Company: NCL
Filing Date: 2025-01-14
Form Type: S-1/A
Source: 0001575872-25-000059
Chunk: 50

Company: Northann Corp.
Filing Date: 2025-01-14
Form: S-1/A
Chunk 50
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 be specific, a 10% withholding tax for the transfer of equity interests)
if we are a transferee in such transactions, under SAT Circular 7 and SAT Circular 37. Our PRC subsidiary may be requested to assist in
the filing under the SAT circulars for share transfer by investors who are non-PRC resident enterprises. As a result, we may be required
to expend valuable resources to comply with the SAT circulars or to request the relevant transferors from whom we purchase taxable assets
to comply with these circulars, or to establish that we should not be taxed under these circulars, which may have a material adverse effect
on our financial condition and results of operations.

The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the “M&A Rules,” and recently adopted regulations and rules concerning
mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign
investors more time consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if
(i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic
security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored
brand. MOFCOM must also be notified in advance of mergers or acquisitions that allow one market player to take control of or to exert
a decisive impact on another market player when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations
of Undertakings, or the “Prior Notification Rules,” issued by the State Council in August 2008 are triggered. In addition,
the security review rules issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors
that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire
de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM.
The rules further prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy
or contractual