A. History and Development of the Company We are a Cayman Islands exempted company with limited liability. We commenced our online consumer finance marketplace business in March 2012 as a business unit under our parent company, CreditEase Holdings (Cayman) Limited, or CreditEase, which remains our parent company and controlling shareholder. CreditEase incorporated Yirendai Ltd. in the Cayman Islands to be our holding company in September 2014. We then established a wholly owned subsidiary in Hong Kong, YouRace Digital Holdings HK Limited, or YouRace HK, in October 2014. YouRace HK further established YouRace Hengchuang Technology Development (Beijing) Co., Ltd., or YouRace Hengchuang, our wholly owned subsidiary in China, in January 2015. YouRace HK then established Chongqing Hengyuda Technology Co., Ltd., or Hengyuda, our wholly owned subsidiary in China, in March 2016. YouRace Hengchuang further established Xiangyu Safety Technology Service (Beijing) Co., Ltd. (formerly known as Yiren Information Consulting (Beijing) Co., Ltd.), or Xiangyu Safety, our wholly owned subsidiary in China, in August 2017. Hengcheng Technology Development (Beijing) Co., Ltd., or Hengcheng, was established in China in September 2014. We became the primary beneficiary of Hengcheng in February 2015 by entering into a series of contractual arrangements with Hengcheng and its shareholders. Hengcheng acquired Dekai Yichuang Asset Management (Shenzhen) Co., Ltd., or Dekai Yichuang, in May 2019 from CreditEase as a part of our business realignment with CreditEase. Dekai Yichuang completed the acquisition of 100% equity interests in Hainan Haijin Yichuang Data Information Service Co., Ltd., or Yichuang Data, in October 2019. Yichuang Data established Haijin Yichuang Financial Leasing Co., Ltd., or Yichuang Financial Leasing, to conduct financial leasing business, in March 2017. Yichuang Data and Yichuang Financial Leasing collectively established Hainan Haijin Yichuang Micro-lending Co., Ltd., or Yichuang Micro-lending, in May 2017, holding 50% and 50% equity interests in Yichuang Micro-lending, respectively, to conduct micro-lending business. CreditEase Puhui Information Consultant (Beijing) Co., Ltd., or CreditEase Puhui, acquired all the equity interests of Dekai Yichuang in September 2020 from Hengcheng. On December 31, 2020, as a result of a business restructuring, we terminated contractual arrangements with Hengcheng and its shareholders, and CreditEase, through its subsidiaries and affiliates, started conducting the business operations of Hengcheng. On December 18, 2015, our ADSs commenced trading on the NYSE under the symbol “YRD.” We raised from our initial public offering approximately US$64.9 million in net proceeds after deducting underwriting commissions and the offering expenses payable by us. Concurrently with our initial public offering, we sold 2,000,000 ordinary shares to Baidu (Hong Kong) Limited, or Baidu Hong Kong, in a private placement, resulting in net proceeds to us of approximately US$9.0 million. 72 To execute our strategy of offering more value-added services to our clients, Yiren Financial Information Service (Beijing) Co., Ltd., or Yiren Financial Information, was established in October 2016 which engaged in customer membership services business and is the share holding company of VIEs as of the date of this annual report. As a result of a series of contractual arrangements entered into among our wholly owned subsidiary Hengyuda, Yiren Financial Information and its shareholders in October 2016, we have been the primary beneficiary of Yiren Financial Information and consolidate its financial results in accordance with U.S. GAAP. In 2019, we had a business realignment with CreditEase whereby we assumed from CreditEase and its affiliates certain businesses, including an online wealth business targeting the mass affluent, unsecured and secured consumer lending, financial leasing, small and medium enterprise (SME) lending and other related services and businesses. After the business realignment, we continue to receive certain business consulting and other support services from CreditEase. As a part of the business alignment, we entered into a series of contractual arrangements with CreditEase Puhui and CreditEase Huimin Investment Management (Beijing) Co., Ltd, or Huimin, in March 2019 and started to consolidate their financial results. In December 2019, we sold Huimin to a subsidiary of CreditEase. In addition, as a result of the business alignment, we started conducting the business operations of Shenzhen Zhongbang Information Consulting Service Co., Ltd., or Shenzhen Zhongbang, which became a wholly owned subsidiary of YouRace Hengchuang in December 2019. Yiren Hengsheng Technology Development (Beijing) Co., Ltd., or Yiren Hengsheng, is currently a wholly owned subsidiary of YouRace Hengchuang, which provides technology and system support to our inter-group companies. In May 2019, we established a wholly owned subsidiary, Yiren Blue Boyage Limited, or Blue Boyage, in the Cayman Islands. On September 30, 2019, with the approval of our shareholders, we changed our name from “Yirendai Ltd.” to “Yiren Digital Ltd.” In September 2020, we established Fujian Jiaying Financing Guarantee Co., Ltd., or Fujian Jiaying, to provide financing guarantee services for our loan facilitation business. In May 2020, Yiren Financial Information acquired Baijunda Logistics (Wuhan) Co., Ltd., or Baijunda, and Wuhan Linyi Business Consulting Co., Ltd., or Wuhan Linyi, along with their jointly owned subsidiary, Hexiang Insurance Broker Co., Ltd. or Hexiang Insurance Brokers, and its wholly owned subsidiary, Heanjun Auto Rescue (Wuhan) Co., Ltd. (formerly known as Hejun Auto Rescue (Wuhan) Co., Ltd.) or Heanjun, which was deregistered in 2024. Hexiang Insurance Brokers has been operating insurance brokerage business since then. On December 31, 2020, we consummated another business restructuring with CreditEase to streamline our service lines and reposition us as a comprehensive digital personal financial management platform in China. In connection with the business restructuring, we disposed of Hengcheng, the entity operating the online consumer lending platform targeting individual investors as the funding source. Since then, funding for Yiren Credit has only been provided by institutional funding partners. In July 2022, we established Beijing Yiren Zhisheng Technology Information Service Co., Ltd. (formerly known as Beijing Yiyouxuan Technology Information Service Co., Ltd.), or Yiren Zhisheng. As of the date of this annual report, Yiren Zhisheng is the operator of Yiren Select. In September 2023, we established Chongqing Hengfengyi Technology Co., Ltd. to provide technology and system support to our inter-group companies. In October 2023, we acquired Chongqing Jintong Financing Guarantee Co., Ltd., or Chongqing Jintong, a licensed financing guarantee company operating financing guarantee business and providing financing advisory services. To expand our business internationally, we established Yiren Vision Pte. Ltd. in October 2022, and acquired Creditable Lending Corporation in February 2023 and Capital para Mexicanos Emprendedores S.A. de C.V., SOFOM, ENR in October 2023. In 2024, we established Xinjiang Hengyu Innovation Technology Development Co., Ltd., Hesi Shengju Technology Development (Xinjiang) Co., Ltd., Hesi Shengrui Technology Development (Xinjiang) Co., Ltd., Beihai Hengze Innovation Technology Co., Ltd., Beihai Youce Yike Technology Co., Ltd., Beihai Youjia Innovation Technology Co., Ltd., and Dingrui Zhijie Technology Development (Guangxi) Co., Ltd., for the purposes of expanding our loan facilitation business nationally. 73 In 2025, Yiren Financial Information acquired Hubei Jiushi Network Technology Co., Ltd. and established Hainan Guatian Film and Television Co., Ltd., which conducted live streaming business for a short period in 2025 but has no business operation as the date of this annual report. In September 2025, Yiren Financial Information acquired all the equity interests of Dekai Yichuang from CreditEase Puhui. In November 2025, we sold CreditEase Puhui and Tianjin Linyang to Puxin Hengye Technology Development (Beijing) Co., Ltd.. In November 2025, we sold Yichuang Micro-lending to a third-party company. In January 2026, we established Youpu Digital (Shanghai) Technology Co., Ltd., to provide loan facilitation service. In February 2026, we acquired 65% of the shares in PT Pinjaman Kemakmuran Rakyat to expand our business internationally. Our principal executive offices are located at 28/F, China Merchants Bureau Building, 118 Jianguo Road, Chaoyang District, Beijing, People’s Republic of China. Our telephone number at this address is +86 10 5964-4552. Our registered office in the Cayman Islands is located at the offices of Sertus Incorporations (Cayman) Limited, Sertus Chambers, P.O. Box 2547, Cassia Court, Camana Bay, Grand Cayman, Cayman Islands. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC on www.sec.gov. You can also find information on our website ir.yiren.com. The information on our website should not be deemed a part of this annual report. B. Business Overview We are a leading AI-powered Fintech platform specializing in digital consumer lending, insurance and financial technology innovation across China and global markets. We leverage advanced artificial intelligence and emerging technologies to enhance customer experience, optimize capital efficiency, and expand financial inclusion. We are primarily engaged in the operation of our credit solution services business, insurance brokerage business and others businesses mainly in China. ● Credit solution. Our subsidiaries and the VIEs provide services as an online marketplace connecting borrowers and investors. The investors originally consisted of individual investors and institutional investors. In 2020, the Group ceased to facilitate new loans funded by individual investors. Since then, loans facilitated on our platform are financed either by third-party funding partners or by our subsidiaries, depending on the specific product structure. With respect to the loans funded by third parties, the funds are provided solely by institutional funding partners, such as commercial banks, internet banks, trusts, microloan companies and consumer finance companies. We charge third-party funding partners, and guarantee companies, where applicable, for the loan facilitation service fees and post-origination service fees. For the loans funded by our subsidiaries, we charge borrowers financing service fees in accordance with the applicable arrangements and regulatory requirements. For loan products under the risk-taking model, we also provide credit guarantee services pursuant to which we assume part or all of the credit risks associated with the underlying loans. Under these arrangements, we are obligated to compensate funding partners for covered losses in the event of borrower default, subject to the terms of the relevant guarantee agreements. We also generate revenues from providing referral arrangements with in relation to borrowers on our platform, intelligent marketing and from the provision of our existing technological capabilities related to credit solution services to third-party companies. The mix of our loan facilitation, financing and guarantee services varies from time to time in response to market conditions, regulatory environment and borrowers’ credit performance. 74 ● Insurance brokerage. Hexiang Insurance Brokers, a VIE subsidiary, operates the insurance brokerage business selling insurance policies on behalf of the insurance companies and earns brokerage commissions determined as a percentage of premiums paid by the insured, including premiums paid upon renewals. Hexiang Insurance Brokers has established a comprehensive and diversified product matrix that encompasses both life and health insurance products as well as property and casualty insurance products, selling to a wide range of clients, including both retail and institutional clients. In addition to traditional brokerage through its nationwide branches and agents’ network, Hexiang Insurance Brokers also operates an internet-based insurance distribution model through selling insurance products on online digital platforms since 2024. Internet insurance products generally carry monthly premiums payable over a one-year period. We earn brokerage commissions from insurance companies based on a pre-agreed rate applied to the actual premium amounts paid by policyholders. ● Others. The “Others” primarily represent the remaining electronic commerce services revenue from the consumption and lifestyle business segment. Since the second quarter of 2024, revenue from these non-financial products and services declined, primarily due to our strategic scale-back of product offerings. At the end of 2025, revenue contribution from this business segment became immaterial, and the relevant entities are primarily focused on servicing remaining members until their membership expires. As a result, we no longer report the consumption and lifestyle business as a separate operating segment in this annual report. Meanwhile, as our AI-powered systems and data-driven service capabilities continue to develop, we have begun to generate revenue from providing intelligent marketing and referral arrangements, technology services to third-party corporate clients outside our credit solutions business. At the end of 2025, the revenues from these operations were insignificant and are not reported as an independent business segment, thus these revenues are reported under the “Others”. Credit Solution Business Our credit solution business embraces the significant opportunities presented by a financial system that leaves many creditworthy individuals and small business owners underserved. Our business model is empowered by our AI and data technologies, user-centric systems and online servicing platforms. We provide borrowers with fast and convenient access to credit products at competitive rates while managing risks at acceptable level. Overview We offer a diversified portfolio of loan products to high-quality and selected underserved borrowers in China, financed by third-party funding partners (“loan facilitation services”) or our subsidiaries (“self-funded financing services”). Historically, we branded this business as “credit-tech business,” and we re-branded it as “financial services business” in the second quarter of 2023. In 2025, we re-branded it as “credit solution business”. Accordingly, we collectively refer to these services as “credit solution business” for purposes of business description and segment reporting. As of December 31, 2025, we had served approximately 14.3 million borrowers through our subsidiaries and the VIEs. In 2023, 2024 and 2025, the aggregate loans we facilitated under our loan facilitation services and self-funded financing services amounted to RMB36,036.3 million, RMB53,591.6 million and RMB67,790.7 million (US$9,693.9 million), respectively. Under the credit solution business, the loans are primarily funded by third parties with small portion by self-funded capital. Since September 2020, our company and the VIEs have ceased accepting new funding from individual investors and instead have solely accepted funding from institutional funding partners, such as commercial banks, internet banks, trusts, microloan companies, and consumer finance companies. In 2023, 2024 and 2025, we facilitated loans of RMB35,992.3 million, RMB53,338.7 million and RMB67,438.7 million (US$9,643.6 million) respectively, funded by third parties. We charge third-party funding partners, and guarantee companies if any, (i) the loan facilitation service fees for our technology-enabled borrower acquisition services, and (ii) the post-origination service fees for our post-origination loan management and collection services, including payment reminder services, payment collection services, overdue payment monitoring services, and lawsuit filing services under certain circumstances, among others. In 2024, we started to increase loan volume facilitated under the risk-taking model, in which our company assumes the credit risk for loans facilitated on our platform and provides guarantee services through our subsidiaries. In this case, we also charge corresponding guarantee service fees. 75 The self-funded loans mainly receive funding from our company’s subsidiaries and are primarily unsecured small revolving loans, and the self-funded loans also included historical auto-secured loans funded from VIEs’ subsidiaries in 2022. These loans amounted to RMB44.0 million, RMB252.9 million and RMB352.0 million (US$50.3 million) in 2023, 2024 and 2025, respectively. For the self-funded loans, we charge financing service fees that consist of interest income charged from borrowers. Borrowers Borrowers under the credit solution business are primarily individuals, including credit card holders with stable credit performances and small business owners with the capabilities to generate recurring revenues. Borrower Profile and Base Based on the information disclosed to us, as of December 31, 2025, the borrower profile was 71.2% male and 28.8% female, while 34.0% were aged 35 years or younger. In 2025, loans were facilitated to 3,513,192 borrowers through our platform under the credit solution business. Borrower Acquisition We, through our subsidiaries and the VIEs, attract borrowers using online channels. Our online borrower acquisition efforts are supported by our big data capabilities and are primarily focused on search engine marketing (SEM), search engine optimization (SEO), mobile application downloads through major app stores, online channels via application programming interfaces (APIs), e-commerce and consumption platforms, social media platforms, and various marketing campaigns and membership services. Historically, our company and the VIEs also utilized offline channels in different locations in China for borrower acquisition. Our company and the VIEs discontinued the offline business in February 2022 to optimize product mix, cost efficiency and revenue structure during and post the pandemic period. The following table provides a breakdown of the number of borrowers under our credit solution business by channel: For the Year Ended December 31, 2023 2024 2025 Number of borrowers(1): Borrowers from online channels 2,891,901 4,187,502 3,513,192 Borrowers from offline channels — — — Total number of borrowers 2,891,901 4,187,502 3,513,192 (1) The number of borrowers for a specified period represents the number of borrowers whose loans were funded under our credit solution business during such period. A borrower who obtains loans through our platform from both online and offline channels during a period is counted as a borrower acquired from online channels for the purpose of the table above. The following table provides a breakdown of the loan volume provided under our credit solution business by channel: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands) Amount of loans facilitated 36,036,301 100.0 53,591,593 100.0 67,790,653 9,693,935 100.0 Loans generated from online channels 36,036,301 100.0 53,591,593 100.0 67,790,653 9,693,935 100.0 Loans generated from offline channels — 0.0 — 0.0 — — 0.0 76 Since we suspended our offline channels of loan facilitation business in February 2022, Yixianghua has served as our only online borrowing service platform in mainland China. We have been committed to optimizing credit risk and customer acquisition efficiency. In 2023, 2024 and 2025, 61.1%, 59.5% and 76.5% of the total loan volume facilitated through the Yixianghua platform originated from repeat borrowers, respectively. Funding Sources Under the credit solution business, the loans are primarily funded by third parties. Since September 2020, we have ceased accepting new funding from individual investors and instead have solely accepted funding from institutional funding partners, such as commercial banks, internet banks, trusts, microloan companies, and consumer finance companies. In 2023, 2024 and 2025, our company and the VIEs facilitated loans of RMB35,992.3 million, RMB53,338.7 million and RMB67,438.7million (US$9,643.6 million), respectively, funded by third parties. The self-funded loans mainly receive funding from our company’s subsidiaries and are primarily unsecured small revolving loans, and in 2022, the self-funded loans also included historical auto-secured loans funded from VIEs’ subsidiaries. These loans amounted to RMB44.0 million, RMB252.9 million and RMB352.0 million (US$50.3 million) in 2023, 2024 and 2025, respectively. The following table sets forth a breakdown of loans by the funding source, both in an absolute amount and as a percentage of the total loan volume, for the periods presented: For the Year Ended December 31, 2023 2024 2025 RMB % RMB % RMB US$ % (in thousands, except for percentages) Third-party capital (i.e., for loan facilitation services) Microloan companies 4,057,073 11.3 318,568 0.6 358,297 51,236 0.5 Banks 12,102,205 33.6 20,195,485 37.7 29,617,270 4,235,213 43.7 Consumer finance companies 17,286,038 48.0 26,753,489 49.9 27,761,684 3,969,868 41.0 Trusts 1,495,626 4.2 1,246,179 2.3 3,018,097 431,582 4.5 Others 1,051,360 2.9 4,824,998 9.0 6,683,332 955,704 9.8 Subtotal 35,992,302 99.9 53,338,719 99.5 67,438,680 9,643,603 99.5 Own capital (i.e., for self-funded financing services) Microloan companies 43,999 0.1 252,874 0.5 351,973 50,331 0.5 Subtotal 43,999 0.1 252,874 0.5 351,973 50,331 0.5 Total 36,036,301 100.0 53,591,593 100.0 67,790,653 9,693,934 100.0 In recent years, we have continuously enhanced our collaboration, through our subsidiaries and the VIEs, with third-party funding partners that provide quality and low-cost financing options. We and the VIEs have proactively expanded our collaboration with a range of funding sources to support our business growth and to lower the risks of reliance on any single funding source. As a result, the total funding volume provided by third-party funding partners, particularly banks and consumer finance companies showed an increasing trend from 2023 to 2025. The funding from third-party microloan companies decreased from 2023 to 2025 due to our enhanced collaboration with a more diverse pool of funding partners. Among these partners, we and the VIEs have managed to cooperate more extensively with those characterized by lower funding costs, such as banks. Furthermore, the changes in our product and service offerings also affected the funding volume provided by different funding sources. For example, in February 2022, we and the VIEs ceased the offering of the offline secured loan products, which were primarily funded by third-party financial leasing companies or by the consolidated financial leasing companies. Therefore, the funding from third-party financial leasing companies showed a significant decreasing trend from RMB4,060.4 million in 2021 to nil in 2022, and the funding provided by the consolidated financial leasing companies decreased from RMB1,687.2 million in 2021 to RMB648.0 thousand in 2022 and further to nil in 2024. 