CHAPTER 1201. PUBLIC SECURITY PROCEDURES ACT
GOVERNMENT CODE
TITLE 9. PUBLIC SECURITIES
SUBTITLE A. GENERAL PROVISIONS
CHAPTER 1201. PUBLIC SECURITY PROCEDURES ACT
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1201.001. SHORT TITLE. This chapter may be cited as the
Public Security Procedures Act.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.002. DEFINITIONS. In this chapter:
(1) "Issuer" means:
(A) an agency, authority, board, body politic, department,
district, instrumentality, municipal corporation, political
subdivision, public corporation, or subdivision of this state; or
(B) a nonprofit corporation acting for or on behalf of an entity
described by Paragraph (A).
(2) "Public security" means an instrument, including a bond,
certificate, note, or other type of obligation authorized to be
issued by an issuer under a statute, a municipal home-rule
charter, or the constitution of this state.
(3) "Public security authorization" means a resolution, order,
or ordinance that is approved or adopted, or any other action
taken in a proceeding, by the governing body of an issuer in
authorizing the issuance of a public security.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.003. APPLICABILITY. This chapter applies to:
(1) an original public security;
(2) a refunding public security;
(3) an exchanged or converted public security; or
(4) any combination of those securities.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.004. CONSTRUCTION. This chapter shall be liberally
construed to achieve the legislative intent and purposes of this
chapter. A power granted by this chapter shall be broadly
interpreted to achieve that intent and those purposes.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.005. CONTENTS OF PUBLIC SECURITY AUTHORIZATION. To
the extent applicable to an authorized public security, the
public security authorization for the public security must
contain each item or other matter authorized or described by
Subchapter B and Sections 1201.061 and 1201.063.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER B. ISSUANCE AND APPROVAL OF PUBLIC SECURITY
Sec. 1201.021. CHARACTERISTICS OF PUBLIC SECURITY. A public
security may:
(1) be issued in any denomination;
(2) bear no interest or bear interest at one or more specified
rates;
(3) be issued with one or more interest coupons or without a
coupon;
(4) be issued as redeemable before maturity at one or more
specified times; and
(5) be payable:
(A) at one or more times;
(B) in installments or a specified amount or amounts;
(C) at a specified place or places;
(D) under specified terms; and
(E) in a specified form or manner.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.022. TERMS OF ISSUANCE. (a) A public security may
be:
(1) issued singly or in a series;
(2) made payable in a specified amount or amounts or
installments to:
(A) the bearer;
(B) a registered or named person;
(C) the order of a registered or named person; or
(D) a successor or assign of a registered or named person;
(3) issued to be sold:
(A) at a public or private sale; and
(B) under the terms determined by the governing body of the
issuer to be in the issuer's best interests; and
(4) issued with other specified characteristics, on additional
specified terms, or in a specified manner.
(b) The governing body of a county or municipality that issues
bonds that are to be paid from ad valorem taxes may provide that
the bonds are to mature serially over a specified number of
years, not to exceed 40.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 769, Sec. 1, eff.
Sept. 1, 2001.
Sec. 1201.023. UNCERTIFICATED BOOK-ENTRY ISSUANCE. (a) The
governing body of an issuer may provide for a book-entry record
of ownership of a public security issued by the issuer. A public
security may be issued in uncertificated book-entry form.
(b) The record of ownership of a public security issued in
uncertificated book-entry form may be kept by the issuer or an
agent of the issuer.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.024. FORM OF PUBLIC SECURITY. (a) A public security
may be:
(1) issued in a specified form or forms;
(2) issued with one or more interest coupons;
(3) registrable as to principal and interest or only as to
principal; and
(4) changed in form in a specific manner.
(b) A public security issued with one or more interest coupons
may have:
(1) a specified form of a coupon; and
(2) a form of a coupon that may be changed in a specified
manner.
(c) An issuer may provide that a public security:
(1) has a coupon and is not registrable;
(2) has a coupon and is registrable only as to principal;
(3) is fully registrable; or
(4) initially has a coupon but may become a fully registrable
security under Section 1203.041.
(d) An issuer may provide that public securities of the same
issue or series are:
(1) of one or more types described by Subsection (c); and
(2) exchangeable in whole or in part for one or more of those
types.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.025. RATE OF INTEREST. (a) An interest rate on a
public security that bears interest may be fixed, variable,
floating, adjustable, or computed by another method.
(b) If an interest rate is not specified by the governing body
of an issuer issuing a public security, the interest rate is
determined by a formula or contractual arrangement for the
periodic determination of the rate.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.001, eff.
Sept. 1, 2001.
Sec. 1201.026. EXECUTION OF PUBLIC SECURITY OR INTEREST COUPON.
