As filed with the Securities and Exchange Commission on August 18,
2022
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CLPS Incorporation
(Exact name of Registrant as Specified in its
Charter)
Cayman Islands |
|
Not applicable |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
c/o Unit 1102, 11th Floor, Millennium City III
370 Kwun Tong Road, Kwun Tong, Kowloon
Hong Kong SAR
Tel: (852) 37073600
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Corporation Service Company
251 Little Falls Drive
Wilmington, DE 19808
Telephone: (800) 927-9800
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Mitchell Nussbaum, Esq.
Tahra Wright, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
(212) 407-4000
Approximate date of commencement of proposed sale
to the public: From time to time after the effective date of this registration statement.
If the only securities being registered on this
Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following
box. ☒
If this Form is filed to register additional securities
for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant
to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the following box. ☐
If this Form is a post-effective amendment to
a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities
Act. ☐
The
information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT
TO COMPLETION, DATED , 2022.
PRELIMINARY PROSPECTUS
US$80,000,000
Common Shares
Preferred Shares
Warrants
Debt Securities
Rights
Depositary Shares
Units
CLPS Incorporation may offer
and sell from time to time up to an aggregate of US$80,000,000 of common shares (issued separately or upon exercise of warrants or conversion
of preferred shares, if convertible), preferred shares, warrants, debt securities, rights, depositary shares and units of the Company’s
securities. The specific terms of any securities offered will be described in supplements to this prospectus. You should read this prospectus
and any applicable prospectus supplement carefully before you purchase our securities. This prospectus may not be used to offer securities
unless accompanied by a prospectus supplement.
We may offer and sell these
securities to or through one or more underwriters, dealers and agents, or directly to purchasers, on a continuous or delayed basis. The
prospectus supplement for each offering of securities will describe in detail the plan of distribution. If underwriters, dealers and agents
are used to sell these securities, we will name them and describe their compensation in a prospectus supplement.
Our outstanding shares are
listed for trading on the NASDAQ Stock Market, or NASDAQ, under the symbol “CLPS”. On August 17, 2022 the closing price of
our shares on the NASDAQ Stock Market was US$1.76 per share. There is currently no established trading market through which the
securities, other than the common shares, may be sold and purchasers may not be able to resell the securities purchased under this prospectus.
This may affect the pricing of the securities in the secondary market, the transparency and availability of trading prices, the liquidity
of the securities and the extent of issuer regulation.
So long as the aggregate market
value worldwide of our outstanding common equity held by non-affiliates, or public float, is less than US$75 million, the aggregate
market value of securities sold by us under this prospectus during the period of 12 calendar months immediately preceding the date of
sale may be no more than one-third of our public float. Our public float, as calculated in accordance with General Instruction I.B.5 of
Form F-3, was approximately US$24 million as of August 17, 2022. We have not sold any securities pursuant to General Instruction
I.B.5 of Form F-3 during the prior 12 calendar month period that ends on and includes the date of this prospectus.
Investing in our securities
involves risks. Prior to purchasing our securities, you should carefully consider the risk factors that will be described in any applicable
prospectus supplement and the risk factors described in our filings with the Securities and Exchange Commission, or the SEC, as explained
under the heading “Risk Factors” on page 5 of this prospectus.
Neither the SEC, nor any securities commission
of any state of the United States has approved or disapproved the securities offered hereby or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offence.
The date of this prospectus is August 18, 2022
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is a part of
a registration statement that we have filed with the SEC utilizing a “shelf” registration process. Under this shelf registration
process, we may sell the securities described in this prospectus in one or more offerings up to a total dollar amount of initial aggregate
offering price of US$80,000,000. This prospectus provides you with a general description of the securities that we may offer. Each time
we sell securities under this process, we will provide a prospectus supplement that will contain specific information about the terms
of that offering, including a description of any risks relating to the offering if those terms and risks are not described in this prospectus.
A prospectus supplement may also add, update, or change information contained in this prospectus. If there is any inconsistency between
the information in this prospectus and the applicable prospectus supplement, you should rely on the information in the prospectus supplement.
Before investing in our securities,
please carefully read both this prospectus and any prospectus supplement together with the documents incorporated by reference into this
prospectus, as listed under “Documents Incorporated by Reference,” and the additional information described below under “Where
You Can Find More Information.”
We may sell securities to or
through underwriters or dealers, and we may also sell securities directly to other purchasers or through agents. To the extent not described
in this prospectus, the names of any underwriters, dealers, or agents employed by us in the sale of the securities covered by this prospectus,
the principal amounts or number of shares or other securities, if any, to be purchased by such underwriters or dealers, and the compensation,
if any, of such underwriters, dealers, or agents will be described in a prospectus supplement.
Owning securities may subject
you to tax consequences in the United States. This prospectus or any applicable prospectus supplement may not describe these tax consequences
fully. You should read the tax discussion in any prospectus supplement with respect to a particular offering and consult your own tax
advisor with respect to your own particular circumstances.
You should rely only on the
information contained in or incorporated by reference into this prospectus or a prospectus supplement. We have not authorized anyone to
provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
The distribution or possession of this prospectus in or from certain jurisdictions may be restricted by law. This prospectus is not an
offer to sell the securities and is not soliciting an offer to buy the securities in any jurisdiction where the offer or sale is not permitted
or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer
or sale. You should assume that the information contained in this prospectus and in any applicable prospectus supplement is accurate only
as of the date on the front cover of this prospectus or prospectus supplement, as applicable, and the information incorporated by reference
into this prospectus or any prospectus supplement is accurate only as of the date of the document incorporated by reference. Our business,
financial condition, results of operations and prospects may have changed since that date.
This prospectus and the documents
incorporated by reference into this prospectus contain company names, product names, trade names, trademarks and service marks of CLPS
and other organizations, all of which are the property of their respective owners. We own or have rights to trademarks, service marks
or trade names that we use in connection with the operation of our business. Solely for convenience, the trademarks, service marks, tradenames
and copyrights referred to in this prospectus are listed without the ©, ® and TM symbols, but we will assert, to the fullest
extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and tradenames.
In this prospectus, unless
the context otherwise requires, references to “CLPS,” the “company,” “we,” “us” or “our”
refer to CLPS Incorporation.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC
a registration statement on Form F-3, of which this prospectus forms a part. This prospectus does not contain all the information set
out in the registration statement. For further information about us and the securities, please refer to the registration statement, including
the exhibits to the registration statement. The exhibits to the registration statement provide more details of the matters discussed in
this prospectus.
We are subject to the informational
requirements of the Securities Exchange Act of 1934, or the Exchange Act, and we file reports and other information with the SEC. You
may read and copy any of our reports and other information at, and obtain copies upon payment of prescribed fees from, the Public Reference
Room maintained by the SEC at 100 F Street, N.E., Washington, DC 20549. In addition, the SEC maintains a web site that contains reports
and other information regarding registrants that file electronically with the SEC at www.sec.gov. The public may obtain information
on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
As a foreign private issuer,
we are exempt under the Exchange Act from, among other things, certain rules prescribing the furnishing and content of proxy statements,
and our executive officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions
contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and
financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
Our principal executive office
is located at Unit 1102, 11th Floor, Millennium City III, 370 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong SAR. Our telephone number
is (852) 37073600. Our website is as follows www.clpsglobal.com. The information on our website is not part of this prospectus.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to “incorporate
by reference” into this prospectus the documents we file with, or furnish to, them, which means that we can disclose important information
to you by referring you to these documents. The information that we incorporate by reference into this prospectus forms a part of this
prospectus, and information that we file later with the SEC automatically updates and supersedes any information in this prospectus. We
incorporate by reference into this prospectus the documents listed below:
● our
Annual Report on Form 20-F for the fiscal years ended June 30, 2021;
● the
description of our shares set forth in our registration statement on Form
F-1 (File No. 333-223956) filed with the SEC on March 27, 2018 and declared effective on May 23, 2018, and our Form
8-A filed with the SEC on May 22, 2018, including any amendment or report filed for the purpose of updating that description;
and
● our
Report of Foreign Private Issuer on Form 6-K furnished to the SEC on December
15, 2021, March 7, April
7, and May
23, 2022, respectively.
All documents filed by us pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the initial filing of this registration statement
and prior to effectiveness of the registration statement that contains this prospectus and prior to the termination of the offering of
the securities offered by this prospectus are incorporated by reference into this prospectus and form part of this prospectus from the
date of filing or furnishing of these documents. Any documents that we furnish to the SEC on Form 6-K subsequent to the date
of this prospectus will be incorporated by reference into this prospectus only to the extent specifically set forth in the Form 6-K.
Any statement contained in
a document incorporated by reference into this prospectus shall be deemed to be modified or superseded for purposes of this prospectus
to the extent that a statement contained in this prospectus, in one of those other documents or in any other later filed document that
is also incorporated by reference into this prospectus modifies or supersedes that statement. Any such statement so modified shall not
be deemed, except as so modified, to constitute a part of this prospectus. Any such statement so superseded shall be deemed not to constitute
a part of this prospectus.
Any person receiving a copy
of this prospectus, including any beneficial owner, may obtain without charge, upon written or oral request, a copy of any of the documents
incorporated by reference into this prospectus, except for the exhibits to those documents unless the exhibits are specifically incorporated
by reference into those documents. Requests should be directed to our principal executive office, Unit 1102, 11th Floor, Millennium City
III, 370 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong SAR.
SUMMARY
This summary does not contain all of the information
about our company that may be important to you and your investment decision. You should carefully read the entire prospectus and the applicable
prospectus supplement, including the section entitled “Risk Factors” as well as the risk factors described in the documents
incorporated by reference into this prospectus and the applicable prospectus supplement, before making an investment decision.
Our Company
We are a global information
technology (“IT”), consulting and solutions service provider focused on delivering services to global institutions in banking,
insurance and financial sectors, both in China and globally. For more than ten years, we have served as an IT solutions provider to a
growing network of clients in the global financial industry, including large financial institutions in the US, Europe, Australia and Hong
Kong and their PRC-based IT centers. We have created and developed a particular market niche by providing turn-key financial solution.
CLPS Incorporation was incorporated
under the laws of the Cayman Islands on May 11, 2017. Since our inception, we have aimed to build one of the largest sales and service
delivery platforms for IT services and solutions in China. The nature of our services is such that we provide a majority of services to
our banking and credit card clients in order to build new or modify existing clients’ own proprietary systems. We are fully committed
to provide digital transformation services with focus on information technology in the banking, wealth management, e-commerce, and automotive
industries, among others, through the utilization of innovative technology to achieve our client’s goals. We maintain 19 delivery
and/or R&D centers, of which 11 are located in Mainland China (Shanghai, Beijing, Dalian, Tianjin, Baoding, Xi’an, Chengdu,
Guangzhou, Shenzhen, Hangzhou, and Hainan) and eight are located globally (Hong Kong SAR, the United States, the Philippines, Japan, Singapore,
Malaysia, Australia, and India.) By combining onsite (when we send our team to our client) or onshore (when we send our team to client’s
overseas location) support and consulting with scalable and high-efficiency offsite (when we send our team to a location other than client’s
location) or offshore (when we send our team to a location that is other than a client’s location overseas) services and processing,
we are able to meet client demands in a cost-effective manner while retaining significant operational flexibility. By serving both Chinese
and global clients on a common platform, we are able to leverage the shared resources, management, industry expertise and technological
know-how to attract new business and remain cost competitive.
Corporate Information
Our principal executive office
is located at Unit 1102, 11th Floor, Millennium City III, 370 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong SAR. Our telephone number
is (851) 37073600. Our website is as follows www.clpsglobal.com. The information on our website is not part of this filing.
RISK FACTORS
An investment in our securities
involves a high degree of risk and should be considered speculative. An investment in our securities should only be undertaken by those
persons who can afford the total loss of their investment. In addition to the risk factors below, you should carefully consider the risks
and uncertainties described under “Item 3D. Risk Factors” in our Annual Report on Form 20-F for the fiscal year ended June
30, 2021, which section is incorporated by reference herein, and the other information contained in this prospectus, as updated by
our subsequent filings under the Exchange Act and the risk factors and other information contained in any applicable prospectus supplement,
before purchasing any of our securities. Additional risks and uncertainties not presently known to us or that we believe to be immaterial
may also adversely affect our business. If any of these risks actually occur, our business, financial condition, prospects, results of
operations or cash flow could be materially and adversely affected and you could lose all or a part of the value of your investment.
Changes in general economic conditions, geopolitical
conditions, U.S.-China trade relations and other factors beyond the Company’s control may adversely impact our business and operating
results.
