CHAPTER 181. GENERAL PROVISIONS
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE F. TRUST COMPANIES
CHAPTER 181. GENERAL PROVISIONS
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 181.001. SHORT TITLE. This subtitle may be cited as the
Texas Trust Company Act.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.002. DEFINITIONS. (a) In this subtitle:
(1) "Account" means the client relationship established with a
trust institution involving the transfer of funds or property to
the trust institution, including a relationship in which the
trust institution acts as trustee, executor, administrator,
guardian, custodian, conservator, receiver, registrar, or agent.
(2) "Affiliate" means a company that directly or indirectly
controls, is controlled by, or is under common control with a
state trust company or other company.
(3) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027, eff.
Sept. 1, 2001.
(4) "Banking commissioner" means the banking commissioner of
Texas or a person designated by the banking commissioner and
acting under the banking commissioner's direction and authority.
(5) "Board" means the board of directors, managers, or managing
participants of, or a person or group of persons acting in a
comparable capacity for, a state trust company or other entity.
(6) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027, eff.
Sept. 1, 2001.
(7) "Capital" means:
(A) the sum of:
(i) the par value of all shares or participation shares of a
state trust company having a par value that have been issued;
(ii) the consideration set by the board for all shares or
participation shares of the state trust company without par value
that have been issued, except the part of that consideration
that:
(a) has been actually received;
(b) is less than all of that consideration; and
(c) the board, by resolution adopted not later than the 60th day
after the date of issuance of those shares, has allocated to
surplus with the prior approval of the banking commissioner; and
(iii) an amount not included in Subparagraphs (i) and (ii) that
has been transferred to capital of the state trust company, on
the payment of a share dividend or on adoption by the board of a
resolution directing that all or part of surplus be transferred
to capital, minus each reduction made as permitted by law; less
(B) all amounts otherwise included in Paragraphs (A)(i) and (ii)
that are attributable to the issuance of securities by the state
trust company and that the banking commissioner determines, after
notice and an opportunity for hearing, should be classified as
debt rather than equity securities.
(8) "Certified surplus" means the part of surplus designated by
a vote of the board of a state trust company under Section
182.105 and recorded in the board minutes as certified.
(9) "Charter" means a charter issued under this subtitle to
engage in a trust business.
(10) "Client" means a person to whom a trust institution owes a
duty or obligation under a trust or other account administered by
the trust institution, regardless of whether the trust
institution owes a fiduciary duty to the person. The term
includes a beneficiary of a trust for whom the trust institution
acts as trustee and a person for whom the trust institution acts
as agent, custodian, or bailee.
(11) "Company" means a corporation, a partnership, an
association, a business trust, another trust, or a similar
organization, including a trust institution.
(12) "Conservator" means the banking commissioner or an agent of
the banking commissioner exercising the powers and duties
provided by Subchapter B, Chapter 185.
(13) "Control" means:
(A) the ownership of or ability or power to vote, directly,
acting through one or more other persons, or otherwise
indirectly, 25 percent or more of the outstanding shares of a
class of voting securities of a state trust company or other
company;
(B) the ability to control the election of a majority of the
board of the state trust company or other company;
(C) the power to exercise, directly or indirectly, a controlling
influence over the management or policies of the state trust
company or other company as determined by the banking
commissioner after notice and an opportunity for hearing; or
(D) the conditioning of the transfer of 25 percent or more of
the outstanding shares or participation shares of a class of
voting securities of the state trust company or other company on
the transfer of 25 percent or more of the outstanding shares of a
class of voting securities of another state trust company or
other company.
(14) "Department" means the Texas Department of Banking.
(15) "Depository institution" means an entity with the power to
accept deposits under applicable law.
(16) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027,
eff. Sept. 1, 2001.
(17) "Equity security" means:
(A) stock or a similar security, any security convertible, with
or without consideration, into such a security, a warrant or
right to subscribe to or purchase such a security, or a security
carrying such a warrant or right;
(B) a certificate of interest or participation in a
profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share
or participation share, investment contract, voting-trust
certificate, or partnership interest; and
(C) a certificate of interest or participation in, temporary or
interim certificate for, or receipt for a security described by
this subdivision that evidences an existing or contingent equity
ownership interest.
