130th Ohio General Assembly
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S. B. No. 161  As Introduced
As Introduced

127th General Assembly
Regular Session
2007-2008
S. B. No. 161


Senator Jacobson 

Cosponsors: Senators Cates, Coughlin, Goodman, Kearney, Mason, Mumper, Padgett 



A BILL
To amend sections 135.143 and 135.35 and to enact sections 137.01 to 137.11 of the Revised Code to specify procedures for divesting investments a public authority holds in a company conducting specified types of business in Sudan and to prohibit public authorities from investing in such a company.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1.  That sections 135.143 and 135.35 be amended and sections 137.01, 137.02, 137.03, 137.04, 137.05, 137.06, 137.07, 137.08, 137.09, 137.10, and 137.11 of the Revised Code be enacted to read as follows:
Sec. 135.143.  (A) The treasurer of state may invest or execute transactions for any part or all of the interim funds of the state in the following classifications of obligations:
(1) United States treasury bills, notes, bonds, or any other obligations or securities issued by the United States treasury or any other obligation guaranteed as to principal and interest by the United States;
(2) Bonds, notes, debentures, or any other obligations or securities issued by any federal government agency or instrumentality;
(3) Bonds and other direct obligations of the state of Ohio issued by the treasurer of state and of the Ohio public facilities commission, the Ohio building authority, and the Ohio housing finance agency;
(4)(a) Written repurchase agreements with any eligible Ohio financial institution that is a member of the federal reserve system or federal home loan bank or any recognized United States government securities dealer, under the terms of which agreement the treasurer of state purchases and the eligible financial institution or dealer agrees unconditionally to repurchase any of the securities that are listed in division (A)(1), (2), or (6) of this section and that will mature or are redeemable within ten years from the date of purchase. The market value of securities subject to these transactions must exceed the principal value of the repurchase agreement by an amount specified by the treasurer of state, and the securities must be delivered into the custody of the treasurer of state or the qualified trustee or agent designated by the treasurer of state. The agreement shall contain the requirement that for each transaction pursuant to the agreement, the participating institution or dealer shall provide all of the following information:
(i) The par value of the securities;
(ii) The type, rate, and maturity date of the securities;
(iii) A numerical identifier generally accepted in the securities industry that designates the securities.
(b) The treasurer of state also may sell any securities, listed in division (A)(1), (2), or (6) of this section, regardless of maturity or time of redemption of the securities, under the same terms and conditions for repurchase, provided that the securities have been fully paid for and are owned by the treasurer of state at the time of the sale.
(5) Securities lending agreements with any eligible financial institution that is a member of the federal reserve system or federal home loan bank or any recognized United States government securities dealer, under the terms of which agreements the treasurer of state lends securities and the eligible financial institution or dealer agrees to simultaneously exchange similar securities or cash, equal value for equal value.
Securities and cash received as collateral for a securities lending agreement are not interim funds of the state. The investment of cash collateral received pursuant to a securities lending agreement may be invested only in such instruments specified by the treasurer of state in accordance with a written investment policy.
(6) Various forms of commercial paper issued by any corporation that is incorporated under the laws of the United States or a state, which notes are rated at the time of purchase in the two highest categories by two nationally recognized rating agencies, provided that the total amount invested under this section in any commercial paper at any time shall not exceed twenty-five per cent of the state's total average portfolio, as determined and calculated by the treasurer of state;
(7) Bankers acceptances, maturing in two hundred seventy days or less, which are eligible for purchase by the federal reserve system, provided that the total amount invested in bankers acceptances at any time shall not exceed ten per cent of the state's total average portfolio, as determined and calculated by the treasurer of state;
(8) Certificates of deposit in eligible institutions applying for interim moneys as provided in section 135.08 of the Revised Code, including linked deposits as provided in sections 135.61 to 135.67 of the Revised Code, agricultural linked deposits as provided in sections 135.71 to 135.76 of the Revised Code, and housing linked deposits as provided in sections 135.81 to 135.87 of the Revised Code;
(9) The state treasurer's investment pool authorized under section 135.45 of the Revised Code;
(10) Debt Except as provided in Chapter 137. of the Revised Code, debt interests, other than commercial paper described in division (A)(6) of this section, rated at the time of purchase in the three highest categories by two nationally recognized rating agencies and issued by corporations that are incorporated under the laws of the United States or a state, or issued by foreign nations diplomatically recognized by the United States government, or any instrument based on, derived from, or related to such interests. All interest and principal shall be denominated and payable in United States funds. The investments made under division (A)(10) of this section shall not exceed in the aggregate twenty-five per cent of the state's total average portfolio, as determined and calculated by the treasurer of state. The investments made under division (A)(10) of this section in debt interests issued by foreign nations shall not exceed in the aggregate one per cent of the state's total average portfolio, as determined and calculated by the treasurer of state. The investments made under division (A)(10) of this section in the debt interests of a single issuer shall not exceed in the aggregate one-half of one per cent of the state's total average portfolio, as determined and calculated by the treasurer of state.
The treasurer of state shall invest under division (A)(10) of this section in a debt interest issued by a foreign nation only if the debt interest is backed by the full faith and credit of that foreign nation. For purposes of division (A)(10) of this section, a debt interest is rated in the three highest categories by two nationally recognized rating agencies if either the debt interest itself or the issuer of the debt interest is rated, or is implicitly rated, at the time of purchase in the three highest categories by two nationally recognized rating agencies.
