AL
Alabama House Bill HB406

Alabama 2023 Regular Session

Alabama House Bill HB406 Compare Versions

Only one version of the bill is available at this time.
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11 HB406INTRODUCED
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33 H9ZB86-1
44 By Representatives Shaw, Brown, Colvin, Shirey, Lamb, Lomax,
55 Givens, Stadthagen, Kiel, DuBose, Carns, Oliver, Hurst,
66 Stringer, Woods
77 RFD: State Government
88 First Read: 27-Apr-23
99 2023 Regular Session
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1717 8 H9ZB86-1 04/18/2023 PMG (L)tgw 2023-1414
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1919 SYNOPSIS:
2020 This bill would require the State Treasurer and
2121 the Boards of Control of the Retirement Systems of
2222 Alabama and Judicial Retirement Fund to create and make
2323 available to the public a list of prohibited companies,
2424 which would be defined as businesses owned or
2525 controlled by Chinese military or government services
2626 and designated by the U.S. government as companies with
2727 whom U.S. citizens are restricted from entering into
2828 transactions.
2929 This bill authorizes the respective retirement
3030 systems to use a third-party service to complete the
3131 identification of prohibited companies.
3232 This bill prohibits the State Treasurer and the
3333 Boards of Control of the Retirement Systems of Alabama
3434 and Judicial Retirement Fund from acquiring direct
3535 holdings in publicly traded securities of a prohibited
3636 company, and requires them to sell, redeem, divest, or
3737 withdraw all direct holdings in publicly traded
3838 securities of a prohibited company within 180 days
3939 after the company becomes a prohibited company.
4040 This bill would also define terms.
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7070 A BILL
7171 TO BE ENTITLED
7272 AN ACT
7373 Relating to public investments; to require the State
7474 Treasurer and the Boards of Control of the Retirement Systems
7575 of Alabama and the Judicial Retirement Fund to establish and
7676 maintain a list of certain companies owned or controlled by
7777 Chinese military or government services and designated by the
7878 U.S. government as companies with whom U.S. citizens are
7979 restricted from entering into transactions; to make this list
8080 available to the public; to prohibit the State Treasurer and
8181 the Boards of Control of the Retirement Systems of Alabama and
8282 the Judicial Retirement Fund from acquiring direct holdings in
8383 publicly traded securities of a listed company, and requiring
8484 the sale, redemption, divestment, or withdrawal of all direct
8585 holdings in publicly traded securities of a listed company
8686 within 180 days after the company becomes a listed company;
8787 and to define terms.
8888 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
8989 Section 1. As used in this act, the following terms
9090 have the following meanings:
9191 (1) COMPANY. Any business or business entity that is
9292 publicly traded and that is not based in the United States.
9393 (2) DIRECT HOLDINGS. All securities of a company held
9494 directly by the public fund or in an account or fund in which
9595 the public fund owns all shares or interests.
9696 (3) INDIRECT HOLDINGS. All securities of a company held
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126126 in an account or fund managed by one or more persons not
127127 employed by the public fund, and in which the public fund owns
128128 shares or interests together with other investors. Indirect
129129 holdings include, but are not limited to, mutual funds,
130130 private equity funds, hedge funds, and real estate funds.
131131 (4) PROHIBITED COMPANY. A company that is owned or
132132 controlled by Chinese military or government services and has
133133 been designated by the United State government as a company
134134 that citizens of the United States are restricted or
135135 prohibited from entering into transactions with, including a
136136 designation in any of the following lists:
137137 a. The federal Bureau of Industry and Security's entity
138138 list.
139139 b. The federal Bureau of Industry and Security's
140140 military end user list.
141141 c. The Department of Defense's communist Chinese
142142 military companies list.
143143 d. The Office of Foreign Assets Control's foreign
144144 sanctions evaders list.
145145 e. The Office of Foreign Assets Control's list of
146146 foreign financial institutions subject to correspondent
147147 account or payable-through account sanctions.
148148 f. The Office of Foreign Assets Control's Non-SDN Iran
149149 sanctions list.
150150 g. The Office of Foreign Assets Control's Non-SDN
151151 Palestinian legislative council list.
152152 h. The Office of Foreign Assets Control's sectoral
153153 sanctions identifications list.
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183183 i. The Office of Foreign Assets Control's specially
184184 designated nationals and blocked persons list.
185185 (5) PUBLIC FUND. The State Treasurer and the respective
186186 Boards of Control of the Employees' Retirement System of
187187 Alabama, the Teachers' Retirement System of Alabama, or the
188188 Judicial Retirement Fund.
189189 Section 2. (a)(1) By January 1, 2024, a public fund
190190 shall identify or have identified all prohibited companies in
191191 which the public fund has direct or indirect holdings and
192192 shall create and make available to the public a prohibited
193193 companies list for that public fund. The public fund shall
