CHAPTER 182. POWERS, ORGANIZATION, AND FINANCIAL REQUIREMENTS
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE F. TRUST COMPANIES
CHAPTER 182. POWERS, ORGANIZATION, AND FINANCIAL REQUIREMENTS
SUBCHAPTER A. ORGANIZATION AND POWERS IN GENERAL
Sec. 182.001. ORGANIZATION AND GENERAL POWERS OF STATE TRUST
COMPANY. (a) Subject to Subsection (g) and the other provisions
of this chapter, one or more persons may organize and charter a
state trust company as a state trust association or a limited
trust association.
(b) A state trust company may engage in the trust business by:
(1) acting as trustee under a written agreement;
(2) receiving money and other property in its capacity as
trustee for investment in real or personal property;
(3) acting as trustee and performing the fiduciary duties
committed or transferred to it by order of a court;
(4) acting as executor, administrator, or trustee of the estate
of a deceased person;
(5) acting as a custodian, guardian, conservator, or trustee for
a minor or incapacitated person;
(6) acting as a successor fiduciary to a trust institution or
other fiduciary;
(7) receiving for safekeeping personal property;
(8) acting as custodian, assignee, transfer agent, escrow agent,
registrar, or receiver;
(9) acting as investment advisor, agent, or attorney in fact
according to an applicable agreement;
(10) with the prior written approval of the banking commissioner
and to the extent consistent with applicable fiduciary
principles, engaging in a financial activity or an activity
incidental or complementary to a financial activity, directly or
through a subsidiary;
(11) exercising additional powers expressly conferred by rule of
the finance commission; and
(12) exercising any incidental power that is reasonably
necessary to enable it to fully exercise the powers expressly
conferred according to commonly accepted fiduciary customs and
usages.
(c) For purposes of other state law, a trust association is
considered a corporation and a limited trust association is
considered a limited liability company. To the extent consistent
with this subtitle, a trust association may exercise the powers
of a Texas business corporation and a limited trust association
may exercise the powers of a Texas limited liability company as
reasonably necessary to enable exercise of specific powers under
this subtitle.
(d) A state trust company may contribute to a community fund or
to a charitable, philanthropic, or benevolent instrumentality
conducive to public welfare an amount that the state trust
company's board considers appropriate and in the interests of the
state trust company.
(e) Subject to Section 184.301, a state trust company may
deposit trust funds with itself.
(f) A state trust company insured by the Federal Deposit
Insurance Corporation may receive and pay deposits, with or
without interest, made by the United States, the state, a county,
or a municipality.
(g) In the exercise of discretion consistent with the purposes
of this subtitle, the banking commissioner may require a state
trust company to conduct an otherwise authorized activity through
a subsidiary.
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. 20, eff.
Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec. 6.008(a),
eff. Sept. 1, 2001.
Sec. 182.002. ARTICLES OF ASSOCIATION OF STATE TRUST COMPANY.
(a) The articles of association of a state trust company must be
signed and acknowledged by each organizer and must contain:
(1) the name of the state trust company, subject to Subsection
(b);
(2) the period of the state trust company's duration, which may
be perpetual;
(3) the powers of the state trust company, which may be stated
as:
(A) all powers granted to a state trust company in this state;
or
(B) a list of the specific powers that the state trust company
chooses and is authorized to exercise;
(4) the aggregate number of shares, or participation shares in
the case of a limited trust association, that the state trust
company will be authorized to issue, and the number of classes of
shares or participation shares, which may be one or more;
(5) if the shares or participation shares are to be divided into
classes:
(A) the designation of each class and statement of the
preferences, limitations, and relative rights of the shares or
participation shares of each class, which in the case of a
limited trust association may be more fully set forth in the
participation agreement;
(B) the number of shares or participation shares of each class;
and
(C) a statement of the par value of the shares or participation
shares of each class or that the shares or participation shares
are to be without par value;
(6) any provision limiting or denying to shareholders or
participants the preemptive right to acquire additional or
treasury shares or participation shares of the state trust
company;
(7) any provision granting the right of shareholders or
participants to cumulative voting in the election of directors or
managers;
(8) the aggregate amount of consideration to be received for all
shares or participation shares initially issued by the state
trust company and a statement that:
(A) all authorized shares or participation shares have been
subscribed; and
(B) all subscriptions received have been irrevocably paid in
cash;
(9) any provision consistent with law that the organizers elect
to set forth in the articles of association for the regulation of
the internal affairs of the state trust company or that is
otherwise required by this subtitle to be set forth in the
articles of association;
(10) the street address of the state trust company's home
office; and
(11) either:
(A) the number of directors or managers constituting the initial
board and the names and street addresses of the persons who are
to serve as directors or managers until the first annual meeting
of shareholders or participants or until successor directors or
managers have been elected and qualified; or
(B) the statement described by Subsection (c).
(b) The banking commissioner may determine that a proposed state
trust company name is potentially misleading to the public and
require the organizers to select a different name.
(c) The organizers of a limited trust association that will have
not fewer than five or more than 25 participants may include in
the articles of association a statement that management is vested
in a board composed of all participants, with management
authority vested in each participant in proportion to the
participant's contribution to capital as adjusted from time to
time to properly reflect any additional contribution, and the
names and street addresses of the persons who are to be the
initial managing participants.
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.
735, Sec. 10, eff. September 1, 2007.
