2023 Maryland Statutes › State Personnel and Pensions › Division II - Pensions › Title 21 - State Retirement and Pension System › Subtitle 1 - Administration › Section 21-123.1 - Divestiture From Iran and Sudan

(a)    (1)    In this subtitle the following words have the meanings indicated.
(2)    (i)    “Actively managed separate accounts” means the accounts of the several systems that are actively managed at the direction of the Board of Trustees and held in separate accounts.
(ii)    “Actively managed separate accounts” does not mean indexed funds, private equity funds, real estate funds, or other commingled or passively managed funds.
(3)    “Company” means any corporation, utility, partnership, joint venture, franchisor, franchisee, trust, entity investment vehicle, financial institution, or a wholly owned subsidiary of any of these entities.
(4)    “Divestment action” means selling, redeeming, transferring, exchanging, otherwise disposing of, and refraining from further investment in certain investments.
(5)    “Doing business in Iran” means the company has, with actual knowledge, on or after August 5, 1996, made an investment of $20,000,000 or more, or any combination of investments of at least $10,000,000 each, which in the aggregate equals or exceeds $20,000,000 in any 12–month period, and which directly or significantly contributes to the enhancement of Iran’s ability to develop the petroleum or natural gas resources of Iran.
(6)    “Doing business in Sudan” means engaging in commerce in Sudan by maintaining or leasing equipment, facilities, personnel, or other apparatus of business or commerce in oil–related activities, mineral extraction activities, power production activities, or production of military equipment of Sudan.
(7)    “Eligible accounts” means actively managed separate accounts containing funds of the several systems.
(8)    “Government of Iran” means the government of Iran, its instrumentalities, and companies owned or controlled by the government of Iran.
(9)    “Investment” means the commitment of funds or other assets to a company, including:
(i)    the ownership or control of a share or interest in the company; or
(ii)    the ownership or control of a bond or other debt instrument of a company.
(10)    “Iran” means the Islamic Republic of Iran.
(11)    (i)    “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 on in the Comprehensive Peace Agreement for Sudan.
(ii)    “Sudan” does not mean the regional government of southern Sudan.
(b)    The Board of Trustees shall review the investment holdings in eligible accounts for the purpose of determining the extent to which funds in eligible accounts are invested in companies doing business in Iran or Sudan.
(c)    (1)    Except as otherwise provided in this section, and consistent with the fiduciary duties of the Board of Trustees under Subtitle 2 of this title and all other applicable law, the Board of Trustees shall, within 30 days of its review under subsection (b) of this section, provide written notice and opportunity to comment to a company in which eligible accounts are invested and that has been identified as doing business in Iran or Sudan.
(2)    Any notice provided by the Board of Trustees under paragraph (1) of this subsection shall state that the company shall be subject to divestment action by the Board of Trustees unless the company provides written comments within 90 days to the Board of Trustees:
(i)    demonstrating that the company is not doing business in Iran or Sudan; or
(ii)    stating that, within 60 days of providing written comments to the Board of Trustees under this paragraph, the company will produce a plan to end doing business in Iran or Sudan within 1 year.
(3)    If the company demonstrates to the satisfaction of the Board of Trustees that it is not doing business in Iran or Sudan, the Board of Trustees may not take any divestment action against the company.
(4)    (i)    If within 60 days of providing written comments to the Board of Trustees under paragraph (2) of this subsection, the company produces a plan to cease doing business in Iran or Sudan within 1 year, the Board of Trustees may not take any divestment action against the company.
(ii)    If the Board of Trustees does not take any divestment action under subparagraph (i) of this paragraph, the Board of Trustees shall monitor the progress of the company’s plan to cease doing business in Iran or Sudan over the 12 months immediately following receipt of the plan.
(iii)    If the company ceases doing business in Iran or Sudan within 1 year, the Board of Trustees may not take any divestment action against the company.
(iv)    If the company does not cease doing business in Iran or Sudan within 1 year, the Board of Trustees shall take divestment action against the company as provided in subsection (d) of this section.
(d)    Except as provided in subsections (c) and (e) of this section, the Board of Trustees:
(1)    shall take divestment action in eligible accounts with regard to current investments:
(i)    in any company doing business in Iran or Sudan; or
(ii)    in any security or instrument issued by Iran or Sudan; and
(2)    may not make any new investments from net new funds in an eligible account in any company that is doing business in Iran or Sudan as determined in accordance with the procedures set forth in subsection (c) of this section.
(e)    Notwithstanding the provisions of this section, the Board of Trustees may exclude from the provisions of subsections (c) and (d) of this section, a company:
(1)    that the United States government affirmatively declares to be excluded from its federal sanctions regime relating to Iran or Sudan; and
(2)    whose divestment cannot be executed for fair market value or greater.
(f)    If the Board of Trustees takes divestment action under subsection (d) of this section, with respect to investments in a company, the Board of Trustees shall provide the company with written notice of its decision and reasons for the decision.
(g)    On or before October 1 of each year, and every 6 months thereafter, the Board of Trustees shall submit a report in accordance with § 2–1257 of the State Government Article to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions that provides:
(1)    a summary of correspondence with companies engaged by the Board of Trustees under this section;
(2)    all divestment actions taken by the Board of Trustees in accordance with this section;
(3)    a list of companies doing business in Iran or Sudan which the Board of Trustees has determined to be ineligible for investments of net new funds under subsection (d)(2) of this section; and
(4)    other developments relevant to investment in companies doing business in Iran or Sudan.
(h)    The Board of Trustees, or any other fiduciary of the several systems, may not be held liable for any actions taken or decisions made in good faith for the purpose of complying with or executing the requirements of any divestment provisions under this subtitle.
(i)    The Board of Trustees shall act in good faith to carry out divestment action as required by this section in compliance with all applicable State and federal law, including relevant judicial decisions and the federal Sudan Accountability and Divestment Act of 2007.
(j)    Nothing in this section shall require the Board of Trustees to take action as described in this section unless the Board of Trustees determines, in good faith, that the action is consistent with the fiduciary responsibilities of the Board of Trustees as described in Subtitle 2 of this title.