Texas 2015 - 84th Regular

Texas Senate Bill SB875 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Eltife S.B. No. 875
2		-	(Flynn)
	1	+	S.B. No. 875
3	2
4	3
5		-	A BILL TO BE ENTITLED
6	4		AN ACT
7	5		relating to the regulation of state trust companies.
8	6		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
9	7		SECTION 1. Section 181.002(a), Finance Code, is amended by
10	8		adding Subdivision (15-a) and amending Subdivision (25) to read as
11	9		follows:
12	10		(15-a) "Equity capital" means the amount by which the
13	11		total assets of a state trust company exceed the total liabilities
14	12		of the trust company.
15	13		(25) "Insolvent" means a circumstance or condition in
16	14		which a state trust company:
17	15		(A) is unable or lacks the means to meet its
18	16		current obligations as they come due in the regular and ordinary
19	17		course of business, even if the value of its assets exceeds its
20	18		liabilities;
21	19		(B) has equity capital that is 50 percent or less
22	20		of the amount of restricted capital the trust company is required to
23	21		maintain [less than $500,000, as determined under regulatory
24	22		accounting principles];
25	23		(C) fails to maintain deposit insurance for its
26	24		deposits with the Federal Deposit Insurance Corporation or its
27	25		successor, or fails to maintain adequate security for its deposits
28	26		as provided by Section 184.301(c);
29	27		(D) sells or attempts to sell substantially all
30	28		of its assets or merges or attempts to merge substantially all of
31	29		its assets or business with another entity other than as provided by
32	30		Chapter 182; or
33	31		(E) attempts to dissolve or liquidate other than
34	32		as provided by Chapter 186.
35	33		SECTION 2. Section 181.104(a), Finance Code, is amended to
36	34		read as follows:
37	35		(a) The banking commissioner shall examine each state trust
38	36		company annually, or on another periodic basis as may be required by
39	37		rule or policy, or as the commissioner considers necessary to:
40	38		(1) safeguard the interests of clients, creditors,
41	39		shareholders, participants, or participant-transferees; and
42	40		(2) efficiently enforce applicable law.
43	41		SECTION 3. Section 181.107(c), Finance Code, is amended to
44	42		read as follows:
45	43		(c) A [Except for portions designated to be confidential by
46	44		the banking commissioner, a] statement of condition and income is a
47	45		public record except for:
48	46		(1) portions of the statement designated confidential
49	47		by the banking commissioner; and
50	48		(2) the statement of condition and income for a state
51	49		trust company exempt under Section 182.011 or 182.019 with regard
52	50		to the period during which the exemption is in effect.
53	51		SECTION 4. Section 182.008(a), Finance Code, is amended to
54	52		read as follows:
55	53		(a) The banking commissioner may not issue a charter to a
56	54		state trust company having restricted capital of less than $2 [$1]
57	55		million.
58	56		SECTION 5. Section 182.011, Finance Code, is amended by
59	57		amending Subsections (a), (d), and (e) and adding Subsection (a-1)
60	58		to read as follows:
61	59		(a) A state trust company may request in writing that it be
62	60		exempted from specified provisions of this subtitle. The banking
63	61		commissioner may grant the exemption in whole or in part, subject to
64	62		Subsection (c), if the banking commissioner finds that the state
65	63		trust company [does not transact business with the public. A state
66	64		trust company does not transact business with the public if it does
67	65		not make any sale, solicitation, arrangement, agreement, or
68	66		transaction to provide a trust or other business service, whether
69	67		or not for a fee, commission, or any other type of remuneration,
70	68		with]:
71	69		(1) has only family clients and transacts business
72	70		solely on behalf of family clients and their related interests [an
73	71		individual who is not related within the fourth degree of affinity
74	72		or consanguinity to an individual who controls the state trust
75	73		company]; [or]
76	74		(2) [a sole proprietorship, partnership, joint
77	75		venture, association, trust, estate, business trust, or
78	76		corporation that] is [not] wholly owned, directly or indirectly,
79	77		legally or beneficially, by one or more family members; and
80	78		(3) does not hold itself out to the general public as a
81	79		corporate fiduciary for hire [individuals related within the fourth
82	80		degree of affinity or consanguinity to an individual who controls
83	81		the state trust company].
