Company: DTSQ
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001417
Chunk: 87

Company: DT Cloud Star Acquisition Corp
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 87
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, and the Notice of the State Administration of Foreign Exchange
on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account (“SAFE Circular 16”),
effective on June 9, 2016, each promulgated by SAFE, which impose limitations on offshore entities in transferring foreign currencies
to PRC persons.

In
light of the various requirements imposed by PRC regulations, for example, SAFE Circular 19 and SAFE Circular 16, on loans to, and direct
investment in, a PRC subsidiary by offshore holding companies, and the fact that the PRC government may at its discretion restrict access
to foreign currencies for current account transactions in the future, we cannot assure you that we will be able to complete the necessary
government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans by us
to a PRC subsidiary or with respect to future capital contributions by us to a PRC subsidiary. If we fail to complete such registrations
or obtain such approvals, our ability to conduct our business post-initial business combination and to capitalize or otherwise fund PRC
operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our
business.

53

PRC
regulations relating to offshore investment activities by PRC residents may limit our ability to inject capital in our Chinese subsidiaries
and Chinese subsidiaries’ ability to change their registered capital or distribute profits to the combined company or otherwise
expose it or its PRC resident beneficial owners to liability and penalties under PRC laws.

In
July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore
Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles (“SAFE Circular 37”). SAFE Circular 37
requires PRC residents (including PRC individuals and PRC corporate entities as well as foreign individuals that are deemed as PRC residents
for foreign exchange administration purpose) to register with SAFE or its local branches in connection with their direct or indirect
offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any
offshore acquisitions that we make in the future.

Under
SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments
in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches.