Delaware General Assembly

CHAPTER 33

FORMERLY

SENATE BILL NO. 83

Section 1. Amend § 3312, Title 12, Delaware Code, by striking said section in its entirety and substituting in its place as follows:

''§ 3312. Investments in affiliated investments.

(a) As used in this section:

(1) ‘Fiduciary’ means any person, including a bank or trust company, acting as a fiduciary as defined in § 3301(b) of this title, and includes an agent with investment discretion.

(2) ‘Investment’ shall mean any security as defined in § 2(a)(1) of the Securities Act of 1933 (15 U.S.C. § 77b(a)(1)), any contract of sale of a commodity for future delivery with the meaning of § 2(i) of the Commodity Exchange Act (7 U.S.C. § 2(i)), or any other investment permitted by law or the governing instrument, including by way of illustration and not limitation shares or interests in a private investment fund (including a private investment fund organized as a limited partnership, a limited liability company, a statutory or common law business trust, or a real estate investment trust), joint venture or other general or limited partnership, or an open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940 (15 U.S.C. § 80a-1 et seq.).

(3) ‘Affiliate’ means any corporation or other entity that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with the fiduciary.

(4) ‘Affiliated investment’ means an investment for which the fiduciary or an affiliate of the fiduciary acts as adviser, administrator, distributor, placement agent, underwriter or in any other capacity for which it receives or has received a fee or commission from such investment.

(5) ‘Fee or commission’ means compensation paid to a fiduciary or an affiliate thereof on account of its services to or on behalf of an investment.

(b) Subject to the investment standards stated in § 3302 of this title, a fiduciary may purchase, sell, hold or otherwise deal with an interest in an affiliated investment and, upon satisfaction of the conditions stated in subsection (c) of this section, such fiduciary may receive fiduciary compensation from such account at the same rate as the fiduciary would be entitled to be compensated if the account were otherwise invested.

(c) A fiduciary seeking compensation pursuant to subsection (b) hereof shall disclose to each principal in an agency relationship and to all current recipients of account statements of any other fiduciary account all fees or commissions received or to be received from any affiliated investment in which the fiduciary account is invested. The disclosure required under this subsection (c) may be given either in a copy of the prospectus or any other disclosure document prepared for the affiliated investment under federal or state securities laws or in a written summary that includes all fees or commissions received or to be received by the fiduciary or any affiliate of the fiduciary and an explanation of the manner in which such fees or commissions are calculated (either as a percentage of the assets invested or by some other method). Such disclosure shall be made at least annually unless there has been no increase in the rate at which such fees or commissions are calculated since the most recent disclosure. Notwithstanding the foregoing provisions of this subsection (c), no such disclosure is required if the governing instrument or a court order expressly authorizes the fiduciary to invest the fiduciary account in affiliated investments.

(d) A fiduciary that has complied with subsection (c) (whether by making the applicable disclosure or by relying on the terms of a governing instrument or court order) shall have full authority to administer an affiliated investment (including the authority to vote proxies thereon) without regard to the affiliation between the fiduciary and the investment."

Section 2. This Act shall become effective upon the date of its enactment.