Company: OCG
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001213900-25-043484
Chunk: 39

Company: Oriental Culture Holding LTD
Filing Date: 2025-05-15
Form: 20-F
Item: Item 4
Chunk 39
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except for foreign-invested real estate enterprises).  

Circular 16 was issued by SAFE on June 9, 2016.
Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to Renminbi on a
self-discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange capital items (including but
not limited to foreign currency capital and foreign debts) on a self-discretionary basis applicable to all enterprises registered in the
PRC. Circular 16 reiterates the principle that an enterprise’s Renminbi converted from foreign currency denominated capital may
not be directly or indirectly used for purposes beyond its business scope or purposes prohibited by PRC laws or regulations, and such
converted Renminbi shall not be provided as loans to nonaffiliated entities.

Circulars 16 and 19 address foreign direct investments
into the PRC, and stipulate the procedures applicable to foreign exchange settlement. If and when proceeds in foreign currency raised
in any offering are settled to RMB, our WFOE would be subject to Circular 19 or Circular 16.

Dividend distribution

The Foreign Investment Law, promulgated on March
15, 2019 and became effective on January 1, 2020, and the Implementation Regulations for the Foreign Investment Law, promulgated in December
26, 2019 and became effective on January 1, 2020, are the key regulations governing distribution of dividends of foreign-invested enterprises.

According to these regulations, a wholly foreign-owned
enterprise in China, or a WFOE, may pay dividends only out of its accumulated profits, if any, determined in accordance with PRC accounting
standards and regulations. In addition, a WFOE is required to allocate at least 10% of its accumulated after-tax profits each year, if
any, to statutory reserve funds unless its reserves have reached 50% of the registered capital of the enterprises. These reserves are
not distributable as cash dividends. The proportional ratio for withdrawal of rewards and welfare funds for employees shall be determined
at the discretion of the WFOE. Profits of a WFOE shall not be distributed before the losses thereof before the previous accounting years
have been made up. Any undistributed profit for the previous accounting years may be distributed together with the distributable profit
for the current accounting year.

In the event that a PRC shareholder holding interests
in a special