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COMMITTEE REPORT
April 10, 2002
H. 4598
S. Printed 4/10/02--S.
Read the first time March 5, 2002.
To whom was referred a Bill (H. 4598) to amend Section 62-7-302, as amended, Code of Laws of South Carolina, 1976, relating to the Uniform Prudent Investor Act, so as to provide that investments in mutual funds, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, page 1, line 33, in Section 62-7-302(C)(5), as contained in SECTION 1, by striking /( i)/ and inserting / (i) /.
Amend the bill further, as and if amended, page 2, line 28, in Section 62-7-405(3), as contained in SECTION 2, by striking /beginning/ and inserting / Beginning /.
Renumber sections to conform.
Amend title to conform.
THOMAS L. MOORE for Committee.
TO AMEND SECTION 62-7-302, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE UNIFORM PRUDENT INVESTOR ACT, SO AS TO PROVIDE THAT INVESTMENTS IN MUTUAL FUNDS SPONSORED BY AFFILIATED ORGANIZATIONS ARE ALLOWED BY THE PRUDENT INVESTOR RULE IF THE INVESTMENTS MEET THE CRITERIA OF THE RULE.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 62-7-302(C)(5) of the 1976 Code, as last amended by Act 80 of 2001, is further amended to read:
"(5)(a) A trustee may invest in any kind of property or type of investment consistent with the standards of this section.
(b) Nothing in this section prohibits affiliate investments if they otherwise comply with the standards of this section. For these purposes, 'affiliate' means an entity that owns or is owned by the trustee, in whole or in part, or is owned by the same entity that owns the trustee. Affiliate investments include:
( i) investment and reinvestment in the securities of an open-end or closed-end management investment company or of an investment trust registered under the Investment Company Act of 1940, as amended. A bank or trustee, or both of them, may invest in these securities even if the bank or trustee, or an affiliate of the bank or trustee, provides services to the investment company or investment trust such as that of an investment advisor, custodian, transfer agent, registrar, sponsor, distributor, manager, or otherwise, and receives reasonable remuneration for those services;
( ii) retention of the securities into which corporate securities owned by the trustee may be converted or which may be derived as a result of merger, consolidation, stock dividends, splits, liquidations, and similar procedures, and the exercise by purchase or otherwise any rights, warrants, or conversion features attaching to the securities;
(iii) purchase or other acquisition and retention of a security underwritten by a syndicate, even if the trustee or its affiliate participates or has participated as a member of the syndicate, provided the trustee does not purchase the security from itself, its affiliate, or from another member of the underwriting syndicate, or its affiliate, pursuant to an implied or express reciprocal agreement between the trustee, or its affiliate, and the other member, or its affiliate, to purchase all or part of each other's underwriting participation commitment within the syndicate."
SECTION 2. Section 62-7-405(3) of the 1976 Code, as amended by Act 80 of 2001, is further amended to read:
"(3) shall distribute to a beneficiary who receives a pecuniary amount outright the rate of interest or other amount provided by the will, or the terms of the trust, or applicable law from net income as determined by item (2) or from principal to the extent that net income is insufficient. If the will or the terms of the trust provide no interest amount, the beneficiary of a pecuniary amount outright shall receive no interest or other income on the bequest for one year after the first appointment of a personal representative. beginning one year after the first appointment of a personal representative, and notwithstanding any other provision of law to the contrary, the beneficiary of a pecuniary amount outright must be treated as any other beneficiary under item (4). If a beneficiary is to receive a pecuniary amount outright from a trust after an income interest ends and no interest or other amount is provided for by the terms of the trust or applicable law, the fiduciary shall distribute the interest or other amount to which the beneficiary would be entitled under applicable law if the pecuniary amount treat the pecuniary amount as if it were required to be paid under a will and as if the payment were being made beginning one year after the first appointment of a personal representative;"
SECTION 3. This act takes effect upon approval by the Governor, and applies to affiliate investments and reinvestments made on or after July 18, 2001, the effective date of the South Carolina Uniform Prudent Investor Act.
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