Senate Bill sb2142
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Florida Senate - 2007 SB 2142
By Senator Deutch
30-1226-07
1 A bill to be entitled
2 An act relating to economic sanctions related
3 to Sudan; providing legislative findings;
4 providing definitions; requiring the State
5 Board of Administration to identify all
6 companies doing certain types of business in or
7 with Sudan in which public moneys are invested;
8 requiring the board to create and maintain a
9 Scrutinized Company List which names all such
10 companies; requiring the board to periodically
11 contact all scrutinized companies and encourage
12 them to refrain from engaging in certain types
13 of business in or with Sudan; requiring the
14 board to inform scrutinized companies of their
15 status as a scrutinized company and to ask for
16 clarification as to the nature of each
17 company's business activities; providing that a
18 company may be removed from the list under
19 certain conditions; providing for
20 reintroduction of a company onto the list;
21 requiring the board to divest of all publicly
22 traded securities of a scrutinized company
23 under certain conditions; providing exceptions
24 to the divestment requirement; prohibiting the
25 board from acquiring securities of scrutinized
26 companies that have active business operations;
27 providing exceptions to the investment
28 prohibition; providing an additional exception
29 from the divestment requirement and the
30 investment prohibition to certain indirect
31 holdings in actively managed investment funds;
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1 requiring the board to request that the
2 managers of such investment funds consider
3 removing scrutinized companies from the fund or
4 create a similar fund that excludes such
5 companies; requiring the board to file a report
6 to the Governor, the Legislature, and Attorney
7 General within a specified period after
8 creation of the Scrutinized Company List;
9 requiring the annual filing of an updated
10 report; requiring that all such reports be made
11 available to the public; requiring that the
12 report include certain information; providing
13 for the expiration of the act; exempting the
14 board from certain statutory or common law
15 obligations; authorizing the board to cease
16 divesting or to reinvest in certain scrutinized
17 companies if the value for all assets under
18 management by the board becomes equal to or
19 less than a specified amount; requiring the
20 board to file a written report to the Governor,
21 the Legislature, and Attorney General before
22 such reinvestment; requiring that the report
23 contain certain information; requiring
24 semiannual updates to such reports when
25 applicable; requiring the Attorney General to
26 enforce the divestment requirements and
27 investment prohibitions; authorizing the
28 Attorney General to bring enforcement actions
29 in court through any lawful designee; providing
30 for severability; providing an effective date.
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1 Be It Enacted by the Legislature of the State of Florida:
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3 Section 1. (1) LEGISLATIVE FINDINGS.--
4 (a) On July 23, 2004, the United States Congress
5 declared that "the atrocities unfolding in Darfur, Sudan, are
6 genocide."
7 (b) On September 9, 2004, Secretary of State Colin L.
8 Powell told the United States Senate Foreign Relations
9 Committee that "genocide has occurred and may still be
10 occurring in Darfur" and "the Government of Sudan and the
11 Janjaweed bear responsibility."
12 (c) On September 21, 2004, addressing the United
13 Nations General Assembly, President George W. Bush affirmed
14 the Secretary of State's finding and stated, "At this hour,
15 the world is witnessing terrible suffering and horrible crimes
16 in the Darfur region of Sudan, crimes my government has
17 concluded are genocide."
18 (d) On December 7, 2004, the United States Congress
19 noted that the genocidal policy in Darfur has led to reports
20 of "systematic rape of thousands of women and girls, the
21 abduction of women and children, and the destruction of
22 hundreds of ethnically African villages, including the
23 poisoning of their wells and the plunder of their crops and
24 cattle upon which the people of such villages sustain
25 themselves."
26 (e) Also on December 7, 2004, Congress found that "the
27 Government of Sudan has restricted access by humanitarian and
28 human rights workers to the Darfur area through intimidation
29 by military and security forces, and through bureaucratic and
30 administrative obstruction, in an attempt to inflict the most
31 devastating harm on those individuals displaced from their
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1 villages and homes without any means of sustenance or
2 shelter."
