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:
- China Construction Technology Co. Ltd.;
- China International Engineering Consulting Corp.;
- China National Offshore Oil Corp. (“CNOOC”); and
- 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.