CHAPTER 10. DIVESTMENT FROM STATES THAT SPONSOR TERROR
IC 5-10.2-10
Chapter 10. Divestment From States That Sponsor Terror
IC 5-10.2-10-1
Requirements for mandatory divestment
Sec. 1. The requirements for mandatory divestment contained inthis chapter are separate and distinct from the requirements formandatory divestment contained in IC 5-10.2-9.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-2
"Active business operations"
Sec. 2. As used in this chapter, "active business operations" meansall business operations that are not inactive business operations.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-3
"Board"
Sec. 3. As used in this chapter, "board" refers to the following:
(1) The board of trustees of the Indiana state teachers'retirement fund.
(2) The board of trustees of the public employees' retirementfund.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-4
"Business operations"
Sec. 4. As used in this chapter, "business operations" meansengaging in any commerce in any form in a state that sponsors terror.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-5
"Company"
Sec. 5. (a) As used in this chapter, "company" means any of thefollowing:
(1) A sole proprietorship.
(2) An organization.
(3) An association.
(4) A corporation.
(5) A partnership.
(6) A joint venture.
(7) A limited partnership.
(8) A limited liability partnership.
(9) A limited liability company.
(10) A business association.
(b) The term includes all wholly owned subsidiaries, majorityowned subsidiaries, parent companies, and affiliates of such entitiesor business associations that exist for profit making purposes.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-6
"Cost of divestment"
Sec. 6. As used in this chapter, "cost of divestment" means thesum of the following:
(1) The costs associated with the sale, redemption, divestment,or withdrawal of an investment.
(2) The costs associated with the acquisition and maintenanceof a replacement investment.
(3) A cost not described in subdivision (1) or (2) that is incurredby the fund in connection with a divestment transaction.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-7
"Direct holdings"
Sec. 7. As used in this chapter, "direct holdings" means allsecurities of a company held directly by a fund or in an account inwhich the fund owns all shares or interests.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-8
"Fund"
Sec. 8. As used in this chapter, "fund" refers to the following:
(1) The Indiana state teachers' retirement fund.
(2) The public employees' retirement fund.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-9
"Inactive business operations"
Sec. 9. As used in this chapter, "inactive business operations"means the mere continued holding or renewal of rights to propertypreviously operated to generate revenues but not presently deployedfor that purpose.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-10
"Indirect holdings"
Sec. 10. As used in this chapter, "indirect holdings" means allsecurities of a company that are:
(1) held in an account or a fund; and
(2) managed by one (1) or more persons:
(A) who are not employed by the fund; and
(B) in which the fund owns shares or interests together withother investors not subject to this chapter.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-10.2
"Military equipment"
Sec. 10.2. (a) As used in this chapter, "military equipment" meansweapons, arms, or military defense supplies provided directly orindirectly to any force of a state sponsor of terror. 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 defensesupplies sold to peacekeeping forces that may be dispatched to a statesponsor of terror by the United Nations or the African Union.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-10.4
"Mineral extraction activities"
Sec. 10.4. (a) As used in this chapter, "mineral extractionactivities" means the exploration, extraction, processing,transporting, or wholesale sale of elemental minerals or associatedmetals 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 extractionactivities, including the provision of supplies or services in supportof mineral extraction activities.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-10.6
"Oil related activities"
Sec. 10.6. (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;
(7) the selling or trading of oil; or
(8) the construction or maintenance of a pipeline, a refinery, oranother oil field infrastructure.
(b) The term includes the facilitation of oil related activities,including the provision of supplies or services in support of oilrelated activities. The mere retail sale of gasoline and relatedconsumer products is not considered an oil related activity.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-10.8
"Power production activities"
Sec. 10.8. As used in this chapter, "power production activities"means any business operation that involves a project commissionedby a state sponsor of terror whose purpose is to facilitate powergeneration and delivery. The term includes the following:
(1) Establishing power generating plants or hydroelectric dams.
(2) Selling or installing components for power generating plantsor hydroelectric dams.
(3) Providing service contracts related to the installation ormaintenance of power generating plants or hydroelectric dams.
