China’s New Outbound Investment Rules: Implications for Cross-Border Deals
— A Practical Guide to Signing, Completion and Exit for Overseas Counterparties
Client briefing | 25 October 2026
Edwin Zhiguo LI, Beijing Dacheng Law Offices, LLP
New outbound investment rules issued by China’s National Development and Reform Commission (NDRC) under Order No. 49 of 2026 (the New Measures) will take effect on 1 December 2026, replacing NDRC Order No. 11 of 2017 (the 2017 Measures). The New Measures retain the approval and filing framework, but expand reporting requirements for investments made through controlled overseas entities and expressly require any necessary amendments to be completed before changes to approved or filed investments take effect. For overseas sellers, joint venture partners and lenders, these requirements can affect the timing of signing, funding, completion and exit.[1]
Regulatory Scope
To determine which NDRC procedure applies, an overseas counterparty needs to understand the transaction’s ownership and funding structure. This means identifying the mainland Chinese investor, the overseas entity making the acquisition or carrying out the project, and who owns or controls that entity. The parties should also establish where the funds will come from and who will provide any equity, loans or guarantees.
The use of a Hong Kong vehicle, offshore borrowing or an overseas subsidiary’s retained profits does not, by itself, take an investment outside the NDRC regime.
A mainland investor may control an overseas entity even with a minority shareholding, for example through voting rights or the power to direct key decisions on its operations, finances, personnel or technology.[2]
| Investment type | Main NDRC requirement |
| Sensitive investment made directly by a mainland investor or through a controlled overseas entity | NDRC approval is required before implementation. |
| Non-sensitive investment involving assets, financing or guarantees provided directly by the mainland investor | A filing notice must be obtained from the NDRC or the competent provincial development and reform authority before implementation. |
| Non-sensitive investment made through a controlled overseas entity | The investor must submit a reinvestment report at least 10 Chinese working days before implementation, regardless of the amount. |
The rules define the “Chinese investment amount” by reference to assets and rights contributed, as well as financing and guarantees provided, by the mainland investor directly or through entities it controls. This amount cannot simply be assumed to equal the purchase price or the Chinese shareholder’s proportionate share of total project cost.
The 2017 Measures required a report for non-sensitive investments made through a controlled overseas entity only where the Chinese investment amount was at least US$300 million. The New Measures remove that threshold, bringing smaller offshore acquisitions and follow-on investments within the advance reporting requirement.
If the mainland investor later contributes capital, provides financing or gives a guarantee, the parties should reconsider whether a filing or an amendment to an existing approval or filing is also needed.[3]
Signing and Funding
Article 41 requires advance reporting where the Chinese investment amount is at least US$100 million or the investment concerns China’s diplomatic relations with another country. In either case, the mainland investor must report “important preliminary work” to the competent development and reform authority at least 10 Chinese working days before carrying it out. Important preliminary work expressly includes signing an investment agreement or similar document. The requirement can therefore affect the signing timetable even where completion is conditional on Chinese regulatory approvals or filings.
The New Measures contain no express exemption for non-binding term sheets. The parties should assess the substance of the document and any investment commitments to a foreign government before signing to determine whether a report is required.
The Article 41 report is separate from the reinvestment report due before implementation under Article 14; the same transaction may require both. Under Article 45, the reporting obligation is fulfilled once true, accurate and complete information has been submitted. The investor can then print a receipt from the online system.
Contractual reporting conditions should require evidence that the relevant report has been properly submitted and that the required advance reporting period has elapsed. They should not require regulatory approval of the report. The authority nevertheless retains the power to require changes to the investment or suspend it.[4]
An agreement can make completion conditional on the Chinese investor satisfying its regulatory obligations. The parties must still check what takes effect on signing. If signing itself transfers assets or control, releases investment funds, provides financing or brings a guarantee into effect, the relevant NDRC requirements must be met first. Deposits, transfers into or out of escrow, and bridge loans need the same assessment. Escrow release conditions should reflect any regulatory requirements that apply to the payment.[5]
Changes to Existing Investments
For investments already approved or filed, Article 36 requires any necessary amendment to be completed before the relevant change takes effect. It applies to the addition or removal of mainland investors, material changes to the investment’s location, scope or scale, and increases or decreases in the Chinese investment amount of at least 20% of the original approved or filed amount or at least US$100 million. It also covers other material changes to the approval or filing.[6]
The monetary thresholds are not the only grounds for an amendment. A foreign investor’s subscription for new shares may also require an amendment if it materially changes the ownership or governance arrangements on which the approval or filing was based, even where the Chinese shareholder contributes no additional funds and retains control. The parties should compare the proposed terms with the original regulatory submission and any subsequent amendments.
