Bill Text: IA HF2331 | 2015-2016 | 86th General Assembly | Enrolled
Bill Title: A bill for an act concerning investment of certain public funds in and public contracts with companies that boycott Israel. Effective 7-1-16.
Spectrum: Committee Bill
Status: (Passed) 2016-05-10 - Signed by Governor. H.J. 999. [HF2331 Detail]
Download: Iowa-2015-HF2331-Enrolled.html
House File 2331 - Enrolled
HOUSE FILE
BY COMMITTEE ON STATE
GOVERNMENT
(SUCCESSOR TO HSB 583)
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A BILL FOR
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House File 2331
AN ACT
CONCERNING INVESTMENT OF CERTAIN PUBLIC FUNDS IN AND PUBLIC
CONTRACTS WITH COMPANIES THAT BOYCOTT ISRAEL.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. NEW SECTION. 12J.1 Legislative findings and
intent.
The general assembly is deeply concerned and does not
support boycotts and related tactics that have become a tool
of economic warfare that threaten the sovereignty and security
of allies and trade partners of the United States, including
the state of Israel. Therefore, the general assembly intends
that state funds and funds administered by the state, including
public employee retirement funds, should not be invested in,
and public contracts should not be entered into with, companies
that refuse to engage in commerce with Israel and boycott
Israel or persons doing business in Israel or territories
controlled by Israel.
Sec. 2. NEW SECTION. 12J.2 Definitions.
As used in this chapter, unless the context otherwise
requires:
1. "Company" means any business or business entity that is
publicly traded and that is not based in the United States.
2. "Direct holdings" in a company means all publicly traded
securities of that company that are held directly by the public
fund in an actively managed account or fund in which the public
fund owns all shares or interests.
3. "Indirect holdings" in a company means all securities
of that company that are held in an account or fund managed
by one or more persons not employed by the public fund, in
which the public fund owns shares or interests together with
other investors not subject to the provisions of this chapter.
Indirect holdings include but are not limited to mutual funds,
fund of funds, index funds, private equity funds, hedge funds,
and real estate funds.
4. "Public entity" means the state, political subdivisions
of the state, public school corporations, and all public
officers, boards, commissions, departments, agencies, and
authorities empowered by law to enter into public contracts for
the expenditure of public funds, including the state board of
regents and institutions under the control of the state board
of regents.
5. "Public fund" means the treasurer of state, the state
board of regents, the public safety peace officers' retirement
system created in chapter 97A, the Iowa public employees'
retirement system created in chapter 97B, the statewide fire
and police retirement system created in chapter 411, or the
judicial retirement system created in chapter 602.
6. "Scrutinized company" means any company that publicly
states it is participating in a boycott of Israel.
Sec. 3. NEW SECTION. 12J.3 Identification of companies ====
notice.
1. a. By March 1, 2017, the public fund shall make its
best efforts to identify or have identified all scrutinized
companies in which the public fund has direct or indirect
holdings or could possibly have such holdings in the future and
shall create and make available to the public a scrutinized
companies list for that public fund. The public fund shall
review on an annual basis and update, if necessary, the
scrutinized companies list.
b. In making its best efforts to identify or have
identified scrutinized companies, the public fund may review
and rely, in the best judgment of the public fund, on publicly
available information regarding companies, and including other
information that may be provided by nonprofit organizations,
research firms, international organizations, and government
entities. The public fund may also contact asset managers
and institutional investors for the public fund to identify
scrutinized companies based upon industry=recognized lists of
such companies that the public fund may have indirect holdings
in.
c. The Iowa public employees' retirement system, acting
on behalf of the system and other public funds subject to
this section, may develop and issue a request for proposals
for third=party services to complete the identification of
scrutinized companies and the compilation of a scrutinized
companies list. The Iowa public employees' retirement system
shall consult with all other public funds on the development of
the request for proposals. However, selection of a successful
proposal and the final scope of services to be provided shall
be determined only by those public funds that have agreed to
utilize the third=party services. If more than one public fund
decides to utilize the third=party services, the participating
public funds shall equally share the costs of such services.
2. a. For each company on the scrutinized companies list,
the public fund shall send or have sent a written notice
informing the company of its status as a scrutinized company
and that it may become subject to divestment and restrictions
on investment in the company by the public fund. The notice
shall offer the company the opportunity to clarify its
activities or to cease its activities causing its inclusion
on the scrutinized company list. The public fund or its
representative shall continue to provide such written notice on
an annual basis if the company remains a scrutinized company.
b. If, following notice as provided by this section, a
scrutinized company ceases activity that designates it as
a scrutinized company and submits a written statement to
the public fund that it has ceased engaging in activities
boycotting Israel, the company shall be removed from the
scrutinized companies list.
Sec. 4. NEW SECTION. 12J.4 Prohibited investments ====
divestment.
1. The public fund shall not acquire publicly traded
securities of a company on the public fund's most recent
scrutinized companies list so long as such company remains on
the public fund's scrutinized companies list as provided in
this chapter.
2. a. The public fund shall sell, redeem, divest, or
withdraw all publicly traded securities of a company on the
public fund's list of scrutinized companies, so long as the
company remains on that list, within eighteen months following
the first written notice sent to the scrutinized company as
required by section 12J.3.
b. This subsection shall not be construed to require the
premature or otherwise imprudent sale, redemption, divestment,
or withdrawal of an investment, but such sale, redemption,
divestment, or withdrawal shall be completed as provided by
this subsection.
3. The requirements of this section shall not apply to
indirect holdings of a scrutinized company. The public
fund shall, however, submit letters to the managers of such
investment funds containing scrutinized companies requesting
that they consider removing such companies from the fund
or create a similar fund with indirect holdings devoid of
such companies. If the manager creates a similar fund with
indirect holdings devoid of such companies, the public fund
is encouraged to replace all applicable investments with
investments in the similar fund consistent with prudent
investing standards.
Sec. 5. NEW SECTION. 12J.5 Reports.
1. Scrutinized companies list. Each public fund shall,
within thirty days after the scrutinized companies list is
created or updated as required by section 12J.3, make the list
available to the public.
2. Annual report. On October 1, 2017, and each October
1 thereafter, each public fund shall make available to the
public, and file with the general assembly, an annual report
covering the prior fiscal year that includes the following:
a. The scrutinized companies list as of the end of the
fiscal year.
b. A summary of all written notices sent as required by
section 12J.3 during the fiscal year.
c. All investments sold, redeemed, divested, or withdrawn as
provided in section 12J.4 during the fiscal year.
Sec. 6. NEW SECTION. 12J.6 Public entities ==== contract
requirements.
A public entity shall not enter into a contract of one
thousand dollars or more with a scrutinized company included on
a scrutinized company list created by a public fund pursuant
to section 12J.3 to acquire or dispose of services, supplies,
information technology, or construction.
Sec. 7. NEW SECTION. 12J.7 Legal obligations ==== immunity.
With respect to actions taken in compliance with this
chapter, including all good=faith determinations regarding
companies as required by this chapter, the public fund shall
be immune from any liability and exempt from any conflicting
statutory or common law obligations, including any such
obligations in respect to choice of asset managers, investment
funds, or investments for the public fund's securities
portfolios.
LINDA UPMEYER
Speaker of the House
PAM JOCHUM
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 2331, Eighty=sixth General Assembly.
CARMINE BOAL
Chief Clerk of the House
Approved , 2016
TERRY E. BRANSTAD
Governor
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