Bill Text: FL S7028 | 2016 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: State Board of Administration

Spectrum: Bipartisan Bill

Status: (Passed) 2016-04-08 - Chapter No. 2016-215 [S7028 Detail]

Download: Florida-2016-S7028-Introduced.html

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       Florida Senate - 2016                                    SB 7028
       
       
        
       By the Committee on Governmental Oversight and Accountability
       
       
       
       
       
       585-01300-16                                          20167028__
    1                        A bill to be entitled                      
    2         An act relating to the State Board of Administration;
    3         amending s. 215.473, F.S.; redefining the term “public
    4         fund”; defining the term “board”; requiring the board,
    5         rather than the public fund, to maintain a list of
    6         certain scrutinized companies rather than assembling
    7         the list by a certain time; clarifying provisions;
    8         deleting a condition that may no longer be used by the
    9         board in scrutinizing companies, relating to a
   10         specified declaration; requiring the board to monitor
   11         certain events and make specified reports at certain
   12         meetings of trustees; conforming provisions to changes
   13         made by the act; providing an effective date.
   14          
   15  Be It Enacted by the Legislature of the State of Florida:
   16  
   17         Section 1. Present paragraphs (b) through (x) of subsection
   18  (1) of section 215.473, Florida Statutes, are redesignated as
   19  paragraphs (c) through (y), respectively, present paragraph (r)
   20  of that subsection is amended, a new paragraph (b) is added to
   21  that subsection, and subsections (2) through (7) of that section
   22  are amended, to read:
   23         215.473 Divestiture by the State Board of Administration;
   24  Sudan; Iran.—
   25         (1) DEFINITIONS.—As used in this section, the term:
   26         (b) “Board” means the State Board of Administration.
   27         (s)(r) “Public fund” means all funds, assets of the Florida
   28  Retirement System held by, trustee, and other designates under
   29  the State Board of Administration in its capacity as a fiduciary
   30  pursuant to chapter 121.
   31         (2) IDENTIFICATION OF COMPANIES.—
   32         (a) Within 90 days after June 8, 2007, The board public
   33  fund shall make its best efforts to identify all scrutinized
   34  companies in which the public fund has direct or indirect
   35  holdings or could possibly have such holdings in the future.
   36  Such efforts include:
   37         1. Reviewing and relying, as appropriate in the board’s
   38  public fund’s judgment, on publicly available information
   39  regarding companies having business operations in Sudan,
   40  including information provided by nonprofit organizations,
   41  research firms, international organizations, and government
   42  entities;
   43         2. Contacting asset managers contracted by the board public
   44  fund which invest in companies having business operations in
   45  Sudan;
   46         3. Contacting other institutional investors that have
   47  divested from or engaged with companies that have business
   48  operations in Sudan; or
   49         4. Reviewing the laws of the United States regarding the
   50  levels of business activity that would cause application of
   51  sanctions for companies conducting business or investing in
   52  countries that are designated state sponsors of terror.
   53         (b) By the first meeting of the public fund following the
   54  90-day period described in paragraph (a), The board public fund
   55  shall maintain a list of assemble all scrutinized companies that
   56  fit criteria specified in subparagraphs (1)(v)1., 2., and 3.
   57  labeled the (1)(u)1., 2., and 3. into a “Scrutinized Companies
   58  with Activities in Sudan List” and a list of all scrutinized
   59  companies that fit criteria specified in subparagraph (1)(v)4.
   60  labeled the (1)(u)4. into a “Scrutinized Companies with
   61  Activities in the Iran Petroleum Energy Sector List.”
   62         (c) The board public fund shall update and make publicly
   63  available quarterly the Scrutinized Companies with Activities in
   64  Sudan List and the Scrutinized Companies with Activities in the
   65  Iran Petroleum Energy Sector List based on evolving information
   66  from, among other sources, those listed in paragraph (a).
   67         (d) Notwithstanding the provisions of this section, a
   68  social-development company that is not complicit in the Darfur
   69  genocide is not considered a scrutinized company under
   70  subparagraph (1)(v)1. (1)(u)1., subparagraph (1)(v)2. (1)(u)2.,
   71  or subparagraph (1)(v)3. (1)(u)3.