For investments previously subject only to reporting, the parties should establish whether a proposed change requires another report or an amendment to an approval or filing elsewhere in the investment structure. Further investment after completion of the original project may instead require a fresh application or report. The competent authority’s guidance should be sought where the correct procedure is unclear.[7]
Amendment applications follow the ordinary approval or filing procedure. The decision period starts on formal acceptance: seven Chinese working days for a filing, extendable by up to seven, and 20 for an approval, extendable by up to 10. External assessment time does not count towards these periods. A filing may therefore take more than 14 working days overall. The transaction timetable should also allow time to prepare or correct the application materials.[8]
Exits and Enforcement
A proposed sale or other disposal of the Chinese investor’s interest should be assessed under the amendment rules discussed above. A transfer between non-Chinese shareholders may also require an amendment if it materially changes the ownership or governance arrangements on which the Chinese investor’s approval or filing was based.
Article 15 separately provides for national security review of investments and related disposals of assets or rights that affect, or may affect, China’s national security. Transactions involving control over strategic assets or rights, resources (including critical minerals), technology or data warrant early consideration, as the New Measures set no detailed timetable for the review. A mineral’s strategic importance does not, by itself, make a transaction a sensitive investment requiring approval.[9]
Article 42 requires the mainland investor to report termination within 10 Chinese working days after its investment ends. A partial disposal does not necessarily terminate the investment.[10]
The exercise of put and call options, redemption rights, drag-along rights and lenders’ enforcement or step-in rights must comply with the requirements applicable at the time of exercise, even where those rights were agreed years earlier. The New Measures do not themselves entitle a party to terminate or renegotiate an existing contract.
Transaction Documents and Ongoing Obligations
- The transaction documents should set deadlines for the Chinese investor’s applications and reports and require the relevant approvals, filing notices and reporting receipts before the applicable transaction step. They should also require updates on progress and material regulatory objections. Changes to the submitted transaction terms should require the counterparty’s consent if they materially affect its rights or obligations.
- The contract should set a realistic long-stop date and define the circumstances and limits of any extension. It should identify regulatory conditions that a party is not obliged to accept and specify when termination is permitted, when payments must be refunded and who bears the costs if completion fails.
- Before fixing a funding date, the parties should confirm the availability of funds, the payment route and the relevant banks’ documentary requirements. The completion checklist should separately address any required approvals or filings with China’s commerce authorities, foreign exchange registration and permissions in the host jurisdiction.[11]
For an operating joint venture, the shareholders’ agreement should require advance consultation on proposed capital calls, guarantees, material expansion and changes in ownership or control. It should also require the parties to provide information reasonably needed for the Chinese investor’s annual reports and reports of serious adverse events, subject to appropriate confidentiality protections.
The mainland investor may have to report a demand for technology, data or the disposal of assets immediately if it threatens China’s national interests or security. Articles 54 and 55 also provide for protective action against certain discriminatory or unreasonable conduct by foreign organisations or individuals, and certain discriminatory measures adopted by foreign states, regions or international organisations. An ordinary contractual dispute will not, by itself, qualify for these protections.[12]
For transactions that begin before 1 December 2026 but continue afterwards, the parties should confirm which requirements apply to each remaining step before agreeing an unconditional completion timetable.
For further information about this briefing, please contact Edwin Zhiguo LI at zhiguo.li@dentons.cn.
This briefing provides general information on PRC law as at 25 October 2026 and is not legal advice. Readers should obtain advice on their particular circumstances before acting on it.
Footnotes:
[1] NDRC, Order No. 49 (2026), art. 76 (effective 1 December 2026).
[2] New Measures, arts. 2, 11–14 and 72.
[3] New Measures, arts. 11–14, 36 and 71; 2017 Measures, art. 42.
[4] New Measures, arts. 14, 17, 41 and 45.
[5] New Measures, arts. 12, 13 and 36.
[6] New Measures, art. 36; 2017 Measures, arts. 34 and 53(2).
[7] New Measures, arts. 14 and 36; Xinjiang Development and Reform Commission, Outbound Investment Approval and Filing Q&A, 11 March 2026 (local guidance under the 2017 Measures; application under the New Measures remains to be clarified).
[8] New Measures, arts. 23, 25, 31, 32 and 36.
[9] New Measures, arts. 12 and 15.
[10] New Measures, art. 42.
[11] New Measures, arts. 35 and 66; MOFCOM Order No. 3 (2014), arts. 6, 15 and 25; SAFE, Capital Account Foreign Exchange Business Guidelines (2024), part II, section 8.2.
[12] New Measures, arts. 53–55. Action under art. 54 is discretionary, within the NDRC’s responsibilities and at the investor’s request, and concerns investments listed in its annual report.