CHAPTER 183. OWNERSHIP AND MANAGEMENT OF STATE TRUST COMPANY

State Codes and Statutes

Statutes > Texas > Finance-code > Title-3-financial-institutions-and-businesses > Chapter-183-ownership-and-management-of-state-trust-company

FINANCE CODE

TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES

SUBTITLE F. TRUST COMPANIES

CHAPTER 183. OWNERSHIP AND MANAGEMENT OF STATE TRUST COMPANY

SUBCHAPTER A. TRANSFER OF OWNERSHIP INTEREST

Sec. 183.001. ACQUISITION OF CONTROL. (a) Except as expressly

permitted by this subtitle, without the prior written approval of

the banking commissioner a person may not directly or indirectly

acquire a legal or beneficial interest in voting securities of a

state trust company or a corporation or other entity owning

voting securities of a state trust company if, after the

acquisition, the person would control the state trust company.

(b) For purposes of this subchapter and except as otherwise

provided by rules adopted under this subtitle, the principal

shareholder or principal participant of a state trust company

that directly or indirectly owns or has the power to vote a

greater percentage of voting securities of the state trust

company than any other shareholder or participant is considered

to control the state trust company.

to acquire, but not acquiring, control of a state trust company

or a person that controls a state trust company.

(d) This section does not apply to:

(1) the acquisition of securities in connection with the

exercise of a security interest or otherwise in full or partial

satisfaction of a debt previously contracted for in good faith if

the acquiring person files written notice of acquisition with the

banking commissioner before the person votes the securities

acquired;

(2) the acquisition of voting securities in any class or series

by a controlling person who has previously complied with and

received approval under this subchapter or who was identified as

a controlling person in a prior application filed with and

approved by the banking commissioner;

(3) an acquisition or transfer by operation of law, will, or

intestate succession if the acquiring person files written notice

of acquisition with the banking commissioner before the person

votes the securities acquired; or

(4) a transaction exempted by the banking commissioner or by

rules adopted under this subtitle because the transaction is not

within the purposes of this subchapter or the regulation of which

is not necessary or appropriate to achieve the objectives of this

subchapter.

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

1, 1999.

Sec. 183.002. APPLICATION REGARDING ACQUISITION OF CONTROL. (a)

The transferee in an acquisition of control of a state trust

company or of a person that controls a state trust company must

file an application for approval of the acquisition. The

application must:

(1) be under oath and on a form prescribed by the banking

commissioner;

(2) contain all information that:

(A) is required by rules adopted under this subtitle; or

(B) the banking commissioner requires in a particular

application as necessary to an informed decision to approve or

reject the acquisition; and

(3) be accompanied by any filing fee required by statute or

rule.

(b) If a person proposing to acquire voting securities in a

transaction subject to this section includes a group of persons

acting in concert, the information required by the banking

commissioner may be required of each member of the group.

confidential or nonconfidential character of information obtained

by the banking commissioner under this section. In the absence

of rules, information obtained by the banking commissioner under

this section is confidential and may not be disclosed by the

banking commissioner or any employee of the department except as

provided by Subchapter D, Chapter 181.

(d) The applicant shall publish notice of the application, its

date of filing, the identity of each applicant, and, if the

applicant includes a group, the identity of each group member.

The notice must be published in the form and frequency specified

by the banking commissioner and in a newspaper of general

circulation in the county where the state trust company's home

office is located, or in another publication or location as

directed by the banking commissioner.

(e) The applicant may defer publication of the notice until not

later than the 34th day after the date the application is filed

if:

(1) the application is filed in contemplation of a public tender

offer subject to 15 U.S.C. Section 78n(d)(1);

(2) the applicant requests confidential treatment and represents

that a public announcement of the tender offer and the filing of

appropriate forms with the Securities and Exchange Commission or

the appropriate federal banking agency, as applicable, will occur

within the period of deferral; and

(3) the banking commissioner determines that the public interest

will not be harmed by the requested confidential treatment.

(f) The banking commissioner may waive the requirement that a

notice be published or permit delayed publication on a

determination that waiver or delay is in the public interest. If

publication of notice is waived under this subsection, the

information that would be contained in a published notice becomes

public information under Chapter 552, Government Code, on the

35th day after the date the application is filed.

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. 3.08,

eff. Sept. 1, 2001.

Amended by:

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

735, Sec. 17, eff. September 1, 2007.

Sec. 183.003. HEARING AND DECISION ON ACQUISITION OF CONTROL.

