Company: NCL
Filing Date: 2025-02-07
Form Type: 424B3
Source: 0001575872-25-000134
Chunk: 46

Company: Northann Corp.
Filing Date: 2025-02-07
Form: 424B3
Chunk 46
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 efforts to support export competitiveness. The PRC government has demonstrated its willingness to adjust foreign exchange policies to address external challenges, but such measures may exacerbate risks like inflation, increased import costs, and further outflows of foreign capital.

Given the interconnected nature of global markets, it is difficult to predict how the RMB will perform against the U.S. dollar in the near future. A weaker RMB reduces the value of revenues earned in China when converted to U.S. dollars, while a stronger RMB increases operational costs within China. As we operate in both China and the United States, these exchange rate fluctuations can significantly affect our financial results, operational costs, and strategic planning. Businesses must remain adaptable to changes in the foreign exchange market and prepare for potential impacts on profitability and liquidity as exchange rate volatility persists.

Under the EIT Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC stockholders and have a material adverse effect on our results of operations and the value of your investment.

Under the EIT Law that
became effective in January 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC
is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise
income tax rate on its worldwide income. Under the implementation rules of the EIT Law, a “de facto management body” is defined
as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources,
finances, and properties of an enterprise. In addition, a circular, known as “SAT Circular 82,” issued in April 2009 by the
State Administration of Taxation, or the “SAT,” and partially amended by People’s Bank of China Circular 9 promulgated
in January 2014, specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will
be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments
that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting
books, company seal, and minutes of board meetings and stockholders’ meetings; and half or more of the senior management or directors
having voting rights. Further to SAT Circular 82, SAT issued a bulletin, known