46 U.S.C. § 53506: Investment and fiduciary…

Summary

Keep the fund money in the bank named in the agreement and follow the trustee and fiduciary rules the Secretary sets. Except for the stock rule below, fund money may only be put into interest‑earning securities the Secretary approves. With the Secretary’s approval, up to an agreed percentage (but no more than 60%) of the fund can be invested in stock of U.S. companies that are fully listed on a national stock exchange and would be chosen by a careful investor who wants steady income and to protect the original money. Preferred stock counts if the company’s common stock meets the rules. If stock value goes above the agreed percentage, future deposits and withdrawals must be done to bring the stock share back down.

Title 46, §53506

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(a)In General.—

Amounts in a capital construction fund shall be kept in the depository specified in the agreement and shall be subject to trustee and other fiduciary requirements prescribed by the Secretary. Except as provided in subsection (b), amounts in the fund may be invested only in interest-bearing securities approved by the Secretary.

(b)Stock Investments.—

(1)In general.—

With the approval of the Secretary, an agreed percentage (but not more than 60 percent) of the assets of the fund may be invested in the stock of domestic corporations that—

(A)is fully listed and registered on an exchange registered with the Securities and Exchange Commission as a national securities exchange; and

(B)would be acquired by a prudent investor seeking a reasonable income and the preservation of capital.

(2)Preferred stock.—

The preferred stock of a corporation is deemed to satisfy the requirements of this subsection, even though it may not be registered and listed because it is nonvoting stock, if the common stock of the corporation satisfies the requirements and the preferred stock otherwise would satisfy the requirements.

(c)Maintaining Agreed Percentage.—

If at any time the fair market value of the stock in the fund is more than the agreed percentage of the assets in the fund, any subsequent investment of amounts deposited in the fund, and any subsequent withdrawal from the fund, shall be made in a way that tends to restore the fair market value of the stock to not more than the agreed percentage.

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 5350646 App.:1177(c).June 29, 1936, ch. 858, title VI, § 607(c), 49 Stat. 2005; June 23, 1938, ch. 600, §§ 23–28, 52 Stat. 960; Aug. 4, 1939, ch. 417, § 10, 53 Stat. 1185; July 17, 1952, ch. 939, §§ 17–19, 66 Stat. 764; Pub. L. 85–637, Aug. 14, 1958, 72 Stat. 216; Pub. L. 86–518, § 1, June 12, 1960, 74 Stat. 216; Pub. L. 87–45, § 6, May 27, 1961, 75 Stat. 91; Pub. L. 87–271, Sept. 21, 1961, 75 Stat. 570; restated Pub. L. 91–469, § 21(a), Oct. 21, 1970, 84 Stat. 1027; Pub. L. 97–31, § 12(97)(A), Aug. 6, 1981, 95 Stat. 162. In subsection (b)(1)(B), the words “prudent investor” are substituted for “prudent men of discretion and intelligence in such matters” to eliminate unnecessary words.

§53506 Investment and Fiduciary Requirements

Summary

Title 46, §53506

Notes & Related Subsidiaries

Historical and Revision Notes

Citations & Metadata