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DeHeng 德恒

Specialized in China practice, DeHeng provides sophisticated and cost-effective legal services for multinational corporations, international institutions and individuals.



In a recent development, the Committee on Foreign Investment in the United States (CFIUS) has proposed new rules aimed at broadening its jurisdiction over real estate transactions. Under the proposed regulations, foreign purchases of real estate within a 100-mile radius of sensitive military installations could trigger a CFIUS review. The expansion seeks to enhance national security safeguards and ensure appropriate oversight of foreign investments. Written public comments on the proposal are due by June 5, 2023.

Expanded Scope and Definition

CFIUS has identified eight additional sites, classified as sensitive military installations, to be included in its list. The proposed rules define a "covered real estate transaction" as any purchase, lease, or concession that grants a foreign person at least three out of the four specified rights in "covered real estate":

1. Right to physical access

2. Right to exclude others from physical access

3. Right to improve or develop the parcel

4. Right to attach fixed or immovable structures or objects to the real estate

In the majority of cases, the acquisition or lease of a real estate parcel is likely to confer the requisite number of rights as outlined above.

Implications and Compliance

Upon finalization of the proposed rule, all covered real estate transactions within a 100-mile radius of the listed facilities will be subject to CFIUS review. Therefore, it is crucial for foreign investors contemplating any investment in the United States, including real estate purchases, to seek guidance from CFIUS counsel for interpreting the regulations. Even if the acquisition does

not involve a listed facility, acquiring a U.S. business near a sensitive government facility or a commercial building housing government tenants may warrant filing with CFIUS. Mandatory filings might be necessary for cases involving foreign government-controlled investors or certain sensitive industries.


CFIUS's proposed expansion of jurisdiction over real estate transactions aims to strengthen national security measures. Foreign investors are advised to consult CFIUS counsel to ensure compliance with the regulations, particularly when considering investments involving listed facilities or proximity to sensitive government sites. By adhering to the updated guidelines, foreign investors can navigate the regulatory landscape effectively and mitigate potential risks associated with real estate transactions in the United States.






1. 进入物理空间的权利

2. 禁止他人进入物理空间的权利

3. 改善或开发土地的权利

4. 在房地产上安装固定或不动的结构或物体的权利






Department of Treasury Releases CFIUS Enforcement and Penalty Guidelines



        On October 25, 2022, the U.S. Department of Treasury released the CFIUS Enforcement and Penalty Guidelines (the “Guidelines”). Such Guidelines are a new step in the evolving development of CFIUS review procedures after the expansion of its staff and funding under the Consolidated Appropriations Act in March 2022, as our prior newsletter described.

        The Guidelines clarify four issues: first, The Types of Conduct that may constitute a violation; second, the Sources of Information on which CFIUS Relies; third, the Penalty Process; fourth, Aggravating and Mitigating Factors.

        First, the Guidelines point out three potentially unlawful conducts: Failure to File, Non-Compliance with CFIUS Mitigation, and Material Misstatement, Omission, or False Certification. Second, regarding the sources of information on which CFIUS relies, the Guidelines note that the committee considers a wide range of sources but emphasize three sources in particular: Tips, Self-Disclosure, and Requests for Information. Third, the Guidelines address that a violation does not necessarily lead to a penalty but outline two important steps in the penalty process: Notice; Contest and Assessment. Fourth, in determining the appropriate response to a violation, the Guidelines point out that CFIUS considers a series of aggravating and mitigating factors. The Guidelines list six relevant factors: Accountability and Future Compliance; Harm; Negligence, Awareness, and Intent; Persistence and Timing; Response and Remediation; Sophistication and Record of Compliance.

        This is the first time that CFIUS clarifies its otherwise obscure procedures. However, this Guideline is non-binding and CFIUS retains broad discretion with respect to its enforcement and penalty decisions. Indeed, listing those potentially unlawful conducts may forewarn investors. To be sure, investors should be cautious in making their filing/non-filing decisions and be especially careful to ensure the completeness and accuracy of information submitted to CFIUS during the review process.





Department of Defense updated its Section 1260H list



        On October 5, 2022, U.S. Department of Defense releases a new list of People's Republic of China (PRC) Military Companies – as required under Section 1260H of the National Defense Authorization Act for Fiscal Year 2021 (NDAA 2021). The first list was released last year in June, 2021. The Department of Defense is required, under Section 1260H(b)(1) of NDAA 2021, to annually report “Chinese military company” until December 31, 2030.

        Although the text of the statute imposes an obligation to report annually, the Secretary of Defense is of the authority to decide additions or deletions to the list. The definitions provided in Section 1260H are broad and vague. The text of that statute does not exclude the possibility that any private Chinese company be labelled as “Chinese Military Company.” Indeed, Section 1260H(d)(1) to (3) of NDAA defines “Chinese military company” and “Military-civil fusion contributor” (MCFC) loosely. The definition of MCFC contains an all-encompassing definition under which an entity can be a “MCFC” whenever “the Secretary determines … appropriate.”

