Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 37

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 37
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s. The contractual arrangements with respect to the Current VIEs are not equivalent to an equity ownership
in the business of the Current VIEs. Any references in this annual report to control or benefits that accrue to us and our subsidiaries
because of the Current VIEs are limited to, and subject to conditions for consolidation of, the Current VIEs under U. S. GAAP. Consolidation
of Current VIEs under U. S. GAAP generally occurs if we or our subsidiaries (1) have an economic interest in the Current VIEs that provides
significant exposure to potential losses or benefits from the Current VIEs and (2) have power over the most significant economic activities
of the Current VIEs. For accounting purposes, we are the primary beneficiary of the Current VIEs. In addition, the contractual agreements
governing the Current VIEs have not been tested in a court of law.

We believe that our corporate structure and contractual
arrangements comply with PRC laws and regulations. Based on its understanding of the relevant laws and regulations, our PRC legal counsel,
Beijing Kingdom Law Firm, is of the opinion that each of the contracts among Current WFOE, the Current VIEs and its shareholders is valid,
binding and enforceable in accordance with its terms.

However, substantial uncertainties remain regarding
the interpretation and application of PRC laws and regulations. PRC government authorities may not agree that we and our subsidiaries’
corporate structure or any of the foregoing contractual arrangements comply with PRC licensing, registration or other regulatory requirements
or policies.

If regulators deem we, our subsidiaries and the
Current VIEs’ corporate structure and contractual arrangements to be illegal, either in whole or in part, we may have to modify
our corporate structure to comply with regulatory requirements. We and our subsidiaries may not be able to achieve this without materially
disrupting their business.

If we, our subsidiaries and the Current VIEs’
corporate structure and contractual arrangements violate existing or future PRC laws or regulations, the relevant regulatory authorities
would have broad discretion in dealing with such violations, including:

  revoking their business and operating licenses;  

  levying fines on us, the PRC subsidiaries;  

  confiscating any of the income generated by us, the                                                        

  discontinuing or restricting the operations of us,  

  imposing conditions or requirements with which we,  
  the PRC subsidiaries may not be able to comply;