FIRSTREGULARSESSION
HOUSEBILLNO.1333
102NDGENERALASSEMBLY
INTRODUCEDBYREPRESENTATIVESPARKS.
2482H.01I DANARADEMANMILLER,ChiefClerk
ANACT
Torepealsections105.687and105.688,RSMo,andtoenactinlieuthereoftwonewsections
relatingtothefiduciarydutiesforinvestmentsofpublicretirementsystems.
BeitenactedbytheGeneralAssemblyofthestateofMissouri,asfollows:
SectionA.Sections105.687and105.688,RSMo,arerepealedandtwonewsections
2enactedinlieuthereof,tobeknownassections105.687and105.688,toreadasfollows:
105.687.Asusedinsections105.687to105.689,thefollowingtermsmean:
2 (1)"Equityinterests",limitedpartnershipinterestsandotherinterestsinwhichthe
3liabilityoftheinvestorislimitedtotheamountoftheinvestment,butdoesnotinclude
4generalpartnershipinterestsorotherinterestsinvolvinggeneralliabilityoftheinvestor;
5 (2)"Fiduciary",anypersonactingonbehalfofapublicretirementsystemasan
6investmentmanager,orproxyadvisor;
7 (3)"Fiduciarycommitment",anyevidenceofafiduciary'spurposeinmanaging
8assetsasafiduciary,including,butnotlimitedto,anyofthefollowinginafiduciary's
9capacityasafiduciary:
10 (a)Advertising,statements,explanations,reports,letterstoclients,
11communicationswithportfoliocompanies,statementsofprinciples,orcommitments;or
12 (b)Participationin,affiliationwith,orstatusasasignatoryto,anycoalition,
13initiative,jointstatementofprinciples,oragreement;
14 (4)"Financial",havingbeenprudentlydeterminedbyafiduciarytohavea
15materialeffectonthefinancialriskorthefinancialreturnofaninvestment.Theterm
16"financial"shallnotincludeanyactiontaken,orfactorconsidered,byafiduciarywith
17anypurposewhatsoevertofurthersocial,political,orideologicalinterests.Afiduciary
EXPLANATION—Matterenclosedinbold-facedbrackets[thus] intheabovebillisnotenactedandis
intendedtobeomittedfromthelaw.Matterinbold-facetypeintheabovebillisproposedlanguage. 18mayreasonablybedeterminedtohavetakenanaction,orconsideredafactor,witha
19purposetofurthersocial,political,orideologicalinterestsbaseduponevidence
20indicatingsuchapurpose,including,butnotlimitedto,anyfiduciarycommitmentto
21further,throughportfoliocompanyengagement,boardorshareholdervotes,or
22otherwiseasafiduciary,anyofthefollowingbeyondwhatcontrollingfederalorstate
23lawrequires:
24 (a)Eliminating,reducing,offsetting,ordisclosinggreenhousegasemissions;
25 (b)Institutingorassessingcorporateboard,oremployment,composition,
26compensation,ordisclosurecriteriathatincorporatescharacteristicsprotectedinthis
27stateunderchapter213;
28 (c)Divestingfrom,limitinginvestmentin,orlimitingtheactivitiesor
29investmentsof,anycompany,forfailing,ornotcommitting,tomeetenvironmental
30standardsordisclosures;
31 (d)Accesstoabortion,sexorgenderreassignmenttreatment,ortransgender
32surgery;or
33 (e)Divestingfrom,limitinginvestmentin,orlimitingtheactivitiesor
34investmentsof,anycompanythatengagesin,facilitates,orsupportsthemanufacture,
35import,distribution,marketingoradvertising,sale,orlawfuluseoffirearms,
36ammunitionorcomponentspartsandaccessoriesoffirearmsorammunition;
37 (5)"Invest"or"investment",utilizationofmoneyintheexpectationoffuturereturns
38intheformofincomeorcapitalgain;
39 [(3)](6)"Investmentfiduciary",apersonwhoeitherexercisesanydiscretionary
40authorityorcontrolintheinvestmentofapublicemployeeretirementsystem'sassetsorwho
