H.R. 2246: Foreign Investment Guardrails to Help Thwart (FIGHT) China Act

The "Foreign Investment Guardrails to Help Thwart (FIGHT) China Act" is a legislative proposal that focuses on safeguarding U.S. national security against potential threats from certain Chinese entities. The main features of the bill include:

Sanctions on Chinese Entities

The bill aims to impose sanctions on specific Chinese companies and organizations identified as risks to U.S. security. Such sanctions may restrict their access to U.S. markets and resources, effectively limiting their operational capabilities within the country.

Regulation of Investments by U.S. Persons

This legislation seeks to regulate how U.S. individuals and companies can invest in China. It will implement measures to scrutinize and potentially limit the investments that could pose risks to national security. The bill aims to monitor and manage these investments to safeguard sensitive technologies and information from foreign adversaries.

Enforcement and Compliance

The FIGHT China Act outlines requirements for enforcement of the sanctions and investment regulations. It mandates that U.S. persons must comply with new reporting requirements regarding their investments in Chinese entities and must be aware of the restrictions imposed by the act. Failure to comply could lead to penalties or other enforcement actions.

Public Database of Foreign Entities

Another significant provision included in the act is the establishment of a public database that will list foreign entities involved in activities that may threaten U.S. national security. This database aims to increase transparency and provide U.S. persons with the necessary information to make informed investment decisions.

Exemptions from "Covered Transactions"

The bill also specifies certain exemptions to what constitutes "covered national security transactions." These exemptions include:

• Minimal-value transactions that are deemed inconsequential.
• Investments in specific securities and funds that are not considered risky.
• Ancillary transactions conducted by financial institutions that do not pose any significant threat.

By clarifying these exemptions, the legislation aims to ensure that benign or low-risk transactions do not face unnecessary restrictions.

Definitions and Compliance Requirements

The act provides definitions for various terms that relate to foreign entities, technologies that are considered notifiable or prohibited, and outlines the compliance requirements for U.S. investors. This will help standardize how these terms are understood and applied, ensuring that investors are fully aware of their obligations and the nature of investments that fall under the bill's jurisdiction.

Conclusion

Overall, the FIGHT China Act represents a comprehensive approach to enforce stricter controls on investments between the U.S. and China, aiming to mitigate risks to national security while delineating clear rules and exemptions to facilitate compliance from U.S. investors.

Relevant Companies

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