By: Bettencourt, et al. S.B. No. 1817

(In the Senate - Filed March 7, 2023; March 20, 2023, read first time and referred to Committee on State Affairs; April 20, 2023, reported adversely, with favorable Committee Substitute by the following vote: Yeas 10, Nays 0; April 20, 2023, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 1817 By: Hughes

A BILL TO BE ENTITLED

AN ACT

relating to investments in certain companies doing business in the Russian Federation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 2270.0001(9), Government Code, is amended to read as follows:

(9) "Scrutinized company" means:

(A) a company that:

(i) engages in scrutinized business operations described by Section 2270.0052; or

(ii) has been complicit in the Darfur genocide during any preceding 20-month period;

(B) a company that engages in scrutinized business operations described by Section 2270.0102; [and]

(C) a company that engages in scrutinized business operations described by Section 2270.0152; and

(D) a company that engages in scrutinized business operations described by Section 2270.0162.

SECTION 2. Section 2270.0002, Government Code, is amended to read as follows:

Sec. 2270.0002. EXCEPTION. (a) Notwithstanding any other law, a company that the United States government affirmatively declares to be excluded from its federal sanctions regime relating to Sudan, its federal sanctions regime relating to Iran, or any federal sanctions regime relating to a designated foreign terrorist organization is not subject to divestment or investment prohibition under this chapter.

(b) Notwithstanding any other law, a company that complies with the United States government federal sanctions regime relating to the Russian Federation, including any exemption or federal guidance, is not subject to divestment or investment prohibition under this chapter.

SECTION 3. Chapter 2270, Government Code, is amended by adding Subchapter D-1 to read as follows:

SUBCHAPTER D-1. GENERAL PROVISIONS RELATING TO INVESTMENTS IN

RUSSIAN FEDERATION

Sec. 2270.0161. DEFINITION. In this subchapter, "business operations" means engaging in commerce in any form in the Russian Federation, including by acquiring, developing, maintaining, owning, selling, possessing, leasing, or operating equipment, facilities, personnel, products, services, personal property, real property, or any other apparatus of business or commerce.

Sec. 2270.0162. SCRUTINIZED BUSINESS OPERATIONS IN RUSSIAN FEDERATION. A company engages in scrutinized business operations in the Russian Federation if the company has business operations that involve contracts with or providing supplies or services to the government of the Russian Federation, a company in which the government of the Russian Federation has any direct or indirect equity share, a consortium or project commissioned by the government of the Russian Federation, or a company involved in a consortium or project commissioned by the government of the Russian Federation.

SECTION 4. Section 2270.0201, Government Code, is amended by amending Subsections (a) and (b) and adding Subsection (b-1) to read as follows:

(a) The comptroller shall prepare and maintain a list of all scrutinized companies. The list must be categorized according to:

(1) companies that are scrutinized companies under Section 2270.0001(9)(A);

(2) companies that are scrutinized companies under Section 2270.0001(9)(B); [and]

(3) companies that are scrutinized companies under Section 2270.0001(9)(C); and

(4) companies that are scrutinized companies under Section 2270.0001(9)(D).

(b) In maintaining the list of scrutinized companies under Subsection (a), the comptroller may review and rely, as appropriate in the comptroller's judgment, on publicly available information regarding companies with business operations in Sudan, in Iran, [or] with designated foreign terrorist organizations, or in the Russian Federation, as applicable, including information provided by the state, nonprofit organizations, research firms, international organizations, and governmental entities.

(b-1) The governor shall periodically consult with the Homeland Security Council, established under Subchapter B, Chapter 421, to review whether a company that is a scrutinized company under Section 2270.0001(9)(D) should be included or continue to be included on the list of scrutinized companies maintained under this section and may, after consulting with the council, direct the comptroller to remove a company from the list.

SECTION 5. Section 2270.0203, Government Code, is amended to read as follows:

Sec. 2270.0203. NOTICE TO LISTED COMPANY ENGAGED IN INACTIVE BUSINESS OPERATIONS. For each listed company identified under Section 2270.0202 that is engaged in only inactive scrutinized business operations, the investing entity shall send a written notice informing the company of this chapter and encouraging the company to continue to refrain from initiating active business operations in Sudan, in Iran, [and] with designated foreign terrorist organizations, and in the Russian Federation until it is able to avoid being considered a listed company. The investing entity shall continue the correspondence as the entity considers necessary, but is not required to initiate correspondence more often than semiannually.

SECTION 6. Section 2270.0204(b), Government Code, is amended to read as follows:

(b) The notice shall offer the company the opportunity to clarify its Sudan-related, Iran-related, [or] designated foreign terrorist organization-related, or Russian Federation-related activities, as applicable, and shall encourage the company, not later than the 90th day after the date the company receives notice under this section, to either cease all scrutinized business operations as described by Sections 2270.0052, 2270.0102, [and] 2270.0152, and 2270.0162, or convert such operations to inactive business operations in order to avoid qualifying for divestment by investing entities.

SECTION 7. Not later than the 180th day after the effective date of this Act, the comptroller of public accounts shall include the companies described by Section 2270.0201(a)(4), Government Code, as added by this Act, on the list under Section 2270.0201(a), Government Code.

SECTION 8. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect September 1, 2023.

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