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United States: Four additional Chinese entities subject to restriction on US securities transactions

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On December 3, 2020, the Department of Defense announced its third list of “Communist Chinese military companies” operating in the United States, pursuant to Section 1237 of the National Defense Authorization Act for Fiscal Year 1999, as amended (“Section 1237”).  The practical impact of the announcement is that these four companies become subject to Executive Order 13959, which restricts US investment in these companies.  The first and second lists also issued pursuant to Section 1237 are found here and here.

The following companies are identified this time:

  1. China Construction Technology Co. Ltd.;
  2. China International Engineering Consulting Corp.;
  3. China National Offshore Oil Corp. (“CNOOC”); and
  4. Semiconductor Manufacturing International Corp. (“SMIC”)

Executive Order 13959 prohibits US persons from acquiring publicly traded securities of companies identified pursuant to Section 1237, effective 60 days following their designation, i.e., starting February 1, 2021.  Transactions made solely to divest from securities held in the above companies as of February 1, 2021 will be authorized until December 3, 2021. This third round of identifications bring the total to 35 entities identified under Section 1237.  Subsidiaries of identified companies are not subject to the securities restrictions unless they are also listed.  For more information on the Executive Order 13959 restrictions, please see our blog post here.

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Janet Kim is a partner in Baker McKenzie's Washington, DC office. Ms. Kim advises clients — including US and foreign companies —on outbound compliance issues arising from the US Foreign Corrupt Practices Act, as well as in criminal and regulatory proceedings, internal investigations and compliance reviews relating to these areas of law. She also advises on the application of these laws in cross-border transactions, including mergers and acquisitions, divestitures and joint venture arrangements. Additionally, Ms. Kim helps develop and implement workable, risk-based compliance programs for companies in a wide range of industries.

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Eunkyung Kim Shin is an associate of Baker McKenzie’s International Commercial Practice Group and the International Trade Compliance Sub-Practice Group in the Chicago office. Eunkyung advices clients on various regulatory compliance and trade issues, concentrating on the US export controls such as the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR), economic and trade sanctions, US customs and import laws, the US Foreign Corrupt Practices Act (FCPA), and foreign anti-bribery laws.

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Callie C. Lefevre is an associate in the Washington, DC office where she is a member of the International Practice Group. Her practice is focused on all aspects of International Trade law, particularly compliance with US export controls, trade and economic sanctions, and US foreign investment restrictions. Prior to joining Baker McKenzie, Callie worked as a student advocate for the New York University School of Law Environmental Law Clinic. While there, she participated in environmental litigation and advocacy pertaining to water quality and urban runoff under the supervision of attorneys at the Natural Resources Defense Council. Callie’s experience also includes working as a summer associate at Baker McKenzie in 2014, where she participated in all aspects of International Trade law, and working as a legal intern at the United Nations High Commissioner for Refugees in Beirut, Lebanon.

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