Texas 2015 - 84th Regular

Texas House Bill HB3308 Compare Versions

Version 1 (Old)

Version 2 (New)

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1	1		84R17157 ATP-F
2	2		By: Flynn H.B. No. 3308
3		-	Substitute the following for H.B. No. 3308:
4		-	By: Stephenson C.S.H.B. No. 3308
5	3
6	4
7	5		A BILL TO BE ENTITLED
8	6		AN ACT
9	7		relating to the regulation of state trust companies.
10	8		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
11	9		SECTION 1. Section 181.002(a), Finance Code, is amended by
12	10		adding Subdivision (15-a) and amending Subdivision (25) to read as
13	11		follows:
14	12		(15-a) "Equity capital" means the amount by which the
15	13		total assets of a state trust company exceed the total liabilities
16	14		of the trust company.
17	15		(25) "Insolvent" means a circumstance or condition in
18	16		which a state trust company:
19	17		(A) is unable or lacks the means to meet its
20	18		current obligations as they come due in the regular and ordinary
21	19		course of business, even if the value of its assets exceeds its
22	20		liabilities;
23	21		(B) has equity capital that is 50 percent or less
24	22		of the amount of restricted capital the trust company is required to
25	23		maintain [less than $500,000, as determined under regulatory
26	24		accounting principles];
27	25		(C) fails to maintain deposit insurance for its
28	26		deposits with the Federal Deposit Insurance Corporation or its
29	27		successor, or fails to maintain adequate security for its deposits
30	28		as provided by Section 184.301(c);
31	29		(D) sells or attempts to sell substantially all
32	30		of its assets or merges or attempts to merge substantially all of
33	31		its assets or business with another entity other than as provided by
34	32		Chapter 182; or
35	33		(E) attempts to dissolve or liquidate other than
36	34		as provided by Chapter 186.
37	35		SECTION 2. Section 181.104(a), Finance Code, is amended to
38	36		read as follows:
39	37		(a) The banking commissioner shall examine each state trust
40	38		company annually, or on another periodic basis as may be required by
41	39		rule or policy, or as the commissioner considers necessary to:
42	40		(1) safeguard the interests of clients, creditors,
43	41		shareholders, participants, or participant-transferees; and
44	42		(2) efficiently enforce applicable law.
45	43		SECTION 3. Section 181.107(c), Finance Code, is amended to
46	44		read as follows:
47	45		(c) A [Except for portions designated to be confidential by
48	46		the banking commissioner, a] statement of condition and income is a
49	47		public record except for:
50	48		(1) portions of the statement designated confidential
51	49		by the banking commissioner; and
52	50		(2) the statement of condition and income for a state
53	51		trust company exempt under Section 182.011 or 182.019 with regard
54	52		to the period during which the exemption is in effect.
55	53		SECTION 4. Section 182.008(a), Finance Code, is amended to
56	54		read as follows:
57	55		(a) The banking commissioner may not issue a charter to a
58	56		state trust company having restricted capital of less than $2 [$1]
59	57		million.
60	58		SECTION 5. Section 182.011, Finance Code, is amended by
61	59		amending Subsections (a), (d), and (e) and adding Subsection (a-1)
62	60		to read as follows:
63	61		(a) A state trust company may request in writing that it be
64	62		exempted from specified provisions of this subtitle. The banking
65	63		commissioner may grant the exemption in whole or in part, subject to
66	64		Subsection (c), if the banking commissioner finds that the state
67	65		trust company [does not transact business with the public. A state
68	66		trust company does not transact business with the public if it does
69	67		not make any sale, solicitation, arrangement, agreement, or
70	68		transaction to provide a trust or other business service, whether
71	69		or not for a fee, commission, or any other type of remuneration,
72	70		with]:
73	71		(1) has only family clients and transacts business
74	72		solely on behalf of family clients and their related interests [an
75	73		individual who is not related within the fourth degree of affinity
76	74		or consanguinity to an individual who controls the state trust
77	75		company]; [or]
78	76		(2) [a sole proprietorship, partnership, joint
79	77		venture, association, trust, estate, business trust, or
80	78		corporation that] is [not] wholly owned, directly or indirectly,
81	79		legally or beneficially, by one or more family members; and
82	80		(3) does not hold itself out to the general public as a
83	81		corporate fiduciary for hire [individuals related within the fourth
84	82		degree of affinity or consanguinity to an individual who controls
85	83		the state trust company].
