NAC: CHAPTER 355 - PUBLIC INVESTMENTS

[Rev. 1/4/2022 1:31:49 PM]

[NAC-355 Revised Date: 11-21]

CHAPTER 355 - PUBLIC INVESTMENTS

INVESTMENTS AND LOANS BY LOCAL GOVERNMENTS

355.100 Loans from investment portfolios of certain cities or consolidated municipalities.

NEVADA CAPITAL INVESTMENT CORPORATION

355.200 Definitions.

355.210 “Board” defined.

355.220 “Corporation” defined.

355.230 “Fund of Funds Manager” defined.

355.240 Corporation: Name; governance and officers; quorum; majority vote required to exercise power or function.

355.250 Business Leadership Council: Establishment; members; powers.

355.260 Confidentiality of information.

355.270 Duties of Board.

355.280 Duties of officers of Corporation.

355.290 Standard of conduct in discharge of duties and making decisions concerning investments; conflicts of interest; Corporation may not finance or influence political activities.

355.300 Authorized sources of money; agreements with public or private investors; restriction on acceptance of certain investments.

355.310 Fund of Funds Manager: Selection; duties; fee structure.

355.320 Use of earnings of certain funds to defray fees of Fund of Funds Manager.

355.330 Requirements relating to private equity funds in which Corporation invests.

355.340 Placement of investments and co-investments; commitment of money for investment opportunities; policies and procedures governing investments.

INVESTMENTS IN COMPANIES WHICH BOYCOTT ISRAEL

355.500 Publicly available information State Treasurer will review and rely upon in identifying scrutinized companies.

355.505 Initial identification of scrutinized company; notice; written response; effect of failure to file response; determination on response.

355.510 Notice of appeal by scrutinized company; hearing; effect of reversal or affirmation of determination.

355.515 Removal of company from list of scrutinized companies: Procedure; request; submission of evidence; notice of determination; effect of removal from list.

355.520 Factors for consideration by State Treasurer when determining whether to adopt certain findings.

355.525 Duties of State Treasurer to monitor direct investment of assets and take certain action based on maturity date of investment.

INVESTMENTS AND LOANS BY LOCAL GOVERNMENTS

NAC 355.100 Loans from investment portfolios of certain cities or consolidated municipalities. (NRS 355.178)

1. The State Board of Finance will not authorize the governing body of a city or consolidated municipality whose population is 25,000 or more but less than 150,000 to lend securities from its investment portfolio pursuant to NRS 355.178 unless the city or consolidated municipality:

(a) Has adopted a written policy for investment which:

(1) Sets forth the procedures to be used for such lending; and

(2) Has been approved by the State Board of Finance; and

(b) Uses an agent to manage such lending who meets the requirements of subsections 2 and 3.

2. If all securities received as collateral from the borrower and investments of cash received as collateral from the borrower are limited to instruments issued by the Federal Government and its agencies and to repurchase agreements and money market accounts based upon such instruments, and those instruments, agreements and accounts will mature no later than the contractual return date of the loaned securities, the agent must:

(a) Be:

(1) Registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940, 15 U.S.C. §§ 80b-1 et seq., as amended; or

(2) A bank or trust company which is organized and either operating or licensed to operate in the United States in accordance with federal law or the law of any state;

(b) Be chosen by the city or consolidated municipality through a formal process of competitive selection;

(c) Enter into a binding contract with the city or consolidated municipality which obligates the agent to abide by the terms of the written policy described in paragraph (a) of subsection 1; and

(d) Agree with the city or consolidated municipality to exercise the judgment and care, under the circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation, but in regard to the investment of their money, considering the probable income as well as the probable safety of their capital.

3. If any securities received as collateral from the borrower or investments of cash received as collateral from the borrower are not limited to the instruments, agreements and accounts described in subsection 2, the agent must:

(a) Meet all the requirements set forth in subsection 2;

(b) Be operating a securities lending program which has been in operation for at least 5 years; and

(c) Have at least five clients participating in its securities lending program, at least one of whom is a public institution whose portfolio has a book value of not less than $100,000,000.

