CHAPTER 183. OWNERSHIP AND MANAGEMENT OF STATE TRUST COMPANY
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE F. TRUST COMPANIES
CHAPTER 183. OWNERSHIP AND MANAGEMENT OF STATE TRUST COMPANY
SUBCHAPTER A. TRANSFER OF OWNERSHIP INTEREST
Sec. 183.001. ACQUISITION OF CONTROL. (a) Except as expressly
permitted by this subtitle, without the prior written approval of
the banking commissioner a person may not directly or indirectly
acquire a legal or beneficial interest in voting securities of a
state trust company or a corporation or other entity owning
voting securities of a state trust company if, after the
acquisition, the person would control the state trust company.
(b) For purposes of this subchapter and except as otherwise
provided by rules adopted under this subtitle, the principal
shareholder or principal participant of a state trust company
that directly or indirectly owns or has the power to vote a
greater percentage of voting securities of the state trust
company than any other shareholder or participant is considered
to control the state trust company.
(c) This subchapter does not prohibit a person from negotiating
to acquire, but not acquiring, control of a state trust company
or a person that controls a state trust company.
(d) This section does not apply to:
(1) the acquisition of securities in connection with the
exercise of a security interest or otherwise in full or partial
satisfaction of a debt previously contracted for in good faith if
the acquiring person files written notice of acquisition with the
banking commissioner before the person votes the securities
acquired;
(2) the acquisition of voting securities in any class or series
by a controlling person who has previously complied with and
received approval under this subchapter or who was identified as
a controlling person in a prior application filed with and
approved by the banking commissioner;
(3) an acquisition or transfer by operation of law, will, or
intestate succession if the acquiring person files written notice
of acquisition with the banking commissioner before the person
votes the securities acquired; or
(4) a transaction exempted by the banking commissioner or by
rules adopted under this subtitle because the transaction is not
within the purposes of this subchapter or the regulation of which
is not necessary or appropriate to achieve the objectives of this
subchapter.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.002. APPLICATION REGARDING ACQUISITION OF CONTROL. (a)
The transferee in an acquisition of control of a state trust
company or of a person that controls a state trust company must
file an application for approval of the acquisition. The
application must:
(1) be under oath and on a form prescribed by the banking
commissioner;
(2) contain all information that:
(A) is required by rules adopted under this subtitle; or
(B) the banking commissioner requires in a particular
application as necessary to an informed decision to approve or
reject the acquisition; and
(3) be accompanied by any filing fee required by statute or
rule.
(b) If a person proposing to acquire voting securities in a
transaction subject to this section includes a group of persons
acting in concert, the information required by the banking
commissioner may be required of each member of the group.
(c) Rules adopted under this subtitle may specify the
confidential or nonconfidential character of information obtained
by the banking commissioner under this section. In the absence
of rules, information obtained by the banking commissioner under
this section is confidential and may not be disclosed by the
banking commissioner or any employee of the department except as
provided by Subchapter D, Chapter 181.
(d) The applicant shall publish notice of the application, its
date of filing, the identity of each applicant, and, if the
applicant includes a group, the identity of each group member.
The notice must be published in the form and frequency specified
by the banking commissioner and in a newspaper of general
circulation in the county where the state trust company's home
office is located, or in another publication or location as
directed by the banking commissioner.
(e) The applicant may defer publication of the notice until not
later than the 34th day after the date the application is filed
if:
(1) the application is filed in contemplation of a public tender
offer subject to 15 U.S.C. Section 78n(d)(1);
(2) the applicant requests confidential treatment and represents
that a public announcement of the tender offer and the filing of
appropriate forms with the Securities and Exchange Commission or
the appropriate federal banking agency, as applicable, will occur
within the period of deferral; and
(3) the banking commissioner determines that the public interest
will not be harmed by the requested confidential treatment.
(f) The banking commissioner may waive the requirement that a
notice be published or permit delayed publication on a
determination that waiver or delay is in the public interest. If
publication of notice is waived under this subsection, the
information that would be contained in a published notice becomes
public information under Chapter 552, Government Code, on the
35th day after the date the application is filed.
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. 3.08,
eff. Sept. 1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
735, Sec. 17, eff. September 1, 2007.
Sec. 183.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.
