515. Is the term "new equity" limited to equity that is issued by an entity owned or controlled by the Government of Venezuela after the sanctions effective date, or would equity purchased or acquired by an entity owned or controlled by the Government of Venezuela from a third party after the sanctions effective date be considered new equity?
Under E.O. 13808, the term "new equity" pertains to equity issued, directly or indirectly, by the Government of Venezuela on or after August 25, 2017. That said, E.O. 13808 also prohibits U.S. persons from purchasing any securities – including equity securities issued by a non-sanctioned party – from the Government of Venezuela. The exception to this prohibition is purchasing securities that qualify as (1) debt of PdVSA issued on or after August 25, 2017, with a maturity of less than or equal to 90 days, or (2) debt of any other part of the Government of Venezuela issued on or after August 25, 2017, with a maturity of less than or equal to 30 days. U.S. persons are not prohibited from dealing with the Government of Venezuela as counterparty to transactions involving securities that fall into either of these two categories. General License 2 authorizes U.S. persons to deal in such new equity issued by CITGO Holding, Inc. or any of its subsidiaries, or to purchase securities from CITGO Holding, Inc. or any of its subsidiaries, provided that no other entities owned or controlled by the Government of Venezuela are involved. [07-19-2018]
Note: this FAQ and comments thereto were posted/written prior to the blocking of the Government of Venezuela pursuant to EO 13884. Neither the FAQ nor the comment have been updated in light of that development.
1) Note how Section 1(b) of EO 13808 differs Section 1(a)(i)-(iv), as well as the Russia-related directives pertaining to new debt and equity.
This is the only instance in which prohibitions specific to debt/equity attach to securities owned by sanctioned parties but issued by non-sanctioned parties.