Rep. Sara Feigenholtz
Filed: 4/15/2015
 
 


 




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1
AMENDMENT TO HOUSE BILL 4011 




2 AMENDMENT NO. ______. Amend House Bill 4011 by replacing 
3everything after the enacting clause with the following:


4 "Section 5. The Illinois Procurement Code is amended by 
5adding Section 50-36.5 as follows:

6 (30 ILCS 500/50-36.5 new)
7 Sec. 50-36.5. Prohibition on contracts with businesses 
8that boycott Israel.  Notwithstanding any other provision of 
9this Code, on and after the effective date of this amendatory 
10Act of the 99th General Assembly, a State agency shall not 
11enter into a contract subject to this Code with a business that 
12boycotts Israel. In determining whether a business boycotts 
13Israel, a State agency shall consult the list of restricted 
14companies developed by the Illinois Investment Policy Board in 
15accordance with Section 1-110.16 of the Illinois Pension Code. 
16For the purposes of this Section, "boycott Israel" means 
 
 
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1engaging in actions that are politically motivated and are 
2intended to penalize, inflict economic harm on, or otherwise 
3limit commercial relations with the State of Israel or 
4businesses based in the State of Israel or in territories 
5controlled by the State of Israel.

6 Section 10. The Illinois Pension Code is amended by adding 
7Section 1-110.16 as follows:

8 (40 ILCS 5/1-110.16 new)
9 Sec. 1-110.16. Transactions prohibited by retirement 
10systems; companies that boycott Israel, Iran-restricted 
11companies, and Sudan-restricted companies.
12 (a) As used in this Section:
13  "Boycott Israel" means engaging in actions that are 
14 politically motivated and are intended to penalize, 
15 inflict economic harm on, or otherwise limit commercial 
16 relations with the State of Israel or companies based in 
17 the State of Israel or in territories controlled by the 
18 State of Israel.
19  "Company" means any sole proprietorship, organization, 
20 association, corporation, partnership, joint venture, 
21 limited partnership, limited liability partnership, 
22 limited liability company, or other entity or business 
23 association, including all wholly owned subsidiaries, 
24 majority-owned subsidiaries, parent companies, or 
 
 
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1 affiliates of those entities or business associations, 
2 that exist for the purpose of making profit.
3  "Illinois Investment Policy Board" means the board 
4 consisting of an appointment of the board of a pension fund 
5 or investment board created under Article 15, 16, or 22A of 
6 this Code and 4 members appointed by the Governor.
7  "Direct holdings" in a company means all publicly 
8 traded securities of that company that are held directly by 
9 the retirement system in an actively managed account or 
10 fund in which the retirement system owns all shares or 
11 interests.
12  "Indirect holdings" in a company means all securities 
13 of that company that are held in an account or fund, such 
14 as a mutual fund, managed by one or more persons not 
15 employed by the retirement system, in which the retirement 
16 system owns shares or interests together with other 
17 investors not subject to the provisions of this Section or 
18 that are held in an index fund.
19  "Iran-restricted company" means a company that meets 
20 the qualifications under Section 1-110.15 of this Code.
21  "Private market fund" means any private equity fund, 
22 private equity funds of funds, venture capital fund, hedge 
23 fund, hedge fund of funds, real estate fund, or other 
24 investment vehicle that is not publicly traded.
25  "Restricted companies" means companies that boycott 
26 Israel, Iran-restricted companies, and Sudan-restricted 
 
 
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1 companies.
2  "Retirement system" means a retirement system 
3 established under Article 2, 14, 15, 16, or 18 of this Code 
4 or the Illinois State Board of Investment.
5  "Sudan-restricted company" means a company that meets 
6 the qualifications under Section 1-110.6 of this Code.
7 (b) Notwithstanding any provision of law to the contrary, 
8beginning January 1, 2016, Sections 110.15 and 1-110.6 of this 
9Code shall be administered in accordance with this Section.
10 (c) By April 1, 2016, the Illinois Investment Policy Board 
11shall make its best efforts to identify all Iran-restricted 
12companies, Sudan-restricted companies, and companies that 
13boycott Israel and assemble those identified companies into a 
14list of restricted companies, to be distributed to each 
15retirement system.
16 These efforts shall include the following, as appropriate 
17in the Illinois Investment Policy Board's judgment:
18  (1) reviewing and relying on publicly available 
19 information regarding Iran-restricted companies, 
20 Sudan-restricted companies, and companies that boycott 
21 Israel, including information provided by nonprofit 
22 organizations, research firms, and government entities;
23  (2) contacting asset managers contracted by the 
24 retirement systems that invest in Iran-restricted 
25 companies, Sudan-restricted companies, and companies that 
26 boycott Israel;
 
