Company: CAAS
Filing Date: 2025-07-25
Form Type: F-4/A
Source: 0001104659-25-070492
Chunk: 46

Company: China Automotive Systems, Inc.
Filing Date: 2025-07-25
Form: F-4/A
Chunk 46
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 the Company’s Board of Directors deems relevant.

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Techniques employed by short sellers may drive down the market price of the Company’s common stock (or CAAS Cayman’s ordinary shares).

Short selling is the practice of selling securities
that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later
date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed
securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the
sale. As it is in the short seller’s best interests for the price of the stock to decline, many short sellers publish, or arrange
for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market
momentum and generate profits for themselves after selling a stock short. These short attacks have, in the past, led to selling of shares
in the market.

In the recent past, many public companies that
have substantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity
has centered around allegations of a lack of effective internal control over financial reporting resulting in financial and accounting
irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of
fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim,
are subject to shareholder lawsuits and/or SEC enforcement actions.

It is not clear what effect such negative publicity
would have on the Company, if any. If the Company were to become the subject of any unfavorable allegations, whether such allegations
are proven to be true or untrue, the Company could have to expend a significant amount of resources to investigate such allegations and/or
defend itself. While the Company would strongly defend against any such short seller attacks, the Company may be constrained in the manner
in which it can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial
confidentiality. Such a situation could be costly and time-consuming, and could distract the Company’s management from growing the
Company. Even if such allegations are ultimately proven to be groundless, allegations against the Company could severely impact its business
operations and stockholders’ equity, and any investment in