Florida Senate - 2014                              CS for SB 948
       
       
        
       By the Committee on Governmental Oversight and Accountability;
       and Senator Ring
       
       
       
       
       585-02217-14                                           2014948c1
    1                        A bill to be entitled                      
    2         An act relating to foreign investments; amending s.
    3         215.47, F.S.; revising the percentage of investments
    4         that the State Board of Administration may invest in
    5         foreign securities; amending s. 215.473, F.S.;
    6         revising and providing definitions with respect to
    7         requirements that the board divest securities in which
    8         public moneys are invested in certain companies doing
    9         specified types of business in or with Sudan or Iran;
   10         revising exclusions from the divestment requirements;
   11         conforming cross-references; creating s. 624.449,
   12         F.S.; providing that insurer investment in certain
   13         foreign companies shall be treated as nonadmitted
   14         assets; requiring insurers to identify, report, and
   15         divest such investments within a specified period;
   16         providing for severability; providing an effective
   17         date.
   18          
   19  Be It Enacted by the Legislature of the State of Florida:
   20  
   21         Section 1. Subsection (20) of section 215.47, Florida
   22  Statutes, is amended to read:
   23         215.47 Investments; authorized securities; loan of
   24  securities.—Subject to the limitations and conditions of the
   25  State Constitution or of the trust agreement relating to a trust
   26  fund, moneys available for investments under ss. 215.44-215.53
   27  may be invested as follows:
   28         (20) Notwithstanding the provisions in subsection (5)
   29  limiting such investments to 25 percent of any fund, the board
   30  may invest up to 50 no more than 35 percent of any fund in
   31  corporate obligations and securities of any kind of a foreign
   32  corporation or a foreign commercial entity having its principal
   33  office located in any country other than the United States or
   34  its possessions or territories, not including United States
   35  dollar-denominated securities listed and traded on a United
   36  States exchange that are a part of the ordinary investment
   37  strategy of the board.
   38         Section 2. Subsections (1) and (2), paragraph (e) of
   39  subsection (3), and subsection (5) of section 215.473, Florida
   40  Statutes, are amended to read:
   41         215.473 Divestiture by the State Board of Administration;
   42  Sudan; Iran.—
   43         (1) DEFINITIONS.—As used in this act, the term:
   44         (a) “Active business operations” means all business
   45  operations that are not inactive business operations.
   46         (b) “Business operations” means engaging in commerce in any
   47  form in Sudan or Iran, including, but not limited to, acquiring,
   48  developing, maintaining, owning, selling, possessing, leasing,
   49  or operating equipment, facilities, personnel, products,
   50  services, personal property, real property, or any other
   51  apparatus of business or commerce.
   52         (c) “Company” means a any sole proprietorship,
   53  organization, association, corporation, partnership, joint
   54  venture, limited partnership, limited liability partnership,
   55  limited liability company, or other entity or business
   56  association, including all wholly owned subsidiaries, majority
   57  owned subsidiaries, parent companies, or affiliates of such
   58  entities or business associations, that exists for the purpose
   59  of making profit.
   60         (d) “Complicit” means taking actions during any preceding
   61  20-month period which have directly supported or promoted the
   62  genocidal campaign in Darfur, including, but not limited to,
   63  preventing Darfur’s victimized population from communicating
   64  with each other; encouraging Sudanese citizens to speak out
   65  against an internationally approved security force for Darfur;
   66  actively working to deny, cover up, or alter the record on human
   67  rights abuses in Darfur; or other similar actions.
   68         (e) “Direct holdings” in a company means all securities of
   69  that company that are held directly by the public fund or in an
   70  account or fund in which the public fund owns all shares or
   71  interests.
   72         (f) “Government of Iran” means the government of Iran, its
   73  instrumentalities, and companies owned or controlled by the
   74  government of Iran.