 
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1  (3) contacting other institutional investors that have 
2 divested from or engaged with Iran-restricted companies, 
3 Sudan-restricted companies, and companies that boycott 
4 Israel; and
5  (4) retaining an independent research firm to identify 
6 Iran-restricted companies, Sudan-restricted companies, and 
7 companies that boycott Israel.
8 The Illinois Investment Policy Board shall review the list 
9of restricted companies on a quarterly basis based on evolving 
10information from, among other sources, those listed in this 
11subsection (c) and distribute any updates to the list of 
12restricted companies to the retirement systems.
13 (d) The Illinois Investment Policy Board shall adhere to 
14the following procedures for companies on the list of 
15restricted companies:
16  (1) For each company newly identified in subsection 
17 (c), the Illinois Investment Policy Board shall send a 
18 written notice informing the company of its status and that 
19 it may become subject to divestment by the retirement 
20 systems.
21  (2) If, following the Illinois Investment Policy 
22 Board's engagement pursuant to this subsection (d) with a 
23 restricted company, that company ceases activity that 
24 designates the company to be an Iran-restricted company, a 
25 Sudan-restricted company, or a company that boycotts 
26 Israel, the company shall be removed from the list of 
 
 
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1 restricted companies and the provisions of this Section 
2 shall cease to apply to it unless it resumes such 
3 activities.
4 (e) The retirement system shall adhere to the following 
5procedures for companies on the list of restricted companies:
6  (1) The retirement system shall identify those 
7 companies on the list of restricted companies in which the 
8 retirement system owns direct holdings and indirect 
9 holdings.
10  (2) The retirement system shall instruct its 
11 investment advisors to sell, redeem, divest, or withdraw 
12 all direct holdings of restricted companies from the 
13 retirement system's assets under management in an orderly 
14 and fiduciarily responsible manner within 12 months after 
15 the company's most recent appearance on the list of 
16 restricted companies.
17  (3) The retirement system may not acquire securities of 
18 restricted companies.
19  (4) The provisions of this subsection (e) do not apply 
20 to the retirement system's indirect holdings in private 
21 market funds. The Illinois Investment Policy Board shall 
22 submit letters to the managers of those investment funds 
23 containing companies that have restricted companies 
24 requesting that they consider removing the companies from 
25 the fund or create a similar actively managed fund having 
26 indirect holdings devoid of the companies. If the manager 
 
 
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1 creates a similar fund, the retirement system shall replace 
2 all applicable investments with investments in the similar 
3 fund in an expedited timeframe consistent with prudent 
4 investing standards.
5 (f) Upon request, and at least annually, each retirement 
6system shall provide the Illinois Investment Policy Board with 
7information regarding investments sold, redeemed, divested, or 
8withdrawn in compliance with this Section.
9 (g) Notwithstanding any provision of this Section to the 
10contrary, a retirement system may cease divesting from 
11companies pursuant to subsection (e) if clear and convincing 
12evidence shows that the value of investments in such companies 
13becomes equal to or less than 0.5% of the market value of all 
14assets under management by the retirement system. For any 
15cessation of divestment authorized by this subsection (g), the 
16retirement system shall provide a written notice to the 
17Illinois Investment Policy Board in advance of the cessation of 
18divestment, setting forth the reasons and justification, 
19supported by clear and convincing evidence, for its decision to 
20cease divestment under subsection (e). 
21 (h) The cost associated with the activities of the Illinois 
22Investment Policy Board shall be borne by the board of a 
23pension fund or investment board created under Article 15, 16, 
24or 22A of this Code. 
25 (i) With respect to actions taken in compliance with this 
26Section, including all good-faith determinations regarding 
 
 
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1companies as required by this Section, the retirement system 
2and Illinois Investment Policy Board are exempt from any 
3conflicting statutory or common law obligations, including any 
4fiduciary duties under this Article and any obligations with 
5respect to choice of asset managers, investment funds, or 
6investments for the retirement system's securities portfolios.
7 (j) If any provision of this amendatory Act of the 99th 
8General Assembly or its application to any person or 
9circumstance is held invalid, the invalidity of that provision 
10or application does not affect other provisions or applications 
11of this amendatory Act of the 99th General Assembly that can be 
12given effect without the invalid provision or application.


13 Section 99. Effective date. This Act takes effect upon 
14becoming law.".