Texas 2017 - 85th Regular

Texas House Bill HB1143 Compare Versions

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Version 2 (New)

Old	New	Differences
1	1	85R19922 KLA-D
2	2	By: Davis of Harris H.B. No. 1143
3	3	Substitute the following for H.B. No. 1143:
4	4	By: Kuempel C.S.H.B. No. 1143
5	5
6	6
7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to investment prohibitions and divestment requirements
10	10	for certain investments of public money.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Section 404.024(b), Government Code, is amended
13	13	to read as follows:
14	14	(b) Subject to Chapter 2270, state [State] funds not
15	15	deposited in state depositories shall be invested by the
16	16	comptroller in:
17	17	(1) direct security repurchase agreements;
18	18	(2) reverse security repurchase agreements;
19	19	(3) direct obligations of or obligations the principal
20	20	and interest of which are guaranteed by the United States;
21	21	(4) direct obligations of or obligations guaranteed by
22	22	agencies or instrumentalities of the United States government;
23	23	(5) bankers' acceptances that:
24	24	(A) are eligible for purchase by the Federal
25	25	Reserve System;
26	26	(B) do not exceed 270 days to maturity; and
27	27	(C) are issued by a bank whose other comparable
28	28	short-term obligations are rated in the highest short-term rating
29	29	category, within which there may be subcategories or gradations
30	30	indicating relative standing, including such subcategories or
31	31	gradations as "rating category" or "rated," by a nationally
32	32	recognized statistical rating organization, as defined by 15 U.S.C.
33	33	Section 78c [Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
34	34	under the Investment Company Act of 1940 by the Securities and
35	35	Exchange Commission];
36	36	(6) commercial paper that:
37	37	(A) does not exceed 270 days to maturity; and
38	38	(B) except as provided by Subsection (i), is
39	39	issued by an entity whose other comparable short-term obligations
40	40	are rated in the highest short-term rating category by a nationally
41	41	recognized statistical rating organization;
42	42	(7) contracts written by the treasury in which the
43	43	treasury grants the purchaser the right to purchase securities in
44	44	the treasury's marketable securities portfolio at a specified price
45	45	over a specified period and for which the treasury is paid a fee and
46	46	specifically prohibits naked-option or uncovered option trading;
47	47	(8) direct obligations of or obligations guaranteed by
48	48	the Inter-American Development Bank, the International Bank for
49	49	Reconstruction and Development (the World Bank), the African
50	50	Development Bank, the Asian Development Bank, and the International
51	51	Finance Corporation that have received the highest long-term rating
52	52	categories for debt obligations by a nationally recognized
53	53	statistical rating organization;
54	54	(9) bonds issued, assumed, or guaranteed by the State
55	55	of Israel;
56	56	(10) obligations of a state or an agency, county,
57	57	city, or other political subdivision of a state;
58	58	(11) mutual funds secured by obligations that are
59	59	described by Subdivisions (1) through (6) or by obligations
60	60	consistent with Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
61	61	by the Securities and Exchange Commission, including pooled funds:
62	62	(A) established by the Texas Treasury
63	63	Safekeeping Trust Company;
64	64	(B) operated like a mutual fund; and
65	65	(C) with portfolios consisting only of
66	66	dollar-denominated securities;
67	67	(12) foreign currency for the sole purpose of
68	68	facilitating investment by state agencies that have the authority
69	69	to invest in foreign securities;
70	70	(13) asset-backed securities, as defined by the
71	71	Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
72	72	270.2a-7), that are rated at least A or its equivalent by a
73	73	nationally recognized statistical rating organization and that
74	74	have a weighted-average maturity of five years or less; and
75	75	(14) corporate debt obligations that are rated at
76	76	least A or its equivalent by a nationally recognized statistical
77	77	rating organization and mature in five years or less from the date
78	78	on which the obligations were "acquired," as defined by the
79	79	Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
80	80	270.2a-7).
81	81	SECTION 2. Section 2256.017, Government Code, is amended to
82	82	read as follows:
83	83	Sec. 2256.017. EXISTING INVESTMENTS. Except as provided by
84	84	Chapter 2270, an [An] entity is not required to liquidate
85	85	investments that were authorized investments at the time of
86	86	purchase.
87	87	SECTION 3. Section 2256.024(a), Government Code, is amended
88	88	to read as follows:
89	89	(a) The authority granted by this subchapter is in addition
90	90	to that granted by other law. Except as provided by Subsection (b)
91	91	and Section 2256.017, this subchapter does not:
92	92	(1) prohibit an investment specifically authorized by
93	93	other law; or
94	94	(2) authorize an investment specifically prohibited
95	95	by other law.
96	96	SECTION 4. Chapter 806, Government Code, is transferred to
97	97	Subtitle F, Title 10, Government Code, redesignated as Chapter 2270
98	98	of that subtitle, and amended to read as follows:
99	99	CHAPTER 2270 [806]. PROHIBITION ON INVESTING PUBLIC MONEY IN
100	100	CERTAIN INVESTMENTS [INVESTMENT IN SUDAN]
101	101	SUBCHAPTER A. GENERAL PROVISIONS
102	102	Sec. 2270.0001 [806.001]. DEFINITIONS. In this chapter:
103	103	(1) "Active business operations" means all business
104	104	operations that are not inactive business operations.
105	105	(2) ["Business operations" means engaging in commerce
106	106	in any form in Sudan, including by acquiring, developing,
107	107	maintaining, owning, selling, possessing, leasing, or operating
108	108	equipment, facilities, personnel, products, services, personal
109	109	property, real property, or any other apparatus of business or
110	110	commerce.
