ENROLLED
       2016 Legislature                          SB 7028, 1st Engrossed
       
       
       
       
       
       
                                                             20167028er
    1  
    2         An act relating to the State Board of Administration;
    3         creating s. 215.4702, F.S.; defining terms;
    4         encouraging the State Board of Administration to
    5         determine which publicly traded companies in which the
    6         Florida Retirement System Trust Fund is invested
    7         operate in Northern Ireland; encouraging the state
    8         board to take certain action upon making a
    9         determination; authorizing the state board to rely on
   10         public information in making a determination;
   11         providing that the state board is not liable or
   12         subject to a cause of action under the act; amending
   13         s. 215.473, F.S.; redefining the term “public fund”;
   14         defining the term “board”; requiring the board, rather
   15         than the public fund, to maintain a list of certain
   16         scrutinized companies rather than assembling the list
   17         by a certain time; clarifying provisions; deleting a
   18         condition that may no longer be used by the board in
   19         scrutinizing companies, relating to a specified
   20         declaration; requiring the board to monitor certain
   21         events and make specified reports at certain meetings
   22         of trustees; conforming provisions to changes made by
   23         the act; providing an effective date.
   24          
   25  Be It Enacted by the Legislature of the State of Florida:
   26  
   27         Section 1. Section 215.4702, Florida Statutes, is created
   28  to read:
   29         215.4702 Investments in publicly traded companies operating
   30  in Northern Ireland.—
   31         (1) As used in this section, the term:
   32         (a) “MacBride Principles” means the objectives for
   33  companies operating in Northern Ireland to:
   34         1. Increase the representation of individuals from
   35  underrepresented religious groups in the workforce, including
   36  managerial, supervisory, administrative, clerical, and technical
   37  jobs.
   38         2. Provide adequate security for the protection of minority
   39  employees both at the workplace and while traveling to and from
   40  work.
   41         3. Ban provocative religious or political emblems from the
   42  workplace.
   43         4. Publicly advertise all job openings and make special
   44  recruitment efforts to attract applicants from underrepresented
   45  religious groups.
   46         5. Provide that layoff, recall, and termination procedures
   47  should not in practice favor particular religious groups.
   48         6. Abolish job reservations, apprenticeship restrictions,
   49  and differential employment criteria that discriminate on the
   50  basis of religion or ethnic origin.
   51         7. Develop training programs that will prepare substantial
   52  numbers of current minority employees for skilled jobs,
   53  including the expansion of existing programs and the creation of
   54  new programs to train, upgrade, and improve the skills of
   55  minority employees.
   56         8. Establish procedures to assess, identify, and actively
   57  recruit minority employees with potential for further
   58  advancement.
   59         9. Appoint senior management staff members to oversee
   60  affirmative action efforts and to set up timetables to carry out
   61  affirmative action principles.
   62         (b) “Operating” means actively engaging in commerce
   63  geographically in Northern Ireland through the acquisition,
   64  development, maintenance, ownership, sale, possession, lease, or
   65  operation of equipment, facilities, personnel, products,
   66  services, or personal property.
   67         (c) “Publicly traded company” means any business
   68  organization having equity securities listed on a national or an
   69  international exchange that is regulated by a national or an
   70  international regulatory authority.
   71         (d) “State board” means the State Board of Administration.
   72         (2) The state board is encouraged to determine which
   73  publicly traded companies in which the Florida Retirement System
   74  Trust Fund is invested operate in Northern Ireland. If the state
   75  board determines that a publicly traded company meets such
   76  criteria, the state board is encouraged to:
   77         (a) Notify the publicly traded company that the state board
   78  supports the MacBride Principles;
   79         (b) Inquire regarding the actions that the publicly traded
   80  company has taken in support of or furtherance of the MacBride
   81  Principles;
   82         (c) Encourage a publicly traded company that has not
   83  adopted the MacBride Principles to make all lawful efforts to
   84  implement the fair employment practices embodied in the MacBride
   85  Principles; and
   86         (d) Support the adoption of the MacBride Principles in
   87  exercising its proxy voting authority. For these purposes, the
   88  state board may not be a fiduciary under this section in
   89  exercising its proxy voting authority.
