New Regulation from the Chinese State Council on Outbound Investment: Investors failing to complete the overseas investment approval process as required will be ordered to correct their actions and have their illegal gains confiscated

On June 1, China’s State Council issued the *State Council Regulations on Outbound Investment*, which includes Article 27 detailing penalties for non-compliant overseas investment actions. Article 27 specifies that if an investor fails to complete mandatory overseas investment approval procedures, or submits false materials or withholds true information when applying for such approval, the relevant approving authority will order the investor to rectify their conduct, seize any illegal profits, and impose a fine of between 0.1% and 0.5% of the total investment amount. If the investor refuses to rectify the issue, they will be ordered to cease the investment activity, dispose of their shares and assets within a specified timeframe, and face a fine ranging from 0.5% to 1% of the investment sum. Directly responsible senior managers and other personnel found at fault will also be fined individually between 20,000 and 50,000 yuan. For investors who obtain overseas investment approval through bribery, fraud, or other improper means, the approval authority will revoke their approval documents, seize illegal gains, and levy a fine of 0.1% to 0.5% of the investment amount. For those who have already invested capital into the project, they will be required to halt the investment activity, offload their shares and assets by a set deadline, and pay a fine of 0.5% to 1% of the investment amount. Directly responsible senior management and staff will again face individual fines of 20,000 to 50,000 yuan.