Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 2 - TEXAS DEPARTMENT OF BANKING › Chapter 17 - TRUST COMPANY REGULATION › Subchapter A - GENERAL › Section 17.3 - Sale or Lease Agreements with an Officer, Director, Principal Shareholder, or Affiliate

Current through Reg. 49, No. 28; July 12, 2024
(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, §
										RSA
				  183.109(a), must be
				  considered and voted upon by the board. Under Finance Code, §
										RSA
				  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,
				  §
										RSA
				  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.