{"url_path":"/sec/tc/10-k/2026/item-4","section_key":"item-4","section_title":"Item 4 INFORMATION ON THE COMPANY**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-08","source_url":"https://www.sec.gov/Archives/edgar/data/1743340/0001213900-26-053942-index.html","accession_number":"0001213900-26-053942","cik":"0001743340","ticker":"TC","issuer_name":"Token Cat Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1743340/0001213900-26-053942-index.html","primary_entity_key":"0001743340","primary_entity_name":"Token Cat Ltd"},"word_count":14928,"has_tables":true,"body_markdown":"**ITEM\n4. INFORMATION ON THE COMPANY**\n\n** **\n\n**A.\nHistory and development of the company**\n\n \n\nWe\nare an exempted company with limited liability incorporated in the Cayman Islands. We commenced our automobile group-purchase facilitation\nbusiness in 2010. We began our auto show business in the fourth quarter of 2016, and we expanded our auto shows to tier-3 and below cities\nin 2017. We no longer operate this business segment, and it constitutes discontinued operations.\n\n \n\nIn the last quarter of 2025,\nwe disposed of substantially all of our legacy business segments in a series of transactions that closed in October 2025. As of the date\nof this Annual Report, we operate only an automobile electronics resale business that we launched in the last quarter of 2025. This business\nsegment focuses on delivering specified automotive electronic components to customers at negotiated prices.\n\n \n\nPreviously,\nwe conducted our business through our subsidiaries and the VIEs in China. Over the past few years, we underwent a series of restructurings.\nIn particular:\n\n \n\n \n●\n*Incorporation\nof the listing entity*. In September 2012, we incorporated Token Cat Limited (formerly known as TuanChe Limited) as a holding\ncompany and proposed listing entity in the Cayman Islands.\n\n \n\n \n●\n*Incorporation\nof Hong Kong and PRC subsidiaries*. In October 2012, we established a wholly-owned subsidiary in Hong Kong, TuanChe Information\nLimited. In January 2013, we also established a wholly-owned subsidiary in China, TuanYuan Internet Technology (Beijing) Co., Ltd.\n(“TuanYuan”), through which we obtained control over TuanChe Internet Information Service (Beijing) Co., Ltd. (“TuanChe\nInternet”), based on a series of contractual arrangements.\n\n \n\n \n●\n*Contractual\narrangements*. Due to PRC legal restrictions on foreign ownership in value-added telecommunications services, we previously carried\nout our business in China through the VIEs and their subsidiaries. In March 2013, we, through TuanYuan, entered into a series of\ncontractual arrangements with (1) TuanChe Internet, and (2) the shareholders of TuanChe Internet, to obtain effective control of\nTuanChe Internet and its subsidiaries. These contractual arrangements, as revised from time to time, were most recently revised in\nFebruary 2023. In June 2018, we, through Chema Beijing, entered into a series of contractual arrangements with (1) Tansuojixian Beijing\n(currently operating as Hainan Shuke), and (2) the shareholders of Tansuojixian Beijing, to obtain effective control of Tansuojixian\nBeijing and its subsidiaries. In January 2020, in relation to our acquisition of Longye, we, through Sangu Maolu, a wholly owned\nsubsidiary in China, entered into a series of contractual arrangements with (1) Drive New Media and Internet Drive Technology, and\n(2) their respective shareholders, to obtain effective control of Drive New Media and Internet Drive Technology and their respective\nsubsidiaries.\n\n \n \n \n\n \n●\n\n*Disposition\nof legacy business segments*. On October 31, 2025, we approved the sale of\n100% of our equity interests in Long Ye International Limited, TuanChe Group Inc., TuanChe\nInformation Limited (a Hong Kong company), and all of the VIE entities associated with\nthe foregoing to the Prime Management Group Limited, a British Virgin Islands company. The\nfinal commercial and industrial registration changes with respect to these dispositions occurred\non December 29, 2025. As of the date of this Annual Report, we no longer operate VIEs in\nChina As of the date of this Annual Report, we no longer operate VIEs in China, or operate\ntheir prior business segments.\n\n \n \n \n\n \n●\n*Planned\nonline platform business segment*.  We intend to launch a new business segment in 2026 that we call multi-channel network\n(“MCN”).  MCN will aim to connect content creators and key opinion leaders with brands and advertisers. Our\nprimary services are planned to include comprehensive support such as content creation guidance, business partnership matchmaking,\nbrand promotion, and data analysis. We intend to help influencers enhance their influence while assisting outstanding supply chain\ncompanies in expanding their market channels. We also intend to undertake functions such as content incubation, commercial monetization,\nand traffic operations.  We have made preliminary preparations to launch the MCN business, including departmental setup,\npersonnel recruitment, related technology development, and equipment procurement. However, this project carries certain uncertainties\nand has not generated revenue as of the date of this Annual Report.  \n\n \n\n40\n\n \n\n \n\nSince\nour incorporation of Token Cat Limited (formerly known as TuanChe Limited) in 2012, we have raised approximately US$146.8 million in\nequity financing from our dedicated group of investors:\n\n \n\n \n●\n*Series\nA financing*. In March 2013, we raised an aggregate of US$700,000 from the issuance of 2,828,393 and 16,970,357 Series A preferred\nshares to K2 Evergreen Partners L.P. and K2 Partners II L.P., respectively.\n\n \n\n \n●\n*Series\nB financing*. In September 2013, we raised an aggregate of US$5,564,856 from the issuance of 4,142,781 and 8,285,562 Series B-1\npreferred shares to K2 Evergreen Partners L.P. and K2 Partners II L.P., respectively, and the issuance of 18,193,772 and 4,548,443\nseries B-2 preferred shares to BAI GmbH and K2 Partners II L.P., respectively.\n\n \n\n \n●\n*Series\nC financing*. In August 2014, we raised an aggregate of US$23,658,593 from the issuance of 3,427,812 Series C-1 preferred shares,\n5,643,437 Series C-2 preferred shares to BAI GmbH, and 27,765,278 Series C-2 preferred shares to Highland 9 - LUX S.à.r.l.\nIn September 2015, Highland 9 - LUX S.à.r.l. transferred such Series C-2 preferred shares to Highland Capital Partners 9 Limited\nPartnership, Highland Capital Partners 9-B Limited Partnership, and Highland Entrepreneurs’ Fund 9 Limited Partnership, and\n483,702 Series C-2 preferred shares to China Equities HK Limited.\n\n \n\n \n●\n*Series\nC+ financing*. In June 2017, we raised an aggregate of US$8,682,770 from the issuance of in total 12,593,555 Series C+ preferred\nshares to Highland Capital Partners 9 Limited Partnership, Highland Capital Partners 9-B Limited Partnership, Highland Entrepreneurs’\nFund 9 Limited Partnership, K2 Partners III Limited, K2 Family Partners Limited, BAI GmbH, and AlphaX Partners Fund I, L.P. On December\n21, 2015, we entered into a convertible loan agreement with Lanxi Puhua Juli Equity Investment L.P. (“Lanxi Puhua”),\nin the amount of RMB30.0 million. On August 18, 2017, we issued 6,261,743 Series C+ preferred shares to Puhua Group Ltd, a company\ndesignated by Lanxi Puhua, at nominal value, pursuant to the loan agreement and a share purchase agreement dated June 16, 2017.\n\n \n\n \n●\n*Convertible\nnote financing*. In August 2017, we raised an aggregate principal amount of US$6,300,000 through issuing notes to AlphaX Partners\nFund I, L.P., K2 Partners III Limited and K2 Family Partners Limited, and Hongtao Investment-I Ltd (formerly known as Eager Info\nInvestments Limited) pursuant to certain convertible note purchase agreements. In June 2018, the convertible notes were converted\ninto an aggregate of 3,965,043, 1,201,528 and 2,403,057 Series C-4 preferred shares, respectively, all at a conversion price of US$0.8322734\nper share.\n\n \n\n \n●\n*Series\nD-1 financing*. In June 2018, we raised an aggregate of US$23,350,000 from the issuance of 3,592,664 and 6,453,887 Series D-1\npreferred shares to ACEE Capital Ltd. and Honour Depot Limited, respectively.  \n\n \n\n \n●\n*Series\nD-2 financing*. In September 2018, we raised US$50,000,000 from the issuance of 20,630,925 Series D-2 preferred shares to Beijing\nZ-Park Fund Investment Center (Limited Partner). In October 2018, we raised US$2,300,000 from the issuance of 949,023 Series D-2\npreferred shares to Beijing Shengjing Fengtai Innovation Investment Center (Limited Partner).\n\n \n\n \n●\n*Initial\npublic offering*. In November 2018, we completed an initial public offering of 2,600,000 ADSs, raising approximately US$15.0 million\nin net proceeds after deducting underwriting commissions and the offering expenses payable by us.\n\n \n\n \n●\n*November\n2022 Offering*. On November 25, 2022, we completed a registered direct offering with investors for the purchase and sale of (1)\n3,654,546 ADSs, (2) certain pre-funded warrants to purchase 1,800,000 ADSs (the “Pre-Funded Warrants”) in lieu of the\nADSs being offered, and (3) certain warrants to purchase up to 5,454,546 ADSs (the “Warrants”), to certain institutional\ninvestors pursuant to a securities purchase agreement dated November 21, 2022, raising approximately US$13.6 million after deducting\nplacement agent fee and the offering expenses payable by us.\n\n \n\n41\n\n \n\n \n\n \n*●*\n*October\n2024 Transaction.*On October 24, 2024, we entered into certain securities purchase agreement with certain non-affiliated institutional\ninvestor (pursuant to which the Company agreed to sell (1) 241,677 ADSs, and (2) certain pre-funded warrants to purchase up to 520,042\nADSs in a registered direct offering, and (3) in a concurrent private placement, restricted warrants to purchase an aggregate of\nup to 761,719 ADSs (, for aggregate gross proceeds of approximately $1.1 million.\n\n \n\n \n*●*\n*February\n2025 Offering.*We entered into a securities purchase agreement with certain non-U.S. persons (as defined in Regulation S under\nthe Securities Act of 1933, as amended) on February 28, 2025 to offer and sell up to an aggregate of 7,357,500,000 Class A ordinary\nshares, par value US$0.0001 per share, at a purchase price of US$0.0031317 per share, for an aggregate purchase price of approximately\nUS$23.04 million. The shares were offered and sold in a private placement conducted outside the United States in reliance on Regulation\nS under the Securities Act. The net proceeds from the offering are intended to be used for working capital and other general corporate\npurposes.\n\n \n\n \n*●*\n\n*February 2026 Securities Purchase Agreement*.\nOn February 12, 2026, the Company entered into certain securities purchase agreement with certain non-U.S. investors pursuant to which\nthe Company agreed to sell to the purchasers an aggregate of 96,000,000,001 Class A ordinary shares, par value US$0.0001 per share, at\na price of $0.0012457 per share to purchase an aggregate of 96,000,000,001 class A Ordinary Shares, for the aggregate purchase price of\napproximately $119,590,000, which purchase price should be paid by the purchasers in fiat money or in cryptocurrencies, in the sole discretion\nof the Company. On February 18, the Company issued an aggregate of 96,000,000,001 Class A Ordinary Shares to the Purchasers.\n\n \n\nEffective on January 26,\n2024, we changed the ratio of the ADSs to Class A ordinary shares from the then ADS ratio of one ADS to sixteen (16) Class A ordinary\nshares to a new ADS ratio of one ADS representing two hundred and forty (240) Class A ordinary shares. Effective on or about August 19,\n2025, we changed the ratio of the ADSs to Class A ordinary shares from the then ADS ratio of one ADS to 240 Class A ordinary\nshares to a new ADS ratio of one ADS representing 4,800 Class A ordinary shares. Unless otherwise indicated, ADSs and per ADS amount\nin this annual report have been retroactively adjusted to reflect the change in ratio for all periods presented.\n\n \n\nWe listed the ADSs on the\nNasdaq Capital Market under the symbol “TC” on November 20, 2018 and completed an initial public offering of 2,600,000 ADSs\non November 23, 2018, raising approximately US$15.0 million in net proceeds after deducting underwriting commissions and the offering\nexpenses payable by us.  \n\n \n\nOn February 10, 2025, shareholders\nof the Company approved the change of our company name from TuanChe Limited to Token Cat Limited at the Company’s annual general\nmeeting of shareholders, effective upon the open of trading on February 28, 2025. The Company’s ADSs will continue trading on the\nNasdaq Capital Market under the trading symbol “TC”, and the CUSIP number remained unchanged.\n\n \n\nOur\nprincipal executive offices are located at 9F, Ruihai Building, No. 21 Yangfangdian Road, Haidian District, Beijing 100038, People’s\nRepublic of China. Our registered office in the Cayman Islands is located at the offices of Osiris International Cayman Limited, Suite\n#4-210, Governors Square, 23 Lime Tree Bay Avenue, PO Box 32311, Grand Cayman KY1-1209, Cayman Islands. The telephone number of our principal\nexecutive offices is (+86-10) 6399-8902. Investors should contact us for any inquiries through the address and telephone number of our\nprincipal executive office. Our agent for service of process in the United States is Cogency Global Inc., located at 10 E. 40th Street,\n10th Floor, New York, N.Y. 10016, United States. Our principal website is tuanche.com.\n\n \n\nFor\ninformation regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects-B. Liquidity\nand Capital Resources-Liquidity and Capital Resources.”\n\n \n\nSEC\nmaintains an Internet site, http://www.sec.gov, which contains reports, proxy and information statements, and other information regarding\nus. We also maintain an Internet site, http://ir.tuanche.com/, for investors’ information.\n\n** **\n\n42\n\n \n\n** **\n\n**B.\nBusiness Overview**\n\n \n\n**Discontinued\nOperations**\n\n \n\nSubstantially all of the\nrevenue recognized in 2025 is attributable to discontinued operations. Prior to the 2025 Dispositions, we previously operated the following\nbusinesses, which are considered discontinued operations:\n\n* *\n\n*Offline\nmarketing solutions*. We and the VIEs organized auto shows and charged industry customers for booth spaces in the auto shows. In addition,\nwe and the VIEs developed special promotion event services to better support industry customers in organizing their special promotion\nevents through various integrated services, including event planning and executing, marketing training and onsite coaching. We and the\nVIEs charged fixed service fees for special promotion event services. We ceased to operate this business segment in connection with the\n2025 Dispositions.\n\n* *\n\n*Online\nmarketing services.* We and the VIEs provided online marketing services for our industry customers to increase the efficiency and\neffectiveness of their marketing campaigns. We ceased to operate this business segment in connection with the 2025 Dispositions.\n\n* *\n\n*Referral\nservice for commercial bank.* We and the VIEs collaborated with and facilitated a commercial bank in expanding its cooperation with\nour and the VIEs’ industry customers to grow its auto loan business. We and the VIEs charged the bank service fees for approved\nloan applications. We and the VIEs ceased to operate the referral services in 2022.\n\n \n\n*Social\nCRM cloud services.* We and the VIEs provided subscription and support services to industry customers, including auto dealers, automakers\nand automotive service provider, with access to cloud services, software licenses and related support and updates during the term of\nthe arrangement. We ceased to operate this business segment in connection with the 2025 Dispositions.\n\n* *\n\n*Referral\nservice for distribution platform.* We and the VIEs commenced customer referral services from the first quarter of 2020 by referring\nindustry customers to Baidu to use the membership services of a Baidu’s auto content distribution platform. We ceased to operate\nthis business segment in connection with the 2025 Dispositions.\n\n \n\n**Our\nCurrent Business Model and Business Plan**\n\n \n\nFollowing the disposition\nof our legacy business effective December 31, 2025 and the termination of our relationships with our former variable interest entities,\nour continuing operations consist of two reportable business segments: (i) our automotive electronics resale business, which we launched\nin the last quarter of 2025, and (ii) our advertising business. We are planning to launch the MCN Platform, which has not yet been launched\nas of the date of this annual report.\n\n \n\n*Automotive\nElectronics Resale Business Segment*\n\n* *\n\nOur\nautomotive electronics resale business focuses on sourcing, holding, and reselling automotive electronics products. We procure products\nfrom third-party suppliers and resell them to customers through our sales channels. Our performance in this segment is driven by our\nability to obtain sufficient quantities of products that meet our pricing and quality requirements, manage inventory and working capital,\nmaintain efficient warehousing and logistics arrangements, and compete effectively on price, delivery times, and service. This segment\nrequires ongoing attention to supply continuity, inventory aging and obsolescence risk, product quality and returns management, and compliance\nwith applicable product, consumer protection, and commercial regulations.\n\n \n\n43\n\n \n\n \n\n*Advertising Business Segment*\n\n \n\nOur continuing advertising business currently consists primarily of\nproxy advertising services, through which we help clients promote their brands, services and products on third-party online platforms\nrather than through the legacy marketing businesses that were disposed of in the 2025 Dispositions. Revenue from this continuing advertising\nbusiness was RMB0.1 million (US$21 thousand) in 2025, representing 2.5% of our total continuing operations revenue for the year.\n\n \n\n*Planned\nMulti-Channel Network Online Platform Business Segment*\n\n* *\n\nThe\nMCN is intended to be a technology-enabled, multi-channel platform designed to connect users, merchants, and other participants and to\nfacilitate transactions and related services. We expect the MCM, once launched, to require significant investment in technology development,\nplatform operations, compliance, and marketing to attract and retain users and merchants and to achieve sufficient scale and marketplace\nliquidity. Our ability to successfully develop and launch the MCM will depend on, among other things, building reliable and scalable\ninfrastructure, establishing and enforcing platform governance policies for merchant onboarding and product listings, implementing effective\npayment and customer service processes, and obtaining and maintaining applicable permits and licenses and complying with evolving PRC\nregulatory requirements that may apply to internet-based platform operations, data security, and consumer protection.\n\n \n\nWe\nevaluate performance and allocate resources across these segments based on their respective strategies, operational requirements, and\ncapital needs. Because our legacy business has been disposed of and constitutes discontinued operations, our historical financial information\nmay not be indicative of the future performance of our continuing operations.\n\n \n\n**Employees**\n\n \n\nAs of December 31,\n2025, we had 6 full-time employees. The following table sets forth the number of our full-time employees by functions as of the\ndates indicated.\n\n \n\n  \nAs of\nDecember 31,\n2025 \n\nFunctional Area \nNumber of\nemployees \n\nSales and marketing \n   2 \n\nGeneral and administrative \n 4 \n\nTotal \n 6 \n\n \n\nOur\nsuccess depends on our ability to attract, retain and motivate qualified employees. We believe that we maintain a good working relationship\nwith our employees, and we have not experienced any material labor disputes as of the date of this annual report. None of our employees\nis represented by labor unions.\n\n \n\n**Legal\nProceedings**\n\n \n\nFrom\ntime to time, we may be subject to various claims and legal actions that arise in the ordinary course of our business. We are not currently\nsubject to any threatened or ongoing legal proceedings that, in the opinion of our management, may have a material adverse effect on\nour business, results of operations or financial condition.\n\n \n\n44\n\n \n\n \n\n**Regulation**\n\n** **\n\n**Regulations\nRelating to Value-added Telecommunications Service**\n\n \n\nThe\nTelecommunications Regulations of PRC promulgated in September 2000 and amended in July 2014 and February 2016, respectively, by the\nState Council and its related implementation rules, including the Catalog of Classification of Telecommunications Business issued by\nthe MIIT, categorize various types of telecommunications and telecommunications-related activities into basic or value-added telecommunications\nservices. The Administrative Measures on Telecommunications Business Operating promulgated in March 2009 and most recently amended in\nJuly 2017 by MIIT set forth more specific provisions regarding the types of licenses required to operate value-added telecommunications\nservices, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses. Under\nthese regulations, a commercial operator of value-added telecommunications services must first obtain a license for value-added telecommunications\nbusiness, or value-added telecommunications service license, from the MIIT or its provincial level counterparts.\n\n \n\nIn\nSeptember 2000, the State Council promulgated the Administrative Measures on Internet Information Services (the “Internet Content\nMeasures”), which was amended in January 2011. Under the Internet Content Measures, commercial internet information services operator\nshall obtain a license for value-added telecommunications business. The Internet Content Measures also set out certain restrictions on\nthe provision of internet information services. For example, the internet information providers are prohibited from producing, copying,\npublishing or distributing information that is humiliating or defamatory to others or that infringes the legal rights of others. Furthermore,\nadministration of mobile internet application information services is strengthened through the Regulations for Administration of Mobile\nInternet Application Information Services (the “MIAIS Regulations”), issued in June 2016 and effective in August 2016, amended\nin June 2022. The MIAIS Regulations were enacted to regulate mobile application information services (the “App”), the App\nproviders (including App owners or operators) and online App stores. App service providers are required to obtain relevant qualifications\npursuant to PRC laws and regulations.\n\n** **\n\n**Regulations\nRelating to Foreign Investment in Value-added Telecommunications Companies**\n\n* *\n\n*The\nPRC Foreign Investment Law*\n\n \n\nOn\nMarch 15, 2019, the NPC approved the Foreign Investment Law, which came into effect on January 1, 2020 and replaced the trio of existing\nlaws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative\nJoint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law. For more details, see “Item 3. Key Information - Risks\nRelated to our Corporate Structure - The interpretation and implementation of the PRC Foreign Investment Law are still evolving and we\nmay not be able to precisely predict how it may impact the viability of our current corporate structure, corporate governance and business\noperations.”\n\n \n\nOn\nDecember 26, 2019, the State Council issued the Implementation Regulation on the Foreign Investment Law, which came into effect on 1\nJanuary 2020, The Implementation Regulation on the Foreign Investment Law further clarified relevant provisions of the Foreign Investment\nLaw. For example, it provides that the existing foreign-invested enterprises established before the effectiveness of the Foreign Investment\nLaw may change their organizational forms, organizational structures, etc. and go through the change of registration procedures in accordance\nwith the Foreign Investment Law and other relevant laws and regulations prior to January 1, 2025, after which the local branches of State\nAdministration for Market Regulations (the “SAMR”), shall stop processing additional registration applications from the said\nenterprises, and disclose relevant information of such enterprises.