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HB 1330

A BILL for an Act to amend and reenact section 21-10-07.1 of the North Dakota Century Code, relating to the prudent investor rule.

69th Legislative Assembly (2025-26) Introduced by Cole Conley and 4 co-sponsors

The bill would require the State Investment Board to divest all direct Chinese holdings from the legacy fund, reducing them by at least 20% annually until zero by August 1, 2030.

Second reading, failed to pass, yeas 20 nays 26
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WeVote Research Nonpartisan
Bill Summary · HB 1330

Summary — HB 1330 (North Dakota) — Amend NDCC § 21‑10‑07.1 (Prudent Investor Rule) and divestment from “Chinese” companies

Status: Introduced Nov. 14, 2024. Second reading — failed to pass (yeas 20, nays 26).

Purpose
- To require the State Investment Board to eliminate direct legacy fund holdings in companies defined as “Chinese companies,” to establish a multi‑year divestment schedule, and to modify the legacy‑fund prudent‑investor rule to (a) give preference to in‑state qualified investment firms and (b) permit divestment from Chinese companies.

Key provisions
- New statutory definitions (typical language across committee drafts):
- “China” — the People’s Republic of China, Chinese Communist Party, Chinese military, or any instrumentality thereof.
- “Chinese company” — a company formed and domiciled in China (some committee versions defined more broadly as majority‑owned/controlled by or subject to jurisdiction/direction of China).
- “Direct holdings” — securities held directly by the legacy fund (or in an account wholly owned by the legacy fund). Explicitly excludes indirect holdings in commingled funds, private equity funds, or ETFs.
- “Indirect holdings” — securities held in commingled/collective investments in which the legacy fund owns a share alongside other investors.

  • Prohibition on direct Chinese investments:

    • Direct holdings of the legacy fund may not consist of securities of a Chinese company.

  • Divestment duties and timeline:

    • The State Investment Board must review all direct legacy fund holdings to identify any Chinese company exposure.
    • The board must develop a divestment plan that reduces the total value of Chinese direct holdings by at least 20% per year (based on the value as of August 1, 2025).
    • Complete divestment from direct Chinese holdings no later than August 1, 2030.

  • Amendment to NDCC § 21‑10‑07.1 (Prudent Investor Rule):

    • For legacy fund investments, the board “shall give preference to qualified investment firms and financial institutions with a presence in the state.”
    • The amendment explicitly permits/divests from Chinese companies as defined in the act (i.e., allows the board to prioritize the new prohibition over the general prudent‑investor standard).

  • Additional/alternate language in some Senate amendment versions:

    • A new subsection permitting the legacy fund to be invested in large‑scale infrastructure projects when beneficial.
    • A limited expiration/sunset in some drafts (e.g., effective through July 31, 2027).

Who would be affected
- Legacy Fund: direct investment universe narrowed; portfolio managers must execute scheduled divestments.
- State Investment Board and Legacy & Budget Stabilization Fund Advisory Board: responsible for review, plan development, implementation and any changes to investment policy or procurement to favor in‑state managers.
- In‑state investment firms/financial institutions: the bill would give them procurement preference for legacy fund mandates.
- Indirect investments (commingled funds, private equity, ETFs): generally unaffected by the direct‑holdings prohibition under the bill text.

Procedural/timeline notes
- Introduced Nov. 14, 2024. Advanced through industry/committee stages with multiple amendment drafts.
- On second reading the measure failed (yeas 20, nays 26) and did not become law in the 2025 session.
- If enacted as drafted, the critical divestment schedule would have begun from an August 1, 2025 baseline and required full divestment by August 1, 2030.

Potential implications (straightforward observations)
- Reduces direct exposure of the legacy fund to companies formed/domiciled in China while leaving indirect exposures via pooled vehicles largely intact.
- Could narrow investment choices, affect diversification and returns, and increase transaction/implementation costs during divestment.
- Preference for in‑state managers may shift future contract awards toward local firms; impacts on fees and performance would depend on available in‑state capacity.
- If a sunset provision were applied (as in some drafts), some restrictions could be temporary.

For full text and precise legal definitions, see the versions of the bill and committee amendment packets referenced under NDCC chapter 21‑10 (House Bill 1330, First Engrossment and subsequent Senate amendments).

Compiled from official sources — confirm details with the bill’s official record.

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