(a) Not later than the 60th day after the date the notice is
published, the banking commissioner shall approve the application
or set the application for hearing. If the banking commissioner
sets a hearing, the department shall participate as the opposing
party and the banking commissioner shall conduct a hearing and
one or more prehearing conferences and opportunities for
discovery as the banking commissioner considers advisable and
consistent with governing statutes and rules. A hearing held
under this section is confidential and closed to the public.
(b) Based on the record, the banking commissioner may issue an
order denying an application if:
(1) the acquisition would substantially lessen competition, be
in restraint of trade, result in a monopoly, or be in furtherance
of a combination or conspiracy to monopolize or attempt to
monopolize the trust industry in any part of this state, unless:
(A) the anticompetitive effects of the acquisition are clearly
outweighed in the public interest by the probable effect of
acquisition in meeting the convenience and needs of the community
to be served; and
(B) the acquisition is not in violation of the law of this state
or the United States;
(2) the financial condition of the transferee, or any member of
a group comprising the transferee, might jeopardize the financial
stability of the state trust company being acquired;
(3) plans or proposals to operate, liquidate, or sell the state
trust company or its assets are not in the best interest of the
state trust company;
(4) the experience, ability, standing, competence,
trustworthiness, and integrity of the transferee, or any member
of a group comprising the transferee, are insufficient 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;
(5) the state trust company will not be solvent, have adequate
capitalization, or be in compliance with the laws of this state
after the acquisition;
(6) the transferee has failed to furnish all information
pertinent to the application reasonably required by the banking
commissioner; or
(7) the transferee is not acting in good faith.
(c) If the banking commissioner approves the application, the
transaction may be consummated. If the approval is conditioned on
a written commitment from the transferee offered to and accepted
by the banking commissioner, the commitment is:
(1) enforceable against the state trust company and the
transferee; and
(2) considered for all purposes an agreement under this
subtitle.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing
has been held, the banking commissioner has entered an order
denying the application, and the order has become final, the
transferee may appeal the final order by filing a petition for
judicial review.
(b) The filing of an appeal under this section does not stay the
order of the banking commissioner.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.005. OBJECTION TO OTHER TRANSFER. This subchapter does
not prevent the banking commissioner from investigating,
commenting on, or seeking to enjoin or set aside a transfer of
voting securities that evidence a direct or indirect interest in
a state trust company, regardless of whether the transfer is
governed by this subchapter, if the banking commissioner
considers the transfer to be against the public interest.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.006. CIVIL ENFORCEMENT; CRIMINAL PENALTY. (a) If the
banking commissioner believes that a person has violated or is
about to violate this subchapter or a rule or order of the
banking commissioner relating to this subchapter, the attorney
general on behalf of the banking commissioner may apply to a
district court in Travis County for an order enjoining the
violation and for other equitable relief the nature of the case
requires.
(b) A person who knowingly fails or refuses to file the
application required by Section 183.002 commits an offense. An
offense under this subsection is a Class A misdemeanor.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
SUBCHAPTER B. BOARD AND OFFICERS
Sec. 183.101. VOTING SECURITIES HELD BY TRUST COMPANY. (a)
Voting securities of a state trust company held by the state
trust company in a fiduciary capacity under a will or trust,
whether registered in its own name or in the name of its nominee,
may not be voted in the election of directors or managers or on a
matter affecting the compensation of directors, managers,
officers, or employees of the state trust company in that
capacity, unless:
(1) under the terms of the will or trust, the manner in which
the voting securities are to be voted may be determined by a
donor or beneficiary of the will or trust and the donor or
beneficiary actually makes the determination in the matter at
issue;
(2) the terms of the will or trust expressly direct the manner
in which the securities must be voted to the extent that
discretion is not vested in the state trust company as fiduciary;
or
(3) the securities are voted solely by a cofiduciary that is not
an affiliate of the state trust company, as if the cofiduciary
were the sole fiduciary.
(b) Voting securities of a state trust company that cannot be
voted under this section are considered to be authorized but
unissued for purposes of determining the procedures for and
results of the affected vote.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.102. BYLAWS. Except as provided by Section 183.207,
each state trust company shall adopt bylaws and may amend its
bylaws from time to time for the purposes and in accordance with
the procedures set forth in the Business Organizations Code.
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. 75, eff. September 1, 2007.
