5) an unpaid expense of supervision or
137-17 conservatorship of the state trust company before its closing for
137-18 liquidation; and
137-19 (6) any unpaid fees or assessments owed to the
137-20 department.
137-21 Sec. 7.002. REMEDIES EXCLUSIVE. (a) Unless the banking
137-22 commissioner requests, a court may not:
137-23 (1) order the closing or suspension of operation of a
137-24 state trust company; or
137-25 (2) appoint for a state trust company a receiver,
137-26 supervisor, conservator, or liquidator, or other manager or
137-27 overseer with similar responsibility.
138-1 (b) A person may not be designated receiver, supervisor,
138-2 conservator, or liquidator without the voluntary approval and
138-3 concurrence of the banking commissioner.
138-4 (c) This chapter prevails over any other conflicting law of
138-5 this state.
138-6 Sec. 7.003. APPOINTMENT OF INDEPENDENT RECEIVER. (a) On
138-7 request of the banking commissioner, the court in which the
138-8 liquidation proceeding is pending may appoint an independent
138-9 receiver and may require a suitable bond of the independent
138-10 receiver.
138-11 (b) If an independent receiver is appointed, the banking
138-12 commissioner is discharged as receiver but shall remain a party to
138-13 the liquidation proceeding with standing to initiate or contest any
138-14 motion. The views of the banking commissioner are entitled to
138-15 deference if not contrary to the plain meaning of this chapter.
138-16 Sec. 7.004. FEDERAL DEPOSIT INSURANCE CORPORATION AS
138-17 LIQUIDATOR. The banking commissioner without court action may
138-18 tender a state trust company that has been closed for liquidation
138-19 to the Federal Deposit Insurance Corporation or its successor as
138-20 receiver and liquidating agent if the trust deposits of the state
138-21 trust company were insured by the Federal Deposit Insurance
138-22 Corporation or its successor on the date of closing. After
138-23 acceptance of tender of the state trust company, the Federal
138-24 Deposit Insurance Corporation or its successor shall perform the
138-25 acts and duties as receiver of the state trust company that it
138-26 considers necessary or desirable and that are permitted or required
138-27 by federal law or this chapter. If the Federal Deposit Insurance
139-1 Corporation or its successor refuses to accept tender of the state
139-2 trust company, the banking commissioner shall act as receiver.
139-3 Sec. 7.005. SUCCESSION OF TRUST POWERS. (a) If a state
139-4 trust company in the process of voluntary or involuntary
139-5 dissolution and liquidation is acting as trustee, guardian,
139-6 executor, administrator, or escrow agent, or in another fiduciary
139-7 or custodial capacity, the banking commissioner may authorize the
139-8 sale of the state trust company's administration of fiduciary
139-9 accounts to a successor entity with fiduciary powers.
139-10 (b) The successor entity shall, without the necessity of
139-11 action by a court or the creator or a beneficiary of the fiduciary
139-12 relationship, continue the office, trust, or fiduciary relationship
139-13 and shall perform all the duties and exercise all the powers
139-14 connected with or incidental to the fiduciary relationship in the
139-15 same manner as if the successor entity had been originally
139-16 designated as the fiduciary.
139-17 (c) This section applies to all fiduciary relationships,
139-18 including a trust established for the benefit of a minor by court
139-19 order under Section 142.005, Property Code. This section does not
139-20 affect any right of a court or a party to the instrument governing
139-21 the fiduciary relationship to subsequently designate another
139-22 trustee as the successor fiduciary.
139-23 (Sections 7.006-7.100 reserved for expansion)
139-24 SUBCHAPTER B. VOLUNTARY DISSOLUTION
139-25 Sec. 7.101. APPROVALS REQUIRED FOR VOLUNTARY DISSOLUTION.
139-26 (a) A state trust company may initiate voluntary dissolution and
139-27 surrender its charter as provided by this subchapter:
140-1 (1) with the approval of the banking commissioner;
140-2 (2) after complying with the provisions of the Texas
140-3 Business Corporation Act regarding board and shareholder approval
140-4 for voluntary dissolution; and
140-5 (3) by filing the notice of dissolution as provided by
140-6 Section 7.102(a) of this Act.
140-7 (b) Unless the banking commissioner directs or consents
140-8 otherwise, the home office and all branch offices of the state
140-9 trust company shall remain open for business during normal business
140-10 hours until the last date specified in published notices for
140-11 presentation of claims, withdrawal of accounts, and redemption of
140-12 property.
140-13 (c) The shareholders or participants of a state trust
140-14 company initiating voluntary dissolution shall by resolution
140-15 appoint one or more persons to act as liquidating agent or
140-16 committee who shall conduct the liquidation as provided by law and
140-17 under the supervision of the board. The board, in consultation
140-18 with the banking commissioner, shall require the liquidating agent
140-19 or committee to give a suitable bond.
140-20 Sec. 7.102. NOTICE OF VOLUNTARY DISSOLUTION. (a) After
140-21 resolutions to dissolve and liquidate the state trust company have
140-22 been adopted by the board and shareholders or participants, a
140-23 majority of the directors, managers, or managing participants shall
140-24 verify and file duplicate certified copies with the banking
140-25 commissioner of:
140-26 (1) the resolutions of the shareholders or
140-27 participants that are adopted at a meeting for which proper notice
141-1 was given or by unanimous written consent and that approve the
141-2 dissolution and liquidation of the state trust company;
141-3 (2) if the trust company is operated by a board of
141-4 directors or managers, the resolutions of the board approving the
141-5 dissolution and liquidation of the state trust company;
141-6 (3) a copy of the notice to the shareholders or
141-7 participants informing them of the meeting; and
141-8 (4) a plan of liquidation.
141-9 (b) The banking commissioner shall review the submitted
141-10 documentation and conduct any necessary investigation or
141-11 examination. If the proceedings appear to have been properly
141-12 conducted and the bond to be given by the liquidating agent or
141-13 committee is adequate for its purposes, the banking commissioner
141-14 shall consent to dissolution and direct the state trust company to
141-15 publish notice of its pending dissolution.
141-16 (c) The state trust company shall publish notice in a
141-17 newspaper of general circulation in each community where its home
141-18 office or a branch is located at least once each week for eight
141-19 consecutive weeks or at other times specified by the banking
141-20 commissioner or rules adopted under this Act. The notice must
141-21 state that the state trust company is liquidating, that clients,
141-22 depositors, and creditors must present their claims for payment on
141-23 or before a specific date, and that all safe deposit box holders
141-24 and bailors of property left with the state trust company should
141-25 remove their property on or before a specified date. The dates
141-26 selected by the state trust company must be approved by the banking
141-27 commissioner and must allow the affairs of the state trust company
142-1 to be wound up as quickly as feasible and allow creditors, clients,
142-2 and owners of property adequate time for presentation of claims,
142-3 withdrawal of accounts, and redemption of property. The banking
142-4 commissioner may adjust the dates with or without republication of
142-5 notice if additional time appears needed for these activities.
142-6 (d) At the same time as or promptly after publication of the
142-7 notice, the state trust company shall mail to each of the state
142-8 trust company's known clients, depositors, creditors, safe deposit
142-9 box holders, and bailors of property left with the state trust
142-10 company, at the mailing address shown on the state trust company's
142-11 records, an individual notice containing the information required
142-12 in a notice under Subsection (c) of this section and specific
142-13 information pertinent to the account or property of the addressee.
142-14 (e) A notice under this section must be in the form and
142-15 include the information required by the banking commissioner.
142-16 Sec. 7.103. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
142-17 contract between the state trust company and a person for bailment,
142-18 or of deposit for hire, or for the lease of a safe, vault, or box,
142-19 ceases on the date specified as the date for removal of property in
142-20 the notices or a later date approved by the banking commissioner.
142-21 A person who has paid rental or storage charges for a period
142-22 extending beyond the date designated for removal of property has an
142-23 unsecured claim against the state trust company for a refund of any
142-24 unearned amount paid.
142-25 (b) If the property is not removed by the date specified in
142-26 the notices or by the banking commissioner, an officer of the state
142-27 trust company, in the presence of a notary public who is not an
143-1 officer or employee of the state trust company and who is bonded in
143-2 an amount and by sureties approved by the banking commissioner,
143-3 shall inventory the property and may open a safe, vault, box,
143-4 package, parcel, or receptacle in the custody or possession of the
143-5 state trust company to make the inventory. The property shall be
143-6 marked to identify, to the extent possible, its owner or the person
143-7 who left it with the state trust company. After all property
143-8 belonging to others that is in the state trust company's custody
143-9 and control has been inventoried, a master list certified by the
143-10 state trust company officer and the notary public shall be
143-11 furnished to the banking commissioner. The master list shall be
143-12 kept in a place and dealt with in a manner the banking commissioner
143-13 specifies pending delivery of the property to its owner or to the
143-14 comptroller as unclaimed property.
143-15 Sec. 7.104. FIDUCIARY ACTIVITIES. (a) As soon after
143-16 publication of the notice of dissolution as is practicable, the
143-17 state trust company shall terminate all fiduciary positions it
143-18 holds, surrender all property held by it as a fiduciary, and settle
143-19 its fiduciary accounts.
143-20 (b) Unless all fiduciary accounts are settled and
143-21 transferred by the last date specified in published notices or by
143-22 the banking commissioner and unless the banking commissioner
143-23 directs otherwise, the state trust company shall mail individual
143-24 notices to each trustor and beneficiary of any remaining trust,
143-25 escrow arrangement, or other fiduciary relationship advising the
143-26 person of an office location open during normal business hours and
143-27 a telephone number at that location where administration of the
144-1 remaining fiduciary accounts will continue until settled or
144-2 transferred.
144-3 Sec. 7.105. FINAL LIQUIDATION. (a) After the state trust
144-4 company has taken all of the actions specified by Sections 7.102,
144-5 7.103, and 7.104 of this Act and has paid all its debts and
144-6 obligations and transferred all property for which a legal claimant
144-7 has been found after the time for presentation of claims has
144-8 expired, the state trust company shall, under oath or affirmation
144-9 of a majority of its board or managing participants, make a list
144-10 from its books of the names of each depositor, creditor, owner of
144-11 personal property in the state trust company's possession or
144-12 custody, or lessee of any safe, vault, or box, who has not claimed
144-13 or has not received a deposit, debt, dividend, interest, balance,
144-14 or other amount or property due to the person.
144-15 (b) The list, accompanied by any necessary identifying
144-16 information, shall be filed with the banking commissioner. The
144-17 state trust company shall pay any unclaimed funds and deliver any
144-18 unclaimed property to the comptroller as provided by Chapter 74,
144-19 Property Code, and certify to the banking commissioner that the
144-20 unclaimed funds and property have been paid or delivered.
144-21 (c) After the banking commissioner has reviewed the list and
144-22 has reconciled the unclaimed cash and property with the amounts of
144-23 money and property reported and transferred to the comptroller, the
144-24 banking commissioner shall allow the state trust company to
144-25 distribute the state trust company's remaining assets, if any,
144-26 among its shareholders, participants, or participant-transferees as
144-27 their ownership interests appear.