(4) Facilitating power production activities, including providingsupplies or services in support of power production activities.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-11
"Private market fund"
Sec. 11. As used in this chapter, "private market fund" means any:
(1) private equity fund;
(2) private equity fund of funds;
(3) venture capital fund;
(4) hedge fund;
(5) hedge fund of funds;
(6) real estate fund; or
(7) investment vehicle;
that is not publicly traded.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-12
"Scrutinized business operations"
Sec. 12. As used in this chapter, "scrutinized business operations"means business operations that have caused a company to become ascrutinized company.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-13
"Scrutinized company"
Sec. 13. (a) As used in this chapter, "scrutinized company" meansa company that meets any of the following criteria:
(1) Both of the following apply to the company:
(A) The company has business operations that involvecontracts with or the provision of supplies or services to:
(i) a state sponsor of terror;
(ii) companies in which a state sponsor of terror has anydirect or indirect equity share;
(iii) consortiums or projects commissioned by a statesponsor of terror; or
(iv) companies involved in consortiums or projectscommissioned by a state sponsor of terror.
(B) Either: (i) more than ten percent (10%) of the company's revenuesor assets is linked to a state sponsor of terror involve oilrelated activities or mineral extraction activities; or
(ii) more than ten percent (10%) of the company'srevenues or assets is linked to a state sponsor of terrorinvolve power production activities.
(2) The company supplies military equipment to a state sponsorof terror, unless the company implements safeguards to preventthe use of the equipment by forces actively participating in anarmed conflict in a state sponsor of terror. This subdivisiondoes not apply to companies involved in the sale of militaryequipment solely to any internationally recognizedpeacekeeping force or humanitarian organization.
(b) The term does not include a social development company.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-14
"Social development company"
Sec. 14. (a) As used in this chapter, "social developmentcompany" means a company that is:
(1) licensed by the United States Department of Treasury underthe Federal Trade Sanction Reform and Export EnhancementAct of 2000 (P.L. 106-387); or
(2) lawfully operating under the laws of another country whoseprimary purpose in a state sponsor of terror is to providehumanitarian goods or services.
(b) A company described in subsection (a)(2) includes a companywhose primary purpose is to provide:
(1) food;
(2) medicine or medical equipment;
(3) agricultural supplies or infrastructure;
(4) educational opportunities;
(5) journalism related activities;
(6) spiritual related activities or materials;
(7) information or information materials;
(8) general consumer goods; or
(9) services of a purely clerical or reporting nature;
to aid the inhabitants of a state sponsor of terror.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-15
"State sponsor of terror"
Sec. 15. As used in this chapter, "state sponsor of terror" meansa country determined by the Secretary of State of the United Statesto have repeatedly provided support for acts of internationalterrorism.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-16
"Substantial action" Sec. 16. As used in this chapter, "substantial action" meansadopting, publicizing, and implementing a formal plan to ceasescrutinized business operations within one (1) year and to refrainfrom any new business operations.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-17
Identification of scrutinized companies
Sec. 17. (a) Not later than March 30, 2010, each board shall makea good faith effort to identify all scrutinized companies in which thefund administered by the board has direct or indirect holdings.
(b) In carrying out its responsibilities under subsection (a), eachboard may use existing research or contract with a research firm.
(c) A board or a research firm with which the board contractsunder subsection (b) may take any of the following actions:
(1) Review publicly available information regarding companieswith business operations in states that sponsor terror.
(2) Contact other institutional investors that have divested fromor invest in companies with business operations in states thatsponsor terror.
(3) Contact asset managers that are contracted by the fund andthat invest in companies with business operations in states thatsponsor terror.
(d) Not later than the first meeting of the board after March 30,2010, each board shall compile the names of all scrutinizedcompanies into a scrutinized company list and indicate whether eachscrutinized company has active or inactive business operations in astate sponsor of terror.
(e) Each board shall update its scrutinized company list at least onan annual basis based on evolving information from sourcesdescribed in subsections (b) and (c).
