Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 225

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 19
Chunk 225
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 basis over tax basis in a domestic subsidiary.

  16.      STATUTORY RESERVES AND NET RESTRICTED ASSETS  

The Group’s ability to pay dividends is primarily dependent on
the Group receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends
by the subsidiary incorporated in PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards
and regulations. The consolidated results of operations reflected in the consolidated financial statements prepared in accordance with
U. S. GAAP differ from those reflected in the statutory financial statements of the Group’s subsidiaries.

Under PRC law, the Group’s subsidiary located in the PRC (“ PRC
subsidiary”) are required to provide for certain statutory reserves, namely a general reserve, an enterprise expansion fund and
a staff welfare and bonus fund. The PRC subsidiary is required to allocate at least10% of their after tax profits on an individual company
basis as determined under PRC accounting standards to the statutory reserve and has the right to discontinue allocations to the statutory
reserve if such reserve has reached50% of registered capital on an individual company basis. In addition, the registered capital of the
PRC subsidiary is also restricted.

Amounts restricted including paid-in capital and statutory reserve
funds as determined pursuant to PRC Laws were niland nilas of September 30, 2023 and 2024, respectively.

F-30

  17.      RELATED PARTY TRANSACTIONS AND BALANCES  

Parties are considered to be related if one party has the ability,
directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational
decisions. Parties are also considered to be related if they are subject to common control or common significant influence. Related parties
may be individuals or corporate entities.

The following entities are considered to be related parties to the
Group. The related parties mainly act as service providers and service recipients to the Group. The Group is not obligated to provide
any type of financial support to these related parties.

  Related Party                             Relationship with the Group                                                                                                                                                                           
  Wangxiancai Limited                       An entity controlled by the legal representative and executive director of one of the former subsidiaries. The subsidiary was disposed of on October 31, 2023 and Wangxiancai Limited was no long...  
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