CHAPTER 9. SUDAN DIVESTMENT
IC 5-10.2-9
Chapter 9. Sudan Divestment
IC 5-10.2-9-1
"Active business operations"
Sec. 1. As used in this chapter, "active business operations" meansall business operations that are not inactive business operations.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-2
"Board"
Sec. 2. 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.149-2007, SEC.3.
IC 5-10.2-9-3
"Business operations"
Sec. 3. As used in this chapter, "business operations" meansengaging in any commerce in any form in Sudan.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-4
"Company"
Sec. 4. (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.149-2007, SEC.3.
IC 5-10.2-9-5
"Complicit in Darfur genocide"
Sec. 5. For purposes of this chapter, a company is "complicit inthe Darfur genocide" if the company took any actions during thepreceding twenty (20) month period that directly support or promotethe genocidal campaign in the Darfur region of Sudan, including anyof the following: (1) Preventing Darfur's victimized population fromcommunicating with each other.
(2) Encouraging Sudanese citizens to speak out against aninternationally approved security force in Darfur.
(3) Actively working to deny, cover up, or alter the record onhuman rights abuses in Darfur.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-6
"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.149-2007, SEC.3.
IC 5-10.2-9-7
"Direct holdings"
Sec. 7. As used in this chapter, "direct holdings" means allsecurities of a company held directly by the fund or in an account inwhich the fund owns all shares or interests.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-8
"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.149-2007, SEC.3.
IC 5-10.2-9-9
"Government of Sudan"
Sec. 9. (a) As used in this chapter, "government of Sudan" refersto the government in Khartoum, Sudan, that is led by the NationalCongress Party (formally known as the National Islamic Front) orany successor government formed on or after October 13, 2006,including the coalition National Unity Government agreed upon inthe Comprehensive Peace Agreement for Sudan.
(b) The term does not include the regional government of southernSudan.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-10
"Inactive business operations"
Sec. 10. As used in this chapter, "inactive business operations"means the mere continued holding or renewal of rights to property
previously operated to generate revenues but not presently deployedfor such purpose.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-11
"Indirect holdings"
Sec. 11. As used in this chapter, "indirect holdings" means allsecurities of a company:
(1) held in an account or a fund; and
(2) managed by one (1) or more persons not employed by thefund, in which the fund owns shares or interests together withother investors not subject to this chapter.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-12
"Marginalized populations of Sudan"
Sec. 12. As used in this chapter, "marginalized populations ofSudan" includes the following:
(1) The part of the population in the Darfur region that has beengenocidally victimized.
(2) The part of the population of southern Sudan victimized bySudan's north-south civil war.
(3) The Beja, Rashidiya, and other similarly underserved groupsof eastern Sudan.
(4) The Nubian and other similarly underserved groups inSudan's Abyei, southern Blue Nile, and Nuba mountain regions.
(5) The Amri, Hamadab, Manasir, and other similarlyunderserved groups of northern Sudan.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-13
"Military equipment"
Sec. 13. (a) As used in this chapter, "military equipment" meansweapons, arms, or military defense supplies provided directly orindirectly to any force actively participating in the conflict in Sudan.The term includes any equipment that readily may be used formilitary 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 Sudanby the United Nations or the African Union.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-14
"Mineral extraction activities"
Sec. 14. (a) As used in this chapter, "mineral extraction activities"means the exploration, extraction, processing, transporting, orwholesale 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 extractionactivities, including the provision of supplies or services in supportof mineral extraction activities.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-15
"Oil related 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;
(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.149-2007, SEC.3.
IC 5-10.2-9-16
"Power production activities"
Sec. 16. As used in this chapter, "power production activities"means any business operation that involves a project commissionedby the National Electricity Corporation of Sudan or other similarentity of the government of Sudan whose purpose is to facilitatepower generation 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.149-2007, SEC.3.
IC 5-10.2-9-17
"Research firm"
Sec. 17. As used in this chapter, "research firm" means areputable, neutral third party research firm not controlled by thefund.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-18
"Scrutinized company"
Sec. 18. (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) the government of Sudan;
(ii) companies in which the government of Sudan has anydirect or indirect equity share;
(iii) consortiums or projects commissioned by thegovernment of Sudan; or
(iv) companies involved in consortiums or projectscommissioned by the government of Sudan.
