{"url_path":"/sec/lxeh/10-k/2026/item-10","section_key":"item-10","section_title":"Item 10 ADDITIONAL INFORMATION**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-12","source_url":"https://www.sec.gov/Archives/edgar/data/1814067/0001213900-26-055168-index.html","accession_number":"0001213900-26-055168","cik":"0001814067","ticker":"LXEH","issuer_name":"Lixiang Education Holding Co. Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1814067/0001213900-26-055168-index.html","primary_entity_key":"0001814067","primary_entity_name":"Lixiang Education Holding Co. Ltd."},"word_count":11911,"has_tables":true,"body_markdown":"**ITEM 10. ADDITIONAL INFORMATION**\n\n** **\n\n**A. Share Capital**\n\n \n\nNot applicable.\n\n \n\n**B. Memorandum and Articles of Association**\n\n \n\nWe were incorporated as\nan exempted company with limited liability in the Cayman Islands on September 6, 2018. Our affairs are currently governed by our\nthird amended and restated memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands, or the Companies\nAct in this section, and the common law of the Cayman Islands.\n\n \n\nAs of the date of the annual\nreport, our authorized share capital is US$2,000,000 divided into (i) 19,700,000,000 Class A ordinary shares of a par value of US$0.0001\neach, (ii) 100,000,000 Class B ordinary shares of a par value of US$0.0001 each, and (iii) 200,000,000 shares of a par value of US$0.0001\neach of such class or classes (however designated) as the board of directors may determine in accordance with our articles of association,\nas amended or substituted from time to time. As of the date of the annual report, there are 1,871,667,000 Class A ordinary shares and\n45,000,000 Class B ordinary shares issued and outstanding. All of our issued and outstanding ordinary shares are fully paid. All options,\nregardless of grant dates, will entitle holders to an equivalent number of ordinary shares once the vesting and exercising conditions\nare met.\n\n \n\nWe have adopted a third\namended and restated memorandum and articles of association, which became effective after annual general meeting on November 18, 2024.\n\n \n\nThe following are summaries\nof material provisions of our third amended and restated memorandum and articles of association and the Companies Act insofar as they\nrelate to the material terms of our ordinary shares. This summary is not complete, and you should read our third amended and restated\nmemorandum and articles of association, which has been filed as Annex A to Exhibit 99.1 to our Form 6-K filed with the SEC\non November 1, 2024.\n\n \n\n152\n\n \n\n \n\n**Registered Office and Objects**\n\n \n\nOur registered office in\nthe Cayman Islands is located at the offices of Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street,\nP.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands. As set forth in article 3 of our memorandum and articles of association, the objects\nfor which our company is established are unrestricted.\n\n \n\n**Board of Directors**\n\n \n\nSee “*Item 6. Directors,\nSenior Management and Employees—C. Board Practices—Committees of the Board of Directors*” and “*Item 6.\nDirectors, Senior Management and Employees—C. Board Practices—Terms of Directors and Officers*.”\n\n \n\n**Ordinary Shares**\n\n \n\n*General.* Our authorized\nshare capital is US$2,000,000 divided into (i) 19,700,000,000 Class A ordinary shares of a par value of US$0.0001 each, (ii) 100,000,000\nClass B ordinary shares of a par value of US$0.0001 each, and (iii) 200,000,000 shares of a par value of US$0.0001 each of such class\nor classes (however designated) as the board of directors may determine in accordance with our articles of association, as amended or\nsubstituted from time to time. Our ordinary shares are issued in registered form and are issued when registered in our register of members\n(shareholders). We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely\nhold and transfer their ordinary shares.\n\n \n\n*Conversion.* Each\nClass B ordinary share is convertible into one (1) Class A ordinary share at any time at the option of the holder thereof. Class A ordinary\nshares are not convertible into Class B ordinary shares under any circumstances.\n\n \n\nAny number of Class B ordinary\nshares held by a holder thereof will be automatically and immediately converted into an equal number of Class A ordinary shares upon\nthe occurrence of any of the following: (a) any direct or indirect sale, transfer, assignment or disposition of such number of Class\nB ordinary shares by the holder thereof or the direct or indirect transfer or assignment of the voting power attached to such number\nof Class B ordinary shares through voting proxy or otherwise to any person that is neither an affiliate of such holder nor another holder\nof Class B ordinary shares or an affiliate of such another holder; or (b) any direct or indirect sale, transfer, assignment or disposition\nof a majority of the issued and outstanding voting securities of, or the direct or indirect transfer or assignment of the voting power\nattached to such voting securities through voting proxy or otherwise, or the direct or indirect sale, transfer, assignment or disposition\nof all or substantially all of the assets of, a holder of Class B ordinary shares that is an entity to any person that is neither an\naffiliate of such holder nor another holder of Class B ordinary shares or an affiliate of such holder.\n\n \n\n*Dividends.* The holders\nof our ordinary shares are entitled to such dividends as may be declared by our board of directors or declared by our shareholders by\nordinary resolution (provided that no dividend may be declared by our shareholders which exceeds the amount recommended by our directors).\nOur memorandum and articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized,\nor from any reserve set aside from profits which our board of directors determine is no longer needed. Under the laws of the Cayman Islands,\nour company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid\nif this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.\n\n \n\nOur directors may also pay\ninterim dividends, whenever our financial position, in the opinion of our directors, justifies such payment.\n\n \n\nOur directors may deduct\nfrom any dividend or distribution payable to any shareholder all sums of money (if any) presently payable by such shareholder to us on\naccount of calls or otherwise.\n\n \n\nNo dividend or other money\npayable by us on or in respect of any share shall bear interest against us.\n\n \n\n*Voting Rights.* Each\nClass A ordinary share shall entitle the holder thereof to one (1) vote on all matters subject to vote at general meetings of the Company,\nand each Class B ordinary share shall entitle the holder thereof to two hundred (200) votes on all matters subject to vote at general\nmeetings of the Company. Voting at any shareholders’ meeting is by show of hands of shareholders who are present in person or by\nproxy or, in the case of a shareholder being a corporation, by its duly authorized representative, unless a poll is demanded.\n\n \n\nA poll may be demanded by\nthe chairman of such meeting or any shareholder present in person or by proxy.\n\n \n\nNo shareholder shall be\nentitled to vote or be reckoned in a quorum at any general meeting unless such shareholder is duly registered as our shareholder and\nall calls or other sums presently payable by such shareholder in respect of his voting shares to us have been paid.\n\n \n\nAn ordinary resolution to\nbe passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary\nshares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching\nto the outstanding ordinary shares at a meeting. A special resolution will be required for important matters such as a change of name\nor making changes to our memorandum and articles of association. Our shareholders may, among other things, divide or combine their shares\nby ordinary resolution.