Texas 2015 - 84th Regular

Texas House Bill HB2534 Compare Versions

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1	1	84R13101 ATP-F
2	2	By: Parker H.B. No. 2534
3	3
4	4
5	5	A BILL TO BE ENTITLED
6	6	AN ACT
7	7	relating to the regulation of state trust companies.
8	8	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	9	SECTION 1. Section 181.002(a), Finance Code, is amended by
10	10	adding Subdivision (15-a) and amending Subdivision (25) to read as
11	11	follows:
12	12	(15-a) "Equity capital" means the amount by which the
13	13	total assets of a state trust company exceed the total liabilities
14	14	of the trust company.
15	15	(25) "Insolvent" means a circumstance or condition in
16	16	which a state trust company:
17	17	(A) is unable or lacks the means to meet its
18	18	current obligations as they come due in the regular and ordinary
19	19	course of business, even if the value of its assets exceeds its
20	20	liabilities;
21	21	(B) has equity capital that is 50 percent or less
22	22	of the amount of restricted capital the trust company is required to
23	23	maintain [less than $500,000, as determined under regulatory
24	24	accounting principles];
25	25	(C) fails to maintain deposit insurance for its
26	26	deposits with the Federal Deposit Insurance Corporation or its
27	27	successor, or fails to maintain adequate security for its deposits
28	28	as provided by Section 184.301(c);
29	29	(D) sells or attempts to sell substantially all
30	30	of its assets or merges or attempts to merge substantially all of
31	31	its assets or business with another entity other than as provided by
32	32	Chapter 182; or
33	33	(E) attempts to dissolve or liquidate other than
34	34	as provided by Chapter 186.
35	35	SECTION 2. Section 181.104(a), Finance Code, is amended to
36	36	read as follows:
37	37	(a) The banking commissioner shall examine each state trust
38	38	company annually, or on another periodic basis as may be required by
39	39	rule or policy, or as the commissioner considers necessary to:
40	40	(1) safeguard the interests of clients, creditors,
41	41	shareholders, participants, or participant-transferees; and
42	42	(2) efficiently enforce applicable law.
43	43	SECTION 3. Section 181.107(c), Finance Code, is amended to
44	44	read as follows:
45	45	(c) A [Except for portions designated to be confidential by
46	46	the banking commissioner, a] statement of condition and income is a
47	47	public record except for:
48	48	(1) portions of the statement designated confidential
49	49	by the banking commissioner; and
50	50	(2) the statement of condition and income for a state
51	51	trust company exempt under Section 182.011 or 182.019 with regard
52	52	to the period during which the exemption is in effect.
53	53	SECTION 4. Section 182.008(a), Finance Code, is amended to
54	54	read as follows:
55	55	(a) The banking commissioner may not issue a charter to a
56	56	state trust company having restricted capital of less than $2 [$1]
57	57	million.
58	58	SECTION 5. Section 182.011, Finance Code, is amended by
59	59	amending Subsections (a), (d), and (e) and adding Subsection (a-1)
60	60	to read as follows:
61	61	(a) A state trust company may request in writing that it be
62	62	exempted from specified provisions of this subtitle. The banking
63	63	commissioner may grant the exemption in whole or in part, subject to
64	64	Subsection (c), if the banking commissioner finds that the state
65	65	trust company [does not transact business with the public. A state
66	66	trust company does not transact business with the public if it does
67	67	not make any sale, solicitation, arrangement, agreement, or
68	68	transaction to provide a trust or other business service, whether
69	69	or not for a fee, commission, or any other type of remuneration,
70	70	with]:
71	71	(1) has only family clients and transacts business
72	72	solely on behalf of family clients and their related interests [an
73	73	individual who is not related within the fourth degree of affinity
74	74	or consanguinity to an individual who controls the state trust
75	75	company]; [or]
76	76	(2) [a sole proprietorship, partnership, joint
77	77	venture, association, trust, estate, business trust, or
78	78	corporation that] is [not] wholly owned, directly or indirectly,
79	79	legally or beneficially, by one or more family members; and
80	80	(3) does not hold itself out to the general public as a
81	81	corporate fiduciary for hire [individuals related within the fourth
82	82	degree of affinity or consanguinity to an individual who controls
83	83	the state trust company].