(a) A public security or an interest coupon may be executed,
with or without a seal, with a manual or facsimile signature.
(b) The signature on a public security or on an interest coupon
of a person who is no longer an officer when the security or
coupon is delivered to a purchaser is valid and sufficient for
all purposes.
(c) A person's successor in office may complete the execution,
authentication, or delivery of the public security or interest
coupon.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.027. AUTHORITY OF ISSUER TO CONTRACT FOR SERVICES.
(a) An issuer has exclusive authority to select, contract with,
and determine the basis for compensation of a person to provide
legal and other services as may be determined by the issuer to be
necessary in connection with the issuer's issuance of public
securities or administration of its affairs that pertain to the
issuance of public securities. The selection of legal counsel
shall be made in accordance with the provisions of Subchapter A,
Chapter 2254, applicable to the selection by a governmental
entity of a provider of professional engineering services.
(b) Subsection (a) does not impair the authority of the attorney
general under Section 402.0212 to approve a contract for legal
services entered into by a state agency.
(c) Except as provided by Subsection (b), to the extent of a
conflict between this section and another law or a municipal
charter, this section controls.
(d) An issuer of a state security, as defined by Section
1231.001, that selects or contracts with a person to provide
services under Subsection (a) shall, on request, submit to the
Bond Review Board:
(1) the request for proposals to provide the services not later
than the date the request for proposals is published;
(2) each final proposal received to provide the services before
a contract for the services is entered into by the issuer; and
(3) an executed contract entered into by an issuer for services
under Subsection (a).
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 1999, 76th Leg., ch. 1064, Sec. 2, eff.
Sept. 1, 1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
991, Sec. 1, eff. September 1, 2007.
Sec. 1201.028. SINGLE MEETING OF GOVERNING BODY SUFFICIENT.
Notwithstanding any other law, including a provision in a
municipal charter, the following actions taken at a meeting of
the governing body of an issuer are effective immediately and a
subsequent meeting is not required:
(1) a resolution, order, or ordinance calling an election to:
(A) authorize the issuance and sale of a public security; or
(B) approve the resources, revenue, or income of the issuer that
may be pledged as security for a public security;
(2) a resolution, order, or ordinance canvassing the results of
an election described by Subdivision (1); or
(3) a public security authorization.
Added by Acts 2001, 77th Leg., ch. 769, Sec. 2, eff. Sept. 1,
2001.
Sec. 1201.029. COMMISSIONS NOT TO BE PAID FROM PRINCIPAL. In a
public or private sale of public securities the principal amount
of which is limited by law, by voted authorization, or by other
means, for purposes of determining whether the principal amount
of the public securities that are issued exceeds the limitation,
amounts produced by the initial purchaser through market pricing
of the public securities when the public securities are resold by
the initial purchaser are not considered proceeds of the issuer
if the amounts constitute all or part of the compensation of the
initial purchaser.
Added by Acts 2003, 78th Leg., ch. 1193, Sec. 1, eff. June 20,
2003.
SUBCHAPTER C. FINANCIAL ASPECTS OF PUBLIC SECURITY
Sec. 1201.041. PUBLIC SECURITY AS NEGOTIABLE INSTRUMENT AND
INVESTMENT SECURITY. A public security is:
(1) a negotiable instrument;
(2) an investment security to which Chapter 8, Business &
Commerce Code, applies; and
(3) a legal and authorized investment for:
(A) an insurance company;
(B) a fiduciary or trustee; or
(C) a sinking fund of a municipality or other political
subdivision or public agency of this state.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.042. USE OF CERTAIN PROCEEDS. (a) An issuer may use
the proceeds of a public security issued to finance the
acquisition, construction, or improvement of a project or
facility to:
(1) pay interest on the public security while the project or
facility is being acquired, constructed, or improved and for the
year after it is acquired, constructed, or improved;
(2) operate and maintain the project or facility during the
estimated period of acquisition, construction, or improvement of
the project or facility and for one year after it is acquired,
constructed, or improved;
(3) finance other funds relating to the public security,
including debt service reserve and contingency; and
(4) pay the cost or expense of the issuance of the public
security.
(b) To the extent and in the manner provided in a public
security authorization, until the proceeds from a public security
described by Subsection (a) are needed the proceeds may be:
(1) placed on time deposit; or
(2) invested in an obligation authorized for the investment of
money of the issuer.
(c) Proceeds from the sale of a public security issued to
finance the acquisition, construction, equipping, or furnishing
of a project or facility may be used to reimburse the issuer for
a cost that is:
(1) attributable to the project or facility; and
(2) paid or incurred before the date of the public security's
issuance.
