Rep. Will Guzzardi

Filed: 11/23/2016

 

 


 

 


 
09900SB1751ham002LRB099 09574 RPS 51648 a

1
AMENDMENT TO SENATE BILL 1751

2    AMENDMENT NO. ______. Amend Senate Bill 1751 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 contract to build a border wall. Notwithstanding any other
9provision of this Code, on and after the effective date of this
10amendatory Act of the 99th General Assembly, a State agency
11shall not enter into a contract subject to this Code with a
12business that contracts to build a border wall. In determining
13whether a business contracts to build a border wall, a State
14agency shall consult the list of restricted companies developed
15by the Illinois Investment Policy Board in accordance with
16Section 1-110.16 of the Illinois Pension Code. For the purposes

 

 

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1of this Section, "contracts to build a border wall" means
2entering into a contract with the federal government for the
3purposes of building a wall along the border of Mexico and the
4United States of America. This Section is repealed on January
520, 2021.
 
6    Section 10. The Illinois Pension Code is amended by
7changing Section 1-110.16 as follows:
 
8    (40 ILCS 5/1-110.16)
9    Sec. 1-110.16. Transactions prohibited by retirement
10systems; companies that boycott Israel, companies that
11contract to build a border wall, Iran-restricted companies, and
12Sudan-restricted companies.
13    (a) As used in this Section:
14        "Boycott Israel" means engaging in actions that are
15    politically motivated and are intended to penalize,
16    inflict economic harm on, or otherwise limit commercial
17    relations with the State of Israel or companies based in
18    the State of Israel or in territories controlled by the
19    State of Israel.
20        "Company" means any sole proprietorship, organization,
21    association, corporation, partnership, joint venture,
22    limited partnership, limited liability partnership,
23    limited liability company, or other entity or business
24    association, including all wholly owned subsidiaries,

 

 

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1    majority-owned subsidiaries, parent companies, or
2    affiliates of those entities or business associations,
3    that exist for the purpose of making profit.
4        "Contract to build a border wall" means entering into a
5    contract with the federal government for the purposes of
6    building a wall along the border of Mexico and the United
7    States of America.
8        "Illinois Investment Policy Board" means the board
9    established under subsection (b) of this Section.
10        "Direct holdings" in a company means all publicly
11    traded securities of that company that are held directly by
12    the retirement system in an actively managed account or
13    fund in which the retirement system owns all shares or
14    interests.
15        "Indirect holdings" in a company means all securities
16    of that company that are held in an account or fund, such
17    as a mutual fund, managed by one or more persons not
18    employed by the retirement system, in which the retirement
19    system owns shares or interests together with other
20    investors not subject to the provisions of this Section or
21    that are held in an index fund.
22        "Iran-restricted company" means a company that meets
23    the qualifications under Section 1-110.15 of this Code.
24        "Private market fund" means any private equity fund,
25    private equity funds of funds, venture capital fund, hedge
26    fund, hedge fund of funds, real estate fund, or other

 

 

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1    investment vehicle that is not publicly traded.
2        "Restricted companies" means companies that boycott
3    Israel, companies that contract to build a border wall,
4    Iran-restricted companies, and Sudan-restricted companies.
5        "Retirement system" means a retirement system
6    established under Article 2, 14, 15, 16, or 18 of this Code
7    or the Illinois State Board of Investment.
8        "Sudan-restricted company" means a company that meets
9    the qualifications under Section 1-110.6 of this Code.
10    (b) There shall be established an Illinois Investment
11Policy Board. The Illinois Investment Policy Board shall
12consist of 7 members. Each board of a pension fund or
13investment board created under Article 15, 16, or 22A of this
14Code shall appoint one member, and the Governor shall appoint 4
15members.
16    (c) Notwithstanding any provision of law to the contrary,
17beginning January 1, 2016, Sections 110.15 and 1-110.6 of this
18Code shall be administered in accordance with this Section.
19    (d) By April 1, 2016, the Illinois Investment Policy Board
20shall make its best efforts to identify all Iran-restricted
21companies, Sudan-restricted companies, and companies that
22boycott Israel and assemble those identified companies into a
23list of restricted companies, to be distributed to each
24retirement system.
25    These efforts shall include the following, as appropriate
26in the Illinois Investment Policy Board's judgment:

 

 

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1        (1) reviewing and relying on publicly available
2    information regarding Iran-restricted companies,
3    Sudan-restricted companies, and companies that boycott
4    Israel, including information provided by nonprofit
5    organizations, research firms, and government entities;
6        (2) contacting asset managers contracted by the
7    retirement systems that invest in Iran-restricted
8    companies, Sudan-restricted companies, and companies that
9    boycott Israel;
10        (3) contacting other institutional investors that have
11    divested from or engaged with Iran-restricted companies,
12    Sudan-restricted companies, and companies that boycott
13    Israel; and
14        (4) retaining an independent research firm to identify
15    Iran-restricted companies, Sudan-restricted companies, and
16    companies that boycott Israel.
17    By April 1, 2017, the Illinois Investment Policy Board
18shall make its best efforts to identify all companies that
19contract to build a border wall and include those companies in
20the list of restricted companies distributed to each retirement
21system. These efforts shall include the following, as
22appropriate in the Illinois Investment Policy Board's
23judgment:
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    The Illinois Investment Policy Board shall review the list
11of restricted companies on a quarterly basis based on evolving
12information from, among other sources, those listed in this
13subsection (d) and distribute any updates to the list of
14restricted companies to the retirement systems.
15    (e) The Illinois Investment Policy Board shall adhere to
16the following procedures for companies on the list of
17restricted companies:
18        (1) For each company newly identified in subsection
19    (d), the Illinois Investment Policy Board shall send a
20    written notice informing the company of its status and that
21    it may become subject to divestment by the retirement
22    systems.
23        (2) If, following the Illinois Investment Policy
24    Board's engagement pursuant to this subsection (e) with a
25    restricted company, that company ceases activity that
26    designates the company to be an Iran-restricted company, a

 

 

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

 

 

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

 

 

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1    (j) With respect to actions taken in compliance with this
2Section, including all good-faith determinations regarding
3companies as required by this Section, the retirement system
4and Illinois Investment Policy Board are exempt from any
5conflicting statutory or common law obligations, including any
6fiduciary duties under this Article and any obligations with
7respect to choice of asset managers, investment funds, or
8investments for the retirement system's securities portfolios.
9    (k) It is not the intent of the General Assembly in
10enacting Public Act 99-128 this amendatory Act of the 99th
11General Assembly to cause divestiture from any company based in
12the United States of America. The Illinois Investment Policy
13Board shall consider this intent when developing or reviewing
14the list of restricted companies.
15    (l) If any provision of Public Act 99-128 or this
16amendatory Act of the 99th General Assembly or its application
17to any person or circumstance is held invalid, the invalidity
18of that provision or application does not affect other
19provisions or applications of Public Act 99-128 or this
20amendatory Act of the 99th General Assembly that can be given
21effect without the invalid provision or application.
22    (m) The changes made by this amendatory Act of the 99th
23General Assembly are inoperative on and after January 20, 2021.
24(Source: P.A. 99-128, eff. 7-23-15.)
 
25    Section 99. Effective date. This Act takes effect upon

 

 

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1becoming law.".