   90         (3) In making the determination specified in subsection
   91  (2), the state board may, to the extent it deems appropriate,
   92  rely on available public information, including information
   93  provided by nonprofit organizations, research firms,
   94  international organizations, and government entities.
   95         (4) The state board may not be held liable for, and a cause
   96  of action does not arise from, any action or inaction by the
   97  state board in the administration of this section.
   98         Section 2. Present paragraphs (b) through (x) of subsection
   99  (1) of section 215.473, Florida Statutes, are redesignated as
  100  paragraphs (c) through (y), respectively, present paragraph (r)
  101  of that subsection is amended, a new paragraph (b) is added to
  102  that subsection, and subsections (2) through (7) of that section
  103  are amended, to read:
  104         215.473 Divestiture by the State Board of Administration;
  105  Sudan; Iran.—
  106         (1) DEFINITIONS.—As used in this section, the term:
  107         (b) “Board” means the State Board of Administration.
  108         (s)(r) “Public fund” means all funds, assets of the Florida
  109  Retirement System held by, trustee, and other designates under
  110  the State Board of Administration in its capacity as a fiduciary
  111  pursuant to chapter 121.
  112         (2) IDENTIFICATION OF COMPANIES.—
  113         (a) Within 90 days after June 8, 2007, The board public
  114  fund shall make its best efforts to identify all scrutinized
  115  companies in which the public fund has direct or indirect
  116  holdings or could possibly have such holdings in the future.
  117  Such efforts include:
  118         1. Reviewing and relying, as appropriate in the board’s
  119  public fund’s judgment, on publicly available information
  120  regarding companies having business operations in Sudan,
  121  including information provided by nonprofit organizations,
  122  research firms, international organizations, and government
  123  entities;
  124         2. Contacting asset managers contracted by the board public
  125  fund which invest in companies having business operations in
  126  Sudan;
  127         3. Contacting other institutional investors that have
  128  divested from or engaged with companies that have business
  129  operations in Sudan; or
  130         4. Reviewing the laws of the United States regarding the
  131  levels of business activity that would cause application of
  132  sanctions for companies conducting business or investing in
  133  countries that are designated state sponsors of terror.
  134         (b) By the first meeting of the public fund following the
  135  90-day period described in paragraph (a), The board public fund
  136  shall maintain a list of assemble all scrutinized companies that
  137  fit criteria specified in subparagraphs (1)(v)1., 2., and 3.
  138  labeled the (1)(u)1., 2., and 3. into a “Scrutinized Companies
  139  with Activities in Sudan List” and a list of all scrutinized
  140  companies that fit criteria specified in subparagraph (1)(v)4.
  141  labeled the (1)(u)4. into a “Scrutinized Companies with
  142  Activities in the Iran Petroleum Energy Sector List.”
  143         (c) The board public fund shall update and make publicly
  144  available quarterly the Scrutinized Companies with Activities in
  145  Sudan List and the Scrutinized Companies with Activities in the
  146  Iran Petroleum Energy Sector List based on evolving information
  147  from, among other sources, those listed in paragraph (a).
  148         (d) Notwithstanding the provisions of this section, a
  149  social-development company that is not complicit in the Darfur
  150  genocide is not considered a scrutinized company under
  151  subparagraph (1)(v)1. (1)(u)1., subparagraph (1)(v)2. (1)(u)2.,
  152  or subparagraph (1)(v)3. (1)(u)3.
  153         (3) REQUIRED ACTIONS.—The board public fund shall adhere to
  154  the following procedure for assembling companies on the
  155  Scrutinized Companies with Activities in Sudan List and the
  156  Scrutinized Companies with Activities in the Iran Petroleum
  157  Energy Sector List:
  158         (a) Engagement.—
  159         1. The board public fund shall immediately determine the
  160  companies on the Scrutinized Companies with Activities in Sudan
  161  List and the Scrutinized Companies with Activities in the Iran
  162  Petroleum Energy Sector List in which the public fund owns
  163  direct or indirect holdings.