Sec. 182.003. APPLICATION FOR STATE TRUST COMPANY CHARTER;
STANDARDS FOR APPROVAL. (a) An application for a state trust
company charter must be made under oath and in the form required
by the banking commissioner. The application must be supported by
information, records, and opinions of counsel that the banking
commissioner requires. The application must be accompanied by all
charter fees and deposits required by statute or rule.
(b) The banking commissioner shall grant a state trust company
charter only on proof satisfactory to the banking commissioner
that public convenience and advantage will be promoted by the
establishment of the state trust company. In determining whether
public convenience and advantage will be promoted, the banking
commissioner shall consider the convenience of the public to be
served and whether:
(1) the organizational and capital structure and amount of
initial capitalization is adequate for the business and location;
(2) the anticipated volume and nature of business indicates a
reasonable probability of success and profitability based on the
market sought to be served;
(3) the proposed officers, directors, and managers, or managing
participants, as a group have sufficient fiduciary experience,
ability, standing, competence, trustworthiness, and integrity to
justify a belief that the state trust company will operate in
compliance with law and that success of the state trust company
is probable;
(4) each principal shareholder or participant has sufficient
experience, ability, standing, competence, trustworthiness, and
integrity to justify a belief that the state trust company will
be free from improper or unlawful influence or interference with
respect to the state trust company's operation in compliance with
law; and
(5) the organizers are acting in good faith.
(c) The organizers bear the burden of proof to establish that
public convenience and advantage will be promoted by the
establishment of the state trust company. The failure of an
applicant to furnish required information, opinions of counsel,
and other material, or the required fee, is considered an
abandonment of the application.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.
(a) The organizers shall solicit comments and protests by
publishing notice of the application, its date of filing, and the
identity of the organizers, in the form and frequency specified
by the banking commissioner, in a newspaper of general
circulation in the county where the initial home office of the
proposed state trust company is to be located, or in another
publication or location as directed by the banking commissioner.
The banking commissioner may require the organizers to publish
the notice at other locations reasonably necessary to solicit the
views of potentially affected persons.
(b) At the expense of the organizers, the banking commissioner
shall thoroughly investigate the application and inquire fully
into the identity and character of each proposed director,
manager, officer, managing participant, and principal shareholder
or participant. The banking commissioner shall prepare a written
report of the investigation.
(c) Rules adopted under this subtitle may specify the
confidential or nonconfidential character of information obtained
or prepared by the department under this section. Except as
provided by Subchapter D, Chapter 181, or in rules regarding
confidential information, the business plan of the applicant and
the financial statement of a proposed officer, director, manager,
or managing participant are confidential and not subject to
public disclosure.
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. 3.07,
eff. Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
735, Sec. 11, eff. September 1, 2007.
Sec. 182.005. PROTEST; HEARING; DECISION ON CHARTER APPLICATION.
(a) A protest of a charter application must be received by the
department before the 15th day after the date the organizers
publish notice under Section 182.004(a) and must be accompanied
by the fees and deposits required by law. If the protest is
untimely, the department shall return all submitted fees and
deposits to the protesting party. If the protest is timely, the
department shall notify the applicant of the protest and mail or
deliver a complete copy of the nonconfidential sections of the
charter application to the protesting party before the 15th day
after the later of the date of receipt of the protest or receipt
of the charter application.
(b) A protesting party must file a detailed protest responding
to each contested statement contained in the nonconfidential
portion of the application not later than the 20th day after the
date the protesting party receives the application from the
department, and relate each statement and response to the
standards for approval set forth in Section 182.003(b). The
applicant must file a written reply to the protesting party's
detailed response on or before the 10th day after the date the
response is filed. The protesting party's response and the
applicant's reply must be verified by affidavit and must certify
that a copy was served on the opposing party. If applicable,
statements in the response and in the reply may be supported by
references to data available in sources of which official notice
may properly be taken. Any comment received by the department and
any reply of the applicant to the comment shall be made available
to the protesting party.
(c) The banking commissioner may not be compelled to hold a
hearing before granting or denying the charter application. In
the exercise of discretion, the banking commissioner may consider
granting a hearing on a charter application at the request of the
applicant or a protesting party. The banking commissioner may
order a hearing regardless of whether a hearing has been
requested by a party. A party requesting a hearing must indicate
with specificity the issues involved that cannot be determined on
the basis of the record compiled under Subsection (b) and why the
issues cannot be determined. A request for hearing and the
banking commissioner's decision with regard to granting a hearing
shall be made a part of the record. If the banking commissioner
sets a hearing, the banking commissioner shall conduct a public
hearing and as many prehearing conferences and opportunities for
discovery as the banking commissioner considers advisable and
consistent with governing statutes and rules, except that the
banking commissioner may not permit discovery of confidential
information in the charter application or the investigation
report.
(d) Based on the record, the banking commissioner shall
determine whether all of the necessary conditions set forth in
Section 182.003(b) have been established and shall enter an order
granting or denying the charter.
(e) The banking commissioner may make approval of any
application conditional. The banking commissioner shall include
any conditions in the order granting the charter.
(f) Chapter 2001, Government Code, does not apply to a charter
application filed for the purpose of assuming all or any portion
of the assets, liabilities, and accounts of a trust institution
considered by the banking commissioner to be in hazardous
condition.
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.
6.009(a), eff. Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
735, Sec. 12, eff. September 1, 2007.
