Company: NCL
Filing Date: 2025-02-07
Form Type: 424B3
Source: 0001575872-25-000134
Chunk: 50

Company: Northann Corp.
Filing Date: 2025-02-07
Form: 424B3
Chunk 50
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 through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the “M&A Rules,” and recently adopted regulations and rules concerning
mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign
investors more time consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if
(i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic
security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored
brand. MOFCOM must also be notified in advance of mergers or acquisitions that allow one market player to take control of or to exert
a decisive impact on another market player when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations
of Undertakings, or the “Prior Notification Rules,” issued by the State Council in August 2008 are triggered. In addition,
the security review rules issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors
that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire
de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM.
The rules further prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy
or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the
requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any
required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete
such transactions. It is clear that our business would not be deemed to be in an industry that raises “national defense and security”
or “national security” concerns. MOFCOM or other government agencies, however, may publish explanations in the future determining
that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those
by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to
expand our business