LAWRENCE J. HOGAN, JR., Governor Ch. 343
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Chapter 343
(Senate Bill 1005)
AN ACT concerning
State Retirement and Pension System – Divestment From Russia
FOR the purpose of requiring the Board of Trustees for the State Retirement and Pension
System to review certain investment holdings; requiring the Board of Trustees to
take certain divestment actions with regard to certain Russian investments;
prohibiting the Board of Trustees from making certain new investments; providing
certain immunities from liability for certain persons; requiring the Board of Trustees
to act in good faith in taking certain actions in a certain manner; requiring the Board
of Trustees to make certain recommendations to the Joint Committee on Pensions;
and generally relating to the investment of assets of the State Retirement and
Pension System.
BY adding to
Article – State Personnel and Pensions
Section 21–123.3
Annotated Code of Maryland
(2015 Replacement Volume and 2021 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – State Personnel and Pensions
21–123.3.
(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS
INDICATED.
(2) (I) “ACTIVELY MANAGED SEP ARATE ACCOUNTS ” MEANS THE
ACCOUNTS OF THE SEVE RAL SYSTEMS THAT ARE ACTIVELY MANAGED AT THE
DIRECTION OF THE BOARD OF TRUSTEES AND HELD IN SEPARATE ACCOUNTS .
(II) “ACTIVELY MANAGED SEPA RATE ACCOUNTS ” DOES NOT
MEAN INDEXED FUNDS , PRIVATE EQUITY FUNDS , REAL ESTATE FUNDS , OR OTHER
COMMINGLED OR PASSIV ELY MANAGED FUNDS .
(3) “COMPANY” MEANS ANY CORPORATIO N, UTILITY, PARTNERSHIP ,
JOINT VENTURE , FRANCHISOR , FRANCHISEE, TRUST, ENTITY INVESTMENT
VEHICLE, FINANCIAL INSTITUTIO N, OR A WHOLLY OWNED SU BSIDIARY OF A NY OF Ch. 343 2022 LAWS OF MARYLAND
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THESE ENTITIES.
(4) “DIVESTMENT ACTION ” MEANS SELLING , REDEEMING ,
TRANSFERRING , EXCHANGING , OTHERWISE DISPOSING OF, AND REFRAINING FROM
FURTHER INVESTMENT I N CERTAIN INVESTMENT S.
(5) “ELIGIBLE ACCOUNTS ” MEANS ACTIVELY MANAG ED SEPARATE
ACCOUNTS CONTAINING FUNDS OF THE SEVERAL SYSTEMS .
(6) “INVESTMENT ” MEANS THE COMMITMENT OF FUNDS OR OTHER
ASSETS TO A COMPANY INCLUDING:
(I) THE OWNERSHIP OR CON TROL OF A SHARE OR I NTEREST IN
THE COMPANY ; OR
(II) THE OWNERSHIP OR CON TROL OF A BOND OR OTHER DEBT
INSTRUMENT OF A COMP ANY.
(7) (I) “RUSSIA” MEANS THE GOVERNMENT OF RUSSIA OR THE
GOVERNMENT OF THE RUSSIAN FEDERATION.
(II) “RUSSIA” INCLUDES ALL AGENCIE S, INSTITUTIONS,
INSTRUMENTALITIES , AND POLITICAL SUBDIV ISIONS OF RUSSIA.
(8) “RUSSIA–RESTRICTED INVESTMEN T” MEANS AN INVESTMENT IN
A COMPANY:
(I) IDENTIFIED BY THE FEDERAL OFFICE OF FOREIGN ASSETS
CONTROL AS A RUSSIAN ENTITY WITH W HICH TRANSACTIONS AR E PROHIBITED BY
FEDERAL LAW ;
(II) OWNED, IN WHOLE OR IN PART , BY RUSSIA;
(III) CONTROLLED BY A COMP ANY THAT IS OWNED , IN WHOLE OR
IN PART, BY RUSSIA;
(IV) INCORPORATED IN RUSSIA; OR
(V) WHOSE PRINCIPAL PLAC E OF BUSINESS IS LOC ATED WITHIN
RUSSIA, TO THE EXTENT THIS D ETERMINATION CAN BE MADE.
(B) THE BOARD OF TRUSTEES SHALL REVIEW THE INVESTMENT HOLDI NGS
IN ELIGIBLE ACCOUNTS FOR THE PURPOSE OF D ETERMINING THE EXTEN T TO WHICH LAWRENCE J. HOGAN, JR., Governor Ch. 343
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FUNDS IN ELIGIBLE AC COUNTS ARE INVESTED IN RUSSIA–RESTRICTED
INVESTMENTS .
(C) EXCEPT AS PROVIDED IN SUBSECTION (D) OF THIS SECTION, THE
BOARD OF TRUSTEES:
(1) SHALL TAKE DIVESTMEN T ACTION IN ELIGIBLE ACCOUNTS WITH
REGARD TO CURRENT IN VESTMENTS:
(I) IN ANY RUSSIA–RESTRICTED INVESTMEN T; OR
(II) IN ANY SECURITY OR I NSTRUMENT ISSUED BY RUSSIA; AND
(2) MAY NOT MAKE ANY NEW INVESTMENTS FROM NET NEW FUNDS IN
AN ELIGIBLE ACCOUNT IN ANY RUSSIA–RESTRICTED INVESTMEN T.
(D) NOTWITHSTANDING THE P ROVISIONS OF THIS SE CTION, THE BOARD OF
TRUSTEES MAY EXCLUDE FROM THE PROVISIONS OF SUBSECTION (C) OF THIS
SECTION A COMPANY:
(1) THAT THE UNITED STATES GOVERNMENT AFF IRMATIVELY
DECLARES TO BE EXCLU DED FROM ITS FEDERAL SANCTIONS REGIME REL ATING TO
RUSSIA; AND
(2) WHOSE DIVESTMENT CAN NOT BE EXECUTED FOR FAIR MARKET
VALUE OR GREATER .
(E) ON OR BEFORE APRIL 1 AND OCTOBER 1 EACH YEAR, THE BOARD OF
TRUSTEES SHALL SUBMIT A REPORT, IN ACCORDANCE WITH § 2–1257 OF THE STATE
GOVERNMENT ARTICLE, TO THE SENATE BUDGET AND TAXATION COMMITTEE, THE
HOUSE APPROPRIATIONS COMMITTEE, AND THE JOINT COMMITTEE ON PENSIONS
THAT PROVIDE S:
(1) ALL DIVESTMENT ACTIO NS TAKEN BY THE BOARD OF TRUSTEES
IN ACCORDANCE WITH T HIS SECTION;
(2) A LIST OF INVESTMENTS THAT THE BOARD OF TRUSTEES HAS
DETERMINED TO BE INE LIGIBLE FOR INVESTME NTS OF NET NEW FUNDS UNDER
SUBSECTION (C)(2) OF THIS SECTIO N; AND
(3) OTHER DEVELOPMENTS R ELEVANT TO RUSSIA–RESTRICTED
INVESTMENTS .
Ch. 343 2022 LAWS OF MARYLAND
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(F) THE BOARD OF TRUSTEES OR ANY OTHER FIDUCIARY OF THE SEV ERAL
SYSTEMS MAY NOT BE H ELD LIABLE FOR ANY A CTIONS TAKEN OR DECI SIONS MADE
IN GOOD FAITH FOR TH E PURPOSE OF COMPLYI NG WITH OR EXECUTING THE
REQUIREMENTS OF ANY DIVESTMENT PROVISION S UNDER THIS SECTION.
(G) THE BOARD OF TRUSTEES SHALL ACT IN GOOD FAITH TO CARRY OUT
DIVESTMENT ACTION AS REQUIRED BY THIS SEC TION IN COMPLIANCE W ITH ALL
APPLICABLE STATE AND FEDERAL LAW , INCLUDING RELEVANT J UDICIAL
DECISIONS.
(H) NOTHING IN THIS SECTI ON SHALL REQUIRE THE BOARD OF TRUSTEES
TO TAKE ACTION AS DE SCRIBED IN THIS SECT ION UNLESS THE BOARD OF TRUSTEES
DETERMINES IN GOOD F AITH THAT THE ACTION IS CONSISTENT WITH T HE
FIDUCIARY RESPONSIBI LITIES OF THE BOARD OF TRUSTEES AS DESCRIBED IN
SUBTITLE 2 OF THIS TITLE.
SECTION 2. AND BE IT FURTHER ENACTED, That :
(a) Notwithstanding any other provision of this Act, Section 1 of this Act may not
be applied to investments or divestment actions by the Board of Trustees for the State
Retirement and Pension System in connection with a Russia–restricted investment if the
United States government declares an end to financial sanctions against the Russian
Federation related to its invasion of and violation of the sovereignty of Ukraine.
(b) Within 6 months after a declaration or other action described under subsection
(a) of this section, the Board of Trustees shall recommend to the Joint Committee on
Pensions legislation that would amend Section 1 of this Act.
SECTION 3. AND BE IT FURTHER ENACTED, That this Act is an emergency
measure, is necessary for the immediate preservation of the public health or safety, has
been passed by a yea and nay vote supported by three–fifths of all the members elected to
each of the two Houses of the General Assembly, and shall take effect from the date it is
enacted.
Approved by the Governor, May 12, 2022.