TITLE 35
Public Finance

CHAPTER 35-10
State Investment Commission

SECTION 35-10-11


§ 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. § 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 § 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 United States government or any agency or 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 United States government or any agency or 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(7) 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.

History of Section.
(P.L. 1965, ch. 222, § 1; P.L. 1981, ch. 255, § 1; P.L. 1984, ch. 154, § 1; P.L. 1986, ch. 110, § 4; P.L. 1987, ch. 340, § 1; P.L. 1989, ch. 98, § 1; P.L. 1993, ch. 387, § 1; P.L. 1995, ch. 269, § 1; P.L. 2009, ch. 105, § 1; P.L. 2009, ch. 108, § 1.)