Section 404 - Collective investment funds(a) Authorization--An institution may, to the extent provided in this section, establish and maintain common trust funds or collective investment funds for the investment and reinvestment of property which: (i) is contributed by the institution or by any affiliate of the institution as described in section 1504 of the Internal Revenue Code in a capacity in which it or the affiliate is authorized to act pursuant tosection 402, and(ii) is eligible for contribution to a collective investment fund under the provisions of this section. As used in this section, the term "collective investment fund" shall include a common trust fund and any other type of collective investment fund.
(b) Types of funds--An institution may contribute property for collective investment in:(i) A fund qualified for exemption from Federal income taxation as a common trust fund and maintained exclusively for fiduciary accounts eligible to participate therein,(ii) A fund consisting solely of assets of retirement, pension, profit-sharing, stock-bonus and other trusts which are exempt from Federal income taxation, or(iii) A fund which complies with regulations of the department.(c) Regulations of department--The department shall regulate the establishment and maintenance of collective investment funds subject to this section except those covered by subsection (b)(i) of this section. Such regulations of the department shall comply with the general standards for exercise of the regulatory power of the department under this act and in addition shall be designed to assure:(i) Ratably equal treatment of the participants in a fund by imposing minimum requirements for the method and frequency of valuation of participations in the fund, for the time and method of admission or withdrawals of participations in the fund and for the determination of interests of participants in the assets and income of the fund; and(ii) The competitive equality between state institutions and national banks with respect to the authority to establish and maintain collective investment funds to the extent compatible with the general purposes of this act.(d) Effect of restrictions on fiduciary--An institution may not contribute to a collective investment fund property held in a fiduciary capacity contrary to express restrictions and limitations imposed on the institution by the terms upon which it is designated as fiduciary.(e) Effect of mistake--No mistake made in good faith and in the exercise of due care in connection with the administration of a collective investment fund shall be deemed a violation of this section or of any other duty of the institution if, promptly after discovery of the mistake, the institution takes whatever action may be practicable in the circumstances to remedy the mistake.(f) Funds not subject to section--An institution may, in any capacity in which it may act under section 402, invest property collectively in accordance with the specific terms upon which it receives such property, without regard to the restrictions of this section.1965, Nov. 30, P.L. 847, No. 356, § 404. Amended 1984, July 6, P.L. 606, No. 125, § 2, imd. effective; 1984, July 6, P.L. 621, No. 128, § 6, imd. effective.