CHAPTER 182. POWERS, ORGANIZATION, AND FINANCIAL REQUIREMENTS

FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE F. TRUST COMPANIES

CHAPTER 182. POWERS, ORGANIZATION, AND FINANCIAL REQUIREMENTS

SUBCHAPTER A. ORGANIZATION AND POWERS IN GENERAL

Sec. 182.001. ORGANIZATION AND GENERAL POWERS OF STATE TRUST

COMPANY. (a) Subject to Subsection (g) and the other provisions

of this chapter, one or more persons may organize and charter a

state trust company as a state trust association or a limited

trust association.

(b) A state trust company may engage in the trust business by:

(1) acting as trustee under a written agreement;

(2) receiving money and other property in its capacity as

trustee for investment in real or personal property;

(3) acting as trustee and performing the fiduciary duties

committed or transferred to it by order of a court;

(4) acting as executor, administrator, or trustee of the estate

of a deceased person;

(5) acting as a custodian, guardian, conservator, or trustee for

a minor or incapacitated person;

(6) acting as a successor fiduciary to a trust institution or

other fiduciary;

(7) receiving for safekeeping personal property;

(8) acting as custodian, assignee, transfer agent, escrow agent,

registrar, or receiver;

(9) acting as investment advisor, agent, or attorney in fact

according to an applicable agreement;

(10) with the prior written approval of the banking commissioner

and to the extent consistent with applicable fiduciary

principles, engaging in a financial activity or an activity

incidental or complementary to a financial activity, directly or

through a subsidiary;

(11) exercising additional powers expressly conferred by rule of

the finance commission; and

(12) exercising any incidental power that is reasonably

necessary to enable it to fully exercise the powers expressly

conferred according to commonly accepted fiduciary customs and

usages.

(c) For purposes of other state law, a trust association is

considered a corporation and a limited trust association is

considered a limited liability company. To the extent consistent

with this subtitle, a trust association may exercise the powers

of a Texas business corporation and a limited trust association

may exercise the powers of a Texas limited liability company as

reasonably necessary to enable exercise of specific powers under

this subtitle.

(d) A state trust company may contribute to a community fund or

to a charitable, philanthropic, or benevolent instrumentality

conducive to public welfare an amount that the state trust

company's board considers appropriate and in the interests of the

state trust company.

(e) Subject to Section 184.301, a state trust company may

deposit trust funds with itself.

(f) A state trust company insured by the Federal Deposit

Insurance Corporation may receive and pay deposits, with or

without interest, made by the United States, the state, a county,

or a municipality.

(g) In the exercise of discretion consistent with the purposes

of this subtitle, the banking commissioner may require a state

trust company to conduct an otherwise authorized activity through

a subsidiary.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 20, eff.

Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec. 6.008(a),

eff. Sept. 1, 2001.

Sec. 182.002. ARTICLES OF ASSOCIATION OF STATE TRUST COMPANY.

(a) The articles of association of a state trust company must be

signed and acknowledged by each organizer and must contain:

(1) the name of the state trust company, subject to Subsection

(b);

(2) the period of the state trust company's duration, which may

be perpetual;

(3) the powers of the state trust company, which may be stated

as:

(A) all powers granted to a state trust company in this state;

or

(B) a list of the specific powers that the state trust company

chooses and is authorized to exercise;

(4) the aggregate number of shares, or participation shares in

the case of a limited trust association, that the state trust

company will be authorized to issue, and the number of classes of

shares or participation shares, which may be one or more;

(5) if the shares or participation shares are to be divided into

classes:

(A) the designation of each class and statement of the

preferences, limitations, and relative rights of the shares or

participation shares of each class, which in the case of a

limited trust association may be more fully set forth in the

participation agreement;

(B) the number of shares or participation shares of each class;

and

(C) a statement of the par value of the shares or participation

shares of each class or that the shares or participation shares

are to be without par value;

(6) any provision limiting or denying to shareholders or

participants the preemptive right to acquire additional or

treasury shares or participation shares of the state trust

company;

(7) any provision granting the right of shareholders or

participants to cumulative voting in the election of directors or

managers;

(8) the aggregate amount of consideration to be received for all

shares or participation shares initially issued by the state

trust company and a statement that:

(A) all authorized shares or participation shares have been

subscribed; and

(B) all subscriptions received have been irrevocably paid in

cash;

(9) any provision consistent with law that the organizers elect

to set forth in the articles of association for the regulation of

the internal affairs of the state trust company or that is

otherwise required by this subtitle to be set forth in the

articles of association;

(10) the street address of the state trust company's home

office; and

(11) either:

(A) the number of directors or managers constituting the initial

board and the names and street addresses of the persons who are

to serve as directors or managers until the first annual meeting

of shareholders or participants or until successor directors or

managers have been elected and qualified; or

(B) the statement described by Subsection (c).

(b) The banking commissioner may determine that a proposed state

trust company name is potentially misleading to the public and

require the organizers to select a different name.

(c) The organizers of a limited trust association that will have

not fewer than five or more than 25 participants may include in

the articles of association a statement that management is vested

in a board composed of all participants, with management

authority vested in each participant in proportion to the

participant's contribution to capital as adjusted from time to

time to properly reflect any additional contribution, and the

names and street addresses of the persons who are to be the

initial managing participants.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

735, Sec. 10, eff. September 1, 2007.

