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 |
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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 [ |
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(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 [ |
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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 [ |
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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 [ |
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(1) has only family clients and transacts business | ||
solely on behalf of family clients and their related interests [ |
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(2) [ |
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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 [ |
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(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; [ |
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(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) [ |
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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 [ |
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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. [ |
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(c) The [ |
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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. [ |
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trust company is sold or otherwise transferred, the acquiring | ||
person must comply with Sections 182.003, 182.004, 182.005, [ |
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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 [ |
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separate application to obtain a new [ |
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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 [ |
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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 | ||
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(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 [ |
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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 |