HF 111

1st Unofficial Engrossment - 86th Legislature (2009 - 2010)

Posted on 12/26/2012 11:27 p.m.

1.1A bill for an act 1.2relating to the State Board of Investment; requiring divestment from certain 1.3investments relating to Iran;requiring a report; proposing coding for new law 1.4in Minnesota Statutes, chapter 11A. 1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.6    Section 1. new text begin [11A.244] INVESTMENT IN IRAN. new text end 1.7     new text begin Subdivision 1. new text end new text begin Definitions. new text end new text begin For the purposes of this section, the following terms new text end 1.8 new text begin have the meanings given them in this subdivision. new text end 1.9 new text begin (1) "Active business operations" means all business operations that are not inactive new text end 1.10 new text begin business operations. new text end 1.11 new text begin (2) "Company" means any sole proprietorship, organization, association, new text end 1.12 new text begin corporation, partnership, joint venture, limited partnership, limited liability partnership, new text end 1.13 new text begin limited liability company, or other entity or business association, including all wholly new text end 1.14 new text begin owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such new text end 1.15 new text begin entities or business associations, that exists for profit-making purposes. new text end 1.16 new text begin (3) "Direct holdings" means all publicly traded debt and equity securities of a new text end 1.17 new text begin company that are held directly by the State Board of Investment or held in an account or new text end 1.18 new text begin fund in which the State Board of Investment owns all shares or interests. new text end 1.19 new text begin (4) "Government of Iran" means the government of the Islamic Republic of Iran or new text end 1.20 new text begin its instrumentalities or political subdivisions and companies owned or controlled by the new text end 1.21 new text begin Islamic Republic of Iran. new text end 1.22 new text begin (5) "Inactive business operations" means the continued holding or renewal of rights new text end 1.23 new text begin to property previously operated for the purpose of generating revenues but not presently new text end 1.24 new text begin deployed for such a purpose. new text end 2.1 new text begin (6) "Indirect holdings" means all investments held in an account or fund, including a new text end 2.2 new text begin mutual fund, a real estate fund, a private equity fund, or a commingled fund, managed by new text end 2.3 new text begin one or more persons who are not employed by the State Board of Investment, in which new text end 2.4 new text begin the public funds own shares or interests together with other investors who are not subject new text end 2.5 new text begin to this section. new text end 2.6 new text begin (7) "Scrutinized company" means any company engaging in scrutinized business new text end 2.7 new text begin operations. new text end 2.8 new text begin (8) "Scrutinized business operations" means any and all active business operations new text end 2.9 new text begin that are subject or liable to sanctions under Public Law 104-172, as amended, the Iran new text end 2.10 new text begin Sanctions Act of 1996, and that involve the maintenance of a company's existing assets or new text end 2.11 new text begin investments in Iran, or the deployment of new investments to Iran that meet or exceed new text end 2.12 new text begin the $20,000,000 threshold referred to in Public Law 104-172, as amended, the Iran new text end 2.13 new text begin Sanctions Act of 1996. "Scrutinized business operations" does not include the retail sale new text end 2.14 new text begin of gasoline and related products. new text end 2.15 new text begin (9) "Substantial action specific to Iran" means adopting, publicizing, and new text end 2.16 new text begin implementing a formal plan to cease scrutinized business operations within one year and new text end 2.17 new text begin to refrain from any such new business operations. new text end 2.18     new text begin Subd. 2. new text end new text begin Identification of scrutinized companies. new text end new text begin (a) Within 90 days following new text end 2.19 new text begin the effective date of this section, the State Board of Investment shall make its best efforts new text end 2.20 new text begin to identify all scrutinized companies in which it has direct holdings. These efforts shall new text end 2.21 new text begin include, as appropriate: new text end 2.22 new text begin (1) reviewing and relying, as appropriate, on publicly available information regarding new text end 2.23 new text begin companies with business operations in Iran, including information provided by nonprofit new text end 2.24 new text begin organizations, research firms, international organizations, and government entities; new text end 2.25 new text begin (2) contacting asset managers contracting with the State Board of Investment who new text end 2.26 new text begin