Act to Prohibit State Board of Regents from Investing Public University Trust Funds in Companies Associated with the Government of China

Summary

The purpose of this Act is to amend the relevant statutes to prohibit the Board of Regents for this state’s public university system from investing its trust funds in companies owned by or associated with the government of the People’s Republic of China. Under current law, the state’s university system may receive gifts, grants, and donations and the public university’s Board of Regents is responsible for overseeing and administering these gifts, grants, and donations subject to certain restrictions. The Board of Regents may elect to invest the state’s public university trust funds by employing a financial manager, contracting with the state’s investment board, or selecting a private investment firm.

Act to Prohibit State Board of Regents from Investing Public University Trust Funds in Companies Associated with the Government of China

POLICY

This state legislative chamber enacts as follows:

SECTION 1. Relevant sections of the statutes governing how the state’s Board of Regents of the state’s public university system will be amended to prohibit investment in Chinese owned and associated companies.

SECTION 2. The Board of Regents may invest revenues from gifts, grants, and donations by doing any of the following:

SECTION 3. The relevant statute is created to read:

In this subsection:

  1. “Company” has the meaning given for “business entity” in s. 13.62 (5).
  2. “Government of China” means any of the following:

a. The Communist Party of China.

b. Any governmental unit of the People’s Republic of China or of a province, region, or other political subdivision of the People’s Republic of China.

c. Any instrumentality of the People’s Republic of China or the Communist Party of China.

SECTION 4. The relevant statute is amended to read:

The board is not required to deposit revenues from gifts, grants, and donations in the state investment fund if the board invests these moneys as provided in the statute.

SECTION 5. The relevant statute is created to read:

Subject to subds. 2. and 3., after the effective date of this subdivision, the board may not invest revenues from gifts, grants, and donations in any equity or debt securities of any of the following:

  1. Any company that is directly controlled by the government of China or in which the government of China maintains a majority ownership interest.
  2. Subject to subd. 3., if the board, on the effective date of this subdivision, maintains any investment prohibited under subd. 1., the board shall divest itself of the investment not later than the first day of the 13th month beginning after the effective date of this subdivision.
  3. In determining whether an investment is prohibited under subds. 1. and 2., the board may rely on 3rd-party information about a company available from any reputable research or screening service, pension fund, institutional investor, or investment adviser, if the 3rd-party information utilizes criteria reasonably similar to the criteria specified in subd. 1. a. and b.
  4. This paragraph applies to financial managers, the investment board, and private investment firms acting on behalf of the board as provided in the relevant paragraph, and applies both to investments held directly in the board’s name or as nominee and to investments held indirectly in mutual funds, index funds, or similar commingled investment instruments.

SECTION 6. The relevant statute is created to read:

TRUST FUNDS INVESTMENT IN COMPANIES ASSOCIATED WITH THE GOVERNMENT OF CHINA. The board shall include in the report required under sub. (2) information relating to the board’s efforts to satisfy the requirements under this statute, including identification of companies in which investment is prohibited and, as applicable, the board’s status of divestment from these companies.

SECTION 7. Initial applicability.

(1) REPORT. The treatment of these amendments to the relevant statute first apply to the first report submitted at least 90 days after the effective date of this subsection.

SECTION 8. Effective date.

(1) This act takes effect on a date determined by this legislative chamber.