Citations Affected: IC 5-10.2-9; IC 34-30-2-11.3.
Synopsis: Pension issues. Conference committee report for EHB 1067. Allows a member of
the teachers' retirement fund (TRF) who is receiving a benefit from TRF and who is a party in
an action for dissolution of marriage in which: (1) the member's designated beneficiary is also
a party; and (2) a final order is issued after the member's first benefit payment is made; to elect
under certain conditions to change the member's designated beneficiary or form of benefit.
Requires the public employees' retirement fund (PERF) and TRF, in the capacity of shareholders,
to: (1) request that companies with certain business activities in Sudan cease those business
activities; and (2) for a company that is unresponsive to a request, sell or divest all publicly
traded securities held by PERF or TRF in that company. Requires that PERF and TRF report
their Sudan-related activities to the general assembly. Excludes private equity funds held by
PERF and TRF from the divestment requirement. Provides for: (1) civil immunity for any act or
omission; and (2) indemnification for costs or expenses, including reasonable attorney fees,
associated with a claim or lawsuit; related to divestment. Assigns to the pension management
oversight commission the study of TRF's structure. (This conference committee report adds
provisions that: (1) require PERF and TRF, in the capacity of shareholders, to: (A) request
that companies with certain business activities in Sudan cease those business activities; and
(B) for a company that is unresponsive to a request, sell or divest all publicly traded
securities held by PERF or TRF in that company; (2) require that PERF and TRF report
their Sudan-related activities to the general assembly; (3) exclude private equity funds held
by PERF and TRF from the divestment requirement; and (4) provide for: (A) civil
immunity for any act or omission; and (B) indemnification for costs or expenses, including
reasonable attorney's fees, associated with a claim or lawsuit; related to divestment.)
Effective: July 1, 2007.
MR. SPEAKER:
Your Conference Committee appointed to confer with a like committee from the Senate
upon Engrossed Senate Amendments to Engrossed House Bill No. 1067 respectfully reports
that said two committees have conferred and agreed as follows to wit:
that the House recede from its dissent from all Senate amendments and that
the House now concur in all Senate amendments to the bill and that the bill
be further amended as follows:
fund, in which the fund owns shares or interests together with
other investors not subject to this chapter.
Sec. 12. As used in this chapter, "marginalized populations of
Sudan" includes the following:
(1) The part of the population in the Darfur region that has
been genocidally victimized.
(2) The part of the population of southern Sudan victimized
by Sudan's north-south civil war.
(3) The Beja, Rashidiya, and other similarly underserved
groups of eastern Sudan.
(4) The Nubian and other similarly underserved groups in
Sudan's Abyei, southern Blue Nile, and Nuba mountain
regions.
(5) The Amri, Hamadab, Manasir, and other similarly
underserved groups of northern Sudan.
Sec. 13. (a) As used in this chapter, "military equipment" means
weapons, arms, or military defense supplies provided directly or
indirectly to any force actively participating in the conflict in
Sudan. The term includes any equipment that readily may be used
for military purposes, including:
(1) radar systems; or
(2) military grade transport vehicles.
(b) The term does not include weapons, arms, or military
defense supplies sold to peacekeeping forces that may be
dispatched to Sudan by the United Nations or the African Union.
Sec. 14. (a) As used in this chapter, "mineral extraction
activities" means the exploration, extraction, processing,
transporting, or wholesale sale of elemental minerals or associated
metals or oxides, including:
(1) gold;
(2) copper;
(3) chromium;
(4) chromite;
(5) diamonds;
(6) iron;
(7) iron ore;
(8) silver;
(9) tungsten;
(10) uranium; and
(11) zinc.
(b) The term includes the facilitation of mineral extraction
activities, including the provision of supplies or services in support
of mineral extraction activities.
Sec. 15. (a) As used in this chapter, "oil related activities"
includes:
(1) the export of oil;
(2) the extraction of or production of oil;
(3) the exploration for oil;
(4) the ownership of rights to oil blocks;
(5) the refining or processing of oil;
(6) the transportation of oil;
include projects that are intended to provide power or
electricity to the marginalized populations of Sudan, and
the company has failed to take substantial action.
(2) The company is complicit in the Darfur genocide.
(3) The company supplies military equipment within Sudan,
unless the company implements safeguards to prevent the use
of the equipment by forces actively participating in armed
conflict in Sudan. This subdivision does not apply to
companies involved in the sale of military equipment solely to
the regional government of southern Sudan or any
internationally recognized peacekeeping force or
humanitarian organization.
(b) The term does not include a social development company
that is not complicit in the Darfur genocide.
Sec. 19. As used in this chapter, "social development company"
means a company whose primary purpose in Sudan is to provide
humanitarian goods or services, including:
(1) medicine or medical equipment;
(2) agricultural supplies or infrastructure;
(3) educational opportunities;
(4) journalism related activities;
(5) information or informational materials;
(6) spiritual related activities;
(7) services that are clerical or reporting in nature;
(8) food;
(9) clothing; or
(10) general consumer goods that are unrelated to oil related
activities, mineral extraction activities, or power production
activities.