(f) If the Secretary of State of the United States determines that acountry is a state sponsor of terror after June 30, 2009, each boardshall add any additional scrutinized company resulting from theSecretary of State's determination when each board updates itsscrutinized company list under subsection (e).
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-18
Identification of holdings
Sec. 18. After a board creates or updates the scrutinized companylist under section 17 of this chapter, the board shall immediatelyidentify the companies on the scrutinized company list in which thefund administered by the board has direct or indirect holdings.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-19
Notice to scrutinized company with inactive business operations
Sec. 19. (a) Each fund shall send to each scrutinized company:
(1) that is identified under section 18 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 provisions of this chapter and astatement encouraging the company to continue to refrain frominitiating active business operations in a state sponsor of terror untilthe company is able to avoid scrutinized business operationsaltogether.
(b) Each fund shall continue to correspond on a semiannual basiswith scrutinized companies:
(1) in which the fund has direct or indirect holdings; and
(2) that have only inactive business operations.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-20
Notice to scrutinized company with active business operations
Sec. 20. (a) Each fund shall send to each scrutinized company:
(1) that is identified under section 18 of this chapter as one inwhich the fund has direct or indirect holdings; and
(2) that has active business operations;
a written notice concerning the contents of this chapter and astatement indicating that the fund's holdings in the company maybecome subject to divestment by the fund.
(b) A notice sent under this section must:
(1) offer the company the opportunity to clarify the company'sstate sponsor of terror related activities; and
(2) encourage the company to:
(A) cease its scrutinized business operations; or
(B) convert the company's operations to inactive businessoperations in order to avoid divestment by the fund of thefund's holdings in the company;
not later than one hundred eighty (180) days after the date ofthe notice.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-21
Compliance by a scrutinized company
Sec. 21. (a) If, within one hundred eighty (180) days after a fundfirst sends written notice to a company under section 20 of thischapter, the company ceases scrutinized business operations, thecompany shall be removed from the fund's scrutinized company list,and sections 22, 23, 24, and 25 of this chapter do not apply to thecompany unless the company resumes scrutinized businessoperations.
(b) If, within one hundred eighty (180) days after a fund firstsends written notice to a company under section 20 of this chapter,the company converts its scrutinized active business operations toinactive business operations, the company is subject to section 19 ofthis chapter.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-22
Divestment; exemption for certain commingled funds
Sec. 22. (a) Except as provided in sections 24 and 25 of thischapter, if a company continues to have scrutinized active businessoperations one hundred eighty (180) days after a fund first sendswritten notice to the company under section 20 of this chapter, thefund shall sell, redeem, divest, or withdraw all publicly tradedsecurities of the company that are held by the fund, as follows:
(1) At least fifty percent (50%) of the securities shall beremoved from the fund's assets under management within three(3) years after the company's appearance on the scrutinizedcompany list.
(2) At least seventy-five percent (75%) of the securities shall beremoved from the fund's assets under management within four(4) years after the company's appearance on the scrutinizedcompany list.
(3) One hundred percent (100%) of the securities shall beremoved from the fund's assets under management within five(5) years after the company's appearance on the scrutinizedcompany list.
(b) If a company that ceased scrutinized active businessoperations following engagement under section 20 of this chapterresumes scrutinized active business operations, the company shallimmediately be placed on the scrutinized company list and shallremain on the scrutinized company list while the company continuesto have active business operations. A fund that has holdings in thecompany shall send a written notice to the company as described insection 20 of this chapter indicating that the company has beenplaced on the scrutinized company list and is subject to divestment.The fund shall sell, redeem, divest, or withdraw all publicly tradedsecurities of the company as provided in subsection (a) based on thedate the company is placed back on the scrutinized company list.
