Bill Amendment: IL HB4011 | 2015-2016 | 99th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: STATE-PROHIBITED TRANSACTIONS

Status: 2015-04-24 - Rule 19(a) / Re-referred to Rules Committee [HB4011 Detail]

Download: Illinois-2015-HB4011-House_Amendment_001.html

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Rep. Sara Feigenholtz

Filed: 4/15/2015

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AMENDMENT TO HOUSE BILL 4011
AMENDMENT NO. ______. Amend House Bill 4011 by replacing
everything after the enacting clause with the following:
"Section 5. The Illinois Procurement Code is amended by
adding Section 50-36.5 as follows:
(30 ILCS 500/50-36.5 new)
Sec. 50-36.5. Prohibition on contracts with businesses
that boycott Israel. Notwithstanding any other provision of
this Code, on and after the effective date of this amendatory
Act of the 99th General Assembly, a State agency shall not
enter into a contract subject to this Code with a business that
boycotts Israel. In determining whether a business boycotts
Israel, a State agency shall consult the list of restricted
companies developed by the Illinois Investment Policy Board in
accordance with Section 1-110.16 of the Illinois Pension Code.
For the purposes of this Section, "boycott Israel" means

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engaging in actions that are politically motivated and are
intended to penalize, inflict economic harm on, or otherwise
limit commercial relations with the State of Israel or
businesses based in the State of Israel or in territories
controlled by the State of Israel.
Section 10. The Illinois Pension Code is amended by adding
Section 1-110.16 as follows:
(40 ILCS 5/1-110.16 new)
Sec. 1-110.16. Transactions prohibited by retirement
systems; companies that boycott Israel, Iran-restricted
companies, and Sudan-restricted companies.
(a) As used in this Section:
"Boycott Israel" means engaging in actions that are
politically motivated and are intended to penalize,
inflict economic harm on, or otherwise limit commercial
relations with the State of Israel or companies based in
the State of Israel or in territories controlled by the
State of Israel.
"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

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affiliates of those entities or business associations,
that exist for the purpose of making profit.
"Illinois Investment Policy Board" means the board
consisting of an appointment of the board of a pension fund
or investment board created under Article 15, 16, or 22A of
this Code and 4 members appointed by the Governor.
"Direct holdings" in a company means all publicly
traded securities of that company that are held directly by
the retirement system in an actively managed account or
fund in which the retirement system owns all shares or
interests.
"Indirect holdings" in a company means all securities
of that company that are held in an account or fund, such
as a mutual fund, managed by one or more persons not
employed by the retirement system, in which the retirement
system owns shares or interests together with other
investors not subject to the provisions of this Section or
that are held in an index fund.
"Iran-restricted company" means a company that meets
the qualifications under Section 1-110.15 of this Code.
"Private market fund" means any private equity fund,
private equity funds of funds, venture capital fund, hedge
fund, hedge fund of funds, real estate fund, or other
investment vehicle that is not publicly traded.
"Restricted companies" means companies that boycott
Israel, Iran-restricted companies, and Sudan-restricted

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companies.
"Retirement system" means a retirement system
established under Article 2, 14, 15, 16, or 18 of this Code
or the Illinois State Board of Investment.
"Sudan-restricted company" means a company that meets
the qualifications under Section 1-110.6 of this Code.
(b) Notwithstanding any provision of law to the contrary,
beginning January 1, 2016, Sections 110.15 and 1-110.6 of this
Code shall be administered in accordance with this Section.
(c) By April 1, 2016, the Illinois Investment Policy Board
shall make its best efforts to identify all Iran-restricted
companies, Sudan-restricted companies, and companies that
boycott Israel and assemble those identified companies into a
list of restricted companies, to be distributed to each
retirement system.
These efforts shall include the following, as appropriate
in the Illinois Investment Policy Board's judgment:
(1) reviewing and relying on publicly available
information regarding Iran-restricted companies,
Sudan-restricted companies, and companies that boycott
Israel, including information provided by nonprofit
organizations, research firms, and government entities;
(2) contacting asset managers contracted by the
retirement systems that invest in Iran-restricted
companies, Sudan-restricted companies, and companies that
boycott Israel;

