85R19922 KLA-D
By: Davis of Harris H.B. No. 1143
Substitute the following for H.B. No. 1143:
By: Kuempel C.S.H.B. No. 1143
A BILL TO BE ENTITLED
AN ACT
relating to investment prohibitions and divestment requirements
for certain investments of public money.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 404.024(b), Government Code, is amended
to read as follows:
(b) Subject to Chapter 2270, state [State] funds not
deposited in state depositories shall be invested by the
comptroller in:
(1) direct security repurchase agreements;
(2) reverse security repurchase agreements;
(3) direct obligations of or obligations the principal
and interest of which are guaranteed by the United States;
(4) direct obligations of or obligations guaranteed by
agencies or instrumentalities of the United States government;
(5) bankers' acceptances that:
(A) are eligible for purchase by the Federal
Reserve System;
(B) do not exceed 270 days to maturity; and
(C) are issued by a bank whose other comparable
short-term obligations are rated in the highest short-term rating
category, within which there may be subcategories or gradations
indicating relative standing, including such subcategories or
gradations as "rating category" or "rated," by a nationally
recognized statistical rating organization, as defined by 15 U.S.C.
Section 78c [Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
under the Investment Company Act of 1940 by the Securities and
Exchange Commission];
(6) commercial paper that:
(A) does not exceed 270 days to maturity; and
(B) except as provided by Subsection (i), is
issued by an entity whose other comparable short-term obligations
are rated in the highest short-term rating category by a nationally
recognized statistical rating organization;
(7) contracts written by the treasury in which the
treasury grants the purchaser the right to purchase securities in
the treasury's marketable securities portfolio at a specified price
over a specified period and for which the treasury is paid a fee and
specifically prohibits naked-option or uncovered option trading;
(8) direct obligations of or obligations guaranteed by
the Inter-American Development Bank, the International Bank for
Reconstruction and Development (the World Bank), the African
Development Bank, the Asian Development Bank, and the International
Finance Corporation that have received the highest long-term rating
categories for debt obligations by a nationally recognized
statistical rating organization;
(9) bonds issued, assumed, or guaranteed by the State
of Israel;
(10) obligations of a state or an agency, county,
city, or other political subdivision of a state;
(11) mutual funds secured by obligations that are
described by Subdivisions (1) through (6) or by obligations
consistent with Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
by the Securities and Exchange Commission, including pooled funds:
(A) established by the Texas Treasury
Safekeeping Trust Company;
(B) operated like a mutual fund; and
(C) with portfolios consisting only of
dollar-denominated securities;
(12) foreign currency for the sole purpose of
facilitating investment by state agencies that have the authority
to invest in foreign securities;
(13) asset-backed securities, as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7), that are rated at least A or its equivalent by a
nationally recognized statistical rating organization and that
have a weighted-average maturity of five years or less; and
(14) corporate debt obligations that are rated at
least A or its equivalent by a nationally recognized statistical
rating organization and mature in five years or less from the date
on which the obligations were "acquired," as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7).
SECTION 2. Section 2256.017, Government Code, is amended to
read as follows:
Sec. 2256.017. EXISTING INVESTMENTS. Except as provided by
Chapter 2270, an [An] entity is not required to liquidate
investments that were authorized investments at the time of
purchase.
SECTION 3. Section 2256.024(a), Government Code, is amended
to read as follows:
(a) The authority granted by this subchapter is in addition
to that granted by other law. Except as provided by Subsection (b)
and Section 2256.017, this subchapter does not:
(1) prohibit an investment specifically authorized by
other law; or
(2) authorize an investment specifically prohibited
by other law.
SECTION 4. Chapter 806, Government Code, is transferred to
Subtitle F, Title 10, Government Code, redesignated as Chapter 2270
of that subtitle, and amended to read as follows:
CHAPTER 2270 [806]. PROHIBITION ON INVESTING PUBLIC MONEY IN
CERTAIN INVESTMENTS [INVESTMENT IN SUDAN]
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2270.0001 [806.001]. DEFINITIONS. In this chapter:
(1) "Active business operations" means all business
operations that are not inactive business operations.
(2) ["Business operations" means engaging in commerce
in any form in Sudan, including by acquiring, developing,
maintaining, owning, selling, possessing, leasing, or operating
equipment, facilities, personnel, products, services, personal
property, real property, or any other apparatus of business or
commerce.
[(3)] "Company" means a sole proprietorship,
organization, association, corporation, partnership, joint
venture, limited partnership, limited liability partnership,
limited liability company, or other entity or business association
whose securities are publicly traded, including a wholly owned
subsidiary, majority-owned subsidiary, parent company, or
affiliate of those entities or business associations, that exists
to make a profit.
