(a) General. Without the prior written consent of the banking commissioner, or as otherwise provided by this section, a person or entity may not, directly or indirectly, acquire a legal or beneficial interest in voting securities of a trust company or a corporation or other entity owning voting securities of a trust company if, after the acquisition, the person or entity would control the trust company. Except as otherwise provided in this section, an application must be filed with the banking commissioner for review and consideration of the proposed transaction.
(b) Form of application. The applicant shall submit a fully completed, verified application on a form prepared and prescribed by the banking commissioner and simultaneously tender the required filing fee pursuant to §21.2 of this title (relating to Filing and Investigation Fees). The application must, except to the extent expressly waived in writing by the banking commissioner, disclose the following information:
  (1) the identity, biographical data, business background, and experience relating to trust industry matters, and a current statement of financial condition, a statement of changes in net worth and a statement of cash flows of each person by whom, or on whose behalf, the acquisition is to be made and by each person acting in concert with others seeking to acquire voting securities subject to Finance Code, §183.001, and to this section. Financial statements will be considered current if audited and dated within 180 days of the date of the application or will be considered current if unaudited and dated within 90 days of the date of the application. All financial statements must be accompanied by an affidavit of no material change dated as of the date of application;
  (2) a completed authorization to release employment, financial, credit, fingerprint information, and criminal history records to the department;
  (3) a completed confirmation inquiry form;
  (4) the identity of each entity other than a natural person seeking to acquire control or working in concert with others to acquire control of a trust company and a copy of the entity's most recent audited financial statement. Financial statements will be considered current if audited and dated within 180 days of the date of the application or will be considered current if unaudited and dated within 90 days of the date of the application. All financial statements must be accompanied by an affidavit of no material change dated as of the date of application;
  (5) a description of all material, pending or adjudicated legal or administrative proceedings in which each acquiring person or entity is or was a party. A material legal proceeding includes a proceeding in which the person or entity has been charged with, cited for, or convicted under a state or federal law relating to trust or other financial institutions, securities or financial instrument reporting, or a felony or crime that directly relates to the duties and responsibilities involved in the operation of a trust company or financial institution under the laws of a state, the United States, or another country. A material legal proceeding also includes a proceeding that resulted in a material unsatisfied judgment, or may result in a judgment, against the acquiring person or entity and such loss contingency must be disclosed in the financial statements of the acquiring person or entity under generally accepted accounting principles, or is otherwise material. A material administrative proceeding includes a proceeding in which the person or entity is or has been subject to a cease and desist, removal, enforcement, or other order, including an order of supervision or conservatorship issued by a state, federal, or foreign regulatory agency;
  (6) the terms and conditions of the proposed acquisition or change of control and the manner in which the acquisition or change of control is to be made;
  (7) the identity, source, and amount of the funds or other consideration used or to be used in making the acquisition or change of control;
  (8) if a portion of the funds or other consideration to be used in making the acquisition has been borrowed or is to be borrowed or otherwise obtained for the purpose of making the acquisition, a complete description of the transaction, the names of the parties to the transaction, and a summary of all arrangements, agreements, or understandings with such parties including terms of repayment;
  (9) the applicant's current or proposed business or strategic plan including amendments to a current plan;
  (10) plans or proposals to liquidate the trust company, to sell its assets or merge it with another trust company or other entity, or to make other major changes in its business, corporate structure, or management;
  (11) plans or proposals to change officers and directors of the trust company and the related trust or financial institution management experience of proposed or current officers and directors;
  (12) the terms and conditions of an offer, invitation, agreement, or arrangement under which a voting security will be acquired and any contract affecting such security or its financing after it is acquired;
  (13) pro forma financial statements with projections indicating whether the acquired or controlled trust company will be adequately capitalized for a period of not less than two years from the date of acquisition; 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 acquisition. The applicant bears the burden to supply all material information necessary to enable the banking commissioner to make a fully informed decision regarding the application.
(c) Public notice. Not earlier than the 14th day before or later than the 14th day after the date of initial submission of an application filed pursuant to §21.4 of this title (relating to Required Information and Abandoned Filings), the applicant shall publish notice as required by Finance Code, §183.002(d), and §21.5 of this title (relating to Public Notice) in the county where the trust company's home office is located. One publication under this subsection is adequate unless the banking commissioner expressly requires additional notice.
(d) Confidentiality. Information obtained by the banking commissioner under this section is confidential and may not be disclosed by the banking commissioner or an officer or employee of the department, subject only to such disclosure as may be permitted by Finance Code, §183.002(c), or by §3.111 of this title (relating to Confidential Information).
(e) Grandfather clause. A principal shareholder or participant that is considered to control a trust company, under Finance Code, §183.001(b), is exempt from filing an application under this section until the principal shareholder acquires one or more additional shares or participation shares of the trust company.
(f) Capital requirements. A person or entity seeking to acquire control of a trust company subject to this section must bring the trust company into compliance with the minimum capital requirements of Finance Code, §182.008, or such amount as required by the banking commissioner at the time the transaction is consummated.
(g) Exemptions. In addition to the acquisitions specifically exempted pursuant to Finance Code, §183.001(d), the following types of involuntary acquisitions of control do not require prior written approval of the banking commissioner:
  (1) the inadvertent acquisition of control of a trust company by a shareholder as a result of a stock redemption or repurchase by the issuer if the potential controlling shareholder or participant of a trust company did not vote or have any direct or indirect input into the issuer's decision to repurchase or redeem the voting securities;
  (2) the acquisition and control by a qualified employee stock ownership plan (ESOP) of less than 25% of voting securities of a trust company unless an officer, director, or principal shareholder or participant directly or indirectly controls the voting securities held by the ESOP, in which event an application for acquisition of control must be filed by the officer, director or principal shareholder or participant, if as a result that person would control over 25% of the voting securities;
  (3) the acquisition of control of a trust company as a result of a shareholder receiving proportionate voting securities in a trust company arising from the liquidation of a holding company;
  (4) the acquisition of additional shares of voting securities of a trust company by virtue of a pro-rata stock dividend or stock split not resulting in increased ownership percentage;
  (5) the acquisition of control of a trust company as a result of a gift made in good faith, provided:
    (A) the donee is related to the donor within the second degree of consanguinity or affinity;
    (B) neither the donor nor donee is under an enforcement order; and
Cont'd...