House Bill 1067

AN ACT TO CREATE THE "FOREIGN COMPANY ACCOUNTABILITY ACT"; TO DEFINE CERTAIN TERMS; TO REQUIRE THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO DEVELOP AND POST ON ITS WEBSITE A LIST OF COMPANIES ENGAGED IN FRAUDULENT FINANCIAL ACTIVITIES; TO REQUIRE NOTICE TO BE GIVEN TO COMPANIES INTENDED TO BE ON THE LIST; TO PROHIBIT THE STATE TREASURER AND PUBLIC EMPLOYEES' RETIREMENT SYSTEM FROM INVESTING IN COMPANIES ON THE LIST; TO REQUIRE OFFICERS AND EMPLOYEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM, DEPARTMENT OF FINANCE AND ADMINISTRATION AND THE STATE TREASURER'S OFFICE TO BE INDEMNIFIED AND HELD HARMLESS FROM CLAIMS STEMMING FROM ACTIONS TAKEN UNDER THIS ACT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. This chapter shall be known and may be cited as the "Foreign Company Accountability Act."

SECTION 2. As used in this chapter, the following words and phrases have the meanings ascribed in this section unless the context clearly requires otherwise:

(a) "Company" means an organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company or other entity or business association, including all wholly owned subsidiaries, majority-owned subsidiaries, and parent companies, which exist for the purpose of making profit.

(b) "Expenses" means all explicit costs associated with divesting of investments, including, but not limited to, trading costs, brokerage commissions, and any realized losses, and all implicit costs, including, but not limited to, lost opportunity costs resulting from the prohibition from making certain investments.

(c) "Investment" means a commitment or contribution of funds or property, whatever the source, a loan or other extension of credit, and the entry into or renewal of a contract for goods or services. The term "investment" does not include indirect beneficial ownership through index funds, commingled funds, limited partnerships, derivative instruments or the like.

(d) "Fraudulent financial activities" means fraudulent accounting practices, embezzlement, falsification of documents, or activities that are beyond the regulation of or inspection by the Public Company Accounting Oversight Board.

SECTION 3. (1) Before December 31, 2021, the Executive Director of the Department of Finance and Administration shall develop or contract to develop, using credible information or listings available to the public through the Public Company Accounting Oversight Board, a list of companies determined to engage in fraudulent financial activities, as defined under Section 2 of this act. When completed, the list must be posted on the website of the Department of Finance and Administration.

(2) The executive director shall update the list required under subsection (1) before July 1 of each year.

(3) Before a company is included on the finalized initial list or updated list, the executive director must provide ninety (90) days written notice of the executive director's intent to include the company on the list. The notice must inform the company that inclusion on the list will make the company ineligible for investment by the state or Public Employees' Retirement System. The executive director shall make every effort to avoid including a company on the list erroneously.

SECTION 4. (1) The Public Employees' Retirement System and the State Treasurer may not invest funds with a company that is identified on the list created under Section 3 of this act.

(2) Any existing investments in violation of this act on July 1, 2021, must be divested when prudent to do so but no later than one hundred twenty (120) days after the posting is made on the website of the Department of Finance and Administration.

SECTION 5. Notwithstanding the provisions of Section 4, an investment may be made in a company engaged in activities described in Section 3(1) of this act, on a case by case basis, if the investor makes a determination that the investments are necessary in order to perform its functions.

SECTION 6. Nothing in this act may be construed to require the Public Employees' Retirement System of Mississippi or the State Treasurer or their agents to take any action described in this act unless it is determined, in good faith, that:

(a) The action described in this act is consistent with the fiduciary responsibilities of the Public Employees' Retirement System of Mississippi or the State Treasurer of their agents; and

(b) There are appropriated funds of the state to absorb the expenses necessary to implement this act.

SECTION 7. Present, future and former board members, officers, employees and agents of the Public Employees' Retirement System and the Department of Finance and Administration, as well as present, future and former State Treasurers, officers and employees of the State Treasurer and agents retained by the State Treasurer, must be indemnified from the State General Fund and held harmless by the state from 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 whatsoever that these present, future or former board members, officers, employees, agents or contract investment managers shall or may at any time sustain by reason of any decision to restrict, reduce or eliminate investments pursuant to this act.

SECTION 8. This act shall take effect and be in force from and after July 1, 2021.