(3) "Designated foreign terrorist organization" means
an organization designated as a foreign terrorist organization by
the United States secretary of state as authorized by 8 U.S.C.
Section 1189.
(4) ["Complicit" means taking actions that have
directly supported or promoted the genocidal campaign in Darfur,
including:
[(A) preventing members of Darfur's victimized
population from communicating with each other;
[(B) encouraging Sudanese citizens to speak out
against an internationally approved security force for Darfur; or
[(C) actively working to deny, cover up, or alter
the record on human rights abuses in Darfur.
[(5)] "Direct holdings" in a company["] means all
securities of that company held directly by an investing [a state
governmental] entity in an account or fund in which an investing [a
state governmental] entity owns all shares or interests.
(5) [(6) "Government of Sudan" means the government in
Khartoum, Sudan, which is led by the National Congress Party,
formerly known as the National Islamic Front, or any successor
government formed on or after October 13, 2006, including the
coalition National Unity Government agreed upon in the
Comprehensive Peace Agreement for Sudan. The term does not include
the regional government of southern Sudan.
[(7)] "Inactive business operations" means the mere
continued holding or renewal of rights to property previously
operated to generate revenue but not presently deployed to generate
revenue.
(6) [(8)] "Indirect holdings" in a company["] means
all securities of that company held in an account or fund, such as a
mutual fund, managed by one or more persons not employed by an
investing [a state governmental] entity, in which the investing
[state governmental] entity owns shares or interests together with
other investors not subject to this chapter. The term does not
include money invested under a plan described by Section 401(k) or
457 of the Internal Revenue Code of 1986.
(7) "Investing entity" means:
(A) an entity subject to Chapter 2256;
(B) the Employees Retirement System of Texas;
(C) the Teacher Retirement System of Texas; and
(D) the comptroller with respect to the
comptroller's investment of state funds.
(8) [(9)] "Listed company" means a company listed by
the comptroller under Section 2270.0201 [806.051].
(9) [(10) "Marginalized populations of Sudan"
includes:
[(A) the portion of the population in the Darfur
region that has been genocidally victimized;
[(B) the portion of the population of southern
Sudan victimized by Sudan's North-South civil war;
[(C) the Beja, Rashidiya, and other similarly
underserved groups of eastern Sudan;
[(D) the Nubian and other similarly underserved
groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
regions; and
[(E) the Amri, Hamadab, Manasir, and other
similarly underserved groups of northern Sudan.
[(11) "Military equipment" means weapons, arms,
military supplies, and equipment that readily may be used for
military purposes, including radar systems or military-grade
transport vehicles or supplies or services sold or provided
directly or indirectly to any force actively participating in armed
conflict in Sudan.
[(12) "Mineral extraction activities" includes
exploring, extracting, processing, transporting, or wholesale
selling or trading of elemental minerals or associated metal alloys
or oxides (ore), including gold, copper, chromium, chromite,
diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
well as facilitating those activities, including by providing
supplies or services in support of those activities.
[(13) "Oil-related activities" includes:
[(A) owning rights to oil blocks;
[(B) exporting, extracting, producing, refining,
processing, exploring for, transporting, selling, or trading of
oil;
[(C) constructing, maintaining, or operating a
pipeline, refinery, or other oil-field infrastructure; or
[(D) facilitating oil-related activities,
including by providing supplies or services in support of the
activities, except that the mere retail sale of gasoline and
related consumer products is not an oil-related activity.
[(14) "Power production activities" means any
business operation that involves a project commissioned by the
National Electricity Corporation of Sudan or another similar
Government of Sudan entity whose purpose is to facilitate power
generation and delivery, including establishing power-generating
plants or hydroelectric dams, selling or installing components for
the project, and providing service contracts related to the
installation or maintenance of the project, as well as facilitating
those activities, including by providing supplies or services in
support of those activities.
[(15)] "Scrutinized company" means:
(A) a company that:
(i) [(A)] engages in scrutinized business
operations described by Section 2270.0052 [806.002]; or
(ii) [(B)] has been complicit in the Darfur
genocide during any preceding 20-month period;
(B) a company that engages in scrutinized
business operations described by Section 2270.0102; and
(C) a company that engages in scrutinized
business operations described by Section 2270.0152.
[(16) "Social development company" means a company
whose primary purpose in Sudan is to provide humanitarian goods or
services, including medicine or medical equipment, agricultural
supplies or infrastructure, educational opportunities,
journalism-related activities, information or information
materials, spiritual-related activities, services of a purely
clerical or reporting nature, food, clothing, or general consumer
goods that are unrelated to oil-related activities, mineral
extraction activities, or power production activities.