Sec. 182.006. ISSUANCE OF CHARTER. A state trust company may
not engage in the trust business until it receives its charter
from the banking commissioner. The banking commissioner may not
deliver the charter until the state trust company has:
(1) received cash in at least the full amount of restricted
capital from subscriptions for the issuance of shares or
participation shares;
(2) elected or qualified the initial officers and directors or
managers, as appropriate, named in the application for charter or
other officers and directors or managers approved by the banking
commissioner; and
(3) complied with all other requirements of this subtitle
relating to the organization of the state trust company.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.007. DEADLINE TO BEGIN BUSINESS. If a state trust
company does not open and engage in the trust business within six
months after the date it receives its charter or conditional
approval of application for charter, the banking commissioner may
revoke the charter or cancel the conditional approval of
application for charter without judicial action.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.008. RESTRICTED CAPITAL. (a) The banking commissioner
may not issue a charter to a state trust company having
restricted capital of less than $1 million.
(b) The banking commissioner may, on a case-by-case basis,
require additional restricted capital for a proposed or existing
state trust company if the banking commissioner finds the
condition and operations of the existing state trust company or
the proposed scope or type of operations of the proposed state
trust company requires additional restricted capital to protect
the safety and soundness of the state trust company. The safety
and soundness factors to be considered by the banking
commissioner in the exercise of discretion include:
(1) the nature and type of business the state trust company
conducts;
(2) the nature and degree of liquidity in assets held in a
corporate capacity;
(3) the amount, type, and depository of fiduciary assets that
the state trust company manages;
(4) the complexity of the state trust company's fiduciary duties
and degree of discretion undertaken;
(5) the competence and experience of the state trust company's
management;
(6) the extent and adequacy of internal controls maintained by
the state trust company;
(7) the presence or absence of annual unqualified audits by an
independent certified public accountant;
(8) the reasonableness of the state trust company's business
plans for retaining or acquiring additional restricted capital;
and
(9) the existence and adequacy of insurance obtained or held by
the state trust company to protect its clients, beneficiaries,
and grantors.
(c) The effective date of an order under Subsection (b) must be
stated in the order and must be on or after the 21st day after
the date the order is mailed or delivered. Unless the state trust
company requests a hearing before the banking commissioner in
writing before the effective date of the order, the order takes
effect and is final and nonappealable. This subsection does not
prohibit an application to reduce capital requirements of an
existing state trust company under Subsection (e) or under
Section 182.011.
(d) Subject to Subsection (e) and Section 182.011, a state trust
company to which the banking commissioner issues a charter shall
at all times maintain restricted capital in at least the amount
required under Subsection (a) and in any additional amount the
banking commissioner requires under Subsection (b).
(e) Notwithstanding Subsection (a), on application, the banking
commissioner may, on a case-by-case basis in the exercise of
discretion, reduce the amount of minimum restricted capital
required for a state trust company in a manner consistent with
protecting the state trust company's safety and soundness. In
making a determination under this subsection, the banking
commissioner shall consider the factors listed by Subsection (b).
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.009. APPLICATION OF GENERAL CORPORATE LAW. (a) The
Business Organizations Code applies to a trust association as if
it were a for-profit corporation, and to a limited trust
association as if it were a limited liability company, to the
extent not inconsistent with this subtitle or the proper business
of a state trust company, except that:
(1) a reference to the secretary of state means the banking
commissioner unless the context requires otherwise; and
(2) the right of shareholders or participants to cumulative
voting in the election of directors or managers exists only if
granted by the state trust company's articles of association.
(b) Unless expressly authorized by this subtitle or a rule of
the finance commission, a state trust company may not take an
action authorized by a law listed under Subsection (a) or (d)
regarding its corporate status, capital structure, or a matter of
corporate governance, of the type for which a law listed under
Subsection (a) would require a filing with the secretary of state
if the state trust company were a business corporation or a
limited liability company, without submitting the filing to the
banking commissioner for prior written approval of the action.
(c) The finance commission may adopt rules to alter or
supplement the procedures and requirements of the laws listed by
Subsection (a) or (d) applicable to an action taken under this
chapter by a state trust company.
(d) Notwithstanding Subsection (a), this subsection establishes
governing law with respect to a state trust company organized
before January 1, 2006:
(1) to the extent not inconsistent with this subtitle or the
proper business of a state trust company:
(A) the Texas Business Corporation Act, the Texas Miscellaneous
Corporation Laws Act (Article 1302-1.01 et seq., Vernon's Texas
Civil Statutes), and any other law relating to general business
corporations apply to a state trust company, and a reference in
this subtitle to the Business Organizations Code is considered a
reference to the prior law; and
(B) the Texas Limited Liability Company Act (Article 1528n,
Vernon's Texas Civil Statutes) and any other law relating to a
limited liability company organized in Texas apply to a limited
trust association, and a reference in this subtitle to the
Business Organizations Code is considered a reference to the
prior law;
(2) the finance commission may establish rules permitting a
state trust company to elect to be governed by the provisions of
the Business Organizations Code to the extent not inconsistent
with this subtitle or the proper business of a state trust
company; and
(3) this subsection expires January 1, 2010.
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. 21, eff.
Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 68, eff. September 1, 2007.
Sec. 182.010. PARITY. (a) A state trust company has the same
rights and privileges with respect to the exercise of fiduciary
powers that are or may be granted to a trust institution that
maintains its principal office or a branch or trust office in
this state, except that this section may not be used by a state
trust company to:
(1) diminish its otherwise applicable fiduciary duties to a
client under the laws of this state; or
(2) avoid otherwise applicable consumer protection laws of this
state.
