CHAPTER 181. GENERAL PROVISIONS

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FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE F. TRUST COMPANIES

CHAPTER 181. GENERAL PROVISIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 181.001. SHORT TITLE. This subtitle may be cited as the

Texas Trust Company Act.

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

1, 1999.

Sec. 181.002. DEFINITIONS. (a) In this subtitle:

(1) "Account" means the client relationship established with a

trust institution involving the transfer of funds or property to

the trust institution, including a relationship in which the

trust institution acts as trustee, executor, administrator,

guardian, custodian, conservator, receiver, registrar, or agent.

(2) "Affiliate" means a company that directly or indirectly

controls, is controlled by, or is under common control with a

state trust company or other company.

(3) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027, eff.

Sept. 1, 2001.

(4) "Banking commissioner" means the banking commissioner of

Texas or a person designated by the banking commissioner and

acting under the banking commissioner's direction and authority.

(5) "Board" means the board of directors, managers, or managing

participants of, or a person or group of persons acting in a

comparable capacity for, a state trust company or other entity.

(6) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027, eff.

Sept. 1, 2001.

(7) "Capital" means:

(A) the sum of:

(i) the par value of all shares or participation shares of a

state trust company having a par value that have been issued;

(ii) the consideration set by the board for all shares or

participation shares of the state trust company without par value

that have been issued, except the part of that consideration

that:

(a) has been actually received;

(b) is less than all of that consideration; and

after the date of issuance of those shares, has allocated to

surplus with the prior approval of the banking commissioner; and

(iii) an amount not included in Subparagraphs (i) and (ii) that

has been transferred to capital of the state trust company, on

the payment of a share dividend or on adoption by the board of a

resolution directing that all or part of surplus be transferred

to capital, minus each reduction made as permitted by law; less

(B) all amounts otherwise included in Paragraphs (A)(i) and (ii)

that are attributable to the issuance of securities by the state

trust company and that the banking commissioner determines, after

notice and an opportunity for hearing, should be classified as

debt rather than equity securities.

(8) "Certified surplus" means the part of surplus designated by

a vote of the board of a state trust company under Section

182.105 and recorded in the board minutes as certified.

(9) "Charter" means a charter issued under this subtitle to

engage in a trust business.

(10) "Client" means a person to whom a trust institution owes a

duty or obligation under a trust or other account administered by

the trust institution, regardless of whether the trust

institution owes a fiduciary duty to the person. The term

includes a beneficiary of a trust for whom the trust institution

acts as trustee and a person for whom the trust institution acts

as agent, custodian, or bailee.

(11) "Company" means a corporation, a partnership, an

association, a business trust, another trust, or a similar

organization, including a trust institution.

(12) "Conservator" means the banking commissioner or an agent of

the banking commissioner exercising the powers and duties

provided by Subchapter B, Chapter 185.

(13) "Control" means:

(A) the ownership of or ability or power to vote, directly,

acting through one or more other persons, or otherwise

indirectly, 25 percent or more of the outstanding shares of a

class of voting securities of a state trust company or other

company;

(B) the ability to control the election of a majority of the

board of the state trust company or other company;

influence over the management or policies of the state trust

company or other company as determined by the banking

commissioner after notice and an opportunity for hearing; or

(D) the conditioning of the transfer of 25 percent or more of

the outstanding shares or participation shares of a class of

voting securities of the state trust company or other company on

the transfer of 25 percent or more of the outstanding shares of a

class of voting securities of another state trust company or

other company.

(14) "Department" means the Texas Department of Banking.

(15) "Depository institution" means an entity with the power to

accept deposits under applicable law.

(16) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027,

eff. Sept. 1, 2001.

(17) "Equity security" means:

(A) stock or a similar security, any security convertible, with

or without consideration, into such a security, a warrant or

right to subscribe to or purchase such a security, or a security

carrying such a warrant or right;

(B) a certificate of interest or participation in a

profit-sharing agreement, collateral-trust certificate,

preorganization certificate or subscription, transferable share

or participation share, investment contract, voting-trust

certificate, or partnership interest; and

interim certificate for, or receipt for a security described by

this subdivision that evidences an existing or contingent equity

ownership interest.

