House Bill 318

Chair's Name: Ben Bridges

Committee: Retirement

House Sponsor: Tommy Benton

HB 318 would allow the following:

• Certain foreign corporations may be deemed to be organized under the laws of this state or another state. This would allow public retirement systems to invest in these corporations in certificated or uncertificated form. (Section 1)
• Public retirement systems may invest in certain businesses organized under the laws of the United States or Canada if the businesses have a minimum market capitalization equivalent to $100 million and have elected to be taxed and continue to qualify as a real estate investment trust, as defined in the Federal Internal Revenue Code. (Section 2)
• Large retirement systems may invest up to 15% of the retirement system assets in corporations organized in a country other than the United States or Canada. (Section 3)
• Large retirement systems may enter into contracts, agreements, and other instruments designed to manage risk exposure. (Section 4)

The committee substitute received a Do Pass recommendation from the Retirement Committee and comes back to the House Floor as a Rules Committee Substitute under the Open Rule. 

Chairman Bridges� opinion of this legislation:

WHAT PROBLEM/OPPORTUNITY DOES THIS LEGISLATION ADDRESS?

The bill will give the investment arm of the large retirement systems (systems with $50 million in assets) another tool to use when investing.  The bill will allow investments in foreign companies at a 15% level (currently 10%) and will allow investment in real estate investment trusts (REITs) that are organized as business corporations or unincorporated trusts (current code only allows REITs that are corporations)

WHAT IS THE DRIVING FORCE BEHIND THIS LEGISLATION?

The Board of Trustees of the retirement systems wants to offer the investment division another tool to increase our returns on investments.