145-1 (d) After distribution of all remaining assets, the state
145-2 trust company shall:
145-3 (1) file with the department, under the oath or
145-4 affirmation of a majority of its board or managing participants,
145-5 another affidavit accompanied by schedules showing the distribution
145-6 to each shareholder, participant, or participant-transferee; and
145-7 (2) tender to the department:
145-8 (A) all copies of reports of examination of the
145-9 state trust company in its possession; and
145-10 (B) its original charter, or an affidavit
145-11 stating that the original charter is lost, and any branch
145-12 certificates of authority.
145-13 (e) After verifying the submitted information and documents,
145-14 the banking commissioner shall issue a certificate canceling the
145-15 charter of the state trust company.
145-16 Sec. 7.106. ADMINISTRATIVE AUTHORITY; ELECTION OF REMEDIES.
145-17 (a) A state trust company in the process of voluntary dissolution
145-18 and liquidation remains subject to this Act, including provisions
145-19 for examination by the banking commissioner, and the state trust
145-20 company shall furnish reports required by the banking commissioner.
145-21 (b) The banking commissioner may authorize a deviation from
145-22 the procedures for voluntary dissolution in this subchapter if the
145-23 banking commissioner determines that the interests of claimants are
145-24 not jeopardized by the deviation.
145-25 (c) If the banking commissioner determines that the
145-26 voluntary liquidation is being conducted in an improper or illegal
145-27 manner or is not in the best interests of the state trust company's
146-1 clients and creditors or that the state trust company is insolvent
146-2 or imminently insolvent, the banking commissioner may close the
146-3 state trust company for involuntary dissolution and liquidation
146-4 under this chapter.
146-5 (d) After a state trust company's charter has been
146-6 voluntarily surrendered and canceled, the state trust company may
146-7 not resume business or reopen except on application for and
146-8 approval of a new charter.
146-9 (Sections 7.107-7.200 reserved for expansion)
146-10 SUBCHAPTER C. INVOLUNTARY DISSOLUTION AND LIQUIDATION
146-11 Sec. 7.201. ACTION TO CLOSE STATE TRUST COMPANY. (a) The
146-12 banking commissioner may close and liquidate a state trust company
146-13 on finding that:
146-14 (1) the interests of its clients and creditors are
146-15 jeopardized by the state trust company's insolvency or imminent
146-16 insolvency; and
146-17 (2) the best interests of clients and creditors would
146-18 be served by requiring that the state trust company be closed and
146-19 its assets liquidated.
146-20 (b) A majority of the state trust company's directors,
146-21 managers, or managing participants may voluntarily close the state
146-22 trust company and place it with the banking commissioner for
146-23 liquidation.
146-24 Sec. 7.202. INVOLUNTARY CLOSING. (a) After closing a state
146-25 trust company under Section 7.201 of this Act, the banking
146-26 commissioner shall place a sign at its main entrance stating that
146-27 the state trust company has been closed and the findings on which
147-1 the closing of the state trust company is based. A correspondent
147-2 bank of the closed state trust company may not pay an item drawn on
147-3 the account of the closed state trust company that is presented for
147-4 payment after the correspondent has received actual notice of
147-5 closing unless it previously certified the item for payment.
147-6 (b) As soon as practicable after posting the sign at the
147-7 state trust company's main entrance, the banking commissioner shall
147-8 tender the state trust company to the Federal Deposit Insurance
147-9 Corporation as provided by Section 7.004 of this Act or initiate a
147-10 receivership proceeding by filing a copy of the notice contained on
147-11 the sign in a district court in the county where the state trust
147-12 company's home office is located. The court in which the notice is
147-13 filed shall docket it as a case styled, "In re liquidation of ____"
147-14 (inserting the name of the state trust company). As soon as this
147-15 notice is filed, the court has constructive custody of all the
147-16 state trust company's assets, and any action initiated that seeks
147-17 to directly or indirectly affect state trust company assets is
147-18 considered to be an intervention in the receivership proceeding and
147-19 subject to this subchapter and Subchapter D of this chapter.
147-20 (c) Venue for an action instituted to effect, contest, or
147-21 otherwise intervene in the liquidation of a state trust company is
147-22 in Travis County, except that on motion filed and served
147-23 concurrently with or before the filing of the answer, the court
147-24 may, upon a finding of good cause, transfer the action to the
147-25 county of the state trust company's home office.
147-26 Sec. 7.203. NATURE AND DURATION OF RECEIVERSHIP. (a) The
147-27 court may not require a bond from the banking commissioner as
148-1 receiver. Any reference in this chapter to the receiver is a
148-2 reference to the banking commissioner as receiver and any
148-3 successors in office, the Federal Deposit Insurance Corporation if
148-4 acting as receiver as provided by Section 7.004 of this Act and
148-5 federal law, or an independent receiver appointed at the request of
148-6 the banking commissioner as provided by Section 7.003 of this Act.
148-7 The receiver and all employees and agents acting on behalf of the
148-8 receiver are acting in an official capacity and are subject to the
148-9 protection of Section 2.010, Texas Banking Act (Article 342-2.010,
148-10 Vernon's Texas Civil Statutes). The acts of the receiver are the
148-11 acts of the state trust company in liquidation and this state and
148-12 its political subdivisions are not liable and may not be held
148-13 accountable for any debt or obligation of a state trust company in
148-14 receivership.
148-15 (b) The receiver has all the powers of the directors,
148-16 managers, managing participants, officers, and shareholders or
148-17 participants of the state trust company as necessary to support an
148-18 action taken on behalf of the state trust company.
148-19 (c) Section 64.072, Civil Practice and Remedies Code,
148-20 applies to the receivership of a state trust company except as
148-21 provided by this subsection. A state trust company receivership
148-22 shall be administered continuously for the length of time necessary
148-23 to complete its purposes, and a period prescribed by other law
148-24 limiting the time for the administration of receiverships or of
148-25 corporate affairs generally, including Section 64.072(d), Civil
148-26 Practice and Remedies Code, does not apply.
148-27 Sec. 7.204. CONTEST OF LIQUIDATION. (a) A state trust
149-1 company, acting through a majority of its directors, managers, or
149-2 managing participants, may intervene in the action filed by the
149-3 banking commissioner to challenge the banking commissioner's
149-4 closing of the state trust company and to enjoin the banking
149-5 commissioner or other receiver from liquidating its assets. The
149-6 intervenors must file the intervention not later than the second
149-7 business day after the closing of the state trust company,
149-8 excluding legal holidays. The court may issue an ex parte order
149-9 restraining the receiver from liquidating state trust company
149-10 assets pending a hearing on the injunction. The receiver shall
149-11 comply with the restraining order but may petition the court for
149-12 permission to liquidate an asset as necessary to prevent its loss
149-13 or diminution pending the outcome of the injunction.
149-14 (b) The court shall hear this action as quickly as possible
149-15 and shall give it priority over other business.
149-16 (c) The state trust company or receiver may appeal the
149-17 court's judgment as in other civil cases, except that the receiver
149-18 shall retain all state trust company assets pending a final
149-19 appellate court order even if the banking commissioner does not
149-20 prevail in the trial court. If the banking commissioner prevails
149-21 in the trial court, liquidation of the state trust company may
149-22 proceed unless the trial court or appellate court orders otherwise.
149-23 If liquidation is enjoined or stayed pending appeal, the trial
149-24 court retains jurisdiction to permit liquidation of an asset as
149-25 necessary to prevent its loss or diminution pending the outcome of
149-26 the appeal.
149-27 Sec. 7.205. NOTICE OF STATE TRUST COMPANY CLOSING. (a) As
150-1 soon as reasonably practicable after initiation of the receivership
150-2 proceeding, the receiver shall publish notice, in a newspaper of
150-3 general circulation in each community where the state trust
150-4 company's home office and a branch are located. The notice must
150-5 state that the state trust company has been closed for liquidation,
150-6 that clients and creditors must present their claims for payment on
150-7 or before a specific date, and that all safe deposit box holders
150-8 and bailors of property left with the state trust company should
150-9 remove their property not later than a specified date. The
150-10 receiver shall select the dates to allow the affairs of the state
150-11 trust company to be wound up as quickly as feasible while allowing
150-12 creditors, clients, and owners of property adequate time for
150-13 presentation of claims, withdrawal of accounts, and redemption of
150-14 property, but may not select a date before the 121st day after the
150-15 date of the notice. The receiver may adjust the dates with the
150-16 approval of the court with or without republication of notice if
150-17 additional time appears needed for these activities.
150-18 (b) As soon as reasonably practicable given the state of
150-19 state trust company records and the adequacy of staffing, the
150-20 receiver shall mail to each of the state trust company's known
150-21 clients, creditors, safe deposit box holders, and bailors of
150-22 property left with the state trust company, at the mailing address
150-23 shown on the state trust company's records, an individual notice
150-24 containing the information required in a notice under Subsection
150-25 (a) of this section and specific information pertinent to the
150-26 account or property of the addressee.
150-27 (c) The receiver may determine the form and content notices
151-1 under this section.
151-2 Sec. 7.206. INVENTORY. As soon as reasonably practicable
151-3 given the state of state trust company records and the adequacy of
151-4 staffing, the receiver shall prepare a comprehensive inventory of
151-5 the state trust company's assets for filing with the court. The
151-6 inventory shall be open to inspection.
151-7 Sec. 7.207. TITLE IN RECEIVER. (a) The receiver has the
151-8 title to all the state trust company's property, contracts, and
151-9 rights of action, wherever located, beginning on the date the state
151-10 trust company is closed for liquidation.
151-11 (b) The rights of the receiver have priority over a
151-12 contractual lien or statutory landlord's lien under Chapter 54,
151-13 Property Code, judgment lien, attachment lien, or voluntary lien
151-14 that arises after the date of the closing of the state trust
151-15 company for liquidation.
151-16 (c) The filing or recording of a receivership order in a
151-17 record office of this state gives the same notice that would be
151-18 given by a deed, bill of sale, or other evidence of title duly
151-19 filed or recorded by the state trust company in liquidation. The
151-20 recording clerk shall index a recorded receivership order in the
151-21 records to which the order relates.
151-22 Sec. 7.208. RIGHTS FIXED. The rights and liabilities of the
151-23 state trust company in liquidation and of a client, creditor,
151-24 officer, director, manager, managing participant, employee,
151-25 shareholder, participant, participant-transferee, agent, or other
151-26 person interested in the state trust company's estate are fixed on
151-27 the date of closing of the state trust company for liquidation
152-1 except as otherwise directed by the court or as expressly provided
152-2 otherwise by this subchapter or Subchapter D of this chapter.
152-3 Sec. 7.209. DEPOSITORIES. (a) The receiver may deposit
152-4 funds collected on behalf of the state trust company estate in:
152-5 (1) the Texas Treasury Safekeeping Trust Company in
152-6 accordance with procedures established by the comptroller; or
152-7 (2) one or more depository institutions in this state,
152-8 the deposits of which are insured by the Federal Deposit Insurance
152-9 Corporation or its successor, if the receiver, using sound
152-10 financial judgment, determines that it would be advantageous to do
152-11 so.
152-12 (b) If receivership funds deposited in an account at a state
152-13 bank exceed the maximum insured amount, the receiver shall require
152-14 the excess deposit to be adequately secured through pledge of
152-15 securities or otherwise, without approval of the court. The
152-16 depository bank may secure the deposits of the state trust company
152-17 in liquidation on behalf of the receiver, notwithstanding any other
152-18 provision of this Act.
