Rep. Sara Feigenholtz

Filed: 4/15/2015





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2    AMENDMENT NO. ______. Amend House Bill 4011 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Illinois Procurement Code is amended by
5adding Section 50-36.5 as follows:
6    (30 ILCS 500/50-36.5 new)
7    Sec. 50-36.5. Prohibition on contracts with businesses
8that boycott Israel. Notwithstanding any other provision of
9this Code, on and after the effective date of this amendatory
10Act of the 99th General Assembly, a State agency shall not
11enter into a contract subject to this Code with a business that
12boycotts Israel. In determining whether a business boycotts
13Israel, a State agency shall consult the list of restricted
14companies developed by the Illinois Investment Policy Board in
15accordance with Section 1-110.16 of the Illinois Pension Code.
16For the purposes of this Section, "boycott Israel" means



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1engaging in actions that are politically motivated and are
2intended to penalize, inflict economic harm on, or otherwise
3limit commercial relations with the State of Israel or
4businesses based in the State of Israel or in territories
5controlled by the State of Israel.
6    Section 10. The Illinois Pension Code is amended by adding
7Section 1-110.16 as follows:
8    (40 ILCS 5/1-110.16 new)
9    Sec. 1-110.16. Transactions prohibited by retirement
10systems; companies that boycott Israel, Iran-restricted
11companies, and Sudan-restricted companies.
12    (a) As used in this Section:
13        "Boycott Israel" means engaging in actions that are
14    politically motivated and are intended to penalize,
15    inflict economic harm on, or otherwise limit commercial
16    relations with the State of Israel or companies based in
17    the State of Israel or in territories controlled by the
18    State of Israel.
19        "Company" means any sole proprietorship, organization,
20    association, corporation, partnership, joint venture,
21    limited partnership, limited liability partnership,
22    limited liability company, or other entity or business
23    association, including all wholly owned subsidiaries,
24    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        "Illinois Investment Policy Board" means the board
4    consisting of an appointment of the board of a pension fund
5    or investment board created under Article 15, 16, or 22A of
6    this Code and 4 members appointed by the Governor.
7        "Direct holdings" in a company means all publicly
8    traded securities of that company that are held directly by
9    the retirement system in an actively managed account or
10    fund in which the retirement system owns all shares or
11    interests.
12        "Indirect holdings" in a company means all securities
13    of that company that are held in an account or fund, such
14    as a mutual fund, managed by one or more persons not
15    employed by the retirement system, in which the retirement
16    system owns shares or interests together with other
17    investors not subject to the provisions of this Section or
18    that are held in an index fund.
19        "Iran-restricted company" means a company that meets
20    the qualifications under Section 1-110.15 of this Code.
21        "Private market fund" means any private equity fund,
22    private equity funds of funds, venture capital fund, hedge
23    fund, hedge fund of funds, real estate fund, or other
24    investment vehicle that is not publicly traded.
25        "Restricted companies" means companies that boycott
26    Israel, Iran-restricted companies, and Sudan-restricted



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1    companies.
2        "Retirement system" means a retirement system
3    established under Article 2, 14, 15, 16, or 18 of this Code
4    or the Illinois State Board of Investment.
5        "Sudan-restricted company" means a company that meets
6    the qualifications under Section 1-110.6 of this Code.
7    (b) Notwithstanding any provision of law to the contrary,
8beginning January 1, 2016, Sections 110.15 and 1-110.6 of this
9Code shall be administered in accordance with this Section.
10    (c) By April 1, 2016, the Illinois Investment Policy Board
11shall make its best efforts to identify all Iran-restricted
12companies, Sudan-restricted companies, and companies that
13boycott Israel and assemble those identified companies into a
14list of restricted companies, to be distributed to each
15retirement system.
16    These efforts shall include the following, as appropriate
17in the Illinois Investment Policy Board's judgment:
18        (1) reviewing and relying on publicly available
19    information regarding Iran-restricted companies,
20    Sudan-restricted companies, and companies that boycott
21    Israel, including information provided by nonprofit
22    organizations, research firms, and government entities;
23        (2) contacting asset managers contracted by the
24    retirement systems that invest in Iran-restricted
25    companies, Sudan-restricted companies, and companies that
26    boycott Israel;



