Company: CAAS
Filing Date: 2025-08-04
Form Type: 424B3
Source: 0001104659-25-073486
Chunk: 27

Company: China Automotive Systems, Inc.
Filing Date: 2025-08-04
Form: 424B3
Chunk 27
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Cash Flows through Our Organization

The Company is a holding company with no operations
of its own. We conduct our operations in China primarily through our subsidiaries, particularly Genesis, which owns interests in eight
Sino-joint ventures and seven wholly-owned subsidiaries in the PRC. As a result, although other means are available for us to obtain
financing at the holding company level, the Company’s ability to pay dividends to the shareholders and to service any debt it may
incur may depend upon dividends paid by our PRC subsidiaries. If any of our subsidiaries incurs debt on its own behalf, the instruments
governing such debt may restrict its ability to pay dividends to the Company. In addition, our PRC subsidiaries are permitted to pay
dividends to CAAS only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations.
Further, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds, which are not distributable as
cash dividends except in the event of a solvent liquidation of the companies.

Under PRC laws and regulations, our PRC subsidiaries
may pay dividends only out of their respective accumulated profits as determined in accordance with PRC accounting standards and regulations.
In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year,
if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. At its
discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to an
enterprise expansion fund, or a staff welfare and bonus fund. Such reserve funds and discretionary funds cannot be distributed to us
as dividends. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to
the amount of net assets held in each operating subsidiary. The amounts restricted include the paid-up capital and the statutory reserve
funds of our PRC subsidiaries, totaling RMB 504.7 million, RMB 508.8 million, RMB 514.0 million and RMB522.3 million as of December 31,
2021, 2022, 2023 and 2024, respectively.

The Company may provide funding to its PRC subsidiaries
by making capital contributions or providing loans, subject to the satisfaction of applicable government registration, filing and approval