Corporate Services
Overseas Direct Investment (ODI) Filing
ODI filing refers to the three key procedures required for Chinese enterprises or organisations investing in countries or regions outside mainland China (including Hong Kong, Macao and Taiwan) through establishing new enterprises, acquiring foreign enterprises, or acquiring equity stakes in foreign enterprises: obtaining approval for overseas investment activities from the commerce department; securing approval or filing for overseas investment projects with the National Development and Reform Commission; and completing foreign exchange registration with banks. Enterprises involving state-owned assets must additionally obtain approval from the State-owned Assets Supervision and Administration Commission.
ODI licensing and filing procedures are categorised into the filing system and the approval system based on factors such as investment amount, industry sector, and country. Generally, non-significant investment amounts or non-sensitive investments fall under the filing system. For sensitive industries, sensitive regions, and investments exceeding specified thresholds, approval from the National Development and Reform Commission and the Ministry of Commerce is required.
Conditions for Filing Overseas Direct Investment (ODI)
Enterprises must satisfy the following conditions to apply for overseas investment filing:
Meets the definition of “overseas investment”
The act of acquiring non-financial enterprises or relevant interests overseas through means such as establishing new entities or mergers and acquisitions.
Entity and establishment time requirements
The principal entity shall be a legally established domestic enterprise, preferably having been in operation for at least one year.
Shareholder background, source of funds, and requirements for investment authenticity
The background of domestic shareholders or partners, the source of funds, and the authenticity of overseas investment projects must be clearly stated.
Financial Requirements
The most recent annual audit report must not show a loss, with a return on net assets exceeding 51% and a debt-to-equity ratio below 70%.
Overseas Direct Investment (ODI) Filing Procedure
When undertaking overseas direct investment (ODI), enterprises must undergo the approval and filing procedures of the following three departments:
1. National Development and Reform Commission project approval
First, domestic enterprise shareholders must apply to the National Development and Reform Commission (NDRC) for project approval. During this process, the enterprise shall submit relevant project information and execute the requisite legal documents. The NDRC oversees the sectoral direction of enterprises' overseas investments and issues the Overseas Investment Project Filing Notice to eligible enterprises.
2. Approval and Licensing by the Ministry of Commerce
Subsequently, enterprises must submit an application for approval to the Ministry of Commerce. The Ministry of Commerce is responsible for conducting comprehensive approval of enterprises' overseas investment matters and issuing the Overseas Investment Certificate to enterprises that meet the requirements. Upon receiving this certificate, enterprises should commence overseas investment activities within two years.
3. Filing with the State Administration of Foreign Exchange
Finally, enterprises must file with the State Administration of Foreign Exchange (SAFE).SAFE oversees foreign exchange registration and procedures for capital outflows. Upon completing the filing process, enterprises must undertake foreign exchange registration with banks in accordance with the "Regulations on Foreign Exchange Administration for Overseas Direct Investment by Domestic Institutions". For projects exceeding USD 5 million in investment value, enterprises must additionally report to SAFE. Following SAFE's review, the "Certificate of Foreign Exchange Registration for Overseas Direct Investment" will be issued to the domestic enterprise.