(11) No-load money market mutual funds consisting exclusively of obligations described in division (A)(1), (2), or (6) of this section and repurchase agreements secured by such obligations.
(12) Obligations of a board of education issued under authority of section 133.10 or 133.301 of the Revised Code.
(B) Whenever, during a period of designation, the treasurer of state classifies public moneys as interim moneys, the treasurer of state shall notify the state board of deposit of such action. The notification shall be given within thirty days after such classification and, in the event the state board of deposit does not concur in such classification or in the investments or deposits made under this section, the board may order the treasurer of state to sell or liquidate any of the investments or deposits, and any such order shall specifically describe the investments or deposits and fix the date upon which they are to be sold or liquidated. Investments or deposits so ordered to be sold or liquidated shall be sold or liquidated for cash by the treasurer of state on the date fixed in such order at the then current market price. Neither the treasurer of state nor the members of the state board of deposit shall be held accountable for any loss occasioned by sales or liquidations of investments or deposits at prices lower than their cost. Any loss or expense incurred in making these sales or liquidations is payable as other expenses of the treasurer's office.
(C) If any securities or obligations invested in by the treasurer of state pursuant to this section are registrable either as to principal or interest, or both, such securities or obligations shall be registered in the name of the treasurer of state.
(D) The treasurer of state is responsible for the safekeeping of all securities or obligations under this section. Any such securities or obligations may be deposited for safekeeping as provided in section 113.05 of the Revised Code.
(E) Interest earned on any investments or deposits authorized by this section shall be collected by the treasurer of state and credited by the treasurer of state to the proper fund of the state.
(F) Whenever investments or deposits acquired under this section mature and become due and payable, the treasurer of state shall present them for payment according to their tenor, and shall collect the moneys payable thereon. The moneys so collected shall be treated as public moneys subject to sections 135.01 to 135.21 of the Revised Code.
(G) The treasurer of state and any board of education issuing obligations referred to in division (A)(12) of this section may enter into an agreement providing for:
(1) The purchase of those obligations by the treasurer of state on terms and subject to conditions set forth in the agreement;
(2) The payment by the board of education to the treasurer of state of a reasonable fee as consideration for the agreement of the treasurer of state to purchase those obligations; provided, however, that the treasurer of state shall not be authorized to enter into any such agreement with the board of education of a school district that has an outstanding obligation with respect to a loan received under authority of section 3313.483 of the Revised Code.
(H) For purposes of division (G) of this section, a fee shall not be considered reasonable unless it is set to recover only the direct costs and a reasonable estimate of the indirect costs associated with the purchasing of obligations of a school board under division (G) of this section and any reselling of the obligations or any interest in the obligations, including interests in a fund comprised of the obligations. No money from the general revenue fund shall be used to subsidize the purchase or resale of these obligations.
(I) All money collected by the treasurer of state from the fee imposed by division (G) of this section shall be deposited to the credit of the state school board obligations fund, which is hereby created in the state treasury. Money credited to the fund shall be used solely to pay the treasurer of state's direct and indirect costs associated with purchasing and reselling obligations of a board of education under division (G) of this section.
Sec. 135.35.  (A) The investing authority shall deposit or invest any part or all of the county's inactive moneys and shall invest all of the money in the county library and local government support fund when required by section 135.352 of the Revised Code. The following classifications of securities and obligations are eligible for such deposit or investment:
(1) United States treasury bills, notes, bonds, or any other obligation or security issued by the United States treasury, any other obligation guaranteed as to principal or interest by the United States, or any book entry, zero-coupon United States treasury security that is a direct obligation of the United States.
Nothing in the classification of eligible securities and obligations set forth in divisions (A)(2) to (11) of this section shall be construed to authorize any investment in stripped principal or interest obligations of such eligible securities and obligations.
(2) Bonds, notes, debentures, or any other obligations or securities issued by any federal government agency or instrumentality, including but not limited to, the federal national mortgage association, federal home loan bank, federal farm credit bank, federal home loan mortgage corporation, government national mortgage association, and student loan marketing association. All federal agency securities shall be direct issuances of federal government agencies or instrumentalities.
(3) Time certificates of deposit or savings or deposit accounts, including, but not limited to, passbook accounts, in any eligible institution mentioned in section 135.32 of the Revised Code;
(4) Bonds and other obligations of this state or the political subdivisions of this state, provided that such political subdivisions are located wholly or partly within the same county as the investing authority;
(5) No-load money market mutual funds consisting exclusively of obligations described in division (A)(1) or (2) of this section and repurchase agreements secured by such obligations, provided that investments in securities described in this division are made only through eligible institutions mentioned in section 135.32 of the Revised Code;
(6) The Ohio subdivision's fund as provided in section 135.45 of the Revised Code;
(7) Securities lending agreements with any eligible institution mentioned in section 135.32 of the Revised Code that is a member of the federal reserve system or federal home loan bank or with any recognized United States government securities dealer meeting the description in division (J)(1) of this section, under the terms of which agreements the investing authority lends securities and the eligible institution or dealer agrees to simultaneously exchange similar securities or cash, equal value for equal value.
Securities and cash received as collateral for a securities lending agreement are not inactive moneys of the county or moneys of a county library and local government support fund. The investment of cash collateral received pursuant to a securities lending agreement may be invested only in instruments specified by the investing authority in the written investment policy described in division (K) of this section.
(8) Up to twenty-five per cent of the county's total average portfolio in either of the following investments:
(a) Commercial paper notes issued by an entity that is defined in division (D) of section 1705.01 of the Revised Code and that has assets exceeding five hundred million dollars, to which notes all of the following apply:
(i) The notes are rated at the time of purchase in the highest classification established by at least two nationally recognized standard rating services.
