Full Text of HB0280 101st General Assembly
HB0280 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 HB0280 Introduced , by Rep. Will Guzzardi SYNOPSIS AS INTRODUCED: |
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Amends the General Provisions Article of the Illinois Pension Code. Requires the Illinois Investment Policy Board to make its best efforts to identify all companies that contract to build a border wall and include those companies in the list of restricted companies for purposes of investment distributed to each retirement system and the Illinois State Board of Investment. Effective immediately.
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| | FISCAL NOTE ACT MAY APPLY | | PENSION IMPACT NOTE ACT MAY APPLY |
| | A BILL FOR |
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| | | HB0280 | | LRB101 04977 RPS 49986 b |
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| 1 | | AN ACT concerning public employee benefits.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Pension Code is amended by changing | 5 | | Section 1-110.16 as follows: | 6 | | (40 ILCS 5/1-110.16) | 7 | | Sec. 1-110.16. Transactions prohibited by retirement | 8 | | systems; companies that boycott Israel, companies that | 9 | | contract to build a border wall, Iran-restricted companies, | 10 | | Sudan-restricted companies, and expatriated entities. | 11 | | (a) As used in this Section: | 12 | | "Boycott Israel" means engaging in actions that are | 13 | | politically motivated and are intended to penalize, | 14 | | inflict economic harm on, or otherwise limit commercial | 15 | | relations with the State of Israel or companies based in | 16 | | the State of Israel or in territories controlled by the | 17 | | State of Israel. | 18 | | "Company" means any sole proprietorship, organization, | 19 | | association, corporation, partnership, joint venture, | 20 | | limited partnership, limited liability partnership, | 21 | | limited liability company, or other entity or business | 22 | | association, including all wholly owned subsidiaries, | 23 | | majority-owned subsidiaries, parent companies, or |
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| 1 | | affiliates of those entities or business associations, | 2 | | that exist for the purpose of making profit. | 3 | | "Contract to build a border wall" means entering into a | 4 | | contract with the federal government for construction | 5 | | pursuant to Section 4 of Executive Order 13767 of the | 6 | | President of the United States. | 7 | | "Illinois Investment Policy Board" means the board | 8 | | established under subsection (b) of this Section. | 9 | | "Direct holdings" in a company means all publicly | 10 | | traded securities of that company that are held directly by | 11 | | the retirement system in an actively managed account or | 12 | | fund in which the retirement system owns all shares or | 13 | | interests. | 14 | | "Expatriated entity" has the meaning ascribed to it in | 15 | | Section 1-15.120 of the Illinois Procurement Code. | 16 | | "Indirect holdings" in a company means all securities | 17 | | of that company that are held in an account or fund, such | 18 | | as a mutual fund, managed by one or more persons not | 19 | | employed by the retirement system, in which the retirement | 20 | | system owns shares or interests together with other | 21 | | investors not subject to the provisions of this Section or | 22 | | that are held in an index fund. | 23 | | "Iran-restricted company" means a company that meets | 24 | | the qualifications under Section 1-110.15 of this Code. | 25 | | "Private market fund" means any private equity fund, | 26 | | private equity funds of funds, venture capital fund, hedge |
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| 1 | | fund, hedge fund of funds, real estate fund, or other | 2 | | investment vehicle that is not publicly traded. | 3 | | "Restricted companies" means companies that boycott | 4 | | Israel, companies that contract to build a border wall, | 5 | | Iran-restricted companies, Sudan-restricted companies, and | 6 | | expatriated entities. | 7 | | "Retirement system" means a retirement system | 8 | | established under Article 2, 14, 15, 16, or 18 of this Code | 9 | | or the Illinois State Board of Investment. | 10 | | "Sudan-restricted company" means a company that meets | 11 | | the qualifications under Section 1-110.6 of this Code. | 12 | | (b) There shall be established an Illinois Investment | 13 | | Policy Board. The Illinois Investment Policy Board shall | 14 | | consist of 7 members. Each board of a pension fund or | 15 | | investment board created under Article 15, 16, or 22A of this | 16 | | Code shall appoint one member, and the Governor shall appoint 4 | 17 | | members. | 18 | | (c) Notwithstanding any provision of law to the contrary, | 19 | | beginning January 1, 2016, Sections 110.15 and 1-110.6 of this | 20 | | Code shall be administered in accordance with this Section. | 21 | | (d) By April 1, 2016, the Illinois Investment Policy Board | 22 | | shall make its best efforts to identify all Iran-restricted | 23 | | companies, Sudan-restricted companies, and companies that | 24 | | boycott Israel and assemble those identified companies into a | 25 | | list of restricted companies, to be distributed to each | 26 | | retirement system. |
