A. History and Development of the Company We commenced our online consumer finance business and began to operate Fenqile in October 2013 through Shenzhen Fenqile Network Technology Co., Ltd., or Shenzhen Fenqile. In October 2013, Beijing Lejiaxin Network Technology Co., Ltd., or Beijing Lejiaxin, was incorporated as an investment holding company in the PRC and established its wholly owned subsidiary, Shenzhen Beizhipiji Technology Co., Ltd. or Beizhipiji in June 2014 to operate our online investment platform Juzi Licai. In November 2013, Staging Finance Holding Ltd., or Staging Finance, was incorporated under the laws of the Cayman Islands as our offshore holding company, which then established our wholly owned subsidiary, Installment (HK) Investment Limited, or Installment HK, in Hong Kong. Beijing Shijitong Technology Co., Ltd., or Beijing Shijitong was established in July 2014 as a wholly owned subsidiary of Installment HK in the PRC. In March 2017, we changed our name from “Staging Finance Holding Ltd.” to “LexinFintech Holdings Ltd.” Through Beijing Shijitong and Shenzhen Lexin Software, we obtained control over Beijing Lejiaxin, Shenzhen Xinjie, Shenzhen Fenqile, Qianhai Dingsheng and Mengtian Technology, or collectively, the variable interest entities, based on a series of contractual arrangements. See “—C. Organizational Structure—Contractual Arrangements with the Variable Interest Entities.” On December 21, 2017, our ADSs commenced trading on Nasdaq under the symbol “LX.” We raised from our initial public offering of approximately US$108.4 million in net proceeds (including the net proceeds generated from the offering of additional 1,800,000 ADSs upon the underwriters’ exercise of their over-allotment option in full) after deducting underwriting commissions and the offering expenses payable by us. In September 2019, we issued and sold convertible notes in an aggregate principal amount of US$300 million to PAGAC Lemongrass Holding I Ltd. through a private placement. On March 13, 2023, we entered into an amendment agreement with PAGAC Lemongrass Holding I Limited regarding previous documents governing the notes. The notes were paid in full by April 2024. In February 2020, we successfully bid for a plot of land in Shenzhen’s Nanshan district. Total purchase price for the acquisition of the land plot was RMB1.032 billion. Pursuant to the terms of the bid, the Company was required to pay 50% of the total purchase price (minus the security deposit) immediately after the signing of the definitive agreements, and the remaining 50% of the purchase price within one year after the signing. The Company made the first installment payment of RMB516 million in February 2020, and the second installment payment of RMB516 million in February 2021. The land use rights are subject to certain agreed-upon performance requirements and transfer restrictions. Our principal executive offices are located at 27/F, CES Tower, No. 3099 Keyuan South Road, Nanshan District, Shenzhen 518057, the People’s Republic of China. Our telephone number at this address is +86 755 3637 8888. Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. Our agent for service of process in the United States is Law Debenture Corporate Services Inc. located at 801 2nd Avenue, Suite 403, New York, NY 10017. Strategic Investments We have conducted strategic investments both domestically and abroad. Our investment activities in recent years include equity investments in companies operating in the online consumer finance, insurance and other sub-sectors in the fintech space. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—From time to time we may evaluate and consummate strategic investments or acquisitions, which could require significant management attention, disrupt our business and adversely affect our financial results.” We expect to continue to evaluate and pursue potential opportunities for strategic investments. B. Business Overview Overview 78 We are a leading consumer finance technology company in China with a decade-long operating history. Upholding financial risk management as our operational cornerstone, we strive to apply advanced technologies such as AI and big data to form an online risk assessment and management system based on quantitative decision-making. Leveraging Lexin’s unique consumption ecosystem that integrates online consumer financing, offline inclusive financing, fintech empowerment services, and e-commerce platforms, we efficiently connect financial institutions with consumers through technology and financial services, offering convenient and speedy finance services to young generation consumers in China. With our technology capabilities, our offerings to financial partners span from multi-channel online intelligent marketing and customer acquisition, offline channel customer acquisition, product design and operation for diversified consumer financing and inclusive financing, customer risk assessment and operation, and post-loan services for loan products. Our core competencies include: •Unique Lexin consumption ecosystem that integrates online consumer financing, offline inclusive financing, fintech empowerment services, and e-commerce platforms, fostering mutual collaboration and synergy; •Large and highly potential young generation customer base in China that we have accumulated over the past decade; •Effective and industry-leading risk management capabilities tailored for small-sized and dispersed consumer loan products supported by a robust online quantitative credit risk management system; •Industry-leading fintech prowess centered around AI and big data; •An extensive network of financial institution partners built over a decade of successful business collaborations with broad geographic coverage and diversity in types; •Financial products deeply resonate with consumer needs, crafted by the original founders with rich experience and business acumen; and •A senior management team with extensive experience from leading technology and financial companies in China. We provide a wide array of credit services, including credit facilitation service, tech-empowerment service, and installment e-commerce platform service. Meanwhile, we provide diversified services to financial institutions including credit assessment, operation system upgrades, user acquisition services and guarantee services utilizing state-of-the-art technologies including big data, advanced computing and artificial intelligence. We strategically focus on serving the young generation of consumers in China between the ages of 23 and 40, who have high growth potential and prime credit profiles. These customers, we believe, have untapped income potential, unsatisfied consumption demand that is temporarily mismatched with their income levels, a strong desire to build up credit profiles and a call for satisfying user experience. In addition, we believe that the young generation consumers will grow and become the primary consumption driver in China economy in the future. We aspire to become one of their most trustworthy consumer brands. Our Services We provide a range of products and services to promising, young and prime customers and diversified financial institutions based on our insights into consumer behaviors and unique platform capabilities, including credit facilitation service, tech-empowerment service, and installment e-commerce platform service. Credit facilitation service Aiming to meet underserved consumers’ credit needs, we apply AI-based matching technology on our Fenqile platform to match consumers having various credit profiles with financial institutions, such as customer acquisition, preliminary credit screening, and loan collections to facilitate the transactions. The loan products offered under our credit facilitation service are primarily funded by our funding partners, our consolidated trusts, asset-backed securitized debts and our microcredit company. We also provide guarantee services through our financing guarantee companies, and cooperate with other third-party financing guarantee companies and/or commercial insurance companies to provide guarantee and insurance services to our borrowers. We are required to provide risk safeguard measures or a deposit as indemnity to these third-parties in the event of default by our borrowers. Moreover, under our new fintech empowerment model, we work with internet super-platforms and banking partners where we assist the banking partners with customer risk assessment and assume the corresponding credit risk. 79 Tech-empowerment service We offer a comprehensive set of tailored technology solutions at various stages of the credit facilitation process to match the diverse needs of our financial institution partners and third parties such as loan facilitation platforms and insurance companies, including customer acquisition, credit assessment, operations and post-loan services. We also offer subscription services to our customers to enhance their experience. Our tech-empowerment service primarily includes profit-sharing model, referral model, intelligent credit platform model and subscription services. Our tech-empowerment service generated approximately 16% of total loan originations in 2025. We historically provided Fintech SaaS technology services for financial institutions, which were discontinued in 2025. Profit-sharing model Our profit-sharing model focuses on providing technology solutions to our financial institution partners throughout the entire credit facilitation process between potential borrowers and the institutional funding partners, such as customer acquisition, credit assessment, and post-loan collection services. Under the profit-sharing model, we take no or very limited credit risk on the borrowers’ principals and interests and charge the financial institutions a service fee at a pre-set percentage of the agreed-upon interests. As of December 31, 2025, we have worked with a total of 58 institutional funding partners under this model. Referral model We refer potential customers to our institutional funding partners under our referral model. For other lending platforms, we refer a portion of our customers to them and charge referral fees. For insurance companies, we direct our customers to them through advertisements and earn referral fees from the insurance companies. In all cases, our referral services do not involve any principal risk exposure. Intelligent credit platform model In addition to providing user acquisition and matching, initial credit screening, and post-loan services to our institutional funding partners, we refer users on our platform for whom we may temporarily not in an appropriate position to provide services to other third-parties and charge service fees. Since 2024, we have been building our innovative intelligent credit platform (ICP) within the Fenqile app, leveraging big data and cloud computing technologies to match certain borrowers with financial institutions. For customers who are out of our risk preference range, we refer them to financial partners including financial guarantee companies and funding partners with complementary risk preferences. For loans facilitated through the ICP, we do not bear principal risk and typically charge service fees or a share of interests from the funding financial institutions. We ceased such business in October 2025 in compliance with the regulatory updates. Subscription services We offer subscription services to subscribing users, offering benefits such as coupon for membership of third-party platforms, product vouchers and virtual gifts of our installment e-commerce platforms, and generate revenues from such subscription services. Installment e-commerce platform service Leveraging our core capabilities in financial payment, risk management and consumer insights, our Fenqile platform provides services to merchants, large brands and small and mid-sized enterprises, equipping them with an e-commerce platform to strengthen their consumer-based operations, while at the meantime offers our young and promising consumers with superior shopping experience that is more convenient, more considerate and more flexible in payment. With our competitive strengths, the Fenqile platform differentiates itself by offering flexible options such as zero down payment and installment purchases, and thus improving the conversion rate of purchase and rewarding the merchants and brands a platform of high speed growth, attractive transaction volume, and promising consumption potential. Our core product offerings are primarily focused in mainland China. With our expanding scale and growing operational expertise, we are selectively exploring international markets to catalyze our global business expansion. 80 Our Users Our target user base is focused on consumers in China between the ages of 23 and 40 with high growth potential and premium credit profiles. As of December 31, 2025, the total number of our registered users reached 245 million, and users with credit line reached 51 million, among whom over 87% are aged between 23 and 40 years old. We are committed to identifying the needs of our consumers for credit services at different life stages and facilitate to provide financial services within their reach. Relying on our efficient risk management systems, we provide customized services and products to our borrowers based on their credit needs and risk profiles through diversified financing channels. The number of our cumulative active users reached 37.3 million in 2025. As their consumer finance service provider, we grow alongside our users since they are young and win their recognition and loyalty over years of services. In addition to credit services, we also help our users fulfill various consumption needs through our installment e-commerce platform. As of December 31, 2025, over 35% of our active users have used more than one of our products. Products for Users We offer diversified and differentiated products and services to meet various demands from our users. Our products include installment loan products and installment purchase products for personal consumption. On Fenqile, we offer credit lines to qualified users for their various daily use. We gain insight about our users based on big data and AI technology to adequately identify and meet their individual needs, offering unsecured credit products with various amounts, maturity, interest rates, and repayment methods for users’ selection. When a user applies for a credit line for the first time, the amount of credit line we approve ranges from RMB3,000 to RMB200,000, and the aggregate amount of personal installment loans borrowed by a single user may not exceed the credit line available to that user. Based on our continuous risk monitoring and assessment, we may adjust the amount of the credit line, change the percentage of the credit line that may be applied toward personal installment loans, or revoke the credit line. We may grant up to RMB200,000 of credit line to existing users who have established a good credit and repayment history with us. Users approved for our credit line are eligible to apply for personal installment loans with credit terms generally ranging from 1 to 24 months. Users can have multiple installment loans outstanding as long as the aggregated outstanding balance does not exceed the credit limit available. Users may use installment loans to obtain cash or to finance purchases on our marketplace through our e-commerce channel. We offer a range of consumer finance products designed to address different customer needs across credit profiles and use scenarios. Our core products include Flexible Loan, an installment loan product that provides flexible credit lines and fast disbursement to meet customers’ short-term liquidity needs. In addition to the main Fenqile installment purchase products, we offer Fenqile Inclusive, which is designed to serve a broader customer base, including small and micro enterprises (SMEs) as well as individual micro-merchants and underserved customers for their working capital needs, with accessible and flexible installment products. We also operate an e-commerce platform where users can purchase in lump-sum or installment their favorite products, such as cell phones, electronics, trendy apparels, cosmetics and daily necessities. User Acquisition and Retention To date, we have successfully accumulated a large user base and achieved deep market penetration among young generation consumers in China by providing a consumption platform that integrates high-quality financial services, online and offline consumption scenarios, subscription benefits, and superior user experience. We acquire users primarily through four ways: (i) online advertising and related channels, including targeted text-messaging supported by our models and advertising on online platforms and apps such as Douyin and WeChat; (ii) organic traffic, which consists of internet traffic generated from our brand recognition, as well as MGM (member get member) ; (iii) our offline sales team who can provide more firsthand detailed information of user and accurate credit assessment through offline market due diligence; and (iv) e-commerce platforms operated by us and third parties. We also continued to optimize our offline user acquisition channels and achieved growth of 16.0% in transaction volume per order in 2025 compared to 2024. Along with improving user acquisition ability and efficiency, we further refined the credit rating system of our existing user cohorts through data and model optimization, as a result we are able to improve identification of premium users 81 and effectively explore and satisfy the needs of different user cohorts with customized operating strategies, and significantly enhanced user satisfaction and retention. The average GMV generated by one existing active user was flat year-over-year in 2025. We also provide our users with a wide variety of products and superior user experience through our e-commerce platform, which significantly enhances our user retention. We have further expanded and enriched the offerings in the existing categories and brands of products offered on the platform, such as cosmetic products, trendy apparels, and daily necessities, enabling young customers to meet their increasing daily consumption needs on our e-commerce platform. In 2025, our total GMV increased by 110% and e-commerce GMV per active user increased by 36.7% on a year-over-year basis from 2024. Our Institutional Customers and Partners We benefit from our position of having diversified funding sources. We primarily finance the loans to users through funding provided by commercial banks, consumer finance companies and other licensed financial institutions as well as through the establishment of consolidated trusts and issuance of asset-backed securities. We refer to these funding sources collectively as our institutional funding partners. In 2025, institutional funding accounted for 100% of our newly funded loans. We had cumulatively served over 180 funding partners as of December 31, 2025. The outstanding balance of funds provided by institutional funding partners was RMB114 billion and RMB89.7 billion (US$12.8 billion) respectively as of December 31, 2024 and December 31, 2025. We provide technology-driven services to our institutional funding partners, including efficient customer acquisition through online and offline channels, credit screening, and post-loan services. We provide our institutional funding partners with extensive and real-time technology solutions through our seamlessly integrated technology infrastructure, which help them rapidly expand the base of credible borrowers, increase the volume of credit assets and gain risk-adjusted returns throughout the economic cycle. We use our platform to refer qualified users to institutional funding partners based on their risk and return requirements. Our proprietary Wormhole system connects our users and funding partners’ systems in real time, which minimizes manual review and approval process by the funding partners and allocates credit needs to various funding sources with different risk-and-return parameters. We previously offered credit digitalization solutions to our institutional funding partners, providing digitalized solutions throughout the credit process of loan products, including channel co-building, product co-developing, joint risk management, whole life cycle operation and customer service. We discontinued this legacy credit digitalization business in the third quarter of 2025. Starting from the third quarter of 2025, we launched our new digital technology services, under which we provide risk management empowerment services to banking partners and offer full guarantees on loans facilitated under this cooperation model through our guarantee company. Under this new model, the banking partners utilize their own channels, customers and loan products, while we solely provide risk management and guarantee services. Our Continuously Enhanced Risk Management Capabilities We have comprehensively strengthened our risk management framework, focusing on the following three key areas: data and model development, risk control system construction, and intelligent tool development. Data and Model Development By continuously introducing high-quality data sources and iteratively optimizing our algorithms, we have enhanced our core risk identification capabilities and our ability to navigate risk volatility. Specifically, we continuously incorporate qualification profiling data, such as aviation and travel records, occupation information, and social security data, to improve our ability to identify premium customers. By establishing a full-lifecycle data management platform, we more agilely identified and phased out ineffective or low quality data, reducing noises in decision-making and significantly improving data effectiveness. In terms of modeling, we established and refined a holistic model system that combines business insights with advanced algorithms such as causal inference and survival analysis, which significantly enhanced our models' efficacy in risk identification and business growth. 82 Risk Control System Construction By refining both negative and positive strategies, we strengthened our ability to manage high-risk customer segments while enhancing our operational system for premium customers, effectively addressing risk volatility caused by industry uncertainties. For high-risk customers, we strengthened negative strategies, implementing timely transaction controls and phase-out disposals for those with significantly rising risk profiles. For premium customers, we further optimized credit limits, pricing, and repayment strategies to continuously enhance the competitiveness of our offerings. We also improved customer satisfaction and retention rates through personalized, real-time re-offers and exclusive dedicated one-on-one services, thereby optimizing our overall asset structure. Intelligent Tool Development We continuously advanced the deep integration of intelligent risk control tools with large AI models, making significant progress in building a next-generation intelligent risk control system. In strategy application, we utilized large AI models to create "strategy agents," achieving full-process automation and intelligence—from audience selection and homogeneous group segmentation to strategy generation and performance evaluation. This paradigm shift from a quantitative-driven to AI-driven approach has significantly improved both the efficiency and effectiveness of credit limit decisions. In data support, we achieved configurable management across the entire process—from data ingestion and processing to business application. This established a unified, flexible, and scalable data support system, providing a consistent and reliable data foundation for pre-loan approval, in-loan monitoring, and post-loan management. Technology and Security Technology has been our driving force and core competency. Our business success and growth of operation results sit on our strong technological capabilities and innovations. Our research and development expenses in 2025 amounted to RMB595 million (US$85.1 million), representing 4.5% of our operating revenue in 2025 and a year-on-year increase by 3.0%. Our strong commitments to technology and research and development talents, as well as abundant investments in research and development resources have empowered us to maintain our industry-leading technology capabilities, which have laid a solid foundation for our seamless user experience, continuous improvement in operational efficiency, robust information security of our platform, and various innovative initiatives. Data Security Management and Capability In 2025, we have continued to enhance our data security management framework covering the full data lifecycle, including data collection, transmission, storage, usage, sharing and disposal, to ensure that all data processing activities meet applicable compliance and audit requirements. We conduct regular security training, scenario-based drills and performance assessments to strengthen our employees’ ability to identify risks, prevent data leakage and respond to security incidents. Our security framework has evolved from a static, rule-based approach to a more proactive model driven by dynamic behavioral monitoring. Leveraging our security operation management platform and the analytical capabilities of large language models, we are able to perform business-contextual analysis of data access activities and identify high-risk behaviors involving sensitive data with greater precision. Through a multi-layered defense system spanning cloud, endpoint and network boundaries, and the use of encryption, dynamic data masking, data isolation and data loss prevention technologies, we seek to safeguard the integrity, availability and confidentiality of our data. Benefiting from our continued investment in data protection and governance, we have maintained a straight record of zero leakage in data security. In 2025, our systems intercepted over 560 million potential data security threats, effectively defending against typical cyberattacks in particular, which we believe further strengthened the foundation supporting our business operations and innovation. Risk Management Technology System We continue to enhance our risk management system with a focus on improving intelligence, automation and precision. We have introduced intelligent strategy tools that utilize AI technologies to support automated rule recommendations, assist risk management personnel in reviewing and optimizing historical strategies, and conduct ongoing portfolio-level risk monitoring and early warning. These tools improve both the efficiency and accuracy of risk strategy management and enable faster responses to evolving business conditions. 83 In addition, we have developed a unified feature platform that enables efficient processing and centralized management of risk-related features, providing flexible and reusable data assets for strategy development. We have also implemented an intelligent supplemental verification system, which automatically identifies and processes additional user information for credit enhancement purposes, improving both risk identification accuracy and user experience. These enhancements address prior limitations, such as fragmented feature management, reliance on manual strategy development and limited user verification channels. As a result, our risk management system has become more real-time, flexible and scalable. We believe these capabilities also provide a solid foundation for further advancement of intelligent risk management, including automated strategy generation, automated data mining and performance tracking. Data-Driven and Refined Marketing System Leveraging our customer data platform, we analyze user data to develop detailed user profiles, enabling refined user segmentation strategies and tailored marketing programs based on user behavior, preferences and historical transaction data. Through our strategy simulation system, we model and predict the performance of different marketing strategies, allowing our operational teams to configure and adjust strategies more effectively through visualized tools. We also utilize AI models to identify optimal timing for user engagement, which we believe enhances user experience and improves marketing effectiveness. By integrating with our experimentation platform and leveraging experimental data, we continuously test and refine product features and user experience to better align with user needs. In addition, through the integration of our campaign management platform and real-time analytics capabilities, we monitor key business metrics, user behavior and conversion performance, enabling timely evaluation of marketing effectiveness and rapid adjustment of strategies. Through these ongoing iterations, we continue to enhance the efficiency and intelligence of our marketing activities and move toward more data-driven decision-making and marketing automation. Efficiency Enhancement and Compliance Framework We have integrated AI capabilities, including large language models and AI agents, into various aspects of our operations to enhance user experience, improve operational efficiency and support compliance. On the user-facing side, AI technologies enable more natural human-machine interactions and more accurate matching of user needs, transforming user engagement from passive responses to more proactive and predictive interactions. In our risk management processes, AI-powered tools have improved both efficiency and accuracy of risk identification. At the strategy level, AI-enabled systems support the generation of differentiated risk strategies by analyzing multi-dimensional user data, and facilitate continuous optimization and evaluation of strategies across the full lifecycle. In our compliance and quality control processes, AI-assisted systems enhance semantic understanding and multi-modal analysis capabilities, improving coverage and accuracy of compliance reviews. In user operations, AI-enabled tools assist users in completing certain processes through intelligent interactions, improving user experience while reducing manual workload and supporting risk control objectives. In customer service, AI agents have become an important component of our service infrastructure. These systems provide efficient and accurate responses to user inquiries, significantly improving service efficiency and user satisfaction. Currently, AI-powered customer service handles a substantial portion of daily user inquiries, reducing reliance on manual support while improving response time and service quality. Competition The credit service market in China is well-developed and highly competitive. As a leading credit technology-empowered consumer financial service enabler in China, we compete with major internet companies, traditional financial institutions, and other installment loan service providers with similar business matrix. Some participants in the internet industry have built up large user bases relying on their strengths in e-commerce platform scenarios and financial resources. With the more active implementation of anti-monopoly policies in China, we expect the market landscape to change in favor of smaller players, with more opportunities to develop their strength and gain market share in their specific market segments. We are strategically focused on the young generation consumers that are not fully covered by traditional financial institutions. Our consumption scenarios, risk management efficiency and superior user experience are major and unique competitiveness that we enjoy over banks and other platform operators. Competition in installment e-commerce platform services is also intense but in more dimensions. We compete directly with dominant players in the internet industry on such services. We may also compete in various sub-sectors with operators of payment services, local brands run by sophisticated international players, and start-ups in BNPL business. 