78R3812 DWS-F

By:  Harris                                                       S.B. No. 417



A BILL TO BE ENTITLED

AN ACT

relating to interest rate ceilings on certain commercial loans.               
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 306.002(a), Finance Code, is amended to 
read as follows: 
	(a)  Except as provided by Section 306.101, a [A] creditor 
may contract for, charge, and receive from an obligor on a 
commercial loan a rate or amount of interest that does not exceed 
the applicable ceilings computed in accordance with Chapter 303.
	SECTION 2.  Section 306.101, Finance Code, is amended to 
read as follows:    
	Sec. 306.101.  QUALIFIED COMMERCIAL LOAN--RATE CEILINGS 
INAPPLICABLE.  (a)  The parties to a qualified commercial loan 
agreement may contract for, charge, and receive any [a] rate or 
amount of interest to which the parties agree, however computed.
	(b)  A rate ceiling provided by this title or another law of 
this state does not apply to a qualified commercial loan [that does 
not exceed the applicable rate ceiling.
	[(b)  The parties to a qualified commercial loan agreement 
may contract for the following charges:
		[(1)  a discount or commission that an obligor has paid 
or agreed to pay to one or more underwriters of securities issued by 
the obligor;
		[(2)  an option or right to exchange, redeem, or 
convert all or a portion of the principal amount of the loan, or 
interest on the principal amount, for or into capital stock or other 
equity securities of an obligor or of an affiliate of an obligor;
		[(3)  an option or right to purchase capital stock or 
other equity securities of an obligor or of an affiliate of an 
obligor;
		[(4)  an option or other right created by contract, 
conveyance, or otherwise, to participate in or own a share of the 
income, revenues, production, or profits:
			[(A)  of an obligor or of an affiliate of an 
obligor;     
			[(B)  of any segment of the business or operations 
of an obligor or of an affiliate of an obligor; or
			[(C)  derived or to be derived from ownership 
rights of an obligor or of an affiliate of an obligor in property, 
including any proceeds of the sale or other disposition of 
ownership rights; or
		[(5)  compensation realized as a result of the receipt, 
exercise, sale, or other disposition of an option or other right 
described by this subsection.
	[(c)  A charge under Subsection (b) is not interest].         
	SECTION 3.  This Act takes effect January 1, 2004, but only 
if the constitutional amendment authorizing the legislature to 
define rates of interest for commercial loans is approved by the 
voters.  If that amendment is not approved by the voters, this Act 
has no effect.