(Added to NAC by St. Bd. of Finance by R069-09, eff. 10-27-2009)

NEVADA CAPITAL INVESTMENT CORPORATION

NAC 355.200 Definitions. (NRS 355.285) As used in NAC 355.200 to 355.340, inclusive, unless the context otherwise requires, the words and terms defined in NAC 355.210, 355.220 and 355.230 have the meanings ascribed to them in those sections.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.210 “Board” defined. (NRS 355.285) “Board” means the Board of Directors of the Corporation.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.220 “Corporation” defined. (NRS 355.285) “Corporation” means the Nevada Capital Investment Corporation formed by the State Treasurer pursuant to subsection 1 of NRS 355.270.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.230 “Fund of Funds Manager” defined. (NRS 355.285) “Fund of Funds Manager” means the person selected by the Board pursuant to NAC 355.310 to assist the Corporation in making investments.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.240 Corporation: Name; governance and officers; quorum; majority vote required to exercise power or function. (NRS 355.285)

1. The name of the corporation for public benefit formed by the State Treasurer pursuant to subsection 1 of NRS 355.270 is the Nevada Capital Investment Corporation.

2. The Corporation must be governed by the Board appointed pursuant to subsection 2 of NRS 355.270. The Chair of the Board is the State Treasurer, and the Vice Chair is the member appointed by the Governor pursuant to subparagraph (1) of paragraph (a) of subsection 2 of NRS 355.270.

3. A majority of the members of the Board who are currently serving constitutes a quorum for the transaction of business at a meeting of the Board.

4. The affirmative vote of a majority of the members of the Board present at a meeting at which a quorum is present, with the State Treasurer voting with the majority, is necessary to exercise a power or function of the Board.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.250 Business Leadership Council: Establishment; members; powers. (NRS 355.285)

1. Pursuant to subsection 4 of NRS 355.285, the Business Leadership Council is hereby established.

2. The Board may appoint to the Business Leadership Council leaders of businesses located in this State and representatives of business development groups in this State. The Board may appoint as many members of the Council as it deems appropriate.

3. The Business Leadership Council may:

(a) Provide strategic advice and guidance to the Fund of Funds Manager and the Board.

(b) Nurture and mentor businesses seeking or receiving an investment from the Corporation.

(c) Provide businesses seeking or receiving an investment from the Corporation with access to the local and international business relationships of the members of the Council.

(d) Collaborate with the Nevada System of Higher Education and other educational institutions, the Board and the Fund of Funds Manager to develop internship programs pursuant to which students are partnered with businesses in which the Corporation invests.

(e) Provide any other support requested by the Board or the officers of the Corporation to further the goals of the Corporation.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.260 Confidentiality of information. (NRS 355.285) A member of the Board or an officer, employee or agent of the Corporation shall not disclose financial or proprietary information of a business seeking or receiving an investment from the Corporation, or otherwise related to the investments of the Corporation, without the consent of the person or entity that submitted the information, unless:

1. The information is disclosed to:

(a) A member of the Board or the Fund of Funds Manager; or

(b) An officer, employee or agent of the Corporation who needs to know the information to carry out his or her duties; or

2. The disclosure of the information is required by chapter 239 or 241 of NRS or other applicable law.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.270 Duties of Board. (NRS 355.285) The Board shall:

1. Adopt a policy concerning the appropriate training of workers and the payment of fair wages and benefits by contractors retained by a business in which the Corporation directly invests. The officers of the Corporation shall prepare and submit to the Board a draft of such a policy. In drafting the policy, the officers of the Corporation shall:

(a) Define “appropriate training of workers” and “fair wages and benefits” in such a manner that recognizes the practicalities of all markets.

(b) Define “fair wages and benefits” based upon the following criteria:

(1) The nature of a project;

(2) The nature of the jobs or trades required for a project and comparable job or trade classifications;

(3) The scope and complexity of the work; and

(4) Any other factors affecting the relevant markets in the locality in which the business receiving an investment is located.

(c) Consider local practices concerning specific trades and types of projects to determine a practical standard for determining fair wages in lieu of the standard wage paid for such trade and projects. In addition, the policy may require a business in which the Corporation invests to engage in broad outreach and a competitive bidding process which invites local trades to suggest contractors whom the local trades believe to be responsible and qualified for a specific project.

2. Establish policies and procedures for the Corporation, including, without limitation, policies and procedures for:

(a) The conduct of meetings of the Board.

(b) Legal representation of the Corporation, the members of the Board and the officers of the Corporation.

(c) The allocation of the returns on investments, including, without limitation, allocations to the State Permanent School Fund.

