With the in-depth development of the national strategy of "Belt and Road" and the strong support of the state for the development of enterprises going abroad, Chinese enterprises have continued to be active in overseas investment activities, and China's outbound investment has maintained a stable and healthy development, and the scale of Overseas Direct Investment (ODI) has been expanding. The scale of Overseas Direct Investment (ODI) has been expanding continuously, and ODI has become an important means for Chinese enterprises to implement internationalization strategy, broaden development space and enhance international competitiveness.

According to the FY2024 Statistical Bulletin on China's Outward FDI, jointly released by the Ministry of Commerce, the National Bureau of Statistics and the State Administration of Foreign Exchange:

In 2024, China's industry-wide outward FDI amounted to RMB 1,159.27 billion, a year-on-year increase of 11.3% (US$162.78 billion in US dollars, an increase of 10.1%). Among them, China's domestic investors made non-financial direct investments in 9,400 overseas enterprises in 151 countries and regions around the world, with a cumulative investment of 1024.45 billion yuan, an increase of 11.7% (143.85 billion U.S. dollars in U.S. dollars, an increase of 10.5%).

These figures show that Chinese enterprises continue to invest actively around the world, and that the Belt and Road Initiative has played an important role in promoting China's outward investment. However, it is not an easy task to carry out outbound direct investment, which involves not onlyThe cross-border flow of capital and international layout of industries also include risk assessment, market investigation, compliance system construction, project decision-making and execution.and a host of other complexities.

In order to help investors better understand the ODI overseas investment filing, today I will focus on the theme of overseas direct investment filing (ODI filing), systematic combing of China's ODI filing laws and regulations, operational procedures, required materials, important and difficult issues, etc., and strive to provide a clear guide to overseas investment filing for the vast number of investors with the need to go overseas.

catalogs

01 What is an ODI offshore investment filing?

02 Why do I need an ODI filing?

03 When do I need to make an ODI offshore investment filing?

04 Which industries can't do ODI filing?

05 What are the advantages of an ODI filing?

06 What are the consequences of not making an ODI filing?

07 Conditions for ODI filing

08 Information required for ODI filing

09 Process for ODI filing

01.What is ODI Offshore Investment Filing

Overseas Investment Filing (ODI), known in English as Overseas Direct Investment, means that domestic enterprises and organizations, after being approved by the relevant departments through theEstablishment, mergers and acquisitions, equity participationThe act of acquiring ownership, control, management and other related rights and interests outside of the country, etc.

Generally speaking, as long as the domestic enterprises involved in foreign investment directly or indirectly to obtain the ownership, control and other rights and interests of foreign companies that need to be filed overseas investment.

Commonly applicable scenarios for ODI outbound investment filings include the following two main types:

• Establishment of new companies abroad
• Offshore M&A Company

1. Establishment of new companies abroad

Definition:This refers to the case where an enterprise establishes a new company outside of China and the mainland company acts as a shareholder with no specific requirements on the percentage of shareholding. This situation usually involves a series of processes such as registering a new company abroad, obtaining a business license and opening a bank account.

Purpose:Enterprises may choose to set up new companies abroad for a variety of reasons such as expanding overseas markets, utilizing overseas resources, and avoiding trade barriers.

2. Offshore M&A companies

Definition:It refers to the acquisition of control or management rights of an already existing company by an enterprise abroad through the purchase of equity or assets. During the M&A process, the enterprise needs to conduct due diligence to understand the target company's financial status, operational status, legal risks, etc. to ensure the smooth progress of the M&A activities.

Purpose:Enterprises may acquire offshore companies to quickly enter new markets, acquire advanced technologies, expand production scale or realize strategic transformation.

Note: If the enterprise's overseas investment involves sensitive countries and regions and sensitive industries, it also needs to implement approval management.