111	111	[(3)] "Company" means a sole proprietorship,
112	112	organization, association, corporation, partnership, joint
113	113	venture, limited partnership, limited liability partnership,
114	114	limited liability company, or other entity or business association
115	115	whose securities are publicly traded, including a wholly owned
116	116	subsidiary, majority-owned subsidiary, parent company, or
117	117	affiliate of those entities or business associations, that exists
118	118	to make a profit.
119	119	(3) "Designated foreign terrorist organization" means
120	120	an organization designated as a foreign terrorist organization by
121	121	the United States secretary of state as authorized by 8 U.S.C.
122	122	Section 1189.
123	123	(4) ["Complicit" means taking actions that have
124	124	directly supported or promoted the genocidal campaign in Darfur,
125	125	including:
126	126	[(A) preventing members of Darfur's victimized
127	127	population from communicating with each other;
128	128	[(B) encouraging Sudanese citizens to speak out
129	129	against an internationally approved security force for Darfur; or
130	130	[(C) actively working to deny, cover up, or alter
131	131	the record on human rights abuses in Darfur.
132	132	[(5)] "Direct holdings" in a company["] means all
133	133	securities of that company held directly by an investing [a state
134	134	governmental] entity in an account or fund in which an investing [a
135	135	state governmental] entity owns all shares or interests.
136	136	(5) [(6) "Government of Sudan" means the government in
137	137	Khartoum, Sudan, which is led by the National Congress Party,
138	138	formerly known as the National Islamic Front, or any successor
139	139	government formed on or after October 13, 2006, including the
140	140	coalition National Unity Government agreed upon in the
141	141	Comprehensive Peace Agreement for Sudan. The term does not include
142	142	the regional government of southern Sudan.
143	143	[(7)] "Inactive business operations" means the mere
144	144	continued holding or renewal of rights to property previously
145	145	operated to generate revenue but not presently deployed to generate
146	146	revenue.
147	147	(6) [(8)] "Indirect holdings" in a company["] means
148	148	all securities of that company held in an account or fund, such as a
149	149	mutual fund, managed by one or more persons not employed by an
150	150	investing [a state governmental] entity, in which the investing
151	151	[state governmental] entity owns shares or interests together with
152	152	other investors not subject to this chapter. The term does not
153	153	include money invested under a plan described by Section 401(k) or
154	154	457 of the Internal Revenue Code of 1986.
155	155	(7) "Investing entity" means:
156	156	(A) an entity subject to Chapter 2256;
157	157	(B) the Employees Retirement System of Texas;
158	158	(C) the Teacher Retirement System of Texas; and
159	159	(D) the comptroller with respect to the
160	160	comptroller's investment of state funds.
161	161	(8) [(9)] "Listed company" means a company listed by
162	162	the comptroller under Section 2270.0201 [806.051].
163	163	(9) [(10) "Marginalized populations of Sudan"
164	164	includes:
165	165	[(A) the portion of the population in the Darfur
166	166	region that has been genocidally victimized;
167	167	[(B) the portion of the population of southern
168	168	Sudan victimized by Sudan's North-South civil war;
169	169	[(C) the Beja, Rashidiya, and other similarly
170	170	underserved groups of eastern Sudan;
171	171	[(D) the Nubian and other similarly underserved
172	172	groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
173	173	regions; and
174	174	[(E) the Amri, Hamadab, Manasir, and other
175	175	similarly underserved groups of northern Sudan.
176	176	[(11) "Military equipment" means weapons, arms,
177	177	military supplies, and equipment that readily may be used for
178	178	military purposes, including radar systems or military-grade
179	179	transport vehicles or supplies or services sold or provided
180	180	directly or indirectly to any force actively participating in armed
181	181	conflict in Sudan.
182	182	[(12) "Mineral extraction activities" includes
183	183	exploring, extracting, processing, transporting, or wholesale
184	184	selling or trading of elemental minerals or associated metal alloys
185	185	or oxides (ore), including gold, copper, chromium, chromite,
186	186	diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
187	187	well as facilitating those activities, including by providing
188	188	supplies or services in support of those activities.
189	189	[(13) "Oil-related activities" includes:
190	190	[(A) owning rights to oil blocks;
191	191	[(B) exporting, extracting, producing, refining,
192	192	processing, exploring for, transporting, selling, or trading of
193	193	oil;
194	194	[(C) constructing, maintaining, or operating a
195	195	pipeline, refinery, or other oil-field infrastructure; or
196	196	[(D) facilitating oil-related activities,
197	197	including by providing supplies or services in support of the
198	198	activities, except that the mere retail sale of gasoline and
199	199	related consumer products is not an oil-related activity.
200	200	[(14) "Power production activities" means any
201	201	business operation that involves a project commissioned by the
202	202	National Electricity Corporation of Sudan or another similar
203	203	Government of Sudan entity whose purpose is to facilitate power
204	204	generation and delivery, including establishing power-generating
205	205	plants or hydroelectric dams, selling or installing components for
206	206	the project, and providing service contracts related to the
207	207	installation or maintenance of the project, as well as facilitating
208	208	those activities, including by providing supplies or services in
209	209	support of those activities.
210	210	[(15)] "Scrutinized company" means:
211	211	(A) a company that:
212	212	(i) [(A)] engages in scrutinized business
213	213	operations described by Section 2270.0052 [806.002]; or
214	214	(ii) [(B)] has been complicit in the Darfur
215	215	genocide during any preceding 20-month period;
216	216	(B) a company that engages in scrutinized
217	217	business operations described by Section 2270.0102; and
218	218	(C) a company that engages in scrutinized
219	219	business operations described by Section 2270.0152.
