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  • Summary date: Apr 13 2023 - View Summary

    Adds new Article 84, North Carolina Public Finance Protection Act, in GS Chapter 143, providing as follows.

    DefinesĀ pension benefit plan or planĀ as any plan; fund; or program established, maintained, or offered by the State or any subdivision, county, municipality, agency, or instrumentality thereof; or any school, college, university, administration, authority, or other enterprise operated by the State, to the extent that by its terms or as a result of surrounding circumstances does either of the following: (1) provides retirement income or other retirement benefits to employees or former employees or (2) results in a deferral of income by employees for a period extending to the termination of covered employment or beyond.

    Requires a fiduciary to discharge duties with respect to a plan solely in the pecuniary interest of the participants and beneficiaries: (1) for the exclusive purpose of providing pecuniary benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan; (2) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with the relevant matters would use in the conduct of an enterprise of a like character and with like aims; (3) by diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and (4) in accordance with the documents and instruments governing the plan insofar as the documents and instruments are consistent with this Article.

    Prohibits plan fiduciaries from promoting non-pecuniary benefits or any other non-pecuniary goals. Specifies that environmental, social, corporate governance, or other similarly oriented considerations are pecuniary factors only if they present economic risks or opportunities that qualified investment professionals would treat as material economic considerations under generally accepted investment theories; sets out provisions governing consideration of those factors.

    Requires all shares held directly or indirectly by or on behalf of a pension benefit plan or the beneficiaries thereof to be voted solely in the pecuniary interest of plan participants. Prohibits voting to further non-pecuniary, environmental, social, political, ideological, or other benefits or goals. Prohibits a fiduciary, unless no economically practicable alternative is available, from adopting a practice of following the recommendations of a proxy advisory firm or other service provider unless the firm or service provider has a practice of, and commits in writing to, following proxy voting guidelines consistent with the fiduciary's obligation to act based only on pecuniary factors. Prohibits plan assets, unless no economically practicable alternative is available, from being entrusted to a fiduciary, unless that fiduciary has a practice of, and commits in writing to following guidelines, when engaging with portfolio companies and voting shares or proxies, that match the plan's obligation to act based only on pecuniary factors. Places the authority to vote shares in a State official who is politically accountable to the people of the State. Sets out provisions governing proxy votes.

    Allows the Attorney General to enforce this Article and sets out actions the Attorney General may take.

    Includes a severability clause.

    Effective October 1, 2023.