(d) The return of the corpus of investments to investors after a defined investment period of not more than 10 years following the capital drawdown by the manager of a private equity fund, plus any extensions authorized by the partnership agreement of the private equity fund or a majority of the limited partners in the private equity fund.

3. Establish investment guidelines for the Fund of Funds Manager, for private equity funds in which the Corporation invests and for direct investments and co-investments by the Corporation, including, without limitation, guidelines for:

(a) The diversification of investments that consider the stage of investment, industry sectors, size of investment and vintage years;

(b) Negotiating and including in each agreement governing a venture capital co-investment made by the Corporation a provision specifying the requirements of the agreement for which a penalty may be imposed and requiring a penalty to be paid to the Corporation if such a requirement is not met;

(d) Contract terms to be negotiated with the managers of private equity funds in which the Corporation invests; and

(e) The selection of investments to be made by the Corporation.

4. Establish investment performance benchmarks and objectives.

5. Establish the roles and responsibilities of the Board, the officers of the Corporation, the Office of the State Treasurer, investment consultants retained by the Corporation, the Office of the Attorney General, the Fund of Funds Manager and the managers of private equity funds in which the Corporation invests.

6. Establish reporting requirements for the Fund of Funds Manager and for the investments made by the Corporation.

7. Retain an independent audit firm to conduct audits of the Corporation.

8. Collaborate with the Nevada System of Higher Education and other educational institutions, the Business Leadership Council established by NAC 355.250 and the Fund of Funds Manager to develop an internship program pursuant to which students are partnered with businesses in which the Corporation invests.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.280 Duties of officers of Corporation. (NRS 355.285) The officers of the Corporation shall:

1. Maintain custody of all funds, securities, contracts, bills of exchange and promissory notes of the Corporation, and any assignments of property or money, stocks, bonds, certificates, vouchers, deeds, evidences of indebtedness, indentures and any other property belonging to, or owed by, the Corporation.

2. Carry out the investments of the Corporation by transferring money from the State Permanent School Fund to the Fund of Funds Manager or other external asset managers with whom the Corporation is placing investments.

3. On behalf of the Corporation, sign all papers required by law, the bylaws of the Corporation or the Board, or designate a signatory to sign such papers.

4. On behalf of the Corporation, endorse for collection checks, notes and other obligations.

5. Deposit all money to the credit of the Corporation in the banks or depository institutions designated by the Board.

6. Sign all receipts and vouchers for payment made by the Corporation.

7. Enter regularly into the books of the Corporation full and accurate accounts of all money received and paid by the Corporation and, whenever requested by the Board, render a statement of the cash account of the Corporation.

8. Upon reasonable notice and during business hours, provide access to the books of account of the Corporation to a member of the Board who requests such access.

9. If required by the Board, give bond to the Corporation conditioned on the faithful performance of the officer’s duties in such a sum, and with such security, as required by the Board. The Corporation shall bear the expense of such a bond.

10. Keep the minutes of all meetings of the Board in accordance with chapter 241 of NRS.

11. If designated by the Board, attend, act and vote at a meeting of the stockholders of a corporation in which the Corporation holds stock. At such a meeting, the officer designated by the Board possesses and may exercise any rights and powers incident to the ownership of such stock.

12. Perform any other duties established by the bylaws of the Corporation.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.290 Standard of conduct in discharge of duties and making decisions concerning investments; conflicts of interest; Corporation may not finance or influence political activities. (NRS 355.285)

1. Members of the Board and officers, employees and agents of the Corporation shall discharge the duties of their respective positions in a nonpartisan manner, in good faith and with the degree of diligence, care and skill which an ordinarily prudent person would exercise in a similar position under similar circumstances. In discharging their duties, members of the Board and officers, employees and agents of the Corporation may rely on:

(a) An opinion of legal counsel for the Corporation concerning matters reasonably believed to be within the professional competence of the legal counsel.

(b) A report of an independent auditor selected by the Board who provides a report on matters reasonably believed to be within the professional competence of the auditor.

(c) Financial statements of the Corporation which the officer of the Corporation having charge of the books or accounts of the Corporation represents to be correct or which a certified public accountant has certified in writing to reflect fairly the financial condition of the Corporation.

2. In making decisions concerning the investments of the Corporation, the members of the Board shall exercise the care, skill and caution that an investor of ordinary prudence, discretion and intelligence would exercise under similar circumstances in a similar position.

