Illinois General Assembly - Full Text of HB4011
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Full Text of HB4011  99th General Assembly


Rep. Sara Feigenholtz

Filed: 4/17/2015





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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    established under subsection (b) of this Section.
5        "Direct holdings" in a company means all publicly
6    traded securities of that company that are held directly by
7    the retirement system in an actively managed account or
8    fund in which the retirement system owns all shares or
9    interests.
10        "Indirect holdings" in a company means all securities
11    of that company that are held in an account or fund, such
12    as a mutual fund, managed by one or more persons not
13    employed by the retirement system, in which the retirement
14    system owns shares or interests together with other
15    investors not subject to the provisions of this Section or
16    that are held in an index fund.
17        "Iran-restricted company" means a company that meets
18    the qualifications under Section 1-110.15 of this Code.
19        "Private market fund" means any private equity fund,
20    private equity funds of funds, venture capital fund, hedge
21    fund, hedge fund of funds, real estate fund, or other
22    investment vehicle that is not publicly traded.
23        "Restricted companies" means companies that boycott
24    Israel, Iran-restricted companies, and Sudan-restricted
25    companies.
26        "Retirement system" means a retirement system



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



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



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



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1    containing restricted companies requesting that they
2    consider removing the companies from the fund or create a
3    similar actively managed fund having indirect holdings
4    devoid of the companies. If the manager creates a similar
5    fund, the retirement system shall replace all applicable
6    investments with investments in the similar fund in an
7    expedited timeframe consistent with prudent investing
8    standards.
9    (g) Upon request, and at least annually, each retirement
10system shall provide the Illinois Investment Policy Board with
11information regarding investments sold, redeemed, divested, or
12withdrawn in compliance with this Section.
13    (h) Notwithstanding any provision of this Section to the
14contrary, a retirement system may cease divesting from
15companies pursuant to subsection (f) if clear and convincing
16evidence shows that the value of investments in such companies
17becomes equal to or less than 0.5% of the market value of all
18assets under management by the retirement system. For any
19cessation of divestment authorized by this subsection (h), the
20retirement system shall provide a written notice to the
21Illinois Investment Policy Board in advance of the cessation of
22divestment, setting forth the reasons and justification,
23supported by clear and convincing evidence, for its decision to
24cease divestment under subsection (f).
25    (i) The cost associated with the activities of the Illinois
26Investment Policy Board shall be borne by the boards of each



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1pension fund or investment board created under Article 15, 16,
2or 22A of this Code.
3    (j) With respect to actions taken in compliance with this
4Section, including all good-faith determinations regarding
5companies as required by this Section, the retirement system
6and Illinois Investment Policy Board are exempt from any
7conflicting statutory or common law obligations, including any
8fiduciary duties under this Article and any obligations with
9respect to choice of asset managers, investment funds, or
10investments for the retirement system's securities portfolios.
11    (k) It is not the intent of the General Assembly in
12enacting this amendatory Act of the 99th General Assembly to
13cause divestiture from any company based in the United States
14of America. The Illinois Investment Policy Board shall consider
15this intent when developing or reviewing the list of restricted
17    (l) If any provision of this amendatory Act of the 99th
18General Assembly or its application to any person or
19circumstance is held invalid, the invalidity of that provision
20or application does not affect other provisions or applications
21of this amendatory Act of the 99th General Assembly that can be
22given effect without the invalid provision or application.
23    Section 99. Effective date. This Act takes effect upon
24becoming law.".