S.F. 98 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 Definitions. 16 As used in this chapter, unless the context otherwise 17 requires: 18 1. “Company” means any business or business entity that is 19 publicly traded and that is not based in the United States. 20 2. “Direct holdings” in a company means all securities of 21 a company held directly by the public fund or in an account or 22 fund in which the public fund owns all shares or interests. 23 3. “Indirect holdings” in a company means all securities 24 of a company held in an account or fund managed by one or more 25 persons not employed by the public fund, in which the public 26 fund owns shares or interests together with other investors not 27 subject to the provisions of this chapter. Indirect holdings 28 include but are not limited to mutual funds, fund of funds, 29 private equity funds, hedge funds, and real estate funds. 30 4. “Prohibited company” means a company that is owned or 31 controlled by Chinese military or government services and has 32 been designated by the United States government as a company 33 that citizens of the United States are restricted or prohibited 34 from entering into transactions with, including a designation 35 -1- LSB 1536XS (2) 90 ec/rn 1/ 9

S.F. 98 in any of the following lists: 1 a. The bureau of industry and security’s entity list. 2 b. The bureau of industry and security’s military end user 3 list. 4 c. The department of defense’s communist Chinese military 5 companies list. 6 d. The office of foreign assets control’s foreign sanctions 7 evaders list. 8 e. The office of foreign assets control’s list of foreign 9 financial institutions subject to correspondent account or 10 payable-through account sanctions. 11 f. The office of foreign assets control’s non-SDN Iran 12 sanctions list. 13 g. The office of foreign assets control’s non-SDN 14 Palestinian legislative council list. 15 h. The office of foreign assets control’s sectoral sanctions 16 identifications list. 17 i. The office of foreign assets control’s specially 18 designated nationals and blocked persons list. 19 j. “Public fund” means the treasurer of state, the state 20 board of regents, the public safety peace officers’ retirement 21 system created in chapter 97A, the Iowa public employees’ 22 retirement system created in chapter 97B, the statewide fire 23 and police retirement system created in chapter 411, or the 24 judicial retirement system created in chapter 602. 25 Sec. 3. NEW SECTION . 12K.2 Identification of companies —— 26 notice. 27 1. a. By January 1, 2024, a public fund shall identify or 28 have identified all prohibited companies in which the public 29 fund has direct or indirect holdings and shall create and make 30 available to the public a prohibited companies list for that 31 public fund. The public fund shall review and update, if 32 necessary, the prohibited companies list on a quarterly basis 33 thereafter. 34 b. In identifying or having identified prohibited companies, 35 -2- LSB 1536XS (2) 90 ec/rn 2/ 9

S.F. 98 the public fund may review and rely, in the best judgment of 1 the public fund, on publicly available information and other 2 information that may be provided by nonprofit organizations, 3 research firms, international organizations, and government 4 entities. The public fund may also contact asset managers 5 and institutional investors for the public fund to identify 6 prohibited companies based upon industry-recognized lists of 7 such companies that the public fund may have indirect holdings 8 in. 9 c. The Iowa public employees’ retirement system, acting 10 on behalf of the system and other public funds subject to 11 this section, may develop and issue a request for proposals 12 for third-party services to complete the identification of 13 prohibited companies and the compilation of a prohibited 14 companies list. The request for proposals may request bids for 15 optional services related to this purpose, including but not 16 limited to provision of notice of such prohibited companies 17 as required in subsection 2. The Iowa public employees’ 18 retirement system shall consult with all other public funds 19 regarding the development of the request for proposals, however 20 selection of a successful proposal and the final scope of 21 services to be provided shall be determined only by those 22 public funds that have agreed to utilize the third-party 23 services. If more than one public fund decides to utilize the 24 third-party services, the participating public funds shall 25 equally share the costs of such services. 26 2. For each company on the prohibited companies list in 27 which a public fund has direct or indirect holdings, the public 28 fund shall send or have sent a written notice informing the 29 company of the requirements of this chapter. The public fund 30 or its representative shall continue to provide such written 31 notice on an annual basis if the company remains a prohibited 32 company. 33 3. If a public fund determines that a company may be subject 34 to inclusion on the prohibited companies list, the public fund 35 -3- LSB 1536XS (2) 90 ec/rn 3/ 9

