CHAPTER 1201. PUBLIC SECURITY PROCEDURES ACT

State Codes and Statutes

Back To Homepage

State Codes and Statutes

Statutes > Texas > Government-code > Title-9-public-securities > Chapter-1201-public-security-procedures-act

GOVERNMENT CODE

TITLE 9. PUBLIC SECURITIES

SUBTITLE A. GENERAL PROVISIONS

CHAPTER 1201. PUBLIC SECURITY PROCEDURES ACT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1201.001. SHORT TITLE. This chapter may be cited as the

Public Security Procedures Act.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.002. DEFINITIONS. In this chapter:

(1) "Issuer" means:

(A) an agency, authority, board, body politic, department,

district, instrumentality, municipal corporation, political

subdivision, public corporation, or subdivision of this state; or

(B) a nonprofit corporation acting for or on behalf of an entity

described by Paragraph (A).

(2) "Public security" means an instrument, including a bond,

certificate, note, or other type of obligation authorized to be

issued by an issuer under a statute, a municipal home-rule

charter, or the constitution of this state.

(3) "Public security authorization" means a resolution, order,

or ordinance that is approved or adopted, or any other action

taken in a proceeding, by the governing body of an issuer in

authorizing the issuance of a public security.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.003. APPLICABILITY. This chapter applies to:

(1) an original public security;

(2) a refunding public security;

(3) an exchanged or converted public security; or

(4) any combination of those securities.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.004. CONSTRUCTION. This chapter shall be liberally

construed to achieve the legislative intent and purposes of this

chapter. A power granted by this chapter shall be broadly

interpreted to achieve that intent and those purposes.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.005. CONTENTS OF PUBLIC SECURITY AUTHORIZATION. To

the extent applicable to an authorized public security, the

public security authorization for the public security must

contain each item or other matter authorized or described by

Subchapter B and Sections 1201.061 and 1201.063.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

SUBCHAPTER B. ISSUANCE AND APPROVAL OF PUBLIC SECURITY

Sec. 1201.021. CHARACTERISTICS OF PUBLIC SECURITY. A public

security may:

(1) be issued in any denomination;

(2) bear no interest or bear interest at one or more specified

rates;

(3) be issued with one or more interest coupons or without a

coupon;

(4) be issued as redeemable before maturity at one or more

specified times; and

(5) be payable:

(A) at one or more times;

(B) in installments or a specified amount or amounts;

(D) under specified terms; and

(E) in a specified form or manner.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.022. TERMS OF ISSUANCE. (a) A public security may

be:

(1) issued singly or in a series;

(2) made payable in a specified amount or amounts or

installments to:

(A) the bearer;

(B) a registered or named person;

(D) a successor or assign of a registered or named person;

(3) issued to be sold:

(A) at a public or private sale; and

(B) under the terms determined by the governing body of the

issuer to be in the issuer's best interests; and

(4) issued with other specified characteristics, on additional

specified terms, or in a specified manner.

(b) The governing body of a county or municipality that issues

bonds that are to be paid from ad valorem taxes may provide that

the bonds are to mature serially over a specified number of

years, not to exceed 40.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 769, Sec. 1, eff.

Sept. 1, 2001.

Sec. 1201.023. UNCERTIFICATED BOOK-ENTRY ISSUANCE. (a) The

governing body of an issuer may provide for a book-entry record

of ownership of a public security issued by the issuer. A public

security may be issued in uncertificated book-entry form.

(b) The record of ownership of a public security issued in

uncertificated book-entry form may be kept by the issuer or an

agent of the issuer.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.024. FORM OF PUBLIC SECURITY. (a) A public security

may be:

(1) issued in a specified form or forms;

(2) issued with one or more interest coupons;

(3) registrable as to principal and interest or only as to

principal; and

(4) changed in form in a specific manner.

(b) A public security issued with one or more interest coupons

may have:

(1) a specified form of a coupon; and

(2) a form of a coupon that may be changed in a specified

manner.

(1) has a coupon and is not registrable;

(2) has a coupon and is registrable only as to principal;

(3) is fully registrable; or

(4) initially has a coupon but may become a fully registrable

security under Section 1203.041.

(d) An issuer may provide that public securities of the same

issue or series are:

(1) of one or more types described by Subsection (c); and

(2) exchangeable in whole or in part for one or more of those

types.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.025. RATE OF INTEREST. (a) An interest rate on a

public security that bears interest may be fixed, variable,

floating, adjustable, or computed by another method.

(b) If an interest rate is not specified by the governing body

of an issuer issuing a public security, the interest rate is

determined by a formula or contractual arrangement for the

periodic determination of the rate.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 2001, 77th Leg., ch. 1420, Sec. 8.001, eff.

Sept. 1, 2001.