\n\n \n\n153\n\n \n\n \n\n*General Meetings of Shareholders.*\nAs a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our\nmemorandum and articles of association provide that we may (but are not obliged to) in each calendar year hold a general meeting as our\nannual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall\nbe held at such time and place as may be determined by our directors.\n\n \n\nShareholders’ general\nmeetings may be convened by a majority of our board of directors. Advance notice of at least 10 calendar days is required for the convening\nof our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders. A quorum required for any\ngeneral meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of all\nvotes attaching to the issued and outstanding shares in our company entitled to vote at general meeting.\n\n \n\nThe Companies Act provides\nshareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal\nbefore a general meeting. However, these rights may be provided in a company’s articles of association. Our memorandum and articles\nof association provide that upon the requisition of any one or more of our shareholders who together hold shares which carry in aggregate\nnot less than one-third of all votes attaching to the issued and outstanding shares of our company entitled to vote at general meetings,\nour board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However,\nour memorandum and articles of association do not provide our shareholders with any right to put any proposals before annual general\nmeetings or extraordinary general meetings not called by such shareholders.\n\n \n\n*Transfer of Ordinary\nShares.* Subject to any applicable restrictions set forth in our memorandum and articles of association as set out below, any of our\nshareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or in a form\nprescribed by the Nasdaq Global Market or in another form that our directors may approve.\n\n \n\nOur directors may decline\nto register any transfer of any share which is not paid up or on which we have a lien. Our directors may also decline to register any\ntransfer of any share unless:\n\n \n\n●the\ninstrument of transfer is lodged with us and is accompanied by the certificate for the shares\nto which it relates and such other evidence as our directors may reasonably require to show\nthe right of the transferor to make the transfer;\n\n \n\n●the\ninstrument of transfer is in respect of only one class of share;\n\n \n\n●the\ninstrument of transfer is properly stamped (if required);\n\n \n\n●in\nthe case of a transfer to joint holders, the number of joint holders to whom the ordinary\nshare is to be transferred does not exceed four;\n\n \n\n●the\nshares are free from any lien in favor of the Company; and\n\n \n\n●a\nfee of such maximum sum as the Nasdaq Global Market may determine to be payable or such lesser\nsum as our directors may from time to time require is paid to us in respect thereof.\n\n* *\n\n*Liquidation.* Subject\nto any future shares which are issued with specific rights, (1) if we are wound up and the assets available for distribution among\nour shareholders are more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the surplus\nshall be distributed amongst the shareholders in proportion to the par value of the shares held by them at the commencement of the winding\nup, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our company for unpaid\ncalls or otherwise, and (2) if we are wound up and the assets available for distribution among the shareholders as such are insufficient\nto repay the whole of the share capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by\nthe shareholders in proportion to the par value of the shares held by them.\n\n \n\nIf we are wound up the liquidator\nmay with the sanction of our special resolution and any other sanction required by the Companies Act, divide among our shareholders in\nkind the whole or any part of our assets (whether or not they shall consist of property of the same kind) and may, for such purpose,\nvalue any assets and determine how such division shall be carried out as between the shareholders or different classes of shareholders.\n\n \n\nThe liquidator may also\nvest the whole or any part of these assets in trustees upon such trusts for the benefit of the shareholders as the liquidator shall think\nfit, but so that no shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.\n\n \n\n154\n\n \n\n \n\n*Calls on Ordinary Shares\nand Surrender of Ordinary Shares.* Subject to our memorandum and articles of association and to the terms of allotment our board of\ndirectors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such\nshareholders at least 14 days prior to the specified time of payment.\n\n \n\nThe ordinary shares that\nhave been called upon and remain unpaid are subject to forfeiture.\n\n \n\n*Redemption, Repurchase\nand Surrender of Ordinary Shares.* We may issue shares on terms that such shares are subject to redemption, at our option or at the\noption of the holders of these shares, on such terms and in such manner as may be determined by either our board of directors or by a\nspecial resolution of our shareholders. Our company may also repurchase any of our shares on such terms and in such manner as have been\napproved by our board of directors or by an ordinary resolution of our shareholders.\n\n \n\nUnder the Companies Act,\nthe redemption or repurchase of any share may be paid out of our company’s profits or out of the proceeds of a fresh issue of shares\nmade for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve)\nif the company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition,\nunder the Companies Act no such share may be redeemed or repurchased (1) unless it is fully paid up, (2) if such redemption\nor repurchase would result in there being no shares outstanding, or (3) if the company has commenced liquidation. In addition, our\ncompany may accept the surrender of any fully paid share for no consideration.\n\n \n\n*Variations of Rights\nof Shares.* If at any time, our share capital is divided into different classes of shares, all or any of the special rights attached\nto any class of shares may, subject to the provisions of the Companies Act, be varied with the consent in writing of the holders of not\nless than two-thirds of the issued shares of that class, or with the sanction of a resolution passed by at least a two-thirds majority\nof the holders of shares of the class present in person or by proxy at a separate general meeting of the holders of the shares of that\nclass.\n\n \n\nThe rights conferred upon\nthe holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that\nclass, be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.\n\n \n\n*Inspection of Books and\nRecords.* Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our register\nof members or our corporate records (other than copies of our memorandum and articles of association, our register of mortgages and charge,\nand any special resolution passed by our shareholders). The Registrar of Companies of the Cayman Islands shall make available the list\nof the names of the current directors of the Company (and where applicable the current alternate directors of the Company) for inspection\nby any person upon payment of a fee by such person. However, we will provide our shareholders with annual audited financial statements.\n\n \n\n*Issuance of Additional\nShares.* Our memorandum of association authorizes our board of directors to issue additional ordinary shares from time to time as\nour board of directors shall determine, to the extent of available authorized but unissued shares.\n\n \n\nOur memorandum of association\nalso authorizes our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect\nto any series of preferred shares, the terms and rights of that series, including:\n\n \n\n●the\ndesignation of the series;\n\n \n\n●the\nnumber of shares of the series;\n\n \n\n●the\ndividend rights, dividend rates, conversion rights, voting rights; and\n\n \n\n●the\nrights and terms of redemption and liquidation preferences.