Full Text of HB4872 102nd General Assembly
HB4872ham001 102ND GENERAL ASSEMBLY | Rep. Jim Durkin Filed: 3/1/2022
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| 1 | | AMENDMENT TO HOUSE BILL 4872
| 2 | | AMENDMENT NO. ______. Amend House Bill 4872 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Pension Code is amended by | 5 | | changing Section 1-110.16 as follows: | 6 | | (40 ILCS 5/1-110.16) | 7 | | Sec. 1-110.16. Transactions prohibited by retirement | 8 | | systems; companies that boycott Israel, for-profit companies | 9 | | that contract to shelter migrant children, Iran-restricted | 10 | | companies, Sudan-restricted companies, and expatriated | 11 | | entities , and companies domiciled in Russia . | 12 | | (a) As used in this Section: | 13 | | "Boycott Israel" means engaging in actions that are | 14 | | politically motivated and are intended to penalize, | 15 | | inflict economic harm on, or otherwise limit commercial | 16 | | relations with the State of Israel or companies based in |
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| 1 | | the State of Israel or in territories controlled by the | 2 | | State of Israel. | 3 | | "Company" means any sole proprietorship, organization, | 4 | | association, corporation, partnership, joint venture, | 5 | | limited partnership, limited liability partnership, | 6 | | limited liability company, or other entity or business | 7 | | association, including all wholly owned subsidiaries, | 8 | | majority-owned subsidiaries, parent companies, or | 9 | | affiliates of those entities or business associations, | 10 | | that exist for the purpose of making profit. | 11 | | "Contract to shelter migrant children" means entering | 12 | | into a contract with the federal government to shelter | 13 | | migrant children under the federal Unaccompanied Alien | 14 | | Children Program or a substantially similar federal | 15 | | program. | 16 | | "Illinois Investment Policy Board" means the board | 17 | | established under subsection (b) of this Section. | 18 | | "Direct holdings" in a company means all publicly | 19 | | traded securities of that company that are held directly | 20 | | by the retirement system in an actively managed account or | 21 | | fund in which the retirement system owns all shares or | 22 | | interests. | 23 | | "Expatriated entity" has the meaning ascribed to it in | 24 | | Section 1-15.120 of the Illinois Procurement Code. | 25 | | "Indirect holdings" in a company means all securities | 26 | | of that company that are held in an account or fund, such |
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| 1 | | as a mutual fund, managed by one or more persons not | 2 | | employed by the retirement system, in which the retirement | 3 | | system owns shares or interests together with other | 4 | | investors not subject to the provisions of this Section or | 5 | | that are held in an index fund. | 6 | | "Iran-restricted company" means a company that meets | 7 | | the qualifications under Section 1-110.15 of this Code. | 8 | | "Private market fund" means any private equity fund, | 9 | | private equity funds of funds, venture capital fund, hedge | 10 | | fund, hedge fund of funds, real estate fund, or other | 11 | | investment vehicle that is not publicly traded. | 12 | | "Restricted companies" means companies that boycott | 13 | | Israel, for-profit companies that contract to shelter | 14 | | migrant children, Iran-restricted companies, | 15 | | Sudan-restricted companies, and expatriated entities , and | 16 | | companies domiciled in Russia . | 17 | | "Retirement system" means a retirement system | 18 | | established under Article 2, 14, 15, 16, or 18 of this Code | 19 | | or the Illinois State Board of Investment. | 20 | | "Sudan-restricted company" means a company that meets | 21 | | the qualifications under Section 1-110.6 of this Code. | 22 | | (b) There shall be established an Illinois Investment | 23 | | Policy Board. The Illinois Investment Policy Board shall | 24 | | consist of 7 members. Each board of a pension fund or | 25 | | investment board created under Article 15, 16, or 22A of this | 26 | | Code shall appoint one member, and the Governor shall appoint |
