Company: ZLAB
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001628280-25-023411
Chunk: 42

Company: Zai Lab Ltd
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 42
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 subsidiaries only out of its retained earnings, if any, as determined in accordance with Chinese accounting standards and regulations. The results of operations reflected in the unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s Chinese subsidiaries.  In accordance with the Company Law of the People’s Republic of China, a domestic enterprise is required to provide statutory reserves of at least 10% of its annual after-tax profit until such reserve has reached 50% of its respective registered capital based on the enterprise’s Chinese statutory accounts. A domestic enterprise may provide discretionary surplus reserve, at the discretion of the Board of Directors, from the profits determined in accordance with the enterprise’s Chinese statutory accounts. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. The Company’s Chinese subsidiaries were established as domestic enterprises and therefore are subject to the above-mentioned restrictions on distributable profits. No appropriation to statutory reserves was made in the first quarter of 2025 and 2024 because the Chinese subsidiaries had substantial losses during such periods. 

14

Zai Lab Limited Notes to the unaudited condensed consolidated financial statements 

As a result of these Chinese laws and regulations, subject to the limits discussed above that require annual appropriations of 10% of after-tax profit to be set aside, prior to payment of dividends, as a general reserve fund, the Company’s Chinese subsidiaries are restricted in their ability to transfer out a portion of their net assets. 

Foreign exchange and other regulation in mainland China may further restrict the Company’s subsidiaries in mainland China from transferring out funds in the form of dividends, loans, and advances. As of March 31, 2025 and December 31, 2024, amounts restricted included the paid-in capital of the Company’s subsidiaries in mainland China and were $506.0 million. 

17. Commitments and Contingencies 

(a) Purchase Commitments  As of March 31, 2025, the Company’s commitments related to commercial manufacturing development and facilities construction and improvement activities that are contracted but not yet reflected in the unaudited condensed consolidated financial statements were $3.8 million and were expected to be incurred within one year.(b) Legal ProceedingsThe Company is not currently a party to any material legal proceedings. (c) Indemnifications

In the normal course of business, the Company enters into agreements that indemnify others for certain liabilities that may arise in connection with a transaction or certain events and