On May 18, 2021, the US Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued General License 1B, “Authorizing Transactions Involving Securities of Certain Communist Chinese Military Companies,” (“GL 1B”) in relation to OFAC’s Communist Chinese Military Companies (“CCMCs”) sanctions program as implemented pursuant to Executive Order 13959 (“EO 13959”) and amended by Executive Order 13974. Our blog posts on EO 13959 and OFAC’s prior guidance on the CCMC sanctions program are available here and here.
As with the original GL 1 and GL 1A, GL 1B authorizes US persons to engage in all transactions and activities otherwise prohibited by EO 13959 involving publicly traded securities (as well as securities that are derivative of, or are designed to provide investment exposure to such securities) of any entity whose name “closely matches, but does not exactly match,” the name of a company on OFAC’s Non-SDN Communist Chinese Military Companies List (“NS-CCMC List”). This authorization has been extended until 9:30 a.m. eastern daylight time on June 11, 2021. The original cut-off was January 28, 2021 which was extended to May 27, 2021 by GL 1A. Our blog post on GL 1A and related FAQs can be found here. GL 1B does not authorize transactions involving publicly traded securities of entities identified on the NS-CCMC List or otherwise identified pursuant to EO 13959, including subsidiary entities that were added to the NS-CCMC List on January 8, 2021, i.e., CNOOC Limited, China Mobile Limited, China Telecom Corporation Limited, China Unicom (Hong Kong) Limited (“Listed CCMC Subsidiaries”).
Notably, companies added to the NS-CCMC List continue their delisting efforts. Earlier this month, the US Department of Defense (“DoD”) agreed to negotiate the removal of Xiaomi Corporation (“Xiaomi”) from the NS-CCMC List after a March 12, 2021 preliminary injunction by the D.C. District Court. Similarly, Luokung Technology Corp. (“Luokung”) was granted a preliminary injunction by the D.C. District Court on May 5, 2021 enjoining DoD and other US Government agencies from implementing or enforcing Luokung’s designation on the NS-CCMC List.