How to Efficiently Handle Bank ODI Cancellation? A Guide to the Process and Practical Tips

How to Efficiently Complete Bank ODI Cancellation A Comprehensive Guide and Practical Tips

In recent years, with the continuous evolution of the global economic environment and adjustments in the structure of Chinese enterprises' overseas investments, more companies are reevaluating their foreign investment projects. As a result, many have chosen to terminate existing overseas initiatives and begin the process of canceling related Outward Direct Investment ODI procedures at banks.

However, due to the complexity of the process and the volume of required documentation, many businesses face challenges during implementation. This article synthesizes recent policy updates and practical experience to provide a streamlined guide for efficiently completing bank ODI cancellation, helping enterprises save time and improve operational efficiency.

1. What is Bank ODI Cancellation?

ODI refers to investment activities where domestic entities establish or acquire ownership, control, or management rights over existing enterprises abroad. After completing ODI filing or approval, companies typically open a foreign exchange account at a bank to facilitate capital outflows-this step is known as ODI fund remittance.

When a company decides to terminate such a project, it must proceed with corresponding liquidation and cancellation procedures, including both the formal termination of the project and the closure of the associated bank account.

Bank ODI cancellation primarily involves two components

Submitting a cancellation application to the State Administration of Foreign Exchange SAFE.

Closing the account and repatriating remaining funds through the relevant bank.

These two steps are closely linked and equally essential.

2. Why ODI Cancellation Matters

According to the Notice issued by SAFE in 2025 on further strengthening prudent management of cross-border capital flows, stricter compliance requirements have been placed on enterprises that fail to complete follow-up ODI procedures in a timely manner.

The notice emphasizes that enterprises with approved but long-dormant ODI projects should proactively fulfill cancellation obligations to avoid being listed as abnormal operators, which could harm credit ratings and impact future cross-border financing and investment activities.

Failure to promptly cancel ODI accounts may lead to

1. Increased annual audit pressure Banks are required to conduct annual inspections of ODI accounts; dormant accounts may attract regulatory scrutiny.

2. Delays in new project approvals Companies with multiple uncancelled ODI projects may face additional review when applying for new ones.

3. Capital risk exposure Some companies still have unsettled foreign currency funds overseas, exposing them to asset depreciation risks due to exchange rate fluctuations.

Timely clearance of inactive ODI projects is a critical part of enterprise compliance management.

3. Key Steps for Efficient ODI Cancellation

Step 1 Prepare Essential Documents

Before initiating the ODI cancellation, the following documents are generally required

Copy of the business license of the domestic entity

Original ODI filing or approval document

Registration certificate and shareholder structure of the overseas entity

Fund transfer records if applicable

A completed cancellation application form explaining the reason

ID proof of legal representative and power of attorney if applicable

Note Specific document requirements may vary slightly by region and bank. It is recommended to consult your local bank relationship manager in advance to ensure completeness.

Step 2 Complete Overseas Project Liquidation

If the overseas company still holds assets or liabilities, a full liquidation must be conducted first. This includes

Ceasing operations of the overseas company

Settling accounts and confirming net assets

Filing tax returns and paying taxes with local authorities

Repatriating remaining funds legally to China

This process often requires assistance from international accounting firms or local legal advisors.

Step 3 Submit Cancellation Request at the Bank

With all necessary documents in hand, visit the original bank where the ODI account was opened and submit the ODI account cancellation form. Upon approval, the bank will close the account and issue a settlement certificate. If funds remain overseas, they must be repatriated concurrently.

Step 4 File with SAFE if required

Depending on regional policies, some cancellations still require post-cancellation reporting to the local SAFE office. Confirm whether supplementary documentation or online registration is needed after completion.

4. Common Issues and Solutions

Issue 1 Unable to contact the overseas partner

If the overseas company is unreachable or unwilling to cooperate with liquidation, consider legal options such as public announcement-based cancellation or hiring an agency to assist. Some regions offer expedited ODI exit channels for such cases.

Issue 2 Bank requests an audit report

Some banks may request financial audit reports of the overseas entity for risk control purposes. In such cases, engage an internationally recognized accounting firm to prepare a simplified audit report tailored to bank requirements.

Issue 3 Funds cannot be fully repatriated

If local foreign exchange controls or other reasons prevent full repatriation, inform the bank and provide supporting documents. Banks often allow temporary retention of the account until conditions permit full withdrawal.

5. Efficiency Tips

1. Choose a bank experienced in ODI matters Not all branches handle ODI processes with equal expertise. Select one with proven experience in similar cancellations.

2. Book an appointment in advance High-value transactions often require extended processing times; scheduling ahead can reduce waiting time.

3. Leverage local commerce department resources Many local commerce bureaus now offer dedicated ODI exit consultation services.

4. Maintain internal digital records Keeping comprehensive electronic files for each ODI project streamlines information retrieval and accelerates processing.

6. Conclusion

As cross-border investment regulations become increasingly standardized, ODI cancellation has become an integral part of corporate compliance. With careful planning, proper preparation, and timely action, enterprises can smoothly complete the ODI cancellation process within a relatively short timeframe. This not only helps optimize asset structures but also clears the way for smoother international expansion in the future.