The Company’s operations
and performance depend significantly on global and regional economic and geopolitical conditions. Changes in U.S.-China trade policies,
and a number of other economic and geopolitical factors both in China and abroad could have a material adverse effect on the Company’s
business, financial condition, results of operations or cash flows. Such factors may include, without limitation:
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instability in political or economic conditions, including but not limited to inflation, recession, foreign currency exchange restrictions and devaluations, restrictive governmental controls on the movement and repatriation of earnings and capital, and actual or anticipated military or political conflicts, particularly in emerging markets; |
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intergovernmental conflicts or actions, including but not limited to armed conflict, trade wars, retaliatory tariffs, and acts of terrorism or war; and |
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interruptions to the Company’s business with its largest customers, distributors and suppliers resulting from but not limited to, strikes, financial instabilities, computer malfunctions or cybersecurity incidents, inventory excesses, natural disasters or other disasters such as fires, floods, earthquakes, hurricanes or explosions. |
Any of the foregoing or similar
factors could result in reduced demand for our services which, in turn, could have material adverse effects on our business and results
of operations.
The Holding Foreign
Companies Accountable Act could result in delisting of our common stock from Nasdaq Capital Market and lack of a readily available market
for our common stock.
On December 18, 2020,
the Holding Foreign Companies Accountable Act ("HFCAA") became law. Among other things, the HFCAA requires the SEC to identify
public companies that have retained a registered public accounting firm to issue an audit report where that firm has a branch or office
that: (1) is located in a foreign jurisdiction, and (2) the Public Company Accounting Oversight Board (“PCAOB”) has determined
that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction. PCAOB
has identified several public accounting firms in China and Hong Kong SAR that PCAOB cannot inspect or investigate completely because
of a position taken by that foreign government. The PCAOB has oversight authority over public accounting firms that audit financial results
of companies subject to the Securities Exchange Act of 1934 (the “Exchange Act”). On December 16, 2021, PCAOB issued the HFCAA
Determination Report, which includes a list of those public accounting firms located outside the U.S. that PCAOB is unable to inspect
or investigate completely because of a position taken by an authority in the foreign jurisdiction (each a “Listed Auditor”).
Our auditor, Ernst & Yong Hua Ming LLP (the “Auditor”), for our 2021 fiscal year audit and currently our public auditor
is a Listed Auditor. Our Auditor is located in China.
The HFCAA states if the
SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection
by PCAOB for three consecutive years beginning in 2021, being a Listed Auditor, the SEC shall prohibit our shares from being traded on
a national securities exchange or in the over-the counter trading market in the U.S. Accordingly, under the current law this could happen
in 2024. On December 2, 2021, the SEC adopted final amendments to its rules implementing the HFCAA (the “Final Amendments”).
The Final Amendments include requirements to disclose information, including the auditor name and location, the percentage of shares of
the issuer owned by governmental entities, whether governmental entities in the applicable foreign jurisdiction with respect to the auditor
has a controlling financial interest with respect to the issuer, the name of each official of the Chinese Communist Party who is a member
of the board of the issuer, and whether the articles of incorporation of the issuer contains any charter of the Chinese Communist Party,
including the text of any such charter.
The SEC publishes a list
of Exchange Act reporting companies that retain a Listed Auditor that has issued an audit report for a fiscal year (each company listed
is a “Commission Identified Issuer” for purposes of HFCAA). If a Commission Identified Issuer has a Listed Auditor issue audit
reports for three consecutive fiscal years, being 2021, 2022 and 2023, then the SEC will impose an initial trading ban on the publicly
traded securities of the Commission Identified Issuer in early 2024, which trading ban can be lifted if Commission Identified Issuer retains
a public auditor that is not a Listed Auditor and that public auditor issues an audit report for a fiscal year for the Commission Identified
Issuer. The SEC’s role at this stage of the process is solely to identify issuers that have used Listed Auditors to audit their
financial statements.
Our Auditor is the independent
registered public accounting firm that issues the audit report included elsewhere in our Form 20-F and conducts the audit of our annual
financial results. As an auditor of a company that has its stock traded publicly in the United States, our Auditor is registered with
and supervised by the PCAOB and is subject to laws in the United States. Under those laws, the PCAOB conducts regular inspections or audits
to assess public accounting firms acting as auditors, including our Auditor, compliance with the applicable PCAOB rules and professional
standards. Since our Auditor is located in China, a jurisdiction where the PCAOB has been unable to conduct audits and inspections completely
without the approval of the Chinese authorities, our Auditor is not currently audited or inspected completely by the PCAOB and is consequently
a Listed Auditor.
The inability of the
PCAOB to conduct unfettered inspections of public accounting firms in Mainland China and Hong Kong SAR, including our Auditor, prevents
the PCAOB from fully evaluating audits and quality control procedures of our Auditor. This lack of full audit and inspection effectively
deprives investors in our Common Stock of the benefits of PCAOB oversight and inspections. The inability of the PCAOB to conduct inspections
of auditors in China and Hong Kong SAR makes it more difficult to evaluate the effectiveness of our Auditor’s audit procedures or
quality control procedures as compared to auditors outside of Mainland China and Hong Kong SAR that are subject to complete audit and
investigation by the PCAOB. This limitation on PCAOB audit and inspection could cause investors and potential investors in our Common
Stock to lose confidence in our audit procedures and reported financial information and the quality of our financial statements. This
lack or loss of confidence could also not only cause investors to avoid trading our Common Stock or sell positions in our Common Stock,
but could also undermine efforts of the Company to secure equity or debt financing, hinder any efforts to up-list the Common Stock to
a national securities exchange, adversely influence the decision of third parties to conduct business with our company, or have other
adverse business or financial consequences.
Under the current
version of HFCAA, an SEC ban on trading shares of Common Stock in the U.S. could take place in early 2024 if we have a Listed Auditor
(a public auditor that cannot be completely audited and investigated by the PCAOB for three consecutive fiscal years (being 2021, 2022
and 2023)). If this happens, there is no certainty that we will be able to list or otherwise trade our shares on a non-U.S. exchange or
that a market for our shares of Common Stock will develop outside of the U.S. The ban on trading of our shares in, or the threat of their
being banned from trading in, the U.S. may materially and adversely affect the value of our Shareholders’ investment.
If the Company is subject
to a trading ban in the United States, it may be unable to list its Common Stock on a non-U.S. public stock market, or even if listed
on a non-U.S. public stock market, that the Common Stock would enjoy any liquidity or investor support. As such, the Common Stock may
be difficult to establish or be unable to be established on a foreign public stock market or quotation system. The absence of a public
market for the Common Stock could render the shares of Common Stock an illiquid, potentially worthless investment.
The HFCAA or other efforts
to increase U.S. regulatory access to audit information could cause investor uncertainty for affected issuers, like our company, and the
market price of the shares could be adversely affected. Additionally, whether the PCAOB will be able to conduct inspections of our Auditor
before the issuance of our financial statements to be included in our Form 20-F for the fiscal year 2023 or at all, is subject to substantial
uncertainty and depends on factors out of our control and our Auditor’s control. If our Auditor is unable to be inspected in time,
and we do not engage a public auditor who is not a Listed Auditor prior to the 2023 annual audit, we could be delisted from the Nasdaq
Capital Market in 2024 and not eligible for trading on other tiers of the over the counter markets. A ban on trading of our Common Stock
would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated
with the ban would have a negative impact on the price of our shares of Common Stock. The ban on trading would also significantly affect
our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial
condition, and prospects. If our shares are prohibited from trading in the U.S., there is no certainty that we will be able to list on
a non-U.S. exchange or that a market for our shares will develop outside of the U.S.
While the Company intends
to engage an auditor who is audited and investigated completely by the PCAOB in prior to fiscal year 2023, the Company has not engaged
such an auditor as of the date of Form F-3. The Company, as a smaller reporting company, may experience delays or difficulties in engaging
a public auditor who can be audited and investigated completely by the PCAOB and also audit our operations, which operations are located
in Mainland China and Hong Kong SAR.
Efforts to increase
U.S. Regulatory access to information about companies in China or Hong Kong SAR in order to enhance transparency for investors in U.S.
corporations traded on U.S. stock markets but with substantial operations in China or Hong Kong SAR, like the Company, and Chinese opposition
and reaction to those U.S. efforts could foster additional measures to restrict access to U.S. capital markets by such corporations or
expedite delisting of securities of such corporations from U.S. stock markets and quotation systems. The potential enactment of the Accelerating
Holding Foreign Companies Accountable Act, if it is enacted into law in the U.S., would decrease the number of non-inspection years from
three to two years under HFCAA, thus reducing the time period before our shares of Common Stock may be banned from being traded in the
U.S. If this bill were enacted as proposed, and we have a Listed Auditor for fiscal years 2021 and 2022, our shares may be banned from
trading in the U.S. in early 2023, not early 2024.
On June 22, 2021, the
U.S. Senate passed a bill known as the Accelerating Holding Foreign Companies Accountable Act, to amend Section 104(i) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7214(i)) (“Proposed Law”) to prohibit securities of any registrant from being listed on any of the
U.S. securities exchanges or traded over-the-counter if the auditor of the registrant’s financial statements is not subject to PCAOB
investigation and inspection completely for two consecutive years, instead of three consecutive years as currently provided in the HFCAA.
On February 4, 2022,
the U.S. House of Representatives passed the America Competes Act of 2022 which includes the same amendments as the bill passed by the
Senate. The America Competes Act, however, includes a broader range of legislation not related to the HFCAA in response to the U.S. Innovation
and Competition Act passed by the Senate in 2021. The U.S. House of Representatives and U.S. Senate will need to agree on amendments to
these respective bills to align the legislation and pass their amended bills before the U.S. President can sign into law. It is unclear
when the U.S. Senate and U.S. House of Representatives will resolve the differences in the U.S. Innovation and Competition Act and the
America Competes Act of 2022 bills currently passed, or when the U.S. President will sign the bill to make the amendment into law, if
at all. In the case that the bill becomes the law, it may reduce the time period before our shares could be prohibited from trading in
the U.S. from 2024 to 2023. Company is not certain as of the date of this Form F-3 of when and if the Proposed Law will become law and
applicable to public companies like our company.
If the Company
becomes directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese/Hong Kong SAR companies,
we may have to expend significant resources to investigate and resolve the matters. Any unfavorable results from the investigations could
harm our business operations and our reputation.
In 2021 and onwards,
U.S. public companies with operations based in China have been subjects of intense scrutiny, criticism and negative publicity by investors,
financial commentators and regulatory agencies, such as the SEC and certain members of Congress. Much of the scrutiny, criticism and negative
publicity has centered on alleged financial and accounting irregularities, lack of effective internal control over financial reporting,
inadequate corporate governance and ineffective implementation thereof and, in many cases, allegations of fraud. As a result of enhanced
scrutiny, criticism and negative publicity, the publicly traded stocks of many U.S.-listed Chinese companies have decreased in value and,
in some cases, have become virtually worthless or illiquid. Shareholder lawsuits and SEC investigations and enforcement actions can be
fostered by intense, negative public focus on Chinese or Hong Kong SAR based companies. The Company does not believe that it is subject
to any of these allegations, investigations or enforcement actions as of the date of this Form F-3. If the Company becomes a subject of
any unfavorable allegations, whether such allegations are proven to be true or untrue, the Company will have to expend significant resources
to investigate such allegations and defend the Company. If such allegations were not proven to be baseless, the Company would be severely
hampered and the price of the stock of the Company could decline substantially. If such allegations were proven to be groundless, the
investigation might have significantly distracted the attention of the Company’s management. The mere commencement of an investigation
by a regulator, like the SEC, even without evidence of any misconduct or violation of laws, can undermine investor confidence in the Company
as an investment and do so even if the investigation finds no misconduct or violations of laws or regulations. Regulator investigations
can take months or longer to resolve and can require considerable resources of a company to adequately respond to such. investigations.
The recent government
regulation of business activities of U.S.-listed Chinese companies may negatively impact our operations.
Chinese regulatory authorities
issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which were available to the public on July 6, 2021, which
further emphasized their goal to strengthen the cross-border regulatory collaboration, to improve relevant laws and regulations on data
security, cross-border data transmission, and confidential information management, and 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. These opinions are issued in mid-2021, and there were no known further explanations or
detailed rules or regulations with respect to such opinions, and there are still uncertainties regarding the interpretation and implementation
of these opinions. China intends to improve regulation of cross-border data flows and security, crack down on illegal activity in the
securities market and punish fraudulent securities issuance, market manipulation and insider trading. China will also check sources of
funding for securities investment and control leverage ratios. If the Chinese government’s regulatory involvement expands and we
become subject to that expanded involvement, our operations may be negatively impacted, although, as of the date of this Form F-3, there
is no known regulatory involvement of the nature described in this paragraph and there is no discernible immediate impact on our company
under the recent regulatory developments described in this paragraph.