Sec. 183.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING
PARTICIPANTS. (a) The board of a state trust company must
consist of not fewer than five or more than 25 directors,
managers, or managing participants, the majority of whom must be
residents of this state. Except for a limited trust association
in which management has been retained by its participants, the
principal executive officer of the state trust company is a
member of the board. The principal executive officer acting in
the capacity of board member is the board's presiding officer
unless the board elects a different presiding officer to perform
the duties as designated by the board.
(b) Unless the banking commissioner consents otherwise in
writing, a person may not serve as director, manager, or managing
participant of a state trust company if:
(1) the state trust company incurs an unreimbursed loss
attributable to a charged-off obligation of or holds a judgment
against:
(A) the person; or
(B) an entity that was controlled by the person at the time of
funding and at the time of default on the loan that gave rise to
the judgment or charged-off obligation;
(2) the person is the subject of an order described by Section
185.007(a);
(3) the person has been convicted of a felony; or
(4) the person has violated, with respect to a trust under which
the state trust company has fiduciary responsibility, Section
113.052 or 113.053(a), Property Code, relating to loan of trust
funds and purchase or sale of trust property by the trustee, and
the violation has not been corrected.
(c) If a state trust company other than a limited trust
association operated by managing participants does not elect
directors or managers before the 61st day after the date of its
regular annual meeting, the banking commissioner may appoint a
conservator under Chapter 185 to operate the state trust company
and elect directors or managers, as appropriate. If the
conservator is unable to locate or elect persons willing and able
to serve as directors or managers, the banking commissioner may
close the state trust company for liquidation.
(d) A vacancy on the board that reduces the number of directors,
managers, or managing participants to fewer than five must be
filled not later than the 30th day after the date the vacancy
occurs. A limited trust association with fewer than five managing
participants must add one or more new participants or elect a
board of managers of not fewer than five persons to resolve the
vacancy. After the 30th day after the date the vacancy occurs,
the banking commissioner may appoint a conservator under Chapter
185 to operate the state trust company and elect a board of not
fewer than five persons to resolve the vacancy. If the
conservator is unable to locate or elect five persons willing and
able to serve as directors or managers, the banking commissioner
may close the state trust company for liquidation.
(e) Before each term to which a person is elected to serve as a
director or manager of a state trust company, or annually for a
person who is a managing participant, the person shall submit an
affidavit for filing in the minutes of the state trust company
stating that the person, to the extent applicable:
(1) accepts the position and is not disqualified from serving in
the position;
(2) will not violate or knowingly permit an officer, director,
manager, managing participant, or employee of the state trust
company to violate any law applicable to the conduct of business
of the trust company; and
(3) will diligently perform the duties of the position.
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. 3.09,
eff. Sept. 1, 2001.
Sec. 183.104. ADVISORY DIRECTOR OR ADVISORY MANAGER. An
advisory director or advisory manager is not considered to be a
director if the advisory director or advisory manager:
(1) is not elected by the shareholders or participants of the
state trust company;
(2) does not vote on matters before the board or a committee of
the board;
(3) is not counted for purposes of determining a quorum of the
board or committee; and
(4) provides solely general policy advice to the board.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.105. REQUIRED QUARTERLY BOARD MEETING. (a) The board
of a state trust company shall hold at least one regular meeting
each quarter.
(b) At each regular meeting the board shall review and approve
the minutes of the preceding meeting and review the operations,
activities, and financial condition of the state trust company.
The board may designate committees from among its members to
perform those duties and approve or disapprove the committees'
reports at each regular meeting.
(c) All actions of the board must be recorded in its minutes.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.106. OFFICERS. (a) The board shall annually appoint
the officers of the state trust company, who serve at the will of
the board.
(b) The state trust company must have a principal executive
officer primarily responsible for the execution of board policies
and operation of the state trust company and an officer
responsible for the maintenance and storage of all corporate
books and records of the state trust company and for required
attestation of signatures. Those positions may not be held by the
same person.
