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Title 46 — ShippingRelease 119-73not60

§53506 Investment and Fiduciary Requirements

Title 46 › Subtitle Subtitle V— Merchant Marine › Part C— Financial Assistance Programs › Chapter 535— CAPITAL CONSTRUCTION FUNDS › § 53506

Last updated Apr 5, 2026|Official source

Summary

Keep the fund in the bank or depository named in the agreement. The money must follow trustee and other fiduciary rules the Secretary sets. Normally the fund can only be put into interest‑paying securities the Secretary approves. With the Secretary’s OK, up to an agreed limit (but no more than 60 percent) of the fund can be put into U.S. company stock that is fully listed on an SEC‑registered national exchange and would be a choice a careful investor would make for steady income and protecting the money. Preferred stock counts if the common stock meets those tests. If the stock value goes above the agreed limit, future deposits and withdrawals must be handled to bring the stock back down to at most that limit.

Full Legal Text

Title 46, §53506

Shipping — Source: USLM XML via OLRC

(a)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)(1)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)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)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.

Legislative History

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.

Reference

Citations & Metadata

Citation

46 U.S.C. § 53506

Title 46 — Shipping

Last Updated

Apr 5, 2026

Release point: 119-73not60