220	220	[(16) "Social development company" means a company
221	221	whose primary purpose in Sudan is to provide humanitarian goods or
222	222	services, including medicine or medical equipment, agricultural
223	223	supplies or infrastructure, educational opportunities,
224	224	journalism-related activities, information or information
225	225	materials, spiritual-related activities, services of a purely
226	226	clerical or reporting nature, food, clothing, or general consumer
227	227	goods that are unrelated to oil-related activities, mineral
228	228	extraction activities, or power production activities.
229	229	[(17) "State governmental entity" means the Employees
230	230	Retirement System of Texas or the Teacher Retirement System of
231	231	Texas.
232	232	[(18) "Substantial action" means adopting,
233	233	publicizing, and implementing a formal plan to cease scrutinized
234	234	business operations within one year and to refrain from any such new
235	235	business operations, undertaking significant humanitarian efforts
236	236	on behalf of one or more marginalized populations of Sudan, or,
237	237	through engagement with the Government of Sudan, materially
238	238	improving conditions for the genocidally victimized population in
239	239	Darfur.]
240	240	Sec. 2270.0002 [806.002. SCRUTINIZED BUSINESS OPERATIONS.
241	241	A company engages in scrutinized business operations if:
242	242	[(1) the company has business operations that involve
243	243	contracts with or providing supplies or services to the Government
244	244	of Sudan, a company in which the Government of Sudan has any direct
245	245	or indirect equity share, a Government of Sudan-commissioned
246	246	consortium or project, or a company involved in a Government of
247	247	Sudan-commissioned consortium or project, and:
248	248	[(A) more than 10 percent of the company's
249	249	revenues or assets linked to Sudan involve oil-related activities
250	250	or mineral extraction activities, less than 75 percent of the
251	251	company's revenue or assets linked to Sudan involve contracts with
252	252	or provision of oil-related or mineral extracting products or
253	253	services to the regional government of southern Sudan or a project
254	254	or consortium created exclusively by that regional government, and
255	255	the company has failed to take substantial action; or
256	256	[(B) more than 10 percent of the company's
257	257	revenue or assets linked to Sudan involve power production
258	258	activities, less than 75 percent of the company's power production
259	259	activities include projects whose intent is to provide power or
260	260	electricity to the marginalized populations of Sudan, and the
261	261	company has failed to take substantial action; or
262	262	[(2) the company supplies military equipment in Sudan,
263	263	unless:
264	264	[(A) the company clearly shows that the military
265	265	equipment cannot be used to facilitate offensive military actions
266	266	in Sudan; or
267	267	[(B) the company implements rigorous and
268	268	verifiable safeguards to prevent use of that equipment by forces
269	269	actively participating in armed conflict, including:
270	270	[(i) using post-sale tracking of the
271	271	equipment by the company;
272	272	[(ii) obtaining certification from a
273	273	reputable and objective third party that the equipment is not being
274	274	used by a party participating in armed conflict in Sudan; or
275	275	[(iii) selling the equipment solely to the
276	276	regional government of southern Sudan or any internationally
277	277	recognized peacekeeping force or humanitarian organization.
278	278	[Sec. 806.003. SOCIAL DEVELOPMENT COMPANY.
279	279	Notwithstanding any other law, a social development company that is
280	280	not complicit in the Darfur genocide is not a scrutinized company.
281	281	[Sec. 806.004]. EXCEPTION. Notwithstanding any other law,
282	282	a company that the United States government affirmatively declares
283	283	to be excluded from its federal sanctions regime relating to Sudan,
284	284	its federal sanctions regime relating to Iran, or any federal
285	285	sanctions regime relating to a designated foreign terrorist
286	286	organization is not subject to divestment or investment prohibition
287	287	under this chapter.
288	288	Sec. 2270.0003 [806.005]. OTHER LEGAL OBLIGATIONS. With
289	289	respect to actions taken in compliance with this chapter, including
290	290	all good faith determinations regarding companies as required by
291	291	this chapter, an investing [a state governmental] entity is exempt
292	292	from any conflicting statutory or common law obligations, including
293	293	any obligations with respect to making investments, divesting from
294	294	any investment, preparing or maintaining any list of companies, or
295	295	choosing asset managers, investment funds, or investments for the
296	296	[state governmental] entity's securities portfolios.
297	297	Sec. 2270.0004. INAPPLICABILITY OF CERTAIN REQUIREMENTS
298	298	INCONSISTENT WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES.
299	299	An investing entity described by Section 2270.0001(7)(B) or (C) is
300	300	not subject to a requirement of this chapter if the entity
301	301	determines that the requirement would be inconsistent with the
302	302	entity's fiduciary responsibility with respect to the investment of
303	303	entity assets or other duties imposed by law relating to the
304	304	investment of entity assets, including the duty of care established
305	305	under Section 67, Article XVI, Texas Constitution.
306	306	Sec. 2270.0005. CONFLICT WITH OTHER LAW. To the extent of a
307	307	conflict between this chapter and a provision of Chapter 404 or 2256
308	308	regarding an investing entity's investments, this chapter
309	309	prevails.