152-19 Sec. 7.210. PENDING LAWSUITS. (a) A judgment or order of a
152-20 court of this state or of any other jurisdiction in an action
152-21 pending by or against the state trust company, rendered after the
152-22 date the state trust company was closed for liquidation, is not
152-23 binding on the receiver unless the receiver was made a party to the
152-24 suit.
152-25 (b) Before the first anniversary of the date the state trust
152-26 company was closed for liquidation, the receiver may not be
152-27 required to plead to any suit pending against the state trust
153-1 company in a court in this state on the date the state trust
153-2 company was closed for liquidation and in which the receiver is a
153-3 proper plaintiff or defendant.
153-4 (c) Sections 64.052, 64.053, and 64.056, Civil Practice and
153-5 Remedies Code, do not apply to a state trust company estate being
153-6 administered under this subchapter and Subchapter D of this
153-7 chapter.
153-8 Sec. 7.211. NEW LAWSUITS. (a) Except as otherwise provided
153-9 by this section, the court in which the receivership proceeding is
153-10 pending under this subchapter has exclusive jurisdiction to hear
153-11 and determine all actions or proceedings instituted by or against
153-12 the state trust company or receiver after the receivership
153-13 proceeding starts.
153-14 (b) The receiver may file in any jurisdiction an ancillary
153-15 suit that may be helpful to obtain jurisdiction or venue over a
153-16 person or property.
153-17 (c) Exclusive venue of an action or proceeding instituted
153-18 against the receiver or the receiver's employee, including an
153-19 employee of the department, that asserts personal liability on the
153-20 part of the receiver or employee lies in Travis County.
153-21 Sec. 7.212. RECORDS WITH THIRD PARTIES. (a) Each state
153-22 trust company affiliate, officer, director, manager, managing
153-23 participant, employee, shareholder, participant,
153-24 participant-transferee, trustee, agent, servant, employee,
153-25 attorney, attorney-in-fact, or correspondent shall immediately
153-26 deliver to the receiver any property, book, record, account,
153-27 document, or other writing of the state trust company or that
154-1 relates to the business of the state trust company without cost to
154-2 the receiver.
154-3 (b) If by contract or otherwise any book, record, account,
154-4 document, or other property that can be copied is the property of a
154-5 person listed in Subsection (a) of this section, it shall be
154-6 copied, the copy shall be delivered to the receiver, and the
154-7 original shall be retained by the owner until notification by the
154-8 receiver that it is no longer required in the administration of the
154-9 state trust company's estate or at another time the court, after
154-10 notice and hearing, directs. A copy is considered to be a record
154-11 of the state trust company in liquidation under Section 7.225 of
154-12 this Act.
154-13 Sec. 7.213. INJUNCTION IN AID OF LIQUIDATION. (a) On
154-14 application by the receiver, the court may with or without notice
154-15 issue an injunction:
154-16 (1) restraining each state trust company officer,
154-17 director, manager, managing participant, employee, shareholder,
154-18 participant, participant-transferee, trustee, agent, servant,
154-19 employee, attorney, attorney-in-fact, accountant or accounting
154-20 firm, correspondent, or another person from transacting the state
154-21 trust company's business or wasting or disposing of its property;
154-22 or
154-23 (2) requiring the delivery of its property or assets
154-24 to the receiver subject to the further order of the court.
154-25 (b) The court, at any time during a proceeding under this
154-26 subchapter, may issue another injunction or order considered
154-27 necessary or desirable to prevent:
155-1 (1) interference with the receiver or the proceeding;
155-2 (2) waste of the assets of the state trust company;
155-3 (3) the beginning or prosecution of an action;
155-4 (4) the obtaining of a preference, judgment,
155-5 attachment, garnishment, or other lien; or
155-6 (5) the making of a levy against the state trust
155-7 company or against its assets.
155-8 Sec. 7.214. SUBPOENA. (a) In addition to the authority
155-9 granted by law to the receiver relating to the taking of a
155-10 deposition of a witness in a civil action, the receiver may request
155-11 the court ex parte to issue a subpoena to compel the attendance and
155-12 testimony of a witness before the receiver and the production of a
155-13 book, account, record, paper, or correspondence or other record
155-14 relating to the receivership estate. For this purpose, the
155-15 receiver or the receiver's designated representative may administer
155-16 an oath or affirmation, examine a witness, or receive evidence.
155-17 The court has statewide subpoena power and may compel attendance
155-18 and production of a record before the receiver at the state trust
155-19 company, the office of the receiver, or another location.
155-20 (b) A person served with a subpoena under this section may
155-21 file a motion with the court for a protective order as provided by
155-22 Rule 166b, Texas Rules of Civil Procedure. In a case of
155-23 disobedience of a subpoena, or of the contumacy of a witness
155-24 appearing before the receiver or the receiver's designated
155-25 representative, the receiver may request and the court may issue an
155-26 order requiring the person subpoenaed to obey the subpoena, give
155-27 evidence, or produce a book, account, record, paper, or
156-1 correspondence or other record relating to the matter in question.
156-2 (c) Each witness who is required to appear before the
156-3 receiver is entitled to receive:
156-4 (1) reimbursement for mileage, in the amount for
156-5 travel by state employees, for traveling to or returning from a
156-6 proceeding that is more than 25 miles from the witness's residence;
156-7 and
156-8 (2) a fee of not less than $10 a day and not more than
156-9 an amount equal to the per diem travel allowance of a state
156-10 employee for each day or part of a day the witness is necessarily
156-11 present as a witness, as established by the receiver with the
156-12 approval of the court.
156-13 (d) All disbursements made in the payment of fees under
156-14 Subsection (c) of this section are administrative expenses of
156-15 liquidation.
156-16 (e) The receiver may serve the subpoena or have it served by
156-17 the receiver's authorized agent, a sheriff, or a constable. The
156-18 sheriff's or constable's fee for serving a subpoena must be the
156-19 same as the fee paid the sheriff or constable for similar services.
156-20 (f) A subpoena issued under this section to a financial
156-21 institution is not subject to Section 30.007, Civil Practice and
156-22 Remedies Code, as added by Chapter 914, Acts of the 74th
156-23 Legislature, Regular Session, 1995.
156-24 (g) On certification by the receiver under official seal, a
156-25 book, account, record, paper, correspondence, or other record or
156-26 document produced or testimony taken as provided by this section
156-27 and held by the receiver is admissible in evidence in any case
157-1 without prior proof of its correctness and without other proof
157-2 except the certificate of the receiver that the book, account,
157-3 record, paper, correspondence, document, or testimony was received
157-4 from the person producing the material or testifying. The
157-5 certified book, account, record, paper, correspondence, or other
157-6 record or document, or a certified copy of such a document, is
157-7 prima facie evidence of the facts it contains. This section does
157-8 not limit another provision of this subchapter, Subchapter D of
157-9 this chapter, or another law that provides for the admission of
157-10 evidence or its evidentiary value.
157-11 Sec. 7.215. EXECUTORY CONTRACTS; ORAL AGREEMENTS. (a) Not
157-12 later than six months after the date the receivership proceeding
157-13 begins, the receiver may terminate any executory contract to which
157-14 the state trust company is a party, or any obligation of the state
157-15 trust company as a lessee. A lessor who receives notice of the
157-16 receiver's election to terminate the lease before the 60th day
157-17 preceding the termination date is not entitled to rent or damages
157-18 for termination, other than rent accrued to the date of
157-19 termination.
157-20 (b) An agreement that tends to diminish or defeat the
157-21 interest of the estate in a state trust company asset is not valid
157-22 against the receiver unless the agreement:
157-23 (1) is in writing;
157-24 (2) was executed by the state trust company and any
157-25 person claiming an adverse interest under the agreement, including
157-26 the obligor, at the same time as the acquisition of the asset by
157-27 the state trust company;
158-1 (3) was approved by the board of the state trust
158-2 company or its designated committee, and the approval is reflected
158-3 in the minutes of the board or committee; and
158-4 (4) has been continuously since its execution an
158-5 official record of the state trust company.
158-6 Sec. 7.216. PREFERENCES. (a) Any transfer of or lien on
158-7 the property or assets of a state trust company is voidable by the
158-8 receiver if the transfer or lien:
158-9 (1) is made or created after:
158-10 (A) four months before the date the state trust
158-11 company is closed for liquidation; or
158-12 (B) one year before the date the state trust
158-13 company is closed for liquidation if the receiving creditor was at
158-14 the time an affiliate, officer, director, manager, managing
158-15 participant, principal shareholder, or participant of the state
158-16 trust company or an affiliate of the trust company;
158-17 (2) was made or created with the intent of giving to a
158-18 creditor or depositor, or enabling a creditor or depositor to
158-19 obtain, a greater percentage of the claimant's debt than is given
158-20 or obtained by another claimant of the same class; and
158-21 (3) is accepted by a creditor or depositor having
158-22 reasonable cause to believe that a preference will occur.
158-23 (b) Each state trust company officer, director, manager,
158-24 managing participant, employee, shareholder, participant,
158-25 participant-transferee, trustee, agent, servant, employee,
158-26 attorney-in-fact, or correspondent, or other person acting on
158-27 behalf of the state trust company, who has participated in
159-1 implementing a voidable transfer or lien, and each person receiving
159-2 property or the benefit of property of the state trust company as a
159-3 result of the voidable transfer or lien, is personally liable for
159-4 the property or benefit received and shall account to the receiver
159-5 for the benefit of the clients and creditors of the state trust
159-6 company.
159-7 (c) The receiver may avoid a transfer of or lien on the
159-8 property or assets of a state trust company that a client,
159-9 creditor, shareholder, participant, or participant-transferee of
159-10 the state trust company could have avoided and may recover the
159-11 property transferred or its value from the person to whom it was
159-12 transferred or from a person who has received it, unless the
159-13 transferee or recipient was a bona fide holder for value before the
159-14 date the state trust company was closed for liquidation.
159-15 Sec. 7.217. OTHER POWERS OF RECEIVER; ADMINISTRATIVE
159-16 EXPENSES. The receiver may employ agents, legal counsel,
159-17 accountants, appraisers, consultants, and other personnel the
159-18 receiver considers necessary to assist in the performance of the
159-19 receiver's duties. The receiver may use personnel of the
159-20 department if the receiver considers the use to be advantageous or
159-21 desirable. The expense of employing these persons is an
159-22 administrative expense of liquidation.
159-23 Sec. 7.218. DISPOSAL OF PROPERTY; SETTLING CLAIMS. (a) In
159-24 the course of liquidating a state trust company, the receiver on
159-25 order of the court entered with or without hearing may:
159-26 (1) sell all or part of the real and personal property
159-27 of the state trust company;
160-1 (2) borrow money and pledge all or part of the assets
160-2 of the state trust company to secure the debt created, except that
160-3 the receiver may not be held personally liable to repay borrowed
160-4 funds;
160-5 (3) compromise or compound a doubtful or uncollectible
160-6 debt or claim owed by or owing to the state trust company; and
160-7 (4) enter another agreement on behalf of the state
160-8 trust company that the receiver considers necessary or proper to
160-9 the management, conservation, or liquidation of its assets.
160-10 (b) If the amount of a debt or claim owed by or owing to the
160-11 state trust company or the value of an item of property of the
160-12 trust company does not exceed $20,000, excluding interest, the
160-13 receiver may compromise or compound the debt or claim or sell the
160-14 property on terms the receiver considers to be in the best
160-15 interests of the state trust company estate without obtaining the
160-16 approval of the court.