84 Despite all these competition and challenges, our installment e-commerce platform is well-positioned to leverage our know-how and technology capabilities to address customers’ demands, thereby bolstering our competitiveness. Comparing to the two segments above, the market for fintech empowerment services is at an early stage of a more tech-intensive and capability-driven market. There are players with business covering certain parts of services to financial institutions such as customer acquisition. Our fintech empowerment service is able to compete favorably by leveraging technological capabilities and business experience accumulated in the credit service sector and providing services that better address the demands of the financial institutions. We believe that our ability to compete effectively for users, investors and funding partners depends on many factors, including the variety of product and service offerings, user experience, effectiveness of risk management, risk-adjusted return, partnership with third parties, marketing efforts and brand strength. Furthermore, as our business continues to grow, we face significant competition for highly-skilled personnel, including operation managers, engineers, product managers and risk management personnel. The success of our growth strategy depends on our ability to retain existing personnel and attract additional talent. Intellectual Property We rely on a combination of patent, copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We have registered 257 patents in China and have applied for 289 additional patents with the PRC State Intellectual Property Office. We have registered 252 software copyrights and 31 copyrights for artworks with the PRC National Copyright Administration. We have 205 registered domain names, including lexin.com, lexinfintech.com, and fenqile.com. As of the date of this annual report, we had 520 registered trademarks, including our “ ,” “,” and “” trademarks. Insurance We provide social security insurance including pension insurance, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance, and housing provident fund plans through a PRC government-mandated defined contribution plan for our employees. We also purchased vehicles insurance and directors and officers liabilities insurance. We do not maintain business interruption insurance or key-man insurance. We consider our insurance coverage to be sufficient for our business operations in China. Seasonality We experience some seasonality in our business, reflecting a combination of seasonal demand for consumer loans and seasonality patterns associated with the online consumption. For example, we generally experience less user traffic and purchase orders during national holidays in China, particularly during the Chinese New Year holiday season in the first quarter of each year. Furthermore, e-commerce companies in China hold special promotional campaigns in June or November each year, which improve our results for that quarter. The demand for our products and services is higher in March, April, September, October and November, which generally corresponds to the start of school and our promotional activities around those promotional campaigns. While our growth has somewhat masked this seasonality, our quarterly operating results could be affected by such seasonality in the future. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our quarterly results may fluctuate significantly due to the seasonality of our business and may not fully reflect the underlying performance of our business.” Regulations This section sets forth a summary of the most significant rules and regulations that affect our business activities in China. We are regulated by various government authorities, including, among others: •the MIIT, regulating the telecommunications and telecommunications-related activities including the internet information services and other value-added telecommunication services; •the People’s Bank of China, as the central bank of China, regulating the formation and implementation of monetary policy, issuing the currency, supervising the commercial banks and assisting the administration of the financing; 85 •the CBIRC, regulating financial institutions and promulgating the regulations related to the administration of financial institutions. 86 Regulations Relating to Foreign Investment Restrictions The PRC Foreign Investment Law The establishment, operation and management of corporate entities in the PRC, including foreign-invested companies, are subject to the PRC Company Law. On December 29, 2023, the Standing Committee of the National People’s Congress promulgated the third revised Company Law, which made further amendments such as improving the company’s establishment and exit system, optimizing the company’s organizational structure, perfecting the company’s capital system and strengthening the responsibilities of controlling shareholders and management personnel, etc., and has taken effect on July 1, 2024. Unless otherwise provided in the PRC Foreign Investment Law, the provisions of the Company Law shall prevail. With respect to the period for payment of the registered capital, pursuant to the latest revised Company Law, all shareholders of a PRC limited liability company shall fully pay up the registered capital subscribed for by such shareholders within five years since the establishment date of the PRC limited liability company, unless otherwise provided by laws and regulations. On July 1, 2024, the State Council issued the Regulations of the State Council on the Implementation of the Registered Capital Registration Management System of the “ Company Law of the People’s Republic of China”, which further specified the detailed requirements and measures of the registration and management of registered capital under the latest revised Company Law. Pursuant to such provisions, there shall be a three-year interim period from July 1, 2024 to June 30, 2027 for the existing companies to adjust their time limit for capital contribution. In March 2019, the National People’s Congress passed the PRC Foreign Investment Law, which became effective in January 2020. The PRC Foreign Investment Law replaces the Law on Sino-Foreign Equity Joint Ventures, the Laws on Sino-Foreign Contractual Joint Ventures and the Law on Foreign-Capital Enterprises to become the legal foundation for foreign investment in the PRC. In December 2019, the State Council promulgated the Implementation Regulations on the Foreign Investment Law, which became effective in January 2020 and further clarified and elaborated the relevant provisions of the Foreign Investment Law. The Foreign Investment Law and its implementation regulations embody the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments, including, among other things: •Negative List. Investments in the PRC by foreign investors and foreign-invested enterprises are regulated by the Catalogue of Encouraged Industries for Foreign Investment (Edition 2025), was promulgated by the Ministry of Commerce and the NDRC in December 2025 and came into effect on February 1, 2026, and the 2024 Negative List, was promulgated by the Ministry of Commerce and the NDRC in September 2024 and became effective on in November 2024. The Foreign Investment Law reiterates and officially establishes the pre-access national treatment plus negative list management system for foreign investment. The negative list, in a unified manner, lists the restrictive measures for the entry of foreign investment. It further expands the scope of permitted industries by foreign investment by reducing the number of industries that fall within the negative list where restrictions on the shareholding percentage or requirements on the composition of board or senior management still exists. In addition, industries such as value-added telecommunication services (except e-commerce, domestic multi-party communications services, store-and-forward service and call center service), including internet information services, are still restricted from foreign investment pursuant to the 2024 Negative List. We provide the value-added telecommunication services that are restricted to foreign investment through the consolidated variable interest entities. •Information Reporting System. The Foreign Investment Law provides that a foreign investment information reporting system shall apply to the foreign-invested enterprises. In December 2019, the Ministry of Commerce and the SAMR jointly issued the Measures for Reporting of Foreign Investment Information, which became effective in January 2020 and superseded the Interim Administrative Measures for the Record-filing of the Establishment and Modification of Foreign-invested Enterprises on the same date. Pursuant to these measures, since January 1, 2020, foreign investors that carry out investment activities directly or indirectly in China and the relevant foreign-invested enterprises shall, through the Enterprise Registration System and the National Enterprise Credit Information Publicity System operated by the SAMR, disclose their investment information to the competent authorities by submitting reports related to the establishment, modification and cancelation of corporations, and their annual reports. •Transition Period. The Implementation Regulations on the Foreign Investment Law require that, among others, existing foreign-invested enterprises established before the effectiveness of the Foreign Investment Law may choose to change their organizational forms or structures and go through the change of registration procedures at any time prior to January 1, 2025. Otherwise, the relevant local branch of the SAMR shall not process other registration matters applied for by the enterprise, and shall publicize relevant information of such enterprise. 87 In December 2020, the NDRC and the Ministry of Commerce promulgated Measures for Security Review of Foreign Investment, which became effective on January 18, 2021. The Foreign Investment Security Review Mechanism in charge of organization, coordination and guidance of foreign investment security review is thereunder established. A working mechanism office shall be established under the NDRC and led by the NDRC and the Ministry of Commerce to undertake routine work on the security review of foreign investment. According to the Foreign Investment Security Review Mechanism, foreign investment activities falling in the scope such as important cultural products and services, important information technologies and internet products and services, important financial services, key technologies and other important fields that concern state security while obtaining the actual control over the enterprises invested in, a foreign investor or a party concerned in the PRC shall take the initiative to make a declaration to the working mechanism office prior to making the investment. For more details of the Foreign Investment Law, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements in relation to the variable interest entities and their subsidiaries do not comply with the PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” Regulations Relating to Foreign Investment in Value-Added Telecommunication Services According to the Provisions on the Administration of Foreign-Invested Telecommunications Enterprises issued by the State Council in December 2001 and amended in September 2008, February 2016, and April 2022 respectively, the ultimate capital contribution percentage held by foreign investors in a foreign-invested value- added telecommunications enterprise shall not exceed 50% unless otherwise provided by the state. Furthermore, on March 29, 2022, the State Council issued the Decision of the State Council to Amend and Repeal Certain Administrative Regulations, which amended the Provisions on the Administration of Foreign-Invested Telecommunications Enterprises issued in 2001, the main foreign investors who are engaged in value-added telecommunications business will be no longer subject to the requirement to demonstrate a good track record and operational experience in providing the services, and the amended rules simplify the application process for telecommunication business operation permits and shorten the review period. The Circular of the MIIT on Liberalizing the Restrictions on Foreign Shareholding Percentages in Online Data Processing and Transaction Processing Business (for-profit e-commerce business) promulgated by the MIIT, in June 2015, or Circular 196, allow a foreign investor to own more than 50% of the total equity interest in an e-commerce business. In July 2006, the Ministry of Information Industry (which was integrated into the MIIT with other governmental departments in March 2008), issued the Notice of the Ministry of Information Industry on Strengthening the Administration over Foreign Investment in the Operation of Value-Added Telecommunications Business. According to the notice, a foreign investor in the telecommunications service industry must establish a foreign invested enterprise and apply for a telecommunications service license. The notice also requires that: (i) PRC domestic telecommunications enterprises must not, through any form, lease, transfer or sell a telecommunications service license to a foreign investor, or provide resources, offices and working places, facilities or other assistance to support illegal telecommunications services operations by a foreign investor; (ii) value-added telecommunications enterprises or their shareholders must directly own the domain names and trademarks used in their daily operations; and (iii) each value-added telecommunications enterprise must have necessary facilities for its approved business operations and maintain such facilities only in the regions covered by its license. The 2024 Negative List stipulates that the ultimate foreign equity ownership in a value-added telecommunications service provider shall not exceed 50%, except for e-commerce business, domestic multi-party communications services business, store-and-forward business and call center business which may be 100% owned by foreign investors. On June 8, 2020, MIIT issued the Notice of Strengthening the Administration of Call Center Service, which provides that any entities engaging in call center service shall obtain corresponding business permits as required by the relevant laws and regulations, and shall conduct the business subject to the Catalog of Telecommunications Business. In light of the above restrictions and requirements, we provide the value-added telecommunication services through the consolidated variable interest entities, and such variable interest entities own the relevant domain names and registered trademarks and have the necessary personnel to operate the website. Regulations relating to Internet Information Services 88 Regulations relating to Value-added Telecommunication Service The Telecommunications Regulations of PRC promulgated in September 2000 and amended in July 2014 and February 2016, respectively, by the State Council and its related implementation rules, including the Catalog of Classification of Telecommunications Business issued and amended in June 2019 by the MIIT, categorize various types of telecommunications and telecommunications-related activities into basic or value-added telecommunications services. The Administrative Measures on Telecommunications Business Operating, promulgated by the MIIT in 2009 and most recently amended in July 2017, set forth more specific provisions regarding the types of licenses required to operate value-added telecommunications services, the qualifications and procedures for obtaining such licenses and the administration and supervision of such licenses. Under these regulations, a commercial operator of value-added telecommunications services must first obtain a license for value-added telecommunications business, or value-added telecommunications service license, from the MIIT or its provincial level counterparts. Administration of mobile internet application information services is strengthened through the Regulations for Administration of Mobile Internet Application Information Services, or the MIAIS Regulations, issued in June 2016 and amended in June 2022, effective in August 2022. The MIAIS Regulations were enacted to regulate application information services and application distribution services which engage in Internet application stores and others. App providers and application distribution platforms are required to obtain relevant qualifications pursuant to PRC laws and regulations. The amended provisions also outline the requirements for application providers, which include, among others, (i) verifying user identity information; (ii) obtaining an internet news and information services license or other administrative licenses for information services; and (iii) establishing a mechanism for examining the content of the information. In particular, the amended provisions stipulate the obligations in relation to cybersecurity, data security and personal information protection, emphasizing the necessity for personal information collection and the fact that users shall not be denied the use of the basic function services of certain applications merely on account of their refusal to provide unnecessary personal information. Our online consumer finance platform, Fenqile, operated by Shenzhen Fenqile, has obtained (i) certain value-added telecommunications service license for the operation of domestic call center service from MIIT in May 2022, which will remain valid until May 2027; and (ii) certain value-added telecommunications service license for online data processing and transaction processing from the Guangdong Administration of Telecommunications in July 2024, which will remain valid until July 2029. Mengtian Technology, one of the variable interest entities, has obtained certain value-added telecommunications service license for the operations of online data processing and transaction processing and internet content service from the Guangdong Administration of Telecommunications in January 2024, which will remain valid until January 2029. Furthermore, it is uncertain if the variable interest entities and their subsidiaries will be required to obtain a separate operating license with respect to our mobile applications in addition to the value-added telecommunications business license. Regulations Relating to Official Accounts of Internet Users On September 7, 2017, the CAC promulgated the Administrative Provisions on the Information Services Provided through Official Accounts of Internet Users, which became effective on October 8, 2017. It requires that providers review user information such as account information and qualifications for and scope of services, categorize users, and file such information with the local cyberspace administrator; and further establish a database with respect to registered persons, published content, the number of people subscribing to a given account, and the number of people reading the relevant articles published by the official user accounts, and implement specific management systems for official user accounts to be filed with the CAC. On December 15, 2019, the CAC promulgated the Regulations on the Ecological Governance of Network Information Content, effective from March 1, 2020, which specify the content scopes that are encouraged, prohibited or prevented from producing, re-producing and publishing. The network information content service platforms should fulfill the main responsibility of content management and establish an ecological governance mechanism of the network information, improve system for user registration, account management, information publishing review, emergency response, and etc. 89 On January 22, 2021, the CAC promulgated the amended Administrative Provisions on the Information Services Provided through Official Accounts of Internet Users, effective from February 22, 2021, further clarifies that the providers shall assume primary responsibility for establishing, improving and strictly implementing user registration, information content verification, emergency response, cybersecurity, data security, personal information protections, intellectual properties protections, credit assessment and other administration system. The providers shall take measures such as compound verification to authenticate the identification information of registered users based on mobile phone number, organization code, identity card number, etc., and the providers shall not serve users who fail to provide their real identity information or make false registration. In addition, the providers shall mark the verified official accounts and publicize the content category, the name of the operator, the registered operation address, the organization code, contact information and other registration information according to different natures of the users. If any official accounts violate the laws and regulations, the providers shall take appropriate measures to stop any such violations, such as, notifying the user to make corrections, restricting account functions, suspending information update, stopping advertising, closing or canceling accounts, keep relevant records and promptly report to the competent authorities. Regulations Relating to Online Consumer Finance Services Regulations Relating to Online Lending Business The PRC laws and regulations governing our online lending business are developing and evolving. The Guidelines, issued and effective on July 18, 2015, stipulates that direct lending on P2P online lending platforms falls within the scope of lending between private citizens, and P2P online lending shall stick to its functions of serving as a platform to provide investors and financiers with information exchange, matching, credit rating and other intermediary services. It emphasizes that, P2P online lending institutions shall specify their nature as information intermediaries, mainly provide information services for the direct lending between borrowers and lenders, and shall neither provide credit enhancement services nor engage in illegal fund-raising. Also, it outlines that the online lending business shall be regulated by the China Banking Regulatory Commission, which was merged into the CBIRC in 2018. In December 2017, the Internet Finance Rectification Office and the Online Lending Rectification Office jointly issued the Circular 141, outlining general requirements on the “cash loan” business conducted by network microcredit companies, banking financial institutions and online lending information intermediaries. The Circular 141 specifies the features of “cash loans” as not relying on consumption scenarios, with no specified use of loan proceeds, with no qualification requirement on users, and unsecured. The Circular 141 sets forth several general requirements with respect to “cash loan” business, including, without limitation: (i) no organizations or individuals may conduct the lending business without obtaining approvals for the lending business; (ii) the aggregated borrowing costs of borrowers charged by institutions in the forms of interest and various fees should be annualized and subject to the limit on interest rate of private lending set forth in the judicial interpretations issued by the Supreme People’s Court; (iii) all relevant institutions shall follow the “know-your-customer” principle and prudentially assess and determine the borrower’s eligibility, credit limit and cooling-off period. Loans to any borrower without income sources are prohibited; and (iv) all relevant institutions shall enhance the internal risk control and prudentially use the “data-driven” risk management model. The Circular 141 also sets forth several requirements on banking financial institutions participating in “cash loan” business, including, among other things, (i) such banking financial institutions shall not extend loans jointly with any third-party institution which has not obtained approvals for the lending business, or fund such institution for the purpose of extending loans in any form; (ii) with respect to the loan business conducted in cooperation with third-party institutions, such banking financial institutions shall not outsource the core business (including the credit assessment and risk control), and shall not accept any credit enhancement service whether or not in a disguised form (including the commitment to taking default risks) provided by any third-party institutions with no guarantee qualification and (iii) such banking financial institutions must require and ensure that the third-party institutions shall not collect any interests or fees from the borrowers. Any violation of the Circular 141 may result in penalties including suspension of operation, orders to make rectification, condemnation, revocation of license, order to cease business operation, and criminal liabilities. 90 In July 2020, the CBIRC implemented the Commercial Banks Online Lending Measure to formulate the regulation regime for online lending business conducted by commercial banks, which was amended in June 2021. For example, the Commercial Banks Online Lending Measures require that a commercial bank shall not grant an individual with a credit line more than RMB200,000 and the term of the personal credit loan extended under such credit shall not exceed one year in the case of repayment of the principal due in a lump sum. Meanwhile, reading of the loan contract by a borrower shall be mandatory in the loan application process and reasonable time limit shall be set therefor. Furthermore, based on the Administrative Measures for Personal Loans promulgated by the NFRA on February 2 and became effective on July 1, 2024, lenders (banking financial institutions) shall establish an effective whole‑process management mechanism and risk management for personal loans. The term of loans for personal consumption shall not exceed five years, for a loan of no more than RMB200,000, the relevant contracts and documents may be concluded through e-banking channels (excluding loans for personal housing purposes), and the lender shall make audio and video recordings of the signing process and properly keep the relevant videos where a contract is signed in person. And the lenders are requested to specify the qualifications of the third parties, which are trusted part of specific matters in a loan investigation and shall not entrust a third party to complete the core matters of risk control in a loan investigation involving borrowers’ true intention, income level, debt status, source of proprietary funds and access of an external assessment agency, etc. In addition, the Commercial Banks Online Lending Measures set several rules for commercial banks to collaborate with external institutions on online lending, including: (i) commercial banks shall conduct pre-admission assessments on cooperative external institutions and manage such external institutions by a name list; (ii) commercial banks shall not accept any credit enhancement services directly or in disguised form, from third parties without qualification to provide guarantee, credit insurance or guarantee insurance; (iii) the cooperative external institutions (except for an insurance company or an institution with guarantee qualification) shall not charge any interest or expense to the borrower in any form; (iv) commercial banks shall independently conduct the credit approval, contract execution and other core risk control business; (v) the collaboration agreement between the commercial banks and the cooperative external institutions shall be executed in writing and specify the cooperation scope, data confidentiality, transitional arrangement for change or termination of the matters under cooperation, and the commitment of the external institutions for cooperating with the commercial bank in accepting the inspection by the banking regulatory authorities; and (vi) the commercial banks shall fully disclose, in conspicuous place of relevant page, the information of the cooperative external institutions, the information of the cooperative product, as well as rights and responsibilities of the commercial bank and the cooperative external institutions. The Commercial Banks Online Lending Measures set forth a transitional period of these measures, which is two years from the date on which the Commercial Banks Online Lending Measures is implemented. The business newly increased in the transitional period shall comply with the requirement therein, and a plan to rectify the online lending business within such transitional period shall be formulated and submitted to the banking regulatory authority within one month from the implementation date. The Commercial Banks Online Lending Measures shall also apply as reference to the online lending business conducted by consumer finance companies and auto finance companies (except for the above-mentioned requirements on the terms of personal credit loan). In February 2021, the CBIRC issued the Circular 24, which sets forth several requirements on the online lending business of the commercial banks, including: (i) the commercial banks shall conduct the risk control measures independently and the core credit assessment and risk control business are prohibited to be outsourced; (ii) except for the commercial banks which have no actual business sites, mainly conduct online business and meet other requirements stipulated by the CBIRC, local commercial banks shall conduct online lending within the jurisdiction where such commercial banks are registered; and (iii) with respect to the online loan business conducted in cooperation with third-party institutions, the capital contribution of cooperative institutions shall not be less than 30% in a single loan. The online lending business of branches of foreign banks, trust companies, consumer finance companies and auto finance companies shall be subject to the Circular 24 and the Commercial Banks Online Lending Measures. 