CHAPTER 33. OWNERSHIP AND MANAGEMENT OF STATE BANK
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE A. BANKS
CHAPTER 33. OWNERSHIP AND MANAGEMENT OF STATE BANK
SUBCHAPTER A. TRANSFER OF OWNERSHIP INTEREST
Sec. 33.001. ACQUISITION OF CONTROL. (a) Except as otherwise
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 bank or a corporation or other entity
owning voting securities of a state bank if, after the
acquisition, the person would control the bank.
(b) For purposes of this subchapter and except as otherwise
provided by rules adopted under this subtitle, the principal
shareholder of a state bank that directly or indirectly owns or
has the power to vote a greater percentage of voting securities
of the bank than any other shareholder is considered to control
the bank.
(c) This subchapter does not prohibit a person from negotiating
to acquire, but not acquiring, control of a state bank or a
person that controls a state bank.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 24, eff. September 1, 2007.
Sec. 33.002. APPLICATION REGARDING ACQUISITION OF CONTROL. (a)
The proposed transferee in an acquisition of control of a state
bank or of a person that controls a state bank must file an
application for approval of the acquisition. The application
must:
(1) be under oath and in 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 proposed acquisition; and
(3) be accompanied by any filing fee required by law.
(b) If a person proposing to acquire voting securities in a
transaction subject to this section includes any 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 31.
(d) The applicant shall publish notice of the application, its
date of filing, and the identity of the 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 in which the bank'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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 412, Sec. 2.09, eff. Sept.
1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
735, Sec. 8, eff. September 1, 2007.
Sec. 33.003. 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 the hearing and
one or more prehearing conferences and opportunities for
discovery as the banking commissioner considers advisable and
consistent with governing law. 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,
restrain trade, result in a monopoly, or further a combination or
conspiracy to monopolize or attempt to monopolize the banking
industry in any part of this state, unless:
(A) the anticompetitive effects of the proposed acquisition are
clearly outweighed in the public interest by the probable effect
of the acquisition in meeting the convenience and needs of the
community to be served; and
(B) the proposed acquisition does not violate the law of this
state or the United States;
(2) the financial condition of the proposed transferee, or any
member of a group comprising the proposed transferee, might
jeopardize the financial stability of the bank being acquired;
(3) plans or proposals to operate, liquidate, or sell the bank
or its assets are not in the best interests of the bank;
(4) the experience, ability, standing, competence,
trustworthiness, and integrity of the proposed transferee, or any
member of a group comprising the proposed transferee, are
insufficient to justify a belief that the bank will be free from
improper or unlawful influence or interference with respect to
the bank's operation in compliance with law;
(5) the bank will not be solvent, have adequate capitalization,
or comply with the law of this state after the acquisition;
(6) the proposed transferee has not furnished all information
pertinent to the application reasonably required by the banking
commissioner; or
(7) the proposed 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 proposed transferee offered to and
accepted by the banking commissioner, the commitment is
enforceable against the bank and the transferee and is considered
for all purposes an agreement under this subtitle.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 33.004. 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
proposed transferee may appeal the 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 33.005. EXEMPTIONS. The following acquisitions are exempt
from Section 33.001:
(1) an 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
and the acquiring person files written notice of acquisition with
the banking commissioner before the person votes the securities
acquired;
(2) an 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 and the acquiring person files written
notice of acquisition with the banking commissioner before the
person votes the securities acquired;
(4) a transaction subject to Chapter 202; and
(5) 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 the
transaction is not necessary or appropriate to achieve the
objectives of this subchapter.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.011, eff. Sept.
1, 1999.
Sec. 33.006. 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 bank, regardless of whether the transfer is governed by
this subchapter, if the banking commissioner considers the
transfer to be against the public interest.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 33.007. 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 of the finance
commission or order of the banking commissioner pertaining to
this subchapter, the attorney general on behalf of the banking
commissioner may apply to a district court of 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 33.002 commits an offense. An
offense under this subsection is a Class A misdemeanor.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 867, Sec. 21, eff. Sept. 1,
2001.
