H.F. 2290 Section 1. Section 12.8, subsection 1, Code 2022, is amended 1 to read as follows: 2 1. The treasurer of state shall invest or deposit, subject 3 to chapters 12F , 12H , and 12J , and 12K and as provided by law, 4 any of the public funds not currently needed for operating 5 expenses and shall do so upon receipt of monthly notice from 6 the director of the department of administrative services of 7 the amount not so needed. In the event of loss on redemption 8 or sale of securities invested as prescribed by law, and if 9 the transaction is reported to the executive council, neither 10 the treasurer nor director of the department of administrative 11 services is personally liable but the loss shall be charged 12 against the funds which would have received the profits or 13 interest of the investment and there is appropriated from the 14 funds the amount so required. 15 Sec. 2. NEW SECTION . 12K.1 Definitions. 16 As used in this chapter, unless the context otherwise 17 requires: 18 1. “Company” means a sole proprietorship, organization, 19 association, corporation, partnership, joint venture, limited 20 partnership, limited liability partnership, limited liability 21 company, or other entity or business association, including 22 all wholly owned subsidiaries, majority-owned subsidiaries, 23 parent companies, or affiliates of such entities or business 24 associations, that exists for profit-making purposes. 25 2. “Direct holdings” in a company means all securities of 26 a company held directly by the public fund or in an account or 27 fund in which the public fund owns all shares or interests. 28 3. “Indirect holdings” in a company means all securities 29 of a company held in an account or fund managed by one or more 30 persons not employed by the public fund, in which the public 31 fund owns shares or interests together with other investors not 32 subject to the provisions of this chapter. Indirect holdings 33 include but are not limited to mutual funds, fund of funds, 34 private equity funds, hedge funds, and real estate funds. 35 -1- LSB 5472YH (1) 89 ec/rn 1/ 8

H.F. 2290 4. “Prohibited company” means a company that is owned 1 or controlled by Chinese military or government services, 2 including but not limited to the people’s liberation army 3 of China or the communist party of China, and that has been 4 sanctioned in any way by the United States government. 5 5. “Public fund” means the treasurer of state, the state 6 board of regents, the public safety peace officers’ retirement 7 system created in chapter 97A, the Iowa public employees’ 8 retirement system created in chapter 97B, the statewide fire 9 and police retirement system created in chapter 411, or the 10 judicial retirement system created in chapter 602. 11 6. “Scrutinized company” means any company that is owned or 12 controlled by Chinese military or government services. 13 Sec. 3. NEW SECTION . 12K.2 Identification of companies —— 14 notice. 15 1. a. Within sixty days following the effective date of 16 this Act, a public fund shall identify or have identified all 17 scrutinized companies in which the public fund has direct or 18 indirect holdings and shall create and make available to the 19 public a scrutinized companies list for that public fund. 20 The public fund shall review and update, if necessary, the 21 scrutinized companies list on a quarterly basis thereafter. 22 b. In identifying or having identified scrutinized 23 companies, the public fund may review and rely, in the best 24 judgment of the public fund, on publicly available information 25 and other information that may be provided by nonprofit 26 organizations, research firms, international organizations, and 27 government entities. The public fund may also contact asset 28 managers and institutional investors for the public fund to 29 identify scrutinized companies based upon industry-recognized 30 lists of such companies that the public fund may have indirect 31 holdings in. 32 c. The Iowa public employees’ retirement system, acting 33 on behalf of the system and other public funds subject to 34 this section, may develop and issue a request for proposals 35 -2- LSB 5472YH (1) 89 ec/rn 2/ 8

