Chapter 105
2009 -- H 5611
Enacted 07/13/09
A N A C T
RELATING TO PUBLIC FINANCE -- STATE INVESTMENT COMMISSION
Introduced By: Representatives Lally, and Brien
Date Introduced: February 25, 2009
It is enacted by the
General Assembly as follows:
SECTION 1. Section 35-10-11 of the General Laws in Chapter
35-10 entitled "State
Investment Commission"
is hereby amended to read as follows:
35-10-11.
Additional investment powers. -- The state, any
state agency, any city or
town, and any municipal agency which has, or has control
of, any funds not immediately required
for other purposes may, in addition to other investments
in which it may be authorized to invest
by law, and notwithstanding any provisions of any
special law or municipal charter to the
contrary, invest these funds, either individually or with each
other, in:
(1) Deposits in banks,
savings banks, national banks or trust companies, loan and
investment companies, credit unions; and in shares of
building-loan associations; the principal
office of which institution or institutions is located in
this state or which has a deposit-taking
facility within this state; provided, that the investments
shall be made as would be done by
prudent persons of discretion and intelligence in these
matters who are seeking a reasonable
income and preservation of their capital;
(2) Shares or units of
beneficial interest of any open end investment company or
association or investment trust which is registered under the
federal Investment Company Act of
1940, 15 U.S.C. section 80a-1 et seq.; provided, that the company, association, or trust shall:
(i)
Limit the issuance, distribution, and ownership of its shares or units solely
to this
state, state agencies, cities and towns of this state, and
municipal agencies thereof, other than
shares or units issued in connection with the initial
capital required by the federal Investment
Company Act of 1940;
(ii) Invest solely in
securities and investments which are lawful for investments of
savings deposits as set forth and defined in chapter 3 of
title 19, without regard to the provisions
of this chapter as to percentage of deposits which may
be so invested, or are lawful for investment
of reserve funds by cities and towns under section
45-11-1, but subject to the restrictions that:
(A) No investment shall
be made in any security or investment authorized under chapter
3 of title 19, unless, after giving effect to the
investment, no more than ten percent (10%) of the
total assets of the company, association, or trust shall be
invested in securities or investments of a
class or type authorized solely under this chapter;
(B) No investment shall
be made in any security or investment authorized under chapter
3 of title 19, unless, after giving effect to the
investments, no more than five percent (5%) of the
total assets shall be invested in the securities or
investments authorized solely under this chapter
of any one issuer or obligor; and
(C) If the lawful
investments constitute collateral for any repurchase agreement, the
company, association, or trust shall take delivery of the
collateral either directly or through an
authorized custodian; and
(iii) Invest solely in
such of the investments as would be done by prudent persons of
discretion and intelligence in these matters who are seeking a
reasonable income and preservation
of their capital; and
(3) Notwithstanding the
provisions of paragraphs (1), (2)(ii)(A), and
(2)(ii)(B), in:
(i)
Obligations issued or guaranteed by the
instrumentality thereof and repurchase agreements fully
collateralized thereby, or in securities of
any open end investment company or association or
investment trust, custodial arrangement, or
pool which is registered under or exempt from the federal
Investment Company Act of 1940,
provided, that the portfolio of the company, association,
trust, custodial arrangement, or pool is
limited to obligations issued or guaranteed by the
instrumentality thereof and repurchase agreements fully
collateralized thereby and that the
company, association, trust, custodial arrangement, or pool
takes delivery of the collateral either
directly or through an authorized custodian, agent, or
depository; and
(ii) Any security of a
state or political subdivision thereof, or in securities of any open
end investment company or association or investment
trust, custodial arrangement, or pool which
is registered under or exempt from the federal
Investment Company Act of 1940, provided, that
(A) The portfolio of
the company, association, trust, custodial arrangement, or pool is
limited to state or political subdivision securities and repurchase
agreements fully collateralized
thereby;
(B) The company,
association, trust, custodial arrangement, or pool takes delivery of the
collateral either directly or through an authorized custodian or
depository;
(C) The interest on the
securities is exempt from federal income taxation;
(D) At the time of the
investment, the security (in the case of a security issued by or on
behalf of a state or political subdivision thereof) has a
rating as determined by a national rating
agency of municipal obligations equal or superior to the
last rating by the agency applicable to
general obligations of the state or (in the case of a fund)
the fund invests solely in securities
having these ratings;
(E) In connection with
the investments, the state, state agency, city, town, or municipal
agency may enter into contracts to purchase and resell the
investments at specified or
determinable prices.
(4) Notwithstanding
the provisions of subdivision (1), in certificates of deposit obtained
in accordance with the following conditions:
(i)
The funds are initially invested through a financial institution as defined in
subdivision
19-1-1(8) or chapter 19-1, selected by the investing
governmental entity;
(ii) The selected
financial institution arranges for the deposit of the funds in certificates of
deposit in one or more federally insured banks or savings and
loan associations, for the account of
the governmental entity;
(iii) The full amount
of the principal and accrued interest of each certificate of deposit is
insured by the Federal Deposit Insurance Corporation;
(iv)
The selected financial institution acts as custodian for the
governmental entity with
respect to the certificates of deposit issued for the
governmental entity’s account; and
(v) At the same time
that the governmental entity’s funds are deposited and the
certificates of deposit are issued, the selected financial
institution receives an amount of deposits
from customers of other banks and savings and loan
associations, wherever located, equal to the
amount of funds initially invested by the governmental
entity through the selected financial
institution.
(5) Public deposits
placed in accordance with the conditions prescribed in this subsection
shall not be required to be secured by eligible collateral
as set forth in chapter 35-10.1.
SECTION 2. This act shall take effect upon passage.
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LC01866
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