(ii) The aggregate value of the notes does not exceed ten per cent of the aggregate value of the outstanding commercial paper of the issuing corporation.
(iii) The notes mature not later than two hundred seventy days after purchase.
(b) Bankers acceptances of banks that are insured by the federal deposit insurance corporation and to which both of the following apply:
(i) The obligations are eligible for purchase by the federal reserve system.
(ii) The obligations mature not later than one hundred eighty days after purchase.
No investment shall be made pursuant to division (A)(8) of this section unless the investing authority has completed additional training for making the investments authorized by division (A)(8) of this section. The type and amount of additional training shall be approved by the auditor of state and may be conducted by or provided under the supervision of the auditor of state.
(9) Up to fifteen per cent of the county's total average portfolio in notes issued by corporations that are incorporated under the laws of the United States and that are operating within the United States, or by depository institutions that are doing business under authority granted by the United States or any state and that are operating within the United States, provided both of the following apply:
(a) The notes are rated in the second highest or higher category by at least two nationally recognized standard rating services at the time of purchase.
(b) The notes mature not later than two years after purchase.
(10) No-load money market mutual funds rated in the highest category at the time of purchase by at least one nationally recognized standard rating service and consisting exclusively of obligations described in division (A)(1), (2), or (6) of section 135.143 of the Revised Code;
(11) Debt Except as provided in Chapter 137. of the Revised Code, debt interests rated at the time of purchase in the three highest categories by two nationally recognized standard rating services and issued by foreign nations diplomatically recognized by the United States government. All interest and principal shall be denominated and payable in United States funds. The investments made under division (A)(11) of this section shall not exceed in the aggregate one per cent of a county's total average portfolio.
The investing authority shall invest under division (A)(11) of this section in a debt interest issued by a foreign nation only if the debt interest is backed by the full faith and credit of that foreign nation, there is no prior history of default, and the debt interest matures not later than five years after purchase. For purposes of division (A)(11) of this section, a debt interest is rated in the three highest categories by two nationally recognized standard rating services if either the debt interest itself or the issuer of the debt interest is rated, or is implicitly rated, at the time of purchase in the three highest categories by two nationally recognized standard rating services.
(B) Nothing in the classifications of eligible obligations and securities set forth in divisions (A)(1) to (11) of this section shall be construed to authorize investment in a derivative, and no investing authority shall invest any county inactive moneys or any moneys in a county library and local government support fund in a derivative. For purposes of this division, "derivative" means a financial instrument or contract or obligation whose value or return is based upon or linked to another asset or index, or both, separate from the financial instrument, contract, or obligation itself. Any security, obligation, trust account, or other instrument that is created from an issue of the United States treasury or is created from an obligation of a federal agency or instrumentality or is created from both is considered a derivative instrument. An eligible investment described in this section with a variable interest rate payment, based upon a single interest payment or single index comprised of other eligible investments provided for in division (A)(1) or (2) of this section, is not a derivative, provided that such variable rate investment has a maximum maturity of two years. A treasury inflation-protected security shall not be considered a derivative, provided the security matures not later than five years after purchase.
(C) Except as provided in division (D) of this section, any investment made pursuant to this section must mature within five years from the date of settlement, unless the investment is matched to a specific obligation or debt of the county or to a specific obligation or debt of a political subdivision of this state located wholly or partly within the county, and the investment is specifically approved by the investment advisory committee.
(D) The investing authority may also enter into a written repurchase agreement with any eligible institution mentioned in section 135.32 of the Revised Code or any eligible securities dealer pursuant to division (J) of this section, under the terms of which agreement the investing authority purchases and the eligible institution or dealer agrees unconditionally to repurchase any of the securities listed in divisions (B)(1) to (5), except letters of credit described in division (B)(2), of section 135.18 of the Revised Code. The market value of securities subject to an overnight written repurchase agreement must exceed the principal value of the overnight written repurchase agreement by at least two per cent. A written repurchase agreement must exceed the principal value of the overnight written repurchase agreement, by at least two per cent. A written repurchase agreement shall not exceed thirty days, and the market value of securities subject to a written repurchase agreement must exceed the principal value of the written repurchase agreement by at least two per cent and be marked to market daily. All securities purchased pursuant to this division shall be delivered into the custody of the investing authority or the qualified custodian of the investing authority or an agent designated by the investing authority. A written repurchase agreement with an eligible securities dealer shall be transacted on a delivery versus payment basis. The agreement shall contain the requirement that for each transaction pursuant to the agreement the participating institution shall provide all of the following information:
(1) The par value of the securities;
(2) The type, rate, and maturity date of the securities;
(3) A numerical identifier generally accepted in the securities industry that designates the securities.
No investing authority shall enter into a written repurchase agreement under the terms of which the investing authority agrees to sell securities owned by the county to a purchaser and agrees with that purchaser to unconditionally repurchase those securities.
(E) No investing authority shall make an investment under this section, unless the investing authority, at the time of making the investment, reasonably expects that the investment can be held until its maturity. The investing authority's written investment policy shall specify the conditions under which an investment may be redeemed or sold prior to maturity.