(18) "Fiduciary record" means a matter written, transcribed,
recorded, received, or otherwise in the possession of a trust
institution that is necessary to preserve information concerning
an act or event relevant to an account of a trust institution.
(19) "Finance commission" means the Finance Commission of Texas.
(20) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027,
eff. Sept. 1, 2001.
(21) "Full liability participant" means a participant that
agrees under the terms of a participation agreement to be liable
under a judgment, decree, or order of court for the entire amount
of all debts, obligations, or liabilities of a limited trust
association.
(22) "Hazardous condition" means:
(A) a refusal by a trust company or an affiliate of a trust
company to permit an examination of its books, papers, accounts,
records, or affairs by the banking commissioner as provided by
Section 181.104;
(B) a violation by a trust company of a condition of its
chartering or an agreement entered into between the trust company
and the banking commissioner or the department; or
(C) a circumstance or condition in which an unreasonable risk of
loss is threatened to clients or creditors of a trust company,
excluding risk of loss to a client that arises as a result of the
client's decisions or actions, but including a circumstance or
condition in which a trust company:
(i) is unable or lacks the means to meet its current obligations
as they come due in the regular and ordinary course of business,
even if the book or fair market value of its assets exceeds its
liabilities;
(ii) has equity capital less than the amount of restricted
capital the trust company is required to maintain under Section
182.008, or has equity capital the adequacy of which is
threatened, as determined under regulatory accounting principles;
(iii) has concentrated an excessive or unreasonable portion of
its assets in a particular type or character of investment;
(iv) violates or refuses to comply with this subtitle, another
statute or regulation applicable to trust companies, or a final
and enforceable order of the banking commissioner;
(v) is in a condition that renders the continuation of a
particular business practice hazardous to its clients and
creditors; or
(vi) conducts business in an unsafe or unsound manner, including
conducting business with:
(a) inexperienced or inattentive management;
(b) weak or potentially dangerous operating practices;
(c) infrequent or inadequate audits;
(d) administration of assets that is notably deficient in
relation to the volume and character of or responsibility for
asset holdings;
(e) unsound administrative practices;
(f) frequent and uncorrected material occurrences of violations
of law, including rules, or terms of the governing instruments;
or
(g) a notable degree of conflicts of interest and engaging in
self-dealing.
(23) "Home office" means a location registered with the banking
commissioner as a state trust company's home office at which:
(A) the trust company does business;
(B) the trust company keeps its corporate books and records; and
(C) at least one executive officer of the trust company
maintains an office.
(24) "Insider" means:
(A) each director, manager, managing participant, officer, and
principal shareholder or participant of a state trust company;
(B) each affiliate of the state trust company and each director,
officer, and employee of the affiliate;
(C) any person who participates or has authority to participate,
other than in the capacity of a director, in major policy-making
functions of the state trust company, whether or not the person
has an official title or the officer is serving without salary or
compensation; or
(D) each company controlled by a person described by Paragraph
(A), (B), or (C).
(25) "Insolvent" means a circumstance or condition in which a
state trust company:
(A) is unable or lacks the means to meet its current obligations
as they come due in the regular and ordinary course of business,
even if the value of its assets exceeds its liabilities;
(B) has equity capital less than $500,000, as determined under
regulatory accounting principles;
(C) fails to maintain deposit insurance for its deposits with
the Federal Deposit Insurance Corporation or its successor, or
fails to maintain adequate security for its deposits as provided
by Section 184.301(c);
(D) sells or attempts to sell substantially all of its assets or
merges or attempts to merge substantially all of its assets or
business with another entity other than as provided by Chapter
182; or
(E) attempts to dissolve or liquidate other than as provided by
Chapter 186.
(26) "Investment security" means a marketable obligation
evidencing indebtedness of a person in the form of a bond, note,
debenture, or investment security.
(27) "Limited trust association" means a state trust company
organized under this subtitle as a limited liability company,
authorized to issue participation shares, and controlled by its
participants.
(28) "Loans and extensions of credit" means direct or indirect
advances of money by a state trust company to a person that are
conditioned on the obligation of the person to repay the funds or
that are repayable from specific property pledged by or on behalf
of the person.
(29) "Manager" means a person elected to the board of a limited
trust association.
