FINANCE CODE
SUBTITLE F. TRUST COMPANIES
CHAPTER 181. GENERAL PROVISIONS
SUBCHAPTER A. GENERAL PROVISIONS
§ 181.001. SHORT TITLE. This subtitle may be cited as
the Texas Trust Company Act.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.002. DEFINITIONS. (a) In this subtitle:
(1) "Account" means the client relationship
established with a trust institution involving the transfer of
funds or property to the trust institution, including a
relationship in which the trust institution acts as trustee,
executor, administrator, guardian, custodian, conservator,
receiver, registrar, or agent.
(2) "Affiliate" means a company that directly or
indirectly controls, is controlled by, or is under common control
with a state trust company or other company.
(3) Repealed by Acts 2001, 77th Leg., ch. 1420, §
6.027, eff. Sept. 1, 2001.
(4) "Banking commissioner" means the banking
commissioner of Texas or a person designated by the banking
commissioner and acting under the banking commissioner's direction
and authority.
(5) "Board" means the board of directors, managers, or
managing participants of, or a person or group of persons acting in
a comparable capacity for, a state trust company or other entity.
(6) Repealed by Acts 2001, 77th Leg., ch. 1420, §
6.027, eff. Sept. 1, 2001.
(7) "Capital" means:
(A) the sum of:
(i) the par value of all shares or
participation shares of a state trust company having a par value
that have been issued;
(ii) the consideration set by the board in
the manner provided by the Texas Business Corporation Act for all
shares or participation shares of the state trust company without
par value that have been issued, except the part of that
consideration that:
(a) has been actually received;
(b) is less than all of that
consideration; and
(c) the board, by resolution adopted
not later than the 60th day after the date of issuance of those
shares, has allocated to surplus with the prior approval of the
banking commissioner; and
(iii) an amount not included in
Subparagraphs (i) and (ii) that has been transferred to capital of
the state trust company, on the payment of a share dividend or on
adoption by the board of a resolution directing that all or part of
surplus be transferred to capital, minus each reduction made as
permitted by law; less
(B) all amounts otherwise included in Paragraphs
(A)(i) and (ii) that are attributable to the issuance of securities
by the state trust company and that the banking commissioner
determines, after notice and an opportunity for hearing, should be
classified as debt rather than equity securities.
(8) "Certified surplus" means the part of surplus
designated by a vote of the board of a state trust company under
Section 182.105 and recorded in the board minutes as certified.
(9) "Charter" means a charter issued under this
subtitle to engage in a trust business.
(10) "Client" means a person to whom a trust
institution owes a duty or obligation under a trust or other account
administered by the trust institution, regardless of whether the
trust institution owes a fiduciary duty to the person. The term
includes a beneficiary of a trust for whom the trust institution
acts as trustee and a person for whom the trust institution acts as
agent, custodian, or bailee.
(11) "Company" means a corporation, a partnership, an
association, a business trust, another trust, or a similar
organization, including a trust institution.
(12) "Conservator" means the banking commissioner or
an agent of the banking commissioner exercising the powers and
duties provided by Subchapter B, Chapter 185.
(13) "Control" means:
(A) the ownership of or ability or power to vote,
directly, acting through one or more other persons, or otherwise
indirectly, 25 percent or more of the outstanding shares of a class
of voting securities of a state trust company or other company;
(B) the ability to control the election of a
majority of the board of the state trust company or other company;
(C) the power to exercise, directly or
indirectly, a controlling influence over the management or policies
of the state trust company or other company as determined by the
banking commissioner after notice and an opportunity for hearing;
or
(D) the conditioning of the transfer of 25
percent or more of the outstanding shares or participation shares
of a class of voting securities of the state trust company or other
company on the transfer of 25 percent or more of the outstanding
shares of a class of voting securities of another state trust
company or other company.
(14) "Department" means the Texas Department of
Banking.
(15) "Depository institution" means an entity with the
power to accept deposits under applicable law.
(16) Repealed by Acts 2001, 77th Leg., ch. 1420, §
6.027, eff. Sept. 1, 2001.
(17) "Equity security" means:
(A) stock or a similar security, any security
convertible, with or without consideration, into such a security, a
warrant or right to subscribe to or purchase such a security, or a
security carrying such a warrant or right;
(B) a certificate of interest or participation in
a profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share or
participation share, investment contract, voting-trust
certificate, or partnership interest; and
(C) a certificate of interest or participation
in, temporary or interim certificate for, or receipt for a security
described by this subdivision that evidences an existing or
contingent equity ownership interest.