        However, no trade restriction measures or any other forms of sanctions are stated in the list this time. Indeed, Section 1260H of NDAA only labels these companies as “CMC” without stating what sanctions or limitations to follow -- a scenario that is different from NS-CMIC list produced by the Biden administration and Section 1237 list produced by the Trump administration.


        尽管NDAA 2021法律条文赋予美国防部每年公布名单的义务,但是具体某一企业进入或脱离名单由美国防部决定。并且,2021国防预算法案中所规定的判断一家企业是否属于“中国军方企业”和“军民融合的贡献企业”的定义宽松。不能排除任何一家与军方并无关联的民营企业被美方划入该名单的可能。具体来说,第1260H条d款1项至3项提供了对于“中国军方企业”和“军民融合的贡献企业”的定义。其中,“军民融合的贡献企业”的定义中包含一兜底条款第1260H条d款2项H节:“其他任何由国防部部长决定符合的情形。”


CFIUS Conference 2022 – updates on case review principles


        In June 2022, the Committee of Foreign Investments in the United States (“CFIUS”) hosted their first ever conference for practitioners, many important notices were addressed at the conference.

To adapt to the ever-evolving national security landscape, CFIUS suggested that it would be smart for investors to be prepared for mitigation and expect any future re-negotiation of mitigation measures. To prepare for a CFIUS review, filing a shortened declaration instead of a full Joint Voluntary Notice (“JVN”) can be beneficial at times, however for investors from countries of concern, or when the petition involves other complex issues, a JVN would be expected.

        With respect to data security, cases involving sensitive personal data (“SPD”) should be analyzed not only for its current access to SPD, but also for how these data collecting practices would change in the future. Genetic and Medical data are now concerned as “high risk”. CFIUS stated that they will continue to share investment screening data with allies of the United States, and work with them on collecting intelligence on foreign acquirers.

        The Consolidated Appropriations Act on March 8th, 2022 funded 12 staff positions in the “Industry and Analysis” unit of the Commerce department’s International Trade Administration, The CFIUS review would become more in-depth around the protection of American technology, and investors should expect increasing mitigation orders, and more post-review questions.



        其次,数据安全方面,涉及敏感个人数据("SPD")的案件,审查不仅包括其目前对SPD的访问情况,也需涵盖未来数据收集方式可能发生的变化。其中基因和医疗数据现在被视为 "高风险"。CFIUS表示,他们将继续与众多盟友国分享投资相关数据,并与他们合作收集有关外国投资者的情报。

        最后,2022年3月8日的《综合拨款法案》为商务部国际贸易管理局的 "行业和分析 "部门提供了12个职位,CFIUS的审查将围绕防止技术外泄变得更加深入严谨,投资者预计会面临更多的缓解令,以及审查完结之后来自相关部门的后续跟进。


SEC published Sample Letter to China-Based Companies


        On Dec 20, 2021, Division of Corporation Finance of SEC publish Sample Letter to China-Based Companies. Recent events have highlighted the risks associated with investing in companies that are based in or that have the majority of their operations in the People’s Republic of China (China-based companies). The Division of Corporation Finance believes that more prominent, specific, and tailored disclosure about these risks, and companies’ use of the variable interest entity (VIE) structure specifically, is warranted to provide investors with the information they need to make informed investment decisions and for companies to comply with their disclosure obligations under the federal securities laws. In light of these concerns, the Division is issuing comments to China-based companies seeking more specific and prominent disclosure about the legal and operational risks associated with China-based companies.

        The Division’s comments focus on the need for clear and prominent disclosure regarding the structure of the company, including the relationship between the entity conducting the offering and the entities conducting the operating activities, risks associated with a company’s use of the VIE structure, and the potential impact on the company’s operations and investors’ interests if such structure were disallowed or the contracts were determined to be unenforceable. The Division’s comments also focus on additional legal, regulatory, and enforcement risks that may apply to investments in China-based companies, such as the potential impact of the Holding Foreign Companies Accountable Act and related rules and any necessary PRC permissions a China-based company may need to operate its business or offer securities to foreign investors. The illustrative sample letter contains sample comments that, depending on the particular facts and circumstances, the Division may issue to China-based companies. The Division urges companies to consider these sample comments and additional regulatory developments in this area as they prepare their disclosure documents.


