Maryland 2022 Regular Session

Maryland House Bill HB905 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTING LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	hb0905
6	6
7	7	HOUSE BILL 905
8	8	P6 2lr2222
9	9	CF SB 727
10	10	By: Delegate Reznik
11	11	Introduced and read first time: February 7, 2022
12	12	Assigned to: Appropriations
13	13
14	14	A BILL ENTITLED
15	15
16	16	AN ACT concerning 1
17	17
18	18	State Retirement and Pension System – Investment Management Fees 2
19	19
20	20	FOR the purpose of requiring the Board of Trustees for the State Retirement and Pension 3
21	21	System, on or before a certain date each year, to require each alternative investment 4
22	22	vehicle in which the system invests to disclose certain information regarding certain 5
23	23	fees and expenses for the preceding fiscal year; requiring the State Retirement 6
24	24	Agency to report certain information pertaining to the disclosures; and generally 7
25	25	relating to investment management fees of the State Retirement and Pension 8
26	26	System. 9
27	27
28	28	BY repealing and reenacting, without amendments, 10
29	29	Article – State Personnel and Pensions 11
30	30	Section 21–315(g) 12
31	31	Annotated Code of Maryland 13
32	32	(2015 Replacement Volume and 2021 Supplement) 14
33	33
34	34	BY adding to 15
35	35	Article – State Personnel and Pensions 16
36	36	Section 21–315(h) 17
37	37	Annotated Code of Maryland 18
38	38	(2015 Replacement Volume and 2021 Supplement) 19
39	39
40	40	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 20
41	41	That the Laws of Maryland read as follows: 21
42	42
43	43	Article – State Personnel and Pensions 22
44	44
45	45	21–315. 23
46	46	2 HOUSE BILL 905
47	47
48	48
49	49	(g) (1) (i) On or before December 31 of each year, the Board of Trustees 1
50	50	shall report to the General Assembly the actual amount spent for investment management 2
51	51	services during the preceding fiscal year. 3
52	52
53	53	(ii) The report required under subparagraph (i) of this paragraph 4
54	54	shall include the amount of carried interest on any assets of the system. 5
55	55
56	56	(2) On or before December 31 each year, the Board of Trustees shall report 6
57	57	to the General Assembly the actual amount spent for Investment Division operations 7
58	58	during the preceding fiscal year. 8
59	59
60	60	(H) (1) (I) IN THIS SUBSECTION TH E FOLLOWING WORDS HA VE THE 9
61	61	MEANINGS INDICATED . 10
62	62
63	63	(II) “ALTERNATIVE INVESTMEN T” MEANS AN INVESTMENT IN A 11
64	64	PRIVATE EQUITY FUND , A VENTURE FUND , A HEDGE FUND , OR AN ABSOLUTE 12
65	65	RETURN FUND . 13
66	66
67	67	(III) “ALTERNATIVE INVESTMEN T VEHICLE ” MEANS THE 14
68	68	LIMITED PARTNERSHIP , LIMITED LIABILITY CO MPANY, OR SIMILAR LEGAL 15
69	69	STRUCTURE THROUGH WH ICH THE STATE RETIREMENT AND PENSION SYSTEM 16
70	70	INVESTS IN AN ALTE RNATIVE INVESTMENT . 17
71	71
72	72	(IV) “CARRIED INTEREST ” MEANS ANY SHARE OF P ROFITS FROM 18
73	73	AN ALTERNATIVE INVES TMENT VEHICLE THAT I S DISTRIBUTED TO A F UND 19
74	74	MANAGER, GENERAL PARTNER , OR RELATED PARTIES , INCLUDING ALLOCATION S OF 20