(18) "Fiduciary record" means a matter written,
transcribed, recorded, received, or otherwise in the possession of
a trust institution that is necessary to preserve information
concerning an act or event relevant to an account of a trust
institution.
(19) "Finance commission" means the Finance
Commission of Texas.
(20) Repealed by Acts 2001, 77th Leg., ch. 1420, §
6.027, eff. Sept. 1, 2001.
(21) "Full liability participant" means a participant
that agrees under the terms of a participation agreement to be
liable under a judgment, decree, or order of court for the entire
amount of all debts, obligations, or liabilities of a limited trust
association.
(22) "Hazardous condition" means:
(A) a refusal by a trust company or an affiliate
of a trust company to permit an examination of its books, papers,
accounts, records, or affairs by the banking commissioner as
provided by Section 181.104;
(B) a violation by a trust company of a condition
of its chartering or an agreement entered into between the trust
company and the banking commissioner or the department; or
(C) a circumstance or condition in which an
unreasonable risk of loss is threatened to clients or creditors of a
trust company, excluding risk of loss to a client that arises as a
result of the client's decisions or actions, but including a
circumstance or condition in which a trust company:
(i) is unable or lacks the means to meet its
current obligations as they come due in the regular and ordinary
course of business, even if the book or fair market value of its
assets exceeds its liabilities;
(ii) has equity capital less than the
amount of restricted capital the trust company is required to
maintain under Section 182.008, or has equity capital the adequacy
of which is threatened, as determined under regulatory accounting
principles;
(iii) has concentrated an excessive or
unreasonable portion of its assets in a particular type or
character of investment;
(iv) violates or refuses to comply with
this subtitle, another statute or regulation applicable to trust
companies, or a final and enforceable order of the banking
commissioner;
(v) is in a condition that renders the
continuation of a particular business practice hazardous to its
clients and creditors; or
(vi) conducts business in an unsafe or
unsound manner, including conducting business with:
(a) inexperienced or inattentive
management;
(b) weak or potentially dangerous
operating practices;
(c) infrequent or inadequate audits;
(d) administration of assets that is
notably deficient in relation to the volume and character of or
responsibility for asset holdings;
(e) unsound administrative practices;
(f) frequent and uncorrected material
occurrences of violations of law, including rules, or terms of the
governing instruments; or
(g) a notable degree of conflicts of
interest and engaging in self-dealing.
(23) "Home office" means a location registered with
the banking commissioner as a state trust company's home office at
which:
(A) the trust company does business;
(B) the trust company keeps its corporate books
and records; and
(C) at least one executive officer of the trust
company maintains an office.
(24) "Insider" means:
(A) each director, manager, managing
participant, officer, and principal shareholder or participant of a
state trust company;
(B) each affiliate of the state trust company and
each director, officer, and employee of the affiliate;
(C) any person who participates or has authority
to participate, other than in the capacity of a director, in major
policy-making functions of the state trust company, whether or not
the person has an official title or the officer is serving without
salary or compensation; or
(D) each company controlled by a person described
by Paragraph (A), (B), or (C).
(25) "Insolvent" means a circumstance or condition in
which a state trust company:
(A) is unable or lacks the means to meet its
current obligations as they come due in the regular and ordinary
course of business, even if the value of its assets exceeds its
liabilities;
(B) has equity capital less than $500,000, as
determined under regulatory accounting principles;
(C) fails to maintain deposit insurance for its
deposits with the Federal Deposit Insurance Corporation or its
successor, or fails to maintain adequate security for its deposits
as provided by Section 184.301(c);
(D) sells or attempts to sell substantially all
of its assets or merges or attempts to merge substantially all of
its assets or business with another entity other than as provided by
Chapter 182; or
(E) attempts to dissolve or liquidate other than
as provided by Chapter 186.
(26) "Investment security" means a marketable
obligation evidencing indebtedness of a person in the form of a
bond, note, debenture, or investment security.
(27) "Limited trust association" means a state trust
company organized under this subtitle as a limited liability
company, authorized to issue participation shares, and controlled
by its participants.
