This bill would prohibit index funds and registered investment companies from investing in Chinese companies, with the goal of preventing American investment capital from supporting China's military development and alleged human rights abuses. The legislation defines Chinese companies broadly to include any company incorporated in China, majority-owned or controlled by the Chinese government, or dependent on Chinese revenues and assets. Index funds and registered investment companies would have a one-year grace period from the bill's enactment to divest from existing Chinese investments, and they would be required to develop and share written divestment plans with shareholders within 180 days. Violations would result in civil penalties of up to $500,000 or twice the transaction amount, whichever is greater, with additional daily penalties for failure to create required divestment plans. According to the bill, American financial institutions have invested over $6.5 billion in Chinese companies that the federal government has blacklisted for supporting China's military capabilities or human rights violations.
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