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~tate of \ltennessee
PUBLIC CHAPTER NO. 289
HOUSE BILL NO. 805
By Representatives Grills, McCalmon, Eldridge, Burkhart, Powers, Bricken, Rudd,
Carringer, Butler, Leatherwood, Howell, Maberry, Brock Martin, Hardaway, Vital, Hawk,
Reedy
Substituted for: Senate Bill No. 542
By Senators Stevens, Bowling, Hatcher, Hensley, Lowe, Taylor, Yager
AN ACT to amend Tennessee Code Annotated, Title 9, Chapter 4, Part 15, relative to
investments.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 9, Chapter 4, Part 15, is amended by
adding the following as new sections:
9-4-1501.
As used in this part:
(1) "Board" means the board of trustees for the Tennessee consolidated
retirement system;
(2) "China" means the government of the People's Republic of China, the
Chinese Communist Party, the Chinese military, or any instrumentality thereof;
(3) "Company" means a sole proprietorship, organization, association,
corporation, partnership, joint venture, limited partnership, limited liability
partnership, limited liability company, or another entity or business association,
including all wholly owned subsidiaries, majority-owned subsidiaries, and parent
companies, or an affiliate of such entity or business association that exists for the
purpose of making a profit;
(4) "Direct holdings" means, in a company, all public securities with a
number assigned by the Committee on Uniform Securities Identification
Procedures (CUSIP) or the International Securities Identification Numbers
Organization (ISIN) that are held directly by the retirement system or a political
subdivision pension plan, except as provided in subdivision (7), or in an account
or fund in which the retirement system or a political subdivision pension plan
owns all shares or interests;
(5) "Divest" means a sale, redemption, replacement, or another activity
that terminates an investment;
(6) "Governing body" means the body that has oversight and control over
a political subdivision pension plan;
(7) "Indirect holdings" means, in a company, all securities of that company
that are held in a commingled fund or other collective investment, including, but
not limited to, private equity funds, strategic lending funds, mutual funds, and
exchange traded funds, in which the retirement system or a political subdivision
pension plan owns shares or interests, together with other investors not subject
to this part;
(8) "Investment activity" means investing, reinvesting, or lending the funds
of the retirement system or a political subdivision pension plan;
HB805
(9) "Majority-owned" means to have ownership of more than fifty percent
(50%) of the outstanding equity interests of a company;
(10) "Political subdivision pension plan" means a defined benefit pension
plan established and maintained by a political subdivision and subject to chapter
3, part 5 of this title;
(11) "Restricted entity" means a company that is known through publicly
available information to be majority-owned by China;
(12) "Restricted investment" means the investment activity of the
retirement system or a political subdivision pension plan in a restricted entity; and
(13) "Retirement system" means the Tennessee consolidated retirement
system defined benefit pension plan.
9-4-1502.
(a)
(1) With respect to the retirement system and political subdivision pension
plans, the board and governing body for each respective political subdivision
pension plan, as applicable, shall, no later than January 15, 2026, and by
January 15 of each subsequent year, review the retirement system's or political
subdivision pension plan's direct holdings as of December 31 of the prior
calendar year to determine which direct holdings, if any, constitute restricted
investments; provided, that the board or governing body may review the
retirement system's or the respective political subdivision pension plan's direct
holdings more frequently.
(2) If the board identifies a restricted investment in the retirement
system's direct holdings, then the state treasurer shall divest from the restricted
investment and report the divestment to the retirement system's investment
committee. If a governing body identifies a restricted investment in its political
subdivision pension plan's direct holdings, then the governing body shall divest
from the restricted investment in accordance with the governing body's
investment policy.
(3) If the board or a governing body cannot cause the retirement system
or political subdivision pension plan to divest expeditiously from a restricted
investment, then the board or governing body shall develop a written divestment
plan for these direct holdings in restricted investments no later than July 1 of
each year and submit a copy of the divestment plan to the chair of the council on
pensions. The divestment plan must be developed and implemented in a manner
consistent with § 35-14-107, the prudent investor rule pursuant to § 35-14-103,
and the standard of care pursuant to§ 35-14-104.
(4) The board or governing body, as applicable, shall divest from the
securities identified in a divestment plan developed pursuant to subdivision
(a)(3), with divestment occurring no later than December 31 of each year, or
such later time established by the board or governing body to implement the
divestment plan consistent with each entity's fiduciary duty.
(b) With respect to the retirement system:
(1) The divestment plan for the retirement system must be implemented
consistent with § 8-37-11 0;
(2) The categorization of the retirement system's securities or investment
vehicles must be done at the discretion of the state treasurer if not specifically
addressed in the retirement system's investment policy; and
(3) The board may delegate its responsibilities under this section to the
state treasurer.
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(c) The following are immune from civil liability for any act or omission under this
section:
(1) This state, and its officers and employees;
(2) Each political subdivision, and its officers and employees;
(3) The retirement system and its board members; and
(4) Each political subdivision pension plan and its governing body.
SECTION 2. This act takes effect upon becoming a law, the public welfare requiring it.
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HOUSE BILL NO. 805
PASSED: April 9, 2025
CAMERON~TON,SPEAKER
HOUSE OF REPRESENTATIVES
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SPEAKER OF THE SENATE
Jf: ApcJ APPROVED this I
day of 2025
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