Rep. Sara Feigenholtz

Filed: 4/20/2015





09900HB4011ham003LRB099 11218 EFG 34525 a


2    AMENDMENT NO. ______. Amend House Bill 4011 by replacing
3everything after the enacting clause with the following:
4    "Section 5. The Illinois Pension Code is amended by adding
5Section 1-110.16 as follows:
6    (40 ILCS 5/1-110.16 new)
7    Sec. 1-110.16. Transactions prohibited by retirement
8systems; companies that boycott Israel, Iran-restricted
9companies, and Sudan-restricted companies.
10    (a) As used in this Section:
11        "Boycott Israel" means engaging in actions that are
12    politically motivated and are intended to penalize,
13    inflict economic harm on, or otherwise limit commercial
14    relations with the State of Israel or companies based in
15    the State of Israel or in territories controlled by the
16    State of Israel.



09900HB4011ham003- 2 -LRB099 11218 EFG 34525 a

1        "Company" means any sole proprietorship, organization,
2    association, corporation, partnership, joint venture,
3    limited partnership, limited liability partnership,
4    limited liability company, or other entity or business
5    association, including all wholly owned subsidiaries,
6    majority-owned subsidiaries, parent companies, or
7    affiliates of those entities or business associations,
8    that exist for the purpose of making profit.
9        "Illinois Investment Policy Board" means the board
10    established under subsection (b) of this Section.
11        "Direct holdings" in a company means all publicly
12    traded securities of that company that are held directly by
13    the retirement system in an actively managed account or
14    fund in which the retirement system owns all shares or
15    interests.
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



09900HB4011ham003- 3 -LRB099 11218 EFG 34525 a

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



09900HB4011ham003- 4 -LRB099 11218 EFG 34525 a

1in the Illinois Investment Policy Board's judgment:
2        (1) reviewing and relying on publicly available
3    information regarding Iran-restricted companies,
4    Sudan-restricted companies, and companies that boycott
5    Israel, including information provided by nonprofit
6    organizations, research firms, and government entities;
7        (2) contacting asset managers contracted by the
8    retirement systems that invest in Iran-restricted
9    companies, Sudan-restricted companies, and companies that
10    boycott Israel;
11        (3) contacting other institutional investors that have
12    divested from or engaged with Iran-restricted companies,
13    Sudan-restricted companies, and companies that boycott
14    Israel; and
15        (4) retaining an independent research firm to identify
16    Iran-restricted companies, Sudan-restricted companies, and
17    companies that boycott Israel.
18    The Illinois Investment Policy Board shall review the list
19of restricted companies on a quarterly basis based on evolving
20information from, among other sources, those listed in this
21subsection (d) and distribute any updates to the list of
22restricted companies to the retirement systems.
23    (e) The Illinois Investment Policy Board shall adhere to
24the following procedures for companies on the list of
25restricted companies:
26        (1) For each company newly identified in subsection



09900HB4011ham003- 5 -LRB099 11218 EFG 34525 a

1    (d), the Illinois Investment Policy Board shall send a
2    written notice informing the company of its status and that
3    it may become subject to divestment by the retirement
4    systems.
5        (2) If, following the Illinois Investment Policy
6    Board's engagement pursuant to this subsection (e) with a
7    restricted company, that company ceases activity that
8    designates the company to be an Iran-restricted company, a
9    Sudan-restricted company, or a company that boycotts
10    Israel, the company shall be removed from the list of
11    restricted companies and the provisions of this Section
12    shall cease to apply to it unless it resumes such
13    activities.
14    (f) The retirement system shall adhere to the following
15procedures for companies on the list of restricted companies:
16        (1) The retirement system shall identify those
17    companies on the list of restricted companies in which the
18    retirement system owns direct holdings and indirect
19    holdings.
20        (2) The retirement system shall instruct its
21    investment advisors to sell, redeem, divest, or withdraw
22    all direct holdings of restricted companies from the
23    retirement system's assets under management in an orderly
24    and fiduciarily responsible manner within 12 months after
25    the company's most recent appearance on the list of
26    restricted companies.



09900HB4011ham003- 6 -LRB099 11218 EFG 34525 a

1        (3) The retirement system may not acquire securities of
2    restricted companies.
3        (4) The provisions of this subsection (f) do not apply
4    to the retirement system's indirect holdings or private
5    market funds. The Illinois Investment Policy Board shall
6    submit letters to the managers of those investment funds
7    containing restricted companies requesting that they
8    consider removing the companies from the fund or create a
9    similar actively managed fund having indirect holdings
10    devoid of the companies. If the manager creates a similar
11    fund, the retirement system shall replace all applicable
12    investments with investments in the similar fund in an
13    expedited timeframe consistent with prudent investing
14    standards.
15    (g) Upon request, and at least annually, each retirement
16system shall provide the Illinois Investment Policy Board with
17information regarding investments sold, redeemed, divested, or
18withdrawn in compliance with this Section.
19    (h) Notwithstanding any provision of this Section to the
20contrary, a retirement system may cease divesting from
21companies pursuant to subsection (f) if clear and convincing
22evidence shows that the value of investments in such companies
23becomes equal to or less than 0.5% of the market value of all
24assets under management by the retirement system. For any
25cessation of divestment authorized by this subsection (h), the
26retirement system shall provide a written notice to the



09900HB4011ham003- 7 -LRB099 11218 EFG 34525 a

1Illinois Investment Policy Board in advance of the cessation of
2divestment, setting forth the reasons and justification,
3supported by clear and convincing evidence, for its decision to
4cease divestment under subsection (f).
5    (i) The cost associated with the activities of the Illinois
6Investment Policy Board shall be borne by the boards of each
7pension fund or investment board created under Article 15, 16,
8or 22A of this Code.
9    (j) With respect to actions taken in compliance with this
10Section, including all good-faith determinations regarding
11companies as required by this Section, the retirement system
12and Illinois Investment Policy Board are exempt from any
13conflicting statutory or common law obligations, including any
14fiduciary duties under this Article and any obligations with
15respect to choice of asset managers, investment funds, or
16investments for the retirement system's securities portfolios.
17    (k) It is not the intent of the General Assembly in
18enacting this amendatory Act of the 99th General Assembly to
19cause divestiture from any company based in the United States
20of America. The Illinois Investment Policy Board shall consider
21this intent when developing or reviewing the list of restricted
23    (l) If any provision of this amendatory Act of the 99th
24General Assembly or its application to any person or
25circumstance is held invalid, the invalidity of that provision
26or application does not affect other provisions or applications



09900HB4011ham003- 8 -LRB099 11218 EFG 34525 a

1of this amendatory Act of the 99th General Assembly that can be
2given effect without the invalid provision or application.
3    Section 99. Effective date. This Act takes effect upon
4becoming law.".