Addressing the Threat From Securities Investments That Finance Communist Chinese Military Companies
This is Executive Order 13959, titled Addressing the Threat From Securities Investments That Finance Communist Chinese Military Companies. Issued in November 2020, it uses the President’s emergency powers (IEEPA) to bar United States persons from buying or holding certain securities. The order targets securities of Communist Chinese military companies (CCMCs), defined by designation lists from the Department of Defense (DoD) and the Treasury. The aim is to cut off U.S. capital from helping fund China’s military and security apparatus through private, ostensibly civilian companies that participate in China’s military‑civil fusion strategy. It creates a phased ban on investing in CCMCs and their investment derivatives, with divestment windows for existing holdings and for newly designated companies, and it authorizes the Treasury to issue regulations and licenses to implement the ban. The order also prohibits evasion and requires reporting back to Congress, while noting that it does not create new legal rights. In short, the order enacts a nationwide financial restrictions regime aimed at preventing U.S. capital from financing Chinese military‑industrial activities, through a combination of prohibitions, licensing options, and ongoing administration by Treasury and other federal agencies.
Key Points
- 1Prohibited actions and phased start dates:
- 2- Starting Jan 11, 2021, 9:30 a.m. ET, United States persons may not transact in publicly traded securities (or derivatives designed to provide investment exposure) of any Communist Chinese military company listed under the order.
- 3- For CCMCs designated later under 4(a)(ii) or (iii), a ban on such transactions begins 60 days after designation.
- 4Divestment provisions for existing holdings:
- 5- Purchases or sales to divest from CCMCs held by U.S. persons as of Jan 11, 2021 are allowed only through 11:59 p.m. ET on Nov 11, 2021.
- 6- For newly designated CCMCs, holders have up to 365 days from designation to divest.
- 7Definitions and scope:
- 8- “Communist Chinese military company” includes (i) DoD-listed CCMCs, (ii) CCMCs DoD determines and lists in consultation with Treasury, and (iii) entities publicly listed by Treasury as meeting DoD criteria.
- 9- “Security” includes standard financial instruments defined by the Securities Exchange Act, with broad inclusion (e.g., certain notes or instruments treated as securities).
- 10- “Transaction” means the purchase for value of any publicly traded security.
- 11- “United States person” covers U.S. citizens, residents, entities organized in the U.S., and persons in the U.S.
- 12Enforcement and licensing:
- 13- The Secretary of the Treasury, with other senior officials, is empowered to issue regulations, implement the order, and use IEEPA authorities to enforce it. Licenses may be issued to permit otherwise prohibited transactions, but require interagency consultation before granting.
- 14Reporting and legal framework:
- 15- Treasury must report periodically to Congress on the national emergency and the status of the program.
- 16- The order includes standard general provisions about consistency with law, no creation of enforceable rights, and preservation of agency authorities.