Untitled Texas Attorney General Opinion ( 1944 )

OFFICE OF THE ATTORNEY GENERAL OF TEXAS AUSTIN QROVER SELLERS ATTORNEY QENERAL Eonorable H. A. 3amison Commissioner of Banking We have your lette ciation until such , after which the Coa- ting inform the State oonsiderationof this section of the law it has been our thought that the same might well be Invoked in respect to any condition whioh the Bank- ing Board 'mightbe disposed to speoify, provided such oondition bears a direct relationshipto any one or all of the five specifio faotors which the Board is required to determine in the affirmativeif it approves any ap- plication for ohartero . . - Honorable II.A. Jamison, wge 2 , We should like for your opinion to advise speoificallyas to whether or not the State Bank- ing Board may require applicants under any given charter to increase their capital structure in whatever amount as may be deemed adequate by the Banking Board, and whether or not the Banking Board might speoify as a conditionthat the proposed bank be admitted as a member of the Federal Deposit In- surance Corporationas a oondition preoedent to engaging in the banking business? "Furt,herws should like advice as to whether or not such a condition or conditions, if imposed by the Banking Board might be rescinded by it on its own motion if it should be determinedthat oom- plianoe with suoh conditionor conditions was wholly beyond the control of the incorporators*" +zd ‘~’Subsection ti1, Article 5 43rd Legislaturereads as follows: of Chapter 9i;'AotS of ,, "~' K' .~ _..~ : '. : ~~wApplicants shall file with the Commissioner an applicationfor charter on suoh form and inolude therein suoh informationas may be prescribed by the Commissioner,and the proposed articles of assooia- tion; shall pay an investigationfee as prescribed under Artiole 3921, Revised Statutes of Texas, 1925, and deposit with the Commissioneroharter fees as prescribedby law. The Commissionershall thereupon make a thorough investigationand report his findings to the State Banking Board., "In uonsideringany such application,the State Banking Board shall, after hearing, determine whether or not: "1. A pub110 neoessitg exists for the'pro- ~ posed bank. 1 . '2. The proposed capital structure is adequate. ?3. The volume of business in the 'oomunity~ where suoh proposed bank is to be establishedis such as to indicate profitable operation of the proposed bank. .. . . Honorable H. A. Jamison, page 3 ,.~, . *4. The proposed officers and directors have sufficientbanking experience, ability and standing to render success of the proposed bank probable* "5. The applioants are acting in good faith. . *Should the State Banking Board determine sng,of the above issue8 adversely to the applicants, it shall reject the application, Otherwise such Board shall approve the application and the Commis- sioner she&l, when the capital‘has been paid in in oash and.the franchise tax paid, deliver to the in- oorporatorsa certified copy of the articles of as- eooiation, and the bank shall come into corporate existence. Provided, however, that the State Bank- ing Board may make its approval of any application oonditional,and in such event shall set out such condition in a resolution granting the oharter, and the Commissionershall not deliver the certified oopy of the articles of association until such con- dition has been met, after which the Commissioner shall in writing inform the State Banking Board as to compliancewith suoh condition and delivery of the articles of association." It is clear.from the foregoing that the Banking Board may make its approval conditional,but we think the condition im- posed would have to be germane to one or more of the rive factors set out in the foregoing article. The Board oould require the applioantsto increase the capital structure,since tht would be germane,tothe second raotor mentioned in the law. The Board.. oould refuse to grant the charter if it deemed the oapitalin8uffi- cient, and hence could impose a condition requiring applicants to inorease same, if the Board deemed the capital in8ufficient, But .,.thatwould not be true with respect to a condition that the pro-, Dosed bank be admitted as a member of the Federal Deposit Insur- anoe Corporation. The Board would not have authority to reject sn application if the applicants should refuse to apply for member- HonorableB. A. Jamison,Page 4 ship therein, and, therefore, oould pot impose suoh a oondition upon the applicantsfor a charter. In answer to your lest question you are advisedthat the Board, In its discretion, may resoind any oondition imposed w it when it determinesthat compliancetherewith, is wholLy beyond the controlof the incorporators. Yours . very truly . ATl’ORNBY GE- Oi !PEXA!3