FINANCE CODE
CHAPTER 183. OWNERSHIP AND MANAGEMENT OF STATE TRUST COMPANY
SUBCHAPTER A. TRANSFER OF OWNERSHIP INTEREST
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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) 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, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.08, eff.
Sept. 1, 2001.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
SUBCHAPTER B. BOARD AND OFFICERS
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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 Texas Business Corporation Act.
Added by Acts 1999, 76th Leg., ch. 62, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999. Amended by Acts 2001, 77th Leg., ch. 412, § 3.09, eff.
Sept. 1, 2001.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
SUBCHAPTER C. LIMITED TRUST ASSOCIATION
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
§ 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, § 7.16(a), eff. Sept. 1,
1999.