(28) "Loans and extensions of credit" means direct or
indirect advances of money by a state trust company to a person that
are conditioned on the obligation of the person to repay the funds
or that are repayable from specific property pledged by or on behalf
of the person.
(29) "Manager" means a person elected to the board of a
limited trust association.
(30) "Managing participant" means a participant in a
limited trust association in which management has been retained by
the participants.
(31) "Mutual funds" means equity securities of an
investment company registered under the Investment Company Act of
1940 (15 U.S.C. Section 80a-1 et seq.) and the Securities Act of
1933 (15 U.S.C. Section 77a et seq.). The term does not include
money market funds.
(32) "Officer" means the presiding officer of the
board, the principal executive officer, or another officer
appointed by the board of a state trust company or other company, or
a person or group of persons acting in a comparable capacity for the
state trust company or other company.
(33) "Operating subsidiary" means a company for which
a state trust company has the ownership, ability, or power to vote,
directly, acting through one or more other persons, or otherwise
indirectly, more than 50 percent of the outstanding shares of each
class of voting securities or its equivalent of the company.
(34) "Participant" means an owner of a participation
share in a limited trust association.
(35) "Participant-transferee" means a transferee of a
participation share who has not received the unanimous consent of
all participants to be a participant, or who becomes a
participant-transferee under Subchapter C, Chapter 183.
(36) "Participation agreement" means the instrument
stating the agreement among the participants of a limited trust
association relating to the rights and duties of the participants
and participant-transferees, including allocations of income,
loss, deduction, credit, distributions, liquidation rights,
redemption rights, liabilities of participants, priority rights of
participant-transferees to transfer participation shares, rights
of participants to purchase participation shares of
participant-transferees, the procedures for elections and voting
by participants, and any other matter not prohibited by or
inconsistent with this subtitle.
(37) "Participation shares" means the units into which
the proprietary interests of a limited trust association are
divided or subdivided by means of classes, series, relative rights,
or preferences.
(38) "Principal shareholder" means a person who owns
or has the ability or power to vote, directly, acting through one or
more other persons, or otherwise indirectly, 10 percent or more of
the outstanding shares or participation shares of any class of
voting securities of a state trust company or other company.
(39) "Restricted capital" means the sum of capital and
certified surplus.
(40) "Regulatory accounting principles" means
generally accepted accounting principles as modified by rules
adopted under:
(A) this subtitle; or
(B) an applicable federal statute or regulation.
(41) "Secondary capital" means the amount by which the
assets of a state trust company exceed restricted capital, required
by Section 182.008, and liabilities.
(42) "Shareholder" means an owner of a share in a state
trust company.
(43) "Shares" means the units into which the
proprietary interests of a state trust company are divided or
subdivided by means of classes, series, relative rights, or
preferences.
(44) "State bank" means a banking association or
limited banking association organized or reorganized under
Subtitle A, including an association organized under the laws of
this state before September 1, 1997, with the express power to
receive and accept deposits and possessing other rights and powers
granted by that subtitle expressly or by implication. The term does
not include a savings association, savings bank, or credit union.
(45) "State trust company" or "trust company" means a
trust association or limited trust association organized or
reorganized under this subtitle, including an association
organized under the laws of this state before September 1, 1997. If
the context or circumstances require, the term includes a trust
company organized under the laws of another state that lawfully
maintains a trust office in this state in accordance with Chapter
187.
(46) "Subsidiary" means a state trust company or other
company that is controlled by another person. The term includes a
subsidiary of a subsidiary.
(47) "Supervisor" means the banking commissioner or an
agent of the banking commissioner exercising the powers and duties
specified in Subchapter B, Chapter 185.
(48) "Trust association" means a trust company
organized under this subtitle as a corporation, authorized to issue
shares of stock, and controlled by its shareholders.
(49) "Trust business" means the business of a company
holding itself out to the public as a fiduciary for hire or
compensation to hold or administer accounts.
(50) "Trust deposits" means client funds held by a
trust institution and authorized to be deposited with itself as a
permanent investment or pending investment, distribution, or
payment of debts on behalf of the client.
(51) "Trust institution" means a bank, credit union,
foreign bank, savings association, savings bank, or trust company
that is authorized by its charter to conduct a trust business.
(52) "Unauthorized trust activity" means an act or
practice within this state by a company without a charter, license,
permit, registration, or other authority issued or granted by the
banking commissioner or other appropriate regulatory authority for
which such a charter, license, permit, registration, or other
authority is required to conduct trust business.