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(3) contacting other institutional investors that have
divested from or engaged with Iran-restricted companies,
Sudan-restricted companies, and companies that boycott
Israel; and
(4) retaining an independent research firm to identify
Iran-restricted companies, Sudan-restricted companies, and
companies that boycott Israel.
The Illinois Investment Policy Board shall review the list
of restricted companies on a quarterly basis based on evolving
information from, among other sources, those listed in this
subsection (c) and distribute any updates to the list of
restricted companies to the retirement systems.
(d) The Illinois Investment Policy Board shall adhere to
the following procedures for companies on the list of
restricted companies:
(1) For each company newly identified in subsection
(c), the Illinois Investment Policy Board shall send a
written notice informing the company of its status and that
it may become subject to divestment by the retirement
systems.
(2) If, following the Illinois Investment Policy
Board's engagement pursuant to this subsection (d) with a
restricted company, that company ceases activity that
designates the company to be an Iran-restricted company, a
Sudan-restricted company, or a company that boycotts
Israel, the company shall be removed from the list of

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restricted companies and the provisions of this Section
shall cease to apply to it unless it resumes such
activities.
(e) The retirement system shall adhere to the following
procedures for companies on the list of restricted companies:
(1) The retirement system shall identify those
companies on the list of restricted companies in which the
retirement system owns direct holdings and indirect
holdings.
(2) The retirement system shall instruct its
investment advisors to sell, redeem, divest, or withdraw
all direct holdings of restricted companies from the
retirement system's assets under management in an orderly
and fiduciarily responsible manner within 12 months after
the company's most recent appearance on the list of
restricted companies.
(3) The retirement system may not acquire securities of
restricted companies.
(4) The provisions of this subsection (e) do not apply
to the retirement system's indirect holdings in private
market funds. The Illinois Investment Policy Board shall
submit letters to the managers of those investment funds
containing companies that have restricted companies
requesting that they consider removing the companies from
the fund or create a similar actively managed fund having
indirect holdings devoid of the companies. If the manager

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creates a similar fund, the retirement system shall replace
all applicable investments with investments in the similar
fund in an expedited timeframe consistent with prudent
investing standards.
(f) Upon request, and at least annually, each retirement
system shall provide the Illinois Investment Policy Board with
information regarding investments sold, redeemed, divested, or
withdrawn in compliance with this Section.
(g) Notwithstanding any provision of this Section to the
contrary, a retirement system may cease divesting from
companies pursuant to subsection (e) if clear and convincing
evidence shows that the value of investments in such companies
becomes equal to or less than 0.5% of the market value of all
assets under management by the retirement system. For any
cessation of divestment authorized by this subsection (g), the
retirement system shall provide a written notice to the
Illinois Investment Policy Board in advance of the cessation of
divestment, setting forth the reasons and justification,
supported by clear and convincing evidence, for its decision to
cease divestment under subsection (e).
(h) The cost associated with the activities of the Illinois
Investment Policy Board shall be borne by the board of a
pension fund or investment board created under Article 15, 16,
or 22A of this Code.
(i) With respect to actions taken in compliance with this
Section, including all good-faith determinations regarding

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companies as required by this Section, the retirement system
and Illinois Investment Policy Board are exempt from any
conflicting statutory or common law obligations, including any
fiduciary duties under this Article and any obligations with
respect to choice of asset managers, investment funds, or
investments for the retirement system's securities portfolios.
(j) If any provision of this amendatory Act of the 99th
General Assembly or its application to any person or
circumstance is held invalid, the invalidity of that provision
or application does not affect other provisions or applications
of this amendatory Act of the 99th General Assembly that can be
given effect without the invalid provision or application.
Section 99. Effective date. This Act takes effect upon
becoming law.".