Company: FSHPU
Filing Date: 2025-03-04
Form Type: 10-K
Source: 0001829126-25-001450
Chunk: 113

Company: Flag Ship Acquisition Corp
Filing Date: 2025-03-04
Form: 10-K
Item: Item 1
Chunk 113
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 based in and primarily operating in China, such as the Proposed GRT Business
Combination, after which the operating companies in China upon consummation of the business combination will receive substantially all
of their revenues in Renminbi. In that case, the combined company may rely on dividend payments from its PRC subsidiaries to fund any
cash and financing requirements it may have. Under existing PRC foreign exchange regulations, payments in foreign currencies of current
account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made
without prior approvals of the SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions,
without prior approvals of the SAFE, cash generated from the operations of PRC operating companies in China may be used to pay dividends.
However, approvals from or registration with appropriate government authorities are required where Renminbi is to be converted into foreign
currencies and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies.

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As a result, the PRC subsidiaries of the combined company will need to obtain the SAFE approval to pay off their debt in a currency other than Renminbi owed to any entities outside China or to make other capital expenditure payments outside China in a currency other than Renminbi.

In light of the flood of capital outflows of China in 2016 due to the weakening Renminbi, the PRC government has imposed more restrictive foreign exchange policies and stepped up scrutiny over major outbound capital movements including overseas direct investment. More restrictions and substantial vetting processes have been put in place by the SAFE to regulate cross-border transactions that fall under the capital account transactions. The PRC government may in the future at its discretion further restrict access to foreign currencies for current account transactions. If the foreign exchange control regulations prevent the combined company from obtaining sufficient foreign currencies from its PRC subsidiaries to satisfy its capital demands, the combined company may not be able to pay dividends in foreign currencies to its shareholders.

Dividends payable to our foreign investors and gains on the sale of our ordinary shares by our foreign investors may be subject to PRC tax.

We may consummate a business
combination with a target business based in and primarily operating in China through subsidiaries in China, such as the Proposed GRT Business
Combination. After such business combination, the combined company may rely on dividends and other distributions from the PRC subsidiaries
of the combined company to provide it with cash flow and to meet its other obligations. Current regulations in