Bill Text: IA SF2271 | 2021-2022 | 89th General Assembly | Introduced
Bill Title: A bill for an act relating to the investment of certain public funds in companies that are owned or controlled by Chinese military or government services.
Spectrum: Partisan Bill (Republican 8-0)
Status: (Introduced - Dead) 2022-03-24 - Referred to State Government. S.J. 621. [SF2271 Detail]
Download: Iowa-2021-SF2271-Introduced.html
Senate
File
2271
-
Introduced
SENATE
FILE
2271
BY
GUTH
,
KLIMESH
,
WILLIAMS
,
DICKEY
,
KRAAYENBRINK
,
JOHNSON
,
J.
TAYLOR
,
and
SCHULTZ
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
2022,
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
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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.
Within
one
hundred
eighty
days
following
the
28
effective
date
of
this
Act,
a
public
fund
shall
identify
or
29
have
identified
all
prohibited
companies
in
which
the
public
30
fund
has
direct
or
indirect
holdings
and
shall
create
and
make
31
available
to
the
public
a
prohibited
companies
list
for
that
32
public
fund.
The
public
fund
shall
review
and
update,
if
33
necessary,
the
prohibited
companies
list
on
a
quarterly
basis
34
thereafter.
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b.
In
identifying
or
having
identified
prohibited
companies,
1
the
public
fund
may
review
and
rely,
in
the
best
judgment
of
2
the
public
fund,
on
publicly
available
information
and
other
3
information
that
may
be
provided
by
nonprofit
organizations,
4
research
firms,
international
organizations,
and
government
5
entities.
The
public
fund
may
also
contact
asset
managers
6
and
institutional
investors
for
the
public
fund
to
identify
7
prohibited
companies
based
upon
industry-recognized
lists
of
8
such
companies
that
the
public
fund
may
have
indirect
holdings
9
in.
10
c.
The
Iowa
public
employees’
retirement
system,
acting
11
on
behalf
of
the
system
and
other
public
funds
subject
to
12
this
section,
may
develop
and
issue
a
request
for
proposals
13
for
third-party
services
to
complete
the
identification
of
14
prohibited
companies
and
the
compilation
of
a
prohibited
15
companies
list.
The
request
for
proposals
may
request
bids
for
16
optional
services
related
to
this
purpose,
including
but
not
17
limited
to
provision
of
notice
of
such
prohibited
companies
18
as
required
in
subsection
2.
The
Iowa
public
employees’
19
retirement
system
shall
consult
with
all
other
public
funds
20
regarding
the
development
of
the
request
for
proposals,
however
21
selection
of
a
successful
proposal
and
the
final
scope
of
22
services
to
be
provided
shall
be
determined
only
by
those
23
public
funds
that
have
agreed
to
utilize
the
third-party
24
services.
If
more
than
one
public
fund
decides
to
utilize
the
25
third-party
services,
the
participating
public
funds
shall
26
equally
share
the
costs
of
such
services.
27
2.
For
each
company
on
the
prohibited
companies
list
in
28
which
a
public
fund
has
direct
or
indirect
holdings,
the
public
29
fund
shall
send
or
have
sent
a
written
notice
informing
the
30
company
of
the
requirements
of
this
chapter.
The
public
fund
31
or
its
representative
shall
continue
to
provide
such
written
32
notice
on
an
annual
basis
if
the
company
remains
a
prohibited
33
company.
34
3.
If
a
public
fund
determines
that
a
company
may
be
subject
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to
inclusion
on
the
prohibited
companies
list,
the
public
fund
1
shall
scrutinize
and
engage
the
company
for
a
period
of
not
2
more
than
twelve
months
and
shall
include
the
company
on
the
3
prohibited
companies
list
if
the
public
fund
determines
that
4
the
company
is
a
prohibited
company.
5
Sec.
4.
NEW
SECTION
.
12K.3
Divestment.
6
1.