3. A member of the Board:

(a) Shall not vote, abstain from voting or otherwise act upon a matter;

(b) Shall not participate in the discussions or deliberations of a matter;

(c) Must not be present for the portion of a meeting during which the Board discusses or deliberates a matter or votes upon a matter; or

(d) Shall not discuss a matter with another member of the Board,

Ê if the action or opinion of the member of the Board would reasonably be affected by his or her commitment in a private capacity to the interest of another person. If a member of the Board is prohibited from discussing or taking action on a matter pursuant to this subsection, immediately before the Board discusses the matter at a meeting, the member of the Board shall disclose the conflict of interest. The disclosure must be included in the record of the meeting.

4. An officer, employee or agent of the Corporation shall not take any action with respect to his or her work for the Corporation which would reasonably be affected by his or her commitment in a private capacity to the interest of another person and shall disclose to the Board in writing the existence and nature of such a conflict of interest.

5. The Corporation may not make expenditures or investments to finance or influence political activities. In making decisions concerning expenditures or investments by the Corporation, the members of the Board shall not consider whether the recipient of the expenditure or investment has made a contribution or expenditure which is subject to the requirements of chapter 294A of NRS.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.300 Authorized sources of money; agreements with public or private investors; restriction on acceptance of certain investments. (NRS 355.285)

1. The Corporation may obtain money from:

(a) The State Permanent School Fund which is transferred to the Corporation by the State Treasurer pursuant to NRS 355.280.

(b) Subject to the requirements of subsections 2 and 3, investments from the Nevada System of Higher Education and other public entities and investments from private individuals, organizations and businesses.

2. If the Corporation obtains an investment from a public or private investor pursuant to subsection 1, the Corporation must enter into an agreement with the investor which states:

(a) The amount of the investment;

(b) Any restrictions on the liquidity of the investment;

(d) The management fees and expenses to be paid by the investor.

3. Before entering into an agreement pursuant to subsection 2, the Corporation must consult with legal counsel concerning whether the agreement would cause the Corporation to lose its exemption from the federal income tax. The Corporation may not accept an investment from a public or private investor pursuant to paragraph (b) of subsection 1 if the acceptance of the investment will cause the Corporation to lose its exemption from the federal income tax.

4. The Corporation shall maintain a record of each agreement entered into pursuant to

subsection 2 and make the record available to a member of the public upon request.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.310 Fund of Funds Manager: Selection; duties; fee structure. (NRS 355.285)

1. In accordance with chapter 333 of NRS and chapter 333 of NAC, the officers of the Corporation shall prepare a request for proposals for the selection of the Fund of Funds Manager and coordinate any activities necessary to present to the Board the proposals submitted in response to the request for proposals. The request for proposals must require that a person submitting a proposal disclose:

(a) Any conflict of interest;

(b) All criminal convictions of the person and the principal personnel of the person;

(c) Any investigations of the person and the principal personnel of the person by the Internal Revenue Service, the Securities and Exchange Commission and any other state or federal agency charged by law with investigating violations of laws relating to taxation or securities; and

(d) All litigation involving the person and the principal personnel of the person relating to the financial affairs of the person or the principal personnel.

2. The Board shall evaluate proposals submitted in response to the request for proposals prepared pursuant to subsection 1 and select the Fund of Funds Manager based on the criteria established by the Board. The contract between the Corporation and the Fund of Funds Manager selected by the Board must contain termination and performance clauses which authorize the Board to terminate the contract based on legal, performance and qualitative criteria and any other criteria agreed to by the Board and the Fund of Funds Manager.

3. The Fund of Funds Manager shall:

(a) Establish an office within this State which, at a minimum, is staffed by a part-time employee who actively seeks opportunities to invest in businesses located in this State.

(b) Establish an investment plan for the Corporation which provides for an asset allocation that:

(1) Invests not more than $7.5 million of the Corporation’s capital in a single business and invests not more than $10 million or 20 percent of the capital invested by the Corporation in a single private equity fund;

(2) Establishes a diversified portfolio of private equity investments that may include, without limitation, venture capital, growth capital, buyout investments, mezzanine financing, distressed debt or secondary investments in private equity; and

(3) Promotes investments in qualified businesses that pursue the primary goal of providing greater investment returns for the State Permanent School Fund and the secondary goal of promoting economic development and employment in this State.