(53) "Undivided profits" means the part of equity
capital of a state trust company equal to the balance of its net
profits, income, gains, and losses since the date of its formation
minus subsequent distributions to shareholders or participants and
transfers to surplus or capital under share dividends or
appropriate board resolutions. The term includes amounts allocated
to undivided profits as a result of a merger.
(54) "Voting security" means a share, participation
share, or other evidence of proprietary interest in a state trust
company or other company that has as an attribute the right to vote
or participate in the election of the board of the trust company or
other company, regardless of whether the right is limited to the
election of fewer than all of the board members. The term includes
a security that is convertible or exchangeable into a voting
security and a nonvoting participation share of a managing
participant.
(b) The definitions provided by this section shall be
liberally construed to accomplish the purposes of this subtitle.
(c) The finance commission by rule may adopt other
definitions to accomplish the purposes of this subtitle.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 528, § 17, eff. Sept.
1, 2001; Acts 2001, 77th Leg., ch. 1420, § 6.002(a), 6.027, eff.
Sept. 1, 2001.
§ 181.003. TRUST COMPANY RULES. (a) The finance
commission may adopt rules to accomplish the purposes of this
subtitle, including rules necessary or reasonable to:
(1) implement and clarify this subtitle;
(2) preserve or protect the safety and soundness of
state trust companies;
Subdivision (3) as amended by Acts 2001, 77th Leg., ch. 528, § 18
(3) grant the same rights and privileges to state
trust companies with respect to the exercise of fiduciary powers
and the conducting of financial activities or activities incidental
or complementary to financial activities that are or may be granted
to a trust institution that maintains its principal office or a
branch or trust office in this state;
Subdivision (3) as amended by Acts 2001, 77th Leg., ch. 1420, §
6.003(a)
(3) grant the same rights and privileges to state
trust companies 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;
(4) provide for recovery of the cost of maintenance
and operation of the department and the cost of enforcing this
subtitle through the imposition and collection of ratable and
equitable fees for notices, applications, and examinations; and
(5) facilitate the fair hearing and adjudication of
matters before the banking commissioner and the finance commission.
(b) The presence or absence in this subtitle of a specific
reference to rules regarding a particular subject does not enlarge
or diminish the rulemaking authority conferred by this section.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 528, § 18, eff. Sept.
1, 2001; Acts 2001, 77th Leg., ch. 1420, § 6.003(a), eff. Sept.
1, 2001.
§ 181.004. IMPLYING THAT PERSON IS TRUST
COMPANY. (a) A person or company may not use in a business name or
advertising the words "trust," "trust company," or any similar term
or phrase, any word pronounced "trust" or "trust company," any
foreign word that means "trust" or "trust company," or any term that
tends to imply that the business is holding out to the public that
it engages in the business of a fiduciary for hire unless the
banking commissioner has approved the use in writing after finding
that the use will not be misleading. This subsection does not
prohibit an individual from engaging in the business of a fiduciary
for compensation or from using the words "trust" or "trustee" for
the purpose of identifying assets held or actions taken in an
existing capacity.
(b) Subsection (a) does not apply to:
(1) a trust institution authorized under this subtitle
to conduct a trust business in this state; or
(2) another entity organized under the laws of this
state, another state, the United States, or a foreign sovereign
state to the extent that:
(A) the entity is authorized under its charter or
the laws of this state or the United States to use a term, word,
character, ideogram, phonogram, or phrase prohibited by Subsection
(a); and
(B) the entity is authorized by the laws of this
state or the United States to conduct the activities in which the
entity is engaged in this state.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, § 6.004(a),
eff. Sept. 1, 2001.
§ 181.005. LIABILITY OF TRUST COMPANY DIRECTORS AND
PERSONNEL. (a) The provisions of the Texas Business Corporation
Act regarding liability, defenses, and indemnification of a
director, officer, agent, or employee apply to a director, officer,
agent, or employee of a state trust company in this state. Except
as limited by those provisions, a disinterested director, manager,
managing participant, officer, or employee of a state trust company
may not be held personally liable in an action seeking monetary
damages arising from the conduct of the state trust company's
affairs unless the damages resulted from the gross negligence or
wilful or intentional misconduct of the person during the person's
term of office or service with the state trust company.