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| 1 | | 4 members. | 2 | | (c) Notwithstanding any provision of law to the contrary, | 3 | | beginning January 1, 2016, Sections 110.15 and 1-110.6 of this | 4 | | Code shall be administered in accordance with this Section. | 5 | | (d) By April 1, 2016, the Illinois Investment Policy Board | 6 | | shall make its best efforts to identify all Iran-restricted | 7 | | companies, Sudan-restricted companies, and companies that | 8 | | boycott Israel and assemble those identified companies into a | 9 | | list of restricted companies, to be distributed to each | 10 | | retirement system. | 11 | | These efforts shall include the following, as appropriate | 12 | | in the Illinois Investment Policy Board's judgment: | 13 | | (1) reviewing and relying on publicly available | 14 | | information regarding Iran-restricted companies, | 15 | | Sudan-restricted companies, and companies that boycott | 16 | | Israel, including information provided by nonprofit | 17 | | organizations, research firms, and government entities; | 18 | | (2) contacting asset managers contracted by the | 19 | | retirement systems that invest in Iran-restricted | 20 | | companies, Sudan-restricted companies, and companies that | 21 | | boycott Israel; | 22 | | (3) contacting other institutional investors that have | 23 | | divested from or engaged with Iran-restricted companies, | 24 | | Sudan-restricted companies, and companies that boycott | 25 | | Israel; and | 26 | | (4) retaining an independent research firm to identify |
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| 1 | | Iran-restricted companies, Sudan-restricted companies, | 2 | | and companies that boycott Israel. | 3 | | The Illinois Investment Policy Board shall review the list | 4 | | of restricted companies on a quarterly basis based on evolving | 5 | | information from, among other sources, those listed in this | 6 | | subsection (d) and distribute any updates to the list of | 7 | | restricted companies to the retirement systems and the State | 8 | | Treasurer. | 9 | | By April 1, 2018, the Illinois Investment Policy Board | 10 | | shall make its best efforts to identify all expatriated | 11 | | entities and include those companies in the list of restricted | 12 | | companies distributed to each retirement system and the State | 13 | | Treasurer. These efforts shall include the following, as | 14 | | appropriate in the Illinois Investment Policy Board's | 15 | | judgment: | 16 | | (1) reviewing and relying on publicly available | 17 | | information regarding expatriated entities, including | 18 | | information provided by nonprofit organizations, research | 19 | | firms, and government entities; | 20 | | (2) contacting asset managers contracted by the | 21 | | retirement systems that invest in expatriated entities; | 22 | | (3) contacting other institutional investors that have | 23 | | divested from or engaged with expatriated entities; and | 24 | | (4) retaining an independent research firm to identify | 25 | | expatriated entities. | 26 | | By July 1, 2022, the Illinois Investment Policy Board |
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| 1 | | shall make its best efforts to identify all for-profit | 2 | | companies that contract to shelter migrant children and | 3 | | include those companies in the list of restricted companies | 4 | | distributed to each retirement system. These efforts shall | 5 | | include the following, as appropriate in the Illinois | 6 | | Investment Policy Board's judgment: | 7 | | (1) reviewing and relying on publicly available | 8 | | information regarding for-profit companies that contract | 9 | | to shelter migrant children, including information | 10 | | provided by nonprofit organizations, research firms, and | 11 | | government entities; | 12 | | (2) contacting asset managers contracted by the | 13 | | retirement systems that invest in for-profit companies | 14 | | that contract to shelter migrant children; | 15 | | (3) contacting other institutional investors that have | 16 | | divested from or engaged with for-profit companies that | 17 | | contract to shelter migrant children; and | 18 | | (4) retaining an independent research firm to identify | 19 | | for-profit companies that contract to shelter migrant | 20 | | children. | 21 | | No later than 6 months after the effective date of this | 22 | | amendatory Act of the 102nd General Assembly, the Illinois | 23 | | Investment Policy Board shall make its best efforts to | 24 | | identify all companies domiciled in Russia and include those | 25 | | companies in the list of restricted companies distributed to | 26 | | each retirement system. These efforts shall include the |
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| 1 | | following, as appropriate in the Illinois Investment Policy | 2 | | Board's judgment: | 3 | | (1) reviewing and relying on publicly available