(18) "Fiduciary record" means a matter written, transcribed,

recorded, received, or otherwise in the possession of a trust

institution that is necessary to preserve information concerning

an act or event relevant to an account of a trust institution.

(19) "Finance commission" means the Finance Commission of Texas.

(20) Repealed by Acts 2001, 77th Leg., ch. 1420, Sec. 6.027,

eff. Sept. 1, 2001.

(21) "Full liability participant" means a participant that

agrees under the terms of a participation agreement to be liable

under a judgment, decree, or order of court for the entire amount

of all debts, obligations, or liabilities of a limited trust

association.

(22) "Hazardous condition" means:

(A) a refusal by a trust company or an affiliate of a trust

company to permit an examination of its books, papers, accounts,

records, or affairs by the banking commissioner as provided by

Section 181.104;

(B) a violation by a trust company of a condition of its

chartering or an agreement entered into between the trust company

and the banking commissioner or the department; or

loss is threatened to clients or creditors of a trust company,

excluding risk of loss to a client that arises as a result of the

client's decisions or actions, but including a circumstance or

condition in which a trust company:

(i) 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 book or fair market value of its assets exceeds its

liabilities;

(ii) has equity capital less than the amount of restricted

capital the trust company is required to maintain under Section

182.008, or has equity capital the adequacy of which is

threatened, as determined under regulatory accounting principles;

(iii) has concentrated an excessive or unreasonable portion of

its assets in a particular type or character of investment;

(iv) violates or refuses to comply with this subtitle, another

statute or regulation applicable to trust companies, or a final

and enforceable order of the banking commissioner;

(v) is in a condition that renders the continuation of a

particular business practice hazardous to its clients and

creditors; or

(vi) conducts business in an unsafe or unsound manner, including

conducting business with:

(a) inexperienced or inattentive management;

(b) weak or potentially dangerous operating practices;

(d) administration of assets that is notably deficient in

relation to the volume and character of or responsibility for

asset holdings;

(e) unsound administrative practices;

(f) frequent and uncorrected material occurrences of violations

of law, including rules, or terms of the governing instruments;

(g) a notable degree of conflicts of interest and engaging in

self-dealing.

(23) "Home office" means a location registered with the banking

commissioner as a state trust company's home office at which:

(A) the trust company does business;

(B) the trust company keeps its corporate books and records; and

maintains an office.

(24) "Insider" means:

(A) each director, manager, managing participant, officer, and

principal shareholder or participant of a state trust company;

(B) each affiliate of the state trust company and each director,

officer, and employee of the affiliate;

other than in the capacity of a director, in major policy-making

functions of the state trust company, whether or not the person

has an official title or the officer is serving without salary or

compensation; or

(D) each company controlled by a person described by Paragraph

(A), (B), or (C).

(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 less than $500,000, as determined under

regulatory accounting principles;

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.

(26) "Investment security" means a marketable obligation

evidencing indebtedness of a person in the form of a bond, note,

debenture, or investment security.

(27) "Limited trust association" means a state trust company

organized under this subtitle as a limited liability company,

authorized to issue participation shares, and controlled by its

participants.

(28) "Loans and extensions of credit" means direct or indirect

advances of money by a state trust company to a person that are

conditioned on the obligation of the person to repay the funds or

that are repayable from specific property pledged by or on behalf

of the person.

(29) "Manager" means a person elected to the board of a limited

trust association.

(30) "Managing participant" means a participant in a limited

trust association in which management has been retained by the

participants.

(31) "Mutual funds" means equity securities of an investment

company registered under the Investment Company Act of 1940 (15

U.S.C. Section 80a-1 et seq.) and the Securities Act of 1933 (15

U.S.C. Section 77a et seq.). The term does not include money

market funds.

(32) "Officer" means the presiding officer of the board, the

principal executive officer, or another officer appointed by the

board of a state trust company or other company, or a person or

group of persons acting in a comparable capacity for the state

trust company or other company.

