CHAPTER 161. MANAGEMENT AND CONTROL OF SECURITIES - Texas Statutes

PROPERTY CODE

TITLE 10. MISCELLANEOUS BENEFICIAL PROPERTY INTERESTS

SUBTITLE B. FIDUCIARIES

CHAPTER 161. MANAGEMENT AND CONTROL OF SECURITIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 161.001. DEFINITIONS. In this chapter:

(1) "Fiduciary" means an executor, administrator, or trustee of

an express trust, including a corporation or a natural person

acting as fiduciary, and a successor or substitute, whether or

not designated in a trust instrument.

(2) "Clearing corporation" has the meaning assigned by Section

8.102, Business & Commerce Code, as amended.

Acts 1983, 68th Leg., p. 3715, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.002. DECREE OR GOVERNING INSTRUMENT CONTROLS. The

authority granted in this chapter is subject to contrary or

limiting provisions in the instrument or court order appointing

the fiduciary of the securities or in a subsequent court order.

Acts 1983, 68th Leg., p. 3715, ch. 576, Sec. 1, eff. Jan. 1,

1984.

SUBCHAPTER B. CUSTODIAN OF SECURITIES

Sec. 161.021. AUTHORITY OF FIDUCIARY. A fiduciary who holds a

security in a fiduciary capacity may:

(1) employ a bank incorporated in this state or a national bank

located in this state as custodian of the security; and

(2) whether the fiduciary is an individual or a bank and if any

individual who is a cofiduciary with the bank consents, authorize

the security to be registered and held in the name of a nominee

of the bank without disclosing the fiduciary relationship.

Acts 1983, 68th Leg., p. 3716, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.022. SEPARATE ASSETS. (a) A bank holding a security

under this subchapter, whether in registered or bearer form, at

all times shall keep the security separate from the bank's

assets. The bank may:

(1) hold separately the certificates representing securities

that periodically comprise the assets of a particular fiduciary

account from those of all other accounts; or

(2) without certification as to ownership attached, hold in bulk

certificates representing the same class of securities of the

same issuer that periodically comprise the assets of different

fiduciary accounts and, to the extent feasible, merge

certificates of small denomination into one or more certificates

of large denomination.

(b) A bank that holds security certificates in bulk is subject

to the regulations issued by the Finance Commission of Texas if

the bank is chartered by this state or by the comptroller of the

currency if the bank is a national banking association.

Acts 1983, 68th Leg., p. 3716, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.023. EXPENSE OF CUSTODIANSHIP. Unless the fiduciary is

a corporation, the cost of employing a bank as a custodian of

securities under this subchapter is a charge against the estate

or trust.

Acts 1983, 68th Leg., p. 3716, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.024. RECORDS. A bank holding a security under Section

161.021, whether in registered or bearer form, at all times shall

keep records showing the ownership of the security.

Acts 1983, 68th Leg., p. 3716, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.025. REDELIVERY OF SECURITY HELD BY NOMINEE. (a) A

bank holding a security in the name of a nominee of the bank

under this subchapter may not redeliver the security to the

individual fiduciary who authorized its registration in the name

of the nominee without registering the security in the name of

the individual fiduciary, as fiduciary.

(b) A sale of the security by the bank at the direction of the

individual fiduciary is not a redelivery.

Acts 1983, 68th Leg., p. 3717, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.026. DISPOSITION OF SECURITY HELD BY NOMINEE. A bank

holding a security in the name of a nominee under this subchapter

may make any disposition of the security that is authorized or

ordered by a court having jurisdiction of the estate or trust.

Acts 1983, 68th Leg., p. 3717, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.027. LIABILITY. A bank holding a security in the name

of a nominee under this subchapter is liable for a loss resulting

from the acts of the bank's nominee with respect to the security.

Acts 1983, 68th Leg., p. 3717, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.028. CERTIFICATION. (a) On the demand of a fiduciary

employing a bank to hold a security as custodian under this

subchapter, the bank shall identify in a written certification

the securities it holds for the fiduciary.

(b) On the demand of a party, or the attorney of a party, to an

accounting by a bank holding a security in the name of a nominee

under this subchapter, the bank shall identify in a written

certification the securities it holds as fiduciary.

