Company: CAAS
Filing Date: 2025-08-04
Form Type: 424B3
Source: 0001104659-25-073486
Chunk: 52

Company: China Automotive Systems, Inc.
Filing Date: 2025-08-04
Form: 424B3
Chunk 52
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shall become subject to these regulations. As of December 31, 2024, the Company has completed such SAFE registration and other related
procedures according to PRC law. If the Company or its Chinese domestic directors or employees fail to comply with these regulations
in the future, the Company or its Chinese domestic directors or employees may be subject to fines or other legal sanctions imposed by
the SAFE or other Chinese government authorities.

In addition, the State Administration of Taxation,
or the SAT has issued certain circulars concerning employee share options. Under these circulars, our Chinese domestic employees who
exercise share options will be subject to PRC individual income tax. Our China-based subsidiaries have obligations to file documents
related to employee share options with tax authorities and to withhold individual income taxes of those employees who exercise their
share options. If our Chinese domestic employees fail to pay or we fail to withhold their income taxes according to laws and regulations,
we may face sanctions imposed by the tax authorities or other PRC government authorities.

Capital outflow policies in China may hamper the Company’s ability to declare and pay dividends to its stockholders.

China has adopted currency and capital transfer
regulations. These regulations may require the Company to comply with complex regulations for the movement of capital. Although the Company’s
management believes that it will be in compliance with these regulations, should these regulations or the interpretation of them by courts
or regulatory agencies change, the Company may not be able to pay dividends to its stockholders outside of China. In addition, under
current Chinese law, the Company’s joint-ventures and wholly-owned enterprise in China must retain a reserve equal to 10% of its
net income after taxes, not to exceed 50% of its registered capital. Accordingly, this reserve will not be available to be distributed
as dividends to the Company’s stockholders. The Company presently does not intend to pay dividends for the foreseeable future.
The Company’s Board of Directors intends to follow a policy of retaining all of the Company’s earnings to finance the development
and execution of its strategy and the expansion of the Company’s business.

The recent government regulations into business activities of U.S.-listed Chinese companies may negatively impact our operations.

China intends to improve regulation of cross-border
data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation
and insider trading. China will also check sources of funding for securities investment and control leverage ratios. The Cyberspace Administration
of China, or the C