310	310	Sec. 2270.0006 [806.006]. INDEMNIFICATION OF INVESTING
311	311	[STATE GOVERNMENTAL] ENTITIES, EMPLOYEES, AND OTHERS. In a cause
312	312	of action based on an action, inaction, decision, divestment,
313	313	investment, company communication, report, or other determination
314	314	made or taken in connection with this chapter, the state shall,
315	315	without regard to whether the person performed services for
316	316	compensation, indemnify and hold harmless for actual damages, court
317	317	costs, and attorney's fees adjudged against, and defend:
318	318	(1) an employee, a member of the governing body, or any
319	319	other officer of an investing [a state governmental] entity;
320	320	(2) a contractor of an investing [a state
321	321	governmental] entity;
322	322	(3) a former employee, a former member of the
323	323	governing body, or any other former officer of an investing [a state
324	324	governmental] entity who was an employee or officer when the act or
325	325	omission on which the damages are based occurred; [and]
326	326	(4) a former contractor of an investing [a state
327	327	governmental] entity who was a contractor when the act or omission
328	328	on which the damages are based occurred; and
329	329	(5) an investing entity.
330	330	Sec. 2270.0007 [806.007]. NO PRIVATE CAUSE OF ACTION. (a)
331	331	A person, including a member, retiree, and beneficiary of a
332	332	retirement system to which this chapter applies, an association, a
333	333	research firm, a company, or any other person may not sue or pursue
334	334	a private cause of action against the state, an investing [a state
335	335	governmental] entity, an employee, a member of the governing body,
336	336	or any other officer of an investing [a state governmental] entity,
337	337	or a contractor of an investing [a state governmental] entity, for
338	338	any claim or cause of action, including breach of fiduciary duty, or
339	339	for violation of any constitutional, statutory, or regulatory
340	340	requirement in connection with any action, inaction, decision,
341	341	divestment, investment, company communication, report, or other
342	342	determination made or taken in connection with this chapter.
343	343	(b) A person who files suit against the state, an investing
344	344	[a state governmental] entity, an employee, a member of the
345	345	governing body, or any other officer of an investing [a state
346	346	governmental] entity, or a contractor of an investing [a state
347	347	governmental] entity, is liable for paying the costs and attorney's
348	348	fees of a person sued in violation of this section.
349	349	Sec. 2270.0008. RELIANCE ON COMPANY RESPONSE. The
350	350	comptroller in administering this chapter and an investing entity
351	351	may rely on a company's response to a notice or communication made
352	352	under this chapter without conducting any further investigation,
353	353	research, or inquiry.
354	354	SUBCHAPTER B. GENERAL PROVISIONS RELATING TO INVESTMENTS IN SUDAN
355	355	Sec. 2270.0051. DEFINITIONS. In this subchapter:
356	356	(1) "Business operations" means engaging in commerce
357	357	in any form in Sudan, including by acquiring, developing,
358	358	maintaining, owning, selling, possessing, leasing, or operating
359	359	equipment, facilities, personnel, products, services, personal
360	360	property, real property, or any other apparatus of business or
361	361	commerce.
362	362	(2) "Complicit" means taking actions that have
363	363	directly supported or promoted the genocidal campaign in Darfur,
364	364	including:
365	365	(A) preventing members of Darfur's victimized
366	366	population from communicating with each other;
367	367	(B) encouraging Sudanese citizens to speak out
368	368	against an internationally approved security force for Darfur; or
369	369	(C) actively working to deny, cover up, or alter
370	370	the record on human rights abuses in Darfur.
371	371	(3) "Government of Sudan" means the government in
372	372	Khartoum, Sudan, which is led by the National Congress Party,
373	373	formerly known as the National Islamic Front, or any successor
374	374	government formed on or after October 13, 2006, including the
375	375	coalition National Unity Government agreed upon in the
376	376	Comprehensive Peace Agreement for Sudan. The term does not include
377	377	the regional government of southern Sudan.
378	378	(4) "Marginalized populations of Sudan" includes:
379	379	(A) the portion of the population in the Darfur
380	380	region that has been genocidally victimized;
381	381	(B) the portion of the population of southern
382	382	Sudan victimized by Sudan's North-South civil war;
383	383	(C) the Beja, Rashidiya, and other similarly
384	384	underserved groups of eastern Sudan;
385	385	(D) the Nubian and other similarly underserved
386	386	groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
387	387	regions; and
388	388	(E) the Amri, Hamadab, Manasir, and other
389	389	similarly underserved groups of northern Sudan.
390	390	(5) "Military equipment" means weapons, arms,
391	391	military supplies, and equipment that readily may be used for
392	392	military purposes, including radar systems or military-grade
393	393	transport vehicles or supplies or services sold or provided
394	394	directly or indirectly to any force actively participating in armed
395	395	conflict in Sudan.
396	396	(6) "Mineral extraction activities" includes
397	397	exploring, extracting, processing, transporting, or wholesale
398	398	selling or trading of elemental minerals or associated metal alloys
399	399	or oxides (ore), including gold, copper, chromium, chromite,
400	400	diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
401	401	well as facilitating those activities, including by providing
402	402	supplies or services in support of those activities.
403	403	(7) "Oil-related activities" includes:
404	404	(A) owning rights to oil blocks;
405	405	(B) exporting, extracting, producing, refining,
406	406	processing, exploring for, transporting, selling, or trading of
407	407	oil;
408	408	(C) constructing, maintaining, or operating a
409	409	pipeline, refinery, or other oil-field infrastructure; or
410	410	(D) facilitating oil-related activities,
411	411	including by providing supplies or services in support of the
412	412	activities, except that the mere retail sale of gasoline and
413	413	related consumer products is not an oil-related activity.
414	414	(8) "Power production activities" means any business
415	415	operation that involves a project commissioned by the National
416	416	Electricity Corporation of Sudan or another similar government of
417	417	Sudan entity whose purpose is to facilitate power generation and
418	418	delivery, including establishing power-generating plants or
419	419	hydroelectric dams, selling or installing components for the
420	420	project, and providing service contracts related to the
421	421	installation or maintenance of the project, as well as facilitating
422	422	those activities, including by providing supplies or services in
423	423	support of those activities.
