103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3494

 

Introduced 2/9/2024, by Sen. Jason Plummer

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Foreign Adversary Divestment Act. Defines "foreign adversary" as the People's Republic of China, the Russian Federation, the Islamic Republic of Iran, the Democratic People's Republic of Korea, the Republic of Cuba, the Venezuelan regime of Nicolas Maduro, or the Syrian Arab Republic, or any other entity deemed to be a foreign adversary by the Governor in consultation with the Director of the Illinois Emergency Management Agency and Office of Homeland Security. Provides that all State-managed funds and local-managed funds are prohibited from holding investments in any foreign adversary, State-owned enterprise of a foreign adversary, company domiciled within a foreign adversary, or company owned or controlled by a foreign adversary, State-owned enterprise of a foreign adversary, company domiciled within a foreign adversary, or other entity within a foreign adversary. Provides that all State-managed funds and local-managed funds are prohibited from investing or depositing public funds into any bank that is domiciled or has its principal place of business in a foreign adversary. Requires all State-managed funds to immediately in good faith begin divestment of prohibited holdings under the Act. Provides that total divestment must be achieved by January 1, 2026, or 2 years after the effective date of the Act, whichever is earlier. Requires the Illinois State Board of Investment to identify companies subject to the Act and to include those companies in a list of restricted companies to be distributed to each State-managed fund and local-managed fund. Makes other changes. Contains a severability provision.


LRB103 39064 MXP 69201 b

 

 

A BILL FOR

 

SB3494LRB103 39064 MXP 69201 b

1    AN ACT concerning finance.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Foreign Adversary Divestment Act.
 
6    Section 5. Purpose. The purpose of this Act is to ensure
7that Illinois public investment moneys are not put at risk in
8countries of concern and do not fund the development of the
9military technologies and surveillance tools of foreign
10adversaries that impede the furthering of Illinois' interests
11and the interests of the United States of America, by
12requiring the divestment of public pension moneys, university
13endowment funds, and other funds from foreign adversaries.
 
14    Section 10. Definitions. In this Act:
15    "Company" means any sole proprietorship, organization,
16association, corporation, partnership, joint venture, limited
17partnership, limited liability partnership, limited liability
18company, or other entity or business association, including
19wholly owned subsidiaries, majority-owned subsidiaries, parent
20companies, or affiliates of those entities or business
21associations, that exist for the purpose of making profit.
22    "Divestment" means the sale or otherwise contractual end

 

 

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1of any current or planned investments.
2    "Domicile" means either the country in which a company is
3registered, where the company's affairs are primarily
4completed, or where the majority of ownership share is held.
5    "Foreign adversary" means the People's Republic of China,
6the Russian Federation, the Islamic Republic of Iran, the
7Democratic People's Republic of Korea, the Republic of Cuba,
8the Venezuelan regime of Nicolas Maduro, or the Syrian Arab
9Republic, or any other entity deemed to be a foreign adversary
10by the Governor in consultation with the Director of the
11Illinois Emergency Management Agency and Office of Homeland
12Security.
13    "Investment" means any transfer of funds in any active or
14passive, direct or indirect structure that seeks to generate
15revenue or accomplish any other gain, including nonmonetary
16gain.
17    "Official government capacity" means any role, elected or
18appointed, in a government or its subsidiaries.
19    "State-managed fund" means any short-term or long-term
20investment structure that is State-managed, State-run,
21State-controlled, or otherwise overseen by the State, a State
22agency, or any political subdivision within the State or
23agency controlled by the same, in which the State or
24subdivision has primary discretion over or vested interest in.
25Nothing in this definition shall be construed to not apply to
26any fund that is subject to the purview or direction of the

 

 

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1State or applicable subdivision, and populated, wholly or in
2part, with State funds, but managed by a third-party entity,
3such as a fiduciary. This includes, but is not limited to:
4        (1) public pension funds, public retirement systems,
5    or other State-sponsored funds that are sponsored,
6    maintained, or contributed to or required to be
7    contributed to by the State or any unit of local
8    government within the State, or any subsidiaries thereof;
9        (2) municipal, county, or other unit of local
10    government or municipal entity investment funds, rainy day
11    funds, or other political subdivision-controlled
12    investment structures; and
13        (3) university or college endowments, trusts, or other
14    structures that constitute, in whole or in part, a public
15    institution of higher education's investable assets.
16    "State-owned enterprise" means any company owned or
17controlled, in whole or in part, by a government or by
18individuals acting in official government capacities in any
19form.
 
20    Section 15. Prohibition on investments.
21    (a) All State-managed funds and local-managed funds are
22prohibited from holding investments in any foreign adversary,
23State-owned enterprise of a foreign adversary, company
24domiciled within a foreign adversary, or company owned or
25controlled by a foreign adversary, State-owned enterprise of a

 

 

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1foreign adversary, company domiciled within a foreign
2adversary, or other entity within a foreign adversary.
3    (b) All State-managed and local-managed funds are
4prohibited from investing or depositing public funds into any
5bank that is domiciled or has its principal place of business
6in a foreign adversary.
 
7    Section 20. Requirement of divestment.
8    (a) All State-managed funds are required to immediately in
9good faith begin divestment of any holdings prohibited under
10subsection (a) of Section 15. Total divestment must be
11achieved by January 1, 2026, or 2 years after effective date of
12this Act, whichever is earlier.
13    (b) For purposes of this Section, "total divestment" means
14reducing the value of prohibited investments to no more than
150.05% of the market value of all assets under management by a
16State-managed fund or local-managed fund.
 
17    Section 25. State investment audit.
18    (a) No later than 6 months after the effective date of this
19Act, the Illinois State Board of Investment shall identify all
20companies that are State-owned enterprises of, are domiciled
21within, whose primary affairs are conducted within, or whose
22majority ownership is held within a foreign adversary, and
23include those companies in a list of restricted companies to
24be distributed to each State-managed fund or local-managed

 

 

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1fund. These efforts include, but are not limited to, the
2following:
3        (1) reviewing and relying on publicly available
4    information regarding companies that are State-owned
5    enterprises of, are domiciled within, whose primary
6    affairs are conducted within, or whose majority ownership
7    share is held within a foreign adversary, including
8    information provided by non-profit organizations, research
9    firms, and government entities;
10        (2) contacting asset managers and fund managers
11    contracted by a State-managed fund that invest in
12    companies and in funds that are State-owned enterprises
13    of, are domiciled within, whose primary affairs are
14    conducted within, or whose majority or plurality ownership
15    share is held within a foreign adversary;
16        (3) contacting other institutional investors that have
17    divested from or engaged with companies that are
18    State-owned enterprises of, are domiciled within, whose
19    primary affairs are conducted within, or whose majority
20    ownership share is held within a foreign adversary; and
21        (4) retaining an independent research firm to identify
22    companies that are directly or indirectly investment
23    holdings of a State-managed fund or local-managed fund
24    that are State-owned enterprises of, are domiciled within,
25    whose primary affairs are conducted within, or whose
26    majority or plurality ownership share is held within a

 

 

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1    foreign adversary.
 
2    Section 30. Investment responsibility. Nothing in this Act
3shall be construed to inhibit, conflict, impede, or otherwise
4interfere with any applicable State or federal law or required
5financial safeguards, fiduciary requirements, and other sound
6investment criteria that any State-managed fund is subject to,
7unless abiding by those safeguards, requirements, or criteria
8would result in a State-managed fund or local-managed fund
9investing in a foreign adversary in violation of this Act.
 
10    Section 97. Severability. The provisions of this Act are
11severable under Section 1.31 of the Statute on Statutes.