3 (f) On September 25, 2006, Congress reaffirmed that
4 "the genocide unfolding in the Darfur region of Sudan is
5 characterized by acts of terrorism and atrocities directed
6 against civilians, including mass murder, rape, and sexual
7 violence committed by the Janjaweed and associated militias
8 with the complicity and support of the National Congress
9 Party-led faction of the Government of Sudan."
10 (g) On September 26, 2006, the United States House of
11 Representatives stated that "an estimated 300,000 to 400,000
12 people have been killed by the Government of Sudan and its
13 Janjaweed allies since the crisis began in 2003, more than
14 2,000,000 people have been displaced from their homes, and
15 more than 250,000 people from Darfur remain in refugee camps
16 in Chad."
17 (h) The Darfur crisis represents the first time the
18 United States Government has labeled ongoing atrocities as
19 genocide.
20 (i) The Federal Government has imposed sanctions
21 against the Government of Sudan since 1997. These sanctions
22 are monitored through the United States Treasury Department's
23 Office of Foreign Assets Control (OFAC).
24 (j) According to a former chair of the United States
25 Securities and Exchange Commission, "the fact that a foreign
26 company is doing material business with a country, government,
27 or entity on OFAC's sanctions list is, in the SEC staff's
28 view, substantially likely to be significant to a reasonable
29 investor's decision about whether to invest in that company."
30 (k) Since 1993, the United States Secretary of State
31 has determined that Sudan is a country whose government has
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1 repeatedly provided support for acts of international
2 terrorism, and, as a result, the United States has restricted
3 assistance, defense exports, defense sales, financial
4 transactions, and various other transactions with the
5 Government of Sudan.
6 (l) A 2006 report by United States House of
7 Representatives states that "a company's association with
8 sponsors of terrorism and human rights abuses, no matter how
9 large or small, can have a materially adverse result on a
10 public company's operations, financial condition, earnings,
11 and stock prices, all of which can negatively affect the value
12 of an investment."
13 (m) In response to the financial risk posed by
14 investments in companies doing business with a state that
15 sponsors terrorists, the Securities and Exchange Commission
16 established its Office of Global Security Risk to provide for
17 enhanced disclosure of material information regarding such
18 companies.
19 (n) The current Sudan divestment movement encompasses
20 nearly 100 universities, municipalities, states, and private
21 pension plans.
22 (o) Companies facing such widespread divestment
23 present further material risk to remaining investors.
24 (p) It is a fundamental responsibility of the State of
25 Florida to decide where, how, and by whom financial resources
26 in its control should be invested, taking into account
27 numerous pertinent factors.
28 (q) It is the prerogative and desire of the State of
29 Florida with respect to investment resources in its control
30 and to the extent reasonable, with due consideration for
31 return on investment on behalf of the state and its investment
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1 beneficiaries, not to participate in an ownership or
2 capital-providing capacity with entities that provide
3 significant practical support for genocide, including certain
4 non-United States companies presently doing business in Sudan.
5 (r) The Legislature finds that this act should remain
6 in effect only insofar as it continues to be consistent with
7 and does not unduly interfere with the foreign policy of the
8 United States as determined by the Federal Government.
9 (s) The Legislature finds that mandatory divestment of
10 public funds from certain companies is a measure that should
11 be employed sparingly and judiciously. A Congressional and
12 Presidential declaration of genocide satisfies this high
13 threshold.
14 (2) DEFINITIONS.--As used in this act, the term:
15 (a) "Active business operations" means all business
16 operations that are not inactive business operations.
17 (b) "Business operations" means engaging in commerce
18 in any form in Sudan, including, but not limited to,
19 acquiring, developing, maintaining, owning, selling,
20 possessing, leasing, or operating equipment, facilities,
21 personnel, products, services, personal property, real
22 property, or any other apparatus of business or commerce.
23 (c) "Company" means any sole proprietorship,
24 organization, association, corporation, partnership, joint
25 venture, limited partnership, limited liability partnership,
26 limited liability company, or other entity or business
27 association, including all wholly owned subsidiaries,
28 majority-owned subsidiaries, parent companies, or affiliates
29 of such entities or business associations, which exists for
30 the purpose of making profit.
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1 (d) "Complicit" means taking actions during any
2 preceding 20-month period which have directly supported or
3 promoted the genocidal campaign in Darfur, including, but not
4 limited to, preventing Darfur's victimized population from
5 communicating with each other, encouraging Sudanese citizens
6 to speak out against an internationally approved security
7 force for Darfur, actively working to deny, cover up, or alter
8 the record on human rights abuses in Darfur, or other similar
9 actions.