SUBCHAPTER B. BOARD AND OFFICERS
Sec. 33.101. VOTING SECURITIES HELD BY BANK. (a) Voting
securities of a state bank held by the bank in a fiduciary
capacity under a will or trust, whether registered in the bank's
name or in the name of its nominee, may not be voted in the
election of directors or on a matter affecting the compensation
of directors, officers, or employees of the bank 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 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 so that discretion is not
vested in the bank as fiduciary; or
(3) the securities are voted solely by a cofiduciary that is not
an affiliate of the bank, as if the cofiduciary were the sole
fiduciary.
(b) Voting securities of a state bank 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 25, eff. September 1, 2007.
Sec. 33.102. BYLAWS. Each state bank shall adopt bylaws and may
amend its bylaws for the purposes and according to the procedures
provided by the Business Organizations Code.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 26, eff. September 1, 2007.
Sec. 33.103. BOARD OF DIRECTORS. (a) The board of a state bank
must consist of not fewer than five but not more than 25
directors, a majority of whom are residents of this state. The
principal executive officer of the bank is a member of the board.
The principal executive officer acting in the capacity of a
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 of a state bank if:
(1) the bank 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
35.007(a); or
(3) the person has been convicted of a felony.
(c) If a state bank does not elect directors before the 61st day
after the date of its regular annual meeting, the banking
commissioner may appoint a conservator under Chapter 35 to
operate the bank and elect directors, as appropriate. If the
conservator is unable to locate or elect persons willing and able
to serve as directors, the banking commissioner may close the
bank for liquidation.
(d) A vacancy on the board that reduces the number of directors
to fewer than five must be filled not later than the 30th day
after the date the vacancy occurs. If the vacancy is not timely
filled, the banking commissioner may appoint a conservator under
Chapter 35 to operate the bank 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, the banking commissioner may close the bank for
liquidation.
(e) Before each term to which a person is elected to serve as a
director of a state bank, the person shall submit an affidavit
for filing in the minutes of the bank 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,
or employee of the bank to violate any law applicable to the
conduct of business of the bank; and
(3) will diligently perform the duties of the position.
(f) The banking commissioner in the exercise of discretion may
waive or reduce the residency requirements for directors set
forth in Subsection (a).
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.0115, eff. Sept.
1, 1999; Acts 2001, 77th Leg., ch. 412, Sec. 2.10, eff. Sept. 1,
2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 27, eff. September 1, 2007.
Sec. 33.104. ADVISORY DIRECTOR. An advisory director is not
considered a director if the advisory director:
(1) is not elected by the shareholders of the bank;
(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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 28, eff. September 1, 2007.
Sec. 33.105. REQUIRED MONTHLY BOARD MEETING. (a) The board of
a state bank shall hold at least one regular meeting each month.
At each regular meeting the board shall review and approve the
minutes of the prior meeting and review the operations,
activities, and financial condition of the bank. The board may
designate a committee from among its members to perform those
duties and approve or disapprove the committee's report at each
regular meeting. Each action of the board must be recorded in its
minutes.
(b) Repealed by Acts 2007, 80th Leg., R.S., Ch. 110, Sec. 14,
eff. September 1, 2007.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
110, Sec. 14, eff. September 1, 2007.
Sec. 33.106. OFFICERS. The board shall annually appoint the
officers of the bank, who serve at the will of the board. The
bank must have a principal executive officer primarily
responsible for the execution of board policies and operation of
the bank and an officer responsible for the maintenance and
storage of all corporate books and records of the bank and for
required attestation of signatures. Those positions may not be
held by the same person. The board may appoint other officers of
the bank as the board considers necessary.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 33.107. 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 bank asset or create or
incur a liability on behalf of the bank.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 33.108. CRIMINAL OFFENSES. (a) An officer, director,
employee, or shareholder of a state bank commits an offense if
the person knowingly:
(1) conceals information or a fact, or removes, destroys, or
conceals a book or record of the bank for the purpose of
concealing information or a fact, from the banking commissioner
or an agent of the banking commissioner; or
(2) removes, destroys, or conceals any book or record of the
bank that is material to a pending or anticipated legal or
administrative proceeding.
