Will Texas Become the First State to Enact a “Mini-CFIUS” Review Process?
On March 13, 2025, the Texas Legislature introduced HB 5007, which, if enacted, could establish the first US state regime tasked with screening foreign investments on national security grounds.[1]
To be sure, this is not the first attempt by Texas to regulate acquisitions by foreign buyers within the state. The Lone Star Infrastructure Protection Act[2] (LIPA), which took effect in June 2021, prohibits Texas businesses from contracting with entities owned or controlled by individuals from China, Russia, North Korea and Iran if the contracting relates to critical infrastructure.[3] In addition, many other states have passed legislation limiting certain foreign investments into agricultural land within their borders.[4] Others are debating similar legislation.
HB 5007 is wholly different. It calls for the formation of a Texas Committee on Foreign Investment (TCFI). Modeled on the federal government’s interagency Committee on Foreign Investment in the United States or CFIUS, TCFI would be comprised of representatives from various Texas state agencies and charged with overseeing the pre-closing review and regulation of foreign acquisitions effecting “critical infrastructure” in Texas, agricultural land in Texas, or the sensitive personal data of Texas residents.[5] Subject to a monetary threshold to be determined by the governor, such transactions would require notification to the Texas Attorney General at least 90 days before closing, with penalties for non-compliance of up to $50,000 per violation.
While there is still uncertainty on whether and when Texas may implement the TCFI, companies considering transactions not only in Texas, but in other states rapidly enacting similar laws, should make sure to perform the necessary due diligence to identify and comply with these regulations, and also build in adequate time for closing delays based on mandatory notification periods that may vary by state.
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[1] TX HB5007, accessible at: https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB5007
[2] Lone Star Infrastructure Protection Act, 87th Leg., R.S., S.B. 2116 (codified as Tex. Bus. & Com. Code § 113.001, et seq.)
[3] LIPA defines critical infrastructure as: 1) communication infrastructure systems; 2) cybersecurity system; 3) electric grid; 4) hazardous waste treatment systems; and 5) water treatment facilities.
[4] https://nationalaglawcenter.org/state-compilations/aglandownership/
[5] “Critical infrastructure” is defined more broadly under HB 5007 than LIPA and includes, among other categories: critical manufacturing, dams, defense industrial bases, emergency services, communications facilities, energy, health care, food, financial services, information technology, transportation systems, nuclear materials, water systems, and government facilities.
HMRC Supports a UK Restructuring Plan with its Change in Approach – Good News for Future RPs?
You may have read our previous blog about the Outside Clinic Restructuring Plan (RP) which asked whether 5p was enough to cram down HMRC and thought, well surely if that’s not enough, 10p would work? The Enzen Restructuring Plans (RPs) that were sanctioned this week also sought to compromise HMRC’s secondary preferential debt proposing a payment that would see HMRC recover 10p in the £ compared to nil in the relevant alternative. The Enzen RPs were not only sanctioned but also supported by HMRC – does this signal a change in attitude by HMRC?
In 2022 and 2023 we saw a number of RPs seeking to compromise HMRC secondary preferential debt in one way or another, and HMRC opposing those. Their reasons for not supporting often centered around the fact that HMRC is an involuntary creditor and that it has preferential status (in respect of certain of its debts) in an insolvency and therefore should be treated differently to other unsecured creditors in an RP.
The risk of HMRC challenge seemed to dissuade many (at least in the mid-market) from using the RP as a tool to restructure after plans proposed by the Great Annual Savings (GAS), Nasmyth and Prezzo were all opposed by HMRC. It was following those cases that HMRC then issued guidance outlining its expectations. Other RPs that have involved HMRC debt included Fitness First where HMRC’s debt was rescheduled, rather than compromised, and Clinton Cards, where HMRC’s debt also remained intact. It is perhaps not therefore surprising we haven’t seen many “HMRC” RPs since these due to the risk (and not to mention the cost) of a potential challenge from HMRC.
The Enzen RPs therefore seem to signal a change in attitude by HMRC who, for the first time, positively supported the plans. But why the change?
There were two plans proposed by Enzen entities, (Enzen Global Limited (EGL) and Enzen Limited (EL). HMRC was owed £5,286,674 by EGL in respect of preferential debts, and £4,319,890 by EL.
The EGL plan proposed to pay HMRC £250,000 in cash, equivalent to a return of 4.2p in the £ compared to 0.1p in the relevant alternative (in this case administration). Under the EL plan HMRC was also to receive a £250,000 cash payment resulting in a return of 5.6p in the £ compared to nil in the relevant alternative – which would also be administration. Essentially HMRC would receive a payment of approximately 10p in the £ under both plans.
Certain other preferential debts (VAT, NIC and PAYE) which were being paid when they fell due, were treated as critical payments under the RPs so were not compromised.
Although HMRC made noises at the convening stage suggesting that it might oppose the RPs there was no indication as to the basis on which it would do so. At this point HMRC’s position was governed by the fact that it hadn’t had enough time to consider its stance ahead of the convening hearing, given the substantial amount of material they had to review.
Between the convening hearing and sanction, HMRC raised its concerns in correspondence with the plan companies (although there is no specific detail about those concerns) save that they highlighted:
that the court should not cram down HMRC without good reason (following Naysmyth)
HMRC has a critical public function, and its views should carry considerable weight (following GAS).
Following this HMRC negotiated an additional £100,000 payment from both EGL and EL which increased its returns under the RPs to 6.6p under the EGL plan and to 8.1p under the EL plan. On that basis HMRC voted in favour of the RPs.
At the sanction hearing HMRC made their position on the RP clear and made the following statements indicating a new approach:
HMRC told the court that they knew they had opposed plans in the past (referencing Naysmith and GAS in particular), but they wanted their stance to the Enzen plan to prove indicative of a more proactive approach in relation to RPs.
HMRC also made it clear it is looking to participate as fully as possible with RPs where it can in the future.
The main reason HMRC supported in this case was because of the increased payment EML and EL were willing to give them, which meant there was a material increase to them.