[(17) "State governmental entity" means the Employees
Retirement System of Texas or the Teacher Retirement System of
Texas.
[(18) "Substantial action" means adopting,
publicizing, and implementing a formal plan to cease scrutinized
business operations within one year and to refrain from any such new
business operations, undertaking significant humanitarian efforts
on behalf of one or more marginalized populations of Sudan, or,
through engagement with the Government of Sudan, materially
improving conditions for the genocidally victimized population in
Darfur.]
Sec. 2270.0002 [806.002. SCRUTINIZED BUSINESS OPERATIONS.
A company engages in scrutinized business operations if:
[(1) the company has business operations that involve
contracts with or providing supplies or services to the Government
of Sudan, a company in which the Government of Sudan has any direct
or indirect equity share, a Government of Sudan-commissioned
consortium or project, or a company involved in a Government of
Sudan-commissioned consortium or project, and:
[(A) more than 10 percent of the company's
revenues or assets linked to Sudan involve oil-related activities
or mineral extraction activities, less than 75 percent of the
company's revenue or assets linked to Sudan involve contracts with
or provision of oil-related or mineral extracting products or
services to the regional government of southern Sudan or a project
or consortium created exclusively by that regional government, and
the company has failed to take substantial action; or
[(B) more than 10 percent of the company's
revenue or assets linked to Sudan involve power production
activities, less than 75 percent of the company's power production
activities include projects whose intent is to provide power or
electricity to the marginalized populations of Sudan, and the
company has failed to take substantial action; or
[(2) the company supplies military equipment in Sudan,
unless:
[(A) the company clearly shows that the military
equipment cannot be used to facilitate offensive military actions
in Sudan; or
[(B) the company implements rigorous and
verifiable safeguards to prevent use of that equipment by forces
actively participating in armed conflict, including:
[(i) using post-sale tracking of the
equipment by the company;
[(ii) obtaining certification from a
reputable and objective third party that the equipment is not being
used by a party participating in armed conflict in Sudan; or
[(iii) selling the equipment solely to the
regional government of southern Sudan or any internationally
recognized peacekeeping force or humanitarian organization.
[Sec. 806.003. SOCIAL DEVELOPMENT COMPANY.
Notwithstanding any other law, a social development company that is
not complicit in the Darfur genocide is not a scrutinized company.
[Sec. 806.004]. EXCEPTION. Notwithstanding any other law,
a company that the United States government affirmatively declares
to be excluded from its federal sanctions regime relating to Sudan,
its federal sanctions regime relating to Iran, or any federal
sanctions regime relating to a designated foreign terrorist
organization is not subject to divestment or investment prohibition
under this chapter.
Sec. 2270.0003 [806.005]. OTHER LEGAL OBLIGATIONS. With
respect to actions taken in compliance with this chapter, including
all good faith determinations regarding companies as required by
this chapter, an investing [a state governmental] entity is exempt
from any conflicting statutory or common law obligations, including
any obligations with respect to making investments, divesting from
any investment, preparing or maintaining any list of companies, or
choosing asset managers, investment funds, or investments for the
[state governmental] entity's securities portfolios.
Sec. 2270.0004. INAPPLICABILITY OF CERTAIN REQUIREMENTS
INCONSISTENT WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES.
An investing entity described by Section 2270.0001(7)(B) or (C) is
not subject to a requirement of this chapter if the entity
determines that the requirement would be inconsistent with the
entity's fiduciary responsibility with respect to the investment of
entity assets or other duties imposed by law relating to the
investment of entity assets, including the duty of care established
under Section 67, Article XVI, Texas Constitution.
Sec. 2270.0005. CONFLICT WITH OTHER LAW. To the extent of a
conflict between this chapter and a provision of Chapter 404 or 2256
regarding an investing entity's investments, this chapter
prevails.
Sec. 2270.0006 [806.006]. INDEMNIFICATION OF INVESTING
[STATE GOVERNMENTAL] ENTITIES, EMPLOYEES, AND OTHERS. In a cause
of action based on an action, inaction, decision, divestment,
investment, company communication, report, or other determination
made or taken in connection with this chapter, the state shall,
without regard to whether the person performed services for
compensation, indemnify and hold harmless for actual damages, court
costs, and attorney's fees adjudged against, and defend:
(1) an employee, a member of the governing body, or any
other officer of an investing [a state governmental] entity;
(2) a contractor of an investing [a state
governmental] entity;
(3) a former employee, a former member of the
governing body, or any other former officer of an investing [a state
governmental] entity who was an employee or officer when the act or
omission on which the damages are based occurred; [and]
(4) a former contractor of an investing [a state
governmental] entity who was a contractor when the act or omission
on which the damages are based occurred; and
(5) an investing entity.
