Company: LHI
Filing Date: 2025-05-23
Form Type: F-1
Source: 0001213900-25-046955
Chunk: 38

Company: Living Homeopathy International Ltd.
Filing Date: 2025-05-23
Form: F-1
Chunk 38
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 including company supervision, mentor
supervision over mentee behavior and self-regulation subject to Company’s monitoring.However, if our supervision
and regulating measures are not effective as to unintentional misdemeanor or fraudulent misconducts by our mentors or mentees, the legitimacy
and sustainability of our mentor and mentee program will be challenged and our marketing strategies, business, financial conditions and
results of operations will be materially and adversely affected as well.

If the relevant laws and regulations regulating “Pyramid Scheme” become increasingly broad on the scope of Pyramid Schemes, there will be more pressure on our compliance cost, managerial resources, and business, and our business, financial conditions, and results of operations will be materially and adversely affected.

We carry out our sales and marketing activities through, among others, our extensive mentor-mentee network. Customers who have bought our products may participate in our mentor-mentee program can become mentees or mentors who are further classified into different levels. Mentors and mentees are entitled to sale discounts and commissions of different levels.

We structure our mentor-mentee program and set
up mentor-mentee program related code of conduct to prevent the mentor-mentee program from becoming a pyramid structure as pyramid schemes
are prohibited in Hong Kong pursuant to the Pyramid Schemes Prohibition Ordinance (Cap. 617, Laws of Hong Kong). See “Business – Marketing” on page 88 of the prospectus for details. It is an offence for a person to participate in a pyramid
scheme. A person who knowingly promotes a pyramid scheme also commits an offence. The Pyramid Schemes Prohibition
Ordinance that came into effect on January 1, 2012 provides for a broad definition of “Pyramid Scheme.” See “Regulation - Regulations Related to our Business Operation in Hong Kong” on page 91 of this prospectus for more details. The Pyramid Schemes
Prohibition Ordinance defines a pyramid scheme as a scheme in which: (1) new participants must provide a participation payment to a participant
or promoter of the scheme; (2) the participation payment is entirely or substantially induced by the prospect that the new participant
will be entitled to a recruitment payment; and (3) the recruitment payment is entirely or substantially derived from the introduction
to the scheme of a further new participant.

The broad definition of “Pyramid Scheme” may enhance compliance and regulatory risks for genuine multi-level marketing schemes for legitimate business, which may become more susceptible to frivolous claims and more exposed to litigations