2013 Maryland Code
STATE PERSONNEL AND PENSIONS
§ 21-123 - Management of funds [Amendment subject to abrogation]

§21-123. IN EFFECT

(a) Except for those assets that the law requires another entity or person to control, the State Retirement Agency, under the supervision of the Board of Trustees, shall manage all assets of the several systems.

(b) The Board of Trustees:

(1) is deemed the owner of all the assets of the several systems; but

(2) may delegate some or all incidents of ownership to the State Retirement Agency to administer the investment portfolios of the several systems.

(c) (1) In this subsection, “qualified information technology, green technology, medical device technology, or bioscience business” means a business that:

(i) is primarily engaged in:

1. manufacturing, processing, or assembling information technology, green technology, medical device technology, or bioscience products;

2. conducting information technological, green technological, medical device technological, or bioscience research and development; or

3. providing information technology, green technology, medical device technology, or bioscience-related services; and

(ii) is not primarily engaged in:

1. retail sales;

2. real estate development;

3. the business of insurance, banking, or lending; or

4. the provision of professional services provided by accountants, attorneys, or physicians.

(2) On or before October 1 of each year, the Board of Trustees shall submit a report, in accordance with § 2-1246 of the State Government Article, to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions that provides:

(i) a list of venture capital funds focusing on qualified information technology, green technology, medical device technology, or bioscience businesses in which the several systems have invested and the amount invested in each venture capital fund;

(ii) a statement of the aggregate amount of assets of the several systems invested in companies headquartered in the State by all venture capital funds in which the several systems have made an investment; and

(iii) a statement of the aggregate amount of assets of the several systems invested in each of the qualified information technology, green technology, medical device technology, or bioscience businesses by all venture capital funds in which the several systems have made an investment.

(d) (1) The Board of Trustees may invest assets of the several systems subject to the conditions that it imposes.

(2) The Board of Trustees shall include the conditions that it adopts under paragraph (1) of this subsection in the investment policy manual required by § 21-116(c) of this subtitle.

(e) (1) This subsection applies only to the execution of:

(i) ground rent redemption deeds;

(ii) releases or reassignments of mortgages; and

(iii) satisfactions or reassignments of notes conveying, releasing, or reassigning any interest owned by the State for the use of a fund of the several systems.

(2) An instrument must be executed by any two of:

(i) the State Treasurer;

(ii) the Executive Director of the State Retirement Agency;

(iii) the Chief Investment Officer of the State Retirement Agency; or

(iv) another employee of the State Retirement Agency as the Executive Director designates with the approval of the Board of Trustees.

(f) (1) The Board of Trustees may commingle assets of the several systems, including the Postretirement Health Benefits Trust Fund, if the Board of Trustees keeps seven sets of records that show:

(i) the percentage of participation of each State system or group of State systems, including the Postretirement Health Benefits Trust Fund;

(ii) the percentage of income, gains, and losses applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund; and

(iii) the total contributions and disbursements applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund.

(2) The Board of Trustees shall keep records required by paragraph (1) of this subsection for each of the following:

(i) the group that consists of the Correctional Officers’ Retirement System, the Employees’ Pension System, the Employees’ Retirement System, and the Legislative Pension Plan;

(ii) the Judges’ Retirement System;

(iii) the Local Fire and Police System;

(iv) the Law Enforcement Officers’ Pension System;

(v) the State Police Retirement System;

(vi) the group that consists of the Teachers’ Pension System and the Teachers’ Retirement System; and

(vii) the Postretirement Health Benefits Trust Fund.

(g) (1) Notwithstanding any other law in force on or after July 1, 1988, unless the law makes specific reference to this subsection, and subject to paragraph (2) of this subsection, the Board of Trustees may keep all analyses, forecasts, negotiations, papers, records, recommendations, and reports closed to public inspection until:

(i) the release of the information would not adversely affect the negotiation for or market price of a security; and

(ii) completion of:

1. a proposed purchase or program of purchases leading to a cumulative position in a security;

2. the making, sale, or prepayment of a loan;

3. any proposed sale or program of sales leading to the elimination of a position in a security; or

4. the sale or purchase of real estate.

(2) (i) The sale or purchase of real estate shall be subject to the approval of a majority of the Comptroller, Treasurer, and Secretary of Budget and Management, in their capacity as members of the Board of Trustees.