160-17 (c) The receiver may with the approval of the court sell or
160-18 offer or agree to sell an asset of the state trust company, other
160-19 than fiduciary assets, to a depositor or creditor of the state
160-20 trust company. Payment may be in whole or in part out of
160-21 distributions payable to the purchasing creditor or depositor on
160-22 account of an approved claim against the state trust company's
160-23 estate. On application by the receiver, the court may designate
160-24 one or more representatives to act for certain clients or creditors
160-25 as a class in the purchase, holding, and management of assets
160-26 purchased by the class under this section, and the receiver may
160-27 with the approval of the court advance the expenses of the
161-1 appointed representative against the security of the claims of the
161-2 class.
161-3 Sec. 7.219. DISCRETION OF COURT. If the court requires
161-4 notice and hearing before entering an order, the court shall fix
161-5 the time and place of the hearing and prescribe whether the notice
161-6 is to be given by service on specific parties, by publication, or
161-7 by a combination of these methods. The court may not enter an
161-8 order requested by a person other than the receiver without notice
161-9 to the receiver and an opportunity for the receiver to be heard.
161-10 Sec. 7.220. FILING REPORTS; EXPENSES. (a) The receiver
161-11 shall file quarterly reports with the court showing the operation,
161-12 receipts, expenditures, and general condition of the state trust
161-13 company in liquidation. The receiver shall also file a final
161-14 report regarding the liquidated state trust company showing all
161-15 receipts and expenditures and giving a full explanation and a
161-16 statement of the disposition of all assets of the state trust
161-17 company.
161-18 (b) The receiver shall pay all administrative expenses out
161-19 of funds or assets of the state trust company. Each quarter the
161-20 receiver shall submit an itemized report of those expenses, sworn
161-21 to by the receiver. The court shall approve the report unless an
161-22 objection is filed before the 11th day after the date of submission
161-23 of the account. An objection, if any, may be made only by a party
161-24 in interest and must specify each item objected to and the ground
161-25 for the objection. The court shall set the objection for hearing
161-26 and notify the parties of this action. The objecting party has the
161-27 burden of proof to show that the item objected to is improper,
162-1 unnecessary, or excessive.
162-2 (c) The court may prescribe whether the notice of the
162-3 receiver's report is to be given by service on specific parties, by
162-4 publication, or by a combination of these methods.
162-5 Sec. 7.221. COURT-ORDERED AUDIT. The court in which the
162-6 receivership proceeding is pending may order an audit of the books
162-7 and records of the receiver that relate to the receivership. A
162-8 report of an audit ordered under this section shall be filed with
162-9 the court. The receiver shall make the books and records relating
162-10 to the receivership available to the auditor as required by the
162-11 court order. The receiver shall pay the expenses of an audit
162-12 ordered under this section as an administrative expense.
162-13 Sec. 7.222. SAFE DEPOSITS AND OTHER BAILMENTS. (a) A
162-14 contract between the state trust company and another person for
162-15 bailment, of deposit for hire, or for the lease of a safe, vault,
162-16 or box ceases on the date specified for removal of property in the
162-17 notices that were published and mailed or a later date approved by
162-18 the receiver or the court. A person who has paid rental or storage
162-19 charges for a period extending beyond the date designated as the
162-20 date for removal of property shall have a claim against the state
162-21 trust company estate for a refund of any unearned amount paid.
162-22 (b) If the property is not removed by the date specified in
162-23 the notices or by the receiver or the court, the receiver shall
162-24 inventory the property and may open a safe, vault, or box, or any
162-25 package, parcel, or receptacle, in the custody or possession of the
162-26 receiver, to make the inventory. The property shall be marked to
162-27 identify, to the extent possible, its owner or the person who left
163-1 it with the state trust company. After all property belonging to
163-2 others that is in the receiver's custody and control has been
163-3 inventoried, the receiver shall compile a master list that is
163-4 divided for each office of the state trust company that received
163-5 property that remains unclaimed. The receiver shall publish, in a
163-6 newspaper of general circulation in each community in which the
163-7 state trust company had an office that received property that
163-8 remains unclaimed, the list and the names of the owners of the
163-9 property as shown in the state trust company's records. The
163-10 published notice shall specify a procedure for claiming the
163-11 property, unless the court, on application of the receiver,
163-12 approves an alternate procedure.
163-13 Sec. 7.223. FIDUCIARY ACTIVITIES. (a) As soon after
163-14 beginning the receivership proceeding as is practicable, the
163-15 receiver shall terminate all fiduciary positions it holds,
163-16 surrender all property held by it as a fiduciary, and settle the
163-17 state trust company's fiduciary accounts. The receiver shall
163-18 release all segregated and identifiable fiduciary property held by
163-19 the state trust company to successor fiduciaries.
163-20 (b) With the approval of the court, the receiver may sell
163-21 the administration of all or substantially all remaining fiduciary
163-22 accounts to one or more successor fiduciaries on terms that appear
163-23 to be in the best interests of the state trust company's estate and
163-24 the persons interested in the fiduciary accounts.
163-25 (c) If commingled fiduciary funds held by the state trust
163-26 company as trustee are insufficient to satisfy all fiduciary claims
163-27 to the commingled funds, the receiver shall distribute commingled
164-1 funds pro rata to all fiduciary claimants of commingled funds based
164-2 on their proportionate interests after payment of administrative
164-3 expenses related solely to the fiduciary claims. The fictional
164-4 tracing rule does not apply.
164-5 (d) The receiver may require certain fiduciary claimants to
164-6 file proofs of claim if the records of the state trust company are
164-7 insufficient to identify their respective interests.
164-8 Sec. 7.224. DISPOSITION AND MAINTENANCE OF RECORDS. (a) On
164-9 approval by the court, the receiver may dispose of records of the
164-10 state trust company in liquidation that are obsolete and
164-11 unnecessary to the continued administration of the receivership
164-12 proceeding.
164-13 (b) The receiver may devise a method for the effective,
164-14 efficient, and economical maintenance of the records of the state
164-15 trust company and of the receiver's office, including maintaining
164-16 those records on any medium approved by the records management
164-17 division of the Texas State Library.
164-18 (c) To maintain the records of a liquidated state trust
164-19 company after the closing of the receivership proceeding, the
164-20 receiver may reserve assets of an estate, deposit them in an
164-21 account, and use them for maintenance, storage, and disposal of
164-22 records in closed receivership estates.
164-23 (d) Records of a liquidated state trust company are not
164-24 government records for any purpose, including Chapter 552,
164-25 Government Code, but shall be preserved and disposed of as if they
164-26 were records of the department under Chapter 441, Government Code.
164-27 These records are confidential as provided by Subchapter B, Chapter
165-1 2, of this Act, rules adopted under this Act, and Section 30.007,
165-2 Civil Practice and Remedies Code, as added by Chapter 914, Acts of
165-3 the 74th Legislature, Regular Session, 1995.
165-4 Sec. 7.225. RECORDS ADMITTED. (a) A book, record,
165-5 document, or paper of a state trust company in liquidation obtained
165-6 by the receiver and held in the course of the receivership
165-7 proceeding, or a certified copy of such a record under the official
165-8 seal of the receiver shall be received in evidence in all cases
165-9 without proof of correctness or other proof, except the certificate
165-10 of the receiver that the records were received from the custody of
165-11 the state trust company or found among its effects.
165-12 (b) The receiver may certify the correctness of a paper,
165-13 document, or record of the receiver's office, including those
165-14 described by Subsection (a) of this section, and may certify any
165-15 fact contained in the paper, document, or record. The paper,
165-16 document, or record shall be received in evidence in all cases in
165-17 which the original would be evidence.
165-18 (c) The original book, record, document, or paper, or a
165-19 certified copy of such a record is prima facie evidence of the
165-20 facts it contains.
165-21 (d) A copy of an original record or another record that is
165-22 maintained on a medium approved by the records management division
165-23 of the Texas State Library, within the scope of this section, and
165-24 produced by the receiver or the receiver's authorized
165-25 representative under this section has the same force and effect as
165-26 the original record and may be used the same as the original record
165-27 in a judicial or administrative proceeding in this state.
166-1 Sec. 7.226. RESUMPTION OF BUSINESS. (a) A state trust
166-2 company closed under Section 7.201 of this Act may not be reopened
166-3 without the approval of the banking commissioner unless a contest
166-4 of liquidation under Section 7.204 of this Act is finally resolved
166-5 adversely to the banking commissioner and the court authorizes its
166-6 reopening.
166-7 (b) If a state trust company reopens under this section, the
166-8 banking commissioner may place temporary limits on the right of
166-9 withdrawals by, or payments to, individual clients and creditors,
166-10 in accordance with applicable law.
166-11 (c) As a depositor or creditor of a reopened state trust
166-12 company, this state or a political subdivision of this state may
166-13 agree to temporary limits that the banking commissioner places on
166-14 payments or withdrawals.
166-15 Sec. 7.227. AFTER-DISCOVERED ASSETS. (a) If the banking
166-16 commissioner discovers, after the receivership has been closed by
166-17 final order of the court, assets that have value and were abandoned
166-18 as worthless or unknown during receivership, the banking
166-19 commissioner shall report the discovery to the court. The court
166-20 may reopen the receivership proceeding for continued liquidation
166-21 if the value of the after-discovered assets justifies the
166-22 reopening.
166-23 (b) If the banking commissioner suspects that the
166-24 information may have been intentionally or fraudulently concealed,
166-25 the banking commissioner shall notify appropriate civil and
166-26 criminal authorities to determine what penalties, if any, may be
166-27 available.
167-1 (Sections 7.228-7.300 reserved for expansion)
167-2 SUBCHAPTER D. CLAIMS AGAINST RECEIVERSHIP ESTATE
167-3 Sec. 7.301. FILING CLAIMS. (a) A person other than a
167-4 shareholder, participant, or participant-transferee acting in that
167-5 capacity who has a claim against a state trust company in
167-6 liquidation, including a claimant with a secured claim and a
167-7 claimant under a fiduciary relationship that has been ordered by
167-8 the receiver to file a claim pursuant to Section 7.223 of this Act,
167-9 may assert the claim by presenting proof of the claim to the
167-10 receiver at a place specified by the receiver within the period
167-11 specified by the receiver under Section 7.205 of this Act. Receipt
167-12 of the required proof of claim by the receiver is a condition
167-13 precedent to the payment of a claim. Except as provided by
167-14 Subsection (b) of this section and Section 7.310(b) of this Act, a
167-15 claim that is not filed within the period specified by the court
167-16 may not participate in a distribution of the assets by the
167-17 receiver. Interest does not accrue on a claim after the date the
167-18 state trust company is closed for liquidation.
167-19 (b) Subject to court approval, the receiver may accept a
167-20 claim filed after the date specified if the claim is filed with the
167-21 receiver not later than the 180th day after the date notice of the
167-22 claimant's right to file a proof of claim is mailed to the
167-23 claimant. If accepted and approved, the claim is subordinate to an
167-24 approved claim of a general creditor.