S.F. 98 shall scrutinize and engage the company for a period of not 1 more than twelve months and shall include the company on the 2 prohibited companies list if the public fund determines that 3 the company is a prohibited company. 4 Sec. 4. NEW SECTION . 12K.3 Divestment. 5 1. A public fund shall not acquire any direct holdings in 6 publicly traded securities of a prohibited company. 7 2. a. A public fund shall sell, redeem, divest, or 8 withdraw all direct holdings in publicly traded securities of 9 a prohibited company no later than one hundred eighty days 10 following the date the company is included on the prohibited 11 companies list. 12 b. This subsection shall not be construed to require the 13 premature or otherwise imprudent sale, redemption, divestment, 14 or withdrawal of an investment, but such sale, redemption, 15 divestment, or withdrawal shall be completed as provided by 16 this subsection. 17 Sec. 5. NEW SECTION . 12K.4 Reports. 18 1. Each public fund shall, within thirty days after the 19 prohibited companies list is created or updated as required by 20 section 12K.2, make the list available to the public. 21 2. On October 1, 2024, and each October 1 thereafter, each 22 public fund shall make available to the public, and file with 23 the general assembly, an annual report covering the prior 24 fiscal year that includes all of the following: 25 a. The prohibited companies list as of the end of the fiscal 26 year. 27 b. A summary of all written notices sent as required by 28 section 12K.2 during the fiscal year. 29 c. All investments sold, redeemed, divested, or withdrawn as 30 provided in section 12K.3 during the fiscal year. 31 d. A list of indirect holdings of the public fund in 32 publicly traded securities of prohibited companies and the 33 percentage of the total portfolio of the public fund the 34 indirect holdings of securities in prohibited companies 35 -4- LSB 1536XS (2) 90 ec/rn 4/ 9

S.F. 98 represent. 1 Sec. 6. NEW SECTION . 12K.5 Legal obligations. 2 With respect to actions taken in compliance with this 3 chapter, including all good-faith determinations regarding 4 companies as required by this chapter, the public fund 5 shall be exempt from any conflicting statutory or common law 6 obligations, including any such obligations with respect to 7 choice of asset managers, investment funds, or investments for 8 the public fund’s securities portfolios. 9 Sec. 7. NEW SECTION . 12K.6 Applicability. 10 The requirements of sections 12K.2, 12K.3, and 12K.4 shall 11 not apply if the United States Congress or president of the 12 United States, through legislation or executive order, declares 13 that mandatory divestment of the type provided for in this 14 chapter interferes with the conduct of United States foreign 15 policy. 16 Sec. 8. Section 97A.7, subsection 1, Code 2023, is amended 17 to read as follows: 18 1. The board of trustees shall be the trustees of the 19 retirement fund created by this chapter as provided in section 20 97A.8 and shall have full power to invest and reinvest funds 21 subject to the terms, conditions, limitations, and restrictions 22 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 23 12K and subject to like terms, conditions, limitations, and 24 restrictions said trustees shall have full power to hold, 25 purchase, sell, assign, transfer, or dispose of any of the 26 securities and investments of the retirement fund which have 27 been invested, as well as of the proceeds of said investments 28 and any moneys belonging to the retirement fund. The board 29 of trustees may authorize the treasurer of state to exercise 30 any of the duties of this section . When so authorized the 31 treasurer of state shall report any transactions to the board 32 of trustees at its next monthly meeting. 33 Sec. 9. Section 97B.4, subsection 5, Code 2023, is amended 34 to read as follows: 35 -5- LSB 1536XS (2) 90 ec/rn 5/ 9

S.F. 98 5. Investments. The system, through the chief investment 1 officer, shall invest, subject to chapters 12F , 12H , and 12J , 2 and 12K and in accordance with the investment policy and 3 goal statement established by the board, the portion of the 4 retirement fund which, in the judgment of the system, is not 5 needed for current payment of benefits under this chapter 6 subject to the requirements of section 97B.7A . 7 Sec. 10. Section 262.14, unnumbered paragraph 1, Code 2023, 8 is amended to read as follows: 9 The board may invest funds belonging to the institutions, 10 subject to chapters 12F , 12H , and 12J , and 12K and the 11 following regulations: 12 Sec. 11. Section 411.7, subsection 1, Code 2023, is amended 13 to read as follows: 14 1. The board of trustees is the trustee of the fire 15 and police retirement fund created in section 411.8 and 16 shall annually establish an investment policy to govern the 17 investment and reinvestment of the moneys in the fund, subject 18 to the terms, conditions, limitations, and restrictions 19 imposed by subsection 2 and chapters 12F , 12H , and 12J , and 20 12K . Subject to like terms, conditions, limitations, and 21 restrictions the system has full power to hold, purchase, sell, 22 assign, transfer, or dispose of any of the securities and 23 investments in which the fund has been invested, as well as of 24 the proceeds of the investments and any moneys belonging to the 25 fund. 26 Sec. 12. Section 602.9111, subsection 1, Code 2023, is 27 amended to read as follows: 28 1. So much of the judicial retirement fund as may not be 29 necessary to be kept on hand for the making of disbursements 30 under this article shall be invested by the treasurer of 31 state in any investments authorized for the Iowa public 32 employees’ retirement system in section 97B.7A and subject to 33 the requirements of chapters 12F , 12H , and 12J , and 12K , and 34 the earnings therefrom shall be credited to the fund. The 35 -6- LSB 1536XS (2) 90 ec/rn 6/ 9

