A BILL TO BE ENTITLED
AN ACT To promote investment in small business ventures.
The General Assembly of North Carolina enacts:
SECTION 1.(a)  G.S. 147‑69.2(b) reads as rewritten:
"(b)	It shall be the duty of the State Treasurer to invest the cash of the funds enumerated in subsection (a) of this section in excess of the amount required to meet the current needs and demands on these funds. The State Treasurer may invest the funds as provided in this subsection in the manner authorized by subsection (e) of this section. If an investment was authorized by this subsection at the time the investment was made or contractually committed to be made, then that investment shall continue to be authorized by this subsection, and none of the percentage or other limitation on investments set forth in this subsection shall be construed to require the State Treasurer to subsequently dispose of the investment or fail to honor any contractual commitments as a result of changes in market values, ratings, or other investment qualifications. For purposes of computing market values on which percentage limitations on investments in this subsection are based, all investments shall be valued as of the last date of the most recent fiscal quarter. Notwithstanding anything in this section to the contrary, the State Treasurer shall categorize investment management arrangements according to the primary investment type or primary strategy utilized under the arrangement authorized under subsection (e) of this section. No investment management arrangement may be categorized in more than one of the subdivisions of this section. The State Treasurer shall select from among the following investments subject to the following limitations and requirements:
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(12)	It is the intent of the General Assembly that the Escheat Fund provide a perpetual and sustainable source of funding for the purposes authorized by the State Constitution. Accordingly, the following provisions apply:
a.	With respect to assets of the Escheat Fund, in addition to those investments authorized by subdivisions (1) through (6) of this subsection, up to ten percent (10%) of the assets may be invested in the investments authorized under subdivisions (6c) through (9a) of this subsection, notwithstanding the percentage limitations imposed on the Retirement Systems' investments under those subdivisions, and provided that the State Treasurer may invest the assets as provided in subsection (e) of this section.
b.	Repealed by Session Laws 2016‑55, s. 1.3, effective January 31, 2017.
c.	The State Treasurer shall invest, in addition to those investments authorized by sub‑subdivision a. of this subdivision, ten percent (10%) of the net assets of the Escheat Fund as authorized under G.S. 147‑69.2A.
d.	With respect to assets of the Escheat Fund, in addition to those investments otherwise authorized by this subdivision, up to one hundred million dollars ($100,000,000) of such assets may be invested as authorized under G.S. 147‑69.2A."
SECTION 1.(b)  G.S. 147‑69.2A reads as rewritten:
"§ 147‑69.2A.  Investments; special funds held by the State Treasurer.
(a)	Funds; Administration. – The State Treasurer shall assign professional and clerical staff to assist in the oversight of the Fund. All costs for the third‑party investment management firm and the professional and clerical staff shall be borne by the Fund pursuant to G.S. 147‑69.3(f). The State Treasurer shall discharge his or her duties with respect to the Fund as a fiduciary consistent with G.S. 147‑69.7. Administration of the Fund shall be as follows:
(1)	With the exception of assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., following a public procurement process, a designee of the Governor, a designee of the State Treasurer, a designee of the Speaker of the House of Representatives, and a designee of the President Pro Tempore of the Senate shall jointly and unanimously select a third‑party professional investment management firm, registered with the U.S. Securities and Exchange Commission, to administer the Fund and select investment opportunities appropriate for receiving allocations from the Fund on the basis of potential return on investment and the risks attendant thereto.
(2)	For assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., following a public procurement process, a designee of the Governor, a designee of the State Treasurer, a designee of the Secretary of Commerce, a designee of the Speaker of the House of Representatives, and a designee of the President Pro Tempore of the Senate shall jointly and unanimously select a third‑party professional investment management firm, registered with the U.S. Securities and Exchange Commission as an Investment Advisor and an exempt entity, to administer the Fund and select investment opportunities appropriate for receiving allocations from the Fund on the basis of the limitations provided in subsections (c) and (c1) of this section.