77 Our Loan Products Yiren Credit primarily facilitates unsecured loan products to borrowers via the Yixianghua platform. We believe that these loans are simple and quality credit products that make it easy for borrowers to budget their repayment obligations and meet their financial needs. In the past, Yiren Credit also facilitated auto-secured loans and property-secured loans, or financed these secured loans through subsidiaries of the consolidated variable interest entities. In order to optimize our product mix and enhance overall operating efficiencies, our company and the VIEs ceased offering property-secured loans in October 2021 and auto-secured loans in February 2022. Unsecured Consumer Loan Products Small revolving loans We and the VIEs facilitate small revolving loans through the Yixianghua platform. These small revolving loans are unsecured loans with an average ticket size of approximately RMB9,000 and terms ranging from 3 months to 12 months. The small revolving loan product was launched in 2020 and has been enjoying a high popularity among our borrowers, leading a continuously growing proportion of our overall loan portfolio. In 2025, small revolving loans accounted for almost all of our total loan facilitation volume under the credit solution business. As part of our global expansion strategy, we began offering unsecured small revolving loans in the Philippines in early 2023 and setting up subsidiaries in other selected countries. We expect growth in our overseas loan volume, given our focused efforts in product and service localization and improved operational efficiency, though such growth may be affected by competition and market risks associated with our overseas operations. Small business loans We facilitate unsecured small business loans that enable business owners to meet their financing needs. Historically, these unsecured small business loan products have terms ranging from 1 month to 24 months with loan amounts ranging from RMB10,000 to RMB4,000,000. We scaled back this product and terminated it at the end of 2022 to optimize loan portfolio and product mix as well as to enhance our overall operational efficiency. Meanwhile, as we note that a certain proportion of borrowers of small revolving loans are small or mini business owners with high quality credit records, we started to facilitate smaller-ticket-sized SME loans through the Yixianghua platform for those borrowers since the end of 2022. For our unsecured loan business, we have been collaborating with third-party guarantee companies since 2018, which provide credit enhancement services for borrowers in all of the loans facilitated by us or financed by subsidiaries of the consolidated variable interest entities. We believe that the additional credit enhancement provided by the third-party guarantee companies helps funding parties lower their risks and improve their loan collection performance. In 2024, we also started to scale up the loan volume facilitated under the risk-taking model, in which our company assumes the credit risk for the loans facilitated on our platform and provides guarantee services through our subsidiaries. Secured Consumer Loan Products In the past, we facilitated and financed auto-secured loans and property-secured loans from offline channels. These secured loan products offered loan terms of 12, 24 and 36 months with loan amounts ranging from RMB30,000 to RMB300,000. In order to optimize product mix and revenue structure, we ceased property-secured loans in October 2021 and strategically terminated auto-secured loan facilitation and financing operations in February 2022. Loan Pricing Mechanism We use a proprietary, AI-driven credit scoring model to assess the creditworthiness of potential borrowers. Our credit scoring model aggregates and analyzes the data submitted by the borrower as well as the data we collect from a number of internal and external sources after obtaining the borrower’s full consent, and then generates a score for the prospective borrower. In addition, we use the AI models that analyze structured and unstructured information about the individual borrower to more accurately characterize a borrower’s credit profile. Under our credit scoring systems, we have an upgraded risk grid with various segments. The expected M3+ Net Charge-off Rate and actual observed results for each of these customer groups divide potential borrowers into distinctively different credit segments. 78 All of the loans offered under our credit solution business feature fixed monthly payments with fixed interest rates, which are paid to the funding parties, either the third-party institutional funding partners or our subsidiaries. In addition, guarantee companies that cooperate with us or our subsidiaries that provide guarantee services charge borrowers guarantee fees for the credit enhancement services they provide. Each of these fees is charged as a percentage of the loan contract. The penalty fees for late payment and prepayment are imposed as a percentage of the past due amounts and the contract amounts, respectively. All fees that are payable by the borrowers are clearly disclosed to the borrower upfront. Credit Facilitation Transaction Process We believe that our business model enables a fast loan application process, a credit assessment that more accurately determines an applicant’s creditworthiness and a superior overall user experience. Our platform and service network touch each point of our relationship with our borrowers, from the application process through the funding and servicing of loans. We provide an automated, streamlined application process that appears simple, seamless and efficient. Beneath the surface, our platform and service network supported by multi-modal AI service models leverage sophisticated, proprietary technology to enable the user-friendly experience. The entire process from initial application to disbursement of funds now typically takes less than five minutes to two hours, driven by our highly efficient digital operations. Stage 1: Application Our borrower application process begins with the submission of a loan application by a prospective borrower. Borrowers can apply through our website, mobile applications, or mini apps. As part of the application process, the prospective borrower is asked to provide necessary personal details. The specific personal details required typically include PRC identity card information, bank account information and bank card information. Stage 2: Verification Upon submission of a completed application by borrowers, our credit models are populated with all information contained in the submitted loan application. Additional data from a number of internal and external sources are then inquired and appended with the application, including the following: Internal ● historical credit data accumulated; ● behavioral data that we glean from an applicant’s behavior as they apply to us for loans, such as the self-reported use of proceeds or use of multiple devices to access our platform; External ● personal identity information maintained by an organization operated under the Ministry of Public Security; ● personal credit information maintained by an organization operated under the PBOC; ● online shopping and payment information for their accounts with certain popular Chinese e-commerce websites; ● basic business information authorized by applicants; ● credit card statement data authorized by applicants; and ● fraud list and database. This data is then aggregated and used to verify an applicant’s identity, for possible fraud detection and for assessment and determination of creditworthiness. All the data that we collect are based on the borrowers’ full knowledge and consent. 79 Stage 3: Fraud Detection, Credit Assessment and Decision Process In order to efficiently screen applicants, we have designed an initial qualification phase to review the basic information regarding a prospective borrower that has been submitted with the application and gathered by us from available sources. Once completed, an initial check is performed using our fraud detection system, and the prospective borrower’s loan application either proceeds to the next phase of the application process or the prospective borrower is notified of the decision to decline the application. The initial qualification process and criteria is regularly updated by our machine learning models that capture new risk and fraud patterns. Following initial qualification, we commence a credit review utilizing our proprietary credit scoring model to generate an A-Score grade for the prospective borrower that drives the decision whether to extend credit. Our current proprietary credit-scoring model originates from a credit scoring system developed by CreditEase. We have further modified our credit scoring system to adapt it to the realities of the Chinese market, which has historically had no source of widely available consumer credit information. In addition, we use our credit scoring systems, to more accurately characterize borrower’s credit profile. Today, our credit scoring system uses our own scoring criteria, and is routinely monitored, tested, updated and validated by our risk management team. Following the generation of credit scores, our credit decisioning system makes a determination as to whether the prospective borrower is qualified. Unqualified borrowers are notified of the decision to decline their applications for failing to meet minimum requirements. Once a potential borrower passes our initial qualification phase and applies for our loan products, the application proceeds to the next phase for further review. Following the initial verification interviews, the application and credit scores will undergo further analysis. If there is suspicion of fraud associated with a particular loan application, or if additional verification is deemed necessary to complete the credit decision process, an automated further due diligence and verification will be conducted. After this review, the automatic credit decision will be made to either approve the loan as is, approve the loan with one or more modified sets of loan characteristics, or decline the loan application. Currently we have already connected our data with third-party credit scoring agents as required by the regulations that prohibit internet platforms from directly providing personal information collected by them to financial institutions. Stage 4: Approval and Funding The funding sources for the credit solution business now include investments from institutional funding partners only. Among the borrowers who have already obtained our preliminary credit assessment and approval, we will refer qualified borrowers to our institutional funding partners based on their specific requirements of borrower profiles. The institutional funding partners will then review the credit application and our preliminary credit assessment of the borrower introduced by us in accordance with their own credit assessment standards and decide if to approve or decline the loan application. Meanwhile, we also refer some of the selected qualified borrowers to our own subsidiaries for loan funding services directly. Once the borrower’s credit application is approved, the loan agreement between the borrower and our institutional funding partner will be signed on our platform, and our institutional funding partner will then directly disburse the loan amount to the borrower’s bank account. Stage 5: Servicing and Collections We and the VIEs assist our institutional funding partners in the loan collection services upon their request. If requested, we utilize an automated process for collecting scheduled loan payments from our borrowers. Upon loan origination, we establish a payment schedule with payment occurring on a set business day each month. Borrowers then make scheduled loan repayments via a third-party payment platform or a payment platform delegated by the institutional funding partners. As a day-to-day service to borrowers, we provide payment reminder services such as sending reminder text messages or phone calls on the day a repayment is due. Once a repayment is past due, we send additional reminder text messages and initiate the collection process once a loan is fifteen days delinquent. To facilitate repayment, the collection process is divided into distinct stages based on the severity of delinquency, which dictates the level of collection steps taken. For example, reminder text messages are sent to a delinquent borrower as soon as the collection process commences, and if the payment is still outstanding, a phone call will be made to further the collection process. Although most stages of the collection process are outsourced to our affiliate, we handle all decisions to restructure or defer delinquent loans that are above a certain threshold, while the collection teams of our affiliate have the discretion to make decisions for the loans that are below such threshold. The collection team also pays close attention to borrowers who are more than 90 days overdue or with weak repayment willingness or fraud suspicion. And through cooperating with professional law firms nationwide, the collection team files lawsuits to the corresponding courts to ensure the compliance of the collection. Juridical conciliation is also an acceptable approach which can accelerate the process of those borrowers’ repayment. With the growing use of AI technology across various business operations, our collection process is now partially automated and supported by our AI service agents. 80 Insurance Brokerage Business We operate our insurance brokerage business through Hexiang Insurance Brokers, a nationwide insurance brokerage company that provides a variety of high-quality insurance services and products to individuals and institutional clients. Hexiang Insurance Brokers provides insurance brokerage services to both retail and institutional clients. As of December 31, 2025, Hexiang Insurance Brokers had established 31 offline branches nationwide and offered over 1,000 insurance products from over 100 insurers and had cumulatively served 1,878,951 individual clients and 156,599 institutional clients. Since 2024, in addition to traditional brokerage services, Hexiang Insurance Brokers began to operate an internet-based insurance distribution business model. We leverage our proprietary artificial intelligence–enabled customer acquisition and optimization algorithms in internet distribution operations. These technologies analyze user behavior, preferences, and risk profiles to improve customer segmentation, precision marketing, and product matching, enabling efficient monetization of existing traffic and facilitating efficient distribution of third-party insurance products through digital channels. These internet insurance products differ from traditional insurance offerings in terms of product design, distribution channels, and transaction processes, and are tailored to meet evolving consumer demand for short term protection and seamless online fulfilment. Products and Services We, through Hexiang Insurance Brokers, have established a comprehensive and diversified product matrix that includes both life and health insurance products and property and casualty insurance products. For life and health insurance, Hexiang Insurance Brokers focuses on critical illness insurance products, annuity, whole life, term life, endowment life, and long-term and short-term health insurance products, which meet the overall needs of the clients in security heath planning, retirement planning, child education fund planning, asset inheritance, etc. For property and casualty insurance, Hexiang Insurance Brokers provides insurance products such as household property insurance, corporate property insurance, liability insurance, auto insurance, cargo insurance, and accident insurance products, which satisfy different demands of individuals, families and corporate clients in property protection, employee welfare and benefit protection, operation risk transfer, etc. The insurance brokerage products and services that Hexiang Insurance Brokers offers have competitive edges in customization. Through the in-depth, data-driven, tech-powered KYC and customer research, Hexiang Insurance Brokers works with insurers and external partners to tailor-make insurance products that target different customer groups based on their particular profiles and demands. Service Fees For our insurance brokerage business, we generate revenue primarily from insurance commission fees paid by insurance companies when clients purchase insurance products through Hexiang Insurance Brokers. We do not bear any loss from our clients’ investments nor do we provide guarantees of return with respect to any insurance products. Others We aim to better serve our existing clients and enhance their overall well-being, while fostering increased user engagement and long-term value. To accomplish this objective, historically, we, through our subsidiaries and the VIEs, have been offering a range of selective non-financial products and services to fulfill various consumer needs and explore additional service demands, aimed at elevating customer experience. These offerings span in multiple sectors, such as various membership upgraded services, mini digital games, daily necessities, beauty products, and healthcare products and services. In the first quarter of 2023, we re-categorized these non-financial products and services primarily offered through Yixianghua and Yiren Select into a new business segment, namely the Consumption and Lifestyle Business and Others, to better capture its business nature at the time. 81 Since the second quarter of 2024, revenue from these non-financial products and services, or E-commerce, has declined, primarily due to high penetration in existing customer pool and our strategic scale-back of product offerings. At the end of 2025, revenue contribution from this business segment has become immaterial, and the relevant entities are primarily focused on servicing remaining members until their membership expires. As a result, we no longer report the consumption and lifestyle business as a separate business segment in this annual report. Meanwhile, as our AI-powered systems and data-driven service capabilities continues to develop, we have begun to generate revenue from providing intelligent marketing and referral arrangements, technology services to third-party corporate clients outside our credit solutions business. These activities remain at an early stage, are not material on a standalone basis, and are not managed as separate operating segments. As of December 31, 2025, we recognized the remaining revenue from the consumption and lifestyle business and from these emerging technology-related services, which are reported under the “Others” segment. Risk Management Traditional risk management tools and the types of consumer finance data available in developed economies, such as widely available consumer credit reporting services, are currently at an early stage of development in China. Our proprietary intelligent risk control engine is an integrated solution that combines big data, AI technologies, expert experience and engineering techniques. It covers the entire customer lifecycle, spanning pre-loan fraud prevention and credit assessment, during-loan monitoring including lending risk control, account security and credit line management, as well as post-loan measures such as SMS reminders, robotic collection, automated calling and legal collection. We believe our industry leading risk management capabilities provide us with a competitive advantage in attracting capital to our marketplace by obtaining the confidence from our institutional funding partners. Proprietary Fraud Detection System Our company and the VIEs use a proprietary fraud detection system, which is part of our larger risk management system, to identify and reject potential borrower applications. Our system leverages advanced AI capabilities by combining quantitative modeling, big data technologies, cutting-edge tools such as knowledge graphs, large language models (LLMs) and third-party services. The quantitative modeling aspect of our fraud detection system utilizes a robust big data platform, enabling the identification of potential inconsistencies in borrower applications. AI-driven big data techniques enhance the process by analyzing vast datasets, detecting patterns, and identifying anomalies with greater accuracy, while the integration of knowledge graphs and LLMs adds depth to our understanding of relationships and context in the data, ultimately improving the system’s ability to flag fraudulent activities. The internet technology aspect includes IP verification and monitoring. Additionally, we employ third-party services to check the online behavior of potential borrowers and utilize government agency open databases to cross-check identity card numbers against known criminals. We maintain a blacklist of fraudulent borrowers. In practice, our identification accuracy for gambling-related, telecom fraud and other illicit activities exceed 90%, effectively safeguarding our clients’ fund security. We have established a full customer lifecycle fraud early warning system that monitors real-time changes in various risk indicators, enabling early intervention and rapid response to potential risk incidents. Over 70% of fraud incidents are blocked prior to loan disbursement. The system also integrates an intelligent decision-making module to deliver appropriate responses to fraud incidents, thereby doubling disposal efficiency. Proprietary Credit Scoring Model and Loan Qualification System Our company and the VIEs have established a credit assessment module to assess the credit quality of borrowers. After obtaining a borrower’s consent, we collect the borrower’s internal and external information, which derives a number of variables from varied dimensions through our data analysis systems. Different scoring models are established and developed based on features of particular products and borrowers to generate accurate assessment of the borrower’s credit status. Given CreditEase’s nearly two-decade experience and expertise in risk management and the considerable data pools it has accumulated, our relationship with CreditEase allows us to further improve our credit scoring models and enhance our capabilities of accurate risk control. 82 The following table presents the key criteria that materially impact a borrower’s credit score: Criteria Examples Effect on Credit Score Purpose of the loan Personal consumption ● No monotonic correlation Customer attributes Education background ● ● Positive correlation Higher education leads to higher score Usage and performance of the loans from other financial institutions Maximum amount of loans that the borrower has borrowed from commercial banks ● ● Positive correlation The larger the amount of bank loans, the higher the score Credit card usage and payment pattern Frequency of credit card usage ● ● Negative correlation Above a certain threshold, the higher the frequency of credit card usage, the lower the score Public record Court enforcement record ● ● No monotonic correlation A borrower’s score is lower if he/she has been subject to court enforcement Income and debt condition Salaries ● ● Positive correlation Below a certain threshold, the higher the salary, the higher the score Geographic location Province or city where the borrower is located ● No monotonic correlation Job stability Length of employment ● ● Positive correlation The longer the employment, the higher the score Online merchant purchasing pattern Recent average consumption level ● ● Positive correlation The higher the recent average consumption level, the higher the score The credit scores derived from our proprietary credit scoring model containing the criteria mentioned above are used to determine the final grade of a borrower’s “A-Score,” which reflects the level of his credit quality as a potential new borrower on our platform. A particular amount of credit line will be granted based on the borrower’s A-Score grade and his income/debt status. At this stage, if the borrower’s grade is below our threshold, his application will be declined. We have established customized loan pricing models based on our A-Score system and risk pricing structures. We allow prospective borrowers who initially fail to meet our borrower criteria to reapply for a loan after a certain period of time, typically ranging from 30 to 90 days, if they are able to demonstrate a verifiable improvement in the criteria that impact their scores. For prospective borrowers that we determine present a fraud risk, reapplications are never permitted. We continue to monitor the credit performance of our existing borrowers on the platform and re-evaluate their credit quality based on a series of factors, including the amount of the loans applied, repayment performances, etc. We will generate a B-Score grade for each existing borrower regularly based on the re-evaluation of their credit performance. For those who receive a high B-Score grade, we will increase their credit line on the basis of their actual needs. Meanwhile, for those who demonstrate a fraud risk, a C-Score grade will be generated based on the borrowers’ overdue amount, overdue duration, loan tenor and other relevant information. Different levels of collection processes will be initiated based on a borrower’s C-Score grade, including reminders from AI robots, text messages, telephone calls, collection methods from out-sourced teams, lawsuits, etc. Our company and the VIEs are constantly monitoring the operations and performances of our models on a regular basis (weekly/monthly/quarterly) to ensure the stability and effectiveness of the models in responding to the evolving market environment and borrower behaviors from different segments. If any major changes are monitored, our model and strategy teams will immediately start troubleshooting processes and shift/update the models accordingly when needed. Sufficient plans are pre-arranged to ensure timely responses to any changes. 