41rendersforafeeadviceforapublicemploymentretirementsystem;
42 [(4)](7)"Smallbusiness",anindependentlyownedandoperatedbusinessasdefined
43inTitle15U.S.C.Section632AandasdescribedbyTitle13CFRPart121;
44 [(5)](8)"Smallbusinessinvestmentcompany",anincorporatedbodyoralimited
45partnershipunderSection301ofTitleIIIoftheSmallBusinessInvestmentActof1958,15
46U.S.C.681;
47 [(6)](9)"System"or"publicretirementsystem", [apublicemployee] any
48retirementorpensionsystem[established] orplanmaintained,provided,orofferedby:
49 (a)Thestateoranypoliticalsubdivisionofthestateincluding,butnotlimitedto,
50anycounty,city,municipality,town,township,village,orschooldistrict; or
51 (b)Anyschool,college,university,administration,authority,orotherenterprise
52operatedbythestateoranypoliticalsubdivisionofthestate;
53 [(7)](10)"Venturecapitalfirm",acorporation,partnership,proprietorship,orother
54entity,theprincipalbusinessesofwhichisthemakingofinvestmentsinsmallbusinesses,
HB1333 2 55eitherdirectlyorindirectlybyinvestinginentitiestheprincipalbusinessofwhichisthe
56makingofinvestmentsinsmallbusinesses.
105.688.1.Theassetsofasystemmaybeinvested,reinvestedandmanagedbyan
2investmentfiduciarysubjecttotheterms,conditionsandlimitationsprovidedinsections
3105.687to105.689.Aninvestmentfiduciaryshalldischargehisorherdutiesintheinterest
4oftheparticipantsinthesystemandtheirbeneficiariesandshall:
5 (1)Actwiththesamecare,skill,prudence,anddiligenceunderthecircumstances
6thenprevailingthataprudentpersonactinginasimilarcapacityandfamiliarwiththose
7matterswoulduseintheconductofasimilarenterprisewithsimilaraims;
8 (2)Actwithdueregardforthemanagement,reputation,andstabilityoftheissuerand
9thecharacteroftheparticularinvestmentsbeingconsidered;
10 (3)Makeinvestmentsforthepurposesofprovidingbenefitstoparticipantsand
11participants'beneficiaries,andofdefrayingreasonableexpensesofinvestingtheassetsofthe
12system;
13 (4)Giveappropriateconsiderationtothosefactsandcircumstancesthatthe
14investmentfiduciaryknowsorshouldknowarerelevanttotheparticularinvestmentor
15investmentcourseofactioninvolved,includingtheroleoftheinvestmentorinvestment
16courseofactionplaysinthatportionofthesystem'sinvestmentsforwhichtheinvestment
17fiduciaryhasresponsibility.Forpurposesofthissubdivision,"appropriateconsideration"
18shallinclude,butisnotnecessarilylimitedtoadeterminationbytheinvestmentfiduciarythat
19aparticularinvestmentorinvestmentcourseofactionisreasonablydesigned,aspartofthe
20investmentsofthesystem,tofurtherthepurposesofthesystem,takingintoconsiderationthe
21riskoflossandtheopportunityforgainorotherreturnassociatedwiththeinvestmentor
22investmentcourseofaction;andconsiderationofthefollowingfactorsastheyrelatetothe
23investmentorinvestmentcourseofaction:
24 (a)Thediversificationoftheinvestmentsofthesystem;
25 (b)Theliquidityandcurrentreturnoftheinvestmentsofthesystemrelativetothe
26anticipatedcashflowrequirementsofthesystem;and
27 (c)Theprojectedreturnoftheinvestmentsofthesystemrelativetothefunding
28objectivesofthesystem;
29 (5)Giveappropriateconsiderationtoinvestmentswhichwouldenhancethegeneral
30welfareofthisstateanditscitizensifthoseinvestmentsofferthesafetyandrateofreturn
31comparabletootherinvestmentsavailabletotheinvestmentfiduciaryatthetimethe
32investmentdecisionismade.