Sec. 2270.0007 [806.007]. NO PRIVATE CAUSE OF ACTION. (a)
A person, including a member, retiree, and beneficiary of a
retirement system to which this chapter applies, an association, a
research firm, a company, or any other person may not sue or pursue
a private cause of action against the state, an investing [a state
governmental] entity, an employee, a member of the governing body,
or any other officer of an investing [a state governmental] entity,
or a contractor of an investing [a state governmental] entity, for
any claim or cause of action, including breach of fiduciary duty, or
for violation of any constitutional, statutory, or regulatory
requirement in connection with any action, inaction, decision,
divestment, investment, company communication, report, or other
determination made or taken in connection with this chapter.
(b) A person who files suit against the state, an investing
[a state governmental] entity, an employee, a member of the
governing body, or any other officer of an investing [a state
governmental] entity, or a contractor of an investing [a state
governmental] entity, is liable for paying the costs and attorney's
fees of a person sued in violation of this section.
Sec. 2270.0008. RELIANCE ON COMPANY RESPONSE. The
comptroller in administering this chapter and an investing entity
may rely on a company's response to a notice or communication made
under this chapter without conducting any further investigation,
research, or inquiry.
SUBCHAPTER B. GENERAL PROVISIONS RELATING TO INVESTMENTS IN SUDAN
Sec. 2270.0051. DEFINITIONS. In this subchapter:
(1) "Business operations" means engaging in commerce
in any form in Sudan, including by acquiring, developing,
maintaining, owning, selling, possessing, leasing, or operating
equipment, facilities, personnel, products, services, personal
property, real property, or any other apparatus of business or
commerce.
(2) "Complicit" means taking actions that have
directly supported or promoted the genocidal campaign in Darfur,
including:
(A) preventing members of Darfur's victimized
population from communicating with each other;
(B) encouraging Sudanese citizens to speak out
against an internationally approved security force for Darfur; or
(C) actively working to deny, cover up, or alter
the record on human rights abuses in Darfur.
(3) "Government of Sudan" means the government in
Khartoum, Sudan, which is led by the National Congress Party,
formerly known as the National Islamic Front, or any successor
government formed on or after October 13, 2006, including the
coalition National Unity Government agreed upon in the
Comprehensive Peace Agreement for Sudan. The term does not include
the regional government of southern Sudan.
(4) "Marginalized populations of Sudan" includes:
(A) the portion of the population in the Darfur
region that has been genocidally victimized;
(B) the portion of the population of southern
Sudan victimized by Sudan's North-South civil war;
(C) the Beja, Rashidiya, and other similarly
underserved groups of eastern Sudan;
(D) the Nubian and other similarly underserved
groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
regions; and
(E) the Amri, Hamadab, Manasir, and other
similarly underserved groups of northern Sudan.
(5) "Military equipment" means weapons, arms,
military supplies, and equipment that readily may be used for
military purposes, including radar systems or military-grade
transport vehicles or supplies or services sold or provided
directly or indirectly to any force actively participating in armed
conflict in Sudan.
(6) "Mineral extraction activities" includes
exploring, extracting, processing, transporting, or wholesale
selling or trading of elemental minerals or associated metal alloys
or oxides (ore), including gold, copper, chromium, chromite,
diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
well as facilitating those activities, including by providing
supplies or services in support of those activities.
(7) "Oil-related activities" includes:
(A) owning rights to oil blocks;
(B) exporting, extracting, producing, refining,
processing, exploring for, transporting, selling, or trading of
oil;
(C) constructing, maintaining, or operating a
pipeline, refinery, or other oil-field infrastructure; or
(D) facilitating oil-related activities,
including by providing supplies or services in support of the
activities, except that the mere retail sale of gasoline and
related consumer products is not an oil-related activity.
(8) "Power production activities" means any business
operation that involves a project commissioned by the National
Electricity Corporation of Sudan or another similar government of
Sudan entity whose purpose is to facilitate power generation and
delivery, including establishing power-generating plants or
hydroelectric dams, selling or installing components for the
project, and providing service contracts related to the
installation or maintenance of the project, as well as facilitating
those activities, including by providing supplies or services in
support of those activities.