   75         (g) “Government of South Sudan” means the Republic of South
   76  Sudan, that has its capital in Juba, South Sudan.
   77         (h)(g) “Government of Sudan” means the Republic of the
   78  Sudan that has its capital government in Khartoum, Sudan, that
   79  is led by the National Congress Party, formerly known as the
   80  National Islamic Front, or any successor government formed on or
   81  after October 13, 2006, including the coalition National Unity
   82  Government agreed upon in the Comprehensive Peace Agreement for
   83  Sudan, and does not include the regional government of southern
   84  Sudan.
   85         (i)(h) “Inactive business operations” means the mere
   86  continued holding or renewal of rights to property previously
   87  operated for the purpose of generating revenues but not
   88  presently deployed for such purpose.
   89         (j)(i) “Indirect holdings” in a company means all
   90  securities of that company that are held in a commingled an
   91  account or fund or other collective investment, such as a mutual
   92  fund, managed by one or more persons not employed by the public
   93  fund, in which the public fund owns shares or interests together
   94  with other investors not subject to the provisions of this
   95  section act.
   96         (k)(j) “Iran” means the Islamic Republic of Iran.
   97         (l)(k) “Marginalized populations of Sudan” include, but are
   98  not limited to, the portion of the population in the Darfur
   99  region that has been genocidally victimized; the portion of the
  100  population of South southern Sudan victimized by Sudan’s north
  101  south civil war; the Beja, Rashidiya, and other similarly
  102  underserved groups of eastern Sudan; the Nubian and other
  103  similarly underserved groups in Sudan’s Abyei, Southern Blue
  104  Nile, and Nuba Mountain regions; and the Amri, Hamadab, Manasir,
  105  and other similarly underserved groups of northern Sudan.
  106         (m)(l) “Military equipment” means weapons, arms, military
  107  supplies, and equipment that may readily be used for military
  108  purposes, including, but not limited to, radar systems,
  109  military-grade transport vehicles, or supplies or services sold
  110  or provided directly or indirectly to any force actively
  111  participating in armed conflict in Sudan.
  112         (n)(m) “Mineral-extraction activities” include the
  113  exploring, extracting, processing, transporting, or wholesale
  114  selling or trading of elemental minerals or associated metal
  115  alloys or oxides (ore), including gold, copper, chromium,
  116  chromite, diamonds, iron, iron ore, silver, tungsten, uranium,
  117  and zinc, as well as facilitating such activities, including
  118  providing supplies or services in support of such activities.
  119         (o)(n) “Oil-related activities” include, but are not
  120  limited to, owning rights to oil blocks; exporting, extracting,
  121  producing, refining, processing, exploring for, transporting,
  122  selling, or trading of oil; constructing, maintaining, or
  123  operating a pipeline, refinery, or other oil-field
  124  infrastructure; and facilitating such activities, including
  125  providing supplies or services in support of such activities,
  126  except that the mere retail sale of gasoline and related
  127  consumer products is not considered an oil-related activity.
  128         (p)(o) “Petroleum resources” means petroleum, petroleum
  129  byproducts, or natural gas.
  130         (q)(p) “Power-production activities” means a any business
  131  operation that involves a project commissioned by the National
  132  Electricity Corporation (NEC) of Sudan or other similar entity
  133  of the government of Sudan whose purpose is to facilitate power
  134  generation and delivery, including, but not limited to,
  135  establishing power-generating plants or hydroelectric dams,
  136  selling or installing components for the project, providing
  137  service contracts related to the installation or maintenance of
  138  the project, as well as facilitating such activities, including
  139  providing supplies or services in support of such activities.
  140         (r)(q) “Public fund” means all funds, assets, trustee, and
  141  other designates under the State Board of Administration
  142  pursuant to chapter 121.
  143         (s)(r) “Scrutinized active business operations” means
  144  active business operations that result have resulted in a
  145  company becoming a scrutinized company.
  146         (t)(s) “Scrutinized business operations” means business
  147  operations that result have resulted in a company becoming a
  148  scrutinized company.