Sec. 1201.026. EXECUTION OF PUBLIC SECURITY OR INTEREST COUPON.

(a) A public security or an interest coupon may be executed,

with or without a seal, with a manual or facsimile signature.

(b) The signature on a public security or on an interest coupon

of a person who is no longer an officer when the security or

coupon is delivered to a purchaser is valid and sufficient for

all purposes.

authentication, or delivery of the public security or interest

coupon.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.027. AUTHORITY OF ISSUER TO CONTRACT FOR SERVICES.

(a) An issuer has exclusive authority to select, contract with,

and determine the basis for compensation of a person to provide

legal and other services as may be determined by the issuer to be

necessary in connection with the issuer's issuance of public

securities or administration of its affairs that pertain to the

issuance of public securities. The selection of legal counsel

shall be made in accordance with the provisions of Subchapter A,

Chapter 2254, applicable to the selection by a governmental

entity of a provider of professional engineering services.

(b) Subsection (a) does not impair the authority of the attorney

general under Section 402.0212 to approve a contract for legal

services entered into by a state agency.

conflict between this section and another law or a municipal

charter, this section controls.

(d) An issuer of a state security, as defined by Section

1231.001, that selects or contracts with a person to provide

services under Subsection (a) shall, on request, submit to the

Bond Review Board:

(1) the request for proposals to provide the services not later

than the date the request for proposals is published;

(2) each final proposal received to provide the services before

a contract for the services is entered into by the issuer; and

(3) an executed contract entered into by an issuer for services

under Subsection (a).

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 1999, 76th Leg., ch. 1064, Sec. 2, eff.

Sept. 1, 1999.

Amended by:

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

991, Sec. 1, eff. September 1, 2007.

Sec. 1201.028. SINGLE MEETING OF GOVERNING BODY SUFFICIENT.

Notwithstanding any other law, including a provision in a

municipal charter, the following actions taken at a meeting of

the governing body of an issuer are effective immediately and a

subsequent meeting is not required:

(1) a resolution, order, or ordinance calling an election to:

(A) authorize the issuance and sale of a public security; or

(B) approve the resources, revenue, or income of the issuer that

may be pledged as security for a public security;

(2) a resolution, order, or ordinance canvassing the results of

an election described by Subdivision (1); or

(3) a public security authorization.

Added by Acts 2001, 77th Leg., ch. 769, Sec. 2, eff. Sept. 1,

2001.

Sec. 1201.029. COMMISSIONS NOT TO BE PAID FROM PRINCIPAL. In a

public or private sale of public securities the principal amount

of which is limited by law, by voted authorization, or by other

means, for purposes of determining whether the principal amount

of the public securities that are issued exceeds the limitation,

amounts produced by the initial purchaser through market pricing

of the public securities when the public securities are resold by

the initial purchaser are not considered proceeds of the issuer

if the amounts constitute all or part of the compensation of the

initial purchaser.

Added by Acts 2003, 78th Leg., ch. 1193, Sec. 1, eff. June 20,

2003.

SUBCHAPTER C. FINANCIAL ASPECTS OF PUBLIC SECURITY

Sec. 1201.041. PUBLIC SECURITY AS NEGOTIABLE INSTRUMENT AND

INVESTMENT SECURITY. A public security is:

(1) a negotiable instrument;

(2) an investment security to which Chapter 8, Business &

Commerce Code, applies; and

(3) a legal and authorized investment for:

(A) an insurance company;

(B) a fiduciary or trustee; or

subdivision or public agency of this state.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.042. USE OF CERTAIN PROCEEDS. (a) An issuer may use

the proceeds of a public security issued to finance the

acquisition, construction, or improvement of a project or

facility to:

(1) pay interest on the public security while the project or

facility is being acquired, constructed, or improved and for the

year after it is acquired, constructed, or improved;

(2) operate and maintain the project or facility during the

estimated period of acquisition, construction, or improvement of

the project or facility and for one year after it is acquired,

constructed, or improved;

(3) finance other funds relating to the public security,

including debt service reserve and contingency; and

(4) pay the cost or expense of the issuance of the public

security.

(b) To the extent and in the manner provided in a public

security authorization, until the proceeds from a public security

described by Subsection (a) are needed the proceeds may be:

(1) placed on time deposit; or

(2) invested in an obligation authorized for the investment of

money of the issuer.

finance the acquisition, construction, equipping, or furnishing

of a project or facility may be used to reimburse the issuer for

a cost that is:

(1) attributable to the project or facility; and

(2) paid or incurred before the date of the public security's

issuance.