(F) No investing authority shall pay a county's inactive moneys or moneys of a county library and local government support fund into a fund established by another subdivision, treasurer, governing board, or investing authority, if that fund was established by the subdivision, treasurer, governing board, or investing authority for the purpose of investing or depositing the public moneys of other subdivisions. This division does not apply to the payment of public moneys into either of the following:
(1) The Ohio subdivision's fund pursuant to division (A)(6) of this section;
(2) A fund created solely for the purpose of acquiring, constructing, owning, leasing, or operating municipal utilities pursuant to the authority provided under section 715.02 of the Revised Code or Section 4 of Article XVIII, Ohio Constitution.
For purposes of division (F) of this section, "subdivision" includes a county.
(G) The use of leverage, in which the county uses its current investment assets as collateral for the purpose of purchasing other assets, is prohibited. The issuance of taxable notes for the purpose of arbitrage is prohibited. Contracting to sell securities not owned by the county, for the purpose of purchasing such securities on the speculation that bond prices will decline, is prohibited.
(H) Any securities, certificates of deposit, deposit accounts, or any other documents evidencing deposits or investments made under authority of this section shall be issued in the name of the county with the county treasurer or investing authority as the designated payee. If any such deposits or investments are registrable either as to principal or interest, or both, they shall be registered in the name of the treasurer.
(I) The investing authority shall be responsible for the safekeeping of all documents evidencing a deposit or investment acquired under this section, including, but not limited to, safekeeping receipts evidencing securities deposited with a qualified trustee, as provided in section 135.37 of the Revised Code, and documents confirming the purchase of securities under any repurchase agreement under this section shall be deposited with a qualified trustee, provided, however, that the qualified trustee shall be required to report to the investing authority, auditor of state, or an authorized outside auditor at any time upon request as to the identity, market value, and location of the document evidencing each security, and that if the participating institution is a designated depository of the county for the current period of designation, the securities that are the subject of the repurchase agreement may be delivered to the treasurer or held in trust by the participating institution on behalf of the investing authority.
Upon the expiration of the term of office of an investing authority or in the event of a vacancy in the office for any reason, the officer or the officer's legal representative shall transfer and deliver to the officer's successor all documents mentioned in this division for which the officer has been responsible for safekeeping. For all such documents transferred and delivered, the officer shall be credited with, and the officer's successor shall be charged with, the amount of moneys evidenced by such documents.
(J)(1) All investments, except for investments in securities described in divisions (A)(5) and (6) of this section, shall be made only through a member of the national association of securities dealers, through a bank, savings bank, or savings and loan association regulated by the superintendent of financial institutions, or through an institution regulated by the comptroller of the currency, federal deposit insurance corporation, or board of governors of the federal reserve system.
(2) Payment for investments shall be made only upon the delivery of securities representing such investments to the treasurer, investing authority, or qualified trustee. If the securities transferred are not represented by a certificate, payment shall be made only upon receipt of confirmation of transfer from the custodian by the treasurer, governing board, or qualified trustee.
(K)(1) Except as otherwise provided in division (K)(2) of this section, no investing authority shall make an investment or deposit under this section, unless there is on file with the auditor of state a written investment policy approved by the investing authority. The policy shall require that all entities conducting investment business with the investing authority shall sign the investment policy of that investing authority. All brokers, dealers, and financial institutions, described in division (J)(1) of this section, initiating transactions with the investing authority by giving advice or making investment recommendations shall sign the investing authority's investment policy thereby acknowledging their agreement to abide by the policy's contents. All brokers, dealers, and financial institutions, described in division (J)(1) of this section, executing transactions initiated by the investing authority, having read the policy's contents, shall sign the investment policy thereby acknowledging their comprehension and receipt.
(2) If a written investment policy described in division (K)(1) of this section is not filed on behalf of the county with the auditor of state, the investing authority of that county shall invest the county's inactive moneys and moneys of the county library and local government support fund only in time certificates of deposits or savings or deposit accounts pursuant to division (A)(3) of this section, no-load money market mutual funds pursuant to division (A)(5) of this section, or the Ohio subdivision's fund pursuant to division (A)(6) of this section.
(L)(1) The investing authority shall establish and maintain an inventory of all obligations and securities acquired by the investing authority pursuant to this section. The inventory shall include a description of each obligation or security, including type, cost, par value, maturity date, settlement date, and any coupon rate.
(2) The investing authority shall also keep a complete record of all purchases and sales of the obligations and securities made pursuant to this section.
(3) The investing authority shall maintain a monthly portfolio report and issue a copy of the monthly portfolio report describing such investments to the county investment advisory committee, detailing the current inventory of all obligations and securities, all transactions during the month that affected the inventory, any income received from the obligations and securities, and any investment expenses paid, and stating the names of any persons effecting transactions on behalf of the investing authority.
(4) The monthly portfolio report shall be a public record and available for inspection under section 149.43 of the Revised Code.
(5) The inventory and the monthly portfolio report shall be filed with the board of county commissioners.
(M) An investing authority may enter into a written investment or deposit agreement that includes a provision under which the parties agree to submit to nonbinding arbitration to settle any controversy that may arise out of the agreement, including any controversy pertaining to losses of public moneys resulting from investment or deposit. The arbitration provision shall be set forth entirely in the agreement, and the agreement shall include a conspicuous notice to the parties that any party to the arbitration may apply to the court of common pleas of the county in which the arbitration was held for an order to vacate, modify, or correct the award. Any such party may also apply to the court for an order to change venue to a court of common pleas located more than one hundred miles from the county in which the investing authority is located.
For purposes of this division, "investment or deposit agreement" means any agreement between an investing authority and a person, under which agreement the person agrees to invest, deposit, or otherwise manage, on behalf of the investing authority, a county's inactive moneys or moneys in a county library and local government support fund, or agrees to provide investment advice to the investing authority.
