Firm News | Seizing the APEC Opportunity: LawMay Attorney Invited to Present on ODI Filing Compliance for Outbound Investment

With 2026 as APEC China Year, economic cooperation across the Asia-Pacific has continued to intensify. Chinese companies going abroad have moved from expansion by scale into a new stage of higher-quality development, and as cross-border investment activity rises, compliance and risk control have become central to a successful outbound strategy.

To address outbound compliance questions directly, on March 26, 2026, Claire Wu, partner at LawMay P.C., was invited to speak at the "International New Year Salon — 2026 Cross-Border Cooperation Outlook," hosted by the Xiangmi Lake International Friendship Service Center.

Ms. Wu, who holds both a New York attorney license and China's legal professional qualification, drew on her U.S.–China background and extensive cross-border experience to walk through the full ODI filing process, using real examples to address the blind spots in cross-border investment risk for the more than twenty companies present.

At the Event: Compliance Guidance Targeted at Outbound Pain Points

Drawing on China's 2025 ODI sector data and the current environment of geopolitical volatility and tightening supervision, Ms. Wu addressed the core of the ODI filing regime in concrete terms, clarifying three central questions: whether a filing is required, how to file, and what the consequences of non-compliance are.

I. What ODI Filing Is, and Who Supervises It

ODI — Overseas Direct Investment — refers to a domestic enterprise acquiring ownership, control, or management rights in an offshore entity through incorporation, acquisition, equity participation, or capital increase. It is also the prerequisite for lawfully moving funds offshore and for repatriating overseas profits in compliance.

Three authorities supervise ODI filings in coordination, each indispensable:

• NDRC — macro industrial policy oversight, reviewing whether a project involves sensitive countries or sensitive industries.
• MOFCOM — supervision of the commercial conduct, verifying the qualifications of the domestic investor and the authenticity and compliance of the project.
• SAFE and the banks — control over the outbound flow of funds; the decisive gate for moving money offshore.

Most ordinary projects — non-sensitive countries, non-sensitive industries — proceed under the filing regime. Projects involving sensitive countries (no diplomatic relations, subject to sanctions, in conflict) or sensitive industries (real estate, hotels, sports clubs, weapons and equipment) require the approval process. Companies should therefore determine the character of a project before filing, to avoid misjudging the route and delaying the transaction.

II. Common Misconceptions and Bright Lines

Ms. Wu reviewed several typical violations. Most stem from an inadequate understanding of the rules or weak compliance awareness, and result in blocked transactions, trapped funds, or administrative penalties.

Misconception 1: A minority stake does not require filing

Example: A domestic manufacturer acquired a 30% stake in an offshore company, assumed that a stake under 50% required no filing, and remitted payment through an offshore subsidiary without authorization. The transaction was ultimately terminated, and the tax authorities pursued back taxes and late payment penalties in the millions of RMB.

Guidance: Even acquiring 1% requires filing. The exception is where the investing entity is an offshore subsidiary and the funds come entirely from that subsidiary's own operating profits — that is, where no new outbound remittance of domestic parent funds is involved. Only then is ODI filing not required.

Misconception 2: A capital increase in an already-filed subsidiary needs no new filing

Example: A domestic gaming company increased capital in an offshore subsidiary that had already been filed, assumed no new application was needed, and had the outbound remittance blocked by its bank — losing the commercial opportunity and incurring a SAFE penalty in the millions of RMB.

Guidance: Every capital increase requires a new filing.

Misconception 3: Invest first, file later

Example: An internet company's offshore subsidiary was highly profitable, but because no ODI filing had been made at the outset, the profits could not be lawfully repatriated. The annual loss in capital efficiency exceeded RMB 10 million, and the remedial filing process was complex and protracted, straining cash flow.

Guidance: Without an ODI filing, overseas profits cannot be lawfully repatriated, and regulatory penalties are a real risk.

III. Practical Guidance: Full-Cycle ODI Compliance in Three Stages

Preparation

Determine before filing whether the project falls under the filing or the approval regime, to avoid delay from a misjudgment.

Ms. Wu also emphasized examining the compliance of the investing entity and the transaction structure:

• whether the investing parent meets the baseline conditions (incorporated for at least one year, with complete audited financial statements) — avoiding "in and out" arrangements;
• whether the investing entity has genuine operating capability — avoiding shell arrangements;
• whether there is an evident mismatch between the domestic and offshore structures (a small parent with a large subsidiary, for example);
• whether the equity structure is clear and can be traced through; and
• whether the purpose and functional positioning of the investment are reasonable.

Filing and Implementation

Assemble all filing materials, ensuring they are genuine, complete, and internally consistent.

Coordinate the sequencing across the three authorities.

Plan the timeline: with complete materials, a non-sensitive project generally takes 20 to 45 working days end to end. Build in buffer.

Ongoing Compliance

File annual reports on time; failure to do so results in listing on the abnormal operations register.

Where a project undergoes a material change or terminates, complete the corresponding change procedures promptly.

Use funds strictly for the registered purpose, retain complete supporting documentation, and cooperate with post-filing review.

On termination or deregistration, complete liquidation procedures promptly so that funds are lawfully repatriated.

A Note From LawMay

For outbound investment, compliance comes first. ODI filing looks procedural, but it bears on the compliance of cross-border fund flows, the enforceability of the investment structure, and the repatriation of later returns. In practice, an inadequate understanding of the regulatory requirements can have a material adverse effect on both the transaction and the business.

This article addresses general legal questions only and does not constitute legal advice on any specific matter.