91 In July 2022, the CBIRC issued the Circular 14, which further requires commercial banks to strengthen their risk control and regulate the cooperation with third-party institutions in online loan business, including: (i) commercial banks shall enter into separate cooperation agreements in respect of joint capital contribution, information technology cooperation and other business cooperation, respectively, for clarifying rights and responsibilities of each party; (ii) commercial banks shall fulfill the primary responsibility in respect of loan administration. If internet loans involve cooperation with cooperative institutions in, for example, marketing, payment and settlement, and information technology, commercial banks shall strengthen the management of core risk control links, and shall not lower risk control standards due to business cooperation; (iii) commercial banks shall strengthen information and data management, and the written agreements signed by a commercial bank with a cooperative institution shall clearly specify the specific requirements for submission of relevant information. These rules also apply to branches of foreign banks, trusts, consumer finance companies and auto finance companies. On March 18, 2024, the NFRA promulgated the Rules on Consumer Finance Companies, which came into effect on April 18, 2024, raises the threshold of relevant authorization criteria of consumer finance companies, such as asset scale and operating income of major equity investors, as well as the minimum equity ratio requirement, in a bid to promote shareholders to play a supporting role and assume shareholder responsibility. It strengthens supervision on business classification, corporate governance supervision, and risk management, and enhancing consumer protection. The Rules on Consumer Finance Companies also stipulates that (i) a consumer finance company shall implement a list system for the management of cooperative institutions, and classify and manage cooperative institutions according to the contents and risks of cooperation. “cooperative institutions” as mentioned includes but is not limited to all kinds of institutions that cooperate with consumer finance companies in marketing, joint financing, loan issuance, payment and settlement, risk sharing, information technology, overdue collection, etc., (ii) consumer finance companies shall not jointly invest in the issuance of loans with institutions without lending qualifications; It shall not accept credit enhancement services provided by institutions without guarantee qualification and failing to meet the requirements of credit insurance and guarantee insurance operation supervision; No relaxation of loan quality control due to the introduction of guarantee and credit enhancement; (iii) The consumer finance company shall sign a cooperation agreement with the cooperative institution, clearly stipulate necessary conditions, and the cooperative institution shall promise to cooperate with the consumer finance company to accept the inspection of the regulatory authorities and provide relevant information and materials. The cooperative institution shall be required not to collect interest fees from the borrower in any form, except for financial institutions, insurance companies and cooperative institutions with guarantee qualifications that jointly invest in the issuance of loans. On April 23, 2024, the NFRA issued the Notice on Further Regulating Internet Loan Business of Joint-stock Banks and Other Three Types of Banking Institutions. It requires Three Types of Banks to (i) refrain from excessively relying on customer acquisition, traffic redirection, or credit enhancement guarantees provided by cooperative institutions to pursue short-term rapid growth in internet loan business scale or profitability; (ii) continuously improve their internet loan business management mechanisms and institutional frameworks, establish robust policies and procedures, and formulate scientifically effective risk management indicators, avoid overreliance on a single category of internet loan business or a single partner; (iii) prudently evaluate borrowers’ genuine debt repayment capacity and ensure that credit review standards shall not be lowered solely due to credit enhancement guarantees provided by cooperative institutions; (iv) establish a unified, institution-wide mechanism for partner admission and exit with clear criteria and procedures; and (v) implement measures such as reducing cooperation scale or terminating cooperation for partners with significantly elevated delinquency rates or financing costs. On April 1, 2025, the NFRA promulgated the Notice on Strengthening the Management of Internet Loan Assistance Business of Commercial Banks and Improving the Quality and Efficiency of Financial Services, which came into effect on October 1, 2025. The notice reinforces the head office’s responsibility for managing internet loan facilitation, sets clear entry requirements for platform operators and credit enhancement service providers, and emphasizes that commercial banks must adhere to the principles of centralized management by head offices, alignment of authority and responsibilities with benefits, reasonable risk pricing, and appropriate business scale when conducting internet loan assistance business. It further stipulates that (i) a commercial bank shall specify platform and credit enhancement service fees standards and ranges in agreements, include the latter in borrowers’ total financing costs, and specify the overall cost range; a platform operator shall not charge borrowers any interest or fees and a credit enhancement service provider must not inflate credit enhancement service rates through disguised charges such as consulting or advisory fees; (ii) the total financing cost paid by borrowers for each loan shall comply with the relevant provisions of the Opinions of the Supreme People’s Court on Further Strengthening Financial Trial Work; a commercial bank and its internet loan facilitation partner shall fully disclose key information to borrowers, and shall not charge any fees other than those explicitly disclosed; (iii) a commercial bank shall maintain and disclose an official list of approved platform and credit enhancement partners, and shall not cooperate with unlisted entities; if a commercial bank pays cooperation fees based on a proportion of the actual interest received from the loan, the payment schedule shall be 92 aligned with the loan principal repayment schedule; and (iv) a commercial bank shall include the credit enhancement balances provided by credit enhancement service providers under unified credit management and assess their compensation capacity at least on a quarterly basis. On March 17, 2025, the NFRA issued the Notice on Developing Consumer Finance to Boost Consumption, which stipulated several measures to guide financial institutions in actively supporting consumption enhancement, including: (i) with respect to the customers with good creditworthiness large-sum consumption needs, the maximum limit for self-disbursement of personal consumption loans may be increased on a temporary basis from RMB 300,000 to RMB 500,000, and the maximum limit for personal online consumption loans may be increased on a temporary basis from RMB 200,000 to RMB 300,000; (ii) with respect to the customers with long-term consumption needs, the loan tenure of personal consumption loans granted by commercial banks may be extended on a temporary basis from a maximum of five years to a maximum of seven years. On June 19, 2025, the People’s Bank of China, the NDRC, the Ministry of Finance, the Ministry of Commerce, the NFRA, and the CSRC jointly issued the Guiding Opinions on Financial Support for Boosting and Expanding Consumption. The Guiding Opinions on Financial Support for Boosting and Expanding Consumption provides that in order to strengthen the credit supply for goods and services consumption and better meet financing needs in consumption sectors, financial institutions shall serve as the primary channel of credit support, promote the integration of internet and big data technologies with consumer finance, streamline the application, approval and disbursement processes for online consumer credit products and enhance the accessibility of consumer financing. On December 12, 2025, the Ministry of Commerce, the People’s Bank of China and the NFRA jointly issued a Circular on Strengthening Commerce-Finance Synergy to Further Boost Consumption, which stipulates measures to guide financial institutions to intensify support for key consumption sectors, including: calibrating loan disbursement ratios, tenors, and interest rates based on repayment capacity and creditworthiness, implementing differentiated policies for personal consumption loan limits, maturities and pricing, and expediting the expansion of personal consumption loan business. Regulations Relating to Loan Interest The Civil Code of PRC, which was promulgated by the National People’s Congress in May 2020 and became effective in January 2021, requires that the interest rates charged under a loan agreement must not violate applicable provisions of the PRC laws and regulations and the interest shall not be deducted from the proceeds of the loan in advance, and if the interest is deducted from the proceeds in advance, the loan shall be repaid and the interest shall be calculated based on the actual loan amount. In accordance with the Provisions on Several Issues Concerning Laws Applicable to Trials of Private Lending Cases issued by the Supreme People’s Court in August 2015 and effective in September 2015, or the 2015 Private Lending Judicial Interpretations, agreements between a lender and a borrower on loans with annual interest rates below 24% are valid and enforceable. With respect to loans with annual interest rates between 24% and 36%, if the interest on the loans has already been paid to the lender, and so long as such payment has not damaged the interest of the state, the community or any third parties, the courts will likely turn down the borrower’s request to demand the return of the interest payment. If the annual interest rate of a private loan is higher than 36%, the obligations to pay interest payment in excess of the maximum interest rate allowed will be invalidated. In December 2020, the Supreme People’s Court issued the Decision on Amending the Provisions of the Supreme People’s Court on Several Issues the Application of Law in the Trial of Private Lending Cases (2nd Revisions in the year of 2020), which amended several provisions of the 2015 Judicial Interpretation including the upper limit of judicial protection for private lending interest rates. The Judicial Interpretation Amendment provides that where the lender requests the borrower to pay interest in accordance with the interest rate agreed upon in the agreement, the people’s court shall support such request, except where the interest rate agreed by both parties exceeds four times of the one-year Loan Prime Rate at the time of the establishment of the agreement, or the Quadruple LPR Limit. The one-year Loan Prime Rate refers to the one-year loan market quoted interest rate issued by the National Bank Interbank Funding Center which was authorized by the People’s Bank of China, on the 20th of each month since August 20, 2019. According to the Judicial Interpretation Amendment, the upper limit of interest rates of 24% and 36% provided in the 2015 Private Lending Judicial Interpretation, are replaced by the Quadruple LPR Limit. Moreover, if the lender and the borrower agree on both the overdue interest rate and the liquidated damages or other fees, the lender may choose to claim any or all of them, but the portion in total exceeding the Quadruple LPR Limit shall not be supported by the people’s court. 93 In addition, the Supreme People’s Court issued the Official Reply to Issues on the Application of the Interpretations of the Supreme People’s Court of New Private Lending in December 2020, and it became effective in January 2021. The official reply confirms that any disputes arising from the relevant financial business conducted by the microcredit companies, financing guarantee companies, regional equity market, Pawn Enterprises, financial leasing companies, commercial factoring companies and local assets management companies that are supervised by the local financial supervision governmental authorities, shall not apply to the Interpretations of the Supreme People’s Court of New Private Lending. In March 2021, the People’s Bank of China releases the Announcement No. 3 to ensure orderly competition in the loan market and protect the legitimate rights and interests of financial consumers, all loan products are required to expressly list their annualized interest rates, specifically: (i) all lending institutions are required to display the annualized rate of each loan product prominently on the website, mobile app, poster, and any other channels where the product is marketed, and specify the annualized rate in the loan contract. Daily and monthly interest rates may also be displayed if necessary, but not more prominently than the annualized interest rates; (ii) lending institutions include but are not limited to depository financial institutions, automobile finance companies, consumer finance companies, micro-lending companies, and internet platforms that advertise or display loan services; (iii) the annualized rate of a loan should be calculated as the annualized ratio of total costs (to borrower) to outstanding principal amount. The costs include interest and other fees and charges directly related to the loan. The amount of principal should be specified in the loan contract or other loan certificates. If the loan is repaid in installments, the outstanding principal amount should be the balance after each repayment; and (iv) the calculation of the annualized interest rate may be based on compound interest or simple interest. The calculation based on compound interest is equivalent to that of the internal rate of return, and the simple-interest approach should be specified as such. On March 15, 2026, the NFRA and the People’s Bank of China jointly issued the Provisions on Clear Disclosure of the Comprehensive Financing Cost of Personal Loan Business, which will come into effect on August 1, 2026, stipulate that: (i) when conducting personal loan business, lenders shall present a disclosure statement of comprehensive financing costs to borrowers; (ii) where installment payment business is handled in online consumption scenarios, the loan principal, installment arrangements, service fees charged, charging entities, the annualized comprehensive financing cost under normal performance, and contingent cost items and charging standards under breach scenarios shall be clearly displayed in a prominent manner on the payment page of the consumption order. Meanwhile, it shall be clearly indicated that, apart from the cost items already disclosed, no other interest or fees will be charged; (iii) in cooperation agreements signed with cooperating institutions, lenders shall clearly specify the responsibilities and obligations of all parties in implementing the requirements for the disclosure of the comprehensive financing cost. Lenders shall strengthen the management of cooperating institutions and promptly take corrective measures against violations or breaches by cooperating institutions, and if the circumstances are serious, lenders shall take measures such as terminating cooperation, recovering losses in accordance with the law, and pursuing legal liability; (iv) the term “lenders” as referred to in these Provisions means financial institutions and local financial organizations such as commercial banks, rural cooperative banks, rural credit cooperatives, auto finance companies, consumer finance companies, finance companies of enterprise groups, trust companies, and microloan companies. “Cooperating institutions” means third-party institutions that cooperate with lenders in carrying out personal loan business in areas such as marketing and customer acquisition, guarantee and credit enhancement. Regulations Relating to Campus Online Lending In April 2017, the CBIRC issued the Guidelines on Prevention and Control of the Risks in Banking Industry, to emphasize the relevant requirements on the campus online lending business provided in the Rectification of Campus Online Lending Notice, which include the prohibitions of: (i) marketing to individuals unable to repay loans; (ii) providing online lending service to college students under the age of eighteen; (iii) conducting false and fraudulent advertising and promotion; or (iv) providing usurious loans in disguised forms. In May 2017, the CBIRC, the Ministry of Education and Ministry of Human Resources and Social Security issued the Notice on Further Strengthening the Regulation and Management Work of Campus Online Lending Business, which provides that (i) the commercial banks and the policy banks may research and develop financial products and provide loans that provide general assistance to college students and support them in areas such as learning and training, consumption and entrepreneurship, and provide customized and quality financial services to college students with reasonable credit limits and interest rates; (ii) any entity established without approval of the relevant banking regulatory authority shall not provide any credit services to college students so as to eliminate fraud, usurious loans or violent loan collections; and (iii) all campus online lending business conducted by the online lending information intermediaries shall be suspended and the outstanding balance of campus online lending loans shall be gradually reduced until reaching a zero balance. In February 2021, the CBIRC, the People’s Bank of China, the Ministry of Education, the Office of the Central Cyberspace Affairs Commission and the Ministry of Public Security jointly issued the Notice on Internet Consumer Loan for 94 College Students. The Notice on Internet Consumer Loan for College Students provides that the microcredit companies are prohibited to provide internet consumer loans to college students. In addition, it sets forth several requirements on the banking financial institutions participating in internet consumer loans for college students, including without limitation: (i) the banking financial institutions and its cooperative institution shall not conduct online precision marketing aimed at college students, and shall complete necessary filings and reports with relevant authorities before offline promotion in campus; (ii) the banking financial institutions shall strictly check credit qualifications and the identities of college students and their use of loans, conduct comprehensive credit assessment, and receive the written confirm from the second repayment sources (such as parents, guardians, or other administrator of the college students) that they agree such internet consumer loan provided to such college student and they will guarantee the repayment of such internet consumer loan; and (iii) all credit information of internet consumer loan for college students shall be submitted to the financial credit information database in a timely, complete and accurate manner, and college students who do not agree to submit such credit information shall not be extended the loan. Regulations Relating to Illegal Fund-Raising and Unapproved Loan Facilitation Raising funds by entities or individuals from the general public must be conducted in strict compliance with applicable PRC laws and regulations to avoid administrative and criminal liabilities. The Notice on Relevant Issues Concerning the Penalty on Illegal Fund-Raising issued by the General Office of the State Council in July 2007, explicitly prohibit illegal public fund-raising. The main features of illegal public fund-raising include: (i) illegally soliciting and raising funds from the general public by means of issuing stocks, bonds, lotteries or other securities without obtaining the approval of relevant authorities, (ii) promising a return of interest or profits or investment returns in cash, properties or other forms within a specified period of time and (iii) using a legitimate form to disguise the unlawful purpose. 95 To further clarify the criminal charges and punishments relating to illegal public fund-raising, the Supreme People’s Court promulgated the Judicial Interpretations to Issues Concerning Applications of Laws for Trial of Criminal Cases on Illegal Fund-Raising which came into force in January 2011 and was revised in March 2022. These judicial interpretations provide that a public fund-raising will constitute a criminal offense related to “illegally soliciting deposits from the public” under the PRC Criminal Law, if it meets all of the following four criteria: (i) the fund-raising without the legal permit of the relevant authorities or is concealed under the guise of legitimate acts; (ii) the fundraising employs general solicitation or advertising such as the Internet, social media, promotion meetings, leafleting and messaging service advertising; (iii) the fundraiser promises to repay, after a specified period of time, the capital and interests, or investment returns in cash, properties in kind and other forms; and (iv) the fund-raising targets at the general public as opposed to specific individuals. An illegal fund-raising activity will be fined or prosecuted in the event that it constitutes a criminal offense. Pursuant to the judicial interpretations, an offender will be subject to criminal liabilities, if it illegally solicits deposits from the general public or illegally solicits deposits in disguised form (i) in an amount exceeding RMB1,000,000, (ii) with over 150 fund-raising targets involved, or (iii) with the direct economic loss caused to fund-raising targets exceeding RMB500,000. Also, an offender will be subject to criminal liabilities if it illegally solicits deposits from the general public or illegally solicits deposits in disguised form in an amount exceeding RMB500,000 or with the direct economic loss caused to fund-raising targets exceeding RMB250,000 and concurrently falls under the following circumstances (i) where it/he has been criminally prosecuted for illegal fund-raising, (ii) where it/he has been had been subject to administrative punishment for illegal fund-raising within two (2) years, or (iii) where there is adverse social impact or other serious consequences. In January 2019, the Supreme People’s Court, Supreme People’s Procuratorate and Ministry of Public Security issued the Opinions on Handling Criminal Cases of Illegal Fund-raising, which further clarified, among other things, that the PRC financial administration laws and regulations shall be considered as the basis for determining the illegality of illegal fund-raising. To further clarify the criminal liability and punishments relating to illegal loan facilitation, the Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security and the Ministry of Justice jointly issued the Opinions on Several Issues Concerning Handling Criminal Cases involving Illegal Loan Lending in July 2019, which became effective in October 2019. Pursuant to these opinions, anyone who illegally offers loans to unspecific targets (including entities and individuals) in the society for profit-making purposes without the approval by the regulatory authorities or beyond its business scope ten times or more within two years, which disturbs the financial market order and involves serious circumstances, shall be convicted of the crime of illegal business operation and punished accordingly in accordance with the PRC Criminal Law. These opinions also clarified that, to involve “serious circumstances,” the illegal lendings shall fulfill the condition that the actual annual interest rate exceeds 36%, provided that the introduction fee, consulting fee, management fee, overdue interest and liquidated damages shall be included in the calculation of actual annual interest rate. On August 1, 2019, the General Office of the State Council issued and promulgated the Guidance on Promoting the Healthy Development of the Platform Economy, which provides that the market-access management and supervision of financial services provided through online platforms in the finance sector are regulated by the laws, regulations and other relevant rules. In addition, entities conducting financial information intermediaries services and transaction-matching services are subject to the market-access management pursuant to relevant laws. The Regulations on the Prevention and Disposition of Illegal Fund-raising Practices promulgated by the State Council in January 2021, which took effect in May 2021, prohibits illegal fund-raising practices in any form. The funding of loans by us going through the trusts may render us to be deemed as a lender or a provider of financial services by the PRC regulatory authorities, and we may be subject to supervision and restrictions on lending under such PRC laws and regulations. Regulations Relating to Microcredit The Guidance on the Pilot Establishment of Microcredit Companies jointly promulgated by the CBIRC and the People’s Bank of China in May 2008 allows provincial governments to approve the establishment of microcredit companies on a test basis. Based on this guidance, many provincial governments in China, including that of Jiangxi Province, promulgated local implementation rules on the administration of microcredit companies. For example, Jiangxi Financial Service Office, the regulatory authority for microcredit companies in Jiangxi Province, promulgated Implementation Rules for the Supervision and Administration of Microcredit Companies in Jiangxi Province in January 2026, to impose the management duties upon the relevant regulatory authorities and to specify more detailed requirements on the microcredit companies, in accordance with which, among other requirements, (i) the microfinance companies are prohibited from 96 engaging in deposit taking activities from the public and illegal fund-raising; (ii) the modification of certain company registration issues shall be subject to the approval by the relevant regulatory authorities. In addition, Jiangxi Financial Service Office further issued the Guidelines for the Supervision and Administration of Network Microcredit Companies of Jiangxi Province (for Trial Implementation) in September 2016, or Jiangxi Network Microcredit Companies Guidelines, to provide more specific rules on the supervision and administration of network microcredit companies in Jiangxi Province, pursuant to which, among other things, the network microcredit company could raise funds through transferring credit asset and asset-backed securitization with the approval of the regulatory authority, apart from the capital contributions paid by its shareholders and loans from no more than two banking financial institutions. In addition, Jiangxi Network Microcredit Companies Guidelines require that (i) the network microcredit company shall primarily conduct its microcredit loan business through the internet, and that the working capital used in the microcredit loan business through the internet shall be no less than 70% of the aggregate working capital of such network microcredit company, and (ii) the aggregate loan balance within the municipality where such network microcredit company is located shall be no less than 30% of the aggregate loan balance of the network microcredit company. In November 2017, the Internet Finance Rectification Office issued the Notice on the Immediate Suspension of Approvals for the Establishment of Network Microcredit Companies, which became effective immediately and provides that the relevant regulatory authorities of microcredit companies at all levels shall suspend the approval of the establishment of network microcredit companies and