(33) "Operating subsidiary" means a company for which a state

trust company has the ownership, ability, or power to vote,

directly, acting through one or more other persons, or otherwise

indirectly, more than 50 percent of the outstanding shares of

each class of voting securities or its equivalent of the company.

(34) "Participant" means an owner of a participation share in a

limited trust association.

(35) "Participant-transferee" means a transferee of a

participation share who has not received the unanimous consent of

all participants to be a participant, or who becomes a

participant-transferee under Subchapter C, Chapter 183.

(36) "Participation agreement" means the instrument stating the

agreement among the participants of a limited trust association

relating to the rights and duties of the participants and

participant-transferees, including allocations of income, loss,

deduction, credit, distributions, liquidation rights, redemption

rights, liabilities of participants, priority rights of

participant-transferees to transfer participation shares, rights

of participants to purchase participation shares of

participant-transferees, the procedures for elections and voting

by participants, and any other matter not prohibited by or

inconsistent with this subtitle.

(37) "Participation shares" means the units into which the

proprietary interests of a limited trust association are divided

or subdivided by means of classes, series, relative rights, or

preferences.

(38) "Principal shareholder" means a person who owns or has the

ability or power to vote, directly, acting through one or more

other persons, or otherwise indirectly, 10 percent or more of the

outstanding shares or participation shares of any class of voting

securities of a state trust company or other company.

(39) "Restricted capital" means the sum of capital and certified

surplus.

(40) "Regulatory accounting principles" means generally accepted

accounting principles as modified by rules adopted under:

(A) this subtitle; or

(B) an applicable federal statute or regulation.

(41) "Secondary capital" means the amount by which the assets of

a state trust company exceed restricted capital, required by

Section 182.008, and liabilities.

(42) "Shareholder" means an owner of a share in a state trust

company.

(43) "Shares" means the units into which the proprietary

interests of a state trust company are divided or subdivided by

means of classes, series, relative rights, or preferences.

(44) "State bank" means a banking association or limited banking

association organized or reorganized under Subtitle A, including

an association organized under the laws of this state before

September 1, 1997, with the express power to receive and accept

deposits and possessing other rights and powers granted by that

subtitle expressly or by implication. The term does not include a

savings association, savings bank, or credit union.

(45) "State trust company" or "trust company" means a trust

association or limited trust association organized or reorganized

under this subtitle, including an association organized under the

laws of this state before September 1, 1997. If the context or

circumstances require, the term includes a trust company

organized under the laws of another state that lawfully maintains

a trust office in this state in accordance with Chapter 187.

(46) "Subsidiary" means a state trust company or other company

that is controlled by another person. The term includes a

subsidiary of a subsidiary.

(47) "Supervisor" means the banking commissioner or an agent of

the banking commissioner exercising the powers and duties

specified in Subchapter B, Chapter 185.

(48) "Trust association" means a trust company organized under

this subtitle as a corporation, authorized to issue shares of

stock, and controlled by its shareholders.

(49) "Trust business" means the business of a company holding

itself out to the public as a fiduciary for hire or compensation

to hold or administer accounts.

(50) "Trust deposits" means client funds held by a trust

institution and authorized to be deposited with itself as a

permanent investment or pending investment, distribution, or

payment of debts on behalf of the client.

(51) "Trust institution" means a bank, credit union, foreign

bank, savings association, savings bank, or trust company that is

authorized by its charter to conduct a trust business.

(52) "Unauthorized trust activity" means an act or practice

within this state by a company without a charter, license,

permit, registration, or other authority issued or granted by the

banking commissioner or other appropriate regulatory authority

for which such a charter, license, permit, registration, or other

authority is required to conduct trust business.

(53) "Undivided profits" means the part of equity capital of a

state trust company equal to the balance of its net profits,

income, gains, and losses since the date of its formation minus

subsequent distributions to shareholders or participants and

transfers to surplus or capital under share dividends or

appropriate board resolutions. The term includes amounts

allocated to undivided profits as a result of a merger.

(54) "Voting security" means a share, participation share, or

other evidence of proprietary interest in a state trust company

or other company that has as an attribute the right to vote or

participate in the election of the board of the trust company or

other company, regardless of whether the right is limited to the

election of fewer than all of the board members. The term

includes a security that is convertible or exchangeable into a

voting security and a nonvoting participation share of a managing

participant.

