| (a) Definitions. The following words and terms when
used in this section shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Affiliate--For purposes of this section only, a
person that directly or indirectly through one or more intermediaries
controls, is controlled by, or is under common control with a trust
company seeking to effect a reverse stock split. A person who is not
an affiliate of the trust company at the commencement of its reverse
stock split will not be considered an affiliate of the trust company
prior to the completion of the reverse stock split.
(2) Appraisal report--A report, opinion (other than
an opinion of counsel), or appraisal, prepared by an outside party,
that is materially related to the reverse stock split, including a
report, opinion, or appraisal relating to the consideration or the
fairness of the consideration to be offered to shareholders in connection
with the reverse stock split or the fairness of such transaction to
the trust company or to unaffiliated shareholders.
(3) Reverse stock split--An amendment to the certificate
of formation of a trust company that achieves a reduction in the number
of issued shares of such trust company by requiring exchange of all
issued shares in a particular class for a proportionately smaller
number of shares, generally with a proportionately increased par or
stated value. The equity capital of the trust company remains substantially
the same.
(4) Share--A unit representing ownership of at least
part of the proprietary interests of a trust company, whether or not
divided or subdivided by means of classes, series, relative rights,
or preferences; and includes a stock or similar security; or a security
convertible, with or without consideration, into such a security,
or carrying a warrant or right to subscribe to or purchase such a
security; or such warrant or right; or another security determined
by the banking commissioner to be an equity security as defined by
Finance Code, §181.002(a).
(5) Unaffiliated shareholder--A shareholder of a share
subject to a reverse stock split who is not an affiliate of the trust
company that issued the share.
(b) Procedure. Pursuant to Finance Code, §182.101,
to effectuate a reverse stock split in compliance with this section,
a trust company shall:
(1) obtain the approval of its shareholders as required
by law; and
(2) obtain the approval of the banking commissioner
pursuant to subsection (d) of this section, by filing an application
setting forth the information and documents required by subsection
(c) of this section and the filing fee required by §21.2 of this
title (relating to Filing and Investigation Fees).
(c) Application. A trust company proposing a reverse
stock split transaction shall file with the banking commissioner a
written application seeking approval of the proposed amendment to
its certificate of formation, stating the results of the vote of shareholders
regarding the proposed reverse stock split and stating the percentage
of shares of unaffiliated shareholders that were voted in favor of
the proposed reverse stock split, or undertaking to supplement the
application after conditional approval is obtained to provide shareholder
approval information, setting forth or including as exhibits the following:
(1) the original and one copy of the proposed amendment
to the certificate of formation, to be processed in the manner required
by Finance Code, §182.101, and a description of the material
terms of the proposed reverse stock split, including terms or arrangements
relating to any shareholder of the trust company which are not identical
to those relating to other shareholders of the same class;
(2) any plan or proposal of the trust company, regarding
activities or transactions which are to occur after the reverse stock
split which relate to or would result in:
(A) an extraordinary corporate transaction, such as
a merger, reorganization, or liquidation, involving the trust company
or any of its subsidiaries;
(B) a sale or transfer of a material amount of assets
of the trust company or any of its subsidiaries;
(C) a change in the present board of directors or management
of the trust company, including a plan or proposal to change the number
or term of directors, to fill an existing vacancy on the board or
to change a material term of the employment contract of an executive
officer;
(D) a material change in the present dividend rate
or policy or indebtedness or capitalization of the trust company;
(E) any other material change in the trust company's
corporate structure or business;
(3) the corporate purpose or purposes of the trust
company for the reverse stock split, and alternative means, if any,
considered by the trust company to accomplish such purposes and the
reasons for their rejection, and the reason for choosing the structure
of a reverse stock split and for undertaking such transaction at this
time;
(4) a certified resolution of the board of directors
of the trust company approving the proposed amendment to the certificate
of formation, accompanied by a statement whether or not the board
of directors of the trust company reasonably believes that the reverse
stock split is fair or unfair to unaffiliated shareholders that:
(A) identifies each director, if any, that dissented
to or abstained from voting on the merits of the reverse stock split,
and describes, if known to the trust company after making reasonable
inquiry, the reasons for each dissent or abstention; and
(B) states the number and percentage of disinterested
directors that voted in favor of the proposed reverse stock split;
(5) whether or not the trust company obtained an appraisal
report and, if an appraisal report was obtained, a copy of the appraisal
report. To the extent not addressed in the appraisal report, the trust
company shall disclose:
(A) the identity, qualifications, and method of selection
of the outside party that prepared the appraisal report, any material
relationship between the outside party or its affiliates and the trust
company or its affiliates which existed during the past two years
or is mutually understood to be contemplated, and any compensation
received or to be received as a result of such relationship;
(B) a summary of the performance of such appraisal
report, including the procedures followed, the findings and recommendations,
the bases for and methods of arriving at such findings and recommendations,
instructions received from the trust company, and any limitation imposed
by the trust company on the scope of the investigation; and
(C) whether such appraisal report will be made available
for inspection and copying at the home office of the trust company
during its regular business hours by any shareholder of the trust
company or such shareholder's representative who has been so designated
in writing;
(6) with respect to the class of shares to which the
reverse stock split relates, the aggregate amount and percentage of
shares beneficially owned by any pension, profit sharing, or similar
plan of the trust company, and by each officer, director, principal
shareholder, and subsidiary of the trust company;
(7) with respect to any purchases of such shares made
by the trust company since the commencement of the trust company's
second full fiscal year preceding the date of the application, the
amount of such shares purchased, the range of prices paid for such
shares, and the average purchase price for each quarterly period of
the trust company during such period;
(8) to the extent known to the trust company after
reasonable inquiry, any transaction in the class of shares subject
to the proposed reverse stock split that was effected during the past
60 days by the trust company or by an officer, director, principal
shareholder, or subsidiary of the trust company, including the identity
of the person who effected the transaction, the date of the transaction,
the amount of shares involved, the price per share, and where and
how the transaction was effected;
(9) to the extent known to the trust company after
reasonable inquiry, a description and/or a copy of any contract, arrangement,
understanding, or relationship (whether or not legally enforceable)
in connection with the reverse stock split between the trust company
(or an officer, director, principal shareholder, or subsidiary of
the trust company) and any person with respect to any shares of the
trust company (including a contract, arrangement, understanding, or
relationship concerning the transfer or the voting of any such shares,
joint ventures, loan, or option arrangements, puts or calls, guaranties
of loans, guaranties against loss or the giving or withholding of
proxies, consents, or authorizations), naming the persons with whom
such contracts, arrangements, understandings, or relationships have
been entered into and giving the material provisions thereof, including
such information for any of such shares that are pledged or otherwise
subject to a contingency, the occurrence of which would give Cont'd... |