There are at least two more plans that are coming before the court for sanction soon – Outside Clinic and Capricorn – that include an element of HMRC debt. Following the Enzen RPs it will be interesting to see, in light of HMRC’s positive engagement on Enzen, whether HMRC will support those.
The Enzen RPs will no doubt spark interest from the mid-market given HMRC’s stance to date has arguably been a blocker on mid-market RPs, but the costs of tabling an RP are still likely to be a concern given the litigious nature of many. Also if it is HMRC’s policy to now participate in restructuring plan hearings (even if they support) who bears those costs?
Annabelle McKeeve also contributed to this article.
Trump Administration Terminates Humanitarian Parole for Citizens of Cuba, Haiti, Nicaragua, Venezuela
Department of Homeland Security (DHS) Secretary Kristi Noem announced the termination of humanitarian parole for citizens of Cuba, Haiti, Nicaragua, and Venezuela, also known as the CHNV program, in the Federal Register on March 25, 2025. Humanitarian parole for citizens of these countries will expire no later than 30 days from March 25, 2025, or April 24, 2025.
CHNV beneficiaries who did not file some other immigration benefit application prior to publication of the termination notice must depart the United States on or before April 24, 2025, or the expiration of their humanitarian parole, whichever date is sooner. DHS will prioritize removal of CHNV beneficiaries without pending immigration applications who remain in the United States beyond the expiration of their humanitarian parole.
DHS has determined that, after termination of the parole, the condition upon which employment authorizations were granted no longer exists, and DHS intends to revoke parole-based employment authorizations.
The CHNV program was instituted by DHS under former President Joe Biden. It allowed citizens of Cuba, Haiti, Nicaragua, and Venezuela who obtained U.S. financial sponsors to enter the United States by humanitarian parole for up to two years. Once in the United States, parolees could apply for work authorization. Humanitarian parole was renewable, however, on Oct. 4, 2024, the Biden Administration announced it would not renew the program. About 530,000 individuals benefited from the CHNV program.
Seeking to enjoin termination of the program, on Feb. 28, 2025, Haitian Bridge Alliance and several individuals affected by the termination of the CHNV program filed a lawsuit in U.S. District Court for the District of Massachusetts, alleging violations of the Administrative Procedure Act and the Due Process Clause of the Fifth Amendment. The lawsuit is pending.
Operation Allies Welcome, the humanitarian parole program for Afghanis who assisted U.S. forces during the war in Afghanistan, and Uniting for Ukraine, the humanitarian parole program for individuals fleeing the war in Ukraine, are unaffected by the latest announcement.
FCA Review of Private Fund Market Valuation Practices
Go-To Guide:
The United Kingdom’s Financial Conduct Authority (FCA) is increasing its scrutiny of private fund market valuation practices, highlighting the need for stronger governance, transparency, and conflict-of-interest management across fund managers.
Fund managers are expected to apply consistent valuation methodologies, maintain functional independence in valuation processes, and address gaps in ad hoc valuation procedures.
The FCA has emphasised the importance of engaging third-party valuation advisers and has reminded fund managers of the importance of ensuring the independence of valuers.
Private fund managers should consider conducting gap analyses and strengthening their valuation frameworks to align with the FCA’s expectations.
Background
The FCA has embarked on a level of engagement with the private funds sector not seen since the consultation and engagement exercises surrounding the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in 2013.
On 26 February 2025, the FCA issued a letter to the CEOs of all asset management and alternative firms, setting out its priorities for the year and informing them that it intends to:
engage with the UK fund management industry in a review of the UK’s implementation of the AIFMD, with a view to streamlining certain UK regulatory requirements (i.e. after maintaining a post-Brexit status quo, the FCA is now finally considering how UK private fund managers and their affiliated entities should be regulated); and
launch a review of conflict of interest management within UK fund managers. As part of this, the FCA will assess how firms oversee the application of their conflict of interest frameworks through their governance bodies and evaluate how investor outcomes are protected. (Note that the FCA will likely expect to see actual living processes deployed to prevent conflicts at all levels of a fund’s structure, with the efficiency of those processes tested by UK managers).
Subsequently, on 5 March 2025, the FCA published its findings from its review of private market valuation practices (the “Review’s Findings”).
Context of the FCA Review
The FCA’s review stemmed from its concern that private market assets, unlike public market assets, are not subject to frequent trading or regular price discovery. This necessitates firms to estimate values using judgment-based approaches, which can pose risks of inappropriate valuations due to conflicts of interest or insufficient expertise.
Private fund managers in the UK deploy a variety of different structures:
many of the valuation-related issues are more pronounced for open-ended funds that permit redemptions during the fund’s life, compared to closed-ended funds, where the true value and performance can only be determined at the end of the fund’s life when assets are sold.
funds that invest into a variety of assets, from relatively liquid ones (as is common with many hedge funds) to illiquid assets whose value may evolve as managers improve the asset (e.g. real estate funds and certain private equity funds).
We expect that the FCA will continue to focus on this area and will likely require all compliance teams across UK fund managers – regardless of their fund strategies – to conduct a gap analysis against the Review’s Findings.
The Review’s Findings
The FCA identified examples of good practice in firms’ valuation processes, including:
high-quality reporting to investors;
comprehensive documentation of valuations; and
use of third-party valuation advisers to enhance independence, expertise, and the consistent application of established valuation methodologies.
Overall, the FCA found that firms recognised the importance of robust valuation processes that prioritise independence, expertise, transparency and consistency.
The Review’s Findings, however, also identified areas requiring improvement, particularly in managing conflicts of interest. For example, conflicts can arise between a manager and its investors in the valuation process, such as when fees charged to investors depend on asset valuations. While firms acknowledged conflicts relating to fee structures and remuneration policies, the FCA found that other potential valuation-related conflicts were inadequately recognised or documented. These include:
conflicts in investor marketing, where unrealised performance of existing funds may be used to market new funds;
secured borrowing, where valuations may be inflated to secure higher borrowing levels; and
pricing of redemptions and subscriptions based on a fund’s net asset value.
