A Chinese company investing in the U.S. must complete ODI before money leaves China — the filing steps under the July 2026 rules, and how they line up with the U.S. side

ODI (outbound direct investment) is the set of approvals, filings and foreign exchange registrations an investor in China completes at home before investing abroad. The State Council's Provisions on Outbound Investment (State Council Order No. 837), in force since July 1, 2026, put this at the level of an administrative regulation: they say who counts as an investor, what the investor must do, and what the penalties are. How to file is still governed by the existing NDRC, MOFCOM and SAFE rules.

The question usually comes up at one point: the Chinese company has decided to set up or buy a U.S. company, the U.S. entity is nearly formed, and when finance goes to wire the money, the bank asks, "Is your ODI done?" Many companies learn only then that the procedures in China come before the money can leave.

What Order No. 837 says

• Timing: adopted at a State Council executive meeting on April 17, 2026, signed May 5, published June 1, and in force July 1, 2026 (Article 34). It has 34 articles.
• Scope (Article 2): an investor in China obtaining ownership, control, management rights or similar interests in an overseas enterprise or assets, directly or indirectly, by contributing assets or equity or by providing financing or guarantees. Investors include companies, other organizations and resident individuals in China. New entities, acquisitions, capital increases and reinvestment abroad are all covered.
• Categories (Article 11): the authorities define encouraged, restricted and prohibited outbound investment.
• Investor duties (Article 12): complete approval or filing, information reporting, cross-border fund registration and similar procedures "in accordance with relevant state provisions." Foreign exchange, tax and similar matters follow other laws and regulations (Article 14).
• Security review (Article 15): transfers or disposals of outbound investments that may affect national security are subject to security review.
• Compliance systems (Article 16): investors set up compliance and internal-control systems.
• Resident individuals (Article 33): specific rules for individuals' outbound investment are to be issued by the State Council's investment and commerce authorities. As of November 2026, we haven't seen them published.

Do the existing rules still apply?

Yes. Order No. 837 doesn't assign tasks to specific agencies and doesn't repeal the existing rules; Article 12 refers back to "relevant state provisions." In practice, three sets of rules still apply:

A company in China (state-owned, private or listed) that sets up a U.S. company, buys shares of a U.S. company or adds capital to one needs ODI. There's no exemption by amount: US$100,000 and US$10 million both go through it. Investing through a Hong Kong or BVI platform, or as a Chinese resident individual, follows different rules; have a PRC lawyer advise.

Description: The left column is the investor and how it invests; the other columns show whether ODI applies, what is usually filed, and what to watch. Rows run from most to least common.

Investor / structure	ODI needed?	What's usually filed	Watch for
Company in China sets up a new U.S. subsidiary directly	Yes	NDRC filing, MOFCOM filing, bank FX registration	Wire the investment only after ODI is complete
Company in China buys shares of a U.S. company	Yes	Same; approval instead of filing for sensitive countries, regions or industries	Confirm the category before signing
Existing U.S. subsidiary; the parent adds capital or lends money	Usually	Capital increase: amended filings and FX change registration; a loan is financing, and which registration applies is for the lawyer and bank to confirm	NDRC change filing if Chinese investment rises 20% or more
Company in China → Hong Kong / BVI company → U.S. company	The offshore platform itself needs ODI	ODI when the platform is set up; later reinvestment into the U.S. reported as required	Confirm with a PRC lawyer
Chinese resident individual funds a U.S. company directly	Rules pending	Order No. 837 names individuals as investors; specific rules are still to be issued	The US$50,000 annual personal FX quota can't be used for direct investment abroad
Chinese individual sets up an offshore company for financing or round-trip investment	Circular 37 registration	FX registration of the special purpose vehicle (SPV)	Only for that purpose
U.S. citizen, U.S. company or other non-Chinese investor forms a U.S. company	No China ODI	—	Not an investor in China

• No minimum: there's no small-amount exemption. In practice, banks look harder at the source of funds once a remittance exceeds RMB 1 million.
• Pre-establishment expenses: if registration or legal fees must be paid before the U.S. company exists, pre-establishment expenses can be wired first, generally up to 15% of the total Chinese investment, and they are registered first too.
• Not just new companies: capital increases, shareholder loans, acquisitions and reinvestment abroad can all be covered. After the first ODI, check before each new transfer of funds.

ODI is an administrative procedure in China, handled by PRC lawyers, accountants or specialized ODI agencies. A U.S. CPA firm can't file it. YCL does not file ODI: when a client needs it, we flag it and refer them through our Shanghai office and partner Chinese accounting firms. We handle the U.S. company, documents, filings and taxes.

