Texas 2017 - 85th Regular

Texas Senate Bill SB253 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	By: Taylor of Collin, et al. S.B. No. 253
2		-	(Davis of Harris)
	1	+	S.B. No. 253
3	2
4	3
5		-	A BILL TO BE ENTITLED
6	4		AN ACT
7	5		relating to investment prohibitions and divestment requirements
8	6		for certain investments of public money.
9	7		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	8		SECTION 1. Section 404.024(b), Government Code, is amended
11	9		to read as follows:
12	10		(b) Subject to Chapter 2270, state [State] funds not
13	11		deposited in state depositories shall be invested by the
14	12		comptroller in:
15	13		(1) direct security repurchase agreements;
16	14		(2) reverse security repurchase agreements;
17	15		(3) direct obligations of or obligations the principal
18	16		and interest of which are guaranteed by the United States;
19	17		(4) direct obligations of or obligations guaranteed by
20	18		agencies or instrumentalities of the United States government;
21	19		(5) bankers' acceptances that:
22	20		(A) are eligible for purchase by the Federal
23	21		Reserve System;
24	22		(B) do not exceed 270 days to maturity; and
25	23		(C) are issued by a bank whose other comparable
26	24		short-term obligations are rated in the highest short-term rating
27	25		category, within which there may be subcategories or gradations
28	26		indicating relative standing, including such subcategories or
29	27		gradations as "rating category" or "rated," by a nationally
30	28		recognized statistical rating organization, as defined by 15 U.S.C.
31	29		Section 78c [Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
32	30		under the Investment Company Act of 1940 by the Securities and
33	31		Exchange Commission];
34	32		(6) commercial paper that:
35	33		(A) does not exceed 270 days to maturity; and
36	34		(B) except as provided by Subsection (i), is
37	35		issued by an entity whose other comparable short-term obligations
38	36		are rated in the highest short-term rating category by a nationally
39	37		recognized statistical rating organization;
40	38		(7) contracts written by the treasury in which the
41	39		treasury grants the purchaser the right to purchase securities in
42	40		the treasury's marketable securities portfolio at a specified price
43	41		over a specified period and for which the treasury is paid a fee and
44	42		specifically prohibits naked-option or uncovered option trading;
45	43		(8) direct obligations of or obligations guaranteed by
46	44		the Inter-American Development Bank, the International Bank for
47	45		Reconstruction and Development (the World Bank), the African
48	46		Development Bank, the Asian Development Bank, and the International
49	47		Finance Corporation that have received the highest long-term rating
50	48		categories for debt obligations by a nationally recognized
51	49		statistical rating organization;
52	50		(9) bonds issued, assumed, or guaranteed by the State
53	51		of Israel;
54	52		(10) obligations of a state or an agency, county,
55	53		city, or other political subdivision of a state;
56	54		(11) mutual funds secured by obligations that are
57	55		described by Subdivisions (1) through (6) or by obligations
58	56		consistent with Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
59	57		by the Securities and Exchange Commission, including pooled funds:
60	58		(A) established by the Texas Treasury
61	59		Safekeeping Trust Company;
62	60		(B) operated like a mutual fund; and
63	61		(C) with portfolios consisting only of
64	62		dollar-denominated securities;
65	63		(12) foreign currency for the sole purpose of
66	64		facilitating investment by state agencies that have the authority
67	65		to invest in foreign securities;
68	66		(13) asset-backed securities, as defined by the
69	67		Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
70	68		270.2a-7), that are rated at least A or its equivalent by a
71	69		nationally recognized statistical rating organization and that
72	70		have a weighted-average maturity of five years or less; and
73	71		(14) corporate debt obligations that are rated at
74	72		least A or its equivalent by a nationally recognized statistical
75	73		rating organization and mature in five years or less from the date
76	74		on which the obligations were "acquired," as defined by the
77	75		Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
78	76		270.2a-7).
79	77		SECTION 2. Section 2256.017, Government Code, is amended to
80	78		read as follows:
81	79		Sec. 2256.017. EXISTING INVESTMENTS. Except as provided by
82	80		Chapter 2270, an [An] entity is not required to liquidate
83	81		investments that were authorized investments at the time of
84	82		purchase.
85	83		SECTION 3. Section 2256.024(a), Government Code, is amended
86	84		to read as follows:
87	85		(a) The authority granted by this subchapter is in addition
88	86		to that granted by other law. Except as provided by Subsection (b)
89	87		and Section 2256.017, this subchapter does not:
90	88		(1) prohibit an investment specifically authorized by
91	89		other law; or
92	90		(2) authorize an investment specifically prohibited
93	91		by other law.
94	92		SECTION 4. Chapter 806, Government Code, is transferred to
95	93		Subtitle F, Title 10, Government Code, redesignated as Chapter 2270
96	94		of that subtitle, and amended to read as follows:
97	95		CHAPTER 2270 [806]. PROHIBITION ON INVESTING PUBLIC MONEY IN
98	96		CERTAIN INVESTMENTS [INVESTMENT IN SUDAN]
99	97		SUBCHAPTER A. GENERAL PROVISIONS
100	98		Sec. 2270.0001 [806.001]. DEFINITIONS. In this chapter:
101	99		(1) "Active business operations" means all business
102	100		operations that are not inactive business operations.
103	101		(2) ["Business operations" means engaging in commerce
104	102		in any form in Sudan, including by acquiring, developing,
105	103		maintaining, owning, selling, possessing, leasing, or operating
106	104		equipment, facilities, personnel, products, services, personal
107	105		property, real property, or any other apparatus of business or
108	106		commerce.
