New Requirements Imposed on Texas Bank Advisory Directors

On September 1, 2013 a new statute took affect regarding Texas state bank advisory directors. The new law, part of recently passed legislation (H.B. 1664), amended the Texas Finance Code to impose new requirements on a bank’s ability to disclose confidential information about the bank or its customers to advisory directors of the bank. These new requirements include adopting board resolutions authorizing such disclosures, and requiring execution of confidentiality or non-disclosure agreements between the bank and the advisory directors.

Specifically, the new law requires the board of directors to adopt resolutions designating advisory directors as being officially connected to the bank. The resolutions should also describe the business purposes for which the disclosure of confidential information is being made. Advisory directors are also required to enter into non-disclosure agreements with the bank regarding receipt of confidential information in their capacity as advisory directors.

In light of this recent legislation, we recommend that state banks review their practices and procedures regarding disclosure of confidential information to advisory directors to ensure they comply with these new provisions of the Texas Finance Code.

If you have any questions concerning the new requirements for advisory directors of Texas banks or would like assistance in complying, please contact one of our attorneys.

These new requirements include adopting board resolutions authorizing such disclosures, and requiring execution of confidentiality or non-disclosure agreements between the bank and the advisory directors.

Specifically, the new law requires the board of directors to adopt resolutions designating advisory directors as being officially connected to the bank. The resolutions should also describe the business purposes for which the disclosure of confidential information is being made. Advisory directors are also required to enter into non-disclosure agreements with the bank regarding receipt of confidential information in their capacity as advisory directors.

In light of this recent legislation, we recommend that state banks review their practices and procedures regarding disclosure of confidential information to advisory directors to ensure they comply with these new provisions of the Texas Finance Code.

If you have any questions concerning the new requirements for advisory directors of Texas banks or would like assistance in complying, please contact one of our attorneys.

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