MISSISSIPPI LEGISLATURE
2021 Regular Session
To: Business and Financial Institutions; Accountability, Efficiency, Transparency
By: Senator(s) Carter
AN ACT TO CREATE THE "FOREIGN COMPANY ACCOUNTABILITY ACT"; TO DEFINE CERTAIN TERMS USED IN THE ACT; TO REQUIRE THE EXECUTIVE DIRECTOR OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION TO DEVELOP AND PUBLISH A LIST OF COMPANIES DETERMINED TO ENGAGE IN FRAUDULENT FINANCIAL ACTIVITIES; TO PROHIBIT THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE STATE TREASURER FROM INVESTING FUNDS WITH A COMPANY THAT IS IDENTIFIED ON THE LIST; TO PROVIDE THAT AN INVESTMENT MAY BE MADE IN A COMPANY ENGAGED IN SUCH ACTIVITIES IF THE INVESTOR MAKES A DETERMINATION THAT THE INVESTMENTS ARE NECESSARY IN ORDER TO PERFORM ITS FUNCTIONS; TO HOLD HARMLESS OFFICERS, EMPLOYEES AND AGENTS OF THE RETIREMENT SYSTEM AND STATE TREASURER'S OFFICE FOR CLAIMS ARISING FROM DECISIONS TO RESTRICT INVESTMENTS UNDER THIS ACT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act shall be known and may be cited as the "Foreign Company Accountability Act."
SECTION 2. (1) As used in this act, the following words and phrases shall have the meanings ascribed in this section, unless the context clearly indicates 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, that exists for the purpose of making profit.
(b) "Expense" 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) "Public fund" means the Public Employees' Retirement System and the Treasurer's office.
(e) "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 described in Section 2 of this act. The list shall be limited to companies of which the Public Company Accounting Oversight Board is prevented from conducting a complete inspection because of a position taken by an authority in that jurisdiction, as determined by the Public Company Accounting Oversight Board. 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 by July 1 of every 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 the Public Employees' Retirement System.
(4) 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 pursuant to Section 3(1) of this act.
(2) Any existing investments in violation of this act as of July 1, 2021, must be divested when prudent to do so, but not 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 of this act, 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 chapter shall be construed to require the Public Employees' Retirement System of Mississippi or the State Treasurer, or their agents, to take any action as 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 or 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.