Full Text of HB0232 102nd General Assembly
HB0232enr 102ND GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning public employee benefits.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Pension Code is amended by | 5 | | changing Section 1-110.16 and by adding Section 1-110.17 as | 6 | | follows: | 7 | | (40 ILCS 5/1-110.16) | 8 | | Sec. 1-110.16. Transactions prohibited by retirement | 9 | | systems; companies that boycott Israel, for-profit companies | 10 | | that contract to shelter migrant children, Iran-restricted | 11 | | companies, Sudan-restricted companies, and expatriated | 12 | | entities. | 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 |
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| 1 | | association, including all wholly owned subsidiaries, | 2 | | majority-owned subsidiaries, parent companies, or | 3 | | affiliates of those entities or business associations, | 4 | | that exist for the purpose of making profit. | 5 | | "Contract to shelter migrant children" means entering | 6 | | into a contract with the federal government to shelter | 7 | | migrant children under the federal Unaccompanied Alien | 8 | | Children Program or a substantially similar federal | 9 | | program. | 10 | | "Illinois Investment Policy Board" means the board | 11 | | established under subsection (b) of this Section. | 12 | | "Direct holdings" in a company means all publicly | 13 | | traded securities of that company that are held directly | 14 | | by the retirement system in an actively managed account or | 15 | | fund in which the retirement system owns all shares or | 16 | | interests. | 17 | | "Expatriated entity" has the meaning ascribed to it in | 18 | | Section 1-15.120 of the Illinois Procurement Code. | 19 | | "Indirect holdings" in a company means all securities | 20 | | of that company that are held in an account or fund, such | 21 | | as a mutual fund, managed by one or more persons not | 22 | | employed by the retirement system, in which the retirement | 23 | | system owns shares or interests together with other | 24 | | investors not subject to the provisions of this Section or | 25 | | that are held in an index fund. | 26 | | "Iran-restricted company" means a company that meets |
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| 1 | | the qualifications under Section 1-110.15 of this Code. | 2 | | "Private market fund" means any private equity fund, | 3 | | private equity funds of funds, venture capital fund, hedge | 4 | | fund, hedge fund of funds, real estate fund, or other | 5 | | investment vehicle that is not publicly traded. | 6 | | "Restricted companies" means companies that boycott | 7 | | Israel, for-profit companies that contract to shelter | 8 | | migrant children, Iran-restricted companies, | 9 | | Sudan-restricted companies, and expatriated entities. | 10 | | "Retirement system" means a retirement system | 11 | | established under Article 2, 14, 15, 16, or 18 of this Code | 12 | | or the Illinois State Board of Investment. | 13 | | "Sudan-restricted company" means a company that meets | 14 | | the qualifications under Section 1-110.6 of this Code. | 15 | | (b) There shall be established an Illinois Investment | 16 | | Policy Board. The Illinois Investment Policy Board shall | 17 | | consist of 7 members. Each board of a pension fund or | 18 | | investment board created under Article 15, 16, or 22A of this | 19 | | Code shall appoint one member, and the Governor shall appoint | 20 | | 4 members. | 21 | | (c) Notwithstanding any provision of law to the contrary, | 22 | | beginning January 1, 2016, Sections 110.15 and 1-110.6 of this | 23 | | Code shall be administered in accordance with this Section. | 24 | | (d) By April 1, 2016, the Illinois Investment Policy Board | 25 | | shall make its best efforts to identify all Iran-restricted | 26 | | companies, Sudan-restricted companies, and companies that |
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| 1 | | boycott Israel and assemble those identified companies into a | 2 | | list of restricted companies, to be distributed to each | 3 | | retirement system. | 4 | | These efforts shall include the following, as appropriate | 5 | | in the Illinois Investment Policy Board's judgment: | 6 | | (1) reviewing and relying on publicly available | 7 | | information regarding Iran-restricted companies, | 8 | | Sudan-restricted companies, and companies that boycott | 9 | | Israel, including information provided by nonprofit | 10 | | organizations, research firms, and government entities; | 11 | | (2) contacting asset managers contracted by the | 12 | | retirement systems that invest in Iran-restricted | 13 | | companies, Sudan-restricted companies, and companies that | 14 | | boycott Israel; | 15 | | (3) contacting other institutional investors that have | 16 | | divested from or engaged with Iran-restricted companies, | 17 | | Sudan-restricted companies, and companies that boycott | 18 | | Israel; and | 19 | | (4) retaining an independent research firm to identify | 20 | | Iran-restricted companies, Sudan-restricted companies, | 21 | | and companies that boycott Israel. | 22 | | The Illinois Investment Policy Board shall review the list | 23 | | of restricted companies on a quarterly basis based on evolving | 24 | | information from, among other sources, those listed in this | 25 | | subsection (d) and distribute any updates to the list of | 26 | | restricted companies to the retirement systems and the State |
