Minnesota Session Laws - 2009, Regular Session

CHAPTER 90--H.F.No. 111

An act

relating to the State Board of Investment; requiring divestment from certain investments relating to Iran; requiring a report;

proposing coding for new law in Minnesota Statutes, chapter 11A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [11A.244] INVESTMENT IN IRAN. new text end

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 have the meanings given them in this subdivision. new text end

new text begin (1) "Active business operations" means all business operations that are not inactive business operations. new text end

new text begin (2) "Company" means any sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, or other entity or business association, including all wholly owned subsidiaries, majority-owned subsidiaries, parent companies, or affiliates of such entities or business associations, that exists for profit-making purposes. new text end

new text begin (3) "Direct holdings" means all publicly traded debt and equity securities of a company that are held directly by the State Board of Investment or held in an account or fund in which the State Board of Investment owns all shares or interests. new text end

new text begin (4) "Government of Iran" means the government of the Islamic Republic of Iran or its instrumentalities or political subdivisions and companies owned or controlled by the Islamic Republic of Iran. new text end

new text begin (5) "Inactive business operations" means the continued holding or renewal of rights to property previously operated for the purpose of generating revenues but not presently deployed for such a purpose. new text end

new text begin (6) "Indirect holdings" means all investments held in an account or fund, including a mutual fund, a real estate fund, a private equity fund, or a commingled fund, managed by one or more persons who are not employed by the State Board of Investment, in which the public funds own shares or interests together with other investors who are not subject to this section. new text end

new text begin (7) "Scrutinized company" means any company engaging in scrutinized business operations. new text end

new text begin (8) "Scrutinized business operations" means any and all active business operations that are subject or liable to sanctions under Public Law 104-172, as amended, the Iran Sanctions Act of 1996, and that involve the maintenance of a company's existing assets or investments in Iran, or the deployment of new investments to Iran that meet or exceed the $20,000,000 threshold referred to in Public Law 104-172, as amended, the Iran Sanctions Act of 1996. "Scrutinized business operations" does not include the retail sale of gasoline and related products. new text end

new text begin (9) "Substantial action specific to Iran" means adopting, publicizing, and implementing a formal plan to cease scrutinized business operations within one year and to refrain from any such new business operations. new text end

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 the effective date of this section, the State Board of Investment shall make its best efforts to identify all scrutinized companies in which it has direct holdings. These efforts shall include, as appropriate: new text end

new text begin (1) reviewing and relying, as appropriate, on publicly available information regarding companies with business operations in Iran, including information provided by nonprofit organizations, research firms, international organizations, and government entities; new text end

new text begin (2) contacting asset managers contracting with the State Board of Investment who invest in companies with business operations in Iran; and new text end

new text begin (3) contacting other institutional investors that have divested from or engaged with companies with business operations in Iran. new text end

new text begin (b) At the first meeting of the State Board of Investment after it has completed the requirements of paragraph (a), the State Board of Investment shall assemble a list of scrutinized companies in which it has direct holdings. new text end

new text begin (c) The State Board of Investment shall update the scrutinized companies list each quarter based on continuing information, including but not limited to information from sources identified in paragraph (a). new text end

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 shall use the following procedures with respect to companies on the scrutinized companies list: new text end

new text begin (1) for each company newly identified in subdivision 2 with scrutinized business operations, the State Board of Investment shall, within 90 days following its assembly of the scrutinized companies list, send a written notice informing the company of its scrutinized company status and that it may become subject to divestment by the State Board of Investment. The notice shall offer the company the opportunity to clarify its scrutinized business operations and shall encourage the company to cease, within 90 days of the date of the notice, its scrutinized business operations, or to convert them to inactive business operations in order to avoid divestment by the State Board of Investment; and new text end

new text begin (2) if, within 90 days following the State Board of Investment's first engagement with a company under clause (1), that company publicly announces its commitment to substantial action specific to Iran, that company shall be removed from the scrutinized companies list and the provisions of this section shall cease to apply to it unless it resumes active business operations in Iran. new text end

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 first engagement with a company under subdivision 3, clause (1), the company continues to have scrutinized business operations, and only while the company continues to have scrutinized business operations, the State Board of Investment shall sell, redeem, divest, or withdraw all publicly traded securities of the company, according to the following schedule: new text end

new text begin (1) at least 50 percent of the holdings in the company shall be removed from the State Board of Investment's assets under management by nine months after the company's initial appearance on the scrutinized companies list; and new text end

new text begin (2) 100 percent of the holdings in the company shall be removed from the State Board of Investment's assets under management within 15 months after the company's initial appearance on the scrutinized companies list. new text end

new text begin (b) If a company that ceased scrutinized business operations following engagement under subdivision 3, clause (1), resumes such operations, paragraph (a) immediately applies to the company and the State Board of Investment shall send a written notice to the company. The company shall also be immediately reintroduced onto the scrutinized companies list. new text end

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 acquire securities of companies on the scrutinized companies list that have scrutinized business operations, except as provided in this section. new text end

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 from its present or any future federal sanctions relating to Iran, that company is exempt from the divestment requirements and the investment prohibitions in this section. new text end

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

new text begin (1) investments in a company that is primarily engaged in supplying goods or services intended to relieve human suffering in Iran; new text end

new text begin (2) investments in a company that is primarily engaged in promoting health, education, or journalistic, religious, or welfare activities in Iran; and new text end

new text begin (3) investments in a United States company that is authorized by the federal government to have active business operations in Iran. new text end

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 holdings in actively managed investment funds. The State Board of Investment shall submit letters to the managers of investment funds containing companies with scrutinized active business operations requesting the managers to consider removing such companies from the fund or to create a similar actively managed fund with indirect holdings that do not include the companies. If a manager creates a similar fund, the State Board of Investment shall promptly replace all applicable investments with investments in the similar fund consistent with prudent investing standards. For the purposes of this section, "private equity" funds shall be deemed to be actively managed investment funds. new text end

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 Investment shall submit a report to the chairs and ranking minority members of the legislative committees and divisions with jurisdiction over the State Board of Investment. The report must include: new text end

new text begin (1) a copy of the most recent list of scrutinized companies; new text end

new text begin (2) a summary of correspondence with companies engaged by the State Board of Investment under subdivision 3; new text end

new text begin (3) a list of all investments sold, redeemed, divested, or withdrawn in compliance with subdivision 4; new text end

new text begin (4) a list of all prohibited investments under subdivision 5; and new text end

new text begin (5) a description of any progress made under subdivision 8. new text end

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 apply: new text end

new text begin (1) Iran is removed from the United States Department of State's list of countries that have been determined to repeatedly provide support for acts of international terrorism; or new text end

new text begin (2) the president of the United States determines and certifies that state legislation similar to this section interferes with the conduct of United States foreign policy. new text end

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 any statutory or common law obligations that conflict with actions taken in compliance with this section, including all good faith determinations regarding companies as required by this section, including any obligations regarding the choice of asset managers, investment funds, or investments for the State Board of Investment's securities portfolios. new text end

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 provision of this section or its application is held invalid, that invalidity does not affect other provisions or applications that can be given effect without the invalid provision or application. new text end

Presented to the governor May 13, 2009

Signed by the governor May 16, 2009, 1:44 p.m.