• Both sides are required; neither replaces the other: ODI is the Chinese investor's administrative filing and decides whether money can lawfully leave China; BE-13 is a U.S. Commerce Department statistical survey filed by the U.S. business (see yclcpa.com/be13).
• Keep the numbers consistent: the ODI amount, the capital and loans actually wired, paid-in capital and intercompany loans on the U.S. books, and the amounts on Form 5472 should all agree.

Usually three steps: a project filing or approval with the development and reform authorities, which issue a Notice of Filing for the Overseas Investment Project; an enterprise filing or approval with the commerce authorities, which issue the Enterprise Overseas Investment Certificate; and, with both documents in hand, outbound direct investment foreign exchange registration at a bank, followed by the wire. The NDRC and MOFCOM filings can usually run in parallel; with complete documents, the process commonly takes one to two months, depending on the locality.

• When to form the U.S. company: often the U.S. company is formed first so the ODI application has formation documents to attach; whether that's required depends on the locality and the agency's advice. Either way, the investment is wired only after ODI is complete.
• Source of funds: preferably the company's own funds, with a clear explanation of where they come from; the amount should fit the parent's size and main business.

What do reviewers look at in practice?

These are common benchmarks used by ODI agencies and banks. They're experience, not legal requirements, and local practice governs:

1. The latest audited year preferably shows no loss.
2. Return on equity preferably above 5%, debt-to-asset ratio preferably below 70%.
3. Companies less than a year old without a full audit usually struggle to get through.
4. Investments unrelated to the main business (such as real estate, entertainment or sports clubs) get closer review.

The Chinese side typically prepares its business license, articles of association and latest audit report; a board or shareholder resolution approving the investment; a source-of-funds statement and an authenticity undertaking; and a project description or feasibility study. The ODI agency and local authority set the exact list.

ODI applications commonly ask for the U.S. company's certificate of incorporation, bylaws (or an LLC's operating agreement), EIN letter, stock ledger and share certificates, and certificate of good standing, and documents used in China may need an apostille. All of these are prepared on the U.S. side, and YCL can handle them.

• Certificate of incorporation: for a Delaware corporation, the Certificate of Incorporation; for an LLC, the Certificate of Formation; issued by the state.
• Bylaws / operating agreement: the corporation's bylaws, or the LLC's operating agreement, showing the owners, shares or ownership percentages, directors and officers.
• EIN letter: the IRS's CP 575; if it's lost, request a 147C letter.
• Stock ledger and share certificates: the stock ledger records who holds how many shares, and should match the ownership structure in the ODI application.
• Certificate of good standing: issued by the state to show the company exists and is in good standing.
• Apostille: China joined the Hague Apostille Convention effective November 7, 2023, so U.S. documents used in China need only an apostille, not consular legalization. State-issued documents are apostilled by that state's authenticating office; which documents need an apostille, and whether notarization comes first, depends on what the Chinese side asks for.
• Chinese and English summaries: a company overview, business plan and budget for the U.S. company can be prepared in both languages for the Chinese agency and bank.

In China: board resolution → NDRC and MOFCOM filings → bank FX registration → wire. In the U.S.: form the company, get the EIN, open a bank account, receive the investment, and file BE-13 within 45 days of setup; then each year file Form 1120 with Form 5472, and withhold and file Form 1042-S when paying dividends. The two tracks run in parallel; the key is that money moves only after ODI is complete.

Description: Read down by step; each row shows the China side on the left and what happens on the U.S. side at the same stage.

Step	China side (PRC lawyer / ODI agency)	U.S. side (YCL)
1	Board or shareholder resolution; set the investment amount and source of funds	Design the ownership structure; choose the state and a corporation or LLC
2	Prepare the ODI application; register pre-establishment expenses if needed	Form the U.S. company, get the EIN, appoint a registered agent; issue the U.S. documents ODI needs, with apostilles if required
3	NDRC project filing and MOFCOM enterprise filing (in parallel)	Register to do business in the operating state; open a U.S. bank account
4	Receive the filing notice and the Enterprise Overseas Investment Certificate; register at the bank	Prepare to receive funds; set up the books (share capital or shareholder loan) to match the ODI filing
5	Wire the investment	Record the funds; file BE-13 within 45 days of setup (see yclcpa.com/be13)
6	Report outstanding investment by September 30 each year; file statistics with the commerce authorities	Each year: Form 1120 with Form 5472, state annual reports and state taxes; payroll if there are employees
7	Capital increases, name changes, share transfers and similar changes: FX change registration and amended filings	Withhold on dividends and interest (10% under the treaty), collect Form W-8BEN-E, file Forms 1042 and 1042-S; keep transfer pricing documentation for intercompany deals