the approval of any microcredit business conducted across provincial lines. On December 1, 2017, the Internet Finance Rectification Office and the Online Lending Rectification Office jointly issued the Circular 141, which emphasizes the suspension of approving new network microcredit companies and further imposes measures to strengthen the regulation of network microcredit companies. Such measures include, among others, that the network microcredit companies shall not provide campus loans, and should suspend the funding of network micro-loans with no specific scenario or designated use of loan proceeds, gradually reduce the volume of the existing business relating to such loans and take rectification measures in a period to be separately specified by authorities. On December 8, 2017, the Online Lending Rectification Office promulgated the Rectification Implementation Plans of Network Microcredit Companies to further detail the requirements on network microcredit companies. Pursuant to the Rectification Implementation Plans of Network Microcredit Companies, “network micro-loans” are defined as micro-loans provided through the internet by network microcredit companies controlled by internet enterprise. The features of network micro-loans include online borrower acquisition, credit assessment based on the online information collected from the business operation and internet consumption, as well as online loan application, approval and funding. Consistent with the Guidance on the Pilot Establishment of Microcredit Companies and the Circular 141, the Rectification Implementation Plans of Network Microcredit Companies emphasize several aspects where inspection and rectification measures must be carried out for the network micro-loans industry, which include, among others, (i) the network microcredit companies shall be approved by the competent authorities in accordance with the applicable regulations promulgated by the State Council, and the approved network microcredit companies in violation of any regulatory requirements shall be re-examined; (ii) qualification requirements to conduct network micro-loan business (including the qualification of sponsor shareholders, the sources of borrowers, the internet scenario and the digital risk-management technology); (iii) whether the qualification and funding source of the shareholders of network microcredit companies are in compliance with the applicable laws and regulations; (iv) whether the “integrated actual interest” (namely the aggregated borrowing costs charged to borrowers in the form of interest and various fees) are annualized and subject to the limit on interest rate of private lending set forth in the judicial interpretations issued by the Supreme People’s Court and, whether any interest, handling fee, management fee or deposit are deducted from the principal of loans provided to the borrowers in advance; (v) whether campus loans, or network micro-loans with no specific scenario or designated use of loan proceeds are granted; (vi) with respect to the loan business conducted in cooperation with third-party institutions, whether the network microcredit companies outsource the core business (including the credit assessment and risk control), or accept any credit enhancement service (whether or not in a disguised form) provided by any third-party institutions with no guarantee qualification; or whether any applicable third-party institution collects any interests or fees from the borrowers; and (vii) entities that conduct network micro-loans business without relevant approval or license for lending business. The Rectification Implementation Plans of Network Microcredit Companies also set forth that all related institutions shall be subject to inspection and investigation before the end of January 2018. Depending on the results, different measures shall be taken before the end of March 2018: (i) for institutions holding network microcredit licenses but do not meet the qualification requirements to conduct network micro-loan business, their network microcredit licenses shall be revoked and such institutions will be prohibited from conducting loan business outside the administrative jurisdiction of their respective approving authorities; (ii) for institutions holding network microcredit licenses that meet the qualification requirements to 97 conduct network micro-loan business but were found not in compliance with other requirements, such as the requirements on the integrated actual interest rate, the scope of loan and the cooperation with third-party institutions, such institutions shall take rectification measures in a period separately specified by authorities, and in the event that the rectification does not meet the authorities’ requirements, such institutions shall be subject to several sanctions, including revocation of license and orders to cease business operation. The Interim Measures for the Administration of Network Microcredit Companies Business (Draft) was released by the CBIRC and the People’s Bank of China in November 2020 to solicit public comments. The draft measures makes it clear that a network microcredit business shall be carried out mainly in the provincial administrative areas to which the entity is registered and shall not be cross-provincial without prior approval. The registered capital of a company operating a network microcredit business shall not be less than RMB1 billion and shall be a one-time paid-in monetary capital. The draft measures would expressly prohibit loans from being used to invest in bonds, stocks, financial derivatives, or asset management products to purchase houses or to repay mortgage loans. The draft measures would establish a three-year transition period, and those operating cross-provincial network microcredit businesses without approval will be phased-out. On December 31, 2024, the NFRA promulgated Interim Measures for the Supervision and Administration of Microcredit Companies, which stipulates the following requirements with respect to the microcredit companies, including: (i) internet microcredit companies shall ensure that core business segments such as loan application acceptance, risk review, approval, disbursement and recovery are completed through online operations. Microcredit companies are not allowed to conduct business across provinces, autonomous regions and centrally administered municipalities. The conditions for the operating regions of internet microcredit companies shall be separately stipulated; (ii) the loan balance for consumption purposes per household by an internet microcredit company shall not exceed RMB200,000, and the total loan balance for production and operation purposes per household shall not exceed RMB10 million; (iii) microcredit companies shall pay the loan principal to the borrowers in full amount as stipulated in the loan contracts, and shall not deduct interest, handling fees, management fees, security deposits or the like in advance; (iv) microcredit companies shall not merely provide services such as marketing and customer acquisition without actual funding, credit profiling and risk assessment, information technology support, or overdue debt collection, if they collaborate with a third-party institution to conduct lending business; (v) the balance of funds raised by microcredit companies through non-standardized forms such as bank loans and shareholder loans shall not exceed one-fold of their net assets at the end of the previous year. The balance of funds raised by microcredit companies through standardized forms such as bond issuance and asset securitization products shall not exceed four-fold of their net assets at the end of the previous year. The risk prevention and control system established by Internet-based microcredit companies shall include data-driven risk control models, anti - fraud systems, risk identification mechanisms, risk monitoring means, risk disposal measures, customer identity identification and registration systems, etc. Internet microcredit companies shall mainly rely on endogenous data information within Internet platforms and other data information obtained through legal channels to assess and prevent customers’ credit risks; (vi) microcredit companies shall strengthen the list-based management of cooperative institutions, establish a unified access mechanism covering various cooperative institutions, and clarify the corresponding standards and procedures. Microcredit companies that carry out marketing and customer acquisition, publish loan products or disburse loans through internet platforms such as websites, mobile applications, and small programs (including their own and those of cooperative institutions) shall file the information of such Internet platforms and the detailed information of the products with the local financial management institutions. Microcredit companies shall not assist entities without a lending business qualification in applying for the registration of websites, mobile applications, or mini-programs containing financial-related terms; (vii) for microcredit companies with serious illegal and irregular behaviors, the provincial local financial management institutions may revoke their microcredit business qualifications in accordance with relevant laws, regulations and regulatory provisions, and require them to complete the change registration or cancellation registration of their names and business scopes with the market supervision and management departments within the prescribed time limit; (viii) microcredit companies shall gradually meet the requirements stipulated in the Interim Measures for the Supervision and Administration of Microcredit Companies within the transition period specified by the provincial local financial management institutions. The transition period shall in principle not exceed two years. In December 2025, the People’s Bank of China and the NFRA jointly issued the Guidelines on Comprehensive Financing Cost Management for Microcredit Companies, or Circular 247, and the Q&A on the implementation of Circular 247 (the “Q&A”). To promote the reduction of comprehensive financing costs for loans by the microcredit companies, the Circular 247 stipulates that: (i) local financial regulatory authorities shall guide microcredit companies to disclose the comprehensive financing costs to borrowers prior to the execution of loan agreements. Comprehensive financing costs refer to interest and fees borne by the borrower directly related to the loan business, including but not limited to loan interest, guarantee fees, and insurance premiums. Such costs shall be disclosed in annualized form, specifying the fee items, charging standards, and the entities who collecting such costs. No other forms of interest or fees shall be charged to borrowers; (ii) local financial regulatory authorities shall guide microcredit companies to strictly comply with applicable laws and 98 regulations regarding the comprehensive financing costs of newly issued loans. Where such costs exceed 24%, local financial regulatory authorities shall take regulatory measures in accordance with the Interim Measures for the Supervision and Administration of Microcredit Companies, urge the microcredit companies to make immediate rectification, and concurrently, share information regarding such violation with the relevant local branch of the People’s Bank of China in a timely manner, to be integrated into the dynamic management for access to the credit reference system; (iii) where comprehensive financing costs of newly issued loans exceed four times the one-year Loan Prime Rate (LPR), local financial regulatory authorities shall take regulatory measures under the Interim Measures for the Supervision and Administration of Microcredit Companies to guide microcredit companies in gradually reducing the comprehensive financing cost of newly issued loans. For microcredit companies with larger scales and sound operations, regulatory authorities may appropriately intensify guidance, leading large companies to play a demonstrative role and drive the development of smaller ones. In principle, all microcredit companies shall reduce such costs to within four times the one-year LPR by the end of 2027; (iv) from 2026, local financial regulatory authorities shall, by year-end, assess progress and effectiveness in reducing comprehensive financing costs of newly issued loans (including cost levels, regulatory measures, and supportive policies), and evaluate feasibility of achieving the target of capping such costs at four times the one-year LPR. The Q&A further clarifies: (i) in principle, by the end of 2026, the proportion of newly issued loans with comprehensive financing costs exceeding four times the one-year LPR shall drop significantly; by the end of 2027, all such costs of newly issued loans shall be capped at four times the one-year LPR; (ii) certain non-bank financial institutions engaged in consumer credit business may be managed by reference to Circular 247. We engage in network microcredit businesses through Ji’an Microcredit, a subsidiary of Shenzhen Fenqile, in Ji’an, Jiangxi Province, which obtained a network microcredit license from the relevant local authority. The microcredit license was updated in July 2024 and will remain valid until August 2026. Regulations Relating to Financing Guarantee In March 2010, the CBIRC, the NDRC, the MIIT, the Ministry of Commerce, the People’s Bank of China, the SAIC and the Ministry of Finance of PRC promulgated the Tentative Administrative Measures for Financing Guarantee Companies. The Tentative Administrative Measures for Financing Guarantee Companies require an entity or individual to obtain a prior approval from the relevant regulatory body to engage in the financing guarantee business, and defines “financing guarantee” as an activity whereby the guarantor and the creditor, such as a financial institution in the banking sector, agree that the guarantor shall bear the guarantee obligations in the event that the secured party fails to perform its financing debt owed to the creditor. In August 2017, the State Council promulgated the Regulations on the Supervision and Administration of Financing Guarantee Companies, or the Financing Guarantee Regulations, which became effective on October 1, 2017. The Financing Guarantee Regulations define “financing guarantee” as a guarantee provided for the debt financing (including the extension of loans or issuance of bonds), and set out that the establishment of a financing guarantee company or engagement in the financing guarantee business without approval may result in several penalties including banning, an order to cease business operation, confiscation of illegal gains, fines of up to RMB1,000,000 and criminal liabilities. The Financing Guarantee Regulations also set forth that the outstanding guarantee liabilities of a financing guarantee company shall not exceed ten times of its net assets, and that the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party shall not exceed 10% of the net assets of the financing guarantee company, while the outstanding guarantee liabilities of a financing guarantee company vis-à-vis the same guaranteed party and its affiliated parties shall not exceed 15% of its net assets. In April 2018, seven PRC regulatory agencies including the CBIRC, the NDRC and the MIIT jointly issued four supporting documents, including Administration Measures for the Permits to Conduct Financing Guarantee Business, Measures for the Calculation of Outstanding Financing Guarantee Liabilities, Administration Measures for the Assets Ratio of Financing Guarantee Companies, and Guidelines to the Cooperation by and between the Banking Financial Institutions and Financing. Guarantee Companies, to set forth implementation measures of the Financing Guarantee Regulations. These measures cover various aspects of business operations of financing guarantee companies, including certain limits on outstanding guarantee liabilities and liability-to-asset ratio, and the requirements on cooperation model with the banking financial institutions. On October 9, 2019, the CBIRC and other eight PRC regulatory agencies promulgated the Supplementary Provisions on the Supervision and Administration of Financing Guarantee Companies, or the Financing Guarantee Supplementary Provisions. The Financing Guarantee Supplementary Provisions provides that, among others, institutions 99 providing services such as client recommendation and credit assessment to various institutional funding partners shall not render any financing guarantee service, whether directly or in disguised form, without the necessary approval. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—If our current investor protection measures for institutional funding partners are deemed to violate the relevant laws and regulations, or if we are deemed to have operated financial guarantee business by the PRC regulatory authorities, our business, liquidity, financial condition and results of operations would be materially and adversely affected.” In July 2020, the CBIRC issued the Guidelines for Off-Site Supervision of Financing Guarantee Companies, or the Off-Site Supervision Guidelines, which took effect in September 2020. The Off-Site Supervision Guidelines stipulate the guidelines for the competent regulatory authorities to continuously analyze and evaluate the risk of financing guarantee companies and the financing guarantee industry, by way of collecting report data and other internal and external data of the financing guarantee companies and by carrying out corresponding measures. Pursuant to the Off-Site Supervision Guidelines, financing guarantee companies shall establish and implement an off-site supervision information report system and submit related data and non-data information in accordance with the requirements of the competent regulatory authorities. The Off-Site Supervision Guidelines note that the corporate governance, internal control, risk management capabilities, guarantee business, associated guarantee risks, asset quality, liquidity indicators and investment conditions of financing guarantee companies shall be the key areas for the off-site supervision. Shenzhen Lexin Financing Guarantee Co., Ltd., one of subsidiaries of Shenzhen Fenqile, through which we provide the guarantee to our borrowers on our e-commerce channel for the loan provided by our institutional funding partners on our platform, has obtained the license to conduct financing guarantee business in September 2017. The license was re-issued in July 2025, and the paid-in capital set forth therein is equal to RMB1.0 billion. Meanwhile, Ganjiang New Area Mengtian Financing Guarantee Co., Ltd., a subsidiary established by Mengtian Technology, has obtained the license to conduct financing guarantee business in October 2019. The license was re-issued in August 2024, and the registered capital set forth therein is equal to RMB1.0 billion. In addition, Hainan Xinchuang Aurora Financing Guarantee Co., Ltd., a subsidiary established by Beihai Aurora has obtained the license to conduct financing guarantee business in July 2023, and the paid-in capital set forth therein is equal to RMB1.0 billion. In December 2021, the People’s Bank of China issued the Regulations for Local Financial Supervision and Administration (Draft) to solicit public opinions, which clarifies the responsibilities of local financial regulatory authorities and outlines the principles for regulating illegal financial activities of local financial organizations including micro-loan companies and financing guarantee companies. Regulations Relating to Commercial Factoring The Notice on the Pilot Launch of Commercial Factoring, issued by the Ministry of Commerce in 2012, approves the pilot launch of commercial factoring in the Shanghai Pudong New Area and the Tianjin Binhai New Area. The Ministry of Commerce also issued another notice to expand the list of pilot areas to include the Chongqing Liangjiang New Area, Sunan Modern Construction Demonstration Zone and Suzhou Industrial Park. In 2015, the Ministry of Commerce issued the Opinions on Supporting the Innovative Development of Pilot Free Trade Zones, which approved the pilot commercial factoring businesses in all the free trade zones. Under these notices issued by the Ministry of Commerce and local implementing rules, commercial factoring companies may be established in these areas upon the approval of the local counterpart of the Ministry of Commerce or other competent authorities. On May 8, 2018, the Ministry of Commerce issued the Notice of Matters concerning the Adjustments to the Duties of Administration of Financial Leasing Companies, Commercial Factoring Companies and Pawnshops, according to which the Ministry of Commerce has transferred the duties of developing business operation and supervision rules for commercial factoring companies to the CBIRC effective on April 20, 2018. In October 2019, the CBIRC issued the Notice on Strengthening the Supervision and Administration over Commercial Factoring Enterprises. This notice clarifies the commercial factoring business as to the following services provided by a commercial factoring enterprise to the supplier that transfers its account receivable based on the real transaction to the commercial factoring enterprise: (i) factoring financing; (ii) maintenance of the sales breakdown (ledger); (iii) collection of account receivables; and (iv) non-commercial bad debt guarantee. Commercial factoring enterprises may concurrently engage in client credit investigation and evaluation and the consulting services relating to commercial factoring. A commercial factoring enterprise may not engage in the following activities or businesses: (i) taking or taking in a disguised manner the deposits from the public; (ii) obtaining funds through online lending information intermediaries, local trading places in various types, asset management institutions, private investment fund or any other institutions; (iii) borrowing or borrowing in a disguised manner funds from other commercial factoring enterprises; (iv) offering loans or offering loans as entrusted; (v) specially engaging in or carrying out as entrusted a collection business or debt repayment demand business irrelevant to commercial factoring; and (vi) carrying out a factoring 100 financing business based on an illegal underlying transaction contract, consignment contract, account receivable with unclear ownership or the right to demand payment arising out instrument or other negotiable securities. The Guiding Opinions on Promoting the New Development Pattern of Financial Services, issued by Shenzhen Branch of CBIRC, the Shenzhen Central Sub-branch of PBC and Shenzhen Local Financial Supervision and Administration in November 2021, highlights that the equity management of local financial organizations such as microcredit companies, financing guarantee companies, financing leasing companies and commercial factoring companies shall follow the principles of good qualification, reasonable structure and regulatory behaviors. The regulatory authorities shall strictly review the qualification of the shareholders of such companies, regulate the change of shareholders and the increase and decrease of the capital, and strengthen the penetration management of the shareholders and actual controllers of such local financial organizations. Regulations Relating to Credit Reporting Business The PRC government has adopted several regulations governing personal credit reporting businesses. These regulations include the Regulation for the Administration of Credit Reporting Industry, enacted by the State Council and became effective in March 2013, and the Management Rules on Credit Agencies, issued by the People’s Bank of China, in the same year. The Regulation for the Administration of Credit Reporting Industry defines “credit reporting business” and “credit reporting agency” for the first time. According to the Regulation for the Administration of Credit Reporting Industry, “credit reporting business” means the activities of collecting, organizing, storing and processing “credit-related information” of individuals and enterprises, as well as providing such information to others, and a “credit reporting agency” refers to a duly established agency whose primary business is credit reporting. Besides, the Regulation for the Administration of Credit Reporting Industry and the Management Rules on Credit Agencies stipulate that the establishment of a credit reporting agency to engage in personal credit reporting business shall be subject to the approval of the People’s Bank of China, and the requirements for such establishment. The requirements for such establishment include: (i) its major shareholders have a good reputation and do not have any record of major violation of law or non-compliance in the past three years; (ii) its registered capital shall not be less than RMB50 million; (iii) it has the facilities, equipment, systems and measures for the protection of information security which comply with the provisions of the People’s Bank of China; (iv) the proposed candidates for directors, supervisors and senior management personnel shall be familiar with the laws and regulations relating to credit reporting business, shall possess the work experience and management capabilities in the credit reporting business required for performance of their duties, shall not have any record of major violation or non-compliance during the past three years, and shall have obtained the appointment qualifications approved by the People’s Bank of China; (v) it has a proper organizational structure; (vi) it has proper internal control systems for business operation, information security management, compliance management, etc.; (vii) its individual credit information system shall satisfy the standard of National Information System Security Level Protection Level 2 or above; and (viii) it satisfies any other prudential requirements stipulated by the People’s Bank of China. Entities engaged in personal credit reporting business without such approval may be subject to penalties, including ban of business, confiscation of revenues related to personal credit reporting business, fines of RMB50,000 to RMB500,000 or criminal liabilities. The Regulation for the Administration of Credit Reporting Industry also requires entities to ensure the security of personal information by setting business rules for personal credit reporting business, prohibiting collecting certain personal information (e.g., religion, finger print), and providing rights for the individuals with respect to their personal information (e.g., inquiry, objection, complaint). The Management Rules on Credit Agencies enacted by the People’s Bank of China is based on the Regulation for the Administration of Credit Reporting Industry, and further detailing the rules with respect to the administration for the credit reporting agency, including the rules to establish, change, deregister a credit reporting agency, the rules for the daily operation of a credit reporting agency, etc. In September 2021, the People’s Bank of China released the Measures for Credit Reporting Business, which took effect in January 2022. The Measures for Credit Reporting Business defines “credit information” as information that “serves the financial and economic activities and is used to determine individuals and enterprises credit status, which refers to basic information, loan information and other relevant information collected in accordance with the law and other information originated from analysis and evaluation of individuals and enterprises’ credit status based on the foregoing information.” It applies to entities that carry out credit reporting business and “activities relating to credit reporting business” in China. Separately, entities “actually providing credit reporting services” in the name of “credit information service, credit service, credit evaluation, credit rating, credit repair and etc.” are also subject to the Measures for Credit Reporting Business. The Measures for Credit Reporting Business provides rules on credit reporting business and credit reporting agencies, including that (i) the credit reporting agencies shall collect credit information following the “minimum and necessary” principle and 101 must not collect credit information by unlawful means, (ii) information user shall not abuse credit information, and shall use credit information for legal and legitimate purpose , (iii) credit reporting agencies shall take measures to ensure the credit information security, and establish emergency and report system for incidents, (iv) the database of the domestic credit reporting agencies shall be set up in the territory of the PRC, (v) credit reporting agencies shall comply with related laws and regulations when providing credit information to the overseas, and (vi) the credit reporting agency shall report to the People’s Bank of China the information processors who collaborate with such credit reporting agency with respect to the collection, storing, processing and analyzing credit information. Any agency carrying out personal credit reporting without the necessary permit should complete the compliance rectification within 18 months after the implementation date of the Measures for Credit Reporting Business. In addition, on July 7, 2021, the Credit Information System Bureau of the People’s Bank of China further issued a notice, or the Notice Relating to Disconnecting Direct Connection, to 13 internet platforms (not including us), requiring the internet platforms to achieve a complete “disconnected direct connection” in terms of personal information with financial institutions, meaning that the direct flow of personal information from internet platforms that collect such information to financial institutions is prohibited, and each internet platform which has been informed is required to formulate a rectification plan accordingly. Although the 13 internet platforms do not include