SB 131 AM H: "An Act relating to investments by fiduciaries."
00SENATE BILL NO. 131 am H 01 "An Act relating to investments by fiduciaries." 02 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 03 * Section 1. AS 06.35.010 is repealed and reenacted to read: 04 Sec. 06.35.010. COMMON TRUST FUNDS. (a) A bank or trust company 05 that is qualified to act as a fiduciary in this state, or in another state if affiliated with 06 a bank or trust company that is qualified to act as a fiduciary in this state, may 07 establish common trust funds for the purpose of furnishing investments to 08 (1) itself as fiduciary; 09 (2) itself and others as cofiduciaries; or 10 (3) its affiliated bank or trust company as fiduciary. 11 (b) A bank or trust company may invest, as fiduciary or cofiduciary, in the 12 common trust funds it establishes under (a) of this section, the funds that the bank or 13 trust company lawfully holds for investment, if the investment is not prohibited by the 14 instrument, court judgment, court decree, or court order creating the fiduciary
01 relationship, and if, in the case of cofiduciaries, the bank or trust company procures 02 the consent of its cofiduciary or cofiduciaries to the investment. 03 (c) Notwithstanding (a) and (b) of this section, a bank or trust company that 04 is qualified to act as a fiduciary in the state where the bank or trust company is 05 organized or otherwise formed and that is not a member of the Federal Reserve System 06 shall in the establishment of or investment in a common trust fund under (a) - (b) of 07 this section comply with the law regulating financial institutions in the state where the 08 bank or trust company is organized or otherwise formed. 09 (d) The Department of Commerce and Economic Development may adopt 10 regulations under AS 44.62 (Administrative Procedure Act) to implement this section. 11 (e) In this section, 12 (1) "affiliated" means two or more banks or trust companies in which 13 (A) 25 percent or more of the voting shares, excluding shares 14 owned by the United States or by a corporation or other entity wholly owned 15 by the United States, is directly or indirectly owned or controlled by a holding 16 company; or 17 (B) the election of a majority of the directors is controlled in 18 any manner by a holding company; 19 (2) "bank" means an organization that is authorized by the United 20 States Comptroller of the Currency, or by the director of banking or the equivalent 21 position in the state of organization, to accept deposits and to make commercial loans, 22 and whose deposits are insured by the Federal Deposit Insurance Corporation; 23 (3) "trust company" means a financial institution, corporation, or other 24 legal entity, authorized to exercise general trust powers, but does not include a natural 25 person. 26 * Sec. 2. AS 13.46.110(b) is amended to read: 27 (b) In dealing with custodial property, a custodian shall observe the standard 28 of care that would be observed by a prudent person dealing with property of another 29 and is not limited by any other statute, except AS 13.90.010, restricting investments 30 by fiduciaries. If a custodian has a special skill or expertise or is named custodian on 31 the basis of representations of a special skill or expertise, the custodian shall use that
01 skill or expertise. However, a custodian, in the custodian's discretion and without 02 liability to the minor or the minor's estate, may retain custodial property received from 03 a transferor. 04 * Sec. 3. AS 13.60.060(b) is amended to read: 05 (b) If the beneficiary is not incapacitated, a custodial trustee shall follow the 06 directions of the beneficiary in the management, control, investment, or retention of 07 the custodial trust property. In the absence of effective contrary direction by the 08 beneficiary while not incapacitated, the custodial trustee shall observe the standard of 09 care that would be observed by a prudent person dealing with property of another and 10 is not limited by another law, except AS 13.90.010, restricting investments by 11 fiduciaries. However, a custodial trustee, in the custodial trustee's discretion, may 12 retain custodial trust property received from the transferor. If a custodial trustee has 13 a special skill or expertise or is named custodial trustee on the basis of representation 14 of a special skill or expertise, the custodial trustee shall use that skill or expertise. 15 * Sec. 4. AS 13 is amended by adding a new chapter to read: 16 CHAPTER 90. MISCELLANEOUS PROVISIONS. 17 Sec. 13.90.010. INVESTMENTS BY FIDUCIARIES. (a) Notwithstanding 18 other provisions of law, except for AS 13.36.300 and the standards of judgment and 19 care established by law, and subject to any express provision or limitation contained 20 in a particular instrument creating the fiduciary relationship, fiduciaries are authorized 21 to acquire and hold securities of an open-end or closed-end management type 22 investment company or investment trust if the company or trust is registered under 15 23 U.S.C. 80a-1 - 80a-64 (Investment Company Act of 1940), as that act exists now or 24 is amended in the future. 25 (b) Under (a) of this section, whenever an instrument creating a fiduciary 26 relationship directs, requires, authorizes, or permits investment in obligations of the 27 United States government, the fiduciary may invest in and hold the obligations either 28 directly or in the form of, or as another interest in, an investment company if the 29 portfolio of the company is limited to obligations of the United States government and 30 to repurchase agreements fully collateralized by the obligations, and, if a repurchase 31 agreement is involved, the investment company takes delivery of the collateral either
01 directly or through an authorized custodian. 02 (c) Under (a) of this section, if a bank or trust company is the fiduciary, the 03 bank or trust company may invest or reinvest in the securities of an investment 04 company even if the fiduciary or an affiliated bank or trust company provides services 05 to the investment company and the fiduciary or affiliate receives reasonable 06 compensation for the services. Upon request of the person, the fiduciary shall furnish 07 a copy of the prospectus relating to the securities acquired under this subsection to a 08 person to whom a regular periodic accounting is ordinarily rendered under an 09 instrument creating a fiduciary relationship. 10 (d) In this section, 11 (1) "affiliated" means two or more banks or trust companies in which 12 (A) 25 percent or more of the voting shares, excluding shares 13 owned by the United States or by a corporation or another entity wholly owned 14 by the United States, is directly or indirectly owned or controlled by a holding 15 company; or 16 (B) the election of a majority of the directors is controlled in 17 any manner by a holding company; 18 (2) "bank" means an organization that is authorized by the United 19 States Comptroller of the Currency, or by the director of banking or the equivalent 20 position in the state of its organization, to accept deposits and to make commercial 21 loans, and whose deposits are insured by the Federal Deposit Insurance Corporation; 22 (3) "fiduciary" includes guardians and conservators under AS 13.26, 23 persons performing the trustee activities described under AS 06.05.180 whether or not 24 the persons are covered by AS 06.05.180, and other persons acting in a fiduciary 25 capacity; 26 (4) "investment company" means an open-end or closed-end 27 management type investment company or investment trust registered under 15 U.S.C. 28 80a-1 - 80a-64 (Investment Company Act of 1940), as that act exists now or as 29 amended in the future; 30 (5) "services" includes acting as an investment advisor, custodian, 31 transfer agent, registrar, sponsor, distributor, or manager;
01 (6) "trust company" means a financial institution, corporation, or other 02 legal entity, authorized to exercise general trust powers, but does not include a natural 03 person.