Stricken language would be deleted from and underlined language would be added to present law.
Act 308 of the Regular Session
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State of Arkansas As Engrossed: H2/10/25 H2/17/25 S2/26/25 1
95th General Assembly A Bill 2
Regular Session, 2025 HOUSE BILL 1307 3
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By: Representatives McAlindon, R. Burkes 5
By: Senator J. Bryant 6
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For An Act To Be Entitled 8
AN ACT TO ENSURE RESPONSIBLE FUND MANAGEMENT; TO 9
AMEND THE UNIFORM PRUDENT MANAGEMENT OF INSTITUTIONAL 10
FUNDS ACT (2006); AND FOR OTHER PURPOSES. 11
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Subtitle 14
TO ENSURE RESPONSIBLE FUND MANAGEMENT; 15
AND TO AMEND THE UNIFORM PRUDENT 16
MANAGEMENT OF INSTITUTIONAL FUNDS ACT 17
(2006). 18
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BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 20
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SECTION 1. Arkansas Code § 28 -69-802 is amended to read as follows: 22
28-69-802. Definitions. 23
In this subchapter: 24
(1) “Charitable purpose” means the relief of poverty, the 25
advancement of education or religion, the promotion of health, the promotion 26
of a governmental purpose, or any other purpose the achievement of which is 27
beneficial to the community. 28
(2) “Endowment fund” means an institutional fund or part thereof 29
that, under the terms of a gift instrument, is not wholly expendable by the 30
institution on a current basis. The term does not include assets that an 31
institution designates as an endowment fund for its own use. 32
(3) “Gift instrument” means a record or records, including an 33
institutional solicitation, under which property is granted to, transferred 34
to, or held by an institution as an institutional fund. 35
(4) “Institution” means: 36 As Engrossed: H2/10/25 H2/17/25 S2/26/25 HB1307
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(A) a person, other than an individual, organized and 1
operated exclusively for charitable purposes; 2
(B) a government or governmental subdivision, agency, or 3
instrumentality, to the extent that it holds funds exclusively for a 4
charitable purpose; or 5
(C) a trust that had both charitable and noncharitable 6
interests, after all noncharitable interests have terminated. 7
(5) “Institutional fund” means a fund held by an institution 8
exclusively for charitable purposes. The term does not include: 9
(A) program-related assets; 10
(B) a fund held for an institution by a trustee that is 11
not an institution; or 12
(C) a fund in which a beneficiary that is not an 13
institution has an interest, other than an interest that could arise upon 14
violation or failure of the purposes of the fund. 15
(6)(A) "Materially negative financial impact" means a materially 16
negative financial impact on the institutional fund's total net investment 17
performance, considering all financial returns received by the fund and all 18
costs paid by the fund. 19
(B) "Materially negative financial impact" does not 20
include the government institution's administrative costs that are not paid 21
by the fund. 22
(6)(7) “Person” means an individual, corporation, business 23
trust, estate, trust, partnership, limited liability company, association, 24
joint venture, public corporation, government or governmental subdivision, 25
agency, or instrumentality, or any other legal or commercial entity. 26
(7)(8) “Program-related asset” means an asset held by an 27
institution primarily to accomplish a charitable purpose of the institution 28
and not primarily for investment. 29
(8)(9) “Record” means information that is inscribed on a 30
tangible medium or that is stored in an electronic or other medium and is 31
retrievable in perceivable form. 32
(10) "Service provider" means a person, including without 33
limitation an affiliate, offering or providing financial services to the 34
institutional fund, including without limitation: 35
(A) an investment manager, investment company, securities 36 As Engrossed: H2/10/25 H2/17/25 S2/26/25 HB1307
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broker or dealer, investment advisor, or subadvisor; or 1
(B) a proxy advisor, including any person who provides 2
corporate governance ratings, proxy research and analyses, proxy voting 3
advice, or other similar services, for compensation and for the purpose of 4
advising a shareholder on how to vote on measures under consideration by 5
shareholders or proxy voting on behalf of a shareholder. 6