(b) The definitions provided by this section shall be liberally

construed to accomplish the purposes of this subtitle.

to accomplish the purposes of this subtitle.

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. 17, eff.

Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec. 6.002(a),

6.027, eff. Sept. 1, 2001.

Amended by:

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

237, Sec. 65, eff. September 1, 2007.

Sec. 181.003. TRUST COMPANY RULES. (a) The finance commission

may adopt rules to accomplish the purposes of this subtitle,

including rules necessary or reasonable to:

(1) implement and clarify this subtitle;

(2) preserve or protect the safety and soundness of state trust

companies;

(3) grant the same rights and privileges to state trust

companies with respect to the exercise of fiduciary powers and

the conducting of financial activities or activities incidental

or complementary to financial activities that are or may be

granted to a trust institution that maintains its principal

office or a branch or trust office in this state;

(4) provide for recovery of the cost of maintenance and

operation of the department and the cost of enforcing this

subtitle through the imposition and collection of ratable and

equitable fees for notices, applications, and examinations; and

(5) facilitate the fair hearing and adjudication of matters

before the banking commissioner and the finance commission.

(b) The presence or absence in this subtitle of a specific

reference to rules regarding a particular subject does not

enlarge or diminish the rulemaking authority conferred by this

section.

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. 18, eff.

Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec. 6.003(a),

eff. Sept. 1, 2001.

Sec. 181.004. IMPLYING THAT PERSON IS TRUST COMPANY. (a) A

person or company may not use in a business name or advertising

the words "trust," "trust company," or any similar term or

phrase, any word pronounced "trust" or "trust company," any

foreign word that means "trust" or "trust company," or any term

that tends to imply that the business is holding out to the

public that it engages in the business of a fiduciary for hire

unless the banking commissioner has approved the use in writing

after finding that the use will not be misleading. This

subsection does not prohibit an individual from engaging in the

business of a fiduciary for compensation or from using the words

"trust" or "trustee" for the purpose of identifying assets held

or actions taken in an existing capacity.

(b) Subsection (a) does not apply to:

(1) a trust institution authorized under this subtitle to

conduct a trust business in this state; or

(2) another entity organized under the laws of this state,

another state, the United States, or a foreign sovereign state to

the extent that:

(A) the entity is authorized under its charter or the laws of

this state or the United States to use a term, word, character,

ideogram, phonogram, or phrase prohibited by Subsection (a); and

(B) the entity is authorized by the laws of this state or the

United States to conduct the activities in which the entity is

engaged in 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.

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

Sec. 181.005. LIABILITY OF TRUST COMPANY DIRECTORS AND

PERSONNEL. (a) The provisions of the Business Organizations

Code regarding liability, defenses, and indemnification of a

director, officer, agent, or employee apply to a director,

officer, agent, or employee of a state trust company in this

state. Except as limited by those provisions, a disinterested

director, manager, managing participant, officer, or employee of

a state trust company may not be held personally liable in an

action seeking monetary damages arising from the conduct of the

state trust company's affairs unless the damages resulted from

the gross negligence or wilful or intentional misconduct of the

person during the person's term of office or service with the

state trust company.

(b) A director, manager, managing participant, officer, or

employee of a state trust company is disinterested with respect

to a decision or transaction if:

(1) the person fully discloses any interest in the decision or

transaction and does not participate in the decision or

transaction; or

(2) the decision or transaction does not involve any of the

following:

(A) personal profit for the person through dealing with the

state trust company or usurping an opportunity of the trust

company;

(B) buying or selling assets of the state trust company in a

transaction in which the person has a direct or indirect

pecuniary interest;

which the person is a director, manager, managing participant,

officer, or employee or otherwise has a significant direct or

indirect financial interest; or

(D) dealing with a family member of the person.

in performing the person's duties and functions, acts in good

faith and reasonably believes that reliance is warranted is

entitled to rely on information, including an opinion, report,

financial statement or other type of statement or financial data,

decision, judgment, or performance, that is prepared, presented,

made, or rendered by:

(1) one or more directors, managers, managing participants,

officers, or employees of the state trust company, or of an

entity under joint or common control with the state trust

company, whom the director, manager, managing participant, or

officer reasonably believes merits confidence;

(2) legal counsel, a public accountant, or another person whom

the director, manager, managing participant, or officer

reasonably believes merits confidence; or

(3) a committee of the board of the state trust company of which

the director, manager, or managing participant is not a member.