(c) Select private equity funds in which to invest the Corporation’s money and co-investments and direct investments for the Corporation in accordance with the guidelines, policies and procedures established by the Board.

(d) On behalf of the Corporation, negotiate and execute partnership agreements with private equity funds in which the money of the Corporation will be invested and to effectuate co-investments and direct investments for the Corporation.

(e) Manage daily activities associated with the investments of the Corporation.

(f) Develop relationships with important constituencies in this State, including, without limitation, governments, educational institutions, corporations, entrepreneurs, and private equity and venture capital organizations, and foster cooperation among these institutions and organizations.

(g) Work with venture capital and entrepreneurial organizations to organize regional forums and conferences.

(h) In accordance with industry standards for due diligence with respect to private equity funds, perform regular due diligence of private equity funds in which the Corporation is invested.

(i) Provide an annual report to the Board concerning the performance and activities of each private equity fund in which the Corporation is invested and each co-investment and direct investment of the Corporation.

(j) Review the performance of all investments made by the Corporation pursuant to NRS 355.250 to 355.285, inclusive, and NAC 355.200 to 355.340, inclusive.

(k) Execute investment decisions based on the following criteria:

(1) Primarily, the probability that a business will succeed and the expected investment return; and

(2) Secondarily, the diversification of the economic base of this State and the generation and retention of jobs and investment in this State.

(l) Ensure that 100 percent of the venture capital co-investments and direct investments of the Corporation are made in businesses that meet the criteria set forth in subsection 6 of NRS 355.285.

(m) Ensure that a business relocating to this State and receiving a venture capital co-investment or direct investment is required:

(1) To maintain a presence in this State, as evidenced by the criteria set forth in subsection 6 of NRS 355.285, for a minimum period; and

(2) To pay back any investment made by the Corporation if the business fails to maintain such a presence for the minimum period.

(n) Ensure that at least 70 percent of the private equity funding provided by the Corporation, after the payment of fees to investment managers, is provided to businesses that meet the criteria set forth in subsection 2 of NRS 355.280.

(o) Prepare a draft of the annual report required by paragraph (d) of subsection 7 of NRS 355.270 and submit the draft to the officers of the Corporation for review. The officers of the Corporation shall review the draft of the report and submit it to the Board for approval. The report must provide:

(1) An accounting of all money received and expended by the Corporation, including, without limitation, any grants, gifts and donations received by the Corporation; and

(2) The name and a brief description of all funds receiving an investment from the Corporation.

(p) Perform any other duties established by the contract between the Corporation and the Fund of Funds Manager.

4. The fee structure for the Fund of Funds Manager may consist of only a management fee and a performance fee. The management fee may not exceed 1 percent of the committed capital. The performance fee may not exceed 10 percent of the profits generated by the Corporation’s investments.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.320 Use of earnings of certain funds to defray fees of Fund of Funds Manager. (NRS 355.285) To defray any administrative or management fees charged by the Fund of Funds Manager pursuant to the contract between the Corporation and the Fund of Funds Manager, the Corporation may place money in a fixed income mutual fund or common trust fund approved by the Board. Upon Board approval, the Corporation may use the earnings of the mutual fund or common trust fund to pay the administrative or management fees of the Fund of Funds Manager.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.330 Requirements relating to private equity funds in which Corporation invests. (NRS 355.285)

1. Private equity funds in which the Corporation invests:

(a) May include qualified private equity funds with an emphasis in venture capital, growth capital, buyout investments, mezzanine financing, distressed debt or secondary investments in private equity.

(b) Must be managed by persons who have at least 10 years of experience in commercial banking, private equity investing, mezzanine funding or venture capital.

2. The managers of a private equity fund in which the Corporation invests have a fiduciary duty to the Corporation with respect to the Corporation’s investment in the fund.

3. The fee structure of a private equity fund in which the Corporation invests may consist of only a management fee and a performance fee. The management fee may not exceed 2.5 percent of committed capital. The performance fee may not exceed 20 percent of the net profits of the fund and must be distributed in a manner which aligns the interests of the general partner of the private equity fund and the limited partners of the fund.

4. A private equity fund in which the Corporation invests must provide to the Fund of Funds Manager an annual financial statement prepared by an accredited audit firm.