A
public
fund
shall
not
acquire
any
direct
holdings
in
7
publicly
traded
securities
of
a
prohibited
company.
8
2.
a.
A
public
fund
shall
sell,
redeem,
divest,
or
9
withdraw
all
direct
holdings
in
publicly
traded
securities
of
10
a
prohibited
company
no
later
than
one
hundred
eighty
days
11
following
the
date
the
company
is
included
on
the
prohibited
12
companies
list.
13
b.
This
subsection
shall
not
be
construed
to
require
the
14
premature
or
otherwise
imprudent
sale,
redemption,
divestment,
15
or
withdrawal
of
an
investment,
but
such
sale,
redemption,
16
divestment,
or
withdrawal
shall
be
completed
as
provided
by
17
this
subsection.
18
Sec.
5.
NEW
SECTION
.
12K.4
Reports.
19
1.
Each
public
fund
shall,
within
thirty
days
after
the
20
prohibited
companies
list
is
created
or
updated
as
required
by
21
section
12K.2,
make
the
list
available
to
the
public.
22
2.
On
October
1,
2023,
and
each
October
1
thereafter,
each
23
public
fund
shall
make
available
to
the
public,
and
file
with
24
the
general
assembly,
an
annual
report
covering
the
prior
25
fiscal
year
that
includes
all
of
the
following:
26
a.
The
prohibited
companies
list
as
of
the
end
of
the
fiscal
27
year.
28
b.
A
summary
of
all
written
notices
sent
as
required
by
29
section
12K.2
during
the
fiscal
year.
30
c.
All
investments
sold,
redeemed,
divested,
or
withdrawn
as
31
provided
in
section
12K.3
during
the
fiscal
year.
32
d.
A
list
of
indirect
holdings
of
the
public
fund
in
33
publicly
traded
securities
of
prohibited
companies
and
the
34
percentage
of
the
total
portfolio
of
the
public
fund
the
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indirect
holdings
of
securities
in
prohibited
companies
1
represent.
2
Sec.
6.
NEW
SECTION
.
12K.5
Legal
obligations.
3
With
respect
to
actions
taken
in
compliance
with
this
4
chapter,
including
all
good-faith
determinations
regarding
5
companies
as
required
by
this
chapter,
the
public
fund
6
shall
be
exempt
from
any
conflicting
statutory
or
common
law
7
obligations,
including
any
such
obligations
with
respect
to
8
choice
of
asset
managers,
investment
funds,
or
investments
for
9
the
public
fund’s
securities
portfolios.
10
Sec.
7.
NEW
SECTION
.
12K.6
Applicability.
11
The
requirements
of
sections
12K.2,
12K.3,
and
12K.4
shall
12
not
apply
if
the
United
States
Congress
or
president
of
the
13
United
States,
through
legislation
or
executive
order,
declares
14
that
mandatory
divestment
of
the
type
provided
for
in
this
15
chapter
interferes
with
the
conduct
of
United
States
foreign
16
policy.
17
Sec.
8.
Section
97A.7,
subsection
1,
Code
2022,
is
amended
18
to
read
as
follows:
19
1.
The
board
of
trustees
shall
be
the
trustees
of
the
20
retirement
fund
created
by
this
chapter
as
provided
in
section
21
97A.8
and
shall
have
full
power
to
invest
and
reinvest
funds
22
subject
to
the
terms,
conditions,
limitations,
and
restrictions
23
imposed
by
subsection
2
and
chapters
12F
,
12H
,
and
12J
,
and
24
12K
and
subject
to
like
terms,
conditions,
limitations,
and
25
restrictions
said
trustees
shall
have
full
power
to
hold,
26
purchase,
sell,
assign,
transfer,
or
dispose
of
any
of
the
27
securities
and
investments
of
the
retirement
fund
which
have
28
been
invested,
as
well
as
of
the
proceeds
of
said
investments
29
and
any
moneys
belonging
to
the
retirement
fund.
