Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 40

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 40
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 gain.

However, the legal frameworks of China and the
Cayman Islands do not provide guidance on resolving conflicts in the event of a conflict with another corporate governance regime. If
we, the PRC subsidiaries cannot resolve any conflict of interest or dispute between any of themselves and the shareholders of the Current
VIEs, we, the PRC subsidiaries will likely rely on legal proceedings, which could disrupt their business and subject them to substantial
uncertainty as to the outcome of such proceedings.

Substantial uncertainties with respect to the implementation
of the Foreign Investment Law may significantly impact the corporate structure and operations of us and the PRC subsidiaries.

On March 15, 2019, the National People’s
Congress published the Foreign Investment Law of the People’s Republic of China (the “ Foreign Investment Law”), which
became effective on January 1, 2020 and replaced the Sino-Foreign Equity Joint Venture Enterprise Law, the Sino-Foreign Cooperative Joint
Venture Enterprise Law and the Foreign Owned Enterprise Law to become the legal foundation for foreign investment in the PRC. Although
the Foreign Investment Law stipulates three forms of foreign investment, it does not explicitly stipulate the contractual arrangements
as a form of foreign investment.

The Foreign Investment Law stipulates that the
concept of a foreign investment includes foreign investors investing in China through “any other methods” under laws, administrative
regulations, or provisions prescribed by the State Council. Future laws, administrative regulations or provisions prescribed by the State
Council may regard contractual arrangements as a form of foreign investment. As a result, the contractual arrangements may be deemed
to violate foreign investment access requirements and the interpretation of the above-mentioned contractual arrangements.

Changes in PRC laws and regulations could materially
adversely affect the contractual arrangements and the business of us, the PRC subsidiaries. If future laws, administrative regulations
or provisions prescribed by the State Council mandate further actions by companies with existing contractual arrangements, we, the PRC
subsidiaries may face substantial uncertainties as to the timely completion of such actions. We, the PRC subsidiaries could potentially
be required to unwind the contractual arrangements and/or dispose the Current VIEs, which could materially adversely affect our business,
results of operations and financial condition.

The bankruptcy or liquidation of the Current VIEs could materially
adversely affect our business and results of operations.

If the Current VIEs become the subject of a bankruptcy
or liquidation proceeding, we and the PRC subsidiaries may