\n\n \n\nIn\nDecember 2019, the MOFCOM and the SAMR jointly issued the Measures for Reporting of Foreign Investment Information (the “Foreign\nInvestment Information Measures”), which came into effect on January 1, 2020, and the Interim Administrative Measures for the Record-filing\nof the Establishment and Modification of Foreign-invested Enterprises were suspended on the same date. Pursuant to the Foreign Investment\nInformation Measures, from January 1, 2020 on, the foreign investors carrying out investment activities directly or indirectly in China\nand the relevant foreign-invested enterprises shall, through the Enterprise Registration System and the National Enterprise Credit Information\nPublicity System operated by the SAMR, disclose their investment information to the competent authorities by submitting various reports,\nincluding the reports related to their establishments, modifications and cancellations, and their annual reports.\n\n \n\n45\n\n \n\n \n\nIn\nDecember 2020, the NDRC and the MOFCOM promulgated Measures for Security Review of Foreign Investment, which became effective on January\n18, 2021. The Foreign Investment Security Review Mechanism (the “Security Review mechanism”), in charge of organization,\ncoordination and guidance of foreign investment security review is thereunder established. A working mechanism office shall be established\nunder the NDRC and led by the NDRC and the Ministry of Commerce to undertake routine work on the security review of foreign investment.\nAccording to the Security Review Mechanism, foreign investment activities falling in the scope such as important cultural products and\nservices, important information technologies and internet products and services, important financial services, key technologies and other\nimportant fields that concern state security while obtaining the actual control over the enterprises invested in, a foreign investor\nor a party concerned in the PRC shall take the initiative to make a declaration to the working mechanism office prior to making the investment.\n\n \n\n**Regulations\nRelating to Automobile Sales**\n\n \n\nThe\nsales of new automobiles within the territory of PRC are principally governed by the Administrative Measures for the Automobile Sales\n(the “Automobile Sales Measures”), promulgated by the MOFCOM in April 2017, which became effective in July 2017. Pursuant\nto the Automobile Sales Measures, the auto dealer shall submit its basic information to the National Automobile Circulation Information\nAdministration System of the MOFCOM for record-filing within 90 days after its establishment, update its filing via the system within\n30 days after its filed information is changed, and promptly submit the number and types of automobiles sold and other information as\nrequired via such system. The Automobile Sales Measures further stipulate that, among other things, (1) automobile suppliers and dealers\nshall sell automobiles, spare parts and other related products in conformity with relevant regulations and standards, and shall refrain\nfrom the sale of products prohibited by applicable laws and regulations, (2) auto dealers shall, in an appropriate manner, expressly\nindicate the prices of automobiles, spare parts and other related products as well as the rates of charges for various services in their\nbusiness premises, and shall not charge additional fees beyond the expressly indicated prices, (3) auto dealers shall expressly indicate\nthe quality assurance, warranty service and other after-sales service policies of which customers should be aware in their business premises,\n(4) auto dealers selling household automobiles shall expressly indicate the information of policies of reparation, replacement and return\napplicable to household automobiles in their business premises; and (5) auto dealers shall maintain an updated and accurate record of\ninformation related to automobiles sold and the customers with a record period of no less than 10 years. Any dealer found to be non-compliant\nwith these requirements may potentially be subject to correction order, warning and/or fines.\n\n** **\n\n**Regulations\nRelating to Advertisements**\n\n \n\nAccording\nto the PRC laws and regulations, companies that engage in advertising activities must obtain from the State Administration for Industry\nand Commerce (which was integrated into the SAMR with other governmental departments in March 2018) (the “SAIC”), or its\nlocal branches a business license which specifically includes operating an advertising business within its business scope. The business\nlicense of an advertising company is valid for the duration of its existence, unless the license is suspended or revoked due to a violation\nof any relevant law or regulation. PRC laws and regulations set forth certain content requirements for advertisements in PRC including,\namong other things, prohibitions on false or misleading content, superlative wording, socially destabilizing content or content involving\nobscenities, superstition, violence, discrimination or infringement of the public interest. Advertisers, advertising agencies, and advertising\ndistributors are required by PRC laws and regulations to ensure that the content of the advertisements they prepare or distribute is\ntrue and in full compliance with applicable law. In providing advertising services, advertising agencies and advertising distributors\nmust review the supporting documents provided by advertisers for advertisements and verify the content of the advertisements against\nthese supporting documents before publishing.\n\n \n\nIn\nFebruary 2023, SAMR issued the Administrative Measures for Internet Advertising (the “Internet Advertising Measures”), which\ncame into effect on May 1, 2023. Pursuant to the Internet Advertising Measures, the internet advertisements refers to the commercial\nadvertisement for direct or indirect marketing of goods or services in the form of text, image, audio, video, or others means through\nwebsites, webpages, internet applications, or other internet media. The Internet Advertising Measures specifically sets out the following\nrequirements: (1) advertisements must be identifiable and marked with the word “advertisement” to the extent that consumers\nare able to distinguish them from non-advertisement information; (2) sponsored search results must be clearly distinguished from organic\nsearch results; (3) it is forbidden to send advertisements or advertisement links by email or other instant message without the recipient’s\npermission or induce internet users to click on an advertisement in a deceptive manner; (4) pop-up advertisements must clearly display\nthe close button so that internet users can close the advertisement with one click; and (5) internet information service providers who\ndo not participate in the business activities of internet advertising but only provide internet information services for the internet\nadvertisement are also required to stop publishing illegal advertisement if they know or should have known that the advertising via their\nservice is illegal.\n\n \n\nViolation\nof these laws and regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination\nof the advertisements and orders to publish an advertisement correcting the misleading information. In circumstances involving serious\nviolations, the SAMR or its local branches may revoke violators’ licenses or permits for their advertising business operations.\nFurthermore, advertisers, advertising agencies and advertising distributors may be subject to civil liability if they infringe on the\nlegal rights and interests of third parties.\n\n \n\n46\n\n \n\n \n\n**Regulations\nRelating to Internet Information Security and Privacy Protection**\n\n \n\nInternet\ninformation in China is regulated from a national security standpoint. The Decisions on Preserving Internet Security was enacted by the\nNPC, in December 2000 and was amended in August 2009, which subject violators to potential criminal punishment in China for any effort\nto (1) gain improper entry into a computer or system of strategic importance; (2) disseminate politically disruptive information; (3)\nleak state secrets; (4) spread false commercial information; or (5) infringe intellectual property rights. The Ministry of Public Security\nof PRC (the “MPS”), has promulgated measures that prohibit use of the internet in ways which, among other things, result\nin a leak of state secrets or a spread of socially destabilizing content. If an internet information service provider violates these\nmeasures, the MPS and its local branches may revoke its operating license and shut down its websites.\n\n \n\nIn\nrecent years, PRC government authorities have enacted laws and regulations on internet use to protect personal information from any unauthorized\ndisclosure. Under the Several Provisions on Regulating the Market Order of Internet Information Services, issued by the MIIT in December\n2011 and effective in March 2012, an internet information service provider may not collect any user personal information or provide any\nsuch information to third parties without the consent of the user. An internet information service provider must expressly inform the\nusers of the method, content and purpose of the collection and processing of such user personal information and may only collect such\ninformation necessary for the provision of its services. An internet information service provider is also required to properly maintain\nthe user’s personal information, and in case of any leak or likely leak of the user’s personal information, the internet\ninformation service provider must take immediate remedial measures and, in severe circumstances, immediately report to the telecommunications\nauthority. In addition, pursuant to the Decision on Strengthening the Protection of Online Information issued by the Standing Committee\nof the NPC in December 2012, the Order for the Protection of Telecommunications and Internet User Personal Information issued by the\nMIIT in July 2013 and came into force in September 2013, any collection and use of user personal information must be subject to the consent\nof the user, abide by the principles of legality, rationality and necessity and be within the specified purposes, methods and scopes.\nAn internet information service provider must also keep such information strictly confidential, and is further prohibited from divulging,\ntampering with or destroying any such information, or selling or providing such information to other parties. An internet information\nservice provider is required to take technical and other measures to prevent the collected personal information from any unauthorized\ndisclosure, damage or loss. Any violation of these laws and regulations may subject the internet information service provider to warnings,\nfines, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of websites or even criminal liabilities.\n\n \n\nMoreover,\npursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the NPC in August 2015 which became effective\nin November 2015, any internet service provider that fails to fulfill the obligations related to internet information security administration\nas required by applicable laws and refuses to rectify upon orders, shall be subject to criminal penalty for the result of (1) any dissemination\nof illegal information in large scale; (2) any severe effect due to the leakage of the client’s information; (3) any serious loss\nof criminal evidence; or (4) other severe situation. Any individual or entity that (1) sells or provides personal information to others\nin a way violating the applicable law, or (2) steals or illegally obtain any personal information, shall be subject to criminal penalty\nin severe situation. In addition, the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate\nof the PRC on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringing Personal Information, issued\nin May 2017 and effective in June 2017, clarified certain standards for the conviction and sentencing of the criminals in relation to\npersonal information infringement. In addition, the PRC General Provisions of the Civil Law, promulgated in March 2017 and became effective\nin October 2017, required personal information of individuals to be protected.