\n\n \n\nOur board of directors may\nissue preferred shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute\nthe voting power of holders of ordinary shares.\n\n \n\n155\n\n \n\n \n\n*Anti-Takeover Provisions.*\nSome provisions of our memorandum and articles of association may discourage, delay or prevent a change of control of our company or\nmanagement that shareholders may consider favorable, including provisions that:\n\n \n\n●authorize\nour board of directors to issue preferred shares in one or more series and to designate the\nprice, rights, preferences, privileges and restrictions of such preferred shares without\nany further vote or action by our shareholders.\n\n \n\n●limit\nthe ability of shareholders to requisition and convene general meetings of shareholders.\n\n \n\nHowever, under Cayman Islands\nlaw, our directors may only exercise the rights and powers granted to them under our memorandum and articles of association for a proper\npurpose and for what they believe in good faith to be in the best interests of our company.\n\n \n\n**Differences in Corporate Law**\n\n \n\nThe Companies Act is derived,\nto a large extent, from the older Companies Acts of England but does not follow recent United Kingdom statutory enactments, and accordingly\nthere are significant differences between the Companies Act and the current Companies Act of England.\n\n \n\nIn addition, the Companies\nAct differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of the significant\ndifferences between the provisions of the Companies Act applicable to us and the laws applicable to United States corporations and companies\nincorporated in the State of Delaware.\n\n \n\n**Mergers and Similar\nArrangements***.* The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman\nIslands companies and non-Cayman Islands companies. For these purposes, (a) “merger” means the merging of two or\nmore constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company,\nand (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and\nthe vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger\nor consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be\nauthorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if\nany, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must\nbe filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or\nsurviving company, a declaration as to the assets and liabilities of each constituent company and an undertaking that a copy of the certificate\nof merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger\nor consolidation will be published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of\ntheir shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures,\nsubject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these\nstatutory procedures.\n\n \n\nA merger between a Cayman\nparent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman\nsubsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees\notherwise. For this purpose, a company is a “parent” of a subsidiary if it holds issued shares that together represent at\nleast ninety percent (90%) of the votes at a general meeting of the subsidiary.\n\n \n\nThe consent of each holder\nof a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman\nIslands.\n\n \n\nSave in certain limited\ncircumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of\nthe fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting\nto the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act.\nThe exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might\notherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation\nis void or unlawful.\n\n \n\n156\n\n \n\n \n\nSeparate from the statutory\nprovisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction\nand amalgamation of companies by way of schemes of arrangement,* provided* that the arrangement is approved by (a) 75%\nin value of the shareholders or class of shareholders, as the case may be, or (b) a majority in number representing 75% in value of the\ncreditors or each class of creditors, as the case may be, with whom the arrangement is to be made, that are, in each case, present and\nvoting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently\nthe arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express\nto the court the view that the transaction ought not to be approved, the Grand Court can be expected to approve the arrangement if it\ndetermines that:\n\n \n\n●the\nstatutory provisions as to the required majority vote have been met;\n\n \n\n●the\nshareholders have been fairly represented at the meeting in question and the statutory majority\nare acting bona fide without coercion of the minority to promote interests adverse to those\nof the class;\n\n \n\n●the\narrangement is such that may be reasonably approved by an intelligent and honest man of that\nclass acting in respect of his interest; and\n\n \n\n●the\narrangement is not one that would more properly be sanctioned under some other provision\nof the Companies Act.\n\n \n\nThe Companies Act also contains\na statutory power of compulsory acquisition which may facilitate the “squeeze out” of a dissentient minority shareholder\nupon a tender offer. When a tender offer is made and accepted by holders of 90.0% of the shares affected within four months, the offeror\nmay, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining\nshares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands,\nbut this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.\n\n \n\nIf an arrangement and reconstruction\nis thus approved, or, if a tender offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights,\nwhich would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment\nin cash for the judicially determined value of the shares.\n\n \n\n**Shareholders’\nSuits.** In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company. As a general rule,\na derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood\nbe of persuasive authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles\n(namely the rule in* Foss v. Harbottle* and the exceptions thereto) so that a non-controlling shareholder\nmay be permitted to commence a class action against or derivative actions in the name of our company to challenge actions where:\n\n \n\n●a\ncompany acts or proposes to act illegally or ultra vires;\n\n \n\n●the\nact complained of, although not ultra vires, could only be effected duly if authorized by\nmore than a simple majority vote that has not been obtained; and\n\n \n\n●those\nwho control our company are perpetrating a “fraud on the minority.”\n\n** **\n\n**Indemnification of\nDirectors and Executive Officers and Limitation of Liability.** Cayman Islands law does not limit the extent to which a company’s\nmemorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision\nmay be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the\nconsequences of committing a crime. Our memorandum and articles of association provide that we shall indemnify our officers and directors\nagainst all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such directors or\nofficer, other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our company’s\nbusiness or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities\nor discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by\nsuch director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our company or its affairs\nin any court whether in the Cayman Islands or elsewhere.\n\n \n\n157\n\n \n\n \n\nIn addition, we have entered\ninto indemnification agreements with our directors and executive officers that provide such persons with additional indemnification beyond\nthat provided in our memorandum and articles of association.