BIS Affiliates Rule: the 50% rule and its suspension

The BIS Affiliates Rule, often called the 50% rule, is a US export-control rule that treats a company as restricted if listed parties own 50% or more of it. It was issued in September 2025 and suspended in November 2025 as part of a US-China trade deal. As of October 2026 the suspension is legally set to end on 9 November 2026 (the rule would resume on 10 November), but an extension to 10 January 2027 has been announced politically, and the formal notice had not been seen in the sources checked.

This page explains what the rule does, how ownership is counted, and what the suspension means for chip and equipment makers. It is background, not legal advice.

What is the BIS Affiliates Rule?

The Bureau of Industry and Security (BIS) is the part of the US Department of Commerce that writes the Export Administration Regulations (EAR). Its Entity List and Military End-User (MEU) List name foreign parties that need a licence for many exports.

Before the rule, BIS applied a “legally distinct” approach: a subsidiary or sister company of a listed entity was not itself restricted unless it was also named on the list. That left a gap, because a listed firm could route purchases through an unlisted affiliate.

On 29 September 2025 BIS issued an interim final rule, Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities (Federal Register document 2025-19001, published 30 September 2025). It closed that gap by extending the licence requirements to non-listed entities that are 50% or more owned by listed parties. The approach is modelled on the 50 percent rule long used by the US Treasury’s sanctions office, OFAC.

How the 50% test works

Law-firm summaries of the rule, such as the Miller Canfield analysis and Kharon’s FAQ, describe the same core mechanics:

Direct or indirect ownership. A listed party can hold the stake itself or through other companies.
Aggregation. Stakes of different listed parties are added together. A 25% stake held by an Entity List party plus 25% held by an MEU List party reaches 50%.
Downstream only. The rule flows from owner to subsidiary. A parent of a listed company is not covered just because its subsidiary is listed.
Ownership, not control. A company that a listed party controls without owning 50% is outside the test, though it can still be a red flag.
Chains. A covered subsidiary that owns 50% or more of another company passes the restriction on to it.
Most restrictive owner. Where several listed owners are involved, the affiliate is treated under the most restrictive licensing requirement and policy that applies to any of them.

The rule also reached certain parties on the US Treasury’s Specially Designated Nationals list under specific sanctions programmes, according to the Kharon summary. This page focuses on the Entity List and MEU List, which matter most to the chip industry.

Why it matters for chip and tool makers

Many Chinese technology groups have a handful of listed entities and a much larger number of subsidiaries, fabs, design houses and trading arms that are not on any list. Under the original rule, a licence requirement that applied to the listed parent could apply to all of those subsidiaries too.

For suppliers of semiconductors, chipmaking equipment, EDA software and components, that would mean checking not only the names on the Entity List but also who owns each customer, distributor and end user. See our coverage of chips and tech regulation for the wider export-control picture.

What exporters were expected to do

Work out ownership percentages when they know or suspect a counterparty has listed owners.
Obtain a licence, or confirm a licence exception applies, if ownership cannot be determined and a listed owner is possible, according to the Kharon and Miller Canfield summaries.
Treat significant minority stakes, shared management or addresses tied to listed parties as red flags that call for more due diligence.
Consult BIS guidance, including its Entity List FAQs, when a transaction’s status is unclear.

The suspension: what happened and when

29 September 2025: BIS issues the interim final rule; it is published in the Federal Register the next day.
November 2025: After US-China talks, the White House announces a one-year suspension starting 10 November 2025. BIS then publishes a final rule implementing the suspension, which says the suspension ends on 9 November 2026 unless extended, as summarised by Kharon; law firms describe the rule as set to resume on 10 November.
During the suspension: The EAR works as it did before the rule, with the “legally distinct” approach. The rule has been suspended, not repealed.
23 September 2026: Treasury Secretary Scott Bessent announces a two-month extension of the US-China trade truce to 10 January 2027, per Mondaq and the National Law Review. The suspension is expected to follow the truce.

The open point, as of October 2026, is paperwork. Law-firm commentary dated early October said BIS had not published a Federal Register notice moving the date and that the US government had not explicitly confirmed the extension covers the Affiliates Rule. Firms generally advise assuming the suspension continues while preparing for the rule to return. Check the Federal Register and bis.gov for the current status before relying on any date here.

What to watch next

A BIS notice in the Federal Register extending the suspension past 9 November 2026.
Whether the truce is renewed again after 10 January 2027.
Any revised Entity List FAQs or other guidance from BIS on how the rule is applied.

Frequently asked questions

What is the BIS 50% rule?

It is the common name for the Affiliates Rule, which applies Entity List and MEU List licence requirements to companies that listed parties own 50% or more of, directly or indirectly.

Is the Affiliates Rule in effect now?

As of October 2026 it is suspended. The suspension is legally set to end on 9 November 2026, and an extension to 10 January 2027 has been announced but was not yet confirmed by a Federal Register notice in the sources checked.

Does the rule apply to Chinese companies only?

No. It applies to any non-US entity that meets the ownership test, wherever it is based. The suspension came out of US-China talks, which is why China is the focus.

Do several minority stakes count together?

Yes. Stakes held by different listed parties are added up, so two 25% holders on different lists produce a 50% aggregate.

Is this legal advice?

No. Companies with export-control exposure should check the official texts and consult qualified counsel.