Arizona 2024 Regular Session

Arizona House Bill HB2457 Compare Versions

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Version 2 (New)

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1		-	~~House Engrossed~~ government investments; plans; fiduciaries; products State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024 ~~HOUSE BILL~~ 2457 An Act amending title 35, chapter 2, article 2, Arizona Revised Statutes, by adding section 35-320; amending title 35, chapter 2, Arizona Revised Statutes, by adding article 11; relating to handling of public funds. (TEXT OF BILL BEGINS ON NEXT PAGE)
	1	+	REFERENCE TITLE: government investments; plans; fiduciaries; products State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024 HB 2457 Introduced by Representative Montenegro An Act amending title 35, chapter 2, article 2, Arizona Revised Statutes, by adding section 35-320; amending title 35, chapter 2, Arizona Revised Statutes, by adding article 11; relating to handling of public funds. (TEXT OF BILL BEGINS ON NEXT PAGE)
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9		-	~~House Engrossed~~ government investments; plans; fiduciaries; products
	9	+	REFERENCE TITLE: government investments; plans; fiduciaries; products
10	10		State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024
11		-	HOUSE BILL 2457
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	14	+	REFERENCE TITLE: government investments; plans; fiduciaries; products
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27	24		State of Arizona
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53	64		An Act
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57	68		amending title 35, chapter 2, article 2, Arizona Revised Statutes, by adding section 35-320; amending title 35, chapter 2, Arizona Revised Statutes, by adding article 11; relating to handling of public funds.
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67	78		Be it enacted by the Legislature of the State of Arizona: Section 1. Title 35, chapter 2, article 2, Arizona Revised Statutes, is amended by adding section 35-320, to read: START_STATUTE35-320. State investments; investment managers; list; posting A. The state treasurer shall post a current list of state investments by name on the state treasurer's pUBLICLY accessible website. The state treasurer shall update Any changes to the list within a reasonable period of time. B. The state treasurer shall post the current list of investment managers on the state treasurer's publicly accessible website and shall update any changes to the list within a reasonable period of time. C. All state investments shall be made in the sole interest of the beneficiary taxpayer. The state treasurer's evaluation of an investment must be based on pecuniary factors as prescribed in title 35, chapter 2, article 10, and The state treasurer may not take UNNECESSARY investment risks or promote nonpecuniary benefits or other nonPECUNIARY social goals. END_STATUTE Sec. 2. Title 35, chapter 2, Arizona Revised Statutes, is amended by adding article 11, to read: ARTICLE 11. GOVERNMENT INVESTMENTS PROTECTION ACT START_STATUTE35-395. Definitions In this article, unless the context otherwise requires: 1. "Fiduciary" means a person who does any of the following: (a) exercises any discretionary authority or discretionary control with respect to A plan or exercises any authority or control managing or disposing of the plan's assets. (b) renders investment advice for a fee or other compensation, directly or indirectly, with respect to any monies or other property of A plan or has the authority or responsibility to render investment advice. (c) has any discretionary authority or discretionary responsibility in administering A plan. 2. "Nonpecuniary factor" includes Any factor that is intended to further or is branded, advertised or otherwise publicly described by The offeror or FIDUCIARY as furthering any of the following: (a) international, domestic or industry agreements relating to environmental or social goals. (b) corporate governance structures based on social characteristics. (c) social or environmental goals. 3. "Pecuniary factor" means a factor that has a material effect on the financial risk or the financial return of an investment based on appropriate investment horizons consistent with A plan's investment objectives and funding policy. 4. "Plan" means any plan, fund or program that is established or maintained by this State or a political subdivision of this state, including a university under the jurisdiction of the Arizona board of regents and a community college district as defined in section 15-1401, to do any of the following: (a) Provide retirement income or other retirement benefits to employees or former employees. (b) defer income by employees for A period of time extending to the termination of covered employment or beyond. (c) invest taxpayer monies for any purpose. END_STATUTE START_STATUTE35-395.01. Plans; fiduciaries; duties A. A fiduciary shall discharge The fiduciary's duties with respect to a plan solely in the interest of the participants and beneficiaries of the plan for the exclusive purpose of providing pecuniary benefits to the participants and their beneficiaries, defraying reasonable expenses of administering the plan and earning a return on the investment. B. A fiduciary shall take into account only pecuniary factors when evaluating an investment or discharging the fiduciary's duties with respect to a plan. A fiduciary may not take into account any nonpecuniary or other factors when evaluating an investment. END_STATUTE START_STATUTE35-395.02. Plans; voting of ownership interests A. Only the governmental entity that establishes or maintains a plan may vote the shares held by the plan. A governmental entity may not grant proxy voting authority to any person who is not a part of the governmental entity unless that person follows guidelines consistent with the governmental entity's obligation to act based only on pecuniary factors. B. The shares held directly or indirectly by a plan shall be voted only in the pecuniary interest of the plan. The shares may not be voted to further nonpecuniary, environmental, social, political, ideological or other benefits or goals. A plan may not entrust any plan assets to a fiduciary that: 1. has a practice of engaging with, or COMMITS to engaging with, a company based on nonpecuniary factors. 2. has a practice of voting shares based on nonpecuniary factors. C. A fiduciary may not adopt a practice of following the recommendations of a proxy advisory firm or other service provider unless The proxy advisory firm's or the service provider's proxy voting guidelines are consistent with the fiduciary's obligation to act based only on pecuniary factors. END_STATUTE
