COVID-19 Impact - The company reported a significant impact from COVID-19 on operations, which could materially affect financial condition and results [307]. Foreign Investment Regulations - The Foreign Investment Law of the PRC, effective from January 1, 2020, implements a pre-entry national treatment system for foreign investments [309]. - The 2021 Negative List prohibits or restricts foreign investment in certain sectors, and the company operates outside these restricted industries [308]. - The M&A Rules require foreign investors to obtain approval from MOFCOM for acquisitions of domestic enterprises [313]. Overseas Listing Compliance - The CSRC's new regulations for overseas listings require domestic companies to file with the CSRC within 3 working days after submitting applications overseas [315]. - Non-compliance with the Overseas Listing Trial Measures can result in fines ranging from RMB1,000,000 to RMB10,000,000 for companies [319]. - The company must ensure confidentiality and archives administration when engaging in overseas offerings and listings [320]. Advertising Regulations - The Advertising Law mandates that advertisements must not contain false or misleading information, holding advertising agents liable for false advertisements [324]. - The Administrative Measures for Online Advertising, effective May 1, 2023, govern online advertising activities and require strict compliance from advertising agents [327]. - The company is subject to penalties for violations of advertising regulations, including fines and potential revocation of business licenses [326]. Data Security and Cybersecurity - The Company is not subject to cybersecurity review as it does not operate online platforms or collect personal information through such platforms [333]. - The Data Security Law of the PRC establishes a classified and tiered system for data protection based on the importance of data and its potential risks to national security [336]. - The Company must comply with the Data Security and Personal Information Protection Law when processing personal information, with obligations to protect data security [332]. - The Company is required to fulfill obligations for data security protection and personal information protection to avoid administrative penalties [332]. - The Company is not required to file for cybersecurity review before the Offering and the Listing based on current understanding of PRC laws [334]. Taxation and Financial Regulations - The Enterprise Income Tax rate for resident enterprises is 25%, while non-resident enterprises with no establishment in China are taxed at a reduced rate of 10% [341]. - Dividends payable to foreign investors by a foreign-invested enterprise are subject to a withholding tax rate of 10%, or 5% if the investor holds at least 25% equity [344][345]. - The VAT rate for the sale of services is set at 6% under the Provisional Regulations on Value-added Tax [342]. - The Company must ensure compliance with foreign exchange regulations when remitting profits to offshore entities [349]. - Loans provided by the Company to its subsidiary in mainland China in foreign currencies are classified as foreign debt under the Foreign Debt Measures [354]. Cross-Border Financing - The People's Bank of China (PBOC) raised the macro-prudential adjustment parameter for enterprise cross-border financing from 1.25 to 1.5, effective July 20, 2023 [355]. - The leverage rate for cross-border financing for an enterprise is set at 2, with the upper limit for risk-weighted balance calculated based on capital or net assets multiplied by this leverage rate [355]. Financial Position and Risks - As of June 30, 2024, the company's cash and cash equivalent balance was RMB48,527 and RMB1.3 million (US$0.2 million) respectively [468]. - The company has not been exposed to material risks due to changes in market interest rates and has not used any derivative financial instruments for interest rate risk management during the years ended June 30, 2022, 2023, and 2024 [469]. - Credit risk is managed through in-house research and monitoring of receivable balances, with exposure to bad debts not being significant [471]. Facilities and Lease Agreements - The company occupies premises with a registered address that will terminate on July 16, 2024, and is currently using a principal office leased until April 30, 2024 [366]. - The company has not been imposed any fines for failure to register lease agreements as of the date of the report [366]. - The company believes its facilities are adequate for immediate needs and suitable additional space will be available on commercially reasonable terms if needed [368]. Accounting Standards - The company adopted ASU No. 2019-12 from July 1, 2022, which did not have a material impact on its financial results or position [474]. - The company is classified as an "emerging growth company" and has elected to delay adopting new accounting standards until they apply to private companies [473]. - The Group adopted ASU No. 2021-08 effective July 1, 2023, with no material impact on financial results or position [475]. - ASU No. 2023-07 requires public entities to disclose incremental segment information annually and quarterly, effective for fiscal years beginning after December 15, 2023 [476]. - The adoption of ASU 2023-09, improving income tax disclosures, is expected to have no material effect on the Company's combined financial statements [477]. - Other FASB accounting standards issued are not anticipated to materially impact consolidated financial statements upon adoption [478].
Star Fashion Culture Holdings Ltd(STFS) - 2024 Q4 - Annual Report