(N) An investment held in the county portfolio on September 27, 1996, that was a legal investment under the law as it existed before September 27, 1996, may be held until maturity, or if the investment does not have a maturity date the investment may be held until five years from September 27, 1996, regardless of whether the investment would qualify as a legal investment under the terms of this section as amended.
Sec. 137.01.  As used in this chapter:
(A) "Active business operations" means those business operations, other than inactive business operations, conducted by a company on or after the effective date of this section.
(B) "Business operations" means engaging in commerce in any form in Sudan, including by maintaining, selling, acquiring, developing, owning, possessing, operating, or leasing equipment, facilities, personnel, products, services, personal or real property, or any other apparatus of business or commerce.
(C) "Company" means a sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company, business association, or other entity, including any wholly-owned subsidiary, majority-owned subsidiary, parent company, or affiliate of any of those types of entities, that exists for the purpose of making a profit.
(D) "Complicit" means taking actions that directly support or promote the genocidal campaign in the Darfur region of Sudan, including, but not limited to, preventing members of the population of the Darfur region of Sudan negatively affected by genocide from communicating with each other; encouraging Sudanese citizens to speak against the internationally approved security force that provides aide to the Darfur region; actively working to deny, cover up, or alter the record on human rights abuses in Darfur; or other similar actions.
(E) "Direct holdings" means all of the securities of a company held directly by a public authority or held in an account or fund of which the public authority owns all of the shares or interests.
(F) "Government of Sudan" means the government in Khartoum, Sudan, that is led by the national congress party, formerly known as the national Islamic front, or any successor government formed on or after October 13, 2006, including the coalition national unity government agreed upon in the "2005 Comprehensive Peace Agreement," and does not include the regional government of southern Sudan.
(G) "Inactive business operations" means those business operations conducted by a company that involve only the continued holding or renewal of rights to property that, at one time, was used for the purpose of generating revenue for the company but is not used for such purpose at the time the Sudan council creates or updates the scrutinized companies divestment list pursuant to section 137.05 of the Revised Code.
(H) "Indirect holdings" means all of the securities of a company indirectly held by a public authority through an account or fund in which the public authority owns shares or interests together with other investors who are not subject to the provisions of this chapter and that is managed by one or more persons not employed by a public authority.
(I) "Marginalized populations of Sudan" includes, but is not limited to, all of the following:
(1) The portion of the population in the Darfur region that has been negatively affected by genocide;
(2) The portion of the population of southern Sudan negatively affected by the civil war that occurred between the north and south regions of Sudan;
(3) The Beja, Rashidiya, and other similarly underserved groups of eastern Sudan;
(4) The Nubian and other similarly underserved groups in the Abyei, southern blue Nile, and Nuba mountain regions of Sudan;
(5) The Amri, Hamadab, Manasir, and other similarly underserved groups of northern Sudan.
(J) "Military equipment" means weapons, arms, military supplies, and equipment including, but not limited to, radar systems, or military-grade transport vehicles, that readily may be used for military purposes; or supplies or services sold or directly or indirectly provided to any force actively participating in armed conflict in Sudan.
(K) "Mineral extraction activities" include exploring, extracting, processing, transporting, or wholesale selling or trading of elemental minerals or associated metal alloys or oxides, also known as ore, including gold, copper, chromium, chromite, diamonds, iron, iron ore, silver, tungsten, uranium, and zinc; and includes facilitating such activities, including by providing supplies or services in support of such activities.
(L) "Oil-related activities" includes, but is not limited to, owning rights to oil blocks; exporting, extracting, producing, refining, processing, exploring for, transporting, selling, or trading of oil; constructing, maintaining, or operating a pipeline, refinery, or other oil-field infrastructure; or facilitating such activities, including by providing supplies or services in support of such activities. "Oil-related activities" does not mean engaging in only the retail sale of gasoline and related consumer products.
(M) "Power production activities" means any business operation that involves a project commissioned by the national electricity corporation of Sudan or other similar entity of the government of Sudan whose purpose is to facilitate power generation and delivery, including, but not limited to, establishing power-generating plants or hydroelectric dams, selling or installing components for a project, providing service contracts related to the installation or maintenance of a project, or facilitating any of these activities, including by providing supplies or services in support of such activities.
(N) "Public authority" means any state retirement board as defined in section 109.98 of the Revised Code, any state agency, or any political subdivision of the state that has authority to invest, manage, or oversee the assets of funds that are under the system's, agency's, or political subdivision's jurisdiction.
(O) "Public fund" means the assets included in any fund under the control of a public authority.
(P) "Social development company" means a company whose primary purpose in Sudan is to provide only the following humanitarian goods or services to the people of Sudan:
(1) Medicine or medical equipment;
(2) Agricultural supplies or infrastructure;
(3) Educational opportunities;
(4) Journalistic activities;
(5) Information or information materials;
(6) Spiritual-related activities;
(7) Services of a purely clerical or reporting nature;
(8) Food, clothing, or general consumer goods that are unrelated to oil-related activities, mineral extraction activities, or power production activities.