The FCA expects firms to identify, document, and assess all potential and relevant valuation-related conflicts, determine their materiality, and take actions needed to mitigate or manage them.
The Review’s Findings also highlighted variations in firms’ approaches to independence within valuation processes. The FCA noted that functional independence within valuation functions and voting membership of valuation committees are critical for effective control and expert challenge. Additionally, the FCA found that many firms lacked clearly defined processes or consistent approaches for conducting ad hoc valuations during market or asset-specific events. Given the importance of ad hoc valuations in mitigating the risk of stale valuations, the FCA encouraged firms to consider the types of events and quantitative thresholds that could trigger such valuations and document how they are to be conducted.
The FCA flagged the following key areas for managers to consider reviewing and potentially improving:
the governance of their valuation processes;
the identification, documentation, and management of potential conflicts within valuation processes;
ensuring functional independence for their valuation process; and
incorporating defined processes for ad hoc valuations.
Breakdown of the Review’s Findings
Governance arrangements
The FCA found that while most firms had specific governance arrangements in place for valuations, including valuation committees responsible for making valuation decisions or recommendations, there were instances where committee meeting minutes lacked sufficient detail on how valuation decisions were reached. The FCA emphasised that firms must keep detailed records to enhance confidence in the effectiveness of oversight for valuation decisions.
Conflicts of interest
The FCA expects firms to identify, avoid, manage and, when relevant, disclose conflicts of interest. The Review’s Findings identified specific areas where conflicts are likely to arise, including investor fees, asset transfers, redemptions and subscriptions, investor marketing, secured borrowing, uplifts and volatility and employee remuneration. While the FCA found that conflicts around fees and remuneration were typically identified and mitigated through fee structures and remuneration policies, other potential conflicts were only partially identified and documented. Many managers had not sufficiently considered or documented these conflicts, often relying on generic descriptions.
The FCA expects firms to thoroughly assess whether valuation-related conflicts are relevant and, if so, to properly document them and the actions taken to mitigate or manage them. This may include engaging third-party valuation advisers.
Functional independence and expertise
The FCA reviewed the extent to which firms maintained independent judgment within their valuation processes, by looking at independent functions and the expertise of valuation committee members.
Only a small number of managers clearly demonstrated functional independence by maintaining a dedicated valuation function or an independent control function to lead on valuations. Such functions were responsible for developing valuation models and preparing recommendations for decisions made by valuation committees.
The FCA noted that examples of good practice to ensure independence included establishing a separate function to lead valuations and ensuring sufficient independence within the voting membership of valuation committees to guarantee effective control and expert challenge.
Policies, procedures and documentation
Unsurprisingly, the FCA emphasised that clear, consistent and appropriate policies, procedures and documentation are core components of a robust valuation process. These elements ensure a consistent approach to valuations and enable auditors and investors to verify adherence to the valuation process.
The FCA found that not all firms provided sufficient detail on their rationales for selecting methodologies and their limitations, nor did they include a description of the safeguards in place to ensure the functional independence of valuations or potential conflicts in the process. The FCA also observed examples of vague rationales for key assumption changes, such as adjustments in discount rates.
The FCA stated that it would encourage firms to engage with auditors appropriately, by inviting them to observe valuation committee meetings, raising auditor challenges at those meetings and taking proactive measures of managing conflicts of interest involving the audit service provider. It also stated that back-testing results can help firms inform their approach to valuations, by identifying insights about current market conditions and potential limitations in models, assumptions and inputs and encouraged firms to consider investing in technology to improve consistency and reduce the risk of human error in valuation processes.
Frequency and ad hoc valuations
The FCA noted that infrequent valuation cycles risk stale valuations, which may not accurately reflect the current conditions of investors’ holdings. This can lead to potential harm, such as inappropriate fees or investors redeeming at inappropriate prices.
The FCA emphasised that conducting ad hoc valuations (outside of the regular valuation schedule) can help mitigate the risk of stale valuations if material events cause significant changes in market conditions or how an asset performs.
Most firms, however, were found to lack formal processes for conducting ad hoc valuations. The FCA urged firms to incorporate a defined process for ad hoc valuations, including defining the thresholds and types of events that would trigger an ad hoc valuation (such as movement in the average multiple of the comparable set, company-specific events and fund-level triggers). It found that most firms waited for changes to flow through at the next valuation cycle instead of conducting ad hoc valuations. Only a few firms formally incorporated ad hoc valuations into their valuation processes by having defined types of events that would trigger these. The FCA stated firms should consider incorporating defined ad hoc valuation processes to mitigate the risk of stale valuations.
Transparency to investors
The FCA emphasised that transparency to investors increases confidence in their decision-making around private assets and enables them to make better informed decisions. The FCA urged full-scope UK AIFMs to provide investors with clear information about valuations and their calculations and encouraged all FCA-regulated firms to pay close attention to the information and needs of their clients.
The Review’s Findings highlighted that most firms demonstrated good practice by reporting both quantitative and qualitative information on performance at the fund and asset-levels, as well as holding regular conference calls with investors. Some firms further enhanced their reporting by including a ‘value bridge’ in their investor reports, showing the different components driving changes in asset values or net asset values, helping investors to better understand the factor influencing valuation changes. The FCA noted that some firms faced barriers limiting their ability to share information with investors. These barriers included restrictions arising from non-disclosure agreements and concerns about the commercial sensitivity of sharing valuation models.
The FCA urged firms to consider whether they can improve investor reporting and engagement by providing detail on fund-level and asset-level performance to increase transparency and investor confidence in the valuation process.
Application of valuation methodologies
The FCA stressed that valuation methodologies must be applied consistently for valuations to be appropriate and fair. In its review, the FCA observed that while firms applied valuation methodologies generally consistently by asset class, there were instances where firms employed different approaches, such as comparable sets and discount rate components for private equity assets. While firms could reasonably justify the use of different assumptions, the FCA expressed concerns that these variations might impair investors’ ability to compare valuations across firms. Firms demonstrating good practice were those that employed another established methodology as a sense check to validate their primary valuation and confirm their judgment.
