Sec. 712.0355. REGULATORY LIMITS ON DISTRIBUTIONS. (a) After notice and an opportunity for hearing, the commissioner by order may convert a total return fund to a net income fund, limit or prohibit distributions from the fund, or both, if:

(1) the current fair market value of the fund at the beginning of a fiscal year is less than the original principal of the fund, consisting of the sum of all required deposits into the fund under this chapter, including deposits required by Sections 712.004 and 712.028;

(2) the average fair market value of the fund declines by 10 percent or more over a two-year period; or

(3) the trustee or other fiduciary of the fund responsible for investment policy has demonstrated a lack of sufficient knowledge and expertise or has failed to ensure that an investment policy is in place to support the use of the total return method of calculating distributions in a manner consistent with achieving the purposes of the fund as provided by Section 712.021(f).

(b) The commissioner may decline to impose corrective measures under Subsection (a) if the commissioner finds that:

(1) the cause of the adverse trend in the fair market value of the fund is due to one or more unusual or temporary factors not within the control of the corporation or trustee of the corporation's fund and could not have been reasonably anticipated;

(2) the current, written investment policy of the fund, in light of anticipated distributions from the fund, is reasonably designed to protect the fund from further declines in fair market value; and

(3) the exception appears to be both necessary and appropriate for the continued protection and perpetual existence of the fund.

Added by Acts 2017, 85th Leg., R.S., Ch. 1051 (H.B. 1948), Sec. 1, eff. September 1, 2017.