The
board
30
of
trustees
may
authorize
the
treasurer
of
state
to
exercise
31
any
of
the
duties
of
this
section
.
When
so
authorized
the
32
treasurer
of
state
shall
report
any
transactions
to
the
board
33
of
trustees
at
its
next
monthly
meeting.
34
Sec.
9.
Section
97B.4,
subsection
5,
Code
2022,
is
amended
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to
read
as
follows:
1
5.
Investments.
The
system,
through
the
chief
investment
2
officer,
shall
invest,
subject
to
chapters
12F
,
12H
,
and
12J
,
3
and
12K
and
in
accordance
with
the
investment
policy
and
4
goal
statement
established
by
the
board,
the
portion
of
the
5
retirement
fund
which,
in
the
judgment
of
the
system,
is
not
6
needed
for
current
payment
of
benefits
under
this
chapter
7
subject
to
the
requirements
of
section
97B.7A
.
8
Sec.
10.
Section
262.14,
unnumbered
paragraph
1,
Code
2022,
9
is
amended
to
read
as
follows:
10
The
board
may
invest
funds
belonging
to
the
institutions,
11
subject
to
chapters
12F
,
12H
,
and
12J
,
and
12K
and
the
12
following
regulations:
13
Sec.
11.
Section
411.7,
subsection
1,
Code
2022,
is
amended
14
to
read
as
follows:
15
1.
The
board
of
trustees
is
the
trustee
of
the
fire
16
and
police
retirement
fund
created
in
section
411.8
and
17
shall
annually
establish
an
investment
policy
to
govern
the
18
investment
and
reinvestment
of
the
moneys
in
the
fund,
subject
19
to
the
terms,
conditions,
limitations,
and
restrictions
20
imposed
by
subsection
2
and
chapters
12F
,
12H
,
and
12J
,
and
21
12K
.
Subject
to
like
terms,
conditions,
limitations,
and
22
restrictions
the
system
has
full
power
to
hold,
purchase,
sell,
23
assign,
transfer,
or
dispose
of
any
of
the
securities
and
24
investments
in
which
the
fund
has
been
invested,
as
well
as
of
25
the
proceeds
of
the
investments
and
any
moneys
belonging
to
the
26
fund.
27
Sec.
12.
Section
602.9111,
subsection
1,
Code
2022,
is
28
amended
to
read
as
follows:
29
1.
So
much
of
the
judicial
retirement
fund
as
may
not
be
30
necessary
to
be
kept
on
hand
for
the
making
of
disbursements
31
under
this
article
shall
be
invested
by
the
treasurer
of
32
state
in
any
investments
authorized
for
the
Iowa
public
33
employees’
retirement
system
in
section
97B.7A
and
subject
to
34
the
requirements
of
chapters
12F
,
12H
,
and
12J
,
and
12K
,
and
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the
earnings
therefrom
shall
be
credited
to
the
fund.
The
1
treasurer
of
state
may
execute
contracts
and
agreements
with
2
investment
advisors,
consultants,
and
investment
management
and
3
benefit
consultant
firms
in
the
administration
of
the
judicial
4
retirement
fund.
5
EXPLANATION
6
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
7
the
explanation’s
substance
by
the
members
of
the
general
assembly.
8
This
bill
relates
to
the
investment
of
certain
public
funds
9
in
companies
that
are
owned
or
controlled
by
Chinese
military
10
or
government
services.
11
The
bill
defines
“company”
as
any
business
or
business
12
entity
that
is
publicly
traded
and
that
is
not
based
in
the
13
United
States.
The
bill
defines
“direct
holdings”
in
a
company
14
as
all
securities
of
a
company
held
directly
by
the
public
15
fund
or
in
an
account
or
fund
in
which
the
public
fund
owns
16
all
shares
or
interests.
