Bill > HF721

Introduced Session

This bill requires a fiduciary to vote all shares of a pension benefit plan established, maintained, or offered by a public entity solely in the best economic interest of the plan participants and beneficiaries. The bill creates the rebuttable presumption that, if a fiduciary’s vote aligns with the recommendation of the board of directors of the issuer of the shares or if the fiduciary or a third party conducts and documents an economic analysis showing that the vote is in the best economic interest of the plan participants and beneficiaries, the vote is in the best interest of the plan participants and beneficiaries. The bill prohibits a fiduciary from voting shares of a plan based on any environmental, social, policy, governance, or ideological goal that is not in the best economic interest of plan participants and beneficiaries. The bill requires a fiduciary to annually report to the treasurer of state any vote inconsistent with the recommendation of an issuer’s board of directors and the economic analysis on which the fiduciary relied. This report must be certified by the fiduciary’s chief executive officer and chief financial officer. The bill also requires a fiduciary to review its economic analysis every three years to ensure that the fiduciary’s models, procedures, and processes predict the best economic interest of the plan participants and beneficiaries. The bill permits a court to award court costs and reasonable attorney fees to the prevailing party in a suit concerning fiduciary voting responsibilities under the bill. The bill prohibits a proxy advisory firm from providing proxy voting advice regarding shareholder-sponsored proposals to an entity that the state regulates unless the advice is based solely on the best economic interests of the enterprise’s shareholders. If a proxy advisory firm’s advice follows the recommendation of the board of directors of the issuer of the shares or if the proxy advisory firm conducts and documents an economic analysis demonstrating that the vote is in the best economic interest of the plan participants and beneficiaries, then the advice is presumed to be based solely on the best economic interest of the enterprise’s shareholders. A proxy advisory firm must submit an annual report to the treasurer of state disclosing any vote inconsistent with the issuer’s board of directors’ recommendations and the economic analysis on which the proxy advisory firm relied. The bill permits an investor, beneficiary, or participant of a plan to submit a request for the economic analysis conducted for a fiduciary’s vote to the investment company that owns shares of an enterprise regulated by the state or the plan if the individual has reason to believe the provisions of the bill have not been met. The investment company or plan must respond in writing within 90 days by providing the requested economic analysis or informing the individual that no economic analysis was conducted or the vote aligned with the recommendation of the board of directors of the issuer of the shares. The investment company or plan must provide such a response without cost up to twice annually per consumer. The bill prohibits a financial institution from refusing to provide, terminating, or restricting financial services based on certain nonfinancial factors. If a financial institution refuses to provide, terminates, or restricts financial services, a consumer may request within 90 days a written statement of the specific reasons for the decision, which the financial institution must provide within 14 days. A person who is discriminated against by a financial institution may bring an action to recover damages or seek an injunction. The bill allows the attorney general to investigate any suspected violations of the bill and to enforce the bill’s provisions by initiating an action in the name of the state and seeking civil penalties for each violation. Each share not voted in the best economic interest of the shareholder qualifies as a separate violation and constitutes irreparable harm. The bill requires civil penalties to be in equity and to not exceed $1,000 per violation. Civil penalties collected under the bill are deposited in the general fund of the state. The bill makes conforming changes.

AI Summary

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Henry Stone (R)*, 

Introduced, referred to Ways and Means. H.J. 490. (on 03/04/2025)

Official Document