(d) In this section, "family member" means a person's:

(1) spouse;

(2) minor child; or

(3) adult child who resides in the person's home.

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. 66, eff. September 1, 2007.

Sec. 181.006. EXEMPTION OF TRUST INSTITUTION DIRECTORS AND

PERSONNEL FROM SECURITIES LAW. An officer, director, manager,

managing participant, or employee of a trust institution with

fewer than 500 shareholders or participants, including a state

trust company or a trust institution organized under the laws of

another state that lawfully maintains an office in this state, or

a holding company with fewer than 500 shareholders or

participants that controls a trust institution is exempt from the

registration and licensing provisions of The Securities Act

(Article 581-1 et seq., Vernon's Texas Civil Statutes) with

respect to that person's participation in a transaction,

including a sale, involving securities issued by the trust

institution or the holding company of which that person is an

officer, director, manager, managing participant, or employee if

the person is not compensated for the person's participation in

the transaction.

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.

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

Sec. 181.007. ATTACHMENT, INJUNCTION, OR EXECUTION. An

attachment, injunction, or execution to collect a money judgment

or secure a prospective money judgment against a trust

institution, including a state trust company or a trust

institution organized under the laws of another state that

lawfully maintains an office in this state, or against a client

of or client account in the trust institution, is governed by

Sections 59.007 and 59.008.

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.

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

SUBCHAPTER B. REGULATION OF TRUST COMPANIES BY BANKING DEPARTMENT

Sec. 181.101. ISSUANCE OF INTERPRETIVE STATEMENTS. (a) The

banking commissioner:

(1) may issue interpretive statements containing matters of

general policy for the guidance of the public and state trust

companies; and

(2) may amend or repeal a published interpretive statement by

issuing an amended statement or notice of repeal of a statement.

(b) An interpretive statement may be disseminated by newsletter,

via an electronic medium such as the Internet, in a volume of

statutes or related materials published by the banking

commissioner or others, or by other means reasonably calculated

to notify persons affected by the interpretive statement. Notice

of an amended or withdrawn statement must be published in a

substantially similar manner as the affected statement was

originally published.

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.

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

Sec. 181.102. ISSUANCE OF OPINION. (a) In response to a

specific request from a member of the public or industry, the

banking commissioner may issue an opinion directly or through a

deputy banking commissioner or department attorney.

(b) If the banking commissioner determines that the opinion is

useful for the general guidance of trust companies and the

public, the banking commissioner may disseminate the opinion by

newsletter, via an electronic medium such as the Internet, in a

volume of statutes or related materials published by the banking

commissioner or others, or by other means reasonably calculated

to notify persons affected by the opinion. A published opinion

must be redacted to preserve the confidentiality of the

requesting party unless the requesting party consents to be

identified in the published opinion.

opinion by issuing an amended opinion or notice of repeal of an

opinion and disseminating the opinion or notice in a

substantially similar manner as the affected statement or opinion

was originally published. The requesting party, however, may rely

on the original opinion if:

(1) all material facts were originally disclosed to the banking

commissioner;

(2) the safety and soundness of the affected trust companies

will not be affected by further reliance on the original opinion;

and

(3) the text and interpretation of relevant governing provisions

of this subtitle have not been changed by legislative or judicial

action.

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. 3.01,

eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 1420, Sec.

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

Sec. 181.103. EFFECT OF INTERPRETIVE STATEMENT OR OPINION. An

interpretive statement or opinion issued under this subchapter

does not have the force of law and is not a rule for the purposes

of Chapter 2001, Government Code, unless adopted as a rule by the

finance commission as provided by Chapter 2001, Government Code.

