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House File 2290 - IntroducedA Bill ForAn Act 1relating to the investment of certain public funds in
2companies that are owned or controlled by Chinese military
3or government services.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 12.8, subsection 1, Code 2022, is amended
2to read as follows:
31. The treasurer of state shall invest or deposit, subject
4to chapters 12F, 12H, and 12J, and 12K and as provided by law,
5any of the public funds not currently needed for operating
6expenses and shall do so upon receipt of monthly notice from
7the director of the department of administrative services of
8the amount not so needed. In the event of loss on redemption
9or sale of securities invested as prescribed by law, and if
10the transaction is reported to the executive council, neither
11the treasurer nor director of the department of administrative
12services is personally liable but the loss shall be charged
13against the funds which would have received the profits or
14interest of the investment and there is appropriated from the
15funds the amount so required.
16 Sec. 2. NEW SECTION. 12K.1 Definitions.
17As used in this chapter, unless the context otherwise
18requires:
191. “Company” means a sole proprietorship, organization,
20association, corporation, partnership, joint venture, limited
21partnership, limited liability partnership, limited liability
22company, or other entity or business association, including
23all wholly owned subsidiaries, majority-owned subsidiaries,
24parent companies, or affiliates of such entities or business
25associations, that exists for profit-making purposes.
262. “Direct holdings” in a company means all securities of
27a company held directly by the public fund or in an account or
28fund in which the public fund owns all shares or interests.
293. “Indirect holdings” in a company means all securities
30of a company held in an account or fund managed by one or more
31persons not employed by the public fund, in which the public
32fund owns shares or interests together with other investors not
33subject to the provisions of this chapter. Indirect holdings
34include but are not limited to mutual funds, fund of funds,
35private equity funds, hedge funds, and real estate funds.
-1- 14. “Prohibited company” means a company that is owned
2or controlled by Chinese military or government services,
3including but not limited to the people’s liberation army
4of China or the communist party of China, and that has been
5sanctioned in any way by the United States government.
65. “Public fund” means the treasurer of state, the state
7board of regents, the public safety peace officers’ retirement
8system created in chapter 97A, the Iowa public employees’
9retirement system created in chapter 97B, the statewide fire
10and police retirement system created in chapter 411, or the
11judicial retirement system created in chapter 602.
126. “Scrutinized company” means any company that is owned or
13controlled by Chinese military or government services.
14 Sec. 3. NEW SECTION. 12K.2 Identification of companies —
15notice.
161. a. Within sixty days following the effective date of
17this Act, a public fund shall identify or have identified all
18scrutinized companies in which the public fund has direct or
19indirect holdings and shall create and make available to the
20public a scrutinized companies list for that public fund.
21The public fund shall review and update, if necessary, the
22scrutinized companies list on a quarterly basis thereafter.
23b. In identifying or having identified scrutinized
24companies, the public fund may review and rely, in the best
25judgment of the public fund, on publicly available information
26and other information that may be provided by nonprofit
27organizations, research firms, international organizations, and
28government entities. The public fund may also contact asset
29managers and institutional investors for the public fund to
30identify scrutinized companies based upon industry-recognized
31lists of such companies that the public fund may have indirect
32holdings in.
33c. The Iowa public employees’ retirement system, acting
34on behalf of the system and other public funds subject to
35this section, may develop and issue a request for proposals
-2-1for third-party services to complete the identification of
2scrutinized companies and the compilation of a scrutinized
3companies list. The request for proposals may request bids for
4optional services related to this purpose, including but not
5limited to provision of notice of such scrutinized companies
6as required in subsection 2. The Iowa public employees’
7retirement system shall consult with all other public funds
8regarding the development of the request for proposals, however
9selection of a successful proposal and the final scope of
10services to be provided shall be determined only by those
11public funds that have agreed to utilize the third-party
12services. If more than one public fund decides to utilize the
13third-party services, the participating public funds shall
14equally share the costs of such services.