10 (e) "Direct holdings" in a company means all
11 securities of that company which are held directly by the
12 Public Fund or in an account or fund in which the Public Fund
13 owns all shares or interests.
14 (f) "Government of Sudan" means the government in
15 Khartoum, Sudan, which is led by the National Congress Party,
16 formerly known as the National Islamic Front, or any successor
17 government formed on or after October 13, 2006, including the
18 coalition National Unity Government agreed upon in the
19 Comprehensive Peace Agreement for Sudan, and does not include
20 the regional government of southern Sudan.
21 (g) "Inactive business operations" means the mere
22 continued holding or renewal of rights to property previously
23 operated for the purpose of generating revenues but not
24 presently deployed for such purpose.
25 (h) "Indirect holdings" in a company means all
26 securities of that company which are held in an account or
27 fund, such as a mutual fund, managed by one or more persons
28 not employed by the Public Fund, in which the Public Fund owns
29 shares or interests together with other investors not subject
30 to the provisions of this act.
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1 (i) "Marginalized populations of Sudan" include, but
2 are not limited to, the portion of the population in the
3 Darfur region who have been genocidally victimized; the
4 portion of the population of southern Sudan victimized by
5 Sudan's north-south civil war; the Beja, Rashidiya, and other
6 similarly underserved groups of eastern Sudan; the Nubian and
7 other similarly underserved groups in Sudan's Abyei, Southern
8 Blue Nile, and Nuba Mountain regions; and the Amri, Hamadab,
9 Manasir, and other similarly underserved groups of northern
10 Sudan.
11 (j) "Military equipment" means weapons, arms, military
12 supplies, and equipment that readily may be used for military
13 purposes, including, but not limited to, radar systems,
14 military-grade transport vehicles, or supplies or services
15 sold or provided directly or indirectly to any force actively
16 participating in armed conflict in Sudan.
17 (k) "Mineral-extraction activities" include exploring,
18 extracting, processing, transporting, or wholesale selling or
19 trading of elemental minerals or associated metal alloys or
20 oxides (ore), including gold, copper, chromium, chromite,
21 diamonds, iron, iron ore, silver, tungsten, uranium, and zinc,
22 as well as facilitating such activities, including, providing
23 supplies or services in support of such activities.
24 (l) "Oil-related activities" include, but are not
25 limited to, owning rights to oil blocks; exporting,
26 extracting, producing, refining, processing, exploring for,
27 transporting, selling, or trading of oil; constructing,
28 maintaining, or operating a pipeline, refinery, or other
29 oil-field infrastructure; and facilitating such activities,
30 including providing supplies or services in support of such
31 activities, except that the mere retail sale of gasoline and
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1 related consumer products is not considered oil-related
2 activities.
3 (m) "Power-production activities" means any business
4 operation that involves a project commissioned by the National
5 Electricity Corporation (NEC) of Sudan or other similar entity
6 of the Government of Sudan whose purpose is to facilitate
7 power generation and delivery, including, but not limited to,
8 establishing power-generating plants or hydroelectric dams,
9 selling or installing components for the project, providing
10 service contracts related to the installation or maintenance
11 of the project, as well as facilitating such activities,
12 including providing supplies or services in support of such
13 activities.
14 (n) "Public Fund" means all funds, assets, trustees,
15 and other designates under the State Board of Administration.
16 (o) "Scrutinized company" means any company that meets
17 any of the following criteria:
18 1. The company has business operations that involve
19 contracts with or provision of supplies or services to the
20 Government of Sudan, companies in which the Government of
21 Sudan has any direct or indirect equity share, consortiums or
22 projects commissioned by the Government of Sudan, or companies
23 involved in consortiums or projects commissioned by the
24 Government of Sudan and:
25 a. More than 10 percent of the company's revenues or
26 assets linked to Sudan involve oil-related activities or
27 mineral-extraction activities; less than 75 percent of the
28 company's revenues or assets linked to Sudan involve contracts
29 with or provision of oil-related or mineral-extracting
30 products or services to the regional government of southern
31 Sudan or a project or consortium created exclusively by that
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1 regional government; and the company has failed to take
2 substantial action; or
3 b. More than 10 percent of the company's revenues or
4 assets linked to Sudan involve power-production activities;
5 less than 75 percent of the company's power-production
6 activities include projects whose intent is to provide power
7 or electricity to the marginalized populations of Sudan; and
8 the company has failed to take substantial action.