(b) A state trust company that intends to exercise a right or
privilege with respect to the exercise of fiduciary powers
granted to a trust institution described in Subsection (a) that
is not authorized for state trust companies under the statutes
and rules of this state other than under this section shall
submit a letter to the banking commissioner, describing in detail
the activity in which the state trust company intends to engage
and the specific authority for the trust institution described in
Subsection (a) to undertake the proposed activity. The state
trust company shall attach copies, if available, of relevant
state and federal law, including regulations and interpretive
letters. The state trust company may begin to perform the
proposed activity after the 30th day after the date the banking
commissioner receives the state trust company's letter unless the
banking commissioner specifies an earlier or later date or
prohibits the activity. The banking commissioner may prohibit the
state trust company from performing the activity only if the
banking commissioner finds that:
(1) a trust institution described in Subsection (a) does not
possess the specific right or privilege to perform the activity
the state trust company seeks to perform; or
(2) the performance of the activity by the state trust company
would adversely affect the safety and soundness of the requesting
state trust company.
(c) The banking commissioner may extend the 30-day period under
Subsection (b) if the banking commissioner determines that the
state trust company's letter raises issues requiring additional
information or additional time for analysis. If the 30-day period
is extended, the state trust company may perform the proposed
activity only on prior written approval by the banking
commissioner, except that the banking commissioner must approve
or prohibit the proposed activity or convene a hearing under
Section 181.201 not later than the 60th day after the date the
commissioner receives the state trust company's letter. If a
hearing is convened, the banking commissioner must approve or
prohibit the proposed activity not later than the 30th day after
the date the hearing is completed.
(d) A state trust company that is denied the requested right or
privilege to engage in an activity by the banking commissioner
under this section may appeal as provided by Sections
181.202-181.204 or may resubmit a letter under this section with
additional information or authority relevant to the banking
commissioner's determination. A denial is immediately final for
purposes of appeal.
(e) The finance commission may adopt rules implementing the
method or manner in which a state trust company exercises
specific rights and privileges, including rules regarding the
exercise of rights and privileges that would be prohibited to
state trust companies under state law except as provided by this
section. The finance commission may not adopt rules under this
subsection unless it finds that:
(1) trust institutions described in Subsection (a) possess the
rights or privileges to perform activities the rules would permit
state trust companies to perform; and
(2) if the rights and privileges would be prohibited to state
trust companies under other state law, the rules contain adequate
safeguards and controls, consistent with safety and soundness, to
address the concern of the legislature evidenced by the state law
the rules would impact.
(f) The exercise of rights and privileges by a state trust
company in compliance with and in the manner authorized by this
section is not a violation of any statute of 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.
6.010(a), eff. Sept. 1, 2001.
Sec. 182.0105. FINANCIAL ACTIVITIES. (a) The finance
commission by rule may determine that an activity not otherwise
approved or authorized for state trust companies is:
(1) a financial activity;
(2) incidental to a financial activity; or
(3) complementary to a financial activity.
(b) In adopting a rule under Subsection (a), the finance
commission shall consider:
(1) the purposes of this subtitle and the Gramm-Leach-Bliley Act
(Pub. L. No. 106-102);
(2) changes or reasonably expected changes in the marketplace in
which state trust companies compete;
(3) changes or reasonably expected changes in the technology for
delivering fiduciary and financial services;
(4) whether the activity is necessary or appropriate to allow a
state trust company to:
(A) compete effectively with another company seeking to provide
fiduciary and financial services;
(B) efficiently deliver information and services that are
financial in nature through the use of technological means,
including an application necessary to protect the security or
efficacy of systems for the transmission of data or financial
transactions; or
(C) offer customers available or emerging technological means
for using fiduciary and financial services or for the document
imaging of data;
(5) whether the activity would violate applicable fiduciary
duties or otherwise pose a substantial risk to the safety and
soundness of a state trust company or the fiduciary and financial
system generally; and
(6) if otherwise determined to be permissible, whether the
conduct of the activity by a state trust company should be
qualified through the imposition of reasonable and necessary
conditions to protect the public and require appropriate regard
for safety and soundness of the trust company and the fiduciary
and financial system generally.
(c) A rule adopted by the finance commission under this section
does not alter or negate applicable licensing and regulatory
requirements administered by a functional regulatory agency of
this state, as defined by Section 31.303, including licensing and
regulatory requirements pertaining to:
(1) insurance activities;
(2) securities activities; and
(3) real estate development, marketing, and sales activities.
Added by Acts 2001, 77th Leg., ch. 528, Sec. 22, eff. Sept. 1,
2001.
Sec. 182.011. EXEMPTION FROM STATUTORY PROVISIONS FOR CERTAIN
STATE TRUST COMPANIES. (a) A state trust company may request in
writing that it be exempted from specified provisions of this
subtitle. The banking commissioner may grant the exemption in
whole or in part if the banking commissioner finds that the state
trust company does not transact business with the public. A state
trust company does not transact business with the public if it
does not make any sale, solicitation, arrangement, agreement, or
transaction to provide a trust or other business service, whether
or not for a fee, commission, or any other type of remuneration,
with:
(1) an individual who is not related within the fourth degree of
affinity or consanguinity to an individual who controls the state
trust company; or
(2) a sole proprietorship, partnership, joint venture,
association, trust, estate, business trust, or corporation that
is not wholly owned by one or more individuals related within the
fourth degree of affinity or consanguinity to an individual who
controls the state trust company.