(30) "Managing participant" means a participant in a limited
trust association in which management has been retained by the
participants.
(31) "Mutual funds" means equity securities of an investment
company registered under the Investment Company Act of 1940 (15
U.S.C. Section 80a-1 et seq.) and the Securities Act of 1933 (15
U.S.C. Section 77a et seq.). The term does not include money
market funds.
(32) "Officer" means the presiding officer of the board, the
principal executive officer, or another officer appointed by the
board of a state trust company or other company, or a person or
group of persons acting in a comparable capacity for the state
trust company or other company.
(33) "Operating subsidiary" means a company for which a state
trust company has the ownership, ability, or power to vote,
directly, acting through one or more other persons, or otherwise
indirectly, more than 50 percent of the outstanding shares of
each class of voting securities or its equivalent of the company.
(34) "Participant" means an owner of a participation share in a
limited trust association.
(35) "Participant-transferee" means a transferee of a
participation share who has not received the unanimous consent of
all participants to be a participant, or who becomes a
participant-transferee under Subchapter C, Chapter 183.
(36) "Participation agreement" means the instrument stating the
agreement among the participants of a limited trust association
relating to the rights and duties of the participants and
participant-transferees, including allocations of income, loss,
deduction, credit, distributions, liquidation rights, redemption
rights, liabilities of participants, priority rights of
participant-transferees to transfer participation shares, rights
of participants to purchase participation shares of
participant-transferees, the procedures for elections and voting
by participants, and any other matter not prohibited by or
inconsistent with this subtitle.
(37) "Participation shares" means the units into which the
proprietary interests of a limited trust association are divided
or subdivided by means of classes, series, relative rights, or
preferences.
(38) "Principal shareholder" means a person who owns or has the
ability or power to vote, directly, acting through one or more
other persons, or otherwise indirectly, 10 percent or more of the
outstanding shares or participation shares of any class of voting
securities of a state trust company or other company.
(39) "Restricted capital" means the sum of capital and certified
surplus.
(40) "Regulatory accounting principles" means generally accepted
accounting principles as modified by rules adopted under:
(A) this subtitle; or
(B) an applicable federal statute or regulation.
(41) "Secondary capital" means the amount by which the assets of
a state trust company exceed restricted capital, required by
Section 182.008, and liabilities.
(42) "Shareholder" means an owner of a share in a state trust
company.
(43) "Shares" means the units into which the proprietary
interests of a state trust company are divided or subdivided by
means of classes, series, relative rights, or preferences.
(44) "State bank" means a banking association or limited banking
association organized or reorganized under Subtitle A, including
an association organized under the laws of this state before
September 1, 1997, with the express power to receive and accept
deposits and possessing other rights and powers granted by that
subtitle expressly or by implication. The term does not include a
savings association, savings bank, or credit union.
(45) "State trust company" or "trust company" means a trust
association or limited trust association organized or reorganized
under this subtitle, including an association organized under the
laws of this state before September 1, 1997. If the context or
circumstances require, the term includes a trust company
organized under the laws of another state that lawfully maintains
a trust office in this state in accordance with Chapter 187.
(46) "Subsidiary" means a state trust company or other company
that is controlled by another person. The term includes a
subsidiary of a subsidiary.
(47) "Supervisor" means the banking commissioner or an agent of
the banking commissioner exercising the powers and duties
specified in Subchapter B, Chapter 185.
(48) "Trust association" means a trust company organized under
this subtitle as a corporation, authorized to issue shares of
stock, and controlled by its shareholders.
(49) "Trust business" means the business of a company holding
itself out to the public as a fiduciary for hire or compensation
to hold or administer accounts.
(50) "Trust deposits" means client funds held by a trust
institution and authorized to be deposited with itself as a
permanent investment or pending investment, distribution, or
payment of debts on behalf of the client.
(51) "Trust institution" means a bank, credit union, foreign
bank, savings association, savings bank, or trust company that is
authorized by its charter to conduct a trust business.
(52) "Unauthorized trust activity" means an act or practice
within this state by a company without a charter, license,
permit, registration, or other authority issued or granted by the
banking commissioner or other appropriate regulatory authority
for which such a charter, license, permit, registration, or other
authority is required to conduct trust business.