83 Our Risk Management Division and Credit Assessment Team We have an independent risk management division dedicated to analyzing loan performance, validating credit models, and assessing credit decision outcomes. This division plays a key role in various risk management activities, including reporting on performance trends, monitoring loan concentrations and stability, conducting economic stress tests on loans, auditing loan decisions made by our credit assessment team, and performing peer benchmarking and external risk assessments. Our credit assessment team members are responsible for analyzing loan applications, as well as assisting with fraud detection and borrower verification. They leverage both skills acquired through training and hands-on experience, as well as our proprietary AI system, to evaluate loans based on direct communication with potential borrowers. Loan Servicing and Collections Our technology platform is capable of monitoring and tracking payment activity. With built-in payment tracking functionality and automated missed payment notifications, the platform allows us to monitor the performance of outstanding loans on a real-time basis. CreditEase has developed a strategy to optimize the collection process for our delinquent loans. Our collection process is divided into distinct stages based on the severity of delinquency, which dictates the level of collection steps taken. Loans progress through the collection cycle based upon the number of days past due, but can be accelerated based on specific circumstances. Our Technology We believe our technology platform is a competitive advantage and an important reason that borrowers and clients utilize our marketplace. Key features of our technology platform include: ● AI-powered system and data-driven services. Our company and the VIEs have developed a proprietary AI-powered system to provide automated KYC and digital customer services that match customers’ credit performance, risk appetite and financial objectives with proper solutions. In the first half of 2023, we initiated an AI Lab project to strengthen our technological innovation in a range of business areas. By adopting advanced LLMs, we have automated and streamlined various business operations, including precision marketing, customer service, risk management, and loan collections. Our actions have involved developing and upgrading workflow agents and integrated systems for intelligent marketing and customer operations, improving automation in tele-sales and loan collections, and developing quality inspection robots, ensuring stringent compliance in our business practices. Additionally, we developed the AI-Generated Content (AIGC) platform to quickly create images and videos for marketing purposes. In April 2025, our proprietary “Zhiyu Large Model” received regulatory approval for commercialization through the successful filing under Interim Measures for the Management of Generative Artificial Intelligence Services and laid solid foundation for broader application and commercialization. We also officially launched our agentic AI platform, Magicube, that consists of a fully digitalized, end-to-end credit orchestration framework covering borrower authentication, credit demand matching, and service fulfillment. Leveraging borrower credit profiles, risk appetite segmentation, and financial objectives, the platform enables precise underwriting support and delivers highly tailored financing solutions across the credit lifecycle. ● Proprietary fraud detection. Our company and the VIEs use a combination of current and historical data obtained during the application process, third-party data and sophisticated analytical tools to help determine an application’s fraud risk. High risk applications are subject to further investigation. In cases that fraud is determined, the application is cancelled, and we identify and flag characteristics of the loan to help refine our fraud detection effort. ● Highly automated process. Our company and the VIEs offer a fast and easy-to-use online application process and provide users with access to live support and online tools throughout the process and for the lifetime of the products. Our platform covers all stages of the customer life cycle: application; verification; credit assessment and decisioning and funding; and servicing and collections. Our web and mobile based platforms also provide a superior customer experience. 84 ● Mobile applications. Our company and the VIEs have developed different user-friendly mobile applications for borrowers and clients of our credit solution business, insurance brokerage business, and other business, which enable them to access our platforms at any time or location that is convenient. ● Scalable platform. Our platform is built on a distributed, load-balanced computing infrastructure, which is both highly scalable and reliable. The infrastructure can be expanded easily to meet increasing data storage needs and user traffic. Our company and the VIEs have designed a unified platform, which administrates all systems and servers and can reconfigure or redeploy systems or servers automatically whenever needed. We utilize advanced testing technologies to offer comprehensive quality data tracking throughout each product iteration cycle, ensuring that each innovation is grounded on a robust data foundation. Our coverage assessment techniques not only scrutinize every aspect of the product but also leverage data-driven insights to precisely illustrate the product’s overall quality. ● Data security. Our network is configured with multiple layers of security to isolate our databases from unauthorized access, and our company and the VIEs use sophisticated security protocols for communication among applications. To prevent unauthorized access to our system, we utilize a system of firewalls and also maintain a perimeter network, or a demilitarized zone, to separate our external-facing services from our internal systems. Our entire website and public and private APIs use the Secure Sockets Layer networking protocol. ● Stability. Our company and the VIEs have multiple layers of redundancy to ensure the reliability of our network. We also have a working data redundancy model with comprehensive backups of our databases and our development environment conducted every day. Product Development Our company and the VIEs constantly evaluate the popularity of our existing product offerings and develop new products and services that can cater to the ever-evolving needs of our clients. From Credit business segment perspective, as we continue to optimize our product offerings, we are developing a more diversified range of credit products tailored to meet the specific needs of our target borrowers and institutional funding partners, all at competitive prices in line with updated regulatory guidelines. As our marketplace grows, we have enhanced our ability to offer risk-based loan pricing. For instance, we have introduced lower-priced loan products and regularly adjust our pricing strategy as we shift towards serving a higher-quality customer segment in response to regulatory directives. In addition, as we develop and deploy AI agents, platforms and other intelligent products across our operations, we continue to optimize our cost structure, liquidity management and asset risk control capabilities, particularly under tightening market credit conditions. We are currently in the product development and commercialization stage for these AI capabilities for our institutional funding partners. Over time, these capabilities may be further extended to additional use cases and industries. Moving forward, we will continue to diversify our product offerings and strengthen synergies across our various business lines. In the insurance brokerage business, we remain committed to driving innovation and customization in our product offerings as we expand our client base and strengthen partnerships with external stakeholders. We closely monitor the market, continually introducing new insurance products that target low-penetration segments with high growth potential. In 2024, we operate an internet-based insurance distribution model through selling insurance products on various online digital platforms. We leverage our proprietary artificial intelligence–enabled customer acquisition strategy and sales optimization algorithms in internet distribution operation. We are also applying our agentic AI platform, Magicube, to our insurance brokerage business segment, integrating our rapidly expanding AI operational capabilities, including AI-generated content (AIGC) systems and human-AI collaborative customer operation solutions. 85 Brand Promotion Our general marketing efforts are designed to build brand awareness and reputation and to attract and retain borrowers and clients. We believe reputation and word-of-mouth drive continued organic growth in our businesses. Meanwhile, we are enhancing our public exposure by providing transparent and prompt information disclosures, and building trust through our consistency in service quality, compliance, and transparency. Moreover, we have been expanding our engagement with customers, the public, and the industry through various channels such as media outlets, social media platforms, and third-party industry agents. Our brand has been increasingly recognized by the industry for its technological advancements, service capabilities, growth momentum, and contributions to social responsibility. For example, Yiren Digital was named as one of the Top 100 Annual Growth Public Companies of 2023 in December 2023 by Snowball Finance (Xueqiu), the renowned investor community in China, following its receipt of the 2023 Annual Digital Inclusive Finance Excellence Award from reputable institutions, including the China Digital Index Research Institute and the Shanghai Finance and Development Laboratory. Yiren Digital was also honored as the Inclusive Finance Institution of the Year at the 9th Beijing Financial Forum in December 2023. In 2024, our company rebranded its Chinese name from “Yiren Jinke” to “Yiren Zhike,” with the word “Jin” meaning “finance” and the word “Zhi” meaning “intelligence,” reflecting our commitment to developing and leveraging AI technology innovation to serve our customers and clients. In 2025, our proprietary Zhiyu Large Language Model was successfully filed in accordance with the Interim Measures for the Management of Generative Artificial Intelligence Services, and we obtained regulatory approval for its commercialization. The MagiCube agent platform won the Third Prize in the 2025 China Information Association Data Element Application Innovation Competition. Competition For our credit solution business, we compete with other consumer finance marketplaces and loan facilitation platforms in China. The industry was intensively competitive before the year 2018. However, as the domestic regulations on the industry evolve and entry barriers continue to increase in recent years, fewer national-level players like us remain in the market while smaller platforms cease their operations, leaving more market share opportunities for us. Meanwhile, as we expand our credit solution businesses overseas, we are facing competition from regional peers. For our insurance brokerage business, we compete with other insurance brokerage companies in China. Given the overall low penetration rate of insurance services in China compared with the US and the Europe, we believe that our strategic deployment in insurance business has navigated us towards a large market with high growth potential. In light of a tightening regulatory landscape domestically, our ability to customize and innovate products, coupled with robust channel partnerships, will play a vital role in maintaining our competitiveness. The change in customers shopping behaviors toward more online purchase presents us a unique opportunity for internet insurance distribution. Intellectual Property Our company and the VIEs regard our trademarks, domain names, know-how, proprietary technologies and similar intellectual property as critical to our success, and we rely on trademark and trade secret law and confidentiality, invention assignment and non-competition agreements with our employees and others to protect our proprietary rights. As of the date of this annual report, our subsidiaries and the VIEs had 459 registered trademarks with the Trademark Office of the National Intellectual Property Administration. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. Monitoring unauthorized use of our technology is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our technology. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources. In addition, third parties may initiate litigation against us alleging infringement of their proprietary rights or declaring their non-infringement of our intellectual property rights. In the event of a successful claim of infringement and our failure or inability to develop non-infringing technology or license the infringed or similar technology on a timely basis, our business could be harmed. Moreover, even if we are able to license the infringed or similar technology, license fees could be substantial and may adversely affect our results of operations. 86 See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.” Insurance Our company and the VIEs maintain property insurance policies covering certain equipment and other property that are essential to our business operation to safeguard against risks and unexpected events. We also provide social security insurance, including pension insurance, unemployment insurance, work-related injury insurance and medical insurance, for our employees. We do not maintain business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance. We consider our insurance coverage to be sufficient for our business operations in China. Seasonality Our company and the VIEs experience seasonality in our business, reflecting seasonal fluctuations in internet usage and traditional personal consumption patterns, as our individual borrowers typically use their borrowing proceeds to finance their personal consumption needs. For example, we generally experience lower transaction volume for our credit solution business during national holidays in China, particularly during the Chinese New Year holiday season in the first quarter of each year. Overall, the historical seasonality of our business has been mild but may increase further in the future. Due to our limited operating history, the seasonal trends that we have experienced in the past may not apply to, or be indicative of, our future operating results. Regulation This section sets forth a summary of the most significant rules and regulations that affect our business activities in China. As an AI-powered Fintech platform specializing in digital consumer lending, insurance and financial technology innovation in China, our company and the VIEs are regulated by various government authorities, including, among others: ● the Ministry of Industry and Information Technology, or the MIIT, regulating the telecommunications and telecommunications-related activities, including, but not limited to, the internet information services and other value-added telecommunication services; ● the People’s Bank of China, or the PBOC, 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; ● the National Administration of Financial Regulation, or the NFRA, is formed in May 2023 on the basis of and replacing the previous China Banking and Insurance Regulatory Commission as China’s new financial regulator. The NFRA is in charge of regulating the financial industry, with the exception of the securities sector. It will take over certain functions of the PBOC and the CSRC; and ● the Cyberspace Administration of China, or the CAC, responsible for cyberspace content management, cybersecurity, and the formulation of related policies. 87 Regulations Relating to Foreign Investment PRC Foreign Investment Law The Foreign Investment Law was formally adopted by the Second session of the 13th National People’s Congress on March 15, 2019, which became effective on January 1, 2020, and, together with their implementation rules and ancillary regulations, have replaced the trio of prior laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. Meanwhile, the Regulations for the Implementation of the Foreign Investment Law came into effect as of January 1, 2020, which clarified and elaborated the relevant provisions of the Foreign Investment Law. The organization form, organization and activities of foreign-invested enterprises shall be governed, among others, by the laws of the Company Law of the People’s Republic of China and the Partnership Enterprise Law of the People’s Republic of China. Foreign-invested enterprises established before the implementation of the Foreign Investment Law may retain the original business organization and so on within five years after the implementation of the Foreign Investment Law. The Foreign Investment Law is formulated to further expand opening-up, vigorously promote foreign investment and protect the legitimate rights and interests of foreign investors. According to the Foreign Investment Law, foreign investments are entitled to pre-entry national treatment and are subject to the negative list management system. The pre-entry national treatment means that the treatment given to foreign investors and their investments at the stage of investment access shall not be less favorable than that of domestic investors and their investments. The negative list management system means that the state implements special administrative measures for access of foreign investment in specific fields. The Foreign Investment Law does not mention the relevant concept and regulatory regime of VIE structures; please refer to “Risk Factors-Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.” Foreign investors’ investment, earnings and other legitimate rights and interests within the territory of China shall be protected in accordance with the law, and all national policies on supporting the development of enterprises shall equally apply to foreign-invested enterprises. Among others, the state guarantees that foreign-invested enterprises participate in the formulation of standards in an equal manner and that foreign-invested enterprises participate in government procurement activities through fair competition in accordance with the law. Further, the state shall not expropriate any foreign investment except under special circumstances. In special circumstances, the state may levy or expropriate the investment of foreign investors in accordance with the law for the needs of the public interest. The expropriation and requisition shall be conducted in accordance with legal procedures and timely and reasonable compensation shall be given. In carrying out business activities, foreign-invested enterprises shall comply with relevant provisions on labor protection, social insurance, tax, accounting, foreign exchange and other matters stipulated in laws and regulations. Industry Catalog and Negative List Relating to Foreign Investment Investment activities in the PRC by foreign investors are principally governed by three principal legal documents: (i) the Provisions for Guiding the Foreign Investments Direction promulgated by the State Council on February 11, 2002, pursuant to which foreign investment projects are categorized as encouraged, permitted, restricted and prohibited; (ii) the 2024 Negative List, jointly issued by the National Development and Reform Commission, or the NDRC and MOFCOM on September 6, 2024 and effective from November 1, 2024, which sets forth management measures for the market entry of foreign investors, such as equity requirements and senior manager requirements and provides that foreign investors shall comply with such restrictive requirements when engaging in the restricted activities listed in the 2024 Negative List and shall not engage in the prohibited activities listed in the 2024 Negative List; and (iii) the Catalog of Industries for Encouraged Foreign Investment (2025 Edition), or the Encouraged Catalog, also jointly issued by the NDRC and MOFCOM on December 15, 2025 and effective from February 1, 2026, which sets forth the encouraged foreign investment industries. Industries not listed in the Encouraged Catalog or the 2024 Negative List are generally deemed as constituting a fourth “permitted” category. Establishment of wholly foreign-owned enterprises is generally allowed in encouraged and permitted industries. Our PRC subsidiaries are mainly engaged in providing investment and financing consultations and technical services, which fall into the “encouraged” or “permitted” category. Our PRC subsidiaries have obtained all material approvals required for its business operations. However, industries such as value-added telecommunication services (except for e-commerce, domestic multi-party communication, storage and forwarding classes and call centers), including internet information services, are restricted from foreign investment. We provide the value-added telecommunication services that are in the “restricted” category through the consolidated variable interest entities. 