Overseas Listings by Chinese Companies – Key Compliance Considerations

China’s ODI regulations in 2026 introduce new compliance considerations for Chinese companies planning overseas listings. This article examines the implications for red-chip structures, offshore SPVs, SAFE Circular 37 registration, and employee equity incentive plans. 

Recent developments in China’s ODI regulatory framework signal new restrictions on overseas investments by Chinese companies and individual investors, and may introduce additional compliance requirements for Chinese companies planning overseas listings. These changes could affect offshore holding structures, special-purpose vehicle (SPV) arrangements, foreign exchange registrations, and even employee equity incentive plans. 

This article examines the implications for overseas listings, including more complex review processes and heightened scrutiny over red chip structures, and discusses how companies can navigate this new regulatory landscape. 

More stringent review processes for overseas investments 

The Regulations on Overseas Investment (State Council Decree No. 837) (hereinafter the “Decree 837”), which took effect on 1 July 2026, expand the scope of ODI reviews from purely investment-related issues to cover areas such as export controls and national security issues. 

Article 13 of Decree 837 explicitly prohibits investors from exporting or utilising goods or assets that are subject to export bans or restrictions without the required permits, or indirectly transferring any such goods or assets through the dispatching of personnel overseas or other cross-border activities, in the course of their ODI activities.

These prohibitions and restrictions are not new; they merely reiterate obligations to which domestic companies and resident individuals in China must adhere. The implication of their inclusion in these regulations is that ODI reviews will now also cover these facets to ensure overseas investment activities are compliant with these laws of strategic importance to China’s national security. 

Moreover, Decree 837 adds an additional review procedure: a new security review system for outbound investments. Under Article 15, authorities, including investment and commerce departments under the State Council, are required to conduct security reviews of outbound investments, as well as the transfer or disposal of related assets and interests, that affect or could affect national security. Any organisations or individuals involved are required to assist and cooperate with the authorities in this process. 

Approval for overseas listings may become more complicated 

Decree 837 expands the definition of ODI to capture more types of overseas funding by Chinese entities and individuals. The rules now explicitly cover the provision of financing and guarantees, the acquisition of control or management rights, and indirect investment structures. This implies that holding and investment arrangements such as variable interest entities (VIEs), SPVs, fund channels, and hybrid financing-plus-control arrangements could now fall under the new ODI rules. This has not yet been confirmed by the authorities, and further guidance on the implementation of Decree 837 is expected. 

This would directly implicate some of the arrangements used by Chinese companies to list on overseas stock exchanges, in particular red chip structures that companies such as Baidu and Alibaba have used to list on NASDAQ and HKEX. 

Approval for indirect overseas listings through red chip structures has already become more complex in recent years, notably since trial administrative measures released by the CSRC in 2023 began requiring red chip structures to undergo a CSRC review before listing overseas for the first time. 

The expansion of ODI to include these types of arrangements would mean more stringent ODI review procedures, including existing obligations such as filing with the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM), foreign exchange registration with a bank, and now the expanded national security review discussed above. 

Heightened scrutiny of SPVs 

Recent regulatory trends suggest heightened scrutiny over overseas SPV arrangements during official approval procedures.[Text Wrapping Break] 

Under the Notice of the State Administration of Foreign Exchange on Relevant Issues Concerning Foreign Exchange Administration for Overseas Investment and Financing and Round-Trip Investment by Domestic Residents via Special Purpose Vehicles (known as “Circular 37”) issued by SAFE in 2014, a domestic resident contributing any domestic or overseas assets or interests to an SPV is required to first apply for registration of their overseas investments with SAFE. Meanwhile, under various regulations and measures including the NDRC’s Administrative Measures for Overseas Investment by Enterprises (“Decree 11”), MOFCOM’s Administrative Measures for Outbound Investment (“Decree 3”), and SAFE’s Regulations on Foreign Exchange Administration of Direct Investment Abroad by Domestic Institutions (Huifa [2009] No. 30), institutions must undergo filing and approval with the relevant authorities and complete foreign exchange registration with a SAFE-approved bank. 