(a) Not later than the 60th day after the date the notice is

published, the banking commissioner shall approve the application

or set the application for hearing. If the banking commissioner

sets a hearing, the department shall participate as the opposing

party and the banking commissioner shall conduct a hearing and

one or more prehearing conferences and opportunities for

discovery as the banking commissioner considers advisable and

consistent with governing statutes and rules. A hearing held

under this section is confidential and closed to the public.

(b) Based on the record, the banking commissioner may issue an

order denying an application if:

(1) the acquisition would substantially lessen competition, be

in restraint of trade, result in a monopoly, or be in furtherance

of a combination or conspiracy to monopolize or attempt to

monopolize the trust industry in any part of this state, unless:

(A) the anticompetitive effects of the acquisition are clearly

outweighed in the public interest by the probable effect of

acquisition in meeting the convenience and needs of the community

to be served; and

(B) the acquisition is not in violation of the law of this state

or the United States;

(2) the financial condition of the transferee, or any member of

a group comprising the transferee, might jeopardize the financial

stability of the state trust company being acquired;

(3) plans or proposals to operate, liquidate, or sell the state

trust company or its assets are not in the best interest of the

state trust company;

(4) the experience, ability, standing, competence,

trustworthiness, and integrity of the transferee, or any member

of a group comprising the transferee, are insufficient 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;

(5) the state trust company will not be solvent, have adequate

capitalization, or be in compliance with the laws of this state

after the acquisition;

(6) the transferee has failed to furnish all information

pertinent to the application reasonably required by the banking

commissioner; or

(7) the transferee is not acting in good faith.

transaction may be consummated. If the approval is conditioned on

a written commitment from the transferee offered to and accepted

by the banking commissioner, the commitment is:

(1) enforceable against the state trust company and the

transferee; and

(2) considered for all purposes an agreement under this

subtitle.

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

1, 1999.

Sec. 183.004. APPEAL FROM ADVERSE DECISION. (a) If a hearing

has been held, the banking commissioner has entered an order

denying the application, and the order has become final, the

transferee may appeal the final order by filing a petition for

judicial review.

(b) The filing of an appeal under this section does not stay the

order of the banking commissioner.

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

1, 1999.

Sec. 183.005. OBJECTION TO OTHER TRANSFER. This subchapter does

not prevent the banking commissioner from investigating,

commenting on, or seeking to enjoin or set aside a transfer of

voting securities that evidence a direct or indirect interest in

a state trust company, regardless of whether the transfer is

governed by this subchapter, if the banking commissioner

considers the transfer to be against the public interest.

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

1, 1999.

Sec. 183.006. CIVIL ENFORCEMENT; CRIMINAL PENALTY. (a) If the

banking commissioner believes that a person has violated or is

about to violate this subchapter or a rule or order of the

banking commissioner relating to this subchapter, the attorney

general on behalf of the banking commissioner may apply to a

district court in Travis County for an order enjoining the

violation and for other equitable relief the nature of the case

requires.

(b) A person who knowingly fails or refuses to file the

application required by Section 183.002 commits an offense. An

offense under this subsection is a Class A misdemeanor.

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

1, 1999.

SUBCHAPTER B. BOARD AND OFFICERS

Sec. 183.101. VOTING SECURITIES HELD BY TRUST COMPANY. (a)

Voting securities of a state trust company held by the state

trust company in a fiduciary capacity under a will or trust,

whether registered in its own name or in the name of its nominee,

may not be voted in the election of directors or managers or on a

matter affecting the compensation of directors, managers,

officers, or employees of the state trust company in that

capacity, unless:

(1) under the terms of the will or trust, the manner in which

the voting securities are to be voted may be determined by a

donor or beneficiary of the will or trust and the donor or

beneficiary actually makes the determination in the matter at

issue;

(2) the terms of the will or trust expressly direct the manner

in which the securities must be voted to the extent that

discretion is not vested in the state trust company as fiduciary;

(3) the securities are voted solely by a cofiduciary that is not

an affiliate of the state trust company, as if the cofiduciary

were the sole fiduciary.

(b) Voting securities of a state trust company that cannot be

voted under this section are considered to be authorized but

unissued for purposes of determining the procedures for and

results of the affected vote.

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

1, 1999.

Sec. 183.102. BYLAWS. Except as provided by Section 183.207,

each state trust company shall adopt bylaws and may amend its

bylaws from time to time for the purposes and in accordance with

the procedures set forth in the Business Organizations Code.

