<a id="pl.1.3"></a><var>1.3</var>investments relating to Iran;requiring a report; proposing coding for new law <br/>
<a id="pl.1.4"></a><var>1.4</var>in Minnesota Statutes, chapter 11A.<br/>
<a id="pl.1.5"></a><var>1.5</var>BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:<br/>
<br/>
<a id="bill.0.1.0"></a><a id="pl.1.6"></a><var>1.6</var>    Section 1. <b>[11A.244] INVESTMENT IN IRAN.</b><br/>
<a id="pl.1.7"></a><var>1.7</var>    Subdivision 1. <b>Definitions.</b> For the purposes of this section, the following terms <br/>
<a id="pl.1.8"></a><var>1.8</var>have the meanings given them in this subdivision.<br/>
<a id="pl.1.9"></a><var>1.9</var>(1) "Active business operations" means all business operations that are not inactive <br/>
<a id="pl.1.10"></a><var>1.10</var>business operations.<br/>
<a id="pl.1.11"></a><var>1.11</var>(2) "Company" means any sole proprietorship, organization, association, <br/>
<a id="pl.1.12"></a><var>1.12</var>corporation, partnership, joint venture, limited partnership, limited liability partnership, <br/>
<a id="pl.1.13"></a><var>1.13</var>limited liability company, or other entity or business association, including all wholly <br/>
<a id="pl.1.14"></a><var>1.14</var>owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such <br/>
<a id="pl.1.15"></a><var>1.15</var>entities or business associations, that exists for profit-making purposes.<br/>
<a id="pl.1.16"></a><var>1.16</var>(3) "Direct holdings" means all publicly traded debt and equity securities of a <br/>
<a id="pl.1.17"></a><var>1.17</var>company that are held directly by the State Board of Investment or held in an account or <br/>
<a id="pl.1.18"></a><var>1.18</var>fund in which the State Board of Investment owns all shares or interests.<br/>
<a id="pl.1.19"></a><var>1.19</var>(4) "Government of Iran" means the government of the Islamic Republic of Iran or <br/>
<a id="pl.1.20"></a><var>1.20</var>its instrumentalities or political subdivisions and companies owned or controlled by the <br/>
<a id="pl.1.21"></a><var>1.21</var>Islamic Republic of Iran.<br/>
<a id="pl.1.22"></a><var>1.22</var>(5) "Inactive business operations" means the continued holding or renewal of rights <br/>
<a id="pl.1.23"></a><var>1.23</var>to property previously operated for the purpose of generating revenues but not presently <br/>
<a id="pl.1.24"></a><var>1.24</var>deployed for such a purpose.<br/>
<a id="pl.2.1"></a><var>2.1</var>(6) "Indirect holdings" means all investments held in an account or fund, including a <br/>
<a id="pl.2.2"></a><var>2.2</var>mutual fund, a real estate fund, a private equity fund, or a commingled fund, managed by <br/>
<a id="pl.2.3"></a><var>2.3</var>one or more persons who are not employed by the State Board of Investment, in which <br/>
<a id="pl.2.4"></a><var>2.4</var>the public funds own shares or interests together with other investors who are not subject <br/>
<a id="pl.2.5"></a><var>2.5</var>to this section.<br/>
<a id="pl.2.6"></a><var>2.6</var>(7) "Scrutinized company" means any company engaging in scrutinized business <br/>
<a id="pl.2.7"></a><var>2.7</var>operations.<br/>
<a id="pl.2.8"></a><var>2.8</var>(8) "Scrutinized business operations" means any and all active business operations <br/>
<a id="pl.2.9"></a><var>2.9</var>that are subject or liable to sanctions under Public Law 104-172, as amended, the Iran <br/>
<a id="pl.2.10"></a><var>2.10</var>Sanctions Act of 1996, and that involve the maintenance of a company's existing assets or <br/>
<a id="pl.2.11"></a><var>2.11</var>investments in Iran, or the deployment of new investments to Iran that meet or exceed <br/>
<a id="pl.2.12"></a><var>2.12</var>the $20,000,000 threshold referred to in Public Law 104-172, as amended, the Iran <br/>
<a id="pl.2.13"></a><var>2.13</var>Sanctions Act of 1996. "Scrutinized business operations" does not include the retail sale <br/>