33 2.(1)Inadditiontothedutiesexpressedundersubsection1ofthissection,when
34makingandsupervisinginvestmentsofthereservefundofapublicretirementsystem,
35theboardoftrusteesofapublicretirementsystemandanyofitsfiduciariesshall
HB1333 3 36dischargeitsdutiessolelyinthefinancialinterestoftheparticipantsandbeneficiaries
37fortheexclusivepurposesof:
38 (a)Providingfinancialbenefitstoparticipantsandtheirbeneficiaries;and
39 (b)Defrayingreasonableexpensesofadministeringthesystem.
40 (2)Anyinvestmentmanagerappointedbythesystemshallbesubjecttothe
41samefiduciarydutiesasamemberoftheboardoftrusteesofasystem.
42 (3)Afiduciaryshalltakeintoaccountonlyfinancialfactorswhendischargingits
43dutieswithrespecttoapublicretirementsystem.
44 (4)Allshareshelddirectlyorindirectlybyoronbehalfofapublicretirement
45systemortheparticipantsinasystemandtheparticipants'beneficiariesshallbevoted
46solelyinthefinancialinterestoftheparticipantsinthesystemandtheparticipants'
47beneficiaries.
48 (5)Unlessnoeconomicallypracticablealternativeisavailable,theboardof
49trusteesshallnotgrantproxyvotingauthoritytoanypersonwhoisnotapartofthe
50boardoftrusteesunlessthatpersonhasapracticeof,andinwritingcommitsto,follow
51guidelinesthatmatchtheboardoftrustee'sobligationtoactsolelyuponfinancial
52factors.
53 (6)Unlessnoeconomicallypracticablealternativeisavailable,publicretirement
54systemassetsshallnotbeentrustedtoafiduciaryunlessthatfiduciaryhasapracticeof,
55andinwritingcommitsto,followguidelines,whenengagingwithportfoliocompanies
56andvotingsharesorproxies,thatmatchtheboardoftrustee'sobligationtoactsolely
57uponfinancialfactors.
58 (7)Unlessnoeconomicallypracticablealternativeisavailable,theboardof
59trusteesoranyofitsfiduciariesshallnotadoptapracticeoffollowingthe
60recommendationsofaproxyadvisororotherserviceproviderunlesssuchadvisoror
61serviceproviderhasapracticeof,andinwritingcommitsto,followproxyvoting
62guidelinesthatmatchtheboardoftrustee'sobligationtoactsolelyuponfinancial
63factors.
64 (8)Allproxyvotesshallbetabulatedandreportedannuallytotheboardof
65trustee.Foreachvote,thereportshallcontainavotecaption,thesystem’svote,the
66recommendationofcompanymanagement,and,ifapplicable,theproxyadvisor’s
67recommendation.Thesereportsshallbepostedonapubliclyavailablewebpageonthe
68system’swebsite.
69 (9)Theprovisionsofthissubsection,oranycontractsubjecttotheprovisionsof
70thissubsection,maybeenforcedbytheattorneygeneral.Iftheattorneygeneralhas
71reasonablecausetobelievethatapersonhasengagedin,isengagingin,orisaboutto
72engagein,aviolationofthissubsection,theattorneygeneralmayrequiresuchpersonto
HB1333 4 73fileonsuchformsprescribedbytheattorneygeneral,astatementorreportinwriting,
74underoath,astoallthefactsandcircumstancesconcerningtheallegedviolation,and
75suchotherdataandinformationastheattorneygeneraldeemsnecessary.
76 (10)Inadditiontoanyotherremediesavailableundergenerallaw,acompany
77whoservesasafiduciaryandwhoviolatesthissubsectionshallbeobligatedtopay
78damagestothestateinanamountequaltothreetimesallmoneyspaidtothecompany
79bythesystemforthecompany’sservices.
✔
HB1333 5