109	107		[(3)] "Company" means a sole proprietorship,
110	108		organization, association, corporation, partnership, joint
111	109		venture, limited partnership, limited liability partnership,
112	110		limited liability company, or other entity or business association
113	111		whose securities are publicly traded, including a wholly owned
114	112		subsidiary, majority-owned subsidiary, parent company, or
115	113		affiliate of those entities or business associations, that exists
116	114		to make a profit.
117	115		(3) "Designated foreign terrorist organization" means
118	116		an organization designated as a foreign terrorist organization by
119	117		the United States secretary of state as authorized by 8 U.S.C.
120	118		Section 1189.
121	119		(4) ["Complicit" means taking actions that have
122	120		directly supported or promoted the genocidal campaign in Darfur,
123	121		including:
124	122		[(A) preventing members of Darfur's victimized
125	123		population from communicating with each other;
126	124		[(B) encouraging Sudanese citizens to speak out
127	125		against an internationally approved security force for Darfur; or
128	126		[(C) actively working to deny, cover up, or alter
129	127		the record on human rights abuses in Darfur.
130	128		[(5)] "Direct holdings" in a company["] means all
131	129		securities of that company held directly by an investing [a state
132	130		governmental] entity in an account or fund in which an investing [a
133	131		state governmental] entity owns all shares or interests.
134	132		(5) [(6) "Government of Sudan" means the government in
135	133		Khartoum, Sudan, which is led by the National Congress Party,
136	134		formerly known as the National Islamic Front, or any successor
137	135		government formed on or after October 13, 2006, including the
138	136		coalition National Unity Government agreed upon in the
139	137		Comprehensive Peace Agreement for Sudan. The term does not include
140	138		the regional government of southern Sudan.
141	139		[(7)] "Inactive business operations" means the mere
142	140		continued holding or renewal of rights to property previously
143	141		operated to generate revenue but not presently deployed to generate
144	142		revenue.
145	143		(6) [(8)] "Indirect holdings" in a company["] means
146	144		all securities of that company held in an account or fund, such as a
147	145		mutual fund, managed by one or more persons not employed by an
148	146		investing [a state governmental] entity, in which the investing
149	147		[state governmental] entity owns shares or interests together with
150	148		other investors not subject to this chapter. The term does not
151	149		include money invested under a plan described by Section 401(k) or
152	150		457 of the Internal Revenue Code of 1986.
153	151		(7) "Investing entity" means:
154	152		(A) an entity subject to Chapter 2256;
155	153		(B) the Employees Retirement System of Texas;
156	154		(C) the Teacher Retirement System of Texas; and
157	155		(D) the comptroller with respect to the
158	156		comptroller's investment of state funds.
159	157		(8) [(9)] "Listed company" means a company listed by
160	158		the comptroller under Section 2270.0201 [806.051].
161	159		(9) [(10) "Marginalized populations of Sudan"
162	160		includes:
163	161		[(A) the portion of the population in the Darfur
164	162		region that has been genocidally victimized;
165	163		[(B) the portion of the population of southern
166	164		Sudan victimized by Sudan's North-South civil war;
167	165		[(C) the Beja, Rashidiya, and other similarly
168	166		underserved groups of eastern Sudan;
169	167		[(D) the Nubian and other similarly underserved
170	168		groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
171	169		regions; and
172	170		[(E) the Amri, Hamadab, Manasir, and other
173	171		similarly underserved groups of northern Sudan.
174	172		[(11) "Military equipment" means weapons, arms,
175	173		military supplies, and equipment that readily may be used for
176	174		military purposes, including radar systems or military-grade
177	175		transport vehicles or supplies or services sold or provided
178	176		directly or indirectly to any force actively participating in armed
179	177		conflict in Sudan.
180	178		[(12) "Mineral extraction activities" includes
181	179		exploring, extracting, processing, transporting, or wholesale
182	180		selling or trading of elemental minerals or associated metal alloys
183	181		or oxides (ore), including gold, copper, chromium, chromite,
184	182		diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
185	183		well as facilitating those activities, including by providing
186	184		supplies or services in support of those activities.
187	185		[(13) "Oil-related activities" includes:
188	186		[(A) owning rights to oil blocks;
189	187		[(B) exporting, extracting, producing, refining,
190	188		processing, exploring for, transporting, selling, or trading of
191	189		oil;
192	190		[(C) constructing, maintaining, or operating a
193	191		pipeline, refinery, or other oil-field infrastructure; or
194	192		[(D) facilitating oil-related activities,
195	193		including by providing supplies or services in support of the
196	194		activities, except that the mere retail sale of gasoline and
197	195		related consumer products is not an oil-related activity.
198	196		[(14) "Power production activities" means any
199	197		business operation that involves a project commissioned by the
200	198		National Electricity Corporation of Sudan or another similar
201	199		Government of Sudan entity whose purpose is to facilitate power
202	200		generation and delivery, including establishing power-generating
203	201		plants or hydroelectric dams, selling or installing components for
204	202		the project, and providing service contracts related to the
205	203		installation or maintenance of the project, as well as facilitating
206	204		those activities, including by providing supplies or services in
207	205		support of those activities.
208	206		[(15)] "Scrutinized company" means:
209	207		(A) a company that:
210	208		(i) [(A)] engages in scrutinized business
211	209		operations described by Section 2270.0052 [806.002]; or
212	210		(ii) [(B)] has been complicit in the Darfur
213	211		genocide during any preceding 20-month period;
214	212		(B) a company that engages in scrutinized
215	213		business operations described by Section 2270.0102; and
216	214		(C) a company that engages in scrutinized
217	215		business operations described by Section 2270.0152.
