Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 1

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 1
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 change of control transactions that holders of our Class A ordinary shares and the ADSs may view as beneficial.”

Our Holding Company Structure and Contractual Arrangement with
the Current VIEs and Their Shareholders

XChange TEC. INC is not an operating company but
a Cayman Islands holding company. Our operations are primarily conducted through our PRC subsidiaries and other consolidated entities.
Investors in our ADSs thus are purchasing equity interest in a Cayman Islands holding company and not in an operating entity. As a holding
company, XChange TEC. INC may rely on dividends from its subsidiaries for cash requirements, including any payment of dividends to our
shareholders. The ability of our subsidiaries to pay dividends to XChange TEC. INC may be restricted by laws and regulations applicable
to them or the debt they incur on their own behalf or the instruments governing their debt.

XChange TEC. INC conducts insurance agency businesses
in the PRC through Alpha Mind and its indirectly wholly-owned subsidiary, the Current WFOE and the Current VIEs. In April 2022, Alpha
Mind, through the Current WFOE, entered into contractual arrangements with Current VIEs, respectively. Via such contractual arrangements
(the “ VIE Structure”), we are regarded as the primary beneficiary of the Current VIEs and consolidate the financial results
of the Current VIEs under U. S. GAAP. The contractual arrangements consist of powers of attorney, exclusive business cooperation agreements,
exclusive option agreements, equity pledge agreements and spousal consent letters. Terms contained in each set of contractual arrangements
with each of the Current VIEs and its respective shareholders are substantially similar. In particular, (i) pledge agreements,
entered into between the Current WFOE and each of the Current VIEs and its shareholders, where each shareholder of the Current VIEs pledged
his or her equity interest to the Current WFOE to ensure performance of their obligations under other relevant contractual arrangements,
and in case of breach, the Current WFOE has the right to dispose of the pledged equity. Current VIEs’ shareholders are prohibited
from disposing of the pledged equity or taking actions that could negatively impact the pledgee’s rights without the Current WFOE’s
written consent until all obligations are discharged; (ii) power of attorney, entered into between the Current WFOE and the Current VIEs
and their shareholders, where each shareholder of the Current VIEs authorizes Current WFOE’s designated individuals