Company: SCAG
Filing Date: 2025-11-12
Form Type: 20-F
Source: 0001213900-25-109190
Chunk: 44

Company: Scage Future
Filing Date: 2025-11-12
Form: 20-F
Item: Item 3
Chunk 44
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 in China. According to the relevant PRC regulations on FIEs in China, capital contributions to
the PRC Subsidiaries are subject to the information report requirement with MOFCOM or their respective local branches and registration
with a local bank authorized by State Administration of Foreign Exchange (“ SAFE”). In addition, any foreign loan procured
by the PRC Subsidiaries cannot exceed statutory limits and is required to be registered with SAFE or the NDRC if the term of the loan
exceeds one year, or their respective local branches.

SAFE promulgated the Circular
on Reforming of the Management Method of the Settlement of Foreign Currency Capital of Foreign-Invested Enterprises (the “ SAFE
Circular 19”), effective from June 2015, in replacement of a former regulation. According to SAFE Circular 19, the flow
and use of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated
such that RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment
of bank loans that have been transferred to a third party. Although SAFE Circular 19 allows RMB capital converted from foreign currency-denominated
registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle
that RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used
for purposes beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in
China in actual practice. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing
the Foreign Exchange Settlement Management Policy of Capital Account (the “ SAFE Circular 16”), effective from June 2016,
which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted
from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against
using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 and SAFE Circular 16 could
result in administrative penalties. The SAFE Circular 19 and SAFE Circular 16 regulate our transfer of any foreign currency we hold,
including proceeds of our offshore fund-raising activities, to the PRC Subsidiaries, which may adversely affect our liquidity and its