We face various risks
and uncertainties relating to doing business in Mainland China and Hong Kong SAR. Our business operations are primarily conducted in Mainland
China and Hong Kong SAR, and we are subject to complex and evolving Chinese and Hong Kong SAR laws and regulations. For example, we face
risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and
data privacy, as well as the lack of inspection on our Auditor by the PCAOB, which may impact our ability to conduct certain businesses,
accept foreign investments, or list and conduct offerings on a United States or other foreign exchange. These risks could result in a
material adverse change in our operations and the value of our shares of Common Stock, significantly limit or completely hinder our ability
to continue to offer securities to investors, or cause the value of our Common Stock to decline.
Uncertainties with respect to the PRC legal
system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in policies, laws and regulations
in China, could adversely affect us.
The PRC legal system is based on written statutes
and court decisions that have limited precedential value. The PRC legal system is evolving rapidly, and therefore the interpretations
and enforcement of many laws, regulations and rules may contain inconsistencies and uncertainties.
From time to time, we may have to resort to administrative
and court proceedings to enforce our legal rights. However, since PRC judicial and administrative authorities have significant discretion
in interpreting and implementing statutory and contractual terms, it may be more difficult to predict the outcome of a judicial or administrative
proceeding than in more developed legal systems. Furthermore, the PRC legal system is based, in part, on government policies and internal
rules, some of which are not published in a timely manner, or at all, but which may have retroactive effect. As a result, we may not always
be aware of any potential violation of these policies and rules. These uncertainties may impede our contractual, property and procedural
rights, which could adversely affect our business, financial condition and results of operations.
The PRC government has significant oversight and
discretion over the conduct of our business and may intervene with or influence our operations as the government deems appropriate to
further regulatory, political and societal goals. The PRC government has recently published new policies that significantly affected certain
industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations
or policies regarding our industry that could adversely affect our business, financial condition and results of operations. Furthermore,
the PRC government has also recently indicated an intent to exert more oversight and control over securities offerings and other capital
markets activities that are conducted overseas and foreign investment in China-based companies like us. Any such action, once taken by
the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and
cause the value of such securities to significantly decline or in extreme cases, become worthless.
Permissions Required from the PRC Authorities
for Our Operations
We conduct our business primarily through our
subsidiaries in China. Our operations in China are governed by PRC laws and regulations. As of the date of this Form F-3, our PRC subsidiaries
have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of
our subsidiaries in China, including, Business license, the Human Resource Services License. Given the uncertainties of interpretation
and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required
to obtain additional licenses, permits, filings or approvals for the services in the future.
Furthermore, in connection with our issuance of
securities to foreign investors, under current PRC laws, regulations and regulatory rules, as of the date of this Form F-3, we, our PRC
subsidiaries, (i) are not required to obtain permissions from the China Securities Regulatory Commission, or the CSRC, (ii) are not required
to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, and (iii) have not been asked to obtain such
permissions by any PRC authority.
However, the PRC government has recently indicated
an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers.
The filing, approval or other administrative
requirements of the CSRC or other PRC government authorities may be required to maintain our listing status or conduct future offshore
securities or debt offerings.
The PRC government authorities may strengthen
oversight over offerings that are conducted overseas and/or foreign investment in overseas-listed China-based issuers like us from time
to time. Such actions taken by the PRC government authorities may intervene our operations at any time, which are beyond our control.
For instance, the relevant PRC governments promulgated the Opinions on Strictly Cracking Down on Illegal Securities Activities, among
which, it is mentioned that the administration and supervision of overseas-listed China-based companies will be strengthened, and the
special provisions of the State Council on overseas issuance and listing of shares by such companies will be revised, clarifying the responsibilities
of domestic industry competent authorities and regulatory authorities. However, due to lack of further interpretations or applications
from the competent authorities on such opinions, there are still uncertainties regarding the interpretation and implementation of these
opinions, and any new rules or regulations promulgated in the future may impose additional requirements on us.
On December 24, 2021, the CSRC published the draft
Regulations of the State Council on the Administration of Overseas Issuance and Listing of Securities by Domestic Companies (Draft for
Comments) (the “Administrative Provisions”) and the draft Measures for the Record-Filing of Overseas Issuance and Listing
of Securities by Domestic Companies (Draft for Comments) (the “Filing Measures”) for public comments till January 23, 2022.
Pursuant to these drafts, a filing-based regulatory system will be applied to both “direct overseas offering and listing”
and “indirect overseas offering and listing” of PRC domestic companies. The “indirect overseas offering and listing”
of PRC domestic companies refers to such securities offering and listing in an overseas market made in the name of an offshore entity,
but based on the underlying equity, assets, earnings or other similar rights of a domestic company which operates its main business domestically.
If the issuer meets the following conditions, the offering and listing shall be determined as an indirect overseas offering and listing
by a domestic company: (i) the total assets, net assets, revenues or profits of the domestic operating entity or entities of the issuer
in the most recent accounting year account for more than 50% of the corresponding figure in the issuer’s audited consolidated financial
statements for the same period; (ii) most of the senior managers in charge of business operation and management of the issuer are Chinese
citizens or have domicile in China, and its main places of business are located in China or main business activities are conducted in
China. As of the date of this Form F-3, it remains uncertain when the final Administrative Provisions and Filing Measures will be adopted
and whether they will be adopted in the current draft form. If the Administrative Provisions and Filing Measures are adopted in the current
form, we may be required to file the relevant documents with the CSRC within three business days after submitting our listing application
documents to the relevant regulator in the place of intended listing, and complete the filing procedures with the CSRC in connection with
such future offshore securities offering. Failure to complete the filing under the Administrative Provisions and Filing Measures may subject
a PRC domestic company to a warning and a fine of RMB1 million to RMB10 million. In the event of a serious violation of the Administrative
Provisions, the PRC domestic company may be ordered to discontinue the related business or suspend its operations for rectification, and
its permits or business licenses may be revoked.
Furthermore, on April 2, 2022, the CSRC published
the draft Provisions on Strengthening the Confidentiality and Archives Management Related to Overseas Issuance and Listing of Securities
by Domestic Companies (Draft for Comments), or the Draft Confidentiality and Archives Management Provisions, for public comments. Pursuant
to the Draft Confidentiality and Archives Management Provisions, PRC domestic companies that seek to offer and list securities in overseas
markets shall establish confidentiality and archives system. The PRC domestic companies shall obtain approval from the competent authority
and file with the confidential administration department at the same level when providing or publicly disclosing documents and materials
related to state secrets or secrets of the governmental authorities to the relevant securities companies, securities service agencies
or the offshore regulatory authorities or providing or publicly disclosing such documents and materials through its offshore listing entity,
and shall complete corresponding procedures when providing or publicly disclosing documents and materials which may adversely influence
national security and the public interest to the relevant securities companies, securities service agencies or the offshore regulatory
authorities or providing or publicly disclosing such documents and materials through its offshore listing entity. The PRC domestic companies
shall provide written statements on the implementation on the aforementioned rules to the relevant securities companies and securities
service agencies and the PRC domestic companies shall not provide accounting files to an overseas accounting firm unless such firm comply
with the corresponding procedures. As of the date of this Form F-3, the Draft Confidentiality and Archives Management Provisions were
released for public comments only and the final version and effective date of such regulations are subject to change with substantial
uncertainty.
If the CSRC or other PRC regulatory authorities
subsequently determine that we need to obtain their approval or complete the required filing or other administrative procedures for any
future offshore securities offering or other financing activities, or if such government authorities promulgate any interpretation or
implement rules that would require us to obtain approvals from the CSRC or other regulatory authorities or complete required filing or
other administrative procedures for any future offshore securities offering or other financing activities, it is uncertain whether we
can or how long it will take us to obtain such approval or complete such filing or other administrative procedures, or obtain any waiver
of aforesaid requirements if and when procedures are established to obtain such waiver. Any failure to obtain or delay in obtaining such
approval or completing such filing or other administrative procedures for any future offshore securities offering, or a rescission of
any such approval obtained by us, could subject us to sanctions by the CSRC or other PRC regulatory agencies. In any such event, these
regulatory authorities may also impose fines and penalties on our operations in China, limit our operating privileges in China, delay
or restrict the repatriation of the proceeds from any future offshore securities offering into the PRC or take other actions that could
adversely affect our business, operating results and financial condition, as well as our ability to complete any future offshore securities
offering. The CSRC or any other PRC government authorities may also take actions requiring us, or making it advisable for us, to halt
any future offshore securities offering. Consequently, if you engage in market trading or other activities in anticipation of and prior
to settlement and delivery, you do so at the risk that such settlement and delivery may not occur. Any uncertainties or negative publicity
regarding such approval requirements could materially and adversely affect the trading price of our shares.
Our subsidiaries in China are subject to
restrictions on paying dividends and making other payments to our holding company.
CLPS Incorporation is our holding company incorporated
in the Cayman Islands. As a result of the holding company structure, it currently relies on dividend payments from our subsidiaries in
China. However, PRC regulations currently permit payment of dividends only out of accumulated profits, as determined in accordance with
PRC accounting standards and regulations. Our subsidiaries in China are also required to set aside a portion of their after-tax profits
according to PRC accounting standards and regulations to fund certain reserve funds. The PRC government also imposes controls on the conversion
of RMB into foreign currencies and the remittance of foreign currencies out of China. We may experience difficulties in completing the
administrative procedures necessary to obtain and remit foreign currency. Furthermore, if our subsidiaries in China incur debt on their
own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If our subsidiaries
in China are unable to pay dividends or make other payments to us, we may be unable to pay dividends on our shares.
Recent regulatory developments in China
may subject us to additional regulatory review and disclosure requirements, expose us to government interference, or otherwise restrict
or completely hinder our ability to offer securities and raise capitals outside China, all of which could materially and adversely affect
our business, and cause the value of our securities to significantly decline or become worthless.
In December 2021, the CAC promulgated the amended
Measures of Cybersecurity Review which require cyberspace operators with personal information of more than one million users to file for
cybersecurity review with the CRO, in the event such operators plan for an overseas listing. The amended Measures of Cybersecurity Review
provide that, among others, an application for cybersecurity review must be made by an issuer that is a “network platform operator”
as defined therein before such issuer’s securities become listed in a foreign country, if the issuer possesses personal information
of more than one million users, and that the relevant governmental authorities in the PRC may initiate cybersecurity review if such governmental
authorities determine an operator’s cyber products or services or data processing activities affect or may affect China’s
national security. The amended Measures of Cybersecurity Review took effect on February 15, 2022.
Under the current PRC cybersecurity laws in China,
critical information infrastructure operators that intend to purchase internet products and services that may affect national security
must be subject to the cybersecurity review. On July 30, 2021, the State Council of the PRC promulgated the Regulations on the Protection
of the Security of Critical Information Infrastructure, which took effect on September 1, 2021. The regulations require, among others,
that certain competent authorities shall identify critical information infrastructures. If any critical information infrastructure is
identified, they shall promptly notify the relevant operators and the Ministry of Public Security.
Currently, the cybersecurity laws and regulations
have not directly affected our business and operations, As the amended Measures of Cybersecurity Review took effect in February 2022,
we may be subject to review when conducting data processing activities, and may face challenges in addressing its requirements and make
necessary changes to our internal policies and practices in data processing. As of the date of this Form F-3, we have not been involved
in any investigations on cybersecurity review made by the CAC on such basis, and we have not received any inquiry, notice, warning, or
sanctions in such respect. Based on the foregoing, we and our PRC legal counsel do not expect that, as of the date of this Form F-3, the
current applicable PRC laws on cybersecurity would have a material adverse impact on our business.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus, including
the documents incorporated by reference herein, contains information that may be forward-looking statements within the meaning of applicable
securities laws. All statements other than statements of historical fact are “forward-looking statements” including any projections
of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations,
any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance,
any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying
any of the foregoing. Words such as “may”, “will”, “should”, “could”, “would”,
“predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”,
“intends”, “plans”, “believes”, “estimates” and similar expressions, as well as statements
in the future tense, identify forward-looking statements.
These statements are necessarily
subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance
or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied
by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including
with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy
and completeness of the publicly available information with respect to the factors upon which our business strategy is based on the success
of our business.
