HB5574 94TH GENERAL ASSEMBLY

LRB094 15741 AMC 50954 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB5574

Introduced 02/07/06, by Rep. Richard T. Bradley

SYNOPSIS AS INTRODUCED:

40 ILCS 5/1-110.5

Amends the Illinois Pension Code. Prohibits investments in any entity other than a qualified private market fund. Defines a qualified private market fund as a private market fund that will not knowingly invest assets of a retirement system or pension fund in any company that (i) has facilities or employees in the Republic of the Sudan or (ii) conducts a commercial business in the Republic of the Sudan. Effective immediately, but not earlier than January 27, 2006.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning public employee benefits.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Pension Code is amended by changing Section 1-110.5 as follows:

(40 ILCS 5/1-110.5)

(For force and effect of certain provisions, see Section 90 of P.A. 94-79)

(This Section may contain text from a Public Act with a delayed effective date)

Sec. 1-110.5. Certain prohibited transactions.

(a) A fiduciary of a retirement system or pension fund established under this Code shall not transfer or disburse funds to, deposit into, acquire any bonds or commercial paper from, or otherwise loan to or invest in any entity other than a qualified private market fund unless the company charged with managing the assets of the retirement system or pension fund, at no additional cost to the fiduciary, certifies to the fiduciary, in the manner and form established by the Treasurer, that:

(1) the fund managing company has not loaned to, invested in, or otherwise transferred any of the retirement system or pension fund's assets to a forbidden entity any time after the effective date of this Act;

(2) at least 60% of the retirement system or pension fund's assets are not invested in forbidden entities at any time more than twelve months after the effective date of this Act;

(3) at least 100% of the retirement system or pension fund's assets are not invested in forbidden entities at any time more than eighteen months after the effective date of this Act.

(b) For purposes of this Section:

"Company" is any entity capable of affecting commerce, including but not limited to (i) a government, government agency, natural person, legal person, sole proprietorship, partnership, firm, corporation, subsidiary, affiliate, franchisor, franchisee, joint venture, trade association, financial institution, utility, public franchise, provider of financial services, trust, or enterprise; and (ii) any association thereof.

"Forbidden entity" means any of the following:

(1) The government of the Republic of the Sudan and any of its agencies, including but not limited to political units and subdivisions;

(2) Any company that is wholly or partially managed or controlled by the government of the Republic of the Sudan and any of its agencies, including but not limited to political units and subdivisions;

(3) Any company (i) that is established or organized under the laws of the Republic of the Sudan; (ii) whose principal place of business is in the Republic of the Sudan;

(4) Any company (i) identified by the Office of Foreign Assets Control in the United States Department of the Treasury as sponsoring terrorist activities; or (ii) fined, penalized, or sanctioned by the Office of Foreign Assets Control in the United States Department of the Treasury for any violation of any United States rules and restrictions relating to the Republic of the Sudan that occurred at any time following the effective date of this Act; and

(5) Any publicly traded company who has been identified by an independent researching firm that specializes in global security risk as being a company that owns or controls property or assets located in, has employees or facilities located in, provides goods or services to, obtain goods or services from, has distribution agreements with, issue credits or loans to, purchase bonds or commercial paper issued by, or invest in (i) the Republic of the Sudan; or (ii) any company domiciled in the Republic of the Sudan; and

(6) Any private market fund that is not a qualified private market fund. Any non publicly-traded company that fails to submit to the fund managing company an affidavit sworn under oath in which an expressly authorized officer of the company avers that the company (i) does not own or control any property or asset located in the Republic of the Sudan; and (ii) did not transact commercial business in the Republic of the Sudan. Notwithstanding the foregoing, the term "forbidden entity" shall exclude companies, except agencies of the Republic of the Sudan, who are certified as Non-Government Organizations by the United Nations, or who engage solely in (i) the provision of goods and services intended to relieve human suffering or to promote welfare, health, religious and spiritual activities, and education humanitarian purposes or otherwise; or (ii) journalistic activities.

"Private market fund" means any private equity fund, private equity fund-of-funds, venture capital fund, real estate fund, or other non-publicly-traded company.

"Qualified private market fund" means any private market fund in which a retirement system or pension fund established under this Code:

(A) has made an investment prior to the effective date of this amendatory Act of the 94th General Assembly so long as the private market fund provides the retirement system or pension fund with a written undertaking within 18 months after the effective date of this amendatory Act that, to the best of the private market fund's knowledge and based upon due diligence and information received, the private market fund has not transferred, loaned, or otherwise invested and will not knowingly transfer, loan, or otherwise invest any of the assets of the retirement system or pension fund in any company that directly or through one or more subsidiaries (i) has facilities or employees in the Republic of the Sudan or (ii) conducts a commercial business in the Republic of the Sudan; or

(B) makes an investment after the effective date of this amendatory Act of the 94th General Assembly so long as the private market fund agrees, through an enforceable written agreement, that it will not knowingly transfer, loan, or otherwise invest any of the assets of the retirement system or pension fund in any company that directly or through one or more subsidiaries (i) has facilities or employees in the Republic of the Sudan or (ii) conducts a commercial business in the Republic of the Sudan or with companies whose principal place of business is located in the Republic of the Sudan.

(c) In addition to any other penalties and remedies available under the law of Illinois and the United States, any transaction that violates the provisions of this Act shall be void or voidable, at the sole discretion of the fiduciary.

(Source: P.A. 94-79, eff. 1-27-06; for force and effect of certain provisions, see Section 90 of P.A. 94-79.)

Section 99. Effective date. This Act takes effect upon becoming law, but not earlier than January 27, 2006.