It is important to note that the Outbound Investment Filing (ODI) is only for established offshore enterprises. In other words.Shell companies set up by domestic enterprises in the path of offshore investment are excluded from the scope of review by the management.At the same time, the secondary investment behavior carried out by overseas enterprises is not in the scope of outward investment management and does not need to be examined by the relevant departments.

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02.Why do I need an ODI filing?

1. Compliance requirements

The Chinese government has clear legal and regulatory requirements for outbound investment, and making an ODI filing is an important step to ensure that an enterprise's outbound investment behavior is in line with national laws, regulations and policy guidelines. This helps to safeguard national economic security and interests and prevent the outflow of illegal funds.

2. Avoiding the risk of non-compliance

Through filing, enterprises can ensure their compliance in the process of offshore investment and avoid the legal risks and economic losses they face due to irregular operation.

3. Financial security and liquidity

Legitimate funds leave the country:Through ODI filing, enterprises can complete the exit of domestic funds in a legal way to ensure the compliance and safety of capital flow. This helps enterprises to smoothly carry out their offshore investment activities and avoid project delays or failures caused by capital problems.

Foreign exchange management facilitation:After the filing, enterprises can enjoy the convenience of the State's foreign exchange management and improve the liquidity and efficiency of capital utilization. This helps enterprises to better utilize offshore resources and achieve their investment objectives.

4. Tax incentives and financial subsidies

Tax Benefits:In some countries and regions, enterprises can enjoy tax incentives for outbound investment. Through ODI filing, enterprises can legally enjoy these preferential policies.Reduce tax costs and increase return on investment.

Financial subsidies:Some local governments provide capital subsidies and other support policies to encourage enterprises to invest abroad. Enterprises that have completed the ODI filing are likely to receive these policy supports, further reducing investment costs.

5. Resource allocation

ODI filing helps enterprises optimize the allocation of domestic and foreign resources and achieve effective utilization and complementarity of resources. This helps to enhance the overall competitiveness and sustainable development of enterprises.

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!

03.When is an ODI filing required?

1. Establishment of overseas subsidiaries to conduct business and capital injection

When enterprises plan to make direct investments, merger and acquisition projects or expand existing businesses overseas, domestic companies setting up subsidiaries overseas will need an ODI filing certificate from the domestic parent company in order to open local bank accounts or carry out remittance operations from the mainland to overseas. Banks will require this supporting document when reviewing the relevant remittance application.

In addition, when an overseas subsidiary generates profits from its operations and wishes to repatriate the funds to China, the filing document can be used as a proof of legality to help the company successfully complete the procedures for repatriation of funds.

2. Overseas listing (red chip/VIE structure construction)

Many Chinese companies prepare for an overseas listing by using aRed chip structure or VIE structure.The construction of these structures often involves complex cross-border capital flows and shareholding arrangements. Making an ODI filing can help companies complete their pre-listing preparations more smoothly, while also facilitating future capital operations and investment exits.

3. Cross-border e-commerce business development

For cross-border e-commerce companies with large capital inbound and outbound needs, in order to ensure business compliance and stability, ODI filing isTransformation into a legitimate cross-border trading entity is a must.

Cross-border e-commerce companies that fail to pass the ODI filing when making large outbound payments may beIt will be subject to refusal by the bank to transfer money or strict scrutiny by the foreign exchange authorities.

And through ODI filing, enterprises can obtain approvals from the Ministry of Commerce and the Development and Reform Commission, thus ensuring the legitimacy of outbound funds. This not only helps enterprises to complete cross-border payments smoothly, but also avoids all kinds of troubles caused by non-compliance of fund flow.

4. Establishment of foreign-invested enterprises

When a Chinese enterprise first establishes a subsidiary overseas and then repatriates funds through that subsidiary to set up a Wholly Foreign Owned Enterprise (WFOE) or other form of foreign enterprise in the country, when opening a capital account, theIf the bank requires equity penetration to a natural person and involves a mainland enterprise, the mainland enterprise will need to apply for an ODI filing certificate.This helps to ensure compliance and clarity of the source of funding for foreign-invested enterprises.

