Company: XHG
Filing Date: 2025-09-09
Form Type: F-3
Source: 0001213900-25-086186
Chunk: 24

Company: XChange TEC.INC
Filing Date: 2025-09-09
Form: F-3
Chunk 24
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. The VIE structure is not equivalent of an investment
in the equity interest of the VIEs. See “Item 4. Information on the Company - C. Organizational Structure - Contractual Arrangements”
for details.

However, neither XChange TEC.INC nor the WFOE
owns any equity interests in the VIEs. Our contractual arrangements with the VIEs and their nominee shareholders are not equivalent of
an investment in the equity interest of the VIEs. Instead, as described above, we are regarded as the primary beneficiary of the VIEs
and consolidate the financial results of the VIEs under U.S. GAAP in light of the VIE structure.

The VIE structure involves unique risks to investors
in the ADSs. It may be less effective than direct ownership in providing us with operational control over the VIEs and we may incur substantial
costs to enforce the terms of the arrangements. For instance, the VIEs and their shareholders could breach their contractual arrangements
with us by, among other things, failing to conduct the operations of the VIEs in an acceptable manner or taking other actions that are
detrimental to our interests. If we had direct ownership of the VIEs in China, we would be able to exercise our rights as a shareholder
to effect changes in the board of directors of the VIEs, which in turn could implement changes, subject to any applicable fiduciary obligations,
at the management and operational level. However, under the current contractual arrangements, we rely on the performance by the VIEs and
their shareholders of their obligations under the contracts to direct the VIEs’ activities. The shareholders of the VIEs may not
act in the best interests of our company or may not perform their obligations under these contracts. If any dispute relating to these
contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC law and arbitration,
litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system.

We may face challenges in enforcing the contractual
arrangements due to jurisdictional and legal limitations. There are substantial uncertainties regarding the interpretation and application
of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect
to its contractual arrangements with the VIEs and their nominee shareholders through our WFOE. As of the date of this prospectus, the