(c) A board is not required to divest the board's holdings in apassively managed commingled fund that includes a scrutinizedcompany with active business operations in a state sponsor of terrorif the estimated cost of divestment of the commingled fund is greaterthan ten percent (10%) of the total value of the scrutinizedcompanies with active business operations held in the commingledfund. The board shall include any commingled fund that includes ascrutinized company that is exempted from divestment under thissubsection in the board's report submitted to the legislative councilunder section 26 of this chapter.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-23
Acquisition of securities containing scrutinized companies
Sec. 23. Except as provided in sections 24 and 25 of this chapter,a fund shall not acquire securities of companies on the scrutinizedcompany list that have active business operations.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-24
Scrutinized company excluded from federal sanctions
Sec. 24. If the government of the United States declares that acompany on the scrutinized company list with active businessoperations in a state sponsor of terror is excluded from any federalsanctions relating to a state sponsor of terror, the company is notsubject to divestment or investment prohibition under this chapter.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-25
Exclusion of indirect holdings in a private market fund
Sec. 25. Notwithstanding any provision to the contrary, sections22 and 23 of this chapter do not apply to indirect holdings in aprivate market fund that includes a scrutinized company with activebusiness operations in a state sponsor of terror.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-25.5
Exclusion of indirect holdings in actively managed investmentfunds
Sec. 25.5. Notwithstanding any provision to the contrary, sections22 and 23 of this chapter do not apply to indirect holdings in activelymanaged investment funds. However, if a fund has indirect holdingsin actively managed investment funds containing the securities ofscrutinized companies with active business operations, the fund shallsubmit letters to the managers of the investment funds requesting thatthe managers remove the scrutinized companies with active businessoperations from the fund or create a similar actively managed fundwith indirect holdings without scrutinized companies with activebusiness operations. If the manager creates a similar fund, the fundshall replace all applicable investments with investments in thesimilar fund in a period consistent with prudent investing standards.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-26
Report to legislative council
Sec. 26. (a) On or before November 1, 2010, and thereafter asdirected by the legislative council, each board shall submit a reportin an electronic format under IC 5-14-6 to the legislative council.Notwithstanding IC 5-14-6-4(b)(2), the submission of a report underthis subsection to the executive director of the legislative servicesagency fulfills the board's requirement to send a copy of the reportto each member of the general assembly using the member's senateor house of representatives electronic mail address.
(b) A report submitted by the board of a fund under this sectionmust include at least the following information, as of the date of thereport:
(1) A copy of the fund's scrutinized company list.
(2) A summary of correspondence between the fund andcompanies under sections 19 and 20 of this chapter. (3) All investments sold, redeemed, divested, or withdrawn bythe fund in compliance with section 22 of this chapter.
(4) All commingled funds that are exempted from divestmentunder section 22 of this chapter.
(5) All companies whose securities the fund is prohibited fromacquiring under section 23 of this chapter.
(6) Any progress made under section 21 of this chapter.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-27
Expiration of chapter
Sec. 27. The provisions of this chapter regarding any countrydetermined to be a state sponsor of terror cease to apply to thatcountry on the earlier of the following:
(1) The date the Secretary of State of the United States removesthe country from its official list of state sponsors of terrorism.
(2) The date Congress or the President of the United States,through legislation or executive order, declares that mandatorydivestment of the type provided for in this chapter interfereswith the conduct of foreign policy of the United States.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-28
Exemption from conflicting statutory or common law obligations
Sec. 28. With respect to actions taken in compliance with thischapter, including all good faith determinations regarding companieson the scrutinized company list, a fund is exempt from anyconflicting statutory or common law obligations, including anyobligations with respect to choice of asset managers, investmentfunds, or investments for fund securities portfolios.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-29
Immunity; liability of the fund and its agents
Sec. 29. (a) Both:
(1) the state and its officers, agents, and employees; and
(2) each fund and its board members, executive director,officers, agents, and employees;
are immune from civil liability for any act or omission related to theremoval 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, andemployees of a fund;
are entitled to indemnification from the fund for all losses, costs, andexpenses, including reasonable attorney's fees, associated withdefending against any claim or suit relating to an act authorizedunder this chapter.
As added by P.L.67-2009, SEC.1.
IC 5-10.2-10-30
Severability
Sec. 30. The provisions of this chapter are severable in the mannerprovided in IC 1-1-1-8(b).
As added by P.L.67-2009, SEC.1.