Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 489

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1
Chunk 489
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does not explicitly classify variable interest entities that are controlled through contractual arrangements as foreign invested enterprises
even if they are ultimately “controlled” by foreign investors. However, it has a catch-all provision under the definition
of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws,
administrative regulations, or the State Council. Therefore, it still leaves leeway for future laws, administrative regulations, or provisions
of the State Council to provide for contractual arrangements as a form of foreign investment, at which time it will be uncertain whether
our contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in the PRC, and
if they are deemed to be in violation, how our contractual arrangements should be dealt with.

The
Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate
in industries specified as either “restricted” or “prohibited” from foreign investment in the Special Administrative
Measures (Negative List) for Foreign Investment Access jointly promulgated by MOFCOM and the NDRC that took effect in July 2020. The
Foreign Investment Law provides that foreign-invested entities operating in “restricted” or “prohibited” industries
will require market entry clearance and other approvals from relevant PRC government authorities. If our control over our VIE through
contractual arrangements is deemed to be foreign investment in the future, and if any business of our VIE is “restricted”
or “prohibited” from foreign investment under the “negative list” effective at the time, we may be deemed to
be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over our VIE may be deemed
to be invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations,
any of which may have a material adverse effect on our business operations.

Furthermore,
if future laws, administrative regulations, or provisions mandate further actions to be taken by companies with respect to existing contractual
arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure
to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely
affect our current corporate structure and business operations.

Our
contractual arrangements may not be as effective in providing control over our variable interest entity as direct ownership.

We
rely on contractual