Senate
File
499
-
Introduced
SENATE
FILE
499
BY
GUTH
A
BILL
FOR
An
Act
relating
to
the
investment
of
certain
public
funds
in
1
companies
that
are
owned
or
controlled
by
Chinese
military
2
or
government
services.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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Section
1.
Section
12.8,
subsection
1,
Code
2021,
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.
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4.
“Prohibited
company”
means
a
company
that
is
owned
or
1
controlled
by
Chinese
military
or
government
services
and
that
2
meets
any
of
the
following
criteria:
3
a.
The
company
has
been
designated
by
the
United
States
4
government
as
a
company
that
citizens
of
the
United
States
are
5
restricted
or
prohibited
from
entering
into
transactions
with,
6
including
a
designation
in
any
of
the
following
lists:
7
(1)
The
bureau
of
industry
and
security’s
entity
list.
8
(2)
The
bureau
of
industry
and
security’s
military
end
user
9
list.
10
(3)
The
department
of
defense’s
communist
Chinese
military
11
companies
list.
12
(4)
The
office
of
foreign
assets
control’s
foreign
13
sanctions
evaders
list.
14
(5)
The
office
of
foreign
assets
control’s
list
of
foreign
15
financial
institutions
subject
to
correspondent
account
or
16
payable-through
account
sanctions.
17
(6)
The
office
of
foreign
assets
control’s
non-SDN
Iran
18
sanctions
list.
19
(7)
The
office
of
foreign
assets
control’s
non-SDN
20
Palestinian
legislative
council
list.
21
(8)
The
office
of
foreign
assets
control’s
sectoral
22
sanctions
identifications
list.
23
(9)
The
office
of
foreign
assets
control’s
specially
24
designated
nationals
and
blocked
persons
list.
25
b.
The
company
has
been
sanctioned
in
any
way
by
the
United
26
States
government.
27
5.
“Public
fund”
means
the
treasurer
of
state,
the
state
28
board
of
regents,
the
public
safety
peace
officers’
retirement
29
system
created
in
chapter
97A,
the
Iowa
public
employees’
30
retirement
system
created
in
chapter
97B,
the
statewide
fire
31
and
police
retirement
system
created
in
chapter
411,
or
the
32
judicial
retirement
system
created
in
chapter
602.
33
6.
“Scrutinized
company”
means
any
company
that
is
owned
or
34
controlled
by
Chinese
military
or
government
services.
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Sec.
3.
NEW
SECTION
.
12K.2
Identification
of
companies
——
1
notice.
2
1.
a.
Within
sixty
days
following
the
effective
date
of
3
this
Act,
a
public
fund
shall
identify
or
have
identified
all
4
scrutinized
companies
in
which
the
public
fund
has
direct
or
5
indirect
holdings
and
shall
create
and
make
available
to
the
6
public
a
scrutinized
companies
list
for
that
public
fund.
7
The
public
fund
shall
review
and
update,
if
necessary,
the
8
scrutinized
companies
list
on
a
quarterly
basis
thereafter.
9
b.
In
identifying
or
having
identified
scrutinized
10
companies,
the
public
fund
may
review
and
rely,
in
the
best
11
judgment
of
the
public
fund,
on
publicly
available
information
12
and
other
information
that
may
be
provided
by
nonprofit
13
organizations,
research
firms,
international
organizations,
and
14
government
entities.
The
public
fund
may
also
contact
asset
15
managers
and
institutional
investors
for
the
public
fund
to
16
identify
scrutinized
companies
based
upon
industry-recognized
17
lists
of
such
companies
that
the
public
fund
may
have
indirect
18
holdings
in.
19
c.
The
Iowa
public
employees’
retirement
system,
acting
20
on
behalf
of
the
system
and
other
public
funds
subject
to
21
this
section,
may
develop
and
issue
a
request
for
proposals
22
for
third-party
services
to
complete
the
identification
of
23
scrutinized
companies
and
the
compilation
of
a
scrutinized
24
companies
list.
The
request
for
proposals
may
request
bids
for
25
optional
services
related
to
this
purpose,
including
but
not
26
limited
to
provision
of
notice
of
such
scrutinized
companies
27
as
required
in
subsection
2.