(53) "Undivided profits" means the part of equity capital of a
state trust company equal to the balance of its net profits,
income, gains, and losses since the date of its formation minus
subsequent distributions to shareholders or participants and
transfers to surplus or capital under share dividends or
appropriate board resolutions. The term includes amounts
allocated to undivided profits as a result of a merger.
(54) "Voting security" means a share, participation share, or
other evidence of proprietary interest in a state trust company
or other company that has as an attribute the right to vote or
participate in the election of the board of the trust company or
other company, regardless of whether the right is limited to the
election of fewer than all of the board members. The term
includes a security that is convertible or exchangeable into a
voting security and a nonvoting participation share of a managing
participant.
(b) The definitions provided by this section shall be liberally
construed to accomplish the purposes of this subtitle.
(c) The finance commission by rule may adopt other definitions
to accomplish the purposes of this subtitle.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 17, eff.
Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec. 6.002(a),
6.027, eff. Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 65, eff. September 1, 2007.
Sec. 181.003. TRUST COMPANY RULES. (a) The finance commission
may adopt rules to accomplish the purposes of this subtitle,
including rules necessary or reasonable to:
(1) implement and clarify this subtitle;
(2) preserve or protect the safety and soundness of state trust
companies;
(3) grant the same rights and privileges to state trust
companies with respect to the exercise of fiduciary powers and
the conducting of financial activities or activities incidental
or complementary to financial activities that are or may be
granted to a trust institution that maintains its principal
office or a branch or trust office in this state;
(4) provide for recovery of the cost of maintenance and
operation of the department and the cost of enforcing this
subtitle through the imposition and collection of ratable and
equitable fees for notices, applications, and examinations; and
(5) facilitate the fair hearing and adjudication of matters
before the banking commissioner and the finance commission.
(b) The presence or absence in this subtitle of a specific
reference to rules regarding a particular subject does not
enlarge or diminish the rulemaking authority conferred by this
section.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 18, eff.
Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec. 6.003(a),
eff. Sept. 1, 2001.
Sec. 181.004. IMPLYING THAT PERSON IS TRUST COMPANY. (a) A
person or company may not use in a business name or advertising
the words "trust," "trust company," or any similar term or
phrase, any word pronounced "trust" or "trust company," any
foreign word that means "trust" or "trust company," or any term
that tends to imply that the business is holding out to the
public that it engages in the business of a fiduciary for hire
unless the banking commissioner has approved the use in writing
after finding that the use will not be misleading. This
subsection does not prohibit an individual from engaging in the
business of a fiduciary for compensation or from using the words
"trust" or "trustee" for the purpose of identifying assets held
or actions taken in an existing capacity.
(b) Subsection (a) does not apply to:
(1) a trust institution authorized under this subtitle to
conduct a trust business in this state; or
(2) another entity organized under the laws of this state,
another state, the United States, or a foreign sovereign state to
the extent that:
(A) the entity is authorized under its charter or the laws of
this state or the United States to use a term, word, character,
ideogram, phonogram, or phrase prohibited by Subsection (a); and
(B) the entity is authorized by the laws of this state or the
United States to conduct the activities in which the entity is
engaged in this state.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.
6.004(a), eff. Sept. 1, 2001.
Sec. 181.005. LIABILITY OF TRUST COMPANY DIRECTORS AND
PERSONNEL. (a) The provisions of the Business Organizations
Code regarding liability, defenses, and indemnification of a
director, officer, agent, or employee apply to a director,
officer, agent, or employee of a state trust company in this
state. Except as limited by those provisions, a disinterested
director, manager, managing participant, officer, or employee of
a state trust company may not be held personally liable in an
action seeking monetary damages arising from the conduct of the
state trust company's affairs unless the damages resulted from
the gross negligence or wilful or intentional misconduct of the
person during the person's term of office or service with the
state trust company.
(b) A director, manager, managing participant, officer, or
employee of a state trust company is disinterested with respect
to a decision or transaction if:
(1) the person fully discloses any interest in the decision or
transaction and does not participate in the decision or
transaction; or
(2) the decision or transaction does not involve any of the
following:
(A) personal profit for the person through dealing with the
state trust company or usurping an opportunity of the trust
company;
(B) buying or selling assets of the state trust company in a
transaction in which the person has a direct or indirect
pecuniary interest;
(C) dealing with another state trust company or other person in
which the person is a director, manager, managing participant,
officer, or employee or otherwise has a significant direct or
indirect financial interest; or
(D) dealing with a family member of the person.