The
bill
defines
“indirect
holdings”
17
in
a
company
as
all
securities
of
a
company
held
in
an
account
18
or
fund
managed
by
one
or
more
persons
not
employed
by
the
19
public
fund,
in
which
the
public
fund
owns
shares
or
interests
20
together
with
other
investors
not
subject
to
the
provisions
21
of
this
new
Code
chapter
12K.
The
bill
defines
“prohibited
22
company”
as
a
company
that
is
owned
or
controlled
by
Chinese
23
military
or
government
services
and
designated
by
the
United
24
States
government
as
a
company
that
citizens
are
restricted
25
or
prohibited
from
entering
into
transactions
with.
The
bill
26
defines
“public
fund”
as
the
treasurer
of
state,
the
state
27
board
of
regents,
the
public
safety
peace
officers’
retirement
28
system,
the
Iowa
public
employees’
retirement
system
(IPERS),
29
the
statewide
fire
and
police
retirement
system,
or
the
30
judicial
retirement
system.
31
The
bill
requires
a
public
fund
to
identify
all
prohibited
32
companies
in
which
the
public
fund
has
direct
or
indirect
33
holdings
within
180
days
following
the
effective
date
of
34
the
bill.
Additionally,
the
bill
requires
a
public
fund
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to
create
and
make
available
to
the
public
a
prohibited
1
companies
list
and
review
and
update
the
list
on
a
quarterly
2
basis.
The
bill
authorizes
a
public
fund
to
review
and
rely
3
on
publicly
available
information
and
information
from
other
4
sources
when
identifying
prohibited
companies.
The
bill
also
5
authorizes
IPERS
to
develop
and
issue
a
request
for
proposals
6
for
third-party
services
to
complete
the
identification
of
7
prohibited
companies
and
the
compilation
of
the
prohibited
8
companies
list.
The
bill
requires
a
public
fund
to
send
notice
9
to
all
companies
on
the
prohibited
companies
list
on
an
annual
10
basis
informing
the
company
of
the
requirements
of
the
new
11
Code
chapter.
The
bill
requires
public
funds
to
scrutinize
12
and
engage
with
companies
the
fund
identifies
for
possible
13
inclusion
as
a
prohibited
company
for
a
period
of
not
more
than
14
12
months.
15
The
bill
prohibits
a
public
fund
from
acquiring
direct
16
holdings
in
publicly
traded
securities
of
a
prohibited
company.
17
The
bill
requires
a
public
fund
to
sell,
redeem,
divest,
or
18
withdraw
all
direct
holdings
in
publicly
traded
securities
of
a
19
prohibited
company
no
later
than
180
days
following
the
date
20
the
company
becomes
a
prohibited
company.
21
The
bill
requires
each
public
fund,
within
30
days
after
the
22
prohibited
companies
list
is
created
or
updated,
to
make
the
23
list
available
to
the
public.
Additionally,
the
bill
requires
24
a
public
fund
to
make
available
to
the
public
and
file
with
the
25
general
assembly
an
annual
report
beginning
October
1,
2023,
26
and
each
October
1
thereafter.
27
The
bill
provides
that,
with
respect
to
actions
taken
28
in
compliance
with
the
Code
chapter,
the
public
fund
shall
29
be
exempt
from
any
conflicting
statutory
or
common
law
30
obligations,
including
any
such
obligations
in
respect
to
31
choice
of
asset
managers,
investment
funds,
or
investments
for
32
the
public
fund’s
securities
portfolios.
33
The
bill
provides
that
the
provisions
related
to
the
34
creation
of
a
prohibited
companies
list,
divestment
of
publicly
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traded
securities
of
a
prohibited
company,
and
reporting
shall
1
not
apply
if
the
United
States
Congress
or
president
of
the
2
United
States
declares
that
mandatory
divestment
of
the
type
3
provided
for
in
the
Code
chapter
interferes
with
the
conduct
of
4
United
States
foreign
policy.
5
The
bill
makes
conforming
changes
to
Code
sections
12.8,
6
97A.7,
97B.4,
262.14,
411.7,
and
602.9111.
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