Company: NCL
Filing Date: 2025-02-07
Form Type: 424B3
Source: 0001575872-25-000134
Chunk: 32

Company: Northann Corp.
Filing Date: 2025-02-07
Form: 424B3
Chunk 32
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 least 25% of equity interests in a PRC enterprise. In that case the withholding tax rate in respect to the payment of dividends by
such PRC enterprise to such Hong Kong resident enterprise is reduced to 5% from a standard rate of 10%, subject to approval
of the PRC local tax authority. Accordingly, our only Hong Kong subsidiary that has subsidiaries, is able to enjoy the 5% withholding
tax rate for the dividends it receives from its PRC subsidiaries (Crazy Industry, Ringold and Marco if Benchwick) satisfies
the conditions prescribed in relevant tax rules and regulations and obtains the required approvals. However, if Benchwick is considered
a non-beneficial owner for purposes of the tax arrangement, any dividends paid to it by its PRC subsidiaries directly would not qualify
for the preferential dividend withholding tax rate of 5%, but rather would be subject to a rate of 10%.

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In addition, in response to the persistent capital
outflow and the Renminbi’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China
(“PBOC”) and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures,
including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments
and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends
and other distributions may be subjected to tighter scrutiny in the future.

Risks Related to Doing Business in China

Changes in China’s political, economic or social conditions could have a material adverse effect on our business and operations.

Most of our products
are manufactured through NCP in China and as a result, our business, financial condition, results of operations, and prospects may be
influenced to a significant degree by political, economic and social conditions in China generally. The Chinese government plays a significant
role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over
China’s economic growth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary
policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy
has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the
economy. Any adverse changes of economic conditions in China, in the policies of the Chinese government, or in the laws and