Relating to prohibited activities of a state trust company under supervision.
Summary
HB 3806 amends the Texas Finance Code to tighten restrictions on a state trust company while it is under supervision. The bill expands the list of prohibited actions during a supervision period to include, unless the banking commissioner or supervisor approves otherwise, disposing of or encumbering assets, lending or investing funds, incurring debt or liability, paying dividends, soliciting or accepting new client accounts, and making changes to executive officers or directors. It also adds a broader catch-all prohibition allowing the banking commissioner to bar any other activity that could threaten the trust company’s safety and soundness.
In practical terms, the bill gives regulators clearer authority to freeze or limit a troubled trust company’s operations while it is being overseen. The changes are aimed at preserving assets, preventing further risk-taking, and maintaining stability during regulatory supervision. The bill takes effect September 1, 2025, and applies to state trust companies subject to supervision under existing Texas banking law.
Impact
HB 3806 directly amends Section 185.106 of the Finance Code, which governs duties and restrictions for state trust companies under supervision. It removes the specific reference to a cash dividend and replaces it with a broader prohibition on any dividend to shareholders or participants, and it adds a new prohibition on changes to executive leadership or board composition. The bill also authorizes the banking commissioner to restrict additional activities deemed unsafe, strengthening supervisory control over troubled trust companies and potentially affecting management decisions, capital distributions, client onboarding, and asset/liability transactions.
Sentiment
The bill appears to have been received very favorably and without controversy. It passed the House and Senate unanimously, with no recorded opposing votes, indicating broad bipartisan support for the regulatory changes. The absence of committee transcript discussion suggests the measure was likely viewed as a technical or prudential update rather than a politically divisive proposal.
Contention
There is little evidence of substantive contention in the available record. The main policy choice is the expansion of supervisory restrictions and the addition of commissioner discretion to prohibit other activities, which could raise concerns in other contexts about regulatory breadth or management autonomy. However, no legislators, committees, or stakeholders are recorded as opposing those provisions, and the unanimous votes suggest any such concerns were not significant enough to affect passage.
Relating to the registration as a lobbyist of persons who engage in certain lobbying activities on behalf of a foreign adversary and to prohibitions on the receipt of compensation related to those lobbying activities; providing a civil penalty.
Amends the definition of "regulated institution", to include non-depository trust companies organized under the law of any state or the United States Government.
Relating to the registration as a lobbyist of persons who engage in certain lobbying activities on behalf of a foreign adversary and to prohibitions on the receipt of compensation related to those lobbying activities; providing a civil penalty.