(a) No fiduciary may maintain the indicia of ownership of any assets
of a plan outside the jurisdiction of the district courts of the United
States, unless:
(1) Such assets are:
(i) Securities issued by a person, as defined in section 3(9) of the
Employee Retirement Income Security Act of 1974 (Act) (other than an
individual), which is not organized under the laws of the United States
or a State and
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does not have its principal place of business within the United States;
(ii) Securities issued by a government other than the government of
the United States or of a State, or any political subdivision, agency or
instrumentality of such a government;
(iii) Securities issued by a person, as defined in section 3(9) of
the Act (other than an individual), the principal trading market for
which securities is outside the jurisdiction of the district courts of
the United States; or
(iv) Currency issued by a government other than the government of
the United States if such currency is maintained outside the
jurisdiction of the district courts of the United States solely as an
incident to the purchase, sale or maintenance of securities described in
paragraph (a)(1) of this section; and
(2)(i) Such assets are under the management and control of a
fiduciary which is a corporation or partnership organized under the laws
of the United States or a State, which fiduciary has its principal place
of business within the United States and which is--
(A) A bank as defined in section 202 (a)(2) of the Investment
Advisers Act of 1940 that has, as of the last day of its most recent
fiscal year, equity capital in excess of $1,000,000;
(B) An insurance company which is qualified under the laws of more
than one State to manage, acquire, or dispose of any asset of a plan,
which company has, as of the last day of its most recent fiscal year,
net worth in excess of $1,000,000 and which is subject to supervision
and examination by the State authority having supervision over insurance
companies; or
(C) An investment adviser registered under the Investment Advisers
Act of 1940 that has, as of the last day of its most recent fiscal year,
total client assets under its management and control in excess
$50,000,000 and either
(1) Shareholders' or partners' equity in excess of $750,000 or
(2) All of its obligations and liabilities assumed or guaranteed by
a person described in paragraph (a)(2)(i)(A), (B), or (C)(1) or
(a)(2)(ii)(A)(2) of this section; or
(ii) Such indicia of ownership are either
(A) In the physical possession of, or, as a result of normal
business operations, are in transit to the physical possession of, a
person which is organized under the laws of the United States or a
State, which person has its principal place of business in the United
States and which is--
(1) A bank as defined in section 202(a)(2) of the Investment
Advisers Act of 1940 that has, as of the last day of its most recent
fiscal year, equity capital in excess of $1,000,000;
(2) A broker or dealer registered under the Securities Exchange Act
of 1934 that has, as of the last day of its most recent fiscal year, net
worth in excess of $750,000; or
(3) A broker or dealer registered under the Securities Exchange Act
of 1934 that has all of its obligations and liabilities assumed or
guaranteed by a person described in paragraph (a)(2)(i)(A), (B), or
(C)(1) or (a)(2)(ii)(A)(2) of this section; or
(B) Maintained by a broker or dealer, described in paragraph
(a)(2)(ii)(A)(2) or (3) of this section, in the custody of an entity
designated by the Securities and Exchange Commission as a ``satisfactory
control location'' with respect to such broker or dealer pursuant to
Rule 15c3-3 under the Securities Exchange Act of 1934, provided that:
(1) Such entity holds the indicia of ownership as agent for the
broker or dealer, and
(2) Such broker or dealer is liable to the plan to the same extent
it would be if it retained the physical possession of the indicia of
ownership pursuant to paragraph (a)(2)(ii)(A) of this section.
(C) Maintained by a bank described in paragraph (a)(2)(ii)(A)(1), in
the custody of an entity that is a foreign securities depository,
foreign clearing agency which acts as a securities depository, or
foreign bank, which entity is supervised or regulated by a government
agency or regulatory authority in the foreign jurisdiction having
authority over such depositories, clearing agencies or banks, provided
that:
(1) The foreign entity holds the indicia of ownership as agent for
the bank;
(2) The bank is liable to the plan to the same extent it would be if
it retained the physical possession of the
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indicia of ownership within the United States;
(3) The indicia of ownership are not subject to any right, charge,
security interest, lien or claim of any kind in favor of the foreign
entity except for their safe custody or administration;
(4) Beneficial ownership of the assets represented by the indicia of
ownership is freely transferable without the payment of money or value
other than for safe custody or administration; and
(5) Upon request by the plan fiduciary who is responsible for the
selection and retention of the bank, the bank identifies to such
fiduciary the name, address and principal place of business of the
foreign entity which acts as custodian for the plan pursuant to this
paragraph (a)(2)(ii)(C), and the name and address of the governmental
agency or other regulatory authority that supervises or regulates that
foreign entity.
(b) Notwithstanding any requirement of paragraph (a) of this
section, a fiduciary with respect to a plan may maintain in Canada the
indicia of ownership of plan assets which are attributable to a
contribution made on behalf of a plan participant who is a citizen or
resident of Canada, if such indicia of ownership must remain in Canada
in order for the plan to qualify for and maintain tax exempt status
under the laws of Canada or to comply with other applicable laws of
Canada or any Province of Canada.
(c) For purposes of this regulation:
(1) The term management and control means the power to direct the
acquisition or disposition through purchase, sale, pledging, or other
means; and
(2) The term depository means any company, or agency or
instrumentality of government, that acts as a custodian of securities in
connection with a system for the central handling of securities whereby
all securities of a particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred,
loaned, or pledged by bookkeeping entry without physical delivery of
securities certificates.
[42 FR 54124, Oct. 4, 1977, as amended at 46 FR 1267, Jan. 6, 1981]