In addition to the common ones listed above, someIndividual and corporate tax harmonization and offshore investmentsWhen you do, you will also need to make an ODI offshore investment filing.

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!

04.What industries can't do ODI filings?

The State Council issued the Circular of the General Office of the State Council Transmitting the Guidance Opinions of the Ministry of Foreign Affairs of the People's Bank of China of the National Development and Reform Commission of the Ministry of Commerce on Further Guiding and Regulating the Direction of Overseas Investments on August 18, 2017, which classified the overseas investment projects into encouraging, restricting and prohibiting categories to further guide and regulate the direction of the enterprises' overseas investments. The specific list is as follows:
1. Categories of encouragement
Infrastructure sector; capacity and equipment sector; high-tech and advanced manufacturing; energy resources; agriculture; and Belt and Road investments;
2. Restricted categories
(1) Overseas investment with sensitive countries and regions with which China has not established diplomatic relations, where wars have occurred, or where restrictions are required under bilateral and multilateral treaties or agreements concluded by China; (2) Overseas investment in the real estate industry; hotel industry; cinema; entertainment industry; sports clubs, etc.; and (3) Establishment of equity investment funds or investment platforms with no specific industrial projects abroad.
3. Prohibited categories
(1) involving the export of core technologies and products of the military industry not approved by the State; (2) the use of technologies, techniques and products prohibited for export in China; (3) gambling and pornography; (4) expressly prohibited by international treaties concluded or participated in by our country; (5) endangering the interests of the State and public security; if an enterprise invests abroad in a sensitive country or region, or in a sensitive industry, the enterprise will also be required to implement the approval of the management. ,

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!

05.Advantages of ODI Offshore Investment Filing

• To accomplish in a lawful manner the exit of funds from the country or to realize the purpose of obtaining foreign currency abroad without the exit of funds from the country.
• Exploit offshore markets to obtain local policy or tax incentives and accelerate the rate of capital accumulation.
• Facilitate business transfers with offshore customers, reducing procedures and costs.
• Improve the image of domestic enterprises and increase their added value.
• Fully absorb foreign advanced technology and management experience as well as timely grasp of external information.6. Effective use of two resources and two markets to avoid foreign trade barriers.
• Coordinate the development of domestic and foreign enterprises and optimize the allocation of resources.
• Subsequent return of overseas funds to invest in the home country can enjoy the corresponding capital subsidies given by the financial departments at the provincial and municipal levels.

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!

06.Consequences of not making an ODI offshore investment filing

• Suspension, cessation of implementation and legal liability that the investor may face:

Failure of an investment entity to comply with the relevant outbound investment regulations and to make the necessary filings or approvals may result in the suspension or cessation of the outbound investment activities carried out by the investment entity.

For non-compliance, the investment entity and its relevant responsible persons will not only receive a warning, but will also be held criminally liable in accordance with the law if the circumstances are serious enough to constitute a crime. This shows that the government attaches great importance to and takes a stern attitude towards the compliance of offshore investment.

• Penalties for financial enterprises that provide financing and guarantees:

When providing financing or guarantees for an offshore investment project, a financial enterprise must ensure that the project has obtained the necessary approval documents or filing notices. If financing or guarantees are provided in violation of the law, not only will the financial enterprise itself be penalized, but its relevant responsible persons will also be punished in accordance with the law.

• Restricted access to foreign exchange::

This is one of the most immediate consequences of not having an ODI filed or approved.The investment program could not be implemented because the investment funds could not be successfully remitted through the bank without complying with the procedures.

Similarly, funds such as profit dividends from foreign subsidiaries cannot be repatriated to China through formal channels, which has a significant impact on the flow of funds and financial planning of the enterprise.

• Returning investments are discouraged:

If an overseas subsidiary plans to bring funds or assets back to the mainland by way of repatriation investment, this plan will not be realized due to the lack of filing procedures for overseas investment.

