The U.S. Department of the Treasury has started enforcing final regulations that restrict, and in some cases prohibit, U.S. companies, funds and individuals from making certain investments in some technology industries owned by Chinese persons, entities, subsidiaries and state-owned enterprises.

The rule was issued under Executive Order 14105 and took effect Jan. 2, 2025. The rule mandates the filing of a notification with the Treasury within 30 days after the transaction for specified investments in certain technology industry sectors and absolutely prohibits other specified investments in those industry sectors. The industry sectors are the semiconductor and microelectronics industry, quantum information technologies and AI systems. Types of transactions include acquisitions of equity interests, greenfield and brownfield investments, joint ventures with covered Chinese persons, and limited partner investments in a non-U.S. fund.

The department has reportedly reached out to several U.S. investors who have submitted notifications with Treasury’s comments and questions on those transactions. For example, it has been reported that Treasury has reached out to a Silicon Valley venture capital firm regarding its investment in an AI company headquartered in Beijing about its investment in that company. This demonstrates the government's decision to make sure companies are complying with the regulations, despite President Trump's announced intent to revisit and review the final regulations.

If you have any questions about the outbound investment regulations or have been notified by the Treasury Department, Fox Rothschild stands ready to assist you. Please contact Paul B. Edelberg at 212.878.7911 or pedelberg@foxrothschild.com.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the author(s) and not necessarily this law firm or its clients.