Illinois General Assembly - Full Text of SB1751
Illinois General Assembly

Previous General Assemblies

Full Text of SB1751  99th General Assembly

SB1751ham003 99TH GENERAL ASSEMBLY

Rep. Will Guzzardi

Filed: 11/30/2016

 

 


 

 


 
09900SB1751ham003LRB099 09574 AMC 51904 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 Pension Code is amended by
5changing Section 1-110.16 as follows:
 
6    (40 ILCS 5/1-110.16)
7    Sec. 1-110.16. Transactions prohibited by retirement
8systems; companies that boycott Israel, companies that
9contract to build a border wall, Iran-restricted companies, and
10Sudan-restricted companies.
11    (a) As used in this Section:
12        "Boycott Israel" means engaging in actions that are
13    politically motivated and are intended to penalize,
14    inflict economic harm on, or otherwise limit commercial
15    relations with the State of Israel or companies based in
16    the State of Israel or in territories controlled by the

 

 

09900SB1751ham003- 2 -LRB099 09574 AMC 51904 a

1    State of Israel.
2        "Company" means any sole proprietorship, organization,
3    association, corporation, partnership, joint venture,
4    limited partnership, limited liability partnership,
5    limited liability company, or other entity or business
6    association, including all wholly owned subsidiaries,
7    majority-owned subsidiaries, parent companies, or
8    affiliates of those entities or business associations,
9    that exist for the purpose of making profit.
10        "Contract to build a border wall" means entering into a
11    contract with the federal government for the purposes of
12    building a wall along the border of Mexico and the United
13    States of America.
14        "Illinois Investment Policy Board" means the board
15    established under subsection (b) of this Section.
16        "Direct holdings" in a company means all publicly
17    traded securities of that company that are held directly by
18    the retirement system in an actively managed account or
19    fund in which the retirement system owns all shares or
20    interests.
21        "Indirect holdings" in a company means all securities
22    of that company that are held in an account or fund, such
23    as a mutual fund, managed by one or more persons not
24    employed by the retirement system, in which the retirement
25    system owns shares or interests together with other
26    investors not subject to the provisions of this Section or

 

 

09900SB1751ham003- 3 -LRB099 09574 AMC 51904 a

1    that are held in an index fund.
2        "Iran-restricted company" means a company that meets
3    the qualifications under Section 1-110.15 of this Code.
4        "Private market fund" means any private equity fund,
5    private equity funds of funds, venture capital fund, hedge
6    fund, hedge fund of funds, real estate fund, or other
7    investment vehicle that is not publicly traded.
8        "Restricted companies" means companies that boycott
9    Israel, companies that contract to build a border wall,
10    Iran-restricted companies, and Sudan-restricted companies.
11        "Retirement system" means a retirement system
12    established under Article 2, 14, 15, 16, or 18 of this Code
13    or the Illinois State Board of Investment.
14        "Sudan-restricted company" means a company that meets
15    the qualifications under Section 1-110.6 of this Code.
16    (b) There shall be established an Illinois Investment
17Policy Board. The Illinois Investment Policy Board shall
18consist of 7 members. Each board of a pension fund or
19investment board created under Article 15, 16, or 22A of this
20Code shall appoint one member, and the Governor shall appoint 4
21members.
22    (c) Notwithstanding any provision of law to the contrary,
23beginning January 1, 2016, Sections 110.15 and 1-110.6 of this
24Code shall be administered in accordance with this Section.
25    (d) By April 1, 2016, the Illinois Investment Policy Board
26shall make its best efforts to identify all Iran-restricted

 

 

09900SB1751ham003- 4 -LRB099 09574 AMC 51904 a

1companies, Sudan-restricted companies, and companies that
2boycott Israel and assemble those identified companies into a
3list of restricted companies, to be distributed to each
4retirement system.
5    These efforts shall include the following, as appropriate
6in the Illinois Investment Policy Board's judgment:
7        (1) reviewing and relying on publicly available
8    information regarding Iran-restricted companies,
9    Sudan-restricted companies, and companies that boycott
10    Israel, including information provided by nonprofit
11    organizations, research firms, and government entities;
12        (2) contacting asset managers contracted by the
13    retirement systems that invest in Iran-restricted
14    companies, Sudan-restricted companies, and companies that
15    boycott Israel;
16        (3) contacting other institutional investors that have
17    divested from or engaged with Iran-restricted companies,
18    Sudan-restricted companies, and companies that boycott
19    Israel; and
20        (4) retaining an independent research firm to identify
21    Iran-restricted companies, Sudan-restricted companies, and
22    companies that boycott Israel.
23    By April 1, 2017, the Illinois Investment Policy Board
24shall make its best efforts to identify all companies that
25contract to build a border wall and include those companies in
26the list of restricted companies distributed to each retirement

 

 

09900SB1751ham003- 5 -LRB099 09574 AMC 51904 a

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

 

 

09900SB1751ham003- 6 -LRB099 09574 AMC 51904 a

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

 

 

09900SB1751ham003- 7 -LRB099 09574 AMC 51904 a

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

 

 

09900SB1751ham003- 8 -LRB099 09574 AMC 51904 a

1supported by clear and convincing evidence, for its decision to
2cease divestment under subsection (f).
3    (i) The cost associated with the activities of the Illinois
4Investment Policy Board shall be borne by the boards of each
5pension fund or investment board created under Article 15, 16,
6or 22A of this Code.
7    (j) With respect to actions taken in compliance with this
8Section, including all good-faith determinations regarding
9companies as required by this Section, the retirement system
10and Illinois Investment Policy Board are exempt from any
11conflicting statutory or common law obligations, including any
12fiduciary duties under this Article and any obligations with
13respect to choice of asset managers, investment funds, or
14investments for the retirement system's securities portfolios.
15    (k) It is not the intent of the General Assembly in
16enacting Public Act 99-128 this amendatory Act of the 99th
17General Assembly to cause divestiture from any company based in
18the United States of America. The Illinois Investment Policy
19Board shall consider this intent when developing or reviewing
20the list of restricted companies.
21    (l) If any provision of Public Act 99-128 or this
22amendatory Act of the 99th General Assembly or its application
23to any person or circumstance is held invalid, the invalidity
24of that provision or application does not affect other
25provisions or applications of Public Act 99-128 or this
26amendatory Act of the 99th General Assembly that can be given

 

 

09900SB1751ham003- 9 -LRB099 09574 AMC 51904 a

1effect without the invalid provision or application.
2    (m) The changes made by this amendatory Act of the 99th
3General Assembly are inoperative on and after January 20, 2021.
4(Source: P.A. 99-128, eff. 7-23-15.)".