Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 82

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 82
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 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.

Regulations on Dividend Distribution

The principal laws and regulations regulating the
dividend distribution of dividends by foreign-invested enterprises in the PRC include the PRC Company Law, as amended in 1999, 2004, 2005,
2013 and 2018, and Foreign Investment Law and the Implementing Regulations of FIL which replaced the Wholly Foreign-owned Enterprise Law
promulgated in 1986 and amended in 2000 and 2016 and its implementation regulations promulgated in 1990 and subsequently amended in 2001
and 2014, the PRC Equity Joint Venture Law promulgated in 1979 and subsequently amended in 1990, 2001 and 2016 and its implementation
regulations promulgated in 1983 and subsequently amended in 1986, 1987, 2001, 2011 and 2014, and the PRC Cooperative Joint Venture Law
promulgated in 1988 and amended in 2000, 2016 and 2017 and its implementation regulations promulgated in 1995 and amended in 2014 and
2017. Under the current regulatory regime in the PRC, foreign-invested enterprises in the PRC may pay dividends only out of their retained
earnings, if any, determined in accordance with PRC accounting standards and regulations. A PRC company is required to set aside as statutory
reserve funds of at least 10% of its after-tax profit, until the cumulative amount of such reserve funds reaches 50% of its registered
capital unless laws regarding foreign investment provide otherwise. A PRC company shall not distribute any profits until any losses from
prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from
the current fiscal year.

Regulations Relating to M& A Rule and Overseas Listing in the PRC

On August 8, 2006, six PRC governmental and regulatory
agencies, including MOFCOM and CSRC, promulgated the Rules on Acquisition of Domestic Enterprises by Foreign Investors, or the M& A
Rules, governing the mergers and acquisitions of domestic enterprises by foreign investors that