BIS suspends 50% affiliate ownership rule for one year
Date of publication: November 17, 2025
On November 10, 2025, the Bureau of Industry and Security (BIS) implemented a one-year suspension of its "Affiliates Rule," which had automatically subjected entities to Entity List restrictions based on ownership by listed entities. The suspension remains in effect until November 9, 2026, after which the rule is scheduled to be automatically reinstated unless further action is taken.
Background: The original affiliates rule
Published on September 30, 2025 (90 FR 47201), the Affiliates Rule represented a significant expansion of U.S. export controls. Under this rule, any entity that was at least 50 percent owned—directly or indirectly, individually or in the aggregate—by one or more entities on the Entity List automatically became subject to Entity List restrictions itself. This applied even if the affiliate was not explicitly listed.
The rule also extended to unlisted entities subject to license requirements or other restrictions based upon their ownership. This created an automatic cascade effect where ownership relationships triggered export control obligations without the need for individual Entity List designations.
The Affiliates Rule amended multiple sections of the Export Administration Regulations (EAR), specifically 15 CFR Parts 732, 734, 736, 744, and 748.
You can find a complete overview of the Interim Final Rule in the ONESOURCE Global Trade Regulatory Insight article here.
The suspension: A two-phase approach
The suspension Final Rule/stay, published November 12, 2025 (Docket No. 251106-0169, RIN 0694-AK34), implements a unique two-phase structure:
Phase 1 (November 10, 2025 – November 9, 2026):
All changes previously made to the EAR by the Affiliates Rule are stayed. During this period, the 50% ownership threshold does not automatically trigger Entity List restrictions for affiliates. Export control compliance should revert to the framework that existed before the Affiliates Rule took effect.Phase 2 (November 10, 2026, onward):
The Affiliates Rule provisions are automatically reinstated. The same license requirements and related provisions from the original rule will be added back into the EAR unless BIS takes further action to extend the suspension or modify the rule.Rationale for suspension
BIS stated that during the suspension period, it "will continue to evaluate U.S. national security and foreign policy interests related to these non-listed foreign affiliates of listed entities." This suggests the agency is reassessing the implementation approach, compliance burden, or policy implications of the automatic ownership-based restrictions. Notably, the suspension rule indicates that public comments received on the original Affiliates Rule were not considered in this suspension decision. However, BIS explicitly states these comments "will be considered for future, subsequent rulemakings."
Regulatory details
Authority
The suspension is issued under the Export Control Reform Act of 2018 (ECRA), specifically 50 U.S.C. 4812 and 4813, which authorize BIS to regulate exports, reexports, and in-country transfers, and to establish lists of controlled items and entities.
Procedural status
Pursuant to Section 1762(a) of ECRA, this rule was implemented as an Interim Final Rule (IFR) without prior notice and comment, exempt from standard Administrative Procedure Act requirements.
Effective Date:
November 10, 2025Automatic Reinstatement Date:
November 10, 2026 (unless extended)Impact on compliance operations
Burden reduction
BIS estimates the suspension will result in a one-time reduction of approximately 245 license applications during the one-year suspension period under OMB Control Number 0694-0088. However, this burden reduction is temporary and will return to prior levels upon reinstatement.
No significant economic impact
The rule was not deemed a "significant regulatory action" under Executive Order 12866, suggesting BIS views the suspension as having limited economic impact—likely because it represents a temporary rollback rather than new restrictions.
Critical action items for trade compliance professionals
- Immediate review:Identify any transactions that were restructured, delayed, or subjected to license requirements solely due to the 50% affiliate ownership threshold under the Affiliates Rule.
- Temporary relief period:Between November 10, 2025, and November 9, 2026, entities that are 50% or more owned by Entity List parties are not automatically subject to Entity List restrictions based solely on that ownership relationship.
- Maintain vigilance:The suspension does not affect:
- Entities explicitly listed on the Entity List in their own right.
- Other end-user controls and screening requirements
- Red flag indicators and due diligence obligations
- Other EAR provisions unrelated to the Affiliates Rule
- Prepare for reinstatement:Unless BIS extends the suspension or withdraws the rule, automatic reinstatement occurs November 10, 2026. Compliance programs should:
- Monitor BIS announcements throughout 2026.
- Maintain systems capable of identifying 50% affiliate relationships.
- Prepare for potential reimplementation of license requirements.
- Consider submitting comments to BIS on the Affiliates Rule for consideration in future rulemakings.
- Documentation:Continue documenting ownership research and due diligence efforts, as these may become relevant again if the rule is reinstated.
Looking ahead
The one-year suspension provides a window for industry engagement and policy reconsideration. Trade compliance professionals should:
- Monitor for extensions:Watch for any BIS announcements regarding extension of the suspension beyond November 9, 2026
- Engage in the process:Consider submitting formal comments to BIS regarding the Affiliates Rule's implementation challenges, compliance burden, or policy concerns.
- Plan for multiple scenarios:Develop contingency compliance procedures for both reinstatement and potential permanent withdrawal of the rule.
The automatic reinstatement mechanism in Phase 2 is particularly noteworthy—it requires no additional BIS action for the rule to return to force. This places the burden on stakeholders to advocate for any extension or modification before the November 2026 deadline. It should also be noted that BIS will continue to evaluate this rule and could make additional changes or decide to reinstate sooner, so companies would be wise to monitor this closely and proceed with implementing robust procedures to prepare.
Conclusion
The suspension of the Affiliates Rule provides temporary relief from automatic Entity List restrictions based on 50% ownership thresholds. However, the built-in sunset provision means this is a pause, not a reversal. Compliance professionals should use this period to reassess affiliate relationships, engage with the regulatory process, and prepare for potential reinstatement in November 2026.
For questions or to request removal or modification of Entity List designations, contact the End-User Review Committee at ERC@bis.doc.gov or (202) 482-5991.
For more information on how ONESOURCE Global Trade solutions can assist you in managing supply chain risk, denied party screening and regulatory compliance, contact your Account Manager or Client Success Manager.