88 Foreign Investment in Value-Added Telecommunication Services The Provisions on Administration of Foreign Invested Telecommunications Enterprises promulgated by the State Council in December 2001 and subsequently amended respectively in September 2008, February 2016 and March 2022 prohibit a foreign investor from owning more than 50% of the total equity interest in any value-added telecommunications service business in China. The 2024 Negative List and Circular of the Ministry of Industry and Information Technology on Liberalizing the Restrictions on Foreign Shareholding Percentages in Online Data Processing and Transaction Processing Business (For-profit E-commerce Business), or the Circular 196, promulgated by MIIT in June 2015 allow a foreign investor to own more than 50% of the total equity interest in an online data processing and transaction business (e-commerce business). In April 2024, the MIIT issued the Circular on Launching the Pilot Program for Expanding the Opening-up of Value-Added Telecommunications Services, or Circular 107, pursuant to which foreign investors are allowed to establish wholly-owned subsidiaries to operate certain value-added telecommunications services, including Internet Data Center (IDC), Content Delivery Network (CDN), Internet Access Service (ISP), Online Data Processing and Transaction Processing, information releasing platforms and delivery services included in information services (excluding the operation of internet news information, online publishing, online audio and video, and internet culture), as well as information protection and processing services in four regions: Comprehensive Demonstration Zone for Expanding Opening up in the Service Sector in Beijing, the Lingang New Area of the China (Shanghai) Pilot Free Trade Zone and the Leading Area for Socialist Modernization Construction, the Hainan Free Trade Port, and the Pilot Demonstration Area of Socialism with Chinese Characteristics in Shenzhen. In July 2006, the Ministry of Information Industry, the predecessor of the MIIT, issued the Circular on Strengthening the Administration of Foreign Investment in the Operation of Value-added Telecommunications Business, pursuant to which a domestic PRC company that holds an operating license for value-added telecommunications business, which we refer to as the VATS License, is prohibited from leasing, transferring or selling the VATS License to foreign investors in any form and from providing any assistance, including resources, sites or facilities, to foreign investors that conduct a value-added telecommunications business illegally in China. Further, the domain names and registered trademarks used by an operating company providing value-added telecommunications services must be legally owned by that company or its shareholders. In addition, the VATS License holder must have the necessary facilities for its approved business operations and to maintain the facilities in the regions covered by its VATS License. In light of the above restrictions and requirements, in 2020, we operated Yiren Credit and Yiren Wealth (predecessor of “Yiren Select”) primarily through Hengcheng, YouRace Hengchuang, CreditEase Puhui and Yiren Financial Information. After the business restructuring in December 2020, we operated Yiren Credit through YouRace Hengchuang and CreditEase Puhui, and operated Yiren Wealth (predecessor of “Yiren Select”) through Yiren Financial Information, Yiren Zhisheng, and Hexiang Insurance Brokers. As of the date of this annual report, we operate Yiren Select through Yiren Zhisheng, and operate Yixianghua through Hainan CreditEase Puhui Micro Loan Co., Ltd., an entity of CreditEase that owns ICP License and EDI License. Certain trademarks relating to our value-added telecommunications business have been transferred to us by CreditEase, in order to comply with the requirement that registered trademarks used by an operating company providing value-added telecommunications services must be legally owned by that company or its shareholders. Regulations on Micro-lending In May 2008, Guidance on the Pilot Establishment of Micro-lending Companies, or the Micro-lending Guidance, was jointly promulgated by the CBRC and the PBOC, authorizing provincial governments to approve the establishment of micro-lending companies on a test basis. The establishment of a micro-lending company is subject to the approval of the competent government authority at the provincial level. The major sources of funds for a micro-lending company are limited to capital paid by shareholders, donated capital and capital borrowed from up to two financial institutions. Furthermore, the balance of the capital is required to be determined by the company with the banking financial institutions upon consultation, and the interest rate must be determined by using the Shanghai Interbank Offered Rate as the base rate. With respect to the grant of credit, micro-lending companies are required to adhere to the principle of “small sum and decentralization.” The outstanding balance of the loans granted by a micro-lending company to one borrower cannot exceed 5% of the net capital of such company. The interest ceiling used by a micro-lending company may be determined by such companies but in no circumstance shall they exceed the restrictions prescribed by the judicatory authority. The interest floor is 0.9 times the base interest rate published by the PBOC. Micro-lending companies have the flexibility to determine the specific interest rate within the range depending on certain market conditions. In addition, according to the Micro-lending Guidance, micro-lending companies are required to establish and improve their corporate governance structures, the loan management systems, the financial accounting systems, the asset classification systems, the provision systems for accurate asset classification and their information disclosure systems, and such companies are required to make adequate provisions for impairment losses. Micro-lending companies are also required to accept public scrutiny supervision and are prohibited from carrying out illegal fund-raising in any form. 89 Based on the Micro-lending Guidance, many provincial governments, including that of Hainan Province, promulgated local implementing rules on the administration of micro-lending companies. Hainan Provincial People’s Government issued the Interim Measures for Pilot Management of Micro-lending Companies in November 2009, the Notice of Expanding the Pilot Scope of Micro-lending Companies in March 2011 and the Opinions on Further Promoting the Reform and Development of Micro-lending Companies in June 2012, imposing the management duties upon the relevant regulatory authorities and specifies more detailed requirements on the micro-lending companies. On November 2, 2020, the CBIRC, the PBOC and other regulatory authorities released a consultation draft of the Interim Administrative Measures for Online Microcredit Business, which states that a microloan company must obtain the official approval of the CBIRC to conduct an online micro-lending businesses outside the province where it is registered. In addition, the draft provides the statutory qualified requirements for an online microloan company, covering such things as registered capital, controlling shareholders, and use of the internet to engage in an online micro-lending business. On December 31, 2021, the PBOC published the Regulations on Local Financial Supervision and Administration (Draft for Public Comments), or the Draft Local Financial Supervision and Administration Regulation, for public review and comments. Pursuant to the Draft Local Financial Supervision and Administration Regulation, “Local Financial Organizations” refers to microcredit companies, financing guarantee companies, regional equity markets, pawn shops, financial leasing companies, commercial factoring companies, local asset management companies, and other institutions engaged in local financial business that are supervised and managed by laws, administrative regulations, and provincial-level people’s governments authorized by the State Council. The Draft Local Financial Supervision and Administration Regulation specify that provincial governments shall perform their duties of supervision, management, and risk disposal of local financial organizations, and no individual or entity shall set up Local Financial Organizations without prior approval. The merger, division, reduction of registered capital, change of the business scope or operating area, the change of the shareholders holding more than 5% of its equity interests, as well as change of the actual controller of the Local Financial Organization shall be subject to the approval of the provincial local financial supervision and management department. Also, Local Financial Organization shall make filings to provincial local financial supervision and management department for setting up branches within the provincial administrative region, changing the name or address of business, increasing the registered capital, changing the directors, supervisors and senior management personnel. Penalties such as fines or criminal liability may be imposed if the Local Financial Organizations fail to comply with the Draft Local Financial Supervision and Administration Regulation. The Interim Measures for the Supervision and Administration of Micro-lending Companies, or the Micro-lending Companies Interim Measures, was issued by the NFRA and came into effect on December 31, 2024. These Measures are designed to regulate the operations of micro-lending companies, including online micro-lending companies, to strengthen supervision, prevent and resolve risks, and promote the stable and healthy development of the industry. For example, (i) with respect to scop of business and operation, all micro-lending companies are required to obtain approval from provincial-level financial regulatory authorities to conduct business; online micro-lending companies must conduct core business processes, including loan application, risk review, approval, disbursement, and recovery, entirely online; (ii) in terms of loan limits and restrictions, micro-lending companies are required to limit the loan balance to any single borrower to no more than 10% of the company’s net assets of the previous year-end while for a single borrower and its associated parties, the loan balance cap is 15%; online micro-lending companies are further restricted to a maximum loan balance of RMB200,000 for individual consumer loans and RMB10.0 million for business operation loans per borrower; (iii) micro-lending companies must not outsource core businesses such as credit review and risk control and they are prohibited from co-funding loans with unlicensed entities or collaborating with institutions lacking proper financing guarantee or insurance qualifications. When co-funding loans with commercial banks, online micro-lending companies must contribute at least 30% of the loan amount; (iv) on funding sources, micro-lending companies may raise funds through bank loans, shareholder loans, bond issuance, and asset securitization. However, non-standardized funding (e.g., bank and shareholder loans) is capped at one time the company’s net assets of the previous year-end, while standardized funding (e.g., bonds and securitization) is capped at four times. 90 On April 1, 2025, the NFRA issued the Notice on Strengthening the Management of Commercial Banks’ Internet Loan Facilitating Business and Enhancing the Quality and Efficiency of Financial Services, which will take effect on October 1, 2025. The notice imposes stricter regulatory requirements on loan facilitation companies’ cooperation with commercial banks in internet loan facilitation business. Specifically, loan facilitation companies must meet the commercial banks’ enhanced access standards and undergo thorough due diligence. They are also required to adhere to transparent fee structures and are prohibited from charging borrowers additional fees or inappropriately intervening in the banks’ loan approval processes. On the other hand, the notice urges commercial banks to publicly disclose all platform operators and credit enhancement service providers the banks cooperate with. Commercial banks are required to add enhance-credit service fees into the comprehensive financing cost on borrowers, which shall be compliant with legal upper limit. The notice further requires that if commercial banks pay cooperation fees based on the actual interest percentage, the payment schedule made to platform operators and credit enhancement service providers should match with the schedule of loan principal recovery. On March 3, 2026, the NFRA promulgated the Provisions on Explicit Disclosure of the Comprehensive Financing Cost of Personal Loans, which will take effect on August 1, 2026. The Provisions require lenders and loan facilitation participants to clearly disclose to borrowers the all-in cost of personal loans, and mandate that such disclosure be made in a prominent and readily understandable manner prior to the conclusion of the loan agreement. Regulations on Financing Guarantee In March 2010, seven governmental authorities including the CBRC, the MOFCOM and Ministry of Finance, or MOF promulgated the Interim Administrative Measures for Financing Guarantee Companies which requires an entity or individual to obtain a prior approval from the relevant governmental authority before engaging in the financing guarantee business. Financing guarantee is defined 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. On August 2, 2017, the PRC State Council promulgated the Regulations on the Supervision and Administration of Financing Guarantee Companies, which became effective on October 1, 2017. These regulations define “financing guarantee” as a guarantee provided for the debt financing, including but not limited to 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 but not limited to an order to cease business operation, confiscation of illegal gains, fines of up to RMB1,000,000 and criminal liabilities. These regulations on financing guarantee 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 ratio of the balance amount of outstanding guarantee liabilities of a financing guarantee company for the same guaranteed party shall not exceed 10%, while the ratio of the balance amount of outstanding guarantee liabilities of a financing guarantee company for the same guaranteed party and its affiliated parties shall not exceed 15%. On October 9, 2019, nine governmental authorities including the CBIRC, the NDRC and the MIIT promulgated the Supplementary Financing Guarantee Provisions (as amended in June 2021), which requires that institutions providing services as customer recommendation and credit assessment for various lending institutions shall not provide, directly or in a disguised form, financing guarantee services without approval. For the companies without the relevant financing guarantee license but actually engaging in financing guarantee business, the regulatory authorities shall cease such companies’ operation and properly make settlement for existing business contracts. 91 On July 14, 2020, the CBIRC issued the Guidelines for Off-Site Supervision of Financing Guarantee Companies, which took effect on September 1, 2020. The 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 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 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 off-site supervision. We established Fujian Jiaying Financing Guarantee Co. Ltd. in September 2020 and acquired Chongqing Jintong Financing Guarantee Co., Ltd. in 2023 to provide financing guarantee services for our loan facilitation business. Regulations on Insurance Brokerage Business Insurance activities undertaken within the PRC are primarily governed by the Insurance Law of the PRC, which was promulgated by the Standing Committee of the National People’s Congress on June 30, 1995, and last amended in 2015, and the related rules, regulations and judicial interpretations. The Insurance Law of the PRC, comprising general principles, insurance contracts, insurance institutions, insurance operational standards, supervision and regulation of the insurance industry, insurance agencies and insurance brokerage companies, legal liabilities and supplementary provisions, sets out the legal framework for regulating the insurance companies. Pursuant to the Insurance Law of the PRC, an insurance broker is an entity that, in the interest of the insurance applicants, provides intermediary services between the insurance applicants and the insurance companies for the conclusion of insurance contracts, and collects commissions for such services in accordance with relevant laws. On May 1, 2018, the CIRC promulgated the Provisions on the Supervision and Administration of Insurance Brokers, or the Insurance Brokerage Provisions, which specifies the provisions regarding market access and exit, operating rules, industry self-discipline, monitor and inspection and legal obligations for insurance brokers. Pursuant to the Insurance Brokerage Provisions, to operate insurance brokerage businesses within the PRC, an insurance brokerage company shall satisfy the requirements stipulated by the CIRC and obtain an Insurance Brokerage License. The minimum registered capital of an insurance brokerage company that conducts business in regions not limited to the provincial level is RMB50 million. The minimum registered capital of an insurance brokerage company that conducts business within the provincial level is RMB10 million. An insurance brokerage company shall not operate insurance brokerage business until it obtains the license, and it shall register the relevant information in a regulatory information system as prescribed by the CIRC in time. The Insurance Brokerage Provisions also requires an insurance brokerage company to procure professional liability insurance or pay a deposit within twenty days upon obtaining an Insurance Brokerage License. If an insurance brokerage company intends to procure professional liability insurance, it shall ensure that the insurance remains valid. The maximum compensation for each accident under the professional liability insurance procured by an insurance brokerage company shall be no less than RMB1.0 million. One-year accumulated maximum compensation shall be no less than RMB10 million and no less than the insurance brokerage company’s income from principal business in the previous year. If an insurance brokerage company intends to pay a deposit, the deposit shall be paid at 5% of its registered capital; if an insurance brokerage company increases its registered capital, the amount of the deposit shall be increased proportionately. The deposit shall be stored in a designated account in the form of a bank deposit in a commercial bank or in any other form approved by the CIRC. Under any of the following circumstances, an insurance brokerage company may use the deposit: (i) decrease of registered capital; (ii) cancellation of license; (iii) taking out of professional liability insurance in conformity with the conditions; or (iv) other circumstances provided by the CIRC. An insurance brokerage company shall report in written form to the local branch of the CIRC within five days from the day when it uses the deposit. 92 Pursuant to the Insurance Brokerage Provisions, an insurance broker may operate all or part of the following businesses: (i) draft insurance plans for policyholders, select insurance companies and process insurance application formalities; (ii) assist insured parties or beneficiaries in making claims; (iii) carry out reinsurance brokerage businesses; (iv) provide advisory services on disaster prevention, loss prevention or risk evaluation and risk management to entrusting parties; and (v) any other insurance brokerage-related businesses stipulated by the CIRC. An insurance broker is required to conduct insurance brokerage business within the business scope and business area of the underwriter. An insurance broker and its practitioners may not sell non-insurance financial products, except for non-insurance financial products that have been approved by the relevant financial regulatory authorities. An insurance broker and its practitioners shall have the necessary qualifications before selling non-insurance financial products. The Insurance Brokerage Provisions also requires an insurance broker to set up a designated account book to record the income and expenditure of the insurance brokerage business. An insurance broker shall open an independent designated account for client funds. The following funds shall only be deposited in the designated account for client funds: (i) insurance premiums paid by policyholders to an insurance company; and (ii) surrender value and pay-outs collected on behalf of policyholders, insured parties and beneficiaries. An insurance broker shall open an independent account for commissions it collects. Pursuant to the Insurance Brokerage Provisions, an insurance broker and its practitioners shall not engage in the following acts or behaviors: (i) deceive or mislead the insurer, the applicant, the insured or the beneficiary; (ii) conceal any important circumstances relating to the insurance contract; (iii) obstruct the applicant from fulfilling his or her obligation to tell the truth, or induce the applicant not to fulfill the same; (iv) grant or commit to grant to the applicant, the insured or the beneficiary any interest other than that provided in the insurance contract; (v) compel or induce the applicant to enter or restrict the applicant from entry into an insurance contract by using their administrative power, position or the advantage of their profession and other improper means; (vi) forge or alter the insurance contract without authorization or providing false evidence for parties to the insurance contract; (vii) misappropriate, retain or embezzle the premiums or insurance benefits; (viii) make use of the advantages of the business to obtain improper benefits for other institutions or individuals; (ix) defraud insurance benefits in collusion with the applicant, the insured or the beneficiary; or (x) disclose trade secrets of the insurer, the applicant or the insured known during the business activities. An insurance broker and its practitioners shall not solicit or accept any remuneration or other property other than those as agreed upon in the contract and granted by any insurance company or its staff or take advantage of executing the insurance brokerage business to obtain other illegal benefits in the course of carrying out the insurance brokerage business. The Insurance Brokerage Provisions sets out the requirements for senior officers of an insurance broker, such as education, work experience and good character. It also provides that senior officers of an insurance broker shall obtain the employment qualification approved by the local branches of CIRC prior to the assumption of duty. Pursuant to the Insurance Law of the PRC, the examination and approval of the qualification of insurance brokerage practitioners have been cancelled. Pursuant to the Insurance Brokerage Provisions and the Notice on Relevant Issues on the Administration of Practitioners of Insurance Intermediaries, which was promulgated by CIRC on August 3, 2015, before an insurance intermediary practitioner begins to practice, his/her employer shall complete the practicing registration in the insurance intermediary regulatory information system of the CIRC for him or her, and the qualification certificate shall not be served as a necessary condition for the administration of practicing registration. Pursuant to the Insurance Brokerage Provisions, an insurance broker may not set payment of fees or purchase of insurance products as a condition of employment, may not promise unreasonably high return, or take the number of persons introduced directly or indirectly or sales performance as the main basis of payroll calculation. Pursuant to the Notice on Strictly Regulating Incentive Measures of Insurance Intermediaries promulgated by the CIRC on November 15, 2010, professional insurance intermediaries may only implement equity incentive measures for sales personnel of more than two consecutive years of practice experience within such intermediaries, and may not arbitrarily expand the scope of equity incentives for rapid business growth. In implementing incentives, professional insurance intermediaries may not: (i) conduct deceptive or misleading promotion for the incentive program, including exaggeration or arbitrarily promising uncertain earning from the future listing; (ii) induce sales personnel to purchase self-insurance or purchase insurance with borrowings for incentives; or (iii) offer client equity in the name of incentive as consideration for illicit interests. According to the Circular on Further Regulating the Incentive Plans of Professional Insurance Intermediary Institutions, promulgated on February 28, 2012, by the CIRC, all professional insurance intermediary institutions shall not, by way of connecting the equity incentive plan with their listing and exaggerating proceeds brought by their listing and other means, induce any of the general public to become a salesperson, or induce salespersons or clients to buy insurance products which are inconsistent with their actual insurance needs. 