Full Text of HB0145 97th General Assembly
HB0145ham001 97TH GENERAL ASSEMBLY | Rep. Jack D. Franks Filed: 3/15/2011
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| 1 | | AMENDMENT TO HOUSE BILL 145
| 2 | | AMENDMENT NO. ______. Amend House Bill 145 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Pension Code is amended by | 5 | | changing Section 1-110.15 as follows: | 6 | | (40 ILCS 5/1-110.15) | 7 | | Sec. 1-110.15. Transactions prohibited by retirement | 8 | | systems; Iran. | 9 | | (a) As used in this Section: | 10 | | "Defense sector" means every industry or company, be it | 11 | | private or owned in whole or in part by the government of Iran | 12 | | or its instrumentalities, that is involved in the purchase, | 13 | | sale, manufacturing, testing, or deployment of military | 14 | | supplies and weapons, including every company that provides | 15 | | military advisors and non-military personnel or that sells | 16 | | strategic information or services to companies that purchase, |
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| 1 | | sell, manufacture, test, or deploy military supplies and | 2 | | weapons, to the government of Iran or its instrumentalities. | 3 | | "Equity tie" means manufacturing or mining plants, | 4 | | employees or advisors, facilities, or an investment, | 5 | | fiduciary, monetary, or physical presence of any kind, | 6 | | including an ownership stake in one or more subsidiary or joint | 7 | | venture with one or more companies in the country. | 8 | | "Foreign company" means any sole proprietorship, | 9 | | organization, association, corporation, partnership, joint | 10 | | venture, limited partnership, limited liability partnership, | 11 | | or other entity or business association, including any wholly | 12 | | owned subsidiary, majority-owned subsidiary, parent company, | 13 | | or affiliate of such an entity or business association, that | 14 | | exists for the purpose of making a profit and is incorporated | 15 | | in any country other than the United States, even if domiciled | 16 | | in the United States. | 17 | | "Humanitarian aid" means the provision of goods and | 18 | | services intended to relieve human suffering or to promote | 19 | | general welfare and health. | 20 | | "Natural gas or petroleum sectors" means those industries | 21 | | and companies that have as their business the owning rights to | 22 | | oil blocks or the exporting, extracting, producing, refining, | 23 | | processing, transporting, selling, or trading of, or exploring | 24 | | for, oil or natural gas or constructing, maintaining, or | 25 | | operating a pipeline, refinery, or other infrastructure and | 26 | | facilitating such activities, including supplies or services |
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| 1 | | in support of such activities. | 2 | | "Nuclear sector" means every industry or company, be it | 3 | | private or owned in whole or in part by the government of Iran | 4 | | or its instrumentalities, that is involved in the purchase, | 5 | | sale, development, testing, or deployment of nuclear | 6 | | technology of any kind or that provides advisors, researchers, | 7 | | scientists, or technicians who are involved in the purchase, | 8 | | sale, development, testing, or deployment of nuclear | 9 | | technology of any kind. | 10 | | "Retirement system" means the State Employees' Retirement | 11 | | System of Illinois, the Judges Retirement System of Illinois, | 12 | | the General Assembly Retirement System, the State Universities | 13 | | Retirement System, and the Teachers' Retirement System of the | 14 | | State of Illinois. | 15 | | "Scrutinized company" means a foreign company that has an | 16 | | equity tie to the government of Iran or its instrumentalities | 17 | | and is engaged in business operations with entities in the | 18 | | defense sector or nuclear sector of Iran, or engaged in | 19 | | business operations with entities involved in the natural gas | 20 | | or petroleum sectors of Iran, in or with that government and | 21 | | its instrumentalities. | 22 | | (b) Notwithstanding any provision of law to the contrary, | 23 | | no assets of any retirement system shall be invested in any | 24 | | foreign company that has an equity tie to the government of | 25 | | Iran or its instrumentalities and is engaged in business | 26 | | operations with entities in the defense sector or nuclear |
