ARIZONA HOUSE OF REPRESENTATIVES Fifty-sixth Legislature Second Regular Session
	Senate: FICO DP 4-2-1-0 | 3^rd Read 16-12-2-0 House: GOV DPA 6-3-0-0 | WM DP 5-3-1-1 Final Pass: 16-14-0-0

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SB 1340: public funds; foreign adversaries; divestment

Sponsor: Senator Carroll, LD 28

Transmitted to the Governor

Overview

Outlines requirements related to publicly managed funds.

History

The State Board of Investment (Board) consists of five members and is chaired by the State Treasurer.  The Board must hold regular monthly meetings and keep an accurate record of its proceedings.  Additionally, the Board is directed to review investments of treasury monies, serve as trustee of any pension prefunding plan investment accounts and may order the State Treasurer to sell any of the securities (A.R.S. § 35-311).

Provisions

1. Prohibits a publicly managed fund from:

a) holding an investment in:

i. a foreign adversary;

ii. a state-owned enterprise of a foreign adversary;

iii. a company domiciled within a foreign adversary; or

iv. any other entity owned by or domiciled in a foreign adversary; or

b) investing or depositing public monies in a bank that is domiciled in, or has a principal place of business in, a foreign adversary. (Sec. 2)

2. Directs a publicly managed fund, on the general effective date, to immediately begin divestment of any prohibited holdings or investments. (Sec. 2)

3. Requires a publicly managed fund to complete total divestment no later than two years after the general effective date. (Sec. 2)

4. Instructs the Board, no later than six months after the general effective date, to do all the following:

a) review all publicly available information regarding companies that are state-owned enterprises of and domiciled within a foreign adversary;

b) contact asset and fund managers contracted by a publicly managed fund that invest in companies and in funds that are state-owned enterprises or, or domiciled within, a foreign adversary;

c) contact other institutional investors that have divested from or engaged with companies that are state-owned enterprises of, or domiciled within, a foreign adversary;

d) retain an independent research firm to identify companies that are investment holdings of a publicly managed fund that are state-owned enterprises, or domiciled within, a foreign adversary; and

e) compile and distribute a list to publicly managed funds of all companies or entities in Arizona that are state-owned enterprises of and are domiciled within a foreign adversary. (Sec. 2)

5. Stipulates that the outlined requirements do not conflict, impede, inhibit or otherwise interfere with any required financial safeguards, fiduciary requirements or other sound investment criteria that a publicly managed fund is subject to. (Sec. 2)

6. Entitles this Act as the Foreign Adversary Divestment Act. (Sec. 3)

7. Contains an applicability clause. (Sec. 4)

8. Defines:

a) company;

b) divestment;

c) domicile;

d) foreign adversary;

e) investment;

f) publicly managed fund; and

g) state-owned enterprise. (Sec. 2)

9. Makes a conforming change. (Sec. 1)

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13.                   SB 1340

14. Initials SJ Page 0 Transmitted

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