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69	80		Be it enacted by the Legislature of the State of Arizona:
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71	82		Section 1. Title 35, chapter 2, article 2, Arizona Revised Statutes, is amended by adding section 35-320, to read:
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73	84		START_STATUTE35-320. State investments; investment managers; list; posting
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75	86		A. The state treasurer shall post a current list of state investments by name on the state treasurer's pUBLICLY accessible website. The state treasurer shall update Any changes to the list within a reasonable period of time.
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77	88		B. The state treasurer shall post the current list of investment managers on the state treasurer's publicly accessible website and shall update any changes to the list within a reasonable period of time.
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79	90		C. All state investments shall be made in the sole interest of the beneficiary taxpayer. The state treasurer's evaluation of an investment must be based on pecuniary factors as prescribed in title 35, chapter 2, article 10, and The state treasurer may not take UNNECESSARY investment risks or promote nonpecuniary benefits or other nonPECUNIARY social goals. END_STATUTE
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81	92		Sec. 2. Title 35, chapter 2, Arizona Revised Statutes, is amended by adding article 11, to read:
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83	94		ARTICLE 11. GOVERNMENT INVESTMENTS PROTECTION ACT
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85	96		START_STATUTE35-395. Definitions
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87	98		In this article, unless the context otherwise requires:
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89	100		1. "Fiduciary" means a person who does any of the following:
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91	102		(a) exercises any discretionary authority or discretionary control with respect to A plan or exercises any authority or control managing or disposing of the plan's assets.
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93	104		(b) renders investment advice for a fee or other compensation, directly or indirectly, with respect to any monies or other property of A plan or has the authority or responsibility to render investment advice.
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95	106		(c) has any discretionary authority or discretionary responsibility in administering A plan.
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97	108		2. "Nonpecuniary factor" includes Any factor that is intended to further or is branded, advertised or otherwise publicly described by The offeror or FIDUCIARY as furthering any of the following:
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99	110		(a) international, domestic or industry agreements relating to environmental or social goals.
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101	112		(b) corporate governance structures based on social characteristics.
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103	114		(c) social or environmental goals.
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105	116		3. "Pecuniary factor" means a factor that has a material effect on the financial risk or the financial return of an investment based on appropriate investment horizons consistent with A plan's investment objectives and funding policy.
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107	118		4. "Plan" means any plan, fund or program that is established or maintained by this State or a political subdivision of this state, including a university under the jurisdiction of the Arizona board of regents and a community college district as defined in section 15-1401, to do any of the following:
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109	120		(a) Provide retirement income or other retirement benefits to employees or former employees.
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111	122		(b) defer income by employees for A period of time extending to the termination of covered employment or beyond.
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113	124		(c) invest taxpayer monies for any purpose. END_STATUTE
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115	126		START_STATUTE35-395.01. Plans; fiduciaries; duties
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117	128		A. A fiduciary shall discharge The fiduciary's duties with respect to a plan solely in the interest of the participants and beneficiaries of the plan for the exclusive purpose of providing pecuniary benefits to the participants and their beneficiaries, defraying reasonable expenses of administering the plan and earning a return on the investment.
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119	130		B. A fiduciary shall take into account only pecuniary factors when evaluating an investment or discharging the fiduciary's duties with respect to a plan. A fiduciary may not take into account any nonpecuniary or other factors when evaluating an investment. END_STATUTE
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121	132		START_STATUTE35-395.02. Plans; voting of ownership interests
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123	134		A. Only the governmental entity that establishes or maintains a plan may vote the shares held by the plan. A governmental entity may not grant proxy voting authority to any person who is not a part of the governmental entity unless that person follows guidelines consistent with the governmental entity's obligation to act based only on pecuniary factors.
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125	136		B. The shares held directly or indirectly by a plan shall be voted only in the pecuniary interest of the plan. The shares may not be voted to further nonpecuniary, environmental, social, political, ideological or other benefits or goals. A plan may not entrust any plan assets to a fiduciary that:
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127	138		1. has a practice of engaging with, or COMMITS to engaging with, a company based on nonpecuniary factors.
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129	140		2. has a practice of voting shares based on nonpecuniary factors.
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131	142		C. A fiduciary may not adopt a practice of following the recommendations of a proxy advisory firm or other service provider unless The proxy advisory firm's or the service provider's proxy voting guidelines are consistent with the fiduciary's obligation to act based only on pecuniary factors. END_STATUTE