| 4 | | information regarding companies domiciled in Russia, | 5 | | including information provided by nonprofit organizations, | 6 | | research firms, and government entities; | 7 | | (2) contacting asset managers contracted by the
| 8 | | retirement systems that invest in companies domiciled in | 9 | | Russia; | 10 | | (3) contacting other institutional investors that have | 11 | | divested from or engaged with companies domiciled in | 12 | | Russia; and | 13 | | (4) retaining an independent research firm to
identify | 14 | | companies domiciled in Russia. | 15 | | (e) The Illinois Investment Policy Board shall adhere to | 16 | | the following procedures for companies on the list of | 17 | | restricted companies: | 18 | | (1) For each company newly identified in subsection | 19 | | (d), the Illinois Investment Policy Board shall send a | 20 | | written notice informing the company of its status and | 21 | | that it may become subject to divestment or shareholder | 22 | | activism by the retirement systems. | 23 | | (2) If, following the Illinois Investment Policy | 24 | | Board's engagement pursuant to this subsection (e) with a | 25 | | restricted company, that company ceases activity that | 26 | | designates the company to be an Iran-restricted company, a |
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| 1 | | Sudan-restricted company, a company that boycotts Israel, | 2 | | an expatriated entity, or a for-profit company that | 3 | | contracts to shelter migrant children, the company shall | 4 | | be removed from the list of restricted companies and the | 5 | | provisions of this Section shall cease to apply to it | 6 | | unless it resumes such activities. | 7 | | (3) For a company domiciled in Russia, if, following | 8 | | the Illinois Investment Policy Board's engagement pursuant | 9 | | to this subsection (e), that company is no longer | 10 | | domiciled in Russia, the company shall be removed from the | 11 | | list of restricted companies and the provisions of this | 12 | | Section shall cease to apply to it unless it becomes | 13 | | domiciled in Russia. | 14 | | (f) Except as provided in subsection (f-1) of this Section | 15 | | the retirement system shall adhere to the following procedures | 16 | | for companies on the list of restricted companies: | 17 | | (1) The retirement system shall identify those | 18 | | companies on the list of restricted companies in which the | 19 | | retirement system owns direct holdings and indirect | 20 | | holdings. | 21 | | (2) The retirement system shall instruct its | 22 | | investment advisors to sell, redeem, divest, or withdraw | 23 | | all direct holdings of restricted companies from the | 24 | | retirement system's assets under management in an orderly | 25 | | and fiduciarily responsible manner within 12 months after | 26 | | the company's most recent appearance on the list of |
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| 1 | | restricted companies. | 2 | | (3) The retirement system may not acquire securities | 3 | | of restricted companies. | 4 | | (4) The provisions of this subsection (f) do not apply | 5 | | to the retirement system's indirect holdings or private | 6 | | market funds. The Illinois Investment Policy Board shall | 7 | | submit letters to the managers of those investment funds | 8 | | containing restricted companies requesting that they | 9 | | consider removing the companies from the fund or create a | 10 | | similar actively managed fund having indirect holdings | 11 | | devoid of the companies. If the manager creates a similar | 12 | | fund, the retirement system shall replace all applicable | 13 | | investments with investments in the similar fund in an | 14 | | expedited timeframe consistent with prudent investing | 15 | | standards. | 16 | | (f-1) The retirement system shall adhere to the following | 17 | | procedures for restricted companies that are expatriated | 18 | | entities or for-profit companies that contract to shelter | 19 | | migrant children: | 20 | | (1) To the extent that the retirement system believes | 21 | | that shareholder activism would be more impactful than | 22 | | divestment, the retirement system shall have the authority | 23 | | to engage with a restricted company prior to divesting. | 24 | | (2) Subject to any applicable State or Federal laws, | 25 | | methods of shareholder activism utilized by the retirement | 26 | | system may include, but are not limited to, bringing |
