Minnesota Legislature
HF 111
1st Unofficial Engrossment - 86th Legislature (2009 - 2010) Posted on 12/26/2012 11:27pm
KEY: stricken = removed, old language.
underscored = added, new language.
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. [11A.244] INVESTMENT IN IRAN.
1.7 Subdivision 1. Definitions. For the purposes of this section, the following terms
1.8have the meanings given them in this subdivision.
1.9(1) "Active business operations" means all business operations that are not inactive
1.10business operations.
1.11(2) "Company" means any sole proprietorship, organization, association,
1.12corporation, partnership, joint venture, limited partnership, limited liability partnership,
1.13limited liability company, or other entity or business association, including all wholly
1.14owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such
1.15entities or business associations, that exists for profit-making purposes.
1.16(3) "Direct holdings" means all publicly traded debt and equity securities of a
1.17company that are held directly by the State Board of Investment or held in an account or
1.18fund in which 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
1.20its instrumentalities or political subdivisions and companies owned or controlled by the
1.21Islamic Republic of Iran.
1.22(5) "Inactive business operations" means the continued holding or renewal of rights
1.23to property previously operated for the purpose of generating revenues but not presently
1.24deployed for such a purpose.
2.1(6) "Indirect holdings" means all investments held in an account or fund, including a
2.2mutual fund, a real estate fund, a private equity fund, or a commingled fund, managed by
2.3one or more persons who are not employed by the State Board of Investment, in which
2.4the public funds own shares or interests together with other investors who are not subject
2.5to this section.
2.6(7) "Scrutinized company" means any company engaging in scrutinized business
2.7operations.
2.8(8) "Scrutinized business operations" means any and all active business operations
2.9that are subject or liable to sanctions under Public Law 104-172, as amended, the Iran
2.10Sanctions Act of 1996, and that involve the maintenance of a company's existing assets or
2.11investments in Iran, or the deployment of new investments to Iran that meet or exceed
2.12the $20,000,000 threshold referred to in Public Law 104-172, as amended, the Iran
2.13Sanctions Act of 1996. "Scrutinized business operations" does not include the retail sale
2.14of gasoline and related products.
2.15(9) "Substantial action specific to Iran" means adopting, publicizing, and
2.16implementing a formal plan to cease scrutinized business operations within one year and
2.17to refrain from any such new business operations.
2.18 Subd. 2. Identification of scrutinized companies. (a) Within 90 days following
2.19the effective date of this section, the State Board of Investment shall make its best efforts
2.20to identify all scrutinized companies in which it has direct holdings. These efforts shall
2.21include, as appropriate:
2.22(1) reviewing and relying, as appropriate, on publicly available information regarding
2.23companies with business operations in Iran, including information provided by nonprofit
2.24organizations, research firms, international organizations, and government entities;
2.25(2) contacting asset managers contracting with the State Board of Investment who
2.26invest in companies with business operations in Iran; and
2.27(3) contacting other institutional investors that have divested from or engaged with
2.28companies with business operations in Iran.
2.29(b) At the first meeting of the State Board of Investment after it has completed the
2.30requirements of paragraph (a), the State Board of Investment shall assemble a list of
2.31scrutinized companies in which it has direct holdings.
2.32(c) The State Board of Investment shall update the scrutinized companies list each
2.33quarter based on continuing information, including but not limited to information from
2.34sources identified in paragraph (a).
3.1 Subd. 3. Engagement of scrutinized companies. The State Board of Investment
3.2shall use the following procedures with respect to companies on the scrutinized companies
3.3list:
3.4(1) for each company newly identified in subdivision 2 with scrutinized business
3.5operations, the State Board of Investment shall, within 90 days following its assembly
3.6of the scrutinized companies list, send a written notice informing the company of its
3.7scrutinized company status and that it may become subject to divestment by the State
3.8Board of Investment. The notice shall offer the company the opportunity to clarify its
3.9scrutinized business operations and shall encourage the company to cease, within 90 days
3.10of the date of the notice, its scrutinized business operations, or to convert them to inactive
3.11business 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
3.13with a company under clause (1), that company publicly announces its commitment to
3.14substantial action specific to Iran, that company shall be removed from the scrutinized
3.15companies list and the provisions of this section shall cease to apply to it unless it resumes
3.16active business operations in Iran.