An interpretive statement or opinion is an administrative

construction of this subtitle entitled to great weight if the

construction is reasonable and does not conflict with this

subtitle.

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

1, 1999.

Sec. 181.104. EXAMINATION REQUIREMENT. (a) The banking

commissioner shall examine each state trust company annually.

(b) The banking commissioner may examine a state trust company

more often than annually as the banking commissioner considers

necessary to:

(1) safeguard the interests of clients, creditors, shareholders,

participants, or participant-transferees; and

(2) enforce this subtitle.

more than six months if the banking commissioner considers the

deferment necessary for the efficient enforcement of this

subtitle.

(d) Disclosure of information to the banking commissioner

pursuant to an examination request does not constitute a waiver

of or otherwise affect or diminish an evidentiary privilege to

which the information is otherwise subject. A report of an

examination under this section is confidential and may be

disclosed only under the circumstances provided by this subtitle.

(e) The banking commissioner may:

(1) accept an examination of a state trust company, a

third-party contractor, or an affiliate of the state trust

company by a federal or other governmental agency in lieu of an

examination under this section; or

(2) conduct an examination of a state trust company, a

third-party contractor, or an affiliate of the state trust

company jointly with a federal or other governmental agency.

(f) The banking commissioner may administer oaths and examine

persons under oath on any subject that the banking commissioner

considers pertinent to the financial condition or the safety and

soundness of the activities of a state trust company.

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. 3.02,

eff. Sept. 1, 2001.

Sec. 181.105. COST OF REGULATION. Each state trust company

shall pay, through the imposition and collection of fees

established by the finance commission under Section

181.003(a)(4):

(1) the cost of examination;

(2) the equitable or proportionate cost of maintenance and

operation of the department; and

(3) the cost of enforcement of this subtitle.

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

1, 1999.

Sec. 181.106. REGULATION AND EXAMINATION OF RELATED ENTITIES.

(a) The banking commissioner may regulate and examine, to the

same extent as if the services or activities were performed by a

state trust company on its own premises:

(1) the activities of a state trust company affiliate; and

(2) the performance of data processing, electronic fund

transfers, or other services or activities performed on behalf of

a state trust company by a third-party contractor.

(b) The banking commissioner may collect a fee from the state

trust company to cover the cost of the examination.

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

1, 1999.

Sec. 181.107. STATEMENTS OF CONDITION AND INCOME; PENALTY. (a)

Each state trust company periodically shall file with the banking

commissioner a copy of its statement of condition and income.

(b) The finance commission by rule may:

(1) require the statement to be filed with the banking

commission at the intervals the finance commission determines;

(2) specify the form of the statement of condition and income,

including specified confidential and public information to be in

the statement; and

(3) require public information in the statement to be published

at the times and in the publications and locations the finance

commission determines.

banking commissioner, a statement of condition and income is a

public record.

(d) A state trust company that fails to file a statement of

condition and income on or before the date it is due is, after

notice and hearing, subject to a penalty of not more than $500 a

day for each day of noncompliance.

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

1, 1999.

Sec. 181.108. LIABILITY OF COMMISSION AND DEPARTMENT OFFICERS

AND PERSONNEL LIMITED. (a) The banking commissioner, a member

of the finance commission, a deputy banking commissioner, an

examiner, assistant examiner, supervisor, conservator, agent, or

other officer or employee of the department, or an agent of the

banking commissioner is not personally liable for damages arising

from the person's official act or omission unless the act or

omission is corrupt or malicious.

(b) The attorney general shall defend an action brought against

a person because of an official act or omission under Subsection

(a), regardless of whether the defendant has terminated service

with the department before the action commences.

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. 3.03,

eff. Sept. 1, 2001.

SUBCHAPTER C. ADMINISTRATIVE PROCEDURE

Sec. 181.201. BANKING COMMISSIONER HEARING. (a) The banking

commissioner may convene a hearing to receive evidence and

argument regarding any matter within the jurisdiction of and

before the banking commissioner for decision or review. The

hearing must be conducted under Chapter 2001, Government Code. A

matter made confidential by law must be considered by the banking

commissioner in a closed hearing.

