Bill Text: TX SB875 | 2015-2016 | 84th Legislature | Enrolled


Bill Title: Relating to the regulation of state trust companies.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Passed) 2015-05-29 - Effective on 9/1/15 [SB875 Detail]

Download: Texas-2015-SB875-Enrolled.html
 
 
  S.B. No. 875
 
 
 
 
AN ACT
  relating to the regulation of state trust companies.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 181.002(a), Finance Code, is amended by
  adding Subdivision (15-a) and amending Subdivision (25) to read as
  follows:
               (15-a)  "Equity capital" means the amount by which the
  total assets of a state trust company exceed the total liabilities
  of the trust company.
               (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 that is 50 percent or less
  of the amount of restricted capital the trust company is required to
  maintain [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.
         SECTION 2.  Section 181.104(a), Finance Code, is amended to
  read as follows:
         (a)  The banking commissioner shall examine each state trust
  company annually, or on another periodic basis as may be required by
  rule or policy, or as the commissioner considers necessary to:
               (1)  safeguard the interests of clients, creditors,
  shareholders, participants, or participant-transferees; and
               (2)  efficiently enforce applicable law.
         SECTION 3.  Section 181.107(c), Finance Code, is amended to
  read as follows:
         (c)  A [Except for portions designated to be confidential by
  the banking commissioner, a] statement of condition and income is a
  public record except for:
               (1)  portions of the statement designated confidential
  by the banking commissioner; and
               (2)  the statement of condition and income for a state
  trust company exempt under Section 182.011 or 182.019 with regard
  to the period during which the exemption is in effect.
         SECTION 4.  Section 182.008(a), Finance Code, is amended to
  read as follows:
         (a)  The banking commissioner may not issue a charter to a
  state trust company having restricted capital of less than $2 [$1]
  million.
         SECTION 5.  Section 182.011, Finance Code, is amended by
  amending Subsections (a), (d), and (e) and adding Subsection (a-1)
  to read as follows:
         (a)  A state trust company may request in writing that it be
  exempted from specified provisions of this subtitle. The banking
  commissioner may grant the exemption in whole or in part, subject to
  Subsection (c), if the banking commissioner finds that the state
  trust company [does not transact business with the public. A state
  trust company does not transact business with the public if it does
  not make any sale, solicitation, arrangement, agreement, or
  transaction to provide a trust or other business service, whether
  or not for a fee, commission, or any other type of remuneration,
  with]:
               (1)  has only family clients and transacts business
  solely on behalf of family clients and their related interests [an
  individual who is not related within the fourth degree of affinity
  or consanguinity to an individual who controls the state trust
  company]; [or]
               (2)  [a sole proprietorship, partnership, joint
  venture, association, trust, estate, business trust, or
  corporation that] is [not] wholly owned, directly or indirectly,
  legally or beneficially, by one or more family members; and
               (3)  does not hold itself out to the general public as a
  corporate fiduciary for hire [individuals related within the fourth
  degree of affinity or consanguinity to an individual who controls
  the state trust company].
         (a-1)  In this section:
               (1)  "Family client" includes:
                     (A)  a family member;
                     (B)  a former family member;
                     (C)  a key employee of the trust company as
  defined by and to the extent permitted by rules adopted under
  Subsection (e), including a former key employee for a reasonable
  transition period specified by rule;
                     (D)  a nonprofit organization, charitable
  foundation, charitable trust, including a charitable lead trust or
  charitable remainder trust whose only current beneficiaries are
  other family clients and charitable or nonprofit organizations, or
  another charitable organization for which all the funding came
  exclusively from one or more other family clients;
                     (E)  the estate of a family member or former
  family member;
                     (F)  an irrevocable trust under which one or more
  other family clients are the only current beneficiaries;
                     (G)  an irrevocable trust funded exclusively by
  one or more family clients in which other family clients and
  nonprofit organizations, charitable foundations, charitable
  trusts, or other charitable organizations are the only current
  beneficiaries;
                     (H)  a company wholly owned by, and operated for
  the sole benefit of, one or more other family clients;
                     (I)  a revocable trust of which one or more other
  family clients are the sole grantors, including any such trust that
  becomes irrevocable, wholly or partly, for a reasonable transition
  period as specified by rule; and
                     (J)  any other persons as may be permitted by
  rules adopted under Subsection (e).
               (2)  "Family member," with respect to an individual,
  means an individual related to the individual within the seventh
  degree of consanguinity or affinity, as determined under Subchapter
  B, Chapter 573, Government Code, except that a foster child is
  considered the child of the foster parent and a person for whom a
  guardian was appointed before the person's 18th birthday is
  considered the child of the guardian.
               (3)  "Former family member" includes a former spouse or
  stepchild who was a family member but is no longer a family member
  due to a divorce or other similar event.
         (d)  A state trust company that is or has been exempt from a
  provision of this subtitle under this section or a predecessor
  statute may not transact business with the general public unless
  the banking commissioner determines, as provided by Section
  182.003, that public convenience and advantage will be promoted by
  permitting the state trust company to engage in the trust business
  with the general public.
         (e)  The finance commission may adopt rules:
               (1)  defining other circumstances under which a state
  trust company may be exempted from a provision of this subtitle
  because it does not transact business with the general public;
               (2)  specifying the provisions of this subtitle that
  are subject to an exemption request; [and]
               (3)  establishing procedures and requirements for
  obtaining, maintaining, or revoking an exemption; and
               (4)  defining or further defining terms used by this
  section.
         SECTION 6.  Section 182.012, Finance Code, is amended by
  amending Subsection (a) and adding Subsection (c) to read as
  follows:
         (a)  A state trust company requesting an exemption under
  Section 182.011 shall file an application with the banking