(b) A director, manager, managing participant, officer, or
employee of a state trust company is disinterested with respect to a
decision or transaction if:
(1) the person fully discloses any interest in the
decision or transaction and does not participate in the decision or
transaction; or
(2) the decision or transaction does not involve any
of the following:
(A) personal profit for the person through
dealing with the state trust company or usurping an opportunity of
the trust company;
(B) buying or selling assets of the state trust
company in a transaction in which the person has a direct or
indirect pecuniary interest;
(C) dealing with another state trust company or
other person in which the person is a director, manager, managing
participant, officer, or employee or otherwise has a significant
direct or indirect financial interest; or
(D) dealing with a family member of the person.
(c) A director, manager, managing participant, or officer
who, in performing the person's duties and functions, acts in good
faith and reasonably believes that reliance is warranted is
entitled to rely on information, including an opinion, report,
financial statement or other type of statement or financial data,
decision, judgment, or performance, that is prepared, presented,
made, or rendered by:
(1) one or more directors, managers, managing
participants, officers, or employees of the state trust company, or
of an entity under joint or common control with the state trust
company, whom the director, manager, managing participant, or
officer reasonably believes merits confidence;
(2) legal counsel, a public accountant, or another
person whom the director, manager, managing participant, or officer
reasonably believes merits confidence; or
(3) a committee of the board of the state trust company
of which the director, manager, or managing participant is not a
member.
(d) In this section, "family member" means a person's:
(1) spouse;
(2) minor child; or
(3) adult child who resides in the person's home.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.006. EXEMPTION OF TRUST INSTITUTION DIRECTORS AND
PERSONNEL FROM SECURITIES LAW. An officer, director, manager,
managing participant, or employee of a trust institution with fewer
than 500 shareholders or participants, including a state trust
company or a trust institution organized under the laws of another
state that lawfully maintains an office in this state, or a holding
company with fewer than 500 shareholders or participants that
controls a trust institution is exempt from the registration and
licensing provisions of The Securities Act (Article 581-1 et seq.,
Vernon's Texas Civil Statutes) with respect to that person's
participation in a transaction, including a sale, involving
securities issued by the trust institution or the holding company
of which that person is an officer, director, manager, managing
participant, or employee if the person is not compensated for the
person's participation in the transaction.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, § 6.005(a),
eff. Sept. 1, 2001.
§ 181.007. ATTACHMENT, INJUNCTION, OR EXECUTION. An
attachment, injunction, or execution to collect a money judgment or
secure a prospective money judgment against a trust institution,
including a state trust company or a trust institution organized
under the laws of another state that lawfully maintains an office in
this state, or against a client of or client account in the trust
institution, is governed by Sections 59.007 and 59.008.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, § 6.006(a),
eff. Sept. 1, 2001.
SUBCHAPTER B. REGULATION OF TRUST COMPANIES BY BANKING DEPARTMENT
§ 181.101. ISSUANCE OF INTERPRETIVE
STATEMENTS. (a) The banking commissioner:
(1) may issue interpretive statements containing
matters of general policy for the guidance of the public and state
trust companies; and
(2) may amend or repeal a published interpretive
statement by issuing an amended statement or notice of repeal of a
statement.
(b) An interpretive statement may be disseminated by
newsletter, via an electronic medium such as the Internet, in a
volume of statutes or related materials published by the banking
commissioner or others, or by other means reasonably calculated to
notify persons affected by the interpretive statement. Notice of
an amended or withdrawn statement must be published in a
substantially similar manner as the affected statement was
originally published.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 1420, § 6.007(a),
eff. Sept. 1, 2001.
§ 181.102. ISSUANCE OF OPINION. (a) In response to a
specific request from a member of the public or industry, the
banking commissioner may issue an opinion directly or through a
deputy banking commissioner or department attorney.
(b) If the banking commissioner determines that the opinion
is useful for the general guidance of trust companies and the
public, the banking commissioner may disseminate the opinion by
newsletter, via an electronic medium such as the Internet, in a
volume of statutes or related materials published by the banking
commissioner or others, or by other means reasonably calculated to
notify persons affected by the opinion. A published opinion must be
redacted to preserve the confidentiality of the requesting party
unless the requesting party consents to be identified in the
published opinion.