(c) A director, manager, managing participant, or officer who,
in performing the person's duties and functions, acts in good
faith and reasonably believes that reliance is warranted is
entitled to rely on information, including an opinion, report,
financial statement or other type of statement or financial data,
decision, judgment, or performance, that is prepared, presented,
made, or rendered by:
(1) one or more directors, managers, managing participants,
officers, or employees of the state trust company, or of an
entity under joint or common control with the state trust
company, whom the director, manager, managing participant, or
officer reasonably believes merits confidence;
(2) legal counsel, a public accountant, or another person whom
the director, manager, managing participant, or officer
reasonably believes merits confidence; or
(3) a committee of the board of the state trust company of which
the director, manager, or managing participant is not a member.
(d) In this section, "family member" means a person's:
(1) spouse;
(2) minor child; or
(3) adult child who resides in the person's home.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 66, eff. September 1, 2007.
Sec. 181.006. EXEMPTION OF TRUST INSTITUTION DIRECTORS AND
PERSONNEL FROM SECURITIES LAW. An officer, director, manager,
managing participant, or employee of a trust institution with
fewer than 500 shareholders or participants, including a state
trust company or a trust institution organized under the laws of
another state that lawfully maintains an office in this state, or
a holding company with fewer than 500 shareholders or
participants that controls a trust institution is exempt from the
registration and licensing provisions of The Securities Act
(Article 581-1 et seq., Vernon's Texas Civil Statutes) with
respect to that person's participation in a transaction,
including a sale, involving securities issued by the trust
institution or the holding company of which that person is an
officer, director, manager, managing participant, or employee if
the person is not compensated for the person's participation in
the transaction.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.
6.005(a), eff. Sept. 1, 2001.
Sec. 181.007. ATTACHMENT, INJUNCTION, OR EXECUTION. An
attachment, injunction, or execution to collect a money judgment
or secure a prospective money judgment against a trust
institution, including a state trust company or a trust
institution organized under the laws of another state that
lawfully maintains an office in this state, or against a client
of or client account in the trust institution, is governed by
Sections 59.007 and 59.008.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.
6.006(a), eff. Sept. 1, 2001.
SUBCHAPTER B. REGULATION OF TRUST COMPANIES BY BANKING DEPARTMENT
Sec. 181.101. ISSUANCE OF INTERPRETIVE STATEMENTS. (a) The
banking commissioner:
(1) may issue interpretive statements containing matters of
general policy for the guidance of the public and state trust
companies; and
(2) may amend or repeal a published interpretive statement by
issuing an amended statement or notice of repeal of a statement.
(b) An interpretive statement may be disseminated by newsletter,
via an electronic medium such as the Internet, in a volume of
statutes or related materials published by the banking
commissioner or others, or by other means reasonably calculated
to notify persons affected by the interpretive statement. Notice
of an amended or withdrawn statement must be published in a
substantially similar manner as the affected statement was
originally published.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.
6.007(a), eff. Sept. 1, 2001.
Sec. 181.102. ISSUANCE OF OPINION. (a) In response to a
specific request from a member of the public or industry, the
banking commissioner may issue an opinion directly or through a
deputy banking commissioner or department attorney.
(b) If the banking commissioner determines that the opinion is
useful for the general guidance of trust companies and the
public, the banking commissioner may disseminate the opinion by
newsletter, via an electronic medium such as the Internet, in a
volume of statutes or related materials published by the banking
commissioner or others, or by other means reasonably calculated
to notify persons affected by the opinion. A published opinion
must be redacted to preserve the confidentiality of the
requesting party unless the requesting party consents to be
identified in the published opinion.
(c) The banking commissioner may amend or repeal a published
opinion by issuing an amended opinion or notice of repeal of an
opinion and disseminating the opinion or notice in a
substantially similar manner as the affected statement or opinion
was originally published. The requesting party, however, may rely
on the original opinion if:
(1) all material facts were originally disclosed to the banking
commissioner;
(2) the safety and soundness of the affected trust companies
will not be affected by further reliance on the original opinion;
and
(3) the text and interpretation of relevant governing provisions
of this subtitle have not been changed by legislative or judicial
action.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.01,
eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec.