218	216		[(16) "Social development company" means a company
219	217		whose primary purpose in Sudan is to provide humanitarian goods or
220	218		services, including medicine or medical equipment, agricultural
221	219		supplies or infrastructure, educational opportunities,
222	220		journalism-related activities, information or information
223	221		materials, spiritual-related activities, services of a purely
224	222		clerical or reporting nature, food, clothing, or general consumer
225	223		goods that are unrelated to oil-related activities, mineral
226	224		extraction activities, or power production activities.
227	225		[(17) "State governmental entity" means the Employees
228	226		Retirement System of Texas or the Teacher Retirement System of
229	227		Texas.
230	228		[(18) "Substantial action" means adopting,
231	229		publicizing, and implementing a formal plan to cease scrutinized
232	230		business operations within one year and to refrain from any such new
233	231		business operations, undertaking significant humanitarian efforts
234	232		on behalf of one or more marginalized populations of Sudan, or,
235	233		through engagement with the Government of Sudan, materially
236	234		improving conditions for the genocidally victimized population in
237	235		Darfur.]
238	236		Sec. 2270.0002 [806.002. SCRUTINIZED BUSINESS OPERATIONS.
239	237		A company engages in scrutinized business operations if:
240	238		[(1) the company has business operations that involve
241	239		contracts with or providing supplies or services to the Government
242	240		of Sudan, a company in which the Government of Sudan has any direct
243	241		or indirect equity share, a Government of Sudan-commissioned
244	242		consortium or project, or a company involved in a Government of
245	243		Sudan-commissioned consortium or project, and:
246	244		[(A) more than 10 percent of the company's
247	245		revenues or assets linked to Sudan involve oil-related activities
248	246		or mineral extraction activities, less than 75 percent of the
249	247		company's revenue or assets linked to Sudan involve contracts with
250	248		or provision of oil-related or mineral extracting products or
251	249		services to the regional government of southern Sudan or a project
252	250		or consortium created exclusively by that regional government, and
253	251		the company has failed to take substantial action; or
254	252		[(B) more than 10 percent of the company's
255	253		revenue or assets linked to Sudan involve power production
256	254		activities, less than 75 percent of the company's power production
257	255		activities include projects whose intent is to provide power or
258	256		electricity to the marginalized populations of Sudan, and the
259	257		company has failed to take substantial action; or
260	258		[(2) the company supplies military equipment in Sudan,
261	259		unless:
262	260		[(A) the company clearly shows that the military
263	261		equipment cannot be used to facilitate offensive military actions
264	262		in Sudan; or
265	263		[(B) the company implements rigorous and
266	264		verifiable safeguards to prevent use of that equipment by forces
267	265		actively participating in armed conflict, including:
268	266		[(i) using post-sale tracking of the
269	267		equipment by the company;
270	268		[(ii) obtaining certification from a
271	269		reputable and objective third party that the equipment is not being
272	270		used by a party participating in armed conflict in Sudan; or
273	271		[(iii) selling the equipment solely to the
274	272		regional government of southern Sudan or any internationally
275	273		recognized peacekeeping force or humanitarian organization.
276	274		[Sec. 806.003. SOCIAL DEVELOPMENT COMPANY.
277	275		Notwithstanding any other law, a social development company that is
278	276		not complicit in the Darfur genocide is not a scrutinized company.
279	277		[Sec. 806.004]. EXCEPTION. Notwithstanding any other law,
280	278		a company that the United States government affirmatively declares
281	279		to be excluded from its federal sanctions regime relating to Sudan,
282	280		its federal sanctions regime relating to Iran, or any federal
283	281		sanctions regime relating to a designated foreign terrorist
284	282		organization is not subject to divestment or investment prohibition
285	283		under this chapter.
286	284		Sec. 2270.0003 [806.005]. OTHER LEGAL OBLIGATIONS. With
287	285		respect to actions taken in compliance with this chapter, including
288	286		all good faith determinations regarding companies as required by
289	287		this chapter, an investing [a state governmental] entity is exempt
290	288		from any conflicting statutory or common law obligations, including
291	289		any obligations with respect to making investments, divesting from
292	290		any investment, preparing or maintaining any list of companies, or
293	291		choosing asset managers, investment funds, or investments for the
294	292		[state governmental] entity's securities portfolios.
295	293		Sec. 2270.0004. INAPPLICABILITY OF CERTAIN REQUIREMENTS
296	294		INCONSISTENT WITH FIDUCIARY RESPONSIBILITIES AND RELATED DUTIES.
297	295		An investing entity described by Section 2270.0001(7)(B) or (C) is
298	296		not subject to a requirement of this chapter if the entity
299	297		determines that the requirement would be inconsistent with the
300	298		entity's fiduciary responsibility with respect to the investment of
301	299		entity assets or other duties imposed by law relating to the
302	300		investment of entity assets, including the duty of care established
303	301		under Section 67, Article XVI, Texas Constitution.
304	302		Sec. 2270.0005. CONFLICT WITH OTHER LAW. To the extent of a
305	303		conflict between this chapter and a provision of Chapter 404 or 2256
306	304		regarding an investing entity's investments, this chapter
307	305		prevails.
308	306		Sec. 2270.0006 [806.006]. INDEMNIFICATION OF INVESTING
309	307		[STATE GOVERNMENTAL] ENTITIES, EMPLOYEES, AND OTHERS. In a cause
310	308		of action based on an action, inaction, decision, divestment,
311	309		investment, company communication, report, or other determination
312	310		made or taken in connection with this chapter, the state shall,
313	311		without regard to whether the person performed services for
314	312		compensation, indemnify and hold harmless for actual damages, court
315	313		costs, and attorney's fees adjudged against, and defend:
316	314		(1) an employee, a member of the governing body, or any
317	315		other officer of an investing [a state governmental] entity;
318	316		(2) a contractor of an investing [a state
319	317		governmental] entity;
320	318		(3) a former employee, a former member of the
321	319		governing body, or any other former officer of an investing [a state
322	320		governmental] entity who was an employee or officer when the act or
323	321		omission on which the damages are based occurred; [and]
324	322		(4) a former contractor of an investing [a state
325	323		governmental] entity who was a contractor when the act or omission
326	324		on which the damages are based occurred; and
327	325		(5) an investing entity.