  149         (u)(t) “Scrutinized company” means a any company that meets
  150  any of the following criteria:
  151         1. The company has business operations that involve
  152  contracts with or provision of supplies or services to the
  153  government of Sudan, companies in which the government of Sudan
  154  has a any direct or indirect equity share, consortiums or
  155  projects commissioned by the government of Sudan, or companies
  156  involved in consortiums or projects commissioned by the
  157  government of Sudan, and:
  158         a. More than 10 percent of the company’s revenues or assets
  159  linked to Sudan involve oil-related activities or mineral
  160  extraction activities; less than 75 percent of the company’s
  161  revenues or assets linked to Sudan involve contracts with or
  162  provision of oil-related or mineral-extracting products or
  163  services to the regional government of South southern Sudan or a
  164  project or consortium created exclusively by that regional
  165  government; and the company has failed to take substantial
  166  action; or
  167         b. More than 10 percent of the company’s revenues or assets
  168  linked to Sudan involve power-production activities; less than
  169  75 percent of the company’s power-production activities include
  170  projects whose intent is to provide power or electricity to the
  171  marginalized populations of Sudan; and the company has failed to
  172  take substantial action.
  173         2. The company is complicit in the Darfur genocide.
  174         3. The company supplies military equipment within Sudan,
  175  unless it clearly shows that the military equipment cannot be
  176  used to facilitate offensive military actions in Sudan or the
  177  company implements rigorous and verifiable safeguards to prevent
  178  use of that equipment by forces actively participating in armed
  179  conflict. Examples of safeguards include post-sale tracking of
  180  such equipment by the company, certification from a reputable
  181  and objective third party that such equipment is not being used
  182  by a party participating in armed conflict in Sudan, or sale of
  183  such equipment solely to the regional government of South
  184  southern Sudan or any internationally recognized peacekeeping
  185  force or humanitarian organization.
  186         4. The company has business operations that involve
  187  contracts with or provision of supplies or services to the
  188  government of Iran, companies in which the government of Iran
  189  has any direct or indirect equity share, consortiums, or
  190  projects commissioned by the government of Iran, or companies
  191  involved in consortiums or projects commissioned by the
  192  government of Iran and:
  193         a. More than 10 percent of the company’s total revenues or
  194  assets are linked to Iran and involve oil-related activities or
  195  mineral-extraction activities,; and the company has failed to
  196  take substantial action; or
  197         b. The company has, with actual knowledge, on or after
  198  August 5, 1996, made an investment of $20 million or more, or
  199  any combination of investments of at least $10 million each,
  200  which in the aggregate equals or exceeds $20 million in any 12
  201  month period, and which directly or significantly contributes to
  202  the enhancement of Iran’s ability to develop the petroleum
  203  resources of Iran.
  204         (v)(u) “Social-development company” means a company whose
  205  primary purpose in Sudan is to provide humanitarian goods or
  206  services, including medicine or medical equipment; agricultural
  207  supplies or infrastructure; educational opportunities;
  208  journalism-related activities; information or information
  209  materials; spiritual-related activities; services of a purely
  210  clerical or reporting nature; food, clothing, or general
  211  consumer goods that are unrelated to oil-related activities;
  212  mineral-extraction activities; or power-production activities.
  213         (w)(v) “Substantial action specific to Iran” means
  214  adopting, publicizing, and implementing a formal plan to cease
  215  scrutinized business operations within 1 year and to refrain
  216  from any such new business operations.
  217         (x)(w) “Substantial action specific to Sudan” means
  218  adopting, publicizing, and implementing a formal plan to cease
  219  scrutinized business operations within 1 year and to refrain
  220  from any such new business operations; undertaking humanitarian
  221  efforts in conjunction with an international organization, the
  222  government of Sudan, the regional government of South southern
  223  Sudan, or a nonprofit entity evaluated and certified by an
  224  independent third party to be substantially in a relationship to
  225  the company’s Sudan business operations and of benefit to one or
  226  more marginalized populations of Sudan; or, through engagement
  227  with the government of Sudan, materially improving conditions
  228  for the genocidally victimized population in Darfur.