167-25 Sec. 7.302. PROOF OF CLAIM. (a) A proof of claim must be a
167-26 written statement signed by the claimant that includes:
167-27 (1) the claim;
168-1 (2) the consideration for the claim;
168-2 (3) a statement of whether collateral is held or a
168-3 security interest is asserted against the claim and, if so, a
168-4 description of the collateral held or security interest asserted;
168-5 (4) any right of priority of payment for the claim or
168-6 other specific right asserted by the claimant;
168-7 (5) a statement of whether a payment has been made on
168-8 the claim and, if so, the amount and source of the payment, to the
168-9 extent known by the claimant;
168-10 (6) a statement that the amount claimed is justly owed
168-11 by the state trust company in liquidation to the claimant; and
168-12 (7) any other matter that is required by the court in
168-13 which the receivership is pending.
168-14 (b) The receiver may designate the form of the proof of
168-15 claim. A proof of claim shall be filed under oath unless the oath
168-16 is waived by the receiver. A proof of claim filed with the
168-17 receiver is considered filed in an official proceeding for purposes
168-18 of Chapter 37, Penal Code.
168-19 (c) If a claim is founded on an instrument in writing, the
168-20 original instrument, unless lost or destroyed, shall be filed with
168-21 the proof of claim. After the instrument is filed, the receiver
168-22 may permit the claimant to substitute a copy of the instrument
168-23 until the final disposition of the claim. If the instrument is
168-24 lost or destroyed, a statement of that fact and of the
168-25 circumstances of the loss or destruction shall be filed under oath
168-26 with the claim.
168-27 Sec. 7.303. JUDGMENT AS PROOF OF CLAIM. A judgment entered
169-1 against a state trust company before the date the state trust
169-2 company was closed for liquidation may not be given higher priority
169-3 than an unsecured creditor unless the judgment creditor in a proof
169-4 of claim proves the allegations supporting the judgment to the
169-5 receiver's satisfaction. A judgment against the state trust
169-6 company entered after the date the state trust company was closed
169-7 for liquidation may not be considered as evidence of liability or
169-8 of the amount of damages. A judgment against the state trust
169-9 company taken by default or by collusion before the date the state
169-10 trust company was closed for liquidation may not be considered as
169-11 conclusive evidence of the liability of the state trust company to
169-12 the judgment creditor or of the amount of damages to which the
169-13 judgment creditor is entitled.
169-14 Sec. 7.304. SECURED CLAIMS. (a) The owner of a secured
169-15 deposit may file a claim as a creditor against a state trust
169-16 company in liquidation. The value of security shall be determined
169-17 under supervision of the court by converting the security into
169-18 money.
169-19 (b) The owner of a secured claim against a state trust
169-20 company in liquidation may surrender the security and file a claim
169-21 as a general creditor or apply the security to the claim and
169-22 discharge the claim. If the owner applies the security and
169-23 discharges the claim, any deficiency shall be treated as a claim
169-24 against the general assets of the state trust company on the same
169-25 basis as a claim of an unsecured creditor. The amount of the
169-26 deficiency shall be determined as provided by Section 7.305 of this
169-27 Act, except that if the amount of the deficiency has been
170-1 adjudicated by a court of competent jurisdiction in a proceeding in
170-2 which the receiver has had notice and an opportunity to be heard,
170-3 the court's decision is conclusive as to the amount.
170-4 (c) The value of security held by a secured creditor shall
170-5 be determined under supervision of the court by:
170-6 (1) converting the security into money according to
170-7 the terms of the agreement under which the security was delivered
170-8 to the creditor; or
170-9 (2) agreement, arbitration, compromise, or litigation
170-10 between the creditor and the receiver.
170-11 Sec. 7.305. UNLIQUIDATED OR UNDETERMINED CLAIMS. (a) A
170-12 claim based on an unliquidated or undetermined demand shall be
170-13 filed within the period provided by Subchapter C of this chapter
170-14 for the filing of a claim. The claim may not share in any
170-15 distribution to claimants until the claim is definitely liquidated,
170-16 determined, and allowed. After the claim is liquidated,
170-17 determined, and allowed, the claim shares ratably with the claims
170-18 of the same class in all subsequent distributions.
170-19 (b) For the purposes of this section, a demand is considered
170-20 unliquidated or undetermined if the right of action on the demand
170-21 accrued while a state trust company was closed for liquidation and
170-22 the liability on the demand has not been determined or the amount
170-23 of the demand has not been liquidated.
170-24 (c) If the receiver in all other respects is in a position
170-25 to close the receivership proceeding, the proposed closing is
170-26 sufficient grounds for the rejection of any remaining claim based
170-27 on an unliquidated or undetermined demand. The receiver shall
171-1 notify the claimant of the intention to close the proceeding. If
171-2 the demand is not liquidated or determined before the 61st day
171-3 after the date of the notice, the receiver may reject the claim.
171-4 Sec. 7.306. SET-OFF. (a) Mutual credits and mutual debts
171-5 shall be set off and only the balance allowed or paid, except that
171-6 a set-off may not be allowed in favor of a person if:
171-7 (1) the obligation of a state trust company to the
171-8 person did not on the date the state trust company was closed for
171-9 liquidation entitle the person to share as a claimant in the assets
171-10 of the state trust company;
171-11 (2) the obligation of the state trust company to the
171-12 person was purchased by or transferred to the person after the date
171-13 the state trust company was closed for liquidation or for the
171-14 purpose of increasing set-off rights; or
171-15 (3) the obligation of the person or the state trust
171-16 company is as a trustee or fiduciary.
171-17 (b) On request, the receiver shall provide a person with an
171-18 accounting statement identifying each debt that is due and payable.
171-19 If a person owes a state trust company an amount that is due and
171-20 payable against which the person asserts set-off of mutual credits
171-21 that may become due and payable from the state trust company in the
171-22 future, the person shall promptly pay to the receiver the amount
171-23 due and payable. The receiver shall promptly refund, to the
171-24 extent of the person's prior payment, mutual credits that become
171-25 due and payable to the person by the state trust company in
171-26 liquidation.
171-27 Sec. 7.307. ACTION ON CLAIMS. (a) Not later than six
172-1 months after the last day permitted for the filing of claims or a
172-2 later date allowed by the court, the receiver shall accept or
172-3 reject each filed claim in whole or in part, except for an
172-4 unliquidated or undetermined claim governed by Section 7.305 of
172-5 this Act. The receiver may approve or reject a claim filed against
172-6 a state trust company in liquidation, and shall reject a claim if
172-7 the receiver doubts its validity.
172-8 (b) The receiver shall mail written notice to each claimant,
172-9 specifying the disposition of the person's claim. If a claim is
172-10 rejected in whole or in part, the receiver in the notice shall
172-11 specify the basis for rejection and advise the claimant of the
172-12 procedures and deadline for appeal.
172-13 (c) The receiver shall send each claimant a summary schedule
172-14 of approved and rejected claims by priority class and notify the
172-15 claimant:
172-16 (1) that a copy of a schedule of claims disposition
172-17 including only the name of the claimant, the amount of the claim
172-18 allowed, and the amount of the claim rejected is available on
172-19 request; and
172-20 (2) of the procedure and deadline for filing objection
172-21 to an approved claim.
172-22 (d) The receiver and the receiver's agents and employees,
172-23 including employees of the department, are not liable for and a
172-24 cause of action may not be brought against any of them for an
172-25 action taken or not taken by them relating to the adjustment,
172-26 negotiation, or settlement of claims.
172-27 Sec. 7.308. OBJECTION TO APPROVED CLAIM. On or before the
173-1 date specified for objection to an approved claim, which shall be
173-2 set by the receiver with court approval, a depositor, creditor,
173-3 other claimant, shareholder, participant, or participant-transferee
173-4 of the state trust company may file an objection to an approved
173-5 claim. The objection shall be heard and determined by the court.
173-6 If the objection is sustained, the court shall direct an
173-7 appropriate modification of the schedule.
173-8 Sec. 7.309. APPEAL OF REJECTED CLAIM. If an action on a
173-9 rejected claim is not brought in the court in which the
173-10 receivership proceeding is pending within three months after the
173-11 date of service of notice, the action of the receiver is final and
173-12 not subject to review. If the action is timely brought, review is
173-13 de novo as if originally filed in the court and subject to the
173-14 rules of procedure and appeal applicable to civil cases. This
173-15 action is separate from the receivership proceeding and is not
173-16 initiated by a claimant's attempt to appeal the action of the
173-17 receiver by intervening in the receivership proceeding.
173-18 Sec. 7.310. PAYMENT OF CLAIMS. (a) Except as expressly
173-19 provided otherwise by this subchapter or Subchapter C of this
173-20 chapter, without the approval of the court the receiver may not
173-21 make a payment on a claim, other than a claim for an obligation
173-22 incurred by the receiver for administrative expenses.
173-23 (b) The banking commissioner shall deposit in one or more
173-24 banks located in this state all funds available for the benefit of
173-25 nonclaiming depositors and creditors. The banking commissioner
173-26 shall pay the depositors or creditors on demand any amount held for
173-27 their benefit.
174-1 (c) After all objections have been heard and decided as
174-2 provided by Section 7.308 of this Act, the time for filing appeals
174-3 has expired as provided by Section 7.309 of this Act, and funds
174-4 have been made available to provide for the payment of all
174-5 nonclaiming depositors and creditors in accordance with Subsection
174-6 (b) of this section, the receiver may periodically make partial
174-7 distribution to the holders of approved claims if a proper reserve
174-8 is established for the pro rata payment of rejected claims that
174-9 have been appealed and any claims based on unliquidated or
174-10 undetermined demands governed by Section 7.305 of this Act.
174-11 (d) As soon as practicable after the determination of all
174-12 objections, appeals, and claims based on previously unliquidated or
174-13 undetermined demands governed by Section 7.305 of this Act and
174-14 funds have been made available to provide for the payment of all
174-15 nonclaiming depositors and creditors in accordance with Subsection
174-16 (b) of this section, the receiver shall distribute the assets of
174-17 the state trust company in satisfaction of approved claims other
174-18 than claims asserted in a person's capacity as a shareholder,
174-19 participant, or participant-transferee.
174-20 Sec. 7.311. PRIORITY OF CLAIMS AGAINST INSURED STATE TRUST
174-21 COMPANY. The distribution of assets from the estate of a state
174-22 trust company the trust deposits of which are insured by the
174-23 Federal Deposit Insurance Corporation or its successor shall be
174-24 made in the same order of priority as assets would be distributed
174-25 on liquidation or purchase of assets and assumption of liabilities
174-26 of a national bank under federal law.
174-27 Sec. 7.312. PRIORITY OF CLAIMS AGAINST UNINSURED STATE TRUST
175-1 COMPANY. (a) The priority of distribution of assets from the
175-2 estate of a state trust company the trust deposits of which are not
175-3 insured by the Federal Deposit Insurance Corporation or its
175-4 successor shall be in accordance with the order of each class as
175-5 provided by this section. Every claim in each class shall be paid
175-6 in full, or adequate funds shall be retained for that payment,
175-7 before the members of the next class receive any payment. A
175-8 subclass may not be established within a class, except for a
175-9 preference or subordination within a class expressly created by
175-10 contract or other instrument or in the articles of association.
