What Is the BIS 50% Rule? The Affiliates Rule Returns on November 10, 2026 — Calculation Examples and How to Prepare

This is Ryuta Hamamoto from TIMEWELL. The question I hear most from export compliance teams right now is simple: "The BIS 50% Rule was suspended — do we still need to prepare?" Short answer: yes. The rule was not repealed. It is stayed through November 9, 2026, and absent further rulemaking it returns on November 10, 2026. As of August 2026, that is roughly three months of calendar time — not three months of spare capacity.

This guide works from the Federal Register text (90 FR 47201 and FR Doc 2025-19846). It is written for US exporters, reexporters, and foreign parties dealing in items subject to the EAR. If you only match names against the Consolidated Screening List today, you will be under-equipped when the stay lifts.

The BIS 50% Rule in 30 seconds

Item	Content
Formal name	Expansion of End-User Controls To Cover Affiliates of Certain Listed Entities (Affiliates Rule / BIS 50% Rule)
In one sentence	Companies owned 50% or more by certain listed entities face the same license requirements as the listed owner — even if the affiliate is never named on a public list
Legal basis	90 FR 47201 (published September 30, 2025; effective September 29, 2025)
Current status	Suspended November 10, 2025 through November 9, 2026
Scheduled return	November 10, 2026
Lists covered	Entity List; Military End-User (MEU) List; certain SDN parties designated under 15 CFR §744.8(a)(1)
Threshold	50% or more ownership — direct or indirect, individual or aggregated
What to do now	Map counterparty ownership (UBO), triage high-risk accounts, and build a process that works on day one of return

If you want a field checklist while you read, use our free BIS 50% Rule compliance checklist (PDF).

What the rule does

The Affiliates Rule is a BIS mechanism introduced in September 2025. When listed entities — alone or together — own 50% or more of another company, that unlisted company is treated as subject to the same end-user license requirements as the listed owner for purposes of the covered lists. If you need a license to ship to the listed parent, you need the same license posture for the 50% affiliate.

From "legally distinct" to ownership percentage

Before the rule, BIS largely drew Entity List boundaries with a legally distinct concept. Branches and aliases of a listed party could be treated as the same entity. A separately incorporated subsidiary generally was not covered unless BIS added that subsidiary to the list by name. Name-matching the public list was often enough to close the file.

The Affiliates Rule redraws the line by ownership. In the preamble, BIS points to diversion risk: listed parties can route transactions through new subsidiaries faster than list maintenance can keep up. An ownership rule is a structural answer to that chase.

Three lists, and the OFAC family resemblance

The rule attaches to:

1. The Entity List
2. The MEU List
3. Certain SDN parties designated under programs in 15 CFR §744.8(a)(1)

The 50% threshold will feel familiar if you already run OFAC's long-standing 50 Percent Rule for SDN blocking. The designs are cousins, not twins. One operational difference that matters: BIS aggregation can run across the covered lists, not only inside a single OFAC program.

Ownership math: four patterns from the rule text

Pattern 1 — single direct ownership

Entity List Company A owns 60% of unlisted Company B. Company B faces Company A's license requirements even though B never appears on the Entity List.

Pattern 2 — aggregation across listed owners

Federal Register example: Company A is listed with a broad license requirement and presumption of denial. Company B is listed with a narrower CCL-item scope and case-by-case review. A owns 35% of unlisted Company C; B owns 15%.

Company C is covered at an aggregated 50%. Under the rule of most restrictiveness, Company A's stricter requirements apply to C. Reverse the percentages (A at 15%, B at 35%) and C is still covered — the total, not the identity of the larger holder, crosses the line.

Pattern 3 — indirect ownership (cascade)

Suppose covered Company C then owns 50% of unlisted Company D. Company D is covered even though C itself is not named on a list. Ownership-based coverage propagates down the chain. In principle, the cascade continues through additional tiers.

Entity List A (35%) + listed B (15%)
        |  aggregate 50%
        v
Unlisted C ... covered (A's stricter requirements)
        |  50%
        v
Unlisted D ... covered by cascade

Pattern 4 — cross-list aggregation

An Entity List company owns 15% of Company X; an MEU List company owns 35%. Neither stake alone is 50%, but aggregate ownership by covered listed parties reaches 50%, so X is covered. This is stricter, in design, than OFAC program-silo aggregation.

Exactly 50% counts; below 50% is not a free pass

"50 percent or more" includes exactly 50%. At 49%, automatic coverage does not fire — but BIS flags significant minority ownership and other control indicia (for example overlapping directors) as diversion red flags. Below 50% still means enhanced diligence, not "ignore."

No public roster of covered affiliates

This is the operational pain point. Affiliates captured only by ownership do not appear on the Entity List or on the Consolidated Screening List (CSL) as such. The Federal Register text itself recognizes that the CSL will no longer be an exhaustive map of parties subject to Entity List-style license requirements. List matching is necessary and no longer sufficient. You determine coverage by investigating ownership.

