CHAPTER 56. AGRICULTURAL FINANCE CORPORATIONS
AGRICULTURE CODE
TITLE 4. AGRICULTURAL ORGANIZATIONS
CHAPTER 56. AGRICULTURAL FINANCE CORPORATIONS
Sec. 56.001. DEFINITIONS. In this chapter:
(1) "Agricultural finance corporation" means a corporation
formed under this chapter.
(2) "Ready marketable, staple, nonperishable agricultural
products" means agricultural products that:
(A) are commonly dealt in ready markets so that their values are
easily and definitely ascertainable and realized on short notice;
and
(B) ordinarily do not substantially depreciate in quality during
the period of immaturity of the obligations that are secured by
or that represent those products.
Acts 1981, 67th Leg., p. 1123, ch. 388, Sec. 1, eff. Sept. 1,
1981.
Sec. 56.002. PURPOSE. An agricultural finance corporation may
be organized to deal in:
(1) acceptances and other receipts that are used to aid or are
issued because of the transportation, warehousing, distribution,
or financing of ready marketable, staple, nonperishable
agricultural products in domestic and foreign trade; and
(2) acceptances of banking corporations not secured by or
representing any ready marketable, staple, nonperishable
agricultural products.
Acts 1981, 67th Leg., p. 1124, ch. 388, Sec. 1, eff. Sept. 1,
1981.
Sec. 56.003. ASSETS REPRESENTED BY ACCEPTANCES OF BANKING
CORPORATIONS. At any time, the total assets of an agricultural
finance corporation that are represented by acceptances of
banking corporations not secured by or representing ready
marketable, staple, nonperishable agricultural products may not
exceed an amount equal to 10 percent of the unimpaired capital of
the corporation.
Acts 1981, 67th Leg., p. 1124, ch. 388, Sec. 1, eff. Sept. 1,
1981.
Sec. 56.004. CAPITAL STOCK. At all times an agricultural
finance corporation shall have authorized capital stock in the
amount of $500,000 or more.
Acts 1981, 67th Leg., p. 1124, ch. 388, Sec. 1, eff. Sept. 1,
1981.
Sec. 56.005. INVESTMENT OF CAPITAL. At all times, an
agricultural finance corporation shall have one-half or more of
its paid-in capital invested in obligations of the United States,
this state, or political subdivisions or incorporated cities of
this state.
Acts 1981, 67th Leg., p. 1124, ch. 388, Sec. 1, eff. Sept. 1,
1981.
Sec. 56.006. LIMIT OF INDEBTEDNESS. (a) For the purposes of
this section, the existing obligations of an agricultural finance
corporation include the primary, secondary, fixed, and contingent
obligations of the corporation but do not include an obligation
for which a liable person has furnished to the corporation funds
to pay the obligation at maturity.
(b) Except as provided by Subsection (c) of this section, an
agricultural finance corporation may not enter into a contract of
acceptance, guaranty, endorsement, or suretyship if the total of
its existing obligations plus its obligations resulting from the
contract exceeds an amount equal to five times the total of its
unimpaired capital and surplus at the time of the contract.
(c) An agricultural finance corporation may exceed the limit set
by Subsection (b) of this section if, before entering into the
contract, the corporation obtains written authorization from the
banking commissioner to do so. If authorization is obtained, the
corporation may not exceed the limit set by the commissioner, and
the limit set by the commissioner may not exceed an amount equal
to 10 times the total of the corporation's unimpaired capital and
surplus at the time of the contract.
(d) Except as provided by Subsection (e) of this section, if a
corporation enters into a contract in violation of this section,
the contract is unenforceable against the corporation.
(e) This section does not prevent the enforcement of a
prohibited obligation by a holder who has acquired the
obligation:
(1) in due course;
(2) for value;
(3) before its maturity; and
(4) without notice of its defect.
Acts 1981, 67th Leg., p. 1124, ch. 388, Sec. 1, eff. Sept. 1,
1981.
Sec. 56.007. STOCK OWNERSHIP. (a) Except as otherwise provided
by this section, an agricultural finance corporation or any
banking corporation or trust company, except a savings bank, may
hold stock of:
(1) an agricultural finance corporation; or
(2) a corporation that is chartered under the laws of the United
States or a state of the United States and that is principally
engaged in financing ready marketable, staple, nonperishable
agricultural products.
(b) The total amount of stock held in accordance with Subsection
(a) of this section may not exceed an amount equal to:
(1) 10 percent of the capital and surplus of the acquiring
corporation; or
(2) 10 percent of the capital stock of the corporation of which
the stock is to be held.
(c) Except in payment of debt, a banking corporation or trust
company may not acquire stock of an agricultural finance
corporation unless it first obtains express written authorization
for the purchase from the banking commissioner under rules
adopted by the banking commissioner.
(d) If a banking corporation or trust company acquires stock of
an agricultural finance corporation in payment of debt, it shall
promptly dispose of the stock unless it obtains express
permission from the banking commissioner to retain the stock.
Acts 1981, 67th Leg., p. 1125, ch. 388, Sec. 1, eff. Sept. 1,
1981.
Sec. 56.008. REGULATION BY BANKING COMMISSIONER. (a) An
agricultural finance corporation is subject to the supervision
and control of the banking commissioner and shall conform to the
rules adopted by the banking commissioner.
(b) An agricultural finance corporation may not begin business
until authorized to do so by the banking commissioner after it
satisfactorily shows that it has complied with the law.
(c) An agricultural finance corporation is subject to the
following requirements as if it were a state bank:
(1) it shall make reports to the banking commissioner;
(2) it shall permit periodic visitations and examinations
conducted under the banking commissioner's direction; and
(3) it shall pay fees for those examinations.
(d) The banking commissioner may take charge of and liquidate an
agricultural finance corporation for causes prescribed for
similar actions against a state bank.
Acts 1981, 67th Leg., p. 1125, ch. 388, Sec. 1, eff. Sept. 1,
1981.