On July 14, 2015, the United States, the Islamic Republic of Iran and a number of other nations entered into the Joint Comprehensive Plan of Action (the “JCPOA”) with respect to Iran’s nuclear program. The JCPOA detailed relief from economic sanctions that would be provided by various nations and international organizations to Iran once the “Implementation Date” had occurred. On January 16, 2016, the International Atomic Energy Agency announced that the Implementation Date had occurred and the U.S. Secretary of State quickly concurred. Consistent with its undertakings in the JCPOA, the United States took a number of regulatory actions to cut back the prohibitions against transactions involving Iran and foreign persons. At the same time, many other aspects of U.S. sanctions were beyond the scope of the JCPOA and thus remain in place against Iran, particularly as they relate to activities of “United States persons.” We summarize below the salient aspects of what has changed and what remains the same. The reporting obligations relating to Iran-related transactions for reporting issuers (defined below) under U.S. securities laws remain in place.


Before the Implementation Date, there were a variety of sanctions regimes adopted by Western nations that were aimed at Iran. Some of these sanctions regimes were targeted specifically at Iran’s nuclear activities. Others were targeted at activities such as Iran’s support for terrorist groups and/or its human rights abuses.

Initially, the sanctions adopted by the United States were “primary” sanctions aimed at prohibiting transactions between “United States persons” and the people and government of Iran. These sanctions were considered “primary” because they targeted “United States persons”1 doing business with or in Iran. Eventually, the United States also adopted additional sanctions that were intended to cause persons not directly subject to U.S. jurisdiction to comply with at least certain aspects of the United States’ trade embargo against Iran, even if that activity occurred entirely outside the United States and complied with the local law applicable to such foreign persons. In 2012, the United States added section 560.215(a) to the primary sanctions under the Iranian Transactions and Sanctions Regulations (“ITSR”), subjecting foreign subsidiaries owned or controlled2 by United States persons to largely the same regulations as their U.S. parent entities; another provision made the U.S. parent entity liable for its foreign subsidiary’s violations of section 560.215. In addition, the United States added sanctions provisions that imposed indirect or collateral U.S. consequences (e.g., denial of access to the U.S. financial and payment systems or denial of the right to bid on U.S. government contracts) on foreign persons engaging in certain transactions with or in Iran even if those activities were in compliance with the local law applicable to such foreign persons. This last category is referred to as “secondary” sanctions.

As part of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”), Congress enacted section 219, which amended the Securities and Exchange Act of 1934 (the “Exchange Act”) and added subsection 13(r). This subsection requires that an issuer obligated to file periodic reports under the Exchange Act (a “U.S. public company”) disclose in its Form 10‑K or Form 10‑Q if it or any of its affiliates knowingly engaged in certain specified activities or transactions involving Iran during the relevant period covered by the form.

The United Nations (“UN”), European Union (“EU”) and some European nations also adopted their own primary sanctions against Iran in connection with Iran’s nuclear activities. The EU and European sanctions against Iran, generally speaking, were more limited than the U.S. sanctions and were not aimed at activities other than nuclear activities.

As contemplated by the JCPOA, the UN terminated previous UN resolutions regarding Iranian nuclear activities upon the Implementation Date. Likewise, the EU and European nations lifted a variety of primary sanctions on the Implementation Date. Thus, European nationals and European companies are now largely free under the laws of those jurisdictions to pursue new business in Iran (with some important exceptions such as certain military goods and nuclear technology). While the sanctions environment in Europe thus changed significantly after the Implementation Date, the sanctions environment in the United States and for United States persons and their affiliates was loosened to a much more limited extent.

