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EO 13974Executive OrderTrump 45 · R Quiet signal

Executive Order 13974

Amending Executive Order 13959Addressing the Threat From Securities Investments That Finance Communist Chinese Military Companies

This executive order amends EO 13959 to clarify and extend timelines for divestment from securities of Communist Chinese military companies. It sets a firm November 11, 2021 deadline for divestment of existing holdings and creates a 365-day divestment window for companies added to the list after the order's signing, while expanding the authority of the Secretaries of Defense and Treasury to designate covered entities and their subsidiaries.

Federal Register Open PDF 86 FR 4875

Impact dates

  1. 365-day divestment window closes for companies designated under sections 4(a)(ii) or (iii); possession prohibited

  2. 60-day mark from determination date for calculating eligible securities for future designations

  3. Divestment deadline for securities held as of January 11, 2021; possession prohibited after 11:59 p.m. EST

Key directives

  • Amend EO 13959 Section 1(b) to permit divestment transactions on or before 11:59 p.m. EST November 11, 2021 for securities held as of 9:30 a.m. EST January 11, 2021
  • Prohibit possession of such securities by U.S. persons effective 11:59 p.m. EST November 11, 2021
  • Permit divestment within 365 days from determination date for companies designated under sections 4(a)(ii) or (iii), for securities held as of 60 days from determination date
  • Prohibit possession of such securities effective 365 days after determination date
  • Expand Defense Secretary authority to list companies operating directly or indirectly in U.S. or its possessions regardless of reporting requirements
  • Grant Treasury Secretary authority to list subsidiaries of designated Communist Chinese military companies
  • Narrow definition of 'transaction' to 'purchase for value, or sale, of any publicly traded security'

Who is ordered

Timeline

Immediate

  • EO takes effect upon signing January 13, 2021
  • Prohibition on new purchases of covered securities continues

Near term (90d)

  • Investors must track any new designations by Defense or Treasury
  • Preparation for November 11, 2021 divestment deadline begins

Long term

  • Full prohibition on possession of pre-January 11, 2021 holdings takes effect November 11, 2021
  • 365-day divestment periods begin for future designations under sections 4(a)(ii) and (iii)
  • Ongoing list maintenance by Defense and Treasury secretaries

Risks & tensions

  • Narrowed 'transaction' definition may create compliance ambiguity for non-standard securities instruments
  • Subsidiary designation authority grants Treasury broad interpretive power with limited procedural constraints listed
  • 365-day relative deadline creates rolling compliance burden without fixed calendar predictability
  • Vague whether 'operates directly or indirectly in the United States or its possessions' includes passive commercial presence or requires active operations
  • Potential market disruption as November 2021 deadline approaches for concentrated holdings
Executive Order 13974: Amending Executive Order 13959Addressing the Threat From Securities Investments That Finance Communist Chinese Military Companies · Executive Orders