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. 75, eff. September 1, 2007.

Sec. 183.103. BOARD OF DIRECTORS, MANAGERS, OR MANAGING

PARTICIPANTS. (a) The board of a state trust company must

consist of not fewer than five or more than 25 directors,

managers, or managing participants, the majority of whom must be

residents of this state. Except for a limited trust association

in which management has been retained by its participants, the

principal executive officer of the state trust company is a

member of the board. The principal executive officer acting in

the capacity of board member is the board's presiding officer

unless the board elects a different presiding officer to perform

the duties as designated by the board.

(b) Unless the banking commissioner consents otherwise in

writing, a person may not serve as director, manager, or managing

participant of a state trust company if:

(1) the state trust company incurs an unreimbursed loss

attributable to a charged-off obligation of or holds a judgment

against:

(A) the person; or

(B) an entity that was controlled by the person at the time of

funding and at the time of default on the loan that gave rise to

the judgment or charged-off obligation;

(2) the person is the subject of an order described by Section

185.007(a);

(3) the person has been convicted of a felony; or

(4) the person has violated, with respect to a trust under which

the state trust company has fiduciary responsibility, Section

113.052 or 113.053(a), Property Code, relating to loan of trust

funds and purchase or sale of trust property by the trustee, and

the violation has not been corrected.

association operated by managing participants does not elect

directors or managers before the 61st day after the date of its

regular annual meeting, the banking commissioner may appoint a

conservator under Chapter 185 to operate the state trust company

and elect directors or managers, as appropriate. If the

conservator is unable to locate or elect persons willing and able

to serve as directors or managers, the banking commissioner may

close the state trust company for liquidation.

(d) A vacancy on the board that reduces the number of directors,

managers, or managing participants to fewer than five must be

filled not later than the 30th day after the date the vacancy

occurs. A limited trust association with fewer than five managing

participants must add one or more new participants or elect a

board of managers of not fewer than five persons to resolve the

vacancy. After the 30th day after the date the vacancy occurs,

the banking commissioner may appoint a conservator under Chapter

185 to operate the state trust company and elect a board of not

fewer than five persons to resolve the vacancy. If the

conservator is unable to locate or elect five persons willing and

able to serve as directors or managers, the banking commissioner

may close the state trust company for liquidation.

(e) Before each term to which a person is elected to serve as a

director or manager of a state trust company, or annually for a

person who is a managing participant, the person shall submit an

affidavit for filing in the minutes of the state trust company

stating that the person, to the extent applicable:

(1) accepts the position and is not disqualified from serving in

the position;

(2) will not violate or knowingly permit an officer, director,

manager, managing participant, or employee of the state trust

company to violate any law applicable to the conduct of business

of the trust company; and

(3) will diligently perform the duties of the position.

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. 3.09,

eff. Sept. 1, 2001.

Sec. 183.104. ADVISORY DIRECTOR OR ADVISORY MANAGER. An

advisory director or advisory manager is not considered to be a

director if the advisory director or advisory manager:

(1) is not elected by the shareholders or participants of the

state trust company;

(2) does not vote on matters before the board or a committee of

the board;

(3) is not counted for purposes of determining a quorum of the

board or committee; and

(4) provides solely general policy advice to the board.

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

1, 1999.

Sec. 183.105. REQUIRED QUARTERLY BOARD MEETING. (a) The board

of a state trust company shall hold at least one regular meeting

each quarter.

(b) At each regular meeting the board shall review and approve

the minutes of the preceding meeting and review the operations,

activities, and financial condition of the state trust company.

The board may designate committees from among its members to

perform those duties and approve or disapprove the committees'

reports at each regular meeting.

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

1, 1999.

Sec. 183.106. OFFICERS. (a) The board shall annually appoint

the officers of the state trust company, who serve at the will of

the board.

(b) The state trust company must have a principal executive

officer primarily responsible for the execution of board policies

and operation of the state trust company and an officer

responsible for the maintenance and storage of all corporate

books and records of the state trust company and for required

attestation of signatures. Those positions may not be held by the

same person.

company as the board considers necessary.

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

1, 1999.

Sec. 183.107. LIMITATION ON ACTION OF OFFICER OR EMPLOYEE IN

RELATION TO ASSET OR LIABILITY. Unless expressly authorized by a

resolution of the board recorded in its minutes, an officer or

employee may not create or dispose of a state trust company asset

or create or incur a liability on behalf of the state trust

company.