84	82		(a-1) In this section:
85	83		(1) "Family client" includes:
86	84		(A) a family member;
87	85		(B) a former family member;
88	86		(C) a key employee of the trust company as
89	87		defined by and to the extent permitted by rules adopted under
90	88		Subsection (e), including a former key employee for a reasonable
91	89		transition period specified by rule;
92	90		(D) a nonprofit organization, charitable
93	91		foundation, charitable trust, including a charitable lead trust or
94	92		charitable remainder trust whose only current beneficiaries are
95	93		other family clients and charitable or nonprofit organizations, or
96	94		another charitable organization for which all the funding came
97	95		exclusively from one or more other family clients;
98	96		(E) the estate of a family member or former
99	97		family member;
100	98		(F) an irrevocable trust under which one or more
101	99		other family clients are the only current beneficiaries;
102	100		(G) an irrevocable trust funded exclusively by
103	101		one or more family clients in which other family clients and
104	102		nonprofit organizations, charitable foundations, charitable
105	103		trusts, or other charitable organizations are the only current
106	104		beneficiaries;
107	105		(H) a company wholly owned by, and operated for
108	106		the sole benefit of, one or more other family clients;
109	107		(I) a revocable trust of which one or more other
110	108		family clients are the sole grantors, including any such trust that
111	109		becomes irrevocable, wholly or partly, for a reasonable transition
112	110		period as specified by rule; and
113	111		(J) any other persons as may be permitted by
114	112		rules adopted under Subsection (e).
115	113		(2) "Family member," with respect to an individual,
116	114		means an individual related to the individual within the seventh
117	115		degree of consanguinity or affinity, as determined under Subchapter
118	116		B, Chapter 573, Government Code, except that a foster child is
119	117		considered the child of the foster parent and a person for whom a
120	118		guardian was appointed before the person's 18th birthday is
121	119		considered the child of the guardian.
122	120		(3) "Former family member" includes a former spouse or
123	121		stepchild who was a family member but is no longer a family member
124	122		due to a divorce or other similar event.
125	123		(d) A state trust company that is or has been exempt from a
126	124		provision of this subtitle under this section or a predecessor
127	125		statute may not transact business with the general public unless
128	126		the banking commissioner determines, as provided by Section
129	127		182.003, that public convenience and advantage will be promoted by
130	128		permitting the state trust company to engage in the trust business
131	129		with the general public.
132	130		(e) The finance commission may adopt rules:
133	131		(1) defining other circumstances under which a state
134	132		trust company may be exempted from a provision of this subtitle
135	133		because it does not transact business with the general public;
136	134		(2) specifying the provisions of this subtitle that
137	135		are subject to an exemption request; [and]
138	136		(3) establishing procedures and requirements for
139	137		obtaining, maintaining, or revoking an exemption; and
140	138		(4) defining or further defining terms used by this
141	139		section.
142	140		SECTION 6. Section 182.012, Finance Code, is amended by
143	141		amending Subsection (a) and adding Subsection (c) to read as
144	142		follows:
145	143		(a) A state trust company requesting an exemption under
146	144		Section 182.011 shall file an application with the banking
147	145		commissioner that includes:
148	146		(1) a nonrefundable application fee set by the finance
149	147		commission;
150	148		(2) a detailed sworn statement showing the state trust
151	149		company's assets and liabilities as of the end of the calendar month
152	150		preceding the filing of the application;
153	151		(3) a sworn statement of the reason for requesting the
154	152		exemption;
155	153		(4) a sworn statement that the state trust company:
156	154		(A) has or will have only family clients and
157	155		transacts or will transact business solely on behalf of family
158	156		clients and their related interests;
159	157		(B) is or will be wholly owned, directly or
160	158		indirectly, legally or beneficially, by one or more family members;
161	159		(C) does not or will not hold itself out to the
162	160		general public as a corporate fiduciary for hire; and
163	161		(D) [is not transacting business with the public
164	162		and that the company] will not transact business with the general
165	163		public without the prior written permission of the banking
166	164		commissioner;
167	165		(5) the current street mailing address and telephone
168	166		number of the physical location in this state at which the state
169	167		trust company will maintain its books and records, with a sworn
170	168		statement that the address given is true and correct and is not a
171	169		United States Postal Service post office box or a private mail box,
172	170		postal box, or mail drop; and
173	171		(6) a list of the specific provisions of this subtitle
174	172		for which the request for an exemption is made.
175	173		(c) In this section, "family client" and "family member"
176	174		have the meanings assigned by Section 182.011.
177	175		SECTION 7. Sections 182.013(a) and (c), Finance Code, are
178	176		amended to read as follows:
179	177		(a) An [Before June 30 of each year, an] exempt state trust
180	178		company shall file a certification annually with its statement of
181	179		condition and income, on a form provided by the banking
182	180		commissioner, that it is maintaining the conditions and limitations
183	181		of its exemption. The certification must be accompanied by a fee
184	182		set by the finance commission. [The certification is not valid
185	183		unless it bears an acknowledgment stamped by the department.]
186	184		(c) The [banking commissioner may examine or investigate
187	185		the] state trust company shall maintain records [periodically as]
188	186		necessary to verify the certification. The records are subject to
189	187		examination under Section 181.104.