us, we have taken several adjustment measures to maintain compliance with the Measures for Credit Reporting Business and the Notice Relating to Disconnecting Direct Connection. Regulations Relating to Internet Information Security The National People’s Congress has enacted legislation that prohibits the use of the internet that breaches the public security, disseminates socially destabilizing content or leaks state secrets. Breach of public security includes breach of national security and infringement on legal rights and interests of the state, society or citizens. Socially destabilizing content includes any content that incites defiance or violations of the PRC laws or regulations or subversion of the PRC government or its political system, spreads socially disruptive rumors or involves cult activities, superstition, obscenities, pornography, gambling or violence. State secrets are defined broadly to include information concerning PRC national defense, state affairs and other matters as determined by the PRC authorities. Pursuant to applicable regulations, ICP operators must complete mandatory security filing procedures and regularly update information security and monitoring systems for their websites with local public security authorities, and must also report any public dissemination of prohibited content. In December 2015, the Standing Committee of the National People’s Congress promulgated the Anti-Terrorism Law of the PRC, or the Anti-Terrorism Law, which took effect on January 1, 2016 and was amended on April 27, 2018. According to the Anti-Terrorism Law, telecommunication service operators or internet service providers shall (i) carry out pertinent anti-terrorism publicity and education to society; (ii) provide technical interfaces, decryption and other technical support and assistance for the competent departments to prevent and investigate terrorist activities; (iii) implement network security and information monitoring systems as well as safety and technical prevention measures to avoid the dissemination of terrorism information, delete the terrorism information, immediately halt its dissemination, keep relevant records and report to the competent departments once the terrorism information is discovered; and (iv) examine customer identities before providing services. Any violation of the Anti-Terrorism Law may result in severe penalties, including substantial fines. In November 2016, the Standing Committee of the National People’s Congress promulgated the Cybersecurity Law of the PRC, or the PRC Cybersecurity Law, which originally took effect on June 1, 2017 and was amended on October 28, 2025. In accordance with the PRC Cybersecurity Law, network operators must comply with applicable laws and regulations and fulfill their obligations to safeguard network security in conducting business and providing services. Network service providers must take technical and other necessary measures as required by laws, regulations and mandatory requirements to safeguard the operation of networks, respond to network security effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability of network data. For the further purposes of regulating data processing activities, safeguarding data security, promoting data development and utilization, protecting the lawful rights and interests of individuals and organizations, and maintaining national sovereignty, security, and development interests, on June 10, 2021, the Standing Committee of the National People’s Congress published the Data Security Law of the People’s Republic of China, which took effect on September 1, 2021. The Data Security Law requires data processing, which includes the collection, storage, use, processing, transmission, provision, publication of data, to be conducted in a legitimate and proper manner. The Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data activities. The Data Security Law also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and 102 the degree of harm it may cause to national security, public interest, or legitimate rights and interests of individuals or organizations if such data are tampered with, destroyed, leaked, illegally acquired or illegally used. The appropriate level of protection measures is required to be taken for each respective category of data. For example, a processor of important data is required to designate the personnel and the management body responsible for data security, carry out risk assessments of its data processing activities and file the risk assessment reports with the competent authorities. State core data, i.e. data having a bearing on national security, the lifelines of national economy, people’s key livelihood and major public interest, shall be subject to stricter management system. Moreover, the Data Security Law provides a national security review procedure for those data activities which affect or may affect national security and imposes export restrictions on certain data and information. In addition, the Data Security Law also provides that any organization or individual within the territory of the PRC shall not provide any foreign judicial body and law enforcement body with any data without the approval of the competent PRC governmental authorities. As the Data Security Law was recently promulgated, we may be required to make further adjustments to our business practices to comply with this law, as well as any adjustments that may be required by the PIPL. On July 6, 2021, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which, among others, provides for improving relevant laws and regulations on data security, cross-border data transmission, and confidential information management. It provided that efforts will be made to revise the regulations on strengthening the confidentiality and file management relating to the offering and listing of securities overseas, to implement the responsibility on information security of overseas listed companies, and to strengthen the standardized management of cross-border information provision mechanisms and procedures. On December 28, 2021, the CAC, the NDRC, the MIIT, the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, the Ministry of Commerce, the People’s Bank of China, the NRTA, the CSRC, the National Administration of State Secrets Protection and the National Cryptography Administration jointly issued the Cybersecurity Review Measures, which took effect on February 15, 2022. The scope of review under the Cybersecurity Review Measures extends to critical information infrastructure operators that intend to purchase internet products and services and data processing operators engaging in data processing activities, which affect or may affect national security. According to Article 7 of the Cybersecurity Review Measures, operators who possess personal information of over a million users shall apply to the Cybersecurity Review Office for cybersecurity reviews before listing in a foreign country. Besides, the Cybersecurity Review Measures also provides that if the relevant authorities consider that certain network products and services, or data processing activities affect or may affect national security, the authorities may initiate a cybersecurity review even if the operators do not have an obligation to report for a cybersecurity review under such circumstances. The Cybersecurity Review Measures also elaborates the factors to be considered when assessing the national security risks of the relevant activities, including among others, risks of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country, risks of critical information infrastructure, core data, important data or a large amount of personal information data being affected, controlled and maliciously used by foreign governments after a foreign listing and risks of cyber information security. On July 30, 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure. Pursuant to these regulations, critical information infrastructure shall mean the important network facilities or information systems of key industries or fields such as public communication and information service, energy, transportation, water conservation, finance, public services, e-government affairs and national defense science, and important network facilities or information systems which may endanger national security, people’s livelihood and public interest once there occur damage, malfunctioning or data leakage to them. The regulations provide that no individual or organization may carry out any illegal activity of intruding into, interfering with, or sabotaging any critical information infrastructures, or endanger the security of any critical information infrastructures. The regulations also require that critical information infrastructure operators shall establish a cybersecurity protection system and accountability system, and that the main responsible person of a critical information infrastructure operator shall take full responsibility for the security protection of the critical information infrastructures operated by it. In addition, relevant administration departments of each important industry and sector shall be responsible for formulating the rule of critical information infrastructure determination applicable to their respective industry or sector, and determine the critical information infrastructure operators in their industry or sector. On July 12, 2021, the MIIT and two other authorities jointly issued the Provisions on the Administration of Security Vulnerabilities of Network Products. The provisions state that, all organization or individual shall not abuse the security vulnerabilities of network products to engage in activities that endanger network security, or to illegally collect, sell, or publish the information on such security vulnerabilities. Anyone who is aware of the aforesaid offences shall not provide technical support, advertising, payment settlement and other assistance to the relevant offenders. According to the Provisions, network product providers, network operators, and platforms collecting network product security vulnerabilities shall establish and improve channels for receiving network product security vulnerability information and keep such channels 103 available, and retain network product security vulnerability information reception logs for at least six months. The provisions also bans provision of undisclosed vulnerabilities to overseas organizations or individuals other than to the product providers. On July 7, 2022, the CAC issued the Outbound Data Transfer Security Assessment Measures, which took effect on September 1, 2022 and specify that data processors who intend to provide important data and personal information that are collected and generated in the operation within the territory of the PRC to overseas shall be subject to security assessment with the CAC. Under the current Outbound Data Transfer Security Assessment Measures, an entity must apply for a CAC security assessment if it processes personal information of over one million individuals and outbound transfers personal information, or if it has cumulatively outbound transferred personal information of more than 100,000 individuals or sensitive personal information of more than 10,000 individuals since January 1 of the previous year. Furthermore, any entity who plans to transfer important data outside of China shall apply to a CAC security assessment. In addition, the Outbound Data Transfer Security Assessment Measures sets forth a 6-month grace period, any entity or data controller may within 6 months upon the effective date of this measures (i.e., before February 28, 2023), take corrective actions and apply to the CAC security assessment. On August 20, 2021, the Standing Committee of the National People’s Congress promulgated the PIPL, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. The PIPL requires, among others, that (i) the processing of personal information should have a clear and reasonable purpose which should be directly related to the processing purpose and should be conducted in a method that has the minimum impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope as necessary to achieve the processing purpose and avoid the excessive collection of personal information. Personal information processors shall adopt necessary measures to safeguard the security of the personal information they handle. The offending entities could be ordered to correct, or to suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties. On July 6, 2021, the Standing Committee of Shenzhen Municipal People’s Congress issued the Data Regulations of Shenzhen Special Economic Zone which took effective on January 1, 2022. These regulations further clarify the responsibilities of local regulatory authorities in Shenzhen regarding data protection and administration, and provide, among others, more detailed provisions in relation to recommendation of personalized products or services based on user portraits, use of biometric data. In addition, the State Secrecy Bureau has issued provisions authorizing the blocking of access to any website it deems to be leaking state secrets or failing to comply with the relevant legislation regarding the protection of state secrets during online information distribution. Specifically, internet companies in the PRC with bulletin boards, chat rooms or similar services must apply for specific approval prior to operating such services. Furthermore, the Provisions on Technological Measures for Internet Security Protection, promulgated by the Ministry of Public Security and became effective in March 2006, require all ICP operators to keep records of certain information about its users (including user registration information, log-in and log-out time, IP address, content and time of posts by users) for at least 60 days and submit the above information as required by laws and regulations. The Decision on Strengthening Network Information Protection, which was promulgated by the National People’s Congress in December 2012, states that ICP operators must request identity information from users when ICP operators provide information publication services to the users. If ICP operators come across prohibited information, they must immediately cease the transmission of such information, delete the information, keep relevant records, and report to relevant government authorities. On October 21, 2019, the Supreme People’s Court and the Supreme People’s Procuratorate of the PRC jointly issued the Interpretations on Certain Issues Regarding the Applicable of Law in the Handling of Criminal Case Involving Illegal Use of Information Networks and Assisting Committing Internet Crimes, which came into effect on November 1, 2019, and further clarified the meaning of Internet service provider and the severe situations of the relevant crimes. In July 2023, the MIIT issued the Notice on Filing of Apps, which came into effect on the same date. According to the Notice 105, App operators engaged in Internet information services within the territory of the PRC shall undergo the filing formalities in accordance with the Law of the PRC on Combating Telecom and Online Fraud, the Administrative Measures on Internet Information Service, and other provisions. Those that fail to do so shall not engage in App-related Internet information services. Meanwhile, Apps that have started business before the issuance of the Notice on Filing of Apps shall, as required by the Notice on Filing of Apps, undergo through their network access service providers and distribution platforms the filing formalities with the provincial-level communications administration where its domicile is located from September 2023 to March 2024. 104 On March 22, 2024, the CAC issued the Measures for Regulating and Promoting Outbound Data Flow, which took effect on the same day, in order to further regulate and promote the orderly and free flow of data legally, it is not required to apply for outbound data security assessment to be provided abroad, to conclude a standard contract for outbound provision of personal information or to pass the certification for personal information protection in certain situations, including, but not limited to, (i) for the data that have not been informed by relevant departments or regions or have been publicly announced as important data, (ii) where the personal information must be provided abroad, as it is necessary for the conclusion and performance of a contract to which the individual is a party, such as cross border shopping, or other listed situations, and (iii) in the event that it is estimated to provide abroad personal information of less than 10,000 individuals within one year. On September 24, 2024, the State Council promulgated the Cyber Data Security Regulation, which came into effect on January 1, 2025. The Cyber Data Security Regulation provides that, among others, network data processors carry out network data processing activities that affect or may affect national security shall undergo the national security review in accordance with relevant regulations. Regulations Relating to Personal Information and Privacy Protection The PRC Constitution states that the PRC law protects the freedom and privacy of communications of citizens and prohibits infringement of these rights. In recent years, PRC government authorities have enacted legislation on internet use to protect personal information from any unauthorized disclosure. The Decision on Strengthening Network Information Protection provides that electronic information that identifies a citizen or involves privacy of any citizen is protected by law and must not be unlawfully collected or provided to others. ICP operators collecting or using personal electronic information of citizens must specify the purposes, manners and scopes of information collection and uses, obtain consent of the relevant citizens, and keep the collected personal information confidential. ICP operators are prohibited from disclosing, tampering with, damaging, selling or illegally providing others with, collected personal information. ICP operators are required to take technical and other measures to prevent the collected personal information from any unauthorized disclosure, damage or loss. The Administrative Measures on Internet Information Services prohibit an ICP operator from insulting or slandering a third party or infringing upon the lawful rights and interests of a third party. According to the Provisions on Protection of Personal Information of Telecommunication and Internet Users, which was promulgated by MIIT and became effective in September 2013, telecommunication business operators and ICP operators are responsible for the security of the personal information of users they collect or use in the course of their provision of services. Without obtaining the consent from the users, telecommunication business operators and ICP operators may not collect or use the users’ personal information. The personal information collected or used in the course of provision of services by the telecommunication business operators or ICP operators must be kept in strict confidence, and may not be divulged, tampered with or damaged, and may not be sold or illegally provided to others. The ICP operators are required to take certain measures to prevent any divulgence of, damage to, tampering with or loss of users’ personal information. In accordance with the Cybersecurity Law, network operators are required to collect and use personal information in compliance with the principles of legitimacy, properness and necessity, and strictly within the scope of authorization by the subject of personal information unless otherwise prescribed by laws or regulations. In the event of any unauthorized disclosure, damage or loss of collected personal information, network operators must take immediate remedial measures, notify the affected users and report the incidents to the relevant authorities in a timely manner. If any user knows that a network operator illegally collects and uses his or her personal information in violation of laws, regulations or any agreement with the user, or the collected and stored personal information is inaccurate or wrong, the user has the right to request the network operator to delete or correct the relevant collected personal information. The relevant telecommunications authorities are further authorized to order ICP operators to rectify unauthorized disclosure. ICP operators are subject to legal liability, including warnings, fines, confiscation of illegal gains, revocation of licenses or filings, closing of the relevant websites, administrative punishment, criminal liabilities, or civil liabilities, if they violate relevant provisions on internet privacy. Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing Committee of the National People’s Congress in August 2015 and becoming effective in November 2015, the standards of crime of infringing citizens’ personal information were amended accordingly and the criminal culpability of unlawful collection, transaction, and provision of personal information has been reinforced. In addition, any ICP provider that fails to fulfill the obligations related to internet information security administration as required by applicable laws and refuses to rectify upon orders, will be subject to criminal liability for (i) any dissemination of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious loss of evidence of criminal activities; or (iv) other severe situations, and any individual or entity that (x) sells or provides personal information to others unlawfully, or (y) steals or illegally obtains any personal information, will be subject to criminal liability in severe situations. 105 In addition, the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate of the PRC on Several Issues Concerning the Application of Law in Handling Criminal Cases of Infringing Personal Information, effective in June 2017, have clarified certain standards for the conviction and sentencing in relation to personal information infringement. The PRC government has the power and authority to order ICP operators to turn over personal information if an internet user posts any prohibited content or engages in illegal activities on the internet. The Civil Code further provides in a stand-alone chapter of right of personality and reiterate that the personal information of a natural person shall be protected by the law. Any organization or individual shall legitimately obtain such personal information of others in due course on a need-to-know basis and ensure the safety and privacy of such information, and refrain from excessively handling or using such information. With respect to the security of information collected and used by mobile apps, pursuant to the Announcement of Conducting Special Supervision against the Illegal Collection and Use of Personal Information by Apps, which was issued on January 23, 2019, app operators should collect and use personal information in compliance with the Cybersecurity Law and should be responsible for the security of personal information obtained from users and take effective measures to strengthen the personal information protection. Furthermore, app operators should not force their users to make authorization by means of bundling, suspending installation or in other default forms and should not collect personal information in violation of laws, regulations or breach of user agreements. Such regulatory requirements were emphasized by the Notice on the Special Rectification of Apps Infringing upon User’s Personal Rights and Interests, which was issued by the MIIT on October 31, 2019. On November 28, 2019, the CAC, the MIIT, the Ministry of Public Security and the SAMR jointly issued the Methods of Identifying Illegal Acts of Apps to Collect and Use Personal Information. This regulation further illustrates certain commonly-seen illegal practices of apps operators in terms of personal information protection, including “failure to publicize rules for collecting and using personal information,” “failure to expressly state the purpose, manner and scope of collecting and using personal information,” “collection and use of personal information without consent of users of such App,” “collecting personal information irrelevant to the services provided by such app in violation of the principle of necessity,” “provision of personal information to others without users’ consent,” “failure to provide the function of deleting or correcting personal information as required by laws” and “failure to publish information such as methods for complaints and reporting.” Among others, any of the following acts of an app operator will constitute “collection and use of personal information without consent of users”: (i) collecting an user’s personal information or activating the permission for collecting any user’s personal information without obtaining such user’s consent; (ii) collecting personal information or activating the permission for collecting the personal information of any user who explicitly refuses such collection, or repeatedly seeking for user’s consent such that the user’s normal use of such app is disturbed; (iii) any user’s personal information which has been actually collected by the app operator or the permission for collecting any user’s personal information activated by the app operator is beyond the scope of personal information which such user authorizes such app operator to collect; (iv) seeking for any user’s consent in a non-explicit manner; (v) modifying any user’s settings for activating the permission for collecting any personal information without such user’s consent; (vi) using users’ personal information and any algorithms to directionally push any information, without providing the option of non-directed pushing such information; (vii) misleading users to permit collecting their personal information or activating the permission for collecting such users’ personal information by improper methods such as fraud and deception; (viii) failing to provide users with the means and methods to withdraw their permission of collecting personal information; and (ix) collecting and using personal information in violation of the rules for collecting and using personal information promulgated by such app operator. On August 22, 2019, the CAC promulgated the Children Information Protection Provisions, which took effect on October 1, 2019, requiring that before collecting, using, transferring or disclosing the personal information of a child, the Internet service operator should inform the child’s guardians in a noticeable and clear manner and obtain their consent. Meanwhile, internet service operators should take measures like encryption when storing children’s personal information. On March 12, 2021, the CAC and three other authorities jointly issued the Rules on the Scope of Necessary Personal Information for Common Types of Mobile Internet Applications. The Rules specifies the scope of necessary personal information to be collected each for a variety of common mobile internet applications, such as maps and navigation apps, online ride-hailing apps, instant messaging apps, online community apps. Operators of such apps shall not refuse to provide basic services to users on the ground of users’ refusal to provide their personal non-essential information. On April 26, 2021, the MIIT issued the Interim Administrative Provisions on Personal Information Protection in Internet Mobile Applications (Draft for Comment). The draft of the Interim Administrative Provisions on Personal Information Protection in Internet Mobile Applications sets forth two principles of collection and utilization of personal information, namely “explicit consent” and “minimum necessity.” On August 20, 2021, the Standing Committee of the National People’s Congress adopted the PIPL which took effect on November 1, 2021. The PIPL integrated provisions from several rules with respect to personal information rights and privacy protection. According to the PIPL, personal information refers to information related to identified or identifiable 106 natural persons which is recorded by electronic or other means (excluding the anonymized information). In addition, it imposes further obligations on a personal information processor that provides for important internet platform services and has large amount of users and complicated business activities, including establishing a sound compliance system for personal information protection in accordance with the provisions of the State and setting up an independent agency mainly composed of external members to supervise personal information protection, formulating platform rules specifying the standards for the processing of personal information by product or service providers on the platform and the obligations to protect personal information following the principles of openness, fairness and impartiality, termination of provision of services for product or service providers on the platform whose personal information processing activities are in material violation of laws and regulations, and issuing personal information protection social responsibilities reports regularly. The entities failing to comply could be ordered to correct, or suspend or terminate the provision of services, and face confiscation of illegal income, fines or other penalties. On September 14, 2024, National Technical Committee on Cybersecurity of Standardization Administration of China issued Notice on Issuing the Practice Guide of Network Security Standards-Guide for Identifying Sensitive Personal Information, further clarifying that the definition of sensitive personal information and specified the identifying rules of such sensitive personal information. In addition, in 2025, the CAC issued a few regulations for public comments related to personal information protection including the Administrative Measures for the Compliance Audit of Personal Information Protection, which states that such