S.B. No. 667 introduces Chapter 809A to the Government Code, which prohibits state governmental entities from investing in certain Chinese-affiliated entities. A "Chinese-affiliated entity" is defined as a publicly traded entity incorporated or headquartered in the People's Republic of China that is controlled by the Chinese government or required to support state intelligence work. The bill outlines terms such as "direct holdings," "indirect holdings," and "restricted entity," which includes entities associated with China that are flagged for national security concerns. The comptroller is responsible for maintaining a list of these restricted entities and providing it to state governmental entities. The bill also includes provisions for indemnification against legal actions related to compliance and states that there is no private cause of action against the state or its entities for actions taken under this chapter.

Additionally, the bill mandates a divestment schedule requiring state governmental entities to divest at least 50% of their investments in listed restricted entities within 180 days and complete divestment within 360 days of receiving notice. It allows for delays in the divestment schedule if entities determine, in good faith, that divestment may lead to financial losses, necessitating a report to the legislature and attorney general. The bill exempts entities from divesting indirect holdings in certain investment funds but requires them to request fund managers to remove restricted entities. It also establishes conditions for ceasing divestment, requiring evidence of potential losses, and mandates annual reporting on divestments and prohibited investments. The attorney general is granted enforcement authority, and the act is set to take effect on September 1, 2025.

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