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person the power to direct the voting or disposition of such shares,
except that disclosure of standard default and similar provisions
contained in loan agreements need not be included;
(10) to the extent known to the trust company after
reasonable inquiry, whether or not any officer, director, principal
shareholder, or subsidiary of the trust company has made a recommendation
in support of or opposed to the reverse stock split and, if so, the
reasons for such recommendation;
(11) whether or not appraisal rights are being voluntarily
accorded by the trust company to shareholders in connection with the
reverse stock split and whether or not any provision has been or will
be made to allow unaffiliated shareholders to obtain counsel or appraisal
services at the voluntary expense of the trust company and, if so,
a detailed description of such appraisal rights or counsel or appraisal
services;
(12) a reasonably itemized statement of all expenses
incurred or estimated to be incurred in connection with the reverse
stock split, including filing fees, legal, accounting, and appraisal
fees, solicitation expenses, and printing costs, and disclosure of
the person who has paid or will be responsible for paying such expenses;
(13) the proxy statement furnished to shareholders
of the trust company in connection with obtaining shareholder approval
for the reverse stock split, or a draft of the proxy statement to
be furnished to shareholders in the event approval of the banking
commissioner is sought prior to a shareholder vote; 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
amendment effectuating a reverse stock split.
(d) Standards for approval.
(1) The banking commissioner shall process the proposed
reverse stock split in accordance with Finance Code, §182.101(d).
The banking commissioner shall require that the reverse stock split
be for a valid business purpose of the trust company, viewed as an
entity distinct from its affiliates, and be accomplished through fair
dealing with and a fair price to unaffiliated shareholders. The banking
commissioner may impose conditions on approval, including a condition
that an independent appraisal report be obtained regarding the value
of the unaffiliated shareholders' shares, exclusive of any element
of value arising from the accomplishment or expectation of the proposed
transaction, and without minority discount. Share value determined
by an independent and properly prepared appraisal report that is fully
disclosed to trust company shareholders or by the market price of
publicly traded shares will be presumed to be a fair value unless
extenuating circumstances to the contrary are specifically noted.
(2) In the event approval of the banking commissioner
is obtained prior to approval by shareholders, the trust company shall
file a statement with the banking commissioner certifying that any
future event or condition upon which the approval of the transaction
was conditioned has been satisfied and the date that each such condition
was satisfied. Upon receipt of such statement, the banking commissioner
shall file the approved amendment to the certificate of formation
in accordance with Finance Code, §182.101(e).
(3) An issuer's purchase of its own shares is a transaction
subject to the antifraud provisions of federal securities law, see
15 United States Code, §78j, 17 Code of Federal Regulations (CFR), §240.10b-5,
and Spector v. L Q Motor Inns, Inc., 517
F.2d 278 (5th Cir. 1975), cert. denied, 423
U.S. 1055 (1976). Such a transaction is also subject to the antifraud
provisions of state securities law, see Texas Civil Statutes, Article
581-33(B). Potential liability of the trust company to the selling
shareholder can therefore arise if the trust company withholds or
misrepresents material facts that the seller would have considered
important in making the decision to sell. Consequently, a trust company
must disclose to the shareholders in writing, prior to or simultaneously
with the written notice of the shareholders meeting, all material
information necessary to an informed decision regarding the proposed
reverse stock split. If the reverse stock split involves publicly
traded shares and is subject to 15 CFR, §240.13e-3, the registration
statement required by federal law is considered to satisfy this disclosure
obligation. Approval of an application under this section by the banking
commissioner does not constitute a determination that the trust company
has complied with applicable securities law.
(e) Exemptions.
(1) This section does not apply to a reverse stock
split that:
(A) will not result in fractional shares;
(B) permits each shareholder to choose to cash in the
resulting fractional share by selling it to the trust company or to
round up to the next highest whole share by purchasing fractional
interests, provided that:
(i) the specified sale and purchase prices are equivalent
and reasonable; and
(ii) no fractional share resulting from the reverse
stock split is less than 10% of a full share;
(C) is adopted by means of a unanimous written consent
of shareholders; or
(D) the banking commissioner expressly exempts after
written application as not within the purposes of this section.
(2) An amendment to the certificate of formation that
implements a reverse stock split exempt from this section is filed
and processed in accordance with Finance Code, §182.101.
(3) The availability of an exemption from the requirements
of this section does not relieve a trust company from its obligation
to comply with applicable securities law.
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| Source Note: The provisions of this §21.92 adopted to be effective December 31, 1998, 23 TexReg 13039; amended to be effective September 5, 2002, 27 TexReg 8203; amended to be effective November 7, 2013, 38 TexReg 7690 |