Red Flag 29 and the affirmative duty

The rule added Red Flag 29 to the Know Your Customer guidance in Supplement No. 3 to Part 732. If you know listed entities hold a stake but cannot determine the percentage, you may not export, reexport, or transfer in-country until you:

1. Resolve the red flag,
2. Obtain a BIS license, or
3. Identify an applicable license exception.

Applying the Affiliates Rule creates an affirmative duty to determine ownership of other parties to the transaction. "We never checked, so we didn't know" is not a process.

When the percentage cannot be determined

Treat the counterparty under the most restrictive license requirements applicable to the listed owner. License applications should flag Affiliates Rule issues (including the designated block on BIS-748P) and explain diligence performed and why the percentage could not be established. Filing is not a shortcut around investigation.

Exceptions and transition tools

The End-User Review Committee can grant case-by-case exclusions where a specific affiliate does not present diversion risk, and parties can petition list modifications under procedures such as §744.16(e). A Temporary General License (General Order No. 7) existed when the rule first took effect but expired November 28, 2025. Whether a similar bridge will accompany the November 2026 return has not been announced. Plan as if no free transition period arrives.

Timeline and countdown (primary-source dates)

Date	Event
September 29, 2025	Affiliates Rule effective (interim final rule)
September 30, 2025	Published at 90 FR 47201 (FR Doc 2025-19001)
October 29, 2025	Public comment deadline
November 10, 2025	One-year suspension begins
November 12, 2025	Suspension rule published (FR Doc 2025-19846)
November 10, 2025 – November 9, 2026	Suspension period (current)
November 10, 2026	Scheduled return

The suspension stays the amendments to 15 CFR parts 732, 734, 736, 744, and 748 through November 9, 2026. It is not a repeal. Absent further action, the rule returns automatically. Policy could extend the stay; betting your program on that is not compliance design. Prepare for return; adjust if Washington changes the text.

Working-backward plan from November 10, 2026

Timing	Action
August 2026 (now)	Finish counterparty inventory; triage high-risk accounts
August–September 2026	Ownership research on high-risk parties; send verification requests
September–October 2026	Upgrade screening tools and SOPs; revise contract clauses
October 2026	Training; identify transactions that may need licenses on day one
November 10, 2026	Operate under the restored rule

For a book of several hundred counterparties, ownership work alone is multi-month work. Starting late September is already tight.

Five-step UBO workflow

Step 1 — Inventory and triage

Consolidate customers, suppliers, distributors, JVs, and known end users. Prioritize China/Russia touchpoints, sensitive items (semiconductors, AI, advanced telecom), and entities with likely state ownership. Equal depth on every account is how you run out of calendar.

Step 2 — Public-source ownership research

Commercial registries, annual reports, filings, and local corporate databases. For Chinese counterparties, start with the National Enterprise Credit Information Publicity System and reputable commercial aggregators — and do not stop at the first shareholder layer. Because coverage cascades, plan on three to four ownership tiers as a working habit.

Step 3 — Ask the counterparty

Where public data fails (private companies, complex JVs), request ownership information directly. Sample ask:

Subject: Request for confirmation of shareholder structure

To comply with the US Export Administration Regulations — specifically the BIS Affiliates Rule (50% ownership rule) scheduled to return on November 10, 2026 — please provide:

1. Names and ownership percentages of shareholders holding 10% or more
2. Parent and ultimate parent for each corporate shareholder above
3. Material ownership changes in the past 12 months

We will use the information solely for export control compliance and handle it confidentially. Please respond by [date].

Refusal is itself a red flag. Document it and escalate the relationship decision.

Step 4 — Run the determination and keep the record

Listed entities (or ownership-covered entities) among shareholders?
 |- None                  -> standard restricted-party screening; keep records
 |- Aggregate ≥ 50%       -> covered; apply most restrictive listed-owner requirements
 |- Aggregate < 50%       -> not automatic; red-flag diligence
 |- Percentage unknown    -> Red Flag 29; no transaction until resolved, licensed, or excepted

Document when you checked, which sources you used, how far you traced, and how you decided. EAR end-user violations are enforced on a strict liability footing for many purposes. Investigation records are what you show later.

Step 5 — Continuous monitoring and contracts

Ownership changes. Add periodic refresh cycles and contractual notice of ownership changes, plus termination rights if the counterparty becomes an affiliate of a listed entity. Ownership fields on end-use statements help.

Manual Steps 2–4 can take tens of minutes to several hours per company. Hundreds of counterparties become hundreds to thousands of hours. If that math does not fit before November 10, you need tooling, staffing, or both.