84	84	(a-1) In this section:
85	85	(1) "Family client" includes:
86	86	(A) a family member;
87	87	(B) a former family member;
88	88	(C) a key employee of the trust company as
89	89	defined by and to the extent permitted by rules adopted under
90	90	Subsection (e), including a former key employee for a reasonable
91	91	transition period specified by rule;
92	92	(D) a nonprofit organization, charitable
93	93	foundation, charitable trust, including a charitable lead trust or
94	94	charitable remainder trust whose only current beneficiaries are
95	95	other family clients and charitable or nonprofit organizations, or
96	96	another charitable organization for which all the funding came
97	97	exclusively from one or more other family clients;
98	98	(E) the estate of a family member or former
99	99	family member;
100	100	(F) an irrevocable trust under which one or more
101	101	other family clients are the only current beneficiaries;
102	102	(G) an irrevocable trust funded exclusively by
103	103	one or more family clients in which other family clients and
104	104	nonprofit organizations, charitable foundations, charitable
105	105	trusts, or other charitable organizations are the only current
106	106	beneficiaries;
107	107	(H) a company wholly owned by, and operated for
108	108	the sole benefit of, one or more other family clients;
109	109	(I) a revocable trust of which one or more other
110	110	family clients are the sole grantors, including any such trust that
111	111	becomes irrevocable, wholly or partly, for a reasonable transition
112	112	period as specified by rule; and
113	113	(J) any other persons as may be permitted by
114	114	rules adopted under Subsection (e).
115	115	(2) "Family member," with respect to an individual,
116	116	means an individual related to the individual within the seventh
117	117	degree of consanguinity or affinity, as determined under Subchapter
118	118	B, Chapter 573, Government Code, except that a foster child is
119	119	considered the child of the foster parent and a person for whom a
120	120	guardian was appointed before the person's 18th birthday is
121	121	considered the child of the guardian.
122	122	(3) "Former family member" includes a former spouse or
123	123	stepchild who was a family member but is no longer a family member
124	124	due to a divorce or other similar event.
125	125	(d) A state trust company that is or has been exempt from a
126	126	provision of this subtitle under this section or a predecessor
127	127	statute may not transact business with the general public unless
128	128	the banking commissioner determines, as provided by Section
129	129	182.003, that public convenience and advantage will be promoted by
130	130	permitting the state trust company to engage in the trust business
131	131	with the general public.
132	132	(e) The finance commission may adopt rules:
133	133	(1) defining other circumstances under which a state
134	134	trust company may be exempted from a provision of this subtitle
135	135	because it does not transact business with the general public;
136	136	(2) specifying the provisions of this subtitle that
137	137	are subject to an exemption request; [and]
138	138	(3) establishing procedures and requirements for
139	139	obtaining, maintaining, or revoking an exemption; and
140	140	(4) defining or further defining terms used by this
141	141	section.
142	142	SECTION 6. Section 182.012, Finance Code, is amended by
143	143	amending Subsection (a) and adding Subsection (c) to read as
144	144	follows:
145	145	(a) A state trust company requesting an exemption under
146	146	Section 182.011 shall file an application with the banking
147	147	commissioner that includes:
148	148	(1) a nonrefundable application fee set by the finance
149	149	commission;
150	150	(2) a detailed sworn statement showing the state trust
151	151	company's assets and liabilities as of the end of the calendar month
152	152	preceding the filing of the application;
153	153	(3) a sworn statement of the reason for requesting the
154	154	exemption;
155	155	(4) a sworn statement that the state trust company:
156	156	(A) has or will have only family clients and
157	157	transacts or will transact business solely on behalf of family
158	158	clients and their related interests;
159	159	(B) is or will be wholly owned, directly or
160	160	indirectly, legally or beneficially, by one or more family members;
161	161	(C) does not or will not hold itself out to the
162	162	general public as a corporate fiduciary for hire; and
163	163	(D) [is not transacting business with the public
164	164	and that the company] will not transact business with the general
165	165	public without the prior written permission of the banking
166	166	commissioner;
167	167	(5) the current street mailing address and telephone
168	168	number of the physical location in this state at which the state
169	169	trust company will maintain its books and records, with a sworn
170	170	statement that the address given is true and correct and is not a
171	171	United States Postal Service post office box or a private mail box,
172	172	postal box, or mail drop; and
173	173	(6) a list of the specific provisions of this subtitle
174	174	for which the request for an exemption is made.
175	175	(c) In this section, "family client" and "family member"
176	176	have the meanings assigned by Section 182.011.
177	177	SECTION 7. Sections 182.013(a) and (c), Finance Code, are
178	178	amended to read as follows:
179	179	(a) An [Before June 30 of each year, an] exempt state trust
180	180	company shall file a certification annually with its statement of
181	181	condition and income, on a form provided by the banking
182	182	commissioner, that it is maintaining the conditions and limitations
183	183	of its exemption. The certification must be accompanied by a fee
184	184	set by the finance commission. [The certification is not valid
185	185	unless it bears an acknowledgment stamped by the department.]