invest in companies with business operations in Iran; and new text end 2.27 new text begin (3) contacting other institutional investors that have divested from or engaged with new text end 2.28 new text begin companies with business operations in Iran. new text end 2.29 new text begin (b) At the first meeting of the State Board of Investment after it has completed the new text end 2.30 new text begin requirements of paragraph (a), the State Board of Investment shall assemble a list of new text end 2.31 new text begin scrutinized companies in which it has direct holdings. new text end 2.32 new text begin ( new text end new text begin c) The State Board of Investment shall update the scrutinized companies list each new text end 2.33 new text begin quarter based on continuing information, including but not limited to information from new text end 2.34 new text begin sources identified in paragraph (a). new text end 3.1     new text begin Subd. 3. new text end new text begin Engagement of scrutinized companies. new text end new text begin The State Board of Investment new text end 3.2 new text begin shall use the following procedures with respect to companies on the scrutinized companies new text end 3.3 new text begin list: new text end 3.4 new text begin (1) for each company newly identified in subdivision 2 with scrutinized business new text end 3.5 new text begin operations, the State Board of Investment shall, within 90 days following its assembly new text end 3.6 new text begin of the scrutinized companies list, send a written notice informing the company of its new text end 3.7 new text begin scrutinized company status and that it may become subject to divestment by the State new text end 3.8 new text begin Board of Investment. The notice shall offer the company the opportunity to clarify its new text end 3.9 new text begin scrutinized business operations and shall encourage the company to cease, within 90 days new text end 3.10 new text begin of the date of the notice, its scrutinized business operations, or to convert them to inactive new text end 3.11 new text begin business operations in order to avoid divestment by the State Board of Investment; and new text end 3.12 new text begin (2) if, within 90 days following the State Board of Investment's first engagement new text end 3.13 new text begin with a company under clause (1), that company publicly announces its commitment to new text end 3.14 new text begin substantial action specific to Iran, that company shall be removed from the scrutinized new text end 3.15 new text begin companies list and the provisions of this section shall cease to apply to it unless it resumes new text end 3.16 new text begin active business operations in Iran. new text end 3.17     new text begin Subd. 4. new text end new text begin Divestment. new text end new text begin (a) If, after 90 days following the State Board of Investment's new text end 3.18 new text begin first engagement with a company under subdivision 3, clause (1), the company continues new text end 3.19 new text begin to have scrutinized business operations, and only while the company continues to have new text end 3.20 new text begin scrutinized business operations, the State Board of Investment shall sell, redeem, divest, new text end 3.21 new text begin or withdraw all publicly traded securities of the company, according to the following new text end 3.22 new text begin schedule: new text end 3.23 new text begin (1) at least 50 percent of the holdings in the company shall be removed from the new text end 3.24 new text begin State Board of Investment's assets under management by nine months after the company's new text end 3.25 new text begin initial appearance on the scrutinized companies list; and new text end 3.26 new text begin (2) 100 percent of the holdings in the company shall be removed from the State new text end 3.27 new text begin Board of Investment's assets under management within 15 months after the company's new text end 3.28 new text begin initial appearance on the scrutinized companies list. new text end 3.29 new text begin (b) If a company that ceased scrutinized business operations following engagement new text end 3.30 new text begin under subdivision 3, clause (1), resumes such operations, paragraph (a) immediately new text end 3.31 new text begin applies to the company and the State Board of Investment shall send a written notice to new text end 3.32 new text begin the company. The company shall also be immediately reintroduced onto the scrutinized new text end 3.33 new text begin companies list. new text end 3.34     new text begin Subd. 5. new text end new text begin Prohibition on new acquisitions. new text end new text begin The State Board of Investment may not new text end 3.35 new text begin acquire securities of companies on the scrutinized companies list that have scrutinized new text end 3.36 new text begin business operations, except as provided in this section. new text end 4.1     new text begin Subd. 6. new text end new text begin Relation to federal action. new text end new text