Does Act 6 of 1985 permit local Firemen and Policemen Pension Funds to invest in stocks and bonds? 24-10-402; 24-11-410; 24-11-805. RESPONSE: No, not stocks, but it does authorize investment in certain no load mutual funds. 24-10-401; 24-10-205. Can still invest in certain bonds.

STATE OF ARKANSAS OFFICE OF THE ATTORNEY GENERAL JUSTICE BUILDING, LITTLE ROCK 72201 STEVE CLARK (501) 371-2007 ATTORNEY GENERAL OPINION NO. 86-5 January 8, 1986 Mr. Bud Canada State Senator 106 Meyer Building Hot Springs, AR 71901 RE: Act 6 of 1985 Dear Senator Canada: This is in response to your opinion request wherein you posed the following question regarding Act 6 of 1985 (en- closed): Does Act 6 of 1985 permit moneys in Firemen's and Policemen's Pension and Relief Funds to be invested in stocks and bonds? This Act does not authorize investment of such funds' moneys in "stocks" as the term is generally used ina business or financial sense. It does authorize investment of certain such funds in shares of "no-load mutual funds". a Investment in certain government interest-bearing bonds is. cM. also permitted under this Act, as under prior law. g ’ STOCKS Act 6 of 1985 does not authorize the investment of moneys from these funds in "stocks" in general, but does authorize, under certain circumstances, investment in no- load mutual funds having the following characteristics: » » « Such mutual funds shall be an open-end diversified investment company registered under the Federal In- vestment Company Act of 1940, as amended; the man- agement company of the investment company shall have assets under management of more than one~hundred million dollars; and there is no sales charge for purchasing shares of such fund, and no redemption for selling such shares. Canada Opinion . ‘January 8, 1986 Page 2 (Ark, Stat. Ann. §12-3806 (6. 20) (g) as amended by Act 6 of 1985). A "stock", as traditionally used as a business or financial term, is a proprietorship element in a corporation (Webster's Third New World International Dictionary 1966). If a share of a "no-load" mutual fund can be considered a stock, it is the only: type stock in which Act 6 permits investment. Act 6 of 1985, [amending Ark. Stat. Ann. §12-3806 (6120); §19-1805; and §19-2223] allows the Board of Trustees, of those funds having assets in excess of $500,000.00, to employ professional investment counsel to invest its assets subject to those conditions provided in subsection 6.20 (i.e., no-load mutual funds) and does not limit investment to interest-bearing bonds. BONDS Act 6 retains the identical language which authorizes and limits bond investment, in each of two of the statutes it amends (Ark. Stat. Ann. §19-1805 for Policemen's Pension and Relief Funds, and §19-2223 for Firemen's Pension and Relief Funds) as follows: - « » in interest-bearing bonds of the United States, of the State of Arkansas, or of the city where such . board is located, e.e Ss : vA of va wed a i a I 4 4 A Consequently, investment in the ahove described bonds is still permitted. CONCLUSION The only significant change made by Act 6 of 1985 is to provide Policemen's and Firemen's Pension and Relief Funds, ~ oa having assets in excess of $500,000.00, the additional 4 options of employing professional investment counsel, and f investing in certain no-load mutual funds. fae sy “Canada Opinion January 8, 1986 ' Page 3 The foregoing opinion, which I hereby approve, was prepared by Assistant Attorney General David S. Mitchell. Sincerely, STEVE CLARK Pp_4 : Attorney General oY pidlandere SC/DSM/1im