Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 103

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 4
Chunk 103
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 RMB on self-discretionary basis. The SAFE Notice No. 16 provides an integrated standard for conversion of foreign exchange
under capital account items (including but not limited to foreign currency capital and foreign debts) on self-discretionary basis, which
applies to all enterprises registered in the PRC. The SAFE Notice No. 16 reiterates the principle that RMB converted from foreign currency-denominated
capital of a company may not be directly or indirectly used for purposes beyond its business scope and may not be used for investment
in securities or other investment with the exception of bank financial products that can guarantee the principal within PRC unless otherwise
specifically provided. Besides, the converted RMB shall not be used to make loans for related enterprises unless it is within the business
scope or to build or to purchase any real estate that is not for the enterprise own use with the exception for the real estate enterprises.

On January 26, 2017, SAFE promulgated the Notice
on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or the SAFE Notice
No. 3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to
offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution,
the original version of tax filing records and audited financial statements; and (ii) domestic entities shall cover losses in the previous
years prior to remittance of profits. Moreover, pursuant to the SAFE Notice No. 3, domestic entities shall make detailed explanations
of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the
registration procedures in connection with an outbound investment.

Regulations on Offshore Financing

On July 4, 2014, the SAFE issued the Notice on
Issues Relating to the Administration of Foreign Exchange for Overseas Investment and Financing and Reverse Investment by Domestic Residents
via Special Purpose Vehicles, or Circular 37, which became effective on the same date, and Circular 37 shall prevail over any other inconsistency
between itself and relevant regulations promulgated earlier. Pursuant to Circular 37, any PRC residents, including both PRC institutions
and individual residents, are required to register with the local SAFE branch before making contribution to a company set up or controlled
by the PRC residents outside of the PRC for the purpose of overseas investment or financing with their legally owned domestic or