Do I need to sum ownership from different lists?

Exceptions apply, but generally BIS and OFAC rules operate independently. However, best practice is to aggregate all blocked parties relevant to the specific regulation (e.g., sum all Entity List + MEU List parties for EAR compliance).

How do I handle indirect ownership chains?

If a restricted party owns 50% or more of an intermediate entity, that intermediate entity is treated as blocked. You then count 100% of the intermediate entity's stake in the target.

BIS 50 Rule Ownership Aggregation

Why Aggregation Matters

The Department of Commerce's application of the 50 Percent Rule contains a critical multiplier: aggregation. You cannot view restricted owners in isolation. You must view them as a coalition.

If Restricted Party A owns 20% of a company, and Restricted Party B owns 30% of that same company, the company is 50% owned by restricted parties. This triggers the block, even though no single restricted party has a controlling stake.

The Calculation Logic

Scenario A: Simple Direct Aggregation

Owner 1 (Entity List) 25%
Owner 2 (MEU List) 25%
Total Restricted 50%
Result: BLOCKED

Scenario B: Indirect Chains (The "Waterfall")

This is where it gets complex. If a restricted party owns 50% or more of an Intermediate Company, that Intermediate Company is treated as if it were the restricted party itself.

1. Restricted Party A owns 51% of Intermediate Corp.
→ Intermediate Corp is now BLOCKED.

2. Intermediate Corp owns 40% of Target Company.
→ Rule treats this as if Restricted Party A owns 40% of Target Company.

3. Restricted Party B (separate listed entity) owns 10% of Target Company.

4. Total Aggregation: 40% (via Intermediate) + 10% (Direct) = 50%.
→ Target Company is BLOCKED.

Scenario C: Minority Limits

If a restricted party owns less than 50% of an Intermediate Company, the restrictions usually do not flow down automatically to the next level (unless the aggregate of multiple restricted parties at the top level is 50%+).

1. Restricted Party A owns 45% of Intermediate Corp.
→ Intermediate Corp is NOT blocked (though Red Flag exists).

2. Intermediate Corp owns 100% of Target Company.
→ Because Intermediate Corp is not blocked, Target Company is NOT blocked.
Warning: Due diligence still required to prove no control/diversion.

Tools for Calculation

Doing this math manually for every customer is prone to error. Spreadsheets don't update themselves when the Entity List changes.

Try the Interactive Calculator

Input your ownership data and see the aggregation results instantly. Perfect for spot-checking complex structures.

Launch Calculator

Best Practices

Always Aggregate: Never screen owners one by one. Screen the entire cap table as a dataset.
Watch for "Acting in Concert": Family members or close associates may be treated as a single block of owners by regulators in enforcement actions.
Keep Snapshots: Save your calculation math. If regulations change or you are audited 3 years later, you need to prove why you approved the transaction at that time.

Disclaimer: Educational content only. "Ownership" can be defined broadly (e.g., voting shares vs equity). Consult legal counsel for definitive determinations.