Public Act 099-0128
 
SB1761 EnrolledLRB099 10953 RPS 31300 b


  
    AN ACT concerning finance.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  


 
    Section 5. 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, Iran-restricted 
companies, and Sudan-restricted companies.
    (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 exist for the purpose of making profit.
        "Illinois Investment Policy Board" means the board 
    established under subsection (b) of this Section.
        "Direct holdings" in a company means all publicly 
    traded securities of that company that are held directly by 
    the retirement system in an actively managed 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 or 
    that are held in an index fund.
        "Iran-restricted company" means a company that meets 
    the qualifications under Section 1-110.15 of this Code.
        "Private market fund" means any private equity fund, 
    private equity funds of funds, venture capital fund, hedge 
    fund, hedge fund of funds, real estate fund, or other 
    investment vehicle that is not publicly traded.
        "Restricted companies" means companies that boycott 
    Israel, Iran-restricted companies, and Sudan-restricted 
    companies.
        "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.
        "Sudan-restricted company" means a company that meets 
    the qualifications under Section 1-110.6 of this Code.
    (b) There shall be established an Illinois Investment 
Policy Board. The Illinois Investment Policy Board shall 
consist of 7 members. Each board of a pension fund or 
investment board created under Article 15, 16, or 22A of this 
Code shall appoint one member, and the Governor shall appoint 4 
members. 
    (c) Notwithstanding any provision of law to the contrary, 
beginning January 1, 2016, Sections 110.15 and  1-110.6 of this 
Code shall be administered in accordance with this Section.
    (d) By April 1, 2016, the Illinois Investment Policy Board 
shall make its best efforts to identify all Iran-restricted 
companies, Sudan-restricted companies, and companies that 
boycott Israel and assemble those identified companies into a 
list of restricted companies, to be distributed to each 
retirement system.
    These efforts shall include the following, as appropriate 
in the Illinois Investment Policy Board's judgment:
        (1) reviewing and relying on publicly available 
    information regarding Iran-restricted companies, 
    Sudan-restricted companies, and companies that boycott 
    Israel, including information provided by nonprofit 
    organizations, research firms, and government entities;
        (2) contacting asset managers contracted by the 
    retirement systems that invest in Iran-restricted 
    companies, Sudan-restricted companies, and companies that 
    boycott Israel;
        (3) contacting other institutional investors that have 
    divested from or engaged with  Iran-restricted companies, 
    Sudan-restricted companies, and companies that boycott 
    Israel; and
        (4) retaining an independent research firm to identify 
    Iran-restricted companies, Sudan-restricted companies, and 
    companies that boycott Israel.
    The Illinois Investment Policy Board shall review the list 
of restricted companies on a quarterly basis based on evolving 
information from, among other sources, those listed in this 
subsection (d) and distribute any updates to the list of 
restricted companies to the retirement systems.
    (e) The Illinois Investment Policy Board shall adhere to 
the following procedures for companies on the list of 
restricted companies:
        (1) For each company newly identified in subsection 
    (d), the Illinois Investment Policy Board shall send a 
    written notice informing the company of its status and that 
    it may become subject to divestment by the retirement 
    systems.
        (2) If, following the Illinois Investment Policy 
    Board's engagement pursuant to this subsection (e) with a 
    restricted company, that company ceases activity that 
    designates the company to be an Iran-restricted company, a 
    Sudan-restricted company, or a company that boycotts 
    Israel, the company shall be removed from the list of 
    restricted companies and the provisions of this Section 
    shall cease to apply to it unless it resumes such 
    activities.
    (f) The retirement system shall adhere to the following 
procedures for companies on the list of restricted companies:
        (1) The retirement system shall identify those 
    companies on the list of restricted companies in which the 
    retirement system owns direct holdings and indirect 
    holdings.
        (2) The retirement system shall instruct its 
    investment advisors to sell, redeem, divest, or withdraw 
    all direct holdings of restricted companies from the 
    retirement system's assets under management in an orderly 
    and fiduciarily responsible manner within 12 months after 
    the company's most recent appearance on the list of 
    restricted companies.
        (3) The retirement system may not acquire securities of 
    restricted companies.
        (4) The provisions of this subsection (f) do not apply 
    to the retirement system's indirect holdings or private 
    market funds. The Illinois Investment Policy Board shall 
    submit letters to the managers of those investment funds 
    containing restricted companies requesting that they 
    consider removing the companies from the fund or create a 
    similar actively managed fund having indirect holdings 
    devoid of the companies. If the manager creates a similar 
    fund, the retirement system shall replace all applicable 
    investments with investments in the similar fund in an 
    expedited timeframe consistent with prudent investing 
    standards.
    (g) Upon request, and at least annually, each retirement 
system shall provide the Illinois Investment Policy Board with 
information regarding investments sold, redeemed, divested, or 
withdrawn in compliance with this Section.
    (h) Notwithstanding any provision of this Section to the 
contrary, a retirement system may cease divesting from 
companies pursuant to subsection (f) if clear and convincing 
evidence shows that the value of investments in such companies 
becomes equal to or less than 0.5% of the market value of all 
assets under management by the retirement system.  For any 
cessation of divestment authorized by this subsection (h), the 
retirement system shall provide a written notice to the 
Illinois Investment Policy Board in advance of the cessation of 
divestment, setting forth the reasons and justification, 
supported by clear and convincing evidence, for its decision to 
cease divestment under subsection (f). 
    (i) The cost associated with the activities of the Illinois 
Investment Policy Board shall be borne by the boards of each  
pension fund or investment board created under Article 15, 16, 
or 22A of this Code. 
    (j) With respect to actions taken in compliance with this 
Section, including all good-faith determinations regarding 
companies as required by this Section, the retirement system 
and Illinois Investment Policy Board are 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.
    (k) It is not the intent of the General Assembly in 
enacting this amendatory Act of the 99th General Assembly to 
cause divestiture from any company based in the United States 
of America. The Illinois Investment Policy Board shall  consider 
this intent when developing or reviewing the list of restricted 
companies. 
    (l) If any provision of this amendatory Act of the 99th 
General Assembly 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 amendatory Act of the 99th General Assembly that can be 
given effect without the invalid provision or application.

 
    Section 99. Effective date. This Act takes effect upon 
becoming law.