Full Text of HB3419 100th General Assembly
HB3419ham001 100TH GENERAL ASSEMBLY | Rep. Jaime M. Andrade, Jr. Filed: 4/24/2017
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| 1 | | AMENDMENT TO HOUSE BILL 3419
| 2 | | AMENDMENT NO. ______. Amend House Bill 3419 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Procurement Code is amended by | 5 | | adding Sections 1-15.120 and 50-17 as follows: | 6 | | (30 ILCS 500/1-15.120 new) | 7 | | Sec. 1-15.120. Expatriated entity. "Expatriated entity" | 8 | | means a foreign incorporated entity which is treated as an | 9 | | inverted domestic corporation under subsection (b) of Section | 10 | | 835 of the Homeland Security Act of 2002, 6 U.S.C. 395(b), or | 11 | | any subsidiary of such an entity. The federal regulations found | 12 | | at 26 CFR 1.7874-3 may be used to determine when 6 U.S.C. | 13 | | 395(b)(3) applies. | 14 | | (30 ILCS 500/50-17 new) | 15 | | Sec. 50-17. Expatriated entities. |
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| 1 | | (a) Except as provided in subsection (b) of this Section, | 2 | | no business or member of a unitary business group, as defined | 3 | | in the Illinois Income Tax Act, shall submit a bid for or enter | 4 | | into a contract with a State agency under this Code if that | 5 | | business or any member of the unitary business group is an | 6 | | expatriated entity. | 7 | | (b) An expatriated entity or a member of a unitary business | 8 | | group with an expatriated entity as a member may submit a bid | 9 | | for or enter into a contract with a State agency under this | 10 | | Code if the appropriate chief procurement officer determines | 11 | | that either of the following apply: | 12 | | (1) the contract is awarded as a sole source | 13 | | procurement under Section 20-25 of this Code, provided that | 14 | | the appropriate chief procurement officer (i) includes in | 15 | | the notice of intent to enter into a sole source contract a | 16 | | prominent statement that the intended sole source | 17 | | contractor is an expatriated entity and (ii) holds a public | 18 | | hearing at which the chief procurement officer and | 19 | | purchasing agency present written justification for the | 20 | | use of a sole source contract with an expatriated entity | 21 | | and any member of the public may present testimony; or | 22 | | (2) the purchase is of pharmaceutical products, drugs, | 23 | | biologics, vaccines, medical supplies, or devices used to | 24 | | provide medical and health care or treat disease or used in | 25 | | medical or research diagnostic tests, and medical | 26 | | nutritionals regulated by the Food and Drug Administration |
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| 1 | | under the Federal Food, Drug, and Cosmetic Act. | 2 | | Section 10. The Illinois Pension Code is amended by | 3 | | changing Section 1-110.16 as follows: | 4 | | (40 ILCS 5/1-110.16) | 5 | | Sec. 1-110.16. Transactions prohibited by retirement | 6 | | systems; companies that boycott Israel, Iran-restricted | 7 | | companies, and Sudan-restricted companies , and expatriated | 8 | | entities . | 9 | | (a) As used in this Section: | 10 | | "Boycott Israel" means engaging in actions that are | 11 | | politically motivated and are intended to penalize, | 12 | | inflict economic harm on, or otherwise limit commercial | 13 | | relations with the State of Israel or companies based in | 14 | | the State of Israel or in territories controlled by the | 15 | | State of Israel. | 16 | | "Company" means any sole proprietorship, organization, | 17 | | association, corporation, partnership, joint venture, | 18 | | limited partnership, limited liability partnership, | 19 | | limited liability company, or other entity or business | 20 | | association, including all wholly owned subsidiaries, | 21 | | majority-owned subsidiaries, parent companies, or | 22 | | affiliates of those entities or business associations, | 23 | | that exist for the purpose of making profit. | 24 | | "Illinois Investment Policy Board" means the board |
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| 1 | | established under subsection (b) of this Section. | 2 | | "Direct holdings" in a company means all publicly | 3 | | traded securities of that company that are held directly by | 4 | | the retirement system in an actively managed account or | 5 | | fund in which the retirement system owns all shares or | 6 | | interests. | 7 | | "Expatriated entity" has the meaning ascribed to it in | 8 | | Section 1-15.120 of the Illinois Procurement Code. | 9 | | "Indirect holdings" in a company means all securities | 10 | | of that company that are held in an account or fund, such | 11 | | as a mutual fund, managed by one or more persons not | 12 | | employed by the retirement system, in which the retirement | 13 | | system owns shares or interests together with other | 14 | | investors not subject to the provisions of this Section or | 15 | | that are held in an index fund. | 16 | | "Iran-restricted company" means a company that meets | 17 | | the qualifications under Section 1-110.15 of this Code. | 18 | | "Private market fund" means any private equity fund, | 19 | | private equity funds of funds, venture capital fund, hedge | 20 | | fund, hedge fund of funds, real estate fund, or other | 21 | | investment vehicle that is not publicly traded. | 22 | | "Restricted companies" means companies that boycott | 23 | | Israel, Iran-restricted companies, and Sudan-restricted | 24 | | companies , and expatriated entities . | 25 | | "Retirement system" means a retirement system | 26 | | established under Article 2, 14, 15, 16, or 18 of this Code |