424	424	(9) "Social development company" means a company whose
425	425	primary purpose in Sudan is to provide humanitarian goods or
426	426	services, including medicine or medical equipment, agricultural
427	427	supplies or infrastructure, educational opportunities,
428	428	journalism-related activities, information or information
429	429	materials, spiritual-related activities, services of a purely
430	430	clerical or reporting nature, food, clothing, or general consumer
431	431	goods that are unrelated to oil-related activities, mineral
432	432	extraction activities, or power production activities.
433	433	(10) "Substantial action" means adopting,
434	434	publicizing, and implementing a formal plan to cease scrutinized
435	435	business operations within one year and to refrain from any such new
436	436	business operations, undertaking significant humanitarian efforts
437	437	on behalf of one or more marginalized populations of Sudan, or,
438	438	through engagement with the government of Sudan, materially
439	439	improving conditions for the genocidally victimized population in
440	440	Darfur.
441	441	Sec. 2270.0052. SCRUTINIZED BUSINESS OPERATIONS IN SUDAN.
442	442	A company engages in scrutinized business operations in Sudan if:
443	443	(1) the company has business operations that involve
444	444	contracts with or providing supplies or services to the government
445	445	of Sudan, a company in which the government of Sudan has any direct
446	446	or indirect equity share, a government of Sudan-commissioned
447	447	consortium or project, or a company involved in a government of
448	448	Sudan-commissioned consortium or project and:
449	449	(A) more than 10 percent of the company's
450	450	revenues or assets linked to Sudan involve oil-related activities
451	451	or mineral extraction activities, less than 75 percent of the
452	452	company's revenue or assets linked to Sudan involve contracts with
453	453	or provision of oil-related or mineral extracting products or
454	454	services to the regional government of southern Sudan or a project
455	455	or consortium created exclusively by that regional government, and
456	456	the company has failed to take substantial action; or
457	457	(B) more than 10 percent of the company's revenue
458	458	or assets linked to Sudan involve power production activities, less
459	459	than 75 percent of the company's power production activities
460	460	include projects whose intent is to provide power or electricity to
461	461	the marginalized populations of Sudan, and the company has failed
462	462	to take substantial action; or
463	463	(2) the company supplies military equipment in Sudan,
464	464	unless:
465	465	(A) the company clearly shows that the military
466	466	equipment cannot be used to facilitate offensive military actions
467	467	in Sudan; or
468	468	(B) the company implements rigorous and
469	469	verifiable safeguards to prevent use of that equipment by forces
470	470	actively participating in armed conflict, including:
471	471	(i) using post-sale tracking of the
472	472	equipment by the company;
473	473	(ii) obtaining certification from a
474	474	reputable and objective third party that the equipment is not being
475	475	used by a party participating in armed conflict in Sudan; or
476	476	(iii) selling the equipment solely to the
477	477	regional government of southern Sudan or any internationally
478	478	recognized peacekeeping force or humanitarian organization.
479	479	Sec. 2270.0053. SOCIAL DEVELOPMENT COMPANY.
480	480	Notwithstanding any other law, a social development company that is
481	481	not complicit in the Darfur genocide is not a scrutinized company
482	482	under Section 2270.0001(9)(A).
483	483	SUBCHAPTER C. GENERAL PROVISIONS RELATING TO INVESTMENTS IN IRAN
484	484	Sec. 2270.0101. DEFINITIONS. In this subchapter:
485	485	(1) "Business operations" means engaging in commerce
486	486	in any form in Iran, including by acquiring, developing,
487	487	maintaining, owning, selling, possessing, leasing, or operating
488	488	equipment, facilities, personnel, products, services, personal
489	489	property, real property, or any other apparatus of business or
490	490	commerce.
491	491	(2) "Military equipment" means weapons, arms,
492	492	military supplies, and equipment that readily may be used for
493	493	military purposes, including radar systems and military-grade
494	494	transport vehicles.
495	495	Sec. 2270.0102. SCRUTINIZED BUSINESS OPERATIONS IN IRAN. A
496	496	company engages in scrutinized business operations in Iran if:
497	497	(1) the company has business operations that involve
498	498	contracts with or providing supplies or services to the government
499	499	of Iran, a company in which the government of Iran has any direct or
500	500	indirect equity share, a consortium or project commissioned by the
501	501	government of Iran, or a company involved in a consortium or project
502	502	commissioned by the government of Iran; or
503	503	(2) the company supplies military equipment to Iran.
504	504	SUBCHAPTER D. GENERAL PROVISIONS RELATING TO INVESTMENTS
505	505	IN CERTAIN FOREIGN TERRORIST ORGANIZATIONS
506	506	Sec. 2270.0151. DEFINITIONS. In this subchapter:
507	507	(1) "Business operations" means engaging in commerce
508	508	in any form, including by acquiring, developing, maintaining,
509	509	owning, selling, possessing, leasing, or operating equipment,
510	510	facilities, personnel, products, services, personal property, real
511	511	property, or any other apparatus of business or commerce.
512	512	(2) "Terroristic equipment" means weapons, arms,
513	513	military supplies, and equipment that readily may be used for
514	514	terroristic purposes or activities.