Sec. 137.02.  There is hereby created the Sudan council consisting of nine members. The governor, the president of the senate, and the speaker of the house of representatives shall each appoint three members to the council and shall make initial appointments to the council within thirty days after the effective date of this section. The governor, president of the senate, and speaker of the house of representatives shall each appoint one member to a term ending one year after the effective date of this section, one member to a term ending two years after the effective date of this section, and one member to a term ending three years after the effective date of this section. Thereafter, terms of office shall be for three years, with each term ending on the same day of the same month as did the term that it succeeds. Each member shall hold office from the date of appointment until the end of the term for which the member was appointed. Members may be reappointed. The governor, president of the senate, and speaker of the house of representatives shall fill a vacancy in the same manner provided for initial appointments. Any member appointed to fill a vacancy occurring prior to the expiration date of the term for which the member's predecessor was appointed shall hold office as a member for the remainder of that term. A member shall continue in office subsequent to the expiration date of the member's term until the member's successor takes office or until a period of sixty days has elapsed, whichever occurs first. Council members shall receive their actual and necessary expenses incurred in the performance of their duties as council members. If any event described in section 137.10 of the Revised Code occurs, the council shall be abolished thirty days after the event occurs.
Sec. 137.03.  (A) Except as provided in divisions (D) and (E) of this section, a company that has business operations in Sudan is a scrutinized company if any of the following apply:
(1)(a) The company meets one of the criteria specified in division (A)(1)(b) of this section and either of the following applies:
(i) More than ten per cent of the company's revenues or assets linked to Sudan involve oil-related activities or mineral extraction activities, less than seventy-five per cent of the company's revenues or assets linked to Sudan involve entering into contracts with or providing oil-related or mineral extracting products or services to the regional government of southern Sudan or a project or consortium exclusively created by that regional government, and the company has failed to take substantial action as described in division (C) of this section.
(ii) More than ten per cent of the company's revenues or assets linked to Sudan involve power production activities, less than seventy-five per cent of the company's power production activities include projects with the intent of providing power or electricity to the marginalized populations of Sudan, and the company has failed to take substantial action as described in division (C) of this section.
(b) The company has business operations that involve any of the following:
(i) Entering into a contract with or providing supplies or services to the government of Sudan;
(ii) Entering into a contract with or providing supplies or services to another company in which the government of Sudan holds any direct or indirect equity share;
(iii) Entering into a contract with a consortium commissioned by the government of Sudan;
(iv) Providing supplies or services for a project commissioned by the government of Sudan;
(v) Entering into a contract with or providing supplies or services to another company that is involved in a consortium or project commissioned by the government of Sudan.
(2) The company, during the twenty months immediately preceding the date the Sudan council determines whether the company is a scrutinized company pursuant to division (A) or (J) of section 137.05 of the Revised Code, was complicit in the genocide occurring in the Darfur region of Sudan.
(3) Except as otherwise specified in division (D) of this section, the company supplies military equipment in Sudan.
(B) The council may take any of the following actions in order to identify companies that meet the criteria described in division (A) of this section:
(1) Review and rely, as the council determines appropriate, on publicly available information regarding companies with business operations in Sudan, including information provided by nonprofit organizations, research firms, international organizations, or governmental entities;
(2) Contact asset managers that invest in or oversee investments in companies with business operations in Sudan;
(3) Contact any institutional investors that have divested from companies that have business operations in Sudan.
(C) A company takes substantial action concerning Sudan if the company takes any of the following actions:
(1) Adopts, publicizes, and implements a formal plan to cease those business operations that the Sudan council determined qualified the company to be a scrutinized company within one year after the ninety-day period described in division (E) of section 137.05 of the Revised Code and to refrain from any new business operations that would requalify the company as a scrutinized company;
(2) Undertakes humanitarian efforts for the benefit of one or more marginalized populations of Sudan in conjunction with an international organization, the government of Sudan, the regional government of southern Sudan, or a nonprofit entity, and an independent third party evaluates those efforts and determines that those efforts are substantial in proportion to the size and scope of the company's business operations in Sudan;
(3) Through engaging the government of Sudan, materially improves conditions for the population in the Darfur region negatively affected by genocide.
(D) A company that supplies military equipment in Sudan is not a scrutinized company if the council determines either of the following:
(1) That the company is able to clearly demonstrate that the military equipment the company supplies cannot be used to facilitate offensive military actions in Sudan.
(2) That the company has implemented rigorous and verifiable safeguards to prevent use of that equipment by forces actively participating in armed conflict, which may include, but are not limited to, any of the following:
(a) Post-sale tracking of such equipment by the company;
(b) Having a reputable and objective third party certify that a party participating in armed conflict in Sudan is not using such equipment;
(c) Selling such equipment solely to the regional government of southern Sudan or any internationally recognized peacekeeping force or humanitarian organization.
(E) A social development company is not a scrutinized company if that company has not been complicit in the genocide occurring in the Darfur region during the twenty months immediately preceding the date the Sudan council makes a determination regarding that company pursuant to division (A) or (J) of section 137.05 of the Revised Code.
Sec. 137.04.  Except as otherwise provided in division (B) of section 137.07 of the Revised Code, no public authority shall invest any public funds by acquiring securities in any company that the Sudan council includes in the scrutinized companies divestment list pursuant to section 137.05 of the Revised Code.