\n\n \n\nInsofar as indemnification\nfor liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing\nprovisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities\nAct and is therefore unenforceable.\n\n \n\n**Directors’ Fiduciary\nDuties.** Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its\nshareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in\ngood faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must\ninform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The\nduty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must\nnot use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best\ninterest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder\nand not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis,\nin good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption\nmay be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by\na director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.\n\n \n\nAs a matter of Cayman Islands\nlaw, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered\nthat he owes the following duties to the company—a duty to act bona fide in the best interests of the company, a duty not to make\na personal profit based on his or her position as director (unless the company permits him or her to do so), a duty not to put himself\nor herself in a position where the interests of the company conflict with his or her personal interest or his or her duty to a third\nparty, and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes\nto the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of\nhis or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience. However,\nEnglish and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities\nare likely to be followed in the Cayman Islands.\n\n \n\n**Shareholder Action\nby Written Consent.** Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to\nact by written consent by amendment to its certificate of incorporation. Under Cayman Islands Law, a company may eliminate the ability\nof shareholders to approve corporate matters by way of written resolution signed by or on behalf of each shareholder who would have been\nentitled to vote on such matters at a general meeting without a meeting being held by amending the articles of association. Our memorandum\nand articles of association provide that shareholders may approve corporate matters by way of a unanimous written resolution signed by\nor on behalf of each shareholder who would have been entitled to vote on such matter at a general meeting without a meeting being held.\n\n \n\n**Shareholder Proposals.** Under\nthe Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided\nit complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other\nperson authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.\n\n \n\nThe Companies Act provides\nshareholders with only limited rights to requisition a general meeting and does not provide shareholders with any right to put any proposal\nbefore a general meeting. However, these rights may be provided in a company’s articles of association. Our memorandum and articles\nof association allow shareholders holding at least one third of the paid-up voting share capital of the Company to requisition an extraordinary\ngeneral meeting of our shareholders, in which case our board is obliged to convene a general meeting. Other than this right to requisition\na shareholders’ meeting, our memorandum and articles of association do not provide our shareholders with any other right to put\nproposals before annual general meetings or extraordinary general meetings not called by such shareholders.\n\n \n\n158\n\n \n\n \n\n**Cumulative Voting.** Under\nthe Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate\nof incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders\non a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single\ndirector, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation\nto cumulative voting under the laws of the Cayman Islands, but our memorandum and articles of association do not provide for cumulative\nvoting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.\n\n \n\n**Removal of Directors.** Under\nthe Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval\nof a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our memorandum\nand articles of association, directors may be removed with or without cause, by an ordinary resolution of our shareholders. A director\nshall hold office until the expiration of his or her term or his or her successor shall have been elected and qualified, or until his\nor her office is otherwise vacated. In addition, a director’s office shall be vacated if the director (i) becomes bankrupt\nor makes any arrangement or composition with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns\nhis office by notice in writing to the company; (iv) without special leave of absence from our board of directors, is absent from\nthree consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law from being a\ndirector; or (vi) is removed from office pursuant to any other provisions of our memorandum and articles of association.\n\n \n\n**Transactions with\nInterested Shareholders.** The Delaware General Corporation Law contains a business combination statute applicable to Delaware\ncorporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate\nof incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three\nyears following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group\nwho or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect\nof limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not\nbe treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested\nshareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming\nan interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition\ntransaction with the target’s board of directors.\n\n \n\nCayman Islands law has no\ncomparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination\nstatute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, the\ndirectors of our company are required to comply with fiduciary duties which they owe to our company under Cayman Islands laws, including\nthe duty to ensure that, in their opinion, any such transactions must be entered into bona fide in the best interests of the company,\nand are entered into for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.\n\n \n\n**Restructuring.**A\ncompany may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer on the grounds\nthat the company:\n\n \n\n(a)is\nor is likely to become unable to pay its debts; and\n\n \n\n(b)intends\nto present a compromise or arrangement to its creditors (or classes thereof) either pursuant\nto the Companies Act, the law of a foreign country or by way of a consensual restructuring.\n\n \n\nThe Grand Court may, among\nother things, make an order appointing a restructuring officer upon hearing of such petition, with such powers and to carry out such\nfunctions as the court may order. At any time (i) after the presentation of a petition for the appointment of a restructuring officer\nbut before an order for the appointment of a restructuring officer has been made, and (ii) when an order for the appointment of a restructuring\nofficer is made, until such order has been discharged, no suit, action or other proceedings (other than criminal proceedings) shall be\nproceeded with or commenced against the company, no resolution to wind up the company shall be passed, and no winding up petition may\nbe presented against the company, except with the leave of the court. However, notwithstanding the presentation of a petition for the\nappointment of a restructuring officer or the appointment of a restructuring officer, a creditor who has security over the whole or part\nof the assets of the company is entitled to enforce the security without the leave of the court and without reference to the restructuring\nofficer appointed.