Company: CAAS
Filing Date: 2025-08-04
Form Type: 424B3
Source: 0001104659-25-073486
Chunk: 89

Company: China Automotive Systems, Inc.
Filing Date: 2025-08-04
Form: 424B3
Chunk 89
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 Exchange Administration over Round-Trip
Investment regarding the procedures for SAFE registration under SAFE Circular 37, which became effective on July 4, 2014, as an
attachment of SAFE Circular 37.

Under the relevant rules, failure to comply with
the registration procedures set forth in SAFE Circular 37 may result in bans on the foreign exchange activities of the relevant onshore
company, including the payment of dividends and other distributions to its offshore parent or affiliates, and may also subject relevant
PRC residents to penalties under PRC foreign exchange administration regulations.

Regulation on Stock Incentive Plans

On February 15, 2012, the SAFE promulgated
the Notice on Foreign Exchange Administration of PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies, or
the Stock Option Rules, replacing the previous rules issued by SAFE in March 2007. Under the Stock Option Rules and other
relevant rules and regulations, domestic individuals, which means the PRC residents and non-PRC citizens residing in China for a
continuous period of not less than one year, subject to a few exceptions, who participate in a stock incentive plan in an overseas publicly-listed
company are required to register with SAFE or its local branches and complete certain other procedures.

Participants of a stock incentive plan who are
PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly-listed company or another qualified
institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive
plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in connection
with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the
PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the
stock incentive plan, the PRC agent or the overseas entrusted institution or other material changes. The PRC agents must, on behalf of
the PRC residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota
for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign
exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed
by the overseas listed companies must be remitted into the bank accounts in