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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
divestment; boycott; Israel; public entities
Purpose
Requires a public entity to sell, redeem, divest or withdraw all direct holdings from a restricted company. Extends public entity prohibitions and requirements to state universities and community college districts by including state universities and community college districts in the definition of public entity.
Background
By April 1 of
each year, the State Treasurer and the state retirement systems must prepare a
list of companies that boycott Israel (restricted company list). The State
Treasurer and the state retirement systems must notify each company included on
the restricted company list that the company is subject to divestment. The
State Treasurer and the state retirement systems must:
1) sell, redeem, divest or withdraw all direct holdings from a restricted
company within three months of the company being placed on the restricted
company list; 2) not acquire securities of a restricted company as part of its
direct holdings; or 3) request that managers of its indirect holdings consider
selling, redeeming, divesting or withdrawing holdings or a restricted company
from the assets under its management (A.R.S.
§ 35-393.02).
Current statute prohibits a public entity from entering into a contract with a value of $100,000 or more with a company to acquire or dispose of services, supplies, information technology or construction unless the contract includes a written certification that the company is not currently engaged in, and agrees for the duration of the contract to not engage in, a boycott of goods and services from Israel. A public entity is the State of Arizona, a political subdivision or an agency, board, commission or department (A.R.S §§ 35-393 and 35-393.01).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Requires each public entity to:
a) sell, redeem, divest or withdraw all direct holdings from a restricted company within three months of the company being placed on the annual restricted company list;
b) not acquire securities of a restricted company as part of its direct holdings; or
c) request that managers of its indirect holdings consider selling, redeeming, divesting or withdrawing holdings of a restricted company from the assets under its management.
2. Includes state universities and community college districts in the definition of public entity.
3. Requires each public entity, by August 1, to annually post on its website a list of investments that are sold, redeemed, divested or withdrawn.
4. Requires the State Treasurer to notify each restricted company that the company is subject to divestment by a public entity.
5. Exempts each public entity, for actions relating to divestment, from any conflicting statutory or common law obligation or fiduciary duties with respect to choice of asset managers, investment funds or investments.
6. Subjects each public entity, for actions relating to divestment, to statutes relating to immunity for acts and omissions.
7. Indemnifies and holds harmless each public entity, for actions relating to divestment, from claims, demands, suits, actions, damages, judgments, costs, charges and expenses, including attorney fees, and against all liability, losses and damages because of a decision to sell, redeem, divest or withdraw holdings of a restricted company.
8. Makes technical changes.
9. Becomes effective on the general effective date.
Prepared by Senate Research
January 31, 2022
MG/slp