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| 1 | | shareholder resolutions and proxy voting on shareholder | 2 | | resolutions. | 3 | | (3) The retirement system shall report on its | 4 | | shareholder activism and the outcome of such efforts to | 5 | | the Illinois Investment Policy Board by April 1 of each | 6 | | year. | 7 | | (4) If the engagement efforts of the retirement system | 8 | | are unsuccessful, then it shall adhere to the procedures | 9 | | under subsection (f) of this Section. | 10 | | (g) Upon request, and by April 1 of each year, each | 11 | | retirement system shall provide the Illinois Investment Policy | 12 | | Board with information regarding investments sold, redeemed, | 13 | | divested, or withdrawn in compliance with this Section. | 14 | | (h) Notwithstanding any provision of this Section to the | 15 | | contrary, a retirement system may cease divesting from | 16 | | companies pursuant to subsection (f) if clear and convincing | 17 | | evidence shows that the value of investments in such companies | 18 | | becomes equal to or less than 0.5% of the market value of all | 19 | | assets under management by the retirement system. For any | 20 | | cessation of divestment authorized by this subsection (h), the | 21 | | retirement system shall provide a written notice to the | 22 | | Illinois Investment Policy Board in advance of the cessation | 23 | | of divestment, setting forth the reasons and justification, | 24 | | supported by clear and convincing evidence, for its decision | 25 | | to cease divestment under subsection (f). | 26 | | (i) The cost associated with the activities of the |
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| 1 | | Illinois Investment Policy Board shall be borne by the boards | 2 | | of each pension fund or investment board created under Article | 3 | | 15, 16, or 22A of this Code. | 4 | | (j) With respect to actions taken in compliance with this | 5 | | Section, including all good-faith determinations regarding | 6 | | companies as required by this Section, the retirement system | 7 | | and Illinois Investment Policy Board are exempt from any | 8 | | conflicting statutory or common law obligations, including any | 9 | | fiduciary duties under this Article and any obligations with | 10 | | respect to choice of asset managers, investment funds, or | 11 | | investments for the retirement system's securities portfolios. | 12 | | (k) It is not the intent of the General Assembly in | 13 | | enacting this amendatory Act of the 99th General Assembly to | 14 | | cause divestiture from any company based in the United States | 15 | | of America. The Illinois Investment Policy Board shall | 16 | | consider this intent when developing or reviewing the list of | 17 | | restricted companies. | 18 | | (l) If any provision of this amendatory Act of the 99th | 19 | | General Assembly or its application to any person or | 20 | | circumstance is held invalid, the invalidity of that provision | 21 | | or application does not affect other provisions or | 22 | | applications of this amendatory Act of the 99th General | 23 | | Assembly that can be given effect without the invalid | 24 | | provision or application.
| 25 | | If any provision of Public Act 100-551 or its application | 26 | | to any person or circumstance is held invalid, the invalidity |
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| 1 | | of that provision or application does not affect other | 2 | | provisions or applications of Public Act 100-551 that can be | 3 | | given effect without the invalid provision or application. | 4 | | If any provision of Public Act 102-118 this amendatory Act | 5 | | of the 102nd General Assembly or its application to any person | 6 | | or circumstance is held invalid, the invalidity of that | 7 | | provision or application does not affect other provisions or | 8 | | applications of Public Act 102-118 this amendatory Act of the | 9 | | 102nd General Assembly that can be given effect without the | 10 | | invalid provision or application. | 11 | | If any provision of this amendatory Act of the 102nd | 12 | | General Assembly or its application to any person or | 13 | | circumstance is held invalid, the invalidity of that provision | 14 | | or application does not affect other provisions or | 15 | | applications of this amendatory Act of the 102nd General | 16 | | Assembly that can be given effect without the invalid | 17 | | provision or application. | 18 | | (Source: P.A. 102-118, eff. 7-23-21.)
| 19 | | Section 99. Effective date. This Act takes effect upon | 20 | | becoming law.".
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