For years the Entity List worked on a literal-match basis: a company was restricted only if its exact legal name appeared on the list, regardless of who owned it. The September 2025 BIS interim final rule closed that gap with one of the most consequential structural changes the Export Administration Regulations (EAR) have seen. Under the rule, any entity that is at least 50 percent owned, directly or indirectly, individually or in aggregate, by one or more Entity List parties automatically becomes subject to the same Entity List restrictions, even if its own name never appears on the list. This is the EAR's version of a long-standing Treasury concept, and importing it changes the diligence calculus for anyone shipping controlled items into corporate structures touching listed parties.
What the 50 percent rule actually says
The rule's core operative text is precise about aggregation. An entity is captured if it is at least 50 percent owned by one or more listed entities, and crucially the ownership can be held individually or in aggregate. That word 'aggregate' is the teeth. A subsidiary that is 30 percent owned by one Entity List party and 25 percent owned by another, neither of which alone reaches 50 percent, is nonetheless captured because the combined holding is 55 percent. The rule reaches direct and indirect ownership alike, so ownership held through intermediate holding companies counts. The same 50 percent standard is extended beyond the Entity List itself to entities at least 50 percent owned by listed 'military end users' and by certain sanctioned parties, meaning the affiliates concept now propagates restrictions across several of the EAR's restricted-party regimes at once.
Why BIS aligned with the Treasury model
BIS did not invent the 50 percent figure. The rule explicitly aligns it with the Office of Foreign Assets Control (OFAC) practice, under which entities owned 50 percent or more, directly or indirectly, individually or in the aggregate, by blocked persons are themselves treated as blocked regardless of whether they are specifically named. BIS adopted the same standard deliberately, reasoning that matching long-standing Treasury practice would limit the additional burden on a business community that already performs OFAC 50-percent screening. In other words, the agency chose a number companies were already operationalizing, so the marginal compliance lift is the work of mapping EAR-listed parties through the same ownership-aggregation engine firms already run for sanctions. The alignment is a tell about how BIS thinks about diversion: it is treating Entity List avoidance through shell affiliates the way Treasury has long treated sanctions evasion through ownership layering.
The diligence problem this creates
The practical consequence is that classification is no longer enough; counterparties must be screened for upstream ownership. Before this rule, a screening hit required matching a name. Now a clean name can still be a captured party if its cap table runs back to listed entities. That pushes the burden into beneficial-ownership research, which is precisely the hardest part of any restricted-party program because ownership is often opaque, layered through multiple jurisdictions, and not reliably disclosed. The rule effectively says that the absence of a name on the Entity List is no longer a safe harbor when the ownership chain is unknown, which raises the diligence bar for transactions involving complex or undisclosed corporate structures, especially those routed through holding companies in third countries.
How it interacts with the chip controls
The affiliates rule is not itself a chip-specific control, but it is force-multiplying the advanced-computing and SME controls that are. Much of the semiconductor-related enforcement effort has involved listed entities standing up new procurement vehicles to keep acquiring controlled tools and accelerators after the parent is restricted. A literal-name Entity List was structurally vulnerable to exactly that maneuver: list one entity, watch a freshly incorporated affiliate take over purchasing. By making 50-percent-owned affiliates automatically restricted, the rule attacks that workaround at its root and dramatically extends the reach of the 3A090 and 3B001/3B002 controls without amending a single ECCN. For compliance teams in the chip supply chain, the September 2025 rule may end up mattering as much as any parameter threshold, because it changes who, not what, is controlled.
Direct, indirect, and the holding-company problem
The phrase 'directly or indirectly' in the rule is more than boilerplate. Indirect ownership means the 50 percent test follows the chain through intermediate entities, so a structure in which a listed party owns a holding company that in turn owns an operating subsidiary can capture the subsidiary even though the listed party holds no shares in it directly. Combined with the aggregation across multiple listed owners, this produces a control surface that mirrors how diversion networks are actually built, through layered minority stakes and intermediate vehicles rather than clean majority holdings in a single named company. The rule's choice to track economic ownership through the chain, rather than the legal-name match the Entity List historically used, is what makes it resistant to restructuring. Reincorporating or renaming an affiliate does not help if the ownership math still runs back to listed parties at 50 percent or more.
It is worth being precise about what the rule does and does not change. It does not add new ECCNs, new parameters, or new commodity-level controls; the license requirements that attach to a captured affiliate are the same Entity List restrictions that already applied to its owners. What changes is the population of parties to whom those restrictions apply, expanded automatically by an ownership formula. BIS framed the alignment with OFAC's longstanding 50 percent practice as a way to keep the marginal burden manageable, since multinational firms already run aggregate-ownership screening for sanctions and can extend the same logic to EAR-listed parties. For the semiconductor supply chain specifically, the rule's effect is to make beneficial-ownership diligence a first-class part of export compliance, on par with the parameter classification work that dominates the advanced-computing and SME rules.