Treasury’s proposed expansion of the Outbound Investment Security Program has prompted different descriptions from leading law firms, but substantial agreement on its consequences for AI and biotechnology investments.
Recent client alerts on the topic offer complementary approaches to assessing transaction eligibility, diligence obligations and the transition to new regulations. The central distinction is between continuity in the program’s structure and changes in the investments it would restrict.
Skadden emphasizes structural continuity. Its description of a “modest” expansion reflects the preservation of the existing prohibition-and-notification framework and many established concepts.
That characterization does not extend uniformly to individual sectors. Skadden identifies AI and biotechnology as the most consequential changes, explaining that the AI provisions would restrict transactions currently reportable or outside the rules.
Its practical contribution includes attention to fund structures, limited-partner exceptions, recusal procedures and existing capital commitments. The analysis helps counsel distinguish provisions requiring revised procedures from those threatening an investment’s eligibility.
Covington concentrates on the proposal’s cumulative reach. Its “broad expansion” assessment combines wider technology restrictions with changes to covered entities, U.S. participation in foreign transactions and notification requirements.
Particularly useful is its discussion of control through minority interests: a target outside China may require closer scrutiny where a Chinese shareholder can direct its management or policies.
Covington also identifies unresolved questions involving joint ventures, existing operations and indirect fund investments. Its treatment of discretionary, nonbinding feedback highlights the limits of relying on Treasury to resolve transaction uncertainty.
Linklaters contributes a close reading of implementation and timing. It distinguishes the existing rules in part 850 from the proposed framework in part 851 and notes that the proposal expressly rejects retroactive application, despite potentially confusing language in Treasury’s fact sheet.
Its analysis also explains proposed protections for underwriting and other financial services. For transaction counsel, this provides a useful starting point for separating historical compliance, pending commitments and future investment decisions.
Linklaters additionally emphasizes the difficulty of obtaining diligence information across jurisdictions.
Clifford Chance organizes the changes through a detailed comparison of current and proposed requirements. Its “significant expansion” characterization rests particularly on the movement of investments from permissible or reportable categories into prohibited categories.
The briefing explains how broader AI restrictions would eliminate much of the existing middle ground, while biotechnology coverage and expanded entity definitions would require revised diligence.
Its comparative presentation is especially useful for compliance teams updating policies, questionnaires and investment approval procedures rather than evaluating a single deal.
Foley Hoag supplies the most focused life-sciences analysis. It distinguishes covered investments from ordinary commercial arrangements, explaining that the proposal would not categorically prohibit licensing Chinese-developed drugs or purchasing research and manufacturing services.
Its distinctive contribution is examining the boundary between licensing and qualifying joint ventures, which may exist without a new entity or equity issuance. That distinction directs counsel toward the arrangement’s substance rather than its label.
Read together, the publications support a transaction-specific approach: identify what changes the legal outcome, what increases diligence, and what remains excepted. Their differing headlines should not obscure those shared priorities for investors and counsel preparing for implementation.
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Reports
Skadden — Treasury Proposes Modest Expansion of Outbound Investment Rules Under the COINS Act, October 30, 2026.
Covington — Treasury Proposes Broad Expansion of Outbound Investment Restrictions, October 29, 2026.
Linklaters — Newly Proposed COINS Act Rules to Revise U.S. Outbound Investment Security Program, October 26, 2026.
Clifford Chance — Proposed Regulations Would Bring Significant Expansion of the U.S. Outbound Investment Security Program, November 3, 2026.
Foley Hoag — Implementing COINS: Treasury Proposes Restricting Outbound Investment on Biotechnology, October 30, 2026.
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