  commissioner that includes:
               (1)  a nonrefundable application fee set by the finance
  commission;
               (2)  a detailed sworn statement showing the state trust
  company's assets and liabilities as of the end of the calendar month
  preceding the filing of the application;
               (3)  a sworn statement of the reason for requesting the
  exemption;
               (4)  a sworn statement that the state trust company:
                     (A)  has or will have only family clients and
  transacts or will transact business solely on behalf of family
  clients and their related interests;
                     (B)  is or will be wholly owned, directly or
  indirectly, legally or beneficially, by one or more family members;
                     (C)  does not or will not hold itself out to the
  general public as a corporate fiduciary for hire; and
                     (D)  [is not transacting business with the public
  and that the company] will not transact business with the general
  public without the prior written permission of the banking
  commissioner;
               (5)  the current street mailing address and telephone
  number of the physical location in this state at which the state
  trust company will maintain its books and records, with a sworn
  statement that the address given is true and correct and is not a
  United States Postal Service post office box or a private mail box,
  postal box, or mail drop; and
               (6)  a list of the specific provisions of this subtitle
  for which the request for an exemption is made.
         (c)  In this section, "family client" and "family member"
  have the meanings assigned by Section 182.011.
         SECTION 7.  Sections 182.013(a) and (c), Finance Code, are
  amended to read as follows:
         (a)  An [Before June 30 of each year, an] exempt state trust
  company shall file a certification annually with its statement of
  condition and income, on a form provided by the banking
  commissioner, that it is maintaining the conditions and limitations
  of its exemption. The certification must be accompanied by a fee
  set by the finance commission. [The certification is not valid
  unless it bears an acknowledgment stamped by the department.]
         (c)  The [banking commissioner may examine or investigate
  the] state trust company shall maintain records [periodically as]
  necessary to verify the certification.  The records are subject to
  examination under Section 181.104.
         SECTION 8.  Section 182.015, Finance Code, is amended to
  read as follows:
         Sec. 182.015.  CHANGE OF CONTROL OF EXEMPT STATE TRUST
  COMPANY. [Control of an exempt state trust company may not be sold
  or transferred with exempt status.] If control of an exempt state
  trust company is sold or otherwise transferred, the acquiring
  person must comply with Sections 182.003, 182.004, 182.005, [and]
  183.001, and 183.002. For the exempt status of the state trust
  company to continue, the acquiring person must file a certification
  with the banking commissioner that the state trust company will
  comply, or continue to comply, with the requirements of Section
  182.011 after control is transferred.  The banking commissioner may
  examine or investigate the acquiring person and the state trust
  company as necessary to verify the certification.  If the
  commissioner determines that the state trust company will not
  comply, or continue to comply, with the requirements of Section
  182.011 after control is transferred, the commissioner shall
  terminate the exemption on the effective date of the transfer.  
  After the termination, the [automatically terminates on the
  effective date of the transfer. The] acquiring person must file a
  separate application to obtain a new [an] exemption for the state
  trust company under Section 182.011.
         SECTION 9.  Section 182.019, Finance Code, is amended to
  read as follows:
         Sec. 182.019.  PRIOR EXEMPTION. (a)  Subject to Subsection
  (b), a [A] state trust company that was exempt before September 1,
  1997, may no longer operate with that prior exempt status after the
  earlier of:
               (1)  September 1, 2020; or
               (2)  the date control is sold or otherwise transferred 
  [under a predecessor to this subtitle is considered exempt under
  this subtitle].
         (b)  A state trust company may apply for a new exemption
  under Section 182.011 before loss of its exempt status under
  Subsection (a).
         SECTION 10.  Section 184.101(b), Finance Code, is amended to
  read as follows:
         (b)  Unless the banking commissioner in writing approves
  maintenance of a lesser amount, a state trust company must invest
  and maintain an amount equal to at least 50 [40] percent of the
  state trust company's restricted capital under Section 182.008 in
  investment securities that are readily marketable and can be
  converted to cash within four business days.
         SECTION 11.  The following provisions of the Finance Code
  are repealed:
               (1)  Sections 181.104(b) and (c); and
               (2)  Section 182.013(b).
         SECTION 12.  (a)  Not later than September 1, 2020, a state
  trust company that has restricted capital in an amount that is less
  than the amount required by Section 182.008, Finance Code, as
  amended by this Act, shall increase its restricted capital to at
  least the amount required under that section, unless the state
  trust company has an exemption under Section 182.011 or 182.019,
  Finance Code, as amended by this Act.  As permitted by Section
  182.008(e), Finance Code, a state trust company may apply to the
  banking commissioner of Texas for approval of restricted capital in
  an amount that is less than the amount required under Section
  182.008.
         (b)  A state trust company that has an exemption under
  Section 182.019, Finance Code, on September 1, 2015, and has
  restricted capital in an amount that is less than the amount
  required by Section 182.008(a), Finance Code, as amended by this
  Act, shall increase its restricted capital to at least $250,000 on
  or before September 1, 2020.
         (c)  The Finance Commission of Texas may adopt rules
  specifying procedures for ratable increases in restricted capital
  for state trust companies as required by this section and for
  deferrals and extensions of time for a state trust company acting in
  good faith to achieve minimum required restricted capital.
         SECTION 13.  Not later than September 1, 2016, a state trust
  company shall comply with the investment liquidity requirements of
  Section 184.101(b), Finance Code, as amended by this Act. On
  written application, the banking commissioner of Texas may extend
  the period for compliance for a state trust company for good cause
  shown.
         SECTION 14.  This Act takes effect September 1, 2015.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 875 passed the Senate on
  April 9, 2015, by the following vote:  Yeas 30, Nays 1.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 875 passed the House on
  May 19, 2015, by the following vote:  Yeas 144, Nays 2, two
  present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor
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