China's new ODI Regulations: what investors need to know

The PRC State Council promulgated the Regulations on Outbound Investment (Regulations) on 1 June 2026, with the rules taking effect on 1 July 2026. The Regulations do not dismantle the existing framework, but they expand its reach, embed national security review as a standalone mechanism, extend liability to individuals, and signal a more intensive regulatory environment for all outbound investment activity going forward. PRC investors with outbound expansion plans should assess the implications now.

What the Regulations cover

The Regulations establish a unified, high-level framework that consolidates the regimes governing outbound investment approvals and filings, ODI national security review, investigations into overseas investment barriers, adoption of countermeasures, and penalties for investment-related violations.

The Regulations apply to ODI made by China-based companies, organisations or individuals through direct or indirect acquisition of ownership, control, management rights, or other interests in overseas enterprises or assets, including by contributing assets or equity, providing financing or guarantees, and by other means.

The existing regulatory framework has been fragmented across multiple authorities. The NDRC and MOFCOM have led on approvals and filings, while SAFE has overseen foreign exchange registration and remittances. Rather than replacing this framework, the Regulations reaffirm that outbound investments must continue to comply with applicable approval and filing requirements administered by these authorities.

Notably, the Regulations expressly expand the definition of "investor" to include China-based organisations and individuals, bringing personal outbound investments squarely within the regulatory perimeter. This is consistent with the PRC's recent tightening of oversight over individuals' cross-border activities and signals that additional and more detailed rules governing overseas investments by PRC individuals are likely to be introduced in the near future.

A new national security review regime for outbound investment

A key feature of the Regulations is the explicit incorporation of ODI into the PRC's national security framework. Article 15 provides that outbound investments, as well as the transfer or disposal of related assets and rights, that affect or may affect national security are subject to ODI national security review.

Whilst national interests and national security have long been considered under the existing ODI approval regime, the Regulations highlight their importance and may, for the first time, lead to the establishment of outbound investment security review as a standalone regulatory mechanism. Further implementing rules and guidance are expected.

For investors, this is the development that warrants the most careful attention. The precise perimeter of what triggers national security review remains to be defined in implementing rules, but the direction is clear: PRC regulators may grant broader discretion to intervene in specific outbound transactions.

Life-cycle compliance and countermeasures

The Regulations closely link ODI activities with compliance obligations under PRC export control, data protection, cybersecurity and other related regulatory regimes. Article 13 specifically prohibits entities from circumventing export control regulations through arrangements such as cross-border personnel secondment, cross-border training arrangements or the provision of cross-border technical guidance.

The Regulations also set out the legal basis for PRC regulators to adopt countermeasures where Chinese investors face investment barriers overseas, including adjusting country-specific investment policies, prohibiting or restricting the import or export of certain goods and technologies, and imposing restrictions on foreign organisations or individuals that take discriminatory actions unjustifiably restricting Chinese investors' legitimate rights.

Stronger enforcement, including individual liability

Under the existing framework, the consequences of ODI violations primarily related to the filing and approval process, focused on corporate liabilities. The Regulations further set out monetary-based penalties for violations, including confiscation of illegal gains and fines calculated as a percentage of the investment amount.

Critically, the Regulations extend liability to individuals. Responsible managers and other directly liable persons may be subject to administrative penalties. Individuals who significantly participate in outbound investment decision-making and implementation and bear direct responsibility for unlawful conduct are likely to be captured.

What this means for you

Before undertaking any outbound investment activity, PRC investors should conduct a substantive review of the proposed transaction to identify all applicable regulatory requirements and ensure that the necessary approvals and filings are obtained in advance. No transaction should be consummated without the requisite authorisations in place.

PRC investors with outbound expansion plans should identify the applicable approval, filing, national security review, export control, and cross-border data compliance requirements for each ODI transaction, assess the impact on deal process and timeline, and allocate related risks appropriately in transaction documents.

Given that the ODI regulatory framework has expanded beyond capital flows to encompass cross-border transfers of technology, data, and personnel, high-tech enterprises in particular should closely assess ODI compliance risks across activities such as technology licensing, establishment of overseas R&D centres, and personnel secondment.

Transactions already underway and structures currently in place both warrant review against the new framework.

HSF Kramer advises on outbound investment, regulatory compliance and cross-border transactions. To discuss how the new regulations affect your investment plans, please contact Nanda Lau, Calvin Ho or Gavin Guo, or reach out to your usual HSF Kramer contact.