Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 53

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 53
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 previous PRC labor laws.

Under the Labor Contract Law, an employer must
sign an unlimited-term labor contract with any employee who has worked for the employer for ten consecutive years. Furthermore, if an
employee requests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting
contract, with certain exceptions, must have an unlimited term, subject to certain exceptions.

With certain exceptions, an employer must pay
severance to an employee where a labor contract is terminated or expires. In addition, PRC governmental authorities have introduced various
new labor-related regulations since the effectiveness of the Labor Contract Law. Under the PRC Social Insurance Law and the Administrative
Measures on Housing Fund, employees must participate in pension insurance, work-related injury insurance, medical insurance, unemployment
insurance, maternity insurance, and housing funds. Employers must apply for social insurance registration and open housing fund accounts
for the employees and are required, together with their employees or separately, to pay the social insurance premiums and housing funds
for their employees.

Certain of the PRC subsidiaries have not made
full contributions to social security insurance plans and housing provident fund for our employees and the employees of the Current VIEs
in compliance with the relevant PRC regulations. As a result, we may be required to make up the contributions for these plans as well
as to pay late fees and fines.

In addition, we have accrued in the financial
statements but not made full contributions to the social insurance plans and the housing provident fund for employees as required by
the relevant PRC laws and regulations. As of the date of this annual report, we are not aware of any notice from regulatory authorities
or any claim or request from these employees in this regard.

As the interpretation and implementation of these
regulations are evolving, employment practices of the PRC subsidiaries may not be at all times deemed in compliance with the regulations.
As a result, these entities could be subject to penalties or incur significant liabilities in connection with labor disputes or investigations.

Risks Related to the Holding Foreign Companies Accountable Act

If the U. S. Public Company Accounting
Oversight Board, or the PCAOB, is unable to inspect our auditors as required under the Holding Foreign Companies Accountable Act, or the
HFCA Act, the SEC will prohibit the trading of our ADSs. A trading prohibition for our ADSs, or the threat of a trading prohibition, may
materially and adversely affect the value of your investment