SECTION 309.151. Change of Ownership, Board of Directors, or Management Committee

(a) Except as otherwise provided by this section, an association may not transfer an ownership interest in the association, grant or sell an option to buy an ownership interest in the association, or make a change in the board of directors or management committee of the association without the prior approval of the Commission.

(b) To receive the approval of the Commission for a proposed ownership transfer, the association shall submit to the Commission all written documents relating to the transfer. If there are no written documents relating to the transfer, the association shall submit a written summary of all terms of the transfer including, but not limited to, the consideration given, the proposed date of the transfer, and the terms of any option given for future acquisition of additional ownership interests. The association shall also submit the following information:

(1) the transferor's name, total ownership percentage, and the manner in which the ownership interest is held, such as through a limited partnership or shares of stock in a corporate general partner or association;

(2) the transferee's name, residence address and telephone number, business address and telephone number, date of birth, physical description, driver's license number, and social security number;

(3) the percentage of ownership interest the transferee is acquiring; and

(4) a set of fingerprints on a form prescribed by the Department of Public Safety, a set of fingerprints for classification by the Federal Bureau of Investigation and completed background information form for the Department of Public Safety, if the transfer results in the acquisition of an ownership interest of 5.0% or more in the association by an individual who has not previously submitted fingerprints to the Commission.

(c) To receive the approval of the Commission for a change in the board of directors or management committee, the association shall submit to the Commission a written request for the change, the names of the individuals involved in the change, the percentage of any ownership interest the individuals hold in the association, and the proposed date of the change. If the proposed change involves placing an individual on the board of directors or management committee who has not previously submitted fingerprints to the Commission, the association shall also submit:

(1) the individual's name, residence address and telephone number, business address and telephone number, date of birth, physical description, driver's license number, and social security number; and

(2) a set of fingerprints on a form prescribed by the Department of Public Safety, a set of fingerprints for classification by the Federal Bureau of Investigation and completed background information form for the Department of Public Safety.

(d) The transfers of pecuniary interests in an association described by this subsection are considered to have the prior approval of the Commission, subject to the right of the Commission to object to the transfer after it is informed of the transfer and has performed any background investigation required by the Commission or the Department of Public Safety. Not later than 10 days after the effective date of a transfer to which this subsection applies, the transferee shall submit to the Commission information regarding the transfer on a form prescribed by the Commission and the Department of Public Safety. If the transferee is not an individual, the form required by this subsection must be submitted for all officers, directors, partners, and members of any management committee of the transferee. The following transfers are considered to have the prior approval of the Commission in accordance with this subsection:

(1) a transfer to an exempt institutional investor of a direct or indirect beneficial ownership interest or a warrant or other option to buy a direct or indirect beneficial ownership interest in an association provided:

(A) following the transfer, the exempt institutional investor owns, directly or indirectly, less than 10% of the total beneficial ownership interests in the association; and

(B) if the transfer results in the investor holding 5.0% or more of the total beneficial ownership interests in the association, the exempt institutional investor provides to the Commission, not later than 10 days after the transfer, a copy of the investor's most recent annual report or, if the report is not available, a copy of the investor's most recent audited financial statements; and

(2) a transfer to any person of a direct or indirect beneficial ownership interest or a warrant or other option to buy a direct or indirect beneficial ownership interest in an association provided that the interest transferred is less than 1% or, following the transfer, the person owns, directly or indirectly, less than 5.0% of the total beneficial ownership interests in the association, and:

(A) the interest was transferred after having been registered under the Federal Securities Act of 1933; or

(B) the individual transferee or each individual with a direct or indirect interest in the transferee has submitted:

(i) the individual person's name, residence address and telephone number, business address and telephone number, date of birth, physical description, and driver's license number; and

(ii) if requested by the Department of Public Safety, a set of fingerprints in a form approved by the Department.

(3) notwithstanding paragraph (2) of this subsection, a transfer to any person of a direct or indirect beneficial ownership interest or a warrant or other option to buy a direct or indirect beneficial ownership interest in an association is not considered to be preapproved if the transfer:

(A) will result in a change in the control of the association; or

(B) will result in the transferee's total beneficial interest increasing from less than 5.0% to 5.0% or more.

(4) Upon receipt of the background report from the Department of Public Safety or verification by the Department that no further background check will be required, the executive secretary shall notify the association within 10 days as to whether a transfer under this subsection should be considered approved or whether the executive secretary will seek further review by the Commission.

Source Note: The provisions of this §309.151 adopted to be effective October 21, 1999, 24 TexReg 8968; amended to be effective January 8, 2004, 29 TexReg 370; amended to be effective September 19, 2013, 38 TexReg 6201