93 According to the Announcement of the CIRC on Permitting the Establishment of Wholly Foreign-invested Insurance Brokerage Companies by Foreign Insurance Brokerage Companies, which was promulgated by CIRC on December 11, 2006, and became effective on the same day, in five years following China’s accession into the WTO, the establishment of a wholly foreign owned enterprise to engage in insurance brokerage services shall be permitted. There shall be no other restrictions except those on the establishment conditions and business scopes. On April 27, 2018, the CBIRC promulgated the Notice on Relaxing Restrictions on the Business Scope of Foreign-Funded Insurance Brokerage Companies, which became effective on April 27, 2018. Pursuant to this notice, the foreign-funded insurance brokerage institutions that obtain insurance brokerage business permits upon approval by the insurance regulatory authority of the State Council may engage in the following insurance brokerage businesses within the PRC: (i) drafting insurance application proposals, selecting insurers, and undergoing the insurance application formalities for insurance applicants; (ii) assisting the insured parties or beneficiaries in claiming compensation; (iii) reinsurance brokerage business; (iv) providing disaster or loss prevention or risk evaluation and management advisory services; and (v) other businesses approved by the CBIRC. The insurance brokerage business is not listed under the 2021 Negative List. However, according to the administrative guidelines published by the CBIRC on its official website in 2019, a foreign investor holding more than 25% of the shares in an insurance brokerage company must satisfy the following requirements before investing in the insurance brokerage industry: (i) it has engaged in insurance brokerage business for more than thirty years within the territories of World Trade Organization members; and (ii) its total assets shall be no less than US$200 million as of the end of the year prior to its application. On May 1, 2019, the CBIRC released a press indicating that it plans to further open up the insurance brokerage industry to foreign investors by abolishing some of the requirements aforesaid. The State Council also promulgated an Opinions on Further Proper Utilization of Foreign Investment on October 30, 2019 to abolish such aforesaid requirements regarding the track record and total assets. The CBIRC published the Circular on Clarifying the Measures Relating to the Liberalization of the Insurance Intermediary Market, or the Liberalization Circular, on December 3, 2021, abrogating the requirements that the foreign investor to establish a foreign-funded insurance brokerage company in PRC should have a history of business operations of more than 30 years in any WTO member states, have maintained a representative office in China for a period of at least two consecutive years, and have a total asset of not less than US$200 million in the year immediately prior to the application. The Liberalization Circular allows professional insurance agencies, insurance brokerage organizations, and insurance adjustment organizations funded and established in PRC by foreign insurance group corporations or foreign-funded insurance group corporations in PRC are allowed to operate the related insurance intermediary business. The Administrative Measures for the Licenses of Banking and Insurance Institutions that was promulgated by the CBIRC on April 28, 2021 and became effective on July 2021 stipulates that no entity or individual may forge, alter, transfer, lease or lend any license of a banking or insurance institution, including the insurance intermediary license. The amended Administrative Measures for the Licenses of Banking and Insurance Institutions promulgated by the NFRA on January 27, 2026 and to take effective on June 1, 2026 maintains this requirement. On October 28, 2021, the CBIRC promulgated the Implementing Measures for Administrative Licensing and Record-filing for Insurance Intermediaries, or the Implementing Measures, which took effect on February 1, 2022, in order to clarify the conditions and procedures for administrative licensing and record-filing matters. According to the Implementing Measures, to apply to operate an insurance brokerage business, an applicant shall meet the following conditions: (i) it has obtained a business license, on which the name shall include the words “insurance brokerage,” and its trade name shall not be the same as that of any existing professional insurance intermediary, except for the professional insurance broker whose actual controller is the same as that of any other professional insurance intermediary; (ii) its shareholders meet certain requirements, including (1) in good financial condition, able to make foreign investments with self-owned funds, and make capital contributions with self-owned, authentic and legitimate funds; (2) for legal person shareholder, a good corporate governance structure or an effective organizational management model, good social reputation, credit records, tax payment records, and good operation and management; its net assets at the end of the previous year of the date of contribution are not negative, and the net assets and monetary funds at the end of the previous month of the date of contribution are greater than the capital contribution; (iii) its registered capital is paid-in monetary capital and is held in custody in accordance with the relevant provisions of the CBIRC; the minimum registered capital of national insurance brokers shall be RMB 50 million, and that of regional insurance brokers RMB 20 million; (iv) the business scope set forth in its business license complies with the relevant provisions of the CBIRC; (v) it has articles of association that comply with the Company Law of the PRC and the Insurance Law of the PRC; (vi) its senior executives meet the required qualifications; (vii) it has a governance structure and an internal control system required by the CBIRC, along with a scientific, reasonable and feasible business model; (viii) it has a fixed domicile commensurate with its business size; (ix) it has business, financial and other computer software and hardware facilities required by the CBIRC; (x) its risk testing meets the requirements; and (xi) it meets other conditions stipulated by laws, administrative regulations and the CBIRC. 94 The Implementing Measures prohibits applications to operate an insurance brokerage business if an entity’s shareholder (i) has been subjected to a criminal penalty or major administrative punishment in the last five years, (ii) is under investigation by the relevant authority due to being suspected of committing any major illegal or criminal offense, (iii) is determined as a target of joint disciplinary action against dishonesty by the relevant authority of the State due to serious dishonesty and shall be subjected to corresponding disciplinary action in the field of insurance, or has any other bad record of serious dishonesty in the last five years; (iv) is not allowed to invest in any enterprise in accordance with laws or administrative regulations; or (v) the CBIRC deems unsuitable for being a shareholder of an insurance broker. Pursuant to the Implementing Measures, senior executives of insurance brokers, including general manager of the company, the deputy general manager of the company, the main principal of the provincial branch, and other personnel who exercise important functions and powers for the operation and management of the company, are subject to qualification licensing. A proposed senior executive of a professional insurance broker shall (i) have a college degree or above, or ten-year experience in finance industry; (ii) have engaged in finance industry for more than three years or in economic industry for more than five years; (iii) have the operation and management capacity required for the performance of his/her duties, and is familiar with insurance laws, administrative regulations and relevant provisions of the CBIRC; and (iv) act in good faith and behaves well. On September 8, 2024, the State Council issued the Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Insurance Industry. These Opinions emphasize that insurance institutions, including insurance intermediaries shall operate in a compliant, transparent, and risk-controlled manner. For example, insurance institutions must meet stricter requirements regarding their qualifications, financial health, and operational capabilities and shall conduct stringent review on shareholders’ backgrounds. Insurance institutions are urged to strengthen their corporate governance and asset-liability management, to enhance product suitability and sales practice, and to implement stricter measures to prevent insurance fraud. On September 30, 2025, the NFRA issued the Notice on Matters Concerning Strengthening Regulation of Non-Auto Insurance Business, which took effective on November 1, 2025, requires that for non-auto property insurance, the property insurance carriers shall strictly implement the insurance policy terms and insurance rates as filed, and paying commissions to insurance intermediaries through disguised forms such as promotional fees, technical support fees, or prevention fees is strictly prohibited. We acquired, through Yiren Financial Information, all outstanding shares of Baijunda and Wuhan Linyi in May 2020. Baijunda and Wuhan Linyi jointly established a subsidiary, Hexiang Insurance Brokers, in September 2011. Upon the completion of this acquisition, Hexiang Insurance Brokers became the wholly owned subsidiaries of Yiren Financial Information in May 2020, and Hexiang Insurance Brokers has been operating our insurance brokerage business since then. Hexiang Insurance Brokers sells various health and life insurance products and property and casualty insurance products offered by insurance companies, and earns brokerage commissions determined as a percentage of premiums paid by the policy holder. We have disclosed Hexiang Insurance’s distribution of the insurance products offered by insurance companies. Hexiang Insurance Brokers has obtained the License for Professional Insurance Intermediaries. Regulations on Internet Insurance Business On December 14, 2020, the CBIRC promulgated the Regulatory Measures for Online Insurance Business, or the Regulatory Measures, which became effective on February 1, 2021 and supersedes the Interim Regulatory Measures for Internet Insurance Business promulgated by the CIRC on July 22, 2015. Pursuant to the Regulatory Measures, “Internet insurance business” refers to the business whereby insurance institutions form insurance contracts or provide insurance services based on internet. Any entity which is not a qualified insurance institution (including the insurance company and insurance intermediary service providers, such as the insurance brokerage company and insurance agency company) is not allowed to conduct online insurance business, including without limitation consultation of insurance products, comparison of insurance products, trial calculation of insurance premiums, quotation and comparison of quotations, drafting insurance plans for policyholders, processing insurance application formalities and premium collection. 95 According to the Regulatory Measures, “self-operated online platform” refers to the online platform which is established and operated independently by an insurance institution for the purpose of engaging in the internet insurance business. The Regulatory Measures requires that insurance institutions conducting online insurance business via their self-operated online platforms in the form of websites or mobile applications shall complete the filing with the competent authority for the operation of their websites and mobile applications. An insurance institution shall sell internet insurance products or provide insurance brokerage or insurance adjustment services via its self-operated online platform or the self-operated online platform of other insurance institutions, and the online insurance transactions being conducted through online interfaces shall be operated by insurance institutions only. In addition, the Regulatory Measures imposes technical IT requirements for insurance institutions engaged in the online insurance business. For example, the self-operated online platforms with online insurance products sales or insuring functions and the information management systems and core business systems that support the operation of such self-operated online platforms shall be certified as Safety Level III Computer Information Systems or above level. As for the self-operated online platforms without online insurance products sales or insuring functions and the information management systems and core business systems that support the operation of such self-operated online platforms shall be certified as Safety Level II Computer Information Systems or above level. The Regulatory Measures also sets out specific requirements in relation to marketing activities conducted by insurance institutions for the marketing and promotion of insurance products or insurance services via internet media, such as websites, webpages and applications, in the form of text, pictures, audio, video or otherwise. An insurance institution shall comply with the Advertising Law of the PRC, laws and regulations on marketing of financial products and other relevant rules promulgated by the CBIRC when carrying out marketing activities to promote their insurance products and services. In addition, the Regulatory Measures also requires insurance institutions to regulate their marketing and sales activities for internet insurances products, including, among others, implementing management protocols on the qualification, training, and behavior of online insurance practitioners and protocols on approval of content on marketing and sales of online insurance products. The online insurance practitioners shall conduct marketing activities of online insurance products within the scope authorized by insurance institutions and disclose relevant information on their marketing web page, such as their personal information and insurance institution’s names. The marketing content published by the practitioners shall be uniformly made by insurance institutions. An insurance institution shall assume the primary responsibility for the internet insurance marketing activities conducted by itself and its practitioners. The Regulatory Measures also sets forth specific operation and management requirements in relation to an insurance institution, including, among others, (i) an insurance institution shall adopt effective technical methods to verify the authenticity of each policyholder’s identity information, and completely record and keep the main internet insurance business process; (ii) an insurance institution shall complete practice registration for their personnel, and shall identify their qualification to engage in internet insurance business for public inquiry; (iii) the relevant fees paid by insurance companies to insurance intermediary service providers shall not be settled in cash; (iv) an insurance institution shall assume the primary responsibility for the protection of customer information, and shall collect, process and use personal information following the principles of legality, legitimacy and necessity, and ensure the security and legality of the collection, processing and use of information; and (v) an insurance institution shall make several internal operation plans and protocols, for example, an emergency response plan for the interruption of internet insurance business operation, an internal control protocol for anti-money laundering, a customer due diligence protocol, a protocol for keeping customer identity data and transaction records, a protocol for the reporting of large-value transactions and suspicious transactions and an anti-fraud protocol. The Regulatory Measures sets out a ramp-up process allowing the insurance institutions to achieve full compliance in phases until February 1, 2022. Pursuant to the Regulatory Measures, the insurance institutions shall (i) complete the rectification of the issues on internal protocols, marketing activities, sales management and information disclosure within three months from the effective date of the Regulatory Measure; (ii) complete the rectification of other issues on business and operation within six months from the effective date of the Regulatory Measure; and (iii) complete the authentication of classified cybersecurity protection of its self-operated online platform within twelve months from the effective date of the Regulatory Measure. On April 14, 2016, the CIRC together with 14 authorities issued the Implementation Plan for the Special Campaign on Internet Insurance Risks, which sets out the overall framework for the rectification initiative dedicated to mitigation of online insurance risks, specifying that the special rectification initiative shall focus on regulating business operation model optimizing market environment and improving regulatory rules, to achieve the objective of parallel promotion of innovation and risk mitigation, and the healthy and sustainable development of online insurance. 96 On April 2, 2019, the CBIRC promulgated the Circular of the General Office of the CBIRC on Issuing the 2019 Plan for the Rectification of Chaos in the Insurance Intermediary Market, or the Rectification Plan, aiming to further curb the chaos of violations of laws and regulations in the insurance intermediary market. The Rectification Plan mainly includes three key tasks: (i) to ascertain insurance companies’ responsibility for management and control of various intermediary channels; (ii) to carefully investigate business compliance of insurance intermediaries; and (iii) to strengthen the rectification of insurance business of the third-party online platforms in cooperation with insurance institutions. Pursuant to the Rectification Plan, all insurance institutions (including insurance companies and insurance intermediaries) shall conduct internet insurance business, regulate the business cooperation with third-party online platforms, prohibit third-party platforms from illegally engaging in insurance intermediary business in accordance with the Interim Regulatory Measures for Internet Insurance Business and relevant regulations, and focus their rectification on the following: (i) whether the activities of any cooperative third-party online platform of the insurance institution and its employees are limited to providing sales support services such as insurance product display and description and web links, and whether it illegally engages in insurance sales, underwriting, settlement of claims, and surrender or other insurance business links; (ii) whether there is a cooperation between the insurance institution and any third-party online platform engaging in internet finance involving wealth management, peer-to-peer lending and finance lease, etc.; (iii) whether the insurance institution performs the primary responsibility for supervising and managing its cooperative third-party platforms as required; (iv) whether all cooperative third-party online platforms of the insurance institution conform to relevant provisions of the Interim Regulatory Measures for Internet Insurance Business; (v) whether the insurance institution owns the interfaces where customers purchase insurance policies on its cooperative third-party online platforms and bears the compliance responsibility, and whether any of its third-party platforms engages in the collection of insurance premiums on its behalf and transfer of payments; (vi) whether each cooperative third-party online platform of the insurance institution discloses the information of all its cooperative insurance institutions at an eye-catching position, and that of such third-party online platform disclosed on the information disclosure platform of the Insurance Association of China at an eye-catching position, and indicates that the insurance business is provided by insurance institutions; and (vii) whether any cooperative third-party online platform of the insurance institution restricts such insurance institutions from accessing relevant information of customers in a truthful, complete and timely manner. On June 22, 2020, the CBIRC promulgated the Circular on Regulating the Traceability Management of Internet Insurance Sales Practices, which took effect on October 1, 2020, setting out requirements on various aspects of online sales by insurance institutions (including insurance companies and insurance intermediaries), including sales practices, record-keeping for backtracking sales, and disclosure requirements. The Circular on Regulating the Retrospective Management of Internet Insurance Sales Practices provides that, (i) online sales pages should be displayed only on insurance institutions’ self-operated online platforms and should be separated from non-sales pages; (ii) important insurance clauses should be presented on a separate page and be confirmed by policyholders or insureds; and (iii) insurance institutions should keep records for five years after the expiry of the policy for policies with a term of one year or less and for ten years for policies with a term longer than one year for purposes of backtracking sales. The CBIRC issued the Administrative Measures for Information Disclosure of Life Insurance Products in November 2022, and issued the Information Disclosure Rules for One-Year-Above Life Insurance Products on December 30, 2022, both of which prescribe for disclosure requirements for life insurance and came into effect on June 30, 2023. On December 26, 2022, the CBIRC promulgated the Administrative Measures for the Protection of Consumer Rights and Interests by Banking and Insurance Institutions, or the Consumer Protection Measures, which became effective on March 1, 2023. The Consumer Protection Measures specify the working mechanism and management requirements for the protection of consumer rights, requiring banking and insurance institutions to protect consumer rights and interests, including the right to know, the right to make independent choices, the right to fair trade, the right to property security, the right to seek legal remedy, the right to education, the right to respect, as well as the right to information security. The Consumer Protection Measures clearly stipulate that banking and insurance institutions shall establish mechanisms for the protection of consumers’ personal information, improve internal management systems, adopt authorization grading control and internal control measures, and implement grading and categorical control of consumers’ personal information throughout the process. 97 In September 2023, the NFRA promulgated the Measures for the Administration of Insurance Sales Activities, which came into force on March 1, 2024. These Measures categorizes insurance sales activities of insurance companies and insurance intermediaries, including insurance agency companies, into three phases namely pre-sales, in-sales, and post-sales activities, sets forth varied regulatory requirements on insurance sales activities in each phase: (1) for pre-sales phase, insurance intermediaries companies shall not engage in insurance sales activities beyond the approved business scope and regional scope; insurance intermediaries companies shall assume the primary management responsibility for the insurance sales promotion information released by its sales personnel; (2) for in-sales phase, insurance intermediaries companies shall not enter into insurance contracts with their clients using methods such as compulsory tie-in sale or default check on web pages; (3) for post-sales phase, insurance intermediaries companies shall establish archives management rules, properly maintain business archives, account books, business ledgers, personnel archives, client materials and audio-visual materials, electronic data, and other archive materials generated during traceability management. On July 17, 2024, the NFRA promulgated the Notice on Strengthening and Improving the Regulation of Internet Property Insurance Business, or the Notice, imposing stricter requirements on internet property insurance business to ensure data security, consumer protection, and compliance with technological and operational standards. The Notice requires that, among other things, insurance intermediaries conducting intermediary business related to internet property insurance must meet certain conditions. The Notice urges property insurance companies to select their partners with due care, and prohibits insurance companies from delegating core business processes that affect risk management entirely to cooperating institutions, nor may they rely solely on data from cooperating institutions for risk identification, assessment, and control. On the other hand, the Notice obligates insurance intermediaries to provide core information related to property insurance business, including customer information, risk control data, and anti-money laundering data, to the cooperating property insurance companies. We acquired, through Yiren Financial Information, all outstanding shares of Baijunda and Wuhan Linyi in May 2020. Baijunda and Wuhan Linyi jointly established a subsidiary, Hexiang Insurance Brokers, in September 2011. Upon the completion of this acquisition, Hexiang Insurance Brokers became the wholly owned subsidiaries of Yiren Financial Information in May 2020, and Hexiang Insurance Brokers has been operating our insurance brokerage business since then. Regulations on Financial Leasing In September 2013, MOFCOM issued the Administration Measures of Supervision on Financing Lease Enterprises, or the Leasing Measures, which became effective on October 1, 2013, to regulate and administer the business operations of financing lease enterprises. According to the Leasing Measures, financing lease enterprises are allowed to carry out financing lease business in such forms as direct lease, sublease, sale-and-lease-back, leveraged lease, entrusted lease and joint lease in accordance with the provisions of relevant laws, regulations and rules. However, the Leasing Measures prohibit financing lease enterprises from engaging in financial business such as accepting deposits, and providing loans or entrusted loans. Without the approval from relevant authorities, financing lease enterprises shall not engage in inter-bank borrowing and other businesses. In addition, financing lease enterprises are prohibited from carrying out illegal fund-raising activities in the name of financing lease. The Leasing Measures require financing lease enterprises to establish and improve their financial and internal risk control systems, and a financing lease enterprise’s risk assets shall not exceed ten times of its total net assets. Risk assets generally refer to the adjusted total assets of a financing lease enterprise excluding cash, bank deposits, sovereign bonds and entrusted leasing assets. In May 2020, the CBIRC issued the Interim Measures for the Supervision and Administration of Financial Leasing Companies which came into effect on May 26, 2020, or the Interim Measures for Financial Leasing. The Interim Measures for Financial Leasing defines “financial leasing business” as the transaction activity in which a lessor provides a lessee with, upon the lessee’s selection of seller and leased property, the leased property purchased from the seller for use, and the lessee pays corresponding rents. To further standardize business operation, the Interim Measures for Financial Leasing prohibits financial leasing company from (i) illegally raising funds, and absorbing deposits directly or in a disguised way; (ii) granting loans directly or under entrustment; (iii) borrowing funds from or lending funds to any other financial leasing company; and (iv) financing or transferring assets through any online loan information intermediary or private investment fund. As for the leased property, based on the Interim Measures for Financial Leasing, the leased property suitable for financial leasing transactions shall be fixed assets, unless otherwise prescribed, and shall be with clear ownership, authentic existence and availability for yielding returns as carriers. In addition, the CBIRC set forth various explicit regulatory indicators for financial leasing operators. For instance, the proportion of a financial leasing company’s assets under financial leasing and other leasing shall not be less than 60% of its total assets; the fixed-income securities investment business carried out by a financial leasing company shall not exceed 20% of its net assets. In December 2020, the Supreme People’s Court issued the Interpretation Concerning Laws Applicable to Trials of Disputes over Financial Leasing Contracts, which provides more specific rules regarding the determination, dissolution, liability for breach and other aspects of financial contracts. 