H.F. 227 Section 1. Section 12.8, subsection 1, Code 2023, 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 Legislative findings and intent. 16 The general assembly is deeply concerned about the 17 activities of the Chinese communist party, the entity in 18 control of the government of the People’s Republic of China, as 19 well as the risks inherent in investing in companies domiciled 20 in China and Hong Kong due to the control exercised by that 21 entity. Therefore, the general assembly intends that state 22 funds and funds administered by the state, including public 23 employee retirement funds, should not be invested in China 24 domiciled companies and funds. 25 Sec. 3. NEW SECTION . 12K.2 Definitions. 26 As used in this chapter, unless the context otherwise 27 requires: 28 1. “China domiciled company” means a company incorporated 29 in, or whose principal place of business is in, the People’s 30 Republic of China or in the Hong Kong special administrative 31 region of the People’s Republic of China. “China domiciled 32 company” does not include a company incorporated in, or whose 33 principal place of business is in, the Republic of China. 34 2. “China exchange-traded fund” means a fund of investments 35 -1- LSB 1857YH (3) 90 ec/rn 1/ 8

H.F. 227 in multiple China domiciled company securities that trades 1 intraday on an exchange like individual stocks, and tracks an 2 underlying index of such securities. 3 3. “Company” means any business or business entity that is 4 publicly traded and that is not based in the United States. 5 4. “Direct holdings” in a company or exchange traded 6 fund means all publicly traded securities of that company or 7 exchange traded fund that are held directly by the public fund 8 in an actively managed account or fund in which the public fund 9 owns all shares or interests. 10 5. “Public entity” means the state, political subdivisions 11 of the state, public school corporations, and all public 12 officers, boards, commissions, departments, agencies, and 13 authorities empowered by law to enter into public contracts for 14 the expenditure of public funds, including the state board of 15 regents and institutions under the control of the state board 16 of regents. 17 6. “Public fund” means the treasurer of state, the state 18 board of regents, the public safety peace officers’ retirement 19 system created in chapter 97A, the Iowa public employees’ 20 retirement system created in chapter 97B, the statewide fire 21 and police retirement system created in chapter 411, or the 22 judicial retirement system created in chapter 602. 23 Sec. 4. NEW SECTION . 12K.3 Identification of Chinese 24 companies and exchange-traded funds. 25 1. a. By October 1, 2023, the public fund shall make its 26 best efforts to identify or have identified all China domiciled 27 companies and China exchange-traded funds in which the public 28 fund has direct holdings and compile a list of such companies 29 and exchange-traded funds. The public fund shall review on 30 an annual basis and update, if necessary, the China domiciled 31 companies and China exchange-traded funds list. 32 b. In making its best efforts to identify or have identified 33 China domiciled companies and China exchange-traded funds, 34 the public fund may review and rely, in the best judgment of 35 -2- LSB 1857YH (3) 90 ec/rn 2/ 8

H.F. 227 the public fund, on publicly available information regarding 1 companies, and including other information that may be provided 2 by nonprofit organizations, research firms, international 3 organizations, and government entities. 4 Sec. 5. NEW SECTION . 12K.4 Prohibited investments —— 5 divestment. 6 1. a. The public fund shall not acquire publicly traded 7 securities of a company or exchange-traded fund on the 8 public fund’s most recent China domiciled companies and 9 China exchange-traded funds list so long as such company 10 or exchange-traded fund remains on the public fund’s China 11 domiciled companies and China exchange-traded funds list as 12 provided in this chapter. 13 b. The public fund shall not acquire publicly traded 14 securities of a company or exchange-traded fund which it knows 15 to be a China domiciled company or China exchange-traded fund 16 regardless of whether it is on the China domiciled companies 17 and China exchange-traded funds list. 18 2. a. The public fund shall sell, redeem, divest, or 19 withdraw all publicly traded securities of a company or 20 publicly traded exchange-traded funds on the public fund’s list 21 of China domiciled companies and China exchange-traded funds 22 within ninety calendar days after the issuance of the first 23 such list and within thirty calendar days after the issuance of 24 subsequent lists. 25 b. The public fund shall sell, redeem, divest, or withdraw 26 all publicly traded securities of a company or exchange-traded 27 fund within ninety calendar days of becoming aware it is a 28 China domiciled company or China exchange-traded fund even if 29 such company or fund is not yet on the public fund’s list of 30 China domiciled companies and China exchange-traded funds. 31 c. This subsection shall not be construed to require the 32 premature or otherwise imprudent sale, redemption, divestment, 33 or withdrawal of an investment, but such sale, redemption, 34 divestment, or withdrawal shall be completed as provided by 35 -3- LSB 1857YH (3) 90 ec/rn 3/ 8

