Chinese enterprises going global has become a prevailing trend! Companies across various sectors, including cross-border e-commerce, gaming, blockchain, and fintech, are increasingly turning their attention overseas in search of broader markets and development opportunities.

Amid this wave, Singapore has emerged as a standout, being the only developed economy in Southeast Asia. With its strategic location, business-friendly policies, and excellent communication capabilities, it has attracted considerable attention from both domestic and international companies and investors, making it a preferred destination for many businesses venturing abroad.

However, as companies join this exploration of overseas opportunities, it is crucial for them to understand the important role that ODI plays in compliance with overseas investment regulations. They must operate legally and orderly under existing policies to ensure their international endeavors are compliant.

I What is ODI

ODI refers to the direct investment activities conducted by domestic enterprises and organizations abroad after obtaining approval from relevant authorities. This can be achieved through methods such as establishing new entities, mergers and acquisitions, or acquiring stakes in foreign companies, with the primary goal of gaining control over the management and operations of those overseas enterprises.

II Which Enterprises Need ODI

1）Enterprises with a demand for overseas direct investment, mergers, and expansion.
2）Companies intending to invest in establishing factories and trade bases in countries along the "Belt and Road" initiative.
3）Domestic and foreign enterprises that have previously invested abroad and wish to repatriate funds for domestic investment.
4）Companies planning to list overseas.
5）Enterprises requiring tax consolidation for individuals and businesses.

III What Documentation is Required for ODI

1）ODI Filing Form
2）Business License of the Enterprise
3）Credit certificate of the domestic enterprise, including a deposit certificate showing a balance greater than the investment amount
4）Relevant articles of association for establishing or merging the foreign-invested enterprise
5）Related board resolutions or capital contribution resolutions
6）Latest audit report of the domestic enterprise
7）Statement of preliminary work completed, including due diligence, feasibility studies, sources of investment funds, and investment environment analysis
8）For merger-related foreign investments, the "Preliminary Report for Overseas Acquisition" must be submitted
9）Commitment letter regarding the authenticity of the overseas investment
10）Company shareholding structure chart

IV What is the ODI Filing Process

ODI filing is categorized into two systems—filing and approval—based on factors such as investment amount, industry, and country. Generally, non-significant investments or non-sensitive investments are subject to the filing system. However, investments in sensitive industries or regions, as well as those exceeding a certain investment amount, require approval from the National Development and Reform Commission and the Ministry of Commerce.

The approval and filing processes of the three departments are as follows:

1 Project Approval from the NDRC

Domestic enterprise shareholders need to apply for project approval from the National Development and Reform Commission. During this process, the enterprise must submit relevant project information and sign the required legal documents. The NDRC is responsible for overseeing the industry direction of overseas investments and will issue a "Notice of Filing for ODI" to eligible enterprises.

2 Approval and Issuance of Certificates by the Ministry of Commerce

Enterprises must submit an approval application to the Ministry of Commerce. The Ministry is responsible for conducting a comprehensive review of the enterprise's overseas investment matters and will issue an "ODI Certificate" to eligible enterprises. After receiving this certificate, the enterprise should commence investment activities abroad within two years.

3 Filing with the State Administration of Foreign Exchange

Enterprises must file with the State Administration of Foreign Exchange (SAFE). SAFE is responsible for overseeing the procedures related to foreign exchange registration and the outbound remittance of funds. After completing the filing process, enterprises must complete foreign exchange registration at a bank in accordance with the "Regulations on Foreign Exchange Management for Domestic Institutions' Overseas Direct Investment."

For projects with an investment amount exceeding USD 5 million, enterprises are also required to report to SAFE. After review, SAFE will issue the "Overseas Direct Investment Foreign Exchange Registration Certificate" to the domestic enterprise.

V What Are the ODI Options

Option 1: Existing Certificate Channel

Enterprises must file with the State Administration of Foreign Exchange. SAFE is responsible for overseeing the procedures related to foreign exchange registration and the outbound remittance of funds. After completing the filing process, enterprises must complete foreign exchange registration at a bank in accordance with the "Regulations on Foreign Exchange Management for Domestic Institutions' Overseas Direct Investment." For projects with an investment amount exceeding USD 5 million, enterprises are also required to report to SAFE. After review, SAFE will issue the "Overseas Direct Investment Foreign Exchange Registration Certificate" to the domestic enterprise.
1）Change the director of the HK entity to the client’s representative, open a bank account, or make information changes; change the legal representative and executives of the SPV to the client’s representative (the SPV’s bank seal is controlled by the client).
2）The shareholders of the domestic company borrow funds from the client (the loan amount is equal to the actual outbound amount).
3）The loan is injected into the SPV through the domestic company.
4）ODI foreign exchange purchase, with funds remitted to the HK company.
5）After the industrial and commercial registration of the domestic company is completed, transfer the equity, changing the original shareholders and executives to the client, and execute a debt-to-equity conversion with the transfer consideration equal to the loan amount.

Option 2: New Certificate Application Channel (Client's Own Company)

1）The domestic company is owned by the client, with no restrictions on the type of business, and must be established for more than one year; however, it is recommended that the company be in the manufacturing or R&D technology sectors.
2）The domestic company establishes an SPV in a designated area, and we will complete the overseas investment filing procedures through a series of project packaging.
3）The client's funds are transferred from the individual to the domestic company, then to the SPV, and subsequently converted into foreign currency to remit to the HK company.

Option 3: New Certificate Application Channel (Client Without Their Own Company)

1）A subsidiary SPV is established under the domestic company provided by us, and a bank account is opened. The executives of the SPV are from the client side and control the bank seal.
2）The shareholders of the domestic company borrow funds from the client (the loan amount is equal to the actual outbound amount).
3）The loan is injected into the SPV through the domestic company.
4）Complete the ODI registration.
5）The HK company is established and a bank account is opened, with the directors being from the client side and the bank seal under the client’s control.
6）ODI foreign exchange purchase, with funds remitted to the HK company.
7）After the industrial and commercial registration of the domestic company is completed, transfer the equity, changing the original shareholders and executives to the client, and execute a debt-to-equity conversion with the transfer consideration equal to the loan amount.