152. For each company on the scrutinized companies list in
16which a public fund has direct or indirect holdings, the public
17fund shall send or have sent a written notice informing the
18company of the requirements of this chapter. The public fund
19or its representative shall continue to provide such written
20notice on an annual basis if the company remains a scrutinized
21company.
22 Sec. 4. NEW SECTION. 12K.3 Divestment.
231. A public fund shall not acquire publicly traded
24securities of a prohibited company.
252. a. A public fund shall sell, redeem, divest, or withdraw
26all publicly traded securities of a prohibited company no later
27than one hundred eighty days following the date the company
28becomes a prohibited company.
29b. This subsection shall not be construed to require the
30premature or otherwise imprudent sale, redemption, divestment,
31or withdrawal of an investment, but such sale, redemption,
32divestment, or withdrawal shall be completed as provided by
33this subsection.
34 Sec. 5. NEW SECTION. 12K.4 Reports.
351. Each public fund shall, within thirty days after the
-3-1scrutinized companies list is created or updated as required by
2section 12K.2, make the list available to the public.
32. On October 1, 2022, and each October 1 thereafter, each
4public fund shall make available to the public, and file with
5the general assembly, an annual report covering the prior
6fiscal year that includes all of the following:
7a. The scrutinized companies list as of the end of the
8fiscal year.
9b. A summary of all written notices sent as required by
10section 12K.2 during the fiscal year.
11c. All investments sold, redeemed, divested, or withdrawn as
12provided in section 12K.3 during the fiscal year.
13 Sec. 6. NEW SECTION. 12K.5 Legal obligations.
14With respect to actions taken in compliance with this
15chapter, including all good-faith determinations regarding
16companies as required by this chapter, the public fund
17shall be exempt from any conflicting statutory or common law
18obligations, including any such obligations with respect to
19choice of asset managers, investment funds, or investments for
20the public fund’s securities portfolios.
21 Sec. 7. NEW SECTION. 12K.6 Applicability.
22The requirements of sections 12K.2, 12K.3, and 12K.4 shall
23not apply if the United States Congress or president of the
24United States, through legislation or executive order, declares
25that mandatory divestment of the type provided for in this
26chapter interferes with the conduct of United States foreign
27policy.
28 Sec. 8. Section 97A.7, subsection 1, Code 2022, is amended
29to read as follows:
301. The board of trustees shall be the trustees of the
31retirement fund created by this chapter as provided in section
3297A.8 and shall have full power to invest and reinvest funds
33subject to the terms, conditions, limitations, and restrictions
34imposed by subsection 2 and chapters 12F, 12H, and 12J, and
3512K and subject to like terms, conditions, limitations, and
-4-1restrictions said trustees shall have full power to hold,
2purchase, sell, assign, transfer, or dispose of any of the
3securities and investments of the retirement fund which have
4been invested, as well as of the proceeds of said investments
5and any moneys belonging to the retirement fund. The board
6of trustees may authorize the treasurer of state to exercise
7any of the duties of this section. When so authorized the
8treasurer of state shall report any transactions to the board
9of trustees at its next monthly meeting.
10 Sec. 9. Section 97B.4, subsection 5, Code 2022, is amended
11to read as follows:
125. Investments. The system, through the chief investment
13officer, shall invest, subject to chapters 12F, 12H, and 12J,
14and 12K and in accordance with the investment policy and
15goal statement established by the board, the portion of the
16retirement fund which, in the judgment of the system, is not
17needed for current payment of benefits under this chapter
18subject to the requirements of section 97B.7A.
19 Sec. 10. Section 262.14, unnumbered paragraph 1, Code 2022,
20is amended to read as follows:
21The board may invest funds belonging to the institutions,
22subject to chapters 12F, 12H, and 12J, and 12K and the
23following regulations:
24 Sec. 11. Section 411.7, subsection 1, Code 2022, is amended
25to read as follows:
261. The board of trustees is the trustee of the fire
27and police retirement fund created in section 411.8 and
28shall annually establish an investment policy to govern the
29investment and reinvestment of the moneys in the fund, subject
30to the terms, conditions, limitations, and restrictions
31imposed by subsection 2 and chapters 12F, 12H, and 12J, and
3212K. Subject to like terms, conditions, limitations, and
33restrictions the system has full power to hold, purchase, sell,
34assign, transfer, or dispose of any of the securities and
35investments in which the fund has been invested, as well as of
-5-1the proceeds of the investments and any moneys belonging to the
2fund.