First, the bank won't send it. If funds go out another way, Article 27 of Order No. 837 provides that skipping the required approval or filing, or applying with false materials, brings an order to correct, confiscation of illegal gains and a fine of 1‰ to 5‰ of the investment; refusing to correct brings an order to stop investing, disposal of the shares and assets within a set time, and a fine of 5‰ to 10‰. If it's treated as evading foreign exchange controls, Article 39 of the Foreign Exchange Administration Regulations allows fines of up to 30% of the amount, and up to the full amount in serious cases.

• Responsible individuals: for skipped approvals or filings, the directly responsible managers and other directly responsible persons can be fined RMB 20,000 to 50,000.
• Prohibited investments: an order to stop, disposal of the shares and assets within a set time, and confiscation of illegal gains; refusing to comply brings a fine of 5‰ to 10‰ of the investment, and RMB 50,000 to 100,000 for responsible individuals.
• Future investments: once a penalty takes effect, the authorities can refuse the investor's approval and filing applications for 3 years, or bar it from outbound investment for 1 to 3 years.
• Evading FX controls: under Article 39 of the Foreign Exchange Administration Regulations, moving foreign exchange or capital out of China in violation of the rules or by deception leads to an order to repatriate it within a set time and a fine of up to 30% of the amount; in serious cases, 30% up to the full amount; criminal liability if it's a crime.
• Listed companies: there are also announcement and disclosure duties, and missing ODI may raise disclosure issues.
• Effect on the U.S. side: if the source of funds can't be explained, U.S. bank account opening, anti-money-laundering review and later dividend repatriation can all be affected.

If money has already been sent without ODI, have a PRC law firm or ODI agency assess remediation as soon as possible. How the facts are treated and whether the filing can be completed after the fact are for a PRC lawyer and the authorities; we don't make that call.

When investing in the U.S. through a Hong Kong, BVI or other offshore platform, the platform itself needs ODI when it's set up. For later reinvestment into the U.S., NDRC requires a report for large (US$300 million or more) non-sensitive projects carried out through controlled overseas entities, and the commerce authorities require a reinvestment report. For Chinese resident individuals, Order No. 837 names them as investors, but the specific rules haven't been issued; consult a PRC lawyer before wiring capital.

Through a Hong Kong or BVI platform

• China side: ODI for the platform when it's set up is the foundation; what to report at each later layer, and when, is a question for a PRC lawyer.
• U.S. side: if the direct shareholder is a Hong Kong or BVI company, the related parties on Form 5472 and the investor information on BE-13 follow the actual ownership chain. The U.S. has no income tax treaty with Hong Kong or the BVI, so dividends and interest paid to a Hong Kong company are generally subject to 30% withholding; the 10% U.S.–China treaty rate doesn't automatically apply. Run the numbers on both sides before settling the structure.

A Chinese resident individual as investor

• Rules pending: Article 33 of Order No. 837 says specific rules for individuals' outbound investment will be issued separately. As of November 2026 we haven't seen them, and there's currently no regular filing channel for individuals investing directly abroad.
• Personal FX quota can't be used: the US$50,000 annual personal FX purchase quota can't be used for direct investment abroad or other capital account items not yet opened.
• Circular 37: covers FX registration only for special purpose vehicles that Chinese resident individuals set up or control for offshore financing or round-trip investment.
• Our advice: a Chinese individual who has formed a company in Delaware, Wyoming or another state and plans to wire capital from China should first confirm the route with a PRC lawyer. On the U.S. side, a company 25% or more owned by a foreign individual also files Form 5472 (a single-member LLC files a pro forma 1120 with Form 5472; see yclcpa.com/5472).

In China: FX change registration when the overseas company changes, outstanding-investment reporting by September 30 for the prior year-end, statistics to the commerce authorities, a completion report on NDRC-filed projects, and an NDRC change filing if the Chinese investment rises 20% or more or the main details change. In the U.S.: Form 1120 with Form 5472, state annual reports and state taxes each year, and withholding with Form 1042-S on dividends or interest.

