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House File 181 - IntroducedA Bill ForAn Act 1prohibiting the state board of regents from investing
2public moneys in companies that are owned or controlled
3by Chinese military or government services and including
4effective date provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 262.14, unnumbered paragraph 1, Code
22023, is amended to read as follows:
3The board may invest funds belonging to the institutions,
4subject to section 262.14A, chapters 12F, 12H, and 12J, and the
5following regulations:
6 Sec. 2. NEW SECTION. 262.14A Restrictions on China-related
7investments.
81. As used in this section:
9a. “Company” means a sole proprietorship, organization,
10association, corporation, partnership, joint venture, limited
11partnership, limited liability partnership, limited liability
12company, or other entity or business association, including
13all wholly owned subsidiaries, majority-owned subsidiaries,
14parent companies, or affiliates of such entities or business
15associations, that exists for profit-making purposes.
16b. “Direct holdings” in a company means all securities of
17a company held directly by the state board of regents or in an
18account or fund in which the state board of regents owns all
19shares or interests.
20c. “Indirect holdings” in a company means all securities
21of a company held in an account or fund managed by one or
22more persons not employed by the state board of regents, in
23which the state board of regents owns shares or interests
24together with other investors not subject to the provisions of
25this section. Indirect holdings include mutual funds, fund
26of funds, private equity funds, hedge funds, and real estate
27funds.
28d. “Prohibited company” means a company that is owned or
29controlled by Chinese military or government services or their
30instrumentalities, including the people’s liberation army of
31China or the communist party of China. “Prohibited company”
32includes a company in which the Chinese military or government
33services or their instrumentalities, including the people’s
34liberation army of China or the communist party of China, own a
35majority interest, either directly or indirectly.
-1- 1e. “Scrutinized company” means any company that is owned or
2controlled by Chinese military or government services or their
3instrumentalities.
42. a. On or before July 1, 2023, the state board of regents
5shall identify or have identified all scrutinized companies
6in which the state board of regents has direct or indirect
7holdings and shall create and make available to the public a
8scrutinized companies list. The state board of regents shall
9review and update, if necessary, the scrutinized companies list
10on a quarterly basis thereafter.
11b. In identifying or having identified scrutinized
12companies, the state board of regents may review and rely,
13in the best judgment of the state board of regents, on
14publicly available information and other information that
15may be provided by nonprofit organizations, research firms,
16international organizations, and government entities. The
17state board of regents may also contact asset managers and
18institutional investors for the state board of regents to
19identify scrutinized companies based upon industry-recognized
20lists of such companies that the state board of regents may
21have indirect holdings in.
223. For each company on the scrutinized companies list
23in which the state board of regents has direct or indirect
24holdings, the state board of regents shall send or have sent
25a written notice informing the company of the requirements of
26this section. The state board of regents or its representative
27shall continue to provide such written notice on an annual
28basis if the company remains a scrutinized company.
294. The state board of regents shall not acquire publicly
30traded securities of a prohibited company.
315. a. The state board of regents shall sell, redeem,
32divest, or withdraw all publicly traded securities of a
33prohibited company no later than one hundred eighty days
34following the date the company becomes a prohibited company.
35b. This subsection shall not be construed to require the
-2-1premature or otherwise imprudent sale, redemption, divestment,
2or withdrawal of an investment, but such sale, redemption,
3divestment, or withdrawal shall be completed as provided by
4this subsection.
56. The state board of regents shall, within thirty days
6after the scrutinized companies list is created or updated
7as required by subsection 2, make the list available to the
8public.
97. On October 1, 2024, and each October 1 thereafter, the
10state board of regents shall make available to the public, and
11file with the general assembly, an annual report covering the
12prior fiscal year that includes all of the following:
13a. The scrutinized companies list as of the end of the
14fiscal year.
15b. A summary of all written notices sent as required by
16subsection 3 during the fiscal year.
17c. All investments sold, redeemed, divested, or withdrawn as
18provided in subsection 5 during the fiscal year.