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| 1 | | Treasurer. | 2 | | By April 1, 2018, the Illinois Investment Policy Board | 3 | | shall make its best efforts to identify all expatriated | 4 | | entities and include those companies in the list of restricted | 5 | | companies distributed to each retirement system and the State | 6 | | Treasurer. These efforts shall include the following, as | 7 | | appropriate in the Illinois Investment Policy Board's | 8 | | judgment: | 9 | | (1) reviewing and relying on publicly available | 10 | | information regarding expatriated entities, including | 11 | | information provided by nonprofit organizations, research | 12 | | firms, and government entities; | 13 | | (2) contacting asset managers contracted by the | 14 | | retirement systems that invest in expatriated entities; | 15 | | (3) contacting other institutional investors that have | 16 | | divested from or engaged with expatriated entities; and | 17 | | (4) retaining an independent research firm to identify | 18 | | expatriated entities. | 19 | | By July 1, 2022, the Illinois Investment Policy Board | 20 | | shall make its best efforts to identify all for-profit | 21 | | companies that contract to shelter migrant children and | 22 | | include those companies in the list of restricted companies | 23 | | distributed to each retirement system. These efforts shall | 24 | | include the following, as appropriate in the Illinois | 25 | | Investment Policy Board's judgment: | 26 | | (1) reviewing and relying on publicly available |
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| 1 | | information regarding for-profit companies that contract | 2 | | to shelter migrant children, including information | 3 | | provided by nonprofit organizations, research firms, and | 4 | | government entities; | 5 | | (2) contacting asset managers contracted by the | 6 | | retirement systems that invest in for-profit companies | 7 | | that contract to shelter migrant children; | 8 | | (3) contacting other institutional investors that have | 9 | | divested from or engaged with for-profit companies that | 10 | | contract to shelter migrant children; and | 11 | | (4) retaining an independent research firm to identify | 12 | | for-profit companies that contract to shelter migrant | 13 | | children. | 14 | | (e) The Illinois Investment Policy Board shall adhere to | 15 | | the following procedures for companies on the list of | 16 | | restricted companies: | 17 | | (1) For each company newly identified in subsection | 18 | | (d), the Illinois Investment Policy Board shall send a | 19 | | written notice informing the company of its status and | 20 | | that it may become subject to divestment or shareholder | 21 | | activism by the retirement systems. | 22 | | (2) If, following the Illinois Investment Policy | 23 | | Board's engagement pursuant to this subsection (e) with a | 24 | | restricted company, that company ceases activity that | 25 | | designates the company to be an Iran-restricted company, a | 26 | | Sudan-restricted company, a company that boycotts Israel, |
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| 1 | | or an expatriated entity, or a for-profit company that | 2 | | contracts to shelter migrant children, the company shall | 3 | | be removed from the list of restricted companies and the | 4 | | provisions of this Section shall cease to apply to it | 5 | | unless it resumes such activities. | 6 | | (f) Except as provided in subsection (f-1) of this Section | 7 | | the retirement system shall adhere to the following procedures | 8 | | for companies on the list of restricted companies: | 9 | | (1) The retirement system shall identify those | 10 | | companies on the list of restricted companies in which the | 11 | | retirement system owns direct holdings and indirect | 12 | | holdings. | 13 | | (2) The retirement system shall instruct its | 14 | | investment advisors to sell, redeem, divest, or withdraw | 15 | | all direct holdings of restricted companies from the | 16 | | retirement system's assets under management in an orderly | 17 | | and fiduciarily responsible manner within 12 months after | 18 | | the company's most recent appearance on the list of | 19 | | restricted companies. | 20 | | (3) The retirement system may not acquire securities | 21 | | of restricted companies. | 22 | | (4) The provisions of this subsection (f) do not apply | 23 | | to the retirement system's indirect holdings or private | 24 | | market funds. The Illinois Investment Policy Board shall | 25 | | submit letters to the managers of those investment funds | 26 | | containing restricted companies requesting that they |
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| 1 | | consider removing the companies from the fund or create a | 2 | | similar actively managed fund having indirect holdings | 3 | | devoid of the companies. If the manager creates a similar | 4 | | fund, the retirement system shall replace all applicable | 5 | | investments with investments in the similar fund in an | 6 | | expedited timeframe consistent with prudent investing | 7 | | standards. | 8 | | (f-1) The retirement system shall adhere to the following | 9 | | procedures for restricted companies that are expatriated | 10 | | entities or for-profit companies that contract to shelter | 11 | | migrant children : | 12 | | (1) To the extent that the retirement system believes | 13 | | that shareholder activism would be more impactful than | 14 | | divestment, the retirement system shall have the authority | 15 | | to engage with a restricted company prior to divesting. | 16 | | (2) Subject to any applicable State or Federal laws, | 17 | | methods of shareholder activism utilized by the retirement | 18 | | system may include, but are not limited to, bringing | 19 | | shareholder resolutions and proxy voting on shareholder | 20 | | resolutions. | 21 | | (3) The retirement system shall report on its | 22 | | shareholder activism and the outcome of such efforts to | 23 | | the Illinois Investment Policy Board by April 1 of each | 24 | | year. | 25 | | (4) If the engagement efforts of the retirement system | 26 | | are unsuccessful, then it shall adhere to the procedures |
