Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 64

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 64
---
 or to request the relevant transferors from whom
we purchase taxable assets to comply with these circulars, or to establish that our Company should not be taxed under these circulars,
which may have a material adverse effect on our financial condition and results of operations.

PRC regulations relating to the establishment
of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our
ability to acquire PRC companies or to inject capital into our PRC subsidiary, limit our PRC subsidiary's ability to distribute profits
to us, or otherwise materially and adversely affect us.

In July 2014, China’s
State Administration of Foreign Exchange (“ SAFE”) has promulgated the Circular on Relevant Issues Concerning Foreign Exchange
Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE
Circular 37, to replace the Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic Residents’ Financing
and Roundtrip Investment Through Offshore Special Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation
of SAFE Circular 37. SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate entities) to register with local
branches of SAFE in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders
who are PRC residents and may be applicable to any offshore acquisitions that we make in the future.

Under SAFE Circular 37, PRC
residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose
vehicles, or SPVs, will be required to register such investments with the SAFE or its local branches. In addition, any PRC resident who
is a direct or indirect shareholder of an SPV, is required to update its filed registration with the local branch of SAFE with respect
to that SPV, to reflect any material changes. Moreover, any subsidiaries of such SPV in China is required to urge the PRC resident shareholders
to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration
or to update the previously filed registration, the subsidiaries of such SPV in China may be prohibited from distributing its profits
or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional
capital contribution into its subsidiary in China. On