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| 1 | | sector of Iran, or engaged in business operations with entities | 2 | | involved in the natural gas or petroleum sectors of Iran, in or | 3 | | with that government and its instrumentalities. This | 4 | | prohibition shall not apply to the activities of any foreign | 5 | | company providing humanitarian aid to the Iranian people | 6 | | through either a governmental or non-governmental | 7 | | organization. | 8 | | (c) The retirement system shall select an independent | 9 | | research firm that specializes in global security risk for | 10 | | portfolio determinations to provide the retirement system with | 11 | | a list of scrutinized companies each month, and the retirement | 12 | | system shall take appropriate action to sell, redeem, divest, | 13 | | or withdraw any investment held in a scrutinized company. This | 14 | | Section shall not be construed to require the premature or | 15 | | otherwise imprudent sale, redemption, divestment, or | 16 | | withdrawal of an investment, but such sale, redemption, | 17 | | divestment, or withdrawal shall be completed not later than 3 | 18 | | years following the company's identification as a scrutinized | 19 | | company. | 20 | | (d) Within 60 days after the effective date of this | 21 | | amendatory Act of the 97th General Assembly, the retirement | 22 | | system shall file with the Public Pension Division and the | 23 | | General Assembly a report of all investments held on the | 24 | | effective date of this amendatory Act of the 97th General | 25 | | Assembly that are in violation of subsection (b) of this | 26 | | Section. Every year thereafter, the retirement system shall |
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| 1 | | report on all investments sold, redeemed, divested, or | 2 | | withdrawn in compliance with subsection (b) of this Section.
| 3 | | Each report after the initial report shall provide a | 4 | | description of the progress that the retirement system has made | 5 | | since the previous report and since the enactment of this | 6 | | amendatory Act of the 97th General Assembly in implementing | 7 | | subsection (c) of this section. | 8 | | (e) Notwithstanding the other provisions of this Section to | 9 | | the contrary, this Section shall be of no effect if: | 10 | | (1) the Congress or the President of the United States, | 11 | | affirmatively and unambiguously, declares, by means | 12 | | including, but not limited to, legislation, executive | 13 | | order, or written certification from the President to | 14 | | Congress, that the government of Iran has ceased to acquire | 15 | | or develop weapons of mass destruction and to support | 16 | | international terrorism; or | 17 | | (2) the United States revokes all sanctions imposed | 18 | | against the government of Iran. | 19 | | (f) Trustees and employees of the retirement systems shall | 20 | | be indemnified and held harmless by the State of Illinois from | 21 | | all claims, demands, suits, actions, damages, judgments, | 22 | | costs, charges, and expenses, including court costs and | 23 | | attorney's fees, and against all liability, losses, and damages | 24 | | of any nature whatsoever that these trustees and employees | 25 | | shall or may at any time sustain by reason of any decision to | 26 | | restrict, reduce, or eliminate investments pursuant to this |
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| 1 | | Section. | 2 | | (a) As used in this Section: | 3 | | "Active business operations" means all business
operations | 4 | | that are not inactive business operations. | 5 | | "Business operations" means engaging in commerce
in any | 6 | | form in Iran, including, but not limited to,
acquiring, | 7 | | developing, maintaining, owning, selling,
possessing, leasing, | 8 | | or operating equipment, facilities,
personnel, products, | 9 | | services, personal property, real
property, or any other | 10 | | apparatus of business or commerce. | 11 | | "Company" means any sole proprietorship,
organization, | 12 | | association, corporation, partnership, joint
venture, limited | 13 | | partnership, limited liability partnership,
limited liability | 14 | | company, or other entity or business
association, including all | 15 | | wholly owned subsidiaries,
majority-owned subsidiaries, parent | 16 | | companies, or affiliates
of those entities or business | 17 | | associations, that exists for
the purpose of making profit. | 18 | | "Direct holdings" in a company means all
securities of that | 19 | | company that are held directly by the
retirement system or in | 20 | | an account or fund in which the retirement system
owns all | 21 | | shares or interests. | 22 | | "Inactive business operations" means the mere
continued | 23 | | holding or renewal of rights to property previously
operated | 24 | | for the purpose of generating revenues but not
presently | 25 | | deployed for that purpose. | 26 | | "Indirect holdings" in a company means all