515	515	Sec. 2270.0152. SCRUTINIZED BUSINESS OPERATIONS WITH
516	516	DESIGNATED FOREIGN TERRORIST ORGANIZATION. A company engages in
517	517	scrutinized business operations with a designated foreign
518	518	terrorist organization if:
519	519	(1) the company has business operations that involve:
520	520	(A) a contract with or providing supplies or
521	521	services to a designated foreign terrorist organization;
522	522	(B) a company in which a designated foreign
523	523	terrorist organization has any direct or indirect equity share;
524	524	(C) a consortium or project commissioned by a
525	525	designated foreign terrorist organization; or
526	526	(D) a company involved in a consortium or project
527	527	commissioned by a designated foreign terrorist organization; or
528	528	(2) the company supplies terroristic equipment to a
529	529	designated foreign terrorist organization.
530	530	Sec. 2270.0153. LIST OF DESIGNATED FOREIGN TERRORIST
531	531	ORGANIZATIONS. (a) The comptroller shall prepare and maintain a
532	532	list of designated foreign terrorist organizations.
533	533	(b) The comptroller shall maintain the list by updating the
534	534	list as necessary to reflect changes in the list of foreign
535	535	organizations designated as foreign terrorist organizations by the
536	536	United States secretary of state as authorized by 8 U.S.C. Section
537	537	1189.
538	538	(c) Not later than the 30th day after the date the
539	539	comptroller first prepares or updates the list of designated
540	540	foreign terrorist organizations as required by this section, the
541	541	comptroller shall:
542	542	(1) file the list with the presiding officer of each
543	543	house of the legislature and the attorney general; and
544	544	(2) post the list on the comptroller's Internet
545	545	website.
546	546	SUBCHAPTER E [B]. DUTIES REGARDING INVESTMENTS
547	547	Sec. 2270.0201 [806.051]. LISTED COMPANIES. (a) The
548	548	comptroller shall prepare and maintain[, and provide to each state
549	549	governmental entity,] a list of all scrutinized companies. The
550	550	list must be categorized according to:
551	551	(1) companies that are scrutinized companies under
552	552	Section 2270.0001(9)(A);
553	553	(2) companies that are scrutinized companies under
554	554	Section 2270.0001(9)(B); and
555	555	(3) companies that are scrutinized companies under
556	556	Section 2270.0001(9)(C).
557	557	(b) In maintaining the list of scrutinized companies under
558	558	Subsection (a), the comptroller may review and rely, as appropriate
559	559	in the comptroller's judgment, on publicly available information
560	560	regarding companies with business operations in Sudan, in Iran, or
561	561	with designated foreign terrorist organizations, as applicable,
562	562	including information provided by the state, nonprofit
563	563	organizations, research firms, international organizations, and
564	564	governmental entities.
565	565	(c) [(b)] The comptroller shall update the list of
566	566	scrutinized companies under Subsection (a) annually or more often
567	567	as the comptroller considers necessary, but not more often than
568	568	quarterly, based on information from, among other sources, those
569	569	listed in Subsection (b) [(a)].
570	570	(d) The comptroller shall:
571	571	(1) provide each list prepared or updated under this
572	572	section to each investing entity; and
573	573	(2) post each list on the comptroller's Internet
574	574	website.
575	575	(e) [(c)] Not later than the 30th day after the date a [the]
576	576	list of scrutinized companies is [first] provided [or updated], the
577	577	comptroller shall file the list of scrutinized companies with the
578	578	presiding officer of each house of the legislature and the attorney
579	579	general.
580	580	(f) For purposes of the prohibitions and duties under this
581	581	chapter, the date the comptroller posts on the comptroller's
582	582	Internet website a list of scrutinized companies under this section
583	583	is considered the date the comptroller receives notice of the list.
584	584	Sec. 2270.0202 [806.052]. IDENTIFICATION OF INVESTMENT IN
585	585	LISTED COMPANIES. Not later than the 30th day after the date an
586	586	investing [a state governmental] entity receives a [the] list
587	587	provided under Section 2270.0201 [806.051], the [state
588	588	governmental] entity shall notify the comptroller of the listed
589	589	companies in which the [state governmental] entity owns direct or
590	590	indirect holdings.
591	591	Sec. 2270.0203 [806.053]. NOTICE TO LISTED COMPANY ENGAGED
592	592	IN INACTIVE BUSINESS OPERATIONS. For each listed company
593	593	identified under Section 2270.0202 [806.052] that is engaged in
594	594	only inactive scrutinized business operations, the investing
595	595	[state governmental] entity shall send a written notice informing
596	596	the company of this chapter and encouraging the company to continue
597	597	to refrain from initiating active business operations in Sudan, in
598	598	Iran, and with designated foreign terrorist organizations until it
599	599	is able to avoid being considered a listed company. The investing
600	600	[state governmental] entity shall continue the correspondence as
601	601	the entity considers necessary, but is not required to initiate
602	602	correspondence more often than semiannually.
603	603	Sec. 2270.0204 [806.054]. ACTIONS RELATING TO LISTED
604	604	COMPANY ENGAGED IN ACTIVE BUSINESS OPERATIONS. (a) For each listed
605	605	company identified under Section 2270.0202 [806.052] that is
606	606	engaged in scrutinized active business operations, the investing
607	607	[state governmental] entity shall send a written notice informing
608	608	the company of its listed company status and warning the company
609	609	that it may become subject to divestment by investing [state
610	610	governmental] entities.
611	611	(b) The notice shall offer the company the opportunity to
612	612	clarify its Sudan-related, Iran-related, or designated foreign
613	613	terrorist organization-related activities, as applicable, and
614	614	shall encourage the company, not later than the 90th day after the
615	615	date the company receives notice under this section, to either
616	616	cease all [its] scrutinized business operations as described by
617	617	Sections 2270.0052, 2270.0102, and 2270.0152, or convert such
618	618	operations to inactive business operations in order to avoid
619	619	qualifying for divestment by investing [state governmental]
620	620	entities.