Sec. 182.003. APPLICATION FOR STATE TRUST COMPANY CHARTER;

STANDARDS FOR APPROVAL. (a) An application for a state trust

company charter must be made under oath and in the form required

by the banking commissioner. The application must be supported by

information, records, and opinions of counsel that the banking

commissioner requires. The application must be accompanied by all

charter fees and deposits required by statute or rule.

(b) The banking commissioner shall grant a state trust company

charter only on proof satisfactory to the banking commissioner

that public convenience and advantage will be promoted by the

establishment of the state trust company. In determining whether

public convenience and advantage will be promoted, the banking

commissioner shall consider the convenience of the public to be

served and whether:

(1) the organizational and capital structure and amount of

initial capitalization is adequate for the business and location;

(2) the anticipated volume and nature of business indicates a

reasonable probability of success and profitability based on the

market sought to be served;

(3) the proposed officers, directors, and managers, or managing

participants, as a group have sufficient fiduciary experience,

ability, standing, competence, trustworthiness, and integrity to

justify a belief that the state trust company will operate in

compliance with law and that success of the state trust company

is probable;

(4) each principal shareholder or participant has sufficient

experience, ability, standing, competence, trustworthiness, and

integrity to justify a belief that the state trust company will

be free from improper or unlawful influence or interference with

respect to the state trust company's operation in compliance with

law; and

(5) the organizers are acting in good faith.

(c) The organizers bear the burden of proof to establish that

public convenience and advantage will be promoted by the

establishment of the state trust company. The failure of an

applicant to furnish required information, opinions of counsel,

and other material, or the required fee, is considered an

abandonment of the application.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.004. NOTICE AND INVESTIGATION OF CHARTER APPLICATION.

(a) The organizers shall solicit comments and protests by

publishing notice of the application, its date of filing, and the

identity of the organizers, in the form and frequency specified

by the banking commissioner, in a newspaper of general

circulation in the county where the initial home office of the

proposed state trust company is to be located, or in another

publication or location as directed by the banking commissioner.

The banking commissioner may require the organizers to publish

the notice at other locations reasonably necessary to solicit the

views of potentially affected persons.

(b) At the expense of the organizers, the banking commissioner

shall thoroughly investigate the application and inquire fully

into the identity and character of each proposed director,

manager, officer, managing participant, and principal shareholder

or participant. The banking commissioner shall prepare a written

report of the investigation.

(c) Rules adopted under this subtitle may specify the

confidential or nonconfidential character of information obtained

or prepared by the department under this section. Except as

provided by Subchapter D, Chapter 181, or in rules regarding

confidential information, the business plan of the applicant and

the financial statement of a proposed officer, director, manager,

or managing participant are confidential and not subject to

public disclosure.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 412, Sec. 3.07,

eff. Sept. 1, 2001.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

735, Sec. 11, eff. September 1, 2007.

Sec. 182.005. PROTEST; HEARING; DECISION ON CHARTER APPLICATION.

(a) A protest of a charter application must be received by the

department before the 15th day after the date the organizers

publish notice under Section 182.004(a) and must be accompanied

by the fees and deposits required by law. If the protest is

untimely, the department shall return all submitted fees and

deposits to the protesting party. If the protest is timely, the

department shall notify the applicant of the protest and mail or

deliver a complete copy of the nonconfidential sections of the

charter application to the protesting party before the 15th day

after the later of the date of receipt of the protest or receipt

of the charter application.

(b) A protesting party must file a detailed protest responding

to each contested statement contained in the nonconfidential

portion of the application not later than the 20th day after the

date the protesting party receives the application from the

department, and relate each statement and response to the

standards for approval set forth in Section 182.003(b). The

applicant must file a written reply to the protesting party's

detailed response on or before the 10th day after the date the

response is filed. The protesting party's response and the

applicant's reply must be verified by affidavit and must certify

that a copy was served on the opposing party. If applicable,

statements in the response and in the reply may be supported by

references to data available in sources of which official notice

may properly be taken. Any comment received by the department and

any reply of the applicant to the comment shall be made available

to the protesting party.

(c) The banking commissioner may not be compelled to hold a

hearing before granting or denying the charter application. In

the exercise of discretion, the banking commissioner may consider

granting a hearing on a charter application at the request of the

applicant or a protesting party. The banking commissioner may

order a hearing regardless of whether a hearing has been

requested by a party. A party requesting a hearing must indicate

with specificity the issues involved that cannot be determined on

the basis of the record compiled under Subsection (b) and why the

issues cannot be determined. A request for hearing and the

banking commissioner's decision with regard to granting a hearing

shall be made a part of the record. If the banking commissioner

sets a hearing, the banking commissioner shall conduct a public

hearing and as many prehearing conferences and opportunities for

discovery as the banking commissioner considers advisable and

consistent with governing statutes and rules, except that the

banking commissioner may not permit discovery of confidential

information in the charter application or the investigation

report.

(d) Based on the record, the banking commissioner shall

determine whether all of the necessary conditions set forth in

Section 182.003(b) have been established and shall enter an order

granting or denying the charter.

