The BIS Affiliates Rule Returns on November 10, 2026: What Exporters Need to Do Now
By Ruta Riley, Founding Partner, One Lex Partners LLC. Published September 23, 2026. This article is general information, not legal advice.
The rule returns November 10 with no grace period. If your transactions will need a license, prepare the application now so it is ready to file when the requirement takes effect.
On November 10, 2026, the export restrictions that apply to parties on the Entity List will again extend to the companies those parties own. The Bureau of Industry and Security (BIS) adopted this Affiliates rule in September 2025 and suspended it for one year six weeks later. Unless BIS extends the suspension, the rule returns automatically. From that date, a name check against the Consolidated Screening List will no longer tell an exporter whether a license is required.
What the rule does
Entity List restrictions apply to any foreign entity owned 50 percent or more by one or more listed entities. Ownership may be direct or indirect, and held individually or in the aggregate. The same test applies to the Military End-User (MEU) List and to persons blocked under the OFAC programs listed in § 744.8(a)(1) of the Export Administration Regulations. The rule also reaches down through layers of ownership. If a listed party owns 50 percent or more of Company A, and Company A owns 50 percent or more of Company B, both companies are covered, even though the listed party owns none of Company B directly. Stakes held by different listed owners are added together. When the owners carry different restrictions, the most restrictive license requirement, license exception eligibility, and license review policy apply.
A covered affiliate is restricted wherever it is located. For example, a Malaysian subsidiary of a company listed under China is covered. The rule covers only foreign entities. A U.S. company owned by a listed party is not covered by the Affiliates rule, but other EAR restrictions can still apply, and a U.S. company owned 50 percent or more by an SDN is generally blocked under OFAC's own rules. It also extends the Entity List foreign direct product rules to covered affiliates, which means non-U.S. manufacturers need the same analysis.
The compliance burden
Strict liability applies. BIS states that the rule creates an affirmative duty to determine the ownership of the other parties to a transaction. Under new Red Flag 29, an exporter that knows a foreign party has a listed owner must determine the ownership percentage. If it cannot, it must obtain a license where the owner's listing requires one, unless a license exception is available.
Ownership below 50 percent does not trigger the rule. BIS still treats significant minority ownership and overlapping board membership as red flags that require more diligence. A license application involving a covered affiliate must identify the listed owners, their ownership percentages, and the method used to determine them.
No transition period
The 2025 rule included a temporary general license for certain transactions with covered affiliates in allied countries and certain joint ventures. That authorization expired in 2025. The suspension rule provides that the reimposed provisions are the same as those in the 2025 rule, so a reinstated temporary general license would carry its original 2025 expiration date. Companies should plan on the full rule applying on November 10, including to orders in progress.
Filing early does not solve this. Until November 10, no license is required for a covered affiliate, and BIS returns an application without action when it determines that no license is required. A license application filed before then is likely to come back unprocessed. The practical course is to complete the ownership analysis and prepare the application now, then file on November 10. As of September 23, 2026, BIS has not announced an extension.
What to do before November 10
If a counterparty will be covered, prepare the license application now, including the listed owners, their ownership percentages, and the method used to determine them, so it can be filed on November 10.
Identify customers, distributors, consignees, and end users with ownership links to listed parties.
Obtain direct and indirect ownership data, aggregated across all listed owners. Confirm that your screening vendor covers Entity List and MEU List ownership, not only SDN ownership.
Add contract representations on listed-party ownership, a duty to notify of ownership changes, and a right to suspend performance.
Assign responsibility for Red Flag 29 cases, and decide in advance when the company will file a license application instead.
Keep the ownership analysis with the transaction record.
The same ownership analysis applies in an acquisition. A buyer should identify the target’s customers, suppliers, and investors that the rule would reach before closing, as described in our article on trade compliance due diligence in M&A and private equity transactions.
Preparing for November 10
One Lex Partners reviews the ownership of specific customers and distributors under the Affiliates rule, resolves cases where ownership is unclear, updates screening procedures and contract terms, and prepares license applications for transactions the rule will cover. Contact us at onelexpartners.com.
