XREAL Ltd. Receives CSRC Supplementary Filing Enquiry on Overseas Listing; Five Key Issues Raised Including VIE Dismantling Compliance

1、Compliance of equity structure establishment and round-trip mergers and acquisitions，Matters to be clarified: (1) Whether shareholders holding 5% or more shares have completed domestic regulatory procedures including foreign exchange registration and outbound investment filings; (2) Whether domestic foreign-invested enterprises controlled by the issuer have fulfilled foreign investment information reporting obligations and completed foreign exchange registration formalities; (3) The rationale, transaction consideration, pricing basis and tax payment status for the acquisition of Unarkern by Infinite Shanghai, and whether such transaction complies with the Regulations on Merger with and Acquisition of Domestic Enterprises by Foreign Investors; (4) The transaction consideration, pricing basis and tax payment status for capital reduction and equity transfer by investor shareholders of Shenzhen Taruo during the VIE dismantling process, whether the capital reduction complies with the Company Law, and whether there exists false capital contribution, capital withdrawal or other conducts; (5) Conclusive opinions confirming that the establishment of equity structure and round-trip M&A activities complied with the effective regulations on foreign exchange administration, outbound investment, foreign investment and tax administration prevailing at the relevant time.

3、Equity incentive schemes，Matters to be clarified: (1) Disclosure on participation of resigned employees in equity incentives in accordance with Guidance No.2; (2) Conclusive opinions on the fairness of consideration for equity incentives, legality and compliance of such schemes and whether benefit transfer exists.

5、Consistency of offering plan，The maximum number of offered shares stated in the filing documents and prospectus shall be consistent. In the event of inconsistency, the revised filing report or prospectus shall be provided. If the number of offered shares and fundraising scale are increased in the prospectus, the fundraising utilisation plan shall be updated simultaneously.

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