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

1, 1999.

Sec. 183.108. CERTAIN CRIMINAL OFFENSES. (a) An officer,

director, manager, managing participant, employee, shareholder,

or participant of a state trust company commits an offense if the

person knowingly:

(1) conceals information or removes, destroys, or conceals a

book or record of the state trust company for the purpose of

concealing information from the banking commissioner or an agent

of the banking commissioner; or

(2) for the purpose of concealing, removes or destroys any book

or record of the state trust company that is material to a

pending or anticipated legal or administrative proceeding.

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

employee of a state trust company commits an offense if the

person knowingly makes a false entry in a book, record, report,

or statement of the state trust company.

degree.

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

1, 1999.

Sec. 183.109. TRANSACTIONS WITH MANAGEMENT AND AFFILIATES. (a)

Without the prior approval of a disinterested majority of the

board recorded in the minutes, or if a disinterested majority

cannot be obtained, the prior written approval of the banking

commissioner, a state trust company may not directly or

indirectly:

(1) sell or lease an asset of the state trust company to an

officer, director, manager, managing participant, or principal

shareholder or participant of the state trust company or an

affiliate of the state trust company;

(2) purchase or lease an asset in which an officer, director,

manager, managing participant, or principal shareholder or

participant of the state trust company or an affiliate of the

state trust company has an interest; or

(3) subject to Section 184.201, extend credit to an officer,

director, manager, managing participant, or principal shareholder

or participant of the state trust company or an affiliate of the

state trust company.

(b) Notwithstanding Subsection (a), a lease transaction

described in Subsection (a)(2) involving real property may not be

consummated, renewed, or extended without the prior written

approval of the banking commissioner. For purposes of this

subsection only, an affiliate of a state trust company does not

include a subsidiary of the state trust company.

directly or indirectly extend credit to an employee, officer,

director, manager, managing participant, or principal shareholder

or participant of the state trust company or to an affiliate of

the state trust company, unless:

(1) the extension of credit is made on substantially the same

terms, including interest rates and collateral, as those

prevailing at the time for comparable transactions by the state

trust company with persons who are not employees, officers,

directors, managers, managing participants, principal

shareholders, participants, or affiliates of the state trust

company;

(2) the extension of credit does not involve more than the

normal risk of repayment or present other unfavorable features;

and

(3) the state trust company follows credit underwriting

procedures that are not less stringent than those applicable to

comparable transactions by the state trust company with persons

who are not employees, officers, directors, managers, managing

participants, principal shareholders, participants, or affiliates

of the state trust company.

(d) An officer, director, manager, or managing participant of a

state trust company who knowingly participates in or permits a

violation of this section commits an offense. An offense under

this subsection is a felony of the third degree.

(e) The finance commission may adopt rules to administer and

carry out this section, including rules to establish limits,

requirements, or exemptions other than those specified by this

section for particular categories of transactions.

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

1, 1999.

Sec. 183.110. FIDUCIARY RESPONSIBILITY. The board of a state

trust company is responsible for the proper exercise of fiduciary

powers by the state trust company and each matter pertinent to

the exercise of fiduciary powers, including:

(1) the determination of policies;

(2) the investment and disposition of property held in a

fiduciary capacity; and

(3) the direction and review of the actions of each officer,

employee, and committee used by the state trust company in the

exercise of its fiduciary powers.

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

1, 1999.

Sec. 183.111. RECORDKEEPING. A state trust company shall keep

its fiduciary records separate and distinct from other records of

the state trust company in compliance with applicable rules

adopted under this subtitle. The fiduciary records must contain

all appropriate material information relative to each account.

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

1, 1999.

Sec. 183.112. BONDING REQUIREMENTS. (a) The board of a state

trust company shall require a bond for the protection and

indemnity of clients, in reasonable amounts established by rules

adopted under this subtitle, against dishonesty, fraud,

defalcation, forgery, theft, and other similar insurable losses.

The bond must be with a corporate insurance or surety company:

(1) authorized to do business in this state; or

(2) acceptable to the banking commissioner and otherwise

lawfully permitted to issue the coverage against those losses in

this state.

(b) Except as otherwise provided by rule, a bond is required to

cover each director, manager, managing participant, officer, and

employee of a state trust company without regard to whether the

person receives salary or other compensation.

for permission to eliminate the bonding requirement of this

section for a particular individual. The banking commissioner

shall approve the application if the banking commissioner finds

that the bonding requirement is unnecessary or burdensome. Unless

the application presents novel or unusual questions, the banking

commissioner shall approve the application 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.

