Sen. Ira I. Silverstein

Filed: 4/17/2015





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2    AMENDMENT NO. ______. Amend Senate Bill 1761, AS AMENDED,
3by replacing everything after the enacting clause with the
5    "Section 5. The Illinois Procurement Code is amended by
6adding Section 50-36.5 as follows:
7    (30 ILCS 500/50-36.5 new)
8    Sec. 50-36.5. Prohibition on contracts with businesses
9that boycott Israel. Notwithstanding any other provision of
10this Code, on and after the effective date of this amendatory
11Act of the 99th General Assembly, a State agency shall not
12enter into a contract subject to this Code with a business that
13boycotts Israel. In determining whether a business boycotts
14Israel, a State agency shall consult the list of restricted
15companies developed by the Illinois Investment Policy Board in
16accordance with Section 1-110.16 of the Illinois Pension Code.



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1For the purposes of this Section, "boycott Israel" means
2engaging in actions that are politically motivated and are
3intended to penalize, inflict economic harm on, or otherwise
4limit commercial relations with the State of Israel or
5businesses based in the State of Israel or in territories
6controlled by the State of Israel.
7    Section 10. The Illinois Pension Code is amended by adding
8Section 1-110.16 as follows:
9    (40 ILCS 5/1-110.16 new)
10    Sec. 1-110.16. Transactions prohibited by retirement
11systems; companies that boycott Israel, Iran-restricted
12companies, and Sudan-restricted companies.
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
24    association, including all wholly owned subsidiaries,



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1    majority-owned subsidiaries, parent companies, or
2    affiliates of those entities or business associations,
3    that exist for the purpose of making profit.
4        "Illinois Investment Policy Board" means the board
5    established under subsection (b) of this Section.
6        "Direct holdings" in a company means all publicly
7    traded securities of that company that are held directly by
8    the retirement system in an actively managed account or
9    fund in which the retirement system owns all shares or
10    interests.
11        "Indirect holdings" in a company means all securities
12    of that company that are held in an account or fund, such
13    as a mutual fund, managed by one or more persons not
14    employed by the retirement system, in which the retirement
15    system owns shares or interests together with other
16    investors not subject to the provisions of this Section or
17    that are held in an index fund.
18        "Iran-restricted company" means a company that meets
19    the qualifications under Section 1-110.15 of this Code.
20        "Private market fund" means any private equity fund,
21    private equity funds of funds, venture capital fund, hedge
22    fund, hedge fund of funds, real estate fund, or other
23    investment vehicle that is not publicly traded.
24        "Restricted companies" means companies that boycott
25    Israel, Iran-restricted companies, and Sudan-restricted
26    companies.



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1        "Retirement system" means a retirement system
2    established under Article 2, 14, 15, 16, or 18 of this Code
3    or the Illinois State Board of Investment.
4        "Sudan-restricted company" means a company that meets
5    the qualifications under Section 1-110.6 of this Code.
6    (b) There shall be established an Illinois Investment
7Policy Board. The Illinois Investment Policy Board shall
8consist of 7 members. Each board of a pension fund or
9investment board created under Article 15, 16, or 22A of this
10Code shall appoint one member, and the Governor shall appoint 4
12    (c) Notwithstanding any provision of law to the contrary,
13beginning January 1, 2016, Sections 110.15 and 1-110.6 of this
14Code shall be administered in accordance with this Section.
15    (d) By April 1, 2016, the Illinois Investment Policy Board
16shall make its best efforts to identify all Iran-restricted
17companies, Sudan-restricted companies, and companies that
18boycott Israel and assemble those identified companies into a
19list of restricted companies, to be distributed to each
20retirement system.
21    These efforts shall include the following, as appropriate
22in the Illinois Investment Policy Board's judgment:
23        (1) reviewing and relying on publicly available
24    information regarding Iran-restricted companies,
25    Sudan-restricted companies, and companies that boycott
26    Israel, including information provided by nonprofit



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1    organizations, research firms, and government entities;
2        (2) contacting asset managers contracted by the
3    retirement systems that invest in Iran-restricted
4    companies, Sudan-restricted companies, and companies that
5    boycott Israel;
6        (3) contacting other institutional investors that have
7    divested from or engaged with Iran-restricted companies,
8    Sudan-restricted companies, and companies that boycott
9    Israel; and
10        (4) retaining an independent research firm to identify
11    Iran-restricted companies, Sudan-restricted companies, and
12    companies that boycott Israel.
13    The Illinois Investment Policy Board shall review the list
14of restricted companies on a quarterly basis based on evolving
15information from, among other sources, those listed in this
16subsection (d) and distribute any updates to the list of
17restricted companies to the retirement systems.
18    (e) The Illinois Investment Policy Board shall adhere to
19the following procedures for companies on the list of
20restricted companies:
21        (1) For each company newly identified in subsection
22    (d), the Illinois Investment Policy Board shall send a
23    written notice informing the company of its status and that
24    it may become subject to divestment by the retirement
25    systems.
26        (2) If, following the Illinois Investment Policy



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



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1    submit letters to the managers of those investment funds
2    containing restricted companies requesting that they
3    consider removing the companies from the fund or create a
4    similar actively managed fund having indirect holdings
5    devoid of the companies. If the manager creates a similar
6    fund, the retirement system shall replace all applicable
7    investments with investments in the similar fund in an
8    expedited timeframe consistent with prudent investing
9    standards.
10    (g) Upon request, and at least annually, each retirement
11system shall provide the Illinois Investment Policy Board with
12information regarding investments sold, redeemed, divested, or
13withdrawn in compliance with this Section.
14    (h) Notwithstanding any provision of this Section to the
15contrary, a retirement system may cease divesting from
16companies pursuant to subsection (f) if clear and convincing
17evidence shows that the value of investments in such companies
18becomes equal to or less than 0.5% of the market value of all
19assets under management by the retirement system. For any
20cessation of divestment authorized by this subsection (h), the
21retirement system shall provide a written notice to the
22Illinois Investment Policy Board in advance of the cessation of
23divestment, setting forth the reasons and justification,
24supported by clear and convincing evidence, for its decision to
25cease divestment under subsection (f).
26    (i) The cost associated with the activities of the Illinois



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1Investment Policy Board shall be borne by the boards of each
2pension fund or investment board created under Article 15, 16,
3or 22A of this Code.
4    (j) With respect to actions taken in compliance with this
5Section, including all good-faith determinations regarding
6companies as required by this Section, the retirement system
7and Illinois Investment Policy Board are exempt from any
8conflicting statutory or common law obligations, including any
9fiduciary duties under this Article and any obligations with
10respect to choice of asset managers, investment funds, or
11investments for the retirement system's securities portfolios.
12    (k) It is not the intent of the General Assembly in
13enacting this amendatory Act of the 99th General Assembly to
14cause divestiture from any company based in the United States
15of America. The Illinois Investment Policy Board shall consider
16this intent when developing or reviewing the list of restricted
18    (l) If any provision of this amendatory Act of the 99th
19General Assembly or its application to any person or
20circumstance is held invalid, the invalidity of that provision
21or application does not affect other provisions or applications
22of this amendatory Act of the 99th General Assembly that can be
23given effect without the invalid provision or application.
24    Section 99. Effective date. This Act takes effect upon
25becoming law.".