(c) The board may appoint other officers of the state trust
company as the board considers necessary.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.107. LIMITATION ON ACTION OF OFFICER OR EMPLOYEE IN
RELATION TO ASSET OR LIABILITY. Unless expressly authorized by a
resolution of the board recorded in its minutes, an officer or
employee may not create or dispose of a state trust company asset
or create or incur a liability on behalf of the state trust
company.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.108. CERTAIN CRIMINAL OFFENSES. (a) An officer,
director, manager, managing participant, employee, shareholder,
or participant of a state trust company commits an offense if the
person knowingly:
(1) conceals information or removes, destroys, or conceals a
book or record of the state trust company for the purpose of
concealing information from the banking commissioner or an agent
of the banking commissioner; or
(2) for the purpose of concealing, removes or destroys any book
or record of the state trust company that is material to a
pending or anticipated legal or administrative proceeding.
(b) An officer, director, manager, managing participant, or
employee of a state trust company commits an offense if the
person knowingly makes a false entry in a book, record, report,
or statement of the state trust company.
(c) An offense under this section is a felony of the third
degree.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.109. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES. (a)
Without the prior approval of a disinterested majority of the
board recorded in the minutes, or if a disinterested majority
cannot be obtained, the prior written approval of the banking
commissioner, a state trust company may not directly or
indirectly:
(1) sell or lease an asset of the state trust company to an
officer, director, manager, managing participant, or principal
shareholder or participant of the state trust company or an
affiliate of the state trust company;
(2) purchase or lease an asset in which an officer, director,
manager, managing participant, or principal shareholder or
participant of the state trust company or an affiliate of the
state trust company has an interest; or
(3) subject to Section 184.201, extend credit to an officer,
director, manager, managing participant, or principal shareholder
or participant of the state trust company or an affiliate of the
state trust company.
(b) Notwithstanding Subsection (a), a lease transaction
described in Subsection (a)(2) involving real property may not be
consummated, renewed, or extended without the prior written
approval of the banking commissioner. For purposes of this
subsection only, an affiliate of a state trust company does not
include a subsidiary of the state trust company.
(c) Subject to Section 184.201, a state trust company may not
directly or indirectly extend credit to an employee, officer,
director, manager, managing participant, or principal shareholder
or participant of the state trust company or to an affiliate of
the state trust company, unless:
(1) the extension of credit is made on substantially the same
terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions by the state
trust company with persons who are not employees, officers,
directors, managers, managing participants, principal
shareholders, participants, or affiliates of the state trust
company;
(2) the extension of credit does not involve more than the
normal risk of repayment or present other unfavorable features;
and
(3) the state trust company follows credit underwriting
procedures that are not less stringent than those applicable to
comparable transactions by the state trust company with persons
who are not employees, officers, directors, managers, managing
participants, principal shareholders, participants, or affiliates
of the state trust company.
(d) An officer, director, manager, or managing participant of a
state trust company who knowingly participates in or permits a
violation of this section commits an offense. An offense under
this subsection is a felony of the third degree.
(e) The finance commission may adopt rules to administer and
carry out this section, including rules to establish limits,
requirements, or exemptions other than those specified by this
section for particular categories of transactions.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.110. FIDUCIARY RESPONSIBILITY. The board of a state
trust company is responsible for the proper exercise of fiduciary
powers by the state trust company and each matter pertinent to
the exercise of fiduciary powers, including:
(1) the determination of policies;
(2) the investment and disposition of property held in a
fiduciary capacity; and
(3) the direction and review of the actions of each officer,
employee, and committee used by the state trust company in the
exercise of its fiduciary powers.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.111. RECORDKEEPING. A state trust company shall keep
its fiduciary records separate and distinct from other records of
the state trust company in compliance with applicable rules
adopted under this subtitle. The fiduciary records must contain
all appropriate material information relative to each account.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.112. BONDING REQUIREMENTS. (a) The board of a state
trust company shall require a bond for the protection and
indemnity of clients, in reasonable amounts established by rules
adopted under this subtitle, against dishonesty, fraud,
defalcation, forgery, theft, and other similar insurable losses.
The bond must be with a corporate insurance or surety company:
(1) authorized to do business in this state; or
(2) acceptable to the banking commissioner and otherwise
lawfully permitted to issue the coverage against those losses in
this state.
(b) Except as otherwise provided by rule, a bond is required to
cover each director, manager, managing participant, officer, and
employee of a state trust company without regard to whether the
person receives salary or other compensation.