Limited U.S. Sanctions Relief on the Implementation Date

As a result of the Implementation Date, the U.S. Department of the Treasury lifted only U.S. secondary sanctions and only those secondary sanctions relating to Iran’s nuclear program. The secondary sanctions lifted on January 16, 2016, as part of the implementation of the JCPOA include each of the following: (1) financial and banking-related sanctions; (2) sanctions on underwriting services, insurance or re-insurance in connection with activities that are consistent with the JCPOA; (3) sanctions on Iran’s energy and petrochemical sectors; (4) sanctions on transactions with Iran’s shipping and shipbuilding sectors and port operators; (5) sanctions on Iran’s trade in gold and other precious metals; (6) sanctions on trade with Iran in graphite, raw or semi-finished metals such as aluminum and steel, coal and software for integrating industrial processes, in each case in connection with activities that are consistent with the JCPOA; and (7) sanctions on the sale, supply or transfer of goods, technology and services used in connection with Iran’s automotive sector.

As a result of the lifting of these secondary sanctions, U.S. sanctions no longer apply to non-U.S. persons that are not owned or controlled by United States persons if, for example, they acquire, sell, transport, market or help develop Iranian oil as long as the transactions do not involve persons remaining on the Specially Designated Nations (“SDN”) listing, occur outside the United States and do not involve U.S. goods, technology or services. In addition, the United States also removed more than 400 persons (including the Central Bank of Iran) from the SDN listing. These delistings have the effect of removing the persons and entities from watch lists used for compliance purposes by banks and other businesses worldwide, thus substantially easing business with them.

However, at the time the JCPOA was negotiated, the United States had broader sanctions against Iran than its European allies, and the United States’ agreement to lift economic sanctions against Iran was far more limited than what was undertaken by the EU and its members. A variety of U.S. sanctions were not lifted including:

  • First, the ITSR’s broad primary sanctions remain in effect.
    • The ITSR prohibited prior to the Implementation Date and continues to prohibit, among other things, “the exportation, re-exportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any goods, technology, or services to Iran or the Government of Iran.”3
    • With some limited exceptions, the ITSR prohibited and continues to prohibit U.S. financial institutions from clearing transactions involving Iran. This restriction means that foreign persons that are now authorized to enter into transactions involving Iran by their local law and that are not prohibited from being involved in such transactions by U.S. secondary sanctions must structure their transactions so that payments do not transit the U.S. financial system.
    • The ITSR also continues to prohibit United States persons from financing, facilitating or guaranteeing any transaction by a foreign person where the transaction by that foreign person would be prohibited if performed by a United States person or within the United States.
  • Second, the United States had previously designated, and retains the authority to designate, persons as SDNs under a variety of executive orders and statutes not related directly to the nuclear issues addressed by the JCPOA.4 In fact, shortly after the Implementation Date, the U.S. Department of the Treasury added a number of additional Iranian persons to the SDN listing under the anti-proliferation Executive Order.
  • Third, the lifting of U.S. sanctions does not affect existing export restrictions to the extent that any trade with Iran involves goods, technology or services subject to U.S. export limits or licensing requirements.
  • Fourth, U.S. secondary sanctions continue to attach to certain significant transactions by foreign persons with: (1) Iranian persons that are on the SDN List; (2) the Islamic Revolutionary Guard Corps and its designated agents or affiliates; and (3) any other person on the SDN List designated in connection with Iran’s proliferation of weapons of mass destruction or support for international terrorism.

As a result, the U.S. domestic trade embargo against Iran and parts of U.S. secondary sanctions remain in place.

Additional U.S. Sanctions Relief for Foreign Subsidiaries of United States Persons

While the sanctions landscape has not changed much for United States persons, it has changed substantially for foreign entities owned or controlled by United States persons. As noted above, prior to the Implementation Date, the U.S. domestic embargo applied not only to U.S. citizens and U.S. incorporated entities, but also – by virtue of section 560.215(a) – to their owned or controlled foreign subsidiaries. Consistent with its obligations under the JCPOA, the U.S. Department of the Treasury published General License H: Authorizing Certain Transactions Relating to Foreign Entities Owned or Controlled by a United States Person on January 16, 2016 (“GL H”). Pursuant to GL H, U.S.-owned or -controlled foreign entities are permitted to engage in transactions with the Government of Iran or any person subject to the jurisdiction of the Government of Iran that would otherwise be prohibited pursuant to the ITSR if engaged in by a United States person or in the United States. In other words, subject to certain exceptions and limitations described below, GL H lifts the prohibitions of section 560.215 as it relates to U.S.-owned or -controlled entities incorporated under the law of a foreign country.5 Foreign entities owned or controlled by United States persons may thus begin to explore renewed trade ties with Iran.