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| 1 | | under subsection (f) of this Section. | 2 | | (g) Upon request, and by April 1 of each year, each | 3 | | retirement system shall provide the Illinois Investment Policy | 4 | | Board with information regarding investments sold, redeemed, | 5 | | divested, or withdrawn in compliance with this Section. | 6 | | (h) Notwithstanding any provision of this Section to the | 7 | | contrary, a retirement system may cease divesting from | 8 | | companies pursuant to subsection (f) if clear and convincing | 9 | | evidence shows that the value of investments in such companies | 10 | | becomes equal to or less than 0.5% of the market value of all | 11 | | assets under management by the retirement system. For any | 12 | | cessation of divestment authorized by this subsection (h), the | 13 | | retirement system shall provide a written notice to the | 14 | | Illinois Investment Policy Board in advance of the cessation | 15 | | of divestment, setting forth the reasons and justification, | 16 | | supported by clear and convincing evidence, for its decision | 17 | | to cease divestment under subsection (f). | 18 | | (i) The cost associated with the activities of the | 19 | | Illinois Investment Policy Board shall be borne by the boards | 20 | | of each pension fund or investment board created under Article | 21 | | 15, 16, or 22A of this Code. | 22 | | (j) With respect to actions taken in compliance with this | 23 | | Section, including all good-faith determinations regarding | 24 | | companies as required by this Section, the retirement system | 25 | | and Illinois Investment Policy Board are exempt from any | 26 | | conflicting statutory or common law obligations, including any |
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| 1 | | fiduciary duties under this Article and any obligations with | 2 | | respect to choice of asset managers, investment funds, or | 3 | | investments for the retirement system's securities portfolios. | 4 | | (k) It is not the intent of the General Assembly in | 5 | | enacting this amendatory Act of the 99th General Assembly to | 6 | | cause divestiture from any company based in the United States | 7 | | of America. The Illinois Investment Policy Board shall | 8 | | consider this intent when developing or reviewing the list of | 9 | | restricted companies. | 10 | | (l) If any provision of this amendatory Act of the 99th | 11 | | General Assembly or its application to any person or | 12 | | circumstance is held invalid, the invalidity of that provision | 13 | | or application does not affect other provisions or | 14 | | applications of this amendatory Act of the 99th General | 15 | | Assembly that can be given effect without the invalid | 16 | | provision or application.
| 17 | | (m) If any provision of Public Act 100-551 this amendatory | 18 | | Act of the 100th General Assembly or its application to any | 19 | | person or circumstance is held invalid, the invalidity of that | 20 | | provision or application does not affect other provisions or | 21 | | applications of Public Act 100-551 this amendatory Act of the | 22 | | 100th General Assembly that can be given effect without the | 23 | | invalid provision or application. | 24 | | If any provision of this amendatory Act of the 102nd | 25 | | General Assembly or its application to any person or | 26 | | circumstance is held invalid, the invalidity of that provision |
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| 1 | | or application does not affect other provisions or | 2 | | applications of this amendatory Act of the 102nd General | 3 | | Assembly that can be given effect without the invalid | 4 | | provision or application. | 5 | | (Source: P.A. 99-128, eff. 7-23-15; 100-551, eff. 1-1-18 .) | 6 | | (40 ILCS 5/1-110.17 new) | 7 | | Sec. 1-110.17. Expiration of prohibited transactions. If, | 8 | | at least 4 years after the effective date of an amendatory Act | 9 | | that initially establishes a prohibited transaction under this | 10 | | Article, the Illinois Investment Policy Board concludes that | 11 | | divestment is no longer necessary due to achievement of the | 12 | | underlying goals of the amendatory Act establishing the | 13 | | prohibited transaction, changes in status surrounding the | 14 | | prohibited transactions, or other verifiable reasons, the | 15 | | Illinois Investment Policy Board may cease actions to require | 16 | | divestment, identify restricted companies, or prohibit | 17 | | transactions by a majority vote of the Illinois Investment | 18 | | Policy Board if: (1) no less than one year prior to the change | 19 | | in policy, the Illinois Investment Policy Board notifies, in | 20 | | writing, the General Assembly of the change in policy and | 21 | | lists the reasons for changing the policy; and (2) the General | 22 | | Assembly does not, before the change in policy, adopt a House | 23 | | Resolution or a Senate Resolution instructing the Illinois | 24 | | Investment Policy Board to not change the policy.
| 25 | | Section 99. Effective date. This Act takes effect upon |
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| 1 | | becoming law. |
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