Forward-looking statements
should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the
times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time
those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties
that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
Key Information
Cash Flows through Our Organization
CLPS Incorporation is a holding company with no
operations of its own. We conduct our operations in mainland China primarily through our subsidiaries in China. As a result, although
other means are available for us to obtain financing at the holding company level, CLPS Incorporation’s ability to pay dividends
to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries. If any of our subsidiaries
incurs debt on its own behalf, the instruments governing such debt may restrict its ability to pay dividends to CLPS Incorporation. In
addition, our PRC subsidiaries are permitted to pay dividends to CLPS Incorporation only out of their retained earnings, if any, as determined
in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries are required to make appropriations to certain
statutory reserve funds. Under PRC law, CLPS Incorporation may provide funding to our PRC subsidiaries only through capital contributions
or loans, subject to satisfaction of applicable government registration and approval requirements. For the years ended June 30, 2019,
2020 and 2021, CLPS Incorporation provided no loans to its PRC subsidiaries. For the years ended June 30, 2019, 2020 and 2021, the PRC
subsidiaries of CLPS Incorporation provided no loans to CLPS Incorporation. CLPS Incorporation has not declared or paid any cash dividends
to pay any cash dividends on its ordinary shares. For the years ended June 30, 2019, 2020 and 2021, cash and cash equivalents of PRC companies
were RMB12.99 million (US$1.89 million), 77.91 million (US$11.03 million), 62.66 million (US$9.71 million).
EXCHANGE RATE INFORMATION
Our business is conducted in
China and majority of our revenues is denominated in RMB. Capital accounts of our financial statements are translated into U.S. dollars
from RMB at their historical exchange rates when the capital transactions occurred. RMB is not freely convertible into foreign currency
and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts
could have been, or could be, converted into U.S. dollars at the rates used in translation.
The following table sets forth
information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. On August 12, 2022, the buying rate
announced by the Federal Reserve Statistical Release was RMB 6.7425 to $1.00.
| |
Spot Exchange Rate | |
| |
Period Ended | | |
Average (1) | | |
Low | | |
High | |
Period | |
(RMB per US$1.00) | |
2019 | |
| 6.9618 | | |
| 6.9081 | | |
| 7.1786 | | |
| 6.6822 | |
2020 | |
| 6.5250 | | |
| 6.9043 | | |
| 7.1681 | | |
| 6.5208 | |
2021 | |
| 6.3726 | | |
| 6.4382 | | |
| 6.3640 | | |
| 6.5518 | |
2022 | |
| | | |
| | | |
| | | |
| | |
April | |
| 6.6080 | | |
| 6.4310 | | |
| 6.3590 | | |
| 6.6243 | |
May | |
| 6.6715 | | |
| 6.6990 | | |
| 6.6079 | | |
| 6.7880 | |
June | |
| 6.6981 | | |
| 6.6952 | | |
| 6.6534 | | |
| 6.7530 | |
July | |
| 6.7433 | | |
| 6.7352 | | |
| 6.6945 | | |
| 6.7655 | |
Source: https://www.federalreserve.gov/releases/h10/hist/default.htm.
| (1) | Annual averages, lows, and highs
are calculated from month-end rates. Monthly averages, lows, and highs are calculated using the average of the daily rates during the
relevant period. |
USE OF PROCEEDS
Unless otherwise indicated
in a prospectus supplement, the net proceeds that we receive from the sale of the securities offered by this prospectus will be used by
us for working capital and general corporate purposes. We have not allocated any portion of the net proceeds for any particular use as
of the date of this prospectus. The net proceeds may be invested temporarily until they are used for their stated purpose. Specific information
concerning the use of proceeds from the sale of any securities will be included in the prospectus supplement relating to such securities.
PRICE RANGE OF COMMON SHARES AND TRADING MARKETS
Since May 24, 2018, our shares
have been listed on the NASDAQ under the ticker symbol CLPS. The following tables set forth, for the periods indicated, the high and low
market prices of our shares as reported on the NASDAQ.
| |
NASDAQ | |
Fiscal year ended | |
High US$ | | |
Low US$ | |
June 30, 2021 | |
| 10.84 | | |
| 2.15 | |
| |
NASDAQ | |
Period | |
High US$ | | |
Low US$ | |
1st Quarter ended September 30, 2021 | |
| 4.26 | | |
| 2.73 | |
2nd Quarter ended December 31, 2021 | |
| 3.22 | | |
| 1.96 | |
3rd Quarter ended March 31, 2022 | |
| 2.37 | | |
| 1.67 | |
4th Quarter ended June 30, 2022 | |
| 2.20 | | |
| 1.53 | |
The holders of common shares
are entitled to vote at all meetings of our shareholders. The holders of common shares are entitled to receive dividends as and when declared
by the board, if any.
DESCRIPTION OF COMMON SHARES
Overview
We are a Cayman Islands company
and our affairs are governed by our Memorandum and Articles of Association and Companies Act (Revised) of the Cayman Islands, which we
refer to as the Companies Act below. As of the date hereof, our authorized share capital consists of 100,000,000 common shares with a
par value of US$0.0001 per share. As of August 17, 2022, there were 22,446,822 shares issued and outstanding. The following summary description
sets forth some of the general terms and provisions of our common shares. Because this is a summary description, it does not contain all
of the information that may be important to you. For a more detailed description of our common shares, you should refer to our Memorandum
and Articles of Association in effect at the time of any offering.
The authorized and unissued common shares are available for issuance
without further action by our shareholders, unless such action is required by applicable law or the rules of the Nasdaq Global Market,
or any stock exchange on which our securities may be listed at such time. Unless approval of our shareholders is so required, our board
of directors will not seek shareholders' approval for the issuance and sale of our common shares.
Common Shares
General. All
of our outstanding common shares are fully paid and non-assessable. Certificates representing the common shares are issued in registered
form. Our shareholders, whether or not they are non-residents of the Cayman Islands, may freely hold and transfer their common shares
in accordance with the Memorandum and Articles of Association.
Dividends. The
holders of our common shares are entitled to such dividends as may be declared by our board of directors. Our articles of association
provide that our board of directors may declare and pay dividends if justified by our financial position and permitted by law.
Voting Rights. In
respect of all matters subject to a shareholders’ vote, each common share is entitled to one vote. Voting at any meeting of shareholders
is by show of hands unless voting by way of a poll is required by the rules of any stock exchange on which our shares are listed for trading,
or a poll is demanded by the chairman of such meeting or one or more shareholders holding not less than 10% of the total voting rights
of all shareholders having the right to vote at the meeting. A quorum required for a meeting of shareholders consists of one shareholder
who holds at least one-third of our issued voting shares. Shareholders’ meetings may be held annually. Each general meeting, other
than an annual general meeting, shall be an extraordinary general meeting. Extraordinary general meetings may be called by a majority
of our board of directors or upon a requisition of shareholders holding at the date of deposit of the requisition not less than 40% of
the aggregate share capital of our company that carries the right to vote at a general meeting, in which case an advance notice of at
least 120 clear days is required for the convening of our annual general meeting and other general meetings by requisition of the shareholders.
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching
to the common shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes
attaching to the common shares cast at a meeting. A special resolution will be required for important matters such as a change of name
or making changes to our memorandum and articles of association.
Transfer of Common Shares. Subject
to the restrictions set out below, any of our shareholders may transfer all or any of his or her common shares by an instrument of transfer
in the usual or common form or any other form approved by our board of directors. Our board of directors may, in its absolute discretion,
decline to register any transfer of any common share irrespective of whether the shares is fully paid or the Company has no lien over
it. If our board of directors refuses to register a transfer, it shall, within two months after the date on which the transfer was lodged,
send to each of the transferor and the transferee notice of such refusal. Upon completion of this offering, we intend to waive our right
to refuse transfers of any common shares. The registration of transfers may, after compliance with any notice required of the stock exchange
on which our shares are listed, be suspended at such times and for such periods as our board of directors may determine, provided, however,
that the registration of transfers shall not be suspended for more than 30 days in any year as our board of directors may determine.
Calls on Common Shares
and Forfeiture of Common Shares. Our board of directors may from time to time make calls upon shareholders for any amounts
unpaid on their common shares in a notice served to such shareholders at least 14 clear days prior to the specified time of payment. The
common shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption of Common
Shares. The Companies Act and our memorandum of association permit us to purchase our own shares. In accordance with our
articles of association and provided the necessary shareholders or board approval have been obtained, we may issue shares on terms that
are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner, provided the
requirements under the Companies Act have been satisfied, including out of capital, as may be determined by our board of directors.
Inspection of Books and
Records. Holders of our common shares have no general right under our articles of association to inspect or obtain copies
of our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements.
See “Where You Can Find Additional Information.”
Issuance of Additional
Shares. Our memorandum of association authorizes our board of directors to issue additional common shares from time to time
as our board of directors shall determine, to the extent of available authorized but unissued shares. Our memorandum and articles of association
also authorizes our board of directors to establish from time to time one or more series of shares and to determine, with respect to any
series of shares, the terms and rights of that series, including:
|
● |
the designation of the series to be issued; |
|
|
|
|
● |
the dividend rights, dividend rates, conversion rights, voting rights; and |
|
|
|
|
● |
the rights and terms of redemption and liquidation preferences. |
Our board of directors may
issue these shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting
power of holders of common shares.
Anti-Takeover Provisions. Some
provisions of our memorandum and articles of association may discourage, delay or prevent a change of control of our company or management
that shareholders may consider favorable, including provisions that authorize our board of directors to issue shares in one or more series
and to designate the price, rights, preferences, privileges and restrictions of such shares without any further vote or action by our
shareholders, to the extent authorized but unissued.
Articles of Association – Exclusive Forum
Provision
Our Articles of Association
provides that the courts of the Cayman Islands shall be the sole and exclusive forum for (i) any derivative action or proceeding brought
on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer of the Company
to the Company or the Company’s shareholders, (iii) any action asserting a claim against the Company arising pursuant to any provision
of the Companies Act, the Memorandum of Association of the Company or the Articles of Association of the Company, and (iv) any action
asserting a claim against the Company in respect of shareholders’ rights as shareholders or distributions of dividends. This choice
of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with
us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees.
Alternatively, a court, including a Cayman Islands court, could find these provisions of our Articles of Association to be inapplicable
or unenforceable in respect of one or more of the specified types of actions or proceedings, which may require us to incur additional
costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
Differences in Corporate Law
The Companies Act is modeled
after the corporate legislation of the United Kingdom but does not follow recent United Kingdom statutory enactments. In addition, the
Companies Act differs from laws applicable to United States corporations and their shareholders. Set forth below is a summary of some
of the significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated
in the United States (particularly Delaware) and their shareholders.
Mergers and Similar Arrangements. The
Companies Act provides for the merger or consolidation of two or more companies into a single entity. The legislation makes a distinction
between a “consolidation” and a “merger.” In a consolidation, a new entity is formed from the combination of each
participating company, and the separate consolidating parties, as a consequence, cease to exist and are each stricken by the Registrar
of Companies. In a merger, one company remains as the surviving entity, having in effect absorbed the other merging parties that are then
stricken and cease to exist.
Two or more Cayman-registered
companies may merge or consolidate. Cayman-registered companies may also merge or consolidate with foreign companies provided that the
laws of the foreign jurisdiction permit such merger or consolidation.
Under the Companies Act, a
plan of merger or consolidation shall be authorized by each constituent company by way of (i) a special resolution of the members of each
such constituent company; and (ii) such other authorization, if any, as may be specified in such constituent company’s memorandum
and articles of association.
A merger between a Cayman parent
company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary
if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For
this purpose a subsidiary is a company of which at least ninety percent (90%) of the votes are owned by the parent company.
The consent of each holder
of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman
Islands.
Save in certain circumstances,
a dissentient shareholder of a Cayman constituent company is entitled to payment of the fair value of his shares upon dissenting to a
merger or consolidation. The exercise of appraisal rights will preclude the exercise of any other rights save for the right to seek relief
on the grounds that the merger or consolidation is void or unlawful.
In addition, there are statutory
provisions that facilitate the reconstruction and amalgamation of companies, provided that the arrangement is approved by a majority in
number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent seventy-five
percent (75%) in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person
or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must
be sanctioned by the Grand Court of the Cayman Islands.
While a dissenting shareholder
has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the
arrangement if it determines that:
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the statutory provisions as to the required majority vote have been met; |
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the shareholders have been fairly represented at the meeting in question; |
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the arrangement is such that an intelligent and honest man of that class acting in respect of his interest ; and |
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the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act or that would amount to a "fraud on the minority". |
When a take-over offer is made
and accepted by holders of not less than 90% of the shares within four months, the offer, or may, within a two-month period commencing
on the expiration of such four months period, require the holders of the remaining shares to transfer such shares on the terms of the
offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which
has been so approved unless there is evidence of fraud, bad faith or collusion.