\n\n \n\nIn\nNovember 2016, the Standing Committee of the NPC released the Internet Security Law, which took effect in June 2017. The Internet Security\nLaw reiterated the requirements regarding collecting and using personal information, including, among others, (1) when collecting or\nusing personal information, network operators shall clearly indicate the purposes, methods and scope of the information collection, the\nuse of information collection, and obtain the consent of those from whom the information is collected; and (2) network operators shall\nstrictly preserve the privacy of user information they collect, and establish and maintain systems to protect user privacy. The Internet\nSecurity Law further requires network operators to perform certain functions related to internet security protection and the strengthening\nof network information management. For instance, under the Internet Security Law, network operators of key information infrastructure\ngenerally shall, during their operations in the PRC, store the personal information and important data collected and produced within\nthe territory of the PRC.\n\n \n\n47\n\n \n\n \n\nIn\nJune 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021. The Data Security\nLaw, among others, provides for a security review procedure for data activities that may affect national security. In November 2021,\nthe CAC released the Administrative Measures for Internet Data Security (Draft for Comments) (the “Draft Measures for Internet\nData Security”). In accordance with the Draft Measures for Internet Data Security, data processors, which refers to individuals\nor organizations that determine the purpose and the manner of processing data, shall apply for a cybersecurity review for the following\nactivities: (1) merger, reorganization or division of internet platform operators that have acquired a large number of data resources\nrelated to national security, economic development or public interests to the extent that affects or may affect national security; (2)\noverseas listing of data processors which process over one million users’ personal information; (3) listing in Hong Kong which\naffects or may affect national security; or (4) other data processing activities that affect or may affect national security. Besides,\ndata processors that are listed overseas shall carry out an annual data security assessment. The Draft Measures for Internet Data Security\nremains unclear on whether the relevant requirements will be applicable to companies that have been listed in the United States and Hong\nKong, such as us. The Draft Measures for Internet Data Security further requires that data processors processing “important data”\nor listed overseas shall conduct an annual data security assessment by itself or commission a data security service provider to do so,\nand submit the assessment report for the preceding year to the municipal cybersecurity department by the end of January each year. There\nis no timetable as to when the Draft Measures for Internet Data Security will be enacted. Furthermore, the Cybersecurity Review Measures,\npromulgated in December 2021 and effective in February 2022, set forth the cybersecurity review mechanism for critical information infrastructure\noperators, and provided that critical information infrastructure operators that intend to purchase internet products and services and\nnetwork platform operators engaging in data processing activities that affect or may affect national security shall be subject to a cybersecurity\nreview.\n\n \n\nIn\nJuly 2021, certain PRC regulatory authorities issued Opinions on Severely Cracking Down on Illegal Securities Activities in accordance\nwith the Law, which, among others, provides for strengthening relevant laws and regulations on data security, cross-border data transmission,\nand confidential information management. These opinions provided that efforts will be made to revise the regulations on strengthening\nthe confidentiality and file management relating to the offering and listing of securities overseas, to hold overseas listed companies\nresponsible for information security, and to strengthen the standardized management of cross-border information provision mechanisms\nand procedures.\n\n \n\nIn\nJuly 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure (the “CIIP Regulations”).\nPursuant to the CIIP Regulations, critical information infrastructure shall mean the important network facilities or information systems\nof key industries or sectors such as public communication and information service, energy, transportation, water conservation, finance,\npublic services, e-government affairs and national defense science, and important network facilities or information systems which may\nendanger national security, people’s livelihood and public interest in case of damage, malfunctioning or data leakage. The CIIP\nRegulations provide that no individual or organization may carry out any illegal activity of intruding into, interfering with, or sabotaging\nany critical information infrastructures, or endanger the security of any critical information infrastructures. The CIIP Regulations\nalso require that critical information infrastructure operators shall establish a cybersecurity protection system and accountability\nsystem, and that the main responsible person of a critical information infrastructure operator shall take full responsibility for the\nsecurity protection of such critical information infrastructures. In addition, relevant administration departments of each important\nindustry and sector shall be responsible for formulating the rule of critical information infrastructure determination applicable to\ntheir respective industry or sector, and determine the critical information infrastructure operators in their industry or sector.\n\n \n\nIn\nJuly 2022, the CAC issued the Outbound Data Transfer Security Assessment Measures, which took effect on September 1, 2022 and specify\nthat data processors who intend to provide important data and personal information that are collected and generated in the operation\nwithin the territory of the PRC to overseas shall be subject to security assessment with the CAC. Under the current Outbound Data Transfer\nSecurity Assessment Measures, an entity must apply for a CAC security assessment if it processes personal information of over one million\nindividuals and conducts outbound transfers of personal information, or if it has cumulatively transferred personal information outbound\nof more than 100,000 individuals or sensitive personal information of more than 10,000 individuals since January 1 of the previous year.\nFurthermore, any entity that plans to transfer important data outside of China shall apply for a CAC security assessment. In addition,\nthe Outbound Data Transfer Security Assessment Measures sets forth a 6-month grace period, any entity or data controller may within 6\nmonths upon February 28, 2023, take corrective actions and apply for the CAC security assessment.\n\n \n\n48\n\n \n\n \n\nIn\nJanuary 2019, the Office of the Central Cyberspace Affairs Commission, the MIIT, the Ministry of Public Security, and the SAMR jointly\nissued an Announcement of Launching Special Crackdown Against Illegal Collection and Use of Personal Information by Apps to carry out\nspecial campaigns against mobile apps collecting and using personal information in violation of applicable laws and regulations, which\nprohibits business operators from collecting personal information irrelevant to their services, or forcing users to give authorization\nin a disguised manner. In November 2019, the Secretary Bureau of the CAC, the MIIT, the Ministry of Public Security and the SAMR promulgated\nthe Identification Method of Illegal Collection and Use of Personal Information by App, which provides guidance for the regulatory authorities\nto identify the illegal collection and use of personal information through mobile apps, for the app operators to conduct self-examination\nand self-correction, and for other participants to voluntarily monitor compliance.\n\n \n\nOn\nDecember 15, 2019, the Provisions on Ecological Governance of Network Information Content was issued by the CAC, which has come into\neffect on March 1, 2020. These provisions require network information content service platform to perform its duties as the information\ncontent administrator, strengthen ecological governance of the network information contents of its own platform, and foster a positive,\nhealthy, progressive and amicable cyber culture.\n\n \n\nThe\nMIIT issued the Notice on the Further Special Rectification of Apps Infringing upon Users’ Personal Rights and Interests in July\n2020, which requires that certain conducts of app service providers should be inspected, including, among others, (i) collecting personal\ninformation without the user’s consent, collecting or using personal information beyond the necessary scope of providing services,\nand forcing users to receive advertisements; (ii) requesting user’s permission in a compulsory and frequent manner, or frequently\nlaunching third-parties apps; and (iii) deceiving and misleading users into downloading apps or providing personal information. The notice\nalso sets forth that the period for the regulatory specific inspection on apps and that the MIIT will order the non-compliant entities\nto modify their business within five business days, or otherwise to make public announcement to remove the apps from the app stores and\nimpose other administrative penalties.\n\n \n\nThe\nCivil Code of PRC, which was promulgated by the NPC in May 2020 and became effective in January 2021, provides that: (1) the personal\ninformation of a natural person shall be protected by law; (2) the processing of personal information, including the collection, storage,\nuse, processing, transmission, provision, and disclosure of personal information, shall be carried out pursuant to the principles of\nlawfulness, appropriateness and necessity, and excessive processing shall not be allowed, among with other conditions as prescribed in\nthe Civil Code of PRC; and (3) an information processor shall not divulge or tamper with the personal information it collects or stores;\nand, without the consent of a natural person, the information processor shall not illegally provide others with the personal information\nof the natural person, except for information that is rendered unrecoverable after processing and from which no specific individual may\nbe identified. Moreover, an information processor shall take technical and other necessary measures to ensure the security of the personal\ninformation it collects and stores, and prevent information from being leaked, tampered with or lost; and, if personal information has\nbeen or may be leaked, tampered with or lost, the information processor shall take remedial measures in a timely manner, inform the natural\npersons concerned in accordance with relevant provisions, and report the situations to competent departments concerned.\n\n \n\nIn\nAugust 2021, the Standing Committee of the NPC promulgated the Personal Information Protection Law, which took effect in November 2021.\nThe Personal Information Protection Law requires, among others, that (1) the processing of personal information should have a clear and\nreasonable purpose directly related to the processing and should be conducted in a method that has the minimum impact on personal rights\nand interests, and (2) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing\npurpose and avoid the excessive collection of personal information. Personal information processors shall adopt necessary measures to\nsafeguard the security of the personal information that they handle. The offending entities could be ordered to correct, or to suspend\nor terminate the provision of services, and face confiscation of illegal income, fines or other penalties.\n\n** **\n\n**Regulations\nRelating to Consumer Rights Protection and Tort Liabilities**\n\n \n\nAccording\nto the Laws on Protection of Consumers’ Rights and Interests of the PRC, which was latest amended in October 2013, if a consumer’s\nlegitimate rights and interests are infringed upon by the goods seller or service provider at a trade fair, such customer may demand\ncompensation from the infringing seller or service provider. If the trade fair is over, the customer may also demand compensation from\nthe undertaker of such trade fair, in which case the undertaker has the right to recover the compensation from the infringing sellers\nor service providers afterwards.