(e) The banking commissioner may make approval of any

application conditional. The banking commissioner shall include

any conditions in the order granting the charter.

(f) Chapter 2001, Government Code, does not apply to a charter

application filed for the purpose of assuming all or any portion

of the assets, liabilities, and accounts of a trust institution

considered by the banking commissioner to be in hazardous

condition.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.009(a), eff. Sept. 1, 2001.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

735, Sec. 12, eff. September 1, 2007.

Sec. 182.006. ISSUANCE OF CHARTER. A state trust company may

not engage in the trust business until it receives its charter

from the banking commissioner. The banking commissioner may not

deliver the charter until the state trust company has:

(1) received cash in at least the full amount of restricted

capital from subscriptions for the issuance of shares or

participation shares;

(2) elected or qualified the initial officers and directors or

managers, as appropriate, named in the application for charter or

other officers and directors or managers approved by the banking

commissioner; and

(3) complied with all other requirements of this subtitle

relating to the organization of the state trust company.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.007. DEADLINE TO BEGIN BUSINESS. If a state trust

company does not open and engage in the trust business within six

months after the date it receives its charter or conditional

approval of application for charter, the banking commissioner may

revoke the charter or cancel the conditional approval of

application for charter without judicial action.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.008. RESTRICTED CAPITAL. (a) The banking commissioner

may not issue a charter to a state trust company having

restricted capital of less than $1 million.

(b) The banking commissioner may, on a case-by-case basis,

require additional restricted capital for a proposed or existing

state trust company if the banking commissioner finds the

condition and operations of the existing state trust company or

the proposed scope or type of operations of the proposed state

trust company requires additional restricted capital to protect

the safety and soundness of the state trust company. The safety

and soundness factors to be considered by the banking

commissioner in the exercise of discretion include:

(1) the nature and type of business the state trust company

conducts;

(2) the nature and degree of liquidity in assets held in a

corporate capacity;

(3) the amount, type, and depository of fiduciary assets that

the state trust company manages;

(4) the complexity of the state trust company's fiduciary duties

and degree of discretion undertaken;

(5) the competence and experience of the state trust company's

management;

(6) the extent and adequacy of internal controls maintained by

the state trust company;

(7) the presence or absence of annual unqualified audits by an

independent certified public accountant;

(8) the reasonableness of the state trust company's business

plans for retaining or acquiring additional restricted capital;

and

(9) the existence and adequacy of insurance obtained or held by

the state trust company to protect its clients, beneficiaries,

and grantors.

(c) The effective date of an order under Subsection (b) must be

stated in the order and must be on or after the 21st day after

the date the order is mailed or delivered. Unless the state trust

company requests a hearing before the banking commissioner in

writing before the effective date of the order, the order takes

effect and is final and nonappealable. This subsection does not

prohibit an application to reduce capital requirements of an

existing state trust company under Subsection (e) or under

Section 182.011.

(d) Subject to Subsection (e) and Section 182.011, a state trust

company to which the banking commissioner issues a charter shall

at all times maintain restricted capital in at least the amount

required under Subsection (a) and in any additional amount the

banking commissioner requires under Subsection (b).

(e) Notwithstanding Subsection (a), on application, the banking

commissioner may, on a case-by-case basis in the exercise of

discretion, reduce the amount of minimum restricted capital

required for a state trust company in a manner consistent with

protecting the state trust company's safety and soundness. In

making a determination under this subsection, the banking

commissioner shall consider the factors listed by Subsection (b).

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.009. APPLICATION OF GENERAL CORPORATE LAW. (a) The

Business Organizations Code applies to a trust association as if

it were a for-profit corporation, and to a limited trust

association as if it were a limited liability company, to the

extent not inconsistent with this subtitle or the proper business

of a state trust company, except that:

(1) a reference to the secretary of state means the banking

commissioner unless the context requires otherwise; and

(2) the right of shareholders or participants to cumulative

voting in the election of directors or managers exists only if

granted by the state trust company's articles of association.

(b) Unless expressly authorized by this subtitle or a rule of

the finance commission, a state trust company may not take an

action authorized by a law listed under Subsection (a) or (d)

regarding its corporate status, capital structure, or a matter of

corporate governance, of the type for which a law listed under

Subsection (a) would require a filing with the secretary of state

if the state trust company were a business corporation or a

limited liability company, without submitting the filing to the

banking commissioner for prior written approval of the action.

(c) The finance commission may adopt rules to alter or

supplement the procedures and requirements of the laws listed by

Subsection (a) or (d) applicable to an action taken under this

chapter by a state trust company.

(d) Notwithstanding Subsection (a), this subsection establishes

governing law with respect to a state trust company organized

before January 1, 2006:

(1) to the extent not inconsistent with this subtitle or the

proper business of a state trust company:

(A) the Texas Business Corporation Act, the Texas Miscellaneous

Corporation Laws Act (Article 1302-1.01 et seq., Vernon's Texas

Civil Statutes), and any other law relating to general business

corporations apply to a state trust company, and a reference in

this subtitle to the Business Organizations Code is considered a

reference to the prior law; and

(B) the Texas Limited Liability Company Act (Article 1528n,

Vernon's Texas Civil Statutes) and any other law relating to a

limited liability company organized in Texas apply to a limited

trust association, and a reference in this subtitle to the

Business Organizations Code is considered a reference to the

prior law;

(2) the finance commission may establish rules permitting a

state trust company to elect to be governed by the provisions of

the Business Organizations Code to the extent not inconsistent

with this subtitle or the proper business of a state trust

company; and

(3) this subsection expires January 1, 2010.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 528, Sec. 21, eff.

