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1 AN ACT concerning public employee benefits.


2 Be it enacted by the People of the State of Illinois,

3represented in the General Assembly:



4 Section 5. The Illinois Pension Code is amended by changing 
5Section 1-110.16 as follows:

6 (40 ILCS 5/1-110.16)
7 Sec. 1-110.16. Transactions prohibited by retirement 
8systems; companies that boycott Israel, companies that 
9contract to build a border wall, Iran-restricted companies, and 
10Sudan-restricted companies.
11 (a) As used in this Section:
12  "Boycott Israel" means engaging in actions that are 
13 politically motivated and are intended to penalize, 
14 inflict economic harm on, or otherwise limit commercial 
15 relations with the State of Israel or companies based in 
16 the State of Israel or in territories controlled by the 
17 State of Israel.
18  "Company" means any sole proprietorship, organization, 
19 association, corporation, partnership, joint venture, 
20 limited partnership, limited liability partnership, 
21 limited liability company, or other entity or business 
22 association, including all wholly owned subsidiaries, 
23 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  "Contract to build a border wall" means entering into a 
4 contract with the federal government for construction 
5 pursuant to Section 4 of Executive Order 13767 of the 
6 President of the United States. 
7  "Illinois Investment Policy Board" means the board 
8 established under subsection (b) of this Section.
9  "Direct holdings" in a company means all publicly 
10 traded securities of that company that are held directly by 
11 the retirement system in an actively managed account or 
12 fund in which the retirement system owns all shares or 
13 interests.
14  "Indirect holdings" in a company means all securities 
15 of that company that are held in an account or fund, such 
16 as a mutual fund, managed by one or more persons not 
17 employed by the retirement system, in which the retirement 
18 system owns shares or interests together with other 
19 investors not subject to the provisions of this Section or 
20 that are held in an index fund.
21  "Iran-restricted company" means a company that meets 
22 the qualifications under Section 1-110.15 of this Code.
23  "Private market fund" means any private equity fund, 
24 private equity funds of funds, venture capital fund, hedge 
25 fund, hedge fund of funds, real estate fund, or other 
26 investment vehicle that is not publicly traded.
 
 
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1  "Restricted companies" means companies that boycott 
2 Israel, companies that contract to build a border wall, 
3 Iran-restricted companies, and Sudan-restricted companies.
4  "Retirement system" means a retirement system 
5 established under Article 2, 14, 15, 16, or 18 of this Code 
6 or the Illinois State Board of Investment.
7  "Sudan-restricted company" means a company that meets 
8 the qualifications under Section 1-110.6 of this Code.
9 (b) There shall be established an Illinois Investment 
10Policy Board. The Illinois Investment Policy Board shall 
11consist of 7 members. Each board of a pension fund or 
12investment board created under Article 15, 16, or 22A of this 
13Code shall appoint one member, and the Governor shall appoint 4 
14members. 
15 (c) Notwithstanding any provision of law to the contrary, 
16beginning January 1, 2016, Sections 110.15 and 1-110.6 of this 
17Code shall be administered in accordance with this Section.
18 (d) By April 1, 2016, the Illinois Investment Policy Board 
19shall make its best efforts to identify all Iran-restricted 
20companies, Sudan-restricted companies, and companies that 
21boycott Israel and assemble those identified companies into a 
22list of restricted companies, to be distributed to each 
23retirement system.
24 These efforts shall include the following, as appropriate 
25in the Illinois Investment Policy Board's judgment:
26  (1) reviewing and relying on publicly available 
 
 
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1 information regarding Iran-restricted companies, 
2 Sudan-restricted companies, and companies that boycott 
3 Israel, including information provided by nonprofit 
4 organizations, research firms, and government entities;
5  (2) contacting asset managers contracted by the 
6 retirement systems that invest in Iran-restricted 
7 companies, Sudan-restricted companies, and companies that 
8 boycott Israel;
9  (3) contacting other institutional investors that have 
10 divested from or engaged with Iran-restricted companies, 
11 Sudan-restricted companies, and companies that boycott 
12 Israel; and
13  (4) retaining an independent research firm to identify 
14 Iran-restricted companies, Sudan-restricted companies, and 
15 companies that boycott Israel.
16 By July 1, 2017, the Illinois Investment Policy Board shall 
17make its best efforts to identify all companies that contract 
18to build a border wall and include those companies in the list 
19of restricted companies distributed to each retirement system. 
20These efforts shall include the following, as appropriate in 
21the Illinois Investment Policy Board's judgment: 
22  (1) reviewing and relying on publicly available 
23 information regarding companies that contract to build a 
24 border wall, including information provided by nonprofit 
25 organizations, research firms, and government entities; 
26  (2) contacting asset managers contracted by the 
 
 
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1 retirement systems that invest in companies that contract 
2 to build a border wall; 
3  (3) contacting other institutional investors that have 
4 divested from or engaged with companies that contract to 
5 build a border wall; and
6  (4) retaining an independent research firm to identify 
7 companies that contract to build a border wall. 
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 (d) and distribute any updates to the list of 
12restricted companies to the retirement systems.
13 (e) 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 (d), 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 (e) 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 (f) 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 (f) do not apply 
20 to the retirement system's indirect holdings or private 
21 market funds. The Illinois Investment Policy Board shall 
22 submit letters to the managers of those investment funds 
23 containing restricted companies requesting that they 
24 consider removing the companies from the fund or create a 
25 similar actively managed fund having indirect holdings 
26 devoid of the companies. If the manager creates a similar 
 
 
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1 fund, the retirement system shall replace all applicable 
2 investments with investments in the similar fund in an 
3 expedited timeframe consistent with prudent investing 
4 standards.
5 (g) 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 (h) Notwithstanding any provision of this Section to the 
10contrary, a retirement system may cease divesting from 
11companies pursuant to subsection (f) 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 (h), 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 (f). 
21 (i) The cost associated with the activities of the Illinois 
22Investment Policy Board shall be borne by the boards of each 
23pension fund or investment board created under Article 15, 16, 
24or 22A of this Code. 
25 (j) 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 (k) It is not the intent of the General Assembly in 
8enacting Public Act 99-128 this amendatory Act of the 99th 
9General Assembly to cause divestiture from any company based in 
10the United States of America. The Illinois Investment Policy 
11Board shall consider this intent when developing or reviewing 
12the list of restricted companies. 
13 (l) If any provision of Public Act 99-128 or this 
14amendatory Act of the 100th General Assembly this amendatory 
15Act of the 99th General Assembly or its application to any 
16person or circumstance is held invalid, the invalidity of that 
17provision or application does not affect other provisions or 
18applications of Public Act 99-128 or this amendatory Act of the 
19100th General Assembly this amendatory Act of the 99th General 
20Assembly that can be given effect without the invalid provision 
21or application.

22(Source: P.A. 99-128, eff. 7-23-15.)