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| 1 | | or the Illinois State Board of Investment. | 2 | | "Sudan-restricted company" means a company that meets | 3 | | the qualifications under Section 1-110.6 of this Code. | 4 | | (b) There shall be established an Illinois Investment | 5 | | Policy Board. The Illinois Investment Policy Board shall | 6 | | consist of 7 members. Each board of a pension fund or | 7 | | investment board created under Article 15, 16, or 22A of this | 8 | | Code shall appoint one member, and the Governor shall appoint 4 | 9 | | members. | 10 | | (c) Notwithstanding any provision of law to the contrary, | 11 | | beginning January 1, 2016, Sections 110.15 and 1-110.6 of this | 12 | | Code shall be administered in accordance with this Section. | 13 | | (d) By April 1, 2016, the Illinois Investment Policy Board | 14 | | shall make its best efforts to identify all Iran-restricted | 15 | | companies, Sudan-restricted companies, and companies that | 16 | | boycott Israel and assemble those identified companies into a | 17 | | list of restricted companies, to be distributed to each | 18 | | retirement system. | 19 | | These efforts shall include the following, as appropriate | 20 | | in the Illinois Investment Policy Board's judgment: | 21 | | (1) reviewing and relying on publicly available | 22 | | information regarding Iran-restricted companies, | 23 | | Sudan-restricted companies, and companies that boycott | 24 | | Israel, including information provided by nonprofit | 25 | | organizations, research firms, and government entities; | 26 | | (2) contacting asset managers contracted by the |
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| 1 | | retirement systems that invest in Iran-restricted | 2 | | companies, Sudan-restricted companies, and companies that | 3 | | boycott Israel; | 4 | | (3) contacting other institutional investors that have | 5 | | divested from or engaged with Iran-restricted companies, | 6 | | Sudan-restricted companies, and companies that boycott | 7 | | Israel; and | 8 | | (4) retaining an independent research firm to identify | 9 | | Iran-restricted companies, Sudan-restricted companies, and | 10 | | companies that boycott Israel. | 11 | | The Illinois Investment Policy Board shall review the list | 12 | | of restricted companies on a quarterly basis based on evolving | 13 | | information from, among other sources, those listed in this | 14 | | subsection (d) and distribute any updates to the list of | 15 | | restricted companies to the retirement systems and the State | 16 | | Treasurer . | 17 | | By April 1, 2018, the Illinois Investment Policy Board | 18 | | shall make its best efforts to identify all expatriated | 19 | | entities and include those companies in the list of restricted | 20 | | companies distributed to each retirement system and the State | 21 | | Treasurer. These efforts shall include the following, as | 22 | | appropriate in the Illinois Investment Policy Board's | 23 | | judgment: | 24 | | (1) reviewing and relying on publicly available | 25 | | information regarding expatriated entities, including | 26 | | information provided by nonprofit organizations, research |
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| 1 | | firms, and government entities; | 2 | | (2) contacting asset managers contracted by the | 3 | | retirement systems that invest in expatriated entities; | 4 | | (3) contacting other institutional investors that have | 5 | | divested from or engaged with expatriated entities; and | 6 | | (4) retaining an independent research firm to identify | 7 | | expatriated entities. | 8 | | (e) The Illinois Investment Policy Board shall adhere to | 9 | | the following procedures for companies on the list of | 10 | | restricted companies: | 11 | | (1) For each company newly identified in subsection | 12 | | (d), the Illinois Investment Policy Board shall send a | 13 | | written notice informing the company of its status and that | 14 | | it may become subject to divestment or shareholder activism | 15 | | by the retirement systems. | 16 | | (2) If, following the Illinois Investment Policy | 17 | | Board's engagement pursuant to this subsection (e) with a | 18 | | restricted company, that company ceases activity that | 19 | | designates the company to be an Iran-restricted company, a | 20 | | Sudan-restricted company, or a company that boycotts | 21 | | Israel , or an expatriated entity , the company shall be | 22 | | removed from the list of restricted companies and the | 23 | | provisions of this Section shall cease to apply to it | 24 | | unless it resumes such activities. | 25 | | (f) Except as provided in subsection (f-1) of this Section | 26 | | the The retirement system shall adhere to the following |