186	186	(c) The [banking commissioner may examine or investigate
187	187	the] state trust company shall maintain records [periodically as]
188	188	necessary to verify the certification. The records are subject to
189	189	examination under Section 181.104.
190	190	SECTION 8. Section 182.015, Finance Code, is amended to
191	191	read as follows:
192	192	Sec. 182.015. CHANGE OF CONTROL OF EXEMPT STATE TRUST
193	193	COMPANY. [Control of an exempt state trust company may not be sold
194	194	or transferred with exempt status.] If control of an exempt state
195	195	trust company is sold or otherwise transferred, the acquiring
196	196	person must comply with Sections 182.003, 182.004, 182.005, [and]
197	197	183.001, and 183.002. For the exempt status of the state trust
198	198	company to continue, the acquiring person must file a certification
199	199	with the banking commissioner that the state trust company will
200	200	comply, or continue to comply, with the requirements of Section
201	201	182.011 after control is transferred. The banking commissioner may
202	202	examine or investigate the acquiring person and the state trust
203	203	company as necessary to verify the certification. If the
204	204	commissioner determines that the state trust company will not
205	205	comply, or continue to comply, with the requirements of Section
206	206	182.011 after control is transferred, the commissioner shall
207	207	terminate the exemption on the effective date of the transfer.
208	208	After the termination, the [automatically terminates on the
209	209	effective date of the transfer. The] acquiring person must file a
210	210	separate application to obtain a new [an] exemption for the state
211	211	trust company under Section 182.011.
212	212	SECTION 9. Section 182.019, Finance Code, is amended to
213	213	read as follows:
214	214	Sec. 182.019. PRIOR EXEMPTION. (a) Subject to Subsection
215	215	(b), a [A] state trust company that was exempt before September 1,
216	216	1997, may no longer operate with that prior exempt status after the
217	217	earlier of:
218	218	(1) September 1, 2020; or
219	219	(2) the date control is sold or otherwise transferred
220	220	[under a predecessor to this subtitle is considered exempt under
221	221	this subtitle].
222	222	(b) A state trust company may apply for a new exemption
223	223	under Section 182.011 before loss of its exempt status under
224	224	Subsection (a).
225	225	SECTION 10. Section 184.101(b), Finance Code, is amended to
226	226	read as follows:
227	227	(b) Unless the banking commissioner in writing approves
228	228	maintenance of a lesser amount, a state trust company must invest
229	229	and maintain an amount equal to at least 50 [40] percent of the
230	230	state trust company's restricted capital under Section 182.008 in
231	231	investment securities that are readily marketable and can be
232	232	converted to cash within four business days.
233	233	SECTION 11. The following provisions of the Finance Code
234	234	are repealed:
235	235	(1) Sections 181.104(b) and (c); and
236	236	(2) Section 182.013(b).
237	237	SECTION 12. (a) Not later than September 1, 2020, a state
238	238	trust company that has restricted capital in an amount that is less
239	239	than the amount required by Section 182.008, Finance Code, as
240	240	amended by this Act, shall increase its restricted capital to at
241	241	least the amount required under that section, unless the state
242	242	trust company has an exemption under Section 182.011 or 182.019,
243	243	Finance Code, as amended by this Act. As permitted by Section
244	244	182.008(e), Finance Code, a state trust company may apply to the
245	245	banking commissioner of Texas for approval of restricted capital in
246	246	an amount that is less than the amount required under Section
247	247	182.008.
248	248	(b) A state trust company that has an exemption under
249	249	Section 182.019, Finance Code, on September 1, 2015, and has
250	250	restricted capital in an amount that is less than the amount
251	251	required by Section 182.008(a), Finance Code, as amended by this
252	252	Act, shall increase its restricted capital to at least $250,000 on
253	253	or before September 1, 2020.
254	254	(c) The Finance Commission of Texas may adopt rules
255	255	specifying procedures for ratable increases in restricted capital
256	256	for state trust companies as required by this section and for
257	257	deferrals and extensions of time for a state trust company acting in
258	258	good faith to achieve minimum required restricted capital.
259	259	SECTION 13. Not later than September 1, 2016, a state trust
260	260	company shall comply with the investment liquidity requirements of
261	261	Section 184.101(b), Finance Code, as amended by this Act. On
262	262	written application, the banking commissioner of Texas may extend
263	263	the period for compliance for a state trust company for good cause
264	264	shown.
265	265	SECTION 14. This Act takes effect September 1, 2015.