(9) "Social development company" means a company whose
primary purpose in Sudan is to provide humanitarian goods or
services, including medicine or medical equipment, agricultural
supplies or infrastructure, educational opportunities,
journalism-related activities, information or information
materials, spiritual-related activities, services of a purely
clerical or reporting nature, food, clothing, or general consumer
goods that are unrelated to oil-related activities, mineral
extraction activities, or power production activities.
(10) "Substantial action" means adopting,
publicizing, and implementing a formal plan to cease scrutinized
business operations within one year and to refrain from any such new
business operations, undertaking significant humanitarian efforts
on behalf of one or more marginalized populations of Sudan, or,
through engagement with the government of Sudan, materially
improving conditions for the genocidally victimized population in
Darfur.
Sec. 2270.0052. SCRUTINIZED BUSINESS OPERATIONS IN SUDAN.
A company engages in scrutinized business operations in Sudan if:
(1) the company has business operations that involve
contracts with or providing supplies or services to the government
of Sudan, a company in which the government of Sudan has any direct
or indirect equity share, a government of Sudan-commissioned
consortium or project, or a company involved in a government of
Sudan-commissioned consortium or project and:
(A) more than 10 percent of the company's
revenues or assets linked to Sudan involve oil-related activities
or mineral extraction activities, less than 75 percent of the
company's revenue or assets linked to Sudan involve contracts with
or provision of oil-related or mineral extracting products or
services to the regional government of southern Sudan or a project
or consortium created exclusively by that regional government, and
the company has failed to take substantial action; or
(B) more than 10 percent of the company's revenue
or assets linked to Sudan involve power production activities, less
than 75 percent of the company's power production activities
include projects whose intent is to provide power or electricity to
the marginalized populations of Sudan, and the company has failed
to take substantial action; or
(2) the company supplies military equipment in Sudan,
unless:
(A) the company clearly shows that the military
equipment cannot be used to facilitate offensive military actions
in Sudan; or
(B) the company implements rigorous and
verifiable safeguards to prevent use of that equipment by forces
actively participating in armed conflict, including:
(i) using post-sale tracking of the
equipment by the company;
(ii) obtaining certification from a
reputable and objective third party that the equipment is not being
used by a party participating in armed conflict in Sudan; or
(iii) selling the equipment solely to the
regional government of southern Sudan or any internationally
recognized peacekeeping force or humanitarian organization.
Sec. 2270.0053. SOCIAL DEVELOPMENT COMPANY.
Notwithstanding any other law, a social development company that is
not complicit in the Darfur genocide is not a scrutinized company
under Section 2270.0001(9)(A).
SUBCHAPTER C. GENERAL PROVISIONS RELATING TO INVESTMENTS IN IRAN
Sec. 2270.0101. DEFINITIONS. In this subchapter:
(1) "Business operations" means engaging in commerce
in any form in Iran, including by acquiring, developing,
maintaining, owning, selling, possessing, leasing, or operating
equipment, facilities, personnel, products, services, personal
property, real property, or any other apparatus of business or
commerce.
(2) "Military equipment" means weapons, arms,
military supplies, and equipment that readily may be used for
military purposes, including radar systems and military-grade
transport vehicles.
Sec. 2270.0102. SCRUTINIZED BUSINESS OPERATIONS IN IRAN. A
company engages in scrutinized business operations in Iran if:
(1) the company has business operations that involve
contracts with or providing supplies or services to the government
of Iran, a company in which the government of Iran has any direct or
indirect equity share, a consortium or project commissioned by the
government of Iran, or a company involved in a consortium or project
commissioned by the government of Iran; or
(2) the company supplies military equipment to Iran.
SUBCHAPTER D. GENERAL PROVISIONS RELATING TO INVESTMENTS
IN CERTAIN FOREIGN TERRORIST ORGANIZATIONS
Sec. 2270.0151. DEFINITIONS. In this subchapter:
(1) "Business operations" means engaging in commerce
in any form, including by acquiring, developing, maintaining,
owning, selling, possessing, leasing, or operating equipment,
facilities, personnel, products, services, personal property, real
property, or any other apparatus of business or commerce.
(2) "Terroristic equipment" means weapons, arms,
military supplies, and equipment that readily may be used for
terroristic purposes or activities.
Sec. 2270.0152. SCRUTINIZED BUSINESS OPERATIONS WITH
DESIGNATED FOREIGN TERRORIST ORGANIZATION. A company engages in
scrutinized business operations with a designated foreign
terrorist organization if:
(1) the company has business operations that involve:
(A) a contract with or providing supplies or
services to a designated foreign terrorist organization;
(B) a company in which a designated foreign
terrorist organization has any direct or indirect equity share;
(C) a consortium or project commissioned by a
designated foreign terrorist organization; or
(D) a company involved in a consortium or project
commissioned by a designated foreign terrorist organization; or
(2) the company supplies terroristic equipment to a
designated foreign terrorist organization.