3 Sec. 12. Section 602.9111, subsection 1, Code 2022, is
4amended to read as follows:
51. So much of the judicial retirement fund as may not be
6necessary to be kept on hand for the making of disbursements
7under this article shall be invested by the treasurer of
8state in any investments authorized for the Iowa public
9employees’ retirement system in section 97B.7A and subject to
10the requirements of chapters 12F, 12H, and 12J, and 12K, and
11the earnings therefrom shall be credited to the fund. The
12treasurer of state may execute contracts and agreements with
13investment advisors, consultants, and investment management and
14benefit consultant firms in the administration of the judicial
15retirement fund.
16EXPLANATION
17The inclusion of this explanation does not constitute agreement with
18the explanation’s substance by the members of the general assembly.
19This bill relates to the investment of certain public funds
20in companies that are owned or controlled by Chinese military
21or government services.
22The bill defines “company” as any entity or business
23association, including all subsidiaries, parent companies, or
24affiliates of such entities or business associations, that
25exist for profit-making purposes. The bill defines “direct
26holdings” in a company as all securities of a company held
27directly by the public fund or in an account or fund in which
28the public fund owns all shares or interests. The bill defines
29“indirect holdings” in a company as all securities of a company
30held in an account or fund managed by one or more persons not
31employed by the public fund, in which the public fund owns
32shares or interests together with other investors not subject
33to the provisions of this new Code chapter 12K. The bill
34defines “prohibited company” as a company that is owned or
35controlled by Chinese military or government services that
-6-1has been sanctioned by the United States government. The
2bill defines “public fund” as the treasurer of state, the
3state board of regents, the public safety peace officers’
4retirement system, the Iowa public employees’ retirement system
5(IPERS), the statewide fire and police retirement system, or
6the judicial retirement system. The bill defines “scrutinized
7company” as any company that is owned or controlled by Chinese
8military or government services.
9The bill requires a public fund to identify all scrutinized
10companies in which the public fund has direct or indirect
11holdings within 60 days following the effective date of
12the bill. Additionally, the bill requires a public fund
13to create and make available to the public a scrutinized
14companies list and review and update the list on a quarterly
15basis. The bill authorizes a public fund to review and rely
16on publicly available information and information from other
17sources when identifying scrutinized companies. The bill also
18authorizes IPERS to develop and issue a request for proposals
19for third-party services to complete the identification of
20scrutinized companies and the compilation of the scrutinized
21companies list. The bill requires a public fund to send notice
22to all companies on the scrutinized companies list on an annual
23basis informing the company of the requirements of the new Code
24chapter.
25The bill prohibits a public fund from acquiring publicly
26traded securities of a prohibited company. The bill requires a
27public fund to sell, redeem, divest, or withdraw all publicly
28traded securities of a prohibited company no later than 180
29days following the date the company becomes a prohibited
30company.
31The bill requires each public fund, within 30 days after the
32scrutinized companies list is created or updated, to make the
33list available to the public. Additionally, the bill requires
34a public fund to make available to the public and file with the
35general assembly an annual report beginning October 1, 2022,
-7-1and each October 1 thereafter.
2The bill provides that, with respect to actions taken
3in compliance with the Code chapter, the public fund shall
4be exempt from any conflicting statutory or common law
5obligations, including any such obligations in respect to
6choice of asset managers, investment funds, or investments for
7the public fund’s securities portfolios.
8The bill provides that the provisions related to the
9creation of a scrutinized companies list, divestment of
10publicly traded securities of a prohibited company, and
11reporting shall not apply if the United States Congress
12or president of the United States declares that mandatory
13divestment of the type provided for in the Code chapter
14interferes with the conduct of United States foreign policy.
15The bill makes conforming changes to Code sections 12.8,
1697A.7, 97B.4, 262.14, 411.7, and 602.9111.
