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