(d) An issuer may spend a premium received by the issuer as part

of the purchase price of public securities sold at a public or

private sale:

(1) to provide for payment of debt service on the public

securities sold;

(2) to contribute to an escrow established to provide for

payment of debt service on obligations being refunded through the

sale of the public securities;

(3) to pay the cost or expense of issuing the public securities;

(4) to pay any other cost related to the purpose for which the

public securities were issued, as specified in the public

security authorization.

(e) Subsection (d)(4) does not authorize an issuer to spend

money in an amount that exceeds limitations provided by other law

or by the public security authorization.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999. Amended by Acts 2003, 78th Leg., ch. 270, Sec. 1, eff. June

18, 2003.

Sec. 1201.043. USE OF INVESTMENT INCOME. An issuer authorized

to invest proceeds from the sale of a public security, including

by placing the proceeds on time deposit, may use money earned

from the investment for the purpose for which the public security

was issued.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.044. PLEDGE OR LIEN ON RESOURCES, ASSETS, OR FUND OF

ISSUER. (a) A pledge or lien provided for in a public security

authorization on a resource of an issuer, including revenue or

income, on an asset of an issuer, or on a fund maintained by an

issuer:

(1) is valid without further action by the issuer according to

its terms and without being filed or recorded, except in the

records of the issuer;

(2) is effective from the time of payment for and delivery of

the public security until the public security is paid or payment

of the public security has been provided for; and

(3) is effective as to an item on hand or later received, and

the item is subject to the lien or pledge without physical

delivery of the item or other act.

(b) This section does not exempt an issuer from a duty to:

(1) record a lien on real property; or

(2) submit a public security to the attorney general for

approval and registration by the comptroller.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

SUBCHAPTER D. CHANGE OR CONVERSION OF PUBLIC SECURITIES

Sec. 1201.061. CONVERSION, RECONVERSION, TRANSFER, OR EXCHANGE

OF PUBLIC SECURITY. (a) The governing body of an issuer may:

(1) provide and covenant for:

(A) conversion of one form of a public security or an interest

coupon to another form or forms; and

(B) reconversion of the public security or interest coupon to

another form or forms; and

(2) provide procedures for transferring or exchanging a public

security for a previously issued public security.

(b) A public security or an interest coupon may be converted, on

request of a bearer or owner, in an aggregate principal amount

equal to the unpaid principal amount of the public security being

converted, bearing interest at the same rate or rates as the

security being converted, to:

(1) a public security with interest coupons, payable to the

bearer, and registrable as to principal and interest or only as

to principal;

(2) a fully registered public security without interest coupons;

(3) any other form, in any denomination.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.062. CHANGE OR CONVERSION OF PUBLIC SECURITY. If a

public security authorization provides a procedure for changing

or converting a public security, an additional resolution, order,

or ordinance is not required to change or convert the security.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.063. EXECUTION AND EXCHANGE OF NEW PUBLIC SECURITY.

(a) On request of the bearer or owner of a public security, if

required or necessary, an appropriate officer of the issuer shall

execute and exchange an appropriate new public security for the

changed or converted public security.

(b) If a public security that is changed or converted has

interest coupons, appropriate new coupons shall also be executed

and exchanged.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.064. SUBMISSION OF NEW PUBLIC SECURITY TO ATTORNEY

GENERAL. Except as provided by Section 1201.067, an issuer that

changes or converts a public security that has been registered by

the comptroller shall submit the new public security to the

attorney general for approval.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.065. APPROVAL OF NEW PUBLIC SECURITY BY ATTORNEY

GENERAL. The attorney general shall approve a new public

security if the attorney general finds that the new public

security has been printed or entered on the books of the

registrar and executed and issued as provided by law and a public

security authorization relating to the public security being

changed or converted.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.066. REGISTRATION OF NEW PUBLIC SECURITY BY

COMPTROLLER. (a) The comptroller shall register and deliver a

new public security after:

(1) approval of the new public security by the attorney general;

and

(2) the surrender to and the cancellation by the comptroller of

each changed or converted public security.

(b) On registration the new public security is valid and

incontestable for all purposes.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

Sec. 1201.067. EXCEPTION TO APPROVAL REQUIREMENT. (a) If the

duty to convert or reconvert a public security or interest coupon

or to transfer or exchange a public security is imposed on a

corporate trustee under a trust agreement or indenture securing

the public security or on a paying agent for the public security,

the attorney general is not required to approve and the

comptroller is not required to register:

(1) the converted or reconverted public security or interest

coupon; or

(2) the public security delivered on transfer or exchange of the

previously issued public security.

(b) A converted or reconverted public security or interest

coupon, or a transferred or exchanged public security, is valid

and incontestable in the same manner and with the same effect as

the previously issued public security.

Added by Acts 1999, 76th Leg., ch. 227, Sec. 1, eff. Sept. 1,

1999.

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

Loading..

Loading, Please Wait!