(b) A hearing before the banking commissioner that is required

or authorized by law may be conducted by a hearings officer on

behalf of the banking commissioner.

that is not otherwise granted by governing law.

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. 3.04,

eff. Sept. 1, 2001.

Sec. 181.202. APPEAL OF BANKING COMMISSIONER DECISION OR ORDER.

Except as expressly provided otherwise by this subtitle, a person

affected by a decision or order of the banking commissioner made

under this subtitle after hearing may appeal the decision or

order:

(1) to the finance commission; or

(2) directly to a district court in Travis County as provided by

Section 181.204.

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

1, 1999.

Sec. 181.203. APPEAL TO FINANCE COMMISSION. (a) In an appeal

to the finance commission, the finance commission shall consider

the questions raised by the application for review and may also

consider additional matters pertinent to the appeal.

(b) An order of the banking commissioner continues in effect

pending review unless the order is stayed by the finance

commission. The finance commission may impose any condition

before granting a stay of the appealed order.

additional evidence or hold an evidentiary hearing if a hearing

was held and a record made before the banking commissioner. The

finance commission shall remand the proceeding to the banking

commissioner to receive any additional evidence the finance

commission chooses to consider.

(d) A hearing before the finance commission that is required or

authorized by law may be conducted by a hearings officer on

behalf of the finance commission.

(e) A matter made confidential by law must be considered by the

finance commission in a closed hearing.

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

1, 1999.

Sec. 181.204. DIRECT APPEAL TO COURT OR APPEAL OF FINANCE

COMMISSION ORDER. A person affected by a final order of the

banking commissioner who elects to appeal directly to district

court, or a person affected by a final order of the finance

commission under this subchapter, may appeal the final order by

filing a petition for judicial review as provided by Chapter

2001, Government Code. A petition for judicial review filed in

the district court does not stay or vacate the appealed order

unless the court, after notice and hearing, expressly stays or

vacates the order.

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

1, 1999.

SUBCHAPTER D. CONFIDENTIALITY OF INFORMATION

Sec. 181.301. DISCLOSURE BY DEPARTMENT PROHIBITED. (a) Except

as expressly provided otherwise by this subtitle or a rule

adopted under Section 181.003(a)(1), the following are

confidential and may not be disclosed by the banking commissioner

or an employee of the department:

(1) information directly or indirectly obtained by the

department in any manner, including through an application or

examination, concerning the financial condition or business

affairs of a state trust company or a present, former, or

prospective shareholder, participant, officer, director, manager,

affiliate, or service provider of the state trust company, other

than the public portions of a report of condition or income

statement; and

(2) each related file or record of the department.

(b) Information obtained by the department from a federal or

state regulatory agency that is confidential under federal or

state law may not be disclosed except as provided by federal or

state law.

department commits an offense if the person:

(1) discloses information or permits access to a file or record

of the department; and

(2) knows at the time of disclosure or permission that the

disclosure or permission violates this subchapter.

(d) An offense under this section is a Class A misdemeanor.

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. 3.05,

eff. Sept. 1, 2001.

Sec. 181.302. DISCLOSURE TO FINANCE COMMISSION. Confidential

information may not be disclosed to a member of the finance

commission. A member of the finance commission may not be given

access to the files and records of the department except that the

banking commissioner may disclose to the finance commission

information, files, and records pertinent to a hearing or matter

pending before the finance commission.

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

1, 1999.

Sec. 181.303. DISCLOSURE TO OTHER AGENCIES. (a) For purposes

of this section, "affiliated group," "agency," "functional

regulatory agency," and "privilege" have the meanings assigned by

Section 31.303.

