Company: NTCL
Filing Date: 2025-10-20
Form Type: F-1
Source: 0001104659-25-100526
Chunk: 116

Company: NetClass Technology Inc
Filing Date: 2025-10-20
Form: F-1
Chunk 116
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.S investors.

Current PRC regulations permit our indirect PRC subsidiaries to pay dividends to NetClass HK only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in the PRC is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments.

Cash dividends, if any, on our Class A Ordinary Shares will be paid in U.S. dollars. NetClass HK may be considered a non-resident enterprise for tax purposes. Any dividends WFOE pays to NetClass HK may be regarded as PRC-sourced income and may be subject to PRC withholding tax at a rate of up to 10%.

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in the PRC project during the 12 consecutive months preceding its receipt of the dividends.

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CORPORATE HISTORY AND STRUCTURE</div>

Below is a chart illustrating our current corporate structure:

History and Development of the Company

NetClass is a Cayman Islands exempted company incorporated on January 4, 202