The
Iowa
public
employees’
28
retirement
system
shall
consult
with
all
other
public
funds
29
regarding
the
development
of
the
request
for
proposals,
however
30
selection
of
a
successful
proposal
and
the
final
scope
of
31
services
to
be
provided
shall
be
determined
only
by
those
32
public
funds
that
have
agreed
to
utilize
the
third-party
33
services.
If
more
than
one
public
fund
decides
to
utilize
the
34
third-party
services,
the
participating
public
funds
shall
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equally
share
the
costs
of
such
services.
1
2.
For
each
company
on
the
scrutinized
companies
list
in
2
which
a
public
fund
has
direct
or
indirect
holdings,
the
public
3
fund
shall
send
or
have
sent
a
written
notice
informing
the
4
company
of
the
requirements
of
this
chapter.
The
public
fund
5
or
its
representative
shall
continue
to
provide
such
written
6
notice
on
an
annual
basis
if
the
company
remains
a
scrutinized
7
company.
8
Sec.
4.
NEW
SECTION
.
12K.3
Divestment.
9
1.
A
public
fund
shall
not
acquire
publicly
traded
10
securities
of
a
prohibited
company.
11
2.
a.
A
public
fund
shall
sell,
redeem,
divest,
or
withdraw
12
all
publicly
traded
securities
of
a
prohibited
company
no
13
later
than
sixty
days
following
the
date
the
company
becomes
a
14
prohibited
company
or
the
effective
date
of
this
Act,
whichever
15
is
earlier.
16
b.
This
subsection
shall
not
be
construed
to
require
the
17
premature
or
otherwise
imprudent
sale,
redemption,
divestment,
18
or
withdrawal
of
an
investment,
but
such
sale,
redemption,
19
divestment,
or
withdrawal
shall
be
completed
as
provided
by
20
this
subsection.
21
Sec.
5.
NEW
SECTION
.
12K.4
Reports.
22
1.
Each
public
fund
shall,
within
thirty
days
after
the
23
scrutinized
companies
list
is
created
or
updated
as
required
by
24
section
12K.2,
make
the
list
available
to
the
public.
25
2.
On
October
1,
2021,
and
each
October
1
thereafter,
each
26
public
fund
shall
make
available
to
the
public,
and
file
with
27
the
general
assembly,
an
annual
report
covering
the
prior
28
fiscal
year
that
includes
all
of
the
following:
29
a.
The
scrutinized
companies
list
as
of
the
end
of
the
30
fiscal
year.
31
b.
A
summary
of
all
written
notices
sent
as
required
by
32
section
12K.2
during
the
fiscal
year.
33
c.
All
investments
sold,
redeemed,
divested,
or
withdrawn
as
34
provided
in
section
12K.3
during
the
fiscal
year.
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Sec.
6.
NEW
SECTION
.
12K.5
Legal
obligations.
1
With
respect
to
actions
taken
in
compliance
with
this
2
chapter,
including
all
good-faith
determinations
regarding
3
companies
as
required
by
this
chapter,
the
public
fund
4
shall
be
exempt
from
any
conflicting
statutory
or
common
law
5
obligations,
including
any
such
obligations
with
respect
to
6
choice
of
asset
managers,
investment
funds,
or
investments
for
7
the
public
fund’s
securities
portfolios.
8
Sec.
7.
NEW
SECTION
.
12K.6
Applicability.
9
The
requirements
of
sections
12K.2,
12K.3,
and
12K.4
shall
10
not
apply
upon
the
occurrence
of
any
of
the
following:
11
1.
The
United
States
congress
or
president
of
the
United
12
States,
through
legislation
or
executive
order,
declares
that
13
mandatory
divestment
of
the
type
provided
for
in
this
chapter
14
interferes
with
the
conduct
of
United
States
foreign
policy.
15
2.
A
controlling
circuit
or
district
court
of
the
United
16
States
issues
an
opinion
that
declares
the
mandatory
divestment
17
of
the
type
provided
for
in
this
chapter
or
similar
statutes
18
of
other
states
is
preempted
by
the
federal
law
of
the
United
19
States.
20
Sec.
8.
Section
97A.7,
subsection
1,
Code
2021,
is
amended
21
to
read
as
follows:
22
1.
