| (a) General. Without the prior written consent of the banking
commissioner, or as otherwise provided by this section, a person or entity
may not, directly or indirectly, acquire a legal or beneficial interest in
voting securities of a trust company or a corporation or other entity owning
voting securities of a trust company if, after the acquisition, the person
or entity would control the trust company. Except as otherwise provided in
this section, an application must be filed with the banking commissioner for
review and consideration of the proposed transaction.
(b) Form of application. The applicant shall submit a fully
completed, verified application on a form prepared and prescribed by the banking
commissioner and simultaneously tender the required filing fee pursuant to §21.2
of this title (relating to Filing and Investigation Fees). The application
must, except to the extent expressly waived in writing by the banking commissioner,
disclose the following information:
(1) the identity, biographical data, business background, and
experience relating to trust industry matters, and a current statement of
financial condition, a statement of changes in net worth and a statement of
cash flows of each person by whom, or on whose behalf, the acquisition is
to be made and by each person acting in concert with others seeking to acquire
voting securities subject to Finance Code, §183.001, and to this section.
Financial statements will be considered current if audited and dated within
180 days of the date of the application or will be considered current if unaudited
and dated within 90 days of the date of the application. All financial statements
must be accompanied by an affidavit of no material change dated as of the
date of application;
(2) a completed authorization to release employment, financial,
credit, fingerprint information, and criminal history records to the department;
(3) a completed confirmation inquiry form;
(4) the identity of each entity other than a natural person
seeking to acquire control or working in concert with others to acquire control
of a trust company and a copy of the entity's most recent audited financial
statement. Financial statements will be considered current if audited and
dated within 180 days of the date of the application or will be considered
current if unaudited and dated within 90 days of the date of the application.
All financial statements must be accompanied by an affidavit of no material
change dated as of the date of application;
(5) a description of all material, pending or adjudicated legal
or administrative proceedings in which each acquiring person or entity is
or was a party. A material legal proceeding includes a proceeding in which
the person or entity has been charged with, cited for, or convicted under
a state or federal law relating to trust or other financial institutions,
securities or financial instrument reporting, or a felony or crime that directly
relates to the duties and responsibilities involved in the operation of a
trust company or financial institution under the laws of a state, the United
States, or another country. A material legal proceeding also includes a proceeding
that resulted in a material unsatisfied judgment, or may result in a judgment,
against the acquiring person or entity and such loss contingency must be disclosed
in the financial statements of the acquiring person or entity under generally
accepted accounting principles, or is otherwise material. A material administrative
proceeding includes a proceeding in which the person or entity is or has been
subject to a cease and desist, removal, enforcement, or other order, including
an order of supervision or conservatorship issued by a state, federal, or
foreign regulatory agency;
(6) the terms and conditions of the proposed acquisition or
change of control and the manner in which the acquisition or change of control
is to be made;
(7) the identity, source, and amount of the funds or other
consideration used or to be used in making the acquisition or change of control;
(8) if a portion of the funds or other consideration to be
used in making the acquisition has been borrowed or is to be borrowed or otherwise
obtained for the purpose of making the acquisition, a complete description
of the transaction, the names of the parties to the transaction, and a summary
of all arrangements, agreements, or understandings with such parties including
terms of repayment;
(9) the applicant's current or proposed business or strategic
plan including amendments to a current plan;
(10) plans or proposals to liquidate the trust company, to
sell its assets or merge it with another trust company or other entity, or
to make other major changes in its business, corporate structure, or management;
(11) plans or proposals to change officers and directors of
the trust company and the related trust or financial institution management
experience of proposed or current officers and directors;
(12) the terms and conditions of an offer, invitation, agreement,
or arrangement under which a voting security will be acquired and any contract
affecting such security or its financing after it is acquired;
(13) pro forma financial statements with projections indicating
whether the acquired or controlled trust company will be adequately capitalized
for a period of not less than two years from the date of acquisition; and
(14) such other information that the banking commissioner requires
to be included in the particular application as considered necessary to an
informed decision to approve or reject the proposed acquisition. The applicant
bears the burden to supply all material information necessary to enable the
banking commissioner to make a fully informed decision regarding the application.
(c) Public notice. Not earlier than the 14th day before or
later than the 14th day after the date of initial submission of an application
filed pursuant to §21.4 of this title (relating to Required Information
and Abandoned Filings), the applicant shall publish notice as required by
Finance Code, §183.002(d), and §21.5 of this title (relating to
Public Notice) in the county where the trust company's home office is located.
One publication under this subsection is adequate unless the banking commissioner
expressly requires additional notice.
(d) Confidentiality. Information obtained by the banking commissioner
under this section is confidential and may not be disclosed by the banking
commissioner or an officer or employee of the department, subject only to
such disclosure as may be permitted by Finance Code, §183.002(c), or
by §3.111 of this title (relating to Confidential Information).
(e) Grandfather clause. A principal shareholder or participant
that is considered to control a trust company, under Finance Code, §183.001(b),
is exempt from filing an application under this section until the principal
shareholder acquires one or more additional shares or participation shares
of the trust company.
(f) Capital requirements. A person or entity seeking to acquire
control of a trust company subject to this section must bring the trust company
into compliance with the minimum capital requirements of Finance Code, §182.008,
or such amount as required by the banking commissioner at the time the transaction
is consummated.
(g) Exemptions. In addition to the acquisitions specifically
exempted pursuant to Finance Code, §183.001(d), the following types of
involuntary acquisitions of control do not require prior written approval
of the banking commissioner:
(1) the inadvertent acquisition of control of a trust company
by a shareholder as a result of a stock redemption or repurchase by the issuer
if the potential controlling shareholder or participant of a trust company
did not vote or have any direct or indirect input into the issuer's decision
to repurchase or redeem the voting securities;
(2) the acquisition and control by a qualified employee stock
ownership plan (ESOP) of less than 25% of voting securities of a trust company
unless an officer, director, or principal shareholder or participant directly
or indirectly controls the voting securities held by the ESOP, in which event
an application for acquisition of control must be filed by the officer, director
or principal shareholder or participant, if as a result that person would
control over 25% of the voting securities;
(3) the acquisition of control of a trust company as a result
of a shareholder receiving proportionate voting securities in a trust company
arising from the liquidation of a holding company;
(4) the acquisition of additional shares of voting securities
of a trust company by virtue of a pro-rata stock dividend or stock split not
resulting in increased ownership percentage;
(5) the acquisition of control of a trust company as a result
of a gift made in good faith, provided:
(A) the donee is related to the donor within the second degree
of consanguinity or affinity;
(B) neither the donor nor donee is under an enforcement order;
and
Cont'd... |
