78R15377 CLG-D


By:  Ellis, et al.                                                S.B. No. 1059

Substitute the following for S.B. No. 1059:                                   

By:  Marchant                                                 C.S.S.B. No. 1059



A BILL TO BE ENTITLED

AN ACT

relating to corporate and business ethics and integrity.                      
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter D, Chapter 371, Finance Code, is 
amended by adding Section 371.184 to read as follows:
	Sec. 371.184.  INTERESTED PARTY TRANSACTION.  (a)  In this 
section:   
		(1)  "Controlling owner" means a shareholder or other 
holder of an ownership interest, or a group of affiliated 
shareholders or other holders of ownership interests, that has 
effective control of a business entity.
		(2)  "Effective control" means ownership of 25 percent 
or more of the shares or other ownership interests eligible to vote:
			(A)  in an election of the governing body of a 
business entity; or  
			(B)  on other matters that require approval of 
shareholders or other holders of ownership interests.
		(3)  "Interested party" means:                                         
			(A)  a controlling owner;                                             
			(B)  a member of the governing body of a business 
entity;           
			(C)  an executive officer of a business entity;                       
			(D)  an immediate family member of a member of the 
governing body, executive officer, or controlling owner of a 
business entity; or
			(E)  an affiliate of a business entity or of a 
person described by Paragraphs (A)-(D).
	(b)  This section applies only to a publicly traded business 
entity that:
		(1)  makes interest-bearing loans;                                     
		(2)  has a single controlling owner; and                               
		(3)  is licensed under this chapter.                                   
	(c)  A business entity may not enter into a transaction with 
an interested party that involves more than $10,000 without the 
prior approval of a majority of the holders of all the outstanding 
shares of capital stock, or other ownership interests, of every 
class or series, including capital stock or ownership interests not 
otherwise entitled to vote, who are not interested parties, voting 
together as a single class.
	SECTION 2.  Subchapter B, Chapter 402, Government Code, is 
amended by adding Section 402.0231 to read as follows:
	Sec. 402.0231.  CORPORATE INTEGRITY UNIT.  (a)  In this 
section, "corporate fraud" means a violation of state or federal 
law or rules relating to fraud committed by a corporation, limited 
liability company, or registered limited liability partnership or 
an officer, director, or partner of those entities while acting in a 
representative capacity.
	(b)  A corporate integrity unit is created within the office 
of the attorney general to assist in the enforcement of the laws 
relating to corporate fraud or other similar illegal activities.  
The unit shall:
		(1)  assist district attorneys and county attorneys in 
the investigation and prosecution of corporate fraud or other 
similar illegal activities allegedly committed by corporations, 
limited liability companies, and registered limited liability 
partnerships;
		(2)  assist state agencies with investigation of 
complaints and administrative enforcement actions for corporate 
fraud violations, including the assessment of an administrative 
penalty or other administrative sanction; and
		(3)  serve as a clearinghouse for information relating 
to the investigation and prosecution of corporate fraud and other 
similar illegal activities in this state.
	(c)  To the extent allowed by law, a state agency or local law 
enforcement agency shall cooperate with the corporate integrity 
unit by providing information requested by the unit as necessary to 
carry out the purposes of this section.  Information disclosed 
under this subsection is confidential and not subject to disclosure 
under Chapter 552.
	SECTION 3.  Section 371.184, Finance Code, as added by this 
Act, applies only to a transaction that is entered into on or after 
the effective date of this Act.  A transaction that is entered into 
before the effective date of this Act is governed by the law in 
effect at the time the transaction was entered into, and the former 
law is continued in effect for that purpose.
	SECTION 4.  The office of the attorney general is not 
required to implement Section 402.0231, Government Code, as added 
by this Act, unless a specific appropriation for the implementation 
is provided in the General Appropriations Act, Acts of the 78th 
Legislature, Regular Session, 2003.
	SECTION 5.  This Act takes effect September 1, 2003.