<a id="pl.2.14"></a><var>2.14</var>of gasoline and related products.<br/>
<a id="pl.2.15"></a><var>2.15</var>(9) "Substantial action specific to Iran" means adopting, publicizing, and <br/>
<a id="pl.2.16"></a><var>2.16</var>implementing a formal plan to cease scrutinized business operations within one year and <br/>
<a id="pl.2.17"></a><var>2.17</var>to refrain from any such new business operations.<br/>
<a id="pl.2.18"></a><var>2.18</var>    Subd. 2. <b>Identification of scrutinized companies.</b> (a) Within 90 days following <br/>
<a id="pl.2.19"></a><var>2.19</var>the effective date of this section, the State Board of Investment shall make its best efforts <br/>
<a id="pl.2.20"></a><var>2.20</var>to identify all scrutinized companies in which it has direct holdings. These efforts shall <br/>
<a id="pl.2.21"></a><var>2.21</var>include, as appropriate:<br/>
<a id="pl.2.22"></a><var>2.22</var>(1) reviewing and relying, as appropriate, on publicly available information regarding <br/>
<a id="pl.2.23"></a><var>2.23</var>companies with business operations in Iran, including information provided by nonprofit <br/>
<a id="pl.2.24"></a><var>2.24</var>organizations, research firms, international organizations, and government entities;<br/>
<a id="pl.2.25"></a><var>2.25</var>(2) contacting asset managers contracting with the State Board of Investment who <br/>
<a id="pl.2.26"></a><var>2.26</var>invest in companies with business operations in Iran; and<br/>
<a id="pl.2.27"></a><var>2.27</var>(3) contacting other institutional investors that have divested from or engaged with <br/>
<a id="pl.2.28"></a><var>2.28</var>companies with business operations in Iran.<br/>
<a id="pl.2.29"></a><var>2.29</var>(b) At the first meeting of the State Board of Investment after it has completed the <br/>
<a id="pl.2.30"></a><var>2.30</var>requirements of paragraph (a), the State Board of Investment shall assemble a list of <br/>
<a id="pl.2.31"></a><var>2.31</var>scrutinized companies in which it has direct holdings.<br/>
<a id="pl.2.32"></a><var>2.32</var>(c) The State Board of Investment shall update the scrutinized companies list each <br/>
<a id="pl.2.33"></a><var>2.33</var>quarter based on continuing information, including but not limited to information from <br/>
<a id="pl.2.34"></a><var>2.34</var>sources identified in paragraph (a).<br/>
<a id="pl.3.1"></a><var>3.1</var>    Subd. 3. <b>Engagement of scrutinized companies.</b> The State Board of Investment <br/>
<a id="pl.3.2"></a><var>3.2</var>shall use the following procedures with respect to companies on the scrutinized companies <br/>
<a id="pl.3.3"></a><var>3.3</var>list:<br/>
<a id="pl.3.4"></a><var>3.4</var>(1) for each company newly identified in subdivision 2 with scrutinized business <br/>
<a id="pl.3.5"></a><var>3.5</var>operations, the State Board of Investment shall, within 90 days following its assembly <br/>
<a id="pl.3.6"></a><var>3.6</var>of the scrutinized companies list, send a written notice informing the company of its <br/>
<a id="pl.3.7"></a><var>3.7</var>scrutinized company status and that it may become subject to divestment by the State <br/>
<a id="pl.3.8"></a><var>3.8</var>Board of Investment. The notice shall offer the company the opportunity to clarify its <br/>
<a id="pl.3.9"></a><var>3.9</var>scrutinized business operations and shall encourage the company to cease, within 90 days <br/>
<a id="pl.3.10"></a><var>3.10</var>of the date of the notice, its scrutinized business operations, or to convert them to inactive <br/>
<a id="pl.3.11"></a><var>3.11</var>business operations in order to avoid divestment by the State Board of Investment; and<br/>
<a id="pl.3.12"></a><var>3.12</var>(2) if, within 90 days following the State Board of Investment's first engagement <br/>
<a id="pl.3.13"></a><var>3.13</var>with a company under clause (1), that company publicly announces its commitment to <br/>
