SB1761 99TH GENERAL ASSEMBLY

LRB099 10953 RPS 31300 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB1761

Introduced 2/20/2015, by Sen. Ira I. Silverstein

SYNOPSIS AS INTRODUCED:

30 ILCS 500/50-36.5 new
40 ILCS 5/1-110.16 new

Amends the Illinois Procurement Code. Prohibits a State agency from entering into a contract subject to the Code with a business that boycotts Israel. Amends the General Provisions Article of the Illinois Pension Code. Requires each of the 5 State-funded retirement systems (or the Illinois State Board of Investment where applicable) to make its best efforts to identify all companies that boycott Israel in which it has direct or indirect holdings and, under certain circumstances, to divest itself of holdings in those companies.

FISCAL NOTE ACT MAY APPLY

PENSION IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning finance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Procurement Code is amended by adding Section 50-36.5 as follows:

(30 ILCS 500/50-36.5 new)

Sec. 50-36.5. Prohibition on contracts with businesses that boycott Israel. Notwithstanding any other provision of this Code, on and after the effective date of this amendatory Act of the 99th General Assembly, a State agency shall not enter into a contract subject to this Code with a business that boycotts Israel. For the purposes of this Section, "boycott Israel" means engaging in actions that are politically motivated and are intended to penalize, inflict economic harm on, or otherwise limit commercial relations with the State of Israel or businesses based in the State of Israel or in territories controlled by the State of Israel.

Section 10. The Illinois Pension Code is amended by adding Section 1-110.16 as follows:

(40 ILCS 5/1-110.16 new)

Sec. 1-110.16. Transactions prohibited by retirement systems; companies that boycott Israel.

(a) As used in this Section:

"Boycott Israel" means engaging in actions that are politically motivated and are intended to penalize, inflict economic harm on, or otherwise limit commercial relations with the State of Israel or companies based in the State of Israel or in territories controlled by the State of Israel.

"Company" means any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other entity or business association, including all wholly owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of those entities or business associations, that exists for the purpose of making profit.

"Direct holdings" in a company means all securities of that company that are held directly by the retirement system or in an account or fund in which the retirement system owns all shares or interests.

"Indirect holdings" in a company means all securities of that company that are held in an account or fund, such as a mutual fund, managed by one or more persons not employed by the retirement system, in which the retirement system owns shares or interests together with other investors not subject to the provisions of this Section.

"Private market fund" means any private equity fund, private equity fund of funds, venture capital fund, hedge fund, hedge fund of funds, real estate fund, or other investment vehicle that is not publicly traded.

"Retirement system" means a retirement system established under Article 2, 14, 15, 16, or 18 of this Code, or the Illinois State Board of Investment with respect to investments of the assets of any of those retirement systems under its management.

(b) Within 90 days after the effective date of this Section, each retirement system shall make its best efforts to identify all companies that boycott Israel in which the retirement system has direct or indirect holdings.

These efforts shall include the following, as appropriate in the retirement system's judgment:

(1) reviewing and relying on publicly available information regarding companies that boycott Israel, including information provided by nonprofit organizations, research firms, and government entities;

(2) contacting asset managers contracted by the retirement system that invest in companies that boycott Israel; and

(3) contacting other institutional investors that have divested from or engaged with companies that boycott Israel.

The retirement system may retain an independent research firm to identify companies that boycott Israel in which the retirement system has direct or indirect holdings. By the first meeting of the retirement system following the 90-day period described in this subsection (b), the retirement system shall assemble all of those identified companies into a list of companies that boycott Israel.

The retirement system shall annually update the list of companies that boycott Israel based on evolving information from, among other sources, those listed in this subsection (b).

(c) The retirement system shall adhere to the following procedures for companies on the list of companies that boycott Israel:

(1) The retirement system shall identify those companies on the list of companies that boycott Israel in which the retirement system owns direct or indirect holdings.

(2) For each company newly identified in item (1) of this subsection (c), the retirement system shall send a written notice informing that company of its status and that it may become subject to divestment by the retirement system.

(3) If, within 90 days after the retirement system's first engagement pursuant to this subsection (c) with a company that boycotts Israel, that company ceases to boycott Israel, the company shall be removed from the list of companies that boycott Israel and the provisions of this Section shall cease to apply to it unless it resumes its boycott of Israel.

(d) If, after 90 days following the retirement system's first engagement pursuant to subsection (c) with a company that boycotts Israel, the company continues to boycott Israel, the retirement system shall sell, redeem, divest, or withdraw all publicly traded securities of the company from the retirement system's assets under management within 12 months after the company's most recent appearance on the list of companies that boycott Israel.

(e) The retirement system may not acquire securities of companies that boycott Israel on the list of companies that boycott Israel.

(f) Each retirement system shall file a report with the Public Pension Division of the Department of Financial and Professional Regulation that includes the list of companies that boycott Israel within 30 days after the list is created. This report shall be made available to the public.

Each retirement system shall file an annual report with the Public Pension Division, which shall be made available to the public, that includes all of the following:

(1) a summary of correspondence with companies engaged by the retirement system under items (2) and (3) of subsection (c);

(2) all investments sold, redeemed, divested, or withdrawn in compliance with subsection (d); and

(3) all prohibited investments under subsection (e).

(g) With respect to actions taken in compliance with this Act, including all good-faith determinations regarding companies as required by this Act, the retirement system is exempt from any conflicting statutory or common law obligations, including any fiduciary duties under this Article and any obligations with respect to choice of asset managers, investment funds, or investments for the retirement system's securities portfolios.

(h) If any provision of this Section or its application to any person or circumstance is held invalid, the invalidity of that provision or application does not affect other provisions or applications of this Section that can be given effect without the invalid provision or application.