Finalizes restrictions on outward investment in "critical technology" sectors in countries of concern
28 Oct 2024
On 28 October 2024, the Department of the Treasury issued a Final Rule that will take effect on 2 January 2025. This rule implements Executive Order 14105 of 8 August 2023, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” (the Outbound Order).
In an Annex to the Outbound Order, the President of the United States identified one country, the People’s Republic of China (PRC), along with the Special Administrative Region of Hong Kong (Hong Kong) and the Special Administrative Region of Macau (Macau), as a country of concern. The rule specifies that the President may modify the Annex to the Outbound Order and update the list of countries of concern.
The rule prohibits certain investments by United States persons (defined as United States citizens, permanent residents, and United States-based entities), in countries of concern and requires notification to the Secretary of the Treasury for others within three specific technology sectors:
- Semiconductors/microelectronics
- Quantum information technologies
- Artificial intelligence
The rule encompasses various types of investments, including equity interests, debt financing with particular rights, joint ventures, and corporate expansions. It concerns not only direct investments but also "intangible benefits" that investment by United States persons can confer, such as enhanced standing, managerial assistance, talent networks, and market access.
A critical aspect of this rule is the "knowledge standard," which holds United States persons responsible if they knew or should have known through reasonable due diligence about relevant circumstances of their transactions.
-
Type:
-
Entry and establishment (Ownership and control, Approval and admission)
-
Industry:
-
Manufacturing (Manufacture of computer, electronic and optical products, and electrical equipment)
-
Services (Computer programming, consultancy and related activities, Scientific research and development)
-
Sources:
