Company: DSWL
Filing Date: 2025-07-29
Form Type: 20-F
Source: 0001174947-25-001096
Chunk: 6

Company: DESWELL INDUSTRIES INC
Filing Date: 2025-07-29
Form: 20-F
Item: Item 3
Chunk 6
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 dividend distributions.

Integrated then declared dividends to its holding company, Deswell, in the amounts of $3.19 million, and $3.19 million for the two years ended March 31, 2024 and March 31, 2025, respectively. Integrated is an International Company incorporated in Samoa. Under current Samoa law, Integrated is not subject to corporate income tax and withholding taxes on dividend distribution as it has no business operations in Samoa.

For operational efficiency, the physical transfer of funds was executed directly from KEMCO to Deswell, bypassing the intermediate holding companies, Joint Harvest and Integrated. However, the documentation and accounting records properly reflected the dividend declarations and approvals at each entity level, maintaining compliance with corporate governance requirements.

The cross-bordertransfer of funds from the Intermediate Holding Companies to its Chinese subsidiaries is legal and compliant with the laws and regulations of China. The Intermediate Holding Companies are permitted to provide funding to their subsidiaries in mainland China in the form of shareholder loans or capital contributions, subject to satisfaction of applicable government registration, approval and filing requirements of the respective jurisdiction. There are no quantity limits on capital contributions by the Intermediate Holding Company to the subsidiaries in mainland China under the PRC regulations. Historically, cash proceeds raised from overseas financing activities by Deswell have been first transferred to the Intermediate Holding Companies. Whenever we need to make capital contributions to the PRC subsidiaries by contributing any of such net proceeds, and convert the contributed proceeds into RMB, we will need to increase the PRC subsidiary’s registered capital by registering and/or filing the increase with the Ministry of Commerce or one of its local branches, the State Administration of Foreign Exchange (“ SAFE”) or one of its local branches, or an authorized bank.

Current PRC regulations permit our PRC subsidiaries to pay dividends to their holding companies only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Each of our PRC subsidiaries is required to set aside at least 10% of its after-taxprofits after making up previous years’ accumulated losses each year, if any, to fund certain statutory reserve funds until the total amount set aside reaches 50% of its registered capital. In addition, it may allocate a portion of its after-taxprofits based on PRC accounting standards to discretionary reserve funds at its discretion. These reserves are not distributable as cash dividends. In addition, if any of our operating subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends. For more details