(d) An issuer may spend a premium received by the issuer as part
of the purchase price of public securities sold at a public or
private sale:
(1) to provide for payment of debt service on the public
securities sold;
(2) to contribute to an escrow established to provide for
payment of debt service on obligations being refunded through the
sale of the public securities;
(3) to pay the cost or expense of issuing the public securities;
or
(4) to pay any other cost related to the purpose for which the
public securities were issued, as specified in the public
security authorization.
(e) Subsection (d)(4) does not authorize an issuer to spend
money in an amount that exceeds limitations provided by other law
or by the public security authorization.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999. Amended by Acts 2003, 78th Leg., ch. 270, Sec. 1, eff. June
18, 2003.
Sec. 1201.043. USE OF INVESTMENT INCOME. An issuer authorized
to invest proceeds from the sale of a public security, including
by placing the proceeds on time deposit, may use money earned
from the investment for the purpose for which the public security
was issued.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.044. PLEDGE OR LIEN ON RESOURCES, ASSETS, OR FUND OF
ISSUER. (a) A pledge or lien provided for in a public security
authorization on a resource of an issuer, including revenue or
income, on an asset of an issuer, or on a fund maintained by an
issuer:
(1) is valid without further action by the issuer according to
its terms and without being filed or recorded, except in the
records of the issuer;
(2) is effective from the time of payment for and delivery of
the public security until the public security is paid or payment
of the public security has been provided for; and
(3) is effective as to an item on hand or later received, and
the item is subject to the lien or pledge without physical
delivery of the item or other act.
(b) This section does not exempt an issuer from a duty to:
(1) record a lien on real property; or
(2) submit a public security to the attorney general for
approval and registration by the comptroller.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
SUBCHAPTER D. CHANGE OR CONVERSION OF PUBLIC SECURITIES
Sec. 1201.061. CONVERSION, RECONVERSION, TRANSFER, OR EXCHANGE
OF PUBLIC SECURITY. (a) The governing body of an issuer may:
(1) provide and covenant for:
(A) conversion of one form of a public security or an interest
coupon to another form or forms; and
(B) reconversion of the public security or interest coupon to
another form or forms; and
(2) provide procedures for transferring or exchanging a public
security for a previously issued public security.
(b) A public security or an interest coupon may be converted, on
request of a bearer or owner, in an aggregate principal amount
equal to the unpaid principal amount of the public security being
converted, bearing interest at the same rate or rates as the
security being converted, to:
(1) a public security with interest coupons, payable to the
bearer, and registrable as to principal and interest or only as
to principal;
(2) a fully registered public security without interest coupons;
or
(3) any other form, in any denomination.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.062. CHANGE OR CONVERSION OF PUBLIC SECURITY. If a
public security authorization provides a procedure for changing
or converting a public security, an additional resolution, order,
or ordinance is not required to change or convert the security.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.063. EXECUTION AND EXCHANGE OF NEW PUBLIC SECURITY.
(a) On request of the bearer or owner of a public security, if
required or necessary, an appropriate officer of the issuer shall
execute and exchange an appropriate new public security for the
changed or converted public security.
(b) If a public security that is changed or converted has
interest coupons, appropriate new coupons shall also be executed
and exchanged.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.064. SUBMISSION OF NEW PUBLIC SECURITY TO ATTORNEY
GENERAL. Except as provided by Section 1201.067, an issuer that
changes or converts a public security that has been registered by
the comptroller shall submit the new public security to the
attorney general for approval.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.065. APPROVAL OF NEW PUBLIC SECURITY BY ATTORNEY
GENERAL. The attorney general shall approve a new public
security if the attorney general finds that the new public
security has been printed or entered on the books of the
registrar and executed and issued as provided by law and a public
security authorization relating to the public security being
changed or converted.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.066. REGISTRATION OF NEW PUBLIC SECURITY BY
COMPTROLLER. (a) The comptroller shall register and deliver a
new public security after:
(1) approval of the new public security by the attorney general;
and
(2) the surrender to and the cancellation by the comptroller of
each changed or converted public security.
(b) On registration the new public security is valid and
incontestable for all purposes.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.
Sec. 1201.067. EXCEPTION TO APPROVAL REQUIREMENT. (a) If the
duty to convert or reconvert a public security or interest coupon
or to transfer or exchange a public security is imposed on a
corporate trustee under a trust agreement or indenture securing
the public security or on a paying agent for the public security,
the attorney general is not required to approve and the
comptroller is not required to register:
(1) the converted or reconverted public security or interest
coupon; or
(2) the public security delivered on transfer or exchange of the
previously issued public security.
(b) A converted or reconverted public security or interest
coupon, or a transferred or exchanged public security, is valid
and incontestable in the same manner and with the same effect as
the previously issued public security.
Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,
1999.