621	621	(c) If, during the time provided by Subsection (b), the
622	622	company ceases scrutinized business operations described by that
623	623	subsection, the comptroller shall remove the company from the list
624	624	of scrutinized companies and this chapter will no longer apply to
625	625	the company unless it resumes scrutinized business operations.
626	626	(d) If, during the time provided by Subsection (b), the
627	627	company converts its scrutinized active business operations to
628	628	inactive business operations, the company is subject to all
629	629	provisions of this chapter relating to inactive business
630	630	operations.
631	631	(e) If, after the time provided by Subsection (b) expires,
632	632	the listed company continues to have scrutinized active business
633	633	operations, the investing [state governmental] entity shall sell,
634	634	redeem, divest, or withdraw all publicly traded securities of the
635	635	company, except securities described by Section 2270.0207
636	636	[806.057], according to the schedule provided by Section 2270.0206
637	637	[806.056].
638	638	Sec. 2270.0205 [806.055]. ACTIONS RELATING TO LISTED
639	639	COMPANY COMPLICIT IN GENOCIDE. (a) In this section, "complicit"
640	640	has the meaning assigned by Section 2270.0051.
641	641	(b) For each company identified under Section 2270.0202
642	642	[806.052] that has been complicit, the investing [state
643	643	governmental] entity shall send a written notice informing the
644	644	company of its listed company status and warning the company that it
645	645	may become subject to divestment by the investing [state
646	646	governmental] entity.
647	647	(c) [(b)] The notice must require the listed company to
648	648	refrain from taking any further action that would make it
649	649	complicit.
650	650	(d) [(c)] If, after receiving the notice under Subsection
651	651	(b) [(a)], the listed company takes additional action that makes
652	652	the company complicit, the investing [state governmental] entity
653	653	shall sell, redeem, divest, or withdraw all publicly traded
654	654	securities of the company, except securities described by Section
655	655	2270.0207 [806.057], according to the schedule provided by Section
656	656	2270.0206 [806.056].
657	657	Sec. 2270.0206 [806.056]. DIVESTMENT OF ASSETS. (a) An
658	658	investing [A state governmental] entity required to sell, redeem,
659	659	divest, or withdraw all publicly traded securities of a listed
660	660	company shall comply with the following schedule:
661	661	(1) at least 50 percent of those assets shall be
662	662	removed from the investing [state governmental] entity's assets
663	663	under management not later than the 270th day after the date the
664	664	company receives notice under Section 2270.0204 [806.054] or
665	665	2270.0205 [806.055] or Subsection (b); and
666	666	(2) 100 percent of those assets shall be removed from
667	667	the investing [state governmental] entity's assets under
668	668	management not later than the 450th day after the date the company
669	669	receives notice under Section 2270.0204 [806.054] or 2270.0205
670	670	[806.055] or Subsection (b).
671	671	(b) If a company that ceased scrutinized active business
672	672	operations after receiving notice under Section 2270.0204
673	673	[806.054] resumes scrutinized active business operations, the
674	674	investing [state governmental] entity shall send a written notice
675	675	to the company informing it that the [state governmental] entity
676	676	will sell, redeem, divest, or withdraw all publicly traded
677	677	securities of the scrutinized company according to the schedule in
678	678	Subsection (a).
679	679	(c) An investing [A state governmental] entity may delay the
680	680	schedule for divestment under Subsection (a) only to the extent
681	681	that the [state governmental] entity determines, in the [state
682	682	governmental] entity's good faith judgment, that divestment from
683	683	listed companies will likely result in a loss in value described by
684	684	Section 2270.0208(a) [806.058(a)]. If the [a state governmental]
685	685	entity delays the schedule for divestment, the [state governmental]
686	686	entity shall submit a report to the presiding officer of each house
687	687	of the legislature and the attorney general stating the reasons and
688	688	justification for the [state governmental] entity's delay in
689	689	divestment from listed companies. The report must include
690	690	documentation supporting its determination that the divestment
691	691	would result in a loss in value described by Section 2270.0208(a)
692	692	[806.058(a)], including objective numerical estimates. The
693	693	investing [state governmental] entity shall update the report every
694	694	six months.
695	695	Sec. 2270.0207 [806.057]. INVESTMENTS EXEMPTED FROM
696	696	DIVESTMENT. An investing [A state governmental] entity is not
697	697	required to divest from any indirect holdings in actively managed
698	698	investment funds or private equity funds. The investing [state
699	699	governmental] entity shall submit letters to the managers of
700	700	investment funds containing listed companies requesting that they
701	701	consider removing those companies from the fund or create a similar
702	702	actively managed fund with indirect holdings devoid of listed
703	703	companies. If the manager creates a similar fund with
704	704	substantially the same management fees and same level of investment
705	705	risk, the investing [state governmental] entity shall replace all
706	706	applicable investments with investments in the similar fund in an
707	707	expedited time frame consistent with prudent fiduciary standards.
708	708	Sec. 2270.0208 [806.058]. AUTHORIZED INVESTMENT IN LISTED
709	709	COMPANIES. (a) An investing [A state governmental] entity may
710	710	cease divesting from or may reinvest in one or more listed companies
711	711	if clear and convincing evidence shows that the value for all assets
712	712	under management by the [state governmental] entity becomes equal
713	713	to or less than 99.7 percent of the hypothetical value of all assets
714	714	under management by the [state governmental] entity had the [state
715	715	governmental] entity not divested from listed companies under this
716	716	chapter.