Sept. 1, 2001.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

237, Sec. 68, eff. September 1, 2007.

Sec. 182.010. PARITY. (a) A state trust company has the same

rights and privileges with respect to the exercise of fiduciary

powers that are or may be granted to a trust institution that

maintains its principal office or a branch or trust office in

this state, except that this section may not be used by a state

trust company to:

(1) diminish its otherwise applicable fiduciary duties to a

client under the laws of this state; or

(2) avoid otherwise applicable consumer protection laws of this

state.

(b) A state trust company that intends to exercise a right or

privilege with respect to the exercise of fiduciary powers

granted to a trust institution described in Subsection (a) that

is not authorized for state trust companies under the statutes

and rules of this state other than under this section shall

submit a letter to the banking commissioner, describing in detail

the activity in which the state trust company intends to engage

and the specific authority for the trust institution described in

Subsection (a) to undertake the proposed activity. The state

trust company shall attach copies, if available, of relevant

state and federal law, including regulations and interpretive

letters. The state trust company may begin to perform the

proposed activity after the 30th day after the date the banking

commissioner receives the state trust company's letter unless the

banking commissioner specifies an earlier or later date or

prohibits the activity. The banking commissioner may prohibit the

state trust company from performing the activity only if the

banking commissioner finds that:

(1) a trust institution described in Subsection (a) does not

possess the specific right or privilege to perform the activity

the state trust company seeks to perform; or

(2) the performance of the activity by the state trust company

would adversely affect the safety and soundness of the requesting

state trust company.

(c) The banking commissioner may extend the 30-day period under

Subsection (b) if the banking commissioner determines that the

state trust company's letter raises issues requiring additional

information or additional time for analysis. If the 30-day period

is extended, the state trust company may perform the proposed

activity only on prior written approval by the banking

commissioner, except that the banking commissioner must approve

or prohibit the proposed activity or convene a hearing under

Section 181.201 not later than the 60th day after the date the

commissioner receives the state trust company's letter. If a

hearing is convened, the banking commissioner must approve or

prohibit the proposed activity not later than the 30th day after

the date the hearing is completed.

(d) A state trust company that is denied the requested right or

privilege to engage in an activity by the banking commissioner

under this section may appeal as provided by Sections

181.202-181.204 or may resubmit a letter under this section with

additional information or authority relevant to the banking

commissioner's determination. A denial is immediately final for

purposes of appeal.

(e) The finance commission may adopt rules implementing the

method or manner in which a state trust company exercises

specific rights and privileges, including rules regarding the

exercise of rights and privileges that would be prohibited to

state trust companies under state law except as provided by this

section. The finance commission may not adopt rules under this

subsection unless it finds that:

(1) trust institutions described in Subsection (a) possess the

rights or privileges to perform activities the rules would permit

state trust companies to perform; and

(2) if the rights and privileges would be prohibited to state

trust companies under other state law, the rules contain adequate

safeguards and controls, consistent with safety and soundness, to

address the concern of the legislature evidenced by the state law

the rules would impact.

(f) The exercise of rights and privileges by a state trust

company in compliance with and in the manner authorized by this

section is not a violation of any statute of this state.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.010(a), eff. Sept. 1, 2001.

Sec. 182.0105. FINANCIAL ACTIVITIES. (a) The finance

commission by rule may determine that an activity not otherwise

approved or authorized for state trust companies is:

(1) a financial activity;

(2) incidental to a financial activity; or

(3) complementary to a financial activity.

(b) In adopting a rule under Subsection (a), the finance

commission shall consider:

(1) the purposes of this subtitle and the Gramm-Leach-Bliley Act

(Pub. L. No. 106-102);

(2) changes or reasonably expected changes in the marketplace in

which state trust companies compete;

(3) changes or reasonably expected changes in the technology for

delivering fiduciary and financial services;

(4) whether the activity is necessary or appropriate to allow a

state trust company to:

(A) compete effectively with another company seeking to provide

fiduciary and financial services;

(B) efficiently deliver information and services that are

financial in nature through the use of technological means,

including an application necessary to protect the security or

efficacy of systems for the transmission of data or financial

transactions; or

(C) offer customers available or emerging technological means

for using fiduciary and financial services or for the document

imaging of data;

(5) whether the activity would violate applicable fiduciary

duties or otherwise pose a substantial risk to the safety and

soundness of a state trust company or the fiduciary and financial

system generally; and

(6) if otherwise determined to be permissible, whether the

conduct of the activity by a state trust company should be

qualified through the imposition of reasonable and necessary

conditions to protect the public and require appropriate regard

for safety and soundness of the trust company and the fiduciary

and financial system generally.