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SECTION 2. Arkansas Code § 28 -69-803, concerning the standard of 8
conduct in managing and investing in an institutional fund, is amended to add 9
additional subsections to read as follows: 10
(f) Except as provided under subsection (h) of this section, in 11
managing and investing an institutional fund, an institution under § 28 -69-12
802(4)(B), including without limitation a two -year or four-year state 13
supported institution of higher education, shall not: 14
(1) Consider any of the goals under subdivisions (f)(2)(A) 15
through (f)(2)(F) of this section, except as required to comply with 16
subdivision (f)(2) of this section, regarding: 17
(A) A possible investment by the institutional fund; 18
(B) The selection of a service provider; or 19
(C) The voting of shares by the institutional fund; or 20
(2) Direct or allow any service provider, in connection with its 21
duties to the institutional fund, to act in a way that is aligned with any of 22
the following goals beyond what is required by controlling law: 23
(A) Directly or indirectly eliminating, reducing, 24
offsetting, or disclosing a reduction target for greenhouse gas emissions, 25
including without limitation by restricting the exploration, production, 26
utilization, transportation, sale, or manufacturing of timber, mining, 27
agriculture, or fossil -fuel-based energy; 28
(B) Instituting a corporate board or employment 29
composition target or criterion that incorporate a characteristic protected 30
in this state under the Arkansas Civil Rights Act of 1993, § 16 -123-101 et 31
seq.; 32
(C) Providing access to or facilitating an abortion, 33
gender-reassignment, or sex -reassignment medication or procedure; 34
(D) Restricting public access to a firearm, ammunition, or 35
a component part or accessory of a firearm, including without limitation by 36 As Engrossed: H2/10/25 H2/17/25 S2/26/25 HB1307
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restricting the distribution, sale, manufacturing, importing, marketing, or 1
advertising of a firearm, ammunition, or a component part or accessory of a 2
firearm; 3
(E) Reducing the amount of business conducted with any 4
entity for the purpose of advancing any of the goals under this subdivision 5
(f)(2); or 6
(F) Advancing the purposes of any international agreement 7
related to any of the goals under this subdivision (f)(2). 8
(g) Subdivision (f)(2) of this section shall not apply if the 9
institution under § 28 -69-802(4)(B) determines that subdivision (f)(2) of 10
this section would require the selection of a service provider that would 11
have a materially negative financial impact on the institutional fund, 12
provided that the institution under § 28 -69-802(4)(B): 13
(1) Contracts with a service provider that most closely meets 14
the requirements of subdivision (f)(2) of this section and would not have a 15
materially negative financial impact on the institutional fund; 16
(2) Documents the determination of the institution under § 28 -17
69-802(4)(B), along with documenting evidence supporting its determination 18
through a description of the services of at least three (3) alternative 19
service providers that were consulted and including without limitation a 20
description of: 21
(A) Fees; 22
(B) Historical investment performance; and 23
(C) Evidence of compliance with subdivision (f)(2) of this 24
section; and 25
(3) Publicly posts notice seeking a service provider that would 26
comply with subdivision (f)(2) of this section at the following times: 27
(A) No later than sixty (60) days after the selection of a 28
service provider that does not meet the requirements of subdivision (f)(2) of 29
this section; 30
(B) No later than sixty (60) days before the beginning of 31
any following procurement period under which that service provider could be 32
replaced; and 33
(C) As part of any following procurement announcement 34
under which that service provider could be replaced; and 35
(4) Reevaluates its determination at least annually under 36 As Engrossed: H2/10/25 H2/17/25 S2/26/25 HB1307
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subdivisions (g)(1) — (3) of this section. 1
(h) The requirements under subsection (f) of this section shall not 2
apply to the investment and management of special gifts for which the intent 3
of a donor was: 4
(1) Contrary to subsection (f) of this section; and 5
(2) Expressed in the gift instruction before January 1, 2024. 6
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/s/McAlindon 8
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APPROVED: 3/18/25 11
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