5. The Corporation must not be a general partner in a private equity fund in which the Corporation invests.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

NAC 355.340 Placement of investments and co-investments; commitment of money for investment opportunities; policies and procedures governing investments. (NRS 355.285)

1. Subject to the requirements of this section, upon the approval of a two-thirds majority of the members of the Board currently serving, with the State Treasurer being in the majority, the Corporation may:

(a) Place direct investments and co-investments with strategic investors.

(b) Commit money for unique private equity investment opportunities in this State.

2. The Board shall adopt policies and procedures governing investments made pursuant to this section. Any investment made pursuant to this section must comply with the policies and procedures adopted pursuant to this subsection. At a minimum, the policies and procedures must establish due diligence controls that provide reasonable assurance that any investments pursuant to this section are likely to meet the investment performance objectives of the Corporation. The due diligence controls may include, without limitation:

(a) Entering into a contract with an investment advisor, investment consultant or any other person to evaluate an opportunity for an investment pursuant to this section. The Corporation may not enter into such a contract with an investment advisor, investment consultant or other person who has a business or familial relationship with a member of the Board or the management of a fund or business being evaluated or whose independence of judgment may reasonably be affected by a commitment to the interests of another person.

(b) Entering into a partnership with an institutional investor that has invested in the opportunity pursuant to which the Corporation and the institutional investor share analytical resources.

(c) Establishing requirements for the due diligence efforts of the State Treasurer’s staff and any subcommittees of the Board that perform due diligence for investments made pursuant to this section.

3. The Corporation may place investments pursuant to this section with an external asset manager other than the Fund of Funds Manager or through the Fund of Funds Manager in accordance with the agreement between the Corporation and the Fund of Funds Manager.

4. The Corporation may not invest more than $10 million pursuant to this section.

(Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)

INVESTMENTS IN COMPANIES WHICH BOYCOTT ISRAEL

NAC 355.500 Publicly available information State Treasurer will review and rely upon in identifying scrutinized companies. (NRS 355.350) The publicly available information regarding companies which are engaging in a boycott of Israel that the State Treasurer will review and rely upon as required by NRS 355.335 includes, without limitation:

1. Information obtained through asset managers with whom the State Treasurer has entered into a contract;

2. Information obtained through an investment of the State Treasurer in conjunction with other institutions or organizations, including, without limitation, a mutual fund or commingled trust fund;

3. Information obtained through institutional investors that have divested from or engaged with companies that have economic prohibitions against Israel;

4. Any list of companies who are engaging in a boycott of Israel that has been created by a governmental entity; and

5. Any information or guidance from the Federal Government relating to companies who are engaging in a boycott of Israel.

(Added to NAC by St. Treasurer by R141-18, eff. 8-21-2019)

NAC 355.505 Initial identification of scrutinized company; notice; written response; effect of failure to file response; determination on response. (NRS 355.350)

1. Upon reviewing publicly available information regarding companies which are engaging in a boycott of Israel, the State Treasurer will initially identify any company in which a public fund has direct holdings or indirect holdings that appears to be a scrutinized company.

2. Within 30 days after the date on which the State Treasurer initially identifies a company as a scrutinized company pursuant to subsection 1, the State Treasurer will provide written notice to the company of that initial identification. Such notice will be sent by registered mail to the legal address of the company and will include, without limitation:

(a) A statement of the reasons why the State Treasurer initially identified the company as a scrutinized company;

(b) Notice that final identification of the company as a scrutinized company will result in inclusion of the company on the list of all scrutinized companies created pursuant to subsection 2 of NRS 355.335; and

(c) Notice that inclusion of the company on the list of all scrutinized companies created pursuant to subsection 2 of NRS 355.335 may:

(1) Result in the sale, redemption, divestment or withdrawal of all direct holdings of the company by the State Treasurer from the assets under his or her management; and

(2) Prohibit the State Treasurer from acquiring securities of the company as part of the direct holdings of the Office of the State Treasurer.

3. Within 30 days after the date on which a company receives notice pursuant to subsection 2, the company may submit a written response to the notice by registered mail to the Office of the State Treasurer. The response may include, without limitation:

(a) An explanation regarding or rebuttal to the statement in the notice described in paragraph (a) of subsection 2; or

(b) Evidence that the company has ceased to engage in any activity specified in the statement in the notice described in paragraph (a) of subsection 2.

4. If a company fails to respond within the period and in the manner prescribed in subsection 3, the company will be deemed to have admitted to being a scrutinized company and will be placed on the list of scrutinized companies when the list is next updated pursuant to subsection 3 of NRS 355.335.