\n\n \n\n159\n\n \n\n \n\n**Dissolution; Winding\nup.** Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution\nmust be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the\nboard of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware\ncorporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated\nby the board.\n\n \n\nUnder Cayman Islands law,\na company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the\ncompany is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding\nup in a number of specified circumstances, including where it is, in the opinion of the court, just and equitable to do so.\n\n \n\n**Variation of Rights\nof Shares.** Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval\nof a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands\nlaw and our memorandum and articles of association, if our share capital is divided into more than one class of shares, we may vary the\nrights attached to any class with the written consent of two-thirds of holders of the issued shares of that class or with the sanction\nof a special resolution passed at a general meeting of the holders of the shares of that class.\n\n \n\n**Amendment of Governing\nDocuments.** Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the\napproval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under\nthe Companies Act and our memorandum and articles of association, our memorandum and articles of association may only be amended by a\nspecial resolution of our shareholders.\n\n \n\n**Rights of Non-resident\nor Foreign Shareholders.** There are no limitations imposed by our memorandum and articles of association on the rights of\nnonresident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum\nand articles of association that require our company to disclose shareholder ownership above any particular ownership threshold.\n\n \n\n**C. Material Contracts**\n\n \n\nWe and the VIEs have not\nentered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information\non the Company” or elsewhere in this annual report on Form 20-F.\n\n \n\n**D. Exchange Controls**\n\n \n\nThere is no exchange control\nlegislation under Cayman Islands law, and accordingly, there are no exchange control regulations imposed under Cayman Islands law. See\nalso “*Item 4. Information on the Company—B. Business Overview—Regulation— PRC Laws and Regulations Relating\nto Foreign Exchange” and “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations\non Taxation in the PRC—Income Tax in relation to Dividend Distribution*.”\n\n \n\n**E. Taxation**\n\n \n\nThe following summary of\nthe material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our ADSs or ordinary shares is based\nupon laws and relevant interpretations thereof in effect as of the date of the annual report, all of which are subject to change. This\nsummary does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences\nunder U.S. state and local tax laws or under the tax laws of jurisdictions other than the Cayman Islands, PRC and the United States.\n\n \n\n160\n\n \n\n \n\n**Cayman Islands Taxation**\n\n \n\nThe Cayman Islands currently\nlevies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature\nof inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the government of the Cayman Islands\nexcept for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the\nCayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company.\nThere are no exchange control regulations or currency restrictions in the Cayman Islands.\n\n \n\nPayments of dividends and\ncapital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment\nof a dividend or capital to any holder of our ADSs or ordinary shares, nor will gains derived from the disposal of our ADSs or ordinary\nshares be subject to Cayman Islands income or corporate tax.\n\n \n\n**People’s Republic of China Taxation**\n\n \n\nUnder the EIT Law and implementation\nregulations issued by the PRC State Council on April 23, 2019, an enterprise established outside the PRC with “de facto management\nbodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally\nsubject to a uniform 25% enterprise income tax rate on its worldwide income. Under the Regulation on the Implementation of Enterprise\nIncome Tax Law of the PRC, a “de facto management body” is defined as a body that has material and overall management and\ncontrol over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. Accordingly,\nour holding company may be considered a resident enterprise and may therefore be subject to a PRC income tax on our global income.\n\n \n\nThe State Administration\nof Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore Incorporated Enterprises as PRC Tax Resident\nEnterprises on the Basis of De Facto Management Bodies, or Circular 82, on April 22, 2009. Circular 82 provides certain specific\ncriteria for determining whether the “de facto management body” of a Chinese-controlled offshore incorporated enterprise\nis located in China, which include all of the following conditions: (i) the senior management and core management departments in\ncharge of daily operations are located mainly inside PRC, (ii) financial and personnel decision are subject to determination or\napproval by persons or organizations located inside PRC, (iii) major assets, accounting books, company seals and minutes and files\nof board and shareholders’ meeting are placed or kept inside PRC, and (iv) at least half of the enterprise’s directors\nwith voting rights or senior management customarily reside inside PRC. Although Circular 82 explicitly provides that the above standards\napply to enterprises which are registered outside the PRC and funded by PRC enterprises or PRC enterprise groups as controlling investors,\nthe determining criteria set forth in Circular 82 may reflect the general position of the State Administration of Taxation on how the\n“de facto management body” test should be applied in determining the tax resident status of offshore enterprises, regardless\nof whether they are controlled by PRC enterprises or PRC enterprise groups or by PRC or foreign individuals.\n\n \n\nThe Company is a company\nincorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets\nare located, and its records (including the resolutions of its board of directors and its shareholders) are maintained, outside the PRC.\nFor the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax resident\nstatus of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation\nof the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view that\nis consistent with ours. See “*Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China*.”\nSuch classification could result in unfavorable tax consequences to us and our non-PRC shareholders.\n\n \n\nThe implementation rules\nof the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC, or (ii) if gains are\nrealized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or capital gains are treated as\nChina-sourced income. It is not clear how “domicile” may be interpreted under the EIT Law, and it may be interpreted as the\njurisdiction where the enterprise is a tax resident. Any dividends we pay to our overseas shareholders or ADS holders as well as gains\nrealized by such shareholders or ADS holders from the transfer of our shares or ADSs may be regarded as China-sourced income, if we are\nconsidered a PRC tax resident enterprise for tax purposes, and as a result, such dividends and capital gains paid to overseas shareholders\nor ADS holders that are non-PRC resident enterprises may become subject to PRC income tax at a rate of up to 10.0%, unless\notherwise exempted or reduced under relevant tax treaties or arrangements between the PRC and relevant foreign jurisdictions. For example,\nfor shareholders eligible for the benefits of the tax treaty between China and Hong Kong, the tax rate is reduced to 5% for dividends\nif relevant conditions are met.