begin If the federal government excludes a company new text end 4.2 new text begin from its present or any future federal sanctions relating to Iran, that company is exempt new text end 4.3 new text begin from the divestment requirements and the investment prohibitions in this section. new text end 4.4     new text begin Subd. 7. new text end new text begin Exemptions. new text end new text begin Subdivisions 4 and 5 do not apply to any of the following: new text end 4.5 new text begin (1) investments in a company that is primarily engaged in supplying goods or new text end 4.6 new text begin services intended to relieve human suffering in Iran; new text end 4.7 new text begin (2) investments in a company that is primarily engaged in promoting health, new text end 4.8 new text begin education, or journalistic, religious, or welfare activities in Iran; and new text end 4.9 new text begin (3) investments in a United States company that is authorized by the federal new text end 4.10 new text begin government to have active business operations in Iran. new text end 4.11     new text begin Subd. 8. new text end new text begin Excluded securities. new text end new text begin Subdivisions 4 and 5 do not apply to indirect new text end 4.12 new text begin holdings in actively managed investment funds. The State Board of Investment shall new text end 4.13 new text begin submit letters to the managers of investment funds containing companies with scrutinized new text end 4.14 new text begin active business operations requesting the managers to consider removing such companies new text end 4.15 new text begin from the fund or to create a similar actively managed fund with indirect holdings that new text end 4.16 new text begin do not include the companies. If a manager creates a similar fund, the State Board of new text end 4.17 new text begin Investment shall promptly replace all applicable investments with investments in the new text end 4.18 new text begin similar fund consistent with prudent investing standards. For the purposes of this section, new text end 4.19 new text begin "private equity" funds shall be deemed to be actively managed investment funds. new text end 4.20     new text begin Subd. 9. new text end new text begin Reporting. new text end new text begin By January 15 of each calendar year, the State Board of new text end 4.21 new text begin Investment shall submit a report to the chairs and ranking minority members of the new text end 4.22 new text begin legislative committees and divisions with jurisdiction over the State Board of Investment. new text end 4.23 new text begin The report must include: new text end 4.24 new text begin (1) a copy of the most recent list of scrutinized companies; new text end 4.25 new text begin (2) a summary of correspondence with companies engaged by the State Board of new text end 4.26 new text begin Investment under subdivision 3; new text end 4.27 new text begin (3) a list of all investments sold, redeemed, divested, or withdrawn in compliance new text end 4.28 new text begin with subdivision 4; new text end 4.29 new text begin (4) a list of all prohibited investments under subdivision 5; and new text end 4.30 new text begin (5) a description of any progress made under subdivision 8. new text end 4.31     new text begin Subd. 10. new text end new text begin Expiration. new text end new text begin This section ceases to be operative if either of the following new text end 4.32 new text begin apply: new text end 4.33 new text begin (1) Iran is removed from the United States Department of State's list of countries that new text end 4.34 new text begin have been determined to repeatedly provide support for acts of international terrorism; or new text end 4.35 new text begin (2) the president of the United States determines and certifies that state legislation new text end 4.36 new text begin similar to this section interferes with the conduct of United States foreign policy. new text end 5.1     new text begin Subd. 11. new text end new text begin Other legal obligations. new text end new text begin The State Board of Investment is exempt from new text end 5.2 new text begin any statutory or common law obligations that conflict with actions taken in compliance new text end 5.3 new text begin with this section, including all good faith determinations regarding companies as required new text end 5.4 new text begin by this section, including any obligations regarding the choice of asset managers, new text end 5.5 new text begin investment funds, or investments for the State Board of Investment's securities portfolios. new text end 5.6     new text begin Subd. 12. new text end new text begin Severability. new text end new text begin The provisions of this section are severable. If any new text end 5.7 new text begin provision of this section or its application is held invalid, that invalidity does not affect new text end 5.8 new text begin other provisions or applications that can be given effect without the invalid provision new text end 5.9 new text begin or application. new text end