(c) A rule adopted by the finance commission under this section

does not alter or negate applicable licensing and regulatory

requirements administered by a functional regulatory agency of

this state, as defined by Section 31.303, including licensing and

regulatory requirements pertaining to:

(1) insurance activities;

(2) securities activities; and

(3) real estate development, marketing, and sales activities.

Added by Acts 2001, 77th Leg., ch. 528, Sec. 22, eff. Sept. 1,

2001.

Sec. 182.011. EXEMPTION FROM STATUTORY PROVISIONS FOR CERTAIN

STATE TRUST COMPANIES. (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 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) 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 by one or more individuals related within the

fourth degree of affinity or consanguinity to an individual who

controls the state trust company.

(b) At the expense of a state trust company, the banking

commissioner may examine or investigate the state trust company

in connection with an application for an exemption. Unless the

application presents novel or unusual questions, the banking

commissioner shall approve the application for exemption or set

the application for hearing not later than the 61st day after the

date the banking commissioner considers the application complete

and accepted for filing. The banking commissioner may require the

submission of additional information as considered necessary to

an informed decision.

(c) An exemption granted under this section may be made subject

to conditions or limitations imposed by the banking commissioner

consistent with this subtitle.

(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 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 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 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.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.012. APPLICATION FOR EXEMPTION. (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 is not

transacting business with the public and that the company will

not transact business with the 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.

(b) The banking commissioner may not approve an exemption unless

the application is completed as required by Subsection (a).

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.013. ANNUAL CERTIFICATION FOR EXEMPT STATE TRUST

COMPANY. (a) Before June 30 of each year, an exempt state trust

company shall file a certification 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.

(b) The department shall return a copy of the acknowledged

annual certification to the state trust company not later than

the 30th day after the date the certification is filed. The state

trust company shall notify the department of any failure to

return an acknowledged copy of any annual certification within

this period.

(c) The banking commissioner may examine or investigate the

state trust company periodically as necessary to verify the

certification.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.014. LIMITATION ON EFFECT OF EXEMPTION. (a) An exempt

state trust company shall comply with the home office provisions

of Section 182.202.

(b) The grant of an exemption to a state trust company does not

affect the state trust company's obligation to pay any corporate

franchise tax required by state law.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

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 transferred, the acquiring person must comply

with Sections 182.003, 182.004, 182.005, and 183.001 and the

exempt status of the state trust company automatically terminates

on the effective date of the transfer. The acquiring person must

file a separate application to obtain an exemption under Section

182.011.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.016. GROUNDS FOR REVOCATION OF EXEMPTION. The banking

commissioner may revoke an exemption of a state trust company if

the trust company:

(1) makes a false statement under oath on any document required

to be filed by this subtitle or finance commission rule;

(2) fails to submit to an examination as required by Section

181.104;

(3) withholds requested information from the banking

commissioner; or

(4) violates any provision of this subtitle applicable to an

exempt state trust company.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.017. NOTICE AND EFFECT OF REVOCATION OF EXEMPTION. (a)

If the banking commissioner determines from examination or other

credible evidence that an exempt state trust company has violated

any of the requirements of this subchapter relating to an exempt

state trust company, the banking commissioner may by personal

delivery or registered or certified mail, return receipt

requested, notify the state trust company in writing that the

state trust company's exemption has been revoked. The notice must

state grounds for the revocation with reasonable certainty. The

notice must state its effective date, which may not be earlier

than the fifth day after the date the notification is mailed or

delivered.

(b) The revocation takes effect for the state trust company if

the state trust company does not request a hearing in writing

before the effective date. After taking effect the revocation is

final and nonappealable as to that state trust company, and the

state trust company is subject to all of the requirements and

provisions of this subtitle applicable to nonexempt state trust

companies.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.018. ACTION AFTER REVOCATION OF EXEMPTION. (a) A

state trust company must comply with all of the provisions of

Sections 182.003(b) and (c) not later than the fifth day after

the date the revocation of the exemption takes effect. If,

however, the banking commissioner determines at the time of

revocation that the state trust company has been engaging in or

attempting to engage in acts intended or designed to deceive or

defraud the public, the banking commissioner, in the banking

commissioner's sole discretion, may waive the compliance period

provided by this subsection.

(b) If within the period prescribed by Subsection (a) the state

trust company does not comply with all of the provisions of this

subtitle, including capitalization requirements determined by the

banking commissioner as necessary to assure the safety and

soundness of the state trust company, the banking commissioner

may:

(1) institute any action or remedy prescribed by this subtitle

or any applicable rule; or

(2) refer the state trust company to the attorney general for

institution of a quo warranto proceeding to revoke the state

trust company's charter.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.019. PRIOR EXEMPTION. A state trust company that was

exempt under a predecessor to this subtitle is considered exempt

under this subtitle.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.020. FOREIGN CORPORATION EXERCISING TRUST POWERS. (a)

A foreign corporation may not conduct a trust business in this

state. A foreign corporation may control a state trust company in

this state if the state trust company is formed or acquired and

operated as provided by this subtitle and applicable rules.

