Executive Order 13959 (2020)

Executive Order 13959 created a United States securities-investment restriction concerning designated Chinese military-linked companies, but the active regime is the order as amended by Executive Order 14032. It is implemented through 31 CFR Part 586 and the Non-SDN Chinese Military-Industrial Complex Companies List.

Current legal structure

Executive Order 14032 replaced the original designation criteria and amended the operative restrictions in June 2021. OFAC's NS-CMIC List identifies covered entities by exact name. United States persons are prohibited from specified purchases or sales of publicly traded securities, or publicly traded securities derivative of or designed to provide investment exposure to such securities, subject to definitions, dates and authorisations.

This is a non-SDN securities restriction. It does not automatically block all property or interests in property of a listed entity. OFAC FAQ 857 states that the 50 Percent Rule does not apply to entities listed solely under the NS-CMIC programme. Subsidiaries are therefore not covered merely through ownership unless separately listed or subject to another authority.

Market channels

The restriction can affect holdings, brokerage, custody and index treatment. It is related to Delisting and capital-market exclusion and may prompt Index and benchmark exclusion, but listing, exchange delisting, index removal and investor divestment are separate decisions. Current company counts should be extracted from the live list with an access date, not copied from a historical release.

The Xiaomi challenge to United States military-company designation (2021) concerned the earlier regime and judicial review of a specific designation. It should not be generalised as invalidating every later listing or the amended programme.

Scope and assessment

Analysis should identify the exact listed name, effective date, security, transaction, United States-person nexus, divestment authorisation and any later removal. A prohibition on purchases or sales is not an asset freeze, and market movement does not prove capability degradation.

The regime also differs from Outbound investment screening, which can require notification or prohibit defined transactions based on technology and destination rather than exact-name securities listing. As at 30 July 2026, the current OFAC programme page, NS-CMIC List and Part 586 control the analysis.

Transaction analysis

The prohibited act must be matched to the security and date. Direct purchases, sales, derivatives, funds and other investment products can create different exposure under definitions and OFAC guidance. A fund containing a small listed-company position is not analysed in the same way as the issuer's own security. Brokers, custodians and index providers may apply wider commercial restrictions, but those decisions should not be attributed to the order itself.

List changes require version control. An entity's former name, subsidiary or similar commercial name is not covered merely because it resembles a listed name. Conversely, a renamed listed entity may remain within published identifying information. Screening should preserve the live list record and the security identifier used.

Effect can be assessed through holdings, trading access, liquidity and issuer financing, but each measure needs a counterfactual. A price fall around listing may also reflect market conditions or firm news. Legal coverage and strategic success remain separate conclusions.

Sources

1. United States Department of the Treasury, Chinese Military Companies Sanctions (accessed 30 July 2026).
2. Federal Register, Executive Order 14032, 3 June 2021.
3. United States Department of the Treasury, OFAC FAQ 899 (accessed 30 July 2026).
4. United States Department of the Treasury, OFAC FAQ 857 (accessed 30 July 2026).
5. Electronic Code of Federal Regulations, 31 CFR Part 586 (accessed 30 July 2026).