Acts 1983, 68th Leg., p. 3717, ch. 576, Sec. 1, eff. Jan. 1,

1984.

SUBCHAPTER C. DEPOSIT OF SECURITY WITH FEDERAL RESERVE BANK OR

CLEARING CORPORATION

Sec. 161.051. APPLICATION. (a) Except as provided by

Subsection (b), this subchapter applies to a fiduciary holding a

security in its fiduciary capacity and to a bank, trust company,

or private banker holding a security as a fiduciary, custodian,

custodian for a fiduciary, or managing agent, regardless of:

(1) the date of the agreement, instrument, or court order by

which the fiduciary, custodian, or managing agent is appointed;

and

(2) ownership by the fiduciary, custodian, or managing agent of

capital stock of the clearing corporation.

(b) This subchapter does not apply to a security held by a

fiduciary, bank, trust company, or private banker on behalf of a

domestic insurance company, unless the prior express approval of

the State Board of Insurance is obtained. The board may grant

approval to all domestic insurance companies generally, or to

specific insurance companies on a case-by-case basis.

(c) For the purposes of this subchapter, "fiduciary" includes a

state or national bank acting in a fiduciary capacity.

Acts 1983, 68th Leg., p. 3717, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.052. AUTHORITY OF FIDUCIARY. A fiduciary holding a

security in its fiduciary capacity and a bank, trust company, or

private banker holding a security as a custodian for a fiduciary,

a managing agent, or a custodian may deposit or arrange for the

deposit of the security with:

(1) the Federal Reserve Bank of Dallas if the United States has

agreed to pay or has guaranteed payment of the security's

principal and interest; or

(2) a clearing corporation, either in this state or elsewhere,

regardless of whether the clearing corporation conducts or is

authorized to conduct business in this state.

Acts 1983, 68th Leg., p. 3718, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.053. BULK HOLDINGS. A clearing corporation may merge

and hold in bulk certificates representing the same class of

securities of the same issuer that are deposited with it under

this subchapter, together with any other securities deposited

with the clearing corporation by any person in the name of the

nominee of the clearing corporation, regardless of the ownership

of the securities. Certificates of small denomination may be

merged into one or more certificates of larger denomination.

Acts 1983, 68th Leg., p. 3718, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.054. RECORDS. A fiduciary, bank, trust company, or

private banker depositing a security under this subchapter shall

show in its records at all times the ownership of the securities

deposited in the account.

Acts 1983, 68th Leg., p. 3719, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.055. REGULATION. A bank, trust company, or private

banker depositing securities under this subchapter is subject to

the regulations issued by the Finance Commission of Texas if the

institution is chartered by this state or is private or by the

comptroller of the currency if the institution is a national

banking association.

Acts 1983, 68th Leg., p. 3719, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.056. BOOK TRANSFERS. The Federal Reserve Bank of

Dallas or a clearing corporation holding securities deposited

under this subchapter may transfer ownership of or other

interests in the securities by making entries in the books of the

bank or corporation and without physical delivery of certificates

representing the securities.

Acts 1983, 68th Leg., p. 3719, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.057. LIABILITY. A fiduciary who deposits securities in

a clearing corporation is liable to the beneficial owner of the

securities for a loss resulting from the acts or omissions of the

clearing corporation. This subchapter does not affect a liability

between the fiduciary and the clearing corporation.

Acts 1983, 68th Leg., p. 3719, ch. 576, Sec. 1, eff. Jan. 1,

1984.

Sec. 161.058. CERTIFICATION. (a) On the demand of a fiduciary

for whom a bank, trust company, or private banker is acting as

custodian, the bank, trust company, or private banker shall

identify in a written certification the securities deposited by

the bank, trust company, or private banker with the federal

reserve bank or in the clearing corporation for the account of

the fiduciary.

(b) On the demand of a party, or the attorney of a party, to an

accounting by a fiduciary or by a bank, trust company, or private

banker that is acting as a fiduciary, a custodian, a custodian

for a fiduciary, or a managing agent, the fiduciary, bank, trust

company, or private banker shall identify in a written

certification to the party the securities deposited by the

fiduciary, bank, trust company, or private banker with the

federal reserve bank or the clearing corporation.

Acts 1983, 68th Leg., p. 3719, ch. 576, Sec. 1, eff. Jan. 1,

1984.