The FCA expects firms to apply valuation methodologies and assumptions consistently, making valuation adjustments solely based on fair value. It also emphasized the need for valuation committees and independent functions to focus on these adjustments to ensure decisions are robust and well-documented.
Use of third-party valuation advisers
The FCA noted that it is good practice to seek further validation for internal valuations through third-party valuation advisors, particularly after identifying material conflicts of interest, such as calculating fees, pricing redemptions and subscriptions, transferring asset using valuations.
The FCA found that most managers engaged third-party valuation advisers and discussed their controls to assess the quality of service and independence provided by these advisers. Examples of good practice included conducting an annual exercise whereby the firm used a valuation from an alternative provider for the same asset and compared the quality of valuations from both providers.
Firms that adopted good practices had considered the limitations of the service provided, taken steps to ensure the independence of the third-party valuation advisers, and retained responsibility for valuation decisions.
The FCA urged firms to consider the strengths and limitations of the service provided and to disclose the nature of these services to investors, including the portfolio coverage and frequency of valuations. Additionally, firms need to be aware of potential conflicts of interest when using third-party valuation advisers and should ensure that investment professionals are kept at arm’s length to maintain the independence of third-party valuations.
Next Steps
The FCA indicated that the Review’s Findings will inform its review of the AIFMD and will be taken into consideration when updates are made to the FCA’s Handbook rules. Furthermore, the FCA indicated that the Review’s Findings will inform its contribution to the International Organization of Securities Commission’s review of global valuation standards to support the use of proportionate and consistent valuation standards globally in private markets.
In the meantime, the FCA has said that managers should assess the Review’s Findings and address any gaps in their valuation processes to ensure they are robust and are supported by a strong governance framework with a clear audit trail. Boards and valuation committees should also be provided with regular and sufficient information on valuations to ensure effective oversight.
In light of the above, fund managers and other regulated firms in the UK performing key functions related to funds should:
consider reviewing the FCA’s findings and identify any gaps in their valuation approach, taking action to address deficiencies where applicable;
ensure their governance arrangements provide accountability for valuation processes;
assess whether their valuation committees have sufficient independence and expertise to make valuation decisions; and
enhance oversight of third-party valuation advisers and consider the strengths and limitations of service providers.
China Releases Draft Implementation Measures for the Protection of Drug Trial Data Including Data Exclusivity for Foreign-Originated Drugs
On March 19, 2025, China’s National Medical Products Administration (NMPA) released Implementation Measures for the Protection of Drug Trial Data (Trial, Draft for Comments) (药品试验数据保护实施办法(试行，征求意见稿))and Working Procedures for the Protection of Drug Trial Data (Draft for Comments) (药品试验数据保护工作程序(征求意见稿)) that provides up to 6 years of data exclusivity of clinical trial data required to be submitted to the NMPA to prove safety and efficacy of a new drug to prevent generic drug manufacturers from relying on this data in their own applications. In contrast, the US generally provides 5 years of exclusivity. However, for foreign-originated drugs, the Chinese data protection period will be 6 years minus the time difference between the date on which the drug’s marketing authorization application in China is accepted and the date on which the drug first obtains marketing authorization overseas. Comments are due before May 18, 2025. The original documents as well as spreadsheets to submit comments are available here (Chinese only).
A translation of the Implementation Measures follows.
Article 1 (Purpose and Basis) These Measures are formulated in accordance with the Drug Administration Law of the People’s Republic of China, the Regulations for the Implementation of the Drug Administration Law of the People’s Republic of China, the Drug Registration Management Measures and other relevant regulations in order to encourage drug innovation and meet the public’s demand for medicines.
Article 2 (Management Mechanism) The State Drug Administration (hereinafter referred to as the NMPA ) is responsible for the protection of drug trial data (hereinafter referred to as data protection) and is responsible for establishing a data protection system and implementing management work in accordance with the principles of fairness, openness and impartiality.
The Drug Technical Review Center of the National Drug Administration (hereinafter referred to as the Drug Review Center) is responsible for the specific implementation of data protection.
Article 3 (Definition of Concepts) Data protection means that when drugs containing new chemical ingredients and other qualified drugs (see the attached table for details) are approved for marketing, the National Medical Products Administration shall protect the test data and other data submitted by the applicant that are obtained independently and not disclosed, and grant a data protection period of no more than 6 years.
During the data protection period, if other applicants apply for drug marketing authorization or supplementary application relying on the data in the preceding paragraph without the consent of the drug marketing authorization holder (hereinafter referred to as the holder), the National Medical Products Administration will not grant permission; unless other applicants obtain the data on their own.
During the data protection period, if other applicants submit drug registration applications using data obtained by themselves, their applications shall be approved if they meet the requirements and no longer be granted the data protection period, but the data shall not be relied upon by other subsequent applicants .
Article 4 (Conditions of protected data) Undisclosed trial data and other data refer to trial data in the complete application materials that are not disclosed in the application for drug marketing authorization for the first time in the country.
After a drug is approved, test data obtained when subsequent research work is completed in accordance with the requirements of the drug regulatory authorities will no longer be given new data protection.
Article 5 (Data Protection Related to Innovative Drugs) A six-year data protection period is granted for innovative drugs from the date of their first domestic marketing authorization.
If an original research drug that has been marketed overseas but not in China applies for marketing in China, the data protection period is 6 years minus the time difference between the date on which the drug’s marketing authorization application in China is accepted and the date on which the drug first obtains marketing authorization overseas. The data protection period is calculated from the date on which the drug obtains marketing authorization in China.
The scope of drug data protection in this clause includes all test data used in the drug marketing authorization application materials to prove the safety, efficacy and quality controllability of the drug.
For innovative drugs that have been approved for multiple indications but have the same approval number, each indication will be given data protection according to the registration category, and the scope of data protection for newly added indications will be the clinical trial data that support its marketing.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for improved new drugs, chemical generic drugs and biosimilar drugs submitted by other applicants without the consent of the holder, relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 6 (Protection of data related to improved new drugs) A three-year data protection period will be granted from the date of the first domestic marketing authorization for the improved new drug.
