Regulatory Gateways
Foreign Countries’ outbound deals don’t start with signing — they start with regulatory clearance.
An Overview of Outbound Regulation PROCEDURES
This section highlights key resources designed to support learning and development in various fields.
The Procedure at the NDRC
Whether the investment project is subject to approval or must only be notified to the NDRC largely depends on three criteria: The sensitivity of the project, the classification as a direct or indirect investment and the investment volume.
In case a direct or indirect investment relates to a sector that has been classified as “sensitive”, a permit will be required, regardless of the envisaged investment volume.
The potential classification of a sector as sensitive can be taken from an official catalogue. For all non-sensitive direct investments an application is sufficient. A non-sensitive indirect investment does not require any application. However, a project investment report must be submitted for investments exceeding USD 300 million.
The Procedure at MOFCOM
Whether an outbound investment is subject to MOFCOM approval or can proceed by record-filing/registration largely depends on three criteria: the sensitivity of the sector, whether the investment is structured as direct or indirect, and (in some cases) the scale of the transaction.
If a direct or indirect investment relates to a sector classified as “sensitive”, MOFCOM will generally require a more formal approval-type process, regardless of the intended investment volume
The sensitivity classification is typically determined by reference to relevant policy catalogues/guidance. For non-sensitive direct investments, MOFCOM record-filing is usually sufficient; for non-sensitive indirect investments, the procedural burden may be lighter, but reporting and filing requirements can still apply depending on how the investment is structured and implemented.
SAFE / FX Bank Registration
Finally, the investment must be registered with a foreign exchange bank that holds a SAFE identification code and has access to the capital account information system. This step is critical because it supports the practical ability to move funds offshore in line with China’s foreign exchange controls.
Documents typically include the FX application form (for the required investment currency) and the company’s business license, which contains the Unified Social Credit Number.
Linked to an online rating system, this number can indicate a company’s creditworthiness and compliance history. If the company is flagged as “dishonest” or high-risk, the bank will generally refuse to register the investment, effectively blocking execution.
Topic Four
The New Measures effective 1 March 2018 updated the NDRC approval and registration regime and expanded its scope to cover both direct and indirect outbound investments by Chinese legal entities and individuals.A key change is that NDRC approval is no longer a validity condition of the investment agreement (e.g., SPA/APA), but an enforceable requirement that can be included as a closing condition—meaning approval must be obtained before closing, not necessarily before signing.The reforms also broadened the treatment of “sensitive” sectors, expressly capturing areas like hotels, real estate, film, and sports amid concerns about capital outflows. While procedures were partially simplified, uncertainty remains due to broad sector definitions and the continued need for an NDRC record-filing notice even for registration-only deals, reflecting a shift toward whole-of-transaction monitoring.
Tadpole helps you clear the approvals fast—so your outbound deal can actually close.
If a Chinese company plans to invest abroad, various regulatory measures must be taken under Chinese law: The investor must either apply to both the NDRC and the Ministry of Commerce (MOFCOM – Chinese: 中华人民共和国商务部) for an approval or register the investment project.
Once the prospective investor company has successfully completed the relevant procedural steps, the investment project is registered with a state-approved foreign exchange bank in accordance with the requirements of the State Administration of Foreign Exchange (SAFE) (Chinese: 国家外汇管理局). State-owned enterprises and publicly traded companies must meet additional requirements
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