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

1, 1999.

Sec. 183.113. REPORTS OF APPARENT CRIME. (a) A state trust

company that is the victim of a robbery, has a shortage of

corporate or fiduciary funds in excess of $5,000, or is the

victim of an apparent or suspected misapplication of its

corporate or fiduciary funds or property in any amount by a

director, manager, managing participant, officer, or employee

shall report the robbery, shortage, or apparent or suspected

misapplication of funds or property to the banking commissioner

within 48 hours after the time it is discovered. The initial

report may be oral if the report is promptly confirmed in

writing. The state trust company or a director, manager, managing

participant, officer, employee, or agent is not subject to

liability for defamation or another charge resulting from

information supplied in the report.

(b) A report filed with the banking commissioner under this

section may be a copy of a written report filed with an

appropriate federal agency.

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

1, 1999.

SUBCHAPTER C. LIMITED TRUST ASSOCIATION

Sec. 183.201. LIABILITY OF PARTICIPANTS AND MANAGERS. (a)

Except as provided by Subsection (b), a participant,

participant-transferee, or manager of a limited trust association

is not liable for a debt, obligation, or liability of the limited

trust association, including a debt, obligation, or liability

under a judgment, decree, or order of court. A participant, other

than a full liability participant, or a manager of a limited

trust association is not a proper party to a proceeding by or

against a limited trust association unless the object of the

proceeding is to enforce the participant's or manager's right

against or liability to a limited trust association.

(b) A full liability participant of a limited trust association

is liable under a judgment, decree, or order of court for a debt,

obligation, or liability of the limited trust association that

accrued during the participation of the full liability

participant in the limited trust association and before the full

liability participant or a successor in interest filed with the

banking commissioner a notice of withdrawal as a full liability

participant from the limited trust association. The filed notice

of withdrawal is a public record.

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

1, 1999.

Sec. 183.202. FILING OF NOTICE OF FULL LIABILITY. (a) A

limited trust association shall file with the banking

commissioner a copy of any participation agreement by which a

participant of the limited trust association agrees to become a

full liability participant and the name and address of each full

liability participant. Only the portion of the filed copy

containing the designation of each full liability participant is

a public record.

(b) The banking commissioner may require a complete copy of the

participation agreement to be filed with the department,

regardless of whether a state trust company has a full liability

participant, except that the provisions of the participation

agreement other than those by which a participant of the limited

trust association agrees to become a full liability participant

are confidential and subject to release only as provided by

Subchapter D, Chapter 181.

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

1, 1999.

Sec. 183.203. CONTRACTING FOR DEBT OR OBLIGATION. Except as

provided by this section or the articles of association of the

limited trust association, a debt, liability, or other obligation

may be contracted for or incurred on behalf of a limited trust

association only by:

(1) a majority of the managers, if management of the limited

trust association has been vested in a board of managers;

(2) a majority of the managing participants; or

(3) an officer or other agent vested with actual or apparent

authority to contract for or incur the debt, liability, or other

obligation.

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

1, 1999.

Sec. 183.204. MANAGEMENT OF LIMITED TRUST ASSOCIATION. (a)

Management of a limited trust association is vested in the

participants in proportion to each participant's contribution to

capital, as adjusted periodically to properly reflect any

additional contribution. The articles of association may provide

that management of a limited trust association is vested in a

board of managers to be elected annually by the participants as

prescribed by the bylaws.

(b) Participants of a limited trust association may not retain

management and must elect a board of managers if:

(1) any participant is disqualified from serving as a managing

participant under Section 183.103;

(2) the limited trust association has fewer than five or more

than 25 participants; or

(3) any participant has been removed by the banking commissioner

under Subchapter A, Chapter 185.

agreement of a limited trust association may use the term

"director" instead of "manager" and the term "board" instead of

"board of managers."

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

1, 1999.

Sec. 183.205. WITHDRAWAL OR REDUCTION OF PARTICIPANT'S

CONTRIBUTION TO CAPITAL. (a) Except as otherwise provided by

this chapter, a participant may not receive from a limited trust

association any part of the participant's contribution to capital

unless:

(1) all liabilities of the limited trust association, except

liabilities to participants on account of contribution to

capital, have been paid;

(2) after the withdrawal or reduction, sufficient property of

the limited trust association will remain to pay all liabilities

of the limited trust association, except liabilities to

participants on account of contribution to capital;

(3) all participants consent; or

(4) the articles of association are canceled or amended to set

out the withdrawal or reduction.