(ii) On or before October 1 of each year, the Board of Trustees shall submit a report in accordance with § 2-1246 of the State Government Article to the Board of Public Works, the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions that provides a list of all sales or purchases of directly held real estate approved by the Board of Trustees for the immediately preceding fiscal year.

(h) Any direct owned real estate purchased as an investment by the State Retirement and Pension System shall be managed by an external investment manager selected by the Chief Investment Officer.

(i) Title 4, Subtitle 3, Part III and § 10-305 of the State Finance and Procurement Article do not apply to the sale, acquisition, lease, transfer, exchange, or other disposition of any real or personal property acquired by the Board of Trustees in any transaction authorized under this title.

21-123. // EFFECTIVE JUNE 30, 2015 PER CHAPTER 614 OF 2010 //

(a) Except for those assets that the law requires another entity or person to control, the State Retirement Agency, under the supervision of the Board of Trustees, shall manage all assets of the several systems.

(b) The Board of Trustees:

(1) is deemed the owner of all the assets of the several systems; but

(2) may delegate some or all incidents of ownership to the State Retirement Agency to administer the investment portfolios of the several systems.

(c) (1) The Board of Trustees may invest assets of the several systems subject to the conditions that it imposes.

(2) The Board of Trustees shall include the conditions that it adopts under paragraph (1) of this subsection in the investment policy manual required by § 21-116(c) of this subtitle.

(d) (1) This subsection applies only to the execution of:

(i) ground rent redemption deeds;

(ii) releases or reassignments of mortgages; and

(iii) satisfactions or reassignments of notes conveying, releasing, or reassigning any interest owned by the State for the use of a fund of the several systems.

(2) An instrument must be executed by any two of:

(i) the State Treasurer;

(ii) the Executive Director of the State Retirement Agency;

(iii) the Chief Investment Officer of the State Retirement Agency; or

(iv) another employee of the State Retirement Agency as the Executive Director designates with the approval of the Board of Trustees.

(e) (1) The Board of Trustees may commingle assets of the several systems, including the Postretirement Health Benefits Trust Fund, if the Board of Trustees keeps seven sets of records that show:

(i) the percentage of participation of each State system or group of State systems, including the Postretirement Health Benefits Trust Fund;

(ii) the percentage of income, gains, and losses applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund; and

(iii) the total contributions and disbursements applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund.

(2) The Board of Trustees shall keep records required by paragraph (1) of this subsection for each of the following:

(i) the group that consists of the Correctional Officers’ Retirement System, the Employees’ Pension System, the Employees’ Retirement System, and the Legislative Pension Plan;

(ii) the Judges’ Retirement System;

(iii) the Local Fire and Police System;

(iv) the Law Enforcement Officers’ Pension System;

(v) the State Police Retirement System;

(vi) the group that consists of the Teachers’ Pension System and the Teachers’ Retirement System; and

(vii) the Postretirement Health Benefits Trust Fund.

(f) (1) Notwithstanding any other law in force on or after July 1, 1988, unless the law makes specific reference to this subsection, and subject to paragraph (2) of this subsection, the Board of Trustees may keep all analyses, forecasts, negotiations, papers, records, recommendations, and reports closed to public inspection until:

(i) the release of the information would not adversely affect the negotiation for or market price of a security; and

(ii) completion of:

1. a proposed purchase or program of purchases leading to a cumulative position in a security;

2. the making, sale, or prepayment of a loan;

3. any proposed sale or program of sales leading to the elimination of a position in a security; or

4. the sale or purchase of real estate.

(2) (i) The sale or purchase of real estate shall be subject to the approval of a majority of the Comptroller, Treasurer, and Secretary of Budget and Management, in their capacity as members of the Board of Trustees.

(ii) On or before October 1 of each year, the Board of Trustees shall submit a report in accordance with § 2-1246 of the State Government Article to the Board of Public Works, the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions that provides a list of all sales or purchases of directly held real estate approved by the Board of Trustees for the immediately preceding fiscal year.

(g) Any direct owned real estate purchased as an investment by the State Retirement and Pension System shall be managed by an external investment manager selected by the Chief Investment Officer.

(h) Title 4, Subtitle 3, Part III and § 10-305 of the State Finance and Procurement Article do not apply to the sale, acquisition, lease, transfer, exchange, or other disposition of any real or personal property acquired by the Board of Trustees in any transaction authorized under this title.

