Company: GLXG
Filing Date: 2025-10-24
Form Type: 20-F
Source: 0001213900-25-102144
Chunk: 11

Company: Galaxy Payroll Group Ltd
Filing Date: 2025-10-24
Form: 20-F
Item: Item 3
Chunk 11
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On December 7, 2018, the
SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U. S. regulators in their oversight of financial
statement audits of U. S.-listed companies with significant operations in China. On April 21, 2020, SEC Chairman Jay Clayton and PCAOB
Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing
in companies based in or have substantial operations in emerging markets including China, reiterating past SEC and PCAOB statements on
matters including the difficulty associated with inspecting accounting firms and audit work papers in China and higher risks of fraud
in emerging markets and the difficulty of bringing and enforcing SEC, Department of Justice and other U. S. regulatory actions, including
in instances of fraud, in emerging markets generally.

On May 20, 2020, the U. S.
Senate passed the HFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is
unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to
inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to trade on a national
exchange. On December 2, 2020, the U. S. House of Representatives approved the HFCA Act.

On May 21, 2021, Nasdaq filed
three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily operating in a “ Restrictive
Market”; (ii) prohibit Restrictive Market companies from directly listing on Nasdaq Capital Market, and only permit them to list
on Nasdaq Global Select or Nasdaq Global Market in connection with a direct listing; and (iii) apply additional and more stringent criteria
to an applicant or listed company based on the qualifications of the company’s auditors.

As a result of this scrutiny,
criticism, and negative publicity, the traded stock of many U. S.-listed Chinese companies sharply decreased in value and, in some cases,
has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting
internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism, and negative
publicity will have on us, our offerings, business, and our share price. If we become the