86	84		(a-1) In this section:
87	85		(1) "Family client" includes:
88	86		(A) a family member;
89	87		(B) a former family member;
90	88		(C) a key employee of the trust company as
91	89		defined by and to the extent permitted by rules adopted under
92	90		Subsection (e), including a former key employee for a reasonable
93	91		transition period specified by rule;
94	92		(D) a nonprofit organization, charitable
95	93		foundation, charitable trust, including a charitable lead trust or
96	94		charitable remainder trust whose only current beneficiaries are
97	95		other family clients and charitable or nonprofit organizations, or
98	96		another charitable organization for which all the funding came
99	97		exclusively from one or more other family clients;
100	98		(E) the estate of a family member or former
101	99		family member;
102	100		(F) an irrevocable trust under which one or more
103	101		other family clients are the only current beneficiaries;
104	102		(G) an irrevocable trust funded exclusively by
105	103		one or more family clients in which other family clients and
106	104		nonprofit organizations, charitable foundations, charitable
107	105		trusts, or other charitable organizations are the only current
108	106		beneficiaries;
109	107		(H) a company wholly owned by, and operated for
110	108		the sole benefit of, one or more other family clients;
111	109		(I) a revocable trust of which one or more other
112	110		family clients are the sole grantors, including any such trust that
113	111		becomes irrevocable, wholly or partly, for a reasonable transition
114	112		period as specified by rule; and
115	113		(J) any other persons as may be permitted by
116	114		rules adopted under Subsection (e).
117	115		(2) "Family member," with respect to an individual,
118	116		means an individual related to the individual within the seventh
119	117		degree of consanguinity or affinity, as determined under Subchapter
120	118		B, Chapter 573, Government Code, except that a foster child is
121	119		considered the child of the foster parent and a person for whom a
122	120		guardian was appointed before the person's 18th birthday is
123	121		considered the child of the guardian.
124	122		(3) "Former family member" includes a former spouse or
125	123		stepchild who was a family member but is no longer a family member
126	124		due to a divorce or other similar event.
127	125		(d) A state trust company that is or has been exempt from a
128	126		provision of this subtitle under this section or a predecessor
129	127		statute may not transact business with the general public unless
130	128		the banking commissioner determines, as provided by Section
131	129		182.003, that public convenience and advantage will be promoted by
132	130		permitting the state trust company to engage in the trust business
133	131		with the general public.
134	132		(e) The finance commission may adopt rules:
135	133		(1) defining other circumstances under which a state
136	134		trust company may be exempted from a provision of this subtitle
137	135		because it does not transact business with the general public;
138	136		(2) specifying the provisions of this subtitle that
139	137		are subject to an exemption request; [and]
140	138		(3) establishing procedures and requirements for
141	139		obtaining, maintaining, or revoking an exemption; and
142	140		(4) defining or further defining terms used by this
143	141		section.
144	142		SECTION 6. Section 182.012, Finance Code, is amended by
145	143		amending Subsection (a) and adding Subsection (c) to read as
146	144		follows:
147	145		(a) A state trust company requesting an exemption under
148	146		Section 182.011 shall file an application with the banking
149	147		commissioner that includes:
150	148		(1) a nonrefundable application fee set by the finance
151	149		commission;
152	150		(2) a detailed sworn statement showing the state trust
153	151		company's assets and liabilities as of the end of the calendar month
154	152		preceding the filing of the application;
155	153		(3) a sworn statement of the reason for requesting the
156	154		exemption;
157	155		(4) a sworn statement that the state trust company:
158	156		(A) has or will have only family clients and
159	157		transacts or will transact business solely on behalf of family
160	158		clients and their related interests;
161	159		(B) is or will be wholly owned, directly or
162	160		indirectly, legally or beneficially, by one or more family members;
163	161		(C) does not or will not hold itself out to the
164	162		general public as a corporate fiduciary for hire; and
165	163		(D) [is not transacting business with the public
166	164		and that the company] will not transact business with the general
167	165		public without the prior written permission of the banking
168	166		commissioner;
169	167		(5) the current street mailing address and telephone
170	168		number of the physical location in this state at which the state
171	169		trust company will maintain its books and records, with a sworn
172	170		statement that the address given is true and correct and is not a
173	171		United States Postal Service post office box or a private mail box,
174	172		postal box, or mail drop; and
175	173		(6) a list of the specific provisions of this subtitle
176	174		for which the request for an exemption is made.
177	175		(c) In this section, "family client" and "family member"
178	176		have the meanings assigned by Section 182.011.
179	177		SECTION 7. Sections 182.013(a) and (c), Finance Code, are
180	178		amended to read as follows:
181	179		(a) An [Before June 30 of each year, an] exempt state trust
182	180		company shall file a certification annually with its statement of
183	181		condition and income, on a form provided by the banking
184	182		commissioner, that it is maintaining the conditions and limitations
185	183		of its exemption. The certification must be accompanied by a fee
186	184		set by the finance commission. [The certification is not valid
187	185		unless it bears an acknowledgment stamped by the department.]
