U.S. Economic Sanctions Targeting Chinese Military Companies: New Executive Order Prohibits U.S. Persons from “Transacting” in Publicly Traded Securities of “Communist Chinese Military Companies”

Sullivan & Cromwell LLP - November 17, 2020
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On November 12, 2020, President Trump issued an Executive Order prohibiting U.S. persons from “transacting” in publicly traded securities of “Communist Chinese military companies.” The new restrictions, which go into force on January 11, 2021, initially target 31 companies that have been identified by the U.S. Department of Defense as “Communist Chinese military companies.”  Those targeted include some of China’s largest industrial and technology firms, including several with subsidiaries that are listed on U.S. stock exchanges. While the full scope of the prohibitions largely depend on future guidance clarifying ambiguous or undefined terms, the new prohibitions will undoubtedly have a significant impact on U.S. and non-U.S. investors with exposure to identified companies.