Last week, Congress passed the “Iran Threat Reduction and Syria Human Rights Act” (H.R. 1905). The bill, expected to be signed by the President, will significantly strengthen existing Iran sanctions and will add to disclosure of any dealings with Iran in public company annual and quarterly ’34 Act filings.
Most notably, the bill prohibits transactions by foreign businesses that are owned or controlled by a U.S. parent company, making the Iranian sanctions more like those currently in place with respect to Cuba, where foreign entities are included in the definition of parties “subject to U.S. jurisdiction.” An important provision in the bill requires the imposition of civil penalties of up to twice the amount of the transaction on U.S. parent companies for the activities of their owned or controlled foreign entities which, if undertaken in the U.S. or by a U.S. person, would violate U.S. sanctions law. That is, if a foreign entity owned or controlled by a U.S. parent enters into an unauthorized transaction with an Iranian party, the penalty will be assessed against the U.S. parent company, not the foreign entity.