securities of |
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| 1 | | that company which are held in an account or
fund, such as a | 2 | | mutual fund, managed by one or more persons
not employed by the | 3 | | retirement system, in which the retirement system owns
shares | 4 | | or interests together with other investors not subject
to the | 5 | | provisions of this Section. | 6 | | " Mineral-extraction activities" include exploring,
| 7 | | extracting, processing, transporting, or wholesale selling or
| 8 | | trading of elemental minerals or associated metal alloys or
| 9 | | oxides (ore), including gold, copper, chromium, chromite,
| 10 | | diamonds, iron, iron ore, silver, tungsten, uranium, and zinc. | 11 | | "Oil-related activities" include, but are not
limited to, | 12 | | owning rights to oil blocks; exporting,
extracting, producing, | 13 | | refining, processing, exploring for,
transporting, selling, or | 14 | | trading of oil; and constructing,
maintaining, or operating a | 15 | | pipeline, refinery, or other
oil-field infrastructure. The | 16 | | mere retail sale of gasoline and
related consumer products is | 17 | | not considered an oil-related
activity. | 18 | | "Petroleum resources" means petroleum, petroleum
| 19 | | byproducts, or natural gas. | 20 | | "Private market fund" means any private equity fund, | 21 | | private equity fund of funds, venture capital fund, hedge fund, | 22 | | hedge fund of funds, real estate fund, or other investment | 23 | | vehicle that is not publicly traded.
| 24 | | "Retirement system" means the State Employees' Retirement | 25 | | System of Illinois, the Judges Retirement System of Illinois, | 26 | | the General Assembly Retirement System, the State Universities |
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| 1 | | Retirement System, and the Teachers' Retirement System of the | 2 | | State of Illinois. | 3 | | "Scrutinized business operations" means business | 4 | | operations that have caused a company to become a scrutinized | 5 | | company.
| 6 | | "Scrutinized company" means the company has
business | 7 | | operations that involve contracts with or provision
of supplies | 8 | | or services to the Government of Iran, companies
in which the | 9 | | Government of Iran has any direct or indirect
equity share, | 10 | | consortiums or projects commissioned by the
Government of Iran, | 11 | | or companies involved in consortiums or
projects commissioned | 12 | | by the Government of Iran and: | 13 | | (1) more than 10% of the company's revenues produced in | 14 | | or assets located in Iran involve oil-related activities or
| 15 | | mineral-extraction activities; less than 75% of the
| 16 | | company's revenues produced in or assets located in Iran | 17 | | involve contracts
with or provision of oil-related or | 18 | | mineral-extraction
products or services to the Government | 19 | | of Iran or a project or
consortium created exclusively by | 20 | | that government; and the
company has failed to take | 21 | | substantial action; or | 22 | | (2) the company has, on or after
August 5, 1996, made | 23 | | an investment of $20 million or more, or
any combination of | 24 | | investments of at least $10 million each
that in the | 25 | | aggregate equals or exceeds $20 million in any
12-month | 26 | | period, that directly or significantly contributes
to the |
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| 1 | | enhancement of Iran's ability to develop petroleum
| 2 | | resources of Iran. | 3 | | "Substantial action" means adopting, publicizing,
and | 4 | | implementing a formal plan to cease scrutinized business
| 5 | | operations within one year and to refrain from any such new
| 6 | | business operations. | 7 | | (b) Within 90 days after the effective date of this
| 8 | | Section, a retirement system shall make its best efforts to | 9 | | identify all scrutinized companies in which the retirement | 10 | | system has direct or indirect holdings. | 11 | | These efforts shall include the following, as appropriate | 12 | | in the retirement system's judgment: | 13 | | (1) reviewing and relying on publicly available | 14 | | information regarding
companies having business operations | 15 | | in Iran, including
information provided by nonprofit | 16 | | organizations, research
firms, international | 17 | | organizations, and government entities; | 18 | | (2) contacting asset managers contracted by the | 19 | | retirement system that invest in companies having business | 20 | | operations in
Iran; and | 21 | | (3) Contacting other institutional investors that have
| 22 | | divested from or engaged with companies that have business