(b) A foreign corporation or other entity chartered or domiciled

in another jurisdiction as a trust company or depository

institution with trust powers may act as a trustee in this state

only as provided by Section 105A, Texas Probate Code.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.021. ACTIVITIES NOT REQUIRING CHARTER. Subject to

Subchapter C, Chapter 187, a company does not engage in the trust

business in a manner requiring a state charter by:

(1) acting in a manner authorized by law and in the scope of

authority as an agent of a trust institution;

(2) rendering a service customarily performed as an attorney in

a manner approved and authorized by the Supreme Court of Texas or

State Bar of Texas;

(3) acting as trustee under a deed of trust made only as

security for the payment of money or for the performance of

another act;

(4) conducting business as a trust institution if the exercise

of fiduciary powers in this state by the trust institution is not

otherwise prohibited by law;

(5) engaging in a business regulated by the Office of Consumer

Credit Commissioner, except as limited by rules adopted by the

finance commission;

(6) receiving and distributing rents and proceeds of sale as a

licensed real estate broker on behalf of a principal in a manner

authorized by the Texas Real Estate Commission;

(7) engaging in a securities transaction or providing an

investment advisory service as a licensed and registered dealer,

salesman, or advisor to the extent that the activity is regulated

by the State Securities Board or the Securities and Exchange

Commission;

(8) engaging in the sale and administration of an insurance

product by an insurance company or agent authorized or licensed

by the Texas Department of Insurance to the extent that the

activity is regulated by the Texas Department of Insurance;

(9) engaging in the lawful sale of prepaid funeral benefits

under a permit issued by the banking commissioner under Chapter

154;

(10) engaging in the lawful business of a perpetual care

cemetery corporation under Chapter 712, Health and Safety Code;

(11) engaging as a principal in the money services business

under a license issued by the banking commissioner under Chapter

151;

(12) acting as trustee under a voting trust as provided by

Section 6.251, Business Organizations Code;

(13) acting as trustee by a public, private, or independent

institution of higher education or a university system, as

defined by Section 61.003, Education Code, including an

affiliated foundation or corporation of such an institution or

system acting as trustee as provided by the Education Code;

(14) engaging in another activity expressly excluded from the

application of this subtitle by rule of the finance commission;

(15) rendering services customarily performed by a certified

accountant in a manner authorized by the Texas State Board of

Public Accountancy;

(16) serving as trustee of a charitable trust as provided by

Section 2.106, Business Organizations Code;

(17) performing escrow or settlement services if licensed or

authorized under Title 11, Insurance Code;

(18) acting as a qualified intermediary in a tax deferred

exchange under Section 1031, Internal Revenue Code of 1986, and

applicable regulations; or

(19) providing permitted services at a trust representative

office established in this state pursuant to Subchapter C,

Chapter 187.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 6.011(a),

eff. Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 11.111, eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

237, Sec. 69, eff. September 1, 2007.

Sec. 182.0211. CONFORMANCE WITH SECURITIES ACT. For the

purposes of Section 182.021(7), "salesman" includes "agent" and

"advisor" includes "investment adviser" or "investment adviser

representative."

Added by Acts 2001, 77th Leg., ch. 1091, Sec. 4.03, eff. Sept. 1,

2001.

SUBCHAPTER B. AMENDMENT OF ARTICLES; CHANGES IN CAPITAL SURPLUS

Sec. 182.101. AMENDMENT OR RESTATEMENT OF STATE TRUST COMPANY

ARTICLES OF ASSOCIATION. (a) A state trust company that has

been granted a charter under Section 182.006 or a predecessor

statute may amend or restate its articles of association for any

lawful purpose, including the creation of authorized but unissued

shares or participation shares in one or more classes or series.

(b) An amendment authorizing the issuance of shares or

participation shares in series must contain:

(1) the designation of each series and a statement of any

variations in the preferences, limitations, and relative rights

among series to the extent that the preferences, limitations, and

relative rights are to be established in the articles of

association; and

(2) a statement of any authority to be vested in the board to

establish series and determine the preferences, limitations, and

relative rights of each series.

(c) A limited trust association may not amend its articles of

association to extend its period of existence for a perpetual

period or for any period of years, unless the period of existence

is expressly contingent on those events resulting in dissolution

of the trust association under Section 183.208.

(d) Amendment or restatement of the articles of association of a

state trust company and approval of the board and shareholders or

participants must be made or obtained in accordance with the

Business Organizations Code for the amendment or restatement of a

certificate of formation by a for-profit corporation, except as

otherwise provided by this subtitle or rules adopted under this

subtitle. The original and one copy of the articles of amendment

or restated articles of association must be filed with the

banking commissioner for approval. Unless the submission

presents novel or unusual questions, the banking commissioner

shall approve or reject the amendment or restatement not later

than the 31st day after the date the banking commissioner

considers the submission informationally complete and accepted

for filing. The banking commissioner may require the submission

of additional information as considered necessary to an informed

decision to approve or reject any amendment or restatement of

articles of association under this section.

(e) If the banking commissioner finds that the amendment or

restatement conforms to law and any conditions imposed by the

banking commissioner, and any required filing fee has been paid,

the banking commissioner shall:

(1) endorse the face of the original and copy with the date of

approval and the word "Approved";

(2) file the original in the department's records; and

(3) deliver a certified copy of the amendment or restatement to

the state trust company.