(B) Either:
(i) more than ten percent (10%) of the company's revenuesor assets linked to Sudan involve oil related activities ormineral extraction activities, and less than seventy-fivepercent (75%) of the company's oil related or mineralextracting revenues or assets linked to Sudan involvecontracts with the regional government of southern Sudanor a project or consortium created exclusively by theregional government, and the company has failed to takesubstantial action; or
(ii) more than ten percent (10%) of the company'srevenues or assets linked to Sudan involve powerproduction activities and less than seventy-five percent(75%) of the company's power production activitiesinclude projects that are intended to provide power orelectricity to the marginalized populations of Sudan, andthe 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 useof the equipment by forces actively participating in armedconflict in Sudan. This subdivision does not apply to companiesinvolved in the sale of military equipment solely to the regionalgovernment of southern Sudan or any internationally recognizedpeacekeeping force or humanitarian organization.
(b) The term does not include a social development company thatis not complicit in the Darfur genocide.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-19
"Social development company"
Sec. 19. As used in this chapter, "social development company"means a company whose primary purpose in Sudan is to providehumanitarian 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 relatedactivities, mineral extraction activities, or power productionactivities.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-20
"Substantial action"
Sec. 20. As used in this chapter, "substantial action" means:
(1) adopting, publicizing, and implementing a formal plan tocease scrutinized business operations within one (1) year and torefrain from any new business operations;
(2) undertaking significant humanitarian efforts on behalf ofone (1) or more marginalized populations of Sudan; or
(3) materially improving conditions for the genocidallyvictimized population in Darfur through engagement with thegovernment of Sudan.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-21
Identification of scrutinized companies
Sec. 21. (a) Not later than March 30, 2008, 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), and atthe board's discretion, each board may use existing research orcontract 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 Sudan.
(2) Contact other institutional investors that invest in companieswith business operations in Sudan.
(3) Contact asset managers contracted by the fund that invest incompanies 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 eachscrutinized company has active or inactive business operations inSudan.
(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).
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-22
Identification of holdings
Sec. 22. After a board creates or updates the scrutinized companylist under section 21 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.149-2007, SEC.3.
IC 5-10.2-9-23
Notice to scrutinized company with inactive business operations
Sec. 23. (a) Each fund shall send to each scrutinized company:
(1) that is identified under section 22 of this chapter as one inwhich 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 astatement encouraging the company to continue to refrain frominitiating active business operations in Sudan until the company isable to avoid scrutinized business operations altogether.
(b) The fund shall continue to correspond on a semiannual basiswith scrutinized companies in which the fund has direct or indirectholdings and that have only inactive business operations.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-24
Notice to scrutinized company with active 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 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 shall:
(1) offer the company the opportunity to clarify the company'sSudan related activities; and
(2) encourage the company, within ninety (90) days after thedate of the written notice, to either:
(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.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-25
Compliance by a scrutinized company
Sec. 25. (a) If, within ninety (90) days after a fund's firstengagement with a company under section 24 of this chapter, thecompany ceases scrutinized business operations, the company shallbe removed from the fund's scrutinized company list and theprovisions of sections 26, 27, 28, and 29 of this chapter shall ceaseto apply to the company unless the company resumes scrutinizedbusiness operations.
(b) If, within ninety (90) days after a fund first engages with acompany under section 24 of this chapter, the company converts itsscrutinized active business operations to inactive businessoperations, the company shall be subject to the provisions of section23 of this chapter.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-26
Divestment; exemption for certain commingled funds
Sec. 26. (a) Except as provided in sections 28 and 29 of thischapter, if, after ninety (90) days after a fund's first engagement witha company under section 24 of this chapter, the company continuesto have scrutinized active business operations, the fund shall sell,redeem, divest, or withdraw all publicly traded securities of thecompany that are held by the fund, as follows:
(1) At least fifty percent (50%) of such assets shall be removedfrom the fund's assets under management within nine (9)months after the company's appearance on the scrutinizedcompany list.
(2) One hundred percent (100%) of such assets shall beremoved from the fund's assets under management withinfifteen (15) months after the company's appearance on thescrutinized company list.
(b) If a company that ceased scrutinized active businessoperations following engagement under section 24 of this chapterresumes scrutinized active business operations, and only while thecompany continues to have active business operations, the companyshall immediately be placed back on the scrutinized company list. Afund that has holdings in the company shall sell, redeem, divest, orwithdraw all publicly traded securities of the company as providedin subsection (a) based on the date the company is placed back on thescrutinized company list. The fund shall send a written notice to thecompany indicating that the company was placed back on thescrutinized company list and is subject to divestment.