   72         (3) REQUIRED ACTIONS.—The board public fund shall adhere to
   73  the following procedure for assembling companies on the
   74  Scrutinized Companies with Activities in Sudan List and the
   75  Scrutinized Companies with Activities in the Iran Petroleum
   76  Energy Sector List:
   77         (a) Engagement.—
   78         1. The board public fund shall immediately determine the
   79  companies on the Scrutinized Companies with Activities in Sudan
   80  List and the Scrutinized Companies with Activities in the Iran
   81  Petroleum Energy Sector List in which the public fund owns
   82  direct or indirect holdings.
   83         2. For each company identified in this paragraph that has
   84  only inactive business operations, the board public fund shall
   85  send a written notice informing the company of this act and
   86  encouraging it to continue to refrain from initiating active
   87  business operations in Sudan or Iran until it is able to avoid
   88  scrutinized business operations. The board public fund shall
   89  continue such correspondence semiannually.
   90         3. For each company newly identified under this paragraph
   91  which that has active business operations, the board public fund
   92  shall send a written notice informing the company of its
   93  scrutinized company status and that it may become subject to
   94  divestment by the public fund. The notice must inform the
   95  company of the opportunity to clarify its Sudan-related or Iran
   96  related activities and encourage the company, within 90 days, to
   97  cease its scrutinized business operations or convert such
   98  operations to inactive business operations within 90 days in
   99  order to avoid qualifying for divestment by the public fund.
  100         4. If, within 90 days after the board’s public fund’s first
  101  engagement with a company pursuant to this paragraph, that
  102  company ceases scrutinized business operations, the company
  103  shall be removed from the Scrutinized Companies with Activities
  104  in Sudan List and the Scrutinized Companies with Activities in
  105  the Iran Petroleum Energy Sector List, and the provisions of
  106  this act shall cease to apply to that company unless that
  107  company resumes scrutinized business operations. If, within 90
  108  days after the board’s public fund’s first engagement, the
  109  company converts its scrutinized active business operations to
  110  inactive business operations, the company is subject to all
  111  provisions relating to inactive business operations. A company
  112  may be removed from one list but remain on the other list, in
  113  which case the company shall be subject to the provisions
  114  applicable to the list on which the company remains.
  115         (b) Divestment.—
  116         1. If, after 90 days following the board’s public fund’s
  117  first engagement with a company pursuant to paragraph (a), the
  118  company continues to have scrutinized active business
  119  operations, and only while such company continues to have
  120  scrutinized active business operations, the board public fund
  121  shall sell, redeem, divest, or withdraw all publicly traded
  122  securities of the company, except as provided in paragraph (d),
  123  from the public fund fund’s assets under management within 12
  124  months after the company’s most recent appearance on the
  125  Scrutinized Companies with Activities in Sudan List or on the
  126  Scrutinized Companies with Activities in the Iran Petroleum
  127  Energy Sector List.
  128         2. If a company that ceased scrutinized active business
  129  operations following engagement pursuant to paragraph (a)
  130  resumes such operations, this paragraph immediately applies, and
  131  the board public fund shall send a written notice to the
  132  company. The company shall also be immediately reintroduced onto
  133  the Scrutinized Companies with Activities in Sudan List or on
  134  the Scrutinized Companies with Activities in the Iran Petroleum
  135  Energy Sector List, as applicable.
  136         (c) Prohibition.—The board public fund may not acquire, on
  137  behalf of the public fund, securities of companies on the
  138  Scrutinized Companies with Activities in Sudan List or the
  139  Scrutinized Companies with Activities in the Iran Petroleum
  140  Energy Sector List that have active business operations, except
  141  as provided in paragraph (d).
  142         (d) Exemption.—A company that the United States Government
  143  affirmatively declares to be excluded from its present or any
  144  future federal sanctions regime relating to Sudan or Iran is not
  145  subject to divestment or the investment prohibition pursuant to
  146  paragraphs (b) and (c).
  147         (e) Excluded securities.—
  148         1. Notwithstanding the provisions of this section,
  149  paragraphs (b) and (c) do not apply to indirect holdings in
