Company: VSA
Filing Date: 2025-05-15
Form Type: 20-F
Source: 0001410578-25-001300
Chunk: 51

Company: VisionSys AI Inc
Filing Date: 2025-05-15
Form: 20-F
Item: Item 3
Chunk 51
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 19, 2023, which emphasizes that if the organizer of a science and technology after-school tutoring institution is a foreign invested enterprise or a social organization controlled by a foreign party, the organizer should comply with relevant regulations in mainland China. As of the date of this annual report, the draft was released for public comment only, and its respective provisions may be subject to change with substantial uncertainty.
Certain local government authorities hold that a wholly foreign-owned enterprise is prohibited or restricted from indirectly investing in or owning private schools through its subsidiaries. As a result, we may have to apply for private school operating permits through a subsidiary of the current VIE, Beijing Tongcheng, in certain regions to satisfy the requirement of such local governmental authorities to the extent necessary. If the PRC government authorities determine in the future that we can no longer own and operate our schools and their related learning centers through our subsidiaries in mainland China, which are considered ineligible to act as sponsors of private schools, we may need to transfer these schools and related learning centers to the variable interest entities, which may severely disrupt our business and expose us to increased risks associated with the contractual arrangements relating to the variable interest entities.
Any failure by Beijing Tongcheng or its shareholders to perform their obligations under our contractual arrangements with them would have an adverse effect on our business.
If Beijing Tongcheng or its shareholders fail to perform their obligations under their contractual arrangements with us, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under the laws of mainland China, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective. For example, if the shareholders of Beijing Tongcheng were to refuse to transfer their equity interest in Beijing Tongcheng to us or our designee if we exercise the exclusive option agreements pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

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All the agreements under our contractual arrangements are governed by laws of mainland China and provide for the resolution of disputes through arbitration in mainland China. Accordingly, these contracts would be interpreted in accordance with laws of mainland China and any disputes would be resolved in accordance with PRC legal procedures. Uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Under laws of mainland China, if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only