State Seal2 copy            Bill Number: H.B. 2637

            Fann Floor Amendment

            Reference to: APPROPRIATIONS Committee amendment

            Amendment drafted by: Leg Council

 

 

FLOOR AMENDMENT EXPLANATION

 

1.   Removes the financial institution prohibition and the related Legislative intent.

2.   Removes the requirement for:

a)   any investment manager to attest that the investment manager does not hold any environmental, social or governance-related investments; and

b) the State Treasurer to certify that the investment managers do not hold investments in environmental, social or governance-related products.

3.   Defines plan as any plan, fund or program established or maintained by the state or a political subdivision of the state to do any of the following:

a)   provide retirement income or other retirement benefits to employees or former employees;

b) defer income by employees for a period of time extending to the termination of covered employment or beyond; or

c)   invest taxpayer monies for any purpose.

4.   Requires a fiduciary to discharge the fiduciary's duties with respect to a plan solely in the interest of the participants and beneficiaries of the plan for the exclusive purpose of:

a)   providing pecuniary benefits to the participants and their beneficiaries;

b) defraying reasonable expenses of administering the plan; and

c)   earning a return on the investment.

5.   Requires a fiduciary to take into account only pecuniary factors when evaluating an investment or discharging the fiduciary's duties with respect to a plan.

6.   Outlines plan voting of ownership interests and proxy voting.

7.   Prohibits a plan from entrusting any plan assets to a fiduciary that has a practice of:

a)   engaging with, or commits to engage with, a company based on nonpecuniary factors; or

b) voting shares based on nonpecuniary factors.

8.   Prohibits a fiduciary from adopting a practice of following the recommendations of a proxy advisory firm or other service provided unless the proxy advisory firm's or the service provider's proxy voting guidelines are consistent with the fiduciary's obligation to act based only on pecuniary factors.

9.   Defines fiduciary, nonpecuniary factor and pecuniary factor.

10. Makes technical and conforming changes.

 


 

Fifty-fifth Legislature                                                      Fann

Second Regular Session                                                  H.B. 2637

 

FANN FLOOR AMENDMENT

SENATE AMENDMENTS TO H.B. 2637

(Reference to APPROPRIATIONS Committee amendment)

 


Page 1, strike lines 2 through 20

Page 2, strike lines 1 through 8

Renumber to conform

Lines 11 and 12, strike "; voting shares"

Line 17, after "b." strike remainder of line

Strike lines 18 through 21

Line 22, strike "investments in environmental, social or governance-related products."

Line 28, after "factors" insert "as prescribed in title 35, chapter 2, article 10"

Strike lines 31 and 32

Page 3, strike lines 1 through 3, insert:

"Sec. 2. Title 35, chapter 2, Arizona Revised Statutes, is amended by adding article 10, to read:

ARTICLE 10. GOVERNMENT INVESTMENTS PROTECTION ACT

START_STATUTE35-394. Definitions

In this article, unless the context otherwise requires:

1. "Fiduciary" means a person who does any of the following:

(a) exercises any discretionary authority or discretionary control with respect to A plan or exercises any authority or control managing or disposing of the plan's assets.

(b) renders investment advice for a fee or other compensation, directly or indirectly, with respect to any monies or other property of A plan or has the authority or responsibility to render investment advice.

(c) has any discretionary authority or discretionary responsibility in administering A plan.

2. "Nonpecuniary factor" includes Any factor that is intended to further or is branded, advertised or otherwise publicly described by The offeror or FIDUCIARY as furthering any of the following:

(a) international, domestic or industry agreements relating to environmental or social goals.

(b) corporate governance structures based on social characteristics.

(c) social or environmental goals.

3. "Pecuniary factor" means a factor that has a material effect on the financial risk or the financial return of an investment based on appropriate investment horizons consistent with A plan's investment objectives and funding policy.

4. "Plan" means any plan, fund or program that is established or maintained by this State or a political subdivision of this state, including a university under the jurisdiction of the Arizona board of regents and a community college district as defined in section 15-1401, to do any of the following:

(a) Provide retirement income or other retirement benefits to employees or former employees.

(b) defer income by employees for A period of time extending to the termination of covered employment or beyond.

(c) invest taxpayer monies for any purpose. END_STATUTE

START_STATUTE35-394.01. Plans; fiduciaries; duties

A. A fiduciary shall discharge The fiduciary's duties with respect to a plan solely in the interest of the participants and beneficiaries of the plan for the exclusive purpose of providing pecuniary benefits to the participants and their beneficiaries, defraying reasonable expenses of administering the plan and earning a return on the investment.

B. A fiduciary must take into account only pecuniary factors when evaluating an investment or discharging the fiduciary's duties with respect to a plan. A fiduciary may not take into account any nonpecuniary or other factors when evaluating an investment. END_STATUTE

START_STATUTE35-394.02. Plans; voting of ownership interests

A. Only the governmental entity that establishes or maintains a plan may vote the shares held by the plan.  A governmental entity may not grant proxy voting authority to any person who is not a part of the governmental entity unless that person follows guidelines consistent with the governmental entity's obligation to act based only on pecuniary factors.

B. The shares held directly or indirectly by a plan shall be voted only in the pecuniary interest of the plan.  The shares may not be voted to further nonpecuniary, environmental, social, political, ideological or other benefits or goals. A plan may not entrust any plan assets to a fiduciary that:

1. has a practice of engaging with, or COMMITS to engaging with, a company based on nonpecuniary factors.

2. has a practice of voting shares based on nonpecuniary factors.

C. A fiduciary may not adopt a practice of following the recommendations of a proxy advisory firm or other service provider unless The proxy advisory firm's or the service provider's proxy voting guidelines are consistent with the fiduciary's obligation to act based only on pecuniary factors."END_STATUTE

Amend title to conform


 

 

KAREN FANN

 

2637FloorFANN.docx

04/20/2022

12:35 PM

C: MEB