6.007(a), eff. Sept. 1, 2001.
Sec. 181.103. EFFECT OF INTERPRETIVE STATEMENT OR OPINION. An
interpretive statement or opinion issued under this subchapter
does not have the force of law and is not a rule for the purposes
of Chapter 2001, Government Code, unless adopted as a rule by the
finance commission as provided by Chapter 2001, Government Code.
An interpretive statement or opinion is an administrative
construction of this subtitle entitled to great weight if the
construction is reasonable and does not conflict with this
subtitle.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.104. EXAMINATION REQUIREMENT. (a) The banking
commissioner shall examine each state trust company annually.
(b) The banking commissioner may examine a state trust company
more often than annually as the banking commissioner considers
necessary to:
(1) safeguard the interests of clients, creditors, shareholders,
participants, or participant-transferees; and
(2) enforce this subtitle.
(c) The banking commissioner may defer an examination for not
more than six months if the banking commissioner considers the
deferment necessary for the efficient enforcement of this
subtitle.
(d) Disclosure of information to the banking commissioner
pursuant to an examination request does not constitute a waiver
of or otherwise affect or diminish an evidentiary privilege to
which the information is otherwise subject. A report of an
examination under this section is confidential and may be
disclosed only under the circumstances provided by this subtitle.
(e) The banking commissioner may:
(1) accept an examination of a state trust company, a
third-party contractor, or an affiliate of the state trust
company by a federal or other governmental agency in lieu of an
examination under this section; or
(2) conduct an examination of a state trust company, a
third-party contractor, or an affiliate of the state trust
company jointly with a federal or other governmental agency.
(f) The banking commissioner may administer oaths and examine
persons under oath on any subject that the banking commissioner
considers pertinent to the financial condition or the safety and
soundness of the activities of a state trust company.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.02,
eff. Sept. 1, 2001.
Sec. 181.105. COST OF REGULATION. Each state trust company
shall pay, through the imposition and collection of fees
established by the finance commission under Section
181.003(a)(4):
(1) the cost of examination;
(2) the equitable or proportionate cost of maintenance and
operation of the department; and
(3) the cost of enforcement of this subtitle.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.106. REGULATION AND EXAMINATION OF RELATED ENTITIES.
(a) The banking commissioner may regulate and examine, to the
same extent as if the services or activities were performed by a
state trust company on its own premises:
(1) the activities of a state trust company affiliate; and
(2) the performance of data processing, electronic fund
transfers, or other services or activities performed on behalf of
a state trust company by a third-party contractor.
(b) The banking commissioner may collect a fee from the state
trust company to cover the cost of the examination.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.107. STATEMENTS OF CONDITION AND INCOME; PENALTY. (a)
Each state trust company periodically shall file with the banking
commissioner a copy of its statement of condition and income.
(b) The finance commission by rule may:
(1) require the statement to be filed with the banking
commission at the intervals the finance commission determines;
(2) specify the form of the statement of condition and income,
including specified confidential and public information to be in
the statement; and
(3) require public information in the statement to be published
at the times and in the publications and locations the finance
commission determines.
(c) Except for portions designated to be confidential by the
banking commissioner, a statement of condition and income is a
public record.
(d) A state trust company that fails to file a statement of
condition and income on or before the date it is due is, after
notice and hearing, subject to a penalty of not more than $500 a
day for each day of noncompliance.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.108. LIABILITY OF COMMISSION AND DEPARTMENT OFFICERS
AND PERSONNEL LIMITED. (a) The banking commissioner, a member
of the finance commission, a deputy banking commissioner, an
examiner, assistant examiner, supervisor, conservator, agent, or
other officer or employee of the department, or an agent of the
banking commissioner is not personally liable for damages arising
from the person's official act or omission unless the act or
omission is corrupt or malicious.
(b) The attorney general shall defend an action brought against
a person because of an official act or omission under Subsection
(a), regardless of whether the defendant has terminated service
with the department before the action commences.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.03,
eff. Sept. 1, 2001.