If a modified drug that has been marketed overseas but not in China applies for marketing in China, the data protection period is 3 years minus the time difference between the date on which the drug’s application for marketing authorization in China is accepted and the date on which the drug first obtains marketing authorization overseas. The data protection period is calculated from the date on which the drug obtains marketing authorization in China.
The scope of drug data protection in this clause includes new clinical trial data that demonstrates that the drug has significant clinical advantages over drugs with known active ingredients (marketed biological products), but does not include bioavailability, bioequivalence and immunogenicity data of vaccines.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for chemical generic drugs and biosimilar drugs submitted by other applicants without the holder’s consent and relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 7 (Data Protection Related to Generic Drugs) A three-year data protection period is granted to the first approved generic drugs (including drugs produced overseas) and biological products of original research drugs that have been marketed overseas but not in China. The data protection period is calculated from the date on which the generic drug or biological product obtains marketing authorization.
The scope of data protection for drugs in this clause includes necessary clinical trial data to support approval, but does not include bioavailability, bioequivalence and immunogenicity data of vaccines.
During the data protection period, the National Medical Products Administration will not approve the marketing application or supplementary application for chemical generic drugs and biosimilar drugs submitted by other applicants without the holder’s consent and relying on the protected data of the holder , unless other applicants submit data obtained by themselves.
Article 8 (Application and supporting documents) If the applicant intends to apply for data protection, he/she shall submit an application for data protection at the same time as submitting the application for drug marketing authorization. If there are any questions about data protection-related issues, he/she may apply for communication.
Article 9 (Technical Review) When conducting technical review of drug registration applications, the Center for Drug Evaluation shall confirm the scope and duration of data protection in accordance with the provisions of these Measures.
Article 10 (Granting of Protection Period and Publicity) For drugs that meet the data protection conditions, the National Medical Products Administration will mark the drug’s data protection information in the drug approval certificate.
The Center for Drug Evaluation has established a data protection column on its website to publish relevant information on drug data protection.
Article 11 (Acceptance, Review and Approval) After a drug obtains data protection, other applicants can submit drug marketing applications and supplementary applications that rely on the protected data within one year before the expiration of the data protection period . The Drug Evaluation Center will suspend the review time after completing the technical review, and the relevant drugs will be approved for marketing after the data protection period expires.
an applicant claims that the data was obtained independently when submitting a drug marketing application and a supplementary application , but it is discovered during the technical review process that the application relies on protected data of other applicants, the application will not be approved.
Article 12 (Termination of Data Protection) Data protection shall terminate if the drug approval document is revoked, suspended, or cancelled, if the holder voluntarily waives data protection, or in other circumstances prescribed by laws and regulations.
If data protection is terminated, the National Medical Products Administration will issue a notice on the termination of data protection, and the Drug Evaluation Center will update the relevant information in the data protection column based on the notice. From the date on which the National Medical Products Administration issues the notice on the termination of data protection, it can accept or approve drug registration applications submitted by other applicants that rely on the protected data.
Article 13 ( Incompliance with data protection information ) If, during the review process, it is found that the documents proving the first overseas marketing authorization for drugs submitted by the applicant in accordance with Articles 5 and 6 of these Measures do not match the actual situation , data protection will not be granted; if data protection has already been granted, the data protection will be cancelled.
Article 14 (Data Protection Procedure) The specific working procedures for data protection will be separately formulated by the Drug Evaluation Center.
Article 15 (Effective Date) This regulation shall come into force from now on.
Schedule 1
Chemical Drug Registration Classification and Data Protection Period
Classification
content
Data protection period
Category 1
Innovative drugs that have not been launched in the domestic or overseas markets.
6 years
Category 2
Improved new drugs that have not been marketed domestically or abroad.
3 years
Category 3
Domestic applicants copy original drugs that are marketed overseas but not in China.
3 years
Category 4
Domestic applicants copy original drugs that have been marketed domestically.
none
Category 5
Drugs that have been marketed overseas can apply for domestic marketing approval.
5.1
Original research drugs that have been marketed overseas apply for domestic marketing.
6 years – (domestic acceptance time – overseas listing time)
Improved drugs that have been marketed overseas may apply for domestic marketing approval.
3 years – (domestic acceptance time – overseas listing time)
5.2
Generic drugs that have been marketed overseas apply for domestic marketing.
3 years
Schedule 2
Registration classification and data protection period for preventive biological products
Classification
content
Data protection period
Category 1
Innovative vaccines
6 years
Category 2
Improved vaccines
3 years
Category 3
3.1 Application for listing of vaccines produced overseas and marketed overseas but not marketed domestically
6 years – (domestic acceptance time – overseas listing time)
3.2 Vaccines that have been marketed overseas but not in China can be produced and marketed in China
3 years
3.3 Vaccines already on the market in China
none
New Interim Rule Removes CTA Reporting Requirements for U.S. Companies and U.S. Persons
On March 21, 2025, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued an interim final rule to the U.S. Corporate Transparency Act (“CTA”) that eliminates beneficial ownership information (“BOI”) reporting requirements for domestic entities and U.S. persons. The immediate result of the interim final rule is that no U.S. entities are required to register or update any BOI reports, and no beneficial owners who are U.S. persons are required to provide BOI.
The prior rule applied to:
“domestic reporting companies”: entities created by a filing with a Secretary of State or any similar office, and
“foreign reporting companies”: entities formed under the law of a foreign country and registered to do business in any U.S. state or tribal jurisdiction by the filing of a document with a Secretary of State or similar office.
These companies were required to file a report with FinCEN identifying their beneficial owners—the persons who ultimately own or control the company—and provide similar identifying information about the persons who formed the entity, absent an applicable exemption.