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| 1 | | These efforts shall include the following, as appropriate | 2 | | in the Illinois Investment Policy Board's judgment: | 3 | | (1) reviewing and relying on publicly available | 4 | | information regarding Iran-restricted companies, | 5 | | Sudan-restricted companies, and companies that boycott | 6 | | Israel, including information provided by nonprofit | 7 | | organizations, research firms, and government entities; | 8 | | (2) contacting asset managers contracted by the | 9 | | retirement systems that invest in Iran-restricted | 10 | | companies, Sudan-restricted companies, and companies that | 11 | | boycott Israel; | 12 | | (3) contacting other institutional investors that have | 13 | | divested from or engaged with Iran-restricted companies, | 14 | | Sudan-restricted companies, and companies that boycott | 15 | | Israel; and | 16 | | (4) retaining an independent research firm to identify | 17 | | Iran-restricted companies, Sudan-restricted companies, and | 18 | | companies that boycott Israel. | 19 | | The Illinois Investment Policy Board shall review the list | 20 | | of restricted companies on a quarterly basis based on evolving | 21 | | information from, among other sources, those listed in this | 22 | | subsection (d) and distribute any updates to the list of | 23 | | restricted companies to the retirement systems and the State | 24 | | Treasurer. | 25 | | By April 1, 2018, the Illinois Investment Policy Board | 26 | | shall make its best efforts to identify all expatriated |
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| 1 | | entities and include those companies in the list of restricted | 2 | | companies distributed to each retirement system and the State | 3 | | Treasurer. These efforts shall include the following, as | 4 | | appropriate in the Illinois Investment Policy Board's | 5 | | judgment: | 6 | | (1) reviewing and relying on publicly available | 7 | | information regarding expatriated entities, including | 8 | | information provided by nonprofit organizations, research | 9 | | firms, and government entities; | 10 | | (2) contacting asset managers contracted by the | 11 | | retirement systems that invest in expatriated entities; | 12 | | (3) contacting other institutional investors that have | 13 | | divested from or engaged with expatriated entities; and | 14 | | (4) retaining an independent research firm to identify | 15 | | expatriated entities. | 16 | | Within 6 months after effective date of this amendatory Act | 17 | | of the 101st General Assembly, the Illinois Investment Policy | 18 | | Board shall make its best efforts to identify all companies | 19 | | that contract to build a border wall and include those | 20 | | companies in the list of restricted companies distributed to | 21 | | each retirement system. These efforts shall include the | 22 | | following, as appropriate in the Illinois Investment Policy | 23 | | Board's judgment: | 24 | | (1) reviewing and relying on publicly available | 25 | | information regarding companies that contract to build a | 26 | | border wall, including information provided by nonprofit |
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| 1 | | organizations, research firms, and government entities; | 2 | | (2) contacting asset managers contracted by the | 3 | | retirement systems that invest in companies that contract | 4 | | to build a border wall; | 5 | | (3) contacting other institutional investors that have | 6 | | divested from or engaged with companies that contract to | 7 | | build a border wall; and | 8 | | (4) retaining an independent research firm to identify | 9 | | companies that contract to build a border wall. | 10 | | (e) The Illinois Investment Policy Board shall adhere to | 11 | | the following procedures for companies on the list of | 12 | | restricted companies: | 13 | | (1) For each company newly identified in subsection | 14 | | (d), the Illinois Investment Policy Board shall send a | 15 | | written notice informing the company of its status and that | 16 | | it may become subject to divestment or shareholder activism | 17 | | by the retirement systems. | 18 | | (2) If, following the Illinois Investment Policy | 19 | | Board's engagement pursuant to this subsection (e) with a | 20 | | restricted company, that company ceases activity that | 21 | | designates the company to be an Iran-restricted company, a | 22 | | Sudan-restricted company, a company that boycotts Israel, | 23 | | or an expatriated entity, the company shall be removed from | 24 | | the list of restricted companies and the provisions of this | 25 | | Section shall cease to apply to it unless it resumes such | 26 | | activities. |
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| 1 | | (f) Except as provided in subsection (f-1) of this Section | 2 | | the retirement system shall adhere to the following procedures | 3 | | for companies on the list of restricted companies: | 4 | | (1) The retirement system shall identify those | 5 | | companies on the list of restricted companies in which the | 6 | | retirement system owns direct holdings and indirect | 7 | | holdings. | 8 | | (2) The retirement system shall instruct its | 9 | | investment advisors to sell, redeem, divest, or withdraw | 10 | | all direct holdings of restricted companies from the | 11 | | retirement system's assets under management in an orderly | 12 | | and fiduciarily responsible manner within 12 months after | 13 | | the company's most recent appearance on the list of | 14 | | restricted companies. | 15 | | (3) The retirement system may not acquire securities of | 16 | | restricted companies. | 17 | | (4) The provisions of this subsection (f) do not apply | 18 | | to the retirement system's indirect holdings or private | 19 | | market funds. The Illinois Investment Policy Board shall | 20 | | submit letters to the managers of those investment funds | 21 | | containing restricted companies requesting that they | 22 | | consider removing the companies from the fund or create a | 23 | | similar actively managed fund having indirect holdings | 24 | | devoid of the companies. If the manager creates a similar | 25 | | fund, the retirement system shall replace all applicable | 26 | | investments with investments in the similar fund in an |
