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ENGROSSED HOUSE
BILL NO. 2254 By: Burns, Boatman, and Hill of
the House
and
Stewart of the Senate
[ public finance - Tobacco Settlement Endowment Trust
Fund - investments - venture capital - effective
date ]
BE IT ENACTED BY THE PEOPLE O F THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 62 O.S. 2021, Section 2306, is
amended to read as follows:
Section 2306. A. The Board of Investors of the Tobacco
Settlement Endowment T rust Fund shall discharge their duties as
trustees of the Tobacco Settlement Endowment Trust Fund:
1. With the care, skill, prudence, and diligence, under the
circumstances then prevailing, that a prudent person acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
2. By diversifying the investments in the trust fund so as to
minimize the risk of large losses, unless, under the circumstances,
it is clearly prudent not to do so; and
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3. In accordance with the laws, doc uments, and instruments
governing the trust fund ;
4. By investment of at l east four percent (4%) of funds in
eligible Oklahoma venture c apital companies or eligible Oklahoma
venture capital fund of funds;
5. As used in this section, "eligible Oklahoma venture capital
company" means a business entity that meets the definition of
"venture capital fund " set forth in 17 CFR Section 275.203(l)-1 and
which:
a. has five or more investors, and no investor, including
their closely related family members and a ffiliates,
may own or have a capital interest in more than forty
percent (40%) of the eligible Oklahoma venture capital
company's capitalization,
b. as used in this subsection, "closely related" means
any of the following in relation to the investor or
the investor's spouse:
(1) parents or grandparents ,
(2) children, grandchildren or their spouses , or
(3) siblings or their spouses and their c hildren,
c. has either:
(1) its principal place of business in the Sta te of
Oklahoma, or
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(2) has more than fifty percent (50%) of its assets,
operations, and employees in the State of
Oklahoma, and
d. is included on the list maintained by the Oklahoma
Department of Commer ce pursuant to subsection D of
Section 2401 of this ti tle.
Eligible Oklahoma venture capital com pany shall also include any
special purpose vehicle created and managed by an eligible Oklahoma
venture capital company for the sole purpose of investing in a
single eligible Oklahoma business venture ; and
6. "Eligible Oklahoma venture capital fund of fu nds" means a
business entity that invests more than fifty percent (50%) of its
aggregate capital contributions and uncalled committed capital in
the equity of "venture capital funds" as defined in 17 CFR Section
275.203(l)-1 and that meets the requirements set forth in
subparagraphs a through d of paragraph 5 of this subsection.
B. The Board of Investors shall retain qualified inv estment
managers, eligible Oklahoma venture capital companies, or eligible
Oklahoma venture fund of funds, as applicable, to provide for the
investment of the monies of the trust fund. The investment
managers, eligible Oklahoma venture capital companies, or eligible
Oklahoma venture fund of funds shall be chosen by a solicitation of
proposals on a competitive basis pursuant to standards set by the
Board of Investors. The investment managers , eligible Oklahoma
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venture capital companies, or eligible Oklahoma venture fund of
funds shall manage those monies of the trust fund allocated to the
investment managers, eligible Oklahoma venture capital companies, or
eligible Oklahoma venture fund of funds in compliance with the
overall investment guidelines set by the Board of Investors. The
monies of the trust fund allocated to the investment manage rs,
eligible Oklahoma venture capital companies, or eligible Oklahoma
venture fund of funds shall be managed by the inv estment managers,
eligible Oklahoma venture capital companies, or eligible Oklahoma
venture fund of funds in accordance with the invest ment guidelines
and other directions of the Board of Investors. The investment
managers, eligible Oklahoma venture capital companies, or eligible
Oklahoma venture fund of funds may sell investments and r ealize
losses if such action is considered advantage ous to longer-term
return maximization. Because of the total return objective, no
distinction shall be made for management and performance evaluation
purposes between realized and unrealized capital gain s and losses.
The Board of Investors may have the S tate Treasurer manage those
monies not specifically allocated to the investment managers ,
eligible Oklahoma venture capital companies, or eligible Oklahoma
venture fund of funds .
C. The trust fund may be invested in the manner in which a
prudent person would invest it and consistent w ith the manner that
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state retirement funds are invested. Investment as required by
paragraph 4 of subsection A of this section is deemed to be prudent.
D. The Board of Inve stors shall select a cus todial bank to
settle transactions involving the investment of funds in the trust
fund and to hold custody of the securities in the trust fund
portfolio. The custodian shall be a bank or trust company offering
pension fund master t rustee and master custod ial services. The
custodian shall be chosen by a solicitat ion of proposals on a
competitive basis pursuant to standards set by the Board of
Investors. The Board of Investors may also select professional
investment consultants, attorneys, auditors, and actuaries to assist
the Board of Investors in carrying out it s fiduciary
responsibilities. All these professionals shall be selected by a
solicitation of proposals on a competitive basis pursuant to
standards set by the Board of Inve stors.
E. The Board of Investors s hall choose the professional
custodians and managers of the assets of the trust fund, eligible
Oklahoma venture capital companies, or eligible Oklahoma venture
fund of funds, shall establish investment and fund management
guidelines, and shall adopt an investment policy. The selection of
investment managers, eligible Oklahoma venture capital companies, or
eligible Oklahoma venture fund of funds, investment consultants,
auditors, and actuaries, and a custodian bank shall b e exempt from
the provisions of the Oklahoma Central Purchasing Act.
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F. The Board of Investors shall set aside cash reserves from
the earnings of the Tobacco Settlement Endowment Trust Fund if
requested by the Board of Directors of the Tobacco Settlement
Endowment Trust Fund pursuant to subsection B of Sec tion 10 2310 of
this act title.
G. The State Treasurer shall provide any necessary staff
support to the Board of Investors. The cost of up to two full -time-
equivalent employees for the Office of the Sta te Treasurer may be
considered as an administrative expense of the trust fund. How ever,
the amount provided to the State Treasurer for this purpose shall be
determined by the Board of Directors of the Tobacco Settlement
Endowment Trust Fund.
SECTION 2. This act shall become effective November 1, 2023.
Passed the House of Repre sentatives the 23rd day of March, 2023.
Presiding Officer of the House
of Representatives
Passed the Senate the ___ day of __________, 2023.
Presiding Officer of the Senate