Minnesota Session Laws - 2022, Regular Session

CHAPTER 43--H.F.No. 4165

An act

relating to state government; requiring divestment from certain investments relating to Russia and Belarus; terminating contracts with Russian and Belarusian entities; requiring a report;

proposing coding for new law in Minnesota Statutes, chapters 11A; 16C.

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

Section 1.

new text begin [11A.245] INVESTMENT IN RUSSIA AND BELARUS. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have the meanings given. new text end

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

new text begin (c) "Belarus" means the government of the Republic of Belarus and its instrumentalities or political subdivisions, and companies owned or controlled by the Republic of Belarus. new text end

new text begin (d) "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 (e) "Direct holdings" means all publicly traded debt and equity securities, including depository receipts representing ownership rights of such securities, of an entity subject to this section, or derivatives or notes representing exposure to such securities, that are held directly by the state board or held in an account or fund in which the state board owns all shares or interests. new text end

new text begin (f) "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 (g) "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, 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 (h) "Russia" means the government of the Russian Federation or its instrumentalities or political subdivisions, and companies owned or controlled by the Russian Federation. new text end

new text begin Subd. 2. new text end

new text begin Divestment required. new text end

new text begin (a) The state board must sell, redeem, or withdraw, in a fiscally prudent manner and consistent with applicable laws and regulations not in conflict with this section, all direct holdings of the following assets: new text end

new text begin (1) securities issued by a company with a principal place of business in Russia or Belarus, or depository receipts representing ownership rights to such securities; new text end

new text begin (2) securities issued by Russia or Belarus; new text end

new text begin (3) securities issued by any governmental unit of Russia or Belarus; new text end

new text begin (4) currency issued by Russia, Belarus, or a governmental unit of Russia or Belarus; and new text end

new text begin (5) derivatives or notes representing exposure to any assets listed in this subdivision. new text end

new text begin (b) For purposes of this subdivision, when determining whether a company has a principal place of business in Russia or Belarus, the state board must give consideration to the company's country of risk; domicile; country of incorporation; the country in which the company's securities are issued; and other relevant factors as determined by the state board or its director. new text end

new text begin (c) At least quarterly, the director must report to the state board on the status of any actions taken under this subdivision. new text end

new text begin Subd. 3. new text end

new text begin Schedule. new text end

new text begin To the extent practicable, the sale, redemption, or withdrawal of assets under subdivision 2 must be completed according to the following schedule: new text end

new text begin (1) at least 50 percent of any direct holdings must be removed from the state board's assets under management by nine months after the effective date of this section; and new text end

new text begin (2) 100 percent of any direct holdings must be removed from the state board's assets under management within 15 months after the effective date of this section. new text end

new text begin Subd. 4. new text end

new text begin Prohibition on new acquisitions. new text end

new text begin The state board may not further acquire securities that are subject to sale, redemption, or withdrawal under subdivision 2. new text end

new text begin Subd. 5. new text end

new text begin Relation to federal action. new text end

new text begin If the federal government excludes an asset from its present, or any future, federal sanctions relating to Russia or Belarus, that asset is exempt from the divestment requirements and the investment prohibitions in this section. new text end

new text begin Subd. 6. new text end

new text begin Exemptions. new text end

new text begin Subdivision 2 does 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 Russia or Belarus; 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 Russia or Belarus; 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 Russia or Belarus. new text end

new text begin Subd. 7. new text end

new text begin Excluded securities. new text end

new text begin Subdivision 2 does not apply to indirect holdings in actively managed investment funds. The state board must submit letters to the managers of investment funds containing assets that would otherwise be subject to sale, redemption, or withdrawal under subdivision 2 requesting the managers to consider removing those assets from the fund or to create a similar actively managed fund with indirect holdings that do not include those assets. If a manager creates a similar fund, the state board 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. 8. new text end

new text begin Reporting. new text end

new text begin By January 15 of each calendar year, the state board shall submit a report to the chairs and ranking minority members of the legislative committees and divisions with jurisdiction over the state board. The report must include: new text end

new text begin (1) a list of all investments sold, redeemed, or withdrawn in compliance with subdivision 2; new text end

new text begin (2) a list of all prohibited investments under subdivision 4; and new text end

new text begin (3) a description of any progress made under subdivision 7. new text end

new text begin Subd. 9. new text end

new text begin Expiration. new text end

new text begin This section ceases to be operative if 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. 10. new text end

new text begin Other legal obligations. new text end

new text begin The state board, including its executive director and staff, 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. 11. 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Sec. 2.

new text begin [16C.051] CONTRACTS WITH RUSSIA OR BELARUS. new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have the meanings given. new text end

new text begin (b) "Belarusian entity" means an institution or company that is headquartered in the Republic of Belarus or has its principal place of business in the Republic of Belarus. new text end

new text begin (c) "Russian entity" means an institution or company that is headquartered in the Russian Federation or has its principal place of business in the Russian Federation. new text end

new text begin Subd. 2. new text end

new text begin Terminating contracts with Russia or Belarus. new text end

new text begin (a) All state agencies must: new text end

new text begin (1) review existing contracts to determine if any existing contracts are with Russian entities or Belarusian entities; new text end

new text begin (2) promptly terminate existing contracts with Russian entities or Belarusian entities as practicable; and new text end

new text begin (3) refrain from entering into contracts with Russian entities or Belarusian entities unless the head of the state agency determines that there is no suitable alternative. new text end

new text begin (b) Nothing in this section is intended to require or encourage state agencies to terminate or avoid contracts with Minnesota companies or other domestic entities, or to relieve state agencies of any obligations under applicable laws, rules, or regulations related to contracting and procurement. new text end

new text begin Subd. 3. 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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment. new text end

Presented to the governor March 31, 2022

Signed by the governor April 1, 2022, 1:44 p.m.