Minnesota Session Laws - 1992, Regular Session

  

                         Laws of Minnesota 1992 

                        CHAPTER 473-S.F.No. 1729 
           An act relating to financial institutions; authorizing 
          a banking institution that is a trustee to invest in 
          certain investment companies and investment trusts; 
          amending Minnesota Statutes 1990, sections 48.01, 
          subdivisions 1 and 2; 48.38, subdivision 6; 48.84; and 
          501B.10, subdivision 6. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1990, section 48.01, 
subdivision 1, is amended to read: 
    Subdivision 1.  [WORDS, TERMS, AND PHRASES.] Unless the 
language or context clearly indicates that a different meaning 
is intended, the term defined in subdivision 2, for the purposes 
of sections 48.38, 48.56 to 48.59, and 48.84, has that meaning; 
and the term defined in subdivision 3, for the purposes of this 
chapter, has that meaning. 
    Sec. 2.  Minnesota Statutes 1990, section 48.01, 
subdivision 2, is amended to read: 
    Subd. 2.  [BANKING INSTITUTION.] The term "banking 
institution" means any bank, trust company, bank and trust 
company, or mutual savings bank which is now or may hereafter be 
organized under the laws of this state.  For purposes of 
sections 48.38, 48.84, and 501B.10, subdivision 6, and to the 
extent permitted by federal law, "banking institution" includes 
any national banking association or affiliate exercising trust 
powers in this state. 
    Sec. 3.  Minnesota Statutes 1990, section 48.38, 
subdivision 6, is amended to read: 
    Subd. 6.  It may invest all moneys received by it in trust, 
in authorized securities, and shall be responsible to the owner 
or cestui que trust for the validity, regularity, quality, 
value, and genuineness of these investments and securities at 
the time made and for the safekeeping of these securities and 
the evidences thereof.  When special directions are given in any 
order, judgment, decree, will, or other written instrument as to 
the particular manner or the particular class or kind of 
securities or property in which any investment shall be made, it 
shall follow this direction and, in such case, it shall not be 
further responsible by reason of the performance of the trust.  
    It may, in its discretion, retain and continue any 
investment and security or securities coming into its possession 
in any fiduciary capacity.  For the faithful discharge of its 
duties and the discharge of its trust, it shall be entitled to 
reasonable compensation or such amount as has been or may be 
agreed upon by the parties and all necessary expenses, with 
legal interest thereon.  
     In the absence of an express prohibition in the trust 
instrument, the trustee may acquire and retain securities of any 
open-end or closed-end management type investment company or 
investment trust registered under the Federal Investment Company 
Act of 1940.  The fact that the banking institution, or any 
affiliate of the banking institution, is providing services to 
the investment company or trust as investment advisor, sponsor, 
broker, distributor, custodian, transfer agent, registrar, or 
otherwise, and receiving compensation for the services shall not 
preclude the trustee from investing in the securities of that 
investment company or trust.  The banking institution shall 
disclose to all current income beneficiaries of the trust the 
rate, formula, and method of the compensation.  This paragraph 
does not alter the degree of care and judgment required of 
trustees by section 501B.10, subdivision 1. 
    No compensation or commission paid or agreed to be paid to 
it for the negotiation of any loan or the execution of any trust 
shall be deemed interest within the meaning of the law, nor 
shall any excess thereof over the legal rate be deemed usury.  
    Sec. 4.  Minnesota Statutes 1990, section 48.84, is amended 
to read: 
    48.84 [CORPORATE TRUSTEE; TRUST FUNDS, INVESTMENT, 
COMMINGLING.] 
    Any trust company or state bank which is permitted to 
exercise trust powers under the provisions of sections 48.37 to 
48.47 inclusive may invest all moneys received by it in trust in 
authorized securities, and shall be responsible to the owner or 
cestui que trust for the validity, regularity, quality, value, 
and genuineness of these investments and securities so made, and 
for the safekeeping of the securities and evidences thereof.  In 
the absence of an express prohibition in the trust instrument, 
the trustee may acquire and retain securities of any open-end or 
closed-end management type investment company or investment 
trust registered under the Federal Investment Company Act of 
1940.  The fact that the banking institution, or any affiliate 
of the banking institution, is providing services to the 
investment company or trust as investment advisor, sponsor, 
broker, distributor, custodian, transfer agent, registrar, or 
otherwise, and receiving compensation for the services shall not 
preclude the trustee from investing in the securities of that 
investment company or trust.  The banking institution shall 
disclose to all current income beneficiaries of the trust the 
rate, formula, and method of the compensation.  This paragraph 
does not alter the degree of care and judgment required of 
trustees by section 501B.10, subdivision 1.  When special 
directions are given in any order, judgment, decree, will, or 
other written instrument as to the particular manner or the 
particular class or kind of securities or property in which any 
investment shall be made, it shall follow such directions, and 
in such case it shall not be further responsible by reason of 
the performance of such trust.  In all other cases it may invest 
funds held in any trust capacity in authorized securities using 
its best judgment in the selection thereof, and shall be 
responsible for the validity, regularity, quality, and value 
thereof at the time made, and for their safekeeping.  Whether it 
be the sole trustee or one of two or more cotrustees, it may 
invest in fractional parts of, as well as in whole, securities, 
or may commingle funds for investment.  If it invests in 
fractional parts of securities or commingles funds for 
investment, all of the fractional parts of such securities, or 
the whole of the funds so commingled shall be owned and held by 
the trust company or state bank in its several trust capacities, 
and it shall be liable for the administration thereof in all 
respects as though separately invested; provided, that not more 
than $100,000, at the cost price of such investments, shall be 
so invested for any one trust at any one time in fractional 
parts or as commingled funds for investment by a trust company 
or state bank having capital and surplus of less than $500,000, 
unless the authority to invest in fractional parts or as 
commingled funds be given in the order, judgment, decree, will, 
or other written instrument governing such trust.  Funds so 
commingled for investment shall be designated collectively as a 
common trust fund.  Such trust company or state bank shall 
maintain such common trust fund in conformity with the rules and 
regulations prevailing from time to time of that federal 
governmental agency which regulates the collective investment of 
trust funds by national banks.  It may, in its discretion, 
retain and continue any investment and security or securities 
coming into its possession in any fiduciary capacity.  The 
foregoing shall apply as well whether a corporate trustee is 
acting alone or with an individual cotrustee.  
    Sec. 5.  Minnesota Statutes 1990, section 501B.10, 
subdivision 6, is amended to read: 
    Subd. 6.  [INVESTMENT COMPANIES.] (a) In the absence of an 
express prohibition in the trust instrument, the trustee may 
acquire and retain securities of any open-end or closed-end 
management type investment company or investment trust 
registered under the Federal Investment Company Act of 
1940.  The fact that a trustee which is a banking institution, 
as defined in section 48.01, subdivision 2, or any affiliate of 
a trustee which is a banking institution, is providing services 
to the investment company or trust as investment advisor, 
sponsor, broker, distributor, custodian, transfer agent, 
registrar, or otherwise, and receiving compensation for the 
services shall not preclude the trustee from investing in the 
securities of that investment company or trust.  A trustee which 
is a banking institution shall disclose to all current income 
beneficiaries of the trust the rate, formula, and method of the 
compensation. 
    (b) This subdivision does not alter the degree of care and 
judgment required of trustees by subdivision 1. 
    Sec. 6.  [EFFECTIVE DATE.] 
    Sections 1 to 5 are effective the day following final 
enactment. 
    Presented to the governor April 14, 1992 
    Signed by the governor April 15, 1992, 1:12 p.m.