Client alert | Reams Law | November 2026

The Commerce Department’s Bureau of Industry and Security (BIS) has again postponed its Affiliates Rule — the “50 percent rule” that would extend Entity List restrictions to companies owned by listed parties. The suspension was set to expire on November 9, 2026. On that date BIS published a final rule extending it through January 10, 2027.

That is a short reprieve, not a repeal. If your company exports, reexports, or transfers items subject to the Export Administration Regulations (EAR) — especially to customers in China, Hong Kong, or elsewhere in Asia — the next eight weeks are the time to get ready. Here is what the BIS Affiliates Rule does, why it keeps getting delayed, and what to do now.

What the Affiliates Rule does

Today, Entity List restrictions generally apply only to the specific companies named on the list. That has left a well-known gap: a listed company’s subsidiaries and affiliates, if not separately named, could often still receive U.S. items without a license.

The Affiliates Rule, first issued as an interim final rule on September 30, 2025, closes that gap. Once in force, it:

• Extends Entity List and Military End-User (MEU) List license requirements to any foreign entity owned 50 percent or more, directly or indirectly, individually or in the aggregate, by one or more listed parties;
• Applies the same approach to certain parties identified by the Treasury Department’s Office of Foreign Assets Control (OFAC) under the EAR; and
• Adds a new “red flag”: if you know a foreign party is partly owned by a listed entity, you must resolve the ownership question before proceeding.

In practice, this works much like OFAC’s long-standing 50 percent rule for sanctioned persons — but it applies to export licensing, and it reaches a far larger set of companies, many of them Chinese.

Why it keeps getting delayed

BIS suspended the rule for one year in November 2025, shortly after it was issued, following U.S.–China trade negotiations. The new extension to January 10, 2027 lines up with the extension of the U.S.–China trade truce. BIS gave no other rationale. Absent further action, the rule’s license requirements take effect on January 10, 2027.

Companies should not assume another extension. Trade negotiations can break down quickly, and the rule could take effect with little warning.

What is still in force right now

The suspension covers only the Affiliates Rule. Everything else remains in effect, including:

• Entity List, MEU List, and Unverified List restrictions on named parties;
• OFAC’s 50 percent rule, which already blocks entities owned 50 percent or more by sanctioned persons on the SDN List;
• BIS’s general “know your customer” guidance and red-flag expectations; and
• Russia- and Belarus-related export controls, which require licenses for a wide range of items.

Five steps to take before January 10, 2027

1. Map ownership for foreign customers, distributors, and end users. Screening names against the lists is no longer enough. You need to know who owns your counterparties — including indirect and aggregated ownership.
2. Re-screen your book of business against the Entity List, MEU List, and SDN List, and flag any counterparty with a listed parent or significant listed shareholder.
3. Classify your products. Know which of your items are EAR99 and which have an Export Control Classification Number (ECCN). Entity List restrictions often reach even EAR99 items.
4. Update contracts. Add ownership representations, notice obligations if ownership changes, and termination rights if a counterparty becomes restricted.
5. Identify pending orders that could be stranded. Shipments contracted now but delivered after January 10 may need a license. Plan for license applications early — BIS processing can take months.

Who should pay attention

This is not only a concern for defense contractors. Oklahoma, Texas, Missouri, and California companies in aerospace, oil and gas equipment, electronics, software, semiconductors, agriculture technology, and university research all sell items subject to the EAR. If you have customers or distributors in China or Hong Kong, the Affiliates Rule could change whether you need a license for an order you already have on the books.

How Reams Law can help

Reams Law advises businesses on sanctions and export controls, including ownership due diligence, classification, licensing, compliance programs, and responses to government inquiries. Reams Law has Chinese speakers available for consultations, which can make ownership research and communication with Chinese-speaking counterparties faster and more accurate.

Call (405) 285-6878 or contact us online to schedule a consultation. For a broader overview, see our page Sanctions and Export Controls: What Oklahoma Businesses Need to Know Before the Next Shipment.

This alert reflects developments through November 12, 2026. It is general information, not legal advice, and reading it does not make anyone a client of this firm. Sanctions and export-control rules change frequently; confirm current requirements before acting.