| 1 | 1 | | 89R9326 JCG-D |
|---|
| 2 | 2 | | By: Paul H.B. No. 3776 |
|---|
| 3 | 3 | | |
|---|
| 4 | 4 | | |
|---|
| 5 | 5 | | |
|---|
| 6 | 6 | | |
|---|
| 7 | 7 | | A BILL TO BE ENTITLED |
|---|
| 8 | 8 | | AN ACT |
|---|
| 9 | 9 | | relating to reporting requirements for a public retirement system |
|---|
| 10 | 10 | | that authorizes the system's shares to be voted by a proxy advisor |
|---|
| 11 | 11 | | or investment manager. |
|---|
| 12 | 12 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|---|
| 13 | 13 | | SECTION 1. Subchapter C, Chapter 802, Government Code, is |
|---|
| 14 | 14 | | amended by adding Section 802.208 to read as follows: |
|---|
| 15 | 15 | | Sec. 802.208. PROXY VOTING: ANNUAL REPORTING. (a) In this |
|---|
| 16 | 16 | | section: |
|---|
| 17 | 17 | | (1) "Investment manager" means a person who for |
|---|
| 18 | 18 | | compensation provides professional investment management services. |
|---|
| 19 | 19 | | The term: |
|---|
| 20 | 20 | | (A) includes a person eligible for appointment as |
|---|
| 21 | 21 | | an investment manager under Section 802.204; and |
|---|
| 22 | 22 | | (B) does not include: |
|---|
| 23 | 23 | | (i) an employee or member of an advisory |
|---|
| 24 | 24 | | committee of a public retirement system; or |
|---|
| 25 | 25 | | (ii) a seller of security interests. |
|---|
| 26 | 26 | | (2) "Proxy advisor" means a person who for |
|---|
| 27 | 27 | | compensation provides corporate governance ratings, proxy research |
|---|
| 28 | 28 | | and analyses, proxy voting, or other similar services to the |
|---|
| 29 | 29 | | shareholders of a publicly traded entity, or other interested |
|---|
| 30 | 30 | | parties, for the purpose of advising a shareholder or other |
|---|
| 31 | 31 | | interested party on how to vote on measures under consideration by |
|---|
| 32 | 32 | | shareholders or voting on behalf of a shareholder by proxy. |
|---|
| 33 | 33 | | (b) This section applies only to a public retirement system |
|---|
| 34 | 34 | | that holds shares that the system is entitled to vote by proxy. |
|---|
| 35 | 35 | | (c) Except as provided by Subsection (d), not later than the |
|---|
| 36 | 36 | | 180th day after the last day of a public retirement system's fiscal |
|---|
| 37 | 37 | | year, the governing body of the system shall tabulate all proxy |
|---|
| 38 | 38 | | votes made on behalf of the system by proxy advisors during the |
|---|
| 39 | 39 | | preceding fiscal year of the system and report the votes to the |
|---|
| 40 | 40 | | State Pension Review Board. For each vote, the report must contain a |
|---|
| 41 | 41 | | vote caption, the system's vote, the recommendation, if any, of the |
|---|
| 42 | 42 | | company holding the election, and, as applicable, the |
|---|
| 43 | 43 | | recommendation of the proxy advisor. The State Pension Review Board |
|---|
| 44 | 44 | | shall post reports submitted under this subsection to the board's |
|---|
| 45 | 45 | | publicly accessible Internet website. |
|---|
| 46 | 46 | | (d) Instead of submitting a report under Subsection (c), the |
|---|
| 47 | 47 | | governing body of a public retirement system may provide to the |
|---|
| 48 | 48 | | State Pension Review Board the location of a report posted to the |
|---|
| 49 | 49 | | system's publicly accessible Internet website that contains the |
|---|
| 50 | 50 | | information required by that subsection. |
|---|
| 51 | 51 | | (e) Except as provided by Subsection (f), if the governing |
|---|
| 52 | 52 | | body of a public retirement system grants proxy voting authority to |
|---|
| 53 | 53 | | an investment manager, the investment manager shall submit a report |
|---|
| 54 | 54 | | to the retirement system, and the retirement system shall submit a |
|---|
| 55 | 55 | | report to the State Pension Review Board, that tabulates all proxy |
|---|
| 56 | 56 | | votes cast by the investment manager on behalf of the system for |
|---|
| 57 | 57 | | each 12-month period the investment manager is managing any assets |
|---|
| 58 | 58 | | of the system. The State Pension Review Board shall post the reports |
|---|
| 59 | 59 | | submitted under this subsection to the board's publicly accessible |
|---|
| 60 | 60 | | Internet website. |
|---|
| 61 | 61 | | (f) Subsection (e) does not apply to an investment manager |
|---|
| 62 | 62 | | that manages less than $50 million of a public retirement system's |
|---|
| 63 | 63 | | assets. |
|---|
| 64 | 64 | | (g) The State Pension Review Board may adopt rules to |
|---|
| 65 | 65 | | implement this section. |
|---|
| 66 | 66 | | SECTION 2. The changes in law made by this Act apply only to |
|---|
| 67 | 67 | | a contract entered into on or after the effective date of this Act. |
|---|
| 68 | 68 | | A contract entered into before the effective date of this Act is |
|---|
| 69 | 69 | | governed by the law in effect on the date the contract was entered |
|---|
| 70 | 70 | | into, and the former law is continued in effect for that purpose. |
|---|
| 71 | 71 | | SECTION 3. This Act takes effect September 1, 2025. |
|---|