(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 Sudan if the estimatedcost of divestment of the commingled fund is greater than ten percent(10%) of the total value of the scrutinized companies with activebusiness operations held in the commingled fund. The board shall
include any commingled fund that includes a scrutinized companythat is exempted from divestment under this subsection in the board'sreport submitted to the legislative council under section 31 of thischapter.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-27
Acquisition of securities containing scrutinized companies
Sec. 27. Except as provided in sections 28 and 29 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.149-2007, SEC.3.
IC 5-10.2-9-28
Scrutinized company excluded from federal sanctions
Sec. 28. If the government of the United States affirmativelydeclares any company on the scrutinized company list with activebusiness operations in Sudan to be excluded from any federalsanctions relating to Sudan, the company is not subject to divestmentor investment prohibition under this chapter.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-29
Exclusion of indirect holdings in actively managed investmentfunds
Sec. 29. Notwithstanding any provision to the contrary, sections26 and 27 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.149-2007, SEC.3.
IC 5-10.2-9-30
Exclusion of private equity funds
Sec. 30. This chapter does not apply to private equity funds.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-31
Report to legislative council
Sec. 31. (a) On or before November 1, 2007, and thereafter asdirected by the legislative council, the board shall submit a report inan electronic format under IC 5-14-6 to the legislative council fordistribution to the members of the general assembly. (b) The report must include at least the following information, asof the date of the report:
(1) A copy of the scrutinized company list.
(2) A summary of correspondence with companies engaged bythe fund under sections 23 and 24 of this chapter.
(3) All investments sold, redeemed, divested, or withdrawn incompliance with section 26 of this chapter.
(4) All commingled funds that are exempted from divestmentunder 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.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-32
Expiration of chapter
Sec. 32. This chapter expires on the earliest of the following:
(1) Twelve (12) months after the date the government of Sudanhalts the genocide in Darfur as determined by the Congress ofthe United States and the United States Department of State.
(2) The date the United States revokes its current sanctionsagainst the government of Sudan.
(3) 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 for the United States.
(4) The date Congress or the President of the United Statesdeclares that the government of Sudan:
(A) has honored its commitments to cease attacks oncivilians;
(B) demobilizes and demilitarizes the Janjaweed andassociated militias;
(C) grants free and unfettered access for deliveries ofhumanitarian assistance; and
(D) allows for the safe and voluntary return of refugees andinternational displaced persons.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-33
Exemption from conflicting statutory or common law obligations
Sec. 33. With respect to actions taken in compliance with thischapter, including all good faith determinations regarding companieson the scrutinized company list, the fund shall be 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.149-2007, SEC.3.
IC 5-10.2-9-34
Cessation of divestment and reinvestment in scrutinized companies
Sec. 34. (a) Notwithstanding any provision to the contrary, the
fund shall be permitted to cease divesting and to reinvest in certainscrutinized companies on the scrutinized company list with activebusiness operations in Sudan if evidence shows that the value for allassets under management by the fund becomes equal to or less thanninety-nine and five-tenths percent (99.5%) of the value of all assetsunder management by the fund, including the companies divestedunder section 26 of this chapter.
(b) As provided by this section, any cessation of divestment orreinvestment shall be strictly limited to the minimum steps necessaryto avoid the contingency set forth in subsection (a).
(c) For any cessation of divestment, reinvestment, and subsequentongoing investment authorized by this section, the fund shall submita report in an electronic format under IC 5-14-6 to the legislativecouncil for distribution to the members of the general assembly inadvance of any initial reinvestment. The report shall be updatedannually thereafter as applicable, setting forth the reasons andjustifications for the decision to cease divestment, reinvest, or remaininvested with companies with scrutinized active business operations.This section does not apply to companies that have ceased to havescrutinized business operations.
As added by P.L.149-2007, SEC.3.
IC 5-10.2-9-35
Immunity; liability of the fund and its agents
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 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 the 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.149-2007, SEC.3.
IC 5-10.2-9-36
Severability
Sec. 36. The provisions of this chapter are severable in the mannerprovided in IC 1-1-1-8(b).
As added by P.L.149-2007, SEC.3.