Treasury Updates Minority Shareholder Protections and COINS Act Regulations on Outbound Investments
The Treasury has clarified that the right to nominate directors is a standard minority shareholder protection, while the right to appoint a director disqualifies an investment from excepted status. Following the enactment of the COINS Act, which mandates regulations to restrict outbound U.S. investments in certain countries, U.S. investors must continue to comply with existing Outbound Investment Security Program requirements until new regulations are established. The COINS Act is expected to increase obligations for U.S. investors moving forward.
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The Treasury has revised its stance in FAQ X.5, stating that the right to nominate directors is a standard minority shareholder protection if available to similarly situated minority shareholders, while the right to appoint a director does not qualify as such. Acquiring an appointment right removes an investment from excepted status.
On December 18, 2025, the COINS Act was enacted as part of the National Defense Authorization Act for FY 2026, mandating the Treasury to issue regulations within 450 days to restrict outbound U.S. investments in specific countries and technologies, including Cuba, Iran, North Korea, Russia, and Venezuela. FAQs XI.1 and XI.2 confirm that the COINS Act does not change the existing Outbound Investment Security Program (OISP) requirements, and U.S. persons must continue to comply with OISP until new regulations are issued. The COINS Act will likely expand obligations for U.S. investors in the future.
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