  150  actively managed investment funds. However, the board public
  151  fund shall submit letters to the managers of such investment
  152  funds containing companies that have scrutinized active business
  153  operations requesting that they consider removing such companies
  154  from the fund or create a similar actively managed fund having
  155  indirect holdings devoid of such companies. If the manager
  156  creates a similar fund, the board, on behalf of the public fund,
  157  shall replace all applicable investments with investments in the
  158  similar fund in an expedited timeframe consistent with prudent
  159  investing standards. For the purposes of this section, a private
  160  equity fund is deemed to be an actively managed investment fund.
  161         2. Notwithstanding the provisions of this section,
  162  paragraphs (b) and (c) do not apply to exchange-traded funds.
  163         (f) Further exclusions.—Notwithstanding any other provision
  164  of this act, the board public fund, when discharging its
  165  responsibility for operation of a defined contribution plan,
  166  shall engage the manager of the investment offerings in such
  167  plans requesting that they consider removing scrutinized
  168  companies from the investment offerings or create an alternative
  169  investment offering devoid of scrutinized companies. If the
  170  manager creates an alternative investment offering and the
  171  offering is deemed by the board public fund to be consistent
  172  with prudent investor standards, the board public fund shall
  173  consider including such investment offering in the plan.
  174         (4) REPORTING.—
  175         (a) The board public fund shall file a report with each
  176  member of its the Board of Trustees of the State Board of
  177  Administration, the President of the Senate, and the Speaker of
  178  the House of Representatives which that includes the Scrutinized
  179  Companies with Activities in Sudan List and the Scrutinized
  180  Companies with Activities in the Iran Petroleum Energy Sector
  181  List within 30 days after the list is created. This report shall
  182  be made available to the public.
  183         (b) At each quarterly meeting of the Board of Trustees
  184  thereafter, the board public fund shall file a report regarding
  185  the public fund, which shall be made available to the public and
  186  to each member of its the Board of Trustees of the State Board
  187  of Administration, the President of the Senate, and the Speaker
  188  of the House of Representatives, and send a copy of that report
  189  to the United States Presidential Special Envoy to Sudan and the
  190  United States Presidential Special Envoy to Iran, or an
  191  appropriate designee or successor, which includes:
  192         1. A summary of correspondence with companies engaged by
  193  the board on behalf of the public fund under subparagraphs
  194  (3)(a)2. and 3.;
  195         2. All investments sold, redeemed, divested, or withdrawn
  196  in compliance with paragraph (3)(b);
  197         3. All prohibited investments under paragraph (3)(c);
  198         4. Any progress made under paragraph (3)(e); and
  199         5. A list of all publicly traded securities held directly
  200  by the public fund this state.
  201         (5) EXPIRATION.—This section expires upon the occurrence of
  202  all of the following:
  203         (a) If any of the following occurs occur, the board may
  204  public fund shall no longer scrutinize companies according to
  205  subparagraphs (1)(v)1. (1)(u)1., 2., and 3. and may shall no
  206  longer assemble the Scrutinized Companies with Activities in
  207  Sudan List, shall cease engagement and divestment of such
  208  companies, and may reinvest in such companies if such companies
  209  do not satisfy the criteria for inclusion in the Scrutinized
  210  Companies with Activities in the Iran Petroleum Energy Sector
  211  List:
  212         1. The Congress or President of the United States,
  213  affirmatively and unambiguously states, by means including, but
  214  not limited to, legislation, executive order, or written
  215  certification from the President to Congress, that the Darfur
  216  genocide has been halted for at least 12 months;
  217         2. The United States revokes all sanctions imposed against
  218  the government of Sudan;
  219         3. The Congress or President of the United States
  220  affirmatively and unambiguously states, by means including, but
  221  not limited to, legislation, executive order, or written
  222  certification from the President to Congress, that the
  223  government of Sudan has honored its commitments to cease attacks
  224  on civilians, demobilize and demilitarize the Janjaweed and
  225  associated militias, grant free and unfettered access for
  226  deliveries of humanitarian assistance, and allow for the safe