<a id="pl.3.14"></a><var>3.14</var>substantial action specific to Iran, that company shall be removed from the scrutinized <br/>
<a id="pl.3.15"></a><var>3.15</var>companies list and the provisions of this section shall cease to apply to it unless it resumes <br/>
<a id="pl.3.16"></a><var>3.16</var>active business operations in Iran.<br/>
<a id="pl.3.17"></a><var>3.17</var>    Subd. 4. <b>Divestment.</b> (a) If, after 90 days following the State Board of Investment's <br/>
<a id="pl.3.18"></a><var>3.18</var>first engagement with a company under subdivision 3, clause (1), the company continues <br/>
<a id="pl.3.19"></a><var>3.19</var>to have scrutinized business operations, and only while the company continues to have <br/>
<a id="pl.3.20"></a><var>3.20</var>scrutinized business operations, the State Board of Investment shall sell, redeem, divest, <br/>
<a id="pl.3.21"></a><var>3.21</var>or withdraw all publicly traded securities of the company, according to the following <br/>
<a id="pl.3.22"></a><var>3.22</var>schedule:<br/>
<a id="pl.3.23"></a><var>3.23</var>(1) at least 50 percent of the holdings in the company shall be removed from the <br/>
<a id="pl.3.24"></a><var>3.24</var>State Board of Investment's assets under management by nine months after the company's <br/>
<a id="pl.3.25"></a><var>3.25</var>initial appearance on the scrutinized companies list; and<br/>
<a id="pl.3.26"></a><var>3.26</var>(2) 100 percent of the holdings in the company shall be removed from the State <br/>
<a id="pl.3.27"></a><var>3.27</var>Board of Investment's assets under management within 15 months after the company's <br/>
<a id="pl.3.28"></a><var>3.28</var>initial appearance on the scrutinized companies list.<br/>
<a id="pl.3.29"></a><var>3.29</var>(b) If a company that ceased scrutinized business operations following engagement <br/>
<a id="pl.3.30"></a><var>3.30</var>under subdivision 3, clause (1), resumes such operations, paragraph (a) immediately <br/>
<a id="pl.3.31"></a><var>3.31</var>applies to the company and the State Board of Investment shall send a written notice to <br/>
<a id="pl.3.32"></a><var>3.32</var>the company. The company shall also be immediately reintroduced onto the scrutinized <br/>
<a id="pl.3.33"></a><var>3.33</var>companies list.<br/>
<a id="pl.3.34"></a><var>3.34</var>    Subd. 5. <b>Prohibition on new acquisitions.</b> The State Board of Investment may not <br/>
<a id="pl.3.35"></a><var>3.35</var>acquire securities of companies on the scrutinized companies list that have scrutinized <br/>
<a id="pl.3.36"></a><var>3.36</var>business operations, except as provided in this section.<br/>
<a id="pl.4.1"></a><var>4.1</var>    Subd. 6. <b>Relation to federal action.</b> If the federal government excludes a company <br/>
<a id="pl.4.2"></a><var>4.2</var>from its present or any future federal sanctions relating to Iran, that company is exempt <br/>
<a id="pl.4.3"></a><var>4.3</var>from the divestment requirements and the investment prohibitions in this section.<br/>
<a id="pl.4.4"></a><var>4.4</var>    Subd. 7. <b>Exemptions.</b> Subdivisions 4 and 5 do not apply to any of the following:<br/>
<a id="pl.4.5"></a><var>4.5</var>(1) investments in a company that is primarily engaged in supplying goods or <br/>
<a id="pl.4.6"></a><var>4.6</var>services intended to relieve human suffering in Iran;<br/>
<a id="pl.4.7"></a><var>4.7</var>(2) investments in a company that is primarily engaged in promoting health, <br/>
<a id="pl.4.8"></a><var>4.8</var>education, or journalistic, religious, or welfare activities in Iran; and<br/>
<a id="pl.4.9"></a><var>4.9</var>(3) investments in a United States company that is authorized by the federal <br/>
<a id="pl.4.10"></a><var>4.10</var>government to have active business operations in Iran.<br/>
<a id="pl.4.11"></a><var>4.11</var>    Subd. 8. <b>Excluded securities.</b> Subdivisions 4 and 5 do not apply to indirect <br/>
