1.1 	A bill for an act
1.2 	relating to the State Board of Investment; requiring divestment from certain 
1.3 	investments relating to Iran;requiring a report; proposing coding for new law 
1.4 	in Minnesota Statutes, chapter 11A.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. [11A.244] INVESTMENT IN IRAN.
1.7 		Subdivision 1.Definitions. For the purposes of this section, the following terms 
1.8 	have the meanings given them in this subdivision.
1.9 	(1) "Active business operations" means all business operations that are not inactive 
1.10 	business operations.
1.11 	(2) "Company" means any sole proprietorship, organization, association, 
1.12 	corporation, partnership, joint venture, limited partnership, limited liability partnership, 
1.13 	limited liability company, or other entity or business association, including all wholly 
1.14 	owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such 
1.15 	entities or business associations, that exists for profit-making purposes.
1.16 	(3) "Direct holdings" means all publicly traded equity securities of a company that 
1.17 	are held directly by the State Board of Investment or held in an account or fund in which 
1.18 	the State Board of Investment owns all shares or interests.
1.19 	(4) "Government of Iran" means the government of the Islamic Republic of Iran or 
1.20 	its instrumentalities or political subdivisions and companies owned or controlled by the 
1.21 	Islamic Republic of Iran.
1.22 	(5) "Inactive business operations" means the continued holding or renewal of rights 
1.23 	to property previously operated for the purpose of generating revenues but not presently 
1.24 	deployed for such a purpose.
2.1 	(6) "Indirect holdings" means all investments held in an account or fund, including a 
2.2 	mutual fund, a real estate fund, a private equity fund, or a commingled fund, managed by 
2.3 	one or more persons who are not employed by the State Board of Investment, in which 
2.4 	the public funds own shares or interests together with other investors who are not subject 
2.5 	to this section.
2.6 	(7) "Scrutinized company" means any company engaging in scrutinized business 
2.7 	operations.
2.8 	(8) "Scrutinized business operations" means any and all active business operations 
2.9 	that are subject or liable to sanctions under Public Law 104-172, as amended, the Iran 
2.10 	Sanctions Act of 1996, and that involve the maintenance of a company's existing assets or 
2.11 	investments in Iran, or the deployment of new investments to Iran that meet or exceed 
2.12 	the $20,000,000 threshold referred to in Public Law 104-172, as amended, the Iran 
2.13 	Sanctions Act of 1996. "Scrutinized business operations" does not include the retail sale 
2.14 	of gasoline and related products.
2.15 	(9) "Substantial action specific to Iran" means adopting, publicizing, and 
2.16 	implementing a formal plan to cease scrutinized business operations within one year and 
2.17 	to refrain from any such new business operations.
2.18 		Subd. 2.Identification of scrutinized companies. (a) Within 90 days following 
2.19 	the effective date of this section, the State Board of Investment shall make its best efforts 
2.20 	to identify all scrutinized companies in which it has direct holdings. These efforts shall 
2.21 	include, as appropriate:
2.22 	(1) reviewing and relying, as appropriate, on publicly available information regarding 
2.23 	companies with business operations in Iran, including information provided by nonprofit 
2.24 	organizations, research firms, international organizations, and government entities;
2.25 	(2) contacting asset managers contracting with the State Board of Investment who 
2.26 	invest in companies with business operations in Iran; and
2.27 	(3) contacting other institutional investors that have divested from or engaged with 
2.28 	companies with business operations in Iran.
2.29 	(b) At the first meeting of the State Board of Investment after it has completed the 
2.30 	requirements of paragraph (a), the State Board of Investment shall assemble a list of 
2.31 	scrutinized companies in which it has direct holdings.
2.32 		(c) The State Board of Investment shall update the scrutinized companies list each 
2.33 	quarter based on continuing information, including but not limited to information from 
2.34 	sources identified in paragraph (a).
3.1 		Subd. 3.Engagement of scrutinized companies. The State Board of Investment 
3.2 	shall use the following procedures with respect to companies on the scrutinized companies 
3.3 	list:
3.4 	(1) for each company newly identified in subdivision 2 with scrutinized business 
3.5 	operations, the State Board of Investment shall, within 90 days following its assembly 
3.6 	of the scrutinized companies list, send a written notice informing the company of its 
3.7 	scrutinized company status and that it may become subject to divestment by the State 
3.8 	Board of Investment. The notice shall offer the company the opportunity to clarify its 
3.9 	scrutinized business operations and shall encourage the company to cease, within 90 days 
3.10 	of the date of the notice, its scrutinized business operations, or to convert them to inactive 
3.11 	business operations in order to avoid divestment by the State Board of Investment; and
3.12 	(2) if, within 90 days following the State Board of Investment's first engagement 
3.13 	with a company under clause (1), that company publicly announces its commitment to 
3.14 	substantial action specific to Iran, that company shall be removed from the scrutinized 
3.15 	companies list and the provisions of this section shall cease to apply to it unless it resumes 
3.16 	active business operations in Iran.