(b) At the expense of a state trust company, the banking
commissioner may examine or investigate the state trust company
in connection with an application for an exemption. Unless the
application presents novel or unusual questions, the banking
commissioner shall approve the application for exemption or set
the application for hearing not later than the 61st day after the
date the banking commissioner considers the application complete
and accepted for filing. The banking commissioner may require the
submission of additional information as considered necessary to
an informed decision.
(c) An exemption granted under this section may be made subject
to conditions or limitations imposed by the banking commissioner
consistent with this subtitle.
(d) A state trust company that is or has been exempt from a
provision of this subtitle under this section or a predecessor
statute may not transact business with the public unless the
banking commissioner determines, as provided by Section 182.003,
that public convenience and advantage will be promoted by
permitting the state trust company to engage in the trust
business with the public.
(e) The finance commission may adopt rules:
(1) defining other circumstances under which a state trust
company may be exempted from a provision of this subtitle because
it does not transact business with the public;
(2) specifying the provisions of this subtitle that are subject
to an exemption request; and
(3) establishing procedures and requirements for obtaining,
maintaining, or revoking an exemption.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.012. APPLICATION FOR EXEMPTION. (a) A state trust
company requesting an exemption under Section 182.011 shall file
an application with the banking commissioner that includes:
(1) a nonrefundable application fee set by the finance
commission;
(2) a detailed sworn statement showing the state trust company's
assets and liabilities as of the end of the calendar month
preceding the filing of the application;
(3) a sworn statement of the reason for requesting the
exemption;
(4) a sworn statement that the state trust company is not
transacting business with the public and that the company will
not transact business with the public without the prior written
permission of the banking commissioner;
(5) the current street mailing address and telephone number of
the physical location in this state at which the state trust
company will maintain its books and records, with a sworn
statement that the address given is true and correct and is not a
United States Postal Service post office box or a private mail
box, postal box, or mail drop; and
(6) a list of the specific provisions of this subtitle for which
the request for an exemption is made.
(b) The banking commissioner may not approve an exemption unless
the application is completed as required by Subsection (a).
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.013. ANNUAL CERTIFICATION FOR EXEMPT STATE TRUST
COMPANY. (a) Before June 30 of each year, an exempt state trust
company shall file a certification on a form provided by the
banking commissioner that it is maintaining the conditions and
limitations of its exemption. The certification must be
accompanied by a fee set by the finance commission. The
certification is not valid unless it bears an acknowledgment
stamped by the department.
(b) The department shall return a copy of the acknowledged
annual certification to the state trust company not later than
the 30th day after the date the certification is filed. The state
trust company shall notify the department of any failure to
return an acknowledged copy of any annual certification within
this period.
(c) The banking commissioner may examine or investigate the
state trust company periodically as necessary to verify the
certification.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.014. LIMITATION ON EFFECT OF EXEMPTION. (a) An exempt
state trust company shall comply with the home office provisions
of Section 182.202.
(b) The grant of an exemption to a state trust company does not
affect the state trust company's obligation to pay any corporate
franchise tax required by state law.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.015. CHANGE OF CONTROL OF EXEMPT STATE TRUST COMPANY.
Control of an exempt state trust company may not be sold or
transferred with exempt status. If control of an exempt state
trust company is transferred, the acquiring person must comply
with Sections 182.003, 182.004, 182.005, and 183.001 and the
exempt status of the state trust company automatically terminates
on the effective date of the transfer. The acquiring person must
file a separate application to obtain an exemption under Section
182.011.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.016. GROUNDS FOR REVOCATION OF EXEMPTION. The banking
commissioner may revoke an exemption of a state trust company if
the trust company:
(1) makes a false statement under oath on any document required
to be filed by this subtitle or finance commission rule;
(2) fails to submit to an examination as required by Section
181.104;
(3) withholds requested information from the banking
commissioner; or
(4) violates any provision of this subtitle applicable to an
exempt state trust company.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.017. NOTICE AND EFFECT OF REVOCATION OF EXEMPTION. (a)
If the banking commissioner determines from examination or other
credible evidence that an exempt state trust company has violated
any of the requirements of this subchapter relating to an exempt
state trust company, the banking commissioner may by personal
delivery or registered or certified mail, return receipt
requested, notify the state trust company in writing that the
state trust company's exemption has been revoked. The notice must
state grounds for the revocation with reasonable certainty. The
notice must state its effective date, which may not be earlier
than the fifth day after the date the notification is mailed or
delivered.
(b) The revocation takes effect for the state trust company if
the state trust company does not request a hearing in writing
before the effective date. After taking effect the revocation is
final and nonappealable as to that state trust company, and the
state trust company is subject to all of the requirements and
provisions of this subtitle applicable to nonexempt state trust
companies.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.018. ACTION AFTER REVOCATION OF EXEMPTION. (a) A
state trust company must comply with all of the provisions of
Sections 182.003(b) and (c) not later than the fifth day after
the date the revocation of the exemption takes effect. If,
however, the banking commissioner determines at the time of
revocation that the state trust company has been engaging in or
attempting to engage in acts intended or designed to deceive or
defraud the public, the banking commissioner, in the banking
commissioner's sole discretion, may waive the compliance period
provided by this subsection.