FinCEN stated that the interim final rule is intended to minimize regulatory burdens on small businesses, a priority for the new federal administration. In the preamble to the interim final rule, FinCEN stated that most domestic reporting companies not covered by an exemption under the prior rule were small businesses and determined that exempting these domestic reporting companies would not negatively impact national security, intelligence, or law enforcement efforts. FinCEN concluded that much of the BOI that would otherwise have been reported under the prior rule is provided to financial institutions at the time an entity opens a bank account or is otherwise available to law enforcement.
Modifications Under the Interim Final Rule:
The interim final rule modifies the definition of “reporting company” to only include foreign reporting companies.
All domestic reporting companies and their beneficial owners are exempt from the CTA and are not required to file or update any BOI reports.
Non-exempt foreign reporting companies are still required to file BOI reports with FinCEN, but such reports are not required to include the BOI of any beneficial owner that is a “U.S. person”.
Foreign reporting companies that only have beneficial owners that are “U.S. persons” are not required to report beneficial owners.
The special rule for foreign pooled investment vehicles only requires disclosure of the individual exercising substantial control if that individual is not a U.S. person. If more than one individual exercises substantial control over a foreign pooled investment vehicle and at least one of those individuals is not a U.S. person, the entity is required to report BOI with respect to the non-U.S. person who has the greatest authority over the strategic management of the entity.
Both the prior rule and the interim final rule incorporate the definition of “United States person” from the Internal Revenue Code, which includes U.S. citizens as well as permanent residents and persons who meet the substantial presence test under the Internal Revenue Code. As a result, the exemptions for U.S. persons apparently also apply to those foreign nationals who fall under the Internal Revenue Code’s definition of United States person. FinCEN appears to use the terms “U.S. person” and “United States person” interchangeably.
Certain U.S. Persons Are Still Required to Report BOI
U.S. persons who are company applicants (i.e., those persons who directly file, and who are primarily responsible for filing, or directing or controlling the filing of, the foreign reporting company’s registration documents with a Secretary of State or similar office) remain obligated to provide their BOI to non-exempt foreign reporting companies.
Compliance Deadlines
The interim final rule is effective as of March 26, 2025. Existing foreign reporting companies are required to file their BOI reports by April 25, 2025. Foreign companies newly registered to do business in a U.S. state or tribal jurisdiction will have thirty days from the date they receive notice that the registration is effective to file a BOI report.
The interim final rule will be open to comments until May 27, 2025; however, the interim final rule will be in effect during the comment period. FinCEN indicated that it had good cause to implement the interim final rule immediately, given that domestic entities were facing a filing deadline of March 21, 2025 and there was not enough time to solicit public comment and implement a final rule before that deadline. FinCEN intends to issue a final rule before the end of the year.
The CTA remains subject to a number of legal challenges despite the issuance of the interim final rule.
We continue to closely monitor further developments with respect to the CTA.
Martine Seiden Agatston also contributed to this article.
Is Registration As A Foreign Corporation A Form Of Compelled Consent?
Not too long ago, I wrote about a bill that is currently pending in the Nevada legislature, AB 158. This bill would authorize Nevada courts to exercise general personal jurisdiction over entities on the sole basis that the entity:
is organized, registered or qualified to do business pursuant to the laws of this State;
expressly consents to the jurisdiction; or
has sufficient contact with Nevada such that the exercise of general personal jurisdiction does not offend traditional notions of fair play and substantial justice.
The first alternative is obviously grounded upon the U.S. Supreme Court’s decision in Mallory v. Norfolk Southern Ry. Co., 600 US 122 (2023). In the case, the Supreme Court in a 5-4 decision held that a Pennsylvania statute did not offend the Due Process clause of the United States Constitution. The Pennsylvania statute provided that a company’s registration as a foreign corporation” is deemed “a sufficient basis of jurisdiction to enable the tribunals of this Commonwealth to exercise general personal jurisdiction over” the corporation. 42 Pa. Cons. Stat. § 5301(a)(2)(i).
In a forthcoming article, Professor Jason Jarvis argues:
Involuntary consent is an oxymoron. Consent must be knowing and voluntary, and consent extracted by threat is coerced and invalid.
Professor Jarvis posits a case-by-case approach to consent whereby the “voluntariness of a corporation’s decision to do business in a state depends on the particular state and the particular corporation”.
The provisions of the California Civil Code concerning contracts and consent line up nicely with Professor Jarvis’ premise. Consent is “essential” to the formation of a contract, Cal. Civ. Code § 1550(2), and that consent must be “free”, Cal. Civ. Code § 1565(1). Consent is neither “real” nor “free” when obtained through: duress, menace, fraud, undue influence or mistake. Cal. Civ. Code § 1567.
The Perils of Interpreting Your Own Rules Too Strictly, Especially When They Don’t Exist (UK)
So here it is, 2025’s first serious contender for the What On Earth Were They Thinking? Awards, an unfair dismissal case with a common-sense answer so clear you could see it from Mars, but which it nonetheless took five years and the Court of Appeal to arrive at.
Mr Hewston was employed by Ofsted as a Social Care Regulatory Inspector. In 2019, in the course of a school inspection, he brushed water off the head and touched the shoulder of a boy of 12 or 13 who had been caught in a rainstorm.
That contact was reported to Ofsted by the school as a case of “inappropriate touching”. The terms of the school’s reports were, said the Court of Appeal, “redolent with hostility against the inspectors and the inspection”. They described the incident in fairly hyperbolic terms – that contact had created a “very precarious situation” and had “put the safety of a student at risk”, both allegations which Ofsted itself quickly dismissed as arrant nonsense. It knew that the same school had made complaints about a number of previous inspectors, allegations not necessarily unconnected with its having serially failed to receive the Ofsted gradings it wanted.
Ofsted itself never made any suggestion that there had been any improper motivation on Hewston’s part. It accepted from the outset that the conduct was “a friendly act of sympathy and assistance”. Nonetheless, it dismissed Hewston for gross misconduct a month later. Why?