\n\n \n\n161\n\n \n\n \n\nIt is unclear whether our non-PRC individual\nshareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the\nevent we are determined to be a PRC resident enterprise. Under the PRC Individual Income Tax Law promulgated on September 10, 1980,\nand amended in 2018 and its implementation rules, dividends from sources within the PRC paid to foreign individual investors who are\nnot residents of the PRC are ordinarily subject to a PRC withholding tax at a rate of 20% and PRC source gains realized by such investors\non the transfer of ADSs or shares would be subject to 20% PRC income tax. However, it is also unclear whether non-PRC shareholders\nof the Company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event\nthat the Company is treated as a PRC resident enterprise. See “*Item 3. Key Information—D. Risk Factors—Risks Relating\nto Doing Business in China*.” Such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.\n\n \n\n**United States Federal Income Taxation**\n\n \n\nThe following discussion\ndescribes the material United States federal income tax consequences to a U.S. Holder (as defined below), under current law, of an investment\nin our ADSs or ordinary shares. This discussion is based on the federal income tax laws of the United States as of the date of the annual\nreport, including the United States Internal Revenue Code of 1986, as amended, or the Code, existing and proposed Treasury regulations\npromulgated thereunder, judicial authority, published administrative positions of U.S. Internal Revenue Service, or the IRS, and other\napplicable authorities, all as of the date of the annual report. All of the foregoing authorities are subject to change, which change\ncould apply retroactively and could significantly affect the tax consequences described below. We have not sought any ruling from the\nIRS with respect to the statements made and the conclusions reached in the following discussion and there can be no assurance that the\nIRS or a court will agree with our statements and conclusions. This summary does not discuss the Medicare contribution tax on net investment\nincome, any federal non-income tax laws, including the federal estate or gift tax laws, or the laws of any state, local or non-United States\ntaxing jurisdiction.\n\n \n\nThis discussion applies\nonly to a U.S. Holder that holds ADSs or ordinary shares as capital assets for United States federal income tax purposes (generally,\nproperty held for investment). The discussion neither addresses the tax consequences to any particular investor nor describes all of\nthe tax consequences applicable to persons in special tax situations, such as:\n\n \n\n●banks;\n\n \n\n●certain\nfinancial institutions;\n\n \n\n●insurance\ncompanies;\n\n \n\n●regulated\ninvestment companies;\n\n \n\n●real\nestate investment trusts;\n\n \n\n●brokers\nor dealers in stocks and securities, or currencies;\n\n \n\n●persons\nwho are required to use a mark-to-market method of accounting;\n\n \n\n●certain\nformer citizens or residents of the United States subject to Section 877 of the Code;\n\n \n\n●entities\nsubject to the United States anti-inversion rules;\n\n \n\n●tax-exempt organizations\nand entities;\n\n \n\n●persons\nsubject to the alternative minimum tax provisions of the Code;\n\n \n\n●persons\nwhose functional currency is other than the United States dollar;\n\n \n\n162\n\n \n\n \n\n \n\n●persons\nholding ADSs or ordinary shares as part of a straddle, hedging, conversion or integrated\ntransaction;\n\n \n\n●persons\nholding ADSs or ordinary shares through a bank, financial institution or other entity, or\na branch thereof, located, organized or resident outside the United States;\n\n \n\n●persons\nthat actually or constructively own 10% or more of our stock by vote or value;\n\n \n\n●persons\nsubject to special tax accounting rules under Section 451(b) of the Code;\n\n \n\n●persons\nwho acquired ADSs or ordinary shares pursuant to the exercise of an employee stock option\nor otherwise as compensation; or\n\n \n\n●partnerships\nor other pass-through entities, or persons holding ADSs or ordinary shares through such entities.\n\n \n\nIf a partnership (including\nan entity or arrangement treated as a partnership for United States federal income tax purposes) holds our ADSs or ordinary shares, the\ntax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership.\nA partner in a partnership holding our ADSs or ordinary shares should consult its own tax advisors regarding the tax consequences of\nholding our ADSs or ordinary shares.\n\n \n\n**The following discussion\nis for informational purposes only and is not a substitute for careful tax planning and advice. Investors considering the purchase of\nADSs or ordinary shares should consult their own tax advisors with respect to the application of the United States federal income tax\nlaws to their particular situations, as well as any tax consequences arising under the Medicare contribution tax on net investment income,\nany federal non-income tax laws, including the federal estate or gift tax laws, or the laws of any state, local or non-United States\ntaxing jurisdiction and under any applicable tax treaty.**\n\n \n\nFor purposes of the discussion\nbelow, a “U.S. Holder” is a beneficial owner of our ADSs or ordinary shares that is, for United States federal income tax\npurposes:\n\n \n\n●an\nindividual who is a citizen or resident of the United States;\n\n \n\n●a\ncorporation (or other entity treated as a corporation for United States federal income tax\npurposes) created or organized in or under the laws of the United States, any state thereof\nor the District of Columbia;\n\n \n\n●an\nestate, the income of which is subject to United States federal income taxation regardless\nof its source; or\n\n \n\n●a\ntrust, if (i) a court within the United States is able to exercise primary supervision\nover its administration and one or more United States persons have the authority to control\nall of its substantial decisions or (ii) in the case of a trust that was treated as\na domestic trust on August 19, 1996 under the law in effect as of that date, a valid\nelection is in place under applicable Treasury regulations to treat such trust as a domestic\ntrust.\n\n \n\nThe discussion below assumes\nthat the representations contained in the deposit agreement and any related agreement is true and that the obligations in such agreements\nwill be complied with in accordance with their terms.\n\n \n\n**ADSs**\n\n \n\nIf you own our ADSs, then\nyou should be treated as the owner of the underlying ordinary shares represented by those ADSs for United States federal income tax purposes.\nAccordingly, deposits or withdrawals of ordinary shares for ADSs should not be subject to United States federal income tax.\n\n \n\n163\n\n \n\n \n\nThe United States Treasury\nDepartment and the IRS have expressed concerns that intermediaries in the chain of ownership between the holder of an ADS and the issuer\nof the security underlying the ADS may be taking actions that are inconsistent with the beneficial ownership of the underlying security\n(for example, a pre-release of ADSs to persons that do not have beneficial ownership of the securities underlying the ADSs).\nSuch actions may be inconsistent with the claiming of the reduced rate of tax applicable to certain dividends received by non-corporate U.S.\nHolders of ADSs, including individual U.S. Holders, and the claiming of foreign tax credits by U.S. Holders of ADSs. Accordingly, among\nother things, the availability of foreign tax credits or the reduced tax rate for dividends received by non-corporate U.S.\nHolders, each discussed below, could be affected by actions taken by intermediaries in the chain of ownership between the holder of an\nADS and our company, if as a result of such actions, the holders of ADSs are not properly treated as beneficial owners of ordinary shares.