Subject to such further restrictions and approvals as its board of directors may set forth in its investment policy, a trust company may purchase, sell, and hold securities, for its own behalf, the following:
(1) Debt Obligations. (a) Obligations of the United States Government or Agencies of the United States Government. The following may be held without limitation:
1. Securities issued by the United States government or an agency of the United States government;2. Securities guaranteed as to principal and interest by the United States government or an agency of the United States government;3. Securities issued under the U.S. Treasury's Separate Trading of Registered Interest and Principal (STRIP's) program, which are offered in book entry form and which are direct obligations of the U.S. Government, as authorized by Subtitle III, Chapter 31 of Title 31 U.S.C.; and4. Securities which are pre-refunded, with the redemption proceeds invested in securities issued by the United States Government or an Agency of the United States Government. (b) Obligations of a State or Territorial Government of the United States or Agencies of State or Territorial Governments. The following may be held without limitation:
1. General obligations of any state or territorial government of the United States or any agency of such governments;2. Securities guaranteed as to principal and interest by such state or territorial governments or any agency thereof; and3. Securities which are pre-refunded, with the redemption proceeds invested in securities issued by state or territorial governments or agencies thereof.(c) Obligations of other Political Subdivisions. 1. The general obligations of a single obligor domiciled within the United States which is authorized to levy taxes may be held in an amount up to twenty-five (25) percent of a trust company's equity capital, as defined by GAAP. This percentage limitation shall not apply where the equity capital is at least $10,000,000.2. Securities which are secured by a pledge or assignment of tax receipts sufficient to pay the principal and interest of such securities as they become due may be held in an amount up to twenty-five (25) percent of the trust company's equity capital, as defined by GAAP. This percentage limitation shall not apply where the equity capital is at least $10,000,000.3. Revenue obligations of a political subdivision authorized to establish utility fees, public transportation usage fees or public use fees where such levies or fees are pledged to and are sufficient to pay the principal and interest of the securities as they become due may be held in an amount up to twenty-five (25) percent of a trust company's equity capital, as defined by GAAP. This percentage limitation shall not apply where the equity capital is at least $10,000,000.4. In those instances where the repayment of revenue obligations is dependent upon rentals or other fees payable to a political subdivision by a non-governmental unit, such as in the case of industrial revenue bonds, the obligor shall be deemed to be the non-governmental unit responsible for the payment of such rentals or other fees and any guarantor of such payments. Investment in such securities is limited to fifteen (15) percent of the trust company's equity capital, as defined by GAAP.5. Securities issued by political subdivisions rated in the four highest rating categories by a nationally recognized rating service and not otherwise authorized under (c)(1)-(4) of this section may be held in an amount up to fifteen (15) percent of a trust company's equity capital, as defined by GAAP.(d) Corporate Debt Securities. Corporate debt securities may be purchased which are:
1. Rated in the four highest rating categories by a nationally recognized rating service;2. Readily salable in an established market with reasonable promptness at a price which corresponds to its fair value;3. Denominated in U.S. dollars; and4. With respect to trust companies having equity capital, as defined by GAAP, of less than $20,000,000, such securities must mature within 15 years. A bank's investment in corporate debt securities is limited to fifteen (15) percent of the trust company's equity capital, as defined by GAAP, per obligor. A trust company's aggregate investment in corporate debt securities shall not exceed one hundred (100) percent of the trust company's equity capital, as defined by GAAP.
(2) Equity Securities. The total investment in equity and investment of any one issuer, obligor, or maker held by a trust company for its own account shall not exceed an amount equal to 15 percent of the trust company's equity capital, as defined by GAAP.
(3) Investment Funds. A trust company for its own account may invest up to fifteen (15) percent of its equity capital, as defined by GAAP, in securities of, or other interests in, any open-end or closed-end management type investment fund or investment trust which is registered under the Investment Company Act of 1940, subject to the following additional conditions.