The disciplinary charges referred to his having without consent or invitation touched a child on the head and shoulder “contrary to Ofsted core values, professional standards and the Civil Service Code”. It was not Ofsted’s case that any of those values or standards or the Code contained any explicit reference to the circumstances in which school inspectors should make physical contact with a child, still less any blanket no-touch rule. Nonetheless, Hewston found himself in an impossible position at the disciplinary Hearing – even though promising that he had learnt his lesson, the more he denied that he had acted improperly (not least in the absence of any such rule), the more fuel he added to Ofsted’s claimed view that he could not be trusted not to do it again.
By the time the question reached the Court of Appeal, the issues had for practical purposes been boiled down to whether it was reasonable for Ofsted to treat that conduct as justifying Hewston’s dismissal, and as part of that, whether even without that no-touch rule, Hewston should have appreciated that his conduct could lead to his dismissal.
The ruling was clear that Hewston’s actions had been a misjudgement, however well-intentioned, but also that Ofsted could not reasonably have determined that they were sufficient to justify his dismissal. There had never been any safeguarding issue nor any risk to the child. Hewston had made it clear that he would undertake whatever training was required and would not repeat his conduct. Even if Ofsted thought that he harboured some continuing doubt about whether he had in fact acted inappropriately, it had no real reason to fear a recurrence. In any case, it was not allowed to turn sub-dismissable conduct into gross misconduct merely because Hewston didn’t seem in its perception to show the appropriate remorse or understanding.
Most of all, Hewston’s trip to the Court of Appeal was successful for the reasons in one short paragraph in a judgement of nearly 30 pages – the “fundamental point was that in the absence of a no-touch rule or other explicit guidance covering a situation of the relevant kind, Hewston had no reason to believe that he was doing anything so seriously wrong as to justify dismissal”. As a result, said the Court, it seemed “deeply regrettable that [Hewston], who was an experienced inspector with an unblemished disciplinary record on safeguarding issues, should have been summarily dismissed for conduct which, on any reasonable appraisal, amounted to no more than a momentary and well-meaning lapse of professional judgement of a kind which he was most unlikely ever to repeat”.
So for employers, the immediate moral of this story is that if you have a principle of conduct in your business which is as important to you as Ofsted said its non-existent no-touch rule was to it, make it express. And the more stringent that rule is, the more it might lead to dismissal for conduct which isn’t on its face that big a deal, the louder you have to shout about it.
But even then, that is not necessarily the end of the matter. As employer, you cannot safely go straight from breach of that rule to dismissal without consideration of the specific circumstances of the case. That is particularly the position where the wider the rule, the easier it is to breach it for wholly innocuous reasons. Even writing as a committed adherent to the instructions on packs of dishwasher tablets to “keep well away from children”, there are limits. Could a school inspector touch a child to help it up after a playground accident? To pull it out of the way of a car or a collision with another child, something corrosive spilt in the Chemistry Lab, an errant javelin on Sports Day? Could you sit it down and dry its tears if it were clearly distressed about something, or help it to the Sick-room? Exactly where is the line between protecting a child’s physical health and safety on the one hand and its comfort, happiness or wellbeing on the other? With the possible exception of that one about not taking the boron rods out of nuclear reactors, every hard rule has its fuzzy edges.
As soon as Ofsted accepted that no harm to the child had been intended or done, that should have been the end of the matter. A warning at its absolute highest. However, to pursue the principle of a rule which did not exist as far as the Court of Appeal at vast cost to both Hewston and the taxpayer shows, with respect, a serious loss of self-awareness from the point of dismissal and ever since. Don’t let this happen to you – remember that fairness trumps rules every time.
DHS Terminates Parole Programs
On March 25, 2025, the Department of Homeland Security (DHS) published a Federal Register notice terminating parole programs for Cuba, Haiti, Nicaragua, and Venezuela (CHNV) as of April 24, 2025, unless Secretary Kristi Noem makes an individual determination to the contrary. This is being carried out pursuant to Executive Order 14165, titled “Securing Our Borders.” The termination of these programs affects 532,000 individuals from these countries. DHS will notify affected individuals through their online myUSCIS accounts.
Unless those under a CHNV program have a separate underlying immigration status to which they can revert, they will be deemed “undocumented” and subject to expedited removal (deportation) from the United States. The subjects of expedited removal do not appear before immigration judges for full hearings, making the deportation process swift. Any work authorization issued to them will also end on April 24, 2025, even if their employment authorization documents contain later expiration dates.
Corporate Transparency Act Shakeup: Domestic Companies off the Hook, Foreign Entities Still Reporting
In a significant change to the Corporate Transparency Act (“CTA”), the Financial Crimes Enforcement Network (“FinCEN”) has announced that U.S.-based companies are no longer required to report beneficial ownership information (“BOI”).
This interim final rule, released on March 21, 2025, means that only foreign entities registered to do business in the United States will still need to meet the CTA’s reporting requirements.
Originally enacted to increase corporate transparency and fight financial crime, the CTA previously required both domestic and foreign companies to disclose their beneficial owners to FinCEN. However, domestic entities are no longer obligated to file BOI reports under the new rule. Instead, the focus has shifted to foreign companies doing business within the United States.
New Reporting Deadlines for Foreign Entities
For those foreign entities that still fall under the reporting requirements, FinCEN has outlined new deadlines based on the publication of the interim final rule. These deadlines are as follows:
Foreign entities registered before March 21, 2025: Must file their BOI reports within 30 calendar days from that date.
Foreign entities registering on or after March 21, 2025: Must file within 30 calendar days of receiving notice of their effective registration.
This update comes shortly after FinCEN’s February 27 announcement, in which the agency stated that it would not impose fines or penalties for failures to file or update BOI reports by the previous deadlines as it awaited the release of this interim final rule. It also aligns with the U.S. Department of the Treasury’s decision to suspend enforcement of the CTA.
What Qualifies as a Foreign Entity?
With reporting now limited to foreign entities, it’s essential to understand which businesses fall under this classification. According to FinCEN, foreign reporting companies are defined as entities—including corporations and limited liability companies—that are formed under the law of a foreign country and have registered to do business in the United States by filing a document with a secretary of state or any similar office. These entities are the only ones still subject to BOI reporting requirements under the revised rule.
