2010 Pennsylvania Code
Title 20 - DECEDENTS, ESTATES AND FIDUCIARIES
Chapter 72 - Prudent Investor Rule
7203 - Prudent investor rule.

     § 7203.  Prudent investor rule.
        (a)  General rule.--A fiduciary shall invest and manage
     property held in a trust as a prudent investor would, by
     considering the purposes, terms and other circumstances of the
     trust and by pursuing an overall investment strategy reasonably
     suited to the trust.
        (b)  Permissible investments.--A fiduciary may invest in
     every kind of property and type of investment, including, but
     not limited to, mutual funds and similar investments, consistent
     with this chapter.
        (c)  Considerations in making investment and management
     decisions.--In making investment and management decisions, a
     fiduciary shall consider, among other things, to the extent
     relevant to the decision or action:
            (1)  the size of the trust;
            (2)  the nature and estimated duration of the fiduciary
        relationship;
            (3)  the liquidity and distribution requirements of the
        trust;
            (4)  the expected tax consequences of investment
        decisions or strategies and of distributions of income and
        principal;
            (5)  the role that each investment or course of action
        plays in the overall investment strategy;
            (6)  an asset's special relationship or special value, if
        any, to the purposes of the trust or to one or more of the
        beneficiaries, including, in the case of a charitable trust,
        the special relationship of the asset and its economic impact
        as a principal business enterprise on the community in which
        the beneficiary of the trust is located and the special value
        of the integration of the beneficiary's activities with the
        community where that asset is located;
            (7)  to the extent reasonably known to the fiduciary, the
        needs of the beneficiaries for present and future
        distributions authorized or required by the governing
        instrument; and
            (8)  to the extent reasonably known to the fiduciary, the
        income and resources of the beneficiaries and related trusts.
        (d)  Requirements for charitable trusts having voting control
     of certain publicly traded business corporations.--
            (1)  Notwithstanding any other legal requirement or
        process which may include court review of the activities of a
        charitable trust, a fiduciary for a charitable trust with a
        majority of its beneficiaries at a principal location within
        this Commonwealth having voting control of a publicly traded
        business corporation received as an asset from the settlor
        shall not consummate any transaction, or vote to permit
        consummation of or otherwise act to consummate any
        transaction, which would result in the trust no longer having
        voting control of that corporation, by sale, merger,
        consolidation or otherwise, without:
                (i)  serving notice upon the Attorney General at
            least 60 days prior to the consummation of the
            transaction; and
                (ii)  directing that at least 30 days' prior notice
            of the consummation of the transaction be provided by the
            publicly traded business corporation controlled by the
            trust to employees of that corporation who are located in
            this Commonwealth.
            (2)  In addition to any other power or duty provided by
        law, the Attorney General also has the power to seek judicial
        review pursuant to this subsection from the court having
        jurisdiction over the trust if the Attorney General concludes
        that the consummation of a transaction described in paragraph
        (1) is unnecessary for the future economic viability of the
        corporation and would constitute a failure to comply with the
        provisions of subsection (c) or an impairment of the
        charitable purpose of the trust.
            (3)  In a judicial proceeding commenced by the Attorney
        General under this subsection, the Attorney General must
        prove by a preponderance of the evidence that consummation of
        a transaction which would result in the charitable trust no
        longer having voting control of the corporation is
        unnecessary for the future economic viability of the
        corporation and must be prevented in order to avoid
        noncompliance with the provisions of subsection (c) or an
        impairment of the charitable purpose of the trust.
            (3.1)  If a fiduciary provides the notice under paragraph
        (1)(i), the following apply:
                (i)  Except as set forth in subparagraph (ii), upon
            expiration of the notice period under paragraph (1)(i),
            the fiduciary may:
                    (A)  vote to permit consummation of a transaction
                described in paragraph (1); or
                    (B)  otherwise act to consummate the transaction
                described in paragraph (1).
                (ii)  The fiduciary has no authority under
            subparagraph (i) if the Attorney General has, within 30
            days of receiving the notice under paragraph (1)(i),
            commenced a judicial proceeding under paragraph (2).
                (iii)  If the fiduciary is enjoined in a judicial
            proceeding under subparagraph (ii), the fiduciary shall
            not have authority under subparagraph (i)(A) or (B)
            unless the injunction is dissolved by:
                    (A)  stipulation of the fiduciary and the
                Attorney General; or
                    (B)  an order of a court of competent
                jurisdiction which is not subject to further judicial
                review as of right.
            (4)  In the event court approval to consummate a
        transaction described in paragraph (1) is obtained pursuant
        to this subsection, the court shall ensure that the
        provisions of 15 Pa.C.S. Ch. 25 Subchs. I (relating to
        severance compensation for employees terminated following
        certain control-share acquisitions) and J (relating to
        business combination transactions - labor contracts) apply to
        the business corporation described in paragraph (1) upon the
        consummation of the transaction.
            (5)  A fiduciary of a charitable trust with a majority of
        its beneficiaries at a principal location within this
        Commonwealth having voting control of a publicly traded
        business corporation received as an asset from the settlor
        shall not be subject to liability for the commercially
        reasonable sale of certain shares of the corporation not
        necessary to maintain voting control and for which no control
        premium is realized if the fiduciary reasonably determined
        that such sale was authorized in a manner consistent with the
        requirements of this section and other applicable provisions
        of this title.
            (6)  The requirements of this subsection shall not apply
        to a noncharitable trust, including a noncharitable trust
        with a charitable remainder and a charitable trust which
        reverts to noncharitable purposes.
            (7)  As used in this subsection, the term "voting
        control" means a majority of the voting power of the
        outstanding shares of stock entitled to vote on the election
        of directors.
     (Nov. 6, 2002, P.L.1101, No.133, eff. imd.; Nov. 30, 2004,
     P.L.1525, No.194, eff. imd.)

        2004 Amendment.  Act 194 amended subsec. (d).
        2002 Amendment.  Act 133 amended subsec. (c)(6) and added
     subsec. (d).
        Cross References.  Section 7203 is referred to in section
     7207 of this title; sections 3303, 4303, 5303 of Title 68 (Real
     and Personal Property).