Relating to prohibiting the investment of state money in certain countries and in certain private business entities in those countries, the official text

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