(f) An amendment or restatement, if approved, takes effect on

the date of approval, unless the amendment or restatement

provides for a different effective date.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

237, Sec. 70, eff. September 1, 2007.

Sec. 182.102. ESTABLISHING SERIES OF SHARES OR PARTICIPATION

SHARES. (a) If the articles of association expressly give the

board authority to establish series and determine the

preferences, limitations, and relative rights of each series, the

board may do so only on compliance with this section and any

rules adopted under this chapter.

(b) A series of shares or participation shares may be

established in the manner provided by the Business Organizations

Code as if a state trust company were a domestic corporation, but

the shares or participation shares of the series may not be

issued and sold except on compliance with Section 182.103. The

state trust company shall file the original and one copy of the

statement of action required by the Business Organizations Code

with the banking commissioner.

(c) Unless the submission presents novel or unusual questions,

the banking commissioner shall approve or reject the series not

later than the 31st day after the date the banking commissioner

considers the submission informationally complete and accepted

for filing. The banking commissioner may require the submission

of additional information as considered necessary to an informed

decision.

(d) If the banking commissioner finds that the interests of the

clients and creditors of the state trust company will not be

adversely affected by the series, that the series otherwise

conforms to law and any conditions imposed by the banking

commissioner, and that any required filing fee has been paid, the

banking commissioner shall:

(1) endorse the face of the original and copy of the statement

with the date of approval and the word "Approved";

(2) file the original in the department's records; and

(3) deliver a certified copy of the statement to the state trust

company.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

237, Sec. 71, eff. September 1, 2007.

Sec. 182.103. CHANGE IN RESTRICTED CAPITAL. (a) A state trust

company may not reduce or increase its restricted capital through

dividend, redemption, issuance of shares or participation shares,

or otherwise without the prior approval of the banking

commissioner, except as permitted by this section or rules

adopted under this chapter.

(b) Unless otherwise restricted by rules, prior approval is not

required for an increase in restricted capital accomplished

through:

(1) issuance of shares of common stock or their equivalent in

participation shares for cash, or a cash contribution to surplus

by shareholders or participants that does not result in issuance

of additional common stock or other securities;

(2) declaration and payment of pro rata share dividends as

defined by the Business Organizations Code; or

(3) adoption by the board of a resolution directing that all or

part of undivided profits be transferred to restricted capital.

(c) Prior approval is not required for:

(1) a decrease in restricted capital caused by losses in excess

of undivided profits; or

(2) a change in restricted capital resulting from accounting

adjustments required by a transaction approved by the banking

commissioner if the accounting adjustments are reasonably

disclosed in the submitted application.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

735, Sec. 13, eff. September 1, 2007.

Sec. 182.104. CAPITAL NOTES OR DEBENTURES. (a) With the prior

written approval of the banking commissioner, a state trust

company may at any time through action of its board, and without

requiring action of its shareholders or participants, issue and

sell its capital notes or debentures. The notes or debentures

must be subordinate to the claims of depositors and may be

subordinate to other claims, including the claims of other

creditors or classes of creditors or the shareholders or

participants.

(b) Capital notes or debentures may be convertible into shares

or participation shares of any class or series. The issuance and

sale of convertible capital notes or debentures are subject to

satisfaction of preemptive rights, if any, to the extent provided

by law.

(c) Without the prior written approval of the banking

commissioner, a state trust company may not pay interest due or

principal repayable on outstanding capital notes or debentures

when the state trust company is in hazardous condition or

insolvent, as determined by the banking commissioner, or to the

extent that payment will cause the state trust company to be in

hazardous condition or insolvent.

(d) The amount of any outstanding capital notes or debentures

that meet the requirements of this section and that are

subordinated to unsecured creditors of the state trust company

may be included in equity capital of the state trust company for

purposes of determining hazardous condition or insolvency, and

for such other purposes provided by rules adopted under this

subtitle.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.105. BOARD DESIGNATION OF CERTIFIED SURPLUS.

Periodically the board may vote to designate and record in its

minutes the amount of certified surplus. Except to absorb losses

in excess of undivided profits and uncertified surplus, certified

surplus may not be reduced without the prior written approval of

the banking commissioner.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

SUBCHAPTER C. STATE TRUST COMPANY OFFICES

Sec. 182.201. CONDUCT OF TRUST BUSINESS. A state trust company

may engage in the trust business at its home office and at other

locations as permitted by this subchapter.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.202. HOME OFFICE. (a) Each state trust company must

have and continuously maintain in this state a home office. The

home office must be a location at which the state trust company

does business and keeps its corporate books and records. At least

one executive officer must maintain an office at the home office.

(b) Repealed by Acts 2007, 80th Leg., R.S., Ch. 244, Sec. 3,

eff. September 1, 2007.

(c) A state trust company may change its home office to any

location in this state, if the location that is the home office

before the change remains an office of the state trust company at

which the state trust company does business. To change the

location of its home office, the state trust company must file a

written notice with the banking commissioner setting forth the

name of the state trust company, the street address of its home

office before the change, the street address to which the home

office is to be changed, and a copy of the resolution adopted by

the board authorizing the change. The change of home office takes

effect on the 31st day after the date the banking commissioner

receives the notice.

(d) A relocation of a state trust company's home office may not

be made, and another action that would effect an abandonment of

the state trust company's initial home office may not be taken,

without the prior written approval of the banking commissioner.

The state trust company must establish to the satisfaction of the

banking commissioner that the abandonment is consistent with the

original determination of public convenience and advantage for

the establishment of a state trust company at that location.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

244, Sec. 3, eff. September 1, 2007.

Sec. 182.203. ADDITIONAL OFFICES. (a) A state trust company

may establish and maintain additional offices. To establish an

additional office, the state trust company must file a written

notice with the banking commissioner setting forth the name of

the state trust company, the street address of the proposed

additional office, a description of the activities proposed to be

conducted at the additional office, and a copy of the resolution

adopted by the board authorizing the additional office.

(b) A state trust company may not commence business at the

additional office before the 31st day after the date the banking

commissioner receives the notice, unless the banking commissioner

specifies an earlier or later date. The banking commissioner may

specify a later date on a determination that the written notice

raises issues that require additional information or additional

time for analysis. If a later date is specified, the state trust

company may establish the additional office only on prior written

approval by the banking commissioner. The banking commissioner

may deny permission to establish an additional office of the

state trust company if the banking commissioner has a significant

supervisory or regulatory concern regarding the proposed

additional office, the applicant, or an affiliate.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.012(a), eff. Sept. 1, 2001.

SUBCHAPTER D. MERGER

Sec. 182.301. MERGER AUTHORITY. (a) Subject to this subchapter

and with the prior written approval of the banking commissioner,

a state trust company may merge with another person to the same

extent as a for-profit corporation under the Business

Organizations Code.

(b) Implementation of the plan of merger by the parties and

approval of the board, shareholders, participants, or owners of

the parties must be made or obtained as provided by the Business

Organizations Code as if the state trust company were a domestic

corporation and all other parties to the merger were foreign

corporations and other entities, except as otherwise provided by

rules adopted under this chapter.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

237, Sec. 72, eff. September 1, 2007.

Sec. 182.302. MERGER APPLICATION; GROUNDS FOR APPROVAL. (a) To

apply for approval of a merger, the parties must submit the

original articles of merger, a number of copies of the articles

of merger equal to the number of surviving, new, and acquiring

entities, and an application in the form required by the banking

commissioner. The banking commissioner may require the submission

of additional information as considered necessary to an informed

decision.

(b) The banking commissioner shall investigate the condition of

the merging parties.

(c) The banking commissioner may approve the merger if:

(1) each resulting state trust company:

(A) has complied with the statutes and rules relating to the

organization of a state trust company; and

(B) will be solvent and have adequate capitalization for its

business and location;

(2) all obligations and liabilities of each trust company that

is a party to the merger have been properly discharged or

otherwise lawfully assumed or retained by a trust institution or

other fiduciary;

(3) each surviving, new, or acquiring person that is not

authorized to engage in the trust business will not engage in the

trust business and has complied with the laws of this state; and

(4) all conditions imposed by the banking commissioner have been

satisfied or otherwise resolved.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec.

6.013(a), eff. Sept. 1, 2001.

Sec. 182.303. APPROVAL OF BANKING COMMISSIONER. (a) If the

banking commissioner approves the merger and finds that all

required filing fees and investigative costs have been paid, the

banking commissioner shall:

(1) endorse the face of the original and each copy of the

articles of merger with the date of approval and the word

"Approved";

(2) file the original in the department's records; and

(3) deliver a certified copy of the articles of merger to each

surviving, new, or acquiring entity.

(b) A merger is effective on the date of approval, unless the

merger agreement provides and the banking commissioner consents

to a different effective date.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Sec. 182.304. RIGHTS OF DISSENTERS TO MERGER. A shareholder,

participant, or participant-transferee may dissent from the

merger to the extent and by following the procedure provided by

the Business Organizations Code or rules adopted under this

subtitle.

Added by Acts 1999, 76th Leg., ch. 62, Sec. 7.16(a), eff. Sept.

1, 1999.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

237, Sec. 73, eff. September 1, 2007.

SUBCHAPTER E. PURCHASE OR SALE OF ASSETS

Sec. 182.401. AUTHORITY TO PURCHASE ASSETS. (a) A state trust

company may purchase assets from another trust institution,

including the right to control accounts established with the

trust institution, or assets from another seller, except that the

prior written approval of the banking commissioner is required if

the purchase price exceeds an amount equal to three times the sum

of the trust company's equity capital less intangible assets.

The finance commission by rule may require a state trust company

to obtain the prior written approval of the banking commissioner

for a transaction not otherwise subject to approval that involves

potentially substantial risks to the safety and soundness of the

purchasing trust company.

(b) Except as otherwise expressly provided by this section or

another statute, the purchase of all or part of the assets of the

selling entity does not make the purchasing state trust company

responsible for any liability or obligation of the selling entity

that the purchasing state trust company does not expressly

assume.

(c) If prior approval of the banking commissioner is required

under this section, an application in the form required by the

banking commissioner must be filed with the banking commissioner.

The banking commissioner shall investigate the condition of the

purchaser and seller and may require the submission of additional

information as considered necessary to make an informed decision.

(d) The banking commissioner shall approve the application to

purchase i