The
board
of
trustees
shall
be
the
trustees
of
the
23
retirement
fund
created
by
this
chapter
as
provided
in
section
24
97A.8
and
shall
have
full
power
to
invest
and
reinvest
funds
25
subject
to
the
terms,
conditions,
limitations,
and
restrictions
26
imposed
by
subsection
2
and
chapters
12F
,
12H
,
and
12J
,
and
27
12K
and
subject
to
like
terms,
conditions,
limitations,
and
28
restrictions
said
trustees
shall
have
full
power
to
hold,
29
purchase,
sell,
assign,
transfer,
or
dispose
of
any
of
the
30
securities
and
investments
of
the
retirement
fund
which
have
31
been
invested,
as
well
as
of
the
proceeds
of
said
investments
32
and
any
moneys
belonging
to
the
retirement
fund.
The
board
33
of
trustees
may
authorize
the
treasurer
of
state
to
exercise
34
any
of
the
duties
of
this
section
.
When
so
authorized
the
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treasurer
of
state
shall
report
any
transactions
to
the
board
1
of
trustees
at
its
next
monthly
meeting.
2
Sec.
9.
Section
97B.4,
subsection
5,
Code
2021,
is
amended
3
to
read
as
follows:
4
5.
Investments.
The
system,
through
the
chief
investment
5
officer,
shall
invest,
subject
to
chapters
12F
,
12H
,
and
12J
,
6
and
12K
and
in
accordance
with
the
investment
policy
and
7
goal
statement
established
by
the
board,
the
portion
of
the
8
retirement
fund
which,
in
the
judgment
of
the
system,
is
not
9
needed
for
current
payment
of
benefits
under
this
chapter
10
subject
to
the
requirements
of
section
97B.7A
.
11
Sec.
10.
Section
262.14,
unnumbered
paragraph
1,
Code
2021,
12
is
amended
to
read
as
follows:
13
The
board
may
invest
funds
belonging
to
the
institutions,
14
subject
to
chapters
12F
,
12H
,
and
12J
,
and
12K
and
the
15
following
regulations:
16
Sec.
11.
Section
411.7,
subsection
1,
Code
2021,
is
amended
17
to
read
as
follows:
18
1.
The
board
of
trustees
is
the
trustee
of
the
fire
19
and
police
retirement
fund
created
in
section
411.8
and
20
shall
annually
establish
an
investment
policy
to
govern
the
21
investment
and
reinvestment
of
the
moneys
in
the
fund,
subject
22
to
the
terms,
conditions,
limitations,
and
restrictions
23
imposed
by
subsection
2
and
chapters
12F
,
12H
,
and
12J
,
and
24
12K
.
Subject
to
like
terms,
conditions,
limitations,
and
25
restrictions
the
system
has
full
power
to
hold,
purchase,
sell,
26
assign,
transfer,
or
dispose
of
any
of
the
securities
and
27
investments
in
which
the
fund
has
been
invested,
as
well
as
of
28
the
proceeds
of
the
investments
and
any
moneys
belonging
to
the
29
fund.
30
Sec.
12.
Section
602.9111,
subsection
1,
Code
2021,
is
31
amended
to
read
as
follows:
32
1.
So
much
of
the
judicial
retirement
fund
as
may
not
be
33
necessary
to
be
kept
on
hand
for
the
making
of
disbursements
34
under
this
article
shall
be
invested
by
the
treasurer
of
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state
in
any
investments
authorized
for
the
Iowa
public
1
employees’
retirement
system
in
section
97B.7A
and
subject
to
2
the
requirements
of
chapters
12F
,
12H
,
and
12J
,
and
12K
,
and
3
the
earnings
therefrom
shall
be
credited
to
the
fund.
The
4
treasurer
of
state
may
execute
contracts
and
agreements
with
5
investment
advisors,
consultants,
and
investment
management
and
6
benefit
consultant
firms
in
the
administration
of
the
judicial
7
retirement
fund.
8
EXPLANATION
9
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
10
the
explanation’s
substance
by
the
members
of
the
general
assembly.
11
This
bill
relates
to
the
investment
of
certain
public
funds
12
in
companies
that
are
owned
or
controlled
by
Chinese
military
13
or
government
services.
14
The
bill
defines
“company”
as
any
entity
or
business
15
association,
including
all
subsidiaries,
parent
companies,
or
16
affiliates
of
such
entities
or
business
associations,
that
17
exist
for
profit-making
purposes.
The
bill
defines
“direct
18
holdings”
in
a
company
as
all
securities
of
a
company
held
19
directly
by
the
public
fund
or
in
an
account
or
fund
in
which
20
the
public
fund
owns
all
shares
or
interests.