198. With respect to actions taken in compliance with this
20section, including all good-faith determinations regarding
21companies as required by this section, the state board of
22regents shall be exempt from any conflicting statutory
23or common law obligations, including any such obligations
24with respect to choice of asset managers, investment funds,
25or investments for the state board of regents’ securities
26portfolios.
279. The requirements of subsections 2 through 7 shall not
28apply if the United States Congress or president of the United
29States, through legislation or executive order, declares that
30mandatory divestment of the type provided for in this section
31interferes with the conduct of United States foreign policy.
32 Sec. 3. EFFECTIVE DATE. This Act, being deemed of immediate
33importance, takes effect upon enactment.
34EXPLANATION
35The inclusion of this explanation does not constitute agreement with
-3-1the explanation’s substance by the members of the general assembly.
2This bill prohibits the state board of regents from
3investing public moneys in companies that are owned or
4controlled by Chinese military or government services.
5The bill defines “company” as any entity or business
6association, including all subsidiaries, parent companies, or
7affiliates of such entities or business associations, that
8exist for profit-making purposes. The bill defines “direct
9holdings” in a company as all securities of a company held
10directly by the state board of regents or in an account or
11fund in which the state board of regents owns all shares or
12interests. The bill defines “indirect holdings” in a company
13as all securities of a company held in an account or fund
14managed by one or more persons not employed by the state board
15of regents, in which the state board of regents owns shares
16or interests together with other investors not subject to
17the provisions of this new Code section 262.14A. The bill
18defines “prohibited company” as a company that is owned or
19controlled by Chinese military or government services or
20their instrumentalities, including the people’s liberation
21army of China or the communist party of China. The bill
22defines “scrutinized company” as any company that is owned or
23controlled by Chinese military or government services or their
24instrumentalities.
25The bill requires the state board of regents to identify
26all scrutinized companies in which the state board of regents
27has direct or indirect holdings on or before July 1, 2023.
28Additionally, the bill requires the state board of regents to
29create and make available to the public a scrutinized companies
30list and review and update the list on a quarterly basis.
31The bill authorizes the state board of regents to review and
32rely on publicly available information and information from
33other sources when identifying scrutinized companies. The
34bill requires the state board of regents to send notice to
35all companies on the scrutinized companies list on an annual
-4-1basis informing the company of the requirements of the new Code
2section.
3The bill prohibits the state board of regents from acquiring
4publicly traded securities of a prohibited company. The bill
5requires the state board of regents to sell, redeem, divest, or
6withdraw all publicly traded securities of a prohibited company
7no later than 180 days following the date the company becomes a
8prohibited company.
9The bill requires the state board of regents, within 30 days
10after the scrutinized companies list is created or updated,
11to make the list available to the public. Additionally, the
12bill requires the state board of regents to make available to
13the public and file with the general assembly an annual report
14beginning October 1, 2024, and each October 1 thereafter.
15The bill provides that, with respect to actions taken in
16compliance with new Code section 262.14A, the state board
17of regents shall be exempt from any conflicting statutory
18or common law obligations, including any such obligations
19in respect to choice of asset managers, investment funds,
20or investments for the state board of regents’ securities
21portfolios.
22The bill provides that the provisions related to the
23creation of a scrutinized companies list, divestment of
24publicly traded securities of a prohibited company, and
25reporting shall not apply if the United States Congress
26or president of the United States declares that mandatory
27divestment of the type provided for in new Code section 262.14A
28interferes with the conduct of United States foreign policy.
29The bill modifies Code section 262.14 to impose these same
30restrictions on the state board of regents’ investments of
31moneys belonging to the state university of Iowa, including
32the university of Iowa hospitals and clinics, the Iowa
33state university of science and technology, including the
34agricultural experiment station, the university of northern
35Iowa, the Iowa braille and sight saving school, the Iowa school
-5-1for the deaf, the Oakdale campus, and the university of Iowa
2hospitals and clinics’ center for disabilities and development.