328	326		Sec. 2270.0007 [806.007]. NO PRIVATE CAUSE OF ACTION.
329	327		(a) A person, including a member, retiree, and beneficiary of a
330	328		retirement system to which this chapter applies, an association, a
331	329		research firm, a company, or any other person may not sue or pursue
332	330		a private cause of action against the state, an investing [a state
333	331		governmental] entity, an employee, a member of the governing body,
334	332		or any other officer of an investing [a state governmental] entity,
335	333		or a contractor of an investing [a state governmental] entity, for
336	334		any claim or cause of action, including breach of fiduciary duty, or
337	335		for violation of any constitutional, statutory, or regulatory
338	336		requirement in connection with any action, inaction, decision,
339	337		divestment, investment, company communication, report, or other
340	338		determination made or taken in connection with this chapter.
341	339		(b) A person who files suit against the state, an investing
342	340		[a state governmental] entity, an employee, a member of the
343	341		governing body, or any other officer of an investing [a state
344	342		governmental] entity, or a contractor of an investing [a state
345	343		governmental] entity, is liable for paying the costs and attorney's
346	344		fees of a person sued in violation of this section.
347	345		Sec. 2270.0008. RELIANCE ON COMPANY RESPONSE. The
348	346		comptroller in administering this chapter and an investing entity
349	347		may rely on a company's response to a notice or communication made
350	348		under this chapter without conducting any further investigation,
351	349		research, or inquiry.
352	350		SUBCHAPTER B. GENERAL PROVISIONS RELATING TO INVESTMENTS IN SUDAN
353	351		Sec. 2270.0051. DEFINITIONS. In this subchapter:
354	352		(1) "Business operations" means engaging in commerce
355	353		in any form in Sudan, including by acquiring, developing,
356	354		maintaining, owning, selling, possessing, leasing, or operating
357	355		equipment, facilities, personnel, products, services, personal
358	356		property, real property, or any other apparatus of business or
359	357		commerce.
360	358		(2) "Complicit" means taking actions that have
361	359		directly supported or promoted the genocidal campaign in Darfur,
362	360		including:
363	361		(A) preventing members of Darfur's victimized
364	362		population from communicating with each other;
365	363		(B) encouraging Sudanese citizens to speak out
366	364		against an internationally approved security force for Darfur; or
367	365		(C) actively working to deny, cover up, or alter
368	366		the record on human rights abuses in Darfur.
369	367		(3) "Government of Sudan" means the government in
370	368		Khartoum, Sudan, which is led by the National Congress Party,
371	369		formerly known as the National Islamic Front, or any successor
372	370		government formed on or after October 13, 2006, including the
373	371		coalition National Unity Government agreed upon in the
374	372		Comprehensive Peace Agreement for Sudan. The term does not include
375	373		the regional government of southern Sudan.
376	374		(4) "Marginalized populations of Sudan" includes:
377	375		(A) the portion of the population in the Darfur
378	376		region that has been genocidally victimized;
379	377		(B) the portion of the population of southern
380	378		Sudan victimized by Sudan's North-South civil war;
381	379		(C) the Beja, Rashidiya, and other similarly
382	380		underserved groups of eastern Sudan;
383	381		(D) the Nubian and other similarly underserved
384	382		groups in Sudan's Abyei, Southern Blue Nile, and Nuba Mountain
385	383		regions; and
386	384		(E) the Amri, Hamadab, Manasir, and other
387	385		similarly underserved groups of northern Sudan.
388	386		(5) "Military equipment" means weapons, arms,
389	387		military supplies, and equipment that readily may be used for
390	388		military purposes, including radar systems or military-grade
391	389		transport vehicles or supplies or services sold or provided
392	390		directly or indirectly to any force actively participating in armed
393	391		conflict in Sudan.
394	392		(6) "Mineral extraction activities" includes
395	393		exploring, extracting, processing, transporting, or wholesale
396	394		selling or trading of elemental minerals or associated metal alloys
397	395		or oxides (ore), including gold, copper, chromium, chromite,
398	396		diamonds, iron, iron ore, silver, tungsten, uranium, and zinc, as
399	397		well as facilitating those activities, including by providing
400	398		supplies or services in support of those activities.
401	399		(7) "Oil-related activities" includes:
402	400		(A) owning rights to oil blocks;
403	401		(B) exporting, extracting, producing, refining,
404	402		processing, exploring for, transporting, selling, or trading of
405	403		oil;
406	404		(C) constructing, maintaining, or operating a
407	405		pipeline, refinery, or other oil-field infrastructure; or
408	406		(D) facilitating oil-related activities,
409	407		including by providing supplies or services in support of the
410	408		activities, except that the mere retail sale of gasoline and
411	409		related consumer products is not an oil-related activity.
412	410		(8) "Power production activities" means any business
413	411		operation that involves a project commissioned by the National
414	412		Electricity Corporation of Sudan or another similar government of
415	413		Sudan entity whose purpose is to facilitate power generation and
416	414		delivery, including establishing power-generating plants or
417	415		hydroelectric dams, selling or installing components for the
418	416		project, and providing service contracts related to the
419	417		installation or maintenance of the project, as well as facilitating
420	418		those activities, including by providing supplies or services in
421	419		support of those activities.