194194 review and update, if necessary, the prohibited companies list
195195 on a quarterly basis thereafter.
196196 (2) In identifying or having identified prohibited
197197 companies, the public fund may review and rely, in the best
198198 judgment of the public fund, on publicly available information
199199 and other information that may be provided by nonprofit
200200 organizations, research firms, international organizations,
201201 and governmental entities. The public fund may also contract
202202 asset managers and institutional investors for the public fund
203203 to identify prohibited companies based upon
204204 industry-recognized lists of such companies that the public
205205 fund may have indirect holdings in.
206206 (3) A Board of Control of the respective Retirement
207207 System of Alabama, acting on behalf of the retirement system
208208 and other public funds subject to this section, may develop
209209 and issue a request for proposals for third-party services to
210210 complete the identification of prohibited companies and the
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240240 compilation of a prohibited companies list. The request for
241241 proposals may request bids for optional services related to
242242 this purpose, including, but not limited to, provision of
243243 notice of such prohibited companies as required in subsection
244244 (b). The respective board of control shall consult with all
245245 other public funds regarding the development of the request
246246 for proposals, however, selection of a successful proposal and
247247 the final scope of services to be provided shall be determined
248248 only by those public funds that have agreed to utilize the
249249 third-party services. If more than one public fund decides to
250250 utilize the third-party services, the participating public
251251 funds shall equally share the costs of such services.
252252 (b) For each company on the prohibited companies list
253253 in which a public fund has direct or indirect holdings, the
254254 public fund shall send or have sent a written notice informing
255255 the company of the requirements of this act. The public fund
256256 or its representative shall continue to provide such written
257257 notice on an annual basis if the company remains a prohibited
258258 company.
259259 (c) If a public fund determines that a company may be
260260 subject to inclusion on the prohibited companies list, the
261261 public fund shall scrutinize and engage the company for a
262262 period of not more than 12 months and shall include the
263263 company on the prohibited companies list if the public fund
264264 determines that the company is a prohibited company.
265265 Section 3. (a) A public fund shall not acquire any
266266 direct holdings in publicly traded securities of a prohibited
267267 company.
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297297 (b)(1) A public fund shall sell, redeem, divest, or
298298 withdraw all direct holdings in publicly traded securities of
299299 a prohibited company no later than 180 days following the date
300300 the company is included on the prohibited companies list.
301301 (2) This subsection shall not be construed to require
302302 the premature or otherwise imprudent sale, redemption,
303303 divestment, or withdrawal of an investment, but such sale,
304304 redemption, divestment, or withdrawal shall be completed as
305305 provided by this subsection.
306306 Section 4. (a) Each public fund shall, within 30 days
307307 after the prohibited companies list is created or updated as
308308 required by Section 2, make the list available to the public.
309309 (b) By October 1, 2024, and each October 1 thereafter,
310310 each public fund shall make available to the public, and file
311311 with the Legislature, an annual report covering the prior
312312 fiscal year that includes all of the following:
313313 (1) The prohibited companies list as of the end of the
314314 fiscal year.
315315 (2) A summary of all written notices sent as required
316316 by Section 2 during the fiscal year.
317317 (3) All investments sold, redeemed, divested, or
318318 withdrawn as provided in Section 3 during the fiscal year.
319319 (4) A list of indirect holdings of the public fund in
320320 publicly traded securities of prohibited companies and the
321321 percentage of the total portfolio of the public fund the
322322 indirect holdings of securities in prohibited companies
323323 represent.
324324 Section 5. With respect to actions taken in compliance
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354354 with this act, including all good-faith determinations
355355 regarding companies as required by this act, the public fund
356356 shall be exempt from any conflicting statutory or common law
357357 obligations, including any such obligations with respect to
358358 choice of asset managers, investment funds, or investments for
359359 the public fund's securities portfolios.
360360 Section 6. The requirements of this act shall not apply
361361 if the United States Congress or President of the United
362362 States, through legislation or executive order, declares that
363363 mandatory divestment of the type provided for in this chapter
364364 interferes with the conduct of United States foreign policy.
365365 Section 7. This act shall become effective on the first
366366 day of the third month following its passage and approval by
367367 the Governor, or its otherwise becoming law.
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