Case Information
*1 . .
The Attorney General of Texas August 20, 1982 MARK WHITE
Attorney General
Supreme P. 0. BOX 12546 5121475-2501 Austin. Telecopier Telex 9101674-1367 TX. 76711- Court Building 512/475-0266 [2546] Honorable James A. Gray Burleson County Attorney Caldwell, Texas 77836 Opinion No. ML'-505 Re: owns stock depository owned by holding company in which county judge Selection of county 2141742-6944 1607 Main St., Suite Dallas. TX. 75201-4709 [1400] Dear Mr. Gray:
depository where the county judge is an officer and director of the You ask whether a bank is disqualified from serving as a county 4624 Alberta Ave.. Suite E, Paso, TX. 79905.2793 9151533.3464 [160] bank's capital stock. You also ask if the same bank would be bank and owns less than 1% of the issued and outstanding shares of the disqualified from serving as county depository where the county judge is an officer and director of the holding company which recently acquired the bank. The judge owns 17% of the capital stock of the 1220 Dallas Ave., Suite 202 holding company. tiouston, TX. 77002-6986 7131650-0666 Article 2529c, V.T.C.S., governs the issues raised by your
opinion request,,and it provides, in pertinent part: 606 6,oadw.w Suite 312 Lubbock. TX. 79401.3479 A bank shall not be disqualified from bidding 8061747-5238 and becoming the depository for any agency or
political subdivision of the state by reasm of having one or more officers, directors or 4309 N. Tenth, Suite 6 bkA,len, TX. 78501-1665 stockholders of said bank who individually or 5121662-4647 collectively own or have a beneficial interest in
not more than 10 percent of the bank's outstanding capital stock, and at the same time serves as a 200 Main Plaza. Suite 400 member of the board, commission, or other body San Antonio, TX. 762052797 512/225-4191 charged by law with the duty of selecting the
depository of such state agency or political subdivision; provided, however, that said bank An Equal opportunityi must be selected as the depository by a majority Affirmative Action Employer vote of the members of the board, commission, or
other body of such agency or political subdivision and no member thereof who is an officer, director or stockholder of the bank shall vote or participate in the proceedings.
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Honorable James A. Gray - Page 2 (Mw-505)
V.T.C.S. art. 2529c, 52. Attorney General Opinion H-596 (1975) is dispositive of your first inquiry. Therein, we determined that, in accordance with article 2529c, section 2, V.T.C.S., a bank could serve as county depository where the county judge owned stock in the bank and served on the board of directors if the members of the commissioners court did not collectively own more than 10% of the bank stock and interested members did not participate in the vote. YOU have not stated whether any other member of the commissioners court owns or has a beneficial interest in the stock of the bank in question. Assuming that the county judge is the only member of the commissioners court with an interest in the bank stock, his ownership of less than 1% of the outstanding capital stock clearly would not serve to disqualify the bank so long as the county judge does not participate in the selection process. If other members of the commissioners court also have an interest in the bank stock, the bank would not be disqualified unless the collective interest of the members exceeds 10%.
Your inquiry regarding the county judge's ownership of 17% of the outstanding capital stock of the bank holding company is not susceptible to a definite answer. If the bank holding company is a one-bank holding company where the bank is the corporation's sole asset, the likelihood is that the county judge then has a "beneficial interest" in more than 10% of the bank's outstanding stock. In such a case, the bank would clearly be disqualified from serving as a county depository. If the bank holding company is a multi-bank holding company, the judge's beneficial interest would have to be determined on an individual basis.
SUMMARY A bank is not disqualified from serving as a county depository where an officer, director, and 1% shareholder of the bank is the county judge, so long as the county judge does not participate in the voting on the selection of the county depository and his interest in the bank stock combined with that of any other members of the commissioners court does not exceed 10%. The bank may be disqualified by virtue of the county judge's ownership of 17% of the outstanding capital stock of the bank holding company, depending upon the judge's resulting "beneficial interest" in the bank stock.
MARK WHITE Attorney General of Texas *3 Honorable James A. Gray - Page 3 (MW-505)
JOHN W. FAINTER, JR.
First Assistant Attorney General
RICHARD E. GRAY III
Executive Assistant Attorney General
Prepared by Catherine B. Fryer
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Susan L. Garrison. Chairman
Jon Bible
Catherine B. Fryer
Rick Gilpin
Patricia Hino-josa
Jim Moellinger
Bruce Youngblood
P. 1821