Sec. 137.05.  The Sudan council shall do all of the following:
(A) Within sixty days after the last member of the council is appointed in accordance with section 137.02 of the Revised Code, determine whether a company is a scrutinized company using the criteria and actions set forth in section 137.03 of the Revised Code;
(B) Within thirty days after the sixty-day period described in division (A) of this section ends, send a written notice to each scrutinized company that the council determines has only inactive business operations in Sudan informing the scrutinized company of the requirements of this chapter and encouraging that company to continue to refrain from initiating any business operations in Sudan that would qualify the company for inclusion in the scrutinized companies divestment list described in division (G) of this section;
(C) Send the written notice required under division (B) or (K) of this section once every six months until the company is no longer considered a scrutinized company;
(D) Within thirty days after the sixty-day period described in division (A) of this section ends, send a written notice to each scrutinized company that the council determines either has active business operations or has been complicit in the genocide occurring in the Darfur region of Sudan during the twenty months immediately preceding the council's determination that the company is a scrutinized company that includes all of the following information:
(1) That the council has determined that the company is a scrutinized company;
(2) That if a public authority holds any investments in the company, the public authority may be required to divest any investments in accordance with section 137.07 of the Revised Code that the public authority holds in that company or, if a public authority does not hold investments in that company, that the public authority may be prohibited from investing in that company, unless the company alters its operations in Sudan so that it is no longer considered a scrutinized company or converts those operations to inactive business operations within ninety days after the company receives the notice, or ceases to be complicit in the genocide occurring in the Darfur region of Sudan for a period of twenty months after the company's last complicit act;
(3) That the company may clarify the types of business operations the company conducts in Sudan.
(E) Ninety days after giving a scrutinized company the notice described in division (D) or (K) of this section, determine whether the scrutinized company has altered its operations in Sudan so that it would no longer be considered a scrutinized company or converted its operations in Sudan to inactive business operations during that ninety-day period or ceased being complicit in the genocide occurring in the Darfur region of Sudan;
(F) If, during the ninety-day period described in division (E) of this section a scrutinized company with active business operations converted those operations to inactive business operations, comply with divisions (B) and (C) of this section with regard to that company;
(G) Create a list, known as the scrutinized companies divestment list, that includes all of the companies that continue to have active business operations or have been complicit in the genocide occurring in the Darfur region during the preceding twenty months after the ninety-day period described in division (E) of this section and that includes a summary of the publicly available information the council used to determine to include the company in the list;
(H) Within fifteen days after the ninety-day period described in division (E) of this section ends, create and maintain a database, accessible to the public, that includes all of the information in the scrutinized companies divestment list;
(I) Notify each public authority, the general assembly, and the attorney general within ten days after the database described in division (H) of this section is operating that the database is available for use;
(J) Beginning after the date the database described in division (H) of this section is operating, review companies on a quarterly basis, identify any additional companies not included previously in the scrutinized companies divestment list that the council determines are scrutinized companies using the criteria and actions set forth in section 137.03 of the Revised Code, and determine whether any companies included in that list no longer warrant inclusion in that list;
(K) Within thirty days after the council performs the quarterly review pursuant to division (J) of this section, send the appropriate written notice described in division (B) or (D) of this section to each new scrutinized company the council identifies through that review and comply with divisions (C), (E), and (F) of this section as applicable;
(L) Update the scrutinized companies divestment list once a calendar quarter and update the database within ten days after the council updates the list;
(M) Beginning one year after the date the database is operating and every year thereafter, notify the general assembly and the attorney general of the most recent update to the database;
(N) If the council determines that a company no longer qualifies for inclusion in the scrutinized companies divestment list, remove the company from the list by the quarterly update of the list that first occurs after the council makes that determination.
(O) Comply with a public records request a person makes in accordance with section 149.43 of the Revised Code requesting all of the publicly available information the council used to determine to include a specific company in the scrutinized companies divestment list.
Sec. 137.06. Each public authority shall do all of the following:
(A) After the public authority receives the notice from the Sudan council pursuant to division (I) of section 137.05 of the Revised Code that the Sudan council's database is operating, determine if the public authority has invested public funds by holding any securities in any company included in that database and create a list of those companies and include in that list a description of the investments the public authority holds in each of those companies;
(B) Submit the list described in division (A) of this section to the general assembly and attorney general and to the council, if the council requests, within thirty days after the date the Sudan council gives notice to the public authority that the database is operating;
(C) Review the database the council creates under section 137.05 of the Revised Code on a quarterly basis and if a new company is included in the scrutinized companies divestment list, if a former scrutinized company reappears on the list, or if the status of a scrutinized company has changed, take appropriate action in accordance with this section or section 137.07 of the Revised Code based on any new information included in the updated database;
(D) Submit letters to each investment manager with whom the public authority has entered into a contract for the investment of public funds who has placed those funds in either an actively managed investment fund in which the public authority has indirect holdings in companies on the scrutinized companies divestment list or a private equity fund in which the public authority has holdings in companies that are included in the scrutinized companies divestment list, requesting that the manager consider creating similar funds that do not include investments in companies that are included in that list;
(E) If a manager to whom the public authority submits a letter under division (D) of this section creates either of the following funds, direct the manager to transfer the assets from the undesirable fund described under division (D) of this section to the desirable new fund described in division (E)(1) or (2) of this section in an expedited timeframe consistent with prudent investment standards:
(1) The manager creates a new actively managed investment fund in which the public authority would have indirect holdings that is similar to the actively managed investment fund described in division (D) of this section, except that the new actively managed investment fund does not include investments in companies included in the scrutinized companies divestment list.
(2) The manager creates a new private equity fund in which the public authority would have holdings that is similar to the private equity fund described in division (D) of this section, except that the new private equity fund does not include investments in companies included in the scrutinized companies divestment list.