  164         2. For each company identified in this paragraph that has
  165  only inactive business operations, the board public fund shall
  166  send a written notice informing the company of this act and
  167  encouraging it to continue to refrain from initiating active
  168  business operations in Sudan or Iran until it is able to avoid
  169  scrutinized business operations. The board public fund shall
  170  continue such correspondence semiannually.
  171         3. For each company newly identified under this paragraph
  172  which that has active business operations, the board public fund
  173  shall send a written notice informing the company of its
  174  scrutinized company status and that it may become subject to
  175  divestment by the public fund. The notice must inform the
  176  company of the opportunity to clarify its Sudan-related or Iran
  177  related activities and encourage the company, within 90 days, to
  178  cease its scrutinized business operations or convert such
  179  operations to inactive business operations within 90 days in
  180  order to avoid qualifying for divestment by the public fund.
  181         4. If, within 90 days after the board’s public fund’s first
  182  engagement with a company pursuant to this paragraph, that
  183  company ceases scrutinized business operations, the company
  184  shall be removed from the Scrutinized Companies with Activities
  185  in Sudan List and the Scrutinized Companies with Activities in
  186  the Iran Petroleum Energy Sector List, and the provisions of
  187  this act shall cease to apply to that company unless that
  188  company resumes scrutinized business operations. If, within 90
  189  days after the board’s public fund’s first engagement, the
  190  company converts its scrutinized active business operations to
  191  inactive business operations, the company is subject to all
  192  provisions relating to inactive business operations. A company
  193  may be removed from one list but remain on the other list, in
  194  which case the company shall be subject to the provisions
  195  applicable to the list on which the company remains.
  196         (b) Divestment.—
  197         1. If, after 90 days following the board’s public fund’s
  198  first engagement with a company pursuant to paragraph (a), the
  199  company continues to have scrutinized active business
  200  operations, and only while such company continues to have
  201  scrutinized active business operations, the board public fund
  202  shall sell, redeem, divest, or withdraw all publicly traded
  203  securities of the company, except as provided in paragraph (d),
  204  from the public fund fund’s assets under management within 12
  205  months after the company’s most recent appearance on the
  206  Scrutinized Companies with Activities in Sudan List or on the
  207  Scrutinized Companies with Activities in the Iran Petroleum
  208  Energy Sector List.
  209         2. If a company that ceased scrutinized active business
  210  operations following engagement pursuant to paragraph (a)
  211  resumes such operations, this paragraph immediately applies, and
  212  the board public fund shall send a written notice to the
  213  company. The company shall also be immediately reintroduced onto
  214  the Scrutinized Companies with Activities in Sudan List or on
  215  the Scrutinized Companies with Activities in the Iran Petroleum
  216  Energy Sector List, as applicable.
  217         (c) Prohibition.—The board public fund may not acquire, on
  218  behalf of the public fund, securities of companies on the
  219  Scrutinized Companies with Activities in Sudan List or the
  220  Scrutinized Companies with Activities in the Iran Petroleum
  221  Energy Sector List that have active business operations, except
  222  as provided in paragraph (d).
  223         (d) Exemption.—A company that the United States Government
  224  affirmatively declares to be excluded from its present or any
  225  future federal sanctions regime relating to Sudan or Iran is not
  226  subject to divestment or the investment prohibition pursuant to
  227  paragraphs (b) and (c).
