Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 46

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 46
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 our ability to inject
capital into the PRC subsidiaries or limit the PRC subsidiaries’ ability to increase their registered capital or distribute profits
to us, or may otherwise adversely affect our business and financial condition.

On July 4, 2014, SAFE issued the Circular on
Relevant Issues Concerning Foreign Exchange Administration on Domestic Residents’ Offshore Investment and Financing and Roundtrip
Investment through Special Purpose Vehicles (“ Circular 37”). Circular 37 replaced the Notice on Issues Relating to the Administration
of Foreign Exchange in Fund-Raising and Reverse Investment Activities of Domestic Residents Conducted Through Offshore Special Purpose
Companies (“ Notice 75”), which became effective on November 1, 2005.

Circular 37 stipulates that prior to establishing
or assuming control of an offshore company (the “ Offshore SPV”), for financing that Offshore SPV with assets of, or equity
interests in, an enterprise in the PRC, each PRC resident (whether a natural or legal person) who is a beneficial owner of the Offshore
SPV must complete prescribed registration procedures with the local branch of SAFE. Pursuant to Circular 37, PRC residents must amend
their SAFE registrations under certain circumstances, including upon any injection of equity interests in, or assets of, a PRC enterprise
to the Offshore SPV or upon any material change in the capital of the Offshore SPV (including a transfer or swap of shares, a merger
or division).

On February 13, 2015, SAFE issued the Notice
on Further Simplifying and Improving Policies for the Foreign Exchange Administration of Direct Investment (“ Notice 13”).
Notice 13 states that local PRC banks will examine and handle foreign exchange registrations for overseas direct investment, including
the initial foreign exchange registration and amendment registration, from June 1, 2015. However, substantial uncertainties remain with
respect to the interpretation and implementation of this notice by governmental authorities and banks.

On December 26, 2017, the NDRC issued the Measures
for the Administration of Overseas Investment of Enterprises (“ Measures 11”), which became effective from March 1, 2018.
Measures 11 states that PRC enterprises must obtain approval from the NDRC or file with the NDRC their offshore investments made through
controlled Offshore SPVs.

Pursuant to the Measures 11 and the Measures
for the Administration of Outbound Investment published by the MOFCOM in September 2014, any outbound investment of