Sec. 20. As used in this chapter, "substantial action" means:
(1) adopting, publicizing, and implementing a formal plan to
cease scrutinized business operations within one (1) year and
to refrain from any new business operations;
(2) undertaking significant humanitarian efforts on behalf of
one (1) or more marginalized populations of Sudan; or
(3) materially improving conditions for the genocidally
victimized population in Darfur through engagement with the
government of Sudan.
Sec. 21. (a) Not later than March 30, 2008, each board shall
make a good faith effort to identify all scrutinized companies in
which the fund administered by the board has direct or indirect
holdings.
(b) In carrying out its responsibilities under subsection (a), and
at the board's discretion, each board may use existing research or
contract with a research firm.
(c) A board or a research firm with which the board contracts
under subsection (b) may take any of the following actions:
(1) Review publicly available information regarding
companies with business operations in Sudan.
(2) Contact other institutional investors that invest in
companies with business operations in Sudan.
(3) Contact asset managers contracted by the fund that invest
in companies with business operations in Sudan.
(d) Not later than the first meeting of the board after March 30,
2008, each board shall compile the names of all scrutinized
companies into a scrutinized company list and indicate whether
each scrutinized company has active or inactive business
operations in Sudan.
(e) Each board shall update its scrutinized company list at least
on an annual basis based on evolving information from sources
described in subsections (b) and (c).
Sec. 22. After a board creates or updates the scrutinized
company list under section 21 of this chapter, the board shall
immediately identify the companies on the scrutinized company list
in which the fund administered by the board has direct or indirect
holdings.
Sec. 23. (a) Each fund shall send to each scrutinized company:
(1) that is identified under section 22 of this chapter as one in
which the fund has direct or indirect holdings; and
(2) that has only inactive business operations;
a written notice concerning the contents of this chapter and a
statement encouraging the company to continue to refrain from
initiating active business operations in Sudan until the company is
able to avoid scrutinized business operations altogether.
(b) The fund shall continue to correspond on a semiannual basis
with scrutinized companies in which the fund has direct or indirect
holdings and that have only inactive business operations.
Sec. 24. (a) Each fund shall send to each scrutinized company:
(1) that is identified under section 22 of this chapter as one in
which the fund has direct or indirect holdings; and
(2) that has active business operations;
a written notice concerning the contents of this chapter and a
statement indicating that the the fund's holdings in the company
may become subject to divestment by the fund.
(b) A notice sent under this section shall:
(1) offer the company the opportunity to clarify the
company's Sudan related activities; and
(2) encourage the company, within ninety (90) days after the
date of the written notice, to either:
(A) cease its scrutinized business operations; or
(B) convert the company's operations to inactive business
operations in order to avoid divestment by the fund of the
fund's holdings in the company.
Sec. 25. (a) If, within ninety (90) days after a fund's first
engagement with a company under section 24 of this chapter, the
company ceases scrutinized business operations, the company shall
be removed from the fund's scrutinized company list and the
provisions of sections 26, 27, 28, and 29 of this chapter shall cease
to apply to the company unless the company resumes scrutinized
business operations.
(b) If, within ninety (90) days after a fund first engages with a
company under section 24 of this chapter, the company converts its
scrutinized active business operations to inactive business
operations, the company shall be subject to the provisions of
section 23 of this chapter.
Sec. 26. (a) Except as provided in sections 28 and 29 of this
chapter, if, after ninety (90) days after a fund's first engagement
with a company under section 24 of this chapter, the company
continues to have scrutinized active business operations, the fund
shall sell, redeem, divest, or withdraw all publicly traded securities
of the company that are held by the fund, as follows:
(1) At least fifty percent (50%) of such assets shall be removed
from the fund's assets under management within nine (9)
months after the company's appearance on the scrutinized
company list.
(2) One hundred percent (100%) of such assets shall be
removed from the fund's assets under management within
fifteen (15) months after the company's appearance on the
scrutinized company list.
(b) If a company that ceased scrutinized active business
operations following engagement under section 24 of this chapter
resumes scrutinized active business operations, and only while the
company continues to have active business operations, the
company shall immediately be placed back on the scrutinized
company list. A fund that has holdings in the company shall sell,
redeem, divest, or withdraw all publicly traded securities of the
company as provided in subsection (a) based on the date the
company is placed back on the scrutinized company list. The fund
shall send a written notice to the company indicating that the
company was placed back on the scrutinized company list and is
subject to divestment.
(c) A board is not required to divest the board's holdings in a
passively managed commingled fund that includes a scrutinized
company with active business operations in Sudan if the estimated
cost of divestment of the commingled fund is greater than ten
percent (10%) of the total value of the scrutinized companies with
active business operations held in the commingled fund. The board
shall include any commingled fund that includes a scrutinized
company that is exempted from divestment under this subsection
in the board's report submitted to the legislative council under
section 31 of this chapter.