\n\n \n\n**Passive Foreign Investment Company Considerations**\n\n \n\nA non-U.S. corporation,\nsuch as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) 75% or more\nof its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets\n(determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production\nof passive income, or the asset test. Passive income generally includes, among other things, dividends, interest, rents, royalties, and\ngains from the disposition of passive assets. Passive assets are those which give rise to passive income, and include assets held for\ninvestment, as well as cash, assets readily convertible into cash, and working capital. The company’s goodwill and other unbooked\nintangibles are taken into account and may be classified as active or passive depending upon the relative amounts of income generated\nby the company in each category. We will be treated as owning a proportionate share of the assets and earning a proportionate share of\nthe income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock. Although the law in\nthis regard is not entirely clear, we treat the consolidated VIEs as being owned by us for U.S. federal income tax purposes because we\ncontrol their management decisions and are entitled to substantially all of the economic benefits associated with them. As a result,\nwe consolidate their results of operations in our consolidated U.S. GAAP financial statements. If it were determined, however, that we\nare not the owner of the consolidated VIEs for U.S. federal income tax purposes, we may be treated as a PFIC for the current taxable\nyear and any subsequent taxable year.\n\n \n\nAssuming that we are the\nowner of the consolidated VIEs for U.S. federal income tax purposes and based upon our current and projected income and assets, we do\nnot expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because\nthe determination of whether we are or will become a PFIC is a factual determination made annually that will depend, in part, upon the\ncomposition and classification of our income and assets. Because there are uncertainties in the application of the relevant rules, it\nis possible that the IRS may challenge our classification of certain income and assets as non-passive, which may result in\nour being or becoming classified as a PFIC in the current or subsequent years. Furthermore, fluctuations in the market price of our ADSs\nmay cause us to be a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including\nthe value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our ADSs from time to time\n(which may be volatile). Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may\nbe or become a PFIC for the current or future taxable years. The composition of our income and assets may also be affected by how, and\nhow quickly, we use our liquid assets and the cash raised in the initial public offering. Under circumstances where our revenue from\nactivities that produce passive income significantly increases relative to our revenue from activities that produce non-passive income,\nor where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase.\n\n \n\n164\n\n \n\n \n\nIf we are a PFIC for any\nyear during which a U.S. Holder holds our ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding\nyears during which such U.S. Holder holds our ADSs or ordinary shares unless, in such case, we cease to be treated as a PFIC and such\nU.S. Holder makes a deemed sale election.\n\n \n\nThe discussion below under\n“—Dividends” and “—Sale or Other Disposition” is written on the basis that we will not be or become\nclassified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as\na PFIC are discussed below under “—Passive Foreign Investment Company Rules.”\n\n \n\n**Dividends**\n\n \n\nAny cash distributions paid\non our ADSs or ordinary shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles,\nwill generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by\nthe U.S. Holder, in the case of ordinary shares, or by the depositary, in the case of ADSs. Because we do not intend to determine our\nearnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend”\nfor U.S. federal income tax purposes. Dividends received on our ADSs or ordinary shares will not be eligible for the dividends received\ndeduction allowed to corporations in respect of dividends received from U.S. corporations.\n\n \n\nIndividuals and other non-corporate U.S.\nHolders may be subject to tax on any such dividends at the lower capital gain tax rate applicable to “qualified dividend income,”\nprovided that certain conditions are satisfied, including that (i) either (x) our ADSs or ordinary shares on which the dividends\nare paid are readily tradable on an established securities market in the United States or (y) we are eligible for the benefits of\na comprehensive income tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory\nfor purposes of this provision and which includes an exchange of information program, (ii) we are neither a PFIC nor treated as\nsuch with respect to a U.S. Holder for the taxable year in which the dividend is paid and the preceding taxable year, and (iii) certain\nholding period requirements are met. We have been approved for listing the ADSs on the Nasdaq Global Market. Provided that this listing\nis approved, we believe that the ADSs should generally be considered to be readily tradeable on an established securities market in the\nUnited States. There can be no assurance that the ADSs will be, or will in later years continue to be, considered readily tradable on\nan established securities market. Because the ordinary shares will not be listed on a U.S. exchange, we do not believe that dividends\nreceived with respect to ordinary shares that are not represented by ADSs will be treated as qualified dividends. In the event we are\ndeemed to be a PRC resident enterprise under EIT Law (see “*—People’s Republic of China Taxation*”), we\nmay be eligible for the benefits of the Agreement Between the Government of the United States of America and the Government of the People’s\nRepublic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income (which the Secretary\nof Treasury of the United States has determined is satisfactory for this purpose). U.S. Holders are urged to consult their tax advisors\nregarding the availability of the lower rate for dividends paid with respect to the ADSs or ordinary shares.\n\n \n\nFor U.S. foreign tax credit\npurposes, dividends paid on our ADSs or ordinary shares will generally be treated as income from foreign sources and will generally constitute\npassive category income. The rules governing the foreign tax credit are complex and U.S. Holders are urged to consult their tax advisors\nregarding the availability of the foreign tax credit under their particular circumstances.\n\n \n\n165\n\n \n\n \n\n**Sale or Other Disposition**\n\n \n\nA U.S. Holder will generally\nrecognize gain or loss upon the sale or other disposition of ADSs or ordinary shares in an amount equal to the difference between the\namount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or ordinary shares. Such gain or loss will\ngenerally be capital gain or loss. Any such capital gain or loss will be long term if the ADSs or ordinary shares have been held for\nmore than one year. Non-corporate U.S. Holders (including individuals) generally will be subject to United States federal income\ntax on long-term capital gain at preferential rates. The deductibility of a capital loss may be subject to limitations. Any such gain\nor loss that the U.S. Holder recognizes will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes,\nwhich could limit the availability of foreign tax credits. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences\nif a foreign tax is imposed on a disposition of our ADSs or ordinary shares, including the applicability of any tax treaty and the availability\nof the foreign tax credit under its particular circumstances.