Company: DTSQ
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001417
Chunk: 86

Company: DT Cloud Star Acquisition Corp
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1
Chunk 86
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 can be made without prior approvals of
the PRC State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Specifically, under the
existing exchange restrictions, without prior approvals of SAFE, cash generated from the operations of PRC operating companies in China
may be used to pay dividends. However, approvals from or registration with appropriate government authorities are required where Renminbi
is to be converted into foreign currencies and remitted out of China to pay capital expenses such as the repayment of loans denominated
in foreign currencies.

As
a result, the PRC subsidiaries of the combined company will need to obtain SAFE approval to pay off their debt in a currency other than
Renminbi owed to any entities outside China or to make other capital expenditure payments outside China in a currency other than Renminbi.

In
light of the flood of capital outflows of China in 2016 due to the weakening Renminbi, the PRC government has imposed more restrictive
foreign exchange policies and stepped-up scrutiny over major outbound capital movements including overseas direct investment. More restrictions
and substantial vetting process have been put in place by SAFE to regulate cross-border transactions that fall under the capital account
transactions. The PRC government may in the future at its discretion further restrict access to foreign currencies for current account
transactions. If the foreign exchange control regulations prevent the combined company from obtaining sufficient foreign currencies from
its PRC subsidiaries to satisfy its capital demands, the combined company may not be able to pay dividends in foreign currencies to its
shareholders.

If
our initial business combination target has the majority of its operations in China, the PRC regulation on loans to, and direct investment
in, such a PRC subsidiary by offshore holding companies and governmental control of currency conversion may restrict our ability to make
loans or capital contributions to such subsidiary, which could materially and adversely affect our liquidity and our ability to fund
and expand our business post-business combination.

If
our initial business combination target has the majority of its operations in China, it may become necessary or desirable for us to make
loans or capital contributions to our PRC subsidiary after the completion of our initial business combination. Our ability to make such
loans or capital contributions may be restricted by certain PRC laws and regulations, including but not limited to the Notice of the
State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign invested
Enterprises (“SAFE Circular 19”), effective on June 1, 2015