Sec. 27. Except as provided in sections 28 and 29 of this chapter,
a fund shall not acquire securities of companies on the scrutinized
company list that have active business operations.
Sec. 28. If the government of the United States affirmatively
declares any company on the scrutinized company list with active
business operations in Sudan to be excluded from any federal
sanctions relating to Sudan, the company is not subject to
divestment or investment prohibition under this chapter.
Sec. 29. Notwithstanding any provision to the contrary, sections
26 and 27 of this chapter do not apply to indirect holdings in
actively managed investment funds. However, if a fund has indirect
holdings in actively managed investment funds containing the
securities of scrutinized companies with active business operations,
the fund shall submit letters to the managers of the investment
funds requesting that the managers remove the scrutinized
companies with active business operations from the fund or create
a similar actively managed fund with indirect holdings without
scrutinized companies with active business operations. If the
manager creates a similar fund, the fund shall replace all
applicable investments with investments in the similar fund in a
period consistent with prudent investing standards.
Sec. 30. This chapter does not apply to private equity funds.
Sec. 31. (a) On or before November 1, 2007, and thereafter as
directed by the legislative council, the board shall submit a report
in an electronic format under IC 5-14-6 to the legislative council
for distribution to the members of the general assembly.
(b) The report must include at least the following information,
as of the date of the report:
(1) A copy of the scrutinized company list.
(2) A summary of correspondence with companies engaged by
the fund under sections 23 and 24 of this chapter.
(3) All investments sold, redeemed, divested, or withdrawn in
compliance with section 26 of this chapter.
(4) All commingled funds that are exempted from divestment
under section 26 of this chapter.
(5) All prohibited investments under section 27 of this
chapter.
(6) Any progress made under section 29 of this chapter.
Sec. 32. This chapter expires on the earliest of the following:
(1) Twelve (12) months after the date the government of
Sudan halts the genocide in Darfur as determined by the
Congress of the United States and the United States
Department of State.
(2) The date the United States revokes its current sanctions
against the government of Sudan.
(3) The date Congress or the President of the United States,
through legislation or executive order, declares that
mandatory divestment of the type provided for in this chapter
interferes with the conduct of foreign policy for the United
States.
(4) The date Congress or the President of the United States
declares that the government of Sudan:
(A) has honored its commitments to cease attacks on
civilians;
(B) demobilizes and demilitarizes the Janjaweed and
associated militias;
(C) grants free and unfettered access for deliveries of
humanitarian assistance; and
(D) allows for the safe and voluntary return of refugees
and international displaced persons.
Sec. 33. With respect to actions taken in compliance with this
chapter, including all good faith determinations regarding
companies on the scrutinized company list, the fund shall be
exempt from any conflicting statutory or common law obligations,
including any obligations with respect to choice of asset managers,
investment funds, or investments for fund securities portfolios.
Sec. 34. (a) Notwithstanding any provision to the contrary, the
fund shall be permitted to cease divesting and to reinvest in certain
scrutinized companies on the scrutinized company list with active
business operations in Sudan if evidence shows that the value for
all assets under management by the fund becomes equal to or less
than ninety-nine and five-tenths percent (99.5%) of the value of all
assets under management by the fund, including the companies
divested under section 26 of this chapter.
(b) As provided by this section, any cessation of divestment or
reinvestment shall be strictly limited to the minimum steps
necessary to avoid the contingency set forth in subsection (a).
(c) For any cessation of divestment, reinvestment, and
subsequent ongoing investment authorized by this section, the fund
shall submit a report in an electronic format under IC 5-14-6 to the
legislative council for distribution to the members of the general
assembly in advance of any initial reinvestment. The report shall
be updated annually thereafter as applicable, setting forth the
reasons and justifications for the decision to cease divestment,
reinvest, or remain invested with companies with scrutinized active
business operations. This section does not apply to companies that
have ceased to have scrutinized business operations.
Sec. 35. (a) Both:
(1) the state and its officers, agents, and employees; and
(2) the fund and its board members, executive director,
officers, agents, and employees;
are immune from civil liability for any act or omission related to
the removal of an asset from the fund under this chapter.
(b) In addition to the immunity provided under subsection (a),
both:
(1) the officers, agents, and employees of the state; and
(2) the board members, executive director, officers, agents,
and employees of the fund;
are entitled to indemnification from the fund for all losses, costs,
and expenses, including reasonable attorney's fees, associated with
defending against any claim or suit relating to an act authorized
under this chapter.
Sec. 36. The provisions of this chapter are severable in the
manner provided in IC 1-1-1-8(b).
____________________________ ____________________________
Representative Crooks Senator Kruse
Chairperson
____________________________ ____________________________
Representative Noe Senator Broden
House Conferees Senate Conferees