US Treasury proposes outbound-investment rules: transaction mapping matters before the December comment deadline

A proposal, with comments due December 7

Treasury’s 26 October proposed rule would implement Subtitle C of the Comprehensive Outbound Investment National Security Act, codified in Title VIII of the Defense Production Act. It proposes notification requirements for certain US-person transactions involving notifiable technologies and prohibitions for certain transactions involving prohibited technologies. Written comments are due on 7 December 2026.

The proposal also addresses the relationship with the existing outbound-investment regulations and their applicable time periods. Publication of a proposal does not mean that all proposed provisions are already effective, or that existing obligations have disappeared while comments are considered. The relevant transaction date remains important.

Start with parties, activities and transaction structure

Treasury’s official program page provides the current framework and related guidance. A sensible initial review maps the investor, ownership and control, the target’s actual activities, and the proposed legal arrangement. A company’s marketing description as a technology business is not a complete regulatory classification.

For a hypothetical investment routed through several jurisdictions, the incorporation address of the immediate counterparty may not answer every scope question. Obtain the relevant ownership and activity information and identify which facts remain unverified. Do not infer either coverage or exemption solely from an intermediary’s location.

Keep other transaction checks separate

Outbound-investment review is distinct from sanctions screening, export controls, inward-investment rules and ordinary commercial due diligence. A conclusion under one regime should not be presented as clearing the entire transaction. Document the separate questions and assign responsibility for each part of the assessment.

A term sheet can identify information needed before commitment and conditions requiring resolution before closing. The appropriate drafting depends on the transaction. Copying a generic compliance warranty without understanding the target’s activities may leave the parties disputing what was promised when a problem emerges.

Comment without exposing confidential deal material

Treasury warns that comments and attachments will be public, including confidential business or identifying information supplied in them. A business can describe a definitional or implementation problem through a carefully anonymised example. A public rulemaking docket is not a confidential request for clearance of a particular deal.

What to do during the consultation

Review planned transactions against the rules currently applicable, then assess how the proposal could affect future commitments if finalised. Preserve the assumptions, sources and date of that review. The proposal is a reason for focused preparation, not a basis for claiming that every overseas investment is prohibited or that a transaction is automatically safe.

Legal check date

Sources and law checked on 27 October 2026. Later developments are not reflected automatically. Application of the rules depends on the individual facts.