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| 1 | | procedures for companies on the list of restricted companies: | 2 | | (1) The retirement system shall identify those | 3 | | companies on the list of restricted companies in which the | 4 | | retirement system owns direct holdings and indirect | 5 | | holdings. | 6 | | (2) The retirement system shall instruct its | 7 | | investment advisors to sell, redeem, divest, or withdraw | 8 | | all direct holdings of restricted companies from the | 9 | | retirement system's assets under management in an orderly | 10 | | and fiduciarily responsible manner within 12 months after | 11 | | the company's most recent appearance on the list of | 12 | | restricted companies. | 13 | | (3) The retirement system may not acquire securities of | 14 | | restricted companies. | 15 | | (4) The provisions of this subsection (f) do not apply | 16 | | to the retirement system's indirect holdings or private | 17 | | market funds. The Illinois Investment Policy Board shall | 18 | | submit letters to the managers of those investment funds | 19 | | containing restricted companies requesting that they | 20 | | consider removing the companies from the fund or create a | 21 | | similar actively managed fund having indirect holdings | 22 | | devoid of the companies. If the manager creates a similar | 23 | | fund, the retirement system shall replace all applicable | 24 | | investments with investments in the similar fund in an | 25 | | expedited timeframe consistent with prudent investing | 26 | | standards. |
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| 1 | | (f-1) The retirement system shall adhere to the following | 2 | | procedures for restricted companies that are expatriated | 3 | | entities: | 4 | | (1) To the extent that the retirement system believes | 5 | | that shareholder activism would be more impactful than | 6 | | divestment, the retirement system shall have the authority | 7 | | to engage with a restricted company prior to divesting. | 8 | | (2) Subject to any applicable State or federal laws, | 9 | | methods of shareholder activism utilized by the retirement | 10 | | system may include, but are not limited to, bringing | 11 | | shareholder resolutions and proxy voting on shareholder | 12 | | resolutions. | 13 | | (3) The retirement system shall report on its | 14 | | shareholder activism and the outcome of such efforts to the | 15 | | Illinois Investment Policy Board by April 1 of each year. | 16 | | (4) If the engagement efforts of the retirement system | 17 | | are unsuccessful, then it shall adhere to the procedures | 18 | | under subsection (f) of this Section. | 19 | | (g) Upon request, and by April 1 of each year at least | 20 | | annually , each retirement system shall provide the Illinois | 21 | | Investment Policy Board with information regarding investments | 22 | | sold, redeemed, divested, or withdrawn in compliance with this | 23 | | Section. | 24 | | (h) Notwithstanding any provision of this Section to the | 25 | | contrary, a retirement system may cease divesting from | 26 | | companies pursuant to subsection (f) if clear and convincing |
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| 1 | | evidence shows that the value of investments in such companies | 2 | | becomes equal to or less than 0.5% of the market value of all | 3 | | assets under management by the retirement system. For any | 4 | | cessation of divestment authorized by this subsection (h), the | 5 | | retirement system shall provide a written notice to the | 6 | | Illinois Investment Policy Board in advance of the cessation of | 7 | | divestment, setting forth the reasons and justification, | 8 | | supported by clear and convincing evidence, for its decision to | 9 | | cease divestment under subsection (f). | 10 | | (i) The cost associated with the activities of the Illinois | 11 | | Investment Policy Board shall be borne by the boards of each | 12 | | pension fund or investment board created under Article 15, 16, | 13 | | or 22A of this Code. | 14 | | (j) With respect to actions taken in compliance with this | 15 | | Section, including all good-faith determinations regarding | 16 | | companies as required by this Section, the retirement system | 17 | | and Illinois Investment Policy Board are exempt from any | 18 | | conflicting statutory or common law obligations, including any | 19 | | fiduciary duties under this Article and any obligations with | 20 | | respect to choice of asset managers, investment funds, or | 21 | | investments for the retirement system's securities portfolios. | 22 | | (k) It is not the intent of the General Assembly in | 23 | | enacting this amendatory Act of the 99th General Assembly to | 24 | | cause divestiture from any company based in the United States | 25 | | of America. The Illinois Investment Policy Board shall consider | 26 | | this intent when developing or reviewing the list of restricted |
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| 1 | | companies. | 2 | | (l) If any provision of this amendatory Act of the 99th | 3 | | General Assembly or its application to any person or | 4 | | circumstance is held invalid, the invalidity of that provision | 5 | | or application does not affect other provisions or applications | 6 | | of this amendatory Act of the 99th General Assembly that can be | 7 | | given effect without the invalid provision or application.
| 8 | | (m) If any provision of this amendatory Act of the 100th | 9 | | General Assembly or its application to any person or | 10 | | circumstance is held invalid, the invalidity of that provision | 11 | | or application does not affect other provisions or applications | 12 | | of this amendatory Act of the 100th General Assembly that can | 13 | | be given effect without the invalid provision or application. | 14 | | (Source: P.A. 99-128, eff. 7-23-15.)".
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