Sec. 2270.0153. LIST OF DESIGNATED FOREIGN TERRORIST
ORGANIZATIONS. (a) The comptroller shall prepare and maintain a
list of designated foreign terrorist organizations.
(b) The comptroller shall maintain the list by updating the
list as necessary to reflect changes in the list of foreign
organizations designated as foreign terrorist organizations by the
United States secretary of state as authorized by 8 U.S.C. Section
1189.
(c) Not later than the 30th day after the date the
comptroller first prepares or updates the list of designated
foreign terrorist organizations as required by this section, the
comptroller shall:
(1) file the list with the presiding officer of each
house of the legislature and the attorney general; and
(2) post the list on the comptroller's Internet
website.
SUBCHAPTER E [B]. DUTIES REGARDING INVESTMENTS
Sec. 2270.0201 [806.051]. LISTED COMPANIES. (a) The
comptroller shall prepare and maintain[, and provide to each state
governmental entity,] a list of all scrutinized companies. The
list must be categorized according to:
(1) companies that are scrutinized companies under
Section 2270.0001(9)(A);
(2) companies that are scrutinized companies under
Section 2270.0001(9)(B); and
(3) companies that are scrutinized companies under
Section 2270.0001(9)(C).
(b) In maintaining the list of scrutinized companies under
Subsection (a), the comptroller may review and rely, as appropriate
in the comptroller's judgment, on publicly available information
regarding companies with business operations in Sudan, in Iran, or
with designated foreign terrorist organizations, as applicable,
including information provided by the state, nonprofit
organizations, research firms, international organizations, and
governmental entities.
(c) [(b)] The comptroller shall update the list of
scrutinized companies under Subsection (a) annually or more often
as the comptroller considers necessary, but not more often than
quarterly, based on information from, among other sources, those
listed in Subsection (b) [(a)].
(d) The comptroller shall:
(1) provide each list prepared or updated under this
section to each investing entity; and
(2) post each list on the comptroller's Internet
website.
(e) [(c)] Not later than the 30th day after the date a [the]
list of scrutinized companies is [first] provided [or updated], the
comptroller shall file the list of scrutinized companies with the
presiding officer of each house of the legislature and the attorney
general.
(f) For purposes of the prohibitions and duties under this
chapter, the date the comptroller posts on the comptroller's
Internet website a list of scrutinized companies under this section
is considered the date the comptroller receives notice of the list.
Sec. 2270.0202 [806.052]. IDENTIFICATION OF INVESTMENT IN
LISTED COMPANIES. Not later than the 30th day after the date an
investing [a state governmental] entity receives a [the] list
provided under Section 2270.0201 [806.051], the [state
governmental] entity shall notify the comptroller of the listed
companies in which the [state governmental] entity owns direct or
indirect holdings.
Sec. 2270.0203 [806.053]. NOTICE TO LISTED COMPANY ENGAGED
IN INACTIVE BUSINESS OPERATIONS. For each listed company
identified under Section 2270.0202 [806.052] that is engaged in
only inactive scrutinized business operations, the investing
[state governmental] entity shall send a written notice informing
the company of this chapter and encouraging the company to continue
to refrain from initiating active business operations in Sudan, in
Iran, and with designated foreign terrorist organizations until it
is able to avoid being considered a listed company. The investing
[state governmental] entity shall continue the correspondence as
the entity considers necessary, but is not required to initiate
correspondence more often than semiannually.
Sec. 2270.0204 [806.054]. ACTIONS RELATING TO LISTED
COMPANY ENGAGED IN ACTIVE BUSINESS OPERATIONS. (a) For each listed
company identified under Section 2270.0202 [806.052] that is
engaged in scrutinized active business operations, the investing
[state governmental] entity shall send a written notice informing
the company of its listed company status and warning the company
that it may become subject to divestment by investing [state
governmental] entities.
(b) The notice shall offer the company the opportunity to
clarify its Sudan-related, Iran-related, or designated foreign
terrorist organization-related activities, as applicable, and
shall encourage the company, not later than the 90th day after the
date the company receives notice under this section, to either
cease all [its] scrutinized business operations as described by
Sections 2270.0052, 2270.0102, and 2270.0152, or convert such
operations to inactive business operations in order to avoid
qualifying for divestment by investing [state governmental]
entities.