188	186		(c) The [banking commissioner may examine or investigate
189	187		the] state trust company shall maintain records [periodically as]
190	188		necessary to verify the certification. The records are subject to
191	189		examination under Section 181.104.
192	190		SECTION 8. Section 182.015, Finance Code, is amended to
193	191		read as follows:
194	192		Sec. 182.015. CHANGE OF CONTROL OF EXEMPT STATE TRUST
195	193		COMPANY. [Control of an exempt state trust company may not be sold
196	194		or transferred with exempt status.] If control of an exempt state
197	195		trust company is sold or otherwise transferred, the acquiring
198	196		person must comply with Sections 182.003, 182.004, 182.005, [and]
199	197		183.001, and 183.002. For the exempt status of the state trust
200	198		company to continue, the acquiring person must file a certification
201	199		with the banking commissioner that the state trust company will
202	200		comply, or continue to comply, with the requirements of Section
203	201		182.011 after control is transferred. The banking commissioner may
204	202		examine or investigate the acquiring person and the state trust
205	203		company as necessary to verify the certification. If the
206	204		commissioner determines that the state trust company will not
207	205		comply, or continue to comply, with the requirements of Section
208	206		182.011 after control is transferred, the commissioner shall
209	207		terminate the exemption on the effective date of the transfer.
210	208		After the termination, the [automatically terminates on the
211	209		effective date of the transfer. The] acquiring person must file a
212	210		separate application to obtain a new [an] exemption for the state
213	211		trust company under Section 182.011.
214	212		SECTION 9. Section 182.019, Finance Code, is amended to
215	213		read as follows:
216	214		Sec. 182.019. PRIOR EXEMPTION. (a) Subject to Subsection
217	215		(b), a [A] state trust company that was exempt before September 1,
218	216		1997, may no longer operate with that prior exempt status after the
219	217		earlier of:
220	218		(1) September 1, 2020; or
221	219		(2) the date control is sold or otherwise transferred
222	220		[under a predecessor to this subtitle is considered exempt under
223	221		this subtitle].
224	222		(b) A state trust company may apply for a new exemption
225	223		under Section 182.011 before loss of its exempt status under
226	224		Subsection (a).
227	225		SECTION 10. Section 184.101(b), Finance Code, is amended to
228	226		read as follows:
229	227		(b) Unless the banking commissioner in writing approves
230	228		maintenance of a lesser amount, a state trust company must invest
231	229		and maintain an amount equal to at least 50 [40] percent of the
232	230		state trust company's restricted capital under Section 182.008 in
233	231		investment securities that are readily marketable and can be
234	232		converted to cash within four business days.
235	233		SECTION 11. The following provisions of the Finance Code
236	234		are repealed:
237	235		(1) Sections 181.104(b) and (c); and
238	236		(2) Section 182.013(b).
239	237		SECTION 12. (a) Not later than September 1, 2020, a state
240	238		trust company that has restricted capital in an amount that is less
241	239		than the amount required by Section 182.008, Finance Code, as
242	240		amended by this Act, shall increase its restricted capital to at
243	241		least the amount required under that section, unless the state
244	242		trust company has an exemption under Section 182.011 or 182.019,
245	243		Finance Code, as amended by this Act. As permitted by Section
246	244		182.008(e), Finance Code, a state trust company may apply to the
247	245		banking commissioner of Texas for approval of restricted capital in
248	246		an amount that is less than the amount required under Section
249	247		182.008.
250	248		(b) A state trust company that has an exemption under
251	249		Section 182.019, Finance Code, on September 1, 2015, and has
252	250		restricted capital in an amount that is less than the amount
253	251		required by Section 182.008(a), Finance Code, as amended by this
254	252		Act, shall increase its restricted capital to at least $250,000 on
255	253		or before September 1, 2020.
256	254		(c) The Finance Commission of Texas may adopt rules
257	255		specifying procedures for ratable increases in restricted capital
258	256		for state trust companies as required by this section and for
259	257		deferrals and extensions of time for a state trust company acting in
260	258		good faith to achieve minimum required restricted capital.
261	259		SECTION 13. Not later than September 1, 2016, a state trust
262	260		company shall comply with the investment liquidity requirements of
263	261		Section 184.101(b), Finance Code, as amended by this Act. On
264	262		written application, the banking commissioner of Texas may extend
265	263		the period for compliance for a state trust company for good cause
266	264		shown.
267	265		SECTION 14. This Act takes effect September 1, 2015.