(c) The banking commissioner may amend or repeal a published
opinion by issuing an amended opinion or notice of repeal of an
opinion and disseminating the opinion or notice in a substantially
similar manner as the affected statement or opinion was originally
published. The requesting party, however, may rely on the original
opinion if:
(1) all material facts were originally disclosed to
the banking commissioner;
(2) the safety and soundness of the affected trust
companies will not be affected by further reliance on the original
opinion; and
(3) the text and interpretation of relevant governing
provisions of this subtitle have not been changed by legislative or
judicial action.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.01, eff.
Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, § 6.007(a), eff.
Sept. 1, 2001.
§ 181.103. EFFECT OF INTERPRETIVE STATEMENT OR
OPINION. An interpretive statement or opinion issued under this
subchapter does not have the force of law and is not a rule for the
purposes of Chapter 2001, Government Code, unless adopted as a rule
by the finance commission as provided by Chapter 2001, Government
Code. An interpretive statement or opinion is an administrative
construction of this subtitle entitled to great weight if the
construction is reasonable and does not conflict with this
subtitle.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.104. EXAMINATION REQUIREMENT. (a) The banking
commissioner shall examine each state trust company annually.
(b) The banking commissioner may examine a state trust
company more often than annually as the banking commissioner
considers necessary to:
(1) safeguard the interests of clients, creditors,
shareholders, participants, or participant-transferees; and
(2) enforce this subtitle.
(c) The banking commissioner may defer an examination for
not more than six months if the banking commissioner considers the
deferment necessary for the efficient enforcement of this subtitle.
(d) Disclosure of information to the banking commissioner
pursuant to an examination request does not constitute a waiver of
or otherwise affect or diminish an evidentiary privilege to which
the information is otherwise subject. A report of an examination
under this section is confidential and may be disclosed only under
the circumstances provided by this subtitle.
(e) The banking commissioner may:
(1) accept an examination of a state trust company, a
third-party contractor, or an affiliate of the state trust company
by a federal or other governmental agency in lieu of an examination
under this section; or
(2) conduct an examination of a state trust company, a
third-party contractor, or an affiliate of the state trust company
jointly with a federal or other governmental agency.
(f) The banking commissioner may administer oaths and
examine persons under oath on any subject that the banking
commissioner considers pertinent to the financial condition or the
safety and soundness of the activities of a state trust company.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.02, eff.
Sept. 1, 2001.
§ 181.105. COST OF REGULATION. Each state trust company
shall pay, through the imposition and collection of fees
established by the finance commission under Section 181.003(a)(4):
(1) the cost of examination;
(2) the equitable or proportionate cost of maintenance
and operation of the department; and
(3) the cost of enforcement of this subtitle.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.106. REGULATION AND EXAMINATION OF RELATED
ENTITIES. (a) The banking commissioner may regulate and examine,
to the same extent as if the services or activities were performed
by a state trust company on its own premises:
(1) the activities of a state trust company affiliate;
and
(2) the performance of data processing, electronic
fund transfers, or other services or activities performed on behalf
of a state trust company by a third-party contractor.
(b) The banking commissioner may collect a fee from the
state trust company to cover the cost of the examination.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.107. STATEMENTS OF CONDITION AND INCOME;
PENALTY. (a) Each state trust company periodically shall file
with the banking commissioner a copy of its statement of condition
and income.
(b) The finance commission by rule may:
(1) require the statement to be filed with the banking
commission at the intervals the finance commission determines;
(2) specify the form of the statement of condition and
income, including specified confidential and public information to
be in the statement; and
(3) require public information in the statement to be
published at the times and in the publications and locations the
finance commission determines.
(c) Except for portions designated to be confidential by the
banking commissioner, a statement of condition and income is a
public record.
(d) A state trust company that fails to file a statement of
condition and income on or before the date it is due is, after
notice and hearing, subject to a penalty of not more than $500 a day
for each day of noncompliance.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.108. LIABILITY OF COMMISSION AND DEPARTMENT
OFFICERS AND PERSONNEL LIMITED. (a) The banking commissioner, a
member of the finance commission, a deputy banking commissioner, an
examiner, assistant examiner, supervisor, conservator, agent, or
other officer or employee of the department, or an agent of the
banking commissioner is not personally liable for damages arising
from the person's official act or omission unless the act or
omission is corrupt or malicious.
(b) The attorney general shall defend an action brought
against a person because of an official act or omission under
Subsection (a), regardless of whether the defendant has terminated
service with the department before the action commences.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.03, eff.