(b)	Public Records. – With the exception of assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., all documents of the Governor or the State Treasurer concerning the Fund are public records governed by Chapter 132 of the General Statutes and any applicable provisions of the General Statutes protecting confidential information. For assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., all documents of the Governor, the Secretary of Commerce, or the State Treasurer concerning the Fund are public records governed by Chapter 132 of the General Statutes and any applicable provisions of the General Statutes protecting confidential information.
(b1)	Investment Policy. – With the exception of assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., the State Treasurer and the Governor shall jointly develop and adopt an investment policy statement for the Fund. For assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., the State Treasurer, the Secretary of Commerce, and the Governor shall jointly develop and adopt an investment policy statement for the Fund.
(b2)	Conflict of Interest. – With the exception of assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., the State Treasurer and Governor shall jointly adopt a common policy to prevent conflicts of interests. For assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d., the State Treasurer, the Secretary of Commerce, and the Governor shall jointly develop and adopt an investment policy statement for the Fund. A policy adopted under this subsection shall ensure, at a minimum, that (i) designees who selected a third‑party investment management firm, pursuant to this section, (ii) the staff of the State Treasurer overseeing the Fund, and (iii) the third‑party investment management firm's employees selecting or overseeing Fund investments do not provide services for compensation, as an employee, consultant, or otherwise, within two years after the end of their service to the Fund, to any entity in which an investment from the Fund was made.
(b3)	Investment Report. – By October 1, 2015, and at least semiannually thereafter, the State Treasurer shall submit a report to the Governor, the Office of State Budget and Management, the Joint Legislative Commission on Governmental Operations, and the Fiscal Research Division on investments made from the Fund and any return on investment. This report shall be made for the Fund in lieu of the reports required by G.S. 147‑69.8 and G.S. 147‑69.12(b).
(c)	Limitations. – Assets of the Fund may be invested in those types of investments authorized for the North Carolina Retirement Systems by G.S. 147‑69.2(b), notwithstanding the percentage limitations imposed on the Retirement Systems' investments under those subdivisions.
(c1)	Additional Limitations. – For assets of the Fund made available for investment pursuant to G.S. 147‑69.2(b)(12)d. only, the following additional limitations apply:
(1)	Such assets shall be allocated to small business ventures (i) with a North Carolina nexus; (ii) of various sizes, growth potential, and industry classifications to maximize opportunities for reasonable return on investment, accounting for risks associated with similar types of investment, and to provide capital and growth opportunities for small business enterprises typically underserved by ordinary venture capital and investment funds; and (iii) that diversify investment risk and maximize the number of business ventures that may benefit from the Fund. The following definitions apply in this subdivision:
a.	North Carolina nexus. – A business has a North Carolina nexus if it is headquartered or domiciled in this State; has a demonstrable and significant portion of its affiliated operations or contractual service operations in this State; or deploys a demonstrable and significant amount of investable capital to acquire, license, or otherwise commercialize intellectual property developed in this State, including through public or private university technology transfer programs.
b.	Small business. – A small business is a business whose annual receipts, combined with the annual receipts of all related persons, for the applicable period of measurement did not exceed five million dollars ($5,000,000).
(2)	No more than thirty‑three percent (33%) of such assets may be allocated to business ventures located in urban regions in the State, including the counties of Wake, Durham, Mecklenburg, and Orange.
(3)	The maximum amount for total annual investments, excluding rollover investments, made in any single calendar year is twenty million dollars ($20,000,000). No investment may be made that, when considered together with other investments made during a single calendar year, excluding rollover investments, could cause the State's total annual investments during a single calendar year to exceed twenty million dollars ($20,000,000). A rollover investment equals the difference between the maximum allowed investment amount for a single calendar year and the amount actually invested for such year.
(4)	At least twenty percent (20%) of such assets shall be invested in business ventures started and owned, in at least majority part, by a veteran of any branch of the Armed Forces of the United States (i) whose character of service at separation was honorable or under honorable conditions and (ii) who has not been convicted of a felony offense or who has been convicted of one or more felonies but each conviction has been expunged.
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SECTION 2.  This act becomes effective July 1, 2019.