1. (a) Compliance required. Pursuant to Finance Code, §182.011 and §182.012, a trust company, which does not transact business with the public, may request in writing that it be exempted from specified provisions of the Trust Company Act. The banking commissioner may grant the request in whole or in part if the trust company does not transact business with the public. A trust company does not transact business with the public if it acts as a corporate fiduciary for accounts in which all beneficiaries are related within the fourth degree of affinity or consanguinity to the person who controls the trust company. A trust company administering family trusts which request exemption from specified provisions of the Trust Company Act, must comply with this section.

2. (b) Application for Exemption.

   1. (1) A trust company administering family trusts which seeks exemption from specified provisions of the Trust Company Act, shall file an application, together with the appropriate filing fee required by §21.2 of this title (relating to Filing and Investigation Fees), with the banking commissioner. The application must specify the specific exemptions requested and the reasons or justification for requesting the exemptions. The application must also include a copy of the trust company's articles of association which must contain the following statement in its purposes clause: "The sole purpose for which the trust company is organized is to act as a corporate fiduciary for accounts in which all beneficiaries are related within the fourth degree of affinity or consanguinity to _______________ (name of person who controls the trust company)."
   2. (2) A person who has beneficial ownership of sufficient outstanding shares of a class of voting securities to constitute control of a state trust company may be designated as the control person for purposes of Finance Code, §182.011(a) and this section. Such identification of a beneficial shareholder as the controlling person is permissive and does not affect determinations of control made pursuant to Finance Code, §183.001.

3. (c) Exemption. Subject to conditions or limitations being imposed by the banking commissioner, a trust company administering family trusts may request exemption from the following provisions of the Trust Company Act:

   1. (1) the requirement of Finance Code, §181.107(c), providing that the report of assets portion of a statement of condition and income is a public record.
   2. (2) the requirement of Finance Code, §183.103(a), that five is the minimum number of directors, managers, or managing participants that can be specified in the articles of association, provided that the articles of association must specify the number of directors, managers, or managing participants, consistent with paragraph (3) of this subsection;
   3. (3) the requirement of Finance Code, §183.103(a), that the number of directors, managers, or managing participants of a trust company cannot be less than five or more than 25, the majority of whom must be residents of this state, provided that the board of a trust company seeking exemption under this section must consist of not fewer than three or more than 25 directors, managers, or managing participants, at least one of whom must be a resident of this state;
   4. (4) the restrictions of Finance Code, §183.109(a) - (c), regarding transactions with management and affiliates;
   5. (5) the limitations of Finance Code, §184.002, on investment in trust company facilities;
   6. (6) the limitations of Finance Code, §184.101, on securities investments, provided that the exemption request must address each limitation and the reasons for exemption separately;
   7. (7) the restrictions of Finance Code, §184.102, regarding transactions in state trust company shares or participation shares;
   8. (8) the limitations of Finance Code, §184.003, on other real estate investments; and
   9. (9) the limitations of Finance Code, §§184.201 - 184.203, regarding lending limit and lease financing transaction restrictions, provided that no loans may be made from a trust company's minimum restricted capital amount.
4. (d) Notice to applicant. The banking commissioner shall issue a written notice as required by §21.4 of this title (relating to Required Information and Abandoned Filings) informing the applicant either that all filing fees have been paid and the application is complete and accepted for filing, or that the application is deficient and specific additional information is required.
5. (e) Notice to beneficiary. A trust company administering family trusts which has been granted an exemption under subsection (c) of this section must provide each beneficiary of the family trust with a copy of the exemption granted by the banking commissioner. The trust company must maintain an acknowledged receipt of such notice in its files.

Source Note:The provisions of this §21.24 adopted to be effective September 3, 1998, 23 TexReg 8832; amended to be effective September 5, 2002, 27 TexReg 8203; amended to be effective May 10, 2007, 32 TexReg 2463.