Company: DTSQ
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001417
Chunk: 91

Company: DT Cloud Star Acquisition Corp
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 91
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 report, an evaluation report and the
acquisition agreement, all of which form part of the application for approval, depending on the structure of the transaction. The regulations
also prohibit a transaction at an acquisition price obviously lower than the appraised value of the Chinese business or assets. The regulations
require that in certain transaction structures, the consideration must be paid within strict time periods, generally not in excess of
a year. In asset transactions there must be no harm of third parties and the public interest in the allocation of assets and liabilities
being assumed or acquired.

55

In
the future, we may pursue a business combination with a China-based business. Complying with the requirements of the above-mentioned
regulations and other relevant rules to complete such transactions could be time-consuming. These regulations will limit our ability
to negotiate various terms of a possible business combination with a PRC target company, including aspects of the initial consideration,
contingent consideration, holdback provisions, indemnification provisions and provisions relating to the assumption and allocation of
assets and liabilities. Transaction structures involving trusts, nominees and similar entities are prohibited. Therefore, we may not
be able to negotiate a transaction with terms that will satisfy our investors and protect our shareholders’ interests in an acquisition
of a PRC target company. Furthermore, any required approval processes, including obtaining approval from MOFCOM, any other relevant PRC
governmental authorities or their respective local counterparts may delay or inhibit our ability to complete such transactions, which
could affect our ability to expand our business or maintain our market share.

Enhanced
scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue
in the future. 

The
PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of certain taxable assets, including, in particular,
equity interests in a PRC resident enterprise, by a non-resident enterprise by promulgating and implementing SAT Circular 59 and Circular
698, which became effective in January 2008, and Circular 7 in replacement of some of the existing rules in Circular 698, which became
effective in February 2015.

Under
Circular 698, where a non-resident enterprise conducts an “indirect transfer” by transferring the equity interests of a PRC
“resident enterprise” indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise,
being the transferor, may be subject to PRC corporate income tax if the