S.F. 98 treasurer of state may execute contracts and agreements with 1 investment advisors, consultants, and investment management and 2 benefit consultant firms in the administration of the judicial 3 retirement fund. 4 EXPLANATION 5 The inclusion of this explanation does not constitute agreement with 6 the explanation’s substance by the members of the general assembly. 7 This bill relates to the investment of certain public funds 8 in companies that are owned or controlled by Chinese military 9 or government services. 10 The bill defines “company” as any business or business 11 entity that is publicly traded and that is not based in the 12 United States. The bill defines “direct holdings” in a company 13 as all securities of a company held directly by the public 14 fund or in an account or fund in which the public fund owns 15 all shares or interests. The bill defines “indirect holdings” 16 in a company as all securities of a company held in an account 17 or fund managed by one or more persons not employed by the 18 public fund, in which the public fund owns shares or interests 19 together with other investors not subject to the provisions 20 of this new Code chapter 12K. The bill defines “prohibited 21 company” as a company that is owned or controlled by Chinese 22 military or government services and designated by the United 23 States government as a company that citizens are restricted 24 or prohibited from entering into transactions with. The bill 25 defines “public fund” as the treasurer of state, the state 26 board of regents, the public safety peace officers’ retirement 27 system, the Iowa public employees’ retirement system (IPERS), 28 the statewide fire and police retirement system, or the 29 judicial retirement system. 30 The bill requires a public fund to identify all prohibited 31 companies in which the public fund has direct or indirect 32 holdings by January 1, 2024. Additionally, the bill requires 33 a public fund to create and make available to the public a 34 prohibited companies list and review and update the list 35 -7- LSB 1536XS (2) 90 ec/rn 7/ 9

S.F. 98 on a quarterly basis. The bill authorizes a public fund 1 to review and rely on publicly available information and 2 information from other sources when identifying prohibited 3 companies. The bill also authorizes IPERS to develop and issue 4 a request for proposals for third-party services to complete 5 the identification of prohibited companies and the compilation 6 of the prohibited companies list. The bill requires a 7 public fund to send notice to all companies on the prohibited 8 companies list on an annual basis informing the company of 9 the requirements of the new Code chapter. The bill requires 10 public funds to scrutinize and engage with companies the fund 11 identifies for possible inclusion as a prohibited company for a 12 period of not more than 12 months. 13 The bill prohibits a public fund from acquiring direct 14 holdings in publicly traded securities of a prohibited company. 15 The bill requires a public fund to sell, redeem, divest, or 16 withdraw all direct holdings in publicly traded securities of a 17 prohibited company no later than 180 days following the date 18 the company becomes a prohibited company. 19 The bill requires each public fund, within 30 days after the 20 prohibited companies list is created or updated, to make the 21 list available to the public. Additionally, the bill requires 22 a public fund to make available to the public and file with the 23 general assembly an annual report beginning October 1, 2024, 24 and each October 1 thereafter. 25 The bill provides that, with respect to actions taken 26 in compliance with the Code chapter, the public fund shall 27 be exempt from any conflicting statutory or common law 28 obligations, including any such obligations in respect to 29 choice of asset managers, investment funds, or investments for 30 the public fund’s securities portfolios. 31 The bill provides that the provisions related to the 32 creation of a prohibited companies list, divestment of publicly 33 traded securities of a prohibited company, and reporting shall 34 not apply if the United States Congress or president of the 35 -8- LSB 1536XS (2) 90 ec/rn 8/ 9