Company: ZHIHF
Filing Date: 2025-04-15
Form Type: 20-F
Source: 0001410578-25-000729
Chunk: 42

Company: Zhihu Inc.
Filing Date: 2025-04-15
Form: 20-F
Item: Item 3
Chunk 42
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 on August 9, 2023, the Biden administration released an executive order directing the U. S. Department of the Treasury to create an outbound FDI review program that will require reporting on or (in more narrow circumstances) will prohibit investments by U. S. persons involving “covered national security technologies and products.” On October 28, 2024, the U. S. Department of the Treasury issued a final rule imposing restrictions on U. S. outbound investment in Chinese companies active in developing certain national security technologies. The final rule took effect on January 2, 2025. The final rule targets investments involving persons and entities associated with “countries of concern,” currently limited to China, and it imposes investment prohibition and notification requirements on a wide range of investments in companies engaged in activities relating to three sectors: (i) semiconductors and microelectronics, (ii) quantum information technologies, and (iii) artificial intelligence systems, with persons from countries of concern engaged in these technologies defined as “covered foreign persons.” Investments by U. S. persons subject to the final rule, which are defined as “covered transactions,” include acquisition of equity or a contingent equity interest, provision of certain debt financing, conversion of contingent equity interest into equity interest, involvement in greenfield or brownfield investment, entrance into a joint venture, and acquisition of a limited partner interest in non-U. S. pooled investment fund. The final rule excludes some investments from the scope of “covered transactions,” including those in publicly traded securities listed on a national stock exchange. The final rule may introduce new hurdles and uncertainties for cross-border collaborations, investments, and funding opportunities of China-based companies. As the final rule and its related legislative and regulatory framework are still relatively new, there remains uncertainty regarding their interpretation, potential amendments, and implementation by U. S. government authorities. Given our assessment of the final rule and our company’s actual business operations, we currently do not believe Zhihu Inc. would be defined as “covered foreign person” under the final rule, because we do not engage in a “covered activity” (as defined in the final rule) or otherwise meet the definition of “covered foreign person” provided in the final rule. However, there is no assurance that the U. S. Department of the Treasury will take the same view as ours. If we were to be deemed a “covered foreign person,” and if U. S. persons engaged in a “covered transaction” that involves the acquisition of our equity interests, such U. S.