PRINTER'S NO. 1492

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1141

Session of

2024

INTRODUCED BY MASTRIANO, ROTHMAN, PHILLIPS-HILL, ARGALL, MILLER

AND DUSH, APRIL 5, 2024

REFERRED TO FINANCE, APRIL 5, 2024

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the China

Divestiture Act.

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Alternative investments." An investment in a private equity

fund, private debt fund, venture fund, real estate fund, hedge

"Company." Any sole proprietorship, organization,

association, corporation, partnership, joint venture, limited

partnership, limited liability partnership, limited liability

company or other entity or business association that exists for

the purpose of making a profit.

"Direct holdings." All securities of a company or the

government of China that are held directly by the public fund.

"Foreign company." Any entity which is not organized under

the laws of the United States.

"Government of China." The government of China and its

political subdivisions and the instrumentalities and companies

investment manager of a public fund who was or is a party to, or

is threatened to be made a party to or is otherwise involved in,

any proceeding by reason of the fact that the person is or was a

board member, designee of a board member, officer, employee,

agent, research firm or investment manager of a public fund.

"Indirect holdings." All securities held in an account or

fund such as a mutual fund managed by one or more persons not

employed by a public fund, in which the public fund owns shares

or interests together with other investors.

"Public fund." Any of the following:

established under 24 Pa.C.S. Pt. IV (relating to retirement

for school employees).

is the custodian.

"Sanctioned Chinese company." Any foreign company that has

been sanctioned under the authority of Presidential Executive

Order 14032 (June 3, 2021), published at 86 Fed. Reg. 107, 30145

(June 7, 2021).

"Scrutinized company." A foreign company which is domiciled

investments of scrutinized companies and the government of

China.

Section 4. Divestment.

(a) Initial divestment of direct holdings.--A public fund

shall sell, redeem, divest or withdraw from its direct holdings

all securities of the government of China.

(b) Additional divestment.--Beginning on the effective date

of this subsection, a public fund shall sell, redeem, divest or

withdraw from the following:

indirect holdings and alternative investments.

public fund has indirect holdings and alternative

investments.

(c) Prohibition.--A public fund may not acquire direct

holdings, indirect holdings or alternative investments of

scrutinized companies or the government of China.

(d) Deadline.--The following apply:

(b) must be divested not later than the following:

administrator's best efforts to liquidate the assets listed

in subsection (b)(2) and (3) over unspecified periods of time

in a manner that does not result in significant adverse

economic harm to the public fund since these assets are

invested in partnerships and other investment vehicles that

make these assets illiquid and typically represent long-term

public fund investment holdings.

than once per year thereafter, provide a report with the content

under subsection (b) to the Governor, the President pro tempore

of the Senate, the Speaker of the House of Representatives and

each member of the boards of the Pennsylvania Municipal

Retirement System, the State Employees' Retirement System and

the Public School Employees' Retirement System. The report shall

include the items required under subsection (b). The public

funds may file a joint report under this subsection. The report

shall be made available to the public.

(b) Contents.--The report under subsection (a) shall include

all of the following:

loss on account of the transactions incurred in compliance

with the provisions of this act, which shall be determined in

accordance with section 9.

withdrawn in compliance with section 4(b).

Section 6. Expiration.

A public fund shall have no obligations under this act with

respect to foreign companies which are domiciled in or organized

under the laws of China or the government of China upon the

through executive order or legislation, declares that

mandatory divestment of the type provided for in this act

interferes with the conduct of United States foreign policy.

Section 7. Conflict with other laws.

(a) Compliance.--Except as otherwise provided under

subsection (b), a public fund may perform any action necessary

to comply with this act, notwithstanding the provisions of any

other law, including, but not limited to, any fiduciary or

prudent investing responsibilities as prescribed in 20 Pa.C.S. §

7302 (relating to authorized investments; in general), 24

securities portfolios.

(b) Applicable standard.--Divestment under section 4(b)

shall be made in accordance with any applicable fiduciary or

prudent investing responsibilities as prescribed under 20

Pa.C.S. § 7302, 24 Pa.C.S. § 8521 and 71 Pa.C.S. § 5931, section

110 of the Pennsylvania Municipal Retirement Law and any

obligations of a public fund with respect to choice of asset

managers, investment funds or investments for the public fund's

securities portfolios.

Section 8. Indemnification.

action, regardless of the date of any action or failure to take

action, in connection with attempts to comply with any

investment limitations imposed by statute against all expense,

liability and loss, including, without limitation, attorney

fees, judgments, fines, taxes, penalties and amounts paid or to

be paid in settlements reasonably incurred or suffered by the

indemnitee in connection with any proceeding.

(b) Advance payment.--The right to indemnification provided

under this section shall include the right to have the expenses

reasonably incurred by the indemnitee in defending any

proceeding paid by the Commonwealth in advance of the final

shall continue as to an indemnitee who has ceased to be a board

member, designee of a board member, officer or employee of a

public fund and shall inure to the benefit of the person's legal

representatives, heirs, executors and administrators.

(d) Reimbursement to public funds.--To the extent that the

Commonwealth does not make any indemnification payments,

including any advancement of legal fees and expenses, within 30

days of demand therefor, a public fund shall make such payment

and the Commonwealth shall reimburse the public fund.

(e) Construction.--The repeal, expiration or amendment of

prior to the effective date of a repeal or amendment.

Section 9. Fund reimbursement.

The Commonwealth shall reimburse each public fund for the

public fund's net losses, costs and expenses incurred as a

result of compliance with the provisions of this act. The

reimbursements shall occur in the following manner:

Budget an itemization of the amount necessary to be

appropriated by the General Assembly to reimburse the public

fund for their net losses, costs and expenses incurred as a

result of compliance with the provisions of section 4(a) in

a fiscal year, the net gains shall be used to offset any

reported costs or expenses incurred by the public fund.

of the Budget shall annually establish a uniform method for

the determination of gains and losses under paragraph (1).

The method shall be used by each public fund in making a

claim for reimbursement under this section. The budget

submission shall be on a form and in a manner determined by

the Secretary of the Budget, including net losses, along with

an itemized accounting of all costs and expenses claimed by

provide for the obligations of the Commonwealth, the amount

shall be paid by the State Treasurer through the Department

of Revenue into the public fund within 90 days of receipt of

the requisition presented by the public fund.

Section 10. Nonapplicability.

(a) State Employees' Defined Contribution Plan and

Commonwealth's Deferred Compensation Plan.--The provisions and

restrictions of this act shall not apply to the State Employees'

Defined Contribution Plan established under 71 Pa.C.S. Pt. XXV

(relating to retirement for State employees and officers), known

Board is authorized to offer to the participants of the plans

investment vehicles that would be permitted under this act.

(b) School Employees' Defined Contribution Plan.--The

provisions and restrictions of this act shall not apply to the

School Employees' Defined Contribution Plan established under 24

Pa.C.S. Ch. 84 (relating to School Employees' Defined

Contribution Plan) or to the individual investment accounts or

the funds and investments therein of the participants of the

plan, but the Public School Employees' Retirement Board is

authorized to offer to the participants of the plan investment