Senate Bill No. 667 seeks to enhance Texas's national security by prohibiting state governmental entities from investing in certain Chinese-affiliated entities. The bill introduces Chapter 809A to the Government Code, defining "Chinese-affiliated entity" and establishing criteria for identification, which includes entities incorporated or headquartered in the People's Republic of China and those flagged by U.S. government agencies for state intelligence support. It also defines terms such as "direct holdings," "indirect holdings," and "restricted entities," which refer to entities associated with China that pose national security risks. The bill mandates the comptroller to maintain a list of restricted entities and requires state entities to report any holdings in these entities.

The legislation outlines a divestment schedule, requiring state governmental entities to divest 100% of their assets from restricted entities within 360 days of notice, with provisions for justifying any delays. It exempts indirect holdings in managed investment funds from divestment requirements and sets conditions under which entities may cease divesting, necessitating clear evidence of potential loss of value. Additionally, the bill mandates annual reporting on divestments and prohibited investments, with the attorney general granted enforcement authority. The act is scheduled to take effect on September 1, 2025.

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