Bill Text: TX HB34 | 2025-2026 | 89th Legislature | Enrolled

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Bill Title: Relating to prohibiting the investment of state money in certain countries and in certain private business entities in those countries.

Sponsorship: Partisan Bill (Republican 26)

Status: (Passed) 2025-06-20 - Effective on 9/1/25 [HB34 Detail]

Download: Texas-2025-HB34-Enrolled.html

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H.B. No. 34

AN ACT
relating to prohibiting the investment of state money in certain
countries and in certain private business entities in those
countries.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 2270.0001, Government Code, is amended
by adding Subdivisions (2-a) and (2-b) and amending Subdivision (9)
to read as follows:
(2-a) "Control" means the power to exercise a
controlling influence over the management or policies of a company,
including involvement in the company's governance structure,
monitoring, or internal human resources decisions, unless such
power is solely the result of an official position with the company.
(2-b) "Country of concern" means:
(A) China, Iran, North Korea, or Russia; or
(B) a country designated by the governor under
Section 2270.0121.
(9) "Scrutinized company" means:
(A) a company that:
(i) engages in scrutinized business
operations described by Section 2270.0052; or
(ii) has been complicit in the Darfur
genocide during any preceding 20-month period;
(B) a company that engages in scrutinized
business operations described by Section 2270.0102; [and]
(C) a company that is a scrutinized company under
Section 2270.0124; and
(D) a company that engages in scrutinized
business operations described by Section 2270.0152.
SECTION 2. Section 2270.0002, Government Code, is amended
to read as follows:
Sec. 2270.0002. EXCEPTION. Notwithstanding any other law,
a company that the United States government affirmatively declares
to be excluded from its federal sanctions regime relating to Sudan,
its federal sanctions regime relating to Iran or another country of
concern, or any federal sanctions regime relating to a designated
foreign terrorist organization is not subject to divestment or
investment prohibition under this chapter.
SECTION 3. Chapter 2270, Government Code, is amended by
adding Subchapter C-1 to read as follows:
SUBCHAPTER C-1. GENERAL PROVISIONS RELATING TO INVESTMENTS IN
COUNTRIES OF CONCERN
Sec. 2270.0121. DESIGNATION AS COUNTRY OF CONCERN. (a) The
governor, after consultation with the public safety director of the
Department of Public Safety, may designate a country as a country of
concern for purposes of this subchapter.
(b) The governor shall consult the Homeland Security
Council, established under Subchapter B, Chapter 421, to assess the
status of a country of concern for purposes of making a designation
under this section.
Sec. 2270.0122. PROHIBITION ON INVESTMENT IN COUNTRY OF
CONCERN. An investing entity may not acquire a security issued by a
country of concern or an entity owned or controlled by or subject to
the jurisdiction of a country of concern.
Sec. 2270.0123. PROHIBITION AGAINST INVESTMENT OR DEPOSIT
IN CERTAIN BANKS. An investing entity may not invest or make a
deposit in a bank with a principal place of business located in a
country of concern.
Sec. 2270.0124. SCRUTINIZED COMPANIES IN COUNTRIES OF
CONCERN. (a) Except as provided by Subsection (b), a company is a
scrutinized company if:
(1) the company is organized under the laws of, is
headquartered in, or has its principal place of business in the
territory of a country of concern;
(2) the company is controlled by a country of concern,
the government of a country of concern, the ruling political party
of a country of concern, or the military of a country of concern; or
(3) the majority of stock or other ownership interest
of the company is held or controlled by a country of concern or
individuals who are citizens of a country of concern.
(b) A scrutinized company does not include a company that:
(1) is a U.S. person, as defined by 15 C.F.R. Section
772.1; or
(2) receives not more than 50 percent of its total
annual global revenue from a country of concern, regardless of
whether it has one or more subsidiaries or affiliates that are
companies described by Subsection (a).
SECTION 4. Sections 2270.0201(a) and (b), Government Code,
are amended to read as follows:
(a) The comptroller shall prepare and maintain a list of all
scrutinized companies. The list must be categorized according to:
(1) companies that are scrutinized companies under
Section 2270.0001(9)(A);
(2) companies that are scrutinized companies under
Section 2270.0001(9)(B); [and]
(3) companies that are scrutinized companies under
Section 2270.0001(9)(C); and
(4) companies that are scrutinized companies under
Section 2270.0001(9)(D).
(b) In maintaining the list of scrutinized companies under
Subsection (a), the comptroller may review and rely, as appropriate
in the comptroller's judgment, on publicly available information
regarding companies with business operations in Sudan, in Iran or
another country of concern, or with designated foreign terrorist
organizations, as applicable, including information provided by
the state, nonprofit organizations, research firms, international
organizations, and governmental entities.
SECTION 5. Subchapter E, Chapter 2270, Government Code, is
amended by adding Section 2270.02035 to read as follows:
Sec. 2270.02035. ACTIONS RELATED TO LISTED COMPANY OWNED OR
CONTROLLED BY OR LOCATED IN COUNTRY OF CONCERN. (a) For each
listed company identified under Section 2270.0202 that is a
scrutinized company under Section 2270.0124, the investing entity
shall send a written notice informing the company of its listed
company status and warning the company that it may become subject to
divestment by investing entities.
(b) The notice shall offer the company the opportunity to,
not later than the 90th day after the date the company receives
notice under this section, change its organizational or ownership
structure or location so as to not be a scrutinized company as
described by Section 2270.0124 in order to avoid qualifying for
divestment by investing entities.
(c) If, during the time provided by Subsection (b), the
company makes any applicable changes required by that subsection,
the comptroller shall remove the company from the list of
scrutinized companies and this chapter will no longer apply to the
company unless the company later again becomes a scrutinized
company as described by Section 2270.0124.
(d) Notwithstanding Section 2270.0207, if, after the time
provided by Subsection (b) expires, the listed company continues to
operate as a scrutinized company as described by Section 2270.0124,
the investing entity shall sell, redeem, divest, or withdraw all
publicly traded securities of the company, except private equity
funds described by Section 2270.0207, according to the schedule
provided by Section 2270.0206.
SECTION 6. Not later than January 1, 2026, the comptroller
of public accounts shall include on the list maintained under
Section 2270.0201(a), Government Code, as amended by this Act, the
companies described by Subsection (a)(3) of that section.
SECTION 7. This Act takes effect September 1, 2025.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 34 was passed by the House on April
30, 2025, by the following vote: Yeas 119, Nays 20, 3 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 34 on May 23, 2025, by the following vote: Yeas 117, Nays 20, 2
present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 34 was passed by the Senate, with
amendments, on May 19, 2025, by the following vote: Yeas 29, Nays
2.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor