Company: CAAS
Filing Date: 2025-08-04
Form Type: 424B3
Source: 0001104659-25-073486
Chunk: 51

Company: China Automotive Systems, Inc.
Filing Date: 2025-08-04
Form: 424B3
Chunk 51
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 may be limited.

The Chinese legal system is based on written statutes
and their interpretation by the Supreme People’s Court. As the Chinese legal system is evolving rapidly, the interpretation, implementation
and enforcement of laws and regulations involve uncertainties. In addition, as the Chinese legal system develops, changes in such laws
and regulations, their interpretation or their enforcement may have a material adverse effect on the Company’s business operations.
Moreover, interpretative case law does not have the same precedential value in China as in the United States, so legal compliance in
China may be more difficult or expensive.

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The Company may be subject to fines and legal sanctions imposed by State Administration of Foreign Exchange, “SAFE”, or other Chinese government authorities if it or its Chinese directors or employees fail to comply with Chinese regulations relating to employee share options or shares granted by offshore listed companies to Chinese domestic individuals.

On December 25, 2006, the People’s
Bank of China, or PBOC, issued the Administration Measures on Individual Foreign Exchange Control, and the corresponding Implementation
Rules were issued by SAFE on January 5, 2007. Both of these regulations became effective on February 1, 2007. According
to these regulations, all foreign exchange matters relating to employee stock holding plans, share option plans or similar plans with
Chinese domestic individuals’ participation require approval from the SAFE or its authorized branch. On February 15, 2012,
SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock
Incentive Plan of Overseas Publicly Listed Company, replacing earlier rules promulgated in 2007. Pursuant to these rules, PRC citizens
and non-PRC citizens who reside in China for a continuous period of not less than one year and participate in any stock incentive plan
of an overseas publicly listed company, subject to a few exceptions, are required to register with SAFE through a domestic qualified
agent, which could be the mainland China subsidiaries of such overseas-listed company, and complete certain other procedures. In addition,
an overseas-entrusted institution must be retained to handle matters in connection with the exercise or sale of stock options and the
purchase or sale of shares and interests. As the Company is an oversea-listed company, its Chinese domestic directors and employees who
are PRC citizens or who reside in China for a continuous period of not less than one year and who may be granted share options or shares