422	420		(9) "Social development company" means a company whose
423	421		primary purpose in Sudan is to provide humanitarian goods or
424	422		services, including medicine or medical equipment, agricultural
425	423		supplies or infrastructure, educational opportunities,
426	424		journalism-related activities, information or information
427	425		materials, spiritual-related activities, services of a purely
428	426		clerical or reporting nature, food, clothing, or general consumer
429	427		goods that are unrelated to oil-related activities, mineral
430	428		extraction activities, or power production activities.
431	429		(10) "Substantial action" means adopting,
432	430		publicizing, and implementing a formal plan to cease scrutinized
433	431		business operations within one year and to refrain from any such new
434	432		business operations, undertaking significant humanitarian efforts
435	433		on behalf of one or more marginalized populations of Sudan, or,
436	434		through engagement with the government of Sudan, materially
437	435		improving conditions for the genocidally victimized population in
438	436		Darfur.
439	437		Sec. 2270.0052. SCRUTINIZED BUSINESS OPERATIONS IN SUDAN.
440	438		A company engages in scrutinized business operations in Sudan if:
441	439		(1) the company has business operations that involve
442	440		contracts with or providing supplies or services to the government
443	441		of Sudan, a company in which the government of Sudan has any direct
444	442		or indirect equity share, a government of Sudan-commissioned
445	443		consortium or project, or a company involved in a government of
446	444		Sudan-commissioned consortium or project and:
447	445		(A) more than 10 percent of the company's
448	446		revenues or assets linked to Sudan involve oil-related activities
449	447		or mineral extraction activities, less than 75 percent of the
450	448		company's revenue or assets linked to Sudan involve contracts with
451	449		or provision of oil-related or mineral extracting products or
452	450		services to the regional government of southern Sudan or a project
453	451		or consortium created exclusively by that regional government, and
454	452		the company has failed to take substantial action; or
455	453		(B) more than 10 percent of the company's revenue
456	454		or assets linked to Sudan involve power production activities, less
457	455		than 75 percent of the company's power production activities
458	456		include projects whose intent is to provide power or electricity to
459	457		the marginalized populations of Sudan, and the company has failed
460	458		to take substantial action; or
461	459		(2) the company supplies military equipment in Sudan,
462	460		unless:
463	461		(A) the company clearly shows that the military
464	462		equipment cannot be used to facilitate offensive military actions
465	463		in Sudan; or
466	464		(B) the company implements rigorous and
467	465		verifiable safeguards to prevent use of that equipment by forces
468	466		actively participating in armed conflict, including:
469	467		(i) using post-sale tracking of the
470	468		equipment by the company;
471	469		(ii) obtaining certification from a
472	470		reputable and objective third party that the equipment is not being
473	471		used by a party participating in armed conflict in Sudan; or
474	472		(iii) selling the equipment solely to the
475	473		regional government of southern Sudan or any internationally
476	474		recognized peacekeeping force or humanitarian organization.
477	475		Sec. 2270.0053. SOCIAL DEVELOPMENT COMPANY.
478	476		Notwithstanding any other law, a social development company that is
479	477		not complicit in the Darfur genocide is not a scrutinized company
480	478		under Section 2270.0001(9)(A).
481	479		SUBCHAPTER C. GENERAL PROVISIONS RELATING TO INVESTMENTS IN IRAN
482	480		Sec. 2270.0101. DEFINITIONS. In this subchapter:
483	481		(1) "Business operations" means engaging in commerce
484	482		in any form in Iran, including by acquiring, developing,
485	483		maintaining, owning, selling, possessing, leasing, or operating
486	484		equipment, facilities, personnel, products, services, personal
487	485		property, real property, or any other apparatus of business or
488	486		commerce.
489	487		(2) "Military equipment" means weapons, arms,
490	488		military supplies, and equipment that readily may be used for
491	489		military purposes, including radar systems and military-grade
492	490		transport vehicles.
493	491		Sec. 2270.0102. SCRUTINIZED BUSINESS OPERATIONS IN IRAN. A
494	492		company engages in scrutinized business operations in Iran if:
495	493		(1) the company has business operations that involve
496	494		contracts with or providing supplies or services to the government
497	495		of Iran, a company in which the government of Iran has any direct or
498	496		indirect equity share, a consortium or project commissioned by the
499	497		government of Iran, or a company involved in a consortium or project
500	498		commissioned by the government of Iran; or
501	499		(2) the company supplies military equipment to Iran.
502	500		SUBCHAPTER D. GENERAL PROVISIONS RELATING TO INVESTMENTS IN
503	501		CERTAIN FOREIGN TERRORIST ORGANIZATIONS
504	502		Sec. 2270.0151. DEFINITIONS. In this subchapter:
505	503		(1) "Business operations" means engaging in commerce
506	504		in any form, including by acquiring, developing, maintaining,
507	505		owning, selling, possessing, leasing, or operating equipment,
508	506		facilities, personnel, products, services, personal property, real
509	507		property, or any other apparatus of business or commerce.
510	508		(2) "Terroristic equipment" means weapons, arms,
511	509		military supplies, and equipment that readily may be used for
512	510		terroristic purposes or activities.
513	511		Sec. 2270.0152. SCRUTINIZED BUSINESS OPERATIONS WITH
514	512		DESIGNATED FOREIGN TERRORIST ORGANIZATION. A company engages in
515	513		scrutinized business operations with a designated foreign
516	514		terrorist organization if:
517	515		(1) the company has business operations that involve:
518	516		(A) a contract with or providing supplies or
519	517		services to a designated foreign terrorist organization;
520	518		(B) a company in which a designated foreign
521	519		terrorist organization has any direct or indirect equity share;
522	520		(C) a consortium or project commissioned by a
523	521		designated foreign terrorist organization; or
524	522		(D) a company involved in a consortium or project
525	523		commissioned by a designated foreign terrorist organization; or
526	524		(2) the company supplies terroristic equipment to a
527	525		designated foreign terrorist organization.