  229         (2) IDENTIFICATION OF COMPANIES.—
  230         (a) Within 90 days after June 8, 2007 the effective date of
  231  this act, the public fund shall make its best efforts to
  232  identify all scrutinized companies in which the public fund has
  233  direct or indirect holdings or could possibly have such holdings
  234  in the future. Such efforts include:
  235         1. Reviewing and relying, as appropriate in the public
  236  fund’s judgment, on publicly available information regarding
  237  companies having business operations in Sudan, including
  238  information provided by nonprofit organizations, research firms,
  239  international organizations, and government entities;
  240         2. Contacting asset managers contracted by the public fund
  241  which that invest in companies having business operations in
  242  Sudan; or
  243         3. Contacting other institutional investors that have
  244  divested from or engaged with companies that have business
  245  operations in Sudan.
  246         4. Reviewing the laws of the United States regarding the
  247  levels of business activity that would cause application of
  248  sanctions for companies conducting business or investing in
  249  countries that are designated state sponsors of terror.
  250         (b) By the first meeting of the public fund following the
  251  90-day period described in paragraph (a), the public fund shall
  252  assemble all scrutinized companies that fit criteria specified
  253  in subparagraphs (1)(u)1., 2., and 3. (1)(t)1., 2., and 3. into
  254  a “Scrutinized Companies with Activities in Sudan List” and
  255  shall assemble all scrutinized companies that fit criteria
  256  specified in subparagraph (1)(u)4. (1)(t)4. into a “Scrutinized
  257  Companies with Activities in the Iran Petroleum Energy Sector
  258  List.”
  259         (c) The public fund shall update and make publicly
  260  available quarterly the Scrutinized Companies with Activities in
  261  Sudan List and the Scrutinized Companies with Activities in the
  262  Iran Petroleum Energy Sector List based on evolving information
  263  from, among other sources, those listed in paragraph (a).
  264         (d) Notwithstanding the provisions of this section act, a
  265  social-development company that is not complicit in the Darfur
  266  genocide is not considered a scrutinized company under
  267  subparagraph (1)(u)1. (1)(t)1., subparagraph (1)(u)2. (1)(t)2.,
  268  or subparagraph (1)(u)3 (1)(t)3.
  269         (3) REQUIRED ACTIONS.—The public fund shall adhere to the
  270  following procedure for assembling companies on the Scrutinized
  271  Companies with Activities in Sudan List and the Scrutinized
  272  Companies with Activities in the Iran Petroleum Energy Sector
  273  List:
  274         (e) Excluded securities.—
  275         1. Notwithstanding the provisions of this act, paragraphs
  276  (b) and (c) do not apply to indirect holdings in actively
  277  managed investment funds. However, the public fund shall submit
  278  letters to the managers of such investment funds containing
  279  companies that have scrutinized active business operations
  280  requesting that they consider removing such companies from the
  281  fund or create a similar actively managed fund having indirect
  282  holdings devoid of such companies. If the manager creates a
  283  similar fund, the public fund shall replace all applicable
  284  investments with investments in the similar fund in an expedited
  285  timeframe consistent with prudent investing standards. For the
  286  purposes of this section, a private equity fund is deemed to be
  287  an actively managed investment fund.
  288         2. Notwithstanding the provisions of this section,
  289  paragraphs (b) and (c) do not apply to exchange-traded funds.