\n\n \n\n**Passive Foreign Investment Company Rules**\n\n \n\nIf we are classified as\na PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares, and unless the U.S. Holder makes a mark-to-market election\n(as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make\nto the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent\nof the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period\nfor the ADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances,\na pledge, of ADSs or ordinary shares. Under the PFIC rules:\n\n \n\n●the\nexcess distribution or gain will be allocated ratably over the U.S. Holder’s holding\nperiod for the ADSs or ordinary shares;\n\n \n\n●the\namount allocated to the taxable year of distribution or gain and any taxable years in the\nU.S. Holder’s holding period prior to the first taxable year in which we are classified\nas a PFIC (each, a “pre-PFIC year”) will be taxable as ordinary income; and\n\n \n\n●the\namount allocated to each prior taxable year, other than a pre-PFIC year, will be subject\nto tax at the highest tax rate in effect for individuals or corporations, as appropriate,\nfor that year, increased by an additional tax equal to the interest on the resulting tax\ndeemed deferred with respect to each such taxable year.\n\n \n\nAs an alternative to the\nforegoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election\nwith respect to such stock. If a U.S. Holder makes this election with respect to our ADSs, the holder will generally (i) include\nas ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the\ntaxable year over the adjusted tax basis of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax\nbasis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but such deduction will only be allowed\nto the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s\nadjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election.\nIf a U.S. Holder makes a mark-to-market election in respect of our ADSs and we cease to be classified as a PFIC, the holder\nwill not be required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If\na U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our\nADSs in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will\nonly be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.\n\n \n\n166\n\n \n\n \n\nThe mark-to-market election\nis available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15\ndays during each calendar quarter, or regularly traded, on a qualified exchange or other market, as defined in applicable United States\nTreasury regulations. We expect that our ADSs being listed on the Nasdaq Global Market, but not our ordinary shares, will be treated\nas marketable stock. We anticipate that our ADSs should qualify as being regularly traded, but no assurances may be given in this regard.\n\n \n\nBecause a mark-to-market election\ncannot technically be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with\nrespect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interests in a PFIC\nfor U.S. federal income tax purposes.\n\n \n\nWe do not intend to provide\ninformation necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different\nfrom (and generally less adverse than) the general tax treatment for PFICs described above.\n\n \n\nDividends that we pay on\nour ADS or ordinary shares will not be eligible for the reduced tax rate that applies to qualified dividend income if we are classified\nas a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. If a U.S. Holder owns our ADSs or ordinary\nshares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. You should consult your tax\nadvisor regarding the U.S. federal income tax consequences of owning and disposing of our ADSs or ordinary shares if we are or become\na PFIC.\n\n \n\n**Information Reporting and Backup Withholding**\n\n \n\nCertain U.S. Holders are\nrequired to report information to the IRS relating to an interest in “specified foreign financial assets” (as defined in\nthe Code), including shares issued by a non-U.S. corporation, for any year in which the aggregate value of all specified foreign\nfinancial assets exceeds $50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception\nfor shares held in custodial accounts maintained with a U.S. financial institution). These rules also impose penalties if a U.S. Holder\nis required to submit such information to the IRS and fails to do so.\n\n \n\nIn addition, U.S. Holders\nmay be subject to information reporting to the IRS and backup withholding with respect to dividends on and proceeds from the sale or\nother disposition of the ADSs or ordinary shares. Information reporting will generally apply to payments of dividends on, and proceeds\nfrom the sale or other disposition of, ADSs or ordinary shares made by a paying agent within the United States to a U.S. Holder, other\nthan U.S. Holders that are exempt from information reporting and properly certify their exemption. A paying agent within the United States\nwill be required to withhold at the applicable statutory rate, currently 24%, in respect of any payments of dividends on, and the proceeds\nfrom the sale or other disposition of, ADSs or ordinary shares within the United States to a U.S. Holder (other than U.S. Holders that\nare exempt from backup withholding and properly certify their exemption) if the holder fails to furnish its correct taxpayer identification\nnumber or otherwise fails to comply with applicable backup withholding requirements. U.S. Holders who are required to establish their\nexempt status generally must provide a properly completed IRS Form W-9.\n\n \n\n167\n\n \n\n \n\nBackup withholding is not\nan additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder’s U.S. federal income tax liability.\nA U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim\nfor refund with the IRS in a timely manner and furnishing any required information. Each U.S. Holder is advised to consult with its tax\nadvisor regarding the application of information reporting and backup withholding rules to their particular circumstances.\n\n \n\n**F. Dividends and Paying Agents**\n\n \n\nNot applicable.\n\n \n\n**G. Statements by Experts**\n\n \n\nNot applicable.\n\n \n\n**H. Documents on Display**\n\n \n\nWe previously filed with\nthe SEC our registration statement on Form F-1, as amended, to register our ordinary shares (now redesignated as Class A ordinary\nshares) in relation to our initial public offering. We have also filed with the SEC a related registration statement on F-6 (Registration\nNo. 333-249010) to register the ADSs.\n\n \n\nWe are subject to periodic\nreporting and other information requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we are required\nto file reports, including annual reports on Form 20-F, and other information with the SEC. All information filed with the\nSEC can be obtained over the internet at the SEC’s website at www.sec.gov or inspected and copied at the public reference\nfacilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of documents, upon payment of\na duplicating fee, by writing to the SEC.\n\n \n\nAs a foreign private issuer,\nwe are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements,\nand our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions\ncontained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and\nfinancial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.\nHowever, we will transmit to the depositary annual and semi-annual reports prepared in accordance with the applicable requirements of\nthe SEC, to the extent such notices, reports and communications are not available on our website or are not otherwise publicly available,\nand all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders.\nThe depositary will make such notices, reports and communications available to holders of ADSs and, if we so request, will provide copies\nthereof to all record holders of ADSs.\n\n \n\n**I. Subsidiary Information**\n\n \n\nNot applicable.\n\n \n\n168"}