Florida Senate - 2024 (Proposed Bill) SPB 7060 FOR CONSIDERATION By the Committee on Governmental Oversight and Accountability 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. 20 21 Be It Enacted by the Legislature of the State of Florida: 22 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,and215.473, 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.