9 2. The company is complicit in the Darfur genocide.
10 3. The company supplies military equipment within
11 Sudan, unless it clearly shows that the military equipment
12 cannot be used to facilitate offensive military actions in
13 Sudan or the company implements rigorous and verifiable
14 safeguards to prevent use of that equipment by forces actively
15 participating in armed conflict. Examples of safeguards
16 include post-sale tracking of such equipment by the company,
17 certification from a reputable and objective third party that
18 such equipment is not being used by a party participating in
19 armed conflict in Sudan, or sale of such equipment solely to
20 the regional government of southern Sudan or any
21 internationally recognized peacekeeping force or humanitarian
22 organization.
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24 Notwithstanding the provisions of this act, a
25 social-development company that is not complicit in the Darfur
26 genocide is not considered a scrutinized company.
27 (p) "Social-development company" means a company whose
28 primary purpose in Sudan is to provide humanitarian goods or
29 services, including medicine or medical equipment;
30 agricultural supplies or infrastructure, educational
31 opportunities; journalism-related activities; information or
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1 information materials; spiritual-related activities; services
2 of a purely clerical or reporting nature; food, clothing, or
3 general consumer goods that are unrelated to oil-related
4 activities; mineral-extraction activities; or power-production
5 activities.
6 (q) "Substantial action" means adopting, publicizing,
7 and implementing a formal plan to cease scrutinized business
8 operations within 1 year and to refrain from any such new
9 business operations; undertaking significant humanitarian
10 efforts on behalf of one or more marginalized populations of
11 Sudan; or, through engagement with the Government of Sudan,
12 materially improving conditions for the genocidally victimized
13 population in Darfur.
14 (3) IDENTIFICATION OF COMPANIES.--
15 (a) Within 90 days after the effective date of this
16 act, the Public Fund shall make its best efforts to identify
17 all scrutinized companies in which the Public Fund has direct
18 or indirect holdings or could possibly have such holdings in
19 the future. Such efforts include:
20 1. Reviewing and relying, as appropriate in the Public
21 Fund's judgment, on publicly available information regarding
22 companies having business operations in Sudan, including
23 information provided by nonprofit organizations, research
24 firms, international organizations, and government entities;
25 2. Contacting asset managers contracted by the Public
26 Fund which invest in companies having business operations in
27 Sudan; or
28 3. Contacting other institutional investors that have
29 divested from or engaged with companies that have business
30 operations in Sudan.
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1 (b) By the first meeting of the Public Fund following
2 the 90-day period described in paragraph (a), the Public Fund
3 shall assemble all scrutinized companies identified into a
4 "Scrutinized Companies List."
5 (c) The Public Fund shall update the Scrutinized
6 Companies List quarterly based on evolving information from,
7 among other sources, those listed in paragraph (a).
8 (4) REQUIRED ACTIONS.--The Public Fund shall adhere to
9 the following procedure for companies on the Scrutinized
10 Companies List:
11 (a) Engagement.--
12 1. The Public Fund shall immediately determine the
13 companies on the Scrutinized Companies List in which the
14 Public Fund owns direct or indirect holdings.
15 2. For each company identified in this paragraph which
16 has only inactive business operations, the Public Fund shall
17 send a written notice informing the company of this act and
18 encouraging it to continue to refrain from initiating active
19 business operations in Sudan until it is able to avoid
20 scrutinized business operations. The Public Fund shall
21 continue such correspondence semiannually.
22 3. For each company newly identified under this
23 paragraph which has active business operations, the Public
24 Fund shall send a written notice informing the company of its
25 scrutinized company status and that it may become subject to
26 divestment by the Public Fund. The notice must inform the
27 company of the opportunity to clarify its Sudan-related
28 activities and encourage the company, within 90 days, to cease
29 its scrutinized business operations or convert such operations
30 to inactive business operations in order to avoid qualifying
31 for divestment by the Public Fund.