528	526		Sec. 2270.0153. LIST OF DESIGNATED FOREIGN TERRORIST
529	527		ORGANIZATIONS. (a) The comptroller shall prepare and maintain a
530	528		list of designated foreign terrorist organizations.
531	529		(b) The comptroller shall maintain the list by updating the
532	530		list as necessary to reflect changes in the list of foreign
533	531		organizations designated as foreign terrorist organizations by the
534	532		United States secretary of state as authorized by 8 U.S.C. Section
535	533		1189.
536	534		(c) Not later than the 30th day after the date the
537	535		comptroller first prepares or updates the list of designated
538	536		foreign terrorist organizations as required by this section, the
539	537		comptroller shall:
540	538		(1) file the list with the presiding officer of each
541	539		house of the legislature and the attorney general; and
542	540		(2) post the list on the comptroller's Internet
543	541		website.
544	542		SUBCHAPTER E [B]. DUTIES REGARDING INVESTMENTS
545	543		Sec. 2270.0201 [806.051]. LISTED COMPANIES. (a) The
546	544		comptroller shall prepare and maintain[, and provide to each state
547	545		governmental entity,] a list of all scrutinized companies. The
548	546		list must be categorized according to:
549	547		(1) companies that are scrutinized companies under
550	548		Section 2270.0001(9)(A);
551	549		(2) companies that are scrutinized companies under
552	550		Section 2270.0001(9)(B); and
553	551		(3) companies that are scrutinized companies under
554	552		Section 2270.0001(9)(C).
555	553		(b) In maintaining the list of scrutinized companies under
556	554		Subsection (a), the comptroller may review and rely, as appropriate
557	555		in the comptroller's judgment, on publicly available information
558	556		regarding companies with business operations in Sudan, in Iran, or
559	557		with designated foreign terrorist organizations, as applicable,
560	558		including information provided by the state, nonprofit
561	559		organizations, research firms, international organizations, and
562	560		governmental entities.
563	561		(c) [(b)] The comptroller shall update the list of
564	562		scrutinized companies under Subsection (a) annually or more often
565	563		as the comptroller considers necessary, but not more often than
566	564		quarterly, based on information from, among other sources, those
567	565		listed in Subsection (b) [(a)].
568	566		(d) The comptroller shall:
569	567		(1) provide each list prepared or updated under this
570	568		section to each investing entity; and
571	569		(2) post each list on the comptroller's Internet
572	570		website.
573	571		(e) [(c)] Not later than the 30th day after the date a [the]
574	572		list of scrutinized companies is [first] provided [or updated], the
575	573		comptroller shall file the list of scrutinized companies with the
576	574		presiding officer of each house of the legislature and the attorney
577	575		general.
578	576		(f) For purposes of the prohibitions and duties under this
579	577		chapter, the date the comptroller posts on the comptroller's
580	578		Internet website a list of scrutinized companies under this section
581	579		is considered the date the comptroller receives notice of the list.
582	580		Sec. 2270.0202 [806.052]. IDENTIFICATION OF INVESTMENT IN
583	581		LISTED COMPANIES. Not later than the 30th day after the date an
584	582		investing [a state governmental] entity receives a [the] list
585	583		provided under Section 2270.0201 [806.051], the [state
586	584		governmental] entity shall notify the comptroller of the listed
587	585		companies in which the [state governmental] entity owns direct or
588	586		indirect holdings.
589	587		Sec. 2270.0203 [806.053]. NOTICE TO LISTED COMPANY ENGAGED
590	588		IN INACTIVE BUSINESS OPERATIONS. For each listed company
591	589		identified under Section 2270.0202 [806.052] that is engaged in
592	590		only inactive scrutinized business operations, the investing
593	591		[state governmental] entity shall send a written notice informing
594	592		the company of this chapter and encouraging the company to continue
595	593		to refrain from initiating active business operations in Sudan, in
596	594		Iran, and with designated foreign terrorist organizations until it
597	595		is able to avoid being considered a listed company. The investing
598	596		[state governmental] entity shall continue the correspondence as
599	597		the entity considers necessary, but is not required to initiate
600	598		correspondence more often than semiannually.
601	599		Sec. 2270.0204 [806.054]. ACTIONS RELATING TO LISTED
602	600		COMPANY ENGAGED IN ACTIVE BUSINESS OPERATIONS. (a) For each
603	601		listed company identified under Section 2270.0202 [806.052] that is
604	602		engaged in scrutinized active business operations, the investing
605	603		[state governmental] entity shall send a written notice informing
606	604		the company of its listed company status and warning the company
607	605		that it may become subject to divestment by investing [state
608	606		governmental] entities.
609	607		(b) The notice shall offer the company the opportunity to
610	608		clarify its Sudan-related, Iran-related, or designated foreign
611	609		terrorist organization-related activities, as applicable, and
612	610		shall encourage the company, not later than the 90th day after the
613	611		date the company receives notice under this section, to either
614	612		cease all [its] scrutinized business operations as described by
615	613		Sections 2270.0052, 2270.0102, and 2270.0152, or convert such
616	614		operations to inactive business operations in order to avoid
617	615		qualifying for divestment by investing [state governmental]
618	616		entities.
619	617		(c) If, during the time provided by Subsection (b), the
620	618		company ceases scrutinized business operations described by that
621	619		subsection, the comptroller shall remove the company from the list
622	620		of scrutinized companies and this chapter will no longer apply to
623	621		the company unless it resumes scrutinized business operations.
624	622		(d) If, during the time provided by Subsection (b), the
625	623		company converts its scrutinized active business operations to
626	624		inactive business operations, the company is subject to all
627	625		provisions of this chapter relating to inactive business
628	626		operations.
629	627		(e) If, after the time provided by Subsection (b) expires,
630	628		the listed company continues to have scrutinized active business
631	629		operations, the investing [state governmental] entity shall sell,
632	630		redeem, divest, or withdraw all publicly traded securities of the
633	631		company, except securities described by Section 2270.0207
634	632		[806.057], according to the schedule provided by Section 2270.0206
635	633		[806.056].
636	634		Sec. 2270.0205 [806.055]. ACTIONS RELATING TO LISTED
637	635		COMPANY COMPLICIT IN GENOCIDE. (a) In this section, "complicit"
638	636		has the meaning assigned by Section 2270.0051.
639	637		(b) For each company identified under Section 2270.0202
640	638		[806.052] that has been complicit, the investing [state
641	639		governmental] entity shall send a written notice informing the
642	640		company of its listed company status and warning the company that it
643	641		may become subject to divestment by the investing [state
644	642		governmental] entity.
645	643		(c) [(b)] The notice must require the listed company to
646	644		refrain from taking any further action that would make it
647	645		complicit.
648	646		(d) [(c)] If, after receiving the notice under Subsection
649	647		(b) [(a)], the listed company takes additional action that makes
650	648		the company complicit, the investing [state governmental] entity
651	649		shall sell, redeem, divest, or withdraw all publicly traded
652	650		securities of the company, except securities described by Section
653	651		2270.0207 [806.057], according to the schedule provided by Section
654	652		2270.0206 [806.056].
655	653		Sec. 2270.0206 [806.056]. DIVESTMENT OF ASSETS. (a) An
656	654		investing [A state governmental] entity required to sell, redeem,
657	655		divest, or withdraw all publicly traded securities of a listed
658	656		company shall comply with the following schedule:
659	657		(1) at least 50 percent of those assets shall be
660	658		removed from the investing [state governmental] entity's assets
661	659		under management not later than the 270th day after the date the
662	660		company receives notice under Section 2270.0204 [806.054] or
663	661		2270.0205 [806.055] or Subsection (b); and
664	662		(2) 100 percent of those assets shall be removed from
665	663		the investing [state governmental] entity's assets under
666	664		management not later than the 450th day after the date the company
667	665		receives notice under Section 2270.0204 [806.054] or 2270.0205
668	666		[806.055] or Subsection (b).
669	667		(b) If a company that ceased scrutinized active business
670	668		operations after receiving notice under Section 2270.0204
671	669		[806.054] resumes scrutinized active business operations, the
672	670		investing [state governmental] entity shall send a written notice
673	671		to the company informing it that the [state governmental] entity
674	672		will sell, redeem, divest, or withdraw all publicly traded
675	673		securities of the scrutinized company according to the schedule in
676	674		Subsection (a).
677	675		(c) An investing [A state governmental] entity may delay the
678	676		schedule for divestment under Subsection (a) only to the extent
679	677		that the [state governmental] entity determines, in the [state
680	678		governmental] entity's good faith judgment, that divestment from
681	679		listed companies will likely result in a loss in value described by
682	680		Section 2270.0208(a) [806.058(a)]. If the [a state governmental]
683	681		entity delays the schedule for divestment, the [state governmental]
684	682		entity shall submit a report to the presiding officer of each house
685	683		of the legislature and the attorney general stating the reasons and
686	684		justification for the [state governmental] entity's delay in
687	685		divestment from listed companies. The report must include
688	686		documentation supporting its determination that the divestment
689	687		would result in a loss in value described by Section 2270.0208(a)
690	688		[806.058(a)], including objective numerical estimates. The
691	689		investing [state governmental] entity shall update the report every
692	690		six months.
693	691		Sec. 2270.0207 [806.057]. INVESTMENTS EXEMPTED FROM
694	692		DIVESTMENT. An investing [A state governmental] entity is not
695	693		required to divest from any indirect holdings in actively managed
696	694		investment funds or private equity funds. The investing [state
697	695		governmental] entity shall submit letters to the managers of
698	696		investment funds containing listed companies requesting that they
699	697		consider removing those companies from the fund or create a similar
700	698		actively managed fund with indirect holdings devoid of listed
701	699		companies. If the manager creates a similar fund with
702	700		substantially the same management fees and same level of investment
703	701		risk, the investing [state governmental] entity shall replace all
704	702		applicable investments with investments in the similar fund in an
705	703		expedited time frame consistent with prudent fiduciary standards.
706	704		Sec. 2270.0208 [806.058]. AUTHORIZED INVESTMENT IN LISTED
707	705		COMPANIES. (a) An investing [A state governmental] entity may
708	706		cease divesting from or may reinvest in one or more listed companies
709	707		if clear and convincing evidence shows that the value for all assets
710	708		under management by the [state governmental] entity becomes equal
711	709		to or less than 99.7 percent of the hypothetical value of all assets
712	710		under management by the [state governmental] entity had the [state
713	711		governmental] entity not divested from listed companies under this
714	712		chapter.
715	713		(b) An investing [A state governmental] entity may invest in
716	714		a listed company as provided by this section only to the extent
717	715		necessary to ensure that the value of the assets managed by the
718	716		[state governmental] entity does not fall below the value described
719	717		by Subsection (a).
720	718		(c) Before an investing [a state governmental] entity may
721	719		invest in a listed company under this section, the [state
722	720		governmental] entity must provide a written report to the presiding
723	721		officer of each house of the legislature and the attorney general
724	722		setting forth the reason and justification, supported by clear and
725	723		convincing evidence, for its decisions to cease divestment, to
726	724		reinvest, or to remain invested in a listed company.
