With the opening up of the global market, enterprises that want to invest abroad must carry out legal and orderly operations under the guidance of policies and go through the corresponding procedures before they can invest abroad, and overseas investment filing (ODI) is one of the most common ways.
Due to policy reasons, a company registered in Hong Kong is also an overseas company, so do I need to do ODI filing after registering a Hong Kong company?
NO.1. Filing of overseas investment
The Certificate of Overseas Investment of Enterprises, referred to as "ODI Overseas Investment Filing", refers to the filing application of enterprises to the relevant government departments before making overseas direct investment. The purpose of this process is to monitor and manage the outbound investment behavior of enterprises and ensure the legality and compliance of investments.
The Hong Kong Company Law stipulates that a Hong Kong company can be a sole proprietorship, i.e., a person can own and control a company alone. This means that a person can register a company in Hong Kong and file it as a sole proprietorship for ODI.
NO.2. Overseas investment
Overseas investment is generally divided into two situations:
Newly established overseas company: A new company must be established in Hong Kong or other overseas countries in the form of wholly or partially controlled by the mainland company as the shareholder;
Overseas M&A company: A mainland company as a shareholder of the acquirer and holding a company overseas is required to issue due diligence.
NO.3. What are the circumstances that need to be filed for ODI?
1. The domestic parent company holds the Hong Kong subsidiary, and the bank requires the issuance of relevant ODI certificates when the parent company invests in the subsidiary;
2. The profits of the Hong Kong subsidiary are remitted back to the domestic parent company, and the domestic parent company is required to issue the relevant ODI certificate when settling foreign exchange;
3. When setting up a foreign-invested enterprise (WFOE) and opening a capital account, the bank requires the equity to penetrate to the natural person, and if a mainland enterprise is involved, the mainland enterprise needs to apply for the relevant ODI certificate;
4. When a Hong Kong company opens a domestic NRA account, the bank requires the equity to penetrate to a natural person, involving a mainland enterprise, and the mainland enterprise needs to apply for a relevant ODI certificate;
5. If the domestic parent company holds the establishment of a Hong Kong company, and there is no capital exchange, it is necessary to apply for the relevant ODI certificate for compliance needs.
NO.4. Advantages of ODI filing
1. The company can complete the export of domestic funds in a legal way, and the entry of overseas profits in compliance with regulations, and the overseas listing of enterprises in the future without compliance risks and obstacles.
2. You can obtain local tax incentives abroad, quickly accumulate capital, and later return overseas funds to return to China for investment, and you can enjoy the capital subsidies given by the government.
3. It is conducive to optimizing the allocation of resources for domestic and foreign enterprises, increasing added value for domestic enterprises and enhancing their corporate image.
NO.5. The consequences of not doing ODI filing
1. The investor may be suspended or stopped from carrying out overseas investment and given a warning. If a warning is given to the investment entity and the relevant responsible person, and if a crime is constituted, criminal responsibility shall be investigated in accordance with law;
2. If there is financing or guarantee, it will be punished in accordance with laws and regulations. If a financial enterprise provides financing or guarantee for a project that falls within the scope of approval and filing management, but has not obtained the approval documents or filing notice, the National Development and Reform Commission shall notify the violation and request the relevant financial regulatory authorities to punish the financial enterprise and the relevant responsible persons in accordance with laws and regulations;
3. At present, in actual operation, the big impact is the restriction of foreign exchange in and out. If it is necessary to make an outbound investment but fails to file or approve it as required, the investment funds will not be able to be remitted smoothly through the bank and the investment work will not be completed. In addition, if the profits and dividends of the overseas company cannot be remitted through banking channels;
4. If the overseas subsidiary wants to return to the mainland for investment, it will not be able to complete the return investment if it does not go through the filing procedures for overseas investment, and enterprises and individuals listed overseas or have structural design needs should pay special attention;
5. Unable to enjoy relevant subsidies and incentives from the domestic government, including overseas intellectual property disputes and subsidies for responding to lawsuits under the "Two Antis and One Guarantee".