H.F. 227 this subsection. 1 Sec. 6. NEW SECTION . 12K.5 Reports. 2 1. Each public fund shall, within thirty days after the 3 China domiciled companies and China exchange-traded funds list 4 is created or updated as required by section 12K.3, make the 5 list available to the public. 6 2. On October 1, 2023, and each October 1 thereafter, each 7 public fund shall make available to the public, and file with 8 the general assembly, an annual report covering the prior 9 fiscal year that includes all of the following: 10 a. The China domiciled companies and China exchange-traded 11 funds list as of the end of the fiscal year. 12 b. All investments sold, redeemed, divested, or withdrawn as 13 provided in section 12K.4 during the fiscal year. 14 Sec. 7. NEW SECTION . 12K.6 Public entities —— contract 15 requirements. 16 A public entity shall not enter into a contract of one 17 thousand dollars or more with a China domiciled company 18 included on a China domiciled company list created by a public 19 fund pursuant to section 12K.3 or with any other company which 20 the public entity is aware is a China domiciled company. 21 Sec. 8. NEW SECTION . 12K.7 Legal obligations —— immunity. 22 With respect to actions taken in compliance with this 23 chapter, including all good-faith determinations regarding 24 companies and exchange-traded funds as required by this 25 chapter, the public fund shall be immune from any liability 26 and exempt from any conflicting statutory or common law 27 obligations, including but not limited to any such obligations 28 in respect to choice of investments for the public fund’s 29 securities portfolios. 30 Sec. 9. Section 35A.13, subsection 4, paragraph a, Code 31 2023, is amended to read as follows: 32 a. Notwithstanding subsection 5 , moneys in the fund, except 33 so much of the fund as may be necessary to be kept on hand 34 for the making of disbursements under this section , shall 35 -4- LSB 1857YH (3) 90 ec/rn 4/ 8

H.F. 227 be invested by the treasurer of state, in consultation with 1 the commission and the public retirement systems committee 2 established by section 97D.4 , in any investments authorized for 3 the Iowa public employees’ retirement system in section 97B.7A , 4 including common stock, and subject to the requirements of 5 chapters 12F , 12H , and 12J , and 12K, and the earnings therefrom 6 shall be credited to the fund. The treasurer of state may 7 execute contracts and agreements with investment advisors, 8 consultants, and investment management and benefit consultant 9 firms in the administration of investments of moneys in the 10 fund. 11 Sec. 10. Section 97A.7, subsection 1, Code 2023, is amended 12 to read as follows: 13 1. The board of trustees shall be the trustees of the 14 retirement fund created by this chapter as provided in section 15 97A.8 and shall have full power to invest and reinvest funds 16 subject to the terms, conditions, limitations, and restrictions 17 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 18 12K and subject to like terms, conditions, limitations, and 19 restrictions said trustees shall have full power to hold, 20 purchase, sell, assign, transfer, or dispose of any of the 21 securities and investments of the retirement fund which have 22 been invested, as well as of the proceeds of said investments 23 and any moneys belonging to the retirement fund. The board 24 of trustees may authorize the treasurer of state to exercise 25 any of the duties of this section . When so authorized the 26 treasurer of state shall report any transactions to the board 27 of trustees at its next monthly meeting. 28 Sec. 11. Section 97B.4, subsection 5, Code 2023, is amended 29 to read as follows: 30 5. Investments. The system, through the chief investment 31 officer, shall invest, subject to chapters 12F , 12H , and 12J , 32 and 12K and in accordance with the investment policy and 33 goal statement established by the board, the portion of the 34 retirement fund which, in the judgment of the system, is not 35 -5- LSB 1857YH (3) 90 ec/rn 5/ 8