(b) If within the period prescribed by Subsection (a) the state
trust company does not comply with all of the provisions of this
subtitle, including capitalization requirements determined by the
banking commissioner as necessary to assure the safety and
soundness of the state trust company, the banking commissioner
may:
(1) institute any action or remedy prescribed by this subtitle
or any applicable rule; or
(2) refer the state trust company to the attorney general for
institution of a quo warranto proceeding to revoke the state
trust company's charter.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.019. PRIOR EXEMPTION. A state trust company that was
exempt under a predecessor to this subtitle is considered exempt
under this subtitle.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.020. FOREIGN CORPORATION EXERCISING TRUST POWERS. (a)
A foreign corporation may not conduct a trust business in this
state. A foreign corporation may control a state trust company in
this state if the state trust company is formed or acquired and
operated as provided by this subtitle and applicable rules.
(b) A foreign corporation or other entity chartered or domiciled
in another jurisdiction as a trust company or depository
institution with trust powers may act as a trustee in this state
only as provided by Section 105A, Texas Probate Code.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.021. ACTIVITIES NOT REQUIRING CHARTER. Subject to
Subchapter C, Chapter 187, a company does not engage in the trust
business in a manner requiring a state charter by:
(1) acting in a manner authorized by law and in the scope of
authority as an agent of a trust institution;
(2) rendering a service customarily performed as an attorney in
a manner approved and authorized by the Supreme Court of Texas or
State Bar of Texas;
(3) acting as trustee under a deed of trust made only as
security for the payment of money or for the performance of
another act;
(4) conducting business as a trust institution if the exercise
of fiduciary powers in this state by the trust institution is not
otherwise prohibited by law;
(5) engaging in a business regulated by the Office of Consumer
Credit Commissioner, except as limited by rules adopted by the
finance commission;
(6) receiving and distributing rents and proceeds of sale as a
licensed real estate broker on behalf of a principal in a manner
authorized by the Texas Real Estate Commission;
(7) engaging in a securities transaction or providing an
investment advisory service as a licensed and registered dealer,
salesman, or advisor to the extent that the activity is regulated
by the State Securities Board or the Securities and Exchange
Commission;
(8) engaging in the sale and administration of an insurance
product by an insurance company or agent authorized or licensed
by the Texas Department of Insurance to the extent that the
activity is regulated by the Texas Department of Insurance;
(9) engaging in the lawful sale of prepaid funeral benefits
under a permit issued by the banking commissioner under Chapter
154;
(10) engaging in the lawful business of a perpetual care
cemetery corporation under Chapter 712, Health and Safety Code;
(11) engaging as a principal in the money services business
under a license issued by the banking commissioner under Chapter
151;
(12) acting as trustee under a voting trust as provided by
Section 6.251, Business Organizations Code;
(13) acting as trustee by a public, private, or independent
institution of higher education or a university system, as
defined by Section 61.003, Education Code, including an
affiliated foundation or corporation of such an institution or
system acting as trustee as provided by the Education Code;
(14) engaging in another activity expressly excluded from the
application of this subtitle by rule of the finance commission;
(15) rendering services customarily performed by a certified
accountant in a manner authorized by the Texas State Board of
Public Accountancy;
(16) serving as trustee of a charitable trust as provided by
Section 2.106, Business Organizations Code;
(17) performing escrow or settlement services if licensed or
authorized under Title 11, Insurance Code;
(18) acting as a qualified intermediary in a tax deferred
exchange under Section 1031, Internal Revenue Code of 1986, and
applicable regulations; or
(19) providing permitted services at a trust representative
office established in this state pursuant to Subchapter C,
Chapter 187.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 6.011(a),
eff. Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch.
728, Sec. 11.111, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 69, eff. September 1, 2007.
Sec. 182.0211. CONFORMANCE WITH SECURITIES ACT. For the
purposes of Section 182.021(7), "salesman" includes "agent" and
"advisor" includes "investment adviser" or "investment adviser
representative."
Added by Acts 2001, 77th Leg., ch. 1091, Sec. 4.03, eff. Sept. 1,
2001.
SUBCHAPTER B. AMENDMENT OF ARTICLES; CHANGES IN CAPITAL SURPLUS
Sec. 182.101. AMENDMENT OR RESTATEMENT OF STATE TRUST COMPANY
ARTICLES OF ASSOCIATION. (a) A state trust company that has
been granted a charter under Section 182.006 or a predecessor
statute may amend or restate its articles of association for any
lawful purpose, including the creation of authorized but unissued
shares or participation shares in one or more classes or series.
(b) An amendment authorizing the issuance of shares or
participation shares in series must contain:
(1) the designation of each series and a statement of any
variations in the preferences, limitations, and relative rights
among series to the extent that the preferences, limitations, and
relative rights are to be established in the articles of
association; and
(2) a statement of any authority to be vested in the board to
establish series and determine the preferences, limitations, and
relative rights of each series.
(c) A limited trust association may not amend its articles of
association to extend its period of existence for a perpetual
period or for any period of years, unless the period of existence
is expressly contingent on those events resulting in dissolution
of the trust association under Section 183.208.
(d) Amendment or restatement of the articles of association of a
state trust company and approval of the board and shareholders or
participants must be made or obtained in accordance with the
Business Organizations Code for the amendment or restatement of a
certificate of formation by a for-profit corporation, except as
otherwise provided by this subtitle or rules adopted under this
subtitle. The original and one copy of the articles of amendment
or restated articles of association must be filed with the
banking commissioner for approval. Unless the submission
presents novel or unusual questions, the banking commissioner
shall approve or reject the amendment or restatement not later
than the 31st day after the date the banking commissioner
considers the submission informationally complete and accepted
for filing. The banking commissioner may require the submission
of additional information as considered necessary to an informed
decision to approve or reject any amendment or restatement of
articles of association under this section.