  228         (e) Excluded securities.—
  229         1. Notwithstanding the provisions of this section,
  230  paragraphs (b) and (c) do not apply to indirect holdings in
  231  actively managed investment funds. However, the board public
  232  fund shall submit letters to the managers of such investment
  233  funds containing companies that have scrutinized active business
  234  operations requesting that they consider removing such companies
  235  from the fund or create a similar actively managed fund having
  236  indirect holdings devoid of such companies. If the manager
  237  creates a similar fund, the board, on behalf of the public fund,
  238  shall replace all applicable investments with investments in the
  239  similar fund in an expedited timeframe consistent with prudent
  240  investing standards. For the purposes of this section, a private
  241  equity fund is deemed to be an actively managed investment fund.
  242         2. Notwithstanding the provisions of this section,
  243  paragraphs (b) and (c) do not apply to exchange-traded funds.
  244         (f) Further exclusions.—Notwithstanding any other provision
  245  of this act, the board public fund, when discharging its
  246  responsibility for operation of a defined contribution plan,
  247  shall engage the manager of the investment offerings in such
  248  plans requesting that they consider removing scrutinized
  249  companies from the investment offerings or create an alternative
  250  investment offering devoid of scrutinized companies. If the
  251  manager creates an alternative investment offering and the
  252  offering is deemed by the board public fund to be consistent
  253  with prudent investor standards, the board public fund shall
  254  consider including such investment offering in the plan.
  255         (4) REPORTING.—
  256         (a) The board public fund shall file a report with each
  257  member of its the Board of Trustees of the State Board of
  258  Administration, the President of the Senate, and the Speaker of
  259  the House of Representatives which that includes the Scrutinized
  260  Companies with Activities in Sudan List and the Scrutinized
  261  Companies with Activities in the Iran Petroleum Energy Sector
  262  List within 30 days after the list is created. This report shall
  263  be made available to the public.
  264         (b) At each quarterly meeting of the Board of Trustees
  265  thereafter, the board public fund shall file a report regarding
  266  the public fund, which shall be made available to the public and
  267  to each member of its the Board of Trustees of the State Board
  268  of Administration, the President of the Senate, and the Speaker
  269  of the House of Representatives, and send a copy of that report
  270  to the United States Presidential Special Envoy to Sudan and the
  271  United States Presidential Special Envoy to Iran, or an
  272  appropriate designee or successor, which includes:
  273         1. A summary of correspondence with companies engaged by
  274  the board on behalf of the public fund under subparagraphs
  275  (3)(a)2. and 3.;
  276         2. All investments sold, redeemed, divested, or withdrawn
  277  in compliance with paragraph (3)(b);
  278         3. All prohibited investments under paragraph (3)(c);
  279         4. Any progress made under paragraph (3)(e); and
  280         5. A list of all publicly traded securities held directly
  281  by the public fund this state.
  282         (5) EXPIRATION.—This section expires upon the occurrence of
  283  all of the following:
  284         (a) If any of the following occurs occur, the board may
  285  public fund shall no longer scrutinize companies according to
  286  subparagraphs (1)(v)1. (1)(u)1., 2., and 3. and may shall no
  287  longer assemble the Scrutinized Companies with Activities in
  288  Sudan List, shall cease engagement and divestment of such
  289  companies, and may reinvest in such companies if such companies
  290  do not satisfy the criteria for inclusion in the Scrutinized
  291  Companies with Activities in the Iran Petroleum Energy Sector
  292  List:
  293         1. The Congress or President of the United States,
  294  affirmatively and unambiguously states, by means including, but
  295  not limited to, legislation, executive order, or written
  296  certification from the President to Congress, that the Darfur
  297  genocide has been halted for at least 12 months;
  298         2. The United States revokes all sanctions imposed against
  299  the government of Sudan;
  300         3. 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
  304  government of Sudan has honored its commitments to cease attacks
  305  on civilians, demobilize and demilitarize the Janjaweed and
  306  associated militias, grant free and unfettered access for
  307  deliveries of humanitarian assistance, and allow for the safe
  308  and voluntary return of refugees and internally displaced
  309  persons; or
  310         4. The Congress or President of the United States
  311  affirmatively and unambiguously states, by means including, but
  312  not limited to, legislation, executive order, or written
  313  certification from the President to Congress, that mandatory
  314  divestment of the type provided for in this section interferes
  315  with the conduct of United States foreign policy.