SUBCHAPTER C. ADMINISTRATIVE PROCEDURE
Sec. 181.201. BANKING COMMISSIONER HEARING. (a) The banking
commissioner may convene a hearing to receive evidence and
argument regarding any matter within the jurisdiction of and
before the banking commissioner for decision or review. The
hearing must be conducted under Chapter 2001, Government Code. A
matter made confidential by law must be considered by the banking
commissioner in a closed hearing.
(b) A hearing before the banking commissioner that is required
or authorized by law may be conducted by a hearings officer on
behalf of the banking commissioner.
(c) This section does not grant a right to hearing to a person
that is not otherwise granted by governing law.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.04,
eff. Sept. 1, 2001.
Sec. 181.202. APPEAL OF BANKING COMMISSIONER DECISION OR ORDER.
Except as expressly provided otherwise by this subtitle, a person
affected by a decision or order of the banking commissioner made
under this subtitle after hearing may appeal the decision or
order:
(1) to the finance commission; or
(2) directly to a district court in Travis County as provided by
Section 181.204.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.203. APPEAL TO FINANCE COMMISSION. (a) In an appeal
to the finance commission, the finance commission shall consider
the questions raised by the application for review and may also
consider additional matters pertinent to the appeal.
(b) An order of the banking commissioner continues in effect
pending review unless the order is stayed by the finance
commission. The finance commission may impose any condition
before granting a stay of the appealed order.
(c) The finance commission may not be required to accept
additional evidence or hold an evidentiary hearing if a hearing
was held and a record made before the banking commissioner. The
finance commission shall remand the proceeding to the banking
commissioner to receive any additional evidence the finance
commission chooses to consider.
(d) A hearing before the finance commission that is required or
authorized by law may be conducted by a hearings officer on
behalf of the finance commission.
(e) A matter made confidential by law must be considered by the
finance commission in a closed hearing.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.204. DIRECT APPEAL TO COURT OR APPEAL OF FINANCE
COMMISSION ORDER. A person affected by a final order of the
banking commissioner who elects to appeal directly to district
court, or a person affected by a final order of the finance
commission under this subchapter, may appeal the final order by
filing a petition for judicial review as provided by Chapter
2001, Government Code. A petition for judicial review filed in
the district court does not stay or vacate the appealed order
unless the court, after notice and hearing, expressly stays or
vacates the order.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
SUBCHAPTER D. CONFIDENTIALITY OF INFORMATION
Sec. 181.301. DISCLOSURE BY DEPARTMENT PROHIBITED. (a) Except
as expressly provided otherwise by this subtitle or a rule
adopted under Section 181.003(a)(1), the following are
confidential and may not be disclosed by the banking commissioner
or an employee of the department:
(1) information directly or indirectly obtained by the
department in any manner, including through an application or
examination, concerning the financial condition or business
affairs of a state trust company or a present, former, or
prospective shareholder, participant, officer, director, manager,
affiliate, or service provider of the state trust company, other
than the public portions of a report of condition or income
statement; and
(2) each related file or record of the department.
(b) Information obtained by the department from a federal or
state regulatory agency that is confidential under federal or
state law may not be disclosed except as provided by federal or
state law.
(c) The banking commissioner or an officer or employee of the
department commits an offense if the person:
(1) discloses information or permits access to a file or record
of the department; and
(2) knows at the time of disclosure or permission that the
disclosure or permission violates this subchapter.
(d) An offense under this section is a Class A misdemeanor.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.05,
eff. Sept. 1, 2001.
Sec. 181.302. DISCLOSURE TO FINANCE COMMISSION. Confidential
information may not be disclosed to a member of the finance
commission. A member of the finance commission may not be given
access to the files and records of the department except that the
banking commissioner may disclose to the finance commission
information, files, and records pertinent to a hearing or matter
pending before the finance commission.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.303. DISCLOSURE TO OTHER AGENCIES. (a) For purposes
of this section, "affiliated group," "agency," "functional
regulatory agency," and "privilege" have the meanings assigned by
Section 31.303.
(b) The banking commissioner may, as the banking commissioner
considers necessary or proper to the enforcement of the laws of
this state, another state, the United States, or a foreign
sovereign state with whom the United States currently maintains
diplomatic relations, or in the best interest of the public,
disclose information in the possession of the department to
another agency. The banking commissioner may not disclose
information under this section that is confidential under
applicable state or federal law unless:
(1) the recipient agency agrees to maintain the confidentiality
and take all reasonable steps to oppose an effort to secure
disclosure of the information from the agency; or
(2) the banking commissioner determines in the exercise of
discretion that the interest of law enforcement outweighs and
justifies the potential for disclosure of the information by the
recipient agency.
