Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 71

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 71
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ers. As a result,
you may not be afforded the same protections or information that would be made available to you were you investing in a U. S. domestic
issuer.

As a company incorporated in the Cayman Islands, we are permitted
to adopt certain home country practices in relation to corporate governance matters that differ significantly from the NASDAQ Capital
Market corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we
complied fully with the NASDAQ Capital Market corporate governance listing standards.

As a Cayman Islands company listed on the NASDAQ
Capital Market, we are subject to the NASDAQ Capital Market corporate governance listing standards. However, NASDAQ Capital Market rules
permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance
practices in the Cayman Islands, which is our home country, may differ significantly from the NASDAQ Capital Market corporate governance
listing standards. Currently, we follow our home country practices and rely on certain exemptions provided by the NASDAQ Capital Market
corporate governance listing standards to a foreign private issuer, including exemptions from the requirements to have:

  majority of independent directors on our board of directors;  

  a minimum of three members in our audit committee;  

  only independent directors being involved in the selection                 

  regularly scheduled executive sessions of independent  

  a quorum of annual general meeting which is no less  

  shareholder approval prior to an issuance of securities                                                                    

As a result of our reliance on the corporate
governance exemptions available to foreign private issuers, you do not have the same protection afforded to shareholders of companies
that are subject to all of NASDAQ Capital Market corporate governance listing standards.

We believe it is likely that we would be a passive foreign investment
company, or PFIC, for U. S. federal income tax purposes, which could subject U. S. investors in ADSs or Class A ordinary shares to significant
adverse U. S. federal income tax consequences.

A non-U. S. corporation will be a passive foreign
investment company, or PFIC, if, in any particular taxable year, either (a) 75% or more of its gross income for such year consists of
certain types of “passive” income or (b) 50% or more of the value of its assets (generally determined on the basis of a quarterly
average) is attributable to assets that produce or are held for the production of passive income. For this