• No access to government subsidies and incentives:

In order to encourage enterprises to "go global", the government will provide a series of subsidies and incentives, such as subsidies for responding to intellectual property disputes outside China and subsidies for responding to the "two counter-insurgencies and one guarantee" (anti-dumping, countervailing subsidies, and safeguard measures).

However, enterprises without ODI filing or approval will not be able to enjoy these policy benefits, which undoubtedly increases their operating costs and market risks.

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!

07.Requirements for ODI outbound investment filing

According to the previous ODI filing practice cases, most of the enterprises that passed the audit as the investment subject need to basically meet the following four application conditions:

1、Domestic enterprises preferably more than 1 year

2. Return on net assets higher than 5%

3. Gearing ratio below 70%

4. Audit report cannot be in the red (net assets greater than investment)

(You can also make paid-in registered capital if 1, 2, and 3 are not satisfied, but the paid-in amount > the invested capital.)

Remarks.

Return on Net Worth = Net Profit:Average Net Worth x 100%

Gearing ratio = total liabilities:total assets x 100%

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!

08.Documents required for ODI outbound investment filing

(i) Information on the subject of the investment

1. A copy of the business license of the domestic company and a photo of the front and back of the ID card of the legal person;

2. The company's corporate assets and operations (net profit, net assets, total assets, etc.) for the latest year;

3、Company profile (main business, operation in the past three years, product advantages, shareholding structure);

4. Certificate of bank creditworthiness of the domestic company; 5. Audit report of the domestic company for the previous year;

6、Domestic company shareholding structure diagram (complex structure need to indicate the actual controller);

7. Explanation of the implementation of preliminary work (including due diligence, feasibility report, explanation of the source of investment funds, analysis and evaluation of the investment environment, etc.);

8. Explanation of the source of investment funds and their use (detailed estimation and breakdown of the funds, as well as corresponding supporting documents such as rental contracts and order contracts).

(ii) Information on target companies

1、Certificate of registration of the target company and articles of association (translation is required for foreign language);

2. Brief introduction of the target company (main business, shareholding structure, operation in the last three years, advantages of the products in the place of investment, reasons for choosing the place of investment, the necessity of overseas investment and profit points);

3. The main business of the target company: introduction, advantages, characteristics, core competitiveness and the company's performance targets and profit points;

4. Introduction of core products/technology of the target company;

5. Operation plan of the target company (size and rent of the rented office address, number of locally recruited and expatriate staff, business development plan);

6. Analysis and evaluation of the investment environment (risk analysis of the political and economic aspects of the investment location).

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!

09.Processing Flow of ODI Outbound Investment Filing

The whole process will take 2-3 months, involving complicated documents and processes, if there is no professional guidance to follow up, it is very time-consuming and laborious, and it is likely that due to the information involved in the submission of documents is not compliant, the industry involved in the more sensitive reasons can not pass the audit.
The process of filing an ODI offshore investment:

1. Project formulation--The shareholders of the domestic enterprise apply for the project to the development and reform department, submit the project information, the domestic investor signs all the required legal documents, pending the approval or filing by the development and reform department, and the issuance of the approval document or filing notice.

2. Licensing--Approval or filing by the commerce department, issuance of the Certificate of Enterprise Overseas Investment, and the enterprise shall carry out investment abroad within 2 years after receiving the certificate.
3. Final filing--Banks release foreign exchange, and the Foreign Exchange Administration supervises. For investment amount of more than 5 million dollars, it is necessary to report to the foreign control department. The foreign exchange control department will issue the Foreign Exchange Registration Certificate for Overseas Direct Investment to the domestic enterprise after examination and approval.

If your enterprise has a related ODI overseas investment filing needs, welcome to sweep the code to add our online customer service (WeChat: jxhqcy890 / cell phone: 16625410105), to arrange for the manager to answer questions, to provide professional advice and full one-on-one service!