(a) Permitted acquisition of treasury stock. Pursuant
to Finance Code, §34.102, a state bank may acquire its own shares
to be held as treasury stock if the acquisition is necessary to avoid
or minimize a loss on a loan or investment previously made in good
faith or is made in compliance with this section. An acquisition under
the authority of this section may constitute an isolated transaction
or a continuing plan of acquisition and may not be made for speculation
or as a means of evading a requirement or obligation under federal
or state banking laws.
(b) Application. A state bank that desires to acquire
its own shares to be held as treasury stock under the authority of
this section must file an application regarding its plan of acquisition
with the banking commissioner, setting forth or including as exhibits:
(1) consistent with subsection (f) of this section,
the pro forma effects of the plan of acquisition on the bank's liquidity
and equity capital, and disclosure of the basis for calculations,
including:
(A) the price or price range per share at which the
shares will be acquired;
(B) the number of shares sought to be acquired, expressed
as a maximum; and
(C) the source of funds for the acquisition;
(2) the date by which the plan of acquisition will
be completed;
(3) a certified copy of a resolution duly adopted by
the board of directors, approving the plan of acquisition; and
(4) a current draft of the securities offering document
or other disclosure materials proposed to be delivered to shareholders
considering the sale of bank shares to the bank.
(c) Action on application. The banking commissioner
will approve or deny the application not later than the 30th day after
the application is complete and accepted for filing pursuant to §15.4(b)
of this title (relating to Required Information and Abandoned Filings),
and may impose conditions on an approved plan of acquisition, including
limitations on the number of shares to be acquired or a condition
that the approval expire as of a specified date. The banking commissioner
may deny the application if the banking commissioner concludes that
the bank's plan of acquisition:
(1) will result in acquisition of treasury stock at
an aggregate cost in excess of its undivided profits, or may otherwise
threaten the adequacy of the bank's equity capital or its liquidity;
(2) appears to be for speculation or a means of evading
a requirement or obligation under federal or state banking laws; or
(3) could otherwise place the bank in an unsafe or
unsound condition.
(d) Compliance with securities law.
(1) 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, §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). The transaction is also subject
to the antifraud provisions of state securities law, see Texas Government
Code, Title 12. Potential liability of the state bank to the selling
shareholder can therefore arise if the state bank withholds or misrepresents
material facts that the seller would have considered important in
making the decision to sell.
(2) Approval of an application under this section by
the commissioner does not constitute a determination that the bank
has complied with applicable securities law.
(e) Retention of treasury stock. Notwithstanding Finance
Code, §34.102(c), treasury stock acquired by a state bank, whether
to avoid or minimize a loss on a loan or investment previously made
in good faith or under an approved plan of acquisition, may be held
indefinitely as treasury stock; provided that the banking commissioner
may require a state bank to cancel and retire all or part of shares
held as treasury stock to the status of authorized and unissued shares
if the banking commissioner concludes that holding treasury stock
in the amount held by the bank creates safety and soundness or other
regulatory concerns.
(f) Accounting for treasury stock. A state bank must
account for the acquisition and retention of treasury stock in accordance
with generally accepted accounting principles as prescribed by Financial
Accounting Standard Board Accounting Standard Codification Topic 505-30,
Treasury Stock. The method used for accounting for treasury stock
must be clearly reflected in the bank's accounting records.
(g) Status of treasury stock. Shares held by a state
bank as treasury stock may not be voted, directly or indirectly, at
any meeting of shareholders, and may not be counted in determining
the total number of outstanding shares at any given time.
|
Source Note: The provisions of this §15.121 adopted to be effective April 16, 1997, 22 TexReg 3399; amended to be effective January 7, 2004, 29 TexReg 80; amended to be effective March 12, 2024, 49 TexReg 1457 |