\n\n \n\n49\n\n \n\n \n\nThe\nImplementation Measures of the PBOC for Protecting Rights and Interests of Financial Consumers (the “Measures for Financial Consumer\nProtection”), is promulgated by the PBOC in September 2020 and came into force in November 2020. The Measures for Financial Consumer\nProtection provided that banks and payment institutions shall follow the principles of voluntariness, equality, fairness and integrity,\nconscientiously assume primary responsibilities for protecting the legitimate rights and interests of financial consumers, and fulfill\nstatutory obligations concerning financial consumer protection. They shall establish and improve internal control systems for financial\nconsumer protection. When handling consumer financial information, banks and payment institutions shall follow the principles of legitimacy,\njustifiability and necessity, and obtain the explicit consent of financial consumers or their guardians. The Measures for Financial Consumer\nProtection also require banks and payment institutions to protect the personal financial information of consumers, including personal\nidentification information, property information, account information, credit information, financial transaction information and other\ninformation that reflects the conditions of a particular individual.\n\n** **\n\n**Regulations\non Anti-Monopoly Matters Related to Internet Platform Companies**\n\n \n\nThe\nPRC Anti-Monopoly Law, which was promulgated in 2008 and last amended in 2022, prohibits monopolistic conducts such as entering into\nmonopoly agreements, abusing market dominance, and undertaking concentrations that may have the effect of eliminating or restricting\ncompetition. On February 7, 2021, the Anti-Monopoly Commission of the State Council officially promulgated the Anti-Monopoly Guidelines\nfor Internet Platforms. The guidelines prohibit certain monopolistic conducts of internet platforms to protect market competition, safeguard\ninterests of users and operators who participate in internet platform economics, including without limitation, prohibiting platforms\nwith dominant position from abusing their market dominance (such as discriminating customers in terms of pricing and other transactional\nconditions using big data and analytics, coercing counterparties into exclusivity arrangements, using technology methods to block competitors’\ninterface, tying or attaching unreasonable trading conditions, compulsory collection of unnecessary user data). In addition, the guidelines\nalso reinforce the requirement of antitrust merger review for internet platform related transactions to safeguard market competition.\n\n** **\n\n**Regulation\nRelating to Financial Lease**\n\n \n\nPursuant\nto the Administrative Measures of Supervision on Financial Leasing Enterprises formulated by the MOFCOM which became effective on October\n1, 2013 (the “Administrative Measures”), financial leasing enterprises shall not engage in deposits, loans, entrusted loans\nor inter-bank borrowing and equity investment unless permission has been granted from relevant departments. The Administrative Measures\nalso contain regulatory provisions specifically focusing on sale-and-leaseback transactions. The leased assets in sale-and-leaseback\ntransactions must be properties that possess economic functions and produce continuous economic benefits. A financial leasing enterprise\nshall give adequate consideration to and objectively evaluate assets leased back, set purchasing prices for subject matter thereof with\nreference to reasonable pricing basis in compliance with accounting principles, and shall not purchase any subject matter at a price\nin excess of the value thereof.\n\n \n\nIn\nApril 2018, the MOFCOM transferred the duties to promulgate rules and regulations on the operations and supervision of financial leasing\nenterprises to the newly founded CBIRC. It is uncertain whether the change of the authority may lead to changes in the interpretation\nand application of existing Administrative Measures or how any such changes might affect financial leasing enterprises. In May 2020,\nthe CBIRC promulgated the Notice of the China Banking and Insurance Regulatory Commission on Promulgation of the Interim Measures for\nthe Supervision and Administration of Finance Leasing Companies (the “Interim Measures for the Finance Leasing Companies”).\nPursuant to the Interim Measures for the Finance Leasing Companies, the finance leasing business refers to transaction activities whereby\na lessor, in accordance with the selection of lessee on seller and leased property, purchases the leased property from the seller and\nprovides the leased property for the lessee to use, for which the lessor pays the rent, and local financial regulatory authorities at\nthe provincial level shall be specifically responsible for the supervision and administration of finance leasing companies within their\nrespective jurisdictions.\n\n \n\n50\n\n \n\n \n\n**Regulations\nRelating to Financing Guarantee**\n\n \n\nIn\nAugust 2017, the State Council promulgated the Regulations on the Supervision and Administration of Financing Guarantee Companies (the\n“Financing Guarantee Regulations”), which became effective on October 1, 2017. The Financing Guarantee Regulations define\n“financing guarantee” as a guarantee provided for the debt financing (including but not limited to the extension of loans\nor issuance of bonds), and set out that the establishment of a financing guarantee company or engagement in the financing guarantee business\nwithout approval may result in several penalties, including but not limited to banning, an order to cease business operation, confiscation\nof illegal gains, fines of up to RMB1,000,000 and criminal liabilities. The Financing Guarantee Regulations also set forth that the outstanding\nguarantee liabilities of a financing guarantee company shall not exceed ten times of its net assets, and that the outstanding guarantee\nliabilities of a financing guarantee company vis-à-vis the same guaranteed party shall not exceed 10% of the net assets of the\nfinancing guarantee company, while the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed\nparty and its affiliated parties shall not exceed 15% of its net assets.\n\n \n\nIn\nApril 2018, seven PRC regulatory agencies including the CBIRC, the NDRC and the MIIT, jointly issued four supporting documents (the “CBIRC\nCircular 1”), including Administration Measures for the Permits to Conduct Financing Guarantee Business, Measures for the Calculation\nof Outstanding Financing Guarantee Liabilities, Administration Measures for the Assets Ratio of Financing Guarantee Companies, and Guidelines\nto the Cooperation by and between the Banking Financial Institutions and Financing Guarantee Companies, to set forth implementation measures\nof the Financing Guarantee Regulations. These measures cover various aspects of business operations of financing guarantee companies,\nincluding certain limits on outstanding guarantee liabilities and liability-to-asset ratio, and the requirements on cooperation model\nwith the banking financial institutions.\n\n \n\nIn\nOctober 2019, the CBIRC and other eight PRC regulatory agencies promulgated the Supplementary Provisions on the Supervision and Administration\nof Financing Guarantee Companies (the “Financing Guarantee Supplementary Provisions”). The Financing Guarantee Supplementary\nProvisions provides that, among others, institutions providing services such as client recommendation and credit assessment to various\ninstitutional funding partners shall not render any financing guarantee service, whether directly or in disguised form, without the necessary\napproval.\n\n \n\nIn\nJuly 2020, the CBIRC implemented the Commercial Banks Online Lending Measure to formulate the regulation regime for online lending business\nconducted by commercial banks. For example, the Commercial Banks Online Lending Measures set several rules for commercial banks to collaborate\nwith external institutions on online lending, including: (i) commercial banks shall conduct pre-admission assessments on cooperative\nexternal institutions and manage such external institutions by a name list; (ii) commercial banks shall not accept any credit enhancement\nservices directly or in disguised form, from third parties without qualification to provide guarantee, credit insurance or guarantee\ninsurance; (iii) the cooperative external institutions (except for an insurance company or an institution with guarantee qualification)\nshall not charge any interest or expense to the borrower in any form; (iv) commercial banks shall independently conduct the credit approval,\ncontract execution and other core risk control business; (v) the collaboration agreement between the commercial banks and the cooperative\nexternal institutions shall be executed in writing and specify the cooperation scope, data confidentiality, transitional arrangement\nfor change or termination of the matters under cooperation, and the commitment of the external institutions for cooperating with the\ncommercial bank in accepting the inspection by the banking regulatory authorities; and (vi) the commercial banks shall fully disclose,\nin conspicuous place of relevant page, the information of the cooperative external institutions, the information of the cooperative product,\nas well as rights and responsibilities of the commercial bank and the cooperative external institutions. The Commercial Banks Online\nLending Measures set forth a transitional period of these measures, which is two years from the date on which the Commercial Banks Online\nLending Measures is implemented. The business newly increased in the transitional period shall comply with the requirement therein, and\na plan to rectify the online lending business within such transitional period shall be formulated and submitted to the banking regulatory\nauthority within one month from the implementation date.\n\n \n\nIn\nFebruary 2021, the CBIRC promulgated the Circular 24, which sets forth several requirements on the online lending business of the commercial\nbanks, including: (i) the commercial banks shall conduct the risk control measures independently and the core credit assessment and risk\ncontrol business are prohibited to be outsourced; (ii) except for the commercial banks which have no actual business sites, mainly conduct\nonline business and meet other requirements stipulated by the CBIRC, local commercial banks shall conduct online lending within the jurisdiction\nwhere such commercial banks are registered; and (iii) with respect to the online loan business conducted in cooperation with third-party\ninstitutions, the capital contribution of cooperative institutions shall not be less than 30% in a single loan.\n\n \n\n51\n\n \n\n** **\n\n**Regulations\nRelating to Intellectual Property Rights**\n\n \n\nThe\nPRC has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks and domain\nnames.\n\n* *\n\n*Copyright*.\nCopyright in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC, which was latest amended\nin November 2020 and took effect in June 2021 (the “Copyright Law”), and related rules and regulations. Under the Copyright\nLaw, the term of protection for copyrighted software is 50 years.\n\n* *\n\n*Patent*.\nThe Patent Law of the PRC that was latest amended in October 2020 and became effective in June 2021 (the “Patent Law”), provides\nfor patentable inventions, utility models and designs. An invention or utility model for which patents may be granted shall have novelty,\ncreativity and practical applicability. The State Intellectual Property Office is responsible for examining and approving patent applications.\n\n* *\n\n*Trademark*.\nThe Trademark Law of the PRC that was latest amended in April 2019 and took effect in November 2019 (the “Trademark Law”),\nand its implementation rules protect registered trademarks. The PRC Trademark Office is responsible for the registration and administration\nof trademarks throughout the PRC. The Trademark Law has adopted a “first-to-file” principle with respect to trademark registration.