98 On January 21, 2022, the CBIRC issued the Off-site Regulation Procedures for Financing Leasing Companies, or the Off-site Regulation Procedures. The Off-site Regulation Procedures stipulate the guidelines for the competent regulatory authorities to continuously analyze and evaluate the risk of financial leasing companies, by way of collecting report data and other internal and external data of the financial companies, cross-validating and analyzing the collected data and by carrying out corresponding measures. Pursuant to the Off-site Regulation Procedures, financial leasing 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 Regulation Procedures require financial leasing companies to establish and implement significant matters report system, and shall report to local authority within five days on significant related transactions, significant pending litigations and arbitrations and other significant matters required to report by the authority. The Off-site Regulation Procedures note that change of external business environment, corporate governance, internal control, risk management capabilities, asset quality and liquidity indicators shall be the key areas for off-site supervision. Yichuang Financial Leasing, which is a subsidiary of the consolidated variable interest entity, is approved to conduct financial leasing business. In order to optimize product mix and revenue structure, we ceased pursuing growth on our financial leasing business in February 2022, and are only maintaining existing business. Regulations on Securities and Funds Information Technology Service Providers The Administrative Measures for Information Technologies of Securities Fund Operators, published by the CSRC in December 2018 and amended in January 2021, provide that agencies providing information technology services for securities and funds business activities shall file record with the CSRC. If an information technology service provider fails to file record with the CSRC, the CSRC and its local offices may require it to submit a written explanation and take certain administrative regulatory measures such as an order to make corrections, regulatory conversations and warning letters, and may, in serious cases, take one or both of the measures including a warning and a fine of up to RMB30,000 against the information technology service provider as well as any managers or other employees found directly liable for the violation. The Provisions on the Implementation of the Measures for the Supervision and Administration of Publicly-offered Securities Investment Fund Distributors, or the Implementation Measures, issued by the CSRC on August 28, 2020 and effective on October 1, 2020, provide that where a fund manager or a fund distributor rents cyberspace premises (such as websites or applications) of a third-party network platform to deploy relevant webpages and feature modules and provide fund distribution services for investors, such third party shall, as a fund service agency engaging in information technology system services, file a record with the CSRC. The Implementation Measures also make it clear that the third party shall only provide information technology services (including cyberspace premises for fund managers and fund distributors), and may neither engage in any part of fund distribution process, nor collect, transmit or retain any fund trading information of investors. Regulations on Artificial Intelligence On May 8, 2015, the State Council issued a notice promulgating the Made in China 2025 Plan, which came into effect on the same day. The Made in China 2025 Plan emphasizes the acceleration of the promotion of the integrated development of new generation information technology and manufacturing technology, and regards intelligent manufacturing as the main direction of the comprehensive integration of informatization and industrialization. Meanwhile, it is underlined that efforts should be made to develop intelligent equipment and intelligent products, promote intelligent production processes, cultivate new production methods, and comprehensively enhance the intelligent level of research and development, production, management and service of enterprises. 99 On July 8, 2017, the State Council issued the Development Plan of a New Generation of Artificial Intelligence. The plan outlines three strategic steps in developing a new generation of artificial intelligence technology, and set goals to have China’s artificial intelligence technology reach a leading level in the world and become one of the major artificial intelligence innovation centers globally. On August 1, 2019, the Ministry of Science and Technology issued Guidelines for the Construction of the National New Generation of AI Open Innovation Platform, emphasizing that “open and sharing” should be the important philosophy in promoting artificial intelligence innovation and industry development in China, and encouraged to open innovation platforms for companies to conduct testing, thereby forming standard and modularized models, middleware and applications to provide services to the public in the form of open interfaces, model libraries, algorithm packages, etc. The Guidelines for the Construction of the New Generation of National Artificial Intelligence Innovation and Development Pilot Zone, which were promulgated by the Ministry of Science and Technology on August 29, 2019 and last amended on September 29, 2020 and came into effect on the same day, underlines the need to create an environment conducive to the innovation and development of artificial intelligence, to promote the construction of artificial intelligence infrastructure and strengthen the conditional support for the innovation and development of artificial intelligence. On December 31, 2021, the Cyberspace Administration of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Administration for Market Regulation jointly promulgated the Administrative Provisions on Algorithm Recommendation of Internet Information Services, which came into effect on March 1, 2022. The Administrative Provisions on Algorithm Recommendation of Internet Information Services implement classification and hierarchical management for algorithm recommendation service providers based on various criteria. Under the Administrative Provisions on Algorithm Recommendation of Internet Information Services, algorithm recommendation service providers shall inform users in a conspicuous manner that algorithm is used in service recommendations, inform users of the basic principles, purpose and intentions, and inform users in an appropriate manner of the main operating mechanisms for the algorithm recommendation services. According to Administrative Provisions on Deep Synthesis of Internet Information Services, which were jointly promulgated by the Cyberspace Administration of China, the Ministry of Industry and Information Technology and the Ministry of Public Security on November 25, 2022 and came into effect on January 10, 2023, deep synthesis technology refers to the use of technologies in relation to deep learning and virtual reality to produce texts, images, audio, video, virtual scenarios and others. Deep synthesis service providers, technical supporters and users shall fulfill corresponding obligations and responsibilities in accordance with the provisions, including establishing and improving the algorithm management system, taking measures to protect data security and personal information, conducting content review, performing security assessment, and completing filing procedures for algorithms. The Interim Measures for the Management of Generative Artificial Intelligence Services, which were promulgated by the CAC together with other government authorities on July 10, 2023 and came into effect on August 15, 2023, specify the compliance requirements for generative artificial intelligence service providers. Individuals or organizations that provide generative artificial intelligence services, such as texts, images, audio, video, and other content shall bear the responsibility of network information content producers to fulfill obligations related to network information security and shall bear the responsibility of personal information processors to protect personal information. Generative artificial intelligence service provider with public opinion attributes or social mobilizing ability shall carry out security assessments in accordance with the regulations of the PRC and shall perform the procedures for algorithm filing, alteration and deregistration in accordance with the Administrative Provisions on Internet Information Service Algorithm-Based Recommendation. On February 28, 2024, the National Information Security Standardization Technical Committee issued the Basic Requirements for the Security of Generative Artificial Intelligence Services, or the Basic Requirements. The Basic Requirements aim to clarify the basic security requirements for generative artificial intelligence services, including the security of training data, model security, security measures, etc., and provide the requirements for security assessment. The Basic Requirements also put forward the basic security requirements that generative artificial service providers need to follow. When generative artificial service providers go through the filing formalities in accordance with relevant requirements, they should conduct a security assessment according to the requirements of the Basic Requirements and submit the assessment report. On April 25, 2025, the CAC and the SAMR issued the Cybersecurity Technology—Basic Requirements for Generative Artificial Intelligence Service which came into effect on November 1, 2025, to further specify the basic security requirements for generative artificial intelligence services. 100 On September 14, 2024, the CAC issued the Labeling Artificial Intelligence Generated Synthetic Contents (Draft for Comment), which if becoming effective will further specify the marking obligation of the generative artificial intelligence providers, the types of marking, the scenarios and methods for marking deployment etc. On March 7, 2025, the CAC, the MIIT, the MPS and the SARFT issued Measures for Labeling AI-Generated or Composed Content which came into effect on January 1, 2026, to specify the requirements of labeling AI-generated or composed content for Internet information service providers. On October 28, 2025, the Standing Committee of National People’s Congress amended the PRC Cybersecurity Law which became effective on January 1, 2026. The PRC Cyber Security Law emphasizes the need to improve ethical norms for artificial intelligence, strengthen risk monitoring and assessment and safety supervision, and promote the application and healthy development of artificial intelligence. Regulations on Value-Added Telecommunication Services The Telecommunications Regulations promulgated by the State Council and its related implementation rules, including the Catalog of Classification of Telecommunications Business issued by the MIIT, categorize various types of telecommunications and telecommunications-related activities into basic or value-added telecommunications services, while internet information services, or ICP services, and data processing and transaction processing services, or EDI services, are classified as value-added telecommunications businesses. In 2009, the MIIT promulgated the Administrative Measures on Telecommunications Business Operating Licenses, amended in July 2017, which 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 VATS License, from the MIIT or its provincial level counterparts, which must identify the specific type of value-added telecommunications services it provides. An internet information service provider must obtain a VATS License for internet information services, and a data processing and transaction processing service provider must obtain a VATS License for data processing and transaction processing services, or EDI License. In September 2000, the State Council also issued the Administrative Measures on Internet Information Services, which was amended in January 2011 and December 2024. Pursuant to these measures, “internet information services” refer to provision of internet information to online users, and are divided into “commercial internet information services” and “non-commercial internet information services.” A commercial internet information services operator must obtain an ICP License, from the relevant government authorities before engaging in any commercial internet information services operations in China. The ICP License has a term of five years and can be renewed within 90 days before expiration. In addition to the Telecommunications Regulations and other regulations above, mobile internet applications are specially regulated by the Regulations for the Administration of Mobile Internet Applications Information Services, or the APP Provisions, which were promulgated by the CAC in June 2016 and became effective in August 2016. Pursuant to the APP Provisions, the APP information service providers shall satisfy relevant qualifications required by laws and regulations, strictly carry out the information security management responsibilities and fulfill their obligations in various aspects relating to the real-name system, protection of users’ information and the examination and management of information content. On June 14, 2022, the CAC published the revised Administrative Provisions on Mobile Internet Applications Information Services, or the Revised APP Provisions, which took effect on August 1, 2022. The Revised APP Provisions, among others, purport to prohibit application providers from false propaganda, bundled downloads, improperly inducing users to download application, as well as ranking and comment manipulations. 101 On July 21, 2023, the MIIT promulgated the Circular of the Ministry of Industry and Information Technology on Launching the Record-filing of Mobile Internet Applications, or the Mobile Application Filing Circular, which took effect on the same day. The Mobile Application Filing Circular requires that the mobile application sponsors who engage in the internet-based information services within the territory of the PRC shall carry out record-filing procedures in accordance with the Anti-Telecom and Online Fraud Law of the PRC, Administrative Measures for Internet-based Information Services and other provisions, and shall not engage in the mobile application internet-based information services if they fail to comply with the record-filing requirements. Yiren Zhisheng, the variable interest entity operating our mobile application Yiren Select, has obtained an ICP License and an EDI License and therefore eligible for providing commercial internet information services and data processing and transaction processing services. Yixianghua is operated by Hainan CreditEase Puhui Micro Loan Co., Ltd., an entity of CreditEase that owns ICP License and EDI License. Regulations Relating to E-Commerce Certain laws and regulations are promulgated in recent years to specifically regulate the e-commerce industry in PRC. In January 2014, the State Administration for Industry and Commerce of the PRC, or SAIC, adopted the Online Transactions Measures, which impose certain stringent requirements and obligations on online trading or service operators as well as the marketplace platform providers. On June 27, 2025, the Standing Committee of the National People’s Congress implemented a newly amended Anti-unfair Competition Law of the PRC, which took effect on October 15, 2025. 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. In August 2018, the Standing Committee of the National People’s Congress 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. The E-Commerce Law also sets forth certain requirements and/or obligations particularly applicable to the e-commerce platform operators. 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 March 15, 2021, the Administrative Regulations on Internet Transactions were released by the SAMR and was last amended on March 18, 2025 and became effective on May 1, 2025, which are the supplementary rules to the E-Commerce Law and repealed the Online Transactions Measures. 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. Our company and the VIEs are subject to these measures as a result of our online direct sales and online marketplace. In December 2024, the SAMR published the Interim Measures for Network Transaction Enforcement Assistance, which took effect on January 20, 2025, which mandate that platform operators provide necessary information to assist in investigations. 102 Regulations Relating to Internet Advertising The main regulations governing internet advertising include the Advertising Law of the PRC, which was amended on April 29, 2021, and the Measures on Internet Advertisement, or the Internet Advertisement Measures, which were issued by the SAMR on February 25, 2023 and took effect on May 1, 2023. Pursuant to the 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 Advertisement Measures regulate any advertisement published on the Internet, including but not limited to, through websites, webpage and APPs, in the form of word, picture, audio and video and provide more detailed guidelines to the advertisers, advertising operators and advertising distributors. In addition, the Internet Advertisement Measures explicitly require that the Advertising Law and the relevant provisions of the Internet Advertisement Measures apply to the internet information service providers. Aiming to provide more user protection and responsibilities on advertisers, advertising operators, advertising distributors and internet platforms in China, the Internet Advertisement Measures cover various forms of online advertisements, including pop-up advertisements, open-screen advertisements, livestreaming advertisement, “soft text advertisements”, internet advertisements containing links, auction ranked advertisements, algorithm-recommended advertisements, internet live broadcast advertisements, and covert advertisements. Internet platform operators are required to take measures to prevent and stop illegal advertisements, including recording and storing the real identity information of users who publish advertisements for at least three (3) years, monitoring and investigating the content of advertisements, and employing measures to stop illegal advertisements. Such platform operators must also establish effective complaint and reporting mechanisms, cooperate with market regulatory authorities in investigating illegal conduct, and use measures such as warnings, suspending or terminating services for users who publish illegal advertisements. The SAMR published the Guidelines for Regulatory Enforcement concerning the Identifiability of Internet Advertising on August 22, 2024, or the Guidelines, which provide guidance on enhancing the identifiability of Internet advertisement. For example, the Guidelines provide that it is non-compliant to publish any bidding-ranking products and services, “soft text advertisement” in forms of knowledge introduction, experience sharing, or user evaluation along with shopping links, advertisements in information streams, without conspicuously marked as “advertisement”. Internet advertisement publishers are encouraged to disclose the advertiser while prominently indicating advertisement. On April 21, 2026, the PBOC and other seven departments jointly issued the Administrative Measures for Online Marketing of Financial Products (the “Online Marketing Measures”), which will take effect on September 30, 2026. The Online Marketing Measures govern the online marketing of financial products by financial institutions and by third-party internet platforms acting on their commission. Among their key provisions, the Online Marketing Measures: (i) require that third-party internet platforms may only engage in online marketing of financial products pursuant to a lawful commission from a financial institution, and may not exceed the scope of such commission or sub-delegate it to other parties; (ii) prohibit third-party platforms from intervening, directly or indirectly, in the financial product sales process, including contract execution, fund transfers, borrower suitability assessments, and loan limit evaluations; (iii) require that when a third-party platform provides a referral channel to a financial product, it must redirect users to the financial institution’s own proprietary platform and may not redirect to another third-party platform; (iv) require all marketing content, including that disseminated via public accounts, livestreaming, and short-form video, to be reviewed and approved by the financial institution in advance, and restrict such activities to personnel employed by, and duly authorized by, the financial institution; (v) prohibit the use of algorithm-based recommendation systems that induce excessive consumption, and require that opt-out mechanisms be provided to consumers; (vi) prohibit online marketing content that is false, misleading, or based on unverified data, including representations that guarantee principal or returns on asset management products, overstatements of insurance coverage, exploitation of regulatory filing procedures to imply official endorsement, inducements through installment payment discounts, and the use of suggestive phrases such as “low risk,” “high return,” or “zero cost”, and (vi) impose strict restrictions on the use of finance-related terminology in platform names, application names, and trademarks by entities that do not hold the corresponding financial licenses. Non-compliance may expose third-party internet platforms to regulatory sanctions from multiple authorities. Regulations on Internet Information Security Internet information in China is also regulated and restricted from a national security standpoint. The National People’s Congress, China’s national legislative body, has enacted the Decisions on Maintaining Internet Security, which may subject violators to criminal punishment in China for any effort to: (i) gain improper entry into a computer or system of strategic importance; (ii) disseminate politically disruptive information; (iii) leak state secrets; (iv) spread false commercial information; or (v) infringe intellectual property rights. In November 2016, the Standing Committee of National People’s Congress promulgated the PRC Cyber Security Law, which was last amended on October 28, 2025 and became effective on January 1, 2026, or the PRC Cyber Security Law, which established a regulatory system with respect to the construction, operation, maintenance and use of internet and set forth provisions on the supervision and administration of cyber security within the territory of the PRC. Pursuant to the PRC Cyber Security Law, the national internet information department shall take charge of the arrangement, coordination, supervision and administration in connection with cyber-security issues, and the telecommunications administrative departments, public security departments as well as other relevant departments shall be responsible for the security protection, supervision and administration within the scope of their respective duties. The Ministry of Public Security has promulgated measures that prohibit use of the internet in ways which, among other things, result in a leakage of state secrets or a spread of socially destabilizing content. If an internet information service provider violates these measures, the Ministry of Public Security and the local security bureaus may revoke its operating license and shut down its websites. In addition, the Guiding Opinions on Promoting the Healthy Development of Internet Finance jointly released by ten PRC regulatory agencies in July 2015 purport, among other things, to require internet finance service providers, to improve technology security standards, and safeguard customer and transaction information. 