175-11 (b) Assets shall be distributed in the following order of
175-12 priority:
175-13 (1) administrative expenses;
175-14 (2) approved claims of secured trust deposits to the
175-15 extent of the value of the security as provided by Section 7.304(a)
175-16 of this Act;
175-17 (3) approved claims of secured creditors to the extent
175-18 of the value of the security as provided by Section 7.304(b) of
175-19 this Act;
175-20 (4) approved claims by beneficiaries of insufficient
175-21 commingled fiduciary funds or missing fiduciary property and
175-22 approved claims of clients of the state trust company;
175-23 (5) other approved claims of general creditors not
175-24 falling within a higher priority under this section, including
175-25 unsecured claims for taxes and debts due the federal government or
175-26 a state or local government;
175-27 (6) approved claims of a type described by
176-1 Subdivisions (1)-(5) of this subsection that were not filed within
176-2 the period prescribed by this subchapter; and
176-3 (7) claims of capital note or debenture holders or
176-4 holders of similar obligations and proprietary claims of
176-5 shareholders, participants, participant-transferees, or other
176-6 owners according to the terms established by issue, class, or
176-7 series.
176-8 (c) Subject to Sections 7.310 and 7.313 of this Act and
176-9 after fully satisfying all timely filed and approved claims of a
176-10 higher priority, the banking commissioner may make a ratable
176-11 distribution to approved claimants within a particular class or
176-12 priority if there are insufficient funds to fully satisfy all of
176-13 those claims, after reserving funds for administrative expenses, if
176-14 necessary.
176-15 Sec. 7.313. EXCESS ASSETS. (a) If state trust company
176-16 assets remain after the receiver has provided for unclaimed
176-17 distributions and all of the liabilities of the state trust company
176-18 in liquidation, the receiver shall distribute the remaining assets
176-19 to the shareholders or participants of the state trust company. If
176-20 the remaining assets are not liquid or otherwise require continuing
176-21 administration, the receiver may call a meeting of the shareholders
176-22 or participants and participant-transferees of the state trust
176-23 company by giving notice in a newspaper of general circulation in
176-24 the county where the home office of the state trust company was
176-25 located and by written notice to the shareholders or participants
176-26 and participant-transferees of record at their last known
176-27 addresses.
177-1 (b) At the meeting, the shareholders or participants shall
177-2 appoint one or more agents to take over the affairs to continue the
177-3 liquidation for the benefit of the shareholders or participants and
177-4 participant-transferees. Voting privileges are governed by the
177-5 state trust company's bylaws and articles of association. If a
177-6 quorum cannot be obtained at the meeting, the banking commissioner
177-7 shall appoint an agent.
177-8 (c) An agent appointed under Subsection (b) of this section
177-9 shall execute and file with the court a bond approved by the court,
177-10 conditioned on the faithful performance of all the duties of the
177-11 trust. Under order of the court the receiver shall transfer and
177-12 deliver to the agent or agents for continued liquidation under the
177-13 court's supervision all assets of the state trust company remaining
177-14 in the receiver's hands, and the court shall discharge the receiver
177-15 from further liability to the state trust company and its clients,
177-16 creditors, shareholders, participants, and participant-transferees.
177-17 The state trust company may not resume business and the charter of
177-18 the state trust company is void on the date the court issues the
177-19 order directing the receiver to transfer and deliver the remaining
177-20 assets of the state trust company to the agent or agents.
177-21 Sec. 7.314. UNCLAIMED FUNDS AND PROPERTY. After completion
177-22 of the liquidation, any unclaimed property remaining in the hands
177-23 of the receiver shall be tendered to the comptroller as provided by
177-24 Chapter 74, Property Code.
177-25 CHAPTER 8. GENERAL PROVISIONS
177-26 Sec. 8.001. LIABILITIES, DEFENSES, AND INDEMNIFICATION
177-27 OF CORPORATE OFFICIALS
178-1 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION
178-2 Sec. 8.003. SLANDER OR LIBEL OF STATE TRUST COMPANY
178-3 Sec. 8.004. AUTHORITY TO ACT AS NOTARY PUBLIC
178-4 Sec. 8.005. EXEMPTION FROM SECURITIES LAW
178-5 Sec. 8.006. SUCCESSION OF TRUST POWERS
178-6 Sec. 8.007. DISCOVERY OF CLIENT RECORDS
178-7 Sec. 8.008. COMPLIANCE REVIEW COMMITTEE
178-8 Sec. 8.009. PARITY
178-9 CHAPTER 8. GENERAL PROVISIONS
178-10 Sec. 8.001. LIABILITIES, DEFENSES, AND INDEMNIFICATION OF
178-11 CORPORATE OFFICIALS. (a) The provisions of the Texas Business
178-12 Corporation Act regarding liability, defenses, and indemnification
178-13 of a director, officer, agent, or employee apply to a director,
178-14 officer, agent, or employee of a state trust company in this state.
178-15 Except as limited by those provisions, a disinterested director,
178-16 manager, managing participant, officer, or employee of a state
178-17 trust company may not be held personally liable in an action
178-18 seeking monetary damages arising from the conduct of the state
178-19 trust company's affairs unless the damages resulted from the gross
178-20 negligence or wilful or intentional misconduct of the person during
178-21 the person's term of office with the state trust company.
178-22 (b) A director, manager, managing participant, officer, or
178-23 employee of a state trust company is disinterested with respect to
178-24 a decision or transaction if the director, manager, managing
178-25 participant, officer, or employee fully discloses any interest in
178-26 the decision or transaction and does not participate in the
178-27 decision or transaction, or if the decision or transaction does not
179-1 involve:
179-2 (1) personal profit for the director, manager,
179-3 managing participant, officer, or employee through dealing with the
179-4 state trust company or usurping an opportunity of the trust
179-5 company;
179-6 (2) buying or selling assets of the state trust
179-7 company in a transaction in which the director, manager, managing
179-8 participant, officer, or employee has a direct or indirect
179-9 pecuniary interest;
179-10 (3) dealing with a state trust company or other person
179-11 in which the director, manager, managing participant, officer, or
179-12 employee is also a director, manager, managing participant,
179-13 officer, or employee or otherwise has a significant direct or
179-14 indirect financial interest; or
179-15 (4) dealing with a family member of the director,
179-16 manager, managing participant, officer, or employee.
179-17 (c) A director, manager, managing participant, or officer
179-18 who, in performing the person's duties and functions, acts in good
179-19 faith and reasonably believes that reliance is warranted is
179-20 entitled to rely on information or an opinion, report, statement,
179-21 including a financial statement or other financial data, decision,
179-22 judgment, or performance, including a decision, judgment, or
179-23 performance by a committee, prepared, presented, made, or rendered
179-24 by:
179-25 (1) one or more directors, managers, managing
179-26 participants, officers, or employees of the state trust company, or
179-27 of an entity under joint or common control with the state trust
180-1 company, who the director, manager, managing participant, or
180-2 officer reasonably believes merits confidence;
180-3 (2) legal counsel, a public accountant, or another
180-4 person who the director, manager, managing participant, or officer
180-5 reasonably believes merits confidence; or
180-6 (3) a committee of the board of which the director,
180-7 manager, or managing participant is not a member.
180-8 (d) In this section, "family member" means a person's:
180-9 (1) spouse;
180-10 (2) minor child; or
180-11 (3) adult child who resides in the person's home.
180-12 Sec. 8.002. ATTACHMENT, INJUNCTION, OR EXECUTION. (a) An
180-13 attachment, injunction, or execution for the purpose of collecting
180-14 a money judgment or securing a prospective money judgment against a
180-15 state trust company may not be issued against a state trust company
180-16 located in this state before the judgment is final and all appeals
180-17 have been exhausted or foreclosed by law.
180-18 (b) This section does not affect an attachment, injunction,
180-19 execution, or writ of garnishment issued to or served on a state
180-20 trust company for the purpose of collecting a money judgment or
180-21 securing a prospective money judgment against a client of or client
180-22 account in the state trust company.
180-23 Sec. 8.003. SLANDER OR LIBEL OF STATE TRUST COMPANY. (a) A
180-24 person commits an offense if the person:
180-25 (1) knowingly makes, circulates, or transmits to
180-26 another person an untrue statement that is derogatory to the
180-27 financial condition of a state trust company located in this state;
181-1 or
181-2 (2) intentionally, to injure the state trust company,
181-3 counsels, aids, procures, or induces another person to knowingly
181-4 make, circulate, or transmit to another person an untrue statement
181-5 that is derogatory to the financial condition of a state trust
181-6 company located in this state.
181-7 (b) An offense under this section is a state jail felony.
181-8 Sec. 8.004. AUTHORITY TO ACT AS NOTARY PUBLIC. A notary
181-9 public is not disqualified from taking an acknowledgment or proof
181-10 of a written instrument as provided by Section 406.016, Government
181-11 Code, solely because of the person's ownership of stock or
181-12 participation interest in or employment by a state trust company
181-13 that is an interested party in the underlying transaction.
181-14 Sec. 8.005. EXEMPTION FROM SECURITIES LAW. (a) An officer,
181-15 director, manager, managing participant, or employee of a state
181-16 trust company with fewer than 500 shareholders or participants or a
181-17 holding company with fewer than 500 shareholders or participants
181-18 that controls a state trust company is exempt from the registration
181-19 and licensing provisions of The Securities Act (Article 581-1 et
181-20 seq., Vernon's Texas Civil Statutes) with respect to that person's
181-21 participation in a sale or other transaction involving securities
181-22 issued by the state trust company or the holding company of which
181-23 that person is an officer, director, manager, managing participant,
181-24 or employee.
181-25 (b) A person may not be compensated for services performed
181-26 under the exemption provided by this section.
181-27 Sec. 8.006. SUCCESSION OF TRUST POWERS. If a reorganizing
182-1 or selling state trust company at the time of a merger,
182-2 reorganization, conversion, or sale of substantially all of its
182-3 assets under Chapter 3 of this Act or other applicable law is
182-4 acting as trustee, guardian, executor, or administrator, or in
182-5 another fiduciary capacity, the successor entity with fiduciary
182-6 powers may, without the necessity of judicial action or action by
182-7 the creator of the trust, continue the office, trust, or fiduciary
182-8 relationship. The successor entity may perform all the duties and
182-9 exercise all the powers connected with or incidental to the
182-10 fiduciary relationship in the same manner as if the successor
182-11 entity had been originally designated as the fiduciary.
182-12 Sec. 8.007. DISCOVERY OF CLIENT RECORDS. Civil discovery of
182-13 a client record maintained by a state trust company is governed by
182-14 Section 30.007, Civil Practice and Remedies Code, as added by
182-15 Chapter 914, Acts of the 74th Legislature, Regular Session, 1995.
182-16 Sec. 8.008. COMPLIANCE REVIEW COMMITTEE. (a) In this
182-17 section:
182-18 (1) "Civil action" means a civil proceeding pending in
182-19 a court or other adjudicatory tribunal with jurisdiction to issue a
182-20 request or subpoena for records, including an alternative dispute
182-21 resolution mechanism, voluntary or required, under which a party
182-22 may compel the production of records. The term does not include an
182-23 examination or enforcement proceeding initiated by the Federal
182-24 Deposit Insurance Corporation or its successor and the board of
182-25 governors of the Federal Reserve System or its successor, in
182-26 exercise of their jurisdiction.
182-27 (2) "Compliance review document" means a document
183-1 prepared for or created by a compliance review committee.