Sept. 1, 2001.
SUBCHAPTER C. ADMINISTRATIVE PROCEDURE
§ 181.201. BANKING COMMISSIONER HEARING. (a) The
banking commissioner may convene a hearing to receive evidence and
argument regarding any matter within the jurisdiction of and before
the banking commissioner for decision or review. The hearing must
be conducted under Chapter 2001, Government Code. A matter made
confidential by law must be considered by the banking commissioner
in a closed hearing.
(b) A hearing before the banking commissioner that is
required or authorized by law may be conducted by a hearings officer
on behalf of the banking commissioner.
(c) This section does not grant a right to hearing to a
person that is not otherwise granted by governing law.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.04, eff.
Sept. 1, 2001.
§ 181.202. APPEAL OF BANKING COMMISSIONER DECISION OR
ORDER. Except as expressly provided otherwise by this subtitle, a
person affected by a decision or order of the banking commissioner
made under this subtitle after hearing may appeal the decision or
order:
(1) to the finance commission; or
(2) directly to a district court in Travis County as
provided by Section 181.204.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.203. APPEAL TO FINANCE COMMISSION. (a) In an
appeal to the finance commission, the finance commission shall
consider the questions raised by the application for review and may
also consider additional matters pertinent to the appeal.
(b) An order of the banking commissioner continues in effect
pending review unless the order is stayed by the finance
commission. The finance commission may impose any condition before
granting a stay of the appealed order.
(c) The finance commission may not be required to accept
additional evidence or hold an evidentiary hearing if a hearing was
held and a record made before the banking commissioner. The finance
commission shall remand the proceeding to the banking commissioner
to receive any additional evidence the finance commission chooses
to consider.
(d) A hearing before the finance commission that is required
or authorized by law may be conducted by a hearings officer on
behalf of the finance commission.
(e) A matter made confidential by law must be considered by
the finance commission in a closed hearing.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.204. DIRECT APPEAL TO COURT OR APPEAL OF FINANCE
COMMISSION ORDER. A person affected by a final order of the
banking commissioner who elects to appeal directly to district
court, or a person affected by a final order of the finance
commission under this subchapter, may appeal the final order by
filing a petition for judicial review as provided by Chapter 2001,
Government Code. A petition for judicial review filed in the
district court does not stay or vacate the appealed order unless the
court, after notice and hearing, expressly stays or vacates the
order.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
SUBCHAPTER D. CONFIDENTIALITY OF INFORMATION
§ 181.301. DISCLOSURE BY DEPARTMENT
PROHIBITED. (a) Except as expressly provided otherwise by this
subtitle or a rule adopted under Section 181.003(a)(1), the
following are confidential and may not be disclosed by the banking
commissioner or an employee of the department:
(1) information directly or indirectly obtained by the
department in any manner, including through an application or
examination, concerning the financial condition or business
affairs of a state trust company or a present, former, or
prospective shareholder, participant, officer, director, manager,
affiliate, or service provider of the state trust company, other
than the public portions of a report of condition or income
statement; and
(2) each related file or record of the department.
(b) Information obtained by the department from a federal or
state regulatory agency that is confidential under federal or state
law may not be disclosed except as provided by federal or state law.
(c) The banking commissioner or an officer or employee of
the department commits an offense if the person:
(1) discloses information or permits access to a file
or record of the department; and
(2) knows at the time of disclosure or permission that
the disclosure or permission violates this subchapter.
(d) An offense under this section is a Class A misdemeanor.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.05, eff.
Sept. 1, 2001.
§ 181.302. DISCLOSURE TO FINANCE
COMMISSION. Confidential information may not be disclosed to a
member of the finance commission. A member of the finance
commission may not be given access to the files and records of the
department except that the banking commissioner may disclose to the
finance commission information, files, and records pertinent to a
hearing or matter pending before the finance commission.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.303. DISCLOSURE TO OTHER AGENCIES. (a) For
purposes of this section, "affiliated group," "agency,"
"functional regulatory agency," and "privilege" have the meanings
assigned by Section 31.303.