H.F. 227 needed for current payment of benefits under this chapter 1 subject to the requirements of section 97B.7A . 2 Sec. 12. Section 262.14, unnumbered paragraph 1, Code 2023, 3 is amended to read as follows: 4 The board may invest funds belonging to the institutions, 5 subject to chapters 12F , 12H , and 12J , and 12K and the 6 following regulations: 7 Sec. 13. Section 411.7, subsection 1, Code 2023, is amended 8 to read as follows: 9 1. The board of trustees is the trustee of the fire 10 and police retirement fund created in section 411.8 and 11 shall annually establish an investment policy to govern the 12 investment and reinvestment of the moneys in the fund, subject 13 to the terms, conditions, limitations, and restrictions 14 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 15 12K . Subject to like terms, conditions, limitations, and 16 restrictions the system has full power to hold, purchase, sell, 17 assign, transfer, or dispose of any of the securities and 18 investments in which the fund has been invested, as well as of 19 the proceeds of the investments and any moneys belonging to the 20 fund. 21 Sec. 14. Section 602.9111, subsection 1, Code 2023, is 22 amended to read as follows: 23 1. So much of the judicial retirement fund as may not be 24 necessary to be kept on hand for the making of disbursements 25 under this article shall be invested by the treasurer of 26 state in any investments authorized for the Iowa public 27 employees’ retirement system in section 97B.7A and subject to 28 the requirements of chapters 12F , 12H , and 12J , and 12K, and 29 the earnings therefrom shall be credited to the fund. The 30 treasurer of state may execute contracts and agreements with 31 investment advisors, consultants, and investment management and 32 benefit consultant firms in the administration of the judicial 33 retirement fund. 34 EXPLANATION 35 -6- LSB 1857YH (3) 90 ec/rn 6/ 8

H.F. 227 The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill creates new Code chapter 12K, which restricts 3 public funds, defined as the treasurer of state, the state 4 board of regents, the Iowa public employees’ retirement system 5 (IPERS), the public safety peace officers’ retirement system, 6 the statewide fire and police retirement system, and the 7 judicial retirement system, and public entities, defined to 8 include a public fund and the state and political subdivisions 9 of the state, from generally investing in China domiciled 10 companies and China exchange-traded funds and entering into a 11 contract with China domiciled companies. 12 The bill defines “China domiciled company” as a company 13 incorporated in, or whose principal place of business is in, 14 the People’s Republic of China or in the Hong Kong special 15 administrative region of the People’s Republic of China. 16 The definition excludes companies incorporated or located 17 in the Republic of China. The bill also defines “China 18 exchange-traded fund” as a fund of investments in multiple 19 China domiciled company securities that trades intraday on an 20 exchange like individual stocks, and tracks an underlying index 21 of such securities. 22 The bill requires a public fund to identify all China 23 domiciled companies and China exchange-traded funds in which 24 the public fund has direct holdings by October 1, 2023. 25 Additionally, the bill requires a public fund to create and 26 make available to the public the list and review and update 27 the list on an annual basis. The bill authorizes a public 28 fund to review and rely on publicly available information and 29 information from other sources when identifying prohibited 30 companies. 31 The bill prohibits a public fund from acquiring direct 32 holdings in China domiciled companies and China exchange-traded 33 funds publicly traded securities. The bill requires a public 34 fund to sell, redeem, divest, or withdraw all direct holdings 35 -7- LSB 1857YH (3) 90 ec/rn 7/ 8

H.F. 227 in publicly traded securities of such a company or fund 1 no later than 90 days following the date the public fund 2 becomes aware that it is a China domiciled company or China 3 exchange-traded fund. 4 The bill requires each public fund, within 30 days after the 5 list of China domiciled companies and China exchange-traded 6 funds is created or updated, to make the list available to the 7 public. Additionally, the bill requires a public fund to make 8 available to the public and file with the general assembly an 9 annual report beginning October 1, 2023, and each October 1 10 thereafter. 11 The bill also provides that a public entity shall not enter 12 into a contract of $1,000 or more with a China domiciled 13 company. 14 The bill provides that, with respect to actions taken 15 in compliance with the bill, including all good-faith 16 determinations regarding companies and funds subject to the 17 bill, the public fund shall be immune from any liability 18 and exempt from any conflicting statutory or common law 19 obligations, including any such obligations in respect 20 to choice of investments for the public fund’s securities 21 portfolios. 22 The bill makes conforming changes to Code sections 12.8, 23 35A.13, 97A.7, 97B.4, 262.14, 411.7, and 602.9111. 24 -8- LSB 1857YH (3) 90 ec/rn 8/ 8