FIRST REGULAR SESSION
SENATE BILL NO. 529
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR CRAWFORD.
1423S.02I KRISTINA MARTIN, Secretary
AN ACT
To amend chapter 105, RSMo, by adding thereto one new section relating to divestment of certain
investments of public employee retirement systems.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Chapter 105, RSMo, is amended by adding thereto 1
one new section, to be known as section 105.693, to read as 2
follows:3
105.693. 1. As used in this section, the following 1
terms mean: 2
(1) "Board", the governing board or decision -making 3
body of a system that is authorized by law to administer the 4
system; 5
(2) "Control": 6
(a) The same meaning as such term is defined in the 7
Investment Company Act of 1940, 15 U.S.C. Section 80a –2(a); 8
or 9
(b) Involvement in an entity's governance struc ture, 10
monitoring, or internal human resources decisions consistent 11
with the objectives set out in the Opinion on Strengthening 12
the United Front Work of the Private Economy in the New Era 13
issued by the General Office of the Central Committee of the 14
Chinese Communist Party (2020) or a successor or similar 15
document; 16
(3) "Divest", a sale, redemption, replacement, or any 17
other activity that terminates an investment; 18 SB 529 2
(4) "Fund", the retirement benefit fund of a system; 19
(5) "Investment", any investment, as such term is 20
defined in section 105.687, that the board or system is 21
authorized to make; 22
(6) "Person", an individual or entity; 23
(7) "Restricted entity", the following, including 24
wholly-owned subsidiaries, majority -owned subsidiaries, 25
parent companies, and affiliates that exist for profit - 26
making purposes: 27
(a) Any person, other than a U.S. person, as the term 28
"U.S. person" is defined in 15 CFR 772.1, that is identified 29
for the People's Republic of China on the Entity List, 30
Supplement No. 4 to 15 CFR 744, as a person reasonably 31
believed to be involved, or to pose a significant risk of 32
being or becoming involved, in activities contrary to the 33
national security or foreign policy interests of the United 34
States until the End-User Review Committee of the Bureau of 35
Industry and Security in the United States Department of 36
Commerce determines that the person no longer meets that 37
criteria and removes the person from the list; 38
(b) Any person that: 39
a. The United States Secretary of Defense has listed 40
as a Communist Chinese military company operating directly 41
or indirectly in the United States or in any of its 42
territories or possessions under Section 1237 of the Strom 43
Thurmond National Defense Authorization A ct of Fiscal Year 44
1999, P.L. 105-261, as amended by Section 1233 of P.L. 106 - 45
398 and Section 1222 of P.L. 108 -375, 50 U.S.C. Section 1701 46
note, until such time as the United States Secretary of 47
Defense removes the person from such list; 48
b. The United States Secretary of Defense, in 49
consultation with the United States Secretary of the 50 SB 529 3
Treasury, determines is a Communist Chinese military company 51
operating directly or indirectly in the United States or in 52
any of its territories or possessions and therefore lists as 53
such under Section 1237 of the Strom Thurmond National 54
Defense Authorization Act of Fiscal Year 1999, P.L. 105 -261, 55
as amended by Section 1233 of P.L. 106 -398 and Section 1222 56
of P.L. 108-375, 50 U.S.C. Section 1701 note, until such 57
time as the United States Secretary of Defense removes the 58
person from such list; or 59
c. The United States Secretary of the Treasury 60
publicly lists as meeting the criteria in Section 61
1237(b)(4)(B) of the Strom Thurmond National Defense 62
Authorization Act of Fiscal Year 1999, P.L. 105 -261, as 63
amended by Section 1222 of P.L. 108 -375, 50 U.S.C. Section 64
1701 note, or publicly lists as a subsidiary of a person 65
already determined to be a Communist Chinese military 66
company, until the United States Se cretary of the Treasury 67
determines that the person no longer meets that criteria and 68
removes the person from such list; 69
(c) Any investment that is domiciled, issued, 70
incorporated, or listed in the People's Republic of China, 71
other than a U.S. per son or U.S. subsidiary, as the terms 72
"U.S. person" or "U.S. subsidiary" are defined in 15 CFR 73
772.1, or that is publicly confirmed to be controlled by the 74
People's Republic of China, the Chinese Communist Party, or 75
a provincial division, municipality, governmental agency, 76
sovereign wealth fund, or political instrumentality of the 77
People's Republic of China; 78
(d) Any organization or citizen that is identified by 79
the appropriate government agencies to be required by the 80
National Intelligence Law of the People's Republic of China 81
(2017), as amended in 2018, or any successor to support, 82 SB 529 4
assist, and cooperate with the state intelligence work of 83
the People's Republic of China and keep the secrets of the 84
national intelligence work of the People's R epublic of 85
China; or 86
(e) Any person that is listed on the Specially 87
Designated Nationals and Blocked Persons List published by 88
the Office of Foreign Assets Control of United States 89
Department of the Treasury; 90
(8) "Restricted investment prod uct", an investment 91
product that: 92
(a) Is managed by one or more persons: 93
a. That are not employed by the system; and 94
b. In which the system on behalf of the fund owns 95
investments together with investors other than the system; 96