190	188		SECTION 8. Section 182.015, Finance Code, is amended to
191	189		read as follows:
192	190		Sec. 182.015. CHANGE OF CONTROL OF EXEMPT STATE TRUST
193	191		COMPANY. [Control of an exempt state trust company may not be sold
194	192		or transferred with exempt status.] If control of an exempt state
195	193		trust company is sold or otherwise transferred, the acquiring
196	194		person must comply with Sections 182.003, 182.004, 182.005, [and]
197	195		183.001, and 183.002. For the exempt status of the state trust
198	196		company to continue, the acquiring person must file a certification
199	197		with the banking commissioner that the state trust company will
200	198		comply, or continue to comply, with the requirements of Section
201	199		182.011 after control is transferred. The banking commissioner may
202	200		examine or investigate the acquiring person and the state trust
203	201		company as necessary to verify the certification. If the
204	202		commissioner determines that the state trust company will not
205	203		comply, or continue to comply, with the requirements of Section
206	204		182.011 after control is transferred, the commissioner shall
207	205		terminate the exemption on the effective date of the transfer.
208	206		After the termination, the [automatically terminates on the
209	207		effective date of the transfer. The] acquiring person must file a
210	208		separate application to obtain a new [an] exemption for the state
211	209		trust company under Section 182.011.
212	210		SECTION 9. Section 182.019, Finance Code, is amended to
213	211		read as follows:
214	212		Sec. 182.019. PRIOR EXEMPTION. (a) Subject to Subsection
215	213		(b), a [A] state trust company that was exempt before September 1,
216	214		1997, may no longer operate with that prior exempt status after the
217	215		earlier of:
218	216		(1) September 1, 2020; or
219	217		(2) the date control is sold or otherwise transferred
220	218		[under a predecessor to this subtitle is considered exempt under
221	219		this subtitle].
222	220		(b) A state trust company may apply for a new exemption
223	221		under Section 182.011 before loss of its exempt status under
224	222		Subsection (a).
225	223		SECTION 10. Section 184.101(b), Finance Code, is amended to
226	224		read as follows:
227	225		(b) Unless the banking commissioner in writing approves
228	226		maintenance of a lesser amount, a state trust company must invest
229	227		and maintain an amount equal to at least 50 [40] percent of the
230	228		state trust company's restricted capital under Section 182.008 in
231	229		investment securities that are readily marketable and can be
232	230		converted to cash within four business days.
233	231		SECTION 11. The following provisions of the Finance Code
234	232		are repealed:
235	233		(1) Sections 181.104(b) and (c); and
236	234		(2) Section 182.013(b).
237	235		SECTION 12. (a) Not later than September 1, 2020, a state
238	236		trust company that has restricted capital in an amount that is less
239	237		than the amount required by Section 182.008, Finance Code, as
240	238		amended by this Act, shall increase its restricted capital to at
241	239		least the amount required under that section, unless the state
242	240		trust company has an exemption under Section 182.011 or 182.019,
243	241		Finance Code, as amended by this Act. As permitted by Section
244	242		182.008(e), Finance Code, a state trust company may apply to the
245	243		banking commissioner of Texas for approval of restricted capital in
246	244		an amount that is less than the amount required under Section
247	245		182.008.
248	246		(b) A state trust company that has an exemption under
249	247		Section 182.019, Finance Code, on September 1, 2015, and has
250	248		restricted capital in an amount that is less than the amount
251	249		required by Section 182.008(a), Finance Code, as amended by this
252	250		Act, shall increase its restricted capital to at least $250,000 on
253	251		or before September 1, 2020.
254	252		(c) The Finance Commission of Texas may adopt rules
255	253		specifying procedures for ratable increases in restricted capital
256	254		for state trust companies as required by this section and for
257	255		deferrals and extensions of time for a state trust company acting in
258	256		good faith to achieve minimum required restricted capital.
259	257		SECTION 13. Not later than September 1, 2016, a state trust
260	258		company shall comply with the investment liquidity requirements of
261	259		Section 184.101(b), Finance Code, as amended by this Act. On
262	260		written application, the banking commissioner of Texas may extend
263	261		the period for compliance for a state trust company for good cause
264	262		shown.
265	263		SECTION 14. This Act takes effect September 1, 2015.
	264	+	______________________________ ______________________________
	265	+	President of the Senate Speaker of the House
	266	+	I hereby certify that S.B. No. 875 passed the Senate on
	267	+	April 9, 2015, by the following vote: Yeas 30, Nays 1.
	268	+	______________________________
	269	+	Secretary of the Senate
	270	+	I hereby certify that S.B. No. 875 passed the House on
	271	+	May 19, 2015, by the following vote: Yeas 144, Nays 2, two
	272	+	present not voting.
	273	+	______________________________
	274	+	Chief Clerk of the House
	275	+	Approved:
	276	+	______________________________
	277	+	Date
	278	+	______________________________
	279	+	Governor