If the arrangement and reconstruction
is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be
available to dissenting shareholders of United States corporations, providing rights to receive payment in cash for the judicially determined
value of the shares.
Shareholders’ Suits. In
principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company and as a general rule a derivative action
may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority
in the Cayman Islands, there are exceptions to the foregoing principle, including when:
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a company acts or proposes to act illegally or ultra vires; |
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the act complained of, although not ultra vires, could only be duly effected if authorized by more than a simple majority vote that has not been obtained; and |
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those who control the company are perpetrating a “fraud on the minority.” |
Indemnification of Directors
and Executive Officers and Limitation of Liability. The Companies Act does not limit the extent to which a company’s
memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision
may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the
consequences of committing a crime, or against the indemnified person's own fraud or dishonesty. Our memorandum and articles of association
permit indemnification of current and former officers and directors for all actions, proceedings, costs, charges, expenses, losses, damages
or liabilities incurred or sustained in their capacities as such unless such losses or damages arise from dishonesty of such directors
or officers’ willful default of fraud. This standard of conduct is generally the same as permitted under the Delaware General Corporation
Law for a Delaware corporation. Insofar as indemnification of each current and former officer for liabilities arising under the Securities
Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in
the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors’ Fiduciary
Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its
shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in
good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must
inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The
duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must
not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best
interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder
and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in
good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may
be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director,
the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation. As
a matter of Cayman Islands law, directors of Cayman Islands companies owe fiduciary duties to their respective companies to, amongst other
things, act in good faith in their dealings with or on behalf of the company and exercise their powers and fulfill the duties of their
office honestly. Core duties are: a duty to act in good faith in what the directors bona fide consider to be the best interests of the
company (and in this regard, it should be noted that the duty is owed to the company and not to associate companies, subsidiaries or holding
companies); a duty not to personally profit from opportunities that arise from the office of director; a duty of trusteeship of the company’s
assets, a duty not to put himself or herself in a position where the interests of the company conflict with his or her personal interest
or his or her duty to a third party, and a duty to exercise powers for the purpose for which such powers were conferred. A director of
a Cayman Islands company also owes to the company a duty to act with skill, care and diligence. A director need not exhibit in the performance
of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge and experience.
Shareholder Action by
Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act
by written consent by amendment to its certificate of incorporation. Cayman Islands law and our articles of association provide that shareholders
may approve corporate matters by way of a unanimous written resolution signed by or on behalf of each shareholder who would have been
entitled to vote on such matter at a general meeting without a meeting being held.
Shareholder Proposals. Under
the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided
it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other
person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings. The Companies
Act provides shareholders with only limited rights to requisition a general meeting and does not provide shareholders with any right to
bring business before a general meeting or requisition a general meeting. However, these rights may be provided in articles of association.
Our articles of association allow our shareholders holding not less than 40% of all voting power of our share capital in issue to requisition
a shareholder’s meeting. Other than this right to requisition a shareholders’ meeting, our articles of association do not
provide our shareholders other right to put proposal before a meeting. As an exempted Cayman Islands company, we are not obliged by law
to call shareholders’ annual general meetings.
Cumulative Voting. Under
the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate
of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on
a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single
director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation
to cumulative voting under the Companies Act but our articles of association do not provide for cumulative voting.
Removal of Directors. Under
the Delaware General Corporation Law, a director of a corporation with a may be removed with the approval of a majority of the outstanding
shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our articles of association, directors may
be removed, by an ordinary resolution of our shareholders.
Transactions with Interested
Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations
whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation,
it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following
the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns
or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability
of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does
not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors
approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages
any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of
directors. The Companies Act has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by
the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its
significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and
for a proper corporate purpose and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding
up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution
must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the
board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware
corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated
by the board. Under the Companies Act, a company may be wound up by either an order of the courts of the Cayman Islands or by a special
resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The
court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just
and equitable to do so. Under the Companies Act and our articles of association, our company may be dissolved, liquidated or wound up
by a special resolution of our shareholders.
Variation of Rights of
Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval
of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under the Companies
Act and our articles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached
to any class with the written consent of the holders of two-thirds of the issued shares of that class or with the sanction of a special
resolution passed at a separate general meeting of the holders of the shares of that class.
Amendment of Governing
Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the
approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted
by the Companies Act, our memorandum and articles of association may only be amended with a special resolution of our shareholders.
Rights of Non-resident
or Foreign Shareholders. There are no limitations imposed by our memorandum and articles of association on the rights of
non-resident or foreign shareholders to hold or exercise voting rights on our shar.es. In addition, there are no provisions in our memorandum
and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.
DESCRIPTION OF PREFERRED SHARES
The following description of
preferred shares and the description of the terms of any particular series of preferred shares that we choose to issue hereunder and that
will be set forth in the related prospectus supplement are not complete. These descriptions are qualified in their entirety by reference
to the certificate of designation relating to that series. The rights, preferences, privileges and restrictions of the preferred shares
of each series will be fixed by the certificate of designation relating to that series.
The authorized share capital
of the Company is currently US$10,000 divided into 100,000,000 shares of US$0.0001 par value each of a single class. Accordingly, the
Company will need to obtain shareholders' approval to create a new class of preferred shares and to amend its memorandum and articles
of association to provide for the rights of the preferred shares prior to its issuance. Subject to the Company having duly authorized
the creation of the new class of preferred shares,
The board of directors will
have the authority, subject to limitations prescribed by law and the then effective memorandum and articles of association, to provide
for the issuance of the preferred shares in one or more series, to establish from time to time the number of shares to be included in
each such series, and to fix the designation, powers, preferences and rights of the shares of each series and the qualifications, limitations
or restrictions, including, but not limited to, the following:
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the number of shares constituting that series; |
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dividend rights and rates; |
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rights and terms of redemption (including sinking fund provisions); and |
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rights of the series in the event of liquidation, dissolution or winding up. |
All preferred shares offered
hereby (after the same have been duly created and authorized for issuance) will, when issued, be fully paid and nonassessable and will
not have any preemptive or similar rights. Subject to the Company having duly authorized the creation of the new class of preferred
shares and the rights of the preferred shares set out in the memorandum and article of association, our board of directors could authorize
the issuance of preferred shares with terms and conditions that could have the effect of discouraging a takeover or other transaction
that might involve a premium price for holders of the shares or which holders might believe to be in their best interests.
We will set forth in a prospectus supplement relating
to the series of preferred shares being offered the following items:
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the title and stated value of the preferred shares; |
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the number of preferred shares offered, the liquidation preference per share and the offering price of the preferred shares; |
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the dividend rate(s), period(s) and/or payment date(s) or method(s) of calculation applicable to the preferred shares; |
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whether dividends are cumulative or non-cumulative and, if cumulative, the date from which dividends on the preferred shares will accumulate; |
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the procedures for any auction and remarketing, if any, for the preferred shares; |
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the provisions for a sinking fund, if any, for the preferred shares; |
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the provision for redemption, if applicable, of the preferred shares; |
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any listing of the preferred shares on any securities exchange; |
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the terms and conditions, if applicable, upon which the preferred shares will be convertible into common shares, including the conversion price (or manner of calculation) and conversion period; |
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voting rights, if any, of the preferred shares; |
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a discussion of any material and/or special United States federal income tax considerations applicable to the preferred shares; |
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the relative ranking and preferences of the preferred shares as to dividend rights and rights upon the liquidation, dissolution or winding up of our affairs; |
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any limitations on issuance of any class or series of preferred shares ranking senior to or on a parity with the class or series of preferred shares as to dividend rights and rights upon liquidation, dissolution or winding up of our affairs; and |
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any other specific terms, preferences, rights, limitations or restrictions of the preferred shares. |
The transfer agent and registrar
for any series of preferred shares will be set forth in the applicable prospectus supplement.
DESCRIPTION OF WARRANTS
We may issue warrants for
the purchase of common shares. Warrants may be offered separately or together with other securities offered by this prospectus, as the
case may be. Unless the applicable prospectus supplement otherwise indicates, each series of warrants will be issued under a separate
warrant agreement to be entered into between us and one or more banks or trust companies acting as warrant agent. The applicable prospectus
supplement will include details of the warrant agreements covering the warrants being offered. The warrant agent will act solely as our
agent and will not assume a relationship of agency with any holders of warrant certificates or beneficial owners of warrants.
The following sets forth certain
general terms and provisions of the warrants offered under this prospectus. The specific terms of the warrants, and the extent to which
the general terms described in this section apply to those warrants, will be set forth in the applicable prospectus supplement. The terms
of any warrants offered under a prospectus supplement may differ from the terms described below.
The particular terms of each
issue of warrants will be described in the related prospectus supplement. This description will include some or all of the following:
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the designation and aggregate number of warrants; |
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the price at which the warrants will be offered; |
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the currency or currencies in which the warrants will be offered; |
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the designation and terms of our common shares purchasable upon exercise of the warrants; |
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the date on which the right to exercise the warrants will commence and the date on which the right will expire; |
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the number of common shares that may be purchased upon exercise of each warrant and the price at which and currency or currencies in which our common shares may be purchased upon exercise of each warrant; |
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the designation and terms of any securities with which the warrants will be offered, if any, and the number of the warrants that will be offered with each security; |
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the date or dates, if any, on or after which the warrants and the related securities will be transferable separately; |
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if applicable, whether the warrants will be subject to redemption or call and, if so, the terms of such redemption or call provisions; |
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material United States tax consequences of owning the warrants; and |
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any other material terms or conditions of the warrants. |
Each warrant will entitle
the holder to purchase common shares, as specified in the applicable prospectus supplement at the exercise price that we describe therein.
Unless we otherwise specify in the applicable prospectus supplement, holders of the warrants may exercise the warrants at any time up
to the specified time on the expiration date that we set forth in the applicable prospectus supplement. After the close of business on
the expiration date, unexercised warrants will become void.
DESCRIPTION OF DEBT SECURITIES
This description is a summary
of the material provisions of the debt securities and the related indenture. We urge you to read the form of indenture filed as an exhibit
to the registration statement of which this prospectus is a part because the indenture, and not this description, governs your rights
as a holder of debt securities. References in this prospectus to an “indenture” refer to the particular indenture under which
we may issue a series of debt securities.
General
The terms of each series of
debt securities will be established by or pursuant to a resolution of our board of directors and set forth or determined in the manner
provided in an officers’ certificate or by a supplemental indenture. Debt securities may be issued in separate series without limitation
as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt securities of any series. The particular
terms of each series of debt securities will be described in a prospectus supplement relating to such series, including any pricing supplement.
The prospectus supplement will set forth specific terms relating to some or all of the following:
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any limit on the aggregate principal amount; |
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the person who shall be entitled to receive interest, if other than the record holder on the record date; |
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the date the principal will be payable; |
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the interest rate, if any, the date interest will accrue, the interest payment dates and the regular record dates; |
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the place where payments may be made; |
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any mandatory or optional redemption provisions; |
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if applicable, the method for determining how the principal, premium, if any, or interest will be calculated by reference to an index or formula; |
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if other than U.S. currency, the currency or currency units in which principal, premium, if any, or interest will be payable and whether we or the holder may elect payment to be made in a different currency; |
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the portion of the principal amount that will be payable upon acceleration of stated maturity, if other than the entire principal amount; |
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any defeasance provisions if different from those described below under “Satisfaction and Discharge; Defeasance”; |
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any conversion or exchange provisions; |
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any obligation to redeem or purchase the debt securities pursuant to a sinking fund; |
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whether the debt securities will be issuable in the form of a global security; |
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any subordination provisions, if different from those described below under “Subordination”; |
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any deletions of, or changes or additions to, the events of default or covenants; and |
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any other specific terms of such debt securities. |
Unless otherwise specified
in the prospectus supplement, the debt securities will be registered debt securities. Debt securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate which at the time of issuance is below market rates.
Exchange and Transfer
Debt securities may be transferred
or exchanged at the office of the security registrar or at the office of any transfer agent designated by us.
We will not impose a service
charge for any transfer or exchange, but we may require holders to pay any tax or other governmental charges associated with any transfer
or exchange.
