The department was asked whether debentures of a real estate investment trust formed under Massachusetts law could be considered “corporate interest-bearing securities” eligible as savings banks investments under section 235(21)(a)(2) of the Banking Law.

The department reiterated its long-standing view that such debentures could not be considered “corporate” for purposes of the subdivision concerned. First of all, both the Legislature and the Congress, particularly in tax legislation but including, at the State level, such other examples as section 81 of the Insurance Law, have shown themselves quite cognizant of the existence of business entities similar but not identical in form to true corporations. Express references to business trusts in some instances, and allusions to “associations” as well as “corporations” in others, are entirely lacking in the pertinent Banking Law subdivision; this led the department to conclude that the Legislature intended “corporate” securities for these purposes to be precisely that. Legislative history, indicating the origins of this subdivision as a narrow and careful exception to the strict rules theretofore prevailing, supported this conclusion, as did the department's review of an explanation by Massachusetts counsel of some significant respects, albeit usually more important to holders of equity than debt, in which Massachusetts trust differ in legal attributes and consequences from corporations in that Commonwealth.

In sum, the department felt it would need a clear legislative mandate before it could allow REIT debentures to be considered “corporate” under the legal-investment statutes.

DATED: February 27, 1973