Florida Senate - 2024                   (Proposed Bill) SPB 7060
       FOR CONSIDERATION By the Committee on Governmental Oversight and
       585-02689A-24                                         20247060pb
    1                        A bill to be entitled                      
    2         An act relating to foreign investments by the State
    3         Board of Administration; amending s. 215.47, F.S.;
    4         conforming a provision to changes made by the act;
    5         creating s. 215.4735, F.S.; defining terms;
    6         prohibiting the State Board of Administration from
    7         acquiring, on behalf of the Florida Retirement System
    8         Trust Fund, direct holdings in Chinese companies;
    9         requiring the board to initiate a review of its direct
   10         holdings to make a specified determination by a
   11         specified date; requiring the board to develop a
   12         certain divestment plan for such holdings by a
   13         specified date; requiring the board to divest from
   14         such holdings according to the required plan by a
   15         specified date; providing for an extension under
   16         specified conditions; requiring that certain actions
   17         be adopted and incorporated into a specified
   18         investment policy statement; providing an effective
   19         date.
   21  Be It Enacted by the Legislature of the State of Florida:
   23         Section 1. Subsection (10) of section 215.47, Florida
   24  Statutes, is amended to read:
   25         215.47 Investments; authorized securities; loan of
   26  securities.—Subject to the limitations and conditions of the
   27  State Constitution or of the trust agreement relating to a trust
   28  fund, moneys available for investments under ss. 215.44-215.53
   29  may be invested as follows:
   30         (10)(a) As used in this subsection, the term “pecuniary
   31  factor” means a factor that the State Board of Administration
   32  prudently determines is expected to have a material effect on
   33  the risk or returns of an investment based on appropriate
   34  investment horizons consistent with applicable investment
   35  objectives and funding policy. The term does not include the
   36  consideration of the furtherance of any social, political, or
   37  ideological interests.
   38         (b) Notwithstanding any other law except for ss. 215.471,
   39  215.4725, and 215.473, and 215.4735, when deciding whether to
   40  invest and when investing the assets of any fund, the State
   41  Board of Administration must make decisions based solely on
   42  pecuniary factors and may not subordinate the interests of the
   43  participants and beneficiaries of the fund to other objectives,
   44  including sacrificing investment return or undertaking
   45  additional investment risk to promote any nonpecuniary factor.
   46  The weight given to any pecuniary factor must appropriately
   47  reflect a prudent assessment of its impact on risk or returns.
   48         (c) Investments made by the State Board of Administration
   49  shall be designed to maximize the financial return to the fund
   50  consistent with the risks incumbent in each investment and shall
   51  be designed to preserve an appropriate diversification of the
   52  portfolio. The board shall discharge its duties with respect to
   53  a plan solely in the interest of its participants and
   54  beneficiaries. The board in performing the above investment
   55  duties shall comply with the fiduciary standards set forth in
   56  the Employee Retirement Income Security Act of 1974 at 29 U.S.C.
   57  s. 1104(a)(1)(A) through (C). Except as provided in paragraph
   58  (b), in case of conflict with other provisions of law
   59  authorizing investments, the investment and fiduciary standards
   60  set forth in this paragraph prevail.
   61         Section 2. Section 215.4735, Florida Statutes, is created
   62  to read:
   63         215.4735 Prohibited foreign investments.—
   64         (1)As used in this section, the term:
   65         (a)“Board” means the State Board of Administration.
   66         (b)“China” means the government of the People’s Republic
   67  of China, the Chinese Communist Party, the Chinese military, or
   68  any instrumentality thereof, or any combination thereof.
   69         (c)“Chinese company” means a company that is publicly
   70  known to be majority-owned by China.
   71         (d)“Company” means a sole proprietorship, organization,
   72  association, corporation, partnership, joint venture, limited
   73  partnership, limited liability partnership, limited liability
   74  company, or other entity or business association, including all
   75  wholly owned subsidiaries, majority-owned subsidiaries, and
   76  parent companies, or an affiliate of such entity or business
   77  association which exists for the purpose of making a profit.
   78         (e)“Direct holdings” in a company means all securities of
   79  that company which are held directly by the Florida Retirement
   80  System Trust Fund or in an account or fund in which the Florida
   81  Retirement System Trust Fund owns all shares or interests. The
   82  term does not include indirect holdings in actively managed
   83  investment funds, including a private equity fund, or holdings
   84  in exchange-traded funds.
   85         (f)“Florida Retirement System Trust Fund” means all assets
   86  of the Florida Retirement System held by the board in its
   87  capacity as a fiduciary pursuant to part I of chapter 121.
   88         (g)“Indirect holdings” in a company means all securities
   89  of that company which are held in a commingled fund or other
   90  collective investment, such as a mutual fund, in which the
   91  Florida Retirement System Trust Fund owns shares or interests,
   92  together with other investors not subject to this section.
   93         (h)“Majority-owned” means to have ownership of 50.1
   94  percent or more of the outstanding equity interests of a
   95  company.
   96         (2)(a)The board may not acquire, on behalf of the Florida
   97  Retirement System Trust Fund, direct holdings in a Chinese
   98  company.
   99         (b)The board must:
  100         1.Initiate, no later than June 1, 2024, a review of all
  101  current direct holdings to determine which direct holdings, if
  102  any, include securities of a Chinese company.
  103         2.Develop, no later than September 1, 2024, a divestment
  104  plan for all direct holdings in Chinese companies. The
  105  divestment plan must be developed and implemented consistent
  106  with the fiduciary standards set forth in s. 215.47(10).
  107         3.Complete divestment from direct holdings in Chinese
  108  companies included in the divestment plan developed pursuant to
  109  subparagraph 2. no later than September 1, 2025, or at such
  110  later time if necessary for the board to implement the
  111  divestment plan consistent with the fiduciary standards set
  112  forth in s. 215.47(10).
  113         (3)The board’s actions taken in compliance with this
  114  section, including all good faith determinations regarding
  115  companies as required by this section, must be adopted and
  116  incorporated into the investment policy statement as provided in
  117  s. 215.475.
  118         Section 3. This act shall take effect upon becoming a law.