-8-ec/rn
2companies that are owned or controlled by Chinese military
3or government services.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 12.8, subsection 1, Code 2022, is amended
2to read as follows:
31. The treasurer of state shall invest or deposit, subject
4to chapters 12F, 12H, and 12J, and 12K and as provided by law,
5any of the public funds not currently needed for operating
6expenses and shall do so upon receipt of monthly notice from
7the director of the department of administrative services of
8the amount not so needed. In the event of loss on redemption
9or sale of securities invested as prescribed by law, and if
10the transaction is reported to the executive council, neither
11the treasurer nor director of the department of administrative
12services is personally liable but the loss shall be charged
13against the funds which would have received the profits or
14interest of the investment and there is appropriated from the
15funds the amount so required.
16 Sec. 2. NEW SECTION. 12K.1 Definitions.
17As used in this chapter, unless the context otherwise
18requires:
191. “Company” means a sole proprietorship, organization,
20association, corporation, partnership, joint venture, limited
21partnership, limited liability partnership, limited liability
22company, or other entity or business association, including
23all wholly owned subsidiaries, majority-owned subsidiaries,
24parent companies, or affiliates of such entities or business
25associations, that exists for profit-making purposes.
262. “Direct holdings” in a company means all securities of
27a company held directly by the public fund or in an account or
28fund in which the public fund owns all shares or interests.
293. “Indirect holdings” in a company means all securities
30of a company held in an account or fund managed by one or more
31persons not employed by the public fund, in which the public
32fund owns shares or interests together with other investors not
33subject to the provisions of this chapter. Indirect holdings
34include but are not limited to mutual funds, fund of funds,
35private equity funds, hedge funds, and real estate funds.
-1- 14. “Prohibited company” means a company that is owned
2or controlled by Chinese military or government services,
3including but not limited to the people’s liberation army
4of China or the communist party of China, and that has been
5sanctioned in any way by the United States government.
65. “Public fund” means the treasurer of state, the state
7board of regents, the public safety peace officers’ retirement
8system created in chapter 97A, the Iowa public employees’
9retirement system created in chapter 97B, the statewide fire
10and police retirement system created in chapter 411, or the
11judicial retirement system created in chapter 602.
126. “Scrutinized company” means any company that is owned or
13controlled by Chinese military or government services.
14 Sec. 3. NEW SECTION. 12K.2 Identification of companies —
15notice.
161. a. Within sixty days following the effective date of
17this Act, a public fund shall identify or have identified all
18scrutinized companies in which the public fund has direct or
19indirect holdings and shall create and make available to the
20public a scrutinized companies list for that public fund.
21The public fund shall review and update, if necessary, the
22scrutinized companies list on a quarterly basis thereafter.
23b. In identifying or having identified scrutinized
24companies, the public fund may review and rely, in the best
25judgment of the public fund, on publicly available information
26and other information that may be provided by nonprofit
27organizations, research firms, international organizations, and
28government entities. The public fund may also contact asset
29managers and institutional investors for the public fund to
30identify scrutinized companies based upon industry-recognized
31lists of such companies that the public fund may have indirect
32holdings in.
33c. The Iowa public employees’ retirement system, acting
34on behalf of the system and other public funds subject to
35this section, may develop and issue a request for proposals
-2-1for third-party services to complete the identification of
2scrutinized companies and the compilation of a scrutinized
3companies list. The request for proposals may request bids for
4optional services related to this purpose, including but not
5limited to provision of notice of such scrutinized companies
6as required in subsection 2. The Iowa public employees’
7retirement system shall consult with all other public funds
8regarding the development of the request for proposals, however
9selection of a successful proposal and the final scope of
10services to be provided shall be determined only by those
11public funds that have agreed to utilize the third-party
12services. If more than one public fund decides to utilize the
13third-party services, the participating public funds shall
14equally share the costs of such services.
152. For each company on the scrutinized companies list in
16which a public fund has direct or indirect holdings, the public
17fund shall send or have sent a written notice informing the
18company of the requirements of this chapter. The public fund
19or its representative shall continue to provide such written
20notice on an annual basis if the company remains a scrutinized
21company.
