BIS 50% Rule: What Exporters Need to Know Now

Trade Update • July 23, 2025

Key Points

• The BIS 50% Rule expands export controls to any company owned 50% or more by parties on the BIS Entity List.

• It closes loopholes where restricted parties use subsidiaries or hidden ownership to avoid controls.

• Exporters must check ownership, not just company names, when screening partners.

• Failing to comply can lead to fines, shipment delays, and legal issues.

• Companies should update their screening tools, policies, and training to meet new requirements.

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) is advancing the BIS 50% Rule, a proposed regulation that will expand export restrictions to any company 50% or more owned by listed parties. Exporters must enhance due diligence and integrate ownership checks into their systems to ensure ongoing compliance and avoid trade disruptions.

What Is the BIS 50% Rule? 

The rule will treat any entity owned 50% or more, directly or indirectly, by one or more parties on the BIS Entity List as restricted, even if that entity is not named on the list. Ownership stakes from multiple listed parties can add up to the 50% threshold. The rule applies to subsidiaries, holding companies, and layered ownership structures. 

Why Is the BIS 50% Rule Being Introduced? 

The rule aligns BIS enforcement with similar sanctions rules used by OFAC, but with a sharper focus on trade compliance and technology diversion risks. It aims to: 

• Stop restricted parties from avoiding export controls by using affiliates, subsidiaries, or hidden ownership 

• Prevent sensitive U.S. technology from reaching countries like China, Russia, and Iran through indirect ownership 

• Apply restrictions quickly without listing every subsidiary separately 
• Respond to bipartisan concerns that export controls are ineffective without ownership-based rules 

Impact on Export Compliance 

• Screening only based on company names is no longer sufficient. 

• Greater risk of fines, delays, and supply chain disruptions, particularly for sensitive technology sectors 

• More complex due diligence requirements, especially for companies with layered or global ownership 

• Early preparation required to meet new requirements  

How to Prepare for the BIS 50% Rule 

• Upgrade standard denied party screening tools to include ownership verification 

• Map ownership of all customers, suppliers, and partners thoroughly. 

• Integrates screening into business systems like ERP and procurement platforms. 

• Update policies and train staff on how to detect and act on ownership risks. 

• Work with compliance experts and technology providers for ongoing support. 

How GHY Can Help?

GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.

By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.

Contact Us Today! Booking a Meeting, email consult@ghy.com, or call +1 (800) 667-0771.