(c) A state trust company may apply to the banking commissioner
for permission to eliminate the bonding requirement of this
section for a particular individual. The banking commissioner
shall approve the application if the banking commissioner finds
that the bonding requirement is unnecessary or burdensome. Unless
the application presents novel or unusual questions, the banking
commissioner shall approve the application 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.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.113. REPORTS OF APPARENT CRIME. (a) A state trust
company that is the victim of a robbery, has a shortage of
corporate or fiduciary funds in excess of $5,000, or is the
victim of an apparent or suspected misapplication of its
corporate or fiduciary funds or property in any amount by a
director, manager, managing participant, officer, or employee
shall report the robbery, shortage, or apparent or suspected
misapplication of funds or property to the banking commissioner
within 48 hours after the time it is discovered. The initial
report may be oral if the report is promptly confirmed in
writing. The state trust company or a director, manager, managing
participant, officer, employee, or agent is not subject to
liability for defamation or another charge resulting from
information supplied in the report.
(b) A report filed with the banking commissioner under this
section may be a copy of a written report filed with an
appropriate federal agency.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
SUBCHAPTER C. LIMITED TRUST ASSOCIATION
Sec. 183.201. LIABILITY OF PARTICIPANTS AND MANAGERS. (a)
Except as provided by Subsection (b), a participant,
participant-transferee, or manager of a limited trust association
is not liable for a debt, obligation, or liability of the limited
trust association, including a debt, obligation, or liability
under a judgment, decree, or order of court. A participant, other
than a full liability participant, or a manager of a limited
trust association is not a proper party to a proceeding by or
against a limited trust association unless the object of the
proceeding is to enforce the participant's or manager's right
against or liability to a limited trust association.
(b) A full liability participant of a limited trust association
is liable under a judgment, decree, or order of court for a debt,
obligation, or liability of the limited trust association that
accrued during the participation of the full liability
participant in the limited trust association and before the full
liability participant or a successor in interest filed with the
banking commissioner a notice of withdrawal as a full liability
participant from the limited trust association. The filed notice
of withdrawal is a public record.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.202. FILING OF NOTICE OF FULL LIABILITY. (a) A
limited trust association shall file with the banking
commissioner a copy of any participation agreement by which a
participant of the limited trust association agrees to become a
full liability participant and the name and address of each full
liability participant. Only the portion of the filed copy
containing the designation of each full liability participant is
a public record.
(b) The banking commissioner may require a complete copy of the
participation agreement to be filed with the department,
regardless of whether a state trust company has a full liability
participant, except that the provisions of the participation
agreement other than those by which a participant of the limited
trust association agrees to become a full liability participant
are confidential and subject to release only as provided by
Subchapter D, Chapter 181.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.203. CONTRACTING FOR DEBT OR OBLIGATION. Except as
provided by this section or the articles of association of the
limited trust association, a debt, liability, or other obligation
may be contracted for or incurred on behalf of a limited trust
association only by:
(1) a majority of the managers, if management of the limited
trust association has been vested in a board of managers;
(2) a majority of the managing participants; or
(3) an officer or other agent vested with actual or apparent
authority to contract for or incur the debt, liability, or other
obligation.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.204. MANAGEMENT OF LIMITED TRUST ASSOCIATION. (a)
Management of a limited trust association is vested in the
participants in proportion to each participant's contribution to
capital, as adjusted periodically to properly reflect any
additional contribution. The articles of association may provide
that management of a limited trust association is vested in a
board of managers to be elected annually by the participants as
prescribed by the bylaws.
(b) Participants of a limited trust association may not retain
management and must elect a board of managers if:
(1) any participant is disqualified from serving as a managing
participant under Section 183.103;
(2) the limited trust association has fewer than five or more
than 25 participants; or
(3) any participant has been removed by the banking commissioner
under Subchapter A, Chapter 185.
(c) The articles of association, bylaws, and participation
agreement of a limited trust association may use the term
"director" instead of "manager" and the term "board" instead of
"board of managers."
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S
CONTRIBUTION TO CAPITAL. (a) Except as otherwise provided by
this chapter, a participant may not receive from a limited trust
association any part of the participant's contribution to capital
unless:
(1) all liabilities of the limited trust association, except
liabilities to participants on account of contribution to
capital, have been paid;
(2) after the withdrawal or reduction, sufficient property of
the limited trust association will remain to pay all liabilities
of the limited trust association, except liabilities to
participants on account of contribution to capital;
(3) all participants consent; or
(4) the articles of association are canceled or amended to set
out the withdrawal or reduction.