(c) If, during the time provided by Subsection (b), the
company ceases scrutinized business operations described by that
subsection, the comptroller shall remove the company from the list
of scrutinized companies and this chapter will no longer apply to
the company unless it resumes scrutinized business operations.
(d) If, during the time provided by Subsection (b), the
company converts its scrutinized active business operations to
inactive business operations, the company is subject to all
provisions of this chapter relating to inactive business
operations.
(e) If, after the time provided by Subsection (b) expires,
the listed company continues to have scrutinized active business
operations, the investing [state governmental] entity shall sell,
redeem, divest, or withdraw all publicly traded securities of the
company, except securities described by Section 2270.0207
[806.057], according to the schedule provided by Section 2270.0206
[806.056].
Sec. 2270.0205 [806.055]. ACTIONS RELATING TO LISTED
COMPANY COMPLICIT IN GENOCIDE. (a) In this section, "complicit"
has the meaning assigned by Section 2270.0051.
(b) For each company identified under Section 2270.0202
[806.052] that has been complicit, the investing [state
governmental] entity shall send a written notice informing the
company of its listed company status and warning the company that it
may become subject to divestment by the investing [state
governmental] entity.
(c) [(b)] The notice must require the listed company to
refrain from taking any further action that would make it
complicit.
(d) [(c)] If, after receiving the notice under Subsection
(b) [(a)], the listed company takes additional action that makes
the company complicit, the investing [state governmental] entity
shall sell, redeem, divest, or withdraw all publicly traded
securities of the company, except securities described by Section
2270.0207 [806.057], according to the schedule provided by Section
2270.0206 [806.056].
Sec. 2270.0206 [806.056]. DIVESTMENT OF ASSETS. (a) An
investing [A state governmental] entity required to sell, redeem,
divest, or withdraw all publicly traded securities of a listed
company shall comply with the following schedule:
(1) at least 50 percent of those assets shall be
removed from the investing [state governmental] entity's assets
under management not later than the 270th day after the date the
company receives notice under Section 2270.0204 [806.054] or
2270.0205 [806.055] or Subsection (b); and
(2) 100 percent of those assets shall be removed from
the investing [state governmental] entity's assets under
management not later than the 450th day after the date the company
receives notice under Section 2270.0204 [806.054] or 2270.0205
[806.055] or Subsection (b).
(b) If a company that ceased scrutinized active business
operations after receiving notice under Section 2270.0204
[806.054] resumes scrutinized active business operations, the
investing [state governmental] entity shall send a written notice
to the company informing it that the [state governmental] entity
will sell, redeem, divest, or withdraw all publicly traded
securities of the scrutinized company according to the schedule in
Subsection (a).
(c) An investing [A state governmental] entity may delay the
schedule for divestment under Subsection (a) only to the extent
that the [state governmental] entity determines, in the [state
governmental] entity's good faith judgment, that divestment from
listed companies will likely result in a loss in value described by
Section 2270.0208(a) [806.058(a)]. If the [a state governmental]
entity delays the schedule for divestment, the [state governmental]
entity shall submit a report to the presiding officer of each house
of the legislature and the attorney general stating the reasons and
justification for the [state governmental] entity's delay in
divestment from listed companies. The report must include
documentation supporting its determination that the divestment
would result in a loss in value described by Section 2270.0208(a)
[806.058(a)], including objective numerical estimates. The
investing [state governmental] entity shall update the report every
six months.
Sec. 2270.0207 [806.057]. INVESTMENTS EXEMPTED FROM
DIVESTMENT. An investing [A state governmental] entity is not
required to divest from any indirect holdings in actively managed
investment funds or private equity funds. The investing [state
governmental] entity shall submit letters to the managers of
investment funds containing listed companies requesting that they
consider removing those companies from the fund or create a similar
actively managed fund with indirect holdings devoid of listed
companies. If the manager creates a similar fund with
substantially the same management fees and same level of investment
risk, the investing [state governmental] entity shall replace all
applicable investments with investments in the similar fund in an
expedited time frame consistent with prudent fiduciary standards.
Sec. 2270.0208 [806.058]. AUTHORIZED INVESTMENT IN LISTED
COMPANIES. (a) An investing [A state governmental] entity may
cease divesting from or may reinvest in one or more listed companies
if clear and convincing evidence shows that the value for all assets
under management by the [state governmental] entity becomes equal
to or less than 99.7 percent of the hypothetical value of all assets
under management by the [state governmental] entity had the [state
governmental] entity not divested from listed companies under this
chapter.