In the event of any potential
redemption of debt securities of any series, we will not be required to:
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issue, register the transfer of, or exchange, any debt security of that series during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption and ending at the close of business on the day of the mailing; or |
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register the transfer of or exchange any debt security of that series selected for redemption, in whole or in part, except the unredeemed portion being redeemed in part. |
We may initially appoint the
trustee as the security registrar. Any transfer agent, in addition to the security registrar, initially designated by us will be named
in the prospectus supplement. We may designate additional transfer agents or change transfer agents or change the office of the transfer
agent. However, we will be required to maintain a transfer agent in each place of payment for the debt securities of each series.
Global Securities
The debt securities of any
series may be represented, in whole or in part, by one or more global securities. Each global security will:
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be registered in the name of a depositary that we will identify in a prospectus supplement; |
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be deposited with the depositary or nominee or custodian; and |
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bear any required legends. |
No global security may be
exchanged in whole or in part for debt securities registered in the name of any person other than the depositary or any nominee unless:
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the depositary has notified us that it is unwilling or unable to continue as depositary or has ceased to be qualified to act as depositary; |
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an event of default is continuing; or |
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the Company executes and delivers to the trustee an officers’ certificate stating that the global security is exchangeable. |
As long as the depositary,
or its nominee, is the registered owner of a global security, the depositary or nominee will be considered the sole owner and holder of
the debt securities represented by the global security for all purposes under the indenture. Except in the above limited circumstances,
owners of beneficial interests in a global security:
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will not be entitled to have the debt securities registered in their names; |
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will not be entitled to physical delivery of certificated debt securities; and |
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will not be considered to be holders of those debt securities under the indentures. |
Payments on a global security
will be made to the depositary or its nominee as the holder of the global security. Some jurisdictions have laws that require that certain
purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the ability to transfer beneficial
interests in a global security.
Institutions that have accounts
with the depositary or its nominee are referred to as “participants.” Ownership of beneficial interests in a global security
will be limited to participants and to persons that may hold beneficial interests through participants. The depositary will credit, on
its book-entry registration and transfer system, the respective principal amounts of debt securities represented by the global security
to the accounts of its participants.
Ownership of beneficial interests
in a global security will be shown on and effected through records maintained by the depositary, with respect to participants’ interests,
or any participant, with respect to interests of persons held by participants on their behalf.
Payments, transfers and exchanges
relating to beneficial interests in a global security will be subject to policies and procedures of the depositary.
The depositary policies and
procedures may change from time to time. Neither we nor the trustee will have any responsibility or liability for the depositary’s
or any participant’s records with respect to beneficial interests in a global security.
Payment and Paying Agent
The provisions of this paragraph
will apply to the debt securities unless otherwise indicated in the prospectus supplement. Payment of interest on a debt security on any
interest payment date will be made to the person in whose name the debt security is registered at the close of business on the regular
record date. Payment on debt securities of a particular series will be payable at the office of a paying agent or paying agents designated
by us. However, at our option, we may pay interest by mailing a check to the record holder. The corporate trust office will be designated
as our sole paying agent.
We may also name any other
paying agents in the prospectus supplement. We may designate additional paying agents, change paying agents or change the office of any
paying agent. However, we will be required to maintain a paying agent in each place of payment for the debt securities of a particular
series.
All moneys paid by us to a
paying agent for payment on any debt security which remain unclaimed at the end of two years after such payment was due will be repaid
to us. Thereafter, the holder may look only to us for such payment.
Consolidation, Merger and Sale of Assets
Except as otherwise set forth
in the prospectus supplement, we may not consolidate with or merge into any other person, in a transaction in which we are not the surviving
corporation, or convey, transfer or lease our properties and assets substantially as an entirety to, any person, unless:
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the successor, if any, is a U.S. corporation, limited liability company, partnership, trust or other entity; |
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the successor assumes our obligations on the debt securities and under the indenture; |
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immediately after giving effect to the transaction, no default or event of default shall have occurred and be continuing; and |
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certain other conditions are met. |
Events of Default
Unless we inform you otherwise
in the prospectus supplement, the indenture will define an event of default with respect to any series of debt securities as one or more
of the following events:
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(1) |
failure to pay principal of or any premium on any debt security of that series when due; |
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(2) |
failure to pay any interest on any debt security of that series for 30 days when due; |
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(3) |
failure to deposit any sinking fund payment when due; |
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(4) |
failure to perform any other covenant in the indenture continued for 90 days after being given the notice required in the indenture; |
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(5) |
our bankruptcy, insolvency or reorganization; and |
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(6) |
any other event of default specified in the prospectus supplement. |
An event of default of one
series of debt securities is not necessarily an event of default for any other series of debt securities.
If an event of default, other
than an event of default described in clause (5) above, shall occur and be continuing, either the trustee or the holders of at least 25%
in aggregate principal amount of the outstanding securities of that series may declare the principal amount of the debt securities of
that series to be due and payable immediately.
If an event of default described
in clause (5) above shall occur, the principal amount of all the debt securities of that series will automatically become immediately
due and payable. Any payment by us on subordinated debt securities following any such acceleration will be subject to the subordination
provisions described below under “Subordinated Debt Securities.”
After acceleration the holders
of a majority in aggregate principal amount of the outstanding securities of that series may, under certain circumstances, rescind and
annul such acceleration if all events of default, other than the non-payment of accelerated principal, or other specified amount, have
been cured or waived.
Other than the duty to act
with the required care during an event of default, the trustee will not be obligated to exercise any of its rights or powers at the request
of the holders unless the holders shall have offered to the trustee reasonable indemnity. Generally, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee.
A holder will not have any
right to institute any proceeding under the indentures, or for the appointment of a receiver or a trustee, or for any other remedy under
the indentures, unless:
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(1) |
the holder has previously given to the trustee written notice of a continuing event of default with respect to the debt securities of that series; |
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(2) |
the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made a written request and have offered reasonable indemnity to the trustee to institute the proceeding; and |
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(3) |
the trustee has failed to institute the proceeding and has not received direction inconsistent with the original request from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series within 90 days after the original request. |
Holders may, however, sue
to enforce the payment of principal or interest on any debt security on or after the due date without following the procedures listed
in (1) through (3) above.
Modification and Waiver
Except as provided in the
next two succeeding paragraphs, the applicable trustee and we may make modifications and amendments to the indentures (including, without
limitation, through consents obtained in connection with a tender offer or exchange offer for, outstanding securities) and may waive any
existing default or event of default (including, without limitation, through consents obtained in connection with a tender offer or exchange
offer for, outstanding securities) with the consent of the holders of a majority in aggregate principal amount of the outstanding securities
of each series affected by the modification or amendment.
However, neither we nor the
trustee may make any amendment or waiver without the consent of the holder of each outstanding security of that series affected by the
amendment or waiver if such amendment or waiver would, among other things:
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change the amount of securities whose holders must consent to an amendment, supplement or waiver; |
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change the stated maturity of any debt security; |
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reduce the principal on any debt security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund; |
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reduce the principal of an original issue discount security on acceleration of maturity; |
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reduce the rate of interest or extend the time for payment of interest on any debt security; |
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make a principal or interest payment on any debt security in any currency other than that stated in the debt security; |
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impair the right to enforce any payment after the stated maturity or redemption date; |
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waive any default or event of default in payment of the principal of, premium or interest on any debt security (except certain rescissions of acceleration); or |
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waive a redemption payment or modify any of the redemption provisions of any debt security; |
Notwithstanding the preceding,
without the consent of any holder of outstanding securities, we and the trustee may amend or supplement the indentures:
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to provide for the issuance of and establish the form and terms and conditions of debt securities of any series as permitted by the indenture; |
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to provide for uncertificated securities in addition to or in place of certificated securities; |
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to provide for the assumption of our obligations to holders of any debt security in the case of a merger, consolidation, transfer or sale of all or substantially all of our assets; |
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to make any change that does not adversely affect the legal rights under the indenture of any such holder; |
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to comply with requirements of the Commission in order to effect or maintain the qualification of an indenture under the Trust Indenture Act; or |
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to evidence and provide for the acceptance of appointment by a successor trustee with respect to the debt securities of one or more series and to add to or change any of the provisions of the indenture as shall be necessary to provide for or facilitate the administration of the trusts by more than one Trustee. |
The consent of holders is
not necessary under the indentures to approve the particular form of any proposed amendment. It is sufficient if such consent approves
the substance of the proposed amendment.
Satisfaction and Discharge; Defeasance
We may be discharged from
our obligations on the debt securities of any series that have matured or will mature or be redeemed within one year if we deposit with
the trustee enough cash to pay all the principal, interest and any premium due to the stated maturity date or redemption date of the debt
securities.
Each indenture contains a
provision that permits us to elect:
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to be discharged from all of our obligations, subject to limited exceptions, with respect to any series of debt securities then outstanding; and/or |
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to be released from our obligations under the following covenants and from the consequences of an event of default resulting from a breach of certain covenants, including covenants as to payment of taxes and maintenance of corporate existence. |
To make either of the above
elections, we must deposit in trust with the trustee enough money to pay in full the principal and interest on the debt securities. This
amount may be made in cash and/or U.S. government obligations. As a condition to either of the above elections, we must deliver to the
trustee an opinion of counsel that the holders of the debt securities will not recognize income, gain or loss for federal income tax purposes
as a result of the action.
If any of the above events
occurs, the holders of the debt securities of the series will not be entitled to the benefits of the indenture, except for the rights
of holders to receive payments on debt securities or the registration of transfer and exchange of debt securities and replacement of lost,
stolen or mutilated debt securities.
Notices
Notices to holders will be
given by mail to the addresses of the holders in the security register.
Governing Law
The indentures and the debt
securities will be governed by, and construed under, the law of the State of New York.
Regarding the Trustee
The indenture limits the right
of the trustee, should it become a creditor of us, to obtain payment of claims or secure its claims.
The trustee is permitted to
engage in certain other transactions. However, if the trustee acquires any conflicting interest, and there is a default under the debt
securities of any series for which they are trustee, the trustee must eliminate the conflict or resign.
Subordination
Payment on subordinated debt
securities will, to the extent provided in the indenture, be subordinated in right of payment to the prior payment in full of all of our
senior indebtedness (except that holders of the notes may receive and retain (i) permitted junior securities and (ii) payments made from
the trust described under “Satisfaction and Discharge; Defeasance”). Any subordinated debt securities also are effectively
subordinated to all debt and other liabilities, including lease obligations, if any.
Upon any distribution of our
assets upon any dissolution, winding up, liquidation or reorganization, the payment of the principal of and interest on subordinated debt
securities will be subordinated in right of payment to the prior payment in full in cash or other payment satisfactory to the holders
of senior indebtedness. In the event of any acceleration of subordinated debt securities because of an event of default, the holders of
any senior indebtedness would be entitled to payment in full in cash or other payment satisfactory to such holders of all senior indebtedness
obligations before the holders of subordinated debt securities are entitled to receive any payment or distribution, except for certain
payments made by the trust described under “Satisfaction and Discharge; Defeasance.” The indenture requires us or the trustee
to promptly notify holders of designated senior indebtedness if payment of subordinated debt securities is accelerated because of an event
of default.
We may not make any payment
on subordinated debt securities, including upon redemption at the option of the holder of any subordinated debt securities or at our option,
if:
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a default in the payment of the principal, premium, if any, interest, rent or other obligations in respect of designated senior indebtedness occurs and is continuing beyond any applicable period of grace (called a “payment default”); or |
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a default other than a payment default on any designated senior indebtedness occurs and is continuing that permits holders of designated senior indebtedness to accelerate its maturity, and the trustee receives notice of such default (called a “payment blockage notice) from us or any other person permitted to give such notice under the indenture (called a “non-payment default”). |
If the trustee or any holder
of the notes receives any payment or distribution of our assets in contravention of the subordination provisions on subordinated debt
securities before all senior indebtedness is paid in full in cash, property or securities, including by way of set-off, or other payment
satisfactory to holders of senior indebtedness, then such payment or distribution will be held in trust for the benefit of holders of
senior indebtedness or their representatives to the extent necessary to make payment in full in cash or payment satisfactory to the holders
of senior indebtedness of all unpaid senior indebtedness.
In the event of our bankruptcy,
dissolution or reorganization, holders of senior indebtedness may receive more, ratably, and holders of subordinated debt securities may
receive less, ratably, than our other creditors (including our trade creditors). This subordination will not prevent the occurrence of
any event of default under the indenture.
We are not prohibited from
incurring debt, including senior indebtedness, under the indenture. We may from time to time incur additional debt, including senior indebtedness.
We are obligated to pay reasonable
compensation to the trustee and to indemnify the trustee against certain losses, liabilities or expenses incurred by the trustee in connection
with its duties under the indenture. The trustee’s claims for these payments will generally be senior to those of noteholders in
respect of all funds collected or held by the trustee.
