Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 108

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 4
Chunk 108
---
 funds unless these reserves have reached 50%
of the registered capital of the enterprises. These reserves are not distributable as cash dividends, and a wholly foreign-owned enterprise
is not permitted to distribute any profits until losses from prior fiscal years have been offset.

Circular 37. On July
4, 2014, SAFE issued Circular 37, which became effective as of July 4, 2014. According to Circular 37, PRC residents shall apply to SAFE
and its branches for going through the procedures for foreign exchange registration of overseas investments before contributing the domestic
assets or interests to a SPV. An amendment to registration or filing with the local SAFE branch by such PRC resident is also required
if the registered overseas SPV’s basic information such as domestic individual resident shareholder, name, operating period, or
major events such as domestic individual resident capital increase, capital reduction, share transfer or exchange, merger or division
has changed. Although the change of overseas funds raised by overseas SPV, overseas investment exercised by overseas SPV and non-cross-border
capital flow are not included in Circular 37, we may be required to make foreign exchange registration if required by SAFE and its branches.

Moreover, Circular 37 applies
retroactively. As a result, PRC residents who have contributed domestic to implementation of Circular 37, are required to send a letter
to SAFE and its branches for explanation. Under the relevant rules, failure to comply with the registration procedures set forth in Circular
37 may result in receiving a warning from SAFE and its branches, and may result in a fine of up to RMB 300,000 for an organization or
up to RMB 50,000 for an individual. In the event of failing to register, if capital outflow occurred, a fine up to 30% of the illegal
amount may be assessed. PRC residents who control our company are required to register with SAFE in connection with their investments
in us. If we use our equity interest to purchase the assets or equity interest of a PRC company owned by PRC residents in the future,
such PRC residents will be subject to the registration procedures described in Circular 37.

New M& A Regulations and Overseas Listings

On August 8, 2006, six PRC
regulatory agencies, including the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration
for Taxation, the State Administration for Industry and Commerce, CSRC and SAFE, jointly issued the