(e) If the banking commissioner finds that the amendment or
restatement conforms to law and any conditions imposed by the
banking commissioner, and any required filing fee has been paid,
the banking commissioner shall:
(1) endorse the face of the original and copy with the date of
approval and the word "Approved";
(2) file the original in the department's records; and
(3) deliver a certified copy of the amendment or restatement to
the state trust company.
(f) An amendment or restatement, if approved, takes effect on
the date of approval, unless the amendment or restatement
provides for a different effective date.
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. 70, eff. September 1, 2007.
Sec. 182.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION
SHARES. (a) If the articles of association expressly give the
board authority to establish series and determine the
preferences, limitations, and relative rights of each series, the
board may do so only on compliance with this section and any
rules adopted under this chapter.
(b) A series of shares or participation shares may be
established in the manner provided by the Business Organizations
Code as if a state trust company were a domestic corporation, but
the shares or participation shares of the series may not be
issued and sold except on compliance with Section 182.103. The
state trust company shall file the original and one copy of the
statement of action required by the Business Organizations Code
with the banking commissioner.
(c) Unless the submission presents novel or unusual questions,
the banking commissioner shall approve or reject the series not
later than the 31st day after the date the banking commissioner
considers the submission informationally complete and accepted
for filing. The banking commissioner may require the submission
of additional information as considered necessary to an informed
decision.
(d) If the banking commissioner finds that the interests of the
clients and creditors of the state trust company will not be
adversely affected by the series, that the series otherwise
conforms to law and any conditions imposed by the banking
commissioner, and that any required filing fee has been paid, the
banking commissioner shall:
(1) endorse the face of the original and copy of the statement
with the date of approval and the word "Approved";
(2) file the original in the department's records; and
(3) deliver a certified copy of the statement to the state trust
company.
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. 71, eff. September 1, 2007.
Sec. 182.103. CHANGE IN RESTRICTED CAPITAL. (a) A state trust
company may not reduce or increase its restricted capital through
dividend, redemption, issuance of shares or participation shares,
or otherwise without the prior approval of the banking
commissioner, except as permitted by this section or rules
adopted under this chapter.
(b) Unless otherwise restricted by rules, prior approval is not
required for an increase in restricted capital accomplished
through:
(1) issuance of shares of common stock or their equivalent in
participation shares for cash, or a cash contribution to surplus
by shareholders or participants that does not result in issuance
of additional common stock or other securities;
(2) declaration and payment of pro rata share dividends as
defined by the Business Organizations Code; or
(3) adoption by the board of a resolution directing that all or
part of undivided profits be transferred to restricted capital.
(c) Prior approval is not required for:
(1) a decrease in restricted capital caused by losses in excess
of undivided profits; or
(2) a change in restricted capital resulting from accounting
adjustments required by a transaction approved by the banking
commissioner if the accounting adjustments are reasonably
disclosed in the submitted application.
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.
735, Sec. 13, eff. September 1, 2007.
Sec. 182.104. CAPITAL NOTES OR DEBENTURES. (a) With the prior
written approval of the banking commissioner, a state trust
company may at any time through action of its board, and without
requiring action of its shareholders or participants, issue and
sell its capital notes or debentures. The notes or debentures
must be subordinate to the claims of depositors and may be
subordinate to other claims, including the claims of other
creditors or classes of creditors or the shareholders or
participants.
(b) Capital notes or debentures may be convertible into shares
or participation shares of any class or series. The issuance and
sale of convertible capital notes or debentures are subject to
satisfaction of preemptive rights, if any, to the extent provided
by law.
(c) Without the prior written approval of the banking
commissioner, a state trust company may not pay interest due or
principal repayable on outstanding capital notes or debentures
when the state trust company is in hazardous condition or
insolvent, as determined by the banking commissioner, or to the
extent that payment will cause the state trust company to be in
hazardous condition or insolvent.
(d) The amount of any outstanding capital notes or debentures
that meet the requirements of this section and that are
subordinated to unsecured creditors of the state trust company
may be included in equity capital of the state trust company for
purposes of determining hazardous condition or insolvency, and
for such other purposes provided by rules adopted under this
subtitle.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.105. BOARD DESIGNATION OF CERTIFIED SURPLUS.
Periodically the board may vote to designate and record in its
minutes the amount of certified surplus. Except to absorb losses
in excess of undivided profits and uncertified surplus, certified
surplus may not be reduced without the prior written approval of
the banking commissioner.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
SUBCHAPTER C. STATE TRUST COMPANY OFFICES
Sec. 182.201. CONDUCT OF TRUST BUSINESS. A state trust company
may engage in the trust business at its home office and at other
locations as permitted by this subchapter.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.202. HOME OFFICE. (a) Each state trust company must
have and continuously maintain in this state a home office. The
home office must be a location at which the state trust company
does business and keeps its corporate books and records. At least
one executive officer must maintain an office at the home office.
(b) Repealed by Acts 2007, 80th Leg., R.S., Ch. 244, Sec. 3,
eff. September 1, 2007.