H.F. 2290 for third-party services to complete the identification of 1 scrutinized companies and the compilation of a scrutinized 2 companies list. The request for proposals may request bids for 3 optional services related to this purpose, including but not 4 limited to provision of notice of such scrutinized companies 5 as required in subsection 2. The Iowa public employees’ 6 retirement system shall consult with all other public funds 7 regarding the development of the request for proposals, however 8 selection of a successful proposal and the final scope of 9 services to be provided shall be determined only by those 10 public funds that have agreed to utilize the third-party 11 services. If more than one public fund decides to utilize the 12 third-party services, the participating public funds shall 13 equally share the costs of such services. 14 2. For each company on the scrutinized companies list in 15 which a public fund has direct or indirect holdings, the public 16 fund shall send or have sent a written notice informing the 17 company of the requirements of this chapter. The public fund 18 or its representative shall continue to provide such written 19 notice on an annual basis if the company remains a scrutinized 20 company. 21 Sec. 4. NEW SECTION . 12K.3 Divestment. 22 1. A public fund shall not acquire publicly traded 23 securities of a prohibited company. 24 2. a. A public fund shall sell, redeem, divest, or withdraw 25 all publicly traded securities of a prohibited company no later 26 than one hundred eighty days following the date the company 27 becomes a prohibited company. 28 b. This subsection shall not be construed to require the 29 premature or otherwise imprudent sale, redemption, divestment, 30 or withdrawal of an investment, but such sale, redemption, 31 divestment, or withdrawal shall be completed as provided by 32 this subsection. 33 Sec. 5. NEW SECTION . 12K.4 Reports. 34 1. Each public fund shall, within thirty days after the 35 -3- LSB 5472YH (1) 89 ec/rn 3/ 8

H.F. 2290 scrutinized companies list is created or updated as required by 1 section 12K.2, make the list available to the public. 2 2. On October 1, 2022, and each October 1 thereafter, each 3 public fund shall make available to the public, and file with 4 the general assembly, an annual report covering the prior 5 fiscal year that includes all of the following: 6 a. The scrutinized companies list as of the end of the 7 fiscal year. 8 b. A summary of all written notices sent as required by 9 section 12K.2 during the fiscal year. 10 c. All investments sold, redeemed, divested, or withdrawn as 11 provided in section 12K.3 during the fiscal year. 12 Sec. 6. NEW SECTION . 12K.5 Legal obligations. 13 With respect to actions taken in compliance with this 14 chapter, including all good-faith determinations regarding 15 companies as required by this chapter, the public fund 16 shall be exempt from any conflicting statutory or common law 17 obligations, including any such obligations with respect to 18 choice of asset managers, investment funds, or investments for 19 the public fund’s securities portfolios. 20 Sec. 7. NEW SECTION . 12K.6 Applicability. 21 The requirements of sections 12K.2, 12K.3, and 12K.4 shall 22 not apply if the United States Congress or president of the 23 United States, through legislation or executive order, declares 24 that mandatory divestment of the type provided for in this 25 chapter interferes with the conduct of United States foreign 26 policy. 27 Sec. 8. Section 97A.7, subsection 1, Code 2022, is amended 28 to read as follows: 29 1. The board of trustees shall be the trustees of the 30 retirement fund created by this chapter as provided in section 31 97A.8 and shall have full power to invest and reinvest funds 32 subject to the terms, conditions, limitations, and restrictions 33 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 34 12K and subject to like terms, conditions, limitations, and 35 -4- LSB 5472YH (1) 89 ec/rn 4/ 8

H.F. 2290 restrictions said trustees shall have full power to hold, 1 purchase, sell, assign, transfer, or dispose of any of the 2 securities and investments of the retirement fund which have 3 been invested, as well as of the proceeds of said investments 4 and any moneys belonging to the retirement fund. The board 5 of trustees may authorize the treasurer of state to exercise 6 any of the duties of this section . When so authorized the 7 treasurer of state shall report any transactions to the board 8 of trustees at its next monthly meeting. 9 Sec. 9. Section 97B.4, subsection 5, Code 2022, is amended 10 to read as follows: 11 5. Investments. The system, through the chief investment 12 officer, shall invest, subject to chapters 12F , 12H , and 12J , 13 and 12K and in accordance with the investment policy and 14 goal statement established by the board, the portion of the 15 retirement fund which, in the judgment of the system, is not 16 needed for current payment of benefits under this chapter 17 subject to the requirements of section 97B.7A . 18 Sec. 10. Section 262.14, unnumbered paragraph 1, Code 2022, 19 is amended to read as follows: 20 The board may invest funds belonging to the institutions, 21 subject to chapters 12F , 12H , and 12J , and 12K and the 22 following regulations: 23 Sec. 11. Section 411.7, subsection 1, Code 2022, is amended 24 to read as follows: 25 1. The board of trustees is the trustee of the fire 26 and police retirement fund created in section 411.8 and 27 shall annually establish an investment policy to govern the 28 investment and reinvestment of the moneys in the fund, subject 29 to the terms, conditions, limitations, and restrictions 30 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 31 12K . Subject to like terms, conditions, limitations, and 32 restrictions the system has full power to hold, purchase, sell, 33 assign, transfer, or dispose of any of the securities and 34 investments in which the fund has been invested, as well as of 35 -5- LSB 5472YH (1) 89 ec/rn 5/ 8