3.17 Subd. 4. Divestment. (a) If, after 90 days following the State Board of Investment's
3.18first engagement with a company under subdivision 3, clause (1), the company continues
3.19to have scrutinized business operations, and only while the company continues to have
3.20scrutinized business operations, the State Board of Investment shall sell, redeem, divest,
3.21or withdraw all publicly traded securities of the company, according to the following
3.22schedule:
3.23(1) at least 50 percent of the holdings in the company shall be removed from the
3.24State Board of Investment's assets under management by nine months after the company's
3.25initial appearance on the scrutinized companies list; and
3.26(2) 100 percent of the holdings in the company shall be removed from the State
3.27Board of Investment's assets under management within 15 months after the company's
3.28initial appearance on the scrutinized companies list.
3.29(b) If a company that ceased scrutinized business operations following engagement
3.30under subdivision 3, clause (1), resumes such operations, paragraph (a) immediately
3.31applies to the company and the State Board of Investment shall send a written notice to
3.32the company. The company shall also be immediately reintroduced onto the scrutinized
3.33companies list.
3.34 Subd. 5. Prohibition on new acquisitions. The State Board of Investment may not
3.35acquire securities of companies on the scrutinized companies list that have scrutinized
3.36business operations, except as provided in this section.
4.1 Subd. 6. Relation to federal action. If the federal government excludes a company
4.2from its present or any future federal sanctions relating to Iran, that company is exempt
4.3from the divestment requirements and the investment prohibitions in this section.
4.4 Subd. 7. Exemptions. Subdivisions 4 and 5 do not apply to any of the following:
4.5(1) investments in a company that is primarily engaged in supplying goods or
4.6services intended to relieve human suffering in Iran;
4.7(2) investments in a company that is primarily engaged in promoting health,
4.8education, or journalistic, religious, or welfare activities in Iran; and
4.9(3) investments in a United States company that is authorized by the federal
4.10government to have active business operations in Iran.
4.11 Subd. 8. Excluded securities. Subdivisions 4 and 5 do not apply to indirect
4.12holdings in actively managed investment funds. The State Board of Investment shall
4.13submit letters to the managers of investment funds containing companies with scrutinized
4.14active business operations requesting the managers to consider removing such companies
4.15from the fund or to create a similar actively managed fund with indirect holdings that
4.16do not include the companies. If a manager creates a similar fund, the State Board of
4.17Investment shall promptly replace all applicable investments with investments in the
4.18similar fund consistent with prudent investing standards. For the purposes of this section,
4.19"private equity" funds shall be deemed to be actively managed investment funds.
4.20 Subd. 9. Reporting. By January 15 of each calendar year, the State Board of
4.21Investment shall submit a report to the chairs and ranking minority members of the
4.22legislative committees and divisions with jurisdiction over the State Board of Investment.
4.23The report must include:
4.24(1) a copy of the most recent list of scrutinized companies;
4.25(2) a summary of correspondence with companies engaged by the State Board of
4.26Investment under subdivision 3;
4.27(3) a list of all investments sold, redeemed, divested, or withdrawn in compliance
4.28with subdivision 4;
4.29(4) a list of all prohibited investments under subdivision 5; and
4.30(5) a description of any progress made under subdivision 8.
4.31 Subd. 10. Expiration. This section ceases to be operative if either of the following
4.32apply:
4.33(1) Iran is removed from the United States Department of State's list of countries that
4.34have been determined to repeatedly provide support for acts of international terrorism; or
4.35(2) the president of the United States determines and certifies that state legislation
4.36similar to this section interferes with the conduct of United States foreign policy.
5.1 Subd. 11. Other legal obligations. The State Board of Investment is exempt from
5.2any statutory or common law obligations that conflict with actions taken in compliance
5.3with this section, including all good faith determinations regarding companies as required
5.4by this section, including any obligations regarding the choice of asset managers,
5.5investment funds, or investments for the State Board of Investment's securities portfolios.