(a) The investment portfolio of such investment fund or investment trust shall be limited to those securities in which trust companies are permitted to invest directly under this rule and Title 7 of the Official Code of Georgia; and(b) The investment fund or trust shall not: 1. Except to the extent authorized in subparagraph (1)(a)3. of this rule, acquire or hold investments in the form of stripped or detached interest obligations;2. Engage in the purchase or sale of interest rate futures contracts;3. Purchase securities on margin, make short sales of securities or maintain a short position; or4. Otherwise engage in futures, forwards or options transactions, except that forward commitments may be entered into for the express purpose of acquiring securities on a when-issued basis.(c) On an aggregate basis, investments in such funds or trusts shall not exceed: 1. Thirty (30) percent of the trust company's equity capital, as defined by GAAP, per fund/trust family or sponsor; and2. Sixty (60) percent of the trust company's equity capital, as defined by GAAP, for all funds combined.(d) An aggregate limitation of one hundred twenty (120) percent of the trust company's equity capital, as defined by GAAP, shall be allowed for all funds combined if the funds or trusts: 1. Are managed so as to maintain the fund or trust shares at a constant net asset value;3. Are rated in the highest rating category by a nationally recognized rating service.(4) Asset-Backed Securities. A trust company may purchase asset-backed securities repayable in both interest and principal which are issued under any of the following:
(a) Governmentally sponsored programs which are fully collateralized by obligations fully guaranteed as to principal and interest by a governmental entity to the same extent as direct obligations of the governmental entity which is the guarantor;(b) Private programs which are fully collateralized by obligations fully guaranteed as to principal and interest by a governmental entity to the same extent as direct obligations of the governmental entity which is the guarantor; or(c) Other private programs in amounts which do not exceed fifteen (15) percent of the trust company's equity capital, as defined by GAAP, for each issuer, provided the issue: 1. Is in registered form;2. Is collateralized by assets which could be owned directly by the trust company; and3. Is rated in the top three rating bands by a recognized national rating service.(d) Aggregate investment in private program issues by all issuers shall not exceed fifty (50) percent of the trust company's equity capital, as defined by GAAP, unless approved by the department.(5) Interest-Only ("IO") Securities. (a) Nothing contained herein shall permit the purchase of investments in the form of stripped or detached IO obligations. An exception to this rule is that securities issued under the U.S. Treasury's Separate Trading of Registered Interest and Principal (STRIP's) program, which are offered in book entry form and which are direct obligations of the U.S. Government, as authorized by Subtitle III, Chapter 31 of Title 31 USC, may be purchased without limitation.(b) Purchasing or trading any other type of IO securities may receive prior written approval from the department for institutions demonstrating technical expertise and policies sufficient to promote safe and sound use of such investments as part of prudent investment strategies.(6) Futures, Forwards, Option Contracts and Interest Rate Swaps. Futures, forwards, option contracts, interest rate swaps, and direct and indirect investments associated with any security which otherwise constitutes a permissible investment under provisions of this rule may be approved in writing by the department for trust companies demonstrating technical expertise and policies sufficient to promote safe and sound use of such investments as part of prudent investment strategies.
(7) All Other Securities. A trust company may invest in such other securities or funds as the department may approve, upon a finding that the securities are marketable under ordinary circumstances, with reasonable promptness at a price which corresponds to their fair value, approval shall be in writing and subject to such limitations as the department may specify. This requirement for departmental approval shall not apply where the equity capital, as defined by GAAP, of the purchasing trust company exceeds $ 20,000,000. However, in such instances, such securities may be purchased only in an amount which does not exceed fifteen (15) percent of the trust company's equity capital, as defined by GAAP.
(8) In the event a trust company's investment in securities no longer conforms to this rule but conformed when the investment was originally made, the trust company shall provide written notification to the Department regarding the nonconforming investment within 30 days of discovering the nonconforming investment or 120 days of the investment becoming nonconforming, whichever event occurs first. In the event a trust company wishes to hold the nonconforming investment, the trust company must submit a letter form application to the Department describing the efforts the trust company will undertake to bring the nonconforming investment into conformity and the anticipated time it will take to bring the investment into conformity. Upon review of the application, the Department may request additional information if it determines such additional information is necessary in order to fully and completely evaluate the application. After completion of its review, the Department shall either approve, conditionally or otherwise, or deny such application in writing.(9) A trust company may sell a nonconforming investment without Department authorization but only if it provides the Department with written notice no later than five (5) business days after the sale.Ga. Comp. R. & Regs. R. 80-13-1-.11
O.C.G.A. § 7-1-61.
Original Rule entitled "Permissible Investments and Limitations of Trust Companies" adopted. F. June 29, 2017; eff. July 19, 2017.