75	75	ALTERNATIVE INVESTME NT VEHICLE PROFITS R ECEIVED BY A FUND MAN AGER IN 21
76	76	CONSIDERATION OF HAV ING WAIVED FEES THAT IT MIGHT OTHERWISE H AVE BEEN 22
77	77	ENTITLED TO RECEIVE . 23
78	78
79	79	(V) “GROSS RATE OF RETURN ” MEANS THE INTERNAL R ATE OF 24
80	80	RETURN FOR THE ALTER NATIVE INVESTMENT VE HICLE PRIOR TO THE R EDUCTION 25
81	81	OF FEES AND EXPENSES. 26
82	82
83	83	(VI) “INVESTMENT MANAGER ” MEANS THE GENERAL PA RTNER, 27
84	84	MANAGING MANAGER , ADVISER, OR OTHER PERSON OR E NTITY WITH PRIMARY 28
85	85	INVESTMENT DECISION –MAKING AUTHORITY OVE R AN ALTERNATIVE INV ESTMENT 29
86	86	VEHICLE AND RELATED PARTIES OF THE FUND MANAGER. 30
87	87
88	88	(VII) “OPERATIONAL PERSON ” MEANS ANY OPERATIONA L 31
89	89	PARTNER, SENIOR ADVISOR , OR OTHER CONSULTANT OR EMPLOYEE WHOSE 32
90	90	PRIMARY ACTIVITY FOR A RELEVANT ENTITY IS TO PROVIDE OPERATION AL OR BACK 33
91	91	OFFICE SUPPORT TO AN Y PORTFOLIO COMPANY OF ANY ALTERNATIVE I NVESTMENT 34
92	92	VEHICLE, ACCOUNT, OR FUND MANAGED BY A RELATED PERSON . 35 HOUSE BILL 905 3
93	93
94	94
95	95
96	96	(VIII) “PORTFOLIO COMPANIES ” MEANS INDIVIDUAL POR TFOLIO 1
97	97	INVESTMENTS MADE BY THE ALTERNATIVE INVE STMENT VEHICLE . 2
98	98
99	99	(IX) “RELATED PARTY ” MEANS ANY: 3
100	100
101	101	1. RELATED PERSON ; 4
102	102
103	103	2. OPERATIONAL PERSO N; 5
104	104
105	105	3. ENTITY WITH MORE THA N 10% OF THE OWNERSHIP 6
106	106	HELD DIRECTLY OR IND IRECTLY, WHETHER THROUGH OTHE R ENTITIES OR TRUSTS , 7
107	107	BY A RELATED PERSON OR OPERATIONAL PERSO N, REGARDLESS OF WHETHE R THE 8
108	108	RELATED PERSON OR OP ERATIONAL PERSON PAR TICIPATES IN THE CAR RIED 9
109	109	INTEREST RECEIVED BY THE GENERAL PARTNER OR THE SPECIAL LIMIT ED 10
110	110	PARTNER; OR 11
111	111
112	112	4. CONSULTANT , LEGAL SERVICES PROVI DER, OR 12
113	113	OTHER SERVICE PROVID ER THAT: 13
114	114
115	115	A. IS REGULARLY ENGAGED BY PORTFOLIO COMPANI ES 14
116	116	OF AN ALTERNATIVE IN VESTMENT VEHICLE , ACCOUNT, OR FUND MANAGED BY A 15
117	117	RELATED PERSON ; AND 16
118	118
119	119	B. ALSO PROVIDES ADVICE OR SERVICES TO ANY 17
120	120	RELATED PERSON OR RE LEVANT ENTITY . 18
121	121
122	122	(X) “RELATED PERSON ” MEANS ANY CURRENT OR FORMER 19
123	123	EMPLOYEE, MANAGER, OR PARTNER OF ANY RE LATED ENTITY THAT IS INVOLVED IN 20
124	124	THE INVESTMENT ACTIVITIE S OR ACCOUNTING AND VALUATION FUNCTIONS OF THE 21
125	125	RELEVANT ENTITY OR A NY OF THEIR RESPECTI VE FAMILY MEMBERS . 22
126	126
127	127	(XI) “RELEVANT ENTITY ” MEANS THE GENERAL PA RTNER, ANY 23
128	128	SEPARATE CARRY VEHIC LE, THE INVESTOR ADVISOR , ANY OF THE INVESTMEN T 24
129	129	ADVISOR’S PARENT OR SUBSIDIA RY ENTITIES, OR ANY SIMILAR ENTIT Y RELATED TO 25
130	130	ANY OTHER ALTERNATIV E INVESTMENT VEHICLE , ACCOUNT, OR FUND ADVISED OR 26
131	131	MANAGED BY ANY CURRE NT OR FORMER RELATED PERSON. 27
132	132
133	133	(2) (I) THIS SECTION APPLIES TO: 28
134	134
135	135	1. ALL NEW CONTRACTS TH E BOARD OF TRUSTEES 29
136	136	ENTERS INTO ON OR AF TER JANUARY 1, 2023; AND 30
137	137	4 HOUSE BILL 905
138	138
139	139
140	140	2. ALL EXISTING CONTRAC TS UNDER WHICH THE 1
141	141	SYSTEM MAKES A NEW C APITAL COMMITMENT ON OR AFTER JANUARY 1, 2023. 2