183-2 (b) A state trust company or an affiliate of a state trust
183-3 company, including its holding company, may establish a compliance
183-4 review committee to test, review, or evaluate the institution's
183-5 conduct, transactions, or potential transactions for the purpose of
183-6 monitoring and improving or enforcing compliance with:
183-7 (1) a statutory or regulatory requirement;
183-8 (2) financial reporting to a governmental agency;
183-9 (3) the policies and procedures of the state trust
183-10 company or its affiliates; or
183-11 (4) safe, sound, and fair lending practices.
183-12 (c) Except as provided by Subsection (d) of this section:
183-13 (1) a compliance review document is confidential and
183-14 is not discoverable or admissible in evidence in a civil action;
183-15 (2) an individual serving on a compliance review
183-16 committee or acting under the direction of a compliance review
183-17 committee may not be required to testify in a civil action as to
183-18 the contents or conclusions of a compliance review document or as
183-19 to an action taken or discussions conducted by or for a compliance
183-20 review committee; and
183-21 (3) a compliance review document or an action taken or
183-22 discussion conducted by or for a compliance review committee that
183-23 is disclosed to a governmental agency remains confidential and is
183-24 not discoverable or admissible in a civil action.
183-25 (d) Subsection (c)(2) of this section does not apply to an
183-26 individual that has management responsibility for the operations,
183-27 records, employees, or activities being examined or evaluated by
184-1 the compliance review committee.
184-2 (e) This section does not limit the discovery or
184-3 admissibility in a civil action of a document that is not a
184-4 compliance review document.
184-5 Sec. 8.009. PARITY. (a) A state trust company has the same
184-6 rights and privileges with respect to the exercise of fiduciary
184-7 powers that are or may be granted to a state or national bank that
184-8 is domiciled in this state and exercising fiduciary powers.
184-9 (b) A state trust company that intends to exercise a right
184-10 or privilege with respect to the exercise of fiduciary powers
184-11 granted to a regulated financial institution described in
184-12 Subsection (a) of this section that is not authorized for state
184-13 trust companies under the statutes and rules of this state shall
184-14 submit a letter to the banking commissioner, describing in detail
184-15 the activity in which the state trust company intends to engage and
184-16 the specific authority for the regulated financial institution
184-17 described in Subsection (a) to undertake the proposed activity and
184-18 shall attach copies, if available, of relevant state and federal
184-19 law, including regulations and interpretive letters. The state
184-20 trust company may begin to perform the proposed activity after the
184-21 30th day after the date the banking commissioner receives the state
184-22 trust company's letter unless the banking commissioner specifies an
184-23 earlier or later date or prohibits the activity. The banking
184-24 commissioner may prohibit the state trust company from performing
184-25 the activity only if the banking commissioner finds that:
184-26 (1) a regulated financial institution described in
184-27 Subsection (a) of this section that is domiciled in this state does
185-1 not possess the specific right or privilege to perform the activity
185-2 the state trust company seeks to perform; or
185-3 (2) the performance of the activity by the state trust
185-4 company would adversely affect the safety and soundness of the
185-5 requesting state trust company.
185-6 (c) The banking commissioner may extend the 30-day period
185-7 under Subsection (b) of this section if the banking commissioner
185-8 determines that the state trust company's letter raises issues
185-9 requiring additional information or additional time for analysis.
185-10 If the 30-day period is extended, the state trust company may
185-11 perform the proposed activity only on prior written approval by the
185-12 banking commissioner, except that the banking commissioner must
185-13 approve or prohibit the proposed activity or convene a hearing
185-14 under Section 3.009 of this Act not later than the 60th day after
185-15 the date the commissioner receives the state trust company's
185-16 letter. If a hearing is convened under Section 3.009 of this Act,
185-17 the banking commissioner must approve or prohibit the proposed
185-18 activity not later than the 30th day after the date the hearing is
185-19 completed.
185-20 (d) A state trust company that is denied the requested right
185-21 or privilege to engage in an activity by the banking commissioner
185-22 under this section may appeal as provided by Section 3.010 of this
185-23 Act or may resubmit a letter under this subsection with additional
185-24 information or authority relevant to the banking commissioner's
185-25 determination. A denial is immediately final for purposes of
185-26 appeal.
185-27 (e) The finance commission may adopt rules implementing the
186-1 method or manner in which a state trust company exercises specific
186-2 rights and privileges, including rules regarding the exercise of
186-3 rights and privileges that would be prohibited to state trust
186-4 companies. The finance commission may not adopt rules under this
186-5 subsection unless it finds that:
186-6 (1) regulated financial institutions described in
186-7 Subsection (a) of this section that are domiciled in this state
186-8 possess the rights or privileges to perform activities the rules
186-9 would permit state trust companies to perform; and
186-10 (2) the rules contain adequate safeguards and
186-11 controls, consistent with safety and soundness, to address the
186-12 concern of the legislature evidenced by the state law the rules
186-13 would impact.
186-14 (f) The exercise of rights and privileges by a state trust
186-15 company in compliance with and in the manner authorized by this
186-16 section is not a violation of any statute of this state.
186-17 SECTION 2. Section 2001.223, Government Code, is amended to
186-18 read as follows:
186-19 Sec. 2001.223. EXCEPTIONS FROM DECLARATORY JUDGMENT, COURT
186-20 ENFORCEMENT, AND CONTESTED CASE PROVISIONS. Section 2001.038 and
186-21 Subchapters C through H do not apply to:
186-22 (1) the granting, payment, denial, or withdrawal of
186-23 financial or medical assistance or benefits under service programs
186-24 of the Texas Department of Human Services;
186-25 (2) action by the Banking Commissioner or the Finance
186-26 Commission of Texas regarding the issuance of a state bank or state
186-27 trust company charter for a bank or trust company to assume the
187-1 assets and liabilities of a financial institution that the
187-2 commissioner considers to be in hazardous condition as defined by
187-3 Section 1.002(a), Texas Banking Act (Article 342-1.002, Vernon's
187-4 Texas Civil Statutes), or Section 1.002(a), Texas Trust Company
187-5 Act, as applicable;
187-6 (3) a hearing or interview conducted by the Board of
187-7 Pardons and Paroles or the pardons and paroles division of the
187-8 Texas Department of Criminal Justice relating to the grant,
187-9 rescission, or revocation of parole or other form of administrative
187-10 release; or
187-11 (4) the suspension, revocation, or termination of the
187-12 certification of a breath analysis operator or technical supervisor
187-13 under the rules of the Department of Public Safety.
187-14 SECTION 3. Section 712.0441(h), Health and Safety Code, is
187-15 amended to read as follows:
187-16 (h) If a fund is misappropriated by its trustee or is not
187-17 otherwise handled as required by this chapter, the commissioner may
187-18 take action against the trustee as provided in Chapter 6, Texas
187-19 Trust Company Act [Articles 342-1104 and 342-1105 of The Texas
187-20 Banking Code] .
187-21 SECTION 4. Section 1, Article 9.05, Insurance Code, is
187-22 amended to read as follows:
187-23 Sec. 1. Any corporation heretofore chartered under the
187-24 provisions of Article 9.03 of this Act, or its antecedents, Article
187-25 9.01, Texas Insurance Code, or Chapter 40, Acts, 41st Legislature,
187-26 1929 (codified as Article 1302a, Vernon's Texas Civil Statutes),
187-27 having as one of its powers "to act as trustee under any lawful
188-1 trust committed to it by contract or will, appointment by any court
188-2 having jurisdiction of the subject matter, as trustee, receiver or
188-3 guardian and as executor or guardian under the terms of any will
188-4 and as any administrator of the estates of decedents under the
188-5 appointment of the court" may transfer and assign to a state bank
188-6 [or trust company] created under the provisions of the Texas
188-7 Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
188-8 Statutes) or a predecessor of that Act, as amended, or to a state
188-9 trust company created under the provisions of the Texas Trust
188-10 Company Act or a predecessor of that Act, as amended, all of its
188-11 fiduciary business in which such corporation is named or acting as
188-12 guardian, trustee, executor, administrator or in any other
188-13 fiduciary capacity, whereupon said state bank or trust company
188-14 shall, without the necessity of any judicial action in the courts
188-15 of the State of Texas or any action by the creator or beneficiary
188-16 of such trust or estate, continue the guardianship, trusteeship,
188-17 executorship, administration or other fiduciary relationship, and
188-18 perform all of the duties and obligations of such corporation, and
188-19 exercise all of the powers and authority relative thereto now being
188-20 exercised by such corporation, and provided further that the
188-21 transfer or assignment by such corporation of such fiduciary
188-22 business being conducted by it under the powers granted in its
188-23 original charter, as amended, shall not constitute or be deemed a
188-24 resignation or refusal to act upon the part of such corporation as
188-25 to any such guardianship, trust, executorship, administration, or
188-26 any other fiduciary capacity; and provided further that the naming
188-27 or designation by a testator or the creator of a living trust of
189-1 such corporation to act as trustee, guardian, executor, or in any
189-2 other fiduciary capacity, shall be considered the naming or
189-3 designation of the state bank or trust company and authorizing such
189-4 state bank or trust company to act in said fiduciary capacity. All
189-5 transfers and assignments of fiduciary business by such
189-6 corporations to a state bank or trust company consistent with the
189-7 provisions of this Act are hereby validated.
189-8 SECTION 5. Section 105A(c), Texas Probate Code, is amended
189-9 to read as follows:
189-10 (c) No foreign bank or trust company shall establish or
189-11 maintain any branch office, agency or other place of business
189-12 within this state, or shall in any way solicit, directly or
189-13 indirectly, any fiduciary business in this state of the types
189-14 embraced by subdivision (a) hereof. Except as authorized herein or
189-15 as may otherwise be authorized by the laws of this state, no
189-16 foreign bank or trust company shall act in a fiduciary capacity in
189-17 this state. Nothing in this Section shall be construed to
189-18 authorize foreign banks and trust companies to issue or to sell or
189-19 otherwise market or distribute in this state any investment
189-20 certificates, trust certificates, or other types of securities
189-21 (including without limiting the generality of the foregoing any
189-22 securities of the types authorized by Chapter 7 of the Insurance
189-23 Code of 1951 prior to the repeal thereof), or to conduct any
189-24 activities or exercise any powers of the type embraced and
189-25 regulated by the Texas Banking Act (Article 342-1.001 et seq.,
189-26 Vernon's Texas Civil Statutes) or the Texas Trust Company Act other
189-27 than those conducted and exercised in a fiduciary capacity under
190-1 the terms and conditions hereof.
190-2 SECTION 6. Section 2.13, Texas Savings Bank Act (Article
190-3 489e, Vernon's Texas Civil Statutes), is amended to read as
190-4 follows:
190-5 Sec. 2.13. The name of a savings bank must include the words
190-6 "State Savings Bank" or the abbreviation "SSB." These words or the
190-7 abbreviation must be preceded by an appropriate descriptive word or
190-8 words approved by the commissioner. The commissioner may not
190-9 approve the incorporation of a savings bank having the same name as
190-10 another financial institution authorized to do business in this
190-11 state under this Act, the Texas Savings and Loan Act (Article 852a,
190-12 Vernon's Texas Civil Statutes), [or] the Texas Banking Act (Article
190-13 342-1.001 et seq., Vernon's Texas Civil Statutes), or the Texas
190-14 Trust Company Act or a name so nearly resembling the name of
190-15 another financial institution as to be calculated to deceive unless
190-16 the savings bank is formed by the reincorporation, reorganization,
190-17 or consolidation of the other financial institution or on the sale
190-18 of the property or franchise of the other savings bank. A person
190-19 or company, either domestic or foreign, other than a state or
190-20 federal savings bank, may not do business under a name or title
190-21 that contains the words "savings bank," that indicates or
190-22 reasonably implies that the business is the character or kind of
190-23 business carried on or transacted by a savings bank, or that is
190-24 calculated to lead any person to believe that its business is that
190-25 of a savings bank. On application by the commissioner or any
190-26 savings bank, a court of competent jurisdiction may issue an
190-27 injunction to restrain a person or company from violating this
191-1 section.