22 Sec. 4. NEW SECTION. 12K.3 Divestment.
231. A public fund shall not acquire publicly traded
24securities of a prohibited company.
252. a. A public fund shall sell, redeem, divest, or withdraw
26all publicly traded securities of a prohibited company no later
27than one hundred eighty days following the date the company
28becomes a prohibited company.
29b. This subsection shall not be construed to require the
30premature or otherwise imprudent sale, redemption, divestment,
31or withdrawal of an investment, but such sale, redemption,
32divestment, or withdrawal shall be completed as provided by
33this subsection.
34 Sec. 5. NEW SECTION. 12K.4 Reports.
351. Each public fund shall, within thirty days after the
-3-1scrutinized companies list is created or updated as required by
2section 12K.2, make the list available to the public.
32. On October 1, 2022, and each October 1 thereafter, each
4public fund shall make available to the public, and file with
5the general assembly, an annual report covering the prior
6fiscal year that includes all of the following:
7a. The scrutinized companies list as of the end of the
8fiscal year.
9b. A summary of all written notices sent as required by
10section 12K.2 during the fiscal year.
11c. All investments sold, redeemed, divested, or withdrawn as
12provided in section 12K.3 during the fiscal year.
13 Sec. 6. NEW SECTION. 12K.5 Legal obligations.
14With respect to actions taken in compliance with this
15chapter, including all good-faith determinations regarding
16companies as required by this chapter, the public fund
17shall be exempt from any conflicting statutory or common law
18obligations, including any such obligations with respect to
19choice of asset managers, investment funds, or investments for
20the public fund’s securities portfolios.
21 Sec. 7. NEW SECTION. 12K.6 Applicability.
22The requirements of sections 12K.2, 12K.3, and 12K.4 shall
23not apply if the United States Congress or president of the
24United States, through legislation or executive order, declares
25that mandatory divestment of the type provided for in this
26chapter interferes with the conduct of United States foreign
27policy.
28 Sec. 8. Section 97A.7, subsection 1, Code 2022, is amended
29to read as follows:
301. The board of trustees shall be the trustees of the
31retirement fund created by this chapter as provided in section
3297A.8 and shall have full power to invest and reinvest funds
33subject to the terms, conditions, limitations, and restrictions
34imposed by subsection 2 and chapters 12F, 12H, and 12J, and
3512K and subject to like terms, conditions, limitations, and
-4-1restrictions said trustees shall have full power to hold,
2purchase, sell, assign, transfer, or dispose of any of the
3securities and investments of the retirement fund which have
4been invested, as well as of the proceeds of said investments
5and any moneys belonging to the retirement fund. The board
6of trustees may authorize the treasurer of state to exercise
7any of the duties of this section. When so authorized the
8treasurer of state shall report any transactions to the board
9of trustees at its next monthly meeting.
10 Sec. 9. Section 97B.4, subsection 5, Code 2022, is amended
11to read as follows:
125. Investments. The system, through the chief investment
13officer, shall invest, subject to chapters 12F, 12H, and 12J,
14and 12K and in accordance with the investment policy and
15goal statement established by the board, the portion of the
16retirement fund which, in the judgment of the system, is not
17needed for current payment of benefits under this chapter
18subject to the requirements of section 97B.7A.
19 Sec. 10. Section 262.14, unnumbered paragraph 1, Code 2022,
20is amended to read as follows:
21The board may invest funds belonging to the institutions,
22subject to chapters 12F, 12H, and 12J, and 12K and the
23following regulations:
24 Sec. 11. Section 411.7, subsection 1, Code 2022, is amended
25to read as follows:
261. The board of trustees is the trustee of the fire
27and police retirement fund created in section 411.8 and
28shall annually establish an investment policy to govern the
29investment and reinvestment of the moneys in the fund, subject
30to the terms, conditions, limitations, and restrictions
31imposed by subsection 2 and chapters 12F, 12H, and 12J, and
3212K. Subject to like terms, conditions, limitations, and
33restrictions the system has full power to hold, purchase, sell,
34assign, transfer, or dispose of any of the securities and
35investments in which the fund has been invested, as well as of
-5-1the proceeds of the investments and any moneys belonging to the
2fund.