measures shall apply to the regular compliance audits of personal information protection by personal information processors, or the compliance audits of their personal information processing activities by a specialized agency entrusted by such processors as required by the authorities performing duties of personal information protection, as well as the supervision and administration of compliance audits of personal information protection, and the Administrative Measures on the Application Security of Facial Recognition Technology, which states that (i) users of facial recognition technology shall, when processing facial information, make assessment n the impact of personal information protection in advance and record the processing, and (ii) any user of facial recognition technology that stores the facial information of more than 100,000 people shall submit the filings with the local cyberspace authority at the prefectural level or above within 30 working days, both took effect in 2025. Regulations Relating to Anti-Money Laundering The PRC Anti-money Laundering Law, which became effective in January 2007 and amended in November 2024, sets forth the principal anti-money laundering requirements applicable to financial institutions as well as non-financial institutions with anti-money laundering obligations, including the adoption of precautionary and supervisory measures, establishment of various systems for client identification, retention of clients identification information and transactions records, and reports on large transactions and suspicious transactions. According to the PRC Anti-money Laundering Law, financial institutions subject to the PRC Anti-money Laundering Law include financial institutions in the banking, securities and futures, insurance and trust business sectors, non-bank payment institutions; and other institutions engaged in financial business activities as determined and published by the State Council Anti-money Laundering Authority. However, the State Council has not promulgated a list of the non-financial institutions subject to anti-money laundering obligations. The Guidelines jointly released by ten PRC regulatory agencies in July 2015, purport, among other things, to require the internet finance industry, to comply with certain anti-money laundering requirements, including establishing a user identification program, monitoring and reporting of suspicious transactions, preserving user information and transaction records, and providing assistance to the public security department and judicial authority in investigations and proceedings in relation to anti-money laundering matters. The People’s Bank of China will formulate implementation rules to further specify the anti-money laundering obligations of the internet finance industry. In October 2018, the People’s Bank of China and the CSRC jointly released the Administrative Measures for Anti-Money Laundering and Anti-Terrorism Financing of Internet Financial Institutions (for Trial Implementation), which became effective in January 2019. The Anti-Money Laundering Measures for Internet Financial Institutions provides that the institutions engaging in internet finance business, including online payment, online lending, and online lending information intermediary business, shall be subject to the obligation of anti-money laundering and anti-terrorism financing, and further refined and detailed requirements of verifying client identity, reporting suspicious transactions, keeping identity data and transaction records, and other anti-money laundering obligations. The Interim Measures also stipulated the anti-money laundering obligations of an online lending intermediary therein. In April 2021, the Measures for Supervision and Administration of Anti-Money Laundering and Anti-Terrorism Financing of Financial Institutions was released by the People’s Bank of China officially and will take effect on August 1, 107 2021. According to these measures for Financial Institutions, the following financial institutions duly established within the PRC territory are clearly required by the People’s Bank of China to fulfill anti-money laundering and anti-terrorism financing related obligations: (i) developmental financial institution, policy banks, commercial banks, rural cooperative banks, rural credit cooperatives and village/township banks; (ii) securities companies, futures companies and fund management companies; (iii) insurance companies and insurance asset management companies; (iv) trust companies, financial asset management companies, finance companies of enterprise groups, financial leasing companies, auto finance companies, consumer finance companies, currency brokerage companies, loan companies and wealth management subsidiaries of commercial banks; and (v) other financial institutions that shall perform their obligations of anti-money laundering and counter-terrorism financing as determined and announced by the People’s Bank of China. Besides, such obligations also apply to the non-bank payment institutions, banks card organization, fund clearing center, microcredit companies engaging in the internet microcredit lending business and the institutions engaging exchange business, funds sales business, insurance agency and brokers business. The People’s Bank of China and its branches shall carry out the supervision and administration of the financial institutions’ work with regard to the anti-money laundering and anti-terrorism financing pursuant to the relevant laws and regulations. The measures require the financial institutions to draft and improve the anti-money laundering and anti-terrorism financing internal control policy, evaluate the anti-money laundering and anti-terrorism financing risks, establish the risks management mechanism according to its risks conditions and operation scale, construct anti-money laundering information system, and set up or appoint institutions equipped with qualified staff, to perform its anti-money laundering and anti-terrorism financing obligations. We have implemented various policies and procedures, such as internal controls and “know-your-customer” procedures, for anti-money laundering purposes. Regulations on Financial Consumers Protection The Measures for Financial Consumer Protection promulgated by the People’s Bank of China on September 15, 2020 came into force on November 1, 2020. Pursuant to the Measures for Financial Consumer Protection, the non-bank payment institution shall adopt a series of internal management measures to protect the rights and interests of financial consumers, including optimizing rules and policies as well as establishing a sound working mechanism and formulating an effective internal control system for protecting the rights and interests of financial consumers. Furthermore, it clearly states that financial information of consumers shall be used for the purpose in compliance with laws and regulations and agreed by both parties and kept in strict confidential, and no leakage or illegal disclosure to other parties shall be allowed, and institutions are required to set up a management system for the usage of financial information of consumers and implement technologies and other measures as necessary to properly maintain and store the financial information of consumers collected. On December 26, 2022, the CBIRC issued the Measures for the Protection, which was effective on March 1, 2023. It requires banking and insurance institutions to establish and improve systems and mechanisms for the protection of consumer’s rights and interests, including mechanisms for review, disclosure, consumer appropriateness management, traceability of sales practices, protection of consumers’ information, list-based management of the partners, complaint handling, diversified resolution of conflicts and disputes, internal training, internal assessment and internal audit. It also lists the following consumers’ rights that the banking and insurance institutions shall protect: (i) right to know; (ii) right to choices on their own; (iii) right to a fair transaction; (iv) right to property safety; (v) right to lawful claim; (vi) right to education; (vii) right to respect; and (viii) right to information security. Further, the CBIRC and its local offices may take regulatory measures against the institutions if any problem regarding consumer protection was inspected, and may impose administrative punishment in case of violation of the administrative measures. Regulations Relating to E-Commerce 108 Certain laws and regulations are promulgated in recent years to specifically regulate the e-commerce industry in PRC. In August 2018, the National People’s Congress Standing Committee promulgated the PRC E-Commerce Law, or the E-Commerce Law, which became effective in January 2019. The E-Commerce Law proposes a series of requirements on e-commerce operators, including individuals and entities carrying out business online, e-commerce platform operators and merchants within the platform. For example, the E-Commerce Law requires e-commerce operators to respect and equally protect consumers’ legitimate rights and provide options to consumers without targeting their personal characteristics, and also requires e-commerce operators to clearly point out to consumers their tie-in sales in which additional services or products are added by merchants to a purchase, and not to assume consumers’ consent to such tie-in sales by default. Moreover, the E-Commerce Law requires e-commerce operators, including individuals and entities carrying out business online, e-commerce platform operators and merchants on these platforms, to display prominently on their home page the information contained in their business licenses or administrative permits relating to their operating businesses; failure to take necessary actions against merchants on the e-commerce platforms that are not in compliance with such requirements may subject the e-commerce platform operators to rectification within a specified period and a fine between RMB20,000 and RMB100,000. The E-Commerce Law also sets forth certain requirements and/or obligations particularly applicable to the e-commerce platform operators, including, among other things: •Requirements relating to credit evaluation. The e-commerce platform operators are required to establish a credit evaluation system and publicize the credit evaluation rules, and provide consumers with ways to evaluate products sold or services provided within the platform. •Requirements relating to transaction rules. The e-commerce platform operators shall develop and continuously publish or make publicly available, prominently on its homepage, a link to its platform service agreement and transaction rules, specifying the rights and obligations of relevant parties with respect to joining and leaving the platform, quality assurance and protection of consumer rights and personal information, and to ensure convenience and complete access to reading and downloading such service agreement and transaction rules by merchants and consumers. •Liability of the e-commerce platform operators. The e-commerce platform operators who fail to take necessary actions when they know or should have known that the merchants within the platform infringe upon others’ intellectual property rights or the products or services provided by the merchants do not meet the requirements for personal and property security, or otherwise infringe upon consumers’ legitimate rights, will be imposed a joint liability with the merchants; with respect to the products or services affecting consumers’ life and health, the e-commerce platform operators will bear relevant responsibilities if they fail to review the qualifications of merchants or fail to safeguard the interests of the consumers. On October 23, 2020, the Interim Measures for Seven-day Unconditional Return of Online Purchased Goods (2020 version) was issued by the SAMR and took in effect on the same day, which emphasizes that online goods sellers shall lawfully perform their duties of ensuring the consumers to exercise the rights of “Seven-day Unconditional Return of Purchased Goods” and the provider of an online trading platform shall guide and urge the online goods sellers who use the platform to perform such duties, as well as conduct supervisions and inspections and provide technical support. On December 31, 2021, the CAC, the MIIT, the Ministry of Public Security and the SAMR jointly issued the Administration Provisions on Algorithmic Recommendation of Internet Information Services, which became effective on March 1, 2022. The provisions provide that algorithmic recommendation service providers shall (i) fulfill their responsibilities for algorithm security, (ii) establish and improve management systems for algorithm mechanism examination, ethical vetting in technology, user registration, information release vetting, protection of data security and personal information, anti- telecommunications and internet fraud, security assessment and monitoring, emergency response to security incidents, etc., and (iii) formulate and disclose relevant rules for algorithm recommendation services, and be equipped with professional staff and technical support appropriate to the scale of the algorithm recommendation service. On March 18, 2025, the Administrative Regulations on Internet Transactions (2025 revised) were released by the SAMR and took into effective on May 1, 2025, which are the supplementary rules to the E-Commerce Law. Pursuant to the Administrative Regulations on Internet Transactions, any online business operator who conducts online sales or provides service through online social networking platforms or online live-broadcasting platforms, should comply with both the E-Commerce Law and the Administrative Regulations on Internet Transactions (2025 revised). We are subject to these measures as a result of our online direct sales and online marketplace. 109 On June 27, 2025, the National People’s Congress Standing Committee implemented a newly amended Anti-unfair Competition Law of the PRC. It further emphasized that a business operator shall not engage in any false or misleading publicity for its products, or fictitious transactions to defraud or mislead consumers or other business operators, shall not assist other business operators in conducting false or misleading commercial promotions through means such as organizing fictious transactions or fabricating reviews. Violation of these provisions may subject the relevant business operators to various penalties, including an order from the relevant governmental authorities to cease illegal acts, with payment of a fine of not more than RMB1 million, or in the case of a severe violation, revocation of business licenses and payment of a fine ranging from RMB1 million to RMB2 million. Regulations Relating to Internet Advertising and Marketing In April 2015, the National People’s Congress Standing Committee promulgated the PRC Advertising Law, which was amended on October 26, 2018 and April 29, 2021 respectively. Pursuant to the PRC Advertising Law, the contents of advertisements shall be authentic and legal, expressed in healthy form, and shall not contain any information that is false or confusing. Violation of these provisions may result in penalties, including fines, orders to cease dissemination of the advertisements and orders to eliminate impact within the corresponding scope. The Internet Advertising Interim Measures were adopted by the SAIC and became effective in September 2016. The Internet Advertising Interim Measures regulate internet advertisement, which are defined as commercial advertisements that directly or indirectly promote goods or services through websites, web pages, internet applications or other internet media in various forms, including texts, pictures, audio clips and videos. According to the Internet Advertising Interim Measures, internet advertisers are responsible for the authenticity of the content of advertisements. The identity, administrative license, cited information and other certificates that advertisers are required to obtain in publishing internet advertisements shall be true and valid. Internet advertisements shall be distinguishable and prominently marked as “advertisements” in order to enable consumers to identify them as advertisements. Publishing and circulating advertisements through the internet shall not affect the normal use of the internet by users. It is not allowed to induce users to click on the content of advertisements by any fraudulent means, or to attach advertisements or advertising links in emails without users’ permission. The Internet Advertising Interim Measures also impose several restrictions on the forms of advertisements and activities used in advertising. In addition, the SAMR issued the Measures for Administration of Internet Advertising , or the Measures for Internet Advertising, on February 25, 2023 and became effective on May 1,2024, simultaneously repealing the Internet Advertising Interim Measures,, which highlights that if the internet broadcast constitutes commercial advertisements, a product seller or service provider shall bear the responsibilities and obligations of the advertiser in accordance with the applicable laws and regulations,, and any advertisements for medical treatment, pharmaceuticals, medical devices, pesticides, veterinary drugs, health food, formula food for special medical purposes and other advertisements which are subject to censorship as required by laws and administrative regulations shall be subject to censorship by advertisement censorship authorities prior to the publication, and such advertisements shall not be published without going through examination. The Circular of the People’s Bank of China, the CBIRC, the China Securities Regulatory Commission and the State Administration of Foreign Exchange on Further Regulating Financial Marketing Campaigns, which was promulgated on December 20, 2019 and became effective on January 25, 2020, regulates that market players who have not obtained the corresponding qualification for the financial business may not carry out marketing related to such financial business, except that information release platforms and the media are entrusted by the financial product operators or financial service providers CSRC that have obtained the qualification for the financial business with the financial marketing in accordance with the law. According to the Announcement No. 3 issued by the People’s Bank of China, all lending institutions are required to display the annualized rate of each loan product prominently on the website, mobile app, poster, and any other channels where the product is marketed, and specify the annualized rate in the loan contract. The calculation of the annualized interest rate may be based on compound interest or simple interest. The calculation based on compound interest is equivalent to that of the internal rate of return, and the simple-interest approach should be specified as such. On April 24, 2026, eight departments including the People’s Bank of China jointly issued the Measures for the Online Marketing of Financial Products, which will take effect on September 30, 2026, stipulating that: (1) Financial institutions shall conduct online marketing of financial products within the scope of business permitted by financial regulatory authorities, and shall prominently indicate that the financial products are only available to customers within the licensed region. Financial institutions subject to regional operating restrictions shall, in accordance with the standards set by financial regulatory authorities, identify and verify the location of customers, and provide financial products only to customers in their registered place and in regions where they have established branches; (2) Where a third-party internet 110 platform provides forwarding channels for financial consumers and investors to purchase financial products, it shall redirect them to the self-operated platform of the financial institution, and shall not redirect them to any other third-party internet platform engaged in online marketing of financial products. When financial consumers and investors are about to enter the stage of purchasing financial products or using financial services, the platform shall provide a prominent reminder and set a mandatory reading time; (3) No institution or individual that has not obtained the corresponding qualifications for financial business or financial information service business, or without the consent of the financial regulatory authorities, may use words or content with financial attributes such as “finance”, “financing”, “loan”, “borrowing”, “pawn”, “bank”, “exchange”, “trading center”, “asset management”, “fund”, “financial management”, “wealth management”, “investment adviser or consultancy”, “securities”, “futures”, “equity crowdfunding”, “insurance”, “commercial insurance annuity”, “trust”, “financial company”, “payment”, “clearing”, “settlement”, “credit reference”, “credit rating”, “foreign exchange”, “currency exchange” in their website, mobile internet application, or internet user account name; (4) Third-party internet platforms shall not, in violation of laws, regulations or national financial management provisions, intervene or indirectly intervene in the financial product sales process, including but not limited to signing of sales contracts, fund transfers, financial consumer and investor appropriateness assessment, loan amount assessment, etc., nor shall they engage in interactive consultations with consumers and investors regarding financial products. Regulations Relating to Product Quality and Consumer Rights Protection Pursuant to the Product Quality Law of PRC promulgated by the National People’s Congress Standing Committee in February 1993, and as amended in July 2000, August 2009 and December 2018 respectively, a seller must establish and practice a check-for-acceptance system for replenishment of its stock, and examine the quality certificates and other marks and must also adopt measures to keep the products for sale in good quality. Violation of the Product Quality Law of PRC could result in various penalties, including the imposition of fines, suspension of business operations, revocation of business licenses or criminal liabilities. Where a defective product causes physical injury to a person or damage to another person’s property, the victim may claim compensation from the manufacturer or from the seller of the product. If the seller pays compensation and it is the manufacturer that should bear the liability, the seller has a right of recourse against the manufacturer. Similarly, if the manufacturer pays compensation and it is the seller that should bear the liability, the manufacturer has a right of recourse against the seller. The PRC Consumer Rights and Interests Protection Law, as amended and effective as of March 15, 2014, the Administrative Regulations on Internet Transactions (2025 revised), the E-Commerce Law and the Regulations on the Implementation of the Law of PRC on the Protection of the Rights and Interests of Consumers promulgated by the State Council on March 15, 2024, which became effective on July 1, 2024, have provided stringent requirements and obligations on business operators, including internet business operators and platform service providers. For example, consumers are entitled to return goods purchased online, subject to certain exceptions, within seven days upon receipt of such goods without stating a reason for such return. To ensure that sellers and service providers comply with these laws and regulations, the platform operators are required to implement rules governing transactions on the platform, monitor the information posted by sellers and service providers, and report any violations by such sellers or service providers to the relevant authorities. In addition, online marketplace platform providers may, pursuant to the relevant PRC consumer protection laws, be exposed to liabilities if the lawful rights and interests of consumers are infringed upon in connection with consumers’ purchase of goods or acceptance of services on online marketplace platforms and the online marketplace platform providers fail to provide consumers with the contact information of the seller or manufacturer. In addition, online marketplace platform providers may be jointly and severally liable with sellers and manufacturers if they are aware or should be aware that any seller or manufacturer is using the online platform to infringe upon the lawful rights and interests of consumers and fail to take measures necessary to prevent or stop such activity. The Civil Code of PRC provides that: (i) in the event of damage arising from a defective product, the infringed party may seek compensation from either the manufacturer or seller of the said product. If the product defect is caused by the manufacturer, the seller shall be entitled to seek reimbursement from the manufacturer upon compensation. If the product defect is caused through the fault of the seller, the manufacturer shall be entitled to seek reimbursement from the seller upon compensation; (ii) if the product defect is caused through the fault of a third party, including, inter alia, the transporter or the party providing storage, and results in damage to others, the seller of the said product shall be entitled to seek reimbursement from the third party upon compensation; 111 (iii) if a defective product endangers the personal or property safety of others, the infringed party shall be entitle to request that the manufacturer or seller assume tort liability through, inter alia, stop infringement, removal of obstacle and elimination of danger; (iv) if a defect is found in a product after it has been put into circulation, the manufacturer and the seller shall take remedial measures in a timely manner including, inter alia, alerts and recalls. In the event of damage is enlarged due to a failure to take remedial measures in a timely manner or inadequate remedial measures, they shall bear tort liability. Where a recall measure is taken pursuant to the preceding sentences, the manufacturer and the seller shall bear the necessary expenses incurred by the infringed party resulted therefrom; and (v) in the event of death or serious damage to health arising from a product that is manufactured or sold when it is known to be defective or failure to take effective remedial measures pursuant to the preceding sentences, the infringed party shall be entitled to claim corresponding punitive compensation. We are subject to these laws and regulations as an online supplier of commodities and a provider of an online marketplace platform. Regulations on Anti-Monopoly Matters Related to Internet Platform Companies The PRC Anti-Monopoly Law, which was amended on June 24, 2022 and took effect on August 1, 2022, prohibits monopolistic conducts such as entering into monopoly agreements, abusing market dominance, and undertaking concentrations that may have the effect of eliminating or restricting competition. The PRC Anti-Monopoly Law requires that operators may not use data and algorithms, technology, capital advantages and platform rules to engage in monopolistic behaviors prohibited by this law. Furthermore, this law stipulates for increasing the fines for illegal concentration of business operators to “no more than ten percent of its preceding year’s sales revenue if the concentration of business operator has or may have an effect of excluding or limiting competition; or a fine of up to RMB5 million if the concentration of business operator does not have an effect of excluding or limiting competition,” and also requires the relevant authority to investigate transaction where there is evidence that the concentration has or may have the effect of eliminating or restricting competition, even if such concentration does not reach the filing threshold. On February 7, 2021, the Anti-Monopoly Commission of the State Council officially promulgated the Anti-Monopoly Guidelines for Internet Platforms. The guidelines prohibit certain monopolistic conducts of internet platforms to protect market competition, safeguard interests of users and operators who participate in internet platform economics, including without limitation, prohibiting platforms with dominant position from abusing their market dominance (such as discriminating customers in terms of pricing and other transactional conditions using big data and analytics, coercing counterparties into exclusivity arrangements, using technology methods to block competitors’ interface, tying or attaching unreasonable trading conditions, compulsory collection of unnecessary user data). In addition, the guidelines also reinforce the requirement of antitrust merger review for internet platform related transactions to safeguard market competition. On November 15, 2021, the SAMR published the Overseas Anti-monopoly Compliance Guidelines for Enterprises, which provides that both PRC enterprises that conduct business and operation overseas and PRC enterprises that conduct business and operations in China and may have certain impacts on overseas markets may face risks on anti-monopoly in other jurisdictions, in particular for those that conduct import and export trade, overseas investments, acquisition, transfer or license of intellectual properties and tendering and bidding activities. On May 6, 2024, the SAMR promulgated the Interim Provisions on Anti-Unfair Competition on the Internet, which prohibits business operators from using data, algorithms and other technical means to commit traffic hijacking, interference, malicious incompatibility and other improprieties to influence user choices or hinder or damage the normal operation of network products or services offered by other business operators. Regulations Relating to Outsourcing Services In recent years, the PRC government has expressed its support for outsourcing services provided by non-governmental