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1 4. If, within 90 days after the Public Fund's first
2 engagement with a company pursuant to this paragraph, that
3 company ceases scrutinized business operations, the company
4 shall be removed from the Scrutinized Companies List and the
5 provisions of this act shall cease to apply to it unless it
6 resumes scrutinized business operations. If, within 90 days
7 after the Public Fund's first engagement, the company converts
8 its scrutinized active business operations to inactive
9 business operations, the company is subject to all provisions
10 relating thereto.
11 (b) Divestment.--
12 1. If, after 90 days following the Public Fund's first
13 engagement with a company pursuant to paragraph (a), the
14 company continues to have scrutinized active business
15 operations, and only while such company continues to have
16 scrutinized active business operations, the Public Fund shall
17 sell, redeem, divest, or withdraw all publicly traded
18 securities of the company, except as provided in paragraph
19 (d), according to the following schedule:
20 a. At least 50 percent of such assets shall be removed
21 from the Public Fund's assets under management by 9 months
22 after the company's most recent appearance on the Scrutinized
23 Companies List.
24 b. One hundred percent of such assets shall be removed
25 from the Public Fund's assets under management within 15
26 months after the company's most recent appearance on the
27 Scrutinized Companies List.
28 2. If a company that ceased scrutinized active
29 business operations following engagement pursuant to paragraph
30 (a) resumes such operations, this paragraph immediately
31 applies, and the Public Fund shall send a written notice to
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1 the company. The company shall also be immediately
2 reintroduced onto the Scrutinized Companies List.
3 (c) Prohibition.--The Public Fund may not acquire
4 securities of companies on the Scrutinized Companies List
5 which have active business operations, except as provided in
6 paragraph (d).
7 (d) Exemption.--A company that the United States
8 Government affirmatively declares to be excluded from its
9 present or any future federal sanctions regime relating to
10 Sudan is not subject to divestment or the investment
11 prohibition pursuant to paragraphs (b) and (c).
12 (e) Excluded securities.--Notwithstanding the
13 provisions of this act, paragraphs (b) and (c) do not apply to
14 indirect holdings in actively managed investment funds.
15 However, the Public Fund shall submit letters to the managers
16 of such investment funds containing companies that have
17 scrutinized active business operations requesting that they
18 consider removing such companies from the fund or create a
19 similar actively managed fund having indirect holdings devoid
20 of such companies. If the manager creates a similar fund, the
21 Public Fund shall replace all applicable investments with
22 investments in the similar fund in an expedited timeframe
23 consistent with prudent investing standards. For the purposes
24 of this section, a private equity fund is deemed to be an
25 actively managed investment fund.
26 (5) REPORTING.--
27 (a) The Public Fund shall file a report to the
28 Governor, the President of the Senate, the Speaker of the
29 House of Representatives, and the Attorney General that
30 includes the Scrutinized Companies List within 30 days after
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1 the list is created. This report shall be made available to
2 the public.
3 (b) Annually thereafter, the Public Fund shall file a
4 report, which shall be made available to the public, to the
5 Governor, the President of the Senate, the Speaker of the
6 House of Representatives, and the Attorney General and send a
7 copy of that report to the United States Presidential Special
8 Envoy to Sudan, or an appropriate designee or successor, which
9 includes:
10 1. A summary of correspondence with companies engaged
11 by the Public Fund under subparagraphs (4)(a)2. and 3.;
12 2. All investments sold, redeemed, divested, or
13 withdrawn in compliance with paragraph (4)(b);
14 3. All prohibited investments under paragraph (4)(c);
15 and
16 4. Any progress made under paragraph (4)(e).
17 (6) EXPIRATION.--This act expires upon the occurrence
18 of any of the following:
19 (a) The Congress or President of the United States
20 declares that the Darfur genocide has been halted for at least
21 12 months;
22 (b) The United States revokes all sanctions imposed
23 against the Government of Sudan;
24 (c) The Congress or President of the United States
25 declares that the Government of Sudan has honored its
26 commitments to cease attacks on civilians, demobilize and
27 demilitarize the Janjaweed and associated militias, grant free
28 and unfettered access for deliveries of humanitarian
29 assistance, and allow for the safe and voluntary return of
30 refugees and internally displaced persons; or
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1 (d) The Congress or President of the United States,
2 through legislation or executive order, declares that
3 mandatory divestment of the type provided for in this act
4 interferes with the conduct of United States foreign policy.