| 23 | | operations in Iran. | 24 | | The retirement system may retain an independent research | 25 | | firm to identify scrutinized companies in which the retirement | 26 | | system has direct or indirect holdings. By the first meeting of |
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| 1 | | the retirement system following
the 90-day period described in | 2 | | this subsection (b), the retirement system
shall assemble all | 3 | | scrutinized companies identified into a
scrutinized companies | 4 | | list. | 5 | | The retirement system shall update the scrutinized
| 6 | | companies list annually based on evolving information from,
| 7 | | among other sources, those listed in this subsection (b). | 8 | | (c) The retirement system shall adhere to
the following | 9 | | procedures for companies on the scrutinized
companies list: | 10 | | (1) The retirement system shall determine the
| 11 | | companies on the scrutinized companies list in which the
| 12 | | retirement system owns direct or indirect holdings. | 13 | | (2) For each company identified in item (1) of this | 14 | | subsection (c) that
has only inactive business operations, | 15 | | the retirement system shall
send a written notice informing | 16 | | the company of this Section and
encouraging it to continue | 17 | | to refrain from initiating active
business operations in | 18 | | Iran until it is able to avoid
scrutinized business | 19 | | operations. The retirement system shall
continue such | 20 | | correspondence semiannually. | 21 | | (3) For each company newly identified in item (1) of | 22 | | this subsection (c) that has active business operations, | 23 | | the retirement system shall send a written notice informing | 24 | | the company of its
scrutinized company status and that it | 25 | | may become subject to
divestment by the retirement system. | 26 | | The notice must inform the
company of the opportunity to |
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| 1 | | clarify its Iran-related
activities and encourage the | 2 | | company, within 90 days, to cease
its scrutinized business | 3 | | operations or convert such operations
to inactive business | 4 | | operations in order to avoid qualifying
for divestment by | 5 | | the retirement system. | 6 | | (4) If, within 90 days after the retirement system's | 7 | | first
engagement with a company pursuant to this subsection | 8 | | (c), that
company ceases scrutinized business operations, | 9 | | the company
shall be removed from the scrutinized companies | 10 | | list and the
provisions of this Section shall cease to | 11 | | apply to it unless it
resumes scrutinized business | 12 | | operations. If, within 90 days
after the retirement | 13 | | system's first engagement, the company converts
its | 14 | | scrutinized active business operations to inactive
| 15 | | business operations, the company is subject to all | 16 | | provisions
relating thereto. | 17 | | (d) If, after 90 days following the retirement system's | 18 | | first
engagement with a company pursuant to subsection (c), the
| 19 | | company continues to have scrutinized active business
| 20 | | operations, and only while such company continues to have
| 21 | | scrutinized active business operations, the retirement system | 22 | | shall
sell, redeem, divest, or withdraw all publicly traded
| 23 | | securities of the company, except as provided in paragraph
(f), | 24 | | from the retirement system's assets under management within 12
| 25 | | months after the company's most recent appearance on the
| 26 | | scrutinized companies list. |
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| 1 | | If a company that ceased scrutinized active
business | 2 | | operations following engagement pursuant to subsection (c) | 3 | | resumes such operations, this subsection (d) immediately
| 4 | | applies, and the retirement system shall send a written notice | 5 | | to
the company. The company shall also be immediately
| 6 | | reintroduced onto the scrutinized companies list. | 7 | | (e) The retirement system may not acquire
securities of | 8 | | companies on the scrutinized companies list
that have active | 9 | | business operations, except as provided in
subsection (f). | 10 | | (f) A company that the United States
Government | 11 | | affirmatively declares to be excluded from its
present or any | 12 | | future federal sanctions regime relating to
Iran is not subject | 13 | | to divestment or the investment
prohibition pursuant to | 14 | | subsections (d) and (e). | 15 | | (g) Notwithstanding the
provisions of this Section, | 16 | | paragraphs (d) and (e) do not apply to
indirect holdings in a | 17 | | private market fund.
