Iran Investment Restrictions

Iowa Code chapter 12H prohibits IPERS from investing in certain companies doing business in Iran. This law became effective on July 1, 2011, but allowed public funds such as IPERS until March 1, 2012, to create its initial list of scrutinized companies.

The law requires IPERS to scrutinize the business activities of companies doing business with Iran in four general areas: military equipment, mineral extraction activities, oil-related activities, and power production activities. IPERS uses the research services of IW Financial, Inc. to assist it in developing the list of scrutinized companies that is based on the criteria specified in Iowa Code chapter 12H. IPERS contacts the scrutinized companies and asks them to explain their business operations in Iran. Each company has 90 days to respond. If a company is deemed to not meet the requirements of the law, or does not respond to IPERS' request for information on their Iran-related activities within the 90 day period, they are placed on IPERS' prohibited investment list. IPERS updates this list quarterly, and companies can be added or removed based on the receipt of new information.

Once a company is placed on the prohibited investment list, IPERS can not make any new investments in the company. IPERS is also required to divest of any securities issued by companies on the prohibited list that IPERS holds directly (direct holdings) within 18 months. If IPERS owns an interest in a mutual fund that holds securities (an indirect holding) of a company on the prohibited companies list, the IPERS Investment Board will decide whether divestment is warranted.

IPERS maintains a holdings list that contains estimates of holdings in prohibited companies.