5.6 Subd. 12. Severability. The provisions of this section are severable. If any
5.7provision of this section or its application is held invalid, that invalidity does not affect
5.8other provisions or applications that can be given effect without the invalid provision
5.9or application.
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. [11A.244] INVESTMENT IN IRAN.
1.7 Subdivision 1. Definitions. For the purposes of this section, the following terms
1.8have the meanings given them in this subdivision.
1.9(1) "Active business operations" means all business operations that are not inactive
1.10business operations.
1.11(2) "Company" means any sole proprietorship, organization, association,
1.12corporation, partnership, joint venture, limited partnership, limited liability partnership,
1.13limited liability company, or other entity or business association, including all wholly
1.14owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such
1.15entities or business associations, that exists for profit-making purposes.
1.16(3) "Direct holdings" means all publicly traded debt and equity securities of a
1.17company that are held directly by the State Board of Investment or held in an account or
1.18fund in which 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
1.20its instrumentalities or political subdivisions and companies owned or controlled by the
1.21Islamic Republic of Iran.
1.22(5) "Inactive business operations" means the continued holding or renewal of rights
1.23to property previously operated for the purpose of generating revenues but not presently
1.24deployed for such a purpose.
2.1(6) "Indirect holdings" means all investments held in an account or fund, including a
2.2mutual fund, a real estate fund, a private equity fund, or a commingled fund, managed by
2.3one or more persons who are not employed by the State Board of Investment, in which
2.4the public funds own shares or interests together with other investors who are not subject
2.5to this section.
2.6(7) "Scrutinized company" means any company engaging in scrutinized business
2.7operations.
2.8(8) "Scrutinized business operations" means any and all active business operations
2.9that are subject or liable to sanctions under Public Law 104-172, as amended, the Iran
2.10Sanctions Act of 1996, and that involve the maintenance of a company's existing assets or
2.11investments in Iran, or the deployment of new investments to Iran that meet or exceed
2.12the $20,000,000 threshold referred to in Public Law 104-172, as amended, the Iran
2.13Sanctions Act of 1996. "Scrutinized business operations" does not include the retail sale
2.14of gasoline and related products.
2.15(9) "Substantial action specific to Iran" means adopting, publicizing, and
2.16implementing a formal plan to cease scrutinized business operations within one year and
2.17to refrain from any such new business operations.
2.18 Subd. 2. Identification of scrutinized companies. (a) Within 90 days following
2.19the effective date of this section, the State Board of Investment shall make its best efforts
2.20to identify all scrutinized companies in which it has direct holdings. These efforts shall
2.21include, as appropriate:
2.22(1) reviewing and relying, as appropriate, on publicly available information regarding
2.23companies with business operations in Iran, including information provided by nonprofit
2.24organizations, research firms, international organizations, and government entities;
2.25(2) contacting asset managers contracting with the State Board of Investment who
2.26invest in companies with business operations in Iran; and
2.27(3) contacting other institutional investors that have divested from or engaged with
2.28companies with business operations in Iran.
2.29(b) At the first meeting of the State Board of Investment after it has completed the
2.30requirements of paragraph (a), the State Board of Investment shall assemble a list of
2.31scrutinized companies in which it has direct holdings.
2.32(c) The State Board of Investment shall update the scrutinized companies list each
2.33quarter based on continuing information, including but not limited to information from
2.34sources identified in paragraph (a).
3.1 Subd. 3. Engagement of scrutinized companies. The State Board of Investment
3.2shall use the following procedures with respect to companies on the scrutinized companies
3.3list:
3.4(1) for each company newly identified in subdivision 2 with scrutinized business
3.5operations, the State Board of Investment shall, within 90 days following its assembly
3.6of the scrutinized companies list, send a written notice informing the company of its
3.7scrutinized company status and that it may become subject to divestment by the State
3.8Board of Investment. The notice shall offer the company the opportunity to clarify its
3.9scrutinized business operations and shall encourage the company to cease, within 90 days
3.10of the date of the notice, its scrutinized business operations, or to convert them to inactive
3.11business 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
3.13with a company under clause (1), that company publicly announces its commitment to
3.14substantial action specific to Iran, that company shall be removed from the scrutinized
3.15companies list and the provisions of this section shall cease to apply to it unless it resumes
3.16active business operations in Iran.