(b) A participant may demand the return of the participant's

contribution to capital on the dissolution of the association and

the failure of the full liability participants to exercise the

right to carry on the business of the limited trust association

as provided by Section 183.208.

contribution to capital only in cash unless a different form of

return of the contribution is allowed by the articles of

association or by the unanimous consent of all participants.

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

1, 1999.

Sec. 183.206. INTEREST IN LIMITED TRUST ASSOCIATION;

TRANSFERABILITY OF INTEREST. (a) The interest of a participant

or participant-transferee in a limited trust association is the

personal property of the participant or the

participant-transferee and may be transferred as provided by the

bylaws or the participation agreement.

(b) A transferee of a participant's interest has the status of a

participant-transferee and does not by the transfer become a

participant or obtain a right to participate in the management of

the limited trust association.

of profits, return of contribution, or other distributive benefit

in respect to the interest transferred to which the participant

who transferred the interest would have been entitled.

(d) A participant-transferee may become a participant only as

provided by the bylaws or the participation agreement.

(e) A limited trust association may add additional participants

in the same manner as participant-transferees after payment in

full of the capital contribution to the limited trust association

payable for the issuance of additional participation interests.

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

1, 1999.

Sec. 183.207. BYLAWS OF LIMITED TRUST ASSOCIATION. (a) A

limited trust association in which management is retained by the

participants is not required to adopt bylaws if the provisions

required by law to be contained in the bylaws are contained in

the articles of association or the participation agreement.

(b) If a limited trust association has adopted bylaws that

designate each full liability participant, the limited trust

association shall file a copy of the bylaws with the banking

commissioner. Only the portion of the bylaws designating each

full liability participant is a public record.

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

1, 1999.

Sec. 183.208. DISSOLUTION. (a) A limited trust association

organized under this chapter is dissolved on:

(1) the expiration of the period fixed for the duration of the

limited trust association;

(2) a vote to dissolve or the execution of a written consent to

dissolve by all full liability participants, if any, and a

sufficient number of other participants that, combined with all

full liability participants, hold at least two-thirds of the

participation shares in each class in the association, or a

greater fraction as provided by the articles of association;

(3) except as provided by the articles of association, the

death, insanity, expulsion, bankruptcy, retirement, or

resignation of a participant unless a majority in interest of all

remaining participants elect in writing not later than the 90th

day after the date of the event to continue the business of the

association; or

(4) the occurrence of an event of dissolution specified in the

articles of association.

(b) A dissolution under this section is considered to be the

initiation of a voluntary dissolution under Subchapter B, Chapter

186.

not cancel or revoke a contract to which the limited trust

association is a party, including a trust indenture or agreement

or voluntary dissolution under Subchapter B, Chapter 186, until

the period for the remaining participants to continue the

business of the limited trust association has expired without the

remaining participants having completed the necessary action to

continue the business of the limited trust association.

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

1, 1999.

Sec. 183.209. ALLOCATION OF PROFITS AND LOSSES. The profits and

losses of a limited trust association may be allocated among the

participants and among classes of participants as provided by the

participation agreement. Without the prior written approval of

the banking commissioner to use a different allocation method,

the profits and losses must be allocated according to the

relative interests of the participants as reflected in the

articles of association and related documents filed with and

approved by the banking commissioner.

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

1, 1999.

Sec. 183.210. DISTRIBUTIONS. Subject to Section 182.103,

distributions of cash or other assets of a limited trust

association may be made to the participants as provided by the

participation agreement. Without the prior written approval of

the banking commissioner to use a different distribution method,

distributions must be made to the participants according to the

relative interests of the participants as reflected in the

articles of association and related documents filed with and

approved by the banking commissioner.

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

1, 1999.

Sec. 183.211. APPLICATION OF OTHER PROVISIONS TO LIMITED TRUST

ASSOCIATIONS. For purposes of applying the provisions of this

subtitle other than this subchapter to a limited trust

association, as the context requires:

(1) a manager and the board of managers are considered to be a

director and the board of directors;

(2) if there is not a board of managers, a participant is

considered to be a director and all of the participants are

considered to be the board of directors;

(3) a participant or participant-transferee is considered to be

a shareholder;

(4) a participation share is considered to be a share of stock;

and

(5) a distribution is considered to be a dividend.

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

1, 1999.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

Loading..

Loading, Please Wait!