(b) An officer, director, or employee of a state bank commits an
offense if the person:
(1) knowingly makes a false entry in a book, record, report, or
statement of the bank; or
(2) violates or knowingly participates in a violation of, or
permits another of the bank's officers, directors, or employees
to violate, the prohibition on lending trust funds under Section
113.052, Property Code.
(c) An offense under this section is a felony of the third
degree.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 29, eff. September 1, 2007.
Sec. 33.109. 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 bank may not directly or indirectly:
(1) sell or lease an asset of the bank to an officer, director,
or principal shareholder of the bank or of an affiliate of the
bank; or
(2) purchase or lease an asset in which an officer, director, or
principal shareholder of the bank or of an affiliate of the bank
has an interest.
(b) An officer or director of the bank 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 412, Sec. 2.11, eff. Sept.
1, 2001.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 30, eff. September 1, 2007.
SUBCHAPTER C. LIMITED BANKING ASSOCIATION
Sec. 33.201. LIABILITY OF PARTICIPANTS AND MANAGERS. (a) A
participant or manager of a limited banking association is not
liable for a debt, obligation, or liability of the limited
banking association, including a debt, obligation, or liability
under a judgment, decree, or order of court. A participant or a
manager of a limited banking association is not a proper party to
a proceeding by or against a limited banking association unless
the object of the proceeding is to enforce a participant's or
manager's right against or liability to a limited banking
association.
(b) Repealed by Acts 2007, 80th Leg., R.S., Ch. 237, Sec. 80,
eff. September 1, 2007.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 31, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 80, eff. September 1, 2007.
Sec. 33.204. MANAGEMENT OF LIMITED BANKING ASSOCIATION. (a)
Management of a limited banking association is vested in a board
of managers elected by the participants as prescribed by the
bylaws.
(b) A board of managers operates in substantially the same
manner as, and has substantially the same rights, powers,
privileges, duties, and responsibilities, as a board of directors
of a banking association, and a manager must meet the
qualifications for a director under Section 33.103.
(c) The articles of association, bylaws, and participation
agreement of a limited banking association may use "director"
instead of "manager" and "board" instead of "board of managers."
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 32, eff. September 1, 2007.
Sec. 33.206. INTEREST IN LIMITED BANKING ASSOCIATION;
TRANSFERABILITY OF INTEREST. (a) The interest of a participant
in a limited banking association is the personal property of the
participant and may be transferred as provided by the bylaws or
the participation agreement.
(b) The bylaws or the participation agreement may not require
the consent of any other participant in order for a participant
to transfer participation shares, including voting rights.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 33, eff. September 1, 2007.
Sec. 33.208. DISSOLUTION. The bylaws or the participation
agreement may not require automatic termination, dissolution, or
suspension of the limited banking association on the death,
disability, bankruptcy, expulsion, or withdrawal of a
participant, or on the happening of any other event other than
the passage of time.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 34, eff. September 1, 2007.
Sec. 33.209. ALLOCATION OF PROFITS AND LOSSES. The profits and
losses of a limited banking 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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 33.210. DISTRIBUTIONS. Subject to Section 32.103,
distributions of cash or other assets of a limited banking
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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 33.211. APPLICATION OF OTHER PROVISIONS TO LIMITED BANKING
ASSOCIATIONS. For purposes of the provisions of Subtitle A and
this subtitle other than this subchapter, as the context
requires:
(1) a manager is considered to be a director and the board of
managers is considered to be the board of directors;
(2) a participant is considered to be a shareholder;
(3) a participation share is considered to be a share; and
(4) a distribution is considered to be a dividend.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
237, Sec. 35, eff. September 1, 2007.