Company: DDC
Filing Date: 2025-01-28
Form Type: 20-F
Source: 0001213900-25-007160
Chunk: 39

Company: DDC Enterprise Ltd
Filing Date: 2025-01-28
Form: 20-F
Item: Item 3
Chunk 39
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 financing requirements,
including the funds necessary to pay dividends and other cash distributions to service any debt we may have or incur in the future. If
any of our PRC subsidiaries incur debt on its own behalf in the future, the instruments governing the debt may restrict its ability to
pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiaries may pay dividends only out of its
respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries
are required to set aside at least 10% of their accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund,
until the aggregate amount of such fund reaches 50% of their respective registered capital. Such reserve funds cannot be distributed to
us as dividends.

Our PRC subsidiaries generate
primarily all of their revenue in RMB, which is not freely convertible into other currencies. As a result, any restriction on currency
exchange may limit the ability of our applicable PRC subsidiaries to use their RMB revenues to pay dividends to us.

The PRC government may continue
to strengthen its capital controls, and more restrictions and substantial vetting process may be put forward by SAFE for cross-border
transactions falling under both the current account and the capital account. Any limitation on the ability of our applicable PRC subsidiaries
to pay dividends or make other kinds of payments to us could materially and adversely limit our ability to grow, make investments or acquisitions
that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the Enterprise
Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable to dividends payable by
Chinese companies to non-PRC-resident enterprises (having no institution or establishment within China or whose incomes have no actual
connection to its institution or establishment within China) unless otherwise exempted or reduced according to treaties or arrangements
between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

PRC regulation of loans to and direct investment
in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from making loans
or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability
to fund and expand our business.

We are a Cayman Islands holding
company conducting a significant portion of our operations in China through our PRC