Introduction
On October 28, 2024, the US Treasury issued a Final Rule for the Outbound Investment Program (OIP) under Executive Order 14105, aimed at protecting national security by restricting US investments in critical technologies in “countries of concern,” particularly China. Effective January 2, 2025, the OIP focuses on investments in Semiconductors, Quantum Technologies, and AI, prohibiting certain transactions while allowing others with notification requirements.
Exemptions apply to passive investments in listed securities, LP investments in pooled funds, and transactions supporting ongoing operations. LPs must conduct diligent inquiries regarding fund activities and cannot rely on safe harbors. Exemptions exist for LP investments under specific conditions, but diligence is crucial to maintain eligibility.
Takeaways
The OIP poses significant diligence challenges for LPs investing in funds linked to countries of concern. Specialist advice is recommended for navigating these complexities.