(c) A state trust company may change its home office to any
location in this state, if the location that is the home office
before the change remains an office of the state trust company at
which the state trust company does business. To change the
location of its home office, the state trust company must file a
written notice with the banking commissioner setting forth the
name of the state trust company, the street address of its home
office before the change, the street address to which the home
office is to be changed, and a copy of the resolution adopted by
the board authorizing the change. The change of home office takes
effect on the 31st day after the date the banking commissioner
receives the notice.
(d) A relocation of a state trust company's home office may not
be made, and another action that would effect an abandonment of
the state trust company's initial home office may not be taken,
without the prior written approval of the banking commissioner.
The state trust company must establish to the satisfaction of the
banking commissioner that the abandonment is consistent with the
original determination of public convenience and advantage for
the establishment of a state trust company at that location.
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.
244, Sec. 3, eff. September 1, 2007.
Sec. 182.203. ADDITIONAL OFFICES. (a) A state trust company
may establish and maintain additional offices. To establish an
additional office, the state trust company must file a written
notice with the banking commissioner setting forth the name of
the state trust company, the street address of the proposed
additional office, a description of the activities proposed to be
conducted at the additional office, and a copy of the resolution
adopted by the board authorizing the additional office.
(b) A state trust company may not commence business at the
additional office before the 31st day after the date the banking
commissioner receives the notice, unless the banking commissioner
specifies an earlier or later date. The banking commissioner may
specify a later date on a determination that the written notice
raises issues that require additional information or additional
time for analysis. If a later date is specified, the state trust
company may establish the additional office only on prior written
approval by the banking commissioner. The banking commissioner
may deny permission to establish an additional office of the
state trust company if the banking commissioner has a significant
supervisory or regulatory concern regarding the proposed
additional office, the applicant, or an affiliate.
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.
6.012(a), eff. Sept. 1, 2001.
SUBCHAPTER D. MERGER
Sec. 182.301. MERGER AUTHORITY. (a) Subject to this subchapter
and with the prior written approval of the banking commissioner,
a state trust company may merge with another person to the same
extent as a for-profit corporation under the Business
Organizations Code.
(b) Implementation of the plan of merger by the parties and
approval of the board, shareholders, participants, or owners of
the parties must be made or obtained as provided by the Business
Organizations Code as if the state trust company were a domestic
corporation and all other parties to the merger were foreign
corporations and other entities, except as otherwise provided by
rules adopted under this chapter.
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. 72, eff. September 1, 2007.
Sec. 182.302. MERGER APPLICATION; GROUNDS FOR APPROVAL. (a) To
apply for approval of a merger, the parties must submit the
original articles of merger, a number of copies of the articles
of merger equal to the number of surviving, new, and acquiring
entities, and an application in the form required by the banking
commissioner. The banking commissioner may require the submission
of additional information as considered necessary to an informed
decision.
(b) The banking commissioner shall investigate the condition of
the merging parties.
(c) The banking commissioner may approve the merger if:
(1) each resulting state trust company:
(A) has complied with the statutes and rules relating to the
organization of a state trust company; and
(B) will be solvent and have adequate capitalization for its
business and location;
(2) all obligations and liabilities of each trust company that
is a party to the merger have been properly discharged or
otherwise lawfully assumed or retained by a trust institution or
other fiduciary;
(3) each surviving, new, or acquiring person that is not
authorized to engage in the trust business will not engage in the
trust business and has complied with the laws of this state; and
(4) all conditions imposed by the banking commissioner have been
satisfied or otherwise resolved.
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.
6.013(a), eff. Sept. 1, 2001.
Sec. 182.303. APPROVAL OF BANKING COMMISSIONER. (a) If the
banking commissioner approves the merger and finds that all
required filing fees and investigative costs have been paid, the
banking commissioner shall:
(1) endorse the face of the original and each copy of the
articles of merger with the date of approval and the word
"Approved";
(2) file the original in the department's records; and
(3) deliver a certified copy of the articles of merger to each
surviving, new, or acquiring entity.
(b) A merger is effective on the date of approval, unless the
merger agreement provides and the banking commissioner consents
to a different effective date.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 182.304. RIGHTS OF DISSENTERS TO MERGER. A shareholder,
participant, or participant-transferee may dissent from the
merger to the extent and by following the procedure provided by
the Business Organizations Code or rules adopted under this
subtitle.
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. 73, eff. September 1, 2007.
SUBCHAPTER E. PURCHASE OR SALE OF ASSETS
Sec. 182.401. AUTHORITY TO PURCHASE ASSETS. (a) A state trust
company may purchase assets from another trust institution,
including the right to control accounts established with the
trust institution, or assets from another seller, except that the
prior written approval of the banking commissioner is required if
the purchase price exceeds an amount equal to three times the sum
of the trust company's equity capital less intangible assets.
The finance commission by rule may require a state trust company
to obtain the prior written approval of the banking commissioner
for a transaction not otherwise subject to approval that involves
potentially substantial risks to the safety and soundness of the
purchasing trust company.
(b) Except as otherwise expressly provided by this section or
another statute, the purchase of all or part of the assets of the
selling entity does not make the purchasing state trust company
responsible for any liability or obligation of the selling entity
that the purchasing state trust company does not expressly
assume.
(c) If prior approval of the banking commissioner is required
under this section, an application in the form required by the
banking commissioner must be filed with the banking commissioner.
The banking commissioner shall investigate the condition of the
purchaser and seller and may require the submission of additional
information as considered necessary to make an informed decision.
(d) The banking commissioner shall approve the application to
purchase i