(F) Submit to the general assembly, the attorney general, and the United States presidential special envoy to Sudan, or a person designated by the envoy or the successor to the envoy, an annual report one year after the public authority submits the list to the general assembly and the attorney general pursuant to division (B) of this section and every year thereafter that includes all of the following information:
(1) A list of all of the companies included in the scrutinized companies divestment list in which the public authority holds investments on the first day of July immediately preceding the date the public authority issues its annual report and a description of the types of investments the public authority holds in those companies;
(2) If the public authority must divest or redeem any investment or must withdraw from an account in accordance with section 137.07 of the Revised Code, a description of the public authority's progress in making such divestment, redemption, or withdrawal;
(3) A list of any companies included in the scrutinized companies divestment list in which the public authority is not invested on the first day of July immediately preceding the date the public authority issues its annual report;
(4) A description of the action the public authority takes in accordance with divisions (D) and (E) of this section.
Sec. 137.07.  (A) Except as provided in division (B) or (C) of this section, a public authority shall divest or redeem any publicly traded securities the public authority holds in a company that is included in the scrutinized companies divestment list or withdraw from an account that includes such companies in accordance with the following schedule:
(1) Within six months after the company first appears in the scrutinized companies divestment list or update of the list, divest or redeem at least fifty per cent of the publicly traded investments that the public authority holds in that company or withdraw at least fifty per cent of the publicly traded investments in that company held in an account;
(2) Within twelve months after the company first appears in the scrutinized companies divestment list or update of the list, divest or redeem one hundred per cent of the publicly traded investments that the public authority holds in that company or withdraw one hundred per cent of those publicly traded investments in that company held in an account.
(B) A public authority is not required to divest, redeem, or withdraw the investments held by the public authority in a company included in the scrutinized companies divestment list, and is not prohibited from investing in such a company, if any of the following apply:
(1) The investments held by the public authority in a company are held in indirect holdings in actively managed investment funds or private equity funds.
(2) The council determines that the company is no longer a scrutinized company.
(3) The company is expressly exempted from federal sanctions against Sudan.
(C) A public authority may cease divesting its investments in a company included in the scrutinized companies divestment list pursuant to division (A) of this section or may reinvest in a company included in that list from which it divested pursuant to that division if clear and convincing evidence demonstrates that the value for all public funds under the control of the public authority is equal to or less than 99.50 per cent or fifty basis points of the hypothetical value of all public funds under the control of the public authority assuming that no divestment of any company included in the scrutinized companies divestment list had occurred under division (A) of this section. Any cessation of divestment of or reinvestment in an investment permitted under this division is limited to the minimum steps necessary to avoid having the all public funds under the control of the public authority be equal to or less than 99.50 per cent or fifty basis points of the hypothetical value of those funds, assuming that no divestment pursuant to division (A) of this section had occurred. If a public authority determines that it must cease divesting from or must reinvest in a company in accordance with this division, the public authority shall submit a written report, updated once every six months as applicable, to the general assembly and attorney general in advance of ceasing divestment or of making initial reinvestment, setting forth the reasons that are supported by clear and convincing evidence for its decisions to cease divesting from or to reinvest in such a company in accordance with this division.
Sec. 137.08.  Neither a public authority nor the members of the Sudan council are liable for breach of the public authority's fiduciary duty to the public fund for which that public authority has the authority to invest assets if the public authority and the Sudan council, respectively, comply with the requirements of this chapter. If the members of the council made determinations in good faith regarding the status of a company as required under this chapter, the members are not liable in an action for libel or slander. All members and former members of the Sudan council and the boards of all public authorities and all officers, employees, and agents of such boards shall be indemnified, whether jointly or severally, for all claims, demands, suits, actions, damages, judgments, costs, charges, and expenses, including court costs and attorney's fees, and against all liability, losses, and damages of any nature that such board members, officers, employees, or agents may incur by reason of any decision to restrict, reduce, or eliminate investments in companies doing business in Sudan. A board member, officer, employee, or agent of a public authority shall be indemnified through the public fund in which the public authority has the authority to invest. The members of the Sudan council shall be indemnified through the general revenue fund.
Sec. 137.09. Except as otherwise specified in this chapter or as otherwise specified by the general assembly, this chapter prevails over sections 135.143, 135.35, 145.11, 742.11, 3307.15, 3309.15, 4123.44, and 5505.06 of the Revised Code and all other laws that conflict with this chapter.
Sec. 137.10.  If any of the following events occur, the Sudan council is no longer required to satisfy the requirements of section 137.05 of the Revised Code, and a public authority is not subject to section 137.04 of the Revised Code and is no longer required to satisfy the requirements of sections 137.06 and 137.07 of the Revised Code:
(A) Congress or the president of the United States determines that the government of Sudan has sufficiently halted the genocide in the Darfur region for at least twelve months.
(B) The federal government revokes all sanctions imposed against the government of Sudan.
(C) Congress or the president of the United States, through legislation or executive order, declares that mandatory divestment of the type provided for in this chapter interferes with the conduct of United States foreign policy.
(D) Congress or the president of the United States declares that the government of Sudan has honored its commitments to cease attacks on civilians, demobilize and demilitarize the Janjaweed and associated militias, grant free and unfettered access for deliveries of humanitarian assistance, and allow for the safe and voluntary return of refugees and internally displaced persons.
Sec. 137.11.  The attorney general shall enforce the provisions of this chapter and the attorney general or the attorney general's designee may bring an action in court to enforce this chapter.
Section 2.  That existing sections 135.143 and 135.35 of the Revised Code are hereby repealed.
Section 3.  The sections and items of law contained in this act, and their applications, are severable. If any section or item of law contained in this act, or if any application of any section or item of law contained in this act, is held invalid, the invalidity does not affect other sections or items of law contained in this act and their applications that can be given effect without the invalid section or item of law or application.
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