and 97
(b) Holds investments in a restricted entity; 98
(9) "System", any state or local public retirement 99
system or plan established by the state or any political 100
subdivision or instrumentality of the state for the purpose 101
of providing plan benefits for e lected or appointed public 102
officials or employees of the state or any political 103
subdivision or instrumentality of the state. 104
2. After August 28, 2025, a system shall not knowingly 105
invest in a restricted entity or a restricted investment 106
product and shall divest any investment that the system has 107
on behalf of a fund in accordance with this section. 108
3. Before December 1, 2025, and at least annually on 109
or before December first of each subsequent year, the board 110
shall make a good faith effort to identify all restricted 111
entities and restricted investment products in which the 112
system holds an investment. The board may use an 113
independent research firm to assist the board. 114 SB 529 5
4. (1) If the board determines after a review under 115
subsection 3 of this section that the system has investments 116
in a restricted entity or a restricted investment product, 117
the board shall establish a plan to divest the investment 118
and complete the divestment as soon as financially prudent. 119
Except as provided in su bdivision (2) of this subsection, 120
the investment shall be divested no later than August 28, 121
2026. 122
(2) The investment may be divested after August 28, 123
2026, but shall be divested no later than August 28, 2028, 124
if the board finds that the following conditions exist: 125
(a) The divestment of the investment by August 28, 126
2026, would result in the system incurring aggregate 127
transaction costs in excess of five hundred thousand dollars; 128
(b) The selling of global public equity interests 129
would result in a loss on secondary markets; or 130
(c) The divestment of the investment by August 28, 131
2026, would otherwise fail to comply with federal or state 132
law or other legal obligations. 133
5. Prior to divesting any commingled fund required by 134
this section in which the divestment would result in a 135
realized loss, the staff of the system shall notify the 136
board and if, within two business days, a majority of the 137
trustees of the board object, no further action shall be 138
taken until a special or regu lar meeting of the board. 139
6. The board shall determine whether to cease or defer 140
divestment in the entity or product initiated under this 141
section and resume investment in the entity or product 142
during any period in which the entity or product has n ot 143
returned to being a restricted entity or restricted 144
investment product if any of the following conditions are 145
met: 146 SB 529 6
(1) The entity or product meets or exceeds the rules 147
and standards of the Public Company Accounting Oversight 148
Board and the Sarbanes-Oxley Act of 2002, P.L. 107 -204, 116 149
Stat. 745; or 150
(2) The board determines that a fund has holdings in a 151
passively managed commingled fund that includes a restricted 152
entity and the estimated cost of divestment of the 153
commingled fund is gre ater than ten percent of the total 154
value of the restricted entities held in the commingled fund. 155
7. (1) On or before December 31, 2025, and annually 156
on or before December thirty -first of each subsequent year, 157
the board shall submit a report to th e general assembly. 158
(2) The report shall include at least the following 159
information, as of the date of the report: 160
(a) A copy of the restricted entity list; 161
(b) All publicly traded securities sold, redeemed, 162
divested, or withdrawn in co mpliance with this section; 163
(c) All commingled funds that are exempted from 164
divestment under subsections 5, 6, or 10 of this section; and 165
(d) Any progress made under subsection 6 of this 166
section. 167
8. With respect to actions taken in comp liance with 168
this section, including all good faith determinations 169
regarding restricted entities and restricted investment 170
products, the board and the system are exempt from any 171
conflicting statutory or common law obligations, including 172
any obligations with respect to choice of asset managers, 173
investment fiduciaries, investment funds, or investments for 174
fund investment portfolios. 175
9. The state and any political subdivision of the 176
state; its officers, agents, and employees; and the board 177
and employees of a system shall be immune from civil 178 SB 529 7
liability for any act or omission related to the removal of 179
an asset from a fund under this section and are entitled to 180
indemnification from the system for all losses, costs, and 181
expenses, including reason able attorney's fees, associated 182
with defending against any claim or suit relating to an act 183
authorized under section. 184
10. (1) Notwithstanding any provision of law to the 185
contrary, the provisions of this section do not apply to 186
investments in private market funds. 187
(2) Notwithstanding any provision of law to the 188
contrary, the provisions of this section do not apply to 189
indirect holdings in actively managed investment funds. 190
(3) If a manager or investment fiduciary creates a 191
similar actively managed investment fund without the 192
restricted entities, the board shall replace all applicable 193
investments with the investments in the similar actively 194
managed investment fund within a period consistent with 195
prudent investing standards. 196