Stricken language would be deleted from and underlined language would be added to present law.
*LJH020* 01/29/2025 2:12:46 PM LJH020
State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1307 3
4
By: Representative McAlindon 5
6
7
For An Act To Be Entitled 8
AN ACT TO AMEND THE UNIFORM PRUDENT MANAGEMENT OF 9
INSTITUTIONAL FUNDS ACT (2006); AND FOR OTHER 10
PURPOSES. 11
12
13
Subtitle 14
TO AMEND THE UNIFORM PRUDENT MANAGEMENT 15
OF INSTITUTIONAL FUNDS ACT (2006). 16
17
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 18
19
S0.ECTION 1. Arkansas Code § 28 -69-802 is amended to read as follows: 20
28-69-802. Definitions. 21
In this subchapter: 22
(1) “Charitable purpose” means the relief of poverty, the 23
advancement of education or religion, the promotion of health, the promotion 24
of a governmental purpose, or any other purpose the achievement of which is 25
beneficial to the community. 26
(2) “Endowment fund” means an institutional fund or part thereof 27
that, under the terms of a gift instrument, is not wholly expendable by the 28
institution on a current basis. The term does not include assets that an 29
institution designates as an endowment fund for its own use. 30
(3) “Gift instrument” means a record or records, including an 31
institutional solicitation, under which property is granted to, transferred 32
to, or held by an institution as an institutional fund. 33
(4) “Institution” means: 34
(A) a person, other than an individual, organized and 35
operated exclusively for charitable purposes; 36 HB1307
2 01/29/2025 2:12:46 PM LJH020
(B) a government or governmental subdivision, agency, or 1
instrumentality, to the extent that it holds funds exclusively for a 2
charitable purpose; or 3
(C) a trust that had both charitable and noncharitable 4
interests, after all noncharitable interests have terminated. 5
(5) “Institutional fund” means a fund held by an institution 6
exclusively for charitable purposes. The term does not include: 7
(A) program-related assets; 8
(B) a fund held for an institution by a trustee that is 9
not an institution; or 10
(C) a fund in which a beneficiary that is not an 11
institution has an interest, other than an interest that could arise upon 12
violation or failure of the purposes of the fund. 13
(6)(A) "Materially negative financial impact" means a materially 14
negative financial impact on the institutional fund's total net investment 15
performance, considering all financial returns received by the fund and all 16
costs paid by the fund. 17
(B) "Materially negative financial impact" does not 18
include the government institution's administrative costs that are not paid 19
by the fund. 20
(6)(7) “Person” means an individual, corporation, business 21
trust, estate, trust, partnership, limited liability company, association, 22
joint venture, public corporation, government or governmental subdivision, 23
agency, or instrumentality, or any other legal or commercial entity. 24
(7)(8) “Program-related asset” means an asset held by an 25
institution primarily to accomplish a charitable purpose of the institution 26
and not primarily for investment. 27
(8)(9) “Record” means information that is inscribed on a 28
tangible medium or that is stored in an electronic or other medium and is 29
retrievable in perceivable form. 30
(10) "Service provider" means a person, including without 31
limitation an affiliate, offering or providing financial services to the 32
institutional fund, including without limitation: 33
(A) an investment manager, investment company, securities 34
broker or dealer, investment advisor, or subadvisor; or 35
(B) a proxy advisor, including any person who provides 36 HB1307
3 01/29/2025 2:12:46 PM LJH020
corporate governance ratings, proxy research and analyses, proxy voting 1
advice, or other similar services, for compensation and for the purpose of 2
advising a shareholder on how to vote on measures under consideration by 3
shareholders or proxy voting on behalf of a shareholder. 4
5
SECTION 2. Arkansas Code § 28 -69-803, concerning the standard of 6
conduct in managing and investing in an institutional fund, is amended to add 7
additional subsections to read as follows: 8
(f) Except as provided under subsection (h) of this section, in 9
managing and investing an institutional fund, an institution under § 28 -69-10
802(4)(B), including without limitation a two -year or four-year state 11
supported institution of higher education, shall not: 12
(1) Consider any of the goals under subdivisions (f)(2)(A) 13
through (f)(2)(F) of this section, except as required to comply with 14
subdivision (f)(2) of this section, regarding: 15
(A) A possible investment by the institutional fund; 16
(B) The selection of a service provider; or 17
(C) The voting of shares by the institutional fund; or 18
(2) Select any service provider that has a purpose or ambition 19
for the service provider's customers, investment portfolio, or any portfolio 20
company, or has joined or participates in any initiative or organization that 21
has a purpose or ambition for its signatories' or members' customers, 22
investment portfolios, or portfolio companies, to be aligned with any of the 23
following goals beyond what is required by controlling law: 24
(A) Directly or indirectly eliminating, reducing, 25
offsetting, or disclosing a reduction target for greenhouse gas emissions, 26
including without limitation by restricting the exploration, production, 27
utilization, transportation, sale, or manufacturing of timber, mining, 28
agriculture, or fossil -fuel-based energy; 29
(B) Instituting a corporate board or employment 30
composition target or criterion that incorporate a characteristic protected 31
in this state under the Arkansas Civil Rights Act of 1993, § 16 -123-101 et 32
seq.; 33
(C) Providing access to or facilitating an abortion, 34
gender-reassignment, or sex-reassignment medication or procedure; 35
(D) Restricting public access to a firearm, ammunition, or 36 HB1307
4 01/29/2025 2:12:46 PM LJH020
a component part or accessory of a firearm, including without limitation by 1
restricting the distribution, sale, manufacturing, importing, marketing, or 2
advertising of a firearm, ammunition, or a component part or accessory of a 3
firearm; 4
(E) Reducing the amount of business conducted with any 5
entity for the purpose of advancing any of the goals under this subdivision 6
(f)(2); or 7
(F) Advancing the purposes of any international agreement 8
related to any of the goals under this subdivision (f)(2). 9
(g) Subdivision (f)(2) of this section shall not apply if the 10
institution under § 28 -69-802(4)(B) determines that subdivision (f)(2) of 11
this section would require the selection of a service provider that would 12
have a materially negative financial impact on the institutional fund, 13
provided that the institution under § 28 -69-802(4)(B): 14
(1) Contracts with a service provider that most closely meets 15
the requirements of subdivision (f)(2) of this section and would not have a 16
materially negative financial impact on the institutional fund; 17
(2) Documents the determination of the institution under § 28 -18
69-802(4)(B), along with documenting evidence supporting its determination 19
through a description of the services of at least three (3) alternative 20
service providers that were consulted and including without limitation a 21
description of: 22
(A) Fees; 23
(B) Historical investment performance; and 24
(C) Evidence of compliance with subdivision (f)(2) of this 25
section; 26
(3) Includes the documentation and evidence required by 27
subdivision (g)(2) of this section in the government institution's minutes or 28
other publicly available medium; 29
(4) Publicly posts notice seeking a service provider that would 30
comply with subdivision (f)(2) of this section at the following times: 31
(A) No later than sixty (60) days after the selection of a 32
service provider that does not meet the requirements of subdivision (f)(2) of 33
this section; 34
(B) No later than sixty (60) days before the beginning of 35
any following procurement period under which that service provider could be 36 HB1307
5 01/29/2025 2:12:46 PM LJH020
replaced; and 1
(C) As part of any following procurement announcement 2
under which that service provider could be replaced; and 3
(5) Limits the contract duration to no more than one (1) year 4
and reevaluates its determination at least annually under subdivisions (g)(1) 5
through (4) of this subdivision (g). 6
(h) The requirements under subsection (f) of this section shall not 7
apply to the investment and management of special gifts for which the intent 8
of a donor was: 9
(1) Contrary to subsection (f) of this section; and 10
(2) Expressed in the gift instruction before January 1, 2024. 11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36