3The bill takes effect upon enactment.
-6-jda/jh
2public moneys in companies that are owned or controlled
3by Chinese military or government services and including
4effective date provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. Section 262.14, unnumbered paragraph 1, Code
22023, is amended to read as follows:
3The board may invest funds belonging to the institutions,
4subject to section 262.14A, chapters 12F, 12H, and 12J, and the
5following regulations:
6 Sec. 2. NEW SECTION. 262.14A Restrictions on China-related
7investments.
81. As used in this section:
9a. “Company” means a sole proprietorship, organization,
10association, corporation, partnership, joint venture, limited
11partnership, limited liability partnership, limited liability
12company, or other entity or business association, including
13all wholly owned subsidiaries, majority-owned subsidiaries,
14parent companies, or affiliates of such entities or business
15associations, that exists for profit-making purposes.
16b. “Direct holdings” in a company means all securities of
17a company held directly by the state board of regents or in an
18account or fund in which the state board of regents owns all
19shares or interests.
20c. “Indirect holdings” in a company means all securities
21of a company held in an account or fund managed by one or
22more persons not employed by the state board of regents, in
23which the state board of regents owns shares or interests
24together with other investors not subject to the provisions of
25this section. Indirect holdings include mutual funds, fund
26of funds, private equity funds, hedge funds, and real estate
27funds.
28d. “Prohibited company” means a company that is owned or
29controlled by Chinese military or government services or their
30instrumentalities, including the people’s liberation army of
31China or the communist party of China. “Prohibited company”
32includes a company in which the Chinese military or government
33services or their instrumentalities, including the people’s
34liberation army of China or the communist party of China, own a
35majority interest, either directly or indirectly.
-1- 1e. “Scrutinized company” means any company that is owned or
2controlled by Chinese military or government services or their
3instrumentalities.
42. a. On or before July 1, 2023, the state board of regents
5shall identify or have identified all scrutinized companies
6in which the state board of regents has direct or indirect
7holdings and shall create and make available to the public a
8scrutinized companies list. The state board of regents shall
9review and update, if necessary, the scrutinized companies list
10on a quarterly basis thereafter.
11b. In identifying or having identified scrutinized
12companies, the state board of regents may review and rely,
13in the best judgment of the state board of regents, on
14publicly available information and other information that
15may be provided by nonprofit organizations, research firms,
16international organizations, and government entities. The
17state board of regents may also contact asset managers and
18institutional investors for the state board of regents to
19identify scrutinized companies based upon industry-recognized
20lists of such companies that the state board of regents may
21have indirect holdings in.
223. For each company on the scrutinized companies list
23in which the state board of regents has direct or indirect
24holdings, the state board of regents shall send or have sent
25a written notice informing the company of the requirements of
26this section. The state board of regents or its representative
27shall continue to provide such written notice on an annual
28basis if the company remains a scrutinized company.
294. The state board of regents shall not acquire publicly
30traded securities of a prohibited company.
315. a. The state board of regents shall sell, redeem,
32divest, or withdraw all publicly traded securities of a
33prohibited company no later than one hundred eighty days
34following the date the company becomes a prohibited company.
35b. This subsection shall not be construed to require the
-2-1premature or otherwise imprudent sale, redemption, divestment,
2or withdrawal of an investment, but such sale, redemption,
3divestment, or withdrawal shall be completed as provided by
4this subsection.
56. The state board of regents shall, within thirty days
6after the scrutinized companies list is created or updated
7as required by subsection 2, make the list available to the
8public.
97. On October 1, 2024, and each October 1 thereafter, the
10state board of regents shall make available to the public, and
11file with the general assembly, an annual report covering the
12prior fiscal year that includes all of the following:
13a. The scrutinized companies list as of the end of the
14fiscal year.
15b. A summary of all written notices sent as required by
16subsection 3 during the fiscal year.
17c. All investments sold, redeemed, divested, or withdrawn as
18provided in subsection 5 during the fiscal year.