717	717	(b) An investing [A state governmental] entity may invest in
718	718	a listed company as provided by this section only to the extent
719	719	necessary to ensure that the value of the assets managed by the
720	720	[state governmental] entity does not fall below the value described
721	721	by Subsection (a).
722	722	(c) Before an investing [a state governmental] entity may
723	723	invest in a listed company under this section, the [state
724	724	governmental] entity must provide a written report to the presiding
725	725	officer of each house of the legislature and the attorney general
726	726	setting forth the reason and justification, supported by clear and
727	727	convincing evidence, for its decisions to cease divestment, to
728	728	reinvest, or to remain invested in a listed company.
729	729	(d) The investing [state governmental] entity shall update
730	730	the report required by Subsection (c) semiannually, as applicable.
731	731	(e) This section does not apply to reinvestment in a company
732	732	that has ceased to be a listed company.
733	733	Sec. 2270.0209 [806.059]. PROHIBITED INVESTMENTS. Except
734	734	as provided by Sections 2270.0002 [806.004] and 2270.0208
735	735	[806.058], an investing [a state governmental] entity may not
736	736	acquire securities of a listed company.
737	737	SUBCHAPTER F [C]. EXPIRATION; REPORT; ENFORCEMENT
738	738	Sec. 2270.0251 [806.101]. EXPIRATION OF CHAPTER. This
739	739	chapter expires September 1, 2037 [on the earliest of:
740	740	[(1) the date on which the United States Congress or
741	741	the president of the United States declares that the Darfur
742	742	genocide has been halted for at least 12 months;
743	743	[(2) the date on which the United States revokes its
744	744	sanctions against the Government of Sudan; or
745	745	[(3) the date on which the United States Congress or
746	746	the president of the United States, through legislation or
747	747	executive order, declares that mandatory divestment of the type
748	748	provided for in this chapter interferes with the conduct of United
749	749	States foreign policy].
750	750	Sec. 2270.0252 [806.102]. REPORT. Not later than December
751	751	31 of each year, each investing [state governmental] entity shall:
752	752	(1) file a publicly available report with the
753	753	presiding officer of each house of the legislature and[,] the
754	754	attorney general[, and the United States presidential special envoy
755	755	to Sudan] that:
756	756	(A) [(1)] identifies all investments sold,
757	757	redeemed, divested, or withdrawn in compliance with Section
758	758	2270.0206 [806.056];
759	759	(B) [(2)] identifies all prohibited investments
760	760	under Section 2270.0209 [806.059]; and
761	761	(C) [(3)] summarizes any changes made under
762	762	Section 2270.0207; and
763	763	(2) file a report with the United States presidential
764	764	special envoy to Sudan that identifies investments in Sudan
765	765	identified in the report as required by Subdivisions (1)(A) and (B)
766	766	and summarizes any changes made under Section 2270.0207 related to
767	767	those investments [806.057].
768	768	Sec. 2270.0253 [806.103]. ENFORCEMENT. The attorney
769	769	general may bring any action necessary to enforce this chapter.
770	770	SECTION 5. Chapter 807, Government Code, is repealed.
771	771	SECTION 6. (a) On the effective date of this Act, all
772	772	powers, duties, and functions of the State Pension Review Board
773	773	under Chapter 807, Government Code, as repealed by this Act, are
774	774	transferred to the comptroller of public accounts.
775	775	(b) All of the following that relate to a power, duty, or
776	776	function transferred under Subsection (a) of this section are
777	777	transferred to the comptroller of public accounts on the effective
778	778	date of this Act:
779	779	(1) all obligations and contracts;
780	780	(2) all property and records in the custody of the
781	781	State Pension Review Board;
782	782	(3) all funds appropriated by the legislature and
783	783	other money;
784	784	(4) all complaints, investigations, or contested
785	785	cases that are pending before the State Pension Review Board,
786	786	without change in status; and
787	787	(5) all necessary personnel.
788	788	(c) A rule, policy, or form adopted by or on behalf of the
789	789	State Pension Review Board that relates to a power, duty, or
790	790	function transferred under Subsection (a) of this section becomes a
791	791	rule, policy, or form of the comptroller of public accounts on the
792	792	transfer of the related power, duty, or function and remains in
793	793	effect:
794	794	(1) until altered by the comptroller of public
795	795	accounts; or
796	796	(2) unless it conflicts with a rule, policy, or form of
797	797	the comptroller of public accounts.
798	798	(d) An action brought or proceeding commenced before the
799	799	date of a transfer under this section, including a contested case or
800	800	a remand of an action or proceeding by a reviewing court, is
801	801	governed by the laws and rules applicable to the action or
802	802	proceeding before the transfer.
803	803	SECTION 7. Not later than September 1, 2017, the
804	804	comptroller of public accounts shall prepare the initial list of
805	805	designated foreign terrorist organizations as required by Section
806	806	2270.0153, Government Code, as added by this Act.
807	807	SECTION 8. Not later than October 1, 2017, the comptroller
808	808	of public accounts shall:
809	809	(1) prepare an updated list of scrutinized companies
810	810	required by Section 2270.0201, Government Code, as added by this
811	811	Act;
812	812	(2) provide the list to each investing entity, as
813	813	defined by Section 2270.0001, Government Code, as added by this
814	814	Act; and
815	815	(3) post the list on the comptroller's Internet
816	816	website.
817	817	SECTION 9. This Act takes effect immediately if it receives
818	818	a vote of two-thirds of all the members elected to each house, as
819	819	provided by Section 39, Article III, Texas Constitution. If this
820	820	Act does not receive the vote necessary for immediate effect, this
821	821	Act takes effect on the 91st day after the last day of the
822	822	legislative session.