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| 1 | | expedited timeframe consistent with prudent investing | 2 | | standards. | 3 | | (f-1) The retirement system shall adhere to the following | 4 | | procedures for restricted companies that are expatriated | 5 | | entities: | 6 | | (1) To the extent that the retirement system believes | 7 | | that shareholder activism would be more impactful than | 8 | | divestment, the retirement system shall have the authority | 9 | | to engage with a restricted company prior to divesting. | 10 | | (2) Subject to any applicable State or Federal laws, | 11 | | methods of shareholder activism utilized by the retirement | 12 | | system may include, but are not limited to, bringing | 13 | | shareholder resolutions and proxy voting on shareholder | 14 | | resolutions. | 15 | | (3) The retirement system shall report on its | 16 | | shareholder activism and the outcome of such efforts to the | 17 | | Illinois Investment Policy Board by April 1 of each year. | 18 | | (4) If the engagement efforts of the retirement system | 19 | | are unsuccessful, then it shall adhere to the procedures | 20 | | under subsection (f) of this Section. | 21 | | (g) Upon request, and by April 1 of each year, each | 22 | | retirement system shall provide the Illinois Investment Policy | 23 | | Board with information regarding investments sold, redeemed, | 24 | | divested, or withdrawn in compliance with this Section. | 25 | | (h) Notwithstanding any provision of this Section to the | 26 | | contrary, a retirement system may cease divesting from |
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| 1 | | companies pursuant to subsection (f) if clear and convincing | 2 | | evidence shows that the value of investments in such companies | 3 | | becomes equal to or less than 0.5% of the market value of all | 4 | | assets under management by the retirement system. For any | 5 | | cessation of divestment authorized by this subsection (h), the | 6 | | retirement system shall provide a written notice to the | 7 | | Illinois Investment Policy Board in advance of the cessation of | 8 | | divestment, setting forth the reasons and justification, | 9 | | supported by clear and convincing evidence, for its decision to | 10 | | cease divestment under subsection (f). | 11 | | (i) The cost associated with the activities of the Illinois | 12 | | Investment Policy Board shall be borne by the boards of each | 13 | | pension fund or investment board created under Article 15, 16, | 14 | | or 22A of this Code. | 15 | | (j) With respect to actions taken in compliance with this | 16 | | Section, including all good-faith determinations regarding | 17 | | companies as required by this Section, the retirement system | 18 | | and Illinois Investment Policy Board are exempt from any | 19 | | conflicting statutory or common law obligations, including any | 20 | | fiduciary duties under this Article and any obligations with | 21 | | respect to choice of asset managers, investment funds, or | 22 | | investments for the retirement system's securities portfolios. | 23 | | (k) It is not the intent of the General Assembly in | 24 | | enacting this amendatory Act of the 99th General Assembly to | 25 | | cause divestiture from any company based in the United States | 26 | | of America. The Illinois Investment Policy Board shall consider |
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| 1 | | this intent when developing or reviewing the list of restricted | 2 | | companies. | 3 | | (l) If any provision of this amendatory Act of the 99th | 4 | | General Assembly or its application to any person or | 5 | | circumstance is held invalid, the invalidity of that provision | 6 | | or application does not affect other provisions or applications | 7 | | of this amendatory Act of the 99th General Assembly that can be | 8 | | given effect without the invalid provision or application.
| 9 | | (m) If any provision of this amendatory Act of the 100th | 10 | | General Assembly or its application to any person or | 11 | | circumstance is held invalid, the invalidity of that provision | 12 | | or application does not affect other provisions or applications | 13 | | of this amendatory Act of the 100th General Assembly that can | 14 | | be given effect without the invalid provision or application. | 15 | | (n) If any provision of this amendatory Act of the 101st | 16 | | General Assembly or its application to any person or | 17 | | circumstance is held invalid, the invalidity of that provision | 18 | | or application does not affect other provisions or applications | 19 | | of this amendatory Act of the 101st General Assembly that can | 20 | | be given effect without the invalid provision or application. | 21 | | (Source: P.A. 99-128, eff. 7-23-15; 100-551, eff. 1-1-18 .)
| 22 | | Section 99. Effective date. This Act takes effect upon | 23 | | becoming law. |
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