3.17 Subd. 4. Divestment. (a) If, after 90 days following the State Board of Investment's
3.18first engagement with a company under subdivision 3, clause (1), the company continues
3.19to have scrutinized business operations, and only while the company continues to have
3.20scrutinized business operations, the State Board of Investment shall sell, redeem, divest,
3.21or withdraw all publicly traded securities of the company, according to the following
3.22schedule:
3.23(1) at least 50 percent of the holdings in the company shall be removed from the
3.24State Board of Investment's assets under management by nine months after the company's
3.25initial appearance on the scrutinized companies list; and
3.26(2) 100 percent of the holdings in the company shall be removed from the State
3.27Board of Investment's assets under management within 15 months after the company's
3.28initial appearance on the scrutinized companies list.
3.29(b) If a company that ceased scrutinized business operations following engagement
3.30under subdivision 3, clause (1), resumes such operations, paragraph (a) immediately
3.31applies to the company and the State Board of Investment shall send a written notice to
3.32the company. The company shall also be immediately reintroduced onto the scrutinized
3.33companies list.
3.34 Subd. 5. Prohibition on new acquisitions. The State Board of Investment may not
3.35acquire securities of companies on the scrutinized companies list that have scrutinized
3.36business operations, except as provided in this section.
4.1 Subd. 6. Relation to federal action. If the federal government excludes a company
4.2from its present or any future federal sanctions relating to Iran, that company is exempt
4.3from the divestment requirements and the investment prohibitions in this section.
4.4 Subd. 7. Exemptions. Subdivisions 4 and 5 do not apply to any of the following:
4.5(1) investments in a company that is primarily engaged in supplying goods or
4.6services intended to relieve human suffering in Iran;
4.7(2) investments in a company that is primarily engaged in promoting health,
4.8education, or journalistic, religious, or welfare activities in Iran; and
4.9(3) investments in a United States company that is authorized by the federal
4.10government to have active business operations in Iran.
4.11 Subd. 8. Excluded securities. Subdivisions 4 and 5 do not apply to indirect
4.12holdings in actively managed investment funds. The State Board of Investment shall
4.13submit letters to the managers of investment funds containing companies with scrutinized
4.14active business operations requesting the managers to consider removing such companies
4.15from the fund or to create a similar actively managed fund with indirect holdings that
4.16do not include the companies. If a manager creates a similar fund, the State Board of
4.17Investment shall promptly replace all applicable investments with investments in the
4.18similar fund consistent with prudent investing standards. For the purposes of this section,
4.19"private equity" funds shall be deemed to be actively managed investment funds.
4.20 Subd. 9. Reporting. By January 15 of each calendar year, the State Board of
4.21Investment shall submit a report to the chairs and ranking minority members of the
4.22legislative committees and divisions with jurisdiction over the State Board of Investment.
4.23The report must include:
4.24(1) a copy of the most recent list of scrutinized companies;
4.25(2) a summary of correspondence with companies engaged by the State Board of
4.26Investment under subdivision 3;
4.27(3) a list of all investments sold, redeemed, divested, or withdrawn in compliance
4.28with subdivision 4;
4.29(4) a list of all prohibited investments under subdivision 5; and
4.30(5) a description of any progress made under subdivision 8.
4.31 Subd. 10. Expiration. This section ceases to be operative if either of the following
4.32apply:
4.33(1) Iran is removed from the United States Department of State's list of countries that
4.34have been determined to repeatedly provide support for acts of international terrorism; or
4.35(2) the president of the United States determines and certifies that state legislation
4.36similar to this section interferes with the conduct of United States foreign policy.
5.1 Subd. 11. Other legal obligations. The State Board of Investment is exempt from
5.2any statutory or common law obligations that conflict with actions taken in compliance
5.3with this section, including all good faith determinations regarding companies as required
5.4by this section, including any obligations regarding the choice of asset managers,
5.5investment funds, or investments for the State Board of Investment's securities portfolios.
5.6 Subd. 12. Severability. The provisions of this section are severable. If any
5.7provision of this section or its application is held invalid, that invalidity does not affect
5.8other provisions or applications that can be given effect without the invalid provision
5.9or application.