CHAPTER 149

RELATING TO INVESTMENTS BY TRUSTEES, GUARDIANS AND OTHER FIDUCIARIES

AN ACT TO AMEND CHAPTER 117 OF THE REVISED CODE OF DELAWARE, 1935, AS AMENDED BY CHAPTER 206, VOLUME 41, LAWS OF DELAWARE, 1937, IN RELATION TO INVESTMENTS BY TRUSTEES, GUARDIANS AND OTHER FIDUCIARIES.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Section 35 of said Chapter 117 of the Revised Code of the State of Delaware, of 1935, being Section 4401 of said Code, be and the same is hereby, amended by adding a new paragraph under subdivision (B) of said Section, to be known as paragraph (10a), as follows:

(10a) Unsecured obligations of industrial corporations, including findings companies, incorporated in one of the states of the United States, maturing in not more than fifteen years from the date of the purchase, provided that the unsecured obligation purchased shall not be convertible into stock or carry the creation of mortgage debt maturing after one year without the said unsecured obligation being equally secured; and provided further that as of the close of the corporation's last fiscal year preceding the date of purchases.

(a) The total assets of the corporation after accrued depreciation and depletion shall have been not less than $100,000,000.

(b) The total secured debt of the corporation shall have been not greater than 10% of the total unsecured debt of the corporation, and

(c) The working capital of the corporation shall have been at least equal to the total of the secured debt and unsecured debt, other than current unsecured debt, of the corporation, and provided further that the net earnings of the corporation after depreciation and depletion, for a period of five fiscal years immediately preceding the date of the purchase, shall have averaged three times total fiscal charges; that in the latest of such five fiscal years and in each of three out of the remaining four such five fiscal years net earnings shall have been at least two times total fixed charges (as defined in paragraph (10) of this subdivision; and that if a corporation shall not have had fixed charges in one or more of the five fiscal years immediately preceding the date of purchase, the coverage ratios of fixed charges for such years, as hereinabove required, may be determined, for the purposes of this Act, by assuming such fixed charges to have been the same as at the date of purchase.

Section 2. That Section 35 of said Chapter 117 of the Revised Code of the State of Delaware of 1935, being Section 4401 of said Code, be and the same is hereby further amended by striking out all of paragraph (15) of subdivision (b) of said Section and inserting in lieu thereof the following:

(15) A bank or trust company authorized to set in a fiduciary capacity and acting in such a capacity, other than merely as Agent, may invest funds held by it for investment as fiduciary in fractional undivided interests in a common fund composed exclusively of securities of the classes described in paragraphs (1) to (12) both inclusive, of this subdivision (B) of this Section 35 and of cash, provided that such common fund shall have been created and is managed exclusively by such bank or trust company as trustee under a written plan of which an original executed by such bank or trust company has been filed and is recorded in the Office of the Register in Chancery of the County in which such bank or trust company is located; and also provided that under such a plan it shall not be permitted that any such fractional interests shall at any time be owned by any other than such bank or trust company as trustee under will, under agreement or for an insane person, or as guardian of a minor, or as executor or administrator; and also provided that at least once each three months, as of a predetermined date, the fair value of the assets of the common fund shall be ascertained, and that a fractional interest in such common fund may only be acquired or redeemed on such predetermined dates or within two business days thereafter by payment, in the case of acquisition, of an amount in cash or, in the case of redemption, of an amount in cash or in kind, or partly in cash and partly in kind, equal to its proportionate part of the fair value of the common fund, and also provided that at the time of the making of an investment in such common fund there shall not be held in the fund any asset which, because of the nature of such asset, the bank or trust company might not then properly purchase as an investment for the fiduciary account for which the investment in the common fund is made; and also provided that the bank or trust company shall not charge a fee or commission to the common fund for its management or receive any fees or commissions from any fiduciary estate which may be invested in a common fund other than those it would be entitled to receive if such estate were otherwise invested.

Approved May 2, 1939.

NOTE: Errors and omissions herein--so enrolled.