(b) A participant may demand the return of the participant's
contribution to capital on the dissolution of the association and
the failure of the full liability participants to exercise the
right to carry on the business of the limited trust association
as provided by Section 183.208.
(c) A participant may demand the return of the participant's
contribution to capital only in cash unless a different form of
return of the contribution is allowed by the articles of
association or by the unanimous consent of all participants.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.206. INTEREST IN LIMITED TRUST ASSOCIATION;
TRANSFERABILITY OF INTEREST. (a) The interest of a participant
or participant-transferee in a limited trust association is the
personal property of the participant or the
participant-transferee and may be transferred as provided by the
bylaws or the participation agreement.
(b) A transferee of a participant's interest has the status of a
participant-transferee and does not by the transfer become a
participant or obtain a right to participate in the management of
the limited trust association.
(c) A participant-transferee is entitled to receive only a share
of profits, return of contribution, or other distributive benefit
in respect to the interest transferred to which the participant
who transferred the interest would have been entitled.
(d) A participant-transferee may become a participant only as
provided by the bylaws or the participation agreement.
(e) A limited trust association may add additional participants
in the same manner as participant-transferees after payment in
full of the capital contribution to the limited trust association
payable for the issuance of additional participation interests.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.207. BYLAWS OF LIMITED TRUST ASSOCIATION. (a) A
limited trust association in which management is retained by the
participants is not required to adopt bylaws if the provisions
required by law to be contained in the bylaws are contained in
the articles of association or the participation agreement.
(b) If a limited trust association has adopted bylaws that
designate each full liability participant, the limited trust
association shall file a copy of the bylaws with the banking
commissioner. Only the portion of the bylaws designating each
full liability participant is a public record.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.208. DISSOLUTION. (a) A limited trust association
organized under this chapter is dissolved on:
(1) the expiration of the period fixed for the duration of the
limited trust association;
(2) a vote to dissolve or the execution of a written consent to
dissolve by all full liability participants, if any, and a
sufficient number of other participants that, combined with all
full liability participants, hold at least two-thirds of the
participation shares in each class in the association, or a
greater fraction as provided by the articles of association;
(3) except as provided by the articles of association, the
death, insanity, expulsion, bankruptcy, retirement, or
resignation of a participant unless a majority in interest of all
remaining participants elect in writing not later than the 90th
day after the date of the event to continue the business of the
association; or
(4) the occurrence of an event of dissolution specified in the
articles of association.
(b) A dissolution under this section is considered to be the
initiation of a voluntary dissolution under Subchapter B, Chapter
186.
(c) An event of dissolution described by Subsection (a)(3) does
not cancel or revoke a contract to which the limited trust
association is a party, including a trust indenture or agreement
or voluntary dissolution under Subchapter B, Chapter 186, until
the period for the remaining participants to continue the
business of the limited trust association has expired without the
remaining participants having completed the necessary action to
continue the business of the limited trust association.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.209. ALLOCATION OF PROFITS AND LOSSES. The profits and
losses of a limited trust association may be allocated among the
participants and among classes of participants as provided by the
participation agreement. Without the prior written approval of
the banking commissioner to use a different allocation method,
the profits and losses must be allocated according to the
relative interests of the participants as reflected in the
articles of association and related documents filed with and
approved by the banking commissioner.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.210. DISTRIBUTIONS. Subject to Section 182.103,
distributions of cash or other assets of a limited trust
association may be made to the participants as provided by the
participation agreement. Without the prior written approval of
the banking commissioner to use a different distribution method,
distributions must be made to the participants according to the
relative interests of the participants as reflected in the
articles of association and related documents filed with and
approved by the banking commissioner.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.
Sec. 183.211. APPLICATION OF OTHER PROVISIONS TO LIMITED TRUST
ASSOCIATIONS. For purposes of applying the provisions of this
subtitle other than this subchapter to a limited trust
association, as the context requires:
(1) a manager and the board of managers are considered to be a
director and the board of directors;
(2) if there is not a board of managers, a participant is
considered to be a director and all of the participants are
considered to be the board of directors;
(3) a participant or participant-transferee is considered to be
a shareholder;
(4) a participation share is considered to be a share of stock;
and
(5) a distribution is considered to be a dividend.
Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.
1, 1999.