191-2 SECTION 7. Subdivision (2), Section A, Article 7.06, Texas
191-3 Miscellaneous Corporation Laws Act (Article 1302-7.06, Vernon's
191-4 Texas Civil Statutes), is amended to read as follows:
191-5 (2) "Corporation" means:
191-6 (a) Any corporation, association, or other
191-7 organization incorporated or organized under the Texas Business
191-8 Corporation Act, the Texas Non-Profit Corporation Act (Article
191-9 1396-1.01 et seq., Vernon's Texas Civil Statutes), the Texas
191-10 Banking Act (Article 342-1.001 et seq., Vernon's Texas Civil
191-11 Statutes) or a predecessor of that Act, the Texas Trust Company Act
191-12 or a predecessor of that Act, the Insurance Code, the Texas Savings
191-13 and Loan Act (Article 852a, Vernon's Texas Civil Statutes), Chapter
191-14 76, Acts of the 43rd Legislature, 1st Called Session, 1933 (Article
191-15 1434a, Vernon's Texas Civil Statutes), the Texas Credit Union Act
191-16 (Article 2461-1.01 et seq., Vernon's Texas Civil Statutes), the
191-17 Cooperative Association Act (Article 1396-50.01, Vernon's Texas
191-18 Civil Statutes), Articles 1399 through 1407, Revised Statutes,
191-19 Article 1448, Revised Statutes, Section 2, Chapter 42, Acts of the
191-20 42nd Legislature, 3rd Called Session, 1932 (Article 1524c, Vernon's
191-21 Texas Civil Statutes), the State Housing Law (Article 1528a,
191-22 Vernon's Texas Civil Statutes), the Electric Cooperative
191-23 Corporation Act (Article 1528b, Vernon's Texas Civil Statutes), the
191-24 Telephone Cooperative Act (Article 1528c, Vernon's Texas Civil
191-25 Statutes), the Automobile Club Services Act (Article 1528d,
191-26 Vernon's Texas Civil Statutes), the Texas Professional Corporation
191-27 Act (Article 1528e, Vernon's Texas Civil Statutes), the Texas
192-1 Professional Association Act (Article 1528f, Vernon's Texas Civil
192-2 Statutes), the Texas Mutual Trust Investment Company Act (Article
192-3 1528i, Vernon's Texas Civil Statutes), Chapter 221, Health and
192-4 Safety Code, the Texas Transportation Corporation Act (Article
192-5 1528l, Vernon's Texas Civil Statutes), the Cultural Education
192-6 Facilities Corporation Act (Article 1528m, Vernon's Texas Civil
192-7 Statutes), Chapter 262, Health and Safety Code, Chapter 264, Health
192-8 and Safety Code, Title 4, Agriculture [Agricultural] Code,
192-9 Subchapter A, Chapter 301, Health and Safety Code, Subchapter B,
192-10 Chapter 301, Health and Safety Code, or the Higher Education
192-11 Authority Act, Chapter 53, Education Code;
192-12 (b) Any corporation, association, or other
192-13 organization incorporated or organized under the laws of this state
192-14 that is governed in whole or in part by the Texas Business
192-15 Corporation Act, the Texas Non-Profit Corporation Act (Article
192-16 1396-1.01 et seq., Vernon's Texas Civil Statutes), or the Texas
192-17 Miscellaneous Corporation Laws Act (Article 1302-1.01 et seq.,
192-18 Vernon's Texas Civil Statutes); or
192-19 (c) To the extent permitted by federal law, any
192-20 federally chartered bank, savings and loan association, or credit
192-21 union.
192-22 SECTION 8. Section 6, Acts of the 60th Legislature, Regular
192-23 Session, 1967 (Article 5069-50.04, Vernon's Texas Civil Statutes),
192-24 is amended to read as follows:
192-25 Sec. 6. The provisions of this Act are cumulative of the
192-26 Texas Banking Act; the Texas Trust Company Act; the "Texas Savings
192-27 and Loan Act," as amended; and Articles 2461 through 2484, Revised
193-1 Civil Statutes of Texas, 1925, as amended and the amendments
193-2 thereto, and Section 5 of House Bill No. 47, Acts of the 46th
193-3 Legislature, Regular Session, 1939, and Chapter 173, Acts of the
193-4 51st Legislature, Regular Session, 1949, relating to Credit Unions
193-5 and the amendments thereto.
193-6 SECTION 9. Article 2.31, Texas Non-Profit Corporation Act
193-7 (Article 1396-2.31, Vernon's Texas Civil Statutes), is amended to
193-8 read as follows:
193-9 Art. 2.31. POWER TO SERVE AS TRUSTEE. A corporation that is
193-10 described by Section 501(c)(3) or 170(c), Internal Revenue Code of
193-11 1986, or a corresponding provision of a subsequent federal tax law,
193-12 or a corporation listed by the Internal Revenue Service in the
193-13 Cumulative List of Organizations Described in Section 170(c) of the
193-14 Internal Revenue Code of 1986, I.R.S. Publication 78, may serve as
193-15 the trustee of a trust:
193-16 (1) of which the corporation is a beneficiary; or
193-17 (2) benefiting another organization described by one
193-18 of those sections of the Internal Revenue Code of 1986, or a
193-19 corresponding provision of a subsequent federal tax law, or listed
193-20 by the Internal Revenue Service in the Cumulative List of
193-21 Organizations Described in Section 170(c) of the Internal Revenue
193-22 Code of 1986, I.R.S. Publication 78 [if the service as trustee is
193-23 in furtherance of the purposes for which the corporation was
193-24 formed].
193-25 SECTION 10. Chapter XI, The Texas Banking Code (Article
193-26 342-1101 et seq., Vernon's Texas Civil Statutes), is repealed.
193-27 SECTION 11. A change in law made by this Act does not
194-1 affect:
194-2 (1) the validity of any action taken by the Finance
194-3 Commission of Texas or banking commissioner of Texas before the
194-4 effective date of this Act; or
194-5 (2) a civil, criminal, or administrative proceeding
194-6 completed before the effective date of this Act.
194-7 SECTION 12. A trust company that exists on the effective
194-8 date of this Act retains the powers provided by its charter and is
194-9 subject to the jurisdiction and control of the banking commissioner
194-10 of Texas as if it were a trust company chartered under the Texas
194-11 Trust Company Act, as added by this Act.
194-12 SECTION 13. (a) The changes in criminal law made by this
194-13 Act apply only to an offense committed on or after the effective
194-14 date of this Act. For purposes of this section, an offense is
194-15 committed before the effective date of this Act if any element of
194-16 the offense occurs before that date.
194-17 (b) The repeal of a criminal law made by this Act does not
194-18 apply to an offense committed under the repealed law before the
194-19 effective date of this Act.
194-20 (c) An offense committed before the effective date of this
194-21 Act is covered by the law in effect when the offense was committed,
194-22 and the former law is continued in effect for that purpose.
194-23 SECTION 14. A principal shareholder or participant that is
194-24 considered to control a state trust company under Section 4.001(a),
194-25 Texas Trust Company Act, as added by this Act, is not required to
194-26 file a change of control application under Section 4.002, Texas
194-27 Trust Company Act, as added by this Act, until the person acquires
195-1 one or more additional shares or participation shares of the state
195-2 trust company on or after the effective date of this Act.
195-3 SECTION 15. The changes in civil enforcement provisions,
195-4 penalties, and procedures made by Chapter 6, Texas Trust Company
195-5 Act, as added by this Act, do not apply to a civil enforcement
195-6 proceeding begun by the service of a notice for hearing or proposed
195-7 civil enforcement order by the banking commissioner before the
195-8 effective date of this Act. That proceeding is governed by the law
195-9 in effect when the proceeding was begun, and that law is continued
195-10 in effect for that purpose.
195-11 SECTION 16. (a) If this Act conflicts with another Act of
195-12 the 75th Legislature, Regular Session, 1997, other than an Act
195-13 adopting a nonsubstantive revision of statutes relating to
195-14 financial institutions and practices:
195-15 (1) the change in law made in the other Act prevails
195-16 and the substance of the change is given effect as part of the
195-17 Texas Trust Company Act adopted by this Act unless:
195-18 (A) this Act or the conflicting Act expressly
195-19 provides otherwise; or
195-20 (B) it is not possible to give the conflicting
195-21 law effect within the context of the Texas Trust Company Act, in
195-22 which event the Texas Trust Company Act prevails; and
195-23 (2) the text of a law that is reenacted in the other
195-24 Act only because of the constitutional requirement that the amended
195-25 law be reenacted at length is superseded by this Act.
195-26 (b) If this Act conflicts with an Act of the 75th
195-27 Legislature, Regular Session, 1997, adopting a nonsubstantive
196-1 revision of statutes relating to financial institutions and
196-2 practices, this Act prevails.
196-3 (c) If this Act and another Act of the 75th Legislature,
196-4 Regular Session, 1997, make the same substantive change from the
196-5 current law but differ in text, this Act prevails regardless of the
196-6 relative dates of enactment.
196-7 SECTION 17. SEVERABILITY. If any provision of this Act or
196-8 its application to any person, entity or circumstance is held
196-9 invalid, the invalidity does not affect other provisions or
196-10 applications of this Act that can be given effect without the
196-11 invalid provision or application, and to this end the provisions of
196-12 this Act are declared to be severable.
196-13 SECTION 18. This Act takes effect September 1, 1997, except
196-14 that Section 3.022(16), Texas Trust Company Act, as added by this
196-15 Act, and Article 2.31, Texas Non-Profit Corporation Act (Article
196-16 1396-2.31, Vernon's Texas Civil Statutes), as amended by this Act,
196-17 take effect immediately, and apply to all corporations serving as
196-18 trustee of a charitable trust before, on, or after the effective
196-19 date of this Act, including all corporations whose status as
196-20 trustee of a charitable trust is the subject of litigation or
196-21 proceedings pending before, on, or after the effective date of this
196-22 Act.
196-23 SECTION 19. The importance of this legislation and the
196-24 crowded condition of the calendars in both houses create an
196-25 emergency and an imperative public necessity that the
196-26 constitutional rule requiring bills to be read on three several
196-27 days in each house be suspended, and this rule is hereby suspended,
197-1 and that this Act take effect and be in force according to its
197-2 terms, and it is so enacted.
_______________________________ _______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 1870 was passed by the House on April
17, 1997, by a non-record vote; and that the House concurred in
Senate amendments to H.B. No. 1870 on May 20, 1997, by the
following vote: Yeas 136, Nays 0, 1 present, not voting.
_______________________________
Chief Clerk of the House
I certify that H.B. No. 1870 was passed by the Senate, with
amendments, on May 15, 1997, by the following vote: Yeas 31, Nays
0.
_______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor