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U.S. Ban on American Investment in Chinese Military Companies


Wednesday, February 17, 2021
This alert addresses recent developments relating to former President Trump s executive orders on Chinese Military Companies that affect both investors in covered securities and exporters.
OFAC s Frequent Asked Questions
On November 12, 2020, former President Trump issued an executive order ( EO ), pursuant to the National Defense Authorization Act for Fiscal Year 1999, as amended ( NDAA ), prohibiting U.S. persons from investing in publicly traded securities of any person designated by the Secretary of Defense or the Secretary of the Treasury as a Communist Chinese military company ( Chinese Military Company ). See our analysis of the Nov. 12 EO 
here. Since then, the 2021 National Defense Authorization Act ( 2021 NDAA ) was enacted into law, the EO was amended, the list of Chinese Military Companies expanded, and frequently asked questions promulgated. ....

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Recent Developments on U.S. Ban on American Investment in Chinese Military Companies | Miller Canfield


GL 1A does 
not authorize any transactions involving covered securities of entities listed on OFAC s Non-SDN Communist Chinese Military Companies List (NS-CCMC List) as a subsidiary of a business entity already determined to be a Chinese Military Company.
Expansion of the Definition of the Chinese Military Company
On January 1, 2021, the 2021 NDAA was enacted into law (available 
here, the revisions discussed in this alert are in Sec. 1260 H. [pp. 578-79]). The 2021 NDAA significantly expands the definition of Chinese Military Company to include Chinese entities that are identified as military-civil fusion contributors. As revised, the definition of Chinese Military Company includes any entity (natural persons are specifically excluded) that is: ....

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New OFAC FAQs Clarifying And Broadening Sanctions On Chinese Military Companies | Morrison & Foerster LLP


On December 28, 2020, the U.S. Treasury Department’s Office of Foreign Assets Control (“
FAQs”) that clarify the scope of Executive Order (“
E.O.”) 13959, the basis for OFAC’s new Chinese Military Companies sanctions program. These FAQs define key terms and clarify how OFAC will interpret E.O. 13959’s prohibition against U.S. investment in the securities of Communist Chinese Military Companies (“
CCMCs”), which goes into effect on January 11, 2021. In general, like previous sanctions programs, the new FAQs show that OFAC will read commonly used terms much more broadly than their common usage might suggest. Now that OFAC has clarified its stance on E.O. 13959, those operating in the investment management sector, especially banks, broker-dealers, investment advisers, and funds should review their assets to determine whether E.O. 13959 could affect their operations. The FAQs represent a Trump Administration decision to continue an aggressive approach tow ....

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