Tooling when manual UBO work does not scale

TRAFEED maps capital-relationship chains — parents, subsidiaries, affiliates — using a knowledge graph across corporate data, research linkages, and regulatory lists. AI screening accuracy of 95% or higher was confirmed in a joint validation with Okayama University (company research). TRAFEED holds Japanese Patent No. 7862062 and is used at more than 20 organizations. Final export decisions remain with your compliance officer. For a quick gap check, start with the free export compliance self-assessment (about three minutes).

Penalties

Affiliates Rule violations ride the general EAR civil and criminal framework. Civil penalties can reach on the order of USD 374,474 per violation (inflation-adjusted; revised periodically) or twice the transaction value, whichever is greater, and stack per violation. Willful criminal cases can involve up to 20 years' imprisonment and USD 1 million per violation, plus denial of export privileges or Entity List designation.

Public enforcement history shows how large cases get. In 2023, Seagate agreed to a USD 300 million settlement related to hard disk drive sales involving Huawei, with hundreds of charged violations. In 2017, ZTE faced roughly USD 1.2 billion in combined penalties across authorities for Iran- and North Korea-related reexport conduct. Those matters pre-date the Affiliates Rule, but they show the enforcement ceiling when end-user controls are ignored.

Strict liability means "we did not know the counterparty was a 50% affiliate" is not a clean defense. It may mitigate; it does not erase the violation theory. That is why Step 4 records matter.

FAQ

Q1. During the suspension, is dealing with a 50% affiliate a violation right now?

The Affiliates Rule's automatic license requirements are stayed. The Entity List itself remains fully effective. Transactions that look like diversion to a listed party can still create exposure under longstanding EAR KYC and General Prohibition principles. Use the stay to finish determinations — do not treat the stay as a free pass to ignore ownership signals.

Q2. Will it really return on November 10, 2026?

FR Doc 2025-19846 states the stay runs through November 9, 2026. Absent further rulemaking, return on November 10 is the default. Extension is a policy choice, not the regulatory baseline.

Q3. How does it differ from OFAC's 50 Percent Rule?

	OFAC 50 Percent Rule	BIS Affiliates Rule
Agency	Treasury OFAC	Commerce BIS
Effect	Blocking / transaction prohibitions	Automatic application of EAR license requirements
Aggregation	Typically within the same sanctions program	Across Entity List, MEU List, and certain SDNs under the rule

If you already run OFAC ownership analysis, extending that machinery to BIS-covered lists is usually faster than inventing a second process from scratch.

Q4. Is checking the CSL enough?

No. Ownership-only affiliates are not reliably listed on the CSL. The CSL remains essential for named parties. The 50% determination requires ownership research.

Q5. Do the EU or UK have an identical 50% export-control rule?

As of August 2026, neither has an EAR-style Affiliates Rule that automatically copies list license requirements by ownership percentage in the same way. EU individual sanctions can reach owned/controlled entities under different ownership/control tests. Do not assume non-US law fills the same gap for EAR-subject items.

Summary

The BIS Affiliates Rule automatically extends certain end-user controls to companies owned 50% or more by Entity List, MEU List, and specified SDN parties — counting direct and indirect stakes, individual and aggregated holdings, including cross-list aggregation. It is suspended through November 9, 2026 and scheduled to return November 10, 2026. There is no published roster of covered affiliates. Coverage is something you prove (or disprove) with ownership work, and that work takes longer than name screening.

Finish inventory and high-risk triage this month. You do not need perfection on day one of August. You do need the first cut before the calendar runs out.

Recommended reading

• Why Chinese ownership structures are hard to trace under the BIS 50% Rule
• What is an ultimate beneficial owner (UBO)?
• Entity List screening and customer due diligence
• Affiliate Rule risk framing
• Entity List, MEU List, and SDN List compared

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If ownership mapping is the bottleneck

Complying with the Affiliates Rule is not "match the Entity List harder." It is multi-tier parent/subsidiary analysis for parties that never appear on the CSL.

TRAFEED maps capital-relationship chains against regulatory lists. Production runs on AWS in the Tokyo region for confidential workloads.

TRAFEED features · Book a 30-minute consultation

TRAFEED product catalog (PDF)

References

Federal Register (primary)

• Expansion of End-User Controls To Cover Affiliates of Certain Listed Entities (90 FR 47201; FR Doc 2025-19001)
• One Year Suspension of Expansion of End-User Controls for Affiliates of Certain Listed Entities (FR Doc 2025-19846)

BIS

• BIS press release on expanding Entity List coverage to affiliates
• BIS Entity List FAQs
• BIS penalties

Additional commentary (secondary)

• JETRO coverage of the Affiliates Rule expansion (September 2025)
• JETRO coverage of BIS FAQ / affirmative confirmation duties (October 2025)
• Davis Polk client update: BIS 50% Rule