(a) Agreement in writing. A sale or lease agreement
between a trust company and an officer, director, principal shareholder,
or affiliate of the trust company must be in writing. Existing verbal
agreements must be reduced to writing and approved by the board.
(b) Terms of agreement. A sale or lease agreement between
a trust company and an officer, director, principal shareholder, or
affiliate must comply with applicable laws and regulations, be subject
to the exercise of prudent judgment, and have terms and rates that
are substantially equivalent to or more favorable to the trust company
than those prevailing at the time for comparable transactions with
or involving nonaffiliated parties.
(c) Board action. All proposed transactions subject
to Finance Code, §183.109(a), must be considered and voted upon
by the board. Under Finance Code, §183.109(a), without the prior
approval of a disinterested majority of the board, the transaction
at issue must be submitted for prior approval of the banking commissioner.
For purposes of this section, approval of a disinterested majority
of the board is obtained in the manner specified by the Texas Business
Organizations Code, §21.418, with respect to a trust association,
or §101.255, with respect to a limited trust association.
(d) Application for approval. If a sale or lease agreement
requires the written approval of the banking commissioner prior to
consummating, renewing, or extending a sale or lease agreement, a
written request for approval must be submitted to the banking commissioner
at least 60 days prior to the proposed effective date of the sale
or lease agreement and must include the following information:
(1) a copy of the proposed sale or lease agreement;
(2) a complete description of the personal or real
property to be sold or leased;
(3) a full disclosure of all existing transactions
and/or relationships, whether direct or indirect, between the trust
company and the parties involved;
(4) in the case of a lease agreement involving real
property, a copy of the minutes of the board meeting reflecting an
analysis of the information contained in this subsection;
(5) a certified copy of a board resolution approving
the transaction and indicating those directors voting or abstaining,
as the case may be, and either:
(A) evidence that the transaction received the approval
of a disinterested majority of the board; or
(B) a statement explaining the reasons the approval
of a disinterested majority of the board could not be obtained;
(6) copies of appropriate supporting documentation,
including analysis of comparable terms and rates for the real or personal
property to be sold or leased;
(7) in the case of a lease agreement, evidence demonstrating
that the trust company will account for the lease in accordance with
Financial Accounting Standards Board Accounting Standards Codification
Topic 842, Leases; and
(8) other information which the banking commissioner
may request.
(e) Records. A trust company shall maintain the originals
of all sale or lease agreements with an officer, director, manager,
managing participant, principal shareholder, or principal participant
of the trust company, or an affiliate, which documents must be made
available at all times to the Texas Department of Banking for examination
and review. For purposes of this subsection, required documentation
need not be retained beyond three years after the expiration of the
sale or lease agreement to which the documentation pertains.
(f) Exemption. Subsection (d) of this section does
not apply to a legally binding, written lease entered into by a trust
company prior to June 16, 1991, until such lease is renewed or extended
beyond its original term.
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Source Note: The provisions of this §17.3 adopted to be effective July 2, 1998, 23 TexReg 6715; amended to be effective July 11, 2002, 27 TexReg 5962; amended to be effective November 4, 2010, 35 TexReg 9696; amended to be effective September 8, 2022, 47 TexReg 5332 |