Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 47

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 47
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 PRC enterprises must
be approved by or filed with MOFCOM, NDRC or their local branches. State-owned enterprises may also be required to complete approval
or filing procedures with state-owned assets supervision and administration authorities with respect to certain outbound direct investments.

We have requested that our current shareholders
and beneficial owners who, to our knowledge, are PRC residents complete the foreign exchange registrations and that those who, to our
knowledge, are PRC enterprises comply with outbound investment related regulations. However, we may not be fully aware of the identities
of beneficial owners who are PRC residents. We do not have control over our beneficial owners and cannot guarantee that all of our beneficial
owners who are PRC residents will comply with the requirements under Circular 37 or related SAFE rules, or other outbound investment
related regulations.

If any of our beneficial owners who are PRC residents
fail to comply with Circular 37 or related SAFE rules or other outbound investment related regulations, the PRC subsidiaries could be
subject to fines and legal penalties. Failure to comply with Circular 37 or related SAFE rules or other outbound investment related regulations
could be deemed as evasion of foreign exchange controls and subject us to liability under PRC law. As a result, SAFE could restrict our
foreign exchange activities, including dividends and other distributions made by the PRC subsidiaries to us and our capital contributions
to the PRC subsidiaries.

If any of our beneficial owners who are PRC residents
fail to comply with Measures 11, the investments of such beneficial owners could be subject to suspension or termination, while such
beneficial owners could be subject to warnings or applicable criminal liabilities. Any of the foregoing could materially adversely affect
our operations, acquisition opportunities and financing alternatives.

Failure to comply with the registration requirements for employee
stock ownership plans or share option plans may subject us and our PRC equity incentive plan participants to fines and other legal or
administrative sanctions.

Pursuant to Circular 37, PRC residents who participate
in share incentive plans in overseas non-publicly-listed companies due to their position as director, senior management or employee of
the PRC subsidiaries of overseas companies may submit applications to SAFE or its local branches for foreign exchange registration before
exercising rights. Our directors, executive officers and other employees who are PRC residents that have been granted options may follow
Circular 37 to apply for foreign exchange registration.

We and our directors, executive officers and
other employees who are PRC residents that have been granted options are subject to