Company: KPEA
Filing Date: 2025-01-14
Form Type: 10-K
Source: 0001493152-25-002124
Chunk: 490

Company: Kun Peng International Ltd.
Filing Date: 2025-01-14
Form: 10-K
Item: Item 1
Chunk 490
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 arrangements with our VIE to operate our electronic platform in China and other businesses in which foreign investment
is restricted or prohibited. These contractual arrangements may not be as effective as direct ownership in providing us with control
over our VIE.

54

If
we had direct ownership of the VIE, we would be able to exercise our rights as an equity holder directly to effect changes in the Board
of Directors of the entity, which could effect changes at the management and operational level. Under our contractual arrangements, we
would be able to change the members of the Board of Directors of the entity exclusively by influencing the equity holders’ votes,
and we would have to rely on the variable interest entity and the variable interest entity equity holders to perform their obligations
under the contractual arrangements in order to exercise our control over the variable interest entity. The variable interest entity equity
holders may have conflicts of interest with us or our shareholders, and they may not act in the best interests of our Company or may
not perform their obligations under these contracts. For example, our VIE, our VIE’s subsidiaries, and our VIE’s equity holders
could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining
our website and using our domain names and trademarks, which the variable interest entity has the exclusive right to use, in an acceptable
manner, or taking other actions that are detrimental to our interests. Pursuant to the call option, we may replace the equity holders
of the VIE at any time pursuant to the contractual arrangements. However, if any equity holder is uncooperative and any dispute relating
to these contracts or to the replacement of the equity holder were to remain unresolved, we would have to enforce our rights under the
contractual arrangements through the operation of PRC law and arbitral or judicial agencies, which may be costly and time-consuming and
would be subject to uncertainties in the PRC legal system.

Additionally,
the binding rights over the VIE’s subsidiaries in the contractual arrangements between King Eagle (China) and King Eagle (Tianjin)
are implicit and indirect and the company laws and regulations in the PRC governing the business operations of the VIE’s subsidiaries
are uncertain. Consequently, the contractual arrangements may not be as effective as direct ownership in ensuring our control over the
relevant portion of our business operations.

Any
failure by our VIE, our VIE’s subsidiaries, or our VIE’s equity holders to perform their obligations under the contractual
arrang