Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 459

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1
Chunk 459
---
RC residents or the PRC subsidiaries of such offshore SPV to penalties under
PRC foreign exchange administration regulations for evasion of applicable foreign exchange restrictions.

37

Regulations
Regarding Foreign Exchange

Under
the Foreign Currency Administration Rules promulgated in 1996 and revised in 1997 and 2008 and various regulations issued by SAFE and
other relevant PRC government authorities, RMB is convertible into other currencies without prior approval from SAFE only to the extent
of current account items, such as trade related receipts and payments, interest, and dividends, and after complying with certain procedural
requirements. The conversion of RMB into other currencies and remittance of the converted foreign currency outside the PRC for the purpose
of capital account items, such as direct equity investments, loans, and repatriation of investment, requires prior approval from SAFE
or its local office. Payments for transactions that take place within China must be made in RMB. Unless otherwise approved, PRC companies
must repatriate foreign currency payments received from abroad. Foreign-invested enterprises may retain foreign exchange in accounts
with designated foreign exchange banks subject to a cap set by SAFE or its local office. Unless otherwise approved, domestic enterprises
must convert all of their foreign currency proceeds into RMB.

On
August 29, 2008, SAFE promulgated Circular 142 which regulates the conversion by a foreign-funded enterprise of foreign currency into
RMB by restricting how the converted RMB may be used. In addition, SAFE promulgated Circular 45 on November 9, 2011 in order to clarify
the application of Circular 142. Under Circular 142 and Circular 45, the RMB capital converted from foreign currency registered capital
of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority
and may not be used for equity investments within the PRC. In addition, SAFE strengthened its oversight of the flow and use of the RMB
capital converted from foreign currency registered capital of foreign-invested enterprises. The use of such RMB capital may not be changed
without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have
not been used. Violations of Circular 142 and Circular 45 could result in severe penalties, such as heavy fines as set out in the relevant
foreign exchange control regulations. On July 4, 2014, SAFE promulgated