3.17 		Subd. 4.Divestment. (a) If, after 90 days following the State Board of Investment's 
3.18 	first engagement with a company under subdivision 3, clause (1), the company continues 
3.19 	to have scrutinized business operations, and only while the company continues to have 
3.20 	scrutinized business operations, the State Board of Investment shall sell, redeem, divest, 
3.21 	or withdraw all publicly traded securities of the company, according to the following 
3.22 	schedule:
3.23 	(1) at least 50 percent of the holdings in the company shall be removed from the 
3.24 	State Board of Investment's assets under management by nine months after the company's 
3.25 	initial appearance on the scrutinized companies list; and
3.26 	(2) 100 percent of the holdings in the company shall be removed from the State 
3.27 	Board of Investment's assets under management within 15 months after the company's 
3.28 	initial appearance on the scrutinized companies list.
3.29 	(b) If a company that ceased scrutinized business operations following engagement 
3.30 	under subdivision 3, clause (1), resumes such operations, paragraph (a) immediately 
3.31 	applies to the company and the State Board of Investment shall send a written notice to 
3.32 	the company. The company shall also be immediately reintroduced onto the scrutinized 
3.33 	companies list.
3.34 		Subd. 5.Prohibition on new acquisitions. The State Board of Investment may not 
3.35 	acquire securities of companies on the scrutinized companies list that have scrutinized 
3.36 	business operations, except as provided in this section.
4.1 		Subd. 6.Relation to federal action. If the federal government excludes a company 
4.2 	from its present or any future federal sanctions relating to Iran, that company is exempt 
4.3 	from the divestment requirements and the investment prohibitions in this section.
4.4 		Subd. 7.Exemptions. (a) This section does not require the State Board of 
4.5 	Investment to take action unless the board determines, in good faith, that the action 
4.6 	described in this section is consistent with the fiduciary responsibilities of the board, 
4.7 	provided the board reports its reasoning to this effect in writing to the chair and vice-chair 
4.8 	of the Legislative Commission on Pensions and Retirement. Such report must include 
4.9 	information with respect to each scrutinized company for which the board did not take 
4.10 	all actions prescribed under this section, and must also specify any and all other actions 
4.11 	that the board intends to take in compliance with this section. Such report must be 
4.12 	updated continually and submitted quarterly to the chair and vice-chair of the Legislative 
4.13 	Commission on Pensions and Retirement. Any report filing under this subdivision does 
4.14 	not eliminate the reporting requirements under subdivision 9.
4.15 	(b) Subdivisions 4 and 5 do not apply to any of the following:
4.16 	(1) investments in a company that is primarily engaged in supplying goods or 
4.17 	services intended to relieve human suffering in Iran;
4.18 	(2) investments in a company that is primarily engaged in promoting health, 
4.19 	education, or journalistic, religious, or welfare activities in Iran; and
4.20 	(3) investments in a United States company that is authorized by the federal 
4.21 	government to have active business operations in Iran.
4.22 		Subd. 8.Excluded securities. Subdivisions 4 and 5 do not apply to indirect 
4.23 	holdings in actively managed investment funds. The State Board of Investment shall 
4.24 	submit letters to the managers of investment funds containing companies with scrutinized 
4.25 	active business operations requesting the managers to consider removing such companies 
4.26 	from the fund or to create a similar actively managed fund with indirect holdings that 
4.27 	do not include the companies. If a manager creates a similar fund, the State Board of 
4.28 	Investment shall promptly replace all applicable investments with investments in the 
4.29 	similar fund consistent with prudent investing standards. For the purposes of this section, 
4.30 	"private equity" funds shall be deemed to be actively managed investment funds.
4.31 		Subd. 9.Reporting. (a) Within 30 days after creating the scrutinized companies 
4.32 	list, the State Board of Investment shall submit the list to the chair and vice-chair of the 
4.33 	Legislative Commission on Pensions and Retirement.
4.34 	(b) By January 15 of each calendar year, the State Board of Investment shall submit 
4.35 	a report to the chairs of the legislative committees and divisions with jurisdiction over 
4.36 	the State Board of Investment. The report must include:
5.1 	(1) a copy of the most recent list of scrutinized companies;
5.2 	(2) a summary of correspondence with companies engaged by the State Board of 
5.3 	Investment under subdivision 3;
5.4 	(3) a list of all investments sold, redeemed, divested, or withdrawn in compliance 
5.5 	with subdivision 4;
5.6 	(4) a list of all prohibited investments under subdivision 5; and
5.7 	(5) a description of any progress made under subdivision 8.
5.8 		Subd. 10.Expiration. This section ceases to be operative if either of the following 
5.9 	apply:
5.10 	(1) Iran is removed from the United States Department of State's list of countries that 
5.11 	have been determined to repeatedly provide support for acts of international terrorism; or
5.12 	(2) the president of the United States determines and certifies that state legislation 
5.13 	similar to this section interferes with the conduct of United States foreign policy.
5.14 		Subd. 11.Other legal obligations. The State Board of Investment is exempt from 
5.15 	any statutory or common law obligations that conflict with actions taken in compliance 
5.16 	with this section, including all good faith determinations regarding companies as required 
5.17 	by this section, including any obligations regarding the choice of asset managers, 
5.18 	investment funds, or investments for the State Board of Investment's securities portfolios.
5.19 		Subd. 12.Severability. The provisions of this section are severable. If any 
5.20 	provision of this section or its application is held invalid, that invalidity does not affect 
5.21 	other provisions or applications that can be given effect without the invalid provision 
5.22 	or application.