Relating to prohibiting the investment of state money in certain countries and in certain private business entities in those countries.
HB 34 expands Texas law governing the investment of state money in “scrutinized companies” and countries of concern. It adds a new framework allowing the governor, after consultation with public safety officials and the Homeland Security Council, to designate additional countries as countries of concern. The bill prohibits investing entities from acquiring securities issued by those countries or by entities owned, controlled by, or subject to their jurisdiction, and bars investments or deposits in banks headquartered in such countries.
The bill also broadens the definition of scrutinized companies to include companies organized in, headquartered in, principally based in, or controlled by a country of concern, as well as companies majority-owned or controlled by such countries or their citizens, with an exception for certain U.S. persons and companies deriving no more than 50 percent of annual global revenue from a country of concern. It requires the comptroller to maintain and categorize a list of scrutinized companies and, for listed companies tied to a country of concern, requires notice and a 90-day opportunity to restructure ownership or location before divestment begins. The bill also updates existing divestment rules and directs the comptroller to add the newly covered companies to the list by January 1, 2026.
HB 34 amends Chapter 2270 of the Government Code to expand Texas’s state investment restrictions beyond existing sanctions-related categories to include countries of concern and companies tied to them. It affects state investing entities, the comptroller’s list-maintenance duties, and the divestment process for public funds, requiring notice, review, and eventual divestment from covered securities and deposits. The bill takes effect September 1, 2025.
The bill appears to have had generally strong support in both chambers, passing the House and Senate by comfortable margins and clearing final House concurrence with a 117-20 vote. The vote totals suggest broad bipartisan acceptance of the bill’s national-security framing, though not unanimous support. No committee transcript was provided, so the available record shows support through votes rather than detailed debate.
The main points of contention likely centered on the breadth of the governor’s authority to designate additional countries of concern, the scope of the investment prohibitions, and the inclusion of companies with substantial foreign ownership or operations. The bill’s treatment of companies connected to China, Iran, North Korea, Russia, or any future designated country could raise concerns about economic impact, administrative burden, and potential overbreadth. The 20 House nays on final concurrence indicate some opposition, likely from members concerned about investment restrictions, implementation costs, or the effect on businesses with international ties.