        该部门的意见集中于明确和突出披露公司结构的必要性,包括进行发行的实体和进行经营活动的实体之间的关系,与公司使用VIE结构相关的风险,如果这种结构被禁止,或合同被确定为不可执行,将对公司的运营和投资者的利益产生潜在影响。该部门的评论还关注了在中国投资公司可能面临的额外法律、监管和执法风险,例如《外国控股公司问责法》(Holding Foreign Companies accountability Act)和相关规定的潜在影响,以及中国公司在经营其业务或向外国投资者提供证券时可能需要获得的任何必要的中国许可。




美国因安全威胁将 27 家公司列入黑名单


        The Bureau of Industry and Security (BIS) of the US Department of Commerce recently stated that for national security reasons, the US has blacklisted 27 foreign entities, 12 of which are from China. BIS stated in the rule published in the Federal Register: “In this final rule, BIS amended the Export Administration Regulations (EAR) and added 27 entities to the list of entities. These 27 entities have been identified by the U.S. government as violating countries. Security or foreign policy the interests of the United States," BIS said in the rules published in the Federal Register. In addition to these 12 Chinese entities, the list also includes entities from Japan, Pakistan, and Singapore, as well as one Russian entity. The list includes three subsidiaries of China Jiazhao Technology Co., Ltd. (an entity that was blacklisted in 2019) in China, Singapore, and Japan. The above facts are not difficult to see that the Biden administration has not relaxed the relevant control policies implemented by the previous government since it came to power. There is huge room for sanctions and the lack of legal basis is not ruled out. Chinese companies, especially technology companies, should maintain a high degree of vigilance, actively prepare, and earnestly study and implement compliance measures. In this way, we can plan to prevent problems before they happen, and establish the awareness of compliance for all employees of the company; second, even if they encounter possible sanctions, they can submit reliable evidence in time to defend themselves and get the company out of the sanctions list. For a long time, DeHeng New York office has been dedicated to serving the American compliance business of various large overseas companies, and has maintained close cooperation with top law firms in Washington, D.C., and has successfully completed various legal services delivered by clients many times. At the same time, DeHeng New York Attorney Xiaomin Chen has been serving as the legal counsel of CGCC for many years, and he is familiar with the latest policies and trends of all parties. We will make persistent efforts to provide professional and reliable legal services for various corporate entities in the process of implementing cross-border compliance strategies.

        美国商务部工业和安全局 (BIS) 近期表示,出于国家安全考虑,美国已将 27 个外国实体列入黑名单,其中 12 个来自中国。BIS在联邦公报上发布的规则中指出:“在此最终规则中,BIS 修改了出口管理条例 (EAR),将 27 个实体添加到实体清单中。这 27 个实体已被美国政府认定为违反国家安全或外交政策美国的利益,”BIS在联邦公报上发布的规则中说。除了这 12 家中国实体外,该名单还包含来自日本、巴基斯坦和新加坡的实体,以及 1 家俄罗斯实体。该名单包括中国嘉兆科技有限公司(一家于 2019 年被列入黑名单的实体)在中国、新加坡和日本的三个附属公司。


The SEC Finalizes the Filing and Disclosure Requirements in the Foreign Company Accountability Act


        The U.S. Securities and Exchange Commission (SEC) said on December 2, 2021 that it had adopted an amendment to finalize the filing and disclosure requirements in the Holding Foreign Companies Accountable Act.  

        The SEC finalizes the filing and disclosure requirements in the Foreign Company Accountability Act. Companies with annual audit reports issued by a certified public accountant firm located in a foreign jurisdiction must submit documents to the SEC proving that it is not owned or controlled by a government entity within the foreign jurisdiction where the accountant firm is located.

The final plan of the "Foreign Corporate Liability Act" requires foreign companies to disclose their accounts to the US government, otherwise they may be delisted from the New York Stock Exchange and the Nasdaq Stock Exchange within three years.

        This new regulation may result in the removal of more than 200 companies and make some Chinese companies less attractive to investors. In fact, the US government has required inspections of foreign listed companies' accounts since 2002, but China and Hong Kong are the only regions that do not allow inspections of accounts. This new rule of the US SEC aims to ensure that foreign companies listed in the United States, especially Chinese companies, abide by the rules of the United States. U.S. regulators worry that the lack of U.S. oversight will put investors at risk.

        The rule will also require Chinese entities listed in the United States through a tool called variable interest entity (VIE) to enhance information disclosure.

        美国证券交易委员会 (SEC) 于 2021 年 12 月 2 日表示,已通过一项修正案,以最终确定《外国公司责任法》中的备案和披露要求。

        SEC 最终确定了《外国公司责任法》中的备案和披露要求。由位于外国司法管辖区的注册会计师事务所出具年度审计报告的公司必须向美国证券交易委员会提交文件,证明其不为会计师事务所所在外国司法管辖区的政府实体所有或控制。


       这项新规定可能会导致 200 多家公司被淘汰,并使一些中国公司对投资者的吸引力降低。事实上,美国政府从2002年就开始要求对外国上市公司的账目进行检查,但中国和香港是唯一不允许进行账目检查的地区。美国证券交易委员会的这项新规定旨在确保在美国上市的外国公司,特别是中国公司,遵守美国的规定。美国监管机构担心美国缺乏监管将使投资者面临风险。


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