857. Do the prohibitions in Executive Order (E.O.) 13959, as amended, apply to purchases or sales of publicly traded securities of subsidiaries of entities listed on the Non-SDN Chinese Military-Industrial Complex Companies List (the “NS-CMIC List”)
The prohibitions in E.O. 13959, as amended, apply to a subsidiary of a Chinese Military-Industrial Complex Company (CMIC) listed on the NS-CMIC List only if such subsidiary itself is publicly listed on the NS-CMIC List by Treasury pursuant to E.O. 13959, as amended, or identified in the Annex of E.O. 13959, as amended. OFAC’s 50 percent rule does not apply to entities listed solely pursuant to E.O. 13959, as amended. Accordingly, the prohibitions on any subsidiaries listed on the NS-CMIC List would go into effect beginning 12:01 a.m. eastern time on the date that is 60 days after such subsidiary is added to the NS-CMIC List.
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1) This is one of the eight EO 13959-related FAQs that remains on OFAC’s website after the release of EO 14032 of June 3, 2021, which substantially altered the sanctions regime pertaining to Chinese military company-related securities. The plain text view of the FAQ included the text of the FAQ as it appeared prior to June 3, 2021.
2) The FAQ clarifies that the "50% rule" does not apply to CMICs, at least at the level of the prohibitions of the EO (as opposed to designation criteria). The 50% rule is a product of the phrase "property and interests in property" (as it appears in blocking and other prohibitions), and the language of the prohibitions in 13959 (as amended) lacks that phrase. See section II(vi) of Consolidated Comment on the Chinese Military Companies Sanctions...