companies. The Guidelines for Management of Outsourcing Risks of Banking Financial Institutions issued and effective on June 4, 2010, requires banks engaging in outsourcing to establish outsourcing risk management guidelines and incorporate these guidelines into their overall risk management systems. These guidelines, which generally regulates outsourcing by banks, 112 defines “outsourcing” as an act whereby a banking financial institution commissions some business activities originally handled by itself to a service provider for sustained operations and such service provider may be an independent third party, a subsidiary, an affiliated company, or a related party established in or outside China by the parent company of the banking financial institution or its affiliates. On December 30, 2021, the CBIRC issued the Measures for the Regulation of IT Outsourcing Risks of Banking and Insurance Institutions, or the IT Outsourcing Regulation Measures, which replaced the Guidelines for Regulating Information Technology Outsourcing Risks of Banking Financial Institutions issued on February 16, 2013, the Circular on Strengthening the Management of Risks Incurred during Offsite and Centralized Information Technology Outsourcing of Banking Financial Institutions issued on July 1, 2014 and the Notice of the General Office of the China Banking Regulatory Commission of the Launch of the Regulatory Assessment of the Offsite Centralized Information Technology Outsourcing of Banking Financial Institutions issued on December 2, 2014. The IT Outsourcing Regulation Measures has incorporated insurance group (holding) companies, insurance companies, insurance asset management companies and financial asset management companies into the scope of its supervision. The measures clearly stipulate that banking and insurance institutions shall not outsource their responsibilities as the subject of IT management and network security, and shall specify the IT functions that cannot be outsourced, including IT strategic management, IT risk management, IT internal audit and other functions related to the core competitiveness of IT. Also, The IT Outsourcing Regulation Measures highlights that when implementing IT outsourcing, the banking and insurance institutions shall include “safeguarding network and information security and strengthening the protection of important data and personal information” as one of the principles. In addition, the banking and insurance institutions shall carry out hierarchical management of IT outsourcing activities and relevant service providers and take differentiated management and control measures for important outsourcing and general outsourcing according to the IT Outsourcing Regulation Measures. On December 27, 2025, the CBIRC issued a draft of the Law of the People’s Republic of China on Banking Regulation for public comments. The draft provides that financial holding companies, financial asset management companies, trust companies, finance companies of enterprise groups, financial leasing companies, auto finance companies, consumer finance companies, currency brokerage companies, wealth management companies and other financial institutions established upon the approval of the banking regulatory authority of the State Council within the territory of the People’s Republic of China, shall be governed by the provisions of the Law of the People’s Republic of China on Banking Regulation on the supervision and administration of banking financial institutions. Information technology service providers offering services to banking financial institutions shall comply with relevant regulations on the management of information technology risks in the banking industry, and shall not intercept, store, forward, or use relevant data of banking financial institutions without authorization, nor infringe on the lawful rights and interests of banking financial institutions, depositors, or other customers through other improper means. If fails to do so, the banking regulatory authority shall have be entitled to order it to rectify the violation, confiscate any illegal gains, and impose a fine. The banking regulatory authority shall be entitled to issue warnings and impose fines on the directly responsible managers and other directly liable persons. Regulations Relating to Intellectual Property Rights The PRC has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents, trademarks and domain names. Copyright. Copyright in the PRC, including copyrighted software, is principally protected under the Copyright Law of the PRC, promulgated in February 2010 and taking effect in April 2010, or the Copyright Law, and related rules and regulations. A revised Copyright Law was published in November 2020 and became effective in June 2021. Under the Copyright Law, the term of protection for copyrighted software is 50 years. Patent. The Patent Law of the PRC, promulgated in December 2008 and effective since October 2009, provides for patentable inventions, utility models and designs. A revised Patent Law was published in October 2020 and became effective in June 2021, and the Implementation Rules of the Patent Law of the PRC (Revised in 2023) most recently amended on December 11, 2023, and took effect on January 20, 2024. An invention or utility model for which patents may be granted shall have novelty, creativity and practical applicability. The State Intellectual Property Office under the State Council is responsible for examining and approving patent applications. Trademark. The Trademark Law of the PRC, promulgated in April 2019 and effective since November 2019, or the Trademark Law, and the rules implemented thereunder protect registered trademarks. The PRC Trademark Office of the CNIPA is responsible for the registration and administration of trademarks throughout the PRC. The Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. In addition, on January 13, 2023, the CNIPA issued 113 the Draft Revision to the Trademark Law of the People’s Republic of China for public comments. The draft revision stipulates that: (i) an application for registration is applied may not be identical to a prior trademark for the same kind of commodity that the applicant has applied for earlier, has been registered, or has been deregistered, revoked or invalidated by public notice within one year before the date of application; (ii) Applicants shall not apply for trademark registration in bad faith; (iii) A trademark registrant shall, within the 12-month period from expiry of every five-year period with effect from the date of approval of trademark registration, explain to the CNIPA the use of the said trademark on the approved commodities or a proper reason for non-use of the said trademark. Domain Name. Domain names are protected under the Measures for the Administration of the Internet Domain Names promulgated by the MIIT in August 2017 and effective since November 2017 or the Domain Names Measures. The MIIT is the major regulatory body responsible for the administration of the PRC internet domain names. The Domain Names Measures has adopted a “first-to-file” principle with respect to the registration of domain names. We have registered 257 patents in China, and have applied for 289 additional patents with the PRC State Intellectual Property Office. We have registered 252 software copyrights and 31 copyrights for artworks with the PRC National Copyright Administration. We have 205 registered domain names, including lexin.com, lexinfintech.com and fenqile.com. As of the date of this annual report, we had 520 registered trademarks, including our “,” “,” and “” trademarks. Regulations Relating to Labor Regulations on Labor Contract The main PRC employment laws and regulations applicable to us include the Labor Law of the PRC, or the Labor Law, the Labor Contract Law of the PRC, or the Labor Contract Law, the Implementing Regulations on the Labor Contract Law of the PRC and other relevant laws and regulations. The Labor Law was issued by the National People’s Congress Standing Committee on July 5, 1994, took effect on January 1, 1995, and was last amended on December 29, 2018. Under this law, employers should enter into employment contracts with their employees based on the principles of equality, consent and agreement through consultation. Wages will be paid based on the policy of performance, equal pay for equal work, lowest wage protection and special labor protection for female worker and juvenile workers. The Labor Law also requires employers to establish and effectively implement a system of ensuring occupational safety and health, educate employees on occupational safety and health, preventing work-related accidents and reducing occupational hazards. Employers are also required to pay their employees’ social insurance premiums. The Labor Contract Law was issued by the National People’s Congress Standing Committee on June 29, 2007, amended on December 28, 2012 and took effect on July 1, 2013. Under this law and its implementing regulations, enterprises established in the PRC must enter into employment agreements with their employees to provide for the term of employment, job duties, work time, holidays and statutory payments, labor protection, working condition and occupational hazard prevention and protection and other essential contents. Both employers and employees will duly perform their duties. The Labor Contract Law also provides for the scenario of rescission and termination. Except for certain situations explicitly stipulated in the Labor Contract Law that are not subject to economic compensation, economic compensation shall be paid to the employee by the employer for the rescission or termination of the employment agreement. Regulations on Social Insurance and Housing Provident Funds Pursuant to the Social Insurance Law of the PRC, which was promulgated by the National People’s Congress Standing Committee on October 28, 2010, effective on July 1, 2011 and last amended on December 29, 2018, the PRC established social insurance systems such as basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. Employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, work-related injury insurance and maternity insurance. Employers must apply for completion of social security registration with the local social security agency within 30 days from the date of incorporation with their business license, registration certificate or corporation seal. Employers that fail to complete social security registration will be ordered by the social security administrative authorities to make correction within a stipulated period; where correction is not made within the stipulated period, the employers will be subject to fines ranging from one to three times the amount of the payable social security premiums, and the person(s)-in-charge who is/are directly accountable and other directly accountable personnel will be subject to fines ranging from RMB500 to RMB3,000. If an employer does not pay the full amount of social insurance 114 premiums as scheduled, the social insurance premium collection institution will order it to make the payment or make up the difference within the stipulated period and impose a daily surcharge equivalent to 0.05% of the overdue payment from the date on which the payment is overdue. If payment is not made within the stipulated period, the relevant administration department will impose a fine from one to three times the amount of overdue payment. According to the Several Provisions on Implementing the Social Insurance Law of the PRC issued by the Ministry of Human Resources and Social Security of the PRC on June 29, 2011 and effective on July 1, 2011, insurance premiums that should be paid by employees will be withheld and paid by the employers. Where an employer fails to withhold and pay the premiums in accordance with these provisions, the social insurance premium collection institution will order the employer to remit within the prescribed time and impose a daily surcharge equivalent to 0.05% of the overdue payment from the date of default as late payment penalty. Employers may not require employees to pay late payment penalties. Pursuant to the Regulations on the Administration of Housing Provident Funds, issued by the State Council on April 3, 1999 and last amended on March 24, 2019, employers must complete housing provident funds registration with local housing fund administration centers and open housing fund accounts for their employees in the bank. Employers must, within 30 days from their date of establishment, go through housing provident funds registration with local housing fund administration centers and complete housing provident fund account establishment procedures for employees with the examination and approval documents of the housing provident fund management center within 20 days from completion of registration. Employers are required to pay and deposit housing funds on behalf of their employees in full and in a timely manner, and any employer that fails to open such bank account or contribute housing funds may be fined and ordered to make payment within a prescribed time limit. If the employer still fails to do so, the housing fund administration center may apply to the court for enforcement of the unpaid amount. Pursuant to the Notice of the General Office of the State Council on Promulgation of the Pilot Program for Implementing Consolidation of Maternity Insurance and Basic Medical Insurance for Employees and Opinions of the General Office of the State Council on Comprehensively Promoting the Implementation of the Combination of Maternity Insurance and Basic Medical Insurance for Employees issued on January 19, 2017 and March 6, 2019, maternity insurance and basic medical insurance for employees will be consolidated. On July 20, 2018, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council of the PRC issued the Reform Plan of the State Tax and Local Tax Collection Administration System. Under the plan, beginning January 1, 2019, tax authorities are responsible for the collection of social insurance contributions in the PRC. Pursuant to the Interim Measures for Participation in Social Insurance by Hong Kong, Macao and Taiwan Residents in the Mainland, which was promulgated by the Ministry of Human Resources and Social Security on November 29, 2019, effective on January 1, 2020, employers registered in the mainland China shall contribute basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance for Hong Kong, Macao and Taiwan residents who are employed or recruited by them. Regulations Relating to Tax Regulations Relating to Enterprise Income Tax PRC enterprise income tax is calculated based on taxable income, which is determined under (i) the PRC Enterprise Income Tax Law, implemented in January 2008 and amended by the National People’s Congress in December 2018 and (ii) the implementation rules to the Enterprise Income Tax Law promulgated by the State Council in January 2008 and amended in December 2024. The Enterprise Income Tax Law imposes a uniform enterprise income tax rate of 25% on all resident enterprises in the PRC, including foreign-invested enterprises and domestic enterprises but, grants preferential treatment to HNTEs, and qualified “Software Enterprises.” HNTEs are instead subject to an income tax rate of 15%, subject to the requirement that they re-apply for HNTE status every three years. During each year of this three-year period, an HNTE must conduct a qualification self-review to ensure it meets the HNTE criteria, or be subject to the regular 25% income tax rate for any year in which it does not meet the criteria. A qualified “Software Enterprise” is entitled to an income tax exemption for two years beginning with its first profitable year and a 50% reduction to a rate of 12.5% for the subsequent three years. According to the Circular on Income Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries, or the Circular 27, which was effective in January 2011, key software enterprises included in the state planning that have not benefited from the preferential treatment of tax exemption in the current year may be subject to enterprise income tax at a reduced rate of 10%. However, in December 2020, the Announcement on the Enterprise Income Tax Policies for Promoting the High-quality Development of the Integrated Circuit Industry and the Software Industry was released, which replaced the above-mentioned provision in the Circular 27. It provides that a key software enterprises 115 encouraged by the state shall be exempt from the enterprise income tax from the first to the fifth year from the year when such enterprise makes profits and be subject to the enterprise income tax levied at the reduced rate of 10% for subsequent years. In April 2021, the Announcement on Income Tax Policies for “Software Enterprises Encouraged by the State” was released, a “Software Enterprise Encouraged by the State” is entitled to an income tax exemption for two years beginning with its first profitable year and a 50% reduction to a rate of 12.5% for the subsequent three years. However, these enterprises shall go through record-filing with the tax authority at the time of final settlement each year and be subject to the examination of the development and reform authority and the industry and information technology authority. In addition, according to the Enterprise Income Tax Law, enterprises registered in countries or regions outside the PRC but have their “de facto management bodies” located within China may be considered to be PRC resident enterprises and are therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income. Though the implementation rules of the Enterprise Income Tax Law define “de facto management bodies” as “establishments that carry out substantial and overall management and control over the manufacturing and business operations, personnel, accounting, and properties of an enterprise,” the only detailed guidance currently available for the definition of “de facto management body” as well as the determination and administration of tax residency status of offshore-incorporated enterprises are set forth in the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies promulgated by the State Administration of Taxation, in April 2009, or Circular 82, and the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Overseas Incorporated Resident Enterprises (Trial Version) issued by the State Administration of Taxation in July 2011, or Bulletin No. 45, which provides guidance on the administration as well as the determination of the tax residency status of a Chinese-controlled offshore-incorporated enterprise, defined as an enterprise that is incorporated under the laws of a foreign country or territory and that has a PRC company or PRC corporate group as its primary controlling shareholder. According to Circular 82, a Chinese-controlled offshore-incorporated enterprise will be regarded as a PRC resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: •the primary location of the day-to-day operational management and the places where they perform their duties are in the PRC; •decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval of organizations or personnel in the PRC; •the enterprise’s primary assets, accounting books and records, company seals and board and shareholder resolutions are located or maintained in the PRC; and •50% or more of voting board members or senior executives habitually reside in the PRC. Bulletin No. 45 further clarifies certain issues related to the determination of tax resident status and competent tax authorities. It also specifies that when provided with a copy of Recognition of Residential Status from a resident Chinese-controlled offshore-incorporated enterprise, a payer does not need to withhold income tax when paying certain PRC-sourced income such as dividends, interest and royalties to such Chinese-controlled offshore-incorporated enterprise. Regulations Relating to Income Tax for Share Transfers According to the Circular 7 promulgated by the State Administration of Taxation in February 2015 as amended in December 2017, if a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by transfer of the equity interests of an offshore holding company (other than a purchase and sale of shares issued by a PRC resident enterprise in public securities market) without a reasonable commercial purpose, the PRC tax authorities have the power to reassess the nature of the transaction and the indirect equity transfer will be treated as a direct transfer. As a result, the gain derived from such transfer, which means the equity transfer price less the cost of equity, will be subject to PRC withholding tax at a rate of up to 10%. Under the terms of Circular 7, the transfer which meets all of the following circumstances shall be directly deemed as having no reasonable commercial purposes: (i) over 75% of the value of the equity interests of the offshore holding company are directly or indirectly derived from PRC taxable properties; (ii) at any time during the year before the indirect transfer, over 90% of the total properties of the offshore holding company are investments within PRC territory, or in the year before the indirect transfer, over 90% of the offshore holding company’s revenue is directly or indirectly derived from PRC territory; (iii) the function performed and risks assumed by the offshore holding company are insufficient to substantiate its corporate existence; or (iv) the foreign income tax imposed on the indirect transfer is lower than the PRC tax imposed on the direct transfer of the PRC taxable properties. 116 In October, 2017, the State Administration of Foreign Exchange issued Bulletin of the State Administration of Foreign Exchange on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, which, among others, repeals certain rules stipulated in Circular 7 on December 1, 2017. The bulletin further details and clarifies the tax withholding methods in respect of income of non-resident enterprises. There is uncertainty as to the application of Circular 7. Circular 7 may be determined by the PRC tax authorities to be applicable to our prior private equity financing transactions that involved non-resident investors, if any of such transactions are determined by the tax authorities to lack reasonable commercial purpose. As a result, we and our non-resident investors in such transactions may become at risk of being taxed under Circular 7, and we may be required to expend valuable resources to comply with Circular 7 or to establish that we should not be taxed under the general anti-avoidance rule of the Enterprise Income Tax Law, which may have a material adverse effect on our financial condition and results of operations. Regulations Relating to Dividend Withholding Tax Pursuant to the Enterprise Income Tax Law and its implementation rules, if a non-resident enterprise has not set up an organization or establishment in the PRC, or has set up an organization or establishment but the income derived has no actual connection with such organization or establishment, it will be subject to a withholding tax on its PRC-sourced income at a rate of 10%. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, the withholding tax rate in 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 the Hong Kong enterprise directly holds at least 25% of the PRC enterprise. Pursuant to the Notice of the State Administration of Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, promulgated by the State Administration of Taxation in February 2009, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it should be a company as provided in the tax treaty; (ii) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (iii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. In August 2015, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, or Circular 60, which became effective in November 2015 and was amended in June 2018. Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax rate. Instead, nonresident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. In February 2018, the State Administration of Taxation promulgated the Notice on Issues Related to the “Beneficial Owner” in Tax Treaties, according to which when determining the applicant’s status as the “beneficial owner” regarding tax treatments in connection with dividends in the tax treaties, several factors, including without limitation, whether the applicant is obligated to pay more than 50% of its income in twelve months to residents in a third-party country or region, whether the business operated by the applicant constitutes the actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes or levies tax at an extremely low rate, will be taken into account, and it will be analyzed according to the actual circumstances of the specific cases. In October 2019, the State Administration of Taxation promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, or Circular 35. Circular 35 became effective and superseded Circular 60 in January 2020. Compared to Circular 60, Circular 35 provides that the nonresident enterprises and their withholding agents are not required to submit the supporting documents for tax treaty benefits when performing tax filings. Instead, nonresident enterprises and their withholding agents may retain such supporting documents themselves for the post-tax filing examinations by the relevant tax authorities. Regulations Relating to Value-added Tax On December 25, 2024, the Standing Committee of the National People’s Congress issued the Value-added Tax Law of the PRC, or the VAT Law, which became effective from January 1, 2026. According to the VAT Law, any entities and individuals (including individual businesses) engaged in the sale of goods, services, intangible assets and immovables and importation of goods within the territory of the PRC are VAT payers and shall pay VAT in accordance with the VAT 117 Law. Except for taxpayers’ export of goods, the sale of services or intangible assets within the scope as prescribed by the State Council by domestic entities and individuals across national borders and other circumstances specified for by the State Council, the rate of VAT for sale of goods, labor services of processing, repair or replacement, or tangible movable property leasing services or import of goods is 13% unless otherwise specified, such as the rate of VAT for sale of agricultural products is 9%, and the rate of VAT for sale of transportation, postal, basic telecommunications, construction, or immovable leasing services, sale of immovables, or transfer of the rights to use land is 9%. In addition to the above circumstances, the rate of VAT for sale of services or intangible assets is 6%. Regulations Relating to Submission of Tax-related Information On December 20, 2024, the State Taxation Administration issued a draft of Public Comments Sought on the Provisions on the Submission of Tax-related Information by Internet Platform Enterprises for public comments. The draft stipulates that an Internet platform enterprise shall submit tax-related information of the business operators and practitioners within its platform to the competent tax authority, including identity information, income information and other tax-related information. Regulations Relating to Foreign Exchange Regulations Relating to Foreign Currency Exchange The principal regulations governing foreign currency exchange in China are the Regulations of the People’s Republic of China on Foreign Exchange Control, promulgated by the State Council as amended in August 2008. Under these regulations, the Renminbi is freely convertible for current account items, including the trade and service-related foreign exchange transactions and other current exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities, unless the prior approval of SAFE is obtained and prior registration with SAFE is made. The Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting the Foreign Exchange Administration Policies on Direct Investments promulgated by SAFE in November 2012 and most recently amended in December 2019 substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts, such as pre-establishment expense accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of Renminbi proceeds by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible previously. In addition, according to the Notice of the State Administration of Foreign Exchange on Issuing the Provisions on the Foreign Exchange Administration of Domestic Direct Investment of Foreign Investors and the Supporting Documents promulgated by SAFE in May 2013 and most recently amended in December 2019, the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. In March 2015, SAFE released the SAFE Circular 19, which became effective in June 2015 and was amended in December 2019 and March 2023. SAFE Circular 19 made certain adjustments to some regulatory requirements on the settlement of foreign exchange capital of foreign-invested enterprises. It also annulled the Notice of the General Affairs Department of the State Administration of Foreign Exchange on the Relevant Operating Issues concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or SAFE Circular 142, and the Notice of the State Administration of Foreign Exchange on the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-Invested Enterprises in Certain Areas, and lifted some foreign exchange restrictions under SAFE Circular 142. However, SAFE Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using a Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, providing entrusted loans or repaying loans between non-financial enterprises. In June 2016, SAFE issued the SAFE Circular 16, which became effective on the same day and was amended in December 2023. Compared to SAFE Circular 19, SAFE Circular 16 provides that, in addition to foreign exchange capital, foreign debt funds and proceeds remitted from foreign listings should also be subject to the discretional foreign exchange settlement. In addition, it also lifted the restriction, that foreign exchange capital under the capital accounts and the 118 corresponding Renminbi capital obtained from foreign exchange settlement should not be used for repaying the inter-enterprise borrowings (including advances by the third party) or repaying bank loans in Renminbi that have been sub-lent to the third party. In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting profits. Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilization arrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with an outbound investment. Regulations Relating to Foreign Exchange Registration Management of Foreign Investment On July 4, 2014, the SAFE promulgated the Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or SAFE Circular 37, for the purpose of simplifying the approval process and for the promotion of the cross-border investment. SAFE Circular 37 supersedes the Notice on Relevant Issues on the Foreign Exchange Administration of Raising Funds through Overseas Special Purpose Vehicle and Investing Back in China by Domestic Residents, and revises and regulates the relevant matters involving foreign exchange registration for round-trip investment. Under SAFE Circular 37, (i) PRC residents (including PRC entities and PRC individuals) must register with the local branch of the SAFE before he or she contributes assets or equity interest in an overseas special purpose vehicle that is directly established or indirectly controlled by the PRC resident for the purpose of conducting investment or financing; and (ii) following the initial registration, PRC residents must update their SAFE registration when the offshore special purpose vehicle undergoes material events relating to any change of basic information, including change of such PRC citizens or residents’ name, operation term, increases or decreases in investment amount, transfers or exchanges of shares, or mergers or divisions. Regulations Relating to PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies On February 15, 2012, the State Administration of Foreign Exchange promulgated the Notice on Foreign Exchange Administration of PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies. Individuals participating in any stock incentive plan of any overseas publicly listed company who are Chinese citizens or foreign citizens who reside in mainland China for a continuous period of not less than one year, subject to a few exceptions, are required to register with the State Administration of Foreign Exchange or its local branches and complete certain other procedures. These plan participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding stock or interests and fund transfers. In addition, the agent in China is required to further amend the registration as required by State Administration of Foreign Exchange with respect to the stock incentive plan if there is any material change to the stock incentive plan, the mainland Chinese agent or the overseas entrusted institution or other material changes. The Chinese agents must, on behalf of the PRC residents who have the right to exercise the employee share options, apply to the State Administration of Foreign Exchange or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in China opened by the Chinese agents before distribution to such PRC residents. Regulations on M&A Rules On August 8, 2006, six PRC regulatory agencies, including the Ministry of Commerce, the State-owned Assets Supervision and Administration Commission of the State Council, the State Administration of Taxation, the SAMR, the CSRC and SAFE, issued the M&A Rules, which took into effect on September 8, 2006 and were amended on June 22, 2009. Foreign investors are subject to the M&A Rules when they purchase equity interest of a domestic company or subscribe for the increased capital of a domestic company that changes a domestic company into a foreign-invested enterprise; or when the foreign investors establish a foreign-invested enterprise in the PRC, purchase the assets of a domestic company and operate the assets via such foreign-invested enterprise; or when the foreign investors purchase the assets of a domestic company, establish a foreign-invested enterprise by injecting such assets and operate the assets. The M&A Rules also provide that if a PRC entity or individual plans to merge or acquire its related PRC entity through an overseas company legitimately 119 incorporated or controlled by such entity or individual, such a merger or acquisition shall be subject to examination and approval by the Ministry of Commerce. On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. On September 6, 2024, the NDRC and the MOC jointly issued the 2024 Negative List, which became effective on November 1, 2024. Pursuant to such Special Administrative Measures, if a domestic company engaging in the prohibited business stipulated in the 2024 Negative List seeks an overseas offering and listing, it shall obtain the approval from the competent governmental authorities. Besides, the foreign investors of the company shall not be involved in the company’s operation and management, and their shareholding percentage shall be subject, mutatis mutandis, to the relevant regulations on the domestic securities investments by foreign investors. Approved by the State Council, CSRC released new regulations for the filing-based administration of overseas securities offering and listing by domestic companies on February 17, 2023. The regulations came into effect on March 31, 2023, which including the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines. The Trial Measures stipulates that both direct and indirect overseas offering and listing activities are subject to regulation, and clearly defines the circumstances where provisions for direct and indirect overseas offering and listing by domestic companies apply. Specifically, where a domestic company seeks to indirectly offer and list securities in overseas markets, the issuer shall designate a major domestic operating entity, which shall, as the domestic responsible entity, file with the CSRC. Any overseas offering and listing made by an issuer that meets both the following conditions will be determined as indirect: (i) 50% or more of the issuer's operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in the PRC, or its main places of business are located in the PRC, or the senior managers in charge of its business operation and management are mostly PRC citizens or domiciled in the PRC. The determination as to whether or not an overseas offering and listing by domestic companies is indirect, shall be made on a substance over form basis. According to the Trial Measures, no overseas offering and listing shall be made under any of the following circumstances: (i) where such securities offering and listing is explicitly prohibited by provisions in laws, administrative regulations and relevant state rules; (ii) where the intended securities offering and listing may endanger national security as reviewed and determined by competent authorities under the State Council in accordance with law; (iii) where the domestic company intending to make the securities offering and listing, or its controlling shareholders and the actual controller, have committed crimes such as corruption, bribery, embezzlement, misappropriation of property or undermining the order of the socialist market economy during the latest three years; (iv) where the domestic company intending to make the securities offering and listing is suspected of committing crimes or major violations of laws and regulations, and is under investigation according to law, and no conclusion has yet been made thereof; (v) where there are material ownership disputes over equity held by the domestic company’s controlling shareholder or by other shareholders that are controlled by the controlling shareholder and/or actual controller. According to the Trial Measures, Initial public offerings or listings in overseas markets, or subsequent securities offerings and listings of an issuer in other overseas markets than where it has offered and listed, shall be filed with the CSRC within 3 working days after the relevant application is submitted overseas. Subsequent securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working days after the offering is completed. A domestic company that seeks to directly or indirectly list its domestic assets in overseas markets through single or multiple acquisitions, share swaps, transfers of shares or other means, shall fulfil the filing procedure with the CSRC within 3 working days the relevant application is submitted overseas or the first public disclosure of the specifics of the transaction is made by the listed company. Where a domestic company fails to fulfill filing procedure as stipulated by the Trial Measures or offers and lists securities in an overseas market in violation of the Trial Measures, the CSRC shall order rectification, issue warnings to such domestic company, and impose a fine of between RMB1,000,000 and RMB10,000,000. Directly liable persons-in-charge and other directly liable persons shall be warned and each imposed a fine of between RMB500,000 and RMB5,000,000. Controlling shareholders and actual controllers of the domestic company that organize or instruct the violations shall be imposed a fine of RMB1,000,000 and RMB10,000,000. Directly liable persons-in-charge and other directly liable persons shall be each imposed a fine of between RMB500,000 and RMB5,000,000. 120 In order to support domestic companies overseas securities offering and listing pursuant to laws and regulations, as a supplement to the Trial Measures, the CSRC, Ministry of Finance of PRC, National Administration of State Secrets Protection and National Archives Administration of China, have jointly revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing (Announcement No.29 [2009] of the CSRC, hereinafter referred to as the Provisions). The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and will come into effect on 31 March 2023 with the Trial Measures. The revised Provisions expands its application to cover both direct and indirect overseas offering and listing, and requires that a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that (i)contain state secrets or working secrets of government agencies shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; or (ii) if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. In addition, the domestic company, securities companies and securities service providers shall first obtain approval from the CSRC or other competent Chinese authorities before cooperating with the inspection and investigation by the overseas securities regulator or competent overseas authority, or providing documents and materials requested in such inspection and investigation. Regulations on Technology Export Control On November 29, 2020, the State Council released the Regulations on the Administration of the Import and Export of Technology (2020 vision). The Regulations stipulate the definition of technology export, which refers to the transfer of technology from China to foreign countries by means of trade, investment or economic and technical cooperation. According to the Regulations, the relevant departments may establish a catalog of technologies that are restricted or prohibited from export, and the export of technologies in the “prohibited” part of the catalog is prohibited. For technologies in the “restricted” part of the catalog, approval from the government is required before the parties conduct substantive negotiations and sign a contract on the export, and an export license must be obtained before the export can be made. On December 21, 2023, the Ministry of Commerce and the Ministry of Science and Technology jointly issued the Catalogue of Technologies Prohibited or Restricted from Export by China (2023 version), which has replaced its previous version issued in 2020. In general, the amendments continue the overall policy trend of optimizing the business environment for technology trade and promoting technology trade facilitation, aiming to create positive conditions for promoting international economic and trade cooperation on the basis of safeguarding national economic security and development interests. The deletion or restriction of relevant technical items would bring great benefits to the overseas business of enterprises in the fields of Internet, artificial intelligence, photovoltaic, new energy, biomedicine, autonomous driving, etc. On December 27, 2025, the Standing Committee of the National People’s Congress issued the Foreign Trade Law, and it provides that foreign traders engaging in import and export of goods or technology shall submit documents and material related to its foreign trade activities to the relevant departments in accordance with the provisions of the foreign trade department of the State Council or other relevant State Council departments in accordance with the Foreign Trade Law. Pursuant to the Foreign Trade Law, where technologies exported are prohibited, or restricted but were exported without governmental permission, relevant authorities will impose penalties in accordance with the relevant laws and regulations, or will order the operators to conduct rectification, confiscate their illegal income, and impose fine of one to five times of the illegal income. And where the illegal gains are RMB500,000 or more, impose a fine of not less than one time but not more than five times the amount of illegal gains; where there are no illegal gains or the illegal gains are less than RMB500,000, impose a fine of not more than RMB500,000; where a crime is constituted, criminal liability shall be pursued according to law. 121 C. Organizational Structure The following diagram illustrates our corporate structure, including our principal subsidiaries, variable interest entities and subsidiaries of the variable interest entities as of the date of this annual report on Form 20-F. (1)The shareholders of Shenzhen Xinjie include Jay Wenjie Xiao (95%) and Wenbin Li (5%). Jay Wenjie Xiao is our chief executive officer and chairman of our board of directors, and Wenbin Li is a non-executive PRC employee. (2)The shareholders of Shenzhen Fenqile include Shenzhen Xinjie (68.7027%) and Jay Wenjie Xiao (31.2973%). (3)The shareholders of Beijing Lejiaxin include Jay Wenjie Xiao (99.87%) and Chao Han (0.13%). Chao Han is our employee. (4)The shareholders of Qianhai Dingsheng include Shenzhen Xinjie (70%) and Jianwei Wei (30%). Jianwei Wei is a non-executive PRC employee. (5)The shareholders of Mengtian Technology include Jay Wenjie Xiao (70.0%), Xiaoting Zhou (17.5%), Jianwei Wei (7.5%) and Shan Xu (5.0%), Xiaoting Zhou and Shan Xu are all our non-executive PRC employee. (6)99% of the equity interest of Shenzhen Lexin Financing Guarantee Co., Ltd. is directly held by Lexin Software, and the remaining 1% is held by Upside Limited, one of our subsidiaries. (7)The shareholders of Beihai Super Egg include Tao Yang (50%) and Chao Han (50%), and Tao Yang and Chao Han are all our non-executive PRC employees. 122 Contractual Arrangements with the Variable Interest Entities LexinFintech Holdings Ltd. is not a Chinese operating company but a Cayman Islands holding company with no equity ownership in the variable interest entities and their subsidiaries. We conduct our operations in China through (i) our PRC subsidiaries, and (ii) the variable interest entities, with which we have maintained contractual arrangements, and their subsidiaries. The PRC laws and regulations impose restrictions on foreign ownership and investment in internet-based businesses such as distribution of online information and other value-added telecommunications services. Accordingly, we operate these businesses in China through the variable interest entities, and rely on contractual arrangements among our PRC subsidiaries, the variable interest entities and their nominee shareholders. Such structure provides investors with exposure to foreign investment in China-based companies where the PRC laws and regulations prohibit or restrict direct foreign investment in operating companies in certain sectors. To comply with the PRC laws and regulations, we have entered into a series of contractual arrangements, mainly through Beijing Shijitong, Shenzhen Lexin Software and Beihai Green Lemon, with the variable interest entities and the shareholders of the variable interest entities to obtain effective control over the variable interest entities and their subsidiaries. We currently conduct our business through the variable interest entities and their subsidiaries based on these contractual arrangements, which allow us to: •exercise effective control over the variable interest entities and their subsidiaries; •receive substantially all of the economic benefits from the variable interest entities and their subsidiaries; and •have an exclusive option to purchase all or part of the equity interests in the variable interest entities and when and to the extent permitted by the PRC law. As a result of these contractual arrangements, we have become the primary beneficiary of the variable interest entities under U.S. GAAP. We have consolidated the financial results of the variable interest entities and their subsidiaries in our consolidated financial statements in accordance with U.S. GAAP. The following is a summary of the currently effective contractual arrangements between our wholly owned PRC subsidiary, Beijing Shijitong, certain of the variable interest entities and their nominee shareholders. The contractual arrangements between (i) our wholly owned PRC subsidiary, Shenzhen Lexin Software, and the variable interest entity, Mengtian Technology, and its shareholders and (ii) our wholly owned PRC subsidiary, Beihai Green Lemon and the variable interest entity, Beihai Super Egg, and its shareholders are of substantially the same terms and conditions. Agreements that Allow Us to Receive Economic Benefits from the Variable Interest Entities Exclusive Business Cooperation Agreements. Beijing Shijitong entered into exclusive business cooperation agreements with each of the variable interest entities. Pursuant to these agreements, Beijing Shijitong or its designated party has the exclusive right to provide the variable interest entities with comprehensive business support, technical support and consulting services. Without Beijing Shijitong’s prior written consent, the variable interest entities shall not accept any consulting and/or services covered by these agreements from any third party. The variable interest entities agree to pay service fees in an amount determined by Beijing Shijitong based on respective profit calculated as revenue minus cost agreed and recognized by Beijing Shijitong of the variable interest entities for the relevant period on a yearly basis or other service fees for specific services as required and as otherwise agreed by both parties. Beijing Shijitong owns the intellectual property rights arising out of the services performed under these agreements. Unless Beijing Shijitong terminates these agreements or pursuant to other provisions of these agreements, these agreements will remain effective indefinitely. These agreements can be terminated by Beijing Shijitong through a 30-day advance written notice, the variable interest entities have no right to unilaterally terminate these agreements. 123 Agreements that Provide Us with Effective Control over the Variable Interest Entities Power of Attorney. Through a series of power of attorney, each nominee shareholder of the variable interest entities irrevocably authorizes Beijing Shijitong or any person(s) designated by Beijing Shijitong to act as its attorney-in- fact to exercise all of such shareholder’s voting and other rights associated with the shareholder’s equity interest in the variable interest entities, including the right to attend shareholder meetings on behalf of such shareholder, the right to appoint legal representatives, directors, supervisors and chief executive officers and other senior management, and the right to sell, transfer, pledge and dispose of all or a portion of the shares held by such shareholder. The power of attorney is irrevocable and remains in force continuously upon execution. Equity Pledge Agreements. Beijing Shijitong has entered into an equity pledge agreement with each nominee shareholder of the variable interest entities. Pursuant to these equity pledge agreements, each shareholder of the variable interest entities has pledged all of his, her or its respective equity interest in the variable interest entities to Beijing Shijitong to guarantee the performance by such nominee shareholder and the variable interest entities of their respective obligations under the exclusive business cooperation agreements, the power of attorney, the loan agreement, the exclusive option agreements, and any amendment, supplement or restatement to such agreements. If the variable interest entities or any of their nominee shareholders breach any obligations under these agreements, Beijing Shijitong, as pledgee, will be entitled to dispose of the pledged equity and have priority to be compensated by the proceeds from the disposal of the pledged equity. Each of the nominee shareholders of the variable interest entities agrees that before his, her or its obligations under the contractual arrangements are discharged, he, she or it will not dispose of the pledged equity interests, create or allow any encumbrance on the pledged equity interests, which may result in the change of the pledged equity that may have adverse effects on the pledgee’s rights under these agreements without the prior written consent of Beijing Shijitong. These equity pledge agreements will remain effective until the variable interest entities and their nominee shareholders discharge all their respective obligations under the contractual arrangements. As of the date of this annual report, the equity pledged between each shareholder of the variable interest entities and Beijing Shijitong has been registered with the local PRC authorities. Agreements that Provide Us with the Option to Purchase the Equity Interest in the Variable Interest Entities Exclusive Option Agreements. Beijing Shijitong has entered into the exclusive option agreements with the variable interest entities. Pursuant to these exclusive option agreements, the nominee shareholders of the variable interest entities have irrevocably granted Beijing Shijitong or any third party designated by Beijing Shijitong an exclusive option to purchase all or part of their respective equity interests in the variable interest entities. The purchase price shall be the lowest price permitted by law. Without Beijing Shijitong’s prior written consent, the variable interest entities shall not, among other things, amend their articles of association, increase or decrease the registered capital, sell, dispose of or set any encumbrance on their assets, business or revenue, enter into any material contract outside the ordinary course of business, merge with any other persons or make any investments, distribute dividends or enter into any transactions which have material adverse effects on their business. The shareholders of the variable interest entities also jointly and severally undertake that they will not transfer, gift or otherwise dispose of their respective equity interests in the variable interest entities to any third party or create or allow any encumbrance on their equity interests within the term of these agreements. These agreements will remain effective until Beijing Shijitong and/or any third party designated by Beijing Shijitong has acquired all equity interests of the variable interest entities from their respective nominee shareholders. Loan Agreements. Pursuant to the loan agreement between Beijing Shijitong and the shareholders of Qianhai Dingsheng, the loan agreements between Beijing Shijitong and the shareholders of Shenzhen Xinjie, the loan agreements between Beijing Shijitong and the shareholders of Shenzhen Fenqile, the loan agreement between Beijing Shijitong and the shareholders of Beijing Lejiaxin. Beijing Shijitong made certain loans to the nominee shareholders of certain variable interest entities solely for the purpose of operating their respective businesses. Pursuant to these loan agreements, the nominee shareholders can only repay the loans by the transfer of all their equity interests in the applicable variable interest entities to Beijing Shijitong and Shenzhen Lexin Software (as applicable) or its designated person(s) pursuant to their respective exclusive option agreements. The nominee shareholders must pay all of the proceeds from transfer of such equity interests to Beijing Shijitong (as applicable). In the event that nominee shareholders transfer their equity interests to Beijing Shijitong (as applicable) or its designated person(s) with a price equivalent to or less than the amount of the principal, the loans will be interest free. If the price is higher than the amount of the principal, the excess amount will be paid to Beijing Shijitong (as applicable) as the loan interest. The loans must be repaid immediately when permitted by the PRC laws at Beijing Shijitong’s request. The term of all loans are ten years and will be extended automatically for another ten years on each expiration. 124 In the opinion of Shihui Partners, our PRC counsel: the ownership structures of the variable interest entities currently do not result in any violation of applicable PRC laws or regulations currently in effect; and the contractual arrangements among our PRC subsidiaries, the variable interest entities and their shareholders, are governed by the PRC laws or regulations and are currently valid, binding and enforceable in accordance with applicable PRC laws or regulations currently in effect, and do not result in any violation of applicable PRC laws or regulations currently in effect. However, Shihui Partners has also advised us that the interpretation and application of current or future PRC laws and regulations are still evolving and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC counsel. In particular, in March 2019, the National People’s Congress passed the PRC Foreign Investment Law, which became effective as of January 1, 2020. For the effect of the PRC Foreign Investment Law on us. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure” and “—Risks Related to Doing Business in China—The interpretation and implementation of the PRC Foreign Investment Law may impact the viability of our current corporate structure, corporate governance and business operations.” However, the contractual arrangements may not be as effective as ownership of the variable interest entities, and we may incur substantial costs to enforce the terms of the arrangements. In addition, the legality and enforceability of the contractual agreements between our PRC subsidiaries, the variable interest entities, and their nominee shareholders, as a whole, have not been tested in a court of law in China as of the date of this annual report. As such, the VIEs structure involves unique risks to investors of our Cayman Islands holding company. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the variable interest entities and their shareholders, for a significant portion of our business operations, which may not be as effective as ownership in directing the activities” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Any failure by the variable interest entities or their respective shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.” There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the variable interest entities and its nominee shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the variable interest entities is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangements in relation to the variable interest entities and their subsidiaries do not comply with the PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations,” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—There are uncertainties in interpretation and enforcement of the PRC laws and regulations.” Our corporate structure is subject to risks associated with our contractual arrangements with the variable interest entities. If the PRC government deems that our contractual arrangements with the variable interest entities do not comply with the PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries and the variable interest entities, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the variable interest entities and, consequently, significantly affect the financial performance of the variable interest entities and our company as a whole. The PRC regulatory authorities could disallow the VIEs structure, which would likely result in a material change in our operations and cause the value of our securities to significantly decline or become worthless. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.” D. Property, Plant and Equipment 125 Our corporate headquarters is located in Shenzhen, China, where we lease office space with an area of approximately 14,551 square meters as of the date of this annual report. For our user services, data verification services and collection services, we lease office space in eight cities in China, namely Beijing, Shanghai, Wuhan, Nanchang, Changsha, Ji’an, Beihai and Hainan, with aggregate area of approximately 28,881 square meters. We also lease office space in various locations in the PRC, with an aggregate area of approximately 9,200 square meters. We lease our premises from unrelated third parties under operating lease agreements. The lease terms vary from 0.75 year to 5 years. Our servers are primarily hosted at internet data centers owned by major domestic internet data center providers. We believe that our existing facilities are generally adequate to meet our current needs, but we expect to seek additional space as needed to accommodate future growth.