5. Within 90 days after the date on which a response is received from a company pursuant to subsection 3, the State Treasurer will make a determination concerning the identification of a company as a scrutinized company. Notice of the determination will be sent by registered mail to the legal address of the company.

(Added to NAC by St. Treasurer by R141-18, eff. 8-21-2019)

NAC 355.510 Notice of appeal by scrutinized company; hearing; effect of reversal or affirmation of determination. (NRS 355.350)

1. Within 10 days after the date on which a company received notice of the determination that it was identified as a scrutinized company pursuant to subsection 5 of NAC 355.505, the company may file a notice of appeal of the determination with the State Treasurer. A notice of appeal must include, without limitation, a written statement of any reason why the company believes that it is not a scrutinized company and any evidence that substantiates its written statement.

2. Within 20 days after the date on which the State Treasurer receives a notice of appeal pursuant to subsection 1, the State Treasurer or his or her designee will hold a hearing on the appeal. The State Treasurer or his or her designee will serve as the hearing officer for such a hearing.

3. If the State Treasurer or his or her designee reverses the determination on appeal, the company:

(a) Will not be identified as a scrutinized company; and

(b) If the company has been included on the list of scrutinized companies created pursuant to NRS 355.335, will be removed from that list not later than 10 days after the date on which the appeal was upheld.

4. If the State Treasurer or his or her designee affirms the determination, the company will be included on the list of scrutinized companies when the list is next updated pursuant to subsection 3 of NRS 355.335.

(Added to NAC by St. Treasurer by R141-18, eff. 8-21-2019)

NAC 355.515 Removal of company from list of scrutinized companies: Procedure; request; submission of evidence; notice of determination; effect of removal from list. (NRS 355.350)

1. A scrutinized company may be removed from the list of scrutinized companies created pursuant to NRS 355.335:

(a) By the State Treasurer after a review of publicly available information during the annual update of the list as required by subsection 3 of NRS 355.335; or

(b) Upon request of the scrutinized company and a determination by the State Treasurer pursuant to the procedure set forth in subsections 2 and 3.

2. If a scrutinized company requests to be removed from the list of scrutinized companies, the scrutinized company must, on or before December 1 of the year immediately preceding the year in which the scrutinized company wishes to be removed from the list, submit to the State Treasurer written evidence which demonstrates that the scrutinized company should no longer be identified as a scrutinized company.

3. Within 90 days after the date on which the State Treasurer receives any written evidence submitted by a scrutinized company pursuant to subsection 2, the State Treasurer will make a determination concerning the continued inclusion of the company on the list of scrutinized companies. Notice of the determination will be sent by registered mail to the legal address of the company.

4. If the State Treasurer determines that a scrutinized company should be removed from the list, the State Treasurer will not:

(a) Include the scrutinized company on the list of scrutinized companies when the list is next updated pursuant to subsection 3 of NRS 355.335; and

(b) Report the scrutinized company as being a scrutinized company in the annual report required to be prepared pursuant to NRS 355.340.

(Added to NAC by St. Treasurer by R141-18, eff. 8-21-2019)

NAC 355.520 Factors for consideration by State Treasurer when determining whether to adopt certain findings. (NRS 355.350) When determining whether to adopt the findings described in subsection 2 of NRS 355.345, the State Treasurer will consider, without limitation, investment safety, liquidity and securing a just and reasonable investment return while avoiding undue risk.

(Added to NAC by St. Treasurer by R141-18, eff. 8-21-2019)

NAC 355.525 Duties of State Treasurer to monitor direct investment of assets and take certain action based on maturity date of investment. (NRS 355.350) Except as otherwise provided in subsection 2 of NRS 355.345, if the maturity date of any direct investment of assets under the management of the State Treasurer:

1. Does not extend more than 3 months after the date on which a company is identified as a scrutinized company, the State Treasurer will monitor the investment until the date on which the security matures and not extend or reinvest with the scrutinized company until the company is no longer identified as a scrutinized company.

2. Extends more than 3 months after the date on which a company is identified as a scrutinized company, the State Treasurer will analyze the complexity of the investment and develop a divestment plan. Such a plan will be based on prudent divestment strategy that preserves the principal value of the investment.

(Added to NAC by St. Treasurer by R141-18, eff. 8-21-2019)