(b) The banking commissioner may, as the banking
commissioner considers necessary or proper to the enforcement of
the laws of this state, another state, the United States, or a
foreign sovereign state with whom the United States currently
maintains diplomatic relations, or in the best interest of the
public, disclose information in the possession of the department to
another agency. The banking commissioner may not disclose
information under this section that is confidential under
applicable state or federal law unless:
(1) the recipient agency agrees to maintain the
confidentiality and take all reasonable steps to oppose an effort
to secure disclosure of the information from the agency; or
(2) the banking commissioner determines in the
exercise of discretion that the interest of law enforcement
outweighs and justifies the potential for disclosure of the
information by the recipient agency.
(c) The banking commissioner by agreement may establish an
information sharing and exchange program with a functional
regulatory agency that has overlapping regulatory jurisdiction
with the department, with respect to all or part of an affiliated
group, including a financial institution, to reduce the potential
for duplicative and burdensome filings, examinations, and other
regulatory activities. Each agency party to the agreement must
agree to maintain confidentiality of information that is
confidential under applicable state or federal law and take all
reasonable steps to oppose any effort to secure disclosure of the
information from the agency. An agreement may also specify
procedures regarding use and handling of confidential information
and identify types of information to be shared and procedures for
sharing on a recurring basis.
(d) Disclosure of information by or to the banking
commissioner under this section does not constitute a waiver of or
otherwise affect or diminish an evidentiary privilege to which the
information is otherwise subject, whether or not the disclosure is
governed by a confidentiality agreement.
(e) Notwithstanding other law, an agency of this state:
(1) may execute, honor, and comply with an agreement
to maintain confidentiality and oppose disclosure of information
obtained from the banking commissioner as provided in this section;
and
(2) shall treat as confidential any information
obtained from the banking commissioner that is entitled to
confidential treatment under applicable state or federal law and
take all reasonable steps to oppose an effort to secure disclosure
of the information from the agency.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 528, § 19, eff. Sept.
1, 2001.
§ 181.304. OTHER DISCLOSURE PROHIBITED;
PENALTY. (a) Confidential information that is provided to a
state trust company, affiliate, or service provider of the state
trust company, whether in the form of a report of examination or
otherwise, is the confidential property of the department. The
information may not be made public or disclosed by the recipient or
by an officer, director, manager, employee, or agent of the
recipient to a person not officially connected to the recipient as
officer, director, employee, attorney, auditor, independent
auditor, or bonding company, except as authorized by rules adopted
under this subtitle.
(b) A person commits an offense if the person discloses or
uses the confidential information in violation of this section. An
offense under this subsection is punishable as if it were an offense
under Section 37.10, Penal Code.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.305. CIVIL DISCOVERY. Civil discovery of
confidential information from a person subject to Section 181.304
under subpoena or other legal process in a civil proceeding must
comply with rules adopted under this subtitle and other applicable
law. The rules may:
(1) restrict release of confidential information to
the portion directly relevant to the legal dispute at issue; and
(2) require that a protective order, in the form and
under circumstances specified by the rules, be issued by a court
before release of the confidential information.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.06, eff.
Sept. 1, 2001.
§ 181.306. INVESTIGATIVE INFORMATION. Notwithstanding
any other law, the banking commissioner may refuse to release
information or records concerning a state trust company in the
custody of the department if, in the opinion of the banking
commissioner, release of the information or records might
jeopardize an ongoing investigation of potentially unlawful
activity.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.307. EMPLOYMENT INFORMATION. (a) A person may
provide employment information concerning the known or suspected
involvement of a present or former employee, officer, or director
of a state trust company in a violation of any state or federal law,
rule, or regulation that has been reported to appropriate state or
federal authorities to:
(1) a state trust company; or
(2) a person providing employment information to a
state trust company.
(b) A person may not be held liable for providing
information under Subsection (a) unless the information provided is
false and the person provided the information with disregard for
the truth.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 181.308. SHAREHOLDER INSPECTION
RIGHTS. (a) Notwithstanding Article 2.44, Texas Business
Corporation Act, a shareholder or participant of a state trust
company may not examine:
(1) a report of examination or other confidential
property of the department that is in the possession of the state
trust company; or
(2) a book or record of the state trust company that
directly or indirectly pertains to financial or other information
maintained by the state trust company on behalf of its clients,
including a specific item in the minutes of the board or a committee
of the board regarding client account review and approval or any
report that would tend to identify the state trust company's
client.
(b) This section does not affect the rights of a shareholder
or participant of a state trust company acting in another capacity.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