(c) The banking commissioner by agreement may establish an
information sharing and exchange program with a functional
regulatory agency that has overlapping regulatory jurisdiction
with the department, with respect to all or part of an affiliated
group, including a financial institution, to reduce the potential
for duplicative and burdensome filings, examinations, and other
regulatory activities. Each agency party to the agreement must
agree to maintain confidentiality of information that is
confidential under applicable state or federal law and take all
reasonable steps to oppose any effort to secure disclosure of the
information from the agency. An agreement may also specify
procedures regarding use and handling of confidential information
and identify types of information to be shared and procedures for
sharing on a recurring basis.
(d) Disclosure of information by or to the banking commissioner
under this section does not constitute a waiver of or otherwise
affect or diminish an evidentiary privilege to which the
information is otherwise subject, whether or not the disclosure
is governed by a confidentiality agreement.
(e) Notwithstanding other law, an agency of this state:
(1) may execute, honor, and comply with an agreement to maintain
confidentiality and oppose disclosure of information obtained
from the banking commissioner as provided in this section; and
(2) shall treat as confidential any information obtained from
the banking commissioner that is entitled to confidential
treatment under applicable state or federal law and take all
reasonable steps to oppose an effort to secure disclosure of the
information from the agency.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 19, eff.
Sept. 1, 2001.
Sec. 181.304. OTHER DISCLOSURE PROHIBITED; PENALTY. (a)
Confidential information that is provided to a state trust
company, affiliate, or service provider of the state trust
company, whether in the form of a report of examination or
otherwise, is the confidential property of the department. The
information may not be made public or disclosed by the recipient
or by an officer, director, manager, employee, or agent of the
recipient to a person not officially connected to the recipient
as officer, director, employee, attorney, auditor, independent
auditor, or bonding company, except as authorized by rules
adopted under this subtitle.
(b) A person commits an offense if the person discloses or uses
the confidential information in violation of this section. An
offense under this subsection is punishable as if it were an
offense under Section 37.10, Penal Code.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.305. CIVIL DISCOVERY. Civil discovery of confidential
information from a person subject to Section 181.304 under
subpoena or other legal process in a civil proceeding must comply
with rules adopted under this subtitle and other applicable law.
The rules may:
(1) restrict release of confidential information to the portion
directly relevant to the legal dispute at issue; and
(2) require that a protective order, in the form and under
circumstances specified by the rules, be issued by a court before
release of the confidential information.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.06,
eff. Sept. 1, 2001.
Sec. 181.306. INVESTIGATIVE INFORMATION. Notwithstanding any
other law, the banking commissioner may refuse to release
information or records concerning a state trust company in the
custody of the department if, in the opinion of the banking
commissioner, release of the information or records might
jeopardize an ongoing investigation of potentially unlawful
activity.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.307. EMPLOYMENT INFORMATION. (a) A person may provide
employment information concerning the known or suspected
involvement of a present or former employee, officer, or director
of a state trust company in a violation of any state or federal
law, rule, or regulation that has been reported to appropriate
state or federal authorities to:
(1) a state trust company; or
(2) a person providing employment information to a state trust
company.
(b) A person may not be held liable for providing information
under Subsection (a) unless the information provided is false and
the person provided the information with disregard for the truth.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 181.308. SHAREHOLDER INSPECTION RIGHTS. (a)
Notwithstanding Section 21.218 or 101.502, Business Organizations
Code, a shareholder or participant of a state trust company may
not examine:
(1) a report of examination or other confidential property of
the department that is in the possession of the state trust
company; or
(2) a book or record of the state trust company that directly or
indirectly pertains to financial or other information maintained
by the state trust company on behalf of its clients, including a
specific item in the minutes of the board or a committee of the
board regarding client account review and approval or any report
that would tend to identify the state trust company's client.
(b) This section does not affect the rights of a shareholder or
participant of a state trust company acting in another capacity.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 67, eff. September 1, 2007.