Recently, the situation in the Middle East has once again touched the nerves of the whole world. Iran, Israel and the United States of America's game, so that this ancient land over the war clouds. For Chinese enterprises that are planning or have already laid out overseas markets, this is not only a news headline, but also a wake-up call.

Why? This is because the logic of reviewing ODI filings (outbound direct investment filings) in these conflict core zones is directly tied to geopolitics.If you plan to invest in a sanctioned country (e.g., Iran) or a war-torn region, your filingsIt's likely that the first step will becaught in the middle of a systematic interception--That's what it's called."Sensitive countries and areas" red line.. Even if your destination is not a war zone, the volatility of the international situation will make regulators ask tougher questions about the authenticity and safety of investment projects.

However, the complexity of compliance goes far beyond that. Within the grand narrative of cross-border investment, there is another, equally critical path - theRegistration of 37. ItServing Individuals, which addresses the compliance issue of domestic residents' offshore shareholdings. The two are like two parallel tracks, serving different subjects and purposes, but often confused by investors.

Today, we will use an article to thoroughly explain the core differences, applicable scenarios and processing points of ODI filing and No. 37 registration, so as to help you take every step to stabilize cross-border investment under the complicated international situation.

One,Core concepts: what exactly are the two?

In the compliance system for cross-border investment, ODI filing and Section 37 registration are like two parallel tracks.Serving different subjects and purposes.

ODI Filing (Outbound Direct Investment Filing)

It is the act of acquiring ownership, control, operation and management rights of non-financial enterprises outside China through new establishment, merger and acquisition, etc. by Chinese domestic enterprises. Simply put, it isOfficial passport for enterprises to "go out" with capitalThe regulatory agencies include the National Development and Reform Commission, the Ministry of Commerce and the Administration of Foreign Exchange. The regulators include the National Development and Reform Commission, the Ministry of Commerce and the Administration of Foreign Exchange (AFE), which implements multi-departmental joint supervision. Without this pass, the enterprise's funds cannot be legally remitted through the bank, and overseas investment is a violation of the Chinese legal framework, which may face administrative penalties, credit damage, and even affect all future foreign exchange business.

Registration of 37

The full title is Circular of the State Administration of Foreign Exchange on Issues Relating to Foreign Exchange Management of Domestic Residents' Overseas Investment and Financing and Return Investment through Special Purpose Companies (Huifa [2014] No. 37).Individuals who are residents of the territoryThe foreign exchange registration procedure required for offshore investment and financing and repatriation investment through Special Purpose Vehicle (SPV). It is essentially"Proof of legal identity" for individuals holding shares abroadThe solution to the problem is the compliance of the individual in the offshore structure. You can understand it as the domestic residents of the individual's offshore investment "on the account" - do this registration, the future of overseas enterprises to make money (dividends) or sell their equity to make money, in order to legally and smoothly remit the money back to the domestic use.

In a nutshell: ODI regulates "outbound" corporate funds, while Article 37 regulates "cross-border" individual equity.

Two,Comparison of core differences: two completely different compliance tracks

Although ODI filing and No. 37 registration are both important compliance procedures for cross-border investment, they are fundamentally different from the applicable subject to the regulatory logic, and from the objectives to the handling process.

01,Fundamental differences in the subjects of application

(i) ODI filing

The applicable subject of ODI filing is very clear - an enterprise legal person established by law within the territory.Whether it is a state-owned enterprise, a private enterprise or a partnership.As long as it involves being outside the countryODI filing is required for the establishment of new subsidiaries, merger and acquisition of stakes in overseas enterprises or participation in overseas projects.

For example, a Shenzhen-based technology company plans to set up a production base in Southeast Asia, investing US$3 million for plant construction and equipment procurement. In this case, it is necessary to apply for ODI filing with the Shenzhen company as the main body in order to remit the funds abroad in a compliant manner.

(ii) Registration of 37

The applicable subjects of the No. 37 registration, on the other hand, are individuals resident in China, including founders of enterprises, Chinese executives who own equity in the company, and core employees who have exercised their options.It should be noted that this registration is not required for "Specified Foreign Individuals".

For example, the founder of an Internet company in Hangzhou needs to set up a holding company in the Cayman Islands to prepare for an overseas listing and introduce investment from a US dollar fund. At this time, the founder as an individual must apply for the 37th registration in order to legally hold the equity of the offshore company, and to ensure the compliance of the entry of the future financing money and the return of personal dividends.

02,Differences in regulatory bodies

(i) ODI filing

ODI filings are made byThree regulators to keep a watchful eye::

1. StatesNDRCResponsible for reviewing the nature and amount of investment projects;

2,Department of CommerceChecking the qualification and commercial compliance of investment entities

3,foreign exchange bureauThe final control of the exit of funds is then implemented through banks.