198. With respect to actions taken in compliance with this
20section, including all good-faith determinations regarding
21companies as required by this section, the state board of
22regents shall be exempt from any conflicting statutory
23or common law obligations, including any such obligations
24with respect to choice of asset managers, investment funds,
25or investments for the state board of regents’ securities
26portfolios.
279. The requirements of subsections 2 through 7 shall not
28apply if the United States Congress or president of the United
29States, through legislation or executive order, declares that
30mandatory divestment of the type provided for in this section
31interferes with the conduct of United States foreign policy.
32 Sec. 3. EFFECTIVE DATE. This Act, being deemed of immediate
33importance, takes effect upon enactment.
34EXPLANATION
35The inclusion of this explanation does not constitute agreement with
-3-1the explanation’s substance by the members of the general assembly.
2This bill prohibits the state board of regents from
3investing public moneys in companies that are owned or
4controlled by Chinese military or government services.
5The bill defines “company” as any entity or business
6association, including all subsidiaries, parent companies, or
7affiliates of such entities or business associations, that
8exist for profit-making purposes. The bill defines “direct
9holdings” in a company as all securities of a company held
10directly by the state board of regents or in an account or
11fund in which the state board of regents owns all shares or
12interests. The bill defines “indirect holdings” in a company
13as all securities of a company held in an account or fund
14managed by one or more persons not employed by the state board
15of regents, in which the state board of regents owns shares
16or interests together with other investors not subject to
17the provisions of this new Code section 262.14A. The bill
18defines “prohibited company” as a company that is owned or
19controlled by Chinese military or government services or
20their instrumentalities, including the people’s liberation
21army of China or the communist party of China. The bill
22defines “scrutinized company” as any company that is owned or
23controlled by Chinese military or government services or their
24instrumentalities.
25The bill requires the state board of regents to identify
26all scrutinized companies in which the state board of regents
27has direct or indirect holdings on or before July 1, 2023.
28Additionally, the bill requires the state board of regents to
29create and make available to the public a scrutinized companies
30list and review and update the list on a quarterly basis.
31The bill authorizes the state board of regents to review and
32rely on publicly available information and information from
33other sources when identifying scrutinized companies. The
34bill requires the state board of regents to send notice to
35all companies on the scrutinized companies list on an annual
-4-1basis informing the company of the requirements of the new Code
2section.
3The bill prohibits the state board of regents from acquiring
4publicly traded securities of a prohibited company. The bill
5requires the state board of regents to sell, redeem, divest, or
6withdraw all publicly traded securities of a prohibited company
7no later than 180 days following the date the company becomes a
8prohibited company.
9The bill requires the state board of regents, within 30 days
10after the scrutinized companies list is created or updated,
11to make the list available to the public. Additionally, the
12bill requires the state board of regents to make available to
13the public and file with the general assembly an annual report
14beginning October 1, 2024, and each October 1 thereafter.
15The bill provides that, with respect to actions taken in
16compliance with new Code section 262.14A, the state board
17of regents shall be exempt from any conflicting statutory
18or common law obligations, including any such obligations
19in respect to choice of asset managers, investment funds,
20or investments for the state board of regents’ securities
21portfolios.
22The bill provides that the provisions related to the
23creation of a scrutinized companies list, divestment of
24publicly traded securities of a prohibited company, and
25reporting shall not apply if the United States Congress
26or president of the United States declares that mandatory
27divestment of the type provided for in new Code section 262.14A
28interferes with the conduct of United States foreign policy.
29The bill modifies Code section 262.14 to impose these same
30restrictions on the state board of regents’ investments of
31moneys belonging to the state university of Iowa, including
32the university of Iowa hospitals and clinics, the Iowa
33state university of science and technology, including the
34agricultural experiment station, the university of northern
35Iowa, the Iowa braille and sight saving school, the Iowa school
-5-1for the deaf, the Oakdale campus, and the university of Iowa
2hospitals and clinics’ center for disabilities and development.
3The bill takes effect upon enactment.
-6-jda/jh