However, the retirement system shall | 18 | | submit letters to the managers
of those investment funds | 19 | | containing companies that have
scrutinized active business | 20 | | operations requesting that they
consider removing the | 21 | | companies from the fund or create a
similar actively managed | 22 | | fund having indirect holdings devoid
of the companies. If the | 23 | | manager creates a similar fund, the
retirement system shall | 24 | | replace all applicable investments with
investments in the | 25 | | similar fund in an expedited timeframe
consistent with prudent | 26 | | investing standards. |
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| 1 | | (h) The retirement system shall file a report with the | 2 | | Public Pension Division of the Department of Financial and | 3 | | Professional Regulation that includes the scrutinized | 4 | | companies list
within 30 days after the list is created. This | 5 | | report shall be
made available to the public. | 6 | | The retirement system shall file an annual report with the | 7 | | Public Pension Division, which shall be made available to the | 8 | | public, that includes all of the following: | 9 | | (1) A summary of correspondence with companies engaged
| 10 | | by the retirement system under items (2) and (3) of | 11 | | subsection (c). | 12 | | (2) All investments sold, redeemed, divested, or
| 13 | | withdrawn in compliance with subsection (d). | 14 | | (3) All prohibited investments under subsection (e). | 15 | | (4) A summary of correspondence with private market | 16 | | funds notified under subsection (g). | 17 | | (i) This Section expires upon the occurrence
of any of the | 18 | | following: | 19 | | (1) The United States revokes all sanctions imposed
| 20 | | against the Government of Iran. | 21 | | (2) The Congress or President of the United States
| 22 | | declares that the Government of Iran has ceased to acquire
| 23 | | weapons of mass destruction and to support international
| 24 | | terrorism. | 25 | | (3) The Congress or President of the United States,
| 26 | | through legislation or executive order, declares that
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| 1 | | mandatory divestment of the type provided for in this | 2 | | Section
interferes with the conduct of United States | 3 | | foreign policy. | 4 | | (j) With respect to actions
taken in compliance with this | 5 | | Act, including all good-faith
determinations regarding | 6 | | companies as required by this Act,
the retirement system is | 7 | | exempt from any conflicting statutory or
common law | 8 | | obligations, including any fiduciary duties under this Article | 9 | | and any obligations with
respect to choice of asset managers, | 10 | | investment funds, or
investments for the retirement system's | 11 | | securities portfolios. | 12 | | (k) Notwithstanding any
other provision of this Section to | 13 | | the contrary, the retirement system
may cease divesting from | 14 | | scrutinized companies
pursuant to subsection (d) or reinvest in
| 15 | | scrutinized companies from which it divested pursuant to
| 16 | | subsection (d) if clear and convincing evidence shows that the | 17 | | value of investments in scrutinized companies with active | 18 | | scrutinized business operations becomes equal to or less than | 19 | | 0.5% of the market value of all assets under management by the | 20 | | retirement system. Cessation of
divestment, reinvestment, or | 21 | | any subsequent ongoing investment
authorized by this Section is | 22 | | limited to the minimum steps
necessary to avoid the contingency | 23 | | set forth in this
subsection (k). For any cessation of | 24 | | divestment, reinvestment, or
subsequent ongoing investment | 25 | | authorized by this Section, the
retirement system shall provide | 26 | | a written report to the Public Pension Division in advance of |
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| 1 | | initial reinvestment, updated
semiannually thereafter as | 2 | | applicable, setting forth the
reasons and justification, | 3 | | supported by clear and convincing
evidence, for its decisions | 4 | | to cease divestment, reinvest, or
remain invested in companies | 5 | | having scrutinized active
business operations. This Section | 6 | | does not apply to reinvestment
in companies on the grounds that | 7 | | they have ceased to have
scrutinized active business | 8 | | operations. | 9 | | (l) If any provision of this Section or its
application to | 10 | | any person or circumstance is held invalid, the
invalidity does | 11 | | not affect other provisions or applications of
the Act which | 12 | | can be given effect without the invalid
provision or | 13 | | application, and to this end the provisions of
this Section are | 14 | | severable. | 15 | | (Source: P.A. 95-616, eff. 1-1-08; 95-876, eff. 8-21-08.)
| 16 | | Section 99. Effective date. This Act takes effect upon | 17 | | becoming law.".
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