Certain Definitions
“indebtedness”
means:
(1) all indebtedness, obligations
and other liabilities for borrowed money, including overdrafts, foreign exchange contracts, currency exchange agreements, interest rate
protection agreements, and any loans or advances from banks, or evidenced by bonds, debentures, notes or similar instruments, other than
any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services;
(2) all reimbursement obligations
and other liabilities with respect to letters of credit, bank guarantees or bankers’ acceptances;
(3) all obligations and liabilities
in respect of leases required in conformity with generally accepted accounting principles to be accounted for as capitalized lease obligations
on our balance sheet;
(4) all obligations and other
liabilities under any lease or related document in connection with the lease of real property which provides that we are contractually
obligated to purchase or cause a third party to purchase the leased property and thereby guarantee a minimum residual value of the leased
property to the lessor and our obligations under the lease or related document to purchase or to cause a third party to purchase the leased
property;
(5) all obligations with respect
to an interest rate or other swap, cap or collar agreement or other similar instrument or agreement or foreign currency hedge, exchange,
purchase or other similar instrument or agreement;
(6) all direct or indirect
guaranties or similar agreements in respect of, and our obligations or liabilities to purchase, acquire or otherwise assure a creditor
against loss in respect of, indebtedness, obligations or liabilities of others of the type described in (1) through (5) above;
(7) any indebtedness or other
obligations described in (1) through (6) above secured by any mortgage, pledge, lien or other encumbrance existing on property which is
owned or held by us; and
(8) any and all refinancings,
replacements, deferrals, renewals, extensions and refundings of, or amendments, modifications or supplements to, any indebtedness, obligation
or liability of the kind described in clauses (1) through (7) above.
“permitted junior securities”
means (i) equity interests in the Company; or (ii) debt securities of the Company that are subordinated to all senior indebtedness and
any debt securities issued in exchange for senior indebtedness to substantially the same extent as, or to a greater extent than the notes
are subordinated to senior indebtedness under the indenture.
“senior indebtedness”
means the principal, premium, if any, interest, including any interest accruing after bankruptcy, and rent or termination payment on or
other amounts due on our current or future indebtedness, whether created, incurred, assumed, guaranteed or in effect guaranteed by us,
including any deferrals, renewals, extensions, refundings, amendments, modifications or supplements to the above. However, senior indebtedness
does not include:
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indebtedness that expressly provides that it shall not be senior in right of payment to subordinated debt securities or expressly provides that it is on the same basis or junior to subordinated debt securities; |
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our indebtedness to any of our majority-owned subsidiaries; and |
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subordinated debt securities. |
DESCRIPTION OF THE RIGHTS
This section describes the
general terms and provisions of the rights to purchase certain of our securities that we may issue to holders of our securities by this
prospectus. The applicable prospectus supplement will describe the specific terms of the rights then issued, and the terms and provisions
described in this section will apply only to the extent not superseded by the terms of the applicable prospectus supplement.
We may issue, as a dividend
at no cost, to holders of record of our securities or any class or series thereof on the applicable record date, rights to purchase common
shares or preferred shares, to the extent duly authorized and created, to purchase warrants exercisable for common shares, preferred shares,
depositary shares, debt securities or units, to purchase debt securities, to purchase depositary shares or to purchase units consisting
of two or more of the foregoing. In this prospectus, we refer to such rights as “stockholder rights.” If stockholder rights
are so issued to existing holders of securities, each stockholder right will entitle the registered holder thereof to purchase the securities
issuable upon exercise of the rights pursuant to the terms set forth in the applicable prospectus supplement.
If stockholder rights are
issued, the applicable prospectus supplement will describe the terms of such stockholder rights including the following where applicable:
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aggregate number of common shares, preferred shares, warrants, depositary shares or units, or principal amount of debt securities, purchasable upon exercise of such stockholder rights; |
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in the case of stockholder rights for preferred shares, preferred share warrants, depositary shares or depositary share warrants, the designation, aggregate number, and terms of the class or series of preferred shares purchasable upon exercise of such stockholder rights or warrants; |
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in the case of stockholder rights for debt securities or debt security warrants, the principal amount of debt securities purchasable upon exercise of such stockholder rights or warrants and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise; |
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the date on which the right to exercise such stockholder rights shall commence and the expiration date on which such right shall expire; |
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federal income tax considerations; and |
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other material terms of such stockholder rights. |
In addition to the terms of
the stockholder rights and the securities issuable upon exercise thereof, the prospectus supplement may describe, for a holder of such
stockholder rights who validly exercises all stockholder rights issued to such holder, how to subscribe for unsubscribed securities, issuable
pursuant to unexercised stockholder rights issued to other holders, to the extent such stockholder rights have not been exercised.
Holders of stockholder rights
will not be entitled by virtue of being such holders, to vote, to consent, to receive dividends, to receive notice with respect to any
meeting of stockholders for the election of our directors or any other matter, or to exercise any rights whatsoever as shareholders of
the Company, except to the extent described in the related prospectus supplement. In addition, holders of shareholder rights to purchase
debt security warrants will not be entitled by virtue of being such holders, to receive payments of principal of, or premium, if any,
or interest on, the debt securities purchasable upon exercise or to enforce covenants in the applicable indenture, except to the extent
described in the related prospectus supplement.
DESCRIPTION OF THE DEPOSITARY SHARES
General
We may, at our option, elect
to offer fractional shares rather than full shares of the common shares. In the event that we determine to do so, we will issue receipts
for depositary shares, each of which will represent a fraction of a common share as more fully described below.
Any fraction of common shares
represented by depositary shares will be deposited under one or more deposit agreements among us, a depositary to be named in the applicable
prospectus supplement, and the holders from time to time of depositary receipts issued thereunder. Subject to the terms of the applicable
deposit agreement, each holder of a depositary share will be entitled, in proportion to the applicable fraction of a common share by the
depositary shares, to all the rights of the common shares represented thereby (including, as applicable, dividend, voting, redemption,
subscription and liquidation rights).
The depositary shares will
be evidenced by depositary receipts issued pursuant to the deposit agreement. Depositary receipts will be distributed to those persons
purchasing the fractional common shares.
The following description
sets forth certain general terms and provisions of the depositary shares to which any prospectus supplement may relate. The particular
terms of the depositary shares to which any prospectus supplement may relate and the extent, if any, to which such general provisions
may apply to the depositary shares so offered will be described in the applicable prospectus supplement. To the extent that any particular
terms of the depositary shares or the deposit agreement described in a prospectus supplement differ from any of the terms described below,
then the terms described below will be deemed to have been superseded by that prospectus supplement relating to such deposited shares.
The forms of deposit agreement and depositary receipt will be filed as exhibits to the documents incorporated or deemed to be incorporated
by reference into this prospectus.
The following summary of certain
provisions of the depositary shares and deposit agreement does not purport to be complete and is subject to, and is qualified in its entirety
by express reference to, all the provisions of the deposit agreement and the applicable prospectus supplement, including the definitions.
Immediately following our
issuance of common shares that will be offered as fractional shares, we will deposit the shares with the depositary, which will then issue
and deliver the depositary receipts to the purchasers thereof. Depositary receipts will only be issued evidencing whole depositary shares.
A depositary receipt may evidence any number of whole depositary shares.
Pending the preparation of
definitive depositary receipts, the depositary may, upon our written order, issue temporary depositary receipts substantially identical
to (and entitling the holders thereof to all the rights pertaining to) the definitive depositary receipts but not in definitive form.
Definitive depositary receipts will be prepared thereafter without unreasonable delay, and such temporary depositary receipts will be
exchangeable for definitive depositary receipts at our expense.
Dividends and Other Distributions
The depositary will distribute
all cash dividends or other cash distributions received in respect of the common shares to the record holders of depositary shares relating
to the common shares in proportion to the number of the depositary shares owned by the holders.
In the event of a distribution
other than in cash, the depositary will distribute property received by it to the record holders of depositary shares entitled thereto
in proportion to the number of depositary shares owned by the holders, unless the depositary determines that the distribution cannot be
made proportionately among the holders or that it is not feasible to make the distributions, in which case the depositary may, with our
approval, adopt any method as it deems equitable and practicable for the purpose of effecting the distribution, including the sale (at
public or private sale) of the securities or property thus received, or any part thereof, at the place or places and upon those terms
as it may deem proper. The amount distributed in any of the foregoing cases will be reduced by any amounts required to be withheld by
us or the depositary on account of taxes or other governmental charges.
Redemption of Depositary Shares
If any common shares underlying
the depositary shares is subject to redemption, the depositary shares will be redeemed from the proceeds received by the depositary resulting
from any redemption, in whole or in part, of the common shares held by the depositary. The redemption price per depositary shares will
be equal to the applicable fraction of the redemption price per share payable with respect to the common shares. If we redeem common shares
held by the depositary, the depositary will redeem as of the same redemption date the number of depositary shares representing the common
shares so redeemed. If less than all the depositary shares are to be redeemed, the depositary shares to be redeemed will be selected by
lot or substantially equivalent method determined by the depositary.
After the date fixed for redemption,
the depositary shares so called for redemption will no longer be deemed to be outstanding and all rights of the holders of the depositary
shares will cease, except the right to receive the monies payable upon redemption and any money or other property to which the holders
of the depositary shares were entitled upon such redemption, upon surrender to the depositary of the depositary receipts evidencing the
depositary shares. Any funds deposited by us with the depositary for any depositary shares that the holders thereof fail to redeem will
be returned to us after a period of two years from the date the funds are so deposited.
Voting the Underlying Common Shares
Upon receipt of notice of
any meeting at which the holders of any common shares are entitled to vote, the depositary will mail the information contained in the
notice of meeting to the record holders of the depositary shares relating to the common shares. Each record holder of the depositary shares
on the record date (which will be the same date as the record date for the related common shares) will be entitled to instruct the depositary
as to the exercise of the voting rights pertaining to the number of common shares represented by that holder’s depositary shares.
The depositary will endeavor, insofar as practicable, to vote or cause to be voted the number of common shares represented by the depositary
shares in accordance with the instructions, provided the depositary receives the instructions sufficiently in advance of the meeting to
enable it to so vote or cause to be voted the common shares, and we will agree to take all reasonable action that may be deemed necessary
by the depositary in order to enable the depositary to do so. The depositary will abstain from voting the common shares to the extent
it does not receive specific instructions from the holders of depositary shares representing the common shares.
Withdrawal of Stock
Upon surrender of the depositary
receipts at the corporate trust office of the depositary and upon payment of the taxes, charges and fees provided for in the deposit agreement
and subject to the terms thereof, the holder of the depositary shares evidenced thereby will be entitled to delivery at such office, to
or upon his or her order, of the number of whole shares of the related common shares and any money or other property, if any, represented
by the depositary shares. Holders of depositary shares will be entitled to receive whole shares of the related common shares, but holders
of the whole common shares will not thereafter be entitled to deposit the common shares with the depositary or to receive depositary shares
therefor. If the depositary receipts delivered by the holder evidence a number of depositary shares in excess of the number of depositary
shares representing the number of whole shares of the related common shares to be withdrawn, the depositary will deliver to the holder
or upon his or her order at the same time a new depositary receipt evidencing the excess number of depositary shares.
Amendment and Termination of a Deposit Agreement
The form of depositary receipt
evidencing the depositary shares of any series and any provision of the applicable deposit agreement may at any time and from time to
time be amended by agreement between us and the depositary. However, any amendment that materially adversely alters the rights of the
holders of depositary shares of any series will not be effective unless the amendment has been approved by the holders of at least a majority
of the depositary shares then outstanding. Every holder of a depositary receipt at the time the amendment becomes effective will be deemed,
by continuing to hold the depositary receipt, to be bound by the deposit agreement as so amended. Notwithstanding the foregoing, in no
event may any amendment impair the right of any holder of any depositary shares, upon surrender of the depositary receipts evidencing
the depositary shares and subject to any conditions specified in the deposit agreement, to receive shares of the related common shares
and any money or other property represented thereby, except in order to comply with mandatory provisions of applicable law. The deposit
agreement may be terminated by us at any time upon not less than 60 days prior written notice to the depositary, in which case, on
a date that is not later than 30 days after the date of the notice, the depositary shall deliver or make available for delivery to
holders of depositary shares, upon surrender of the depositary receipts evidencing the depositary shares, the number of whole or fractional
shares of the related common shares as are represented by the depositary shares. The deposit agreement shall automatically terminate after
all outstanding depositary shares have been redeemed or there has been a final distribution in respect of the related common shares in
connection with any liquidation, dissolution or winding up of us and the distribution has been distributed to the holders of depositary
shares.
