Introduced Version
House Bill 2846 History
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Key: Green = existing Code. Red = new code to be enacted
H. B. 2846
(By Delegates Canterbury, Walters, Ambler and Ashley)
[Introduced March 6, 2013; referred to the
Committee on Finance.]
A BILL to amend and reenact §12-6-12 of the Code of West Virginia,
1931, as amended, relating to removing investment restrictions
on foreign securities.
Be it enacted by the Legislature of West Virginia:
That §12-6-12 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 6. WEST VIRGINIA INVESTMENT MANAGEMENT BOARD.
§12-6-12. Investment restrictions.
(a) The board shall hold in nonreal estate equity investments
no more than seventy-five percent of the assets managed by the
board and no more than seventy-five percent of the assets of any
individual participant plan.
(b) In addition to any investments the board may make pursuant
to subsection (h) (g) of this section, the board shall hold in real estate equity investments no more than twenty-five percent of the
assets managed by the board and no more than twenty-five percent of
the assets of any individual participant plan: Provided, That any
such investment be only made upon the recommendation by a
professional, third-party fiduciary investment adviser registered
with the Securities and Exchange Commission under the Investment
Advisors Act of 1940, as amended, upon the approval of the board or
a committee designated by the board, and upon the execution of the
transaction by a third-party investment manager: Provided,
however, That the board's ownership interest in any fund is less
than forty percent of the fund's assets at the time of purchase:
Provided further, That the combined investment of institutional
investors, other public sector entities and educational
institutions and their endowments and foundations in the fund is in
an amount equal to or greater than fifty percent of the board's
total investment in the fund at the time of acquisition. For the
purposes of this subsection, "fund" means a real estate investment
trust traded on a major exchange of the United States of America,
or a partnership, limited partnership, limited liability company or
other entity holding or investing in related or unrelated real
estate investments, at least three of which are unrelated and the
largest of which is not greater than forty percent of the entity's
holdings, at the time of purchase.
(c) The board shall hold in international securities no more than thirty percent of the assets managed by the board and no more
than thirty percent of the assets of any individual participant
plan.
(d) (c) The board may not at the time of purchase hold more
than five percent of the assets managed by the board in the nonreal
estate equity securities of any single company or association:
Provided, That if a company or association has a market weighting
of greater than five percent in the Standard & Poor's 500 index of
companies, the board may hold securities of that nonreal estate
equity equal to its market weighting.
(e) (d) No security may be purchased by the board unless the
type of security is on a list approved by the board. The board may
modify the securities list at any time and shall give notice of
that action pursuant to subsection (g), section three of this
article and shall review the list at its annual meeting.
(f) (e) Notwithstanding the investment limitations set forth
in this section, it is recognized that the assets managed by the
board or the assets of the participant plans, whether considered in
the aggregate or individually, may temporarily exceed the
investment limitations in this section due to market appreciation,
depreciation and rebalancing limitations. Accordingly, the
limitations on investments set forth in this section shall not be
considered to have been violated if the board rebalances the assets
it manages or the assets of the participant plans, whichever is applicable, to comply with the limitations set forth in this
section at least once every twelve months based upon the latest
available market information and any other reliable market data
that the board considers advisable to take into consideration,
except for those assets authorized by subsections (b) and (h) (g)
of this section for which compliance with the percentage
limitations shall be measured at such time as the investment is
made.
(g) (f) The board, at the annual meeting required in
subsection (h), section three of this article, shall review,
establish and modify, if necessary, the investment objectives of
the individual participant plans as incorporated in the investment
policy statements of the respective trusts so as to provide for the
financial security of the trust funds giving consideration to the
following:
(1) Preservation of capital;
(2) Diversification;
(3) Risk tolerance;
(4) Rate of return;
(5) Stability;
(6) Turnover;
(7) Liquidity; and
(8) Reasonable cost of fees.
(h) (g) In addition to any and all other investments the board may make under this article and all investment authority granted to
the board by this article, the board is expressly authorized to
invest no more than twenty percent of the assets managed by the
board and no more than twenty percent of the assets of any
individual participant plan, or any other endowment or other fund
managed by the board, as measured at the time of the investment, in
any one or more classes, styles or strategies of alternative
investments suitable and appropriate for investment by the board.
A suitable and appropriate alternative investment is a private
equity fund such as a venture capital, private real estate or buy-
out fund; commodities fund; distressed debt fund; mezzanine debt
fund; hedge fund; put or call on an individual security purchased
for the purpose of hedging an authorized investment position; or
fund consisting of any combination of private equity, distressed or
mezzanine debt, hedge funds, private real estate, commodities and
other types and categories of investment permitted under this
article: Provided, That any such investment be only made upon the
recommendation by a professional, third-party fiduciary investment
adviser registered with the Securities and Exchange Commission
under the Investment Advisors Act of 1940, as amended, upon the
approval of the board or a committee designated by the board and
upon the execution of the transaction by a third-party investment
manager: Provided, however, That if the standard confidentiality
agreements, policies or procedures of any firm, company or organization through which the board invests in securities
prohibit, restrict or limit the disclosure of information
pertaining to the securities, the information shall be exempt from
disclosure, under the provisions of chapter twenty-nine-b of this
code or otherwise, to the extent of the prohibitions, restrictions
or limitations: Provided further, That the board's ownership
interest in any fund is less than forty percent of the fund's
assets at the time of purchase: And provided further, That the
combined investment of institutional investors, other public sector
entities, and educational institutions and their endowments and
foundations in the fund is in an amount equal to or greater than
fifty percent of the board's total investment in the fund at the
time of acquisition. For the purposes of this subsection, "fund"
means a partnership, limited partnership, limited liability company
or other form of entity holding or investing in a collection of
related or unrelated investments, at least three of which are
unrelated and the largest of which is not greater than forty
percent of the fund's composition at the time of purchase. To
facilitate access to markets, control, manage or diversify
portfolio risk, or enhance performance or efficiency in connection
with investments in alternative investments and all other types and
categories of investment permitted under this article, the board
may enter into commercially customary and prudent market
transactions consistent with the laws of the state: And provided further, That neither the purpose nor the effect of such
transactions may materially increase market risk or market exposure
of the total portfolio of investments as adjusted, from time to
time, by the board. The investments described in this subsection
are subject to the requirements, limitations and restrictions set
forth in this subsection and the standard of care set forth in
section eleven of this article, but are not subject to any other
limitations or restrictions set forth elsewhere in this article or
code.
NOTE: The purpose of this bill is to remove restriction on
investments in foreign securities.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.