142	142
143	143	(II) WITH RESPECT TO EXIST ING CONTRACTS NOT CO VERED 3
144	144	UNDER SUBPARAGRAPH (I) OF THIS PARAGRAPH , THE BOARD OF TRUSTEES SHALL 4
145	145	UNDERTAKE REASONABLE EFFORTS TO OBTAIN TH E INFORMATION DESCRI BED IN 5
146	146	PARAGRAPH (3) OF THIS SUBSECTION A ND COMPLY WITH THE R EPORTING 6
147	147	REQUIREMENTS WITH RE SPECT TO ANY INFORMA TION OBTAINED ON OR AFTER 7
148	148	JANUARY 1, 2023. 8
149	149
150	150	(3) (I) ON OR BEFORE DECEMBER 31 EACH YEAR, THE BOARD OF 9
151	151	TRUSTEES SHALL REQUIR E EACH ALTERNATIVE I NVESTMENT VEHICLE IN WHICH IT 10
152	152	INVESTS TO DISCLOSE AT LEAST ANNUALLY FO R THE PRECEDING FISC AL YEAR: 11
153	153
154	154	1. THE FEES AND EXPENSE S THAT THE STATE 12
155	155	RETIREMENT AGENCY PAYS DIRECTLY TO THE ALTERNATIVE I NVESTMENT 13
156	156	VEHICLE, THE INVESTMENT MANAG ER, OR RELATED PARTIES ; 14
157	157
158	158	2. THE SYSTEM ’S PRO RATA SHARE OF FEES AND 15
159	159	EXPENSES NOT INCLUDE D IN ITEM 1 OF THIS SUBPARAGRAPH THAT ARE PAID FROM 16
160	160	THE ALTERNATIVE INVE STMENT VEHICLE TO THE INVES TMENT MANAGER OR 17
161	161	RELATED PARTIES ; 18
162	162
163	163	3. THE SYSTEM ’S PRO RATA SHARE OF CARRIED 19
164	164	INTEREST DISTRIBUTED TO THE INVESTMENT MA NAGER OR RELATED PAR TIES; AND 20
165	165
166	166	4. THE SYSTEM’S PRO RATA SHARE OF AGGREGATE FEES 21
167	167	AND EXPENSES PAID BY ALL OF THE PORTFOLIO COMPANIE S HELD WITHIN THE 22
168	168	ALTERNATIVE INVESTME NT VEHICLE TO THE IN VESTMENT MANAGER OR RELATED 23
169	169	PARTIES. 24
170	170
171	171	(II) 1. THE STATE RETIREMENT AGENCY SHALL DISCLOSE 25
172	172	THE INFORMATION PROV IDED IN ACCORDANCE W ITH SUBPARAGRAPH (I) OF THIS 26
173	173	PARAGRAPH AT LEAS T ONCE ANNUALLY IN A REPORT PRESENTED TO THE GENERAL 27
174	174	ASSEMBLY, IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT ARTICLE. 28
175	175
176	176	2. THE REPORT REQUIRED U NDER SUBSUBPARAGRAPH 29
177	177	1 OF THIS SUBPARAGRAPH SHALL ALSO INCLUDE T HE GROSS AND NET RAT E OF 30
178	178	RETURN OF EAC H ALTERNATIVE INVEST MENT VEHICLE , SINCE INCEPTION , IN 31
179	179	WHICH THE SYSTEM PAR TICIPATES. 32
180	180
181	181	3. THE STATE RETIREMENT AGENCY MAY REPORT THE 33
182	182	GROSS AND NET RATE O F RETURN AND INFORMA TION REQUIRED BY 34 HOUSE BILL 905 5
183	183
184	184
185	185	SUBPARAGRAPH (I) OF THIS PARAGRAPH BA SED ON ITS OWN CALCULATIONS OR 1
186	186	BASED ON CALCULATION S PROVIDED BY THE AL TERNATIVE INVESTMENT VEHICLE. 2
187	187
188	188	4. A. THE STATE RETIREMENT AGENCY MAY 3
189	189	INDEPENDENTLY CALCUL ATE THE INFORMATION REQUIRED UNDER THIS 4
190	190	SUBPARAGRAPH BASED O N INFORMATION CONTRA CTUALLY REQUIRED TO BE 5
191	191	PROVIDED BY THE ALTERNAT IVE INVESTMENT VEHIC LE TO THE BOARD OF 6
192	192	TRUSTEES. 7
193	193
194	194	B. IF THE STATE RETIREMENT AGENCY 8
195	195	INDEPENDENTLY CALCUL ATES THE INFORMATION REQUIRED UNDER THIS 9
196	196	SUBPARAGRAPH , THEN THE ALTERNATIVE INVESTMENT VEHICLE M AY NOT BE 10
197	197	REQUIRED TO PROVIDE THE INFORMATION IDENT IFIED IN THIS PARAGR APH. 11
198	198
199	199	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 12
200	200	October 1, 2022. 13
201	201