Public Comment and Next Steps
As FinCEN continues to refine the regulation, the agency is actively seeking public feedback on the interim rule before finalizing it later this year. Companies impacted by the change are encouraged to participate in the comment process to ensure their perspectives are considered.
This Week in 340B: March 18 – 24, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Contract Pharmacy; Rebate Model
In a case by a drug manufacturer challenging a state law, the intervenor defendant filed a brief in support of its motion to compel discovery, and the drug manufacturer filed a brief in opposition to the intervenor’s motion for judgment on the pleadings.
In four cases against the Health Resources and Services Administration (HRSA) alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models, the intervenor defendants filed a cross motion for summary judgment and opposition to the plaintiff’s motion for summary judgment.
In one such case, 37 state and regional hospital associates filed a motion for leave to file an amici brief in support of HRSA.
Massachusetts Court Denies Certification of Privacy Class Action for Failure to Meet Ascertainability Requirement
On February 14, 2025, in Therrien v. Hearst Television, Inc., the District of Massachusetts denied a motion for class certification due to the plaintiff’s failure to meet the implied ascertainability requirement of Rule 23. The court concluded that the named plaintiff’s claims for unlawful disclosure of personally identifiable information could not be maintained on a class-wide basis because the proposed method for identifying proposed class members was “administratively infeasible” and raised due process concerns.
Therrien’s Video Privacy Protection Act Claim Based on Geolocation Data
Charles Therrien brought this case on his own behalf and other similarly situated individuals against Hearst Television, Inc. (“HTV”) for allegedly unlawfully disclosing his personally identifiable information to third parties in violation of the Video Privacy Protection Act (VPPA), 18 U.S.C. § 2710. The VPPA prohibits a videotape service provider from knowingly disclosing personally identifiable information concerning any of its consumers.
HTV is a news and weather broadcaster that offers mobile phone apps on which users can read articles and watch associated videos. The apps collect users’ geolocation data. To send push and email updates, HTV utilizes Braze, a third-party software-as-a-service-provider. Although users have the option to enable or disable sharing geolocation data, when it is enabled, users’ geolocation data is shared with Braze.
In addition, HTV also uses Google Ad Manager to send targeted advertisements to its apps’ users. Like Braze, if a user has enabled geolocation services, the geolocation data is shared with Google.
Thus, Therrien claimed that, because his geolocation data was shared with third parties, HTV violated the VPPA.
Therrien’s Proposed Class Definition of Mobile App Users
Therrien sought certification for this class action claim, for which he was required to establish the four threshold requirements of Rule 23(a) — numerosity, commonality, typicality, and adequacy — as well as the two additional prerequisites of Rule 23(b)(3) – predominance and superiority.
Although not one of the four threshold requirements of Rule 23(a), ascertainability is an implicit requirement that a plaintiff also must meet for class certification. Ascertainability requires that the class is “currently and readily identifiable based on objective criteria.” Additionally, the plaintiff’s proposed mechanism for determining class members must be both administratively feasible and protective of the defendant’s Seventh Amendment and due process rights.
To assess whether Therrien met the Rule 23 requirements, the court scrutinized the proposed class definition. In the present case, Therrien’s proposed class was defined as, “All persons in the United States that (i) downloaded one of the Class Apps onto their mobile phone, (ii) enabled location permissions for the Class App for at least 250 sessions over a period of at least one month, and (iii) watched at least ten (10) videos between May 5, 2021, and April 16, 2024 (the “Class Period”).”
Courts considering class definitions will often assess the way the definition has been drafted, but in this case, the court’s analysis did not turn on the drafting of the definition but on the validity of Therrien’s proposed mechanism for identifying class members.
Court’s Critique of Therrien’s Proposed Methodology and Denial of Certification
For purposes of identifying class members, Therrien aimed to rely on an expert witness’s methodology using geolocation data. This method would involve analyzing geolocation data points to generate names of mobile app users, followed by testimony from each user confirming that the information obtained belongs to them and is accurate.
The court highlighted that this method would be administratively infeasible and could potentially violate HTV’s due process rights, running afoul of In re Nexium Antitrust Litig. Expanding upon the infeasibility of this method, the court noted that, for addresses where there are multiunit apartment buildings with hundreds of occupants, geolocation points could not be used to identify specific unit numbers, and therefore specific users, of the HTV apps.
Thus, the generated user data could not be used to differentiate putative class members from other users, making it nearly impossible to provide notice of a pending class action. Applying the reasoning from In re Asacol Anitrust Litig., the court noted that the proposed process would likely result in thousands of class members waiting to provide testimony on individual issues, which would predominate over common ones.
Moreover, the court explained that, although affidavits may be sufficient for differentiating between individuals who were injured and who were not injured, testimony used as part of a party’s affirmative case cannot be used to certify a class, “without providing the defendant an opportunity to litigate its defenses.” Because the determination of whether HTV shared personally identifiable information with Braze and Google is an essential element of the VPPA claim, this information could not be used for the purpose of fulfilling the ascertainability requirement.
Based on the foregoing administrative hurdles and due process considerations, the court denied the motion for class certification.
The court’s analysis highlights the importance of a sound mechanism for identifying class members and the potency of an ascertainability challenge if defense counsel can effectively illustrate practical challenges for the court.
More than anything, this case makes clear that it would be imprudent for litigants to treat ascertainability as an afterthought in their Rule 23(a) analysis because, as the holding of this court illustrates, failing to meet ascertainability is fatal for class certification within the First Circuit.
Finally, the decision in Hearst Television highlights that venue can be outcome determinative in class action litigation, where there is a persistent circuit court split on whether a class representative must prove an administratively feasible method of identifying absent class members as a precondition for class certification under Rule 23, with the First Circuit aligned with the Third and Fourth Circuits and the Second, Sixth, Seventh, Eighth, Ninth, and Eleventh Circuits following a more permissive standard.
Until the Supreme Court speaks on this division that is ripe for review, litigants should continue to address ascertainability as a critical issue at the certification stage.