26-40.01 - In what securities fiduciaries may invest; definitions.
§ 26-40.01. In what securities fiduciaries may invest; definitions.
A. As used in this section:
"Fiduciary" shall be defined as in § 8.01-2 and shall also include anattorney in fact or agent acting for a principal under a written power ofattorney, a custodian under § 31-48, and a custodial trustee under § 55-34.7.
"National rating service" shall mean Standard & Poor's Corporation, Moody'sInvestors Service, Inc., Duff and Phelps, Inc., Fitch Investors Corporationand any successor to the rating business of any of them.
B. Notwithstanding any other provision of law designating as legalinvestments for fiduciaries the bonds, notes, obligations or other evidencesof indebtedness issued by a governmental entity or political subdivision ofthe Commonwealth, including but not limited to agencies, authorities,commissions, districts, boards, or local governments, and except asspecifically provided in § 26-40, fiduciaries, whether individual orcorporate, shall, except as limited in subsection E, be conclusively presumedto have been prudent in investing the funds held by them in a fiduciarycapacity in only the following securities:
1. Obligations of the Commonwealth, its agencies and political subdivisions.- The following obligations:
a. Bonds, notes and other evidences of indebtedness of the Commonwealth, andsecurities unconditionally guaranteed as to the payment of principal andinterest by the Commonwealth;
b. Revenue bonds, revenue notes or other evidences of revenue indebtednessissued by agencies or authorities of the Commonwealth upon which there is nodefault; and
c. Bonds, notes and other evidences of indebtedness of any county, city,town, district, authority or other public body in the Commonwealth upon whichthere is no default provided that such bonds, notes and other evidences ofindebtedness are (i) direct legal obligations of the public body, for thepayment of which the public body has pledged its full faith and credit andunlimited taxing power, or (ii) unconditionally guaranteed as to the paymentof principal and interest by the public body.
In every case referred to in subsection B 1, such bonds, notes or otherevidences of indebtedness shall be rated in one of the two highest ratingcategories of at least one national rating service and not rated in acategory lower than the two highest rating categories of any national ratingservice. Determination of an obligation's rating in one of the two highestrating categories shall be made without regard to any refinement or gradationof such rating category by numerical or other modifier. In addition, theremaining maturity of such bonds, notes or other evidences of indebtednessshall not be greater than five years.
2. Obligations of the United States. - Bonds, notes and other obligations ofthe United States, and securities unconditionally guaranteed as to thepayment of principal and interest by the United States with a remainingmaturity not greater than five years, except in the case of savings bonds,which may have a longer maturity. The obligations enumerated in thissubdivision may be held directly or in the form of repurchase agreementscollateralized by such obligations or in the form of securities of anyopen-end or closed-end management type investment company or investment trustregistered under the Investment Company Act of 1940, provided that theportfolio of such investment company or investment trust is limited to suchobligations or repurchase agreements collateralized by such obligations, orsecurities of other such investment companies or investment trusts whoseportfolios are so restricted.
3. Savings accounts, time deposits or certificates of deposit. - Savingsaccounts, time deposits or certificates of deposit in any bank, savings bank,trust company, savings and loan association or credit union authorized to dobusiness as such in this Commonwealth, but only to the extent that suchaccounts, deposits or certificates are fully insured by the Federal DepositInsurance Corporation or any successor federal agency or by the NationalCredit Union Share Insurance Fund or any successor to it.
C. Notwithstanding the provisions of this section, investments listed in §26-40 as in effect prior to July 1, 1992, which continue to be held on July1, 1992, shall be subject to § 26-45.3, and any reference to the Virginia"legal list" or to § 26-40 or any predecessor statute contained in a will,trust, or other instrument that was irrevocable on June 30, 1992, shall beconstrued to refer to such section as in effect on June 30, 1992, or at suchearlier time as may be specified in the controlling document, absent anexpression of intent to the contrary contained in such document.
D. The permissible investments specified in subsection B are not exclusiveand shall not be construed to limit a fiduciary's investments as permittedpursuant to Article 2 (§ 26-45.3 et seq.).
E. The presumption under subsection B shall apply to (i) a fiduciary only fora calendar year in which the value of the intangible personal property underthe fiduciary's control or management does not exceed $100,000 at thebeginning of such year, or (ii) a fiduciary who, on motion for good causeshown, has obtained express authorization from the court having jurisdictionover such fiduciary for the presumption under subsection B to apply.
(1992, c. 810; 1996, c. 508; 1999, c. 772; 2005, c. 62; 2007, c. 517.)