According to analysis from King & Wood, for individual investors setting up an overseas SPV, banks are increasingly scrutinising factors such as a company’s date of establishment, whether or not the overseas investments are genuine, and whether they comply with China’s restrictions on foreign investment. This is to assess whether the structure is a genuine and legal overseas investment and financing arrangement, rather than an attempt to bypass China’s foreign exchange controls or foreign investment restrictions. 

Moreover, King & Wood note that since the issuance of the Guidelines for Foreign Exchange Business under Capital Accounts in 2024, which transferred the responsibility for supplementary Circular 37 registrations from banks to SAFE authorities, retroactive registrations of previously unregistered holdings are exclusively handled by SAFE and may result in administrative penalties. 

King & Wood have also found that local regulatory authorities are becoming more restrictive with ODI filings, deferring to the NDRC for additional consultations on ODI in sensitive sectors such as AI and semiconductors, leading to longer review times, and refusing to handle applications to establish new SPVs for ODI purposes. 

Equity incentive plan considerations 

Under existing rules, including those outlined in the 2012 SAFE Circular 7, overseas listed companies are required to conduct foreign exchange registration of equity incentive plans with the local SAFE branch via an appointed domestic agency. 

Decree 837, along with the draft Measures for the Administration of Outbound Investment (the “draft measures”) released in August 2026, may introduce an additional layer of scrutiny where an employee’s exercise of options or acquisition of offshore shares could constitute outbound investment by a Chinese resident individual. Decree 837 defines outbound investment to include individual investors that “directly or indirectly acquire ownership, control, management rights, or other related interests in enterprises or assets located in other countries or regions”. 

The draft measures, which seek to revise Decree 11 to align it with Decree 837 and update the regulatory framework for outbound investment, adopt the same definition. This means equity incentive plans could be subject to additional requirements, such as individual ODI filings or reporting obligations. 

However, the extent of any additional requirements remains subject to further implementing guidelines and rules, as well as clarification from the competent authorities on whether and how employee equity incentive arrangements fall within the ODI framework. 

What this means for Chinese companies’ overseas investments 

The latest regulatory updates signal a general trend toward stricter requirements and higher levels of scrutiny for overseas investment by Chinese individuals and companies, and in particular for companies considering indirect overseas listings through red chip structures. 

For Chinese companies considering overseas listings, this means assessing regulatory requirements at an early stage, including applicable outbound investment approvals, filings, and foreign exchange registrations, will be paramount to adequately plan timelines and avoid lengthy reviews.

Red-chip structures involving offshore holding companies, SPVs, and Chinese resident founders are likely to come under additional scrutiny, meaning companies should review their ownership and financing arrangements, including the establishment and funding of offshore entities, and identify any existing compliance gaps that could affect a proposed listing. Where a structure presents material regulatory uncertainty or cannot readily be brought into compliance, companies may need to consider alternative listing structures, domestic listing options, or other financing channels. 

Companies should also assess arrangements involving individual investors and employees, including offshore shareholdings and employee equity incentive plans, as these may raise separate ODI or foreign exchange compliance questions. Ongoing compliance procedures should cover both corporate investments and relevant individual arrangements, with appropriate coordination between legal, finance, tax, and HR teams.  

As certain new requirements remain subject to further rules and regulatory clarification, companies are also advised to monitor developments and get professional advice tailored to their particular circumstances before committing to cross-border investments or restructuring arrangements. 

How Dezan Shira & Associates can help 

As the new regulations reshape how Chinese companies approach outbound investment and offshore structures, it is worth reviewing existing and planned arrangements. Dezan Shira & Associates’ ODI advisory team supports Chinese and Asian companies with ODI structuring, approvals and filings, documentation, and cross-border transactions. We can help you assess whether your offshore holding or listing structure are still compliant and effective, and how to prepare for ODI and foreign exchange registration. Contact us for a free consultation.