<a id="pl.4.12"></a><var>4.12</var>holdings in actively managed investment funds. The State Board of Investment shall <br/>
<a id="pl.4.13"></a><var>4.13</var>submit letters to the managers of investment funds containing companies with scrutinized <br/>
<a id="pl.4.14"></a><var>4.14</var>active business operations requesting the managers to consider removing such companies <br/>
<a id="pl.4.15"></a><var>4.15</var>from the fund or to create a similar actively managed fund with indirect holdings that <br/>
<a id="pl.4.16"></a><var>4.16</var>do not include the companies. If a manager creates a similar fund, the State Board of <br/>
<a id="pl.4.17"></a><var>4.17</var>Investment shall promptly replace all applicable investments with investments in the <br/>
<a id="pl.4.18"></a><var>4.18</var>similar fund consistent with prudent investing standards. For the purposes of this section, <br/>
<a id="pl.4.19"></a><var>4.19</var>"private equity" funds shall be deemed to be actively managed investment funds.<br/>
<a id="pl.4.20"></a><var>4.20</var>    Subd. 9. <b>Reporting.</b>  By January 15 of each calendar year, the State Board of <br/>
<a id="pl.4.21"></a><var>4.21</var>Investment shall submit a report to the chairs and ranking minority members of the <br/>
<a id="pl.4.22"></a><var>4.22</var>legislative committees and divisions with jurisdiction over the State Board of Investment. <br/>
<a id="pl.4.23"></a><var>4.23</var>The report must include:<br/>
<a id="pl.4.24"></a><var>4.24</var>(1) a copy of the most recent list of scrutinized companies;<br/>
<a id="pl.4.25"></a><var>4.25</var>(2) a summary of correspondence with companies engaged by the State Board of <br/>
<a id="pl.4.26"></a><var>4.26</var>Investment under subdivision 3;<br/>
<a id="pl.4.27"></a><var>4.27</var>(3) a list of all investments sold, redeemed, divested, or withdrawn in compliance <br/>
<a id="pl.4.28"></a><var>4.28</var>with subdivision 4;<br/>
<a id="pl.4.29"></a><var>4.29</var>(4) a list of all prohibited investments under subdivision 5; and<br/>
<a id="pl.4.30"></a><var>4.30</var>(5) a description of any progress made under subdivision 8.<br/>
<a id="pl.4.31"></a><var>4.31</var>    Subd. 10. <b>Expiration.</b> This section ceases to be operative if either of the following <br/>
<a id="pl.4.32"></a><var>4.32</var>apply:<br/>
<a id="pl.4.33"></a><var>4.33</var>(1) Iran is removed from the United States Department of State's list of countries that <br/>
<a id="pl.4.34"></a><var>4.34</var>have been determined to repeatedly provide support for acts of international terrorism; or<br/>
<a id="pl.4.35"></a><var>4.35</var>(2) the president of the United States determines and certifies that state legislation <br/>
<a id="pl.4.36"></a><var>4.36</var>similar to this section interferes with the conduct of United States foreign policy.<br/>
<a id="pl.5.1"></a><var>5.1</var>    Subd. 11. <b>Other legal obligations.</b> The State Board of Investment is exempt from <br/>
<a id="pl.5.2"></a><var>5.2</var>any statutory or common law obligations that conflict with actions taken in compliance <br/>
<a id="pl.5.3"></a><var>5.3</var>with this section, including all good faith determinations regarding companies as required <br/>
<a id="pl.5.4"></a><var>5.4</var>by this section, including any obligations regarding the choice of asset managers, <br/>
<a id="pl.5.5"></a><var>5.5</var>investment funds, or investments for the State Board of Investment's securities portfolios.<br/>
<a id="pl.5.6"></a><var>5.6</var>    Subd. 12. <b>Severability.</b> The provisions of this section are severable. If any <br/>
<a id="pl.5.7"></a><var>5.7</var>provision of this section or its application is held invalid, that invalidity does not affect <br/>
<a id="pl.5.8"></a><var>5.8</var>other provisions or applications that can be given effect without the invalid provision <br/>
<a id="pl.5.9"></a><var>5.9</var>or application.<br/>