This is a complex system of multi-sectoral joint supervision, emphasizing the whole process of control of enterprise funds "going out".

(ii) Registration of 37

The 37th registration is made by theState Administration of Foreign Exchange Single Responsibility, usually through authorized banks. Its regulatory logic is more focused: to ensure that the shareholding structures built by domestic individuals abroad are legal and transparent, paving the way for future capital repatriation.

03,Differences in core objectives

(i) ODI filing

The core objective of the ODI filing can be summarized in four words:Compliance Exit.It addresses the question of how domestic enterprises can legally convert RMB funds into foreign currency funds for offshore investments and carry out substantial business activities abroad.It's a one-way tunnel from China to the outside world.The

(ii) Registration of 37

The goal of the 37th registration, on the other hand, is:Identity rights and pathway opening. It has to solve the problem of how the individuals in the territory can legally hold the equity of overseas companies, how to make the offshore financing money enter the territory in a compliant manner, and how to smoothly return the dividends or exit proceeds after the overseas listing in the future. This is a two-way circular channel - setting up an SPV in small amounts out of the country first, returning to invest back into the country after introducing foreign capital, and then returning the proceeds to the country in a compliant manner in the future.

04,Differences in applicable scenarios

(i) ODI filing

Core scenarios include:

1. Layout of offshore entities: Establishment of new subsidiaries, branches or offices overseas to carry out physical operations such as manufacturing, trading and distribution.

2. Cross-border mergers and acquisitions: Acquisition of equity or assets of a foreign company to gain control

3. Investment in offshore projects: Investing in major projects in energy and infrastructure abroad

4、Extension of industry chain: Establishment of raw material procurement centers, logistics and warehousing bases, or R&D and design centers outside of China.

Special attention needs to be paid to the 2026 regulatory policyTight restrictions on sensitive industries and areas. Involving real estate, hotels, studios, entertainment, sports clubs and other industries, or investing in countries with no diplomatic relations or war-torn countries (such as some of the current conflict areas in the Middle East), the ODI filing review is extremely strict and may even be rejected outright.

(ii) Registration of 37

The core scenarios registered in 37 include:

1、Red chip/VIE structure construction: This is the most typical scenario. Domestic company founders set up a special purpose vehicle (SPV) in Cayman or BVI for an offshore listing

2. Return investment: Upon completion of offshore financing, invest back into the country through an SPV and set up a Wholly Foreign Owned Enterprise (WFOE) to control the operating entity in the country.

3. Employee offshore equity incentives: Employees of a domestic company participating in an Employee Stock Ownership Plan (ESOP) through a foreign parent company are required to register to ensure that future exercise proceeds can be repatriated to the domestic market.

05,Differences in the flow of funds

(i) ODI filing

The ODI filing deals with theOne-way exit of enterprise funds.. Domestic enterprises remit their own funds or financing funds, after compliance review, to their overseas subsidiaries or project accounts. The use of this money must be strictly consistent with the filed project, and subsequent repatriation of profits requires separate procedures.

(ii) Registration of 37

The flow of funds handled by the 37th registration is much more complex. At the initial stage, only a small amount of money (usually a few thousand dollars) is required by an individual to register an offshore SPV, and no large amounts of outbound funds are involved. Subsequently, the offshore financing money (e.g., USD fund investment) enters the SPV, and then enters the domestic market through the return investment channel to be used for setting up a WFOE or expanding domestic operations. When the offshore listing exits in the future, the individual dividend or equity transfer proceeds can be remitted back to the domestic settlement for use in a compliant manner. This is aComplete funding closure.

06,Differences in continuing compliance requirements for subsequent obligations

(i) ODI filing

Once the ODI filing is complete, companies are required to annuallyCompletion of registration of stock interests by June 30In addition, it shall report to the supervisory authorities the assets, liabilities, ownership interests and other data of the overseas enterprises. If an offshore enterprise undergoes a capital increase, capital reduction, change of equity and other significant matters, it is required to file the changes within 30 days.

(ii) Registration of 37

37 registration likewise has a follow-up obligation. If the offshore SPV undergoes major events such as change of shareholding, capital increase, listing, bankruptcy and liquidation, theIndividuals are required to register changes within 30 days. There is also a need to cooperate with the completion of the register of interests in the stock each year to ensure the continued transparency of information on individuals' foreign holdings

Three,The two are related: when do they need to be done at the same time?

In the complex cross-border architecture, ODI filings and Section 37 registrations are not completely cut off, but are closely related.