(b) The banking commissioner may, as the banking commissioner

considers necessary or proper to the enforcement of the laws of

this state, another state, the United States, or a foreign

sovereign state with whom the United States currently maintains

diplomatic relations, or in the best interest of the public,

disclose information in the possession of the department to

another agency. The banking commissioner may not disclose

information under this section that is confidential under

applicable state or federal law unless:

(1) the recipient agency agrees to maintain the confidentiality

and take all reasonable steps to oppose an effort to secure

disclosure of the information from the agency; or

(2) the banking commissioner determines in the exercise of

discretion that the interest of law enforcement outweighs and

justifies the potential for disclosure of the information by the

recipient agency.

information sharing and exchange program with a functional

regulatory agency that has overlapping regulatory jurisdiction

with the department, with respect to all or part of an affiliated

group, including a financial institution, to reduce the potential

for duplicative and burdensome filings, examinations, and other

regulatory activities. Each agency party to the agreement must

agree to maintain confidentiality of information that is

confidential under applicable state or federal law and take all

reasonable steps to oppose any effort to secure disclosure of the

information from the agency. An agreement may also specify

procedures regarding use and handling of confidential information

and identify types of information to be shared and procedures for

sharing on a recurring basis.

(d) Disclosure of information by or to the banking commissioner

under this section does not constitute a waiver of or otherwise

affect or diminish an evidentiary privilege to which the

information is otherwise subject, whether or not the disclosure

is governed by a confidentiality agreement.

(e) Notwithstanding other law, an agency of this state:

(1) may execute, honor, and comply with an agreement to maintain

confidentiality and oppose disclosure of information obtained

from the banking commissioner as provided in this section; and

(2) shall treat as confidential any information obtained from

the banking commissioner that is entitled to confidential

treatment under applicable state or federal law and take all

reasonable steps to oppose an effort to secure disclosure of the

information from the agency.

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. 19, eff.

Sept. 1, 2001.

Sec. 181.304. OTHER DISCLOSURE PROHIBITED; PENALTY. (a)

Confidential information that is provided to a state trust

company, affiliate, or service provider of the state trust

company, whether in the form of a report of examination or

otherwise, is the confidential property of the department. The

information may not be made public or disclosed by the recipient

or by an officer, director, manager, employee, or agent of the

recipient to a person not officially connected to the recipient

as officer, director, employee, attorney, auditor, independent

auditor, or bonding company, except as authorized by rules

adopted under this subtitle.

(b) A person commits an offense if the person discloses or uses

the confidential information in violation of this section. An

offense under this subsection is punishable as if it were an

offense under Section 37.10, Penal Code.

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

1, 1999.

Sec. 181.305. CIVIL DISCOVERY. Civil discovery of confidential

information from a person subject to Section 181.304 under

subpoena or other legal process in a civil proceeding must comply

with rules adopted under this subtitle and other applicable law.

The rules may:

(1) restrict release of confidential information to the portion

directly relevant to the legal dispute at issue; and

(2) require that a protective order, in the form and under

circumstances specified by the rules, be issued by a court before

release of the confidential information.

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. 3.06,

eff. Sept. 1, 2001.

Sec. 181.306. INVESTIGATIVE INFORMATION. Notwithstanding any

other law, the banking commissioner may refuse to release

information or records concerning a state trust company in the

custody of the department if, in the opinion of the banking

commissioner, release of the information or records might

jeopardize an ongoing investigation of potentially unlawful

activity.

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

1, 1999.

Sec. 181.307. EMPLOYMENT INFORMATION. (a) A person may provide

employment information concerning the known or suspected

involvement of a present or former employee, officer, or director

of a state trust company in a violation of any state or federal

law, rule, or regulation that has been reported to appropriate

state or federal authorities to:

(1) a state trust company; or

(2) a person providing employment information to a state trust

company.

(b) A person may not be held liable for providing information

under Subsection (a) unless the information provided is false and

the person provided the information with disregard for the truth.

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

1, 1999.

Sec. 181.308. SHAREHOLDER INSPECTION RIGHTS. (a)

Notwithstanding Section 21.218 or 101.502, Business Organizations

Code, a shareholder or participant of a state trust company may

not examine:

(1) a report of examination or other confidential property of

the department that is in the possession of the state trust

company; or

(2) a book or record of the state trust company that directly or

indirectly pertains to financial or other information maintained

by the state trust company on behalf of its clients, including a

specific item in the minutes of the board or a committee of the

board regarding client account review and approval or any report

that would tend to identify the state trust company's client.

(b) This section does not affect the rights of a shareholder or

participant of a state trust company acting in another capacity.

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. 67, eff. September 1, 2007.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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