In addition, GL H also authorizes certain activities ancillary to a U.S.-owned or -controlled foreign entity providing goods, technology or services that, prior to the adoption of GL H, might otherwise have been prohibited if engaged in by a United States person. For example, GL H:

  • authorizes United States persons, including senior management of a U.S. parent company or its owned or controlled foreign entities, to be involved in the initial determination to engage in activities with Iran authorized by GL H, as well as the establishment or alteration of the necessary policies and procedures;
  • permits United States persons to be hired as outside legal counsel or consultants to draft, alter, advise or consult on such operating policies and procedures;
  • authorizes United States persons who are employees of a U.S. parent company or a U.S.-owned or -controlled foreign entity to provide training on the new or revised operating policies and procedures to employees of a U.S.-owned or -controlled foreign entity and/or to the U.S. parent; and
  • permits U.S. parent companies to make available to foreign entities they own or control automated and globally integrated computer, accounting and other business support systems necessary to store, collect, transmit, generate or otherwise process documents or information related to transactions by foreign entities they own or control that are authorized by GL H.6

However, GL H includes a number of important exceptions. As a result, it does not permit U.S.-owned or -controlled foreign entities to engage in transactions involving:

(1) the direct or indirect exportation or re-exportation of goods, technology, or services from the United States (without separate authorization from OFAC); (2) any transfer of funds to, from, or through the U.S. financial system; (3) any individual or entity on the SDN List or any activity that would be prohibited by non-Iran sanctions administered by OFAC if engaged in by a U.S. person or in the United States; (4) any individual or entity identified on the [Foreign Sanction Evaders] List; (5) any activity involving any item subject to the Export Administration Regulations [(“EAR”)] that is prohibited by, or requires a license under, part 744 of the EAR; or participation in any transaction with a person whose export privileges have been denied pursuant to part 764 or 766 of the EAR (without authorization from the Department of Commerce); (6) any military, paramilitary, intelligence, or law enforcement entity of the Government of Iran, or any official, agent, or affiliate thereof; (7) any activity that is sanctionable under [the Executive Orders]; or (8) any nuclear activity involving Iran that is subject to the JCPOA procurement channel and that has not been approved through that procurement channel process.7

In addition, GL H does not authorize United States persons to be involved in the ongoing Iran-related operations or decision-making of its owned or controlled foreign entity engaging in activities with Iran authorized by GL H after these actions are taken, nor does it authorize United States persons to be involved in the Iran-related day-to-day operationsof a U.S.-owned or -controlled foreign entity, including by approving, financing, facilitating or guaranteeing any Iran-related transaction by the foreign entity.

To navigate GL H and its complexities and exclusions, and otherwise to meet the expectations of U.S. regulators, United States persons and their owned or controlled foreign subsidiaries should proceed cautiously and with expert advice.

SEC Disclosure Obligations Continue

As noted above, ITRA added subsection 13(r) to the Exchange Act requiring that a U.S. public company must disclose certain activities or transactions knowingly engaged in with or involving Iran. Under the JCPOA, the United States did not commit to make any changes to this provision and so far no changes have been made. Because the loosening of sanctions (particularly as it relates to non-U.S. persons) means it is likely that there will be many more transactions and activities involving Iran than there have been in past several years, it is also likely that there will be many more instances where the nature of the activity (e.g., supporting the Iranian petrochemical sector) or the transaction (e.g., a transaction with a person that is part of the Government of Iran) will require disclosure under subsection 13(r) in a U.S. public company’s periodic reports.


Despite the sanctions relief provided by the JCPOA, United States persons remain largely prohibited from engaging in most transactions with and activities in Iran. Although some sanctions relief has been afforded in the context of certain transactions involving non-U.S. subsidiaries of United States persons, care and caution are advised as the regulations are complicated and the down-side risks could be significant.