  290         (5) EXPIRATION.—This act expires upon the occurrence of all
  291  of the following:
  292         (a) If any of the following occur, the public fund shall no
  293  longer scrutinize companies according to subparagraphs (1)(u)1.,
  294  2., and 3. (1)(t)1., 2., and 3. and shall no longer assemble the
  295  Scrutinized Companies with Activities in Sudan List, shall cease
  296  engagement and divestment of such companies, and may reinvest in
  297  such companies if as long as such companies do not satisfy the
  298  criteria for inclusion in the Scrutinized Companies with
  299  Activities in the Iran Petroleum Energy Sector List:
  300         1. The Congress or President of the United States,
  301  affirmatively and unambiguously states, by means including, but
  302  not limited to, legislation, executive order, or written
  303  certification from the President to Congress, that the Darfur
  304  genocide has been halted for at least 12 months;
  305         2. The United States revokes all sanctions imposed against
  306  the government of Sudan;
  307         3. The Congress or President of the United States
  308  affirmatively and unambiguously states, by means including, but
  309  not limited to, legislation, executive order, or written
  310  certification from the President to Congress, that the
  311  government of Sudan has honored its commitments to cease attacks
  312  on civilians, demobilize and demilitarize the Janjaweed and
  313  associated militias, grant free and unfettered access for
  314  deliveries of humanitarian assistance, and allow for the safe
  315  and voluntary return of refugees and internally displaced
  316  persons; or
  317         4. The Congress or President of the United States
  318  affirmatively and unambiguously states, by means including, but
  319  not limited to, legislation, executive order, or written
  320  certification from the President to Congress, that mandatory
  321  divestment of the type provided for in this section act
  322  interferes with the conduct of United States foreign policy.
  323         (b) If any of the following occur, the public fund shall no
  324  longer scrutinize companies according to subparagraph (1)(u)4.
  325  (1)(t)4. and shall no longer assemble the Scrutinized Companies
  326  with Activities in the Iran Petroleum Energy Sector List and
  327  shall cease engagement, investment prohibitions, and divestment.
  328  The public fund may reinvest in such companies if as long as
  329  such companies do not satisfy the criteria for inclusion in the
  330  Scrutinized Companies with Activities in Sudan List:
  331         1. The Congress or President of the United States
  332  affirmatively and unambiguously states, by means including, but
  333  not limited to, legislation, executive order, or written
  334  certification from the President to Congress, that the
  335  government of Iran has ceased to acquire weapons of mass
  336  destruction and support international terrorism;
  337         2. The United States revokes all sanctions imposed against
  338  the government of Iran; or
  339         3. The Congress or President of the United States
  340  affirmatively and unambiguously declares, by means including,
  341  but not limited to, legislation, executive order, or written
  342  certification from the President to Congress, that mandatory
  343  divestment of the type provided for in this section act
  344  interferes with the conduct of United States foreign policy.
  345         Section 3. Section 624.449, Florida Statutes, is created to
  346  read:
  347         624.449 Insurer investment in foreign companies.—
  348         (1) Investments by a domestic insurer in companies included
  349  on the “Scrutinized Companies with Activities in Sudan List” and
  350  “Scrutinized Companies with Activities in the Iran Petroleum
  351  Energy Sector List,” compiled by the State Board of
  352  Administration pursuant to s. 215.473(2), shall be treated as
  353  nonadmitted assets. On or before June 30, 2014, and quarterly
  354  thereafter, the insurer shall determine its investments in
  355  companies included on these lists.
  356         (2) The insurer shall provide to the office, on a quarterly
  357  basis, a list of investments that the insurer has in companies
  358  included on the “Scrutinized Companies with Activities in Sudan
  359  List” and “Scrutinized Companies with Activities in the Iran
  360  Petroleum Energy Sector List,” including, but not limited to,
  361  the name of the issuer and the stock, bond, security, and other
  362  evidence of indebtedness.
  363         (3) Within 36 months after a company’s appearance on a list
  364  compiled pursuant to subsection (2), the insurer shall sell,
  365  redeem, divest, or withdraw all of its investments in the
  366  company.
  367         Section 4. If any provision of this act or the application
  368  thereof to any person or circumstance is held invalid, the
  369  invalidity does not affect other provisions or applications of
  370  the act which can be given effect without the invalid provision
  371  or application, and to this end the provisions of this act are
  372  declared severable.
  373         Section 5. This act shall take effect July 1, 2014.