Key Compliance Tips: In a return investment structure, regulatory requirements are made to conductPenetrating verification of the identity of the ultimate holderThe

● If the ultimate holder isdomestic enterpriseIf you are a member of the ODI, you must first complete an ODI filing.

● If the ultimate holder isDomestic natural personsIn the case of the 37th, advance registration is required

● If the ODI filing involves natural person's foreign shareholding, it is necessary to synchronize the completion of the registration of the 37th, dual compliance is indispensable

For example, the case of Mr. W mentioned earlier: he applied for ODI filing with Shenzhen Technology Co., Ltd. as the main body to solve the problem of outbound funds; at the same time, as an individual, he applied for No. 37 registration to solve the problem of personal shareholding compliance. The two procedures are parallel to ensure the legal compliance of the whole structure.

Four,In-depth analysis: how to choose in different scenarios?

Scenario 1: Enterprises simply "go to sea" - choose ODI filing

If you are a manufacturing company planning to set up a production base in Vietnam, investing US$5 million for plant construction and equipment procurement. In this case, the choice path is very clear:Take domestic enterprises as the main body for ODI filing.

Your domestic company will act as the main investor and submit an application to the Development and Reform Commission (DRC) and the Commercial Department to prove its financial strength, the commercial substance of the project and the legitimacy of the source of funds. Upon approval, the capital can be remitted to the Vietnamese subsidiary for production and operation in a compliant manner.

Scenario 2: Individual offshore shareholding - Office 37 registration

Suppose you are the founder of a technology company and the company plans to set up a red chip structure for listing in Hong Kong. You need to set up a holding company in the Cayman Islands to bring in investment from a US dollar fund. In this caseYou, as an individual founder of Chinese nationality, must register for 37.

What you need to do is to submit a registration application to the local foreign exchange bureau or authorized bank after the registration of the offshore SPV is completed and before the introduction of foreign capital. Upon approval, you will obtain a business registration certificate, which is the only proof of your legal ownership of the offshore company. This is the only proof that you legally hold the equity of the offshore company. In the future, you will need this certificate for foreign exchange settlement for the entry of financing money and the return of dividends after listing.

Special attention needs to be paid to the37 registration is subject to strict timeliness requirements: It must be completed before the offshore SPV obtains its first offshore financing. If the financing is done before registration, it will constitute a compliance defect and may risk penalties or the inability to be replaced.

Scenario 3: Composite Architecture of Enterprise + Individual -

Both are needed

This is the most complex and common scenario. Let's still take the example of Mr. W, the founder of the above mentioned tech company:

Mr. W is both the legal representative of the domestic operating entity and an individual shareholder of the offshore listed company. At the same time, he is required at the corporate level to inject a portion of his business or assets into the offshore SPV.

In this case.The path to compliance is a two-track approach::

● As a business: General W's domestic companies are required to apply for ODI filings to inject relevant assets or business compliance into the offshore structure to ensure that the exit of funds and assets at the corporate level is legal.

● As an individual: Individuals of General W need to go through the 37th registration to establish the legitimacy of their individual shareholder status in the offshore SPV.

Two formalities are indispensableIf we only do ODI without ODI, Mr. W's personal shareholding will be in a "black account". If we only do ODI but not No. 37, Mr. W's personal shareholding will be in a "black account" status, and future dividends will not be able to flow back in a compliant manner; if we only do No. 37 but not ODI, the exit of assets at the company level will constitute a violation.

Scene Four:Employee Equity Incentives -

Special application of 37 registrations

If you are a Chinese employee of a company that has erected a red-chip structure, you have been granted options or restricted shares of the offshore parent company. When you exercise or vest, you will also need to register for Section 37 - to be precise.It is an employee stock ownership plan registration under Section 37.

In this case, the company usually applies to the foreign exchange bureau for centralized registration of all Chinese employees participating in the incentive plan. Upon approval, each employee is entitled to aPersonal Shareholding LimitIn the future, the exit of funds from the exercise of rights and the repatriation of proceeds from the sale of shares can be handled in a compliant manner within the quota.

In 2026, with war clouds in the Middle East and accelerating global capital flows, the compliance bar for cross-border investment is rising. Whether a company is going overseas or an individual is crossing the border, compliance is no longer optional, but a must-answer question.

Select a recommendation:

• If you are an enterprise and plan to set up subsidiaries overseas, merge and acquire overseas assets - do ODI filing.
• If you are an individual and need to set up a red chip structure and hold equity in a foreign company - Office 37 registration
• If you are both a business owner and involved in personal offshore shareholding - both need to be done only to abide by the bottom line of compliance, the enterprise's "going to sea" boat will be able to travel steadily in the wind and waves, and personal cross-border investment will be able to safely dock in the complex international situation.