Charges of Depositary
We will pay all transfer and
other taxes and the governmental charges arising solely from the existence of the depositary arrangements. We will pay the charges of
the depositary, including charges in connection with the initial deposit of the related common shares and the initial issuance of the
depositary shares and all withdrawals of shares of the related common shares, except that holders of depositary shares will pay transfer
and other taxes and governmental charges and any other charges as are expressly provided in the deposit agreement to be for their accounts.
Resignation and Removal of Depositary
The depositary may resign
at any time by delivering to us written notice of its election to do so, and we may at any time remove the depositary. Any resignation
or removal will take effect upon the appointment of a successor depositary, which successor depositary must be appointed within 60 days
after delivery of the notice of resignation or removal and must be a bank or trust company having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000.
Miscellaneous
The depositary will
forward to the holders of depositary shares all reports and communications from us that are delivered to the depositary and which we
are required to furnish to the holders of the related common shares. The depositary’s corporate trust office will be
identified in the applicable prospectus supplement. Unless otherwise set forth in the applicable prospectus supplement, the
depositary will act as transfer agent and registrar for depositary receipts and if common shares are redeemable, the depositary will
also act as redemption agent for the corresponding depositary receipts.
DESCRIPTION OF UNITS
We may issue units comprised
of one or more of the other securities that may be offered under this prospectus, in any combination. The following information, together
with the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions
of any such the units that we may offer under this prospectus. While the information below will apply generally to any units that we may
offer under this prospectus, we will describe the particular terms of any series of units in detail in the applicable prospectus supplement.
The terms of any units offered under a prospectus supplement may differ from the general terms described below.
We will file the form of unit
agreement, if any, between us and a unit agent that describes the terms and conditions of the series of units we are offering, and any
supplemental agreements, concurrently with the filing of the applicable prospectus supplement under which such series of units are offered.
This summary is subject to, and qualified in their entirety by reference to, all the provisions of the unit agreement, if any, and any
supplemental agreements applicable to a particular series of units. We urge you to read the applicable prospectus supplements related
to the particular series of units that we sell under this prospectus, as well as the complete unit agreement, if any, and any supplemental
agreements that contain the terms of the units.
We may issue units comprising
one or more of shares and warrants in any combination. Each unit will be issued so that the holder of the unit is also the holder of each
security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security.
The unit agreement, under which a unit may be issued, if any, may provide that the securities included in the unit may not be held or
transferred separately, at any time or at any time before a specified date. We will describe in the applicable prospectus supplement the
terms of the series of units.
The provisions described in
this section, as well as those described under “Description of Share Capital” and “Description of Warrants” will
apply to each unit and to any share or warrant included in each unit, respectively. We may issue units in such amounts and in numerous
distinct series as we determine.
PLAN OF DISTRIBUTION
We may sell the securities
offered by this prospectus to or through underwriters or dealers, and also may sell those securities to one or more other purchasers directly
or through agents, including sales pursuant to ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers,
or if indicated in a prospectus supplement, pursuant to delayed delivery contracts, by remarketing firms or by other means. Underwriters
may sell securities to or through dealers. Each prospectus supplement will set forth the terms of the offering, including the name or
names of any underwriters, dealers or agents and any fees or compensation payable to them in connection with the offering and sale of
a particular series or issue of securities, the public offering price or prices of the securities and the proceeds from the sale of the
securities.
The securities may be sold,
from time to time in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated prices, including sales made directly on the NASDAQ or other
existing trading markets for the securities. The prices at which the securities may be offered may vary as between purchasers and during
the period of distribution. If, in connection with the offering of securities at a fixed price or prices, the underwriters have made a
bona fide effort to sell all of the securities at the initial offering price fixed in the applicable prospectus supplement, the public
offering price may be decreased and thereafter further changed, from time to time, to an amount not greater than the initial public offering
price fixed in such prospectus supplement, in which case the compensation realized by the underwriters will be decreased by the amount
that the aggregate price paid by purchasers for the securities is less than the gross proceeds paid by the underwriters to us.
Underwriters, dealers and
agents who participate in the distribution of the securities may be entitled under agreements to be entered into with us to indemnification
by us against certain liabilities, including liabilities under the Securities Act, or to contribution with respect to payments which such
underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers and agents may be customers of,
engage in transactions with, or perform services for us in the ordinary course of business.
In connection with any offering
of securities, the underwriters may over-allot or effect transactions which stabilize or maintain the market price of the securities offered
at a level above that which might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any time.
Any underwriters, dealers or agents to or through which securities other than our common shares are sold by us for public offering and
sale may make a market in such securities, but such underwriters, dealers or agents will not be obligated to do so and may discontinue
any such market making at any time and without notice. No assurance can be given that a market for trading in securities of any series
or issue will develop or as to the liquidity of any such market, whether or not such securities are listed on a securities exchange.
The place, time of delivery,
and other terms of the offered securities will be described in the applicable prospectus supplement.
CERTAIN INCOME TAX CONSIDERATIONS
The applicable prospectus
supplement may describe certain United States federal income tax consequences of the acquisition, ownership and disposition of securities
offered by this prospectus by an initial investor who is subject to United States federal income taxation.
ENFORCEMENT OF CIVIL LIABILITIES
We are an exempted company
with limited liability incorporated under the laws of the Cayman Islands and our affairs are governed by our memorandum and articles of
association and the Companies Act, and the common law of the Cayman Islands. We are incorporated in the Cayman Islands because of certain
benefits associated with being a Cayman Islands company, such as: (1) political and economic stability; (2) an effective judicial system;
(3) a favorable tax system; (4) the absence of exchange control or currency restrictions; and (5) the availability of professional and
support services.
However, certain disadvantages
accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following: (1) the Cayman Islands
has a less developed body of securities laws as compared to the United States and provide less protection for investors; and (2) Cayman
Islands companies may not have standing to sue before the federal courts of the United States. Our constitutional documents do not contain
provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers,
directors and shareholders, be arbitrated.
All of our operations are
conducted outside the United States, and all of our assets are located outside the United States. A substantial number of our officers
are nationals or residents of jurisdictions other than the United States. As a result, it may be difficult for a shareholder to effect
service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts,
including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United
States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S.
federal securities laws against us and our executive officers and directors.
We have appointed Corporation
Service Company, 251 Little Falls Drive, Wilmington, DE 19808, as our agent upon whom process may be served in any action brought against
us under the securities laws of the United States.
Ogier, our counsel as to Cayman
Islands law, and Grandway Law Offices, our counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether
the courts of the Cayman Islands and China, respectively, would:
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recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or |
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entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States. |
Ogier has advised us that
it is uncertain whether the courts of the Cayman Islands will allow shareholders of our company to originate actions in the Cayman Islands
based upon securities laws of the United States. In addition, there is uncertainty with regard to Cayman Islands law related to whether
a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of
the Cayman Islands as penal or punitive in nature. If such determination is made, the courts of the Cayman Islands will not recognize
or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on
making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws,
it is uncertain whether such judgments would be enforceable in the Cayman Islands. Ogier has further advised us that although there is
no statutory enforcement in the Cayman Islands of judgments obtained in the United States, a judgment obtained in such jurisdiction will
be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying
dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given
by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment
has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty, (e) was not obtained in a manner and (f) is not of
a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.
Grandway Law Offices has advised
us that the recognition and enforcement of foreign judgments are provided for under PRC Civil Procedure Law. PRC courts may recognize
and enforce foreign judgments in accordance with the requirements of PRC Civil Procedure Law based either on treaties between China and
the country where the judgment is made or on reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity
with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition,
according to the PRC Civil Procedure Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers
if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result,
it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States or in the Cayman
Islands.
EXPERTS
The consolidated financial
statements of CLPS Incorporation appearing in CLPS Incorporation’s Annual Report (Form 20-F) for the year ended June 30, 2021 have
been audited by Ernst & Young Hua Ming LLP, independent registered public accounting firm as set forth in their report thereon included
therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance
upon such report given on the authority of such firm as experts in accounting and auditing. The offices of Ernst & Young Hua Ming
LLP are located at 50/F, Shanghai World Financial Center, 100 Century Avenue, Pudong New Area, Shanghai, the People’s Republic of
China.
LEGAL MATTERS
Certain matters as to U.S.
federal law in connection with this offering will be passed upon for us by Loeb & Loeb LLP. The validity of the shares and certain
legal matters relating to the offering as to Cayman Islands law will be passed upon for us by Ogier. Certain legal matters relating to
the offering as to Chinese law will be passed upon for us by Grandway Law Offices of People’s Republic of China. In addition, certain
legal matters in connection with any offering of securities under this prospectus will be passed upon for any underwriters, dealers or
agents by counsel to be designated at the time of the offering by such underwriters, dealers or agents with respect to matters of applicable
law.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. |
Indemnification of Directors and Officers |
The Companies Act does not
limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors,
except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification
against civil fraud or the consequences of committing a crime. Our memorandum and articles of association permit indemnification of officers
and directors for losses, damages, costs and expenses incurred in their capacities as such unless such losses or damages arise from dishonesty
of such directors or officers willful default of fraud. This standard of conduct is generally the same as permitted under the Delaware
General Corporation Law for a Delaware corporation.
Insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended, or Securities Act, may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Securities
and Exchange Commission, or the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore
unenforceable.
| * | To be filed as an exhibit to a
post-effective amendment to this registration statement or as an exhibit to a report filed on Form 6-K under the Exchange Act and incorporated
herein by reference. |
| ** | To be filed as a 305B2 filing
in connection with an offering of debt securities. |
The undersigned registrant hereby undertakes:
(a) (1) To file, during any
period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus
required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus
any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed
that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table
in the effective registration statement;
(iii) To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to
such information in the registration statement; provided, however, that the undertakings set forth in paragraphs (a)(1)(i),
(a)(1)(ii) and (a)(1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs
is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, or the Exchange Act, that are incorporated by reference into the registration statement, or is contained
in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose
of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) To file a post-effective
amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed
offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the
Securities Ac need not be furnished, provided that the registrant includes in the prospectus, by means of post-effective
amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect
to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required
by Section 10(a)(3) of the Securities Act or Rule 3-19 of Regulation S-K if such financial statements and information are contained
in periodic reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference into the registration statement.
(5) That, for the purpose
of determining liability under the Securities Act to any purchaser:
(A) Each prospectus filed
by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus
was deemed part of and included in the registration statement; and (B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i),
(vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to
be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness
or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in
a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated
by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document immediately prior to such effective date.
(6) That, for the purpose
of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the
undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will
be considered to offer or sell such securities to such purchaser:
(i) any preliminary prospectus
or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) the portion of any other
free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) For purposes of determining
any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Hong Kong SAR, on August 18, 2022.
|
CLPS Incorporation |
|
|
|
|
By: |
/s/ Raymond Ming Hui Lin |
|
Name: |
Raymond Ming Hui Lin |
|
Title: |
Chief Executive Officer
(Principal Executive Officer) |
POWERS OF ATTORNEY
Each person whose signature
appears below constitutes and appoints Raymond Ming Hui Lin as his or her true and lawful attorneys-in-fact and agents with full powers
of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or
all amendments to this registration statement, including post-effective amendments, and to file the same, with all exhibits thereto, and
other documents and in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents,
and each of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about
the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all his
or her said attorneys-in-fact and agents or any of them or his or her substitute or substitutes may lawfully do or cause to be done by
virtue hereof. This Power of Attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken
together shall constitute one instrument. Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities indicated on August 18, 2022.
Pursuant to the requirements
of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and
on the dates indicated:
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ Xiao Feng Yang |
|
Chairman, President and Director |
|
August 18, 2022 |
Xiao Feng Yang |
|
|
|
|
|
|
|
|
|
/s/ Raymond Ming Hui Lin |
|
Chief Executive Officer and Director |
|
August 18, 2022 |
Raymond Ming Hui Lin |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Rui Yang |
|
Chief Financial Officer |
|
August 18, 2022 |
Rui Yang |
|
(Principal Accounting and Financial Officer) |
|
|
|
|
|
|
|
/s/ Zhaohui Feng |
|
Independent Director |
|
August 18, 2022 |
Zhaohui Feng |
|
|
|
|
|
|
|
|
|
/s/ Chong Seng Kee |
|
Independent Director |
|
August 18, 2022 |
Chong Seng Kee |
|
|
|
|
|
|
|
|
|
/s/ Jin He Shao |
|
Independent Director |
|
August 18, 2022 |
Jin He Shao |
|
|
|
|
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