727	725		(d) The investing [state governmental] entity shall update
728	726		the report required by Subsection (c) semiannually, as applicable.
729	727		(e) This section does not apply to reinvestment in a company
730	728		that has ceased to be a listed company.
731	729		Sec. 2270.0209 [806.059]. PROHIBITED INVESTMENTS. Except
732	730		as provided by Sections 2270.0002 [806.004] and 2270.0208
733	731		[806.058], an investing [a state governmental] entity may not
734	732		acquire securities of a listed company.
735	733		SUBCHAPTER F [C]. EXPIRATION; REPORT; ENFORCEMENT
736	734		Sec. 2270.0251 [806.101]. EXPIRATION OF CHAPTER. This
737	735		chapter expires September 1, 2037 [on the earliest of:
738	736		[(1) the date on which the United States Congress or
739	737		the president of the United States declares that the Darfur
740	738		genocide has been halted for at least 12 months;
741	739		[(2) the date on which the United States revokes its
742	740		sanctions against the Government of Sudan; or
743	741		[(3) the date on which the United States Congress or
744	742		the president of the United States, through legislation or
745	743		executive order, declares that mandatory divestment of the type
746	744		provided for in this chapter interferes with the conduct of United
747	745		States foreign policy].
748	746		Sec. 2270.0252 [806.102]. REPORT. Not later than December
749	747		31 of each year, each investing [state governmental] entity shall:
750	748		(1) file a publicly available report with the
751	749		presiding officer of each house of the legislature and[,] the
752	750		attorney general[, and the United States presidential special envoy
753	751		to Sudan] that:
754	752		(A) [(1)] identifies all investments sold,
755	753		redeemed, divested, or withdrawn in compliance with Section
756	754		2270.0206 [806.056];
757	755		(B) [(2)] identifies all prohibited investments
758	756		under Section 2270.0209 [806.059]; and
759	757		(C) [(3)] summarizes any changes made under
760	758		Section 2270.0207; and
761	759		(2) file a report with the United States presidential
762	760		special envoy to Sudan that identifies investments in Sudan
763	761		identified in the report as required by Subdivisions (1)(A) and (B)
764	762		and summarizes any changes made under Section 2270.0207 related to
765	763		those investments [806.057].
766	764		Sec. 2270.0253 [806.103]. ENFORCEMENT. The attorney
767	765		general may bring any action necessary to enforce this chapter.
768	766		SECTION 5. Chapter 807, Government Code, is repealed.
769	767		SECTION 6. (a) On the effective date of this Act, all
770	768		powers, duties, and functions of the State Pension Review Board
771	769		under Chapter 807, Government Code, as repealed by this Act, are
772	770		transferred to the comptroller of public accounts.
773	771		(b) All of the following that relate to a power, duty, or
774	772		function transferred under Subsection (a) of this section are
775	773		transferred to the comptroller of public accounts on the effective
776	774		date of this Act:
777	775		(1) all obligations and contracts;
778	776		(2) all property and records in the custody of the
779	777		State Pension Review Board;
780	778		(3) all funds appropriated by the legislature and
781	779		other money;
782	780		(4) all complaints, investigations, or contested
783	781		cases that are pending before the State Pension Review Board,
784	782		without change in status; and
785	783		(5) all necessary personnel.
786	784		(c) A rule, policy, or form adopted by or on behalf of the
787	785		State Pension Review Board that relates to a power, duty, or
788	786		function transferred under Subsection (a) of this section becomes a
789	787		rule, policy, or form of the comptroller of public accounts on the
790	788		transfer of the related power, duty, or function and remains in
791	789		effect:
792	790		(1) until altered by the comptroller of public
793	791		accounts; or
794	792		(2) unless it conflicts with a rule, policy, or form of
795	793		the comptroller of public accounts.
796	794		(d) An action brought or proceeding commenced before the
797	795		date of a transfer under this section, including a contested case or
798	796		a remand of an action or proceeding by a reviewing court, is
799	797		governed by the laws and rules applicable to the action or
800	798		proceeding before the transfer.
801	799		SECTION 7. Not later than September 1, 2017, the
802	800		comptroller of public accounts shall prepare the initial list of
803	801		designated foreign terrorist organizations as required by Section
804	802		2270.0153, Government Code, as added by this Act.
805	803		SECTION 8. Not later than October 1, 2017, the comptroller
806	804		of public accounts shall:
807	805		(1) prepare an updated list of scrutinized companies
808	806		required by Section 2270.0201, Government Code, as added by this
809	807		Act;
810	808		(2) provide the list to each investing entity, as
811	809		defined by Section 2270.0001, Government Code, as added by this
812	810		Act; and
813	811		(3) post the list on the comptroller's Internet
814	812		website.
815	813		SECTION 9. This Act takes effect immediately if it receives
816	814		a vote of two-thirds of all the members elected to each house, as
817	815		provided by Section 39, Article III, Texas Constitution. If this
818	816		Act does not receive the vote necessary for immediate effect, this
819	817		Act takes effect on the 91st day after the last day of the
820	818		legislative session.
	819	+	______________________________ ______________________________
	820	+	President of the Senate Speaker of the House
	821	+	I hereby certify that S.B. No. 253 passed the Senate on
	822	+	April 19, 2017, by the following vote: Yeas 31, Nays 0.
	823	+	______________________________
	824	+	Secretary of the Senate
	825	+	I hereby certify that S.B. No. 253 passed the House on
	826	+	May 9, 2017, by the following vote: Yeas 144, Nays 1, two present
	827	+	not voting.
	828	+	______________________________
	829	+	Chief Clerk of the House
	830	+	Approved:
	831	+	______________________________
	832	+	Date
	833	+	______________________________
	834	+	Governor