H.F. 2290 the proceeds of the investments and any moneys belonging to the 1 fund. 2 Sec. 12. Section 602.9111, subsection 1, Code 2022, is 3 amended to read as follows: 4 1. So much of the judicial retirement fund as may not be 5 necessary to be kept on hand for the making of disbursements 6 under this article shall be invested by the treasurer of 7 state in any investments authorized for the Iowa public 8 employees’ retirement system in section 97B.7A and subject to 9 the requirements of chapters 12F , 12H , and 12J , and 12K , and 10 the earnings therefrom shall be credited to the fund. The 11 treasurer of state may execute contracts and agreements with 12 investment advisors, consultants, and investment management and 13 benefit consultant firms in the administration of the judicial 14 retirement fund. 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanation’s substance by the members of the general assembly. 18 This bill relates to the investment of certain public funds 19 in companies that are owned or controlled by Chinese military 20 or government services. 21 The bill defines “company” as any entity or business 22 association, including all subsidiaries, parent companies, or 23 affiliates of such entities or business associations, that 24 exist for profit-making purposes. The bill defines “direct 25 holdings” in a company as all securities of a company held 26 directly by the public fund or in an account or fund in which 27 the public fund owns all shares or interests. The bill defines 28 “indirect holdings” in a company as all securities of a company 29 held in an account or fund managed by one or more persons not 30 employed by the public fund, in which the public fund owns 31 shares or interests together with other investors not subject 32 to the provisions of this new Code chapter 12K. The bill 33 defines “prohibited company” as a company that is owned or 34 controlled by Chinese military or government services that 35 -6- LSB 5472YH (1) 89 ec/rn 6/ 8

H.F. 2290 has been sanctioned by the United States government. The 1 bill defines “public fund” as the treasurer of state, the 2 state board of regents, the public safety peace officers’ 3 retirement system, the Iowa public employees’ retirement system 4 (IPERS), the statewide fire and police retirement system, or 5 the judicial retirement system. The bill defines “scrutinized 6 company” as any company that is owned or controlled by Chinese 7 military or government services. 8 The bill requires a public fund to identify all scrutinized 9 companies in which the public fund has direct or indirect 10 holdings within 60 days following the effective date of 11 the bill. Additionally, the bill requires a public fund 12 to create and make available to the public a scrutinized 13 companies list and review and update the list on a quarterly 14 basis. The bill authorizes a public fund to review and rely 15 on publicly available information and information from other 16 sources when identifying scrutinized companies. The bill also 17 authorizes IPERS to develop and issue a request for proposals 18 for third-party services to complete the identification of 19 scrutinized companies and the compilation of the scrutinized 20 companies list. The bill requires a public fund to send notice 21 to all companies on the scrutinized companies list on an annual 22 basis informing the company of the requirements of the new Code 23 chapter. 24 The bill prohibits a public fund from acquiring publicly 25 traded securities of a prohibited company. The bill requires a 26 public fund to sell, redeem, divest, or withdraw all publicly 27 traded securities of a prohibited company no later than 180 28 days following the date the company becomes a prohibited 29 company. 30 The bill requires each public fund, within 30 days after the 31 scrutinized companies list is created or updated, to make the 32 list available to the public. Additionally, the bill requires 33 a public fund to make available to the public and file with the 34 general assembly an annual report beginning October 1, 2022, 35 -7- LSB 5472YH (1) 89 ec/rn 7/ 8

H.F. 2290 and each October 1 thereafter. 1 The bill provides that, with respect to actions taken 2 in compliance with the Code chapter, the public fund shall 3 be exempt from any conflicting statutory or common law 4 obligations, including any such obligations in respect to 5 choice of asset managers, investment funds, or investments for 6 the public fund’s securities portfolios. 7 The bill provides that the provisions related to the 8 creation of a scrutinized companies list, divestment of 9 publicly traded securities of a prohibited company, and 10 reporting shall not apply if the United States Congress 11 or president of the United States declares that mandatory 12 divestment of the type provided for in the Code chapter 13 interferes with the conduct of United States foreign policy. 14 The bill makes conforming changes to Code sections 12.8, 15 97A.7, 97B.4, 262.14, 411.7, and 602.9111. 16 -8- LSB 5472YH (1) 89 ec/rn 8/ 8