5 (7) OTHER LEGAL OBLIGATIONS.--With respect to actions
6 taken in compliance with this act, including all good faith
7 determinations regarding companies as required by this act,
8 the Public Fund is exempt from any conflicting statutory or
9 common law obligations, including any such obligations with
10 respect to choice of asset managers, investment funds, or
11 investments for the Public Fund's securities portfolios.
12 (8) REINVESTMENT IN CERTAIN COMPANIES HAVING
13 SCRUTINIZED ACTIVE BUSINESS OPERATIONS.--Notwithstanding any
14 other provision of this act to the contrary, the Public Fund
15 may cease divesting from certain scrutinized companies
16 pursuant to paragraph (4)(b) or reinvest in certain
17 scrutinized companies from which it divested pursuant to
18 paragraph (4)(b) if clear and convincing evidence shows that
19 the value of all assets under management by the Public Fund
20 becomes equal to or less than 99.50 percent, or 50 basis
21 points, of the hypothetical value of all assets under
22 management by the Public Fund assuming no divestment for any
23 company had occurred under paragraph (4)(b). Cessation of
24 divestment, reinvestment, or any subsequent ongoing investment
25 authorized by this act is limited to the minimum steps
26 necessary to avoid the contingency set forth in this
27 subsection. For any cessation of divestment, reinvestment, or
28 subsequent ongoing investment authorized by this act, the
29 Public Fund shall provide a written report to the Governor,
30 the President of the Senate, the Speaker of the House of
31 Representatives, and the Attorney General in advance of
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1 initial reinvestment, updated semiannually thereafter as
2 applicable, setting forth the reasons and justification,
3 supported by clear and convincing evidence, for its decisions
4 to cease divestment, reinvest, or remain invested in companies
5 having scrutinized active business operations. This act does
6 not apply to reinvestment in companies on the grounds that
7 they have ceased to have scrutinized active business
8 operations.
9 (9) ENFORCEMENT.--The Attorney General shall enforce
10 the provisions of this act and may bring any necessary actions
11 in court through any lawful designee.
12 Section 2. If any provision of this act or its
13 application to any person or circumstance is held invalid, the
14 invalidity does not affect other provisions or applications of
15 the act which can be given effect without the invalid
16 provision or application, and to this end the provisions of
17 this act are severable.
18 Section 3. This act shall take effect upon becoming a
19 law.
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2 SENATE SUMMARY
3 Requires the State Board of Administration to identify
all companies doing certain types of business in or with
4 Sudan in which the public moneys are invested. Requires
the board to create and maintain a Scrutinized Company
5 List that names all such companies. Requires the board to
periodically contact all scrutinized companies and
6 encourage them to refrain from engaging in certain types
of business in or with Sudan. Requires the board to
7 inform scrutinized companies of their status as a
scrutinized company and to ask for clarification as to
8 the nature of each company's business activities.
Provides that a company may be removed from the list
9 under certain conditions. Provides for reintroduction of
a company onto the list. Requires the board to divest
10 itself of all publicly traded securities of a scrutinized
company under certain conditions. Provides exceptions to
11 the divestment requirement. Prohibits the board from
acquiring securities of certain scrutinized companies.
12 Provides exceptions to the investment prohibition.
Provides an additional exception from the divestment
13 requirement and the investment prohibition to certain
indirect holdings in actively managed investment funds.
14 Requires the board to request that the managers of such
investment funds consider removing scrutinized companies
15 from the fund or create a similar fund that excludes such
companies. Requires the board to file a report to the
16 Governor, Legislature, and Attorney General within a
specified period after creation of the Scrutinized
17 Company List. Requires the annual filing of an updated
report. Requires that all such reports be made available
18 to the public. Requires that the report include certain
information. Provides for the expiration of the act.
19 Exempts the board from certain statutory or common law
obligations. Authorizes the board to cease divesting or
20 to reinvest in certain scrutinized companies if the value
for all assets under management by the board becomes
21 equal to or less than a specified amount. Requires the
board to file a written report to the Governor,
22 Legislature, and Attorney General prior to such
reinvestment. Requires that the report contain certain
23 information. Requires semiannual updates to such a report
when applicable. Requires the Attorney General to enforce
24 the divestment requirements and investment prohibitions.
Authorizes the Attorney General to bring enforcement
25 actions in court through any lawful designee.
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