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1        (3) contacting other institutional investors that have
2    divested from or engaged with Iran-restricted companies,
3    Sudan-restricted companies, and companies that boycott
4    Israel; and
5        (4) retaining an independent research firm to identify
6    Iran-restricted companies, Sudan-restricted companies, and
7    companies that boycott Israel.
8    The Illinois Investment Policy Board shall review the list
9of restricted companies on a quarterly basis based on evolving
10information from, among other sources, those listed in this
11subsection (c) and distribute any updates to the list of
12restricted companies to the retirement systems.
13    (d) The Illinois Investment Policy Board shall adhere to
14the following procedures for companies on the list of
15restricted companies:
16        (1) For each company newly identified in subsection
17    (c), the Illinois Investment Policy Board shall send a
18    written notice informing the company of its status and that
19    it may become subject to divestment by the retirement
20    systems.
21        (2) If, following the Illinois Investment Policy
22    Board's engagement pursuant to this subsection (d) with a
23    restricted company, that company ceases activity that
24    designates the company to be an Iran-restricted company, a
25    Sudan-restricted company, or a company that boycotts
26    Israel, the company shall be removed from the list of



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1    restricted companies and the provisions of this Section
2    shall cease to apply to it unless it resumes such
3    activities.
4    (e) The retirement system shall adhere to the following
5procedures for companies on the list of restricted companies:
6        (1) The retirement system shall identify those
7    companies on the list of restricted companies in which the
8    retirement system owns direct holdings and indirect
9    holdings.
10        (2) The retirement system shall instruct its
11    investment advisors to sell, redeem, divest, or withdraw
12    all direct holdings of restricted companies from the
13    retirement system's assets under management in an orderly
14    and fiduciarily responsible manner within 12 months after
15    the company's most recent appearance on the list of
16    restricted companies.
17        (3) The retirement system may not acquire securities of
18    restricted companies.
19        (4) The provisions of this subsection (e) do not apply
20    to the retirement system's indirect holdings in private
21    market funds. The Illinois Investment Policy Board shall
22    submit letters to the managers of those investment funds
23    containing companies that have restricted companies
24    requesting that they consider removing the companies from
25    the fund or create a similar actively managed fund having
26    indirect holdings devoid of the companies. If the manager



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1    creates a similar fund, the retirement system shall replace
2    all applicable investments with investments in the similar
3    fund in an expedited timeframe consistent with prudent
4    investing standards.
5    (f) Upon request, and at least annually, each retirement
6system shall provide the Illinois Investment Policy Board with
7information regarding investments sold, redeemed, divested, or
8withdrawn in compliance with this Section.
9    (g) Notwithstanding any provision of this Section to the
10contrary, a retirement system may cease divesting from
11companies pursuant to subsection (e) if clear and convincing
12evidence shows that the value of investments in such companies
13becomes equal to or less than 0.5% of the market value of all
14assets under management by the retirement system. For any
15cessation of divestment authorized by this subsection (g), the
16retirement system shall provide a written notice to the
17Illinois Investment Policy Board in advance of the cessation of
18divestment, setting forth the reasons and justification,
19supported by clear and convincing evidence, for its decision to
20cease divestment under subsection (e).
21    (h) The cost associated with the activities of the Illinois
22Investment Policy Board shall be borne by the board of a
23pension fund or investment board created under Article 15, 16,
24or 22A of this Code.
25    (i) With respect to actions taken in compliance with this
26Section, including all good-faith determinations regarding



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1companies as required by this Section, the retirement system
2and Illinois Investment Policy Board are exempt from any
3conflicting statutory or common law obligations, including any
4fiduciary duties under this Article and any obligations with
5respect to choice of asset managers, investment funds, or
6investments for the retirement system's securities portfolios.
7    (j) If any provision of this amendatory Act of the 99th
8General Assembly or its application to any person or
9circumstance is held invalid, the invalidity of that provision
10or application does not affect other provisions or applications
11of this amendatory Act of the 99th General Assembly that can be
12given effect without the invalid provision or application.
13    Section 99. Effective date. This Act takes effect upon
14becoming law.".