  227  and voluntary return of refugees and internally displaced
  228  persons; or
  229         4. The Congress or President of the United States
  230  affirmatively and unambiguously states, by means including, but
  231  not limited to, legislation, executive order, or written
  232  certification from the President to Congress, that mandatory
  233  divestment of the type provided for in this section interferes
  234  with the conduct of United States foreign policy.
  235         (b) If either any of the following occurs occur, the board
  236  may public fund shall no longer scrutinize companies according
  237  to subparagraph (1)(v)4., may (1)(u)4. and shall no longer
  238  assemble the Scrutinized Companies with Activities in the Iran
  239  Petroleum Energy Sector List, and shall cease engagement,
  240  investment prohibitions, and divestment:. The public fund may
  241  reinvest in such companies if such companies do not satisfy the
  242  criteria for inclusion in the Scrutinized Companies with
  243  Activities in Sudan List:
  244         1. The Congress or President of the United States
  245  affirmatively and unambiguously states, by means including, but
  246  not limited to, legislation, executive order, or written
  247  certification from the President to Congress, that the
  248  government of Iran has ceased to acquire weapons of mass
  249  destruction and support international terrorism; or
  250         2. The United States revokes all sanctions imposed against
  251  the government of Iran; or
  252         3. The Congress or President of the United States
  253  affirmatively and unambiguously declares, by means including,
  254  but not limited to, legislation, executive order, or written
  255  certification from the President to Congress, that mandatory
  256  divestment of the type provided for in this section interferes
  257  with the conduct of United States foreign policy.
  258  
  259  The board, on behalf of the public fund, may reinvest in such
  260  companies if such companies do not satisfy the criteria for
  261  inclusion in the Scrutinized Companies with Activities in Sudan
  262  List. The board, acting as a fiduciary in accordance with s.
  263  215.47(10), shall monitor events relating to subparagraphs 1.
  264  and 2., and, upon finding that the conditions in subparagraph 1.
  265  or subparagraph 2. have occurred, the board shall report such
  266  finding at a quarterly meeting of its trustees. At each
  267  quarterly meeting of the trustees, the board shall report on the
  268  status of events relating to subparagraphs 1. and 2.
  269         (6) INVESTMENT POLICY STATEMENT OBLIGATIONS.—The board’s
  270  public fund’s actions taken in compliance with this act,
  271  including all good faith determinations regarding companies as
  272  required by this act, shall be adopted and incorporated into the
  273  public fund’s investment policy statement (the IPS) as provided
  274  set forth in s. 215.475.
  275         (7) REINVESTMENT IN CERTAIN COMPANIES HAVING SCRUTINIZED
  276  ACTIVE BUSINESS OPERATIONS.—Notwithstanding any other provision
  277  of this act to the contrary, the public fund may cease divesting
  278  from certain scrutinized companies pursuant to paragraph (3)(b)
  279  or reinvest in certain scrutinized companies from which it
  280  divested pursuant to paragraph (3)(b) if clear and convincing
  281  evidence shows that the value of all assets of under management
  282  by the public fund becomes equal to or less than 99.50 percent,
  283  or 50 basis points, of the hypothetical value of all assets of
  284  under management by the public fund assuming no divestment for
  285  any company had occurred under paragraph (3)(b). Cessation of
  286  divestment, reinvestment, or any subsequent ongoing investment
  287  authorized by this act is limited to the minimum steps necessary
  288  to avoid the contingency set forth in this subsection or that no
  289  divestment of any company is required for less than fair value.
  290  For any cessation of divestment, reinvestment, or subsequent
  291  ongoing investment authorized by this act, the board public fund
  292  shall provide a written report to each member of its the Board
  293  of Trustees of the State Board of Administration, the President
  294  of the Senate, and the Speaker of the House of Representatives
  295  in advance of initial reinvestment, updated semiannually
  296  thereafter as applicable, setting forth the reasons and
  297  justification, supported by clear and convincing evidence, for
  298  its decisions to cease divestment, reinvest, or remain invested
  299  in companies having scrutinized active business operations. This
  300  act does not apply to reinvestment in companies on the grounds
  301  that they have ceased to have scrutinized active business
  302  operations.
  303         Section 2. This act shall take effect July 1, 2016.