§ 21-123 - Management of funds (Abrogation of amendment effective June 30, 2015.)

(a) In general. -- Except for those assets that the law requires another entity or person to control, the State Retirement Agency, under the supervision of the Board of Trustees, shall manage all assets of the several systems.

(b) Ownership of investments. -- The Board of Trustees:

(1) is deemed the owner of all the assets of the several systems; but

(2) may delegate some or all incidents of ownership to the State Retirement Agency to administer the investment portfolios of the several systems.

(c) Conditions on investment. --

(1) The Board of Trustees may invest assets of the several systems subject to the conditions that it imposes.

(2) The Board of Trustees shall include the conditions that it adopts under paragraph (1) of this subsection in the investment policy manual required by § 21-116(c) of this subtitle.

(d) Execution of documents. --

(1) This subsection applies only to the execution of:

(i) ground rent redemption deeds;

(ii) releases or reassignments of mortgages; and

(iii) satisfactions or reassignments of notes conveying, releasing, or reassigning any interest owned by the State for the use of a fund of the several systems.

(2) An instrument must be executed by any two of:

(i) the State Treasurer;

(ii) the Executive Director of the State Retirement Agency;

(iii) the Chief Investment Officer of the State Retirement Agency; or

(iv) another employee of the State Retirement Agency as the Executive Director designates with the approval of the Board of Trustees.

(e) Commingling of assets. --

(1) The Board of Trustees may commingle assets of the several systems, including the Postretirement Health Benefits Trust Fund, if the Board of Trustees keeps seven sets of records that show:

(i) the percentage of participation of each State system or group of State systems, including the Postretirement Health Benefits Trust Fund;

(ii) the percentage of income, gains, and losses applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund; and

(iii) the total contributions and disbursements applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund.

(2) The Board of Trustees shall keep records required by paragraph (1) of this subsection for each of the following:

(i) the group that consists of the Correctional Officers' Retirement System, the Employees' Pension System, the Employees' Retirement System, and the Legislative Pension Plan;

(ii) the Judges' Retirement System;

(iii) the Local Fire and Police System;

(iv) the Law Enforcement Officers' Pension System;

(v) the State Police Retirement System;

(vi) the group that consists of the Teachers' Pension System and the Teachers' Retirement System; and

(vii) the Postretirement Health Benefits Trust Fund.

(f) Disclosure of information. --

(1) Notwithstanding any other law in force on or after July 1, 1988, unless the law makes specific reference to this subsection, and subject to paragraph (2) of this subsection, the Board of Trustees may keep all analyses, forecasts, negotiations, papers, records, recommendations, and reports closed to public inspection until:

(i) the release of the information would not adversely affect the negotiation for or market price of a security; and

(ii) completion of:

1. a proposed purchase or program of purchases leading to a cumulative position in a security;

2. the making, sale, or prepayment of a loan;

3. any proposed sale or program of sales leading to the elimination of a position in a security; or

4. the sale or purchase of real estate.

(2) (i) The sale or purchase of real estate shall be subject to the approval of a majority of the Comptroller, Treasurer, and Secretary of Budget and Management, in their capacity as members of the Board of Trustees.

(ii) On or before October 1 of each year, the Board of Trustees shall submit a report in accordance with § 2-1246 of the State Government Article to the Board of Public Works, the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions that provides a list of all sales or purchases of directly held real estate approved by the Board of Trustees for the immediately preceding fiscal year.

(g) Management of real estate. -- Any direct owned real estate purchased as an investment by the State Retirement and Pension System shall be managed by an external investment manager selected by the Chief Investment Officer.

(h) Certain provisions not applicable to disposition of property. -- Title 4, Subtitle 3, Part III and § 10-305 of the State Finance and Procurement Article do not apply to the sale, acquisition, lease, transfer, exchange, or other disposition of any real or personal property acquired by the Board of Trustees in any transaction authorized under this title.

§ 21-123 - 1. Divestiture from Iran and Sudan

(a) Definitions. --

(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) Review of investments. -- 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) Notice and opportunity to comment. --

(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) Divestment action. -- 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) Exclusion. -- 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) Written notice of decision of divestment. -- 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) Report. -- On or before October 1 of each year, and every 6 months thereafter, the Board of Trustees shall submit a report in accordance with § 2-1246 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) No liability for actions taken in good faith. -- 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) Good faith action. -- 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) Good faith action -- Certain action not required. -- 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.