The
bill
defines
21
“indirect
holdings”
in
a
company
as
all
securities
of
a
company
22
held
in
an
account
or
fund
managed
by
one
or
more
persons
23
not
employed
by
the
public
fund,
in
which
the
public
fund
24
owns
shares
or
interests
together
with
other
investors
not
25
subject
to
the
provisions
of
this
new
Code
chapter
12K.
The
26
bill
defines
“prohibited
company”
as
a
company
that
is
owned
27
or
controlled
by
Chinese
military
or
government
services
and
28
that
meets
criteria
enumerated
in
the
bill.
The
bill
defines
29
“public
fund”
as
the
treasurer
of
state,
the
state
board
of
30
regents,
the
public
safety
peace
officers’
retirement
system,
31
the
Iowa
public
employees’
retirement
system
(IPERS),
the
32
statewide
fire
and
police
retirement
system,
or
the
judicial
33
retirement
system.
The
bill
defines
“scrutinized
company”
as
34
any
company
that
is
owned
or
controlled
by
Chinese
military
or
35
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government
services.
1
The
bill
requires
a
public
fund
to
identify
all
scrutinized
2
companies
in
which
the
public
fund
has
direct
or
indirect
3
holdings
within
60
days
following
the
effective
date
of
4
the
bill.
Additionally,
the
bill
requires
a
public
fund
5
to
create
and
make
available
to
the
public
a
scrutinized
6
companies
list
and
review
and
update
the
list
on
a
quarterly
7
basis.
The
bill
authorizes
a
public
fund
to
review
and
rely
8
on
publicly
available
information
and
information
from
other
9
sources
when
identifying
scrutinized
companies.
The
bill
also
10
authorizes
IPERS
to
develop
and
issue
a
request
for
proposals
11
for
third-party
services
to
complete
the
identification
of
12
scrutinized
companies
and
the
compilation
of
the
scrutinized
13
companies
list.
The
bill
requires
a
public
fund
to
send
notice
14
to
all
companies
on
the
scrutinized
companies
list
on
an
annual
15
basis
informing
the
company
of
the
requirements
of
the
new
Code
16
chapter.
17
The
bill
prohibits
a
public
fund
from
acquiring
publicly
18
traded
securities
of
a
prohibited
company.
The
bill
requires
a
19
public
fund
to
sell,
redeem,
divest,
or
withdraw
all
publicly
20
traded
securities
of
a
prohibited
company
no
later
than
60
days
21
following
the
date
the
company
becomes
a
prohibited
company,
or
22
the
effective
date
of
the
bill,
whichever
is
earlier.
23
The
bill
requires
each
public
fund,
within
30
days
after
the
24
scrutinized
companies
list
is
created
or
updated,
to
make
the
25
list
available
to
the
public.
Additionally,
the
bill
requires
26
a
public
fund
to
make
available
to
the
public
and
file
with
the
27
general
assembly
an
annual
report
beginning
October
1,
2021,
28
and
each
October
1
thereafter.
29
The
bill
provides
that,
with
respect
to
actions
taken
30
in
compliance
with
the
Code
chapter,
the
public
fund
shall
31
be
exempt
from
any
conflicting
statutory
or
common
law
32
obligations,
including
any
such
obligations
in
respect
to
33
choice
of
asset
managers,
investment
funds,
or
investments
for
34
the
public
fund’s
securities
portfolios.
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The
bill
provides
that
the
provisions
related
to
the
1
creation
of
a
scrutinized
companies
list,
divestment
of
2
publicly
traded
securities
of
a
prohibited
company,
and
3
reporting
shall
not
apply
if
the
United
States
congress
4
or
president
of
the
United
States
declares
that
mandatory
5
divestment
of
the
type
provided
for
in
this
chapter
interferes
6
with
the
conduct
of
United
States
foreign
policy,
or
a
7
controlling
circuit
or
district
court
of
the
United
States
8
issues
an
opinion
that
declares
the
mandatory
divestment
of
9
the
type
provided
for
in
the
Code
chapter
or
similar
statutes
10
of
other
states
is
preempted
by
the
federal
law
of
the
United
11
States.
12
The
bill
makes
conforming
changes
to
Code
sections
12.8,
13
97A.7,
97B.4,
262.14,
411.7,
and
602.9111.
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