\nIn addition, on January 13, 2023, the CNIPA issued the Draft Revision to the Trademark Law of the People’s Republic of China (the\n“Draft Trademark Law”), for public comments. The Draft Trademark Law stipulate that: (1) an application for registration\nmay not be identical to a prior trademark for the same kind of commodity that the applicant has applied for earlier, has been registered,\nor has been deregistered, revoked or invalidated by public notice within one year before the date of application; (2) applicants shall\nnot apply for trademark registration in bad faith; (3) a trademark registrant shall, within the 12-month period from expiry of every\nfive-year period with effect from the date of approval of trademark registration, explain to the CNIPA the use of the said trademark\non the approved commodities or a proper reason for non-use of the said trademark.\n\n* *\n\n*Domain\nName*. Domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by MIIT in August 2017,\nwhich became effective in November 2017 (the “Domain Names Measures”). MIIT is the major regulatory body responsible for\nthe administration of the PRC internet domain names. The Domain Names Measures has adopted a “first-to-file” principle with\nrespect to the registration of domain names.\n\n** **\n\n**Regulations\nRelating to Tax**\n\n* *\n\n*Enterprise\nIncome Tax*\n\n \n\nPRC\nenterprise income tax is calculated based on taxable income, which is determined under (1) the PRC Enterprise Income Tax Law, promulgated\nby the NPC and implemented in January 2008 and amended in December 2018 (the “EIT Law”), and (2) the implementation rules\nto the EIT Law promulgated by the State Council in January 2008 and amended in April 2019. The EIT Law imposes a uniform enterprise income\ntax rate of 25% on all resident enterprises in the PRC, including foreign-invested enterprises and domestic enterprises, unless they\nqualify for certain exceptions. According to the EIT Law and its implementation rules, the income tax rate of an enterprise that has\nbeen determined to be a high and new technology enterprise may be reduced to 15%.\n\n \n\nIn\naddition, according to the EIT Law, enterprises registered in countries or regions outside the PRC but have their “de facto management\nbodies” located within China may be considered as PRC resident enterprises and are therefore subject to PRC enterprise income tax\nat the rate of 25% on their worldwide income. Though the implementation rules of the EIT Law define “de facto management bodies”\nas “establishments that carry out substantial and overall management and control over the manufacturing and business operations,\npersonnel, accounting, properties, etc., of an enterprise,” the only detailed guidance currently available for the definition of \n“de facto management body” as well as the determination and administration of tax residency status of offshore-incorporated\nenterprises are set forth in the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax\nResident Enterprises on the Basis of De Facto Management Bodies promulgated by SAT in April 2009 (“SAT Circular 82”), the\nAdministrative Measures for Enterprise Income Tax of Chinese-Controlled Overseas Incorporated Resident Enterprises (Trial Version) issued\nby the SAT in July 2011 (“SAT Bulletin No. 45”), and the Notice on Issues Related To Implementation of Determination of Tax\nResident Enterprise on the Basis of De Facto Management Bodies issued by the SAT in January 2014 (“SAT Bulletin No. 9”),\nall of which provide guidance on the administration as well as the determination of the tax residency status of a Chinese-controlled\noffshore-incorporated enterprise, defined as an enterprise that is incorporated under the law of a foreign country or territory and that\nhas a PRC company or PRC corporate group as its primary controlling shareholder.\n\n \n\n52\n\n \n\n \n\nAccording\nto SAT Circular 82, a Chinese-controlled offshore-incorporated enterprise will be regarded as a PRC resident enterprise by virtue of\nhaving its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only\nif all of the following conditions are met:\n\n \n\n \n●\nthe\nsenior management and core management departments in charge of the enterprise’s daily operations function are mainly in the\nPRC;\n\n \n\n \n●\nfinancial\nand human resources decisions of the enterprise are subject to determination or approval by persons or bodies in the PRC;\n\n \n\n \n●\nthe\nenterprise’s major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings\nare located or kept in the PRC; and\n\n \n\n \n●\n50%\nor more of the enterprise’s directors or senior management with voting right habitually reside in the PRC.\n\n \n\nSAT\nBulletin No. 45 further clarifies certain issues related to the determination of tax resident status and competent tax authorities. It\nalso specifies that when provided with a copy of Recognition of Residential Status from a resident Chinese-controlled offshore-incorporated\nenterprise, a payer does not need to withhold income tax when paying certain PRC-sourced income such as dividends, interest and royalties\nto such Chinese-controlled offshore-incorporated enterprise.\n\n \n\nSAT\nBulletin No. 9 further provides that, among other things, an entity that is classified as a “PRC resident enterprise” in\naccordance with the SAT Circular 82 shall file the application for classifying its status of residential enterprise with the local tax\nauthorities where its main domestic investors are registered. From the year in which the entity is determined as a “PRC resident\nenterprise”, any dividend, profit and other equity investment gain shall be taxed in accordance with the EIT Law and its implementing\nrules.\n\n \n\nIf\nwe or any of our subsidiaries outside of China were to be considered a PRC “resident enterprise” under the EIT Law, we will\nbe subject to PRC enterprise income tax on our worldwide income at a uniform tax rate of 25.0%. See “Item 3. Key Information-D.\nRisk Factors-Risks Related to Doing Business in China-If we are classified as a PRC resident enterprise for PRC enterprise income tax\npurposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and ADS holders.”\n\n \n\n*Income\nTax for Share Transfers*\n\n \n\nAccording\nto the Public Notice Regarding Certain Enterprise Income Tax Matters on Indirect Transfer of Properties by Non-resident Enterprise (“SAT\nBulletin 7”), promulgated by the SAT in February 2015, if a non-resident enterprise transfers the equity interests of a PRC resident\nenterprise indirectly by transfer of the equity interests of an offshore holding company (other than a purchase and sale of shares issued\nby a PRC resident enterprise in public securities market) without a reasonable commercial purpose, the PRC tax authorities have the power\nto reassess the nature of the transaction and the indirect equity transfer will be treated as a direct transfer. As a result, the gain\nderived from such transfer, which means the equity transfer price less the cost of equity, will be subject to PRC withholding tax at\na rate of up to 10%. Under the terms of SAT Bulletin 7, the transfer which meets all of the following circumstances shall be directly\ndeemed as having no reasonable commercial purposes: (1) over 75% of the value of the equity interests of the offshore holding company\nare directly or indirectly derived from PRC taxable properties; (2) at any time during the year before the indirect transfer, over 90%\nof the total properties of the offshore holding company are investments within PRC territory, or in the year before the indirect transfer,\nover 90% of the offshore holding company’s revenue is directly or indirectly derived from PRC territory; (3) the function performed\nand risks assumed by the offshore holding company are insufficient to substantiate its corporate existence; or (4) the foreign income\ntax imposed on the indirect transfer is lower than the PRC tax imposed on the direct transfer of the PRC taxable properties. In October\n2017, SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise\nIncome Tax at Source (“SAT Bulletin 37”), which, among others, repeals certain rules stipulated in SAT Bulletin 7 and became\neffective on December 1, 2017. The SAT Bulletin 37 further details and clarifies the tax withholding methods in respect of income of\nnon-resident enterprises.\n\n \n\nThere\nis uncertainty as to the application of SAT Bulletin 7. SAT Bulletin 7 may be determined by the PRC tax authorities to be applicable\nto our prior private equity financing transactions that involved non-resident investors, if any of such transactions are determined by\nthe tax authorities to lack reasonable commercial purpose. As a result, we and our non-resident investors in such transactions may become\nat risk of being taxed under SAT Bulletin 7, and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to\nestablish that we should not be taxed under the general anti-avoidance rule of the EIT Law, which may have a material adverse effect\non our financial condition and results of operations.\n\n \n\n53\n\n \n\n \n\n*Dividend\nWithholding Tax*\n\n \n\nPursuant\nto the EIT Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC,\nor has set up an organization or establishment but the income derived has no actual connection with such organization or establishment,\nit will be subject to a withholding tax on its PRC-sourced income at a rate of 10%. Pursuant to the Arrangement between Mainland China\nand the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate\nin respect to the payment of dividends by a PRC enterprise to a Hong Kong enterprise is reduced to 5% from a standard rate of 10% if\nthe Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant to the Notice of the SAT on the Issues concerning\nthe Application of the Dividend Clauses of Tax Agreements (“SAT Circular 81”), promulgated by the SAT in February 2009, a\nHong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (1) it\nshould be a company as provided in the tax treaty; (2) it must directly own the required percentage of equity interests and voting rights\nin the PRC resident enterprise; and (3) it must have directly owned such percentage in the PRC resident enterprise throughout the 12\nmonths prior to receiving the dividends. In August 2015, the SAT promulgated the Administrative Measures for Non-Resident Taxpayers to\nEnjoy Treatments under Tax Treaties (“SAT Circular 60”), which became effective in November 2015 and was repealed in January\n2020. SAT Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority\nin order to enjoy the reduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment\nand on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax\nrate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations\nby the relevant tax authorities. In February 2018, the SAT promulgated the Notice on Issues Related to the “Beneficial Owner”\nin Tax Treaties, according to which when determining the applicant’s status of the “beneficial owner” regarding tax\ntreatments in connection with dividends in the tax treaties, several factors, including without limitation, whether the applicant is\nobligated to pay more than 50% of its income in twelve months to residents in third country or region, whether the business operated\nby the applicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does\nnot levy any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and it\nwill be analyzed according to the actual circumstances of the specific cases. In October 2019, the SAT promulgated the Administrative\nMeasures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties (“SAT Circular 35”). SAT Circular 35 became effective\non January 1, 2020 and superseded SAT Circular 60 on the same date. Compared to SAT Circular 60, SAT Circular 35 provides that the nonresident\nenterprises and their withholding agents are not required to submit the supporting documents for tax treaty benefits when performing\ntax filings. Instead, nonresident enterprises and their withholding agents may retain such supporting documents themselves for the post-tax\nfiling examinations by the relevant tax authorities. According to the Circular on Several Issues regarding the “Beneficial Owner”\nin Tax Treaties (“Circular 9”), which was issued in February 2018 by the SAT, effective as of April 1, 2018, when determining\nthe applicant’s status as the “beneficial owner” regarding tax treatments in connection with dividends, interests or\nroyalties in the tax treaties, several factors, including without limitation, whether the applicant is obligated to pay more than 50%\nof its income in twelve months to residents in a third country or region, whether the business operated by the applicant constitutes\nactual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax or grant tax exemption\non relevant incomes or levy tax at an extremely low rate, will be taken into account and analyzed based on specific circumstances. This\nCircular further provides that applicants who intend to prove his or her status as the “beneficial owner” shall submit the\nrelevant documents to the relevant tax bureau according to the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments\nunder Tax Treaties. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the\nrelevant tax authority, the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%.\nSee “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-There are significant uncertainties in certain\ntreaty benefits enjoyed by our PRC subsidiaries with respect to dividends payable by our PRC subsidiaries to our offshore subsidiaries\nunder the PRC enterprise income tax law relating to the withholding tax liabilities.”\n\n** **\n\n**Regulations\nRelating to Foreign Currency Exchange**\n\n* *\n\n*Foreign\nCurrency Exchange*\n\n \n\nThe\nprincipal regulations governing foreign currency exchange in China are the Regulations of the People’s Republic of China on Foreign\nExchange Administration, promulgated by the State Council and amended in August 2008. Under these regulations, the Renminbi is freely\nconvertible for current account items, including the trade and service-related foreign exchange transactions and other current exchange\ntransactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities,\nunless the prior approval of the SAFE, is obtained and prior registration with SAFE is made.\n\n \n\n54\n\n \n\n \n\nIn\nAugust 2008, the Notice of the General Affairs Department of the State Administration of Foreign Exchange on the Relevant Operating Issues\nconcerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises\n(“SAFE Circular 142”), was promulgated by the General Affairs Department of SAFE, which regulates the conversion by foreign-invested\nenterprises of foreign currency capital into Renminbi by restricting how the converted Renminbi may be used. SAFE Circular 142 requires\nthat Renminbi converted from the foreign currency-denominated capital of a foreign-invested enterprise may only be used for purposes\nwithin the business scope approved by the relevant government authority and may not be used to make equity investments in PRC, unless\nspecifically provided otherwise. SAFE further strengthened its oversight over the flow and use of Renminbi funds converted from the foreign\ncurrency-denominated capital of a foreign-invested enterprise. The use of such Renminbi may not be changed without approval from SAFE,\nand may not be used to repay Renminbi loans if the proceeds of such loans have not yet been used. Any violation of SAFE Circular 142\nmay result in severe penalties, including substantial fines.\n\n \n\nThe\nNotice of the State Administration of Foreign Exchange on Further Improving and Adjusting the Foreign Exchange Administration Policies\non Direct Investments was promulgated by SAFE in November 2012 and most recently amended in December 2019, and substantially amends and\nsimplifies the foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts,\nsuch as pre-establishment expense accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds\nby foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign\nshareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened\nin different provinces, which was not possible previously. In addition, according to the Notice of the State Administration of Foreign\nExchange on Issuing the Provisions on the Foreign Exchange Administration of Domestic Direct Investment of Foreign Investors and the\nSupporting Documents promulgated by SAFE in May 2013 and most recently amended in December 2019, the administration by SAFE or its local\nbranches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign\nexchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches.\n\n \n\nIn\nJuly 2014, SAFE further reformed the foreign exchange administration system in order to satisfy and facilitate the business and capital\noperations of foreign investment entities, and issued the Notice of the State Administration of Foreign Exchange on the Pilot Reform\nof the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-Invested Enterprises in Certain Areas\n(“SAFE Circular 36”). This circular suspends the application of SAFE Circular 142 in certain areas and allows a foreign-invested\nenterprise registered in such areas to use the Renminbi capital converted from foreign currency registered capital for equity investments\nwithin the PRC if the approved principal business of the foreign-invested enterprise includes investment or it complies with certain\nforeign exchange procedures.\n\n \n\nIn\nMarch 2015, SAFE released the Notice of the State Administration of Foreign Exchange on Reforming the Administrative Approach Regarding\nthe Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises (“SAFE Circular 19”), effective in June 2015\nand amended in December 2019, which has made certain adjustments to some regulatory requirements on the settlement of foreign exchange\ncapital of foreign-invested enterprises, lifted some foreign exchange restrictions under SAFE Circular 142, and annulled SAFE Circular\n142 and SAFE Circular 36. However, SAFE Circular 19 continues to, prohibit foreign-invested enterprises from, among other things, using\nRenminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying\nloans between non-financial enterprises.\n\n \n\nIn\nJune 2016, SAFE issued the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Administrative Provisions\non Capital Account Foreign Exchange Settlement (“SAFE Circular 16”), which took effect on the same day and was further amended\nin December 2023. Compared to SAFE Circular 19, SAFE Circular 16 provides that, in addition to foreign exchange capital, foreign debt\nfunds and proceeds remitted from foreign listings should also be subject to the discretional foreign exchange settlement. In addition,\nit also lifted the restriction, that foreign exchange capital under the capital accounts and the corresponding Renminbi capital obtained\nfrom foreign exchange settlement should not be used for repaying the inter-enterprise borrowings (including advances by the third party)\nor repaying bank loans in Renminbi that have been sub-lent to the third party.\n\n \n\nIn\nJanuary 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness\nand Compliance Verification (“SAFE Circular 3”), which stipulates several capital control measures with respect to the outbound\nremittance of profit from domestic entities to offshore entities, including (1) under the principle of genuine transaction, banks shall\ncheck board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and\n(2) domestic entities shall hold income to account for previous years’ losses before remitting profits. Moreover, pursuant to SAFE\nCircular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board\nresolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment.\n\n \n\nIn\nApril 2020, SAFE promulgated the Circular on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related\nBusiness (“SAFE Circular 8”), which promoted the nationwide reform of facilitating the payments of incomes under the capital\naccounts. Pursuant to SAFE Circular 8, under the prerequisite of ensuring true and compliant use of funds and compliance and complying\nwith the prevailing administrative provisions on use of income from capital projects, enterprises which satisfy the criteria are allowed\nto use income under the capital account, such as capital funds, foreign debt and overseas listing, etc., for domestic payment, without\nthe need to provide proof materials for veracity to the bank beforehand for each transaction.\n\n* *\n\n55\n\n \n\n* *\n\n*Foreign\nExchange Registration of Overseas Investment by PRC Residents*\n\n \n\nIn\nJuly 2014, SAFE promulgated the Notice of the State Administration of Foreign Exchange on the Administration of Foreign Exchange Involved\nin Overseas Investment, Financing and Roundtrip Investment Conducted by Residents in China via Special-Purpose Companies (“SAFE\nCircular 37”), which replaced the former circular commonly known as SAFE Circular 75 promulgated by SAFE in October 2005. SAFE\nCircular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect\ncontrol of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets\nor equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose\nvehicle.” SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect\nto the special purpose vehicle, such as an increase or decrease of capital contributed by PRC individuals, share transfer or exchange,\nmerger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to\nfulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions\nto the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may\nbe restricted in its ability to contribute additional capital into its PRC subsidiary. Furthermore, failure to comply with the various\nSAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange controls.\n\n \n\nIn\nFebruary 2015, SAFE released the Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the Policies\nof Foreign Exchange Administration Applicable to Direct Investment (“SAFE Circular 13”), which has amended SAFE Circular\n37 by requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their\nestablishment or control of the special purpose vehicle. However, remedial registration applications made by PRC residents that previously\nfailed to comply with the SAFE Circular 37 continue to fall under the jurisdiction of the relevant local branch of SAFE.\n\n \n\n*Share\nOption Rules*\n\n \n\nPursuant\nto SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications\nto SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. In addition,\nunder the Notice of the State Administration of Foreign Exchange on Issues Related to Foreign Exchange Administration in Domestic Individuals\nParticipation in Equity Incentive Plans of Companies Listed Abroad issued by SAFE in February 2012 (“SAFE Circular 7”), PRC\nresidents who are granted shares or share options by companies listed on overseas stock exchanges under share incentive plans are required\nto (1) register with SAFE or its local branches, (2) retain a qualified PRC agent, which may be a PRC subsidiary of the overseas listed\ncompany or another qualified institution selected by the PRC subsidiary, to conduct SAFE registration and other procedures with respect\nto the share incentive plans on behalf of the participants, and (3) retain an overseas institution to handle matters in connection with\ntheir exercise of share options, purchase and sale of shares or interests and funds transfers. In addition, the PRC agent is required\nto amend the SAFE registration with respect to the stock incentive plan if there is any material change to the share incentive plan,\nthe PRC agent or the overseas entrusted institution or other material changes. The PRC agents must, on behalf of the PRC residents who\nhave the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the payment of foreign\ncurrencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds received\nby the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed\ncompanies must be remitted into the bank accounts in the PRC opened by the PRC agents before distribution to such PRC residents.\n\n** **\n\n56\n\n \n\n** **\n\n**Regulations\nRelating to Dividend Distribution**\n\n \n\nUnder\nour current corporate structure, our Cayman Islands holding company may rely on dividend payments from our PRC subsidiaries, which is\na wholly foreign-owned enterprise incorporated in China, to fund any cash and financing requirements we may have. Under PRC laws and\nregulations, wholly foreign-owned enterprises in the PRC may pay dividends only out of accumulated profits, after setting aside annually\nat least 10% of accumulated after-tax profits as statutory reserve fund, if any, unless these reserves have reached 50% of the registered\ncapital of the enterprises. A wholly foreign-owned enterprise may allocate a portion of its after-tax profits to discretionary surplus\nfund at its discretion. These statutory reserve funds and discretionary surplus funds may not be distributed as cash dividends. Profit\nof a wholly foreign-owned enterprise shall not be distributed before the losses thereof for the previous accounting years have been made\nup. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.\n\n** **\n\n**Regulations\nRelating to M&A and Overseas Listings**\n\n \n\nSix\nPRC regulatory agencies, including the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign\nInvestors, which became effective in September 2006 and was amended in June 2009 (the “M&A Rules”). Foreign investors\nshall comply with the M&A Rules when they purchase equity interests of a domestic company or subscribe the increased capital of a\ndomestic company, and thus changing the nature of the domestic company into a foreign-invested enterprise; or when the foreign investors\nestablish a foreign-invested enterprise in the PRC and purchase, through such enterprise, any assets of a domestic company and operate\nsuch assets; or when the foreign investors purchase the asset of a domestic company, establish a foreign-invested enterprise by injecting\nsuch assets and operate the assets. The M&A Rules, among other things, require offshore special purpose vehicles formed for overseas\nlisting purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval\nof the CSRC prior to publicly listing their securities on an overseas stock exchange.\n\n \n\nIn\nJuly 2021, the relevant PRC government authorities issued Opinions on Severely Cracking Down Illegal Securities Activities in accordance\nwith the Laws. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision\non overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant\nregulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.\n\n \n\nIn\nSeptember 2024, the NDRC and MOFCOM jointly issued the Negative List (2024 Version), which became effective on November 1, 2024. Pursuant\nto the Negative List (2024 Version), if a domestic company engaging in the prohibited business stipulated in the Negative List (2024\nVersion) seeks an overseas offering and listing, it shall obtain approval from the competent governmental authorities. Besides, the foreign\ninvestors of such company shall not be involved in the company’s operation and management, and their shareholding percentage shall\nbe subject, mutatis mutandis, to the relevant regulations on the domestic securities investments by foreign investors.\n\n \n\nIn\nFebruary 2023, approved by the State Council, CSRC released new regulations for the filing-based administration of overseas securities\noffering and listing by domestic companies. The regulations will come into effect on March 31, 2023, which include the Trial Administrative\nMeasures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), and five supporting guidelines.\nThe Trial Measures stipulates that both direct and indirect overseas offering and listing activities are subject to regulation, and clearly\ndefines the circumstances where provisions for direct and indirect overseas offering and listing by domestic companies apply. Specifically,\nwhere a domestic company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate a major domestic\noperating entity, which shall, as the domestic responsible entity, file with the CSRC. Any overseas offering and listing made by an issuer\nthat meets both the following conditions will be determined as indirect: (1) 50% or more of the issuer’s operating revenue, total\nprofit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year\nis accounted for by domestic companies; and (2) the main parts of the issuer’s business activities are conducted in the PRC, or\nits main places of business are located in the PRC, or the senior managers in charge of its business operation and management are mostly\nPRC citizens or domiciled in the PRC. The determination as to whether or not an overseas offering and listing by domestic companies is\nindirect, shall be made on a substance over form basis. According to the Trail Measures, no overseas offering and listing shall be made\nunder any of the following circumstances: (1) where such securities offering and listing is explicitly prohibited by provisions in laws,\nadministrative regulations and relevant state rules; (2) where the intended securities offering and listing may endanger national security\nas reviewed and determined by competent authorities under the State Council in accordance with law; (3) where the domestic company intending\nto make the securities offering and listing, or its controlling shareholders and the actual controller, have committed crimes such as\ncorruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest\nthree years; (4) where the domestic company intending to make the securities offering and listing is suspected of committing crimes or\nmajor violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; (5)\nwhere there are material ownership disputes over equity held by the domestic company’s controlling shareholder or by other shareholders\nthat are controlled by the controlling shareholder and/or actual controller.\n\n \n\n57\n\n \n\n \n\nAccording\nto the Trial Measures, initial public offerings or listings in overseas markets, or subsequent securities offerings and listings of an\nissuer in other overseas markets than where it has offered and listed, shall be filed with the CSRC within three working days after the\nrelevant application is submitted overseas. Subsequent securities offerings of an issuer in the same overseas market where it has previously\noffered and listed securities shall be filed with the CSRC within three working days after the offering is completed. A domestic company\nthat seeks to directly or indirectly list its domestic assets in overseas markets through single or multiple acquisitions, share swaps,\ntransfers of shares or other means, shall fulfil the filing procedure with the CSRC within three working days the relevant application\nis submitted overseas or the first public disclosure of the specifics of the transaction is made by the listed company. Where a domestic\ncompany fails to fulfill filing procedure as stipulated by the Trial Measures or offers and lists securities in an overseas market in\nin violation of the Trial Measures, the CSRC shall order rectification, issue warnings to such domestic company, and impose a fine of\nbetween RMB1,000,000 and RMB10,000,000. Persons-in-charge and other persons that are directly liable shall be warned and each imposed\na fine of between RMB500,000 and RMB5,000,000. Controlling shareholders and actual controllers of the domestic company that organize\nor instruct the violations shall be imposed a fine of RMB1,000,000 and RMB10,000,000. Persons-in-charge and other persons that are directly\nliable shall be each imposed a fine of between RMB500,000 and RMB5,000,000.\n\n \n\nIn order to support domestic\ncompanies overseas securities offering and listing pursuant to laws and regulations, as a supplement to the Trial Measures, the CSRC,\nMinistry of Finance of PRC, National Administration of State Secrets Protection and National Archives Administration of China, have jointly\nrevised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing (,\nhereinafter referred to as the “revised Provisions”). The revised Provisions  became effective on March 31, 2023 with\nthe Trial Measures. The revised Provisions expands its application to cover both direct and indirect overseas offering and listing, and\nrequires that a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to\nrelevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents\nand materials that (1) contain state secrets or working secrets of government agencies shall first obtain approval from competent authorities\naccording to law, and file with the secrecy administrative department at the same level; or (2) if leaked, will be detrimental to national\nsecurity or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. In addition, the\ndomestic company, securities companies and securities service providers shall first obtain approval from the CSRC or other competent\nChinese authorities before cooperating with the inspection and investigation by the overseas securities regulator or competent overseas\nauthority, or providing documents and materials requested in such inspection and investigation. \n\n \n\n**Regulations\nRelating to Employment**\n\n \n\nPursuant\nto the Labor Law of PRC, promulgated by the Standing Committee of NPC in July 1994 and amended in December 2018 (the “Labor Law”),\nand the Labor Contract Law of PRC, promulgated by Standing Committee of the NPC in June 2007 and amended in December 2012 (the “Labor\nContract Law”), employers must execute written employment contracts with full-time employees. If an employer fails to enter into\na written employment contract with an employee for more than a month but less than a year from the date on which the employment relationship\nis established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the\nemployee twice the employee’s salary for the period from the day following the lapse of one month from the date of establishment\nof the employment relationship to the day prior to the execution of the written employment contract. If an employer fails to conclude\na written labor contract with a worker within one year as of the date when it employs the worker, it shall be deemed to have concluded\nan open-ended labor contract with the latter. All employers must compensate their employees with wages equal to at least the local minimum\nwage. Violations of the Labor Law and the Labor Contract Law may result in fines and other administrative sanctions, and serious violations\nmay result in criminal liabilities.\n\n \n\nEnterprises\nin China are required by the Social Insurance Law of PRC promulgated by the Standing Committee of the NPC in October 2010 which became\neffective in July 2011 and amended in 2018 (the “Social Insurance Law”), the Regulations on Management of Housing Provident\nFund released by the State Council in March 2002 and amended in March 2019, and other related rules and regulations, to participate in\ncertain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance\nplan, an on-the-job injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or\nfunds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local\ngovernment. Failure to make adequate contributions to various employee benefit plans may be subject to fines and other administrative\nsanctions. According to the Social Insurance Law, an employer that fails to make social insurance contributions may be ordered to rectify\nthe non-compliance and pay the required contributions within a stipulated deadline and be subject to a late fee of 0.05% per day, as\nthe case may be. If the employer still fails to rectify the failure to make social insurance contributions within the deadline, it may\nbe subject to a fine ranging from one to three times the amount overdue. According to the Regulations on Management of Housing Fund,\nan enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions\nwithin a stipulated deadline; otherwise, an application may be made to a local court for compulsory enforcement.\n\n \n\n58\n\n \n\n \n\n**C.\nOrganizational Structure**\n\n \n\nThe following diagram illustrates\nour corporate structure, including our principal subsidiaries, as of the date of this annual report:\n\n \n\n \n\nThe\nfollowing table sets out the details of our subsidiaries that are significant to us.\n\n \n\n**Subsidiaries**\n \n**Place of\nIncorporation**\n \n**Ownership\nInterest**\n \n\nNew\nTuanche New York Inc. (“New Tuanche”)\n \nNew\nYork\n \n \n100\n%\n\nNew\nTuanChe Colorado Inc.\n \nColorado\n \n \n100\n%\n\nNew\nTuanChe PTE. Ltd.\n \nSingapore\n \n \n100\n%\n\nNew\nTuanChe Hong Kong Limited\n \nHong\nKong\n \n \n100\n%\n\nShenzhen\nFeixingjia Information Technology Co., Ltd.\n \nPRC\n \n \n100\n%\n\nBeijing\nFeixingjia Information Technology Co., Ltd.\n \nPRC\n \n \n100\n%\n\nChangsha\nFeixingjia Information Technology Co., Ltd.\n \nPRC\n \n \n100\n%\n\n \n\n**D.\nProperty, plants and equipment**\n\n \n\nSee\n“Item 4. Information on the Company-B. Business Overview-Facilities.”\n\n** **\n\n59"}