  316         (b) If either any of the following occurs occur, the board
  317  may public fund shall no longer scrutinize companies according
  318  to subparagraph (1)(v)4., may (1)(u)4. and shall no longer
  319  assemble the Scrutinized Companies with Activities in the Iran
  320  Petroleum Energy Sector List, and shall cease engagement,
  321  investment prohibitions, and divestment:. The public fund may
  322  reinvest in such companies if such companies do not satisfy the
  323  criteria for inclusion in the Scrutinized Companies with
  324  Activities in Sudan List:
  325         1. The Congress or President of the United States
  326  affirmatively and unambiguously states, by means including, but
  327  not limited to, legislation, executive order, or written
  328  certification from the President to Congress, that the
  329  government of Iran has ceased to acquire weapons of mass
  330  destruction and support international terrorism; or
  331         2. The United States revokes all sanctions imposed against
  332  the government of Iran; or
  333         3. The Congress or President of the United States
  334  affirmatively and unambiguously declares, by means including,
  335  but not limited to, legislation, executive order, or written
  336  certification from the President to Congress, that mandatory
  337  divestment of the type provided for in this section interferes
  338  with the conduct of United States foreign policy.
  339  
  340  The board, on behalf of the public fund, may reinvest in such
  341  companies if such companies do not satisfy the criteria for
  342  inclusion in the Scrutinized Companies with Activities in Sudan
  343  List. The board, acting as a fiduciary in accordance with s.
  344  215.47(10), shall monitor events relating to subparagraphs 1.
  345  and 2., and, upon finding that the conditions in subparagraph 1.
  346  or subparagraph 2. have occurred, the board shall report such
  347  finding at a quarterly meeting of its trustees. At each
  348  quarterly meeting of the trustees, the board shall report on the
  349  status of events relating to subparagraphs 1. and 2.
  350         (6) INVESTMENT POLICY STATEMENT OBLIGATIONS.—The board’s
  351  public fund’s actions taken in compliance with this act,
  352  including all good faith determinations regarding companies as
  353  required by this act, shall be adopted and incorporated into the
  354  public fund’s investment policy statement (the IPS) as provided
  355  set forth in s. 215.475.
  356         (7) REINVESTMENT IN CERTAIN COMPANIES HAVING SCRUTINIZED
  357  ACTIVE BUSINESS OPERATIONS.—Notwithstanding any other provision
  358  of this act to the contrary, the public fund may cease divesting
  359  from certain scrutinized companies pursuant to paragraph (3)(b)
  360  or reinvest in certain scrutinized companies from which it
  361  divested pursuant to paragraph (3)(b) if clear and convincing
  362  evidence shows that the value of all assets of under management
  363  by the public fund becomes equal to or less than 99.50 percent,
  364  or 50 basis points, of the hypothetical value of all assets of
  365  under management by the public fund assuming no divestment for
  366  any company had occurred under paragraph (3)(b). Cessation of
  367  divestment, reinvestment, or any subsequent ongoing investment
  368  authorized by this act is limited to the minimum steps necessary
  369  to avoid the contingency set forth in this subsection or that no
  370  divestment of any company is required for less than fair value.
  371  For any cessation of divestment, reinvestment, or subsequent
  372  ongoing investment authorized by this act, the board public fund
  373  shall provide a written report to each member of its the Board
  374  of Trustees of the State Board of Administration, the President
  375  of the Senate, and the Speaker of the House of Representatives
  376  in advance of initial reinvestment, updated semiannually
  377  thereafter as applicable, setting forth the reasons and
  378  justification, supported by clear and convincing evidence, for
  379  its decisions to cease divestment, reinvest, or remain invested
  380  in companies having scrutinized active business operations. This
  381  act does not apply to reinvestment in companies on the grounds
  382  that they have ceased to have scrutinized active business
  383  operations.
  384         Section 3. This act shall take effect July 1, 2016.