(b) An investing [A state governmental] entity may invest in
a listed company as provided by this section only to the extent
necessary to ensure that the value of the assets managed by the
[state governmental] entity does not fall below the value described
by Subsection (a).
(c) Before an investing [a state governmental] entity may
invest in a listed company under this section, the [state
governmental] entity must provide a written report to the presiding
officer of each house of the legislature and the attorney general
setting forth the reason and justification, supported by clear and
convincing evidence, for its decisions to cease divestment, to
reinvest, or to remain invested in a listed company.
(d) The investing [state governmental] entity shall update
the report required by Subsection (c) semiannually, as applicable.
(e) This section does not apply to reinvestment in a company
that has ceased to be a listed company.
Sec. 2270.0209 [806.059]. PROHIBITED INVESTMENTS. Except
as provided by Sections 2270.0002 [806.004] and 2270.0208
[806.058], an investing [a state governmental] entity may not
acquire securities of a listed company.
SUBCHAPTER F [C]. EXPIRATION; REPORT; ENFORCEMENT
Sec. 2270.0251 [806.101]. EXPIRATION OF CHAPTER. This
chapter expires September 1, 2037 [on the earliest of:
[(1) the date on which the United States Congress or
the president of the United States declares that the Darfur
genocide has been halted for at least 12 months;
[(2) the date on which the United States revokes its
sanctions against the Government of Sudan; or
[(3) the date on which the United States Congress or
the president of the United States, through legislation or
executive order, declares that mandatory divestment of the type
provided for in this chapter interferes with the conduct of United
States foreign policy].
Sec. 2270.0252 [806.102]. REPORT. Not later than December
31 of each year, each investing [state governmental] entity shall:
(1) file a publicly available report with the
presiding officer of each house of the legislature and[,] the
attorney general[, and the United States presidential special envoy
to Sudan] that:
(A) [(1)] identifies all investments sold,
redeemed, divested, or withdrawn in compliance with Section
2270.0206 [806.056];
(B) [(2)] identifies all prohibited investments
under Section 2270.0209 [806.059]; and
(C) [(3)] summarizes any changes made under
Section 2270.0207; and
(2) file a report with the United States presidential
special envoy to Sudan that identifies investments in Sudan
identified in the report as required by Subdivisions (1)(A) and (B)
and summarizes any changes made under Section 2270.0207 related to
those investments [806.057].
Sec. 2270.0253 [806.103]. ENFORCEMENT. The attorney
general may bring any action necessary to enforce this chapter.
SECTION 5. Chapter 807, Government Code, is repealed.
SECTION 6. (a) On the effective date of this Act, all
powers, duties, and functions of the State Pension Review Board
under Chapter 807, Government Code, as repealed by this Act, are
transferred to the comptroller of public accounts.
(b) All of the following that relate to a power, duty, or
function transferred under Subsection (a) of this section are
transferred to the comptroller of public accounts on the effective
date of this Act:
(1) all obligations and contracts;
(2) all property and records in the custody of the
State Pension Review Board;
(3) all funds appropriated by the legislature and
other money;
(4) all complaints, investigations, or contested
cases that are pending before the State Pension Review Board,
without change in status; and
(5) all necessary personnel.
(c) A rule, policy, or form adopted by or on behalf of the
State Pension Review Board that relates to a power, duty, or
function transferred under Subsection (a) of this section becomes a
rule, policy, or form of the comptroller of public accounts on the
transfer of the related power, duty, or function and remains in
effect:
(1) until altered by the comptroller of public
accounts; or
(2) unless it conflicts with a rule, policy, or form of
the comptroller of public accounts.
(d) An action brought or proceeding commenced before the
date of a transfer under this section, including a contested case or
a remand of an action or proceeding by a reviewing court, is
governed by the laws and rules applicable to the action or
proceeding before the transfer.
SECTION 7. Not later than September 1, 2017, the
comptroller of public accounts shall prepare the initial list of
designated foreign terrorist organizations as required by Section
2270.0153, Government Code, as added by this Act.
SECTION 8. Not later than October 1, 2017, the comptroller
of public accounts shall:
(1) prepare an updated list of scrutinized companies
required by Section 2270.0201, Government Code, as added by this
Act;
(2) provide the list to each investing entity, as
defined by Section 2270.0001, Government Code, as added by this
Act; and
(3) post the list on the comptroller's Internet
website.
SECTION 9. This Act takes effect immediately if it receives
a vote of two-thirds of all the members elected to each house, as
provided by Section 39, Article III, Texas Constitution. If this
Act does not receive the vote necessary for immediate effect, this
Act takes effect on the 91st day after the last day of the
legislative session.