China’s New Rules on Outbound Investment Will Take Effect from 1 July 2026
Recently, the State Council of the PRC released the Regulation of the State Council on Outbound Investment" (State Council Decree No. 837), which will take effect on 1 July 1 2026.
The new regulation integrates the existing regulatory rules for outbound investment into a unified administrative regulation and strengthen supervision and management in areas such as national security, export control, and cross-border data transfer.
In addition, the new regulation establishes more substantial and stringent legal liabilities for unlawful outbound investment activities, introduces for the first time hefty fines calculated based on the investment amount, and establishes a link to criminal liability, significantly upgrades regulatory enforcement. For example:
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For outbound investments prohibited by the state, the relevant competent authorities shall order the cessation of such investment activities, dispose of shares and assets within a specified period of time, and confiscate illegal gains. Those who refuse to comply shall be fined between 5 ‰ and 10 ‰ of the investment amount, a fine of no less than RMB50,000 and no more than RMB100,000 shall be imposed on the directly responsible supervisors and other directly responsible personnel.
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If the investors fail to fulfill the procedures for overseas investment approval and filing according to regulations, or apply for relevant approval and filing by submitting false materials, concealing true information, etc., the approval and filing authority shall order them to make corrections, confiscate illegal gains and impose a fine of not less than 1 ‰ and not more than 5 ‰ of the investment amount. Those who refuse to make corrections shall be ordered to stop the investment activity, have their shares and assets disposed of within a specified period of time and be fined between 5 ‰ and 10 ‰ of the investment amount, a fine of no less than RMB20,000 and no more than RMB50,000 shall be imposed on the directly responsible supervisors and other directly responsible personnel.
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If the investors obtain overseas investment approval and filing through improper means such as bribery or deception, the approval and filing authority shall revoke the approval and filing documents, confiscate illegal gains and impose a fine of not less than 1 ‰ and not more than 5 ‰ of the investment amount. For those who have already invested, they shall be ordered to stop the investment activity, have their shares and assets disposed of within a time limit and be fined between 5 ‰ and 10 ‰ of the investment amount, a fine of no less than RMB20,000 and no more than RMB50,000 shall be imposed on the directly responsible supervisors and other directly responsible personnel.
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From the effective date of the aforementioned penalty decision, the relevant competent authorities may not accept the application for approval and filing submitted by the offender for a period of 3 years or prohibit them from engaging in overseas investment activities for a period of 1 to 3 years.
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