103 The National People’s Congress has enacted legislation that prohibits 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 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 Cyber Security Law of the PRC, or the PRC Cyber Security Law, which took effect on June 1, 2017. In accordance with the PRC Cyber Security 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, Standing Committee of the PRC National People’s Congress published the Data Security Law of the People’s Republic of China, or the Data Security Law, 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 the degree of harm it may cause to national security, public interests, 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 interests, 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. 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. 104 On December 28, 2021, the Cyberspace Administration of China issued the revised Measures for Cybersecurity Review, or the Measures, which took effect in February 2022, and replaced the previous Measures for Cybersecurity Review. The scope of review under the Measures extends to critical information infrastructure operators that intend to purchase internet products and services and online platform operator engaging in data processing activities, which affect or may affect national security. According to Article 7 of the Measures, online platform 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 Measures also provides that if the relevant authorities consider that certain network products and services and 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 Measures also elaborated 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 and 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. Given the recency of the issuance of the Measures, there is a general lack of guidance and substantial uncertainties exist with respect to their interpretation and implementation. For example, it is unclear whether the requirement of cybersecurity review applies to follow-on offerings by an “online platform operator” that is in possession of personal data of more than one million users where the offshore holding company of such operator is already listed overseas. On July 30, 2021, the State Council issued the Regulations on Protection of Critical Information Infrastructure, or the Regulations. Pursuant to the 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, or the Provisions. The Provisions state that, no organization or individual may 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 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 December 31, 2021, the CAC, MIIT, MPS and SAMR promulgated the Administrative Provisions on Algorithms Recommendation in Internet-based Information Services, or the Algorithms Recommendation Administrative Provisions, which took effect on March 1, 2022. Pursuant to the Algorithms Recommendation Administrative Provisions, internet-based information service providers who apply algorithm-based recommendation technologies in such service within the territory of the PRC shall comply with relevant requirements regarding information services and user rights and interests protection. Algorithm-based recommendation service providers with public opinion attributes or social mobilization capabilities shall fill in certain information through the internet-based information service algorithm record-filing system, perform the record-filing procedures and conduct security assessment in accordance with relevant provisions. 105 On July 7, 2022, the CAC issued the Measures for Security Assessment of Cross-border Data Transfer, or the Measures, which took effect on September 1, 2022. According to the Measures, in addition to the self-risk assessment requirement for provision of any data outside China, a data processor shall apply to the competent cyberspace department for data security assessment and clearance of outbound data transfer in any of the following events: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by an operator of critical information infrastructure or a data processor which has processed more than one million users’ personal data; (iii) outbound transfer of personal information by a data processor which has made outbound transfers of more than one hundred thousand users’ personal information or more than ten thousand users’ sensitive personal information cumulatively since January 1 of the previous year; (iv) such other circumstances where ex-ante security assessment and evaluation of cross-border data transfer is required by the CAC. In a Q&A released on the official website of the CAC, the respondent CAC official illustrated that outbound data transfer referred to in the Measures mainly includes the following data activities: (i) data collected and generated during domestic operation is transmitted or stored overseas by data processors, and (ii) data collected and generated by data processors and stored domestically can be accessed to or used by oversea institutions, organizations or individuals. On March 22, 2024, the CAC issued Regulations on Promoting and Regulating Cross-Border Data Flows, or the Cross-border Data Flows Regulations, outlining the mechanisms for data outbound transmission. The Cross-border Data Flows Regulations further specify the threshold for conducting security assessments and filing standard contracts for outbound data transfer. Under the Cross-border Data Flows Regulations, if any data is not announced or published by relevant department or locality as important data, data processors are not required to apply for the security assessment for such data. The Cross-border Data Flows Regulations provide certain exemptions for declaration for the security assessment of outbound data transfer, conclusion of a standard contract for outbound cross-border transfer of personal information, and the personal information protection certification. For example, where a data processor other than critical information infrastructure operator transfers overseas the personal information of less than 100,000 individuals on a cumulative basis (excluding sensitive personal information) starting from January 1 of the said year, the declaration for the security assessment, the conclusion of the standard contract, and the personal information protection certification. On the other hand, security assessment will be required for critical information infrastructure operator providing personal information or important data overseas, or data processor other than critical information infrastructure operator transferring overseas the personal information of more than one million individuals (excluding sensitive personal information) or the sensitive personal information of more than 10,000 individuals on a cumulative basis starting from January 1 of the said year. On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. The Personal Information Protection Law 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 September 24, 2024, the State Council issued the Administrative Regulation on Network Data Security, which became effective on January 1, 2025. According to the Administrative Regulation on Network Data Security, cyber data processors engaging in data processing activities that affect or may affect national security shall, in accordance with relevant state provisions, apply for cybersecurity review with the Office of Cybersecurity Review. 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, or the Network Information Protection Decision, which was promulgated by the PRC 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. 106 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 clarifies the meaning of Internet service provider and the severe situations of the relevant crimes. On March 18, 2023, the CAC released the Provisions on the Administrative Law Enforcement Procedures for the Cyberspace Administration Authorities, which came into effect on June 1, 2023. These provisions clarify the procedures of cyberspace administrative law enforcement actions of the cyberspace administration authorities, as well as the procedures and requirements for administrative penalty. On December 6, 2025, the CAC released the Measures for Network Data Security Risk Assessment (Draft for Comments), which further specify the mechanism of network data security risk assessments. Regulations on Privacy Protection The PRC Constitution states that 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 Network Information Protection Decision 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 PRC Cyber Security 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. 107 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. 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 PRC Cyber Security 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 MIIT on October 31, 2019. On November 28, 2019, the CAC, the MIIT, the Ministry of Public Security and the State Administration for Market Regulation, or 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 a 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. 108 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 consents. 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 January 10, 2026, the CAC released the Provisions on the Collection and Use of Personal Information by Internet Applications (Draft for Comments), which further specify the responsibilities of internet application operators, software development kit operators, distribution platform operators and smart terminal manufacturers for collection and utilization of personal information. On August 20, 2021, the Standing Committee of the National People’s Congress adopted the Personal Information Protection Law which took effect on November 1, 2021. The Personal Information Protection Law 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, in a method that has the least impact on personal rights and interests, and (ii) the collection of personal information should be limited to the minimum scope necessary to achieve the processing purpose to avoid the excessive collection of personal information. Different types of personal information and personal information processing will be subject to various rules on consent, transfer, and security. Entities handling personal information shall bear responsibilities for their personal information handling activities, and adopt necessary measures to safeguard the security of the personal information they handle. 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 December 31, 2021, the MIIT, the CAC, the SAMR and the PBOC issued the Provisions on the Administration of Algorithm-generated Recommendations for Internet Information Services which took effect on March 1, 2022, stipulating rules for algorithm-generated recommendations for Internet information services. Also, on June 27, 2022, the CAC issued the Administrative Provisions for Internet User Account Information, which took effect on August 1, 2022, specifying rules of users accounts information for internet-based information service provider as well as its users. Regulations on Intellectual Property Rights The PRC has adopted comprehensive legislation governing intellectual property rights, including trademarks. The PRC Trademark Law and its implementation rules protect registered trademarks. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. The Trademark Office of the National Intellectual Property Administration is responsible for the registration and administration of trademarks throughout the PRC, and grants a term of ten years to registered trademarks and another ten years if requested upon expiry of the initial or extended term. Trademark license agreements must be filed with the Trademark Office for record. As of the date of this annual report, we had 459 registered trademarks with the Trademark Office of the National Intellectual Property Administration. 109 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, a Hong Kong resident enterprise must meet the following conditions, among others, in order to enjoy the reduced withholding tax: (i) it must directly own the required percentage of equity interests and voting rights in the PRC resident enterprise; and (ii) it must have directly owned such percentage in the PRC resident enterprise throughout the 12 months prior to receiving the dividends. There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. 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 on November 1, 2015. 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, non-resident 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. On October 14, 2019, the State Administration of Taxation promulgated a new Administrative Measures for Non-Resident Taxpayers to Enjoy Treaty Benefits, or Circular 35, which became effective on January 1, 2020 and replaced and repealed Circular 60. However, Circular 35 sets forth similar rules that non-resident enterprises and their withholding agents shall enjoy treaty benefit by means of “self-judgment of eligibility, declaration of entitlement, and retention of relevant materials for future reference.” Accordingly, YouRace HK, our Hong Kong subsidiary, may be able to enjoy the 5% withholding tax rate for the dividends they receive from YouRace Hengchuang and Hengyuda, our PRC subsidiaries, if they satisfy the conditions prescribed under Circular 81 and other relevant tax rules and regulations. However, according to Circular 81 and Circular 35, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities may adjust the favorable withholding tax in the future. According to the Circular on Several Issues regarding the “Beneficial Owner” in Tax Treaties, which was issued on February 3, 2018 by the SAT and has taken effect from April 1, 2018, or Circular 9, when determining the applicant’s status of the “beneficial owner” regarding tax treatments in connection with dividends, interests or royalties in the tax treaties, several factors, including without limitation whether the applicant is obligated to pay more than 50% of his or her income in twelve months to residents in a third 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 levies any tax or grants tax exemption on relevant incomes or levies tax at an extremely low rate, will be taken into account, and such determination will be analyzed according to the actual circumstances of the specific cases. Circular 9 further provides that applicants who intend to prove his or her status of the “beneficial owner” shall submit the relevant documents to the relevant tax authority according to Circular 35. However, if a competent tax authority finds out that it is necessary to apply the general anti-tax avoidance rules, it may start general investigation procedures for anti-tax avoidance and adopt corresponding measures for subsequent administration. Regulations on Overseas Offering and Listing 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 Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Version), or 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 2021 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. 110 On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Regulations, and five supporting guidelines, which became effective on March 31, 2023. Pursuant to the Overseas Listing Regulations, companies in China that directly or indirectly offer or list their securities in an overseas market, including a company in China limited by shares and an offshore company whose main business operations are in China and intends to offer shares or be listed in an overseas market based on its equities, assets or similar interests in China are required to file with the CSRC within three business days after submitting their listing application documents to the regulator in the place of intended listing. If the company fails to complete the filing procedure or conceals any material fact or falsifies any major content in its filing documents, it may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. The Overseas Listing Regulations also provide that a company in China must file with the CSRC within three business days for its follow on offering of securities after it is listed in an overseas market. On February 17, 2023, the CSRC also issued the Notice on Administration of the Filing of Overseas Offering and Listing by Domestic Companies and held a press conference for the release of the Overseas Listing Regulations, which, among others, clarified that the companies in China that have been listed overseas before March 31, 2023 are not required to file with the CSRC immediately, but these companies should complete filing with the CSRC for their refinancing activities in accordance with the Overseas Listing Regulations. Based on the foregoing, we are not required to complete filing with the CSRC for our prior offshore offerings at this stage, but we may be subject to the filing requirements for our refinancing activities under the Overseas Listing Regulations. On February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China jointly published the Provisions on Strengthening Confidentiality and Archives Management of Overseas Securities Issuance and Listing by Domestic Enterprises, or the Confidentiality and Archives Management Provisions, which became effective on March 31, 2023. Pursuant to the Confidentiality and Archives Management Provisions, China-based companies that offer and list securities in overseas markets shall establish confidentiality and archives system. The “China-based companies” refer to companies in China limited by shares which are directly listed on a foreign stock exchange and the domestic operating entities of an offshore company being indirectly listed on a foreign stock exchange. These China-based companies shall obtain the approvals from relevant authorities and file with the competent confidential administration authorities when providing or publicly filing documents and materials related to state secrets or secrets of the government authorities to the relevant securities companies, securities service agencies or the offshore regulatory authorities, or providing or publicly filing such documents and materials through its offshore listing entity. In addition, the China-based companies shall complete corresponding procedures when (i) providing or publicly filing documents and materials which may adversely affect national security and public interests to the relevant securities companies, securities service agencies or the offshore regulatory authorities, (ii) providing or publicly filing such documents and materials through its offshore listing entity, or (iii) providing accounting files or copies to relevant securities companies, securities service institutions, overseas regulators and individuals. These China-based companies are also required to provide written statements as to whether they have completed the approval or filing procedures as above when providing documents and materials to securities companies and securities service providers, and the securities companies and securities service providers should properly retain such written statements for inspection. If a China-based company finds that the documents and materials related to state secrets or secrets of the government authorities or other materials, which may adversely affect national security and public interests, have been leaked or have leakage risks, it should take remedial measures immediately and report to the relevant authorities. Regulations Relating to Foreign Exchange Regulations on Foreign Currency Exchange The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, most recently amended in August 2008. Under the PRC foreign exchange regulations, payments of current account items, such as profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. By contrast, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated loans, repatriation of investments and investments in securities outside of China. In November 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, most recently amended in December 2019, which 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 expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB proceeds derived 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, SAFE promulgated another circular in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by SAFE and its branches. On February 13, 2015, SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment, or SAFE Notice 13. After SAFE Notice 13 became effective on June 1, 2015, instead of applying for approvals regarding foreign exchange registrations of foreign direct investment and overseas direct investment from SAFE, entities and individuals may apply for such foreign exchange registrations from qualified banks. The qualified banks, under the supervision of SAFE, may directly review the applications and conduct the registration. 111 On March 30, 2015, SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. On June 9, 2016, SAFE promulgated Circular 16 to further expand and strengthen such reform. Circular 16 was partly amended on December 4, 2023. Under Circular 19 and Circular 16, foreign-invested enterprises in the PRC are allowed to use their foreign exchange funds under capital accounts and RMB funds from exchange settlement for expenditure under current accounts within its business scope or expenditure under capital accounts permitted by laws and regulations, except that such funds shall not be used for (i) expenditure beyond the enterprise’s business scope or expenditure prohibited by laws and regulations; (ii) securities investment or other investment and wealth management (except for wealth management products and structured deposits with risk rating results of not higher than Grade II) unless otherwise specified ; (iii) granting of loans to non-affiliated enterprises, except where it is expressly permitted in the business license; and (iv) purchasing residential real estate not for self-use (except for enterprises engaging in real estate development and leasing operation). Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents SAFE issued SAFE Circular on Relevant Issues Relating to Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, that became effective in July 2014, replacing the previous SAFE Circular 75. SAFE Circular 37 regulates foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. Under SAFE Circular 37, a SPV refers to an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while “round trip investment” refers to direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 provides that, before making contribution into an SPV, PRC residents or entities are required to complete foreign exchange registration with SAFE or its local branch. SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015, which took effect on June 1, 2015. This notice has amended SAFE Circular 37 requiring PRC residents or entities to register with qualified banks rather than SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. PRC residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign exchange administration regulations. Regulations on Stock Incentive Plans SAFE promulgated the Stock Option Rules in February 2012, replacing the previous rules issued by SAFE in March 2007. Under the Stock Option Rules and other relevant rules and regulations, PRC residents who participate in stock incentive plan in an overseas publicly listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of the participants. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or other material changes. The PRC agent must, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE 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 the PRC opened by the PRC agents before distribution to such PRC residents. 112 We have adopted four share incentive plans, under which we have the discretion to grant a broad range of equity-based awards to eligible participants. See “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.” We plan to advise the recipients of awards under our share incentive plans to handle foreign exchange matters in accordance with the Stock Option Rules. However, we cannot assure you that they can successfully register with SAFE in full compliance with the Stock Option Rules. Any failure to complete their registration pursuant to the Stock Option Rules and other foreign exchange requirements may subject these PRC individuals to fines and legal sanctions, and may also limit our ability to contribute additional capital to our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute dividends to us or otherwise materially adversely affect our business. Regulations on Dividend Distribution Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from YouRace Hengchuang, which is a wholly foreign-owned enterprise incorporated in China, to fund any cash and financing requirements we may have. The principal regulations governing distribution of dividends of foreign-invested enterprises include the Company Law of PRC and the Foreign Investment Law. Under the current laws and regulations, wholly foreign-owned enterprises in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises in China are required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50% of the registered capital of the enterprises. Regulations Relating to Employment The PRC Labor Law and the Labor Contract Law require that employers must execute written employment contracts with full-time employees. If an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee’s salary for the period from the day following the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the written employment contract. All employers must compensate their employees with wages equal to at least the local minimum wage standards. Violations of the PRC Labor Law and the Labor Contract Law may result in the imposition of fines and other administrative sanctions, and serious violations may result in criminal liabilities. Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located. Failure to make adequate contributions to various employee benefit plans may be subject to fines and other administrative sanctions. Certain entities we acquired in March 2019 as part of our business realignment with CreditEase did not make adequate employee benefits payment in the past. The probability that we may be subject to late penalties or fines in relation to the underpaid employee benefits is remote. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Failure to make adequate contributions to various employee benefit plans as required by PRC regulations may subject us to penalties.” 113 C. Organizational Structure Yiren Digital Ltd. is not an operating company but a Cayman Islands holding company with operations conducted by (i) its subsidiaries and (ii) the consolidated variable interest entity, Yiren Financial Information with which its subsidiary, Hengyuda, has maintained contractual arrangement. PRC laws and regulations restrict and impose conditions on foreign investment in production of radio and television programs, internet culture business and certain value-added telecommunication services such as internet content provision services. Accordingly, these businesses are operated by Yiren Financial Information in China. Neither Yiren Digital Ltd. nor its subsidiaries own any equity interest or direct foreign investment in Yiren Financial Information. Instead, Yiren Digital Ltd. relies on contractual arrangements among Hengyuda, Yiren Financial Information and its shareholders, which allow Yiren Digital Ltd. to (i) direct the activities of the Yiren Financial Information that most significantly impact its economic performance; (ii) receive substantially all of the economic benefits of Yiren Financial Information; and (iii) have an exclusive option to purchase all or part of the equity interests in Yiren Financial Information when and to the extent permitted by PRC law. As a result of these VIE agreements, Yiren Digital Ltd. is considered the primary beneficiary of Yiren Financial Information for accounting purposes and is able to consolidate the financial results of Yiren Financial Information in the consolidated financial statements in accordance with U.S. GAAP. Investors in our ADSs are not holding equity interest in the consolidated variable interest entities in China but instead are holding equity interest in a holding company incorporated in the Cayman Islands. A series of contractual agreements, including the loan agreement, the exclusive purchase option agreement, the exclusive technology consulting and services agreement or exclusive business cooperation agreement, as applicable, equity pledge agreements, powers of attorney and business operation agreement, have been entered into by and among Hengyuda, Yiren Financial Information and its shareholders. Terms contained in each set of contractual arrangements with Yiren Financial Information and its shareholders are substantially similar. As a result of the contractual agreements, we are considered the primary beneficiary of Yiren Financial Information and have consolidated the financial results of Yiren Financial Information in our consolidated financial statements in accordance with U.S. GAAP. These contractual arrangements may not be as effective as direct ownership. Under the current contractual arrangements, we rely on the performance by Yiren Financial Information and its shareholders of their obligations under the contracts. The shareholders of Yiren Financial Information may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate our business through the contractual arrangements with Yiren Financial Information. Although we have the right to replace any shareholder of Yiren Financial Information under its contractual arrangements, if any shareholder of Yiren Financial Information is uncooperative or any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC laws and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. If Yiren Financial Information or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective under PRC laws. For example, if the shareholders of Yiren Financial Information were to refuse to transfer their equity interest in Yiren Financial Information, as the case may be, to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations. 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 Yiren Financial Information and its shareholders. If the PRC government finds that the agreements that establish the structure for operating our online consumer finance marketplace business do not comply with PRC government restrictions on foreign investment in value-added telecommunications services businesses, such as internet content provision services, we could be subject to severe penalties, including being prohibited from continuing operations. 114 In addition, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. There are very few precedents and little formal guidance as to how contractual arrangements in the context of a variable interest entity should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of the arbitration should legal action become necessary. In the event that we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to conduct the business operations of the consolidated variable interest entities, and our ability to conduct our business may be negatively affected. For more details of these potential risks, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We rely on contractual arrangements with the consolidated variable interest entity, and its shareholders for certain business operations in China, which may not be as effective as direct ownership,” “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—The shareholders of the consolidated variable interest entity may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition,” “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Any failure by the consolidated variable interest entity or its shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business,” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangement in relation to the consolidated variable interest entity do not comply with 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.” The following diagram illustrates our corporate structure, including our subsidiaries, the consolidated variable interest entities, and our consolidated assets backed financing entities, as of the date of this annual report: Notes: (1) The shareholders of Yiren Financial Information are CreditEase Pucheng Credit Assessment and Management (Beijing) Co., Ltd., Mr. Ning Tang and Ms. Yan Tian, each owning 95%, 3.8% and 1.2% of Yiren Financial Information’s equity interest, respectively. The shareholders of CreditEase Pucheng Credit Assessment and Management (Beijing) Co., Ltd. are Mr. Ning Tang and Ms. Yan Tian, ultimately owning 95% and 5% of its equity interest, respectively. Mr. Ning Tang is our executive chairman and Ms. Yan Tian is a third-party individual designated by CreditEase. 115 Contractual Arrangements with the Consolidated Variable Interest Entities Due to PRC legal restrictions on foreign ownership and investment in value-added telecommunications services, and internet content provision services in particular, we currently conduct these activities through Yiren Financial Information, which we conduct the business operations through a series of contractual arrangements. These contractual arrangements allow us to: ● conduct the business operations of Yiren Financial Information; ● receive substantially all of the economic benefits of Yiren Financial Information; and ● have an exclusive option to purchase all or part of the equity interests in Yiren Financial Information when and to the extent permitted by PRC law. As a result of these contractual arrangements, we have become the primary beneficiary of Yiren Financial Information, and we treat Yiren Financial Information as the consolidated variable interest entity under U.S. GAAP. We have consolidated the financial results of Yiren Financial Information in our consolidated financial statements in accordance with U.S. GAAP. Before our business restructuring with CreditEase in December 2020, we also conducted those activities through Hengcheng, which we conducted the business operations until December 31, 2020 through a series of contractual arrangements. These contractual arrangements allowed us to: ● conduct the business operations of Hengcheng; ● receive substantially all of the economic benefits of Hengcheng; and ● have an exclusive option to purchase all or part of the equity interests in Hengcheng when and to the extent permitted by PRC law. As a result of these contractual arrangements, we were the primary beneficiary of Hengcheng and treated Hengcheng as the variable interest entity under U.S. GAAP before December 31, 2020. We consolidated the financial results of Hengcheng in our consolidated financial statements in accordance with U.S. GAAP before December 31, 2020. Our contractual arrangements with Hengcheng and its shareholders were terminated on December 31, 2020. We also used to conduct those activities through CreditEase Puhui, which we conducted the business operations until October 31, 2025 through a series of contractual arrangements. These contractual arrangements allowed us to: ● conduct the business operations of CreditEase Puhui; ● receive substantially all of the economic benefits of CreditEase Puhui; and ● have an exclusive option to purchase all or part of the equity interests in CreditEase Puhui when and to the extent permitted by PRC law. As a result of these contractual arrangements, we were the primary beneficiary of CreditEase Puhui and treated CreditEase Puhui as the variable interest entity under U.S. GAAP before October 31, 2025. We consolidated the financial results of CreditEase Puhui in our consolidated financial statements in accordance with U.S. GAAP before October 31, 2025. Our contractual arrangements with CreditEase Puhui and its shareholders were terminated on October 31, 2025. Contractual Arrangements with Yiren Financial Information The following is a summary of the currently effective contractual arrangements by and among our wholly-owned subsidiary, Hengyuda, the variable interest entity, Yiren Financial Information, and the shareholders of Yiren Financial Information. 116 Agreements that Allow Us to Conduct the Business Operations of Yiren Financial Information Amended and Restated Equity Interest Pledge Agreements. Pursuant to amended and restated the equity interest pledge agreements, each shareholder of Yiren Financial Information has pledged all of his or her equity interest in Yiren Financial Information to guarantee the shareholder’s and Yiren Financial Information’s performance of their obligations under the exclusive business cooperation agreement, exclusive option agreement, loan agreement (as applicable) and power of attorney. If Yiren Financial Information or any of its shareholders breaches their contractual obligations under these agreements, Hengyuda, as pledgee, will be entitled to certain rights regarding the pledged equity interests, including receiving proceeds from the auction or sale of all or part of the pledged equity interests of Yiren Financial Information in accordance with the law. Each of the shareholders of Yiren Financial Information agrees that, during the term of the equity interest pledge agreements, he or she will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests without the prior written consent of Hengyuda. The equity interest pledge agreements remain effective until Yiren Financial Information and its shareholders discharge all their obligations under the contractual arrangements. We have registered the equity pledge with the relevant office of the Administration for Market Regulation in accordance with the PRC Property Rights Law. Powers of Attorney. Pursuant to the powers of attorney, each shareholder of Yiren Financial Information has irrevocably appointed Hengyuda to act as such shareholder’s exclusive attorney-in-fact to exercise all shareholder rights, including, but not limited to, voting on all matters of Yiren Financial Information requiring shareholder approval, disposing of all or part of the shareholder’s equity interest in Yiren Financial Information, and appointing directors and executive officers. Hengyuda is entitled to designate any person to act as such shareholder’s exclusive attorney-in-fact without notifying or the approval of such shareholder, and if required by PRC law, Hengyuda shall designate a PRC citizen to exercise such right. Each power of attorney will remain in force as long as the shareholder remains a shareholder of Yiren Financial Information. Each shareholder has waived all the rights which have been authorized to Hengyuda and will not exercise such rights. Agreement that Allows us to Receive Economic Benefits from Yiren Financial Information Exclusive Business Cooperation Agreement. Under the exclusive business cooperation agreement between Hengyuda and Yiren Financial Information, Hengyuda has the exclusive right to provide Yiren Financial Information with technical support, consulting services and other services. Without Hengyuda’s prior written consent, Yiren Financial Information agrees not to accept the same or any similar services provided by any third party. Hengyuda may designate other parties to provide services to Yiren Financial Information. Yiren Financial Information agrees to pay service fees on a monthly basis and at an amount determined by Hengyuda after taking into account multiple factors, such as the complexity and difficulty of the services provided, the time consumed, the content and commercial value of services provided and the market price of comparable services. Hengyuda owns the intellectual property rights arising out of the performance of this agreement. In addition, Yiren Financial Information has granted Hengyuda an irrevocable and exclusive option to purchase any or all of the assets and businesses of Yiren Financial Information at the lowest price permitted under PRC law. Unless terminated in accordance with the provision of the agreement or terminated by Hengyuda unilaterally in writing, this agreement will remain effective permanently. Agreements that Provide Us with the Option to Purchase the Equity Interest in Yiren Financial Information Amended and Restated Exclusive Option Agreement. Pursuant to the amended and restated exclusive option agreements, each shareholder of Yiren Financial Information has irrevocably granted Hengyuda an exclusive option to purchase, or have its designated person or persons to purchase, at its discretion, to the extent permitted under PRC law, all or part of the shareholder’s equity interests in Yiren Financial Information. The purchase price shall be the higher of the amount equal to the registered capital contributed by the respective shareholders of Yiren Financial Information (or such other price then accepted by Hengyuda) or the minimum price required by PRC law, which purchase price could be paid by way of offset of the outstanding debts owed by the shareholders of Yiren Financial Information to Hengyuda (including without limitation the outstanding amount of the loan owed by the shareholders of Yiren Financial Information to Hengyuda and any interest thereon under the respective loan agreement). If Hengyuda exercises the option to purchase part of the equity interest held by a shareholder of Yiren Financial Information, the purchase price shall be calculated proportionally. Yiren Financial Information and each of its shareholders have agreed to appoint any persons designated by Hengyuda to act as Yiren Financial Information’s directors. Without Hengyuda’s prior written consent, Yiren Financial Information shall not amend its articles of association, increase or decrease the registered capital, sell or otherwise dispose of, or create or allow any encumbrance on its assets or beneficial interest with a value of more than RMB500,000, provide any loans to any third parties, enter into any material contract with a value of more than RMB500,000 (except those contracts entered into in the ordinary course of business), merge with or acquire any other persons or make any investments, or distribute dividends to the shareholders. The shareholders of Yiren Financial Information have agreed that, without Hengyuda’s prior written consent, they will not dispose of their equity interests in Yiren Financial Information or create or allow any encumbrance on their equity interests. Moreover, without Hengyuda’s prior written consent, no dividend will be distributed to Yiren Financial Information’s shareholders, and if any of the shareholders receives any profit, interest, dividend or proceeds of share transfer or liquidation, the shareholder must give such profit, interest, dividend and proceeds to Hengyuda. These agreements will remain effective until all equity interests of Yiren Financial Information held by its shareholders have been transferred or assigned to Hengyuda or its designated person(s). 117 Amended and Restated Loan Agreements. Pursuant to the amended and restated loan agreements between Hengyuda and the shareholders of Yiren Financial Information, Hengyuda agreed to provide loans of RMB1.9 million, RMB0.6 million and RMB47.5 million to Mr. Ning Tang, Mr. Yan Tian and CreditEase Pucheng Credit Assessment and Management (Beijing) Co., Ltd., respectively, solely for the capitalization of Yiren Financial Information. Pursuant to the loan agreement, the shareholders can only repay the loans by the sale of all their equity interest in Yiren Financial Information to Hengyuda or its designated person(s) pursuant to their respective exclusive option agreements. The shareholders must pay all of the proceeds from sale of such equity interests to Hengyuda. In the event that shareholders sell their equity interests to Hengyuda 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 Hengyuda as the loan interest. The loan must be repaid immediately under certain circumstances, including, among others, if a foreign investor is permitted to hold majority or 100% equity interest in Yiren Financial Information and Hengyuda elects to exercise its exclusive equity purchase option. The term of the loans is ten years and can be extended upon mutual written consent of the parties. In the opinion of Han Kun Law Offices, our PRC counsel: ● the ownership structures of our subsidiary, Hengyuda, and the consolidated variable interest entity, Yiren Financial Information, will not result in any violation of PRC laws or regulations currently in effect; and ● the contractual agreements relating to Yiren Financial Information, the consolidated variable interest entity, as described in “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with Yiren Financial Information,” governed by PRC law are valid, binding and enforceable, and do not and will not result in any violation of PRC laws or regulations currently in effect. The equity pledge under the equity pledge agreement has been registered with the competent office of the State Administration for Market Regulation in accordance with the PRC laws. However, there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which has become effective on January 1, 2020. Under the Foreign Investment Law, “foreign investment” refers to the investment activities directly or indirectly conducted by foreign individuals, enterprises or other entities in China. Although it does not explicitly classify contractual arrangements as a form of foreign investment, there is no assurance that foreign investment via contractual arrangement would not be interpreted as a type of indirect foreign investment activity under the definition in the future. In addition, the definition contains a catch-all provision which includes investments made by foreign investors through means stipulated in laws or administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions promulgated by the State Council to provide for contractual arrangements as a form of foreign investment. If the PRC government finds that the agreements that establish the structure for operating our online consumer finance marketplace business do not comply with PRC government restrictions on foreign investment in value-added telecommunications services businesses, such as internet content provision services, we could be subject to severe penalties, including being prohibited from continuing operations. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government deems that the contractual arrangement in relation to the consolidated variable interest entity do not comply with 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,” “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations,” “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the legal system in Chinese mainland could adversely affect us. Certain laws and regulations in Chinese mainland can evolve quickly, which bring risks and uncertainties to their interpretation and enforcement. Administrative and court proceedings in Chinese mainland may be protracted. Some government policies and internal rules may not be published on a timely manner. These risks and uncertainties may make it difficult for us to meet or comply with requirements under the applicable laws and regulations” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.” 118 D. Property, Plant and Equipment Our principal executive offices are located on leased premises comprising 1,935.6 square meters in Beijing, China. Our company and the VIEs have leased additional office spaces of 5,129.2 and 8,993.4 square meters in Beijing and other cities in China, respectively. We lease our premises from unrelated third parties under operating lease agreements. The lease for our principal executive offices will expire in April 2028. Our servers are primarily hosted at internet data centers owned by major domestic internet data center providers. The hosting services agreements typically have a three-year term. We believe that we will be able to obtain adequate facilities, principally through leasing, to accommodate our future expansion plans.