China side (handled by the Chinese investor and its advisers)

• FX change registration: when the overseas company changes its name, increases or reduces capital, transfers shares, merges or splits, register the change within the required time; if it's dissolved, deregister.
• Outstanding-investment registration: by September 30 each year, report outstanding outbound direct investment as of the prior year-end.
• Commerce authorities: file outbound direct investment statistics each year; amend the certificate when the investor or key details of the overseas company change.
• NDRC: report completion of a filed project; file a change if the Chinese investment rises 20% or more, or the investor, destination or main content changes.
• Order No. 837: report information truthfully (Article 12), maintain compliance and internal-control systems (Article 16), and cooperate with security review where national security is involved (Article 15).
• Listed companies: ongoing disclosure under the listing rules.

U.S. side (YCL can handle)

• BE-13: within 45 days of setup or acquisition; investments of $40 million or less file the short Claim for Exemption; later expansions may trigger another filing (see yclcpa.com/be13).
• Form 1120 with Form 5472: a U.S. corporation 25% or more foreign-owned attaches Form 5472 to its Form 1120; each missed form costs $25,000 per year (see yclcpa.com/subsidiary).
• BOI: as of October 2026, companies formed in the U.S. don't file.
• Dividends and interest: paid to a Chinese parent, 30% withholding by statute, generally 10% under the U.S.–China tax treaty; collect Form W-8BEN-E and file Forms 1042 and 1042-S by March 15 of the following year.
• State annual reports and registered agent: Delaware's annual report and franchise tax by March 1; a company operating in North Carolina files the North Carolina annual report and CD-405 separately (see yclcpa.com/annual and yclcpa.com/ra).
• Transfer pricing: loan interest, service fees and product prices at arm's length, with agreements and pricing support on file.
• Chinese-English financial statements: prepared for the parent's audit, consolidation and annual reporting in China (see yclcpa.com/financials).

Example (hypothetical numbers, to show the process): a privately owned manufacturer in Jiangsu, in a non-sensitive industry, plans to invest US$800,000 in US Co, a new, wholly owned Delaware corporation that will lease a plant in North Carolina for assembly and after-sales service. The Chinese investment is far below US$300 million and non-sensitive, so it files with the provincial development and reform authority and the provincial commerce department.

If the money went first: suppose the Chinese side skipped ODI and moved the US$800,000 to the U.S. through other channels. We'd advise having a PRC firm assess remediation first. For illustration only: under Article 27 of Order No. 837, the fine for skipping approval or filing is 1‰ to 5‰ of the investment, roughly $800 to $4,000 on $800,000; refusing to correct raises it to 5‰ to 10‰, roughly $4,000 to $8,000; responsible individuals can also be fined RMB 20,000 to 50,000. How the authorities characterize it, and the currency and amount used, are up to them; if it's treated as evading FX controls, the Foreign Exchange Administration Regulations apply separately. On the U.S. side, we'd review how the funds were booked and whether BE-13 and Form 5472 were missed.

Start with whether the investor is a Chinese company or an individual, whether money has been sent, and whether there's an offshore platform in between; then whether the investor is listed or state-owned. Here are the common situations.

• Situation A: nothing wired yet. Complete ODI through a PRC lawyer or ODI agency. On the U.S. side, form the company, get the EIN, prepare the U.S. documents and apostilles ODI needs, open the bank account, and file BE-13 within 45 days of setup (see yclcpa.com/be13). We can connect you with a firm in China through our Shanghai office or partner Chinese accounting firms.
• Situation B: money already wired without ODI. Have a PRC firm assess remediation promptly; the consequences and options are for a PRC lawyer, and we don't assess them. On the U.S. side, book the capital or loan as it actually happened, and check whether BE-13 or Form 5472 was missed; missed filings can be made under the appropriate procedures (see yclcpa.com/diirsp).
• Situation C: a Chinese individual shareholder. Specific rules for individuals haven't been issued, and the US$50,000 personal FX quota can't be used for direct investment abroad. Consult a PRC lawyer before wiring; on the U.S. side, a foreign individual owning 25% or more also triggers Form 5472.
• Situation D: investing through a Hong Kong company. The Hong Kong company itself should have completed ODI; what reinvestment into the U.S. requires is for a PRC lawyer. On the U.S. side, dividends and interest paid to a Hong Kong company are generally subject to 30% withholding, so run the tax on both sides before settling the structure.
• Situation E: a listed company or SOE. Beyond ODI, there are listing-rule disclosures and state-owned asset supervision requirements, handled internally and by counsel. On the U.S. side, a state-linked investor buying land or involved with critical technology should have an attorney review CFIUS and North Carolina's farmland law first (see yclcpa.com/subsidiary).