3 Sec. 12. Section 602.9111, subsection 1, Code 2022, is
4amended to read as follows:
51. So much of the judicial retirement fund as may not be
6necessary to be kept on hand for the making of disbursements
7under this article shall be invested by the treasurer of
8state in any investments authorized for the Iowa public
9employees’ retirement system in section 97B.7A and subject to
10the requirements of chapters 12F, 12H, and 12J, and 12K, and
11the earnings therefrom shall be credited to the fund. The
12treasurer of state may execute contracts and agreements with
13investment advisors, consultants, and investment management and
14benefit consultant firms in the administration of the judicial
15retirement fund.
16EXPLANATION
17The inclusion of this explanation does not constitute agreement with
18the explanation’s substance by the members of the general assembly.
19This bill relates to the investment of certain public funds
20in companies that are owned or controlled by Chinese military
21or government services.
22The bill defines “company” as any entity or business
23association, including all subsidiaries, parent companies, or
24affiliates of such entities or business associations, that
25exist for profit-making purposes. The bill defines “direct
26holdings” in a company as all securities of a company held
27directly by the public fund or in an account or fund in which
28the public fund owns all shares or interests. The bill defines
29“indirect holdings” in a company as all securities of a company
30held in an account or fund managed by one or more persons not
31employed by the public fund, in which the public fund owns
32shares or interests together with other investors not subject
33to the provisions of this new Code chapter 12K. The bill
34defines “prohibited company” as a company that is owned or
35controlled by Chinese military or government services that
-6-1has been sanctioned by the United States government. The
2bill defines “public fund” as the treasurer of state, the
3state board of regents, the public safety peace officers’
4retirement system, the Iowa public employees’ retirement system
5(IPERS), the statewide fire and police retirement system, or
6the judicial retirement system. The bill defines “scrutinized
7company” as any company that is owned or controlled by Chinese
8military or government services.
9The bill requires a public fund to identify all scrutinized
10companies in which the public fund has direct or indirect
11holdings within 60 days following the effective date of
12the bill. Additionally, the bill requires a public fund
13to create and make available to the public a scrutinized
14companies list and review and update the list on a quarterly
15basis. The bill authorizes a public fund to review and rely
16on publicly available information and information from other
17sources when identifying scrutinized companies. The bill also
18authorizes IPERS to develop and issue a request for proposals
19for third-party services to complete the identification of
20scrutinized companies and the compilation of the scrutinized
21companies list. The bill requires a public fund to send notice
22to all companies on the scrutinized companies list on an annual
23basis informing the company of the requirements of the new Code
24chapter.
25The bill prohibits a public fund from acquiring publicly
26traded securities of a prohibited company. The bill requires a
27public fund to sell, redeem, divest, or withdraw all publicly
28traded securities of a prohibited company no later than 180
29days following the date the company becomes a prohibited
30company.
31The bill requires each public fund, within 30 days after the
32scrutinized companies list is created or updated, to make the
33list available to the public. Additionally, the bill requires
34a public fund to make available to the public and file with the
35general assembly an annual report beginning October 1, 2022,
-7-1and each October 1 thereafter.
2The bill provides that, with respect to actions taken
3in compliance with the Code chapter, the public fund shall
4be exempt from any conflicting statutory or common law
5obligations, including any such obligations in respect to
6choice of asset managers, investment funds, or investments for
7the public fund’s securities portfolios.
8The bill provides that the provisions related to the
9creation of a scrutinized companies list, divestment of
10publicly traded securities of a prohibited company, and
11reporting shall not apply if the